-----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, WSkwAhqGhJJPheUBBc9rdFaof8ACy3UJEvGg1A7bKPzj3gpc2SqRFIWId56+s1h0 aU+2/CbTh1I2qdqmZtcx5w== 0000830260-95-000014.txt : 19951119 0000830260-95-000014.hdr.sgml : 19951119 ACCESSION NUMBER: 0000830260-95-000014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951114 SROS: NYSE 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: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09887 FILM NUMBER: 95591863 BUSINESS ADDRESS: STREET 1: 1000 BROADWAY BLDG STREET 2: 1000 S W BROADWAY, SUITE 2200 CITY: PORTLAND STATE: OR ZIP: 97205 BUSINESS PHONE: 5032239228 10-Q 1 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 September 30, 1995 ------------------------------------ OR / / 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 (IRS Employer incorporation or organization) Identification No.) 1000 Broadway Building, 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 ---- ---- APPLICABLE ONLY TO CORPORATE ISSUERS: 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 19,421,614 ---------------------------- ----------------------------- Class Number of Shares Outstanding (as of April 30, 1995) OREGON STEEL MILLS, INC. INDEX Page ---- PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets September 30, 1995 (unaudited) and December 31, 1994 . . . . . . . . . 2 Consolidated Statements of Income (unaudited) Three months and nine months ended September 30, 1995 and 1994 . . . 3 Consolidated Statements of Cash Flows (unaudited) Nine months ended September 30, 1995 and 1994 . . . . . . . . . . . . . . . . . 4 Notes to Consolidated Financial Statements (unaudited) . . . . . . . . . 5 - 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . 8 - 12 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. . . . . . . 13 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . 13 OREGON STEEL MILLS, INC. CONSOLIDATED BALANCE SHEETS (In thousands) September 30, 1995 December 31, (Unaudited) 1994 ------------- ------------ ASSETS Current assets: Cash and cash equivalents $ 9,604 $ 5,039 Trade accounts receivable, net 73,150 80,203 Inventories 144,058 160,788 Other current assets 8,126 7,661 Deferred tax asset 5,775 5,775 --------- --------- Total current assets 240,713 259,466 --------- --------- Property, plant and equipment: Land and improvements 28,511 28,319 Buildings 37,240 36,943 Machinery and equipment 365,338 230,019 Construction in progress 122,415 139,842 --------- -------- 553,504 435,123 Accumulated depreciation (111,943) (97,027) --------- -------- 441,561 338,096 --------- -------- Excess of cost over net assets acquired 41,895 42,569 Other assets 32,583 25,602 --------- -------- $756,752 $665,733 ========= ======== LIABILITIES Current liabilities: Current portion of long-term debt $ 5,827 $ 5,302 Accounts payable 105,979 85,618 Accrued expenses 34,423 24,692 Other taxes payable 3,798 2,374 Total current liabilities 150,027 117,986 Long-term debt 239,596 187,935 Deferred employee benefits 16,862 17,661 Other deferred liabilities 36,120 36,609 Deferred income taxes 15,709 10,725 -------- -------- 458,314 370,916 -------- -------- Minority interests 18,811 18,934 -------- -------- STOCKHOLDERS' EQUITY Common stock 194 194 Additional paid-in capital 150,826 150,090 Retained earnings 131,616 130,145 -------- -------- 282,636 280,429 Cumulative foreign currency translation adjustment (3,009) (4,546) -------- -------- 279,627 275,883 -------- -------- $756,752 $665,733 ======== ======== The accompanying notes are an integral part of the consolidated financial statements. 2 OREGON STEEL MILLS, INC. CONSOLIDATED STATEMENTS OF INCOME (In thousands, except tonnage and per share amounts) (Unaudited)
Three Months Ended Nine Months Ended September 30, September 30, ------------------------- ------------------------- 1995 1994 1995 1994 -------- -------- -------- -------- Revenues: Sales $188,479 $193,053 $526,644 $646,721 Proceeds from insurance settlement - - 3,959 - -------- -------- -------- -------- Total revenues 188,479 193,053 530,603 646,721 Costs and expenses: Cost of sales 170,681 178,179 472,340 589,740 Provision for rolling mill closures - 22,134 - 22,134 Selling, general and administrative expenses 11,401 12,185 32,652 38,094 Profit participation and ESOP contribution 592 164 3,985 1,718 -------- -------- -------- -------- Operating income 5,805 (19,609) 21,626 (4,965) Other income (expense): Interest and dividend income 123 109 248 357 Interest expense (2,990) (663) (7,112) (3,106) Other, net 53 334 661 586 Gain on sale of subsidiary's common stock - 12,323 - 12,323 Minority interests 93 (843) 158 (2,050) -------- -------- -------- -------- Income before income taxes 3,084 (8,349) 15,581 3,145 Income tax (expense) benefit (1,118) 7,855 (5,959) 3,487 -------- -------- -------- -------- Net income (loss) $ 1,966 $ (494) $ 9,622 $ 6,632 ======== ======== ======== ======== Primary and fully diluted net income (loss) per common and common equivalent share $.10 ($.02) $.48 $.33 Dividends declared per common share $.14 $.14 $.42 $.42 Weighted average common shares and common share equivalents outstanding 20,020 19,976 20,015 19,972 Tonnage sold 372,900 391,100 1,045,200 1,280,100 The accompanying notes are an integral part of the consolidated financial statements. 3 /TABLE OREGON STEEL MILLS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)
Nine Months Ended September 30, ------------------------------- 1995 1994 ---------- --------- Cash flows from operating activities: Net income $ 9,622 $ 6,632 Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation 16,892 15,891 Amortization 1,042 1,010 Provision for rolling mill closures - 22,134 Deferred income tax provision 4,984 (7,438) Gain on sale of subsidiary's common stock - (12,323) Accrual for contribution of common stock to employee stock ownership plan - 500 Minority interests (123) 1,056 Other, net (1,366) 1,224 Changes in current assets and liabilities, net 49,533 (26,949) --------- -------- NET CASH PROVIDED BY OPERATING ACTIVITIES 80,584 1,737 --------- -------- Cash flows from investing activities: Additions to property, plant and equipment (119,553) (92,588) Proceeds from disposal of property, plant and equipment 110 352 Other, net (550) (707) --------- -------- NET CASH USED BY INVESTING ACTIVITIES (119,993) (92,943) --------- -------- Cash flows from financing activities: Net borrowings under loan agreements 55,607 79,293 Payments of other debt (3,579) (3,105) Proceeds from sale of subsidiary's common stock - 16,800 Dividends paid (8,151) (8,134) Other, net (74) 260 --------- -------- NET CASH PROVIDED BY FINANCING ACTIVITIES 43,803 85,114 --------- -------- Effects of foreign currency exchange rate changes on cash 171 224 --------- -------- Net increase (decrease) in cash and cash equivalents 4,565 (5,868) Cash and cash equivalents at beginning of period 5,039 9,623 --------- -------- Cash and cash equivalents at end of period $ 9,604 $ 3,755 ========= ======== See Note 9 for additional supplemental disclosures of cash flow information: Cash paid for: Interest $10,902 $7,392 Income taxes $ 1,620 $3,954 The accompanying notes are an integral part of the consolidated financial statements. 4 /TABLE OREGON STEEL MILLS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Basis of Presentation --------------------- The consolidated financial statements include the accounts of Oregon Steel Mills, Inc. and its subsidiaries (the "Company"). All significant intercompany balances and transactions have been eliminated upon consolidation. Certain previously reported amounts have been reclassified to conform with current period presentation. The unaudited financial statements include all adjustments (consisting of normal recurring accruals) which, in the opinion of management, are necessary for a fair presentation of the interim periods. Results for an interim period are not necessarily indicative of results for a full year. Reference should be made to the Company's 1994 Annual Report on Form 10-K for additional disclosures including a summary of significant accounting policies. 2. Inventories ----------- Inventories consist of: September 30, December 31, 1995 1994 ------------- ------------ (In thousands) Raw materials $ 21,914 $ 37,389 Semi-finished product 52,980 50,033 Finished product 45,613 50,320 Stores and operating supplies 23,551 23,046 -------- -------- $144,058 $160,788 ======== ======== 3. Common Stock ------------ In February 1995 the Company contributed approximately 44,300 shares of common stock of the Company ("Common Stock") to the Employee Stock Ownership Plan (the "ESOP") in payment of a $736,000 liability accrued in 1994. In February 1994 the Company contributed approximately 29,600 shares of Common Stock to the ESOP in payment of a $753,000 liability accrued in 1993. On October 26, 1995, the Board of Directors declared a quarterly cash dividend of 14 cents per share to be paid November 30, 1995, to stockholders of record as of November 10, 1995. 4. Contingencies ------------- ENVIRONMENTAL. The Company's Napa Pipe Corporation subsidiary has a reserve of $2.7 million at September 30, 1995 for environmental remediation relating to the Napa pipe mill. The Company's 90 percent owned New CF&I, Inc. subsidiary owns a 95.2 percent interest in a Pueblo, Colorado steel mill, CF&I Steel, L.P. ("CF&I"). In connection with CF&I's acquisition of certain assets from CF&I Steel Corporation in 1993, CF&I established a reserve of $36.7 million for environmental remediation. The Colorado Department of Public Health and Environment issued a 10 year post closure permit with two ten year renewals to CF&I which became effective on October 30, 1995. The permit contains a schedule for corrective actions to be completed which is substantially reflective of a straight line rate of expenditure over 30 years. At September 30, 1995, CF&I has a reserve of $35.9 million, of which $33.9 million is classified as non-current in other deferred liabilities in the consolidated balance sheet. STATE OF OREGON OCCUPATIONAL SAFETY AND HEALTH DIVISION ("OREGON OSHA") CITATION. On July 25, 1995 Oregon OSHA cited the Company $1.4 million in penalties for alleged violations of Oregon occupational safety and health rules. Oregon OSHA claims that a Material Safety Data Sheet ("MSDS") that the Company had prepared for its glass frit product produced at its Portland steel mill was incomplete in its description of certain metals present in the product. Oregon OSHA also claims that certain administrative and record- 5 OREGON STEEL MILLS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (Unaudited) keeping aspects of the glass plant's lead and cadmium protection programs were not in complete compliance with applicable Oregon OSHA regulations. Of the eighteen individual citations, ten were alleged by Oregon OSHA to be willful. With the assistance of counsel, the Company has conducted its own investigation of all the alleged violations. Based on that investigation, it is the Company's belief that no willful violation of the Oregon OSHA rules occurred. The Company has appealed the citation, and believes that the final outcome will not have a material adverse effect on the Company's financial position. 5. Commitments ----------- During 1994 the Company began construction of various capital improvement projects at both its Portland, Oregon and Pueblo, Colorado steel mills. Commitments for expenditures related to the completion of these projects were $82.5 million at September 30, 1995. 6. Proceeds From Insurance Settlement ---------------------------------- During the second quarter of 1995, the Company received insurance proceeds of approximately $4 million as reimbursement of lost profits resulting from lost production and start-up delays of CF&I's rod/bar mill caused by an explosion that occurred during the third quarter of 1994. 7. Senior Credit Facilities Amendment ---------------------------------- The Company maintains a $100 million revolving credit facility and a $200 million term loan facility (the "Senior Credit Facilities"). Maximum borrowings available under the revolving credit facility are based on the amount of the combined inventory and accounts receivable of the Company. At September 30, 1995, $185 million was outstanding under the Senior Credit Facilities. The Senior Credit Facilities were amended as of September 30, 1995 to, among other things, modify the interest coverage ratio covenant and certain other restrictive covenants, and to facilitate the Company in pursuing other or additional financing alternatives. The amendment to the interest coverage ratio was needed in light of lower than anticipated earnings in 1995, and higher than anticipated borrowings on the Senior Credit Facilities. The amendments permit additional financing if necessary to accomplish the Company's capital expansion projects within the time currently projected. 8. Subsequent Event ---------------- During October 1995, the Company announced its intention to sell three percent of its interest in its subsidiary, New CF&I, Inc., to the Nissho Iwai Group. In connection with that sale, the Nissho Iwai Group will promote sales of steel products from the Oregon Steel and CF&I Steel Divisions. The sale is expected to occur prior to December 31, 1995. 6 OREGON STEEL MILLS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (Unaudited) 9. Supplemental Cash Flow Information ---------------------------------- At September 30, 1995 and September 30, 1994, the Company had financed property, plant and equipment with accounts payable of $23.7 million and $16.2 million, respectively. During the nine months ended September 30, 1994, the Company's provision for rolling mill closures reduced the carrying value by $22.1 million of various pieces of property, plant and equipment, inventories, and other operating supplies relating to the closure of the Fontana rolling mill and for those assets unlikely to be used following the construction of the combination mill at the Portland steel mill. In February 1995 the Company contributed approximately 44,300 shares of Common Stock of the Company to the ESOP in payment of a $736,000 liability accrued in 1994. In February 1994 the Company contributed approximately 29,600 shares of Common Stock to the ESOP in payment of a $753,000 liability accrued in 1993. 7 OREGON STEEL MILLS, INC. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS General - ------- The consolidated financial statements include the accounts of Oregon Steel Mills, Inc. and its wholly-owned and majority-owned subsidiaries (the "Company"), Napa Pipe Corporation ("Napa"), Oregon Steel Mills - Fontana Division, Inc. ("Fontana"), Camrose Pipe Corporation ("CPC") which owns a 60 percent interest in Camrose Pipe Company ("Camrose"), and 90 percent owned New CF&I, Inc. which owns a 95.2 percent interest in CF&I Steel, L.P. ("CF&I"). Fontana ceased production in the fourth quarter of 1994 and closed permanently in the first quarter of 1995. Results of Operations - --------------------- The following table sets forth tonnage sold, sales revenues and average selling price per ton by division: Three Months Ended, Nine Months Ended, September 30, September 30, ------------------- ------------------- 1995 1994 1995 1994 ------- -------- -------- --------- Total tonnage sold: Oregon Steel Division (1): Plate products 60,400 109,900 225,500 318,300 Welded pipe products 89,600 101,800 196,800 376,600 Semi-finished products 69,500 2,800 170,500 4,200 CF&I Steel Division 153,400 176,600 452,400 581,000 ------- ------- --------- --------- Total 372,900 391,100 1,045,200 1,280,100 ======= ======= ========= ========= Sales revenues (in thousands): Oregon Steel Division $117,560 $115,130 $309,860 $389,285 CF&I Steel Division 70,919 77,923 216,784 257,436 -------- -------- -------- -------- Total $188,479 $193,053 $526,644 $646,721 ======== ======== ======== ======== Average selling price per ton: Oregon Steel Division $536 $537 $523 $557 CF&I Steel Division $462 $441 $479 $443 Average $505 $494 $504 $505 - ----------------------- (1) The Oregon Steel Division consists primarily of the operations of the Portland, Oregon steel mill, Napa, Fontana and Camrose. The consolidated average selling price increased $11 to $505 per ton for the third quarter of 1995 and decreased $1 to $504 per ton for the first nine months of 1995, compared to the corresponding 1994 periods. The changes in the consolidated average selling prices relate to product mix variations in 1995 compared to 1994, primarily the increased volume of sales of the generally lowest priced semi- finished products and the decreased volume of sales of the higher priced plate and welded pipe products sold by the Oregon Steel Division. These negative product mix variances were offset positively by a reduction in the sales volume of the CF&I Steel Division's lower priced rod and bar products in 1995 versus 1994. In addition, selling prices increased for most products in the 1995 periods compared to the 1994 periods due to generally favorable market conditions and improved quality resulting from capital facility improvements. However, selling prices for Oregon Steel Division's semi-finished products dropped in the third quarter of 1995 due to increased international competition. This resulted in the Company's decision to substantially reduce the sale of semi-finished products at the Oregon Steel Division in the fourth quarter of 1995. Also, Oregon Steel Division's Canadian Camrose pipe mill was negatively impacted by a reduction in demand for its pipe products in the 1995 periods compared to the 1994 periods. 8 OREGON STEEL MILLS, INC. Consolidated tonnage sold decreased 18,200 tons to 372,900 tons for the third quarter of 1995 and decreased 234,900 tons to one million tons for the first nine months of 1995, compared to the corresponding 1994 periods. These tonnage decreases were primarily the result of reduced welded pipe and plate product sales by the Oregon Steel Division, reduced rod and bar sales by the CF&I Steel Division, offset by increased semi-finished product sales by both divisions. The closure of the Company's Fontana plate mill in the first quarter of 1995 reduced the Company's plate rolling capacity by approximately 50 percent. The new combination mill under construction at the Portland steel mill is scheduled to become operational in 1997. The temporary reduction in rolling capacity has resulted in lower plate sales to customers and reduced tonnage available for the Napa pipe mill. The Company has been able to purchase plate for pipe production to meet demand for its large diameter product at Napa. CF&I Steel Division's rod and bar product costs net of revenues were charged to the newly constructed, preoperational rod/bar mill capital asset account through July of 1995. Thus, the Company's income statement for the three and nine month periods ended September 30, 1995 did not include rod/bar mill product sales of 20,600 and 78,700 tons, respectively. The Company began recognizing all revenues and costs associated with the rod/bar facility in its income statement beginning in August of 1995. As a result of the decreased sales volume and changes in average selling prices, sales revenues for the three and nine month periods ended September 30, 1995 were $188.5 million and $526.6 million, respectively, compared to $193.1 million and $646.7 million for the corresponding 1994 periods. The $4.6 million sales revenue decrease was comprised of a $9 million volume decrease offset by a $4.4 million increase resulting from higher average selling prices. Of the $120.1 million year-to-date sales revenue decrease, $119 million was the result of a volume decrease, and $1.1 million resulted from lower average selling prices. Gross profits for the three and nine month periods ended September 30, 1995, increased $2.9 million and $1.3 million from the corresponding periods to $17.8 million and $58.3 million, respectively. Gross profit as a percentage of revenues for the three and nine month periods ended September 30, 1995 increased 1.7 percent and 2.2 percent, respectively, to 9.4 percent and 11 percent. The $2.9 million quarterly increase resulted from a $3.6 million positive average margin variance, offset by $700,000 negative volume variance. The $1.3 million year-to-date increase resulted from a $7.8 million positive average margin variance, a $4 million insurance settlement, offset by a $10.5 million negative volume variance. Gross profits in the third quarter and first nine months of 1995 improved compared to the corresponding 1994 periods due to higher selling prices, as discussed above; the current periods did not include higher manufacturing costs and sales allowances associated with the Company's first large international pipe order from the Napa pipe mill, as was the case in 1994; and CF&I Steel Division's low margin rod and bar product sales were only 22 and 18 percent of total CF&I Steel Division sales in the third quarter and first nine months of 1995 compared to 29 percent of total sales in the corresponding periods in 1994. Also, gross profits for the first nine months of 1995 were improved compared to the corresponding 1994 period due to the $4 million proceeds received from the Company's business interruption insurance carrier in the second quarter of 1995 for reimbursements of lost profits at the CF&I Steel Division due to lost production and the delay in start-up of the new rod/bar mill. This delay was caused by an explosion that occurred during the third quarter of 1994. These gross profit improvements were offset by high operating costs on the new rod/bar mill at the Company's CF&I Steel Division resulting from production delays and because the Company's lowest margin semi-finished product sales were 10 and 9 percent of consolidated sales in the third quarter and the first nine months of 1995 compared to less than one percent in the corresponding periods in 1994. Gross profits in 1995 were also impacted negatively due to decreased pipe sales from the Company's Camrose pipe mill and higher scrap prices at CF&I and the Portland steel mill. Further, the first quarter of 1995 included approximately $1.7 million in costs associated with the closure of the Fontana plate mill. 9 OREGON STEEL MILLS, INC. Selling, general and administrative expenses ("SG&A") for the three and nine month periods ended September 30, 1995 decreased $784,000 and $5.4 million, respectively, from the corresponding periods in 1994. These decreases were due primarily to reduced shipping expenses by the Oregon Steel Division as a result of the closure of the Fontana plate mill in the first quarter of 1995 and reduced shipping volume from the Company's Napa and Camrose pipe mills. Additionally, the closure of the Fontana plate mill decreased SG&A costs $2.2 million for the first nine months of 1995 compared to the same period in 1994. SG&A as a percent of revenues for the three and nine month periods ended September 30, 1995 was 6 and 6.2 percent, respectively, compared to 6.3 and 5.9 percent for the corresponding periods in 1994. The profit participation and ESOP contribution expense for the three and nine month periods ended September 30, 1995 increased compared to the corresponding 1994 periods, reflecting the increased profitability in 1995 versus 1994. Other Income (Expense) - ---------------------- Total interest costs for the three and nine month periods ended September 30, 1995, were $5.6 million and $15.8 million, respectively, compared to $2.9 million and $7.9 million for the corresponding 1994 periods. These increases were primarily the result of the debt incurred to fund the Portland combination mill and the CF&I capital expenditure programs. Capitalized interest cost for the three and nine month periods ended September 30, 1995 was $2.6 million and $8.7 million, respectively, compared to $2.2 million and $4.8 million for the corresponding 1994 periods. The third quarter of 1994 included a $12.3 million gain from the sale of a 10 percent equity interest in New CF&I, Inc. to a subsidiary of Nippon Steel Corporation. Income Taxes - ------------ The Company's effective income tax rate was 36 and 38 percent for the three and nine month periods ended September 30, 1995, respectively. The benefit of income taxes was at a rate of 32.2 percent for the year ended December 31, 1994. Income before income taxes in 1994 included a non-taxable $12.3 million gain on the sale of a 10 percent equity interest in New CF&I, Inc. which occurred during the third quarter of 1994. 10 OREGON STEEL MILLS, INC. Liquidity and Capital Resources - ------------------------------- The Company's cash flow from operations for the nine month period ended September 30, 1995 was a positive $80.6 million compared to a positive cash flow of $1.7 million in the corresponding 1994 period. During 1995, the other principal source of cash flow was borrowings under the Senior Credit Facilities. Principal uses of cash was to fund the Company's capital expansion projects and dividends. Net working capital at September 30, 1995 decreased $50.8 million from December 31, 1994 due to an $18.8 million decrease in current assets, principally inventory and accounts receivable, and a $32 million increase in current liabilities, principally accounts payable and accrued expenses. The Company maintains a $100 million revolving credit facility and a $200 million term loan facility (the "Senior Credit Facilities"). Maximum borrowings available under the revolving credit facility are based on the amount of the combined inventory and accounts receivable of the Company. At September 30, 1995, $185 million was outstanding under the Senior Credit Facilities. The Senior Credit Facilities were amended as of September 30, 1995 to, among other things, modify the interest coverage ratio covenant and certain other restrictive covenants, and to facilitate the Company in pursuing other or additional financing alternatives. The amendment to the interest coverage ratio was needed in light of lower than anticipated earnings in 1995, and higher than anticipated borrowings on the Senior Credit Facilities. The amendments permit additional financing if necessary to accomplish the Company's capital expansion projects within the time currently projected. The Company has a $14.5 million uncollateralized and uncommitted revolving line of credit with a bank which matures May 31, 1996 and may be used to support issuance of letters of credit, foreign exchange contracts and interest rate hedges. At September 30, 1995, $9.8 million was restricted under outstanding letters of credit. In addition, the Company has a $5 million uncollateralized and uncommitted revolving credit line with a bank which is restricted to use for letters of credit. At September 30, 1995, $3.6 million was restricted under outstanding letters of credit. Camrose maintains a Canadian $15 million revolving credit facility with a bank, expiring on October 31, 1996. The facility is collateralized by substantially all of the assets of Camrose. Borrowings under this facility are limited to an amount equal to specified percentages of Camrose's eligible trade accounts receivables and inventories. As of September 30, 1995, Camrose had $3.9 million outstanding under this facility. CF&I incurred indebtedness in an original principal amount of $67.5 million as part of the purchase price of the assets of CF&I Steel Corporation on March 3, 1993. At September 30, 1995, the outstanding balance was $56.5 million, of which $50.7 million was classified as noncurrent. CAPITAL EXPENDITURES. In the first nine months of 1995, the Company expended approximately $39 million on the capital program at CF&I and $76 million on the combination mill at the Portland steel mill. During the balance of 1995 the Company expects to expend $37 million on the capital program at CF&I and $39 million on the combination mill at the Portland steel mill. To complete the capital program at CF&I and the combination mill in 1996 and beyond, the Company expects to expend $15 million at CF&I and $73 million on the combination mill. 11 OREGON STEEL MILLS, INC. In addition, the Company has expended approximately $4 million for capital improvements at its Oregon Steel Division manufacturing facilities for recurring upgrade projects to the present facilities and equipment during the first nine months of 1995. The Company expects to expend approximately $5 million on these projects during the remainder of 1995. The Company has also budgeted $16 million for an approximate 13 percent equity interest in a planned Venezuelan hot briquetted iron plant. Approximately $7 million is planned to be expended in 1995. The Company's total capitalization at September 30, 1995 of $520 million consists of $240 million in long-term debt and $280 million in stockholder's equity, for a long-term debt-to-capitalization ratio of .46 to 1. Net book value per share of common stock at September 30, 1995 was $14.40 per share versus $14.24 per share at December 31, 1994. The Company believes that its anticipated needs for working capital will be met from existing cash balances, funds generated from operations, and borrowings pursuant to the Senior Credit Facilities. The Company's capital expenditure program is expected to be funded primarily by funds from operations, borrowings pursuant to the Senior Credit Facilities and additional financing or other funding alternatives which the Company believes will be available as needed. 12 OREGON STEEL MILLS, INC. PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K -------------------------------- (a) Exhibits 10.0 Amendment dated as of September 30, 1995 to the Credit Agreement dated December 14, 1994 among Oregon Steel Mills, Inc., as the Borrower, Certain Commercial Lending Institutions, as the Lenders, First Interstate Bank of Oregon, N.A., as the Administrative Agent for the Lenders, The Bank of Nova Scotia, as the Syndication Agent for the Lenders, and First Interstate Bank of Oregon, N.A. and The Bank of Nova Scotia, as the Managing Agents for the Lenders. 11.0 Statement Regarding Computation of Per Share Earnings 27.0 Financial Data Schedule (b) Reports on Form 8-K During the quarter ended September 30, 1995, no reports on Form 8-K were filed by the Company. 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 thereunto duly authorized. OREGON STEEL MILLS, INC. Date: November 14, 1995 /s/ L. Ray Adams ------------------------- L. Ray Adams Vice President of Finance and Chief Financial Officer 13 EX-27 2
5 9-MOS DEC-31-1995 SEP-30-1995 9604 0 75009 1859 144058 240713 553504 111943 756752 150027 0 194 0 0 279433 756752 526644 530603 472340 472340 0 0 7112 15581 5959 9622 0 0 0 9622 .48 .48
EX-11 3 OREGON STEEL MILLS, INC. EXHIBIT 11 STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS (In thousands, except per share data amounts)
Three Months Ended Nine Months Ended September 30, September 30, ------------------- --------------------- 1995 1994 1995 1994 ------ ------ ------ ------ Weighted average number of common shares outstanding 19,422 19,378 19,416 19,374 Common stock equivalents arising from 598 shares of stock to be issued March 2003 598 598 598 598 ------ ------ ------ ------ 20,020 19,976 20,015 19,972 ====== ====== ====== ====== Net income (loss) $1,966 $ (494) $9,622 $6,632 ====== ====== ====== ====== Primary and fully diluted net income (loss) per common and common equivalent share $.10 $(.02) $.48 $.33 ==== ===== ==== ====
EX-10 4 AMENDMENT NO. 1 TO CREDIT AGREEMENT THIS AMENDMENT NO. 1 TO THE CREDIT AGREEMENT (this "Amendment No. 1"), dated as of September 30, 1995, among OREGON STEEL --------------- MILLS, INC., a Delaware corporation (the "Borrower"), the various -------- financial institutions as are or may become parties hereto (collectively, the "Lenders"), FIRST INTERSTATE BANK OF OREGON, ------- N.A. ("First Interstate"), as administrative agent (the ---------------- "Administrative Agent"), for the Lenders, THE BANK OF NOVA SCOTIA -------------------- ("Scotiabank"), as syndication agent for the Lenders (the "Syndication ---------- ----------- Agent") and the First Interstate and Scotiabank as managing agents - ----- (the "Managing Agents"; the Managing Agents, the Administrative Agent --------------- and the Syndication Agent are collectively referred to as the "Agents") for the Lenders. ------ W I T N E S S E T H: - - - - - - - - - - WHEREAS, the Borrower, the Lenders and the Agents are parties to the Credit Agreement, dated as of December 14, 1994 (hereinafter referred to as the "Existing Credit Agreement"); and ------------------------- WHEREAS, the Borrower has requested that certain amendments be made to the Existing Credit Agreement; and WHEREAS, the Lenders and Agents are willing to make certain amendments to the Existing Credit Agreement on the terms and conditions hereinafter provided; NOW, THEREFORE, in consideration of the agreements herein contained, the parties hereto hereby agree as follows: ARTICLE I DEFINITIONS ----------- SECTION 1.1. CERTAIN DEFINITIONS. The following terms (whether ------------------- or not underscored) when used in this Amendment No. 1 shall have the following meanings: "Amended Credit Agreement" shall mean the Existing Credit ------------------------ Agreement as amended by this Amendment No. 1. "Amendment No. 1 Effective Date" shall have the meaning provided ------------------------------ in Section 6.1. ----------- -1- SECTION 1.2. OTHER DEFINITIONS. Unless otherwise defined or the ----------------- context otherwise requires, terms used herein (including in the preamble and recitals hereto) have the meanings provided for in the Existing Credit Agreement. ARTICLE II AMENDMENTS TO ------------- EXISTING CREDIT AGREEMENT ------------------------- Effective on the Amendment No. 1 Effective Date, the Existing Credit Agreement is amended in accordance with the terms of this Article II; except as so amended, the Existing Credit Agreement shall - ---------- continue to remain in all respects in full force and effect. SECTION 2.1. AMENDMENTS TO SECTION 1.1. -------------------------- 2.1.1. The definition of "Change in Control" is hereby amended to read in its entirety as follows: "'Change in Control' means (i) the acquisition by ----------------- any Person (other than the ESOP), or two or more Persons acting in concert, of beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934) of 20% or more of the outstanding shares of voting stock of the Borrower, or (ii) the occurrence of any event or condition that would require the Borrower to repurchase or redeem any Permitted Subordinated Indebtedness as a result of any 'change in control,' 'change of control' or similar circumstance under the definitive documentation for any Permitted Subordinated Indebtedness." 2.1.2. Clause (iii) of clause (x) of the definition of "Interest Coverage Ratio" is hereby amended to read in its entirety as follows: "(iii) interest expense during such period plus" and clause (y) of the ---- definition of "Interest Coverage Ratio" is hereby amended to read in its entirety as follows: "(y) the Borrower and its Subsidiaries' total interest expense (including capitalized interest) paid in cash during such period." 2.1.3. The second sentence of the definition of "Applicable Margin" is hereby amended by inserting the following immediately before the end thereof: "; provided, further, that if on or before March 31, -------- ------- 1996 the Borrower shall not have received an aggregate of at -2- least $50,000,000 of Net Equity Proceeds and/or Net Permitted Subordinated Indebtedness Proceeds, then as of such date each Applicable Margin set forth above shall increase by .25%, and if on or before May 31, 1996, the Borrower shall not have received (in addition to the above-mentioned $50,000,000) an aggregate of at least $50,000,000 of additional Net Equity Proceeds and/or Net Permitted Subordinated Indebtedness Proceeds, each Applicable Margin set forth above shall increase by an additional .25%; provided, further, that if, after the Applicable Margins shall -------- ------- have been increased by .25% as provided in the first clause of the preceding proviso, the Borrower shall have thereafter received an aggregate of at least $50,000,000 of Net Equity Proceeds and/or Net Permitted Subordinated Indebtedness Proceeds, the Applicable Margins shall thereupon be reduced by .25% and if after the Applicable Margins shall have been increased by .25% as provided in the second clause of the preceding proviso, the Borrower shall have thereafter received (in addition to the above-mentioned $50,000,000) an aggregate of at least $50,000,000 of additional Net Equity Proceeds and/or Net Permitted Subordinated Indebtedness Proceeds, the Applicable Margins shall thereupon be reduced by .25% (returning the Applicable Margins to the levels set forth in the chart above). 2.1.4. There shall be added to Section 1.1 of the Existing Credit Agreement new definitions, in appropriate alphabetical sequence, reading in their entirety as follows: "Net Permitted Subordinated Indebtedness Proceeds" ------------------------------------------------ means, with respect to any issuance by the Borrower of any Permitted Subordinated Indebtedness, the gross consideration received by or for the Borrower minus underwriting and brokerage commissions, discounts and fees and other professional fees and expenses relating to such issuance that are payable by the Borrower. "Permitted Subordinated Indebtedness" means unsecured ----------------------------------- Indebtedness of the Borrower which is subordinated to the monetary Obligations of the Borrower upon terms no less favorable to the Lenders in any substantial respect than those set forth in Exhibit M or upon such other terms as may be satisfactory to the Managing Agents and the Required Lenders." SECTION 2.2. AMENDMENT OF SECTION 3.1.3 -------------------------- The final sentence of Section 3.1.3 of the Existing Credit Agreement is hereby amended to read in its entirety as follows: -3- "If less than $200,000,000 of Term Loans are outstanding on the Term Facility Commitment Termination Date (other than pursuant to mandatory prepayments or mandatory commitment reductions required under this Agreement), then all scheduled payments shall be reduced pro rata." -------- SECTION 2.3 AMENDMENT OF SECTION 3.1.5. -------------------------- Section 3.1.5 of the Existing Credit Agreement is hereby amended to read in its entirety as follows: "SECTION 3.1.5 Net Equity Proceeds. Within five Business ------------------- Days of the receipt by the Borrower of any Net Equity Proceeds, the Borrower shall make a mandatory prepayment of the Loans in an amount equal to 100% of such Net Equity Proceeds to be applied as set forth in Section 3.2.2 or, if such prepayment would cause the ------------- Borrower to be liable for losses or expenses pursuant to the terms of Section 4.4(a) hereof, the Borrower shall deliver such -------------- Net Equity Proceeds to the Administrative Agent to be held as cash collateral pursuant to the terms of the Security Agreement and to be applied by the Administrative Agent as set forth in Section 3.2.2 to the payments of the Loans on the earliest dates ------------- such payment may be made without incurring losses or expenses pursuant to Section 4.4(a). Notwithstanding the foregoing, no -------------- mandatory prepayment of the Loans shall be required to be made from the first $75,000,000 of Net Equity Proceeds received by the Borrower." SECTION 2.4. ADDITION OF SECTION 3.1.9. ------------------------- There shall be added to the Existing Credit Agreement, immediately after Section 3.1.8, a new Section reading in its entirety as follows: "SECTION 3.1.9. Net Permitted Subordinated Indebtedness ------------------------------------------------------- Proceeds. Upon receipt by the Borrower of any Net Permitted -------- Subordinated Indebtedness Proceeds, the Commitments shall immediately be reduced and/or within five Business Days of the receipt by the Borrower of such proceeds, the Borrower shall make a mandatory prepayment of the Loans, in each case in the amounts specified in the following sentence for application as set forth in Section 3.2.3 or, if such a prepayment would cause the ------------- Borrower to be liable for losses or expenses pursuant to the terms of Section 4.4(a) hereof, the Borrower shall deliver such -------------- Net Permitted Subordinated Indebtedness Proceeds to the Administrative Agent to be held as cash collateral pursuant to the terms of the Security Agreement and to be applied by -4- the Administrative Agent as set forth in Section 3.2.3 to ------------- the payments of the Loans on the earliest dates such payment may be made without incurring losses or expenses pursuant to Section 4.4(a). The mandatory Commitment reductions and/or -------------- prepayment of the Loans described above shall be in an amount equal to 40% of such Net Permitted Subordinated Indebtedness Proceeds, so long as such proceeds do not exceed $75,000,000 in the aggregate, and if such Net Permitted Subordinated Indebtedness Proceeds exceed $75,000,000 in the aggregate, 100% of all amounts in excess of $75,000,000 shall be applied to reduce the Commitments and Loans; provided, however, if the -------- ------- amount of Net Equity Proceeds received by the Borrower prior to the issuance of any Permitted Subordinated Indebtedness exceeds $50,000,000, then the $75,000,000 threshold previously described shall be increased by one dollar for each dollar of Net Equity Proceeds in excess of $50,000,000 received by the Borrower." SECTION 2.5. ADDITION OF SECTION 3.2.3. ------------------------- There shall be added to the Existing Credit Agreement, immediately after Section 3.2.2, a new Section reading in its entirety ------------- as follows: "SECTION 3.2.3. Further Mandatory Commitment Reductions and ----------------------------------------------------------- Prepayments. Upon the Borrower's receipt of Net Permitted ----------- Subordinated Indebtedness Proceeds as described in Section 3.1.9, ------------- the Commitments shall be reduced and the Loans shall be repaid as hereinafter provided. Such proceeds shall first reduce any unused portion of the Term Loan Commitment and may, to the extent thereof, be retained by the Borrower. After there exists no unused Term Loan Commitment, all remaining proceeds shall be applied to the scheduled repayments of Term Loans set forth in Section 3.1.3 in inverse order of maturity. After all ------------- outstanding Term Loans have been repaid in full, if any proceeds remain, the Revolving Loan Commitment Amount shall be reduced by the aggregate amount of such proceeds (and the Borrower shall make a prepayment of Revolving Loans in an amount equal to the excess, if any, of the then outstanding Revolving Loans over the Revolving Loan Commitment amount, as so reduced)." SECTION 2.6. AMENDMENTS TO SECTION 7.2.2. --------------------------- Section 7.2.2 of the Existing Credit Agreement is hereby amended (a) by adding the following clause immediately after clause (i) thereof: "(j) Permitted Subordinated Indebtedness;" -5- and (b) by amending the proviso at the end of such Section to read in its entirety as follows: "provided, however, that no Indebtedness otherwise permitted by -------- ------- clauses (d), (e), (f), (g), (h), (i) or (j) shall be permitted ----------- --- --- --- --- --- --- if, after giving effect to the incurrence thereof, any Default shall have occurred and be continuing." SECTION 2.7. AMENDMENT TO SECTION 7.2.4(b). ----------------------------- Section 7.2.4(b) of the Existing Credit Agreement is hereby amended to read in its entirety as follows: (b) Its Interest Coverage Ratio, tested on a rolling four quarter basis, to be less than the specified ratio as of the end of any of the following Fiscal Quarters: Fiscal Quarter Minimum Interest Coverage Ratio -------------- ------------------------------- September 30, 1995 1.25 to 1.0 December 31, 1995 1.20 to 1.0 March 31, 1996 1.45 to 1.0 June 30, 1996 1.50 to 1.0 September 30, 1996 1.75 to 1.0 December 31, 1996 2.00 to 1.0 March 31, 1997 2.25 to 1.0 June 30, 1997 2.50 to 1.0 September 30, 1997 2.75 to 1.0 December 31, 1997 3.00 to 1.0 March 31, 1998 3.00 to 1.0 June 30, 1998 3.25 to 1.0 September 30, 1998 3.25 to 1.0 December 31, 1998 3.50 to 1.0 March 31, 1999 3.50 to 1.0 June 30, 1999 3.75 to 1.0 September 30, 1999 3.75 to 1.0 December 31, 1999 4.00 to 1.0 SECTION 2.8. AMENDMENT TO SECTION 7.2.4(e). ----------------------------- Section 7.2.4(e) of the Existing Credit Agreement is hereby amended to read in its entirety as follows: (e) Its Funded Debt to Capitalization Ratio at any time to exceed the specified ratio in any of the following Fiscal Quarters: -6- Maximum Funded Debt to Quarter Ending Capitalization Ratio -------------- ---------------------- September 30, 1995 .55 to 1.0 December 31, 1995 .58 to 1.0 March 31, 1996 .58 to 1.0 June 30, 1996 .50 to 1.0 September 30, 1996 .50 to 1.0 December 31, 1996 .50 to 1.0 March 31, 1997 .50 to 1.0 June 30, 1997 .50 to 1.0 September 30, 1997 .50 to 1.0 December 31, 1997 .50 to 1.0 March 31, 1998 .40 to 1.0 June 30, 1998 .40 to 1.0 September 30, 1998 .40 to 1.0 December 31, 1998 .40 to 1.0 March 31, 1999 .35 to 1.0 June 30, 1999 .35 to 1.0 September 30, 1999 .35 to 1.0 December 31, 1999 .35 to 1.0 SECTION 2.9. AMENDMENT TO SECTION 7.2.7. -------------------------- Section 7.2.7 of the Existing Credit Agreement is hereby amended to read in its entirety as follows: SECTION 7.2.7 Capital Expenditures, etc. The Borrower will -------------------------- not, and will not permit any of its Subsidiaries to, make or commit to make Capital Expenditures in any Fiscal Year, except Capital Expenditures substantially as contemplated by the Borrower's revised financial plan dated as of October 27, 1995 and which do not aggregate in excess of the amount set forth below opposite such Fiscal Year: Year Maximum Capital Expenditures ---- ---------------------------- 1995 $187,500,000 1996 $ 86,250,000 1997 $ 65,000,000 1998 $ 30,000,000 1999 $ 25,000,000 provided, however, that -------- ------- (i) if a duly executed and delivered Compliance Certificate demonstrates that the Funded Debt to Capitalization Ratio is .50 to 1.0 or less as of the last day of any Fiscal Quarter ending on or after December 31, 1995, then the maximum Capital Expenditures for the 1996 Fiscal Year shall be increased to $115,000,0000 and the -7- maximum Capital Expenditures for the 1997 and 1999 Fiscal Years shall be reduced to $40,000,000 and $20,000,000, respectively; (ii) to the extent Capital Expenditures are made or committed to be made in any Fiscal year in an amount less than the maximum amount permitted for such Fiscal year as provided above, the Capital Expenditures which the Borrower or its Subsidiaries may make or commit to make in the next following Fiscal Year shall be increased by 100% of the amount of the permitted Capital Expenditures not so made or committed to be made in the immediately preceding Fiscal Year (the "Carry-Forward Amount"); -------------------- (iii) if all or part of the Carry-Forward Amount is not used in full in the immediately succeeding Fiscal Year, up to 50% of such original Carry-Forward Amount may be carried forward to the second immediately succeeding Fiscal Year, but no further carry forward of such Carry-Forward Amount to any other succeeding Fiscal Year shall be permitted; and (iv) no portion of any Carry-Forward Amount shall be used in any Fiscal Year until the entire amount of the Capital Expenditures permitted to be made or committed to be made in such Fiscal Year as provided in the preceding clauses (ii) and (iii) shall have been used. ------------ ----- SECTION 2.10. ADDITION OF SECTION 7.2.14. -------------------------- There shall be added to the Credit Agreement a new Section 7.2.14 reading in its entirety as follows: "SECTION 7.2.14. Permitted Subordinated Indebtedness. ----------------------------------- The Borrower will not, and will not permit any of its Subsidiaries to, (i) make any cash payments of interest on any Permitted Subordinated Indebtedness or (ii) make any payment or prepayment of, or redemption or acquisition for value of, any Permitted Subordinated Indebtedness." SECTION 2.11. AMENDMENT OF EXHIBIT L. ---------------------- Exhibit L to the Existing Credit Agreement is hereby amended and restated in its entirety to read as set forth in Exhibit L to this Amendment No. 1. SECTION 2.12. ADDITION OF NEW EXHIBIT. ----------------------- -8- There shall be added to the Existing Credit Agreement, immediately after Exhibit L, a new Exhibit M in the form of Exhibit M to this Amendment No. 1. ARTICLE III OTHER AGREEMENTS CONCERNING --------------------------- EXISTING CREDIT AGREEMENT ------------------------- SECTION 3.1. EXTENSION OF REVOLVING LOAN COMMITMENT -------------------------------------- TERMINATION DATE. The Borrower has requested the Lenders to extend - ---------------- the Revolving Loan Commitment Termination Date by one year. Subject to the terms and conditions hereinafter set forth, the Lenders have agreed to extend the date specified in clause (b) of the definition of the term "Revolving Loan Commitment Termination Date" from December 31, 1997 to December 31, 1998; provided, however, such extension shall -------- ------- not be effective unless and until the Borrower has duly executed and delivered a Compliance Certificate that demonstrates that the Funded Debt to Capitalization Ratio is .50 to 1.00 or less as of the last day of any Fiscal Quarter ending on December 31, 1995, March 31, 1996 or June 30, 1996. SECTION 3.2. RELEASE OF COLLATERAL. The Borrower has agreed to --------------------- sell 3% of the shares of the common stock of New CF&I to a third party for considerations identified in the Borrower's revised financial plan dated as of October 27, 1995. Pursuant to the terms of the Pledge Agreement and Section 10.1 of the Existing Credit Agreement, the consent of the Required Lenders is required before such a sale may be completed. By their execution of this Amendment No. 1, each of the undersigned Lenders have evidenced their consent to the sale of 3% of the common stock of New CF&I by the Borrower, substantially on the terms described above; provided, that (i) such sale shall be completed -------- on or before December 31, 1995 and (ii) the Term Loan Commitment shall immediately be reduced upon the Borrower's receipt of the net proceeds from such sale by $3,100,000. ARTICLE IV REPRESENTATIONS AND WARRANTIES ------------------------------ In order to induce the Lenders to make the amendments provided for in Article II and to extend the Revolving Loan Commitment Termination Date as provided for in Article III, the Borrower hereby (a) represents and warrants, that each of the representations and warranties contained in the Existing Credit Agreement and in the other Loan Documents is true and correct as of the date hereof as if made on the date hereof (except, if any such representation and warranty relates to an earlier date, such -9- representation and warranty shall be true and correct in all material respects as of such earlier date) and immediately after giving effect to the provisions of this Amendment No. 1 no Default has occurred and is continuing and (b) agrees that the incorrectness in any material respect of any representation and warranty contained in the preceding clause (a) shall constitute an immediate Event of Default. By its - ---------- execution hereof, each Lender acknowledges receipt of the Borrower's revised financial plan dated as of October 27, 1995, together with the Borrower's monthly projections through December 31, 1996. ARTICLE V ACKNOWLEDGEMENT OF GUARANTORS ----------------------------- By executing the acknowledgement to this Amendment No. 1, each Guarantor of the Borrower hereby confirms and agrees that the Guaranty and each Security Agreement to which it is a party is, and shall continue to be, in full force and effect and is hereby ratified and confirmed in all respects, except that, on and after the Amendment No. 1 Effective Date, each reference therein to the "Credit Agreement", "thereunder", "thereof" or words of like import referring to the Existing Credit Agreement, shall mean and refer to the Existing Credit Agreement after giving effect to this Amendment No. 1. ARTICLE VI CONDITIONS TO EFFECTIVENESS --------------------------- SECTION 6.1. EFFECTIVE DATE. This Amendment No. 1 shall become -------------- effective on the date (herein called the "Amendment No. 1 Effective ------------------------- Date") when the conditions set forth in this Section 6.1 have been - ---- ----------- satisfied, such effectiveness to be retroactive to September 30, 1995. SECTION 6.1.1. EXECUTION OF COUNTERPARTS. The Administrative ------------------------- Agent shall have received counterparts of this Amendment No. 1 duly executed and delivered on behalf of the Borrower, the Guarantors, the Lenders and the Agents. SECTION 6.1.2. RESOLUTIONS AND LEGAL OPINION. The ----------------------------- Administrative Agent shall have received (a) resolutions of the Board of Directors of the Borrower authorizing the execution, delivery and performance of Amendment No. 1 and (b) a satisfactory legal opinion from Schwabe Williamson & Wyatt (or other counsel satisfactory to the Agents) as to the due authorization, execution, and delivery of this Amendment No. 1 by, and good standing of, the Borrower and the Guarantors and the -10- enforceability of this Amendment No. 1 against the Borrower and the Guarantors. SECTION 6.1.3. Fees. The Agents shall have received, for and on ---- behalf of the Lenders, payment in full of the fees provided for in the fee letter, dated October 30, 1995, between the Borrower and the Agents. SECTION 6.1.4. LEGAL DETAILS, ETC. All documents executed or ------------------- submitted pursuant hereto, and all legal matters incident thereto, shall be satisfactory in form and substance to the Managing Agents and their counsel. SECTION 6.2. EXPIRATION. If all of the conditions set forth in ----------- Section 6.1 hereof shall not have been satisfied on or prior to - ----------- November 15, 1995, the agreements of the parties contained in this Amendment No. 1 shall, unless otherwise agreed by the Lenders, terminate effective immediately on such date and without further action. ARTICLE VII MISCELLANEOUS ------------- SECTION 7.1. LOAN DOCUMENT PURSUANT TO EXISTING CREDIT ----------------------------------------- AGREEMENT. This Amendment No. 1 is a Loan Document executed pursuant - --------- to the Existing Credit Agreement. Except as expressly amended or waived hereby, all of the representations, warranties, terms, covenants and conditions contained in the Existing Credit Agreement and each other Loan Document shall remain unamended and in full force and effect. The amendments set forth herein shall be limited precisely as provided for herein and shall not be deemed to be a waiver of, amendment of, consent to or modification of any other term or provision of the Existing Credit Agreement or of any term or provision of any other Loan Document or of any transaction or further or future action on the part of the Borrower or any of its Subsidiaries or which would require the consent of any of the Lenders under the Existing Credit Agreement or any other Loan Document. SECTION 7.2. COUNTERPARTS, ETC. This Amendment No. 1 may be ----------------- executed by the parties hereto in several counterparts, each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement. SECTION 7.3. GOVERNING LAW; ENTIRE AGREEMENT. THIS ------------------------------- AMENDMENT NO. 1 SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK. -11- IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to be executed by their respective officers hereunto duly authorized as of the day and year first above written. OREGON STEEL MILLS, INC. By: ----------------------------------- Title: ----------------------------- FIRST INTERSTATE BANK OF OREGON, N.A., as Administrative Agent and Managing Agent By: ----------------------------------- Title: ----------------------------- -11- THE BANK OF NOVA SCOTIA, as Syndication Agent and Managing Agent By: ----------------------------------- Title: ----------------------------- LENDERS ------- FIRST INTERSTATE BANK OF OREGON, N.A. By: ---------------------------------- Title: ---------------------------- THE BANK OF NOVA SCOTIA By: ---------------------------------- Title: ---------------------------- -12- TORONTO DOMINION (TEXAS), INC. By: ---------------------------------- Title: ---------------------------- UNITED STATES NATIONAL BANK OF OREGON By: ---------------------------------- Title: ---------------------------- KEY BANK OF WASHINGTON By: ---------------------------------- Title: ---------------------------- -12- NBD BANK, N.A. By: ---------------------------------- Title: ---------------------------- THE BANK OF TOKYO, LTD., PORTLAND BRANCH By: ---------------------------------- Title: ---------------------------- PNC BANK, NATIONAL ASSOCIATION By: ---------------------------------- Title: ---------------------------- THE BANK OF CALIFORNIA, N.A. By: ---------------------------------- Title: ---------------------------- -13- NATIONSBANK OF TEXAS, N.A. By: ---------------------------------- Title: ---------------------------- FUJI BANK, LIMITED By: ---------------------------------- Title: ---------------------------- BANK OF AMERICA NT & SA By: ---------------------------------- Title: ---------------------------- Acknowledged and Accepted: NAPA PIPE CORPORATION By: --------------------------- Name: Title: OREGON STEEL MILLS - FONTANA DIVISION, INC. By: --------------------------- Name: Title: CAMROSE PIPE CORPORATION By: --------------------------- Name: Title: NEW CF & I, INC. By: --------------------------- Name: Title: Exhibits available upon request. -14- -----END PRIVACY-ENHANCED MESSAGE-----