10-Q

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    June 30, 2005
OR
o	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 incorporation or organization)	(IRS Employer 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)
(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 o

Indicate by check mark whether the registrant  is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes x No o

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	35,484,489
Class	Number of Shares Outstanding (as of August 1, 2005)

OREGON STEEL MILLS, INC.

TABLE OF CONTENTS

PART I.    FINANCIAL INFORMATION			3
	Item 1.	Consolidated Financial Statements of Oregon Steel Mills, Inc.	3
		Notes to Consolidated Financial Statements	6
		Consolidated Financial Statements of New CF&I, Inc.	16
		Notes to Consolidated Financial Statements	19
		Financial Statements of CF&I Steel, L.P. .	25
		Notes to Financial Statements	28
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40
	Item 4.	Controls and Procedures	40
PART II.  OTHER INFORMATION			41
	Item 1.	Legal Proceedings	41
	Item 4.	Submission of Matters to a Vote of Security Holders	41
	Item 6.	Exhibits	41
	SIGNATURES		42

2

PART I.    FINANCIAL INFORMATION
Item 1.  Financial Statements

OREGON STEEL MILLS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands except per share amounts)

	June 30, 2005			December 31, 2004
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents, including restricted cash of $23,250 and none	$	70,876		$	77,026
Short-term investments		38,850			60,110
Trade accounts receivable, less allowance for doubtful accounts of $1,224 and $4,660		110,050			118,952
Inventories		336,053			235,010
Deferred income taxes		7,294			4,680
Other		12,726			9,881
Assets held for sale		28,322			28,448
Total current assets		604,171			534,107
Property, plant and equipment:
Land and improvements		21,086			19,934
Buildings		56,444			55,736
Machinery and equipment		798,895			795,571
Construction in progress		30,334			14,779
		906,759			886,020
Accumulated depreciation		(445,528	)		(434,346	)
Net property, plant and equipment		461,231			451,674
Goodwill		3,042			520
Intangibles, net		33,314			33,396
Other assets		9,663			10,004
TOTAL ASSETS	$	1,111,421		$	1,029,701
LIABILITIES
Current liabilities:
Current portion of long-term debt	$	10,201		$	2,459
Accounts payable		65,036			79,509
Accrued expenses		69,513			61,918
Liabilities related to assets held for sale		1,010			1,160
Total current liabilities		145,760			145,046
Long-term debt		316,352			313,699
Deferred employee benefits		82,456			76,607
Environmental liability		26,643			27,833
Deferred income taxes		30,254			5,164
Other long-term liabilities		245			138
Total liabilities		601,710			568,487
Minority interests		13,381			22,706
Commitments and contingencies (Note 10)
STOCKHOLDERS’ EQUITY
Preferred stock, par value $.01 per share, 1,000 shares authorized; none issued		—			—
Common stock, par value $.01 per share; 45,000 shares authorized; 35,456 and 35,338 shares issued and outstanding		355			353
Additional paid-in capital		360,892			359,350
Retained earnings		147,091			90,316
Accumulated other comprehensive loss:
Cumulative foreign currency translation adjustment		(1,221	)		(724	)
Minimum pension liability		(10,787	)		(10,787	)
Total stockholders’ equity		496,330			438,508
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,111,421		$	1,029,701

The accompanying notes are an integral part of the consolidated financial statements.

3

OREGON STEEL MILLS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share amounts)
(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2005			2004			2005			2004
Sales:
Product sales	$	321,531		$	269,936		$	610,363		$	511,746
Freight		13,428			11,833			20,561			22,419
		334,959			281,769			630,924			534,165
Costs and expenses:
Cost of sales		264,228			212,772			484,323			427,372
Labor dispute settlement charges (Note 10)		—			31,868			—			38,868
Selling, general and administrative expenses		12,264			13,774			28,324			27,683
Incentive compensation		4,672			3,042			10,000			5,088
Gain on disposal of assets		(212	)		(30	)		(299	)		(293	)
		280,952			261,426			522,348			498,718
Operating income		54,007			20,343			108,576			35,447
Other income (expense):
Interest expense		(8,326	)		(8,461	)		(16,968	)		(17,029	)
Minority interests		(1,176	)		1,259			(4,252	)		1,614
Other income		1,854			836			3,360			1,472
Income before income taxes		46,359			13,977			90,716			21,504
Income tax benefit (expense)		(17,934	)		43			(33,941	)		41
Net income	$	28,425		$	14,020		$	56,775		$	21,545
Basic income per share	$	0.80		$	0.53		$	1.60		$	0.81
Diluted income per share	$	0.80		$	0.52		$	1.59		$	0.81
Weighted average common shares and common share equivalents outstanding:
Basic		35,439			26,583			35,419			26,535
Diluted		35,750			26,848			35,762			26,704

The accompanying notes are an integral part of the consolidated financial statements.

4

OREGON STEEL MILLS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

	Six Months Ended June 30,
	2005			2004
Cash flows from operating activities:
Net income	$	56,775		$	21,545
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		19,445			19,499
Tax benefit on employee stock option plans		748			—
Deferred income taxes		20,005			(546	)
Gain on disposal of assets		(299	)		(293	)
Loss on repurchase of 10% First Mortgage Notes		211			—
Stock compensation expense		591			—
Minority interests		4,252			(1,614	)
Other, net		(102	)		—
Changes in current assets and liabilities:
Trade accounts receivables		8,902			(12,823	)
Inventories		(100,619	)		(14,812	)
Operating liabilities		(7,621	)		921
Labor dispute settlement charges (Note 10)		—			35,720
Other		1,111			8,411
Net cash provided by operating activities		3,399			56,008
Cash flows from investing activities:
Purchases of short-term investments		(64,592	)		—
Sales and maturities of short-term investments		85,841			—
Additions to property, plant and equipment		(23,000	)		(9,461	)
Proceeds from disposal of property and equipment		345			115
Investment in Camrose Pipe Company		(18,603	)		—
Other, net		10			(30	)
Net cash used by investing activities		(19,999	)		(9,376	)
Cash flows from financing activities:
Net borrowings under Canadian bank revolving loan facility		13,517			—
Proceeds from bank debt		—			186,097
Payments on bank and long-term debt		(1,440	)		(186,097	)
Proceeds from issuance of common stock		553			934
Repurchase of 10% First Mortgage Notes		(2,173	)		—
Net cash provided by financing activities		10,457			934
Effects of foreign currency exchange rate changes on cash		(7	)		(378	)
Net increase (decrease) in cash and cash equivalents		(6,150	)		47,188
Cash and cash equivalents at the beginning of period		77,026			5,770
Cash and cash equivalents at the end of period	$	70,876		$	52,958
Supplemental disclosures of cash flow information:
Cash paid for:
Interest	$	16,325		$	15,275
Income taxes	$	13,557		$	778
Non-cash activities:
See Note 11 for a description of the non-cash consolidation of Oregon Feralloy Partners.

The accompanying notes are an integral part of the consolidated financial statements.

5

OREGON STEEL MILLS, INC.
Notes to Consolidated Financial Statements
(Unaudited)

1.       Basis of Presentation

          The consolidated financial statements include all wholly owned and those majority owned subsidiaries over which Oregon Steel Mills, Inc. (“Company”) exerts management control.  Non-controlled subsidiaries and affiliates are accounted for using the equity method.  Material wholly owned and majority owned subsidiaries of the Company are wholly owned Camrose Pipe Corporation (“CPC”), which does business as Columbia Structural Tubing (“CST”) and which, through ownership in another corporation, holds a 100 percent interest in Camrose Pipe Company (“Camrose”); a 60 percent interest in Oregon Feralloy Partners (“OFP”) and 87 percent owned New CF&I, Inc. (“New CF&I”), which owns a 95.2 percent interest in CF&I Steel, L.P. (“CF&I”).  The Company also directly owns an additional 4.3 percent interest in CF&I.  In January 1998, CF&I assumed the trade name Rocky Mountain Steel Mills (“RMSM”).  New CF&I owns a 100 percent interest in the Colorado and Wyoming Railway Company.  All significant inter-company balances and transactions have been eliminated.

          The unaudited financial statements include estimates and other adjustments, consisting of normal recurring accruals and other charges as described in Note 10 to the Consolidated Financial Statements, “Contingencies – Labor Matters – CF&I Labor Dispute Settlement – Accounting” 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 2004 Annual Report on Form 10-K for additional disclosures including a summary of significant accounting policies.

Recent Accounting Pronouncements

          In November 2004, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard (“SFAS”) No. 151, “Inventory Costs, an Amendment of ARB No. 43, Chapter 4.” SFAS No. 151 amends Accounting Research Bulletin 43, Chapter 4, to clarify that the abnormal amounts of idle facility expense, freight, handling costs and wasted materials (spoilage) be recognized as current period charges. It also requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities.  SFAS No. 151 is effective for inventory costs incurred during fiscal years beginning after June 15, 2005.  The Company is in the process of assessing the impact of adopting this new standard.

          In December 2004, the FASB issued SFAS No. 153, “Exchanges of Nonmonetary Assets, an Amendment of APB Opinion No. 29.”  The guidance in Accounting Principles Board (“APB”) Opinion No. 29, “Accounting for Nonmonetary Transactions,” is based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged.  The guidance in APB Opinion No. 29, however, included certain exceptions to that principle. SFAS No. 153 amends APB Opinion No. 29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. A nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange.  SFAS No. 153 is effective for nonmonetary asset exchanges in fiscal periods beginning after June 15, 2005.  The Company does not believe that the adoption of SFAS No. 153 will have a material impact on the Consolidated Financial Statements.

          In December 2004, the FASB issued SFAS No. 123R (revised 2004), “Share-Based Payment,” which is a revision of SFAS No. 123, “Accounting for Stock-Based Compensation.”  SFAS No. 123R supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees,” and amends SFAS No. 95, “Statement of Cash Flows.”  Generally, the approach in Statement 123R is similar to the approach described in SFAS 123, however, SFAS 123R requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. Once effective, pro forma disclosures currently provided in Note 2 to the Consolidated Financial Statements, “Stock-Based Compensation,” in lieu of recognition of stock compensation expense, will no longer be an alternative. The Securities and Exchange Commission has amended the compliance dates originally established by SFAS No. 123R, and the adoption of this standard is required for fiscal years beginning after June 15, 2005. The Company is in the process of assessing the impact of adopting this new standard.

          In May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections,” which replaces APB Opinion No. 20, “Accounting Changes” and SFAS No. 3, “Reporting Accounting Changes in Interim Financial Statements” and requires the retrospective application to prior periods’ financial statements for changes in accounting principle, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change.  The retrospective application of the change would be limited to the direct effects of the change, and indirect effects would be recognized in the period of the accounting change.  SFAS No. 154 is effective for fiscal years beginning after December 31, 2005.  The Company does not believe that the adoption of SFAS No. 154 will have a material impact on the Consolidated Financial Statements.

6

Reclassifications

          Certain reclassifications have been made to the prior periods to conform to the current year presentation.  Such reclassifications do not affect results of operations as previously reported.

2.       Stock-Based Compensation

          The Company has two stock-based compensation plans to make awards of stock options to officers, key employees and non-employee directors. The Company accounts for its option plans under the recognition and measurement principles of APB Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations.   No stock-based compensation cost is reflected in net income from these plans, as all options granted under these plans had exercise prices equal to the market value of the underlying common stock at the date of grant.  Options have a term of ten years and generally vest over one to three years from the date of the grant.

          The Company did not award options during the three and six months ended June 30, 2005.  On April 29, 2004, the Company awarded options having a weighted average fair value of $5.66 per share, derived using the following assumptions:  (1) an annualized dividend yield of 0%, (2) common stock price volatility of 71.5%, (3) a 4.1% risk-free rate of return and (4) an expected option term of 7 years. 

          On April 28, 2005, the Company adopted the 2005 Long-Term Incentive Plan (“LTIP”).  Under the LTIP, performance-based equity awards (“Performance Shares”) are earned based on the Company achieving goals within defined performance categories over a three-year period beginning January 1, 2005.  The performance categories used to determine how many Performance Shares ultimately will be earned are (1) the Company’s total shareholder return (“TSR”) relative to the TSR of the selected industry peer group and (2) the three-year average earnings before interest, taxes, depreciation and amortization (“EBITDA”).  One half of the total Performance Shares awarded are earned based on each performance category.  Earned awards will be paid 60% in cash and 40% in Company common stock.  In accordance with APB Opinion No. 25, the Company recorded compensation expense of $0.6 million in the second quarter, which represents expense for the first six months of the three-year performance period, and is based on the quoted market price of the Company’s stock at June 30, 2005. 

          Also in conjunction with the LTIP, shares of restricted common stock were awarded to non-employee directors with the shares vesting in equal parts over three years beginning April 28, 2005.  The Company recorded compensation expense of $11,000 in the second quarter, which represents expense for the first two months of the three-year vesting period.   

          The following table illustrates the effect on net income and earnings per share as if the Black-Scholes fair value method described in SFAS No. 123, “Accounting for Stock-Based Compensation,” as amended, had been applied to the Company’s stock-based compensation plans.

	Three Months Ended June 30,						Six Months Ended June 30,
	2005			2004			2005			2004
	(In thousands, except per share amounts)
Net income, as reported	$	28,425		$	14,020		$	56,775		$	21,545
Add: total stock-based compensation expense included in reported net income, net of related tax effects		363			—			363			—
Deduct: total stock-based compensation expense determined under fair value based method for all awards, net of related tax effects		(436	)		(281	)		(511	)		(311	)
Pro forma net income	$	28,352		$	13,739		$	56,627		$	21,234
Income per share:
Basic – as reported	$	0.80		$	0.53		$	1.60		$	0.81
Basic – pro forma	$	0.80		$	0.52		$	1.60		$	0.80
Diluted – as reported	$	0.80		$	0.52		$	1.59		$	0.81
Diluted – pro forma	$	0.79		$	0.51		$	1.58		$	0.80

7

3.       Inventories

          Inventories are stated at the lower of manufacturing cost or market value with manufacturing cost determined under the average cost method.  The components of inventories are as follows:

	June 30, 2005		December 31, 2004
	(In thousands)
Raw materials	$	16,075	$	20,168
Semi-finished product		203,768		136,362
Finished product		86,567		50,073
Stores and operating supplies		29,643		28,407
Total inventories	$	336,053	$	235,010

          Semi-finished product includes Company manufactured and purchased steel plate and coil that will be converted into finished welded pipe or structural tubing product by the Company.

4.       Comprehensive Income

	Three Months Ended June 30,						Six Months Ended June 30,
	2005			2004			2005			2004
	(In thousands)						(In thousands)
Net income	$	28,425		$	14,020		$	56,775		$	21,545
Foreign currency translation adjustment		(678	)		(216	)		(497	)		(378	)
Comprehensive income	$	27,747		$	13,804		$	56,278		$	21,167

5.       Debt, Financing Arrangements and Liquidity

          Debt balances were as follows:

	June 30, 2005			December 31, 2004
	(In thousands)
10% First Mortgage Notes due 2009	$	303,000		$	305,000
Less unamortized discount on 10% Notes		(2,480	)		(2,721	)
OFP Term Loan		7,077			8,500
CPC Mortgage Loan		3,532			3,549
Camrose Revolving Credit Facility		15,424			1,830
Total debt outstanding		326,553			316,158
Less current portion of OFP Term Loan		(2,000	)		(2,423	)
Less current portion of CPC Mortgage Loan		(40	)		(36	)
Less current portion of Camrose Revolving Credit Facility		(8,161	)		—
Non-current maturity of long-term debt	$	316,352		$	313,699

          On July 15, 2002, the Company issued $305.0 million of 10% First Mortgage Notes due 2009 (“10% Notes”) at a discount of 98.772% and an interest rate of 10.0%.  Interest is payable on January 15 and July 15 of each year. The 10% Notes are secured by a lien on substantially all of the property, plant and equipment, and certain other assets of the Company (exclusive of CPC and OFP), excluding accounts receivable, inventory, and certain other assets.  The Indenture under which the 10% Notes were issued contains restrictions (except for CPC and OFP) on new indebtedness and various types of disbursements, including dividends, based on the cumulative amount of the Company’s net income, as defined. New CF&I and CF&I (collectively, the “Guarantors”) guarantee the obligations of the 10% Notes, and those guarantees are secured by a lien on substantially all of the property, plant and equipment and certain other assets of the Guarantors, excluding accounts receivable, inventory, and certain other assets.  At any time on or after July 15, 2006, the 10% Notes will be redeemable at the option of the Company, in whole or in part at a set range of redemption prices.  If redeemed during the twelve-month period beginning July 15, 2006 the price is 105% of the principal amount, plus accrued and unpaid interest and any liquidated damages, as defined.  The redemption price adjusts to 102.5% and 100%, respectively, for the two subsequent twelve-month periods.

8

          On March 29, 2000, OFP entered into a seven-year $14.0 million loan agreement for the purchase of certain processing assets and for the construction of a processing facility.  Amounts outstanding under the loan agreement bear interest based on the LIBOR rate plus a margin ranging from 1.25% to 3.00%, and as of June 30, 2005, there was $7.1 million of principal outstanding of which $2.0 million was classified as current. The loan is secured by all the assets of OFP. The loan agreement contains various restrictive covenants including a minimum tangible net worth amount, a minimum debt service coverage ratio, and a specified amount of insurance coverage. Principal payments required on the loan are $0.5 million per quarter but can be accelerated for excess cash flows, as defined. Excess cash flows generated in 2004 resulted in $0.4 million of additional principal payments paid in 2005.  The creditors of OFP have no recourse to the general credit of the Company.  Effective January 1, 2004, the Company included the OFP loan balance in the consolidated balance sheet as a result of the adoption of FIN 46R.  See Note 11 to the Consolidated Financial Statements, “Joint Venture and Adoption of FIN 46R – Consolidation of Variable Interest Entities.”

          On September 17, 2004, CPC entered into a ten-year loan agreement related to an undivided 50% interest as tenants in common in a warehouse under a co-tenancy agreement. CPC’s share of the debt is $3.5 million. Amounts outstanding under the loan agreement bear interest at a rate of 6.57%.  As of June 30, 2005, CPC’s share of the principal outstanding was $3.5 million of which $40,000 was classified as current. The loan is secured by the warehouse and contains various restrictive covenants on CPC including minimum income and cash flow requirements, a minimum debt service coverage amount and limitations on incurring new or additional debt obligations other than as allowed by the loan agreement.

          On March 29, 2005, the Company entered into a Letter of Credit Facility Agreement (“Credit Agreement”) with U.S. Bank National Association.  The Credit Agreement, as amended, provides for a maximum borrowing of $35.0 million for the sole purpose of issuing letters of credit and terminates on March 29, 2006.  Under the Credit Agreement, the Company agrees to pay an issuance fee of the greater of $100 or the face amount of a letter of credit multiplied by 0.125% and a fee, payable quarterly in arrears, at a rate of 0.50% per annum of the average aggregate undrawn face amount of all outstanding letters of credit during the preceding calendar quarter.  The Credit Agreement contains certain customary covenants for credit facilities of this type, such as provisions regarding compliance with laws, taxes, notice to issuers and financial information and will be secured by restricted cash.  As of June 30, 2005, the Company had $23.3 million of restricted cash as collateral supporting $22.1 million of letters of credit associated with the Credit Agreement.

          Camrose maintains a CDN $15.0 million revolving credit facility with a Canadian bank, the proceeds of which may be used for working capital and general business purposes of Camrose. Amounts under the facility bear interest based on the prime rate.  The facility is collateralized by substantially all of the assets of Camrose, and borrowings under this facility are limited to an amount equal to the sum of the product of specified advance rates and Camrose’s eligible trade accounts receivable and inventories. The credit facility contains various restrictive covenants including a minimum tangible net worth amount. This facility expires in September 2006. At June 30, 2005, there were no restricted amounts for outstanding letters of credit.  Camrose has subsequently agreed to amendments to its existing loan agreement with the Canadian bank to include a temporary credit facility for an additional CDN $15.0 million.  Any amounts drawn on the temporary credit facility will bear interest at the prime rate and will have to be repaid in the third quarter of 2005.  All other terms of the temporary credit facility are consistent with the original credit facility.  As of June 30, 2005, the interest rate of this facility was 4.25%.  Camrose pays annual commitment fees of up to 0.25% of the unused portion of the credit line.  At June 30, 2005, there was a $15.4 million outstanding balance due under the credit facility.

          As of June 30, 2005, principal payments on debt are due as follows (in thousands):

2005	$	8,294
2006		10,202
2007		4,122
2008		48
2009		303,051
2010		55
2011 and thereafter		3,261
	$	329,033

6.     Income Taxes

          The effective income tax expense rate was 38.7% and 37.4%, for the three and six months ended June 30, 2005, respectively, as compared to a tax benefit rate of less than 1.0% in the corresponding periods in 2004. The effective income tax rate for the three and six months ended June 30, 2005 varied from the combined state and federal statutory rate principally because the Company recorded tax benefits associated with export sales.  The effective income tax rate for the three and six months ended June 30, 2004 varied from the combined state and federal statutory rate principally because the Company reversed a portion of the valuation allowance, established in 2003, for certain federal and state net operating loss carry-forwards, state tax credits and alternative minimum tax credits.

9

          SFAS No. 109, “Accounting for Income Taxes,” requires that tax benefits for federal and state net operating loss carry-forwards, state tax credits, and alternative minimum tax credits each be recorded as an asset to the extent that management assesses the utilization of such assets to be “more likely than not”; otherwise, a valuation allowance is required to be recorded.  Based on this guidance, the Company increased the valuation allowance by $0.5 million and $0.3 million for the three and six months ended June 30, 2005, respectively, because of the uncertainty regarding the utilization of additional state tax credits identified in 2005.  For the three and six months ended June 30, 2004, the Company decreased the valuation allowance established in 2003 by $7.3 million and $10.5 million, respectively, because improved earnings reduced the uncertainty surrounding allowances pertaining to 2003.   At June 30, 2005, the valuation allowance for deferred assets was $8.3 million.

          The Company will continue to evaluate the need for valuation allowances in the future.  Changes in estimated future taxable income and other underlying factors may lead to adjustments to the valuation allowances.

7.        Net Income Per Share

          The Company calculates earnings per share in accordance with SFAS No. 128, “Earnings per Share.”  SFAS No. 128 requires the presentation of “basic” earnings per share and “diluted” earnings per share.  Basic earnings per share is computed by dividing the net income available to common shareholders by the weighted average number of shares of common stock outstanding. For purposes of calculating diluted earnings per share, the denominator includes both the weighted average number of shares of common stock outstanding and the number of dilutive common stock equivalents such as stock options, performance stock awards and restricted stock awards, as determined using the treasury stock method.

Shares used in calculating basic and diluted earnings per share for the three-month and six-month periods ended June 30 are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2005		2004		2005		2004
	(In thousands, except per share amounts)
Basic weighted average shares outstanding		35,439		26,583		35,419		26,535
Dilutive effect of stock based compensation awards		311		265		343		169
Weighted average number of shares outstanding assuming dilution		35,750		26,848		35,762		26,704
Net income	$	28,425	$	14,020	$	56,775	$	21,545
Basic income per share:	$	0.80	$	0.53	$	1.60	$	0.81
Diluted income per share:	$	0.80	$	0.52	$	1.59	$	0.81

8.       Employee Benefit Plans

          The Company has noncontributory defined benefit retirement plans, certain health care and life insurance benefits, and qualified Thrift (401(k)) plans covering all of its eligible domestic employees.  The Company also has noncontributory defined benefit retirement plans covering all of its eligible Camrose employees.

          Components of net periodic benefit cost related to the defined benefit retirement plans, including supplemental employee retirement plans, were as follows:

	Defined Benefit Retirement Plans
	Three Months Ended June 30,						Six Months Ended June 30,
	2005			2004			2005			2004
	(In thousands)						(In thousands)
Service cost	$	1,084		$	1,086		$	2,171		$	2,172
Interest cost		2,321			1,788			4,648			3,577
Expected return on plan assets		(2,050	)		(1,722	)		(4,134	)		(3,445	)
Amortization of unrecognized net loss		235			332			473			662
Amortization of unrecognized prior service cost		622			11			1,243			22
Total net periodic benefit cost	$	2,212		$	1,495		$	4,401		$	2,988

10

Components of net periodic benefit cost related to the health care and life insurance benefit plans were as follows:

	Other Benefit Plans
	Three Months Ended June 30,				Six Months Ended June 30,
	2005		2004		2005		2004
	(In thousands)				(In thousands)
Service cost	$	152	$	120	$	283	$	240
Interest cost		538		419		1,060		837
Amortization of unrecognized net loss		76		90		137		180
Amortization of unrecognized net transition asset		49		49		98		98
Amortization of unrecognized prior service cost		180		19		361		38
Total net periodic benefit cost	$	995	$	697	$	1,939	$	1,393

          The Company made contributions of $2.5 million and $6.3 million, respectively, to its defined benefit retirement plans for the three and six months ended June 30, 2005.  Contributions of $2.2 million were made during both the three and six months ended June 30, 2004.  The Company expects to make additional contributions of $1.2 million in 2005.

9.       Concentrations

          The Company’s Portland, Oregon steel mill (“Portland Mill”) purchases steel slab from a number of foreign producers.  Any interruption or reduction in the supply of steel slab may make it difficult or impossible to satisfy customers’ delivery requirements, which could have a material adverse effect on the Company’s results of operations.  In 2004, the Company had two major suppliers of steel slab.  It is expected that these companies, in addition to other foreign and domestic slab suppliers, will also be major suppliers of steel slab to the Company in 2005.  Most of the steel slabs the Company purchases are delivered by ship.  Any disruption to port operations, including those caused by a labor dispute involving longshoreman or terrorism, could materially impact the supply or the cost of steel slabs, which could have a material adverse effect on the Company’s production, sales levels and profitability.

10.      Contingencies

Environmental

          All material environmental remediation liabilities for non-capital expenditures, which are probable and estimable, are recorded in the financial statements based on current technologies and current environmental standards at the time of evaluation.  Adjustments are made when additional information is available that suggests different remediation methods or periods may be required and affect the total cost.  The best estimate of the probable cost within a range is recorded; however, if there is no best estimate, the low end of the range is recorded and the range is disclosed.

Oregon Steel Division

          In May 2000, the Company entered into a Voluntary Clean-up Agreement with the Oregon Department of Environmental Quality (“DEQ”) committing the Company to conduct an investigation of whether, and to what extent, past or present operations at the Company’s Portland Mill may have affected sediment quality in the Willamette River.  Based on preliminary findings, the Company is conducting a full remedial investigation (“RI”), including areas of investigation throughout the Portland Mill, and has committed to implement source control if required.  The Company’s best estimate for costs of the RI study is approximately $0.8 million over the next two years. Accordingly, the Company has accrued a liability of $0.8 million as of June 30, 2005. The Company has also recorded a $0.8 million receivable for insurance proceeds that are expected to cover these RI costs because the Company’s insurer is defending this matter, subject to a standard reservation of rights, and is paying these RI costs as incurred.  Based upon the results of the RI, the DEQ may require the Company to incur costs associated with additional phases of investigation, remedial action or implementation of source controls, which could have a material adverse effect on the Company’s results of operations because it may cause costs to exceed available insurance or because insurance may not cover those particular costs.  It is probable that the DEQ will require the Company to perform some stabilization of some portion of the riverbank on the Portland Mill property; however, the cost of such stabilization cannot be estimated at this time.  The Company is unable at this time to determine if the likelihood of any further unfavorable outcome or loss is either probable or remote, or to estimate a dollar amount range for a potential loss.

          In a related matter, in December 2000, the Company received a general notice letter from the U.S. Environmental Protection Agency (“EPA”), identifying it, along with 68 other entities, as a potentially responsible party (“PRP”) under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) with respect to contamination in a portion of the Willamette River that has been designated as the “Portland Harbor Superfund Site.”  The letter advised the Company that it may be liable for costs of remedial investigation and remedial action at the Portland Harbor Superfund Site (which liability, under CERCLA, is joint and several with other PRPs) as well as for natural resource damages that may be associated with any releases of contaminants (principally at the Portland Mill site) for which the Company has liability.  At this time, nine private and public

11

entities have signed an Administrative Order on Consent (“AOC”) to perform a remedial investigation/feasibility study (“RI/FS”) of the Portland Harbor Superfund Site under EPA oversight.  The RI/FS is expected to be completed in 2008.  Although the Company did not sign the original AOC, the Company is a member of the Lower Willamette Group, which is funding that investigation, and the Company signed a Coordination and Cooperation Agreement with the EPA that binds the Company to all terms of the AOC.  As a best estimate of the Company’s share of the remaining RI/FS costs, which are expected to be incurred in the next three to four years, the Company has accrued a liability of $0.9 million as of June 30, 2005.  The Company has also recorded a $0.9 million receivable for insurance proceeds that are expected to cover these RI/FS costs because the Company’s insurer is defending this matter, subject to a standard reservation of rights, and is paying these RI/FS costs as incurred.  At the conclusion of the RI/FS, the EPA will issue a Record of Decision setting forth any remedial action that it requires to be implemented by identified PRPs.  In addition, in June 2003, the Company signed a Funding and Participating Agreement whereby the Company, with nine other industrial and municipal parties, agreed to fund a joint effort with federal, state and tribal trustees to study potential natural resource damages in the Portland Harbor. The Company, along with eight of the nine other industrial and municipal parties, withdrew from the agreement, effective October 1, 2004, because of the inability to reach agreement with the trustees with respect to the assessment to be conducted. The Company intends to continue to work with interested parties to assess natural resources damages. The Company estimates its financial commitment in connection with future natural resource damage assessment to be approximately $0.3 million.  Based on this estimate, the Company has accrued a liability of $0.3 million as of June 30, 2005.  The Company has also recorded a $0.3 million receivable for insurance proceeds that are expected to cover these costs because the Company’s insurer is defending this matter, subject to a standard reservation of rights, and is paying these costs as incurred. In connection with these matters, the Company could incur additional costs associated with investigation, remedial action, natural resource damage and natural resource restoration, the costs of which may exceed available insurance or which may not be covered by insurance, which therefore could have a material adverse effect on the Company’s results of operations.  The Company is unable to estimate a dollar amount range for any related remedial action that may be implemented by the EPA, or natural resource damages and restoration that may be sought by federal, state and tribal natural resource trustees.

RMSM Division

          In connection with the acquisition of the steelmaking and finishing facilities located in Pueblo, Colorado (“Pueblo Mill”), CF&I accrued a liability of $36.7 million for environmental remediation related to the prior owner’s operations.  CF&I believed this amount was the best estimate of costs from a range of $23.1 million to $43.6 million.  CF&I’s estimate of this liability was based on two initial remediation investigations conducted by environmental engineering consultants, and included costs for the Resource Conservation and Recovery Act facility investigation, a corrective measures study, remedial action, and operation and maintenance associated with the proposed remedial actions.  In October 1995, CF&I and the Colorado Department of Public Health and Environment (“CDPHE”) finalized a postclosure permit for hazardous waste units at the Pueblo Mill.  As part of the postclosure permit requirements, CF&I must conduct a corrective action program for the 82 solid waste management units (“SWMU”) at the facility and continue to address projects on a prioritized corrective action schedule over 30 years.  The State of Colorado mandated that the schedule for corrective action could be accelerated if new data indicated a greater threat existed to the environment than was currently believed to exist.  In 2004, the Company contracted two environmental engineering consultants to conduct remediation investigations of the remaining SWMU’s.  The cost estimates provided by the consultants for the SWMU’s, for which remediation work had not already commenced, were $24.0 million and $25.0 million.  The Company determined the best estimate was the average of the two studies, or $24.5 million, which was $1.6 million more than previously accrued. At June 30, 2005, there were 60 SWMU’s that still required remediation.  At June 30, 2005, the total accrued liability for all remaining SWMU’s was $24.8 million, of which $23.3 million was classified as non-current on the Company’s consolidated balance sheet.

          The CDPHE inspected the Pueblo Mill in 1999 for possible environmental violations, and in the fourth quarter of 1999 issued a Compliance Advisory indicating that air quality regulations had been violated, which was followed by the filing of a judicial enforcement action (“Action”) in the second quarter of 2000.  In March 2002, CF&I and CDPHE reached a settlement of the Action, which was approved by the court (the “State Consent Decree”).  The State Consent Decree provided for CF&I to pay $0.3 million in penalties, fund $1.5 million of community projects, and to pay approximately $0.4 million for consulting services, all of which have been paid as of June 30, 2005. CF&I is also required to make certain capital improvements expected to cost approximately $30.3 million, including converting to the new single New Source Performance Standards Subpart AAa (“NSPS AAa”) compliant furnace discussed below.  The State Consent Decree provides that the two existing furnaces will be permanently shut down approximately 16 months after the issuance of a Prevention of Significant Deterioration (“PSD”) air permit.  The PSD permit was issued June 21, 2004.  CF&I anticipates completing the furnace capital improvements in October 2005.

          In May 2000, the EPA issued a final determination that one of the two electric arc furnaces at the Pueblo Mill was subject to federal NSPS AA.  This determination was contrary to an earlier “grandfather” determination first made in 1996 by CDPHE.  CF&I appealed the EPA determination in the federal Tenth Circuit Court of Appeals. The issue has been resolved by entry of a Consent Decree on November 26, 2003, and the Tenth Circuit dismissed the appeal on December 10, 2003.  In that Consent Decree and overlapping with the commitments made to the CDPHE described above, CF&I committed to the conversion to the new single NSPS AAa compliant furnace (demonstrating full compliance 21 months after permit approval and expected to cost, with all related emission control improvements, approximately $30.3 million), and to pay approximately $0.5 million in penalties and fund certain supplemental environmental projects valued at approximately $1.1 million, including the installation of certain pollution control equipment at the Pueblo Mill.  The above mentioned expenditures for supplemental environmental projects will

12

be both capital and non-capital expenditures. As of June 30, 2005, the non-capital expenditures have been paid.  Under this settlement and the settlement with the CDPHE, the Company is subject to certain stipulated penalties if it fails to comply with the terms of the settlement.  In March 2004, the CDPHE notified CF&I of alleged violations of the State Consent Decree relating to opacity.  In June 2004, the CDPHE assessed stipulated penalties of $0.3 million.  On July 26, 2004, CF&I sought judicial review of the determination.  In August 2004, the state filed its response and the case has been set for trial commencing in November 2005.

          Beginning in May 2005, CF&I and the CDPHE exchanged a number of settlement proposals dealing with the above and other alleged violations of the State Consent Decree.  In July 2005, CF&I and the CDPHE continued to negotiate for a settlement of all pending matters.  CF&I believes that it is probable that both capital and non-capital expenditures will be incurred to settle all pending matters with the CDPHE.  In addition to these penalties, the Company may in the future incur additional penalties related to this matter.  To date, such penalties have not been material to its results of operations and cash flows; however, the Company cannot be assured that future penalties will not be material.

          In response to the CDPHE settlement and subsequent alleged violations and the resolution of the EPA action, CF&I expensed  $0.1 million and $0.3 million, respectively, for the three and six months ended June 30, 2005, and $0.1 million for both the three and six months ended June 30, 2004 for possible fines and non-capital related expenditures.  As of June 30, 2005, the remaining accrued liability was approximately $1.2 million.

          In December 2001, the State of Colorado issued a Title V air emission permit to CF&I under the Clean Air Act Amendments (“CAA”) requiring that the furnace subject to the EPA action operate in compliance with NSPS AA standards.  The Title V permit has been modified several times and gives CF&I adequate time (at least 15 1/2 months after CDPHE issues the PSD permit) to convert to a single NSPS AAa compliant furnace. The decrease in steelmaking production during the furnace conversion period when both furnaces are expected to be shut down will be offset by increasing production prior to the conversion period by building up semi-finished steel inventory and, if necessary, purchasing semi-finished steel (“billets”) for conversion into rod products at spot market prices.  Pricing and availability of billets is subject to significant volatility.

Labor Matters

CF&I Labor Dispute Settlement

          On January 15, 2004, the Company announced a tentative agreement to settle the labor dispute between the United Steelworkers of America (“Union”) and CF&I that had been ongoing since October 1997 and on September 10, 2004 the settlement was finalized and became effective (the “Settlement”). The Settlement resulted in the dismissal of all court actions between CF&I and the Union relating to the labor dispute and environmental matters and the conditional withdrawal of charges by the United States National Labor Relations Board. The Settlement also included the ratification of new five-year collective bargaining agreements and called for the establishment of a trust and on September 10, 2004, the Rocky Mountain Steel Mills – United Steelworkers of America Back Pay Trust (“Trust”) was established. As part of the tentative settlement the Company had originally planned to issue four million shares of the Company’s common stock to the Trust on behalf of CF&I.  On September 10, 2004, the parties agreed instead that the Trust would receive cash in an amount equal to the gross proceeds from the sale of four million shares of the Company’s common stock in an underwritten stock offering.

          The Settlement also included payment by CF&I of: (1) a cash contribution of $2,500 for each beneficiary, a total of $2.5 million and (2) beginning on the effective date of the Settlement, a ten year profit participation obligation (“Back Pay Profit Sharing Obligation” or “BPPSO”) consisting of 25% of CF&I’s quarterly profit, as defined, for years 2004 and 2007 through 2013, and 30% for years 2005 and 2006, not to exceed $3.0 million per year for 2004 through 2008 and $4.0 million per year for 2009 through 2013; these cap amounts are subject to a carryforward/carryback provision described in the Settlement documents.  The beneficiaries are those individuals who (1) as of October 3, 1997 were employees of CF&I and represented by the Union, (2) as of December 31, 1997 had not separated, as defined, from CF&I and (3) are entitled to an allocation as defined in the Trust. The Settlement, certain elements of which are effected through the new five-year collective bargaining agreements, also includes: (1) early retirement with immediate enhanced pension benefit where CF&I will offer bargaining unit employees an early retirement opportunity based on seniority until a maximum of 200 employees have accepted the offer, the benefit will include immediate and unreduced pension benefits for all years of service (including the period of the labor dispute) and for each year of service prior to March 3, 1993 (including service with predecessor companies) an additional monthly pension of $10, (2) pension credit for the period of the labor dispute whereby CF&I employees who went on strike will be given pension credit for both eligibility and pension benefit determination purposes for the period beginning October 3, 1997 and ending on the latest of said employees’ actual return to work, termination of employment, retirement or death, (3) pension credit for service with predecessor companies whereby for retirements after January 1, 2004, effective January 2, 2006 for each year of service prior to March 3, 1978 (including service with predecessor companies), CF&I will provide an additional monthly benefit to employees of $12.50, and for retirements after January 1, 2006, effective January 2, 2008 for each year of service between March 3, 1978 and March 3, 1993 (including service with predecessor companies), CF&I will provide an additional monthly benefit of $12.50, and (4) individuals who are members of the bargaining units as of October 3, 1997 and who do not choose to elect or do not qualify for early retirement, will be immediately eligible to apply for and receive qualified long-term disability (“LTD”) benefits on a go forward basis, notwithstanding the date of the injury or illness, service requirements or any filing deadlines. The Settlement also includes the Company’s agreement to nominate a director designated by the Union on the Company’s board of directors, and to a broad-based neutrality clause for certain of the Company’s facilities in the future.

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CF&I Labor Dispute Settlement – Accounting

          The Company recorded charges of $31.1 million in 2003 related to the tentative Settlement obligation.  The charge consisted of (1) $23.2 million for the value of four million shares of the Company’s common stock valued as of December 31, 2003, (2) the cash payment of $2.5 million noted above, and (3) $5.4 million accrual for the LTD benefits noted above.  As noted above, on September 10, 2004, the parties agreed that the Trust would receive cash in an amount equal to the gross proceeds from the sale of four million shares of the Company’s common stock in an underwritten stock offering.  On September 29, 2004, the public offering price was established at $16.00 per share, and $64.0 million was paid to the Trust in the fourth quarter of 2004.  In 2004, the Company recorded a charge of $45.4 million ($7.0 million, $31.9 million, $4.5 million and $2.0 million for 2004 quarters ended March 31, June 30, September 30 and December 31, respectively) related to the Settlement obligation consisting of (1) $40.8 million for the incremental change in value of the four million shares of the Company’s common stock, (2) $8.9 million in retirement benefits for the 200 employees who accepted the early retirement benefits, which were partially offset by (3) a reduction of $4.3 million of the existing LTD accrual.  At June 30, 2005, $1.0 million was accrued for LTD benefits.  Beneficiaries have until September 2005 to claim LTD benefits and this accrual will continue to be adjusted as better claims information becomes available.  The Company recorded a charge for the BPPSO and related taxes of $3.4 million for both the three and six months ended June 30, 2005 and charges of $1.4 million and $3.0 million, respectively, for the corresponding periods in 2004.  The BPPSO charges were classified as selling, general and administrative expenses.

Purchase Commitments

          Effective January 8, 1990, the Company entered into an agreement, which was subsequently amended on December 7, 1990 and again on April 3, 1991, to purchase a base amount of oxygen produced from a facility located at the Company’s Portland Mill.  The oxygen facility is owned and operated by an independent third party.  The agreement expires in August 2011 and specifies that the Company will pay a base monthly charge that is adjusted annually based upon a percentage change in the Producer Price Index. The monthly base charge at June 30, 2005 was approximately $0.1 million. In addition, the agreement does not currently provide benefit to the Company’s operations as the Portland Mill’s melt shop is currently not in use. If the Company determines the melt shop will not reopen or decides to terminate the agreement, it will incur an expense for contract termination costs. The Company estimates the cancellation and buyout costs could range from $3.0 million to $5.5 million, depending on the negotiation of the settlement. None of the future costs of the contract have been accrued in accordance with SFAS No. 146 “Accounting for Costs Associated with Exit or Disposal Activities” as the company has not effectively ceased its rights under the contract.

          A separate contract to purchase oxygen for the Pueblo Mill was entered into on February 2, 1993 by CF&I, and expires in February 2013.  The agreement specifies that CF&I will pay a base monthly charge that is adjusted annually based upon a percentage change in the Producer Price Index.  The monthly base charge at June 30, 2005 was $0.1 million.

          The Company purchases electricity used at the Pueblo Mill from an independent third party under an agreement that expires in May 2008.  This commitment specifies that the Company will pay a minimum monthly charge of $33,000 per month.

          In the second quarter of 2005, the Company entered into multiple agreements for the delivery and installation of certain machinery used in the construction of the new electric arc furnace at the Pueblo Mill.  The Company has agreed to pay a total of $11.2 million to a group of third parties, with ordinary payment terms due upon delivery or as services are rendered by the contracted vendors.  The construction of the electric arc furnace is expected to be completed in the fourth quarter of 2005.

          In March 2005, the Company entered into an agreement to purchase the manufacturing equipment for the Company’s new spiral weld large diameter line pipe mill, which will be located at the Company’s Portland Mill.  The agreement, as amended, specifies that the Company will pay approximately $16.3 million for the delivery and installation of the machinery, which will be paid in installments as certain performance milestones are reached by the vendor.  The construction of the spiral weld mill is expected to be completed in the first quarter of 2006.

Contracts With Key Employees

          The Company has agreements with certain officers, which provide for severance compensation in the event that their employment with the Company is terminated subsequent to a defined change in control of the Company.

Other Contingencies

          The Company is party to various other claims, disputes, legal actions and other proceedings involving contracts, employment and various other matters.  In the opinion of management, the outcome of these matters would not have a material adverse effect on the consolidated financial condition of the Company, its results of operations, and liquidity.

14

          The CPC loan of $3.5 million as of June 30, 2005 was entered into for an undivided 50% interest as tenants in common in a warehouse under a co-tenancy agreement.  The Company is not a guarantor for CPC’s co-tenant’s share; however, CPC is a co-borrower and is jointly and severally liable in the event of default by the other co-tenant or its respective guarantors.  The co-tenant’s share of the loan was $3.5 million as of June 30, 2005.  Two owners of the co-tenant are personal guarantors of the entire loan.  The Company believes that the co-tenant has sufficient liquidity to pay its share of the loan.

11.     Joint Venture and Adoption of FIN 46R – Consolidation of Variable Interest Entities

          In June 1999, a wholly-owned subsidiary of the Company and Feralloy Oregon Corporation (“Feralloy”) formed OFP to construct a temper mill and a cut-to-length (“CTL”) facility (“Facility”) with an annual stated capacity of 300,000 tons to process CTL plate from steel coil produced at the Company’s Portland Mill. The Facility commenced operations in May 2001.  The Company has a 60% profit/loss interest and Feralloy, the managing partner, has a 40% profit/loss interest in OFP.  Each partner holds 50% voting rights as an owner of OFP.  The Company is not required to, nor does it currently anticipate it will, make other contributions of capital to fund operations of OFP.  However, the Company is obligated to supply a quantity of steel coil for processing through the Facility of not less than 15,000 tons per month.  In the event that the three month rolling average of steel coil actually supplied for processing is less than 15,000 tons and OFP operates at less than breakeven (as defined in the Joint Venture Agreement), then the Company is required to make a payment to OFP at the end of the three-month period equal to the shortfall.  At the end of each calendar year, the actual results are compared to the shortfall payment made by the Company to OFP. If the twelve-month calculation results in a shortfall payment that is less than the amount paid by the Company, then the Company is owed a refund for the difference. The Company’s consolidated financial statements included a net charge of $0.1 million and $0.2 million, respectively, related to the shortfall for the three and six months ended June 30, 2005, and $34,000 and $0.3 million, respectively, related to the shortfall for the three and six months ended June 30, 2004.

          The Company adopted FIN 46R “Consolidation of Variable Interest Entities” on January 1, 2004, which resulted in the consolidation of OFP’s operations. The cumulative impact of the adoption of this accounting standard on retained earnings was zero as the Company believes the fair value of OFP approximated its carrying value.  OFP primarily owns land improvements, a building, equipment and other operating assets, all of which are collateral for the outstanding bank debt of OFP.  The creditors of OFP have no recourse to the general credit of the Company.  The financial statement impact was to increase current assets by $1.7 million, increase net property, plant and equipment by $15.0 million, decrease other assets by $3.5 million, increase current liabilities by $3.4 million, increase long-term debt by $7.5 million (consisting of bank debt) and increase minority interest by $2.3 million.

12.     Investment in Camrose Pipe Company

          On March 30, 2005, Canadian National Steel, a wholly owned subsidiary of CPC, purchased the 40 percent partnership interest in Camrose previously owned by a subsidiary of Stelco, Inc., and the Company now indirectly owns 100 percent of Camrose.  The Company has recorded the acquisition in accordance with SFAS No. 141, “Business Combinations.”  The purchase price, including acquisition related costs, was $18.6 million.  There are no contingent payments or any other material future obligations related to the acquisition.   Due to the timing of the acquisition date, the Company had not finalized the purchase price allocation at March 31, 2005.  In the second quarter, the Company completed a preliminary purchase price allocation and recorded goodwill of $2.5 million.  The preliminary allocation included increases to the fair value of inventory and property, plant and equipment.  The Company also recorded the fair value of customer backlog specific to significant sales orders outstanding at the date of acquisition.  The customer backlog was included in other current assets due to the expected delivery terms for those orders.  In addition, the Company made a preliminary adjustment to deferred employee benefit liabilities.  The final allocation of the purchase price is expected to be made when additional information is available.  All minority interest associated with Camrose has been eliminated from the Company’s consolidated balance sheet.

13.     Assets Held for Sale

          In July 2004, the Company idled its Napa, California pipe mill (“Napa mill”).  In December 2004, the Company announced the permanent closure of the Napa mill and has engaged with third parties to market the pipe mill equipment and real estate.  The assets held for sale consist of land, buildings and machinery and equipment with net book value balances of $9.5 million, $3.3 million and $15.5 million, respectively.  The liabilities related to assets held for sale of $1.0 million consist of environmental reserves.  The Company believes the market value for these assets are in excess of book value at June 30, 2005 and that the assets will be sold in 2005.

15

NEW CF&I, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands except per share and share amounts)

	June 30, 2005			December 31, 2004
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	1		$	1
Trade accounts receivable, net of allowance for doubtful accounts of $697 and $1,083		47,094			46,643
Inventories		106,539			70,940
Deferred income taxes		4,067			3,610
Other		3,059			3,376
Total current assets		160,760			124,570
Property, plant and equipment:
Land and improvements		3,301			3,301
Buildings		19,836			19,836
Machinery and equipment		274,905			273,126
Construction in progress		14,964			7,702
		313,006			303,965
Accumulated depreciation		(156,567	)		(149,595	)
Net property, plant and equipment		156,439			154,370
Intangibles, net		32,416			32,481
Non-current deferred income taxes		44,403			52,790
Minority interest		6,147			7,136
TOTAL ASSETS	$	400,165		$	371,347
LIABILITIES
Current liabilities:
Accounts payable	$	21,294		$	40,413
Accrued expenses		25,594			28,171
Total current liabilities		46,888			68,584
Long-term debt - Oregon Steel Mills, Inc.		321,790			288,730
Environmental liability		24,524			25,596
Deferred employee benefits		50,128			46,467
Total liabilities		443,330			429,377
Redeemable common stock, 26 shares issued and outstanding		21,840			21,840
Commitments and contingencies (Note 4)
STOCKHOLDERS’ DEFICIT
Common stock, par value $1 per share, 1,000 shares authorized; 200 shares issued and outstanding		1			1
Additional paid-in capital		16,603			16,603
Accumulated deficit		(77,937	)		(92,802	)
Accumulated other comprehensive loss:
Minimum pension liability		(3,672	)		(3,672	)
Total stockholders’ deficit		(65,005	)		(79,870	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	400,165		$	371,347

The accompanying notes are an integral part of the consolidated financial statements.

16

NEW CF&I, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands)
(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2005			2004			2005			2004
Sales:
Product sales	$	116,887		$	120,882		$	237,610		$	223,871
Freight		3,758			4,454			6,862			8,234
		120,645			125,336			244,472			232,105
Costs and expenses:
Cost of sales		93,297			99,237			189,097			194,748
Labor dispute settlement charges (Note 4)		—			31,868			—			38,868
Selling, general and administrative expenses		4,229			6,250			11,858			11,769
Incentive compensation		1,999			528			4,070			1,089
Gain on disposal of assets		(212	)		(22	)		(299	)		(282	)
		99,313			137,861			204,726			246,192
Operating income (loss)		21,332			(12,525	)		39,746			(14,087	)
Other income (expense):
Interest expense		(7,726	)		(5,861	)		(14,870	)		(11,988	)
Minority interests		(533	)		829			(989	)		1,210
Other income		65			62			122			125
Income (loss) before income taxes		13,138			(17,495	)		24,009			(24,740	)
Income tax benefit (expense)		(5,360	)		6,059			(9,144	)		9,594
Net income (loss)	$	7,778		$	(11,436	)	$	14,865		$	(15,146	)

The accompanying notes are an integral part of the consolidated financial statements.

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NEW CF&I, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

	Six Months Ended June 30,
	2005			2004
Cash flows from operating activities:
Net income (loss)	$	14,865		$	(15,146	)
Adjustments to reconcile net income (loss) to net cash used by operating activities:
Depreciation and amortization		10,060			9,162
Deferred income taxes		7,930			(10,196	)
Gain on disposal of assets		(299	)		(282	)
Minority interests		989			(1,210	)
Other, net		2,589			(1,496	)
Changes in current assets and liabilities:
Trade accounts receivable		(451	)		(5,087	)
Inventories		(35,599	)		(1,780	)
Accounts payable		(19,119	)		11,351
Accrued expenses		(2,577	)		4,356
Other		317			129
Net cash used by operating activities		(21,295	)		(10,199	)
Cash flows from investing activities:
Additions to property, plant and equipment		(12,066	)		(3,958	)
Proceeds from disposal of assets		300			380
Net cash used by investing activities		(11,766	)		(3,578	)
Cash flows from financing activities:
Borrowings from Oregon Steel Mills, Inc.		141,594			131,505
Payments to Oregon Steel Mills, Inc.		(108,533	)		(117,732	)
Net cash provided by financing activities		33,061			13,773
Net decrease in cash and cash equivalents		—			(4	)
Cash and cash equivalents at the beginning of period		1			5
Cash and cash equivalents at the end of period	$	1		$	1
Supplemental disclosures of cash flow information:
Cash paid for:
Interest	$	15,058		$	12,490

The accompanying notes are an integral part of the consolidated financial statements.

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NEW CF&I, INC.
Notes to Consolidated Financial Statements
(Unaudited)

1.       Basis of Presentation

          The consolidated financial statements include the accounts of New CF&I, Inc. and its subsidiaries (“New CF&I”). New CF&I owns a 95.2 percent interest in CF&I Steel, L.P. (“CF&I”), which is one of New CF&I’s principal subsidiaries.  Oregon Steel Mills, Inc. (“Oregon Steel”) holds an 87 percent ownership interest in New CF&I. Oregon Steel also owns directly an additional 4.3 percent interest in CF&I.   In January 1998, CF&I assumed the trade name Rocky Mountain Steel Mills.  New CF&I also owns a 100 percent interest in the Colorado and Wyoming Railway Company, which is a short-line railroad servicing CF&I. All significant intercompany balances and transactions have been eliminated.

          The unaudited financial statements include estimates and other adjustments, consisting of normal recurring accruals and other charges, as described in Note 4 to the Consolidated Financial Statements, “Contingencies – Labor Matters - CF&I Labor Dispute Settlement – Accounting” 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 Oregon Steel 2004 Form 10-K for additional New CF&I disclosures including a summary of significant accounting policies.

Recent Accounting Pronouncements

          In November 2004, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard (“SFAS”) No. 151, “Inventory Costs, and Amendment of ARB No. 43, Chapter 4.” SFAS No. 151 amends Accounting Research Bulletin 43, Chapter 4, to clarify that the abnormal amounts of idle facility expense, freight, handling costs and wasted materials (spoilage) be recognized as current period charges. It also requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities.  SFAS No. 151 is effective for inventory costs incurred during fiscal years beginning after June 15, 2005.  New CF&I is in the process of assessing the impact of adopting this new standard.

          In December 2004, the FASB issued SFAS No. 153, “Exchanges of Nonmonetary Assets, an Amendment of APB Opinion No. 29.”  The guidance in Accounting Principles Board (“APB”) Opinion No. 29, “Accounting for Nonmonetary Transactions,” is based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged.  The guidance in APB Opinion No. 29, however, included certain exceptions to that principle. SFAS No. 153 amends APB Opinion No. 29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. A nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange.  SFAS No. 153 is effective for nonmonetary asset exchanges in fiscal periods beginning after June 15, 2005.  New CF&I does not believe that the adoption of SFAS No. 153 will have a material impact on the Consolidated Financial Statements.

          In May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections,” which replaces APB No. 20, “Accounting Changes” and SFAS No. 3, “Reporting Accounting Changes in Interim Financial Statements” and requires the retrospective application to prior periods’ financial statement for changes in accounting principle, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change.  The retrospective application of the change would be limited to the direct effects of the change, and indirect effects would be recognized in the period of the accounting change.  SFAS No. 154 is effective for fiscal years beginning after December 31, 2005.  New CF&I does not believe that the adoption of SFAS No. 154 will have a material impact on the Consolidated Financial Statements.

Reclassifications

          Certain reclassifications have been made in prior periods to conform to the current year presentation.  Such reclassifications do not affect results of operations as previously reported.

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2.       Inventories

          Inventories are stated at the lower of manufacturing cost or market value with manufacturing cost determined under the average cost method.  The components of inventories are as follows:

	June 30, 2005		December 31, 2004
	(In thousands)
Raw materials	$	16,001	$	19,750
Semi-finished product		65,368		26,226
Finished product		13,462		13,504
Stores and operating supplies		11,708		11,460
Total inventories	$	106,539	$	70,940

3.       Long-term Debt

          Borrowing requirements for capital expenditures and working capital have been provided through three revolving loans from Oregon Steel to CF&I.  The loans include interest on the daily amount outstanding, paid monthly, at the rate of 10.65% per annum. The principal is due on demand or on December 31, 2006 if no demand is made.

          At June 30, 2005, principal payments on long-term debt were due as follows (in thousands):

2006 $ 321,790

          Oregon Steel is not required to provide financing to CF&I and, although the demand for repayment of the obligation is not expected before December 31, 2006, Oregon Steel may demand repayment of the loans at any time. If Oregon Steel were to demand repayment of the loans, it is not likely that CF&I would be able to obtain the external financing necessary to repay the loans or to fund its capital expenditures and other cash needs and, if available, that such financing would be on terms satisfactory to CF&I.

4.     Contingencies

Environmental

          In connection with the acquisition of the steelmaking and finishing facilities located in Pueblo, Colorado (“Pueblo Mill”), CF&I accrued a liability of $36.7 million for environmental remediation related to the prior owner’s operations.  CF&I believed this amount was the best estimate of costs from a range of $23.1 million to $43.6 million.  CF&I’s estimate of this liability was based on two initial remediation investigations conducted by environmental engineering consultants, and included costs for the Resource Conservation and Recovery Act facility investigation, a corrective measures study, remedial action, and operation and maintenance associated with the proposed remedial actions.  In October 1995, CF&I and the Colorado Department of Public Health and Environment (“CDPHE”) finalized a postclosure permit for hazardous waste units at the Pueblo Mill.  As part of the postclosure permit requirements, CF&I must conduct a corrective action program for the 82 solid waste management units (“SWMU”) at the facility and continue to address projects on a prioritized corrective action schedule over 30 years.  The State of Colorado mandated that the schedule for corrective action could be accelerated if new data indicated a greater threat existed to the environment than was currently believed to exist.  In 2004, CF&I contracted two environmental engineering consultants to conduct remediation investigations of the remaining SWMU’s.  The cost estimates provided by the consultants for the SWMU’s, for which remediation work had not already commenced, were $24.0 million and $25.0 million.  CF&I determined the best estimate was the average of the two studies, or $24.5 million, which was $1.6 million more than previously accrued. At June 30, 2005, there were 60 SWMU’s that still required remediation.  At June 30, 2005, the total accrued liability for all remaining SWMU’s was $24.8 million, of which $23.3 million was classified as non-current on New CF&I’s consolidated balance sheet.

          The CDPHE inspected the Pueblo Mill in 1999 for possible environmental violations, and in the fourth quarter of 1999 issued a Compliance Advisory indicating that air quality regulations had been violated, which was followed by the filing of a judicial enforcement action (“Action”) in the second quarter of 2000.  In March 2002, CF&I and CDPHE reached a settlement of the Action, which was approved by the court (the “State Consent Decree”).  The State Consent Decree provided for CF&I to pay $0.3 million in penalties, fund $1.5 million of community projects, and to pay approximately $0.4 million for consulting services, all of which have been paid as of June 30, 2005. CF&I is also required to make certain capital improvements expected to cost approximately $30.3 million, including converting to the new single New Source Performance Standards Subpart AAa (“NSPS AAa”) compliant furnace discussed below.  The State Consent Decree provides that the two existing furnaces will be permanently shut down approximately 16 months after the issuance of a Prevention of Significant Deterioration (“PSD”) air permit.  The PSD permit was issued June 21, 2004.  CF&I anticipates completing the furnace capital improvements in October 2005.

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          In May 2000, the EPA issued a final determination that one of the two electric arc furnaces at the Pueblo Mill was subject to federal NSPS AA.  This determination was contrary to an earlier “grandfather” determination first made in 1996 by CDPHE.  CF&I appealed the EPA determination in the federal Tenth Circuit Court of Appeals. The issue has been resolved by entry of a Consent Decree on November 26, 2003, and the Tenth Circuit dismissed the appeal on December 10, 2003.  In that Consent Decree and overlapping with the commitments made to the CDPHE described above, CF&I committed to the conversion to the new single NSPS AAa compliant furnace (demonstrating full compliance 21 months after permit approval and expected to cost, with all related emission control improvements, approximately $30.3 million), and to pay approximately $0.5 million in penalties and fund certain supplemental environmental projects valued at approximately $1.1 million, including the installation of certain pollution control equipment at the Pueblo Mill.  The above mentioned expenditures for supplemental environmental projects will be both capital and non-capital expenditures. As of June 30, 2005, the non-capital expenditures have been paid.  Under this settlement and the settlement with the CDPHE, CF&I is subject to certain stipulated penalties if it fails to comply with the terms of the settlement.  In March 2004, the CDPHE notified CF&I of alleged violations of the State Consent Decree relating to opacity.  In June 2004, the CDPHE assessed stipulated penalties of $0.3 million.  On July 26, 2004, CF&I sought judicial review of the determination.  In August 2004, the state filed its response and the case has been set for trial commencing in November 2005.

          Beginning in May 2005, CF&I and the CDPHE exchanged a number of settlement proposals dealing with the above and other alleged violations of the State Consent Decree.  In July 2005, CF&I and the CDPHE continued to negotiate for a settlement of all pending matters.  CF&I believes that it is probable that both capital and non-capital expenditures will be incurred to settle all pending matters with the CDPHE.  In addition to these penalties, CF&I may in the future incur additional penalties related to this matter.  To date, such penalties have not been material to its results of operations and cash flows; however, CF&I cannot be assured that future penalties will not be material.

          In response to the CDPHE settlement and subsequent alleged violations and the resolution of the EPA action, CF&I expensed  $0.1 million and $0.3 million, respectively, for the three and six months ended June 30, 2005, and $0.1 million for both the three and six months ended June 30, 2004 for possible fines and non-capital related expenditures.  As of June 30, 2005, the remaining accrued liability was approximately $1.2 million.

          In December 2001, the State of Colorado issued a Title V air emission permit to CF&I under the Clean Air Act Amendments (“CAA”) requiring that the furnace subject to the EPA action operate in compliance with NSPS AA standards.  The Title V permit has been modified several times and gives CF&I adequate time (at least 15 1/2 months after CDPHE issues the PSD permit) to convert to a single NSPS AAa compliant furnace. The decrease in steelmaking production during the furnace conversion period when both furnaces are expected to be shut down will be offset by increasing production prior to the conversion period by building up semi-finished steel inventory and, if necessary, purchasing semi-finished steel (“billets”) for conversion into rod products at spot market prices.  Pricing and availability of billets is subject to significant volatility.

Labor Matters

CF&I Labor Dispute Settlement

          On January 15, 2004, CF&I announced a tentative agreement to settle the labor dispute between the United Steelworkers of America (“Union”) and CF&I that had been ongoing since October 1997 and on September 10, 2004 the settlement was finalized and became effective (the “Settlement”). The Settlement resulted in the dismissal of all court actions between CF&I and the Union relating to the labor dispute and environmental matters and the conditional withdrawal of charges by the United States National Labor Relations Board. The Settlement also included the ratification of new five-year collective bargaining agreements and called for the establishment of a trust and on September 10, 2004, the Rocky Mountain Steel Mills – United Steelworkers of America Back Pay Trust (“Trust”) was established. As part of the tentative settlement Oregon Steel had originally planned to issue four million shares of Oregon Steel’s common stock to the Trust on behalf of CF&I.  On September 10, 2004, the parties agreed instead that the Trust would receive cash in an amount equal to the gross proceeds from the sale of four million shares of the Oregon Steel’s common stock in an underwritten stock offering.

          The Settlement also included payment by CF&I of: (1) a cash contribution of $2,500 for each beneficiary, a total of $2.5 million and (2) beginning on the effective date of the Settlement, a ten year profit participation obligation (“Back Pay Profit Sharing Obligation” or “BPPSO”) consisting of 25% of CF&I’s quarterly profit, as defined, for years 2004 and 2007 through 2013, and 30% for years 2005 and 2006, not to exceed $3.0 million per year for 2004 through 2008 and $4.0 million per year for 2009 through 2013; these cap amounts are subject to a carryforward/carryback provision described in the Settlement documents.  The beneficiaries are those individuals who (1) as of October 3, 1997 were employees of CF&I and represented by the Union, (2) as of December 31, 1997 had not separated, as defined, from CF&I and (3) are entitled to an allocation as defined in the Trust. The Settlement, certain elements of which are effected through the new five-year collective bargaining agreements, also includes: (1) early retirement with immediate enhanced pension benefit where CF&I will offer bargaining unit employees an

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early retirement opportunity based on seniority until a maximum of 200 employees have accepted the offer, the benefit will include immediate and unreduced pension benefits for all years of service (including the period of the labor dispute) and for each year of service prior to March 3, 1993 (including service with predecessor companies) an additional monthly pension of $10, (2) pension credit for the period of the labor dispute whereby CF&I employees who went on strike will be given pension credit for both eligibility and pension benefit determination purposes for the period beginning October 3, 1997 and ending on the latest of said employees’ actual return to work, termination of employment, retirement or death, (3) pension credit for service with predecessor companies whereby for retirements after January 1, 2004, effective January 2, 2006 for each year of service prior to March 3, 1978 (including service with predecessor companies), CF&I will provide an additional monthly benefit to employees of $12.50, and for retirements after January 1, 2006, effective January 2, 2008 for each year of service between March 3, 1978 and March 3, 1993 (including service with predecessor companies), CF&I will provide an additional monthly benefit of $12.50, and (4) individuals who are members of the bargaining units as of October 3, 1997 and who do not choose to elect or do not qualify for early retirement, will be immediately eligible to apply for and receive qualified long-term disability (“LTD”) benefits on a go forward basis, notwithstanding the date of the injury or illness, service requirements or any filing deadlines. The Settlement also includes Oregon Steel’s agreement to nominate a director designated by the Union on Oregon Steel’s board of directors, and to a broad-based neutrality clause for certain of Oregon Steel’s facilities in the future.

CF&I Labor Dispute Settlement – Accounting

          CF&I recorded charges of $31.1 million in 2003 related to the tentative Settlement obligation.  The charge consisted of (1) $23.2 million for the value of four million shares of the Oregon Steel’s common stock valued as of December 31, 2003, (2) the cash payment of $2.5 million noted above, and (3) $5.4 million accrual for the LTD benefits noted above.  As noted above, on September 10, 2004, the parties agreed that the Trust would receive cash in an amount equal to the gross proceeds from the sale of four million shares of the Oregon Steel’s common stock in an underwritten stock offering.  On September 29, 2004, the public offering price was established at $16.00 per share, and $64.0 million was paid to the Trust in the fourth quarter of 2004.  In 2004, CF&I recorded a charge of $45.4 million ($7.0 million, $31.9 million, $4.5 million and $2.0 million for 2004 quarters ended March 31, June 30, September 30 and December 31, respectively) related to the Settlement obligation consisting of (1) $40.8 million for the incremental change in value of the four million shares of Oregon Steel’s common stock, (2) $8.9 million in retirement benefits for the 200 employees who accepted the early retirement benefits, which were partially offset by (3) a reduction of $4.3 million of the existing LTD accrual.  At June 30, 2005, $1.0 million was accrued for LTD benefits.  Beneficiaries have until September 2005 to claim LTD benefits and this accrual will continue to be adjusted as better claims information becomes available.  CF&I recorded a charge for the BPPSO and related taxes of $3.4 million for both the three and six months ended June 30, 2005 and charges of $1.4 million and $3.0 million, respectively, for the corresponding periods in 2004.  The BPPSO charges were classified as selling, general and administrative expenses.

Purchase Commitments

          A contract to purchase oxygen for the Pueblo Mill was entered into on February 2, 1993 by CF&I, and expires in February 2013.  The agreement specifies that CF&I will pay a base monthly charge that is adjusted annually based upon a percentage change in the Producer Price Index.  The monthly base charge at June 30, 2005 was $0.1 million.

          CF&I purchases electricity used at the Pueblo Mill from an independent third party under an agreement that expires in May 2008.  This commitment specifies that CF&I will pay a minimum monthly charge of $33,000 per month.

          In the second quarter of 2005, CF&I entered into multiple agreements for the delivery and installation of certain machinery used in the construction of the new electric arc furnace.  CF&I has agreed to pay a total of $11.2 million to a group of third parties, with ordinary payment terms due upon delivery or as services are rendered by the contracted vendors.  The construction of the electric arc furnace is expected to be completed in the fourth quarter of 2005.

Guarantees and Financing Arrangements

          On July 15, 2002, Oregon Steel issued $305.0 million of 10% First Mortgage Notes due 2009 (“10% Notes”) at a discount of 98.772% and an interest rate of 10.0%.  Interest is payable on January 15 and July 15 of each year. The 10% Notes are secured by a lien on substantially all of the property, plant and equipment, and certain other assets of Oregon Steel, excluding accounts receivable, inventory, and certain other assets.  As of June 30, 2005, Oregon Steel had outstanding $303.0 million of principal amount under the 10% Notes.  The Indenture under which the 10% Notes were issued contains restrictions on new indebtedness and various types of disbursements, including dividends, based on the cumulative amount of Oregon Steel’s net income, as defined.  New CF&I and CF&I (collectively, the “Guarantors”) guarantee the obligations of the 10% Notes, and those guarantees are secured by a lien on substantially all of the property, plant and equipment and certain other assets of the Guarantors, excluding accounts receivable, inventory, and certain other assets.

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Other Contingencies

          New CF&I is party to various other claims, disputes, legal actions and other proceedings involving contracts, employment and various other matters.  In the opinion of management, the outcome of these matters would not have a material adverse effect on the consolidated financial condition of New CF&I, its results of operations, and liquidity.

5.       Income Taxes

          The effective income tax expense rates were 40.8% and 38.1%, for the three and six months ended June 30, 2005, respectively, as compared to tax benefit rates of 34.6% and 38.8% in the corresponding periods in 2004.  The effective income tax rates for the three and six months ended June 30, 2005 did not vary materially from the combined state and federal statutory rate.  The effective income tax rate for the three and six months ended June 30, 2004 varied from the combined state and federal statutory rate, principally because New CF&I reversed a portion of the valuation allowance established in 2003 for certain federal and state net operating loss carry-forwards, state tax credits and alternative minimum tax credits.

          Oregon Steel files its income tax return as part of a consolidated group, for which a formal tax allocation agreement exists.  As a subsidiary of Oregon Steel, New CF&I is included in the consolidated group and thus does not file a separate tax return.  Under the terms of the tax allocation agreement, New CF&I is required to compute a separate tax liability as if it had filed a separate tax return and shall pay such amount to Oregon Steel.  Also, New CF&I will be compensated by Oregon Steel to the extent that tax benefits generated by New CF&I provide a benefit on a consolidated basis.  On this basis, New CF&I computes its stand alone tax assets and liabilities, and reflects such balances in its consolidated balance sheets.

          SFAS No. 109, “Accounting for Income Taxes,” requires that tax benefits for federal and state net operating loss carry-forwards, state tax credits, and alternative minimum tax credits each be recorded as an asset to the extent that management assesses the utilization of such assets to be “more likely than not”; otherwise, a valuation allowance is required to be recorded.  Based on this guidance, Oregon Steel increased the valuation allowance in the three and six months ended June 30, 2005 due to uncertainty regarding the utilization of certain state tax credits.  Oregon Steel reduced the valuation allowance in the three and six months ended June 30, 2004 due to reduced uncertainty regarding the realization of deferred tax assets.  New CF&I has been allocated a $0.2 million and $0.1 million valuation allowance reduction for the three and six months ended June 30, 2005, respectively, and a reduction of $3.6 million and $4.5 million for the three and six months ended June 30, 2004, respectively.  At June 30, 2005, the valuation allowance for deferred tax assets was $7.8 million.

          New CF&I will continue to evaluate the need for valuation allowances in the future.  Changes in estimated future taxable income and other underlying factors may lead to adjustments to the valuation allowances.

6.       Employee Benefit Plans

          New CF&I has noncontributory defined benefit retirement plans, certain health care and life insurance benefits, and qualified Thrift (401(k)) plans covering all of its eligible employees.

          Components of net periodic benefit cost related to the defined benefit retirement plans were as follows:

	Defined Benefit Retirement Plans
	Three Months Ended June 30,						Six Months Ended June 30,
	2005			2004			2005			2004
	(In thousands)						(In thousands)
Service cost	$	579		$	550		$	1,158		$	1,100
Interest cost		1,001			558			2,002			1,116
Expected return on plan assets		(586	)		(442	)		(1,200	)		(883	)
Amortization of unrecognized net loss		38			148			76			295
Amortization of unrecognized prior service cost		609			—			1,218			—
Total net periodic benefit cost	$	1,641		$	814		$	3,254		$	1,628

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Components of net periodic benefit cost related to the health care and life insurance benefit plans were as follows:

	Other Benefit Plans
	Three Months Ended June 30,				Six Months Ended June 30,
	2005		2004		2005		2004
	(In thousands)				(In thousands)
Service cost	$	55	$	36	$	111	$	72
Interest cost		304		201		607		402
Amortization of unrecognized net loss		54		83		107		166
Amortization of unrecognized prior service cost		180		18		359		36
Total net periodic benefit cost	$	593	$	338	$	1,184	$	676

          New CF&I made contributions of $2.2 million and $5.6 million, respectively, to its defined benefit retirement plans for the three and six months ended June 30, 2005.  Contributions of $1.1 million were made during both the three and six months ended June 30, 2004.  New CF&I expects to make additional contributions of $1.1 million in 2005.

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CF&I STEEL, L.P.
BALANCE SHEETS
(In thousands)

	June 30, 2005			December 31, 2004
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	—		$	—
Trade accounts receivable, less allowance for doubtful accounts of $649 and $1,036		45,697			45,314
Inventories		106,134			70,624
Other		2,696			3,129
Total current assets		154,527			119,067
Property, plant and equipment:
Land and improvements		3,295			3,295
Buildings		18,443			18,443
Machinery and equipment		271,410			269,632
Construction in progress		14,965			7,702
		308,113			299,072
Accumulated depreciation		(154,018	)		(147,197	)
Net property, plant and equipment		154,095			151,875
Intangibles, net		32,416			32,481
TOTAL ASSETS	$	341,038		$	303,423
LIABILITIES
Current liabilities:
Accounts payable	$	32,916		$	50,158
Accrued expenses		25,068			28,868
Total current liabilities		57,984			79,026
Long-term debt - Oregon Steel Mills, Inc.		321,790			288,730
Long-term debt - New CF&I, Inc.		21,756			21,756
Environmental liability		24,524			25,596
Deferred employee benefits		50,107			46,329
Total liabilities		476,161			461,437
Commitments and contingencies (Note 4)
PARTNERS’ DEFICIT
General partner		(128,637	)		(150,425	)
Limited partners		(6,486	)		(7,589	)
Total partners’ deficit		(135,123	)		(158,014	)
TOTAL LIABILITIES AND PARTNERS’ DEFICIT	$	341,038		$	303,423

The accompanying notes are an integral part of the financial statements.

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CF&I STEEL, L.P.
STATEMENTS OF OPERATIONS
(In thousands)
(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2005			2004			2005			2004
Sales:
Product sales	$	115,014		$	118,866		$	233,987		$	219,792
Freight		3,758			4,454			6,862			8,235
		118,772			123,320			240,849			228,027
Costs and expenses:
Cost of sales		92,451			97,974			186,985			192,361
Labor dispute settlement charges (Note 4)		—			31,868			—			38,868
Selling, general and administrative		4,203			6,101			11,793			11,574
Incentive compensation		1,935			528			3,962			1,089
Gain on disposal of assets		(206	)		(13	)		(287	)		(245	)
		98,383			136,458			202,453			243,647
Operating income (loss)		20,389			(13,138	)		38,396			(15,620	)
Other income (expense):
Interest expense		(8,122	)		(6,127	)		(15,627	)		(12,510	)
Other income		65			63			122			125
Net income (loss)	$	12,332		$	(19,202	)	$	22,891		$	(28,005	)

The accompanying notes are an integral part of the financial statements.

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CF&I STEEL, L.P.
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

	Six Months Ended June 30,
	2005			2004
Cash flows from operating activities:
Net income (loss)	$	22,891		$	(28,005	)
Adjustments to reconcile net income (loss) to net cash used by operating activities:
Depreciation and amortization		9,911			9,044
Gain on disposal of assets		(287	)		(245	)
Other		2,706			(1,752	)
Changes in current assets and liabilities:
Trade accounts receivable		(383	)		(4,858	)
Inventories		(35,510	)		(1,746	)
Accounts payable		(17,242	)		12,788
Accrued expenses		(3,800	)		4,408
Other		433			221
Net cash used by operating activities		(21,281	)		(10,145	)
Cash flows from investing activities:
Additions to property, plant and equipment		(12,066	)		(3,958	)
Proceeds from disposal of assets		287			330
Net cash used by investing activities		(11,779	)		(3,628	)
Cash flows from financing activities:
Borrowings from related parties		141,594			131,505
Payments to related parties		(108,534	)		(117,732	)
Net cash provided by financing activities		33,060			13,773
Net increase in cash and cash equivalents		—			—
Cash and cash equivalents at the beginning of period		—			—
Cash and cash equivalents at the end of period	$	—		$	—
Supplemental disclosures of cash flow information:
Cash paid for:
Interest	$	15,058		$	12,490

The accompanying notes are an integral part of the financial statements.

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CF&I STEEL, L.P.
Notes to Financial Statements
(Unaudited)

1.       Basis of Presentation

          The financial statements include the accounts of CF&I Steel, L.P. (“CF&I”).  Oregon Steel Mills, Inc. (“Oregon Steel”) owns an 87 percent interest in New CF&I, Inc. (“New CF&I”), which owns a 95.2 percent interest in CF&I.  Oregon Steel also owns directly an additional 4.3 percent interest in CF&I.  In January 1998, CF&I assumed the trade name of Rocky Mountain Steel Mills.

          The unaudited financial statements include estimates and other adjustments, consisting of normal recurring accruals and other charges, as described in Note 4 to the Financial Statements, “Contingencies – Labor Matters - CF&I Labor Dispute Settlement – Accounting” 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 Oregon Steel 2004 Form 10-K for additional CF&I disclosures including a summary of significant accounting policies.

Recent Accounting Pronouncements

          In November 2004, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard (“SFAS”) No. 151, “Inventory Costs, an Amendment of ARB No. 43, Chapter 4.” SFAS No. 151 amends Accounting Research Bulletin 43, Chapter 4, to clarify that the abnormal amounts of idle facility expense, freight, handling costs and wasted materials (spoilage) be recognized as current period charges. It also requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities.  SFAS No. 151 is effective for inventory costs incurred during fiscal years beginning after June 15, 2005.  CF&I is in the process of assessing the impact of adopting this new standard.

          In December 2004, the FASB issued SFAS No. 153, “Exchanges of Nonmonetary Assets, an Amendment of APB Opinion No. 29.”  The guidance in Accounting Principles Board (“APB”) Opinion No. 29, “Accounting for Nonmonetary Transactions,” is based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged.  The guidance in APB Opinion No. 29, however, included certain exceptions to that principle. SFAS No. 153 amends APB Opinion No. 29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. A nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange.  SFAS No. 153 is effective for nonmonetary asset exchanges in fiscal periods beginning after June 15, 2005.  CF&I does not believe that the adoption of SFAS No. 153 will have a material impact on the Financial Statements.

          In May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections,” which replaces APB No. 20, “Accounting Changes” and SFAS No. 3, “Reporting Accounting Changes in Interim Financial Statements” and requires the retrospective application to prior periods’ financial statement for changes in accounting principle, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change.  The retrospective application of the change would be limited to the direct effects of the change, and indirect effects would be recognized in the period of the accounting change.  SFAS No. 154 is effective for fiscal years beginning after December 31, 2005.  CF&I does not believe that the adoption of SFAS No. 154 will have a material impact on the Financial Statements.

Reclassifications

          Certain reclassifications have been made in prior periods to conform to the current year presentation.  Such reclassifications do not affect results of operations as previously reported. 

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2.       Inventories

          Inventories are stated at the lower of manufacturing cost or market value with manufacturing cost determined under the average cost method.  The components of inventories are as follows:

	June 30, 2005		December 31, 2004
	(In thousands)
Raw materials	$	16,001	$	19,750
Semi-finished product		65,368		26,226
Finished product		13,462		13,504
Stores and operating supplies		11,303		11,144
Total inventories	$	106,134	$	70,624

3.       Long-term Debt

          Borrowing requirements for capital expenditures and working capital have been provided through three revolving loans from Oregon Steel to CF&I as well as a loan from New CF&I to CF&I.  The Oregon Steel loans include interest on the daily amount outstanding, paid monthly, at the rate of 10.65% per annum.  The principal on the Oregon Steel loans is due on demand or on December 31, 2006 if no demand is made.  The loan from New CF&I includes interest on the daily amount outstanding at prime.  Interest was calculated at a weighted average interest rate of 6.0% and 5.7%, respectively, for the three and six months ended June 30, 2005.  The principal on the New CF&I loan is due on demand; however, it is classified as long-term based on New CF&I’s intent not to demand payment in 2005. 

          At June 30, 2005, principal payments on long-term debt were due as follows (in thousands):

2006 $ 343,546

          Oregon Steel and New CF&I are not required to provide financing to CF&I and, although the demand for repayment of the obligation in full is not expected before December 31, 2006, Oregon Steel and New CF&I may demand repayment of the loans at any time. If Oregon Steel and New CF&I were to demand repayment of the loans, it is not likely that CF&I would be able to obtain the external financing necessary to repay the loans or to fund its capital expenditures and other cash needs and, if available, that such financing would be on terms satisfactory to CF&I.

4.       Contingencies

Environmental

          In connection with the acquisition of the steelmaking and finishing facilities located in Pueblo, Colorado (“Pueblo Mill”), CF&I accrued a liability of $36.7 million for environmental remediation related to the prior owner’s operations.  CF&I believed this amount was the best estimate of costs from a range of $23.1 million to $43.6 million.  CF&I’s estimate of this liability was based on two initial remediation investigations conducted by environmental engineering consultants, and included costs for the Resource Conservation and Recovery Act facility investigation, a corrective measures study, remedial action, and operation and maintenance associated with the proposed remedial actions.  In October 1995, CF&I and the Colorado Department of Public Health and Environment (“CDPHE”) finalized a postclosure permit for hazardous waste units at the Pueblo Mill.  As part of the postclosure permit requirements, CF&I must conduct a corrective action program for the 82 solid waste management units (“SWMU”) at the facility and continue to address projects on a prioritized corrective action schedule over 30 years.  The State of Colorado mandated that the schedule for corrective action could be accelerated if new data indicated a greater threat existed to the environment than was currently believed to exist.  In 2004, CF&I contracted two environmental engineering consultants to conduct remediation investigations of the remaining SWMU’s.  The cost estimates provided by the consultants for the SWMU’s, for which remediation work had not already commenced, were $24.0 million and $25.0 million.  CF&I determined the best estimate was the average of the two studies, or $24.5 million, which was $1.6 million more than previously accrued. At June 30, 2005, there were 60 SWMU’s that still required remediation.  At June 30, 2005, the total accrued liability for all remaining SWMU’s was $24.8 million, of which $23.3 million was classified as non-current on CF&I’s balance sheet.

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          The CDPHE inspected the Pueblo Mill in 1999 for possible environmental violations, and in the fourth quarter of 1999 issued a Compliance Advisory indicating that air quality regulations had been violated, which was followed by the filing of a judicial enforcement action (“Action”) in the second quarter of 2000.  In March 2002, CF&I and CDPHE reached a settlement of the Action, which was approved by the court (the “State Consent Decree”).  The State Consent Decree provided for CF&I to pay $0.3 million in penalties, fund $1.5 million of community projects, and to pay approximately $0.4 million for consulting services, all of which have been paid as of June 30, 2005. CF&I is also required to make certain capital improvements expected to cost approximately $30.3 million, including converting to the new single New Source Performance Standards Subpart AAa (“NSPS AAa”) compliant furnace discussed below.  The State Consent Decree provides that the two existing furnaces will be permanently shut down approximately 16 months after the issuance of a Prevention of Significant Deterioration (“PSD”) air permit.  The PSD permit was issued June 21, 2004.  CF&I anticipates completing the furnace capital improvements in October 2005.

In May 2000, the EPA issued a final determination that one of the two electric arc furnaces at the Pueblo Mill was subject to federal NSPS AA.  This determination was contrary to an earlier “grandfather” determination first made in 1996 by CDPHE.  CF&I appealed the EPA determination in the federal Tenth Circuit Court of Appeals. The issue has been resolved by entry of a Consent Decree on November 26, 2003, and the Tenth Circuit dismissed the appeal on December 10, 2003.  In that Consent Decree and overlapping with the commitments made to the CDPHE described above, CF&I committed to the conversion to the new single NSPS AAa compliant furnace (demonstrating full compliance 21 months after permit approval and expected to cost, with all related emission control improvements, approximately $30.3 million), and to pay approximately $0.5 million in penalties and fund certain supplemental environmental projects valued at approximately $1.1 million, including the installation of certain pollution control equipment at the Pueblo Mill.  The above mentioned expenditures for supplemental environmental projects will be both capital and non-capital expenditures. As of June 30, 2005, the non-capital expenditures have been paid.  Under this settlement and the settlement with the CDPHE, CF&I is subject to certain stipulated penalties if it fails to comply with the terms of the settlement.  In March 2004, the CDPHE notified CF&I of alleged violations of the State Consent Decree relating to opacity.  In June 2004, the CDPHE assessed stipulated penalties of $270,000.  On July 26, 2004, CF&I sought judicial review of the determination.  In August 2004, the state filed its response and the case has been set for trial commencing in November 2005.

          Beginning in May 2005, CF&I and the CDPHE exchanged a number of settlement proposals dealing with the above and other alleged violations of the State Consent Decree.  In July 2005, CF&I and the CDPHE continued to negotiate for a settlement of all pending matters.  CF&I believes that it is probable that both capital and non-capital expenditures will be incurred to settle all pending matters with the CDPHE.  In addition to these penalties, CF&I may in the future incur additional penalties related to this matter.  To date, such penalties have not been material to its results of operations and cash flows; however, CF&I cannot be assured that future penalties will not be material.

          In response to the CDPHE settlement and subsequent alleged violations and the resolution of the EPA action, CF&I expensed  $0.1 million and $0.3 million, respectively, for the three and six months ended June 30, 2005, and $0.1 million for both the three and six months ended June 30, 2004 for possible fines and non-capital related expenditures.  As of June 30, 2005, the remaining accrued liability was approximately $1.2 million. 

          In December 2001, the State of Colorado issued a Title V air emission permit to CF&I under the Clean Air Act Amendments (“CAA”) requiring that the furnace subject to the EPA action operate in compliance with NSPS AA standards.  The Title V permit has been modified several times and gives CF&I adequate time (at least 15 1/2 months after CDPHE issues the PSD permit) to convert to a single NSPS AAa compliant furnace. The decrease in steelmaking production during the furnace conversion period when both furnaces are expected to be shut down will be offset by increasing production prior to the conversion period by building up semi-finished steel inventory and, if necessary, purchasing semi-finished steel (“billets”) for conversion into rod products at spot market prices.  Pricing and availability of billets is subject to significant volatility. 

Labor Matters

CF&I Labor Dispute Settlement

          On January 15, 2004, CF&I announced a tentative agreement to settle the labor dispute between the United Steelworkers of America (“Union”) and CF&I that had been ongoing since October 1997 and on September 10, 2004 the settlement was finalized and became effective (the “Settlement”). The Settlement resulted in the dismissal of all court actions between CF&I and the Union relating to the labor dispute and environmental matters and the conditional withdrawal of charges by the United States National Labor Relations Board. The Settlement also included the ratification of new five-year collective bargaining agreements and called for the establishment of a trust and on September 10, 2004, the Rocky Mountain Steel Mills – United Steelworkers of America Back Pay Trust (“Trust”) was

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established. As part of the tentative settlement Oregon Steel had originally planned to issue four million shares of Oregon Steel’s common stock to the Trust on behalf of CF&I.  On September 10, 2004, the parties agreed instead that the Trust would receive cash in an amount equal to the gross proceeds from the sale of four million shares of the Oregon Steel’s common stock in an underwritten stock offering.

          The Settlement also included payment by CF&I of: (1) a cash contribution of $2,500 for each beneficiary, a total of $2.5 million and (2) beginning on the effective date of the Settlement, a ten year profit participation obligation (“Back Pay Profit Sharing Obligation” or “BPPSO”) consisting of 25% of CF&I’s quarterly profit, as defined, for years 2004 and 2007 through 2013, and 30% for years 2005 and 2006, not to exceed $3.0 million per year for 2004 through 2008 and $4.0 million per year for 2009 through 2013; these cap amounts are subject to a carryforward/carryback provision described in the Settlement documents.  The beneficiaries are those individuals who (1) as of October 3, 1997 were employees of CF&I and represented by the Union, (2) as of December 31, 1997 had not separated, as defined, from CF&I and (3) are entitled to an allocation as defined in the Trust. The Settlement, certain elements of which are effected through the new five-year collective bargaining agreements, also includes: (1) early retirement with immediate enhanced pension benefit where CF&I will offer bargaining unit employees an early retirement opportunity based on seniority until a maximum of 200 employees have accepted the offer, the benefit will include immediate and unreduced pension benefits for all years of service (including the period of the labor dispute) and for each year of service prior to March 3, 1993 (including service with predecessor companies) an additional monthly pension of $10, (2) pension credit for the period of the labor dispute whereby CF&I employees who went on strike will be given pension credit for both eligibility and pension benefit determination purposes for the period beginning October 3, 1997 and ending on the latest of said employees’ actual return to work, termination of employment, retirement or death, (3) pension credit for service with predecessor companies whereby for retirements after January 1, 2004, effective January 2, 2006 for each year of service prior to March 3, 1978 (including service with predecessor companies), CF&I will provide an additional monthly benefit to employees of $12.50, and for retirements after January 1, 2006, effective January 2, 2008 for each year of service between March 3, 1978 and March 3, 1993 (including service with predecessor companies), CF&I will provide an additional monthly benefit of $12.50, and (4) individuals who are members of the bargaining units as of October 3, 1997 and who do not choose to elect or do not qualify for early retirement, will be immediately eligible to apply for and receive qualified long-term disability (“LTD”) benefits on a go forward basis, notwithstanding the date of the injury or illness, service requirements or any filing deadlines. The Settlement also includes Oregon Steel’s agreement to nominate a director designated by the Union on Oregon Steel’s board of directors, and to a broad-based neutrality clause for certain of Oregon Steel’s facilities in the future.

CF&I Labor Dispute Settlement – Accounting

          CF&I recorded charges of $31.1 million in 2003 related to the tentative Settlement obligation.  The charge consisted of (1) $23.2 million for the value of four million shares of the Oregon Steel’s common stock valued as of December 31, 2003, (2) the cash payment of $2.5 million noted above, and (3) $5.4 million accrual for the LTD benefits noted above.  As noted above, on September 10, 2004, the parties agreed that the Trust would receive cash in an amount equal to the gross proceeds from the sale of four million shares of the Oregon Steel’s common stock in an underwritten stock offering.  On September 29, 2004, the public offering price was established at $16.00 per share, and $64.0 million was paid to the Trust in the fourth quarter of 2004.  In 2004, CF&I recorded a charge of $45.4 million ($7.0 million, $31.9 million, $4.5 million and $2.0 million for 2004 quarters ended March 31, June 30, September 30 and December 31, respectively) related to the Settlement obligation consisting of (1) $40.8 million for the incremental change in value of the four million shares of Oregon Steel’s common stock, (2) $8.9 million in retirement benefits for the 200 employees who accepted the early retirement benefits, which were partially offset by (3) a reduction of $4.3 million of the existing LTD accrual.  At June 30, 2005, $1.0 million was accrued for LTD benefits.  Beneficiaries have until September 2005 to claim LTD benefits and this accrual will continue to be adjusted as better claims information becomes available.  CF&I recorded a charge for the BPPSO and related taxes of $3.4 million for both the three and six months ended June 30, 2005 and charges of $1.4 million and $3.0 million, respectively, for the corresponding periods in 2004.  The BPPSO charges were classified as selling, general and administrative expenses.

Purchase Commitments

          A contract to purchase oxygen for the Pueblo Mill was entered into on February 2, 1993 by CF&I, and expires in February 2013.  The agreement specifies that CF&I will pay a base monthly charge that is adjusted annually based upon a percentage change in the Producer Price Index.  The monthly base charge at June 30, 2005 was $0.1 million.

          CF&I purchases electricity used at the Pueblo Mill from an independent third party under an agreement that expires in May 2008.  This commitment specifies that CF&I will pay a minimum monthly charge of $33,000 per month.

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          In the second quarter of 2005, CF&I entered into multiple agreements for the delivery and installation of certain machinery used in the construction of the new electric arc furnace.  CF&I has agreed to pay a total of $11.2 million to a group of third parties, with ordinary payment terms due upon delivery or as services are rendered by the contracted vendors.  The construction of the electric arc furnace is expected to be completed in the fourth quarter of 2005. 

Guarantees and Financing Arrangements

          On July 15, 2002, Oregon Steel issued $305.0 million of 10% First Mortgage Notes due 2009 (“10% Notes”) at a discount of 98.772% and an interest rate of 10.0%.  Interest is payable on January 15 and July 15 of each year. The 10% Notes are secured by a lien on substantially all of the property, plant and equipment, and certain other assets of Oregon Steel, excluding accounts receivable, inventory, and certain other assets.  As of June 30, 2005, Oregon Steel had outstanding $303.0 million of principal amount under the 10% Notes.  The Indenture under which the 10% Notes were issued contains restrictions on new indebtedness and various types of disbursements, including dividends, based on the cumulative amount of Oregon Steel’s net income, as defined.  New CF&I and CF&I (collectively, the “Guarantors”) guarantee the obligations of the 10% Notes, and those guarantees are secured by a lien on substantially all of the property, plant and equipment and certain other assets of the Guarantors, excluding accounts receivable, inventory, and certain other assets.

Other Contingencies

          CF&I is party to various other claims, disputes, legal actions and other proceedings involving contracts, employment and various other matters.  In the opinion of management, the outcome of these matters would not have a material adverse effect on the consolidated financial condition of CF&I, its results of operations, and liquidity.

5.        Employee Benefit Plans

          CF&I has noncontributory defined benefit retirement plans, certain health care and life insurance benefits, and qualified Thrift (401(k)) plans covering all of its eligible employees.

          Components of net periodic benefit cost related to the defined benefit retirement plans were as follows:

	Defined Benefit Retirement Plans
	Three Months Ended June 30,						Six Months Ended June 30,
	2005			2004			2005			2004
	(In thousands)						(In thousands)
Service cost	$	579		$	550		$	1,158		$	1,100
Interest cost		1,001			558			2,002			1,116
Expected return on plan assets		(586	)		(442	)		(1,200	)		(883	)
Amortization of unrecognized net loss		38			148			76			295
Amortization of unrecognized prior service cost		609			—			1,218			—
Total net periodic benefit cost	$	1,641		$	814		$	3,254		$	1,628

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          Components of net periodic benefit cost related to the health care and life insurance benefit plans were as follows:

	Other Benefit Plans
	Three Months Ended June 30,				Six Months Ended June 30,
	2005		2004		2005		2004
	(In thousands)				(In thousands)
Service cost	$	55	$	36	$	111	$	72
Interest cost		304		201		607		402
Amortization of unrecognized net loss		54		83		107		166
Amortization of unrecognized prior service cost		180		18		359		36
Total net periodic benefit cost	$	593	$	338	$	1,184	$	676

          CF&I made contributions of $2.2 million and $5.6 million, respectively, to its defined benefit retirement plans for the three and six months ended June 30, 2005.  Contributions of $1.1 million were made during both the three and six months ended June 30, 2004.  CF&I expects to make additional contributions of $1.1 million in 2005.

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Item 2.          Management’s Discussion and Analysis of Financial Condition and Results of Operations

General

          The following information contains forward-looking statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  Statements made in this report that are not statements of historical fact are forward-looking statements.  Forward-looking statements made in this report can be identified by forward-looking words such as, but not limited to, “expect,” “anticipate,” “believe,” “intend,” “plan,” “seek,” “forecast,” “estimate,” “continue,” “may,” “will,” “would,” “could,” “likely,” and similar expressions.  These forward-looking statements are subject to risks and uncertainties and actual results could differ materially from those projected.  These risks and uncertainties include, but are not limited to:

• changes in market supply and demand for steel, including the effect of changes in general economic conditions and imports;

• actions by the Company’s domestic and foreign competitors;

• changes in the availability and costs of steel scrap, steel scrap substitute materials, steel slab and billets and other raw materials or supplies used by the Company, as well as the availability and cost of electricity and other utilities;

• downturns in the industries the Company serves, including the rail transportation, construction, capital equipment, oil and gas, and durable goods segments;

• the Company’s substantial indebtedness;

• volatility in interest rates and performance of investments in capital markets, both of which have a significant effect on pension and postretirement benefit obligations and expenses;

• unplanned equipment failures and plant outages;

• dependence on senior management and the inability to replace key executives, should they leave;

• costs of environmental compliance and the impact of governmental regulations;

• pending environmental matters, including the risk that costs associated with such matters may exceed the Company’s expectations or available insurance coverage, if any, and the risk that the Company may not be able to resolve any matter as expected;

• changes in the Company’s relationship with its workforce, including it’s unionized employees; and

• changes in United States or foreign trade policies affecting steel imports or exports.

Overview

          The consolidated financial statements include all wholly owned and those majority owned subsidiaries over which Oregon Steel Mills, Inc. (“Company”) exerts management control.  Non-controlled subsidiaries and affiliates are accounted for using the equity method.  Material wholly owned and majority owned subsidiaries of the Company are wholly owned Camrose Pipe Corporation (“CPC”), which does business as Columbia Structural Tubing (“CST”) and which, through ownership in another corporation, holds a 100 percent interest in Camrose Pipe Company (“Camrose”); a 60 percent interest in Oregon Feralloy Partners (“OFP”) and 87 percent owned New CF&I, Inc. (“New CF&I”), which owns a 95.2 percent interest in CF&I Steel, L.P. (“CF&I”).  The Company also directly owns an additional 4.3 percent interest in CF&I.  In January 1998, CF&I assumed the trade name Rocky Mountain Steel Mills (“RMSM”).  New CF&I owns a 100 percent interest in the Colorado and Wyoming Railway Company.  All significant inter-company balances and transactions have been eliminated.

          The Company currently has two aggregated operating divisions known as the Oregon Steel Division and the RMSM Division. The Oregon Steel Division is centered at the steel plate mill in Portland, Oregon, which in addition to sales to third parties, supplies steel plate and coiled plate to the Company’s structural tubing and welded pipe finishing facilities. The Oregon Steel Division’s steel pipe mill in Napa, California is a large diameter steel line pipe mill and fabrication facility.  In July 2004, the Company idled the Napa pipe mill, and in December 2004, the Company announced the permanent closure of the Napa pipe mill and has contracted with third parties to market the pipe mill equipment and real estate. See Note 13 to the Company’s Consolidated Financial Statements, “Assets Held for Sale” for further discussion.  The Oregon Steel Division also produces large diameter line pipe and electric resistance welded (“ERW”) line pipe and casing at the Camrose pipe mill.  In October 2003, the Oregon Steel Division began production of structural tubing at its CST facility. The Company intends to construct a new spiral weld double submerged arc weld (“DSAW”) pipe mill for the construction of large diameter line pipe and plans to begin production in the first quarter of 2006.  The RMSM Division consists of the steelmaking and finishing facilities of the Pueblo mill, as well as certain related operations.

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          On January 15, 2004, the Company announced a tentative agreement to settle the labor dispute between the United Steelworkers of America (“Union”) and CF&I and, on September 10, 2004, the settlement was finalized and became effective.  The Company recorded charges of $31.1 million and $45.4 million related to the settlement in 2003 and 2004, respectively.  See Note 10 to the Company’s Consolidated Financial Statements, “Contingencies – Labor Matters – CF&I Labor Dispute Settlement - Accounting” for a discussion of the accounting for the agreement.

Critical Accounting Policies and Estimates

          The Company’s discussion and analysis of its financial condition and results of operations are based upon its consolidated financial statements, which have been prepared in accordance with Generally Accepted Accounting Principles (“GAAP”). The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. This provides a basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions, and these differences may be material.  A description of the Company’s critical accounting policies and related estimates and judgments that affect the preparation of the consolidated financial statements is set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2004.

2005 Outlook

          As a result of the new electric arc furnace installation at RMSM and the related equipment outage, the Company’s operating income is expected to be negatively impacted by approximately $3.7 million in the third quarter of 2005 and $1 million in the fourth quarter of 2005. The installation of the new one furnace operation is expected to reduce operating costs at RMSM by approximately $10 million per year.  In addition, beginning the second week in July 2005, Camrose’s large diameter line pipe mill is expected to be out of service for approximately 3 months for equipment upgrades that will allow Camrose to make a heavier wall line pipe product. The Camrose mill is expected to restart during the third week of October. The large diameter line pipe backlog at Camrose is approximately five months or 80,000 tons.

          For 2005, the Company expects to ship approximately 1.5 million tons of products and generate approximately $1.25 billion in sales.  In the Oregon Steel Division the product mix is expected to consist of approximately 480,000 tons of plate and coil, 190,000 tons of welded pipe and 60,000 tons of structural tubing. The Company’s RMSM Division expects to ship approximately 410,000 tons and 380,000 tons of rail and rod and bar products, respectively.

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Discussion and Analysis of Income
(Information in tables in thousands except tons, per ton, and percentages)

	Three Months Ended June 30,										Six Months Ended June 30,
	2005		2004		$ Change			% Change			2005		2004		$ Change			% Change
Sales
Oregon Steel Division	$	214,314	$	156,433	$	57,881			37.0	%	$	386,452	$	302,059	$	84,393			27.9	%
RMSM Division		120,645		125,336		(4,691	)		(3.7	)%		244,472		232,106		12,366			5.3	%
Consolidated	$	334,959	$	281,769	$	53,190			18.9	%	$	630,924	$	534,165	$	96,759			18.1	%
Tons sold
Oregon Steel Division:
Plate and Coil		112,200		135,900		(23,700	)		(17.4	)%		224,600		309,700		(85,100	)		(27.5	)%
Welded Pipe		66,900		49,400		17,500			35.4	%		97,200		108,200		(11,000	)		(10.2	)%
Structural Tubing		13,700		18,800		(5,100	)		(27.1	)%		28,500		29,300		(800	)		(2.7	)%
Total Oregon Steel Division		192,800		204,100		(11,300	)		(5.5	)%		350,300		447,200		(96,900	)		(21.7	)%
RMSM Division:
Rail		103,200		93,200		10,000			10.7	%		205,000		193,900		11,000			5.7	%
Rod and Bar		83,600		133,200		(49,600	)		(37.2	)%		170,000		263,300		(93,300	)		(35.4	)%
Seamless Pipe		—		500		(500	)		(100.0	)%		—		3,300		(3,300	)		(100.0	)%
Total RMSM Division		186,800		226,900		(40,100	)		(17.7	)%		375,000		460,500		(85,500	)		(18.6	)%
Consolidated		379,600		431,000		(51,400	)		(11.9	)%		725,300		907,700		(182,400	)		(20.1	)%
Sales price per ton
Oregon Steel Division	$	1,112	$	766	$	346			45.2	%	$	1,103	$	675	$	428			63.4	%
RMSM Division	$	646	$	552	$	94			17.0	%	$	652	$	504	$	148			29.4	%
Consolidated	$	882	$	654	$	229			34.9	%	$	870	$	588	$	282			48.0	%

Sales

          Sales for the three months ended June 30, 2005 increased 18.9% to $335.0 million as compared to sales of $281.8 million for the three months ended June 30, 2004.  Average sales price was $882 per ton in the second quarter of 2005 compared to $654 per ton in the second quarter of 2004.  The increase is primarily attributed to increased prices for plate, welded pipe and rail products.  The decrease in shipments was primarily due to decreased shipments of plate and coil, structural tubing and rod and bar products partially offset by higher shipments of welded pipe and rail products.  Shipments of plate and coil and rod and bar products decreased as customers managed inventory levels for those products.  Shipments on a specific line pipe order made during the second quarter drove the increase in volumes seen in welded pipe, while there was continued strong demand for rail products in the second quarter.  Sales for the six months ended June 30, 2005 increased 18.1% to $630.9 million as compared to sales of $534.2 million for the comparable period in 2004.  Average sales price was $870 per ton in the first six months of 2005 compared to $588 per ton in the first six months of 2004.  The Company realized increased sales prices on all products during the first six months of 2005, as compared to the same period of 2004.  Shipments of plate and coil and rod and bar products decreased as customer managed inventory levels for those products during the first six months of 2005. 

Gross Profit

	Three Months Ended June 30,									Six Months Ended June 30,
	2005		2004		$ Change		% Change			2005		2004		$ Change		% Change
Gross Profit	$	70,731	$	68,997	$	1,734		2.5	%	$	146,601	$	106,793	$	39,808		37.3	%

          In the second quarter of 2005, the Company’s gross profit margin was 21.1% as compared to 24.5% for the comparable period of 2004.  The lower gross profit margin was attributed to decreased shipment volumes coupled with increased costs for steel slab, which more than offset the higher average sales prices.  The Company’s gross profit margin was 23.2% for the six months ended June 30, 2005 compared to 20.0% for the comparable period of 2004.  The higher gross profit margin was primarily a result of higher average sales prices, for which a greater quarter over quarter increase was realized in the first quarter.  The higher sales prices were partially offset by lower shipment volumes and higher steel slab costs.

36

Selling, General and Administrative Expenses

	Three Months Ended June 30,										Six Months Ended June 30,
	2005		2004		$ Change			% Change			2005		2004		$ Change		% Change
Selling, General and Administrative Expenses	$	12,264	$	13,774	$	(1,510	)		(11.0	)%	$	28,324	$	27,683	$	641		2.3	%

          Selling, general and administrative expenses decreased for the three months ended June 30, 2005 as compared to 2004 primarily as a result of decreased quarterly expense related to the ten-year profit participation obligation resulting from the labor dispute settlement between the Union and CF&I.  The Company did not record a charge for the Back Pay Profit Sharing Obligation (“BPPSO”) and related payroll taxes in the three months ended June 30, 2005 as the entire potential payout on 2005 earnings was achieved in the first quarter of 2005.  This compares to $1.4 million and $3.0 million in BPPSO related charges recorded for the three and six months ended June 30, 2004, respectively.  Selling, general and administrative expenses increased for the six months ended June 30, 2005 as compared to the same period of 2004, also primarily as a result of the timing of BPPSO charges as explained above.  See Note 10 to the Company’s Consolidated Financial Statements, “Contingencies – Labor Matters – CF&I Labor Dispute Settlement - Accounting.” 

Incentive Compensation

	Three Months Ended June 30,									Six Months Ended June 30,
	2005		2004		$ Change		% Change			2005		2004		$ Change		% Change
Incentive Compensation	$	4,672	$	3,042	$	1,630		53.6	%	$	10,000	$	5,088	$	4,912		96.5	%

          Incentive compensation increased for the three and six months ended June 30, 2005 as compared to the same periods of 2004, due largely to higher operating income.  In addition, the Company recorded a charge of $0.6 million during both the three and six months ended June 30, 2005 for stock compensation expense recorded in connection with the Long-Term Incentive Plan (“LTIP”).  The LTIP was approved by shareholder vote in April 2005 and the second quarter charge represents the estimated expense for the first six months of 2005.  See Note 2 to the Company’s Consolidated Financial Statements, “Stock-Based Compensation.” 

Interest Expense

	Three Months Ended June 30,										Six Months Ended June 30,
	2005		2004		$ Change			% Change			2005		2004		$ Change			% Change
Interest Expense	$	8,326	$	8,461	$	(135	)		(1.6	)%	$	16,968	$	17,029	$	(61	)		(0.4	)%

          Interest expense recorded for the three and six months ended June 30, 2005 was effectively the same as the same periods of the prior year. Substantially all of the Company’s interest expense is related to the 10% First Mortgage Notes due in 2009.

37

Income Tax Expense (Benefit)

	Three Months Ended June 30,										Six Months Ended June 30,
	2005		2004			$ Change		% Change			2005		2004			$ Change		% Change
Income Tax Expense (Benefit)	$	17,934	$	(43	)	$	17,977		>1,000.0	%	$	33,941	$	(41	)	$	33,982		>1,000.0	%

          The effective income tax expense rate was 38.7% and 37.4%, respectively, for the three and six months ended June 30, 2005, as compared to an effective income tax benefit rate of less than 1.0% for the three and six months ended June 30, 2004.  The effective income tax rate for 2005 varied from the combined state and federal statutory rate principally because the Company recorded tax benefits associated with export sales.  Statement of Financial Accounting Standard No. 109, “Accounting for Income Taxes,” requires that tax benefits for federal and state net operating loss carry-forwards, state tax credits, and alternative minimum tax credits each be recorded as an asset to the extent that management assesses the utilization of such assets to be “more likely than not”; otherwise, a valuation allowance is required to be recorded.  Based on this guidance, the Company increased its valuation allowance by $0.5 and $0.3 million in the three and six months ended June 30, 2005, respectively, because of the uncertainty regarding the utilization of certain state tax credits.  The Company decreased the valuation allowance by $7.3 million and $10.5 million in the three and six months ended June 30, 2004, respectively, because the improved earnings reduced the uncertainty surrounding allowances pertaining to 2003.  The Company will continue to evaluate the need for valuation allowances in the future.  Changes in estimated future taxable income and other underlying factors may lead to adjustments to the valuation allowances.  As of June 30, 2005, the only significant valuation allowance relates to the State of Colorado net operating losses and credits.

38

Liquidity and Capital Resources

          At June 30, 2005, the Company’s liquidity, comprised of cash (including restricted cash of $23.3 million), cash equivalents, and short-term investments totaled approximately $109.7 million.  At December 31, 2004, the Company’s liquidity comprised of cash, cash equivalents, short-term investments and funds available under its $65.0 million revolving credit facility ($45.1 million) totaled approximately $182.3 million.  The Company terminated the $65.0 million revolving credit facility on March 29, 2005 and replaced it with a new credit facility that, as amended, provides for a maximum borrowing of $35.0 million for the sole purpose of issuing letters of credit.  For further information see Note 5 to the Company’s Consolidated Financial Statements, “Debt, Financing Arrangements and Liquidity.”

          Net working capital at June 30, 2005 increased $69.4 million compared to December 31, 2004, substantially all of which was attributed to the $70.1 million increase in current assets as total current liabilities were effectively the same at the end of both periods. The increase in current assets was primarily due to an increase in inventory of $101.0 million, partially offset by a decrease in cash, cash equivalents and short-term investments of $27.4 million.  The increase in inventories is primarily due to (1) increased volume of higher cost steel slab, (2) increased volumes of plate (for conversion into large diameter line pipe) and large diameter pipe at Camrose and (3) the buildup of semi-finished inventory at RMSM in anticipation of the installation of the new electric arc furnace that is expected to occur during the third and fourth quarters of 2005.  The new furnace installation is expected to take 45 days, during which time both furnaces at RMSM will not be operating.  The Company anticipates that year end inventories will be approximately $210 million.

          On July 15, 2002, the Company issued $305.0 million of 10% First Mortgage Notes due 2009 (“10% Notes”) at a discount of 98.772% and an interest rate of 10.0%.  Interest is payable on January 15 and July 15 of each year. The 10% Notes are secured by a lien on substantially all of the property, plant and equipment, and certain other assets of the Company (exclusive of CPC and OFP), excluding accounts receivable, inventory, and certain other assets.  The Indenture under which the 10% Notes were issued contains restrictions (except for CPC and OFP) on new indebtedness and various types of disbursements, including dividends, based on the cumulative amount of the Company’s net income, as defined. New CF&I and CF&I (collectively, the “Guarantors”) guarantee the obligations of the 10% Notes, and those guarantees are secured by a lien on substantially all of the property, plant and equipment and certain other assets of the Guarantors, excluding accounts receivable, inventory, and certain other assets.  At any time on or after July 15, 2006, the 10% Notes will be redeemable at the option of the Company, in whole or in part at a set range of redemption prices.  If redeemed during the twelve-month period beginning July 15, 2006 the price is 105% of the principal amount, plus accrued and unpaid interest and any liquidated damages, as defined.  The redemption price adjusts to 102.5% and 100%, respectively, for the two subsequent twelve-month periods.

          On March 29, 2000, OFP entered into a seven-year $14.0 million loan agreement for the purchase of certain processing assets and for the construction of a processing facility.  Amounts outstanding under the loan agreement bear interest based on the LIBOR rate plus a margin ranging from 1.25% to 3.00%, and as of June 30, 2005, there was $7.1 million of principal outstanding of which $2.0 million was classified as current. The loan is secured by all the assets of OFP. The loan agreement contains various restrictive covenants including a minimum tangible net worth amount, a minimum debt service coverage ratio, and a specified amount of insurance coverage. Principal payments required on the loan are $0.5 million per quarter but can be accelerated for excess cash flows, as defined. Excess cash flows generated in 2004 resulted in $0.4 million of additional principal payments paid in 2005.  The creditors of OFP have no recourse to the general credit of the Company.  Effective January 1, 2004, the Company included the OFP loan balance in the consolidated balance sheet as a result of the adoption of FIN 46R.  See Note 11 to the Consolidated Financial Statements, “Joint Venture and Adoption of FIN 46R – Consolidation of Variable Interest Entities.”

          On September 17, 2004, CPC entered into a ten-year loan agreement related to an undivided 50% interest as tenants in common in a warehouse under a co-tenancy agreement. CPC’s share of the debt is $3.5 million. Amounts outstanding under the loan agreement bear interest at a rate of 6.57%.  As of June 30, 2005, CPC’s share of the principal outstanding was $3.5 million of which $40,000 was classified as current. The loan is secured by the warehouse and contains various restrictive covenants on CPC including minimum income and cash flow requirements, a minimum debt service coverage amount and limitations on incurring new or additional debt obligations other than as allowed by the loan agreement.

          On March 29, 2005, the Company entered into a Letter of Credit Facility Agreement (“Credit Agreement”) with U.S. Bank National Association.  The Credit Agreement, as amended, provides for a maximum borrowing of $35.0 million for the sole purpose of issuing letters of credit and terminates on March 29, 2006.  Under the Credit Agreement, the Company agrees to pay an issuance fee of the greater of $100 or the face amount of a letter of credit multiplied by 0.125% and a fee, payable quarterly in arrears, at a rate of 0.50% per annum of the average aggregate undrawn face amount of all outstanding letters of credit during the preceding calendar quarter.  The Credit Agreement contains certain customary covenants for credit facilities of this type, such as provisions regarding compliance with laws, taxes, notice to issuers and financial information and will be secured by restricted cash.  As of June 30, 2005, the Company had $23.3 million of restricted cash as collateral supporting $22.1 million of letters of credit associated with the Credit Agreement.

39

          Camrose maintains a CDN $15.0 million revolving credit facility with a Canadian bank, the proceeds of which may be used for working capital and general business purposes of Camrose. Amounts under the facility bear interest based on the prime rate.  The facility is collateralized by substantially all of the assets of Camrose, and borrowings under this facility are limited to an amount equal to the sum of the product of specified advance rates and Camrose’s eligible trade accounts receivable and inventories. The credit facility contains various restrictive covenants including a minimum tangible net worth amount. This facility expires in September 2006. At June 30, 2005, there were no restricted amounts for outstanding letters of credit.  Camrose has subsequently agreed to amendments to its existing loan agreement with the Canadian bank to include a temporary credit facility for an additional CDN $15.0 million.  Any amounts drawn on the temporary credit facility will bear interest at the prime rate and will have to be repaid in the third quarter of 2005.  All other terms of the temporary credit facility are consistent with the original credit facility.  As of June 30, 2005, the interest rate of this facility was 4.25%.  Camrose pays annual commitment fees of up to 0.25% of the unused portion of the credit line.  At June 30, 2005, there was a $15.4 million outstanding balance due under the credit facility. 

          As of June 30, 2005, principal payments on debt are due as follows (in thousands):

2005	$	8,294
2006		10,202
2007		4,122
2008		48
2009		303,051
2010		55
2011 and thereafter		3,261
	$	329,033

          Due to the favorable net results for the first three and six months of 2005, the Company has been able to satisfy its needs for working capital and capital expenditures through operations and, in part, through its available cash on hand.  The Company believes that its anticipated needs for working capital and capital expenditures for the next twelve months will be met from cash on hand and from funds generated from operations.

Off Balance Sheet Arrangements

          Information on the Company’s off balance sheet arrangements is disclosed in the contractual obligations table of the Company’s 2004 Form 10-K.

Item 3.          Quantitative and Qualitative Disclosures About Market Risk

          No material changes.

Item 4.          Controls and Procedures

Evaluation of Disclosure Controls and Procedures

          As of June 30, 2005, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and the Company’s Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures.  Based on the evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. 

40

Changes in Internal Control over Financial Reporting

          There has been no change in our internal control over financial reporting that occurred during the three and six months ended June 30, 2005, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II.   OTHER INFORMATION

Item 1.          Legal Proceedings

          See Note 10 to the Company’s Consolidated Financial Statements, “Contingencies,” for a discussion of the status of (a) the environmental issues at the Portland mill and RMSM, and (b) the settlement of the labor dispute at RMSM.

          The Company is a party to various other claims, disputes, legal actions and other proceedings involving contracts, employment and various other matters.  In the opinion of management, the outcome of these matters should not have a material adverse effect on the consolidated financial condition of the Company.

          The Company maintains insurance against various risks, including certain types of tort liability arising from the sale of its products. The Company does not maintain insurance against liability arising out of waste disposal, on-site remediation of environmental contamination or earthquake damage to its Napa pipe mill and related properties because of the high cost of that coverage.  In addition, our per claim deductible for workers’ compensation claims is $1 million due to the high cost of maintaining such insurance with a lower deductible.  There is no assurance that the insurance coverage carried by the Company will be available in the future at reasonable rates, if at all.

Item 4.          Submission of Matters to a Vote of Security Holders

          The Company held its Annual Meeting of Stockholders on April 28, 2005.

          The stockholders elected Harry Demorest, Stephen Reynolds and William Swindells as Class B directors, to serve until 2008.  All Class A and Class C directors continued in office after the meeting.  Demorest, Reynolds and Swindells were elected by a vote of 30,474,422 shares, 30,925,109 shares and 30,842,006 shares, respectively, and 1,074,279 shares, 623,592 shares and 706,695 shares, respectively, withheld authority to vote. 

          The stockholders also voted on a proposal to approve the Oregon Steel Mills, Inc. 2005 Long-Term Incentive Plan.  The proposal was approved with a vote of 19,968,212 shares for, 2,600,970 shares against, 1,130,778 shares abstaining and 11,728,628 shares subject to broker non-votes.            

Item 6.          Exhibits

3.1	Bylaws of the Company (as amended and restated).
10.1**	2005 Long-Term Incentive Plan.
10.2**	2005 Program for Executive Officers and Key Employees Under the 2005 Long-Term Incentive Plan.
10.3**	2005 Non-Employee Director Equity Compensation Program Under the 2005 Long-Term Incentive Plan.
10.4	First Amendment to Letter of Credit Facility Agreement, dated as of June 15, 2005, between the Company and U.S. Bank National Association.
31.1	Certification of Chief Executive Officer required by Rules 13a-14(a) and 15d-14(a) as promulgated by the  Securities and Exchange Commission and pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer required by Rules 13a-14(a) and 15d-14(a) as promulgated by the Securities and Exchange Commission and pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

** Management contract or compensatory plan

41

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:  August 9, 2005	/s/ ROBIN A. GANTT
	Robin A. Gantt
	Corporate Controller
	(Principal Accounting Officer)

42

OREGON STEEL MILLS, INC.

Exhibit Index

LIST OF EXHIBITS FILED WITH FORM 10-Q FOR THE PERIOD
ENDED JUNE 30, 2005

3.1	Bylaws of the Company (as amended and restated).
10.1**	2005 Long-Term Incentive Plan.
10.2**	2005 Program for Executive Officers and Key Employees Under the 2005 Long-Term Incentive Plan.
10.3**	2005 Non-Employee Director Equity Compensation Program Under the 2005 Long-Term Incentive Plan.
10.4	First Amendment to Letter of Credit Facility Agreement, dated as of June 15, 2005, between the Company and U.S. Bank National Association.
31.1	Certification of Chief Executive Officer required by Rules 13a-14(a) and 15d-14(a) as promulgated by the  Securities and Exchange Commission and pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer required by Rules 13a-14(a) and 15d-14(a) as promulgated by the Securities and Exchange Commission and pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

** Management contract or compensatory plan

43

EX-3.1

Exhibit 3.1

                            OREGON STEEL MILLS, INC.
                                     BYLAWS
                   (as amended and restated on April 28, 2005)

                                    ARTICLE 1
                                     OFFICES

1.1  Registered Office. The registered office of the corporation in the State of
Delaware shall be in the City of Wilmington, County of New Castle.

1.2  Other Offices. The corporation shall also have and maintain an office or
principal place of business at 1000 SW Broadway, Suite 2200, Portland, Oregon,
and may also have offices at such other places, both within and without the
State of Delaware, as the Board of Directors may from time to time determine or
the business of the corporation may require.

                                   ARTICLE 2
                             STOCKHOLDERS' MEETINGS

2.1  Annual Meeting. The annual meetings of the stockholders of the corporation
for the purpose of election of directors and for such other business as may
lawfully come before it, shall be held on such date and at such time as may be
designated from time to time by the Board of Directors.

2.2  Business To Be Conducted at Annual Meeting. At an annual meeting of
stockholders, only such business shall be conducted as shall have been brought
before the meeting (a) pursuant to the corporation's notice of the meeting, (b)
by or at the direction of the Board (or any duly organized committee thereof),
or (c) by any stockholder of the corporation who is a stockholder of record on
the date of giving of the notice provided for in this Section 2.2 and on the
record date for the determination of stockholders entitled to vote at such
meeting and who has complied with the notice procedures set forth in this
Section 2.2.

     2.2.1  In addition to any other applicable requirements, including but not
     limited to rules promulgated by the Securities and Exchange Commission, for
     business to be properly brought before an annual meeting by a stockholder,
     such business must be a proper matter for stockholder action under the
     general corporation law of the state of Delaware and the proposing
     stockholder must have given timely notice in proper written form to the
     Secretary, which notice is not withdrawn by such stockholder at or prior to
     such annual meeting.

     2.2.2  To be timely, a stockholder's notice must be received by the
     Secretary at the principal executive offices of the corporation, not less
     than 120 days nor more than 150 days prior to the first anniversary date of
     the proxy statement for the preceding year's annual meeting of
     stockholders; provided, however, that in the event that the annual meeting
     is called for a date that is not within 30 days before or after the
     anniversary date of the previous year's annual meeting, notice by the
     stockholder in order to be timely must be received not less than a
     reasonable time, as determined by the Board of Directors, prior to the date
     of the annual meeting.

                                                                    Page 1 of 23


     2.2.3  To be in proper written form, such stockholder's notice must set
     forth as to each matter the stockholder proposes to bring before the annual
     meeting (a) a brief description of the business desired to be brought
     before the annual meeting and the reasons for conducting such business at
     such meeting; (b) the name and address, as they appear on the corporation's
     books, of the stockholder proposing such business, and the name and address
     of the beneficial owner, if any, on whose behalf the proposal is made; (c)
     the class, series and the number of shares of the corporation's stock which
     are beneficially owned by such stockholder, and the beneficial owner, if
     any, on whose behalf the proposal is made; (d) a description of all
     arrangements or understandings between such stockholder or beneficial owner
     and any other person or persons (including their names) in connection with
     the proposal of such business by such stockholder or beneficial owner and
     any material interest of the stockholder, and of the beneficial owner, if
     any, on whose behalf the proposal is made, in such business; and (e) a
     representation that such stockholder or beneficial owner intends to appear
     in person or by proxy at the annual meeting to bring such business before
     the meeting.

     2.2.4  Notwithstanding anything in these Bylaws to the contrary, no
     business shall be conducted at an annual meeting except in accordance with
     the procedures set forth in this Section 2.2. The Board of Directors will
     determine, in its sole discretion, whether a stockholder has complied with
     the provisions of this Section 2.2.

2.3  Nomination of Directors. Only persons who are nominated in accordance with
the following procedures shall be eligible for election as directors of the
corporation, except as may be otherwise expressly provided in the Restated
Certificate of Incorporation of the corporation with respect to the right of
holders of preferred stock of the corporation to nominate and elect a specified
number of directors in certain circumstances. Nominations of persons for
election to the Board may be made at any annual meeting of stockholder: (a) by
or at the direction of the Board (or any duly authorized committee thereof) or
(b) by any stockholder of the corporation who is a stockholder of record on the
date of the giving of the notice provided for in this Section 2.3 and on the
record date for the determination of stockholders entitled to vote at such
meeting and who complies with the notice procedures set forth in this Section
2.3.

     2.3.1  In addition to any other applicable requirements, for a nomination
     to be made by a stockholder, such stockholder must have given timely notice
     thereof in proper written form to the Secretary of the corporation.

     2.3.2  To be timely, a stockholder's notice must be received by the
     Secretary at the principal executive offices of the corporation, not less
     than 120 days nor more than 150 days prior to the first anniversary date of
     the proxy statement for the preceding year's annual meeting of
     stockholders; provided, however, that in the event that the annual meeting
     is called for a date that is not within 30 days

                                                                    Page 2 of 23


     before or after the anniversary date of the previous year's annual meeting,
     notice by the stockholder in order to be timely must be received not less
     than a reasonable time, as determined by the Board of Directors, prior to
     the date of the annual meeting.

     2.3.3  To be in proper written form, a stockholder's notice to the
     Secretary must set forth (a) as to each person whom the stockholder
     proposes to nominate for election as a director (A) the name, age, business
     address and residence address of the person, (B) the principal occupation
     or employment of the person, (C) the class, series and the number of shares
     of capital stock of the corporation which are owned beneficially or of
     record by the person, and (D) any other information relating to the person
     that would be required to be disclosed in a proxy statement or other
     filings required to be made in connection with solicitations of proxies for
     election of directors pursuant to Section 14 of the Securities Exchange
     Act of 1934, as amended (the "Exchange Act"), and the rules and regulations
     promulgated thereunder; and (b) as to the stockholder giving the notice or
     the beneficial owner on whose behalf the nomination is made, (A) the name
     and address of such stockholder as they appear on the corporation's books,
     (B) the class or series and the number of shares of the corporation's stock
     which are beneficially owned by such stockholder or beneficial owner, (C) a
     description of all arrangements or understandings between such stockholder
     or beneficial owner and each proposed nominee and any other person or
     persons (including their names) pursuant to which the nomination(s) are to
     be made by such stockholder or beneficial owner, (D) a representation that
     such stockholder or beneficial owner intends to appear in person or by
     proxy at the meeting to nominate the persons named in its notice, and (E)
     any other information relating to such stockholder or beneficial owner that
     would be required to be disclosed in a proxy statement or other filings
     required to be made in connection with solicitations of proxies for
     election of directors pursuant to Section 14 of the Exchange Act and the
     rules and regulations promulgated thereunder. Such notice must be
     accompanied by a written consent of each proposed nominee to being named as
     a nominee and to serve as a director if elected.

     2.3.4  No person shall be eligible for election as a director of the
     corporation unless nominated in accordance with the procedures set forth in
     this Section 2.3. The Board of Directors will determine, in its sole
     discretion, whether a stockholder has complied with the provisions of this
     Section 2.3.

2.4  Rules of Conduct. The Board of Directors of the corporation shall be
entitled to make such rules or regulations for the conduct of meetings of
stockholders as it shall deem necessary, appropriate or convenient. Subject to
such rules and regulations of the Board, if any, the chairman of the meeting
shall have the right and authority to prescribe such rules, regulations and
procedures and to do all such acts as, in the judgment of such chairman, are
necessary, appropriate or convenient for the proper conduct of the meeting,
including, without limitation, establishing an agenda or order of business for
the meeting, rules and procedures for maintaining order at the meeting and the
safety of those present, limitations on participation in such meeting to
stockholders of record of the corporation and their duly authorized and
constituted proxies, and such other persons as the chairman shall permit,
restrictions on entry to the

                                                                    Page 3 of 23


meeting after the time fixed for the commencement thereof, limitations on the
time allotted to questions or comments by participants and regulation of the
opening and closing of the polls for balloting on matters which are to be voted
on by ballot. Unless, and to the extent, determined by the Board or the chairman
of the meeting, meetings of stockholders shall not be required to be held in
accordance with rules of parliamentary procedure.

2.5  Special Meeting. Special meetings of the stockholders may be called, for
any purpose or purposes, by the Chairman of the Board, the President, the Board
of Directors or one or more stockholders holding not less than one-fifth of the
voting power of the corporation.

2.6  Place of Meetings.

     2.6.1  Meetings of the stockholders of the corporation shall be held at
     such place, either within or without the State of Delaware, as may be
     designated from time to time by the Board of Directors or if not so
     designated, then at the office of the corporation required to be maintained
     pursuant to Section 1.2.

     2.6.2  The Board of Directors may, in its sole discretion, determine that
     the meeting shall not be held at any place, but may instead be held solely
     by means of remote communication in accordance with Section 211(a)(2) of
     the Delaware General Corporation Law. If authorized by the Board of
     Directors in its sole discretion, and subject to such guidelines and
     procedures as the Board of Directors may adopt, stockholders and
     proxyholders not physically present at a meeting of stockholders may, by
     means of remote communication: (a) participate in a meeting of
     stockholders; and (b) be deemed present in person and vote at a meeting of
     stockholders whether such meeting is to be held at a designated place or
     solely by means of remote communication, provided that (i) the corporation
     shall implement reasonable measures to verify that each person deemed
     present and permitted to vote at the meeting by means of remote
     communication is a stockholder or proxyholder; (ii) the corporation shall
     implement reasonable measures to provide such stockholders and proxyholders
     a reasonable opportunity to participate in the meeting and to vote on
     matters submitted to the stockholders, including an opportunity to read or
     hear the proceedings of the meeting substantially concurrently with such
     proceedings; and (iii) if any stockholder or proxyholder votes or takes
     other action at the meeting by means of remote communication, a record of
     such vote or other action shall be maintained by the corporation.

2.7  Notice of Meetings.

     2.7.1  Whenever stockholders are required or permitted to take any action
     at a meeting, a written notice (as the term "written" is defined in Section
     9.6 of these Bylaws) of the meeting of stockholders shall be given which
     shall state the place, if any, date and hour of the meeting, the means of
     remote communications, if any, by which stockholders and proxyholders may
     be deemed to be present in person and vote at such meeting, and, in the
     case of a special meeting, the purpose or purposes for which the meeting is
     called. Unless otherwise provided by law or the Restated Certificate of
     Incorporation, the written notice shall be given not less than 10 nor more
     than 60 days before the date of the meeting to

                                                                    Page 4 of 23


     each stockholder entitled to vote at such meeting, directed to the
     stockholder in accordance with the procedures set forth in Article 8 of
     these Bylaws. Notice shall be deemed to have been given to all stockholders
     of record who share an address if notice is given in accordance with the
     "householding" rules set forth in Rule 14a-3(e) under the Exchange Act.

     2.7.2  If at any meeting action is proposed to be taken which, if taken,
     would entitle stockholders fulfilling the requirements of Section 262(d) of
     the Delaware General Corporation Law to an appraisal of the fair value of
     their shares, the notice of such meeting shall contain a statement of that
     purpose and to that effect and shall be accompanied by a copy of that
     statutory section.

     2.7.3  When a meeting is adjourned to another time or place, notice need
     not be given of the adjourned meeting if the time and place, if any,
     thereof, and the means of remote communications, if any, by which
     stockholders and proxyholders may be deemed to be present in person and
     vote at such adjourned meeting are announced at the meeting at which the
     adjournment is taken unless the adjournment is for more than 30 days, or
     unless after the adjournment a new record date is fixed for the adjourned
     meeting, in which event a notice of the adjourned meeting shall be given to
     each stockholder of record entitled to vote at the meeting.

2.8  Quorum and Voting.

     2.8.1  Except where otherwise provided by law, the Restated Certificate of
     Incorporation, or these Bylaws, a majority of the shares entitled to vote,
     present in person or represented by proxy, shall constitute a quorum for
     the transaction of business at a meeting of stockholders. In the absence of
     a quorum, any meeting of stockholders may be adjourned, from time to time,
     by vote of the holders of a majority of the shares represented at the
     meeting, but no other business shall be transacted at such meeting. At such
     adjourned meeting at which a quorum is present or represented, any business
     may be transacted which might have been transacted at the original meeting.
     The stockholders present at a duly called or convened meeting, at which a
     quorum is present, may continue to transact business until adjournment,
     notwithstanding the withdrawal of enough stockholders to leave less than a
     quorum.

     2.8.2  Except as otherwise provided by law, the Restated Certificate of
     Incorporation or these Bylaw, the affirmative vote of the majority of
     shares present in person or represented by proxy at the meeting and
     entitled to vote on the subject matter shall be the act of the
     stockholders.

2.9  Proxies.

     2.9.1  Each stockholder entitled to vote at a meeting of stockholders or to
     express consent or dissent to corporate action in writing without a meeting
     may authorize another person or persons to act for such stockholder by
     proxy, but no such proxy shall be voted or acted upon after three years
     from its date, unless the proxy provides for a longer period.

                                                                    Page 5 of 23


     2.9.2  All proxies shall be in writing, executed by the person entitled to
     vote or by the person's duly authorized agent and filed with the Secretary
     of the corporation at or before the meeting at which it is to be used.

     2.9.3  Unless and until voted, every proxy shall be revocable at the
     pleasure of the person who executed it or of the stockholder's legal
     representatives or assigns, except in those cases where an irrevocable
     proxy permitted by statute has been given. A stockholder may revoke a proxy
     by (a) written notice of such revocation to the Secretary of the
     corporation; (b) a later dated proxy is filed with the Secretary of the
     corporation; or (c) attending the meeting and voting in person (attendance
     at the meeting will not by itself revoke the proxy).

2.10 Voting Rights.

     2.10.1  Except as otherwise provided by law, only persons in whose names
     shares entitled to vote stand on the stock records of the corporation on
     the record date for determining the stockholders entitled to vote at such
     meeting shall be entitled to vote at such meeting. Shares standing in the
     names of two or more person shall be voted or represented in accordance
     with the determination of the majority of such persons, or, if only one of
     such persons is present in person or represented by proxy, such person
     shall have the right to vote such shares and such shares shall be deemed to
     be represented for the purpose of determining a quorum.

     2.10.2  Upon the demand of any stockholder made before the voting begins,
     the election of directors shall be by ballot.

2.11 Voting Procedures and Inspectors of Elections.

     2.11.1  The corporation shall, in advance of any meeting of stockholders,
     appoint one or more inspectors to act at the meeting and make a written
     report thereof. The corporation may designate one or more persons as
     alternate inspectors to replace any inspector who fails to act. If no
     inspector or alternate is able to act at a meeting of stockholders, the
     person presiding at the meeting shall appoint one or more inspectors to act
     at the meeting. Each inspector, before entering upon the discharge of the
     duties, shall take and sign an oath faithfully to execute the duties of
     inspector with strict impartiality and according to the best of such
     inspector's ability.

     2.11.2  The inspectors shall (i) ascertain the number of shares outstanding
     and the voting power of each, (ii) determine the shares represented at a
     meeting and the validity of proxies and ballots, (iii) count all votes and
     ballots, (iv) determine and retain for a reasonable period a record of the
     disposition of any challenges made to any determination by the inspectors,
     and (v) certify their determination of the number of shares represented at
     the meeting, and their count of all votes and ballots. The inspectors may
     appoint or retain other persons or entities to assist the inspectors in the
     performance of the duties of the inspectors.

     2.11.3  The date and time of the opening and the closing of the polls for
     each matter upon which the stockholders will vote at a meeting shall be
     announced at the meeting. No ballot, proxies or votes, nor any revocations
     thereof or changes thereto, shall be accepted by the inspectors after the
     closing of the polls unless the Court of Chancery upon application by a
     stockholder shall determine otherwise.

                                                                    Page 6 of 23


     2.11.4  In determining the validity and counting of proxies and ballots,
     the inspectors shall be limited to an examination of the proxies, any
     envelopes submitted with those proxies, any information provided in
     accordance with Section 212(c)(2) of the Delaware General Corporation Law,
     ballots and the regular books and records of the corporation, except that
     the inspectors may consider other reliable information for the limited
     purpose of reconciling proxies and ballots submitted by or on behalf of
     banks, brokers, their nominees or similar persons which represent more
     votes than the holder of a proxy is authorized by the record owner to cast
     or more votes than the stockholder holds of record. If the inspectors
     consider other reliable information for the limited purpose permitted
     herein, the inspectors at the time they make their certification pursuant
     to Section 2.11.2(v) shall specify the precise information considered by
     them including the person or persons from whom they obtained the
     information, when the information was obtained, the means by which the
     information was obtained and the basis for the inspectors' belief that such
     information is accurate and reliable.

2.12 Confidential Voting. All proxies, ballots, consents, and voting tabulations
that identify the vote of a particular stockholder or benefit plan participant
will be held in confidence by the independent tabulators and by the inspectors
of election and will not be disclosed to any other person, including the
corporation and its directors, officers, and employees, except as follows:

     (a)  as necessary to meet legal requirements or to pursue or defend legal
          or regulatory actions; or

     (b)  to allow the inspectors of election to certify the results of the
          vote; or

     (c)  when expressly authorized by a stockholder or benefit plan
          participant; or

     (d)  in the event of a contested election for the Board of Directors or
          contested proxy/consent solicitation; or

     (e)  if a bona fide dispute exists regarding the authenticity of any proxy
          card or ballot or the accuracy of any tabulation of votes. However,
          the disclosure of any comments or other information written on any
          proxy card, consent or ballot without reference to the vote of the
          stockholder is permitted, except where such vote is included in, and
          necessary to an understanding of, such written material.

     (f)  This Section 2.12 may only be amended or repealed by the approval of
          the holders of a majority of votes cast at any duly called meeting
          where the matter is considered.

2.13 List of Stockholders. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least 10 days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, showing the address of and the number
of shares registered in the name of each stockholder. Nothing in this Section
2.13 shall require the corporation to include electronic mail addresses or other
electronic contact

                                                                    Page 7 of 23


information on such list. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, for a period of at least 10
days prior to the meeting: (a) on a reasonably accessible electronic network,
provided that the information required to gain access to such list is provided
with the notice of the meeting, or (b) during ordinary business hours, at the
principal place of business of the corporation. In the event that the
corporation determines to make the list available on an electronic network, the
corporation may take reasonable steps to ensure that such information is
available only to stockholders of the corporation. If the meeting is to be held
at a place, then the list shall be produced and kept at the time and place of
meeting during the whole time thereof, and may be inspected by any stockholder
who is present. If the meeting is to be held solely by means of remote
communication, then the list shall also be open to the examination of any
stockholder during the whole time of the meeting on a reasonably accessible
electronic network, and the information required to access such list shall be
provided with the notice of the meeting.

2.14 Action Without Meeting.

     2.14.1  Unless otherwise provided in the Restated Certificate of
     Incorporation, any action required by Delaware General Corporation Law to
     be taken at any annual or special meeting of stockholders of the
     corporation, or any action which may be taken at any annual or special
     meeting of such stockholders, may be taken without a meeting, without prior
     notice and without a vote, if a consent or consents in writing, setting
     forth the action so taken, are signed by the holders of outstanding stock
     having not less than the minimum number of votes that would be necessary to
     authorize or take such action at a meeting at which all shares entitled to
     vote thereon were present and voted. To be effective, a written consent
     must be delivered to the corporation by delivery to its registered office
     in Delaware, its principal place of business, or an officer or agent of the
     corporation having custody of the book in which proceedings of meetings of
     stockholders are recorded. Delivery made to the corporation's registered
     office shall be by hand or by certified or registered mail, return receipt
     requested. Every written consent shall bear the date of signature of each
     stockholder who signs the consent and no written consent shall be effective
     to take the corporate action referred to therein unless, within 60 days of
     the earliest dated consent delivered in the manner required by this Section
     2.14 to the corporation, written consents signed by a sufficient number of
     holders to take action are delivered to the corporation in accordance with
     this Section 2.14.

     2.14.2  A telegram, cablegram or other electronic transmission consenting
     to an action to be taken and transmitted by a stockholder or proxyholder,
     or by a person or persons authorized to act for a stockholder or
     proxyholder, shall be deemed to be written, signed and dated for the
     purposes of this Section 2.14, provided that any such telegram, cablegram
     or other electronic transmission sets forth or is delivered with
     information from which the corporation can determine (a) that the telegram,
     cablegram or other electronic transmission was transmitted by the
     stockholder or proxyholder or by a person or persons authorized to act for
     the stockholder or proxyholder, and (b) the date on which such stockholder
     or proxyholder or authorized person or persons transmitted such telegram,
     cablegram or electronic transmission. The date on which such telegram,
     cablegram or electronic transmission is transmitted shall be deemed to

                                                                    Page 8 of 23


     be the date on which such consent was signed. Except to the extent and in
     the manner authorized by the Board of Directors, no consent given by
     telegram, cablegram or other electronic transmission shall be deemed to
     have been delivered until such consent is reproduced in paper form and
     until such paper form shall be delivered to the corporation by delivery to
     its registered office in Delaware, its principal place of business or an
     officer or agent of the corporation having custody of the book in which
     proceedings of meetings of stockholders are recorded. Delivery made to the
     corporation's registered office shall be made by hand or by certified or
     registered mail, return receipt requested.

     2.14.3  Any copy, facsimile or other reliable reproduction of a consent in
     writing may be substituted or used in lieu of the original writing for any
     and all purposes for which the original writing could be used, provided
     that such copy, facsimile or other reproduction shall be a complete
     reproduction of the entire original writing.

     2.14.4  Prompt notice of the taking of the corporate action without a
     meeting by less than unanimous written consent shall be given to those
     stockholders who have not consented in writing and who, if the action had
     been taken at a meeting, would have been entitled to notice of the meeting
     if the record date of such meeting had been the date that written consents
     signed by a sufficient number of stockholders to take the action were
     delivered to the corporation in the manner required by this Section 2.14.

2.15 Record Date. The Board of Directors may fix a time in the future as a
record date for the determination of the stockholders entitled to notice of and
to vote at any meeting of stockholders or entitled to receive any dividend or
distribution, or any allotment of rights, or to exercise rights in respect to
any change, conversion, or exchange of shares. If no record date is fixed by the
Board of Directors, the record date for determining stockholders entitled to (a)
notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held; (b) consent to corporate action in writing without a
meeting, when no prior action by the Board of Directors is required, shall be
the first date on which a signed written consent setting forth the action taken
or proposed to be taken is delivered to the corporation by delivery to its
registered office in Delaware, its principal place of business, or an officer or
agent of the corporation having custody of the book in which proceedings of
meetings of stockholders are recorded; (c) consent to corporate action in
writing without a meeting, when prior action by the Board of Directors is
required, shall be at the close of business on the day on which the Board of
Directors adopts the resolution taking such prior action; and (d) receive
payment of any dividend or other distribution or allotment of any rights or the
stockholders entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other lawful action,
shall be at the close of business on the day on which the Board of Directors
adopts the resolution relating thereto. In no event shall a record date be fixed
which is more than 60 days nor less than 10 days prior to the date of the
meeting or event for the purpose for which it is fixed. When a record date is so
fixed, only stockholders of record on that date are entitled to notice of and to
vote at the meeting or to receive the dividend, distribution, or allotment of
rights, or to exercise the rights, as the case may be, notwithstanding any
transfer of any shares on the books of the corporation after the record date.

                                                                    Page 9 of 23


2.16 Stockholders of Record. The corporation shall be entitled to treat the
holder of record of any share or shares as the holder in fact thereof, and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person whether or not
it shall have express or other notice thereof, except as otherwise provided by
the laws of Delaware.

                                   ARTICLE 3
                               BOARD OF DIRECTORS

3.1  Number and Term of Office. The number of directors constituting the entire
Board of Directors shall be not less than three (3) nor more than twelve (12) as
fixed from time to time by vote of a majority of the entire Board, provided,
however, that the number of directors shall not be reduced so as to shorten the
term of any director. In accordance with the Restated Certificate of
Incorporation, each director shall be elected to a class. Except as provided in
Section 3.3, the directors up for election at the meeting shall be elected by a
plurality vote of the shares represented in person or by proxy, at the
stockholders annual meeting and entitled to vote on the election of directors.
Each director shall hold office until the director's successor is elected and
qualified or until such director's earlier resignation or removal. Directors
need not be stockholders.

3.2  Powers. Except as may be otherwise provided in the Delaware General
Corporation Law or in the Restated Certificate of Incorporation, the business
and affairs of the corporation shall be managed by or under the direction of the
Board of Directors.

3.3  Vacancies -- Newly Created Directorships. Vacancies and newly created
directorships resulting from any increase in the authorized number of directors
may be filled by a majority of the directors then in office, although less than
a quorum, or by a sole remaining director. A vacancy in the Board of Directors
shall be deemed to exist under this Section 3.3 in the case of death, removal or
resignation of any director. Any directors chosen under this Section 3.3 shall
hold office until the next election of the class for which such directors shall
have been chosen, and until their successors shall be elected and qualified.

3.4  Removal. A director may only be removed from office for cause by: (a) a
vote of stockholders holding a majority of the outstanding shares entitled to
vote at an election of directors; or (b) the Board of Directors. In case any one
or more directors be so removed, new directors may be elected by the
stockholders at the same meeting or appointed by the Board of Directors.

3.5  Resignation. Any director may resign at any time upon notice given in
writing or by electronic transmission to the Secretary, such resignation to
specify whether it will be effective at a particular time, upon receipt by the
Secretary or at the pleasure of the Board of Directors. If no such specification
is made, it shall be deemed effective at the pleasure of the Board of Directors.
When one or more directors shall resign from the

                                                                   Page 10 of 23


Board, effective at a future date, a majority of the directors then in office,
including those who have so resigned, shall have power to fill such vacancy or
vacancies, the vote thereon to take effect when such resignation or resignations
shall become effective, and each director so chosen shall hold office for the
unexpired portion of the term of the director whose place shall be vacated and
until the person's successor shall have been duly elected and qualified. The
acceptance of a resignation shall not be required to make it effective.

3.6  Fees and Compensation. Directors shall not receive any stated salaries for
their services, but, by resolution of the Board of Directors, a fixed fee, with
or without expense of attendance, may be allowed for attendance at each meeting
and at each meeting of any committee of the Board of Directors. Nothing herein
contained shall be construed to preclude any director from serving the
corporation in any other capacity as an officer, agent, employee, or otherwise,
and receiving compensation therefor.

3.7  Committees.

     3.7.1  Executive Committee: The Board of Directors may appoint an Executive
     Committee of not less than one member, each of whom shall be a director.
     The Executive Committee, to the extent permitted by Delaware law, these
     Bylaws, an executive committee charter or other resolutions of the Board of
     Directors, shall have and may exercise when the Board of Directors is not
     in session all powers of the Board of Directors in the management of the
     business and affairs of the corporation, including, without limitation, the
     power and authority to declare a dividend or to authorize the issuance of
     stock, except such committee shall not have the power or authority to (a)
     approve or adopt, or recommend to the corporation's stockholders, any
     action or matter expressly required by the Delaware General Corporation Law
     to be submitted to stockholders for approval, or (b) adopt, amend or repeal
     any bylaw of the corporation.

     3.7.2  Other Committees: The Board of Directors may appoint such other
     committees as may be permitted by law. Such other committees appointed by
     the Board of Directors shall have such powers and perform such duties as
     may be prescribed by the charters or resolution or resolutions creating
     such committee, but in no event shall any such committee have the powers
     denied to the Executive Committee in these Bylaws.

     3.7.3  Term: The members of all committees of the Board of Directors shall
     be appointed at the annual meeting of directors following the annual
     meeting of stockholders and shall serve a term until the next annual
     meeting of directors. The Board, subject to the provisions of Sections
     3.7.1 and 3.7.2, may at any time increase or decrease the number of members
     of a committee or terminate the existence of a committee; provided, that no
     committee shall consist of less than one member. The membership of a
     committee member shall terminate on the date of such director's death or
     voluntary resignation, but the Board may at any time for any reason remove
     any individual committee member and the Board may fill any committee
     vacancy created by death, resignation, removal or increase in the number of
     members of the committee. The Board of Directors may designate one or more
     directors as alternate members of any committee, who may replace any absent
     or disqualified member at any meeting of the committee, and, in addition,
     in the absence or disqualification of any member of

                                                                   Page 11 of 23


     a committee, the member or members thereof present at any meeting and not
     disqualified from voting, whether or not the member or members constitutes
     a quorum, may unanimously appoint another member of the Board of Directors
     to act at the meeting in the place of any such absent or disqualified
     member.

     3.7.4  Meetings: Unless the Board of Directors shall otherwise provide,
     regular meetings of the Executive Committee or any other committee
     appointed pursuant to this Section 3.7 shall be held at such times and
     places as are determined by the Board of Directors, or by any such
     committee, and when notice thereof has been given to each member of such
     committee, no further notice of such regular meetings need be given
     thereafter; special meetings of any such committee may be held at the
     principal office of the corporation required to be maintained pursuant to
     Section 1.2, or at any place which has been designated from time to time by
     resolution of such committee or by written consent of all members thereof,
     and may be called by any director who is a member of such committee, upon
     written notice to the members of such committee of the time and place of
     such special meeting given in the manner provided for the giving of written
     notice to members of the Board of Directors of the time and place of
     special meetings of the Board of Directors. Notice of any special meeting
     of any committee may be waived in writing at any time before or after the
     meeting. A majority of the authorized number of members of any such
     committee shall constitute a quorum for the transaction of business, and
     the act of a majority of those present at any meeting at which a quorum is
     present shall be the act of such committee.

3.8  Declaration of Dividends. Subject to any applicable provisions of law or of
the Restated Certificate of Incorporation, dividends may be declared by the
Board of Directors in its sole and absolute discretion at any meeting. Dividends
may be paid in cash, in property or in shares of the capital stock of the
corporation.

3.9  Special Purpose Reserves. The Board of Directors, in its sole and absolute
discretion, may set apart out of any funds of the corporation available for
dividends a reserve or reserves for any proper purpose and may abolish any such
reserve.

3.10 Meetings.

     3.10.1  Annual Meeting: The annual meeting of directors shall be held
     immediately after the annual stockholders' meeting and such meeting shall
     be held for the purpose of electing officers and transacting such other
     business as may lawfully come before it. No notice of an annual meeting of
     the Board shall be necessary.

     3.10.2  Regular Meetings: Regular meetings of the Board of Directors may be
     held at such time designated by resolutions of the Board of Directors or
     the written consent of all directors. Regular meetings may be held without
     notice, provided that notice of any change in the time or place of any such
     meeting shall be sent to all of the directors.

     3.10.3  Special Meetings: Special meetings of the Board of Directors may be
     held at any time whenever called by the Chairman, President or any two of
     the directors. Notice of each special meeting shall be given to each
     director on not

                                                                   Page 12 of 23


     less than two days' written or oral notice, through any form of written or
     oral communication. If the address of a director is not shown on the
     records and is not readily ascertainable, such notice shall be addressed to
     the director at the place in which the meetings of the directors are
     regularly held. Neither the business to be transacted at, nor the purpose
     of, any special meeting of the Board of Directors need be specified in the
     notice of such meeting.

     3.10.4  Place of Meetings: The Board of Directors may hold its meetings at
     any place within or without the State of Delaware designated from time to
     time by resolution of the Board or by written consent of all the members of
     the Board. In the absence of such designation, meetings shall be held at
     the principal office of the corporation. Any regular or special meeting is
     valid wherever held if held upon written consent of all of the members of
     the Board of Directors, given either before or after the meeting and filed
     with the Secretary of the corporation.

3.11 Meeting Without Regular Call and Notice. The transactions of any meeting of
the Board of Directors, or any committee thereof, however called and noticed or
wherever held, are as valid as though had at a meeting duly held after regular
call and notice, if a quorum is present and if, either before or after the
meeting, each of the directors not present shall deliver to the corporation a
written waiver of notice, a consent to holding the meeting, or an approval of
the minutes thereof. All such waivers, consents, or approvals shall be filed
with the corporate records or made a part of the minutes of the meeting. Neither
the business to be transacted at, nor the purpose of, any regular or special
meeting of the Board of Directors need be specified in the waiver of notice of
such meeting.

3.12 Quorum. A quorum of the Board of Directors shall consist of a majority of
the exact number of directors fixed from time to time in accordance with Section
3.1, but not less than two; provided, however, at any meeting whether a quorum
be present or otherwise, a majority of the directors present may adjourn from
time to time until the time fixed for the next regular meeting of the Board of
Directors, without notice other than by announcement at the meeting. The vote of
a majority of the directors present at a meeting duly held at which a quorum is
present shall be the act of the Board of Directors, unless a greater number is
required by law, the Restated Certificate of Incorporation or these Bylaws.

3.13 Adjourned Meeting. In the absence of a quorum, a majority of the directors
present may adjourn from time to time but not later than the time fixed for the
next regular meeting of the Board. Notice of the time and place of holding an
adjourned meeting need not be given to the directors absent at the meeting which
was adjourned if the time and place of the adjourned meeting was fixed at the
meeting which was adjourned.

3.14 Action Without Meeting. Unless otherwise restricted by the Restated
Certificate of Incorporation or these Bylaws, any action required or permitted
to be taken by the Board of Directors, or of any committee thereof, may be taken
without a meeting, if all members of the Board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the board or committee. Such filing shall be in paper
form if the minutes are maintained in paper form or shall be in electronic form
if the minutes are maintained in electronic form.

                                                                   Page 13 of 23


3.15 Participation in Meetings by Telephone or Other Communications Equipment.
Unless otherwise restricted by the Restated Certificate of Incorporation or
these Bylaws, members of the Board of Directors, or any committee designated by
the Board of Directors, may participate in a meeting of such Board, or any
committee, by means of conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and such participation in a meeting shall constitute presence in person at the
meeting.

3.16 Reliance Upon Records. A member of the Board of Directors, or a member of
any committee designated by the Board of Directors, shall, in the performance of
such member's duties, be fully protected in relying in good faith upon the
records of the corporation and upon such information, opinions, reports or
statements presented to the corporation by any of the corporation's officers or
employees, or committees of the Board of Directors, or by any other person as to
matters the member reasonably believes are within such other person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the corporation.

                                    ARTICLE 4
                                    OFFICERS

4.1  Officers Designated. The officers of the corporation shall be a Chairman of
the Board of Directors who shall be a member of the Board of Directors, a
President, one or more Vice Presidents, a Chief Financial Officer, a Secretary,
and a Treasurer. The Board of Directors or the Chairman of the Board or the
President may also appoint one or more assistant secretaries, assistant
treasurers, and such other officers and agents with such powers and duties as
shall be deemed appropriate. Any one person may hold any number of offices of
the corporation at any one time unless specifically prohibited by law. The
salaries and compensation of the officers of the corporation shall be fixed by
or in the manner designated by the Board of Directors.

4.2  Tenure and Duties of Officers.

     4.2.1  General: All officers shall hold office at the pleasure of the Board
     of Directors and each officer shall hold office until such officer's
     successor is elected and qualified or until such officer's earlier
     resignation or removal. Any officer elected or appointed by the Board of
     Directors may be removed at any time by the Board of Directors. If the
     office of any officer becomes vacant for any reason, the vacancy may be
     filled by the Board of Directors. Nothing in these Bylaws shall be
     construed as creating any kind of contractual right to employment with the
     corporation.

     4.2.2  Duties of the Chairman of the Board of Directors: The Chairman of
     the Board of Directors shall preside at all meetings of the stockholders
     and the Board of Directors. The Chairman of the Board of Directors shall
     perform such other duties and have such other powers as the Board of
     Directors shall designate from time to time.

     4.2.3  Duties of President: The President shall be the chief executive
     officer of the corporation unless the Board of Directors designates some
     other officer to serve in such capacity. The President shall preside at all
     meetings of the stockholders

                                                                   Page 14 of 23


     and at all meetings of the Board of Directors, unless the Chairman of the
     Board of Directors has been appointed and is present. The President shall
     be ex officio a member of the executive and other committees, shall have
     general and active management of the business of the corporation, shall see
     that all orders and resolutions of the Board of Directors are carried into
     effect, and shall exercise such other powers and perform such other duties
     as shall be determined from time to time by the Board of Directors. If some
     officer other than the President is designated as the chief executive
     officer, the officer shall have all of the powers conferred upon the
     President by these Bylaws to the extent permitted by law, and, in the
     absence or disability of such other officer, the President shall perform
     and exercise the duties of chief executive officer. The President or any
     other officer designated by the Board of Directors at any time is
     authorized to vote, grant proxies or consents for, or represent all shares
     of other corporations standing in the name of this corporation and may
     exercise all rights incident to such shares on behalf of this corporation.

     4.2.3.1 In the event the President is absent or disabled, the Board of
     Directors shall promptly meet to confer the title, powers and duties of the
     President on another officer or officers. Until the Board of Directors
     takes such action, the Chief Financial Officer shall exercise all power and
     perform all the duties of the President.

     4.2.4  Duties of Vice Presidents: The Vice Presidents shall perform such
     other duties and have such other powers as the Board of Directors or the
     President shall designate from time to time.

     4.2.5  Duties of Secretary: The Secretary shall attend all meetings of the
     stockholders and of the Board of Directors and any committee thereof, and
     shall record the proceedings of the meetings in the minute book of the
     corporation and shall keep the seal of the corporation in safe custody. The
     Secretary shall give notice, in conformity with these Bylaws, of all
     meetings of the stockholders, and of all meetings of the Board of Directors
     and any committee thereof requiring notice. The Secretary shall perform
     such other duties and have such other powers as the Board of Directors
     shall designate from time to time. The President may direct any Assistant
     Secretary to assume and perform the duties of the Secretary in the absence
     or disability of the Secretary, and each Assistant Secretary shall perform
     such other duties and have such other powers as the Board of Directors or
     the President shall designate from time to time.

     4.2.6  Duties of Chief Financial Officer and Treasurer: Each of the Chief
     Financial Officer and the Treasurer shall control, audit and arrange the
     financial affairs of the corporation, consistent with the responsibilities
     delegated to each of them by the corporation's President. The Chief
     Financial Officer or Treasurer, as the case may be, shall receive and
     deposit all monies belonging to the corporation and shall pay out the same
     only in such manner as the Board of Directors may from time to time
     determine, and shall perform such other further duties as the Board of
     Directors may require. It shall be the duty of the assistant treasurers to
     assist the Treasurer in the performance of the Treasurer's duties and
     generally to perform such other duties as may be delegated to them by the
     Board of Directors.

                                                                   Page 15 of 23


4.3  Resignation. Any officer may resign at any time, such resignation to be
made in writing and to take effect from the time of its receipt by the
corporation, unless some time be fixed in the resignation, and then from that
time. The acceptance of a resignation shall not be required to make it
effective.

                                    ARTICLE 5
            EXECUTION OF CORPORATE INSTRUMENTS; FORM AND EXECUTION OF
              CERTIFICATES; OTHER SECURITIES OF THE CORPORATION AND
                  VOTING OF SECURITIES OWNED BY THE CORPORATION

5.1  Execution of Corporate Instruments.

     5.1.1  The Board of Directors may, in its discretion, determine the method
     and designate the signatory officer or officers, or other person or
     persons, to execute any corporate instrument or document, or to sign the
     corporate name without limitation, except where otherwise provided by law,
     and such execution or signature shall be binding upon the corporation.

     5.1.2  Unless otherwise specifically determined by the Board of Directors
     or otherwise required by law, formal contracts of the corporation,
     promissory notes, deeds of trust, mortgages and other evidences of
     indebtedness of the corporation, and other corporate instruments or
     documents requiring the corporate seal, and certificates of shares of stock
     owned by the corporation, shall be executed, signed or endorsed by the
     Chairman of the Board, the President, any Vice President or the Secretary.
     All other instruments and documents requiring the corporate signature, but
     not requiring the corporate seal, may be executed as aforesaid or in such
     other manner as may be directed by the Board of Directors.

     5.1.3  All checks and drafts drawn on banks or other depositaries on funds
     to the credit of the corporation, or in special accounts of the
     corporation, or demands for money and notes of the corporation shall be
     signed by such person or persons as may be designated from time to time by
     the Board of Directors.

5.2  Form and Execution of Certificates. Certificates for the shares of stock of
the corporation shall be in such form as is consistent with the Restated
Certificate of Incorporation and applicable law. Every holder of stock in the
corporation shall be entitled to have a certificate signed by, or in the name of
the corporation by, the Chairman of the Board (if there be such an officer
appointed), or by the President or any Vice President and by the Treasurer or
Assistant Treasurer or the Secretary or Assistant Secretary, certifying the
number of shares owned by such stockholder in the corporation. Any or all of the
signatures on the certificate may be a facsimile. In case any officer, transfer
agent, or registrar who has signed or whose facsimile signature has been placed
upon a certificate shall have ceased to be such officer, transfer agent, or
registrar before such certificate is issued, it may be issued with the same
effect as if he or she were such officer, transfer agent, or registrar at the
date of issue. If the corporation shall be authorized to issue more than one
class of stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set

                                                                   Page 16 of 23


forth in full or summarized on the face or back of the certificate which the
corporation shall issue to represent such class or series of stock, provided
that, except as otherwise provided in Section 202 of the Delaware General
Corporation Law, in lieu of the foregoing requirements, there may be set forth
on the face or back of the certificate which the corporation shall issue to
represent such class or series of stock, a statement that the corporation will
furnish without charge to each stockholder who so requests the powers,
designations, preferences and relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.

5.3  Other Securities of the Corporation. All bonds, debentures and other
corporate securities of the corporation, other than stock certificates, may be
signed by the Chairman of the Board or the President or any Vice President or
such other person as may be authorized by the Board of Directors and the
corporate seal impressed thereon or a facsimile of such seal imprinted thereon
and attested by the signature of the Secretary or an Assistant Secretary, or the
Treasurer or an Assistant Treasurer; provided, however, that where any such
bond, debenture or other corporate security shall be authenticated by the manual
signature of a trustee under an indenture pursuant to which such bond, debenture
or other corporate security shall be issued, the signature of the persons
signing and attesting the corporate seal on such bond, debenture or other
corporate security may be the imprinted facsimile of the signatures of such
persons. Interest coupons appertaining to any such bond, debenture or other
corporate security, authenticated by a trustee as aforesaid, shall be signed by
the Treasurer or Assistant Treasurer of the corporation, or such other person as
may be authorized by the Board of Directors, or bear imprinted thereon the
facsimile signature of such person. In case any officer who shall have signed or
attested any bond, debenture or other corporate security, or whose facsimile
signature shall appear thereon shall have ceased to be such officer of the
corporation before the bond, debenture or other corporate security so signed or
attested shall have been delivered, such bond, debenture or other corporate
security nevertheless may be adopted by the corporation and issued and delivered
as though the person who signed the same or whose facsimile signature shall have
been used thereon had not ceased to be such officer of the corporation.

5.4  Voting of Securities Owned by Corporation. All stock and other securities
of other corporations owned or held by the corporation for itself, or for other
parties in any capacity, shall be voted, and all proxies with respect thereto
shall be executed, by the person authorized so to do by resolution of the Board
of Directors or, in the absence of such authorization, by the Chairman of the
Board (if there be such an officer appointed), or by the President, or by any
Vice President.

                                    ARTICLE 6
          INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS

6.1  Action, Etc., Other Than by or in the Right of the Corporation. The
corporation shall have the power to indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that the person is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the

                                                                   Page 17 of 23


corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by the person in connection with such action,
suit or proceeding if the person acted in good faith and in a manner the person
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe the person's conduct was unlawful. The termination
of any action, suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which the
person reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, that such
person had reasonable cause to believe that such person's conduct was unlawful.

6.2  Actions, Etc., by or in the Right of the Corporation. The corporation shall
have the power to indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the corporation to procure a judgment in its favor by reason of the
fact that the person is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees),
actually and reasonably incurred by the person in connection with the defense or
settlement of such action or suit if the person acted in good faith and in a
manner the person reasonably believed to be in or not opposed to the best
interests of the corporation and except that no indemnification shall be made in
respect to any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent that the
Court of Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.

6.3  Right to Indemnification. Notwithstanding the other provisions of this
Article 6, to the extent that a present or former director, officer, employee or
agent of a corporation has been successful on the merits or otherwise in defense
of any action, suit or proceeding referred to in Sections 6.1 and 6.2, or in
defense of any claim, issue or matter therein, such person shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
such person in connection therewith.

6.4  Determination of Right to Indemnification. Any indemnification under
Sections 6.1 and 6.2 (unless ordered by a court) shall be made by the
corporation only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances because the person has met the applicable standard of conduct set
forth in Sections 6.1 and 6.2. Such determination shall be made, with respect to
a person who is a director or officer at the time of such determination, (a) by
a majority vote of the Board of Directors who are not parties to such action,
suit or proceeding, even though less than a quorum, or (b) by a committee of
such directors designated by majority vote of such directors, even though less
than a quorum, or (c) if there are no such directors, or if such directors so
direct, by independent legal counsel in a written opinion, or (d) by the
stockholders.

                                                                   Page 18 of 23


6.5  Prepaid Expenses. Expenses (including attorneys' fees) incurred by an
officer or director in defending any civil, criminal, administrative or
investigative action, suit or proceeding may be paid by the corporation in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that such person is not entitled to
be indemnified by the corporation as authorized in this Article 6. Such expenses
(including attorneys' fees) incurred by other employees and agents may be so
paid upon terms and conditions, if any, as the Board of Directors deems
appropriate.

6.6  Other Rights and Remedies. The indemnification and advancement of expenses
provided by, or granted pursuant to, the other sections of this Article 6 shall
not be deemed exclusive of any rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in such
person's official capacity and as to action in another capacity while holding
such office.

6.7  Insurance. Upon resolution passed by the Board of Directors, the
corporation may purchase and maintain insurance on behalf of any person who is
or was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against the person and incurred by the
person in any such capacity, or arising out of the person's status as such,
whether or not the corporation would have the power to indemnify the person
against such liability under the provisions of this Article 6.

6.8  Constituent Corporations. For the purposes of this Article 6, references to
'the corporation' shall include, in addition to the resulting corporation, any
constituent corporation (including any constituent of a constituent) absorbed in
a consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers and employees
or agents, so that any person who is or was a director, officer, employee or
agent of such constituent corporation, or is or was serving at the request of
such constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
shall stand in the same position under Article 6 with respect to the resulting
or surviving corporation as such person would have stood with respect to such
constituent corporation if its separate existence had continued.

6.9  Other Enterprises. For the purpose of this Article 6, references to "other
enterprises" shall include employee benefit plans and employee stock ownership
plans; references to "fines" shall include any excise or other taxes assessed on
a person with respect to any employee benefit plan or employee stock ownership
plan; references to "serving at the request of the corporation" shall include
any service as a director, officer, employee or agent of the corporation which
imposes duties on, or involved services by, such director, officer, employee or
agent with respect to an employee benefit plan or employee stock ownership plan,
its participants or beneficiaries; and a person who acted in good faith in a
manner the person reasonably believed to be in

                                                                   Page 19 of 23


the interest of the participants and beneficiaries of an employee benefit plan
or employee stock ownership plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
Article 6.

6.10 Scope of Indemnification. The indemnification and advancement of expenses
provided by, or granted pursuant, this Article 6 shall, unless otherwise
provided when authorized or ratified, continue as to a person who has ceased to
be a director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.

6.11 Subrogation. In the event of payment under this Article 6, the corporation
shall be subrogated to the extent of such payment to all of the rights of
recovery of the Agent, who shall execute all papers required and shall do
everything that may be necessary to secure such rights, including the execution
of such documents necessary to enable the corporation effectively to bring suit
to enforce such rights.

6.12 No Duplication of Payments. The corporation shall not be liable under this
Article 6 to make any payment in connection with any claim made under this
Article 6 to the extent the person has otherwise actually received payment
(under any insurance policy, agreement, vote, or otherwise) of the amounts
otherwise indemnifiable hereunder.

                                    ARTICLE 7
                                   AMENDMENTS

Unless otherwise provided in the Restated Certificate of Incorporation or these
Bylaws, these Bylaws may be repealed, altered or amended, or new Bylaws adopted
by (a) written consent of the stockholders in the manner authorized by these
Bylaws, or at any meeting of stockholders, either annual or special, by the
affirmative vote of the majority of stock entitled to vote at such meeting; or
(b) by the affirmative vote of a majority of the whole number of directors in
office.

Section 2.12 of these Bylaws may only be amended or repealed by the approval of
the holders of a majority of votes cast at any duly called meeting where the
matter is considered.

                                    ARTICLE 8
                                     NOTICES

8.1  Whenever, under any provisions of these Bylaws, notice is required to be
given to any stockholder, the same shall be given in writing, either (a) timely
and duly deposited in the United States Mail, postage prepaid, and addressed to
the stockholder's last known post office address as shown by the stock record of
the corporation or its transfer agent or (b) by a form of electronic
transmission consented to by the stockholder to whom the notice is given, except
to the extent prohibited by Section 232(e) of the Delaware General Corporation
Law. Any consent to receive notice by electronic transmission shall be revocable
by the stockholder by written notice to the corporation. Any such consent shall
be deemed revoked if (i) the corporation is unable to deliver by electronic
transmission two consecutive notices given by the corporation in

                                                                   Page 20 of 23


accordance with such consent and (ii) such inability becomes known to the
Secretary or an Assistant Secretary of the corporation or to the transfer agent,
or other person responsible for the giving of notice; provided, however, the
inadvertent failure to treat such inability as a revocation shall not invalidate
any meeting or other action.

8.2  Any notice required to be given to any director may be given by the method
stated above. Any such notice, other than one which is delivered personally,
shall be sent to such post office address, facsimile number or electronic mail
address as such director shall have filed in writing with the Secretary of the
corporation, or, in the absence of such filing, to the last known post office
address of such director. It shall not be necessary that the same method of
giving notice be employed in respect of all directors, but one permissible
method may be employed in respect of any one or more, and any other permissible
method or methods may be employed in respect of any other or others.

8.3  If no post office address of a stockholder or director be known, such
notice may be sent to the office of the corporation required to be maintained
pursuant to Section 1.2. An affidavit executed by a duly authorized and
competent employee of the corporation or the transfer agent or other agent of
the corporation appointed with respect to the class of stock affected,
specifying the name and post office address or the names and post office
addresses of the stockholder or stockholders, director or directors, to whom any
such notice or notices was or were given, and the time and method of giving the
same (or, for any stockholder or director to whom notice has been directed by
electronic transmission, the form of electronic transmission and the facsimile
number, electronic mail address or other location to which such notice was
directed and the time at which such notice was directed to each such director or
stockholder), shall be prima facie evidence of the statements therein contained.

8.4  All notices given by mail, as above provided, shall be deemed to have been
given as at the time of mailing. All notices given to stockholders by a form of
electronic transmission, as above provided, shall be deemed to have been given:
(a) if by facsimile, when directed to a number at which the stockholder has
consented to receive notice; (b) if by electronic mail, when directed to an
electronic mail address at which the stockholder has consented to receive
notice; (c) if by a posting on an electronic network together with separate
notice to the stockholder of such specific posting, upon the later of (i) such
posting and (ii) the giving of such separate notice; and (d) if by any other
form of electronic transmission, when directed to the stockholder. All notices
given to directors by a form of electronic transmission, as above provided,
shall be deemed to have been given when directed to the electronic mail address,
facsimile number, or other location filed in writing by the director with the
Secretary of the corporation.

8.5  The period or limitation of time within which any stockholder may exercise
any option or right, or enjoy any privilege or benefit, or be required to act,
or within which any director may exercise any power or right, or enjoy any
privilege, pursuant to any notice sent the stockholder in the manner above
provided, shall not be affected or extended in any manner by the failure of such
a stockholder or such director to receive such notice.

                                                                   Page 21 of 23


8.6  Whenever any notice is required to be given under the provisions of the
Delaware General Corporation Law, the Restated Certificate of Incorporation, or
these Bylaws, a written waiver, signed by the person entitled to notice, or a
waiver by electronic transmission by the person entitled to notice, whether
before or after the time stated therein, shall be deemed equivalent thereto.
Neither the business to be transacted at, nor the purpose of, any regular or
special meeting of the stockholders, directors or members of a committee of
directors need be specified in any written waiver of notice of such meeting.
Attendance of a person at a meeting shall constitute a waiver of notice of such
meeting, except when the person attends a meeting for the express purpose of
objecting at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Any stockholder so
waiving notice of such meeting shall be bound by the proceedings of any such
meeting in all respects as if due notice thereof had been given.

8.7  Whenever notice is required to be given, under any provision of law or of
the Restated Certificate of Incorporation or Bylaws of the corporation, to any
person with whom communication is unlawful, the giving of such notice to such
person shall not be required and there shall be no duty to apply to any
governmental authority or agency for a license or permit to give such notice to
such person. Any action or meeting which shall be taken or held without notice
to any such person with whom communication is unlawful shall have the same force
and effect as if such notice had been duly given. In the event that the action
taken by the corporation is such as to require the filing of a certificate under
any provision of the Delaware General Corporation Law, the certificate shall
state, if such is the fact and if notice is required, that notice was given to
all persons entitled to receive notice except such persons with whom
communication is unlawful.

8.8  Whenever notice is to be given to the corporation by a stockholder under
any provision of law or of the Restated Certificate of Incorporation or Bylaws
of the corporation, such notice shall be delivered to the Secretary at the
principal executive offices of the corporation. If delivered by electronic mail
or facsimile, the stockholder's notice shall be directed to the Secretary at the
electronic mail address or facsimile number, as the case may be, specified in
the corporation's most recent proxy statement.

                                    ARTICLE 9
                                  MISCELLANEOUS

9.1  Facsimile Signature. In addition to the provisions for the use of facsimile
signatures elsewhere specifically authorized in these Bylaws, facsimile
signatures of any officer or officers of the corporation may be used whenever
and as authorized by the Board of Directors or a committee thereof.

9.2  Corporate Seal. The Board of Directors may provide a suitable seal,
containing the name of the corporation, which seal shall be under the charge of
the Secretary. If and when so directed by the Board of Directors or a committee
thereof, duplicates of the seal may be kept and used by the Treasurer or by the
Assistant Secretary or Assistant Treasurer.

                                                                   Page 22 of 23


9.3  Fiscal Year. The fiscal year of the corporation shall be fixed by the Board
of Directors.

9.4  Time Periods. In applying any provision of these Bylaws which requires that
an act be done or not done within a specified number of days prior to an event
or that an act be done during a period of a specified number of days prior to an
event, calendar days shall be used, the day of the doing of the act shall be
excluded, and the day of the event shall be included.

9.5  Lost, Stolen or Destroyed Certificates. The corporation may direct a new
certificate or uncertificated shares to be issued in place of any certificate
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate for shares to be lost, stolen or destroyed. When authorizing
such issuance, the corporation may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed certificate, or the owner's legal representative, to give the
corporation a bond sufficient to indemnify it against any claim that may be made
against the corporation on account of the alleged loss, theft or destruction of
any such certificate or the issuance of such new certificate or uncertificated
shares.

9.6  Electronic Transmission. When used in these Bylaws, the terms "written" and
"in writing" shall include any "electronic transmission," as defined in Section
232(c) of the Delaware General Corporation Law, including without limitation any
telegram, cablegram, facsimile transmission and communication by electronic
mail.

                                   **********

                                                                   Page 23 of 23

EX-10.1

Exhibit 10.1

                            OREGON STEEL MILLS, INC.
                          2005 LONG-TERM INCENTIVE PLAN

APPROVED BY STOCKHOLDERS APRIL 28, 2005
EFFECTIVE JANUARY 1, 2005

SECTION 1.   PURPOSE

The purposes of the Oregon Steel Mills, Inc. 2005 Long-Term Incentive
Program (the "Plan") are to ensure that selected employees and Non-Employee
Directors of Oregon Steel Mills Inc. ("OSM" or the "Company") and its Affiliates
maintain a vested interest in the long-term growth and performance of the
Company, to align employees and Non-Employee Directors with stockholders, and to
enhance the ability of the Company and its Affiliates to attract, retain, and
motivate individuals of exceptional managerial talent upon whom, in large
measure, the sustained progress, growth, and profitability of the Company
depends.

SECTION 2.   DEFINITIONS

As used in the Plan, the following terms have the meanings set forth below:

a)   "Affiliate" is (i) any Person that directly, or through one or more
     intermediaries, controls, or is controlled by, or is under common control
     with, the Company or (ii) any entity in which the Company has a significant
     equity interest, as determined by the Committee.

b)   "Award" is any Option, Stock Appreciation Right, Restricted Stock Award,
     Performance Share, or Other Stock Unit Award.

c)   "Award Agreement" is any written or electronic agreement, contract, or
     other instrument or document evidencing any Award granted by the Committee
     under the Plan, which may, but need not, be executed or acknowledged by
     both the Company and the Participant.

d)   "Board" is the Board of Directors of the Company.

e)   "Change in Control" is the happening of any of the following events:

     i)   Any time less than a majority of the directors of the Company are
          individuals who were either elected by the Board or nominated by the
          Board of (or a committee of the Board) for election by the
          stockholders of the Company.

     ii)  At any time a majority of the Board are individuals who, in connection
          with a single transaction or a series of related transactions that
          effects a change in the ownership of the Company, were either not
          elected by the Board or not nominated by the Board (or a committee of
          the Board) for election by the stockholders of the Company;

     iii) Any person (other than (a) an employee benefit plan of the Company, or
          (b) a corporation owned directly or indirectly, by the stockholders of
          the Company in substantially the same proportions as their ownership
          of stock of the Company) is or becomes the beneficial owner (as
          defined in Rule 13d of the Securities Exchange Act of 1934, as
          amended), directly or indirectly, of securities of the Company
          representing twenty-five percent (25%) or more of the combined voting
          power of the Company's then outstanding securities; or

                                                                    page 1 of 12


     iv)  The stockholders of the Company approve (a) a plan of complete
          liquidation of the Company, other than in connection with the complete
          cessation of the business activities conducted with the Company's
          operating assets, or (b) an agreement is entered for the sale or
          disposition by the Company of all or substantially all of the
          Company's assets except pursuant to an order of a bankruptcy court
          having jurisdiction of the Company. For purposes of clause (b), the
          term "the sale or disposition by the Company of all or substantially
          all of the Company's assets" is a sale or other disposition
          transaction or series of related transactions involving assets of the
          Company or of any direct or indirect subsidiary of the Company
          (including the stock of any direct or indirect subsidiary of the
          Company) in which the value of the assets or stock being sold or
          otherwise disposed of (as measured by the purchase price being paid
          therefore or by such other method as the Board determines is
          appropriate in a case where there is no readily ascertainable purchase
          price) constitutes more than two-thirds (2/3) of the fair market value
          of the Company (as hereinafter defined). For purposes of the preceding
          sentence, the "fair market value of the Company" is the aggregate
          market value of the Company's outstanding common stock (on a fully
          diluted basis) plus the aggregate market value of the Company's other
          outstanding equity securities, if any. The aggregate market value of
          the Company's common stock is determined by multiplying the number of
          shares of the Company's common stock (on a fully diluted basis)
          outstanding on the date of the execution and delivery of a definitive
          agreement with respect to the transaction or series of related
          transactions (the "Transaction Date") by the average closing price of
          the Company's common stock for the ten (10) trading days immediately
          preceding the Transaction Date. The aggregate market value of any
          other equity securities of the Company is determined in a manner
          similar to that prescribed in the immediately preceding sentence for
          determining the aggregate market value of the Company's common stock
          or by such other method as the Board determines is appropriate;
          provided that, in the event that on the Transaction Date there is no
          public market for such common stock or other equity security, the fair
          market value of the equity securities or common stock is as reasonably
          determined by the Board.

f)   "Code" is the Internal Revenue Code of 1986, as amended from time to time,
     any successor provision, and any applicable regulations promulgated
     thereunder.

g)   "Committee" is the Compensation Committee of the Board, or any successor to
     such committee, composed of no fewer than two directors each of whom is a
     Non-Employee Director and an "outside director" within the meaning of
     Section 162(m) of the Code, and each of whom is "independent" as set forth
     in the applicable rules and regulations of the SEC and the NYSE.

h)   "Company" is Oregon Steel Mills, Inc. ("OSM"), a Delaware corporation.

i)   "Covered Employee" is a "covered employee" within the meaning of Section
     162(m)(3) of the Code.

j)   "Employee" is any employee of the Company or of any Affiliate. Unless
     otherwise determined by the Committee in its sole discretion, for purposes
     of the Plan, an employee is considered to have terminated employment and to
     have ceased to be an Employee if his or her employer ceases to be an
     Affiliate, even if he or she continues to be employed by such employer.

k)   "Exchange Act" is the Securities Exchange Act of 1934, as amended.

l)   "Fair Market Value" is, unless the Committee determines otherwise, as at
     any date the average of the highest and lowest sale prices on the NYSE for
     the Shares on such date.

m)   "Incentive Stock Option" is an Option granted under Section 6 of the Plan
     that is intended to meet the requirements of Section 422 of the Code.

                                                                    page 2 of 12


n)   "Non-Employee Director" has the meaning set forth in Rule 16b-3(b)(3)
     promulgated by the SEC under the Exchange Act, or any successor definition
     adopted by the SEC.

o)   "Nonstatutory Stock Option" or "NSO" is an Option granted under Section 6
     of the Plan that is not intended to be an Incentive Stock Option.

p)   "NYSE" is the New York Stock Exchange.

q)   "Officer" is any Employee of the Company or any Affiliate holding a
     position classified as executive officer as defined by SEC and NYSE
     guidelines.

r)   "Option" is any right granted to a Participant under Section 6 of the Plan
     allowing such Participant to purchase Shares at such price or prices and
     during such period or periods, as the Committee determines.

s)   "Other Stock Unit Award" is any right granted to a Participant by the
     Committee under Section 10 of the Plan.

t)   "Participant" is an Employee or Non-Employee Director who is selected by
     the Committee to receive an Award under the Plan.

u)   "Performance Award" is any Award of Performance Shares or Performance Units
     under Section 9 of the Plan.

v)   "Performance Period" is that period established by the Committee at the
     time any Award is granted or at any time thereafter during which any
     performance goals specified by the Committee with respect to such Award are
     to be measured.

w)   "Performance Share" is any grant under Section 9 of the Plan of a unit
     valued by reference to a designated number of Shares, which value may be
     paid to the Participant by delivery of such property as the Committee
     determines, including, without limitation, cash, Shares, or any combination
     thereof, upon achievement of such performance goals during the Performance
     Period as the Committee establishes at the time of such grant or
     thereafter.

x)   "Performance Unit" is any grant under Section 9 of the Plan of a unit
     valued by reference to a designated amount of property other than Shares,
     which value may be paid to the Participant by delivery of such property as
     the Committee determines, including, without limitation, cash, Shares, or
     any combination thereof, upon achievement of such performance goals during
     the Performance Period as the Committee establishes at the time of such
     grant or thereafter.

y)   "Person" is any individual, corporation, partnership, association,
     joint-stock company, trust, unincorporated organization, or government or
     political subdivision thereof.

z)   "Restricted Stock" is any Share issued with the restriction that the holder
     may not sell, transfer, pledge, or assign such Share and with such other
     restrictions as the Committee, in its sole discretion, may impose
     (including, without limitation, any forfeiture condition or any restriction
     on the right to vote such Share, and the right to receive any cash
     dividends), which restrictions may lapse separately or in combination at
     such time or times, in installments or otherwise, as the Committee may deem
     appropriate.

aa)  "Restricted Stock Award" is an award of Restricted Stock under Section 8 of
     the Plan.

bb)  "SEC" is the Securities and Exchange Commission.

cc)  "Shares" are, the shares of Common Stock of the Company ("OSM Shares").

dd)  "Stock Appreciation Right" or "SAR" is any right granted to a Participant
     under Section 7 of the Plan to receive, upon exercise by the Participant,
     the excess of:

                                                                    page 3 of 12


     i)   the Fair Market Value of one Share on the date of exercise or, if the
          Committee so determines in the case of any such right other than one
          related to any Incentive Stock Option, at any time during a specified
          period before the date of exercise over

     ii)  the grant price of the right on the date of grant, or if granted in
          connection with an outstanding Option on the date of grant of the
          related Option, as specified by the Committee in its sole discretion,
          which, except in the case of Substitute Awards or in connection with
          an adjustment provided in Section 4(c), may not be less than the Fair
          Market Value of one Share on such date of grant of the right or the
          related Option, as the case may be. Any payment by the Company in
          respect of such right may be made in cash, Shares, other property, or
          any combination thereof, as the Committee, in its sole discretion,
          determines.

ee)  "Subsidiary" is any corporation (other than the Company) in an unbroken
     chain of corporations beginning with the Company if, at the time of the
     granting of the Award, each of the corporations other than the last
     corporation in the unbroken chain owns stock possessing fifty percent (50%)
     or more of the total combined voting power of all classes of stock in one
     of the other corporations in the chain.

ff)  "Substitute Awards" are Awards granted or Shares issued by the Company in
     assumption of, or in substitution or exchange for, awards previously
     granted, or the right or obligation to make future awards, by a company
     acquired by the Company or with which the Company combines.

SECTION 3.   ADMINISTRATION

The Plan is administered by the Committee. The Committee has full power and
authority, subject to such orders or resolutions not inconsistent with the
provisions of the Plan as may from time to time be adopted by the Board, to:

a)   select the Employees of the Company and its Affiliates and Non-Employee
     Directors of the Company to whom Awards may from time to time be granted
     under the Plan;

b)   determine the type or types of Award to be granted to each Participant;

c)   determine the number of Shares to be covered by each Award granted;

d)   determine the terms and conditions, not inconsistent with the provisions of
     the Plan, of any Award granted;

e)   determine whether, to what extent and under what circumstances Awards may
     be settled in cash, Shares or other property or canceled or suspended;

f)   determine whether, to what extent and under what circumstances cash, Shares
     and other property and other amounts payable with respect to an Award under
     this Plan are deferred either automatically or at the election of the
     Participant;

g)   interpret and administer the Plan and any instrument or agreement entered
     into under the Plan;

h)   establish such rules and regulations and appoint such agents as it deems
     appropriate for the proper administration of the Plan; and

i)   make any other determination and take any other action that the Committee
     deems necessary or desirable for administration of the Plan.

Decisions of the Committee are final, conclusive and binding upon all persons,
including the Company, any Participant, any stockholder, and any employee of the
Company or of any Affiliate. A majority of the members of the Committee may
determine its actions and fix the time and place of its meetings.
Notwithstanding the foregoing or anything else to the contrary in the Plan, any
action or determination by the Committee specifically affecting or relating to
an Award to a Non-employee Director must be approved and ratified by the Board.

                                                                    page 4 of 12


SECTION 4.   SHARES SUBJECT TO THE PLAN

a)   Subject to adjustment as provided in Section 4(c), a total of 500,000
     Shares are available for Awards granted under the Plan; provided, that if
     any Shares subject to an Award under the Plan are forfeited or if any Award
     under the Plan based on Shares is settled for cash, or expires or otherwise
     is terminated without issuance of such Shares, the Shares subject to such
     Award are, to the extent of such cash settlement, forfeiture or
     termination, available for Awards under the Plan. In the event that any
     Option or other Award granted under the Plan is exercised through the
     delivery of Shares or in the event that withholding tax liabilities arising
     from such Option or other Award are satisfied by the withholding of Shares
     by the Company, the number of Shares available for Awards under the Plan is
     increased by the number of Shares so surrendered or withheld. In addition,
     Substitute Awards do not reduce the Shares available for grants under the
     Plan or to a Participant in any calendar year.

b)   Any Shares issued under the Plan may consist, in whole or in part, of
     authorized and unissued shares, treasury shares, or shares purchased in the
     open market or otherwise.

c)   In the event of any merger, reorganization, consolidation,
     recapitalization, stock dividend, stock split, reverse stock split,
     spin-off or similar transaction or other change in corporate structure
     affecting the Shares, such adjustments and other substitutions are made to
     the Plan and to Awards as the Committee in its sole discretion deems
     equitable or appropriate, including without limitation such adjustments

     i)   in the aggregate number, class and kind of securities which may be
          delivered under the Plan, in the aggregate or to any one Participant,

     ii)  in the number, class, kind and exercise price of securities or other
          property subject to outstanding Options, Stock Appreciation Rights or
          other Awards granted under the Plan, and

     iii) in the number, class and kind of securities or other property subject
          to Awards granted under the Plan (including, if the Committee deems
          appropriate, the substitution of similar options to purchase the
          shares of, or other awards denominated in the shares of, another
          company, or the cancellation of outstanding Awards in exchange for
          payments of cash, property or a combination thereof, or, in connection
          with the disaffiliation with the Company of a Subsidiary, arranging
          for the assumption or replacement with new Awards (by such Subsidiary
          or by an entity controlling such Subsidiary following such
          disaffiliation) of Awards held by Participants employed by the
          affected Subsidiary), as the Committee may determine to be appropriate
          in its sole discretion provided that the number of Shares subject to
          any Award is always a whole number. Shares delivered under the Plan as
          an Award or in settlement of an Award issued or made (i) upon the
          assumption, substitution, conversion or replacement of outstanding
          awards under a plan or arrangement of an entity acquired in a merger
          or other acquisition, or (ii) as a post-transaction grant under such a
          plan or arrangement of an acquired entity, will not reduce or be
          counted against the maximum number of Shares available for delivery
          under the Plan, to the extent that the exemption for transactions in
          connection with mergers and acquisitions from the stockholder approval
          requirements of the New York Stock Exchange for equity compensation
          plans applies.

                                                                    page 5 of 12


SECTION 5.   ELIGIBILITY

Any Employee or Non-Employee Director is eligible to be selected as a
Participant, provided, however, that Incentive Stock Options are granted only to
participants who are employees of the Company or a Subsidiary of the Company,
and provided that no Non-Employee Director receives Awards with an aggregate
Fair Market Value in excess of $150,000 in any calendar year.

SECTION 6.   STOCK OPTIONS

Options may be granted under the Plan to Participants either alone or in
addition to other Awards granted under the Plan. Any Option granted under the
Plan is evidenced by an Award Agreement in such form as the Committee may from
time to time approve. Any such Option is subject to the following terms and
conditions and to such additional terms and conditions, not inconsistent with
the provisions of the Plan, as the Committee deems desirable:

a)   OPTION PRICE. The purchase price per Share purchasable under an Option is
     determined by the Committee in its sole discretion; provided that, such
     purchase price is not less than the Fair Market Value of the Share on the
     date of the grant of the Option. Substitute Awards or Awards granted in
     connection with an adjustment provided for in Section 4(c) have a purchase
     price per Share that is intended to preserve the economic value of the
     Award which was replaced or adjusted.

b)   OPTION PERIOD. The term of each Option is fixed by the Committee in its
     sole discretion; provided that no Option is exercisable after the
     expiration of ten (10) years from the date the Option is granted.

c)   EXERCISABILITY. Options are exercisable at such time or times as determined
     by the Committee at or subsequent to grant; provided that, no Option will
     vest in full prior to three (3) years from the grant date.

d)   METHOD OF EXERCISE. Subject to the other provisions of the Plan, any Option
     may be exercised by the Participant in whole or in part at such time or
     times, and the Participant may make payment of the option price in such
     form or forms, including, without limitation, payment by delivery of cash,
     Shares or other consideration (including, where permitted by law and the
     Committee, Awards) having a Fair Market Value on the exercise date equal to
     the total option price, or by any combination of cash, Shares and other
     consideration, as the Committee may specify in the applicable Award
     Agreement.

e)   INCENTIVE STOCK OPTIONS or "ISOs." In accordance with rules and procedures
     established by the Committee, and except as otherwise provided in Section
     11, the aggregate Fair Market Value (determined as of the time of grant) of
     the Shares with respect to which ISOs held by any Participant which are
     exercisable for the first time by such Participant during any calendar year
     under the Plan (and under any other benefit plans of the Company or any
     Subsidiary) may not exceed $100,000 or, if different, the maximum
     limitation in effect at the time of grant under Section 422 of the Code.
     ISOs may be granted only to participants who are employees of the Company
     or a Subsidiary of the Company. The terms of any ISO granted under the Plan
     will comply in all respects with the provisions of Section 422 of the Code.
     The expiration date of any ISO granted will not exceed the period of nine
     (9) years and 364 days from the grant date. No more than 100,000 shares can
     be issued as Incentive Stock Options.

                                                                    page 6 of 12


f)   FORM OF SETTLEMENT. In its sole discretion, the Committee may provide, at
     the time of grant, that the Shares to be issued upon an Option's exercise
     are in the form of Restricted Stock or other similar securities, or may
     reserve the right so to provide after the time of grant.

SECTION 7.   STOCK APPRECIATION RIGHTS OR "SARS"

Stock Appreciation Rights may be granted under the Plan to Participants either
alone or in addition to other Awards granted under the Plan and may, but need
not, relate to a specific Option granted under Section 6. The provisions of SARs
need not be the same with respect to each recipient. Any SAR related to a
Nonstatutory Stock Option may be granted at the same time such Option is granted
or at any time thereafter before exercise or expiration of such Option. Any SAR
related to an ISO must be granted at the same time such Option is granted. In
the case of any SAR related to any Option, the SAR or its applicable portion
terminates and is no longer exercisable upon the termination or exercise of the
related Option, except that a SAR granted with respect to less than the full
number of Shares covered by a related Option is not reduced until the exercise
or termination of the related Option exceeds the number of Shares not covered by
the SAR. Any Option related to any SAR is no longer exercisable to the extent
the related SAR has been exercised. The Committee may impose such conditions or
restrictions on the exercise of any SAR as it deems appropriate, provided that
no SAR may have a term that is longer than ten (10) years.

SECTION 8.   RESTRICTED STOCK

a)   ISSUANCE. A Restricted Stock Award is subject to restrictions imposed by
     the Committee during a period of time specified by the Committee (the
     "Restriction Period"). Restricted Stock Awards may be issued under the Plan
     to Participants either alone or in addition to other Awards granted under
     the Plan. The provisions of Restricted Stock Awards need not be the same
     with respect to each recipient.

b)   REGISTRATION. Any Restricted Stock issued under the Plan may be evidenced
     in such manner as the Committee in its sole discretion deems appropriate,
     including, without limitation, book-entry registration or issuance of a
     stock certificate or certificates, unless otherwise specified by the
     Committee. In the event any stock certificate is issued in respect of
     shares of Restricted Stock awarded under the Plan, such certificate is
     registered in the name of the Participant, and bears an appropriate legend
     referring to the terms, conditions, and restrictions applicable to such
     Award.

c)   FORFEITURE. Except as otherwise determined by the Committee at the time of
     grant or thereafter, upon termination of employment for any reason during
     the Restriction Period, all Shares of Restricted Stock still subject to
     forfeiture are forfeited by the Participant and reacquired by the Company.
     Unrestricted Shares, evidenced in such manner as the Committee deems
     appropriate, are issued to the grantee promptly after the period of
     forfeiture, as determined or modified by the Committee, expires.

d)   MINIMUM VESTING CONDITION. The minimum Restriction Period applicable to any
     Restricted Stock Award that is not subject to performance conditions
     restricting the grant size, the transfer of the shares, or the vesting of
     the award is two (2) years from the date of grant; provided, however, that
     a Restriction Period of less than two (2) years may be approved under the
     Plan for such Awards with respect to up to 50,000 Shares.

                                                                    page 7 of 12


SECTION 9.   PERFORMANCE AWARDS

Performance Awards may be issued under the Plan to Participants either alone or
in addition to other Awards granted under the Plan. The performance criteria to
be achieved during any Performance Period and the length of the Performance
Period are determined by the Committee upon the grant of each Performance Award.
Except as provided in Section 11, Performance Awards are distributed only after
the end of the relevant Performance Period. Performance Awards may be paid in
cash, Shares, other property, or any combination thereof, in the sole discretion
of the Committee at the time of payment. The performance levels to be achieved
for each Performance Period and the amount of the Award to be distributed are
conclusively determined by the Committee. Performance Awards may be paid in a
lump sum or in installments following the close of the Performance Period.

SECTION 10.  OTHER STOCK UNIT AWARDS

a)   STOCK AND ADMINISTRATION. Other Awards of Shares and other Awards that are
     valued in whole or in part by reference to, or are otherwise based on,
     Shares or other property ("Other Stock Unit Awards") may be granted under
     the Plan to Participants, either alone or in addition to other Awards
     granted under the Plan. Other Stock Unit Awards may be paid in Shares, cash
     or any other form of property as the Committee determines. Subject to the
     provisions of the Plan, the Committee has sole and complete authority to
     determine the Employees of the Company and its Affiliates and Non-Employee
     Directors to whom and the time or times at which such Awards are made, the
     number of Shares to be granted pursuant to such Awards, and all other
     conditions of the Awards. The provisions of Other Stock Unit Awards need
     not be the same with respect to each recipient.

b)   TERMS AND CONDITIONS. Subject to the provisions of this Plan and any
     applicable Award Agreement, Awards and Shares subject to Awards made under
     this Section 10, may not be sold, assigned, transferred, pledged or
     otherwise encumbered prior to the date on which the Shares are issued, or,
     if later, the date on which any applicable restriction, performance or
     deferral period lapses. For any Award or Shares subject to any Award made
     under this Section 10 the transferability and vesting of which are
     conditioned only on the passage of time, such restriction period is a
     minimum of three (3) years for full vesting.

SECTION 11.  CHANGE IN CONTROL PROVISIONS

Notwithstanding any other provision of the Plan to the contrary, unless the
Committee determines otherwise at the time of grant with respect to a particular
Award, in the event of a Change in Control, as of the date such Change in
Control is determined to have occurred;

a)   any Options and SARs outstanding which are not then exercisable and vested
     become fully exercisable and vested;

b)   any Options and SARs outstanding which are then vested and exercisable,
     including newly vested Options and SARs as a result of (a) above, remain
     exercisable as provided in the Award Agreement;

c)   the restrictions and deferral limitations applicable to any Restricted
     Stock lapse, and such Restricted Stock becomes free of all restrictions and
     limitations and become fully vested and transferable;

                                                                    page 8 of 12


d)   all Performance Awards are considered to be prorated, and any deferral or
     other restriction lapses and such Performance Awards are immediately
     settled or distributed in accordance with policies established by the
     Committee; and

e)   the restrictions and deferral limitations and other conditions applicable
     to any Other Stock Unit Awards or any other Awards lapses, and such Other
     Stock Unit Awards or such other Awards become free of all restrictions,
     limitations or conditions and become fully vested and transferable to the
     full extent of the Award not previously forfeited or vested.

SECTION 12.  CODE SECTION 162(m) PROVISIONS

a)   Notwithstanding any other provision of this Plan, if the Committee
     determines at the time Restricted Stock, a Performance Award or an Other
     Stock Unit Award is granted to a Participant who is then an Officer that
     such Participant is, or may be as of the end of the tax year in which the
     Company would claim a tax deduction in connection with such Award, a
     Covered Employee, then the Committee may provide that this Section 12 is
     applicable to such Award.

b)   If an Award is subject to this Section 12, then the lapsing of any
     restrictions and the related distribution of cash, Shares or other
     property, as applicable, are subject to the achievement of one or more
     objective performance goals established by the Committee, which are based
     on the attainment of specified levels of one or any combination of the
     following: net cash provided by operating activities, earnings per share
     from continuing operations, operating income, revenues, gross margin,
     EBITDA, EBITDA per ton of steel shipped, return on operating assets, return
     on equity, economic value added, stock price appreciation, total
     stockholder return, or cost control, of the Company or the Affiliate or
     division of the Company for or within which the Participant is primarily
     employed. Such performance goals also may be based upon the achievement of
     specified levels of Company performance (or performance of applicable
     Affiliate or division of the Company) under one or more of the measures
     described above relative to the performance of other corporations. Such
     performance goals are set by the Committee within the time period
     prescribed by, and otherwise comply with the requirements of, Section
     162(m) of the Code.

c)   Notwithstanding any provision of this Plan other than Section 11, with
     respect to any Award that is subject to this Section 12, the Committee may
     adjust downwards, but not upwards, the amount payable pursuant to such
     Award, and the Committee may not waive the achievement of the applicable
     performance goals except in the case of the death or disability of the
     Participant.

d)   The Committee has the power to impose such other restrictions on Awards
     subject to this Section 12 as it may deem necessary or appropriate to
     ensure that such Awards satisfy all requirements for "performance-based
     compensation" within the meaning of Section 162(m) (4) (C) of the Code.

e)   Notwithstanding any provision of this Plan other than Section 4(c),
     commencing with calendar year 2005,

     i)   no Participant may be granted in any twelve (12) month period an
          aggregate amount of Options and/or SARs with respect to more than
          150,000 Shares, and

     ii)  no Participant may be granted in any twelve (12) month period an
          aggregate amount of Restricted Stock, Performance Awards or Other
          Stock Unit Awards, with respect to more than 75,000 Shares (or cash
          amounts based on the value of more than 75,000 Shares); except that an
          external hire may be granted up to an aggregate amount of Performance
          Awards or Other Stock Unit Awards with respect to no more than 150,000
          Shares (or cash amounts based on the value of no more than 150,000
          Shares).

                                                                    page 9 of 12


SECTION 13.  AMENDMENTS AND TERMINATION

The Board may amend, alter, suspend, discontinue or terminate the Plan or any
portion of the Plan at any time; provided that no such amendment, alteration,
suspension, discontinuation or termination is made without

     i)   stockholder approval if such approval is necessary to qualify for or
          comply with any tax or regulatory requirement for which or with which
          the Board deems it necessary or desirable to qualify or comply or

     ii)  the consent of the affected Participant, if such action would impair
          the rights of such Participant under any outstanding Award.
          Notwithstanding anything to the contrary herein, the Committee may
          amend the Plan in such manner as may be necessary so as to have the
          Plan conform to local rules and regulations in any jurisdiction
          outside the United States.

The Committee may amend the terms of any Award granted, prospectively or
retroactively, but no such amendment may impair the rights of any Participant
without his or her consent. Notwithstanding any provision of this plan, the
Committee does not have the authority to take any action that would require
stockholder approval under applicable SEC or NYSE rules including amending the
terms of any Option to reduce the option price; nor may the Committee, without
prior stockholder approval, cancel any outstanding Option and replace it with a
new Option with a lower option price, or where the economic effect would be the
same as reducing the option price of the canceled Option; nor may the Committee,
without prior stockholder approval, provide for any Option to be exchanged for
any other Award under this Plan.

SECTION 14.  GENERAL PROVISIONS

a)   Unless the Committee determines otherwise at the time the Award is granted
     or thereafter:

     i)   no Award, and no Shares subject to Awards described in Section 10
          which have not been issued or as to which any applicable restriction,
          performance or deferral period has not lapsed, may be sold, assigned,
          transferred, pledged or otherwise encumbered, except by will or by the
          laws of descent and distribution; provided that, if so determined by
          the Committee, a Participant may, in the manner established by the
          Committee, designate a beneficiary to exercise the rights of the
          Participant with respect to any Award upon the death of the
          Participant; and

     ii)  each Award is exercisable, during the Participant's lifetime, only by
          the Participant or, if permissible under applicable law, by the
          Participant's guardian or legal representative.

b)   The term of each Award is for such period of months or years from the date
     of its grant as may be determined by the Committee; except as provided in
     Section 6.

c)   No Employee or Participant has any claim to be granted any Award under the
     Plan and there is no obligation for uniformity of treatment of Employees or
     Participants under the Plan.

d)   The prospective recipient of any Award under the Plan will not, with
     respect to such Award, be deemed to have become a Participant, or to have
     any rights with respect to such Award, until and unless such recipient, to
     the extent required by the Committee, has either executed an agreement or
     other instrument evidencing the Award and delivered a copy to the Company,
     or otherwise evidenced acceptance of the then applicable terms and
     conditions.

                                                                   page 10 of 12


e)   Except to the extent that such action would cause an Award subject to
     Section 12 not to qualify for the exemption from the limitation on
     deductibility imposed by Section 162(m) of the Code that is set forth in
     Section 162(m)(4)(C) of the Code, the Committee is authorized to make
     adjustments in performance award criteria or in the terms and conditions of
     other Awards in recognition of unusual or nonrecurring events affecting the
     Company or its financial statements or changes in applicable laws,
     regulations or accounting principles. The Committee may correct any defect,
     supply any omission or reconcile any inconsistency in the Plan or any Award
     in the manner and to the extent it deems desirable to carry it into effect.
     In the event the Company assumes outstanding employee benefit awards or the
     right or obligation to make future such awards in connection with the
     acquisition of or combination with another corporation or business entity,
     the Committee may, in its discretion, make such adjustments in the terms of
     Awards under the Plan as it deems appropriate.

f)   Notwithstanding anything in the Plan to the contrary, the Committee has the
     authority under the Plan to determine (and may so provide in any Award
     Agreement) that in the event of serious misconduct by the Participant or
     any activity of a Participant in competition with the business of the
     Company or any Subsidiary or Affiliate, any outstanding Award granted to
     such Participant may be cancelled, in whole or in part, whether or not
     vested or deferred. The determination of whether a Participant has engaged
     in a serious breach of conduct or any activity in competition with the
     business of the Company or any Subsidiary or Affiliate is determined by the
     Committee in good faith and in its sole discretion. This Section 14(f) has
     no application following a Change in Control.

g)   All certificates for Shares delivered under the Plan pursuant to any Award
     are subject to such stock-transfer orders and other restrictions as the
     Committee may deem advisable under the rules, regulations, and other
     requirements of the SEC, any stock exchange upon which the Shares are then
     listed, and any applicable Federal or state securities law, and the
     Committee may cause a legend or legends to be put on any such certificates
     to make appropriate reference to such restrictions.

h)   No Award granted under the Plan may be construed as an offer to sell
     securities of the Company, and no such offer may be outstanding, unless and
     until the Committee in its sole discretion has determined that any such
     offer, if made, would be in compliance with all applicable requirements of
     the U.S. federal securities laws and any other laws to which such offer, if
     made, would be subject.

i)   The Committee is authorized to establish procedures for the deferral of the
     payment of any Award. Subject to the provisions of the Plan and any Award
     Agreement, the recipient of an Award (including, without limitation, any
     deferred Award) may, if so determined by the Committee, be entitled to
     receive, currently or on a deferred basis, cash dividends, or cash payments
     in amounts equivalent to cash dividends on Shares ("dividend equivalents"),
     with respect to the number of Shares covered by the Award, as determined by
     the Committee, in its sole discretion, and the Committee may provide that
     such amounts (if any) are deemed to have been reinvested in additional
     Shares or otherwise reinvested.

j)   Except as otherwise required in any applicable Award Agreement or by the
     terms of the Plan, recipients of Awards under the Plan are not required to
     make any payment or provide consideration other than the rendering of
     services.

k)   The Committee may delegate to one or more Directors, Officers, or a
     committee of Officers the right to grant Awards to Employees who are not
     officers or directors of the Company and to cancel or suspend Awards to
     Employees who are not officers or directors of the Company.

                                                                   page 11 of 12


l)   The Company is authorized to withhold from any Award granted or payment due
     under the Plan the amount of withholding taxes due in respect of an Award
     or payment under the Plan and to take such other action as may be necessary
     in the opinion of the Company to satisfy all obligations for the payment of
     such taxes not to exceed the statutory minimum withholding obligation. The
     Committee is authorized to establish procedures for election by
     Participants to satisfy such obligations for the payment of such taxes by
     delivery of or transfer of Shares to the Company, or by directing the
     Company to retain Shares otherwise deliverable in connection with the
     Award.

m)   Nothing contained in this Plan prevents the Board from adopting other or
     additional compensation arrangements, subject to stockholder approval if
     such approval is required; and such arrangements may be either generally
     applicable or applicable only in specific cases.

n)   The validity, construction, and effect of the Plan and any rules and
     regulations relating to the Plan are determined in accordance with the laws
     of the State of Oregon and applicable Federal law.

o)   If any provision of this Plan is or becomes or is deemed invalid, illegal
     or unenforceable in any jurisdiction, or would disqualify the Plan or any
     Award under any law deemed applicable by the Committee, such provision is
     construed or deemed amended to conform to applicable laws or if it cannot
     be construed or deemed amended without, in the determination of the
     Committee, materially altering the intent of the Plan, it is stricken and
     the remainder of the Plan remains in full force and effect.

p)   Awards may be granted to Participants who are foreign nationals or employed
     outside the United States, or both, on such terms and conditions different
     from those applicable to Awards to Employees employed in the United States
     as may, in the judgment of the Committee, be necessary or desirable in
     order to recognize differences in local law or tax policy. The Committee
     also may impose conditions on the exercise or vesting of Awards in order to
     minimize the Company's obligation with respect to tax equalization for
     Employees on assignments outside their home country.

SECTION 15.  EFFECTIVE DATE OF PLAN

The Plan is effective as of the date the stockholders approve the Plan in 2005.

SECTION 16.  TERM OF PLAN

No Award may be granted under the Plan after May 31, 2010, but any Award granted
may extend beyond that date.

                                                                   page 12 of 12

EX-10.2

Exhibit 10.2

                               OREGON STEEL MILLS
              2005 PROGRAM FOR EXECUTIVE OFFICERS AND KEY EMPLOYEES
                     UNDER THE 2005 LONG-TERM INCENTIVE PLAN
1.  PURPOSE

The purpose of the 2005 Long-Term Incentive Plan ("LTIP", or "the Plan") is to
increase senior management's focus on the Company's long-term performance, to
encourage retention of executives and key employees, and to provide executives
and key employees with a motivating incentive opportunity. This 2005 Program for
Executive Officers and Key Employees ("2005 Program") was approved by the Board
on April 28, 2005 to grant Performance Awards under the Plan. Capitalized terms
not defined in this document will have the meanings given in the Plan.

2.  PROGRAM ADMINISTRATION

The Board of Directors ("Board") has primary responsibility for interpretation
and administration of the terms and provisions of the Plan and the 2005 Program.
The Board may act through its Compensation Committee ("Committee"). Such
responsibility includes, but is not limited to, selecting plan participants,
setting performance targets, conducting consultations with officers and other
executives of the Company as needed to perform the Board's duties, promulgating
necessary rules, guidelines, and procedures for Plan and 2005 Program
administration, and engaging or employing counsel, advisors, or consultants, and
any other persons as it may deem necessary or expedient for the performance of
its responsibilities under the Plan and the 2005 Program.

The Vice President Administration will serve the Committee as the chief
personnel resource for matters relating to the Plan and 2005 Program. While the
Committee is free to delegate any duties and responsibilities it deems
appropriate, all decisions regarding selection for participation, performance
and payments under the Plan and 2005 Program will be made solely by the
Committee and to the extent required, by the Board. All decisions,
determinations and interpretations of the Committee with respect to the Plan and
2005 Program will be binding upon all persons.

3.  PROGRAM PARTICIPATION

        3.1. ELIGIBILITY

Participation in the 2005 Program is limited to executive officers, senior
management and certain key employees who can have a major impact on the
long-term success of the Company. The CEO will recommend Participants subject to
Committee approval.

                                                                     page 1 of 8


4.  PERFORMANCE AWARDS

        4.1. PERFORMANCE PERIODS

Each Performance Period shall consist of a period of three consecutive Company
fiscal years, with the Performance Period for the 2005 Program commencing on
January 1, 2005 and ending on December 31, 2007.

Performance Periods of future Performance Awards will overlap and provide a
payout opportunity annually beginning in Q1 2008.

[CHART APPEARS HERE]

        4.2. TARGET PERFORMANCE AWARD

The Target Performance Award Value ("Target Value") is set by the Committee for
each Participant at the beginning of each Performance Period. The Target Value
is expressed in US dollars and is based on an assessment of external market data
as well as the Participant's level of responsibility within the Company.

The Target Performance Share Grant ("Target Grant") is determined by dividing
the Target Value by the "Share Price" (defined as the prior twenty-trading-day
average closing price) as of the first day of the Performance Period. The Target
Grant will be rounded to the nearest whole number of Performance Shares.

        Example Calculation of Target Grant at Target Value:

        Target Value: $100,000
        Average OSM Share Price: $20.00
        Target Grant:  $100,000 / $20.00 = 5,000 Performance Shares

                                                                     page 2 of 8


Once the Target Grant is set for a three-year Performance Period it will not be
changed unless otherwise provided in the 2005 Program or the Plan.

        4.3. PERFORMANCE AWARD DETERMINATION

Performance Shares are earned at the end of the three-year Performance Period
subject to the following performance measures as approved by the Committee.

        4.3.1. TOTAL SHAREHOLDER RETURN RELATIVE TO INDUSTRY PEER GROUP.

Fifty percent (50%) of the Target Grant for a Performance Period is earned based
on Total Shareholder Return ("TSR") relative to a select steel industry peer
group ("Peer Group" defined in Section 4.3.2) TSR is defined as the stock price
appreciation including reinvestment of dividends during the Performance Period.

        The Relative Total Shareholder Return ("rTSR") performance will be
        calibrated as follows:

            Superior       >=  75th Percentile Performance
            Target          =  50th Percentile Performance
            Threshold       =  25th Percentile Performance

The percentile rank of the Company will be determined through a rank ordering of
the Peer Group and the Company. The top ranked company will be the 100th
percentile and the bottom ranked company will be the 0th percentile. The
"PERCENTRANK" function of Microsoft Excel will indicate the Company's relative
rank. The Performance Award determination for this measure will be calculated as
outlined in Sections 5.1 and 5.2.

        4.3.2. PEER GROUP

For the rTSR award determination, a performance peer group ("Peer Group") is
required. The Peer Group for a Performance Period will be defined at the
beginning of the Performance Period, approved by the Committee and documented in
an Addendum to this 2005 Program. The Peer Group may be modified for future
Performance Periods. The Peer Group may be adjusted at the discretion of the
Committee; however, to the extent any modification of the Peer Group impacts the
Performance Award to be received by a Participant, such modification will be
made within the time period prescribed by Section 162(m) of the Code and related
regulations.

In general, if a Peer Group company is acquired or otherwise ceases to have a
publicly traded common stock during the Performance Period, it will be dropped
from the Peer Group. If, however, the company ceases to have a tradable common
stock for reasons of bankruptcy, liquidation or other indication of financial
distress, the company will remain in the Peer Group as the lowest performing
company. All decisions regarding the above will be made by the Committee and are
final.

                                                                     page 3 of 8


        4.3.3. COMPANY FINANCIAL MEASURE.

Fifty percent (50%) of the Target Grant for a Performance Period is earned based
on the three-year average EBITDA per ton of steel shipped. Target- and
range-setting for the Company's EBITDA measure is based on OSM's internal
financial plan and forecasts, as well as any other information that the
Committee may choose to use. The EBITDA measure will be expressed in terms of a
minimum "Threshold Performance", "Target Performance" and "Superior Performance"
for the three-year Performance Period. The CEO will recommend, and the Committee
will approve, the Threshold, Target and Superior levels of performance for a
Performance Period and document the approved levels in an Addendum to this 2005
Program.

The Performance Award determination for this measure will be calculated as
outlined in 5.1 and 5.2.

Once targets and ranges are set for a three-year Performance Period, they may
not be changed. New performance assumptions may be incorporated in targets and
ranges set for future Performance Periods.

5.  PAYMENT OF PERFORMANCE AWARD

        5.1. CALCULATION OF ACTUAL PERFORMANCE AWARD

The actual Performance Award is expressed as a number of Performance Shares and
is determined by the Participant's Target Grant (see Section 4.2) and the actual
performance level that the Company achieves over the three-year Performance
Period. See Exhibits for example award calculations under different scenarios.

        The actual Performance Award will be calibrated as follows:

                            Multiple Applied to # of
            Performance     Performance Shares of
            Level           Target Grant
            -----------     ------------------------
            Superior        2.00 X
            Target          1.00 X
            Threshold       0.25 X

        5.2. INTERPOLATION OF PERFORMANCE AWARDS BETWEEN PERFORMANCE LEVELS

Linear interpolation will be used to determine actual awards when Company
performance is between performance levels. No awards will be earned if Company
performance is not at or above threshold level for either the rTSR or Company
financial measures.

                                                                     page 4 of 8


If at least the threshold is achieved in a category, then Performance Shares
will be earned in an amount equal to the number of the award's target shares
tied to that category, multiplied by a percentage determined by a straight-line
interpolation between the level of the Company's performance in that category
and the above-stated payout percentages.

        5.3. FORM AND MANNER OF PAYOUT

As indicated above and subject to Section 6 below, the actual Performance Award
will be paid out as follows: Forty percent (40%) of the Performance Award will
be paid out in OSM Shares. The remaining sixty percent (60%) will be payable in
cash in an amount determined by multiplying the number of remaining Performance
Shares by the prior twenty-trading-day average closing price as of the last day
of the Performance Period.

The delivery of OSM Shares and payment of cash will be made as soon as
reasonably practicable following the Committee's certification of performance
results. In general, payments will be made before the close of the first quarter
of the fiscal year following the end of the Performance Period ("Payment Date").

        5.4. TAXATION

All Performance Awards are subject to any applicable taxes immediately upon
payout. The Company will withhold any sums that federal, state, local, or
foreign tax law requires to be withheld with respect to award payments. All
applicable taxes will be subtracted from the cash amount payable to the
Participant.

6.  2005 PROGRAM GUIDELINES

        6.1. RETIREMENT

Upon retirement on or after age 55 with 15 years of pension eligible Company
service under the Company's pension plan applicable to the Participant, or on or
after age 65 ("Retirement"), for all Performance Periods commenced at the time
of Retirement, a pro-rata Performance Award will be calculated based on actual
performance at the end of the Performance Period and paid contingent upon
receipt of any separation agreement requested by the Company. Unless otherwise
specified in the separation agreement, such payments will be made on the
applicable Payment Date for the Performance Award as prorated for service during
the period.

                                                                     page 5 of 8


        6.2. VOLUNTARY TERMINATION AND INVOLUNTARY TERMINATION FOR CAUSE

Upon voluntary termination other than Retirement or involuntary termination for
Cause, any Performance Awards not paid by the date of termination are completely
forfeited, including Performance Awards earned but unpaid from completed
Performance Periods and Performance Awards not yet earned. Involuntary
termination of your employment for "Cause" means any act or omission that is: a
breach of your obligations to the Company, including but not limited to
substantial absence without cause, serious breach of confidence, criminal
offenses committed at the place of work or outside of it, personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform stated duties, willful violation of any
law, rule, or regulation (other than traffic violations or similar offenses).

        6.3. INVOLUNTARY TERMINATION WITHOUT CAUSE

Upon involuntary termination without Cause (as defined in 6.2), (i) if the date
of termination is at least 24 months into the Performance Period, a pro-rata
Performance Award will be calculated based on actual performance at the end of
the Performance Period and paid contingent upon any separation agreement
requested by the Company; and (ii) all other Performance Awards for all other
Performance Periods will be completely forfeited at the date of termination. Any
payments will be made on the applicable Payment Date for the Performance Award
as prorated for service during the period.

        6.4. DEATH AND LONG-TERM DISABILITY

If termination of a Participant's employment occurs during the Performance
Period for reason of death or Long-Term Disability as defined in the Company's
Long-Term Disability Policy then in effect, a pro-rata Performance Award will be
calculated based on actual performance at the end of the Performance Period.
Unless otherwise specified in the separation agreement, such payments will be
made on the applicable Payment Date for the Performance Award as prorated for
service during the period. In the event of death, the payment will be made to
the Employee's estate.

        6.5. CHANGE OF CONTROL

In the event that a Change in Control (as defined in the Plan) is deemed to have
occurred at any time within a Performance Period, a pro-rata Performance Award
will be calculated based on actual performance as of the date of the Change in
Control and paid as soon as reasonably practical following the Change in
Control.

        6.6. NEW HIRES AND PROMOTIONS INTO ELIGIBILITY

Subject to approval by the Committee, any individual who is hired or promoted
into a position that is selected for participation in the 2005 Program during
the first twelve months of a Performance Period will be eligible to participate
in such Performance Period. The Target Value and Target Grant granted will be
prorated for the portion of the Performance Period in which he or she is a
Participant.

                                                                     page 6 of 8


Individuals who are hired or promoted into a position that is selected for
participation in the 2005 Program after the first twelve months of a Performance
Period will not be eligible for that Performance Period but will be eligible for
subsequent Performance Periods to the extent approved by the Committee.

        6.7. PROMOTIONS WITHIN 2005 PROGRAM ELIGIBLE POSITIONS

For any current Participant who is promoted to another 2005 Program-eligible
position, no changes will be made to grant levels for all Performance Periods
commenced by the date of promotion. Grant levels for such Participants may be
reviewed by the Committee for subsequent Performance Periods.

        6.8. REMOVAL FROM 2005 PROGRAM

A Participant may be removed from further participation in the 2005 Program by
the Committee and such removal shall be effective as of the date determined by
the Committee. In such a case, the Participant shall be eligible to receive a
pro-rated Performance Award, if any, based on his or her period of participation
during the Performance Period ending in the year in which the Participant's
removal occurred.

7.  MISCELLANEOUS PROVISIONS

        7.1. ASSIGNMENT OR TRANSFER

No Performance Awards or other interest or rights under the 2005 Program or the
Plan may be sold, assigned, transferred, pledged or otherwise encumbered, except
by will or by the laws of descent and distribution; provided that, if so
determined by the Committee, a Participant may, in the mender established by the
Committee, designate a beneficiary to exercise the rights of the Participant
with respect to any Performance Award upon the death of the Participant.

        7.2. COSTS AND EXPENSES

The costs and expenses of administering the 2005 Program and Plan shall be borne
by the Company and shall not be directly charged against any Participant.

        7.3. EFFECT ON EMPLOYMENT

Nothing contained in the Plan, 2005 Program or any related agreement shall
affect, or be construed as affecting, the terms of employment of any Participant
except to the extent specifically provided. Nothing contained in this Plan, the
2005 Program or any related agreement shall impose, or be construed as imposing,
any obligation on (i) the Company to continue the employment of any Participant;
or (ii) any Participant to remain in the employ of the Company.

                                                                     page 7 of 8


        7.4. NOT PART OF OTHER BENEFITS

The benefits provided in 2005 Program and the Plan shall not be deemed a part of
any other benefit provided by the Company to its employees. The Company assumes
and shall have no obligation to Participants except as expressly provided in the
Plan or the 2005 Program.

        7.5. AMENDMENT OR TERMINATION OF THE 2005 PROGRAM

The Committee shall have the right to amend or terminate the 2005 Program at any
time in any way provided, that no such amendment or termination is made without
the consent of the affected Participant, if such action would impair the right
of such Participant under any outstanding Performance Award.

        7.6. PLAN TERMS

The terms of the Plan are incorporated by reference into the 2005 Program. The
Company and the Committee retain all rights and authority under the Plan and
2005 Program with respect to a Performance Award. Any conflict between the Plan
and the 2005 Program will be resolved in favor of the Plan.

        7.7. NO RIGHTS OF STOCK OWNERSHIP

Any Performance Award will not entitle a Participant to any interest in or to
any dividend, voting, or other rights normally attributable to common stock
ownership.

        7.8. DISPUTE RESOLUTION

Any dispute or disagreement with arises under, or as a result of, or pursuant
to, this 2005 Program will be determined by the Company's Board or Committee in
its absolute and uncontrolled discretion, and any such determination or any
other determination by the Board or Committee under or pursuant to this 2005
Program and any interpretation by the Board or Committee of the terms of the
2005 Program will be final, binding and conclusive on all persons affected.

                                                                     page 8 of 8

EX-10.3

Exhibit 10.3

                            OREGON STEEL MILLS, INC.
             2005 NON-EMPLOYEE DIRECTOR EQUITY COMPENSATION PROGRAM
                     UNDER THE 2005 LONG-TERM INCENTIVE PLAN

1.  PURPOSE.

The purposes of this Program are to attract and retain the services of the
Participants who make significant contributions to the Company; to further the
growth and financial success of the Company by aligning the interests of the
Participants with the interests of the Company's stockholders; and to provide
the Participants with an incentive for long-term value creation.

2.  DEFINITIONS.

For purposes of the Program, terms are defined as set forth in the 2005
Long-Term Incentive Plan, and as follows:

"Common Stock" means the common stock of the Company, par value $.01 per share.

"Effective Date" means April 28, 2005.

"Participant" means a Non-Employee Director who is granted a Restricted Stock
award under this Program.

"Plan" means the Oregon Steel Mills, Inc. 2005 Long-Term Incentive Plan, as
amended from time to time.

"Program" means this Oregon Steel Mills, Inc. 2005 Non-Employee Director Equity
Compensation Program, as amended from time to time.

"Retirement" means termination of an individual's directorship with at least ten
years of service as a member of the Board or after age 70.

"Termination of Directorship" means the date upon which any Participant ceases
to be a member of the Board for any reason.

In addition, certain other terms used herein have definitions given to them in
the first place in which they are used.

3.  ADMINISTRATION.

The Program is administered by the Committee. The Committee has the authority to
adopt, alter, supplement and repeal such administrative rules, guidelines and
practices governing the Program as the Committee deems advisable, to interpret
the terms and provisions of the Program and any Restricted Stock Award issued
under the Program (and any agreement relating thereto) and to otherwise
supervise the administration of the Program.

The determination of the Committee on all matters relating to the Program or any
agreement relating thereto is conclusive and final. No member of the Committee
will be liable for any action or determination made in good faith with respect
to the Program or any Award.

                                                                     page 1 of 4


4.  ELIGIBILITY.

Only individuals who are Non-Employee Directors are eligible to be granted
Awards under the Plan.

5.  RESTRICTED STOCK AWARDS.

     5.1. Initial Grants. Each participant who first becomes a Non-Employee
          Director after the Effective Date is automatically granted an initial
          Restricted Stock Award on the date of such election or appointment, in
          the number of shares of Common Stock equal to $30,000, based on the
          Fair Market Value of the shares on the grant date (the "Initial Grant
          Amount"). Such Initial Grant is in addition to any Annual Grant as
          described in Section 5.2 below.

     5.2. Annual Grants. On the date of each annual meeting of the Company's
          stockholders on or after the Effective Date, each person who is a
          Non-Employee Director immediately following such meeting (regardless
          of whether elected, re-elected or retained as a Non-Employee Director
          at such meeting) will automatically be granted an Award of Restricted
          Stock in the number of shares of Common Stock (the "Annual Grant
          Amount") equal to $25,000 at the Fair Market Value as of such meeting
          date. (The Initial Grant Amount and the Annual Grant Amount are
          referred to herein collectively as the "Grant Amounts".)

     5.3. Available Shares. In the event that the number of shares of Common
          Stock available for future grant under the Plan is insufficient to
          make all automatic grants required to be made on a given date, then
          all Non-Employee Directors entitled to a grant on such date will share
          ratably in the number of shares of Common Stock in accordance with the
          number of shares available for grant under the Plan.

6.  AWARD TERMS.

Restricted Stock Awards granted under the Program will be evidenced by a grant
agreement and will be subject to the following terms and conditions:

     6.1. Vesting. Except as otherwise provided in this Program, Awards will
          vest as follows:

                     Percentage of Shares
                       Awarded  That Vest    Time Period or Event
                     --------------------    ----------------------------------
                                  33 1/3%    One year from date of grant
                                  66 2/3%    Two years from the date of grant
                                     100%    Three years from the date of grant
                                     100%    Upon a Change in Control

                                                                     page 2 of 4


     6.2. Termination of Directorship. If a Termination of Directorship occurs,
          any unvested Award may vest in accordance with the following:

                      If Termination of
                     Directorship is for:    Disposition of Unvested Awards
                     --------------------    ------------------------------
                           Death                    Vest immediately
                         Disability                 Vest immediately
                         Retirement                     Forfeited
                        Not elected or                  Forfeited
                           removed

     6.3. Taxation. Unless a timely tax election is otherwise made by a
          Participant, the vesting of each portion on an Award of Restricted
          Stock is a taxable event, documented by a 1099 for the Participant
          reporting the amount of the Fair Market Value of the Restricted Shares
          on the vesting date.

7.  SECURITIES LAW AND LISTING MATTERS.

     7.1. Compliance with Laws. If the Committee deems it necessary, the Company
          may require that a restrictive legend be affixed to certificates for
          shares of Common Stock issued pursuant to Awards.

     7.2. Registration and Listing. If the Committee determines, in its
          discretion, that it is necessary or desirable that the shares subject
          to any Award (a) be registered, listed or qualified on any securities
          exchange or the Nasdaq Stock Market or under any applicable law, or
          (b) be approved by any governmental regulatory body, or (c) be
          approved by the stockholders of the Company, as a condition of, or in
          connection with, the granting of such Award, the Award may not be
          exercised in whole or in part unless such registration, listing,
          qualification or approval has been obtained free of any condition not
          acceptable to the Committee.

8.  AMENDMENT OR TERMINATION OF THIS PROGRAM.

Unless previously terminated by the Board, this Program will terminate on May
31, 2010 and no Awards will be granted thereafter. Such termination will not
affect any Award previously granted. The Board may from time to time in its
discretion amend or modify this Program without the approval of the stockholders
of the Company, except as such approval as may be required under the Exchange
Act, the Code or by the national securities exchange on which the Common Stock
is traded.

                                                                     page 3 of 4


9.  GENERAL PROVISIONS.

     9.1. Plan Terms. The Program is subject to the terms of the 2005 Long-Term
          Incentive Plan and the terms of the Plan are incorporated by reference
          into the 2005 Program. The Company and the Committee retain all rights
          and authority under the Plan and 2005 Program with respect to an
          Award. Any conflict between the Plan and the 2005 Program will be
          resolved in favor of the Plan.

     9.2. No Other Rights. Nothing in the Program, or any Award granted under
          the Plan, will confer any right to any person to continue as a
          director of the Company or interfere in any way with the rights of the
          stockholders of the Company or the Board to elect and remove
          directors.

     9.3. Assignment or Transfer. No Awards or other interest or rights under
          the 2005 Program or the Plan may be sold, assigned, transferred,
          pledged or otherwise encumbered, except by will or by the laws of
          descent and distribution; provided that, if so determined by the
          Committee, a Participant may, in the manner established by the
          Committee, designate a beneficiary to exercise the rights of the
          Participant with respect to any Award upon the death of the
          Participant.

     9.4. Dispute Resolution. Any dispute or disagreement which arises under, or
          as a result of, or pursuant to, this 2005 Program will be resolved by
          the Company's Board or Committee in its absolute discretion, and any
          such determination or any other determination by the Board or
          Committee under or pursuant to this 2005 Program and any
          interpretation by the Board or Committee of the terms of the 2005
          Program will be final, binding and conclusive on all persons affected.

                                                                     page 4 of 4

EX-10.4

Exhibit 10.4

                               FIRST AMENDMENT TO
                       LETTER OF CREDIT FACILITY AGREEMENT

     THIS FIRST AMENDMENT TO LETTER OF CREDIT FACILITY AGREEMENT is entered into
as of June 15, 2005, by and between OREGON STEEL MILLS, INC., a Delaware
corporation ("Applicant"), and U.S. BANK NATIONAL ASSOCIATION ("Issuer").

                                    RECITALS

     Applicant and Issuer are parties to that certain Letter of Credit Facility
Agreement dated as of March 29, 2005 (the "L/C Agreement") and desire to amend
the L/C Agreement in the manner set forth below.

     NOW, THEREFORE, in consideration of the mutual covenants and promises of
the parties contained herein, Issuer and Applicant hereby agree as follows:

     1.   Definitions. All capitalized terms used herein and not otherwise
defined herein shall have the meaning attributed to them in the L/C Agreement.

     2.   Amendment of Section 1.1. The definition of "Commitment Amount" in
Section 1.1 is hereby amended to read as follows:

     "Commitment Amount" means $35,000,000.

     3.   Effective Date. This First Amendment shall be effective as of June 15,
2005 upon execution by the parties.

     4.   Ratification. Except as otherwise provided in this First Amendment,
all of the provisions of the L/C Agreement are hereby ratified and confirmed and
shall remain in full force and effect.

     5.   One Agreement. The L/C Agreement, as modified by the provisions of
this First Amendment, shall be construed as one agreement.

     6.   Counterparts. This First Amendment may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed to be an
original, and all of which when taken together shall constitute one and the same
agreement. Delivery of an executed signature page of this First Amendment by
facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof.
                                                                          Page 1


     IN WITNESS WHEREOF, this First Amendment to Letter of Credit Facility
Agreement has been duly executed as of the date first written above.

                                        OREGON STEEL MILLS, INC.


                                        By: /s/ Jeff S. Stewart
                                            ------------------------------------
                                        Title: Corporate Controller


                                        U.S. BANK NATIONAL ASSOCIATION


                                        By: /s/ Scott Bell
                                            ------------------------------------
                                        Title: Senior Vice President
                                                                          Page 2

EX-31.1

EXHIBIT 31.1

                                  CERTIFICATION

     I, James E. Declusin, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Oregon Steel
     Mills, Inc.;

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material fact or omit to state a material fact necessary to make the
     statements made, in light of the circumstances under which such statements
     were made, not misleading with respect to the period covered by this
     report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the registrant as of, and for, the periods presented in this report;

4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
     financial reporting (as defined in Exchange Act Rules 13a-15(f) and
     15d-15(f)) for the registrant and have:

     a)   Designed such disclosure controls and procedures, or caused such
          disclosure controls and procedures to be designed under our
          supervision, to ensure that material information relating to the
          registrant, including its consolidated subsidiaries, is made known to
          us by others within those entities, particularly during the period in
          which this report is being prepared;

     b)   Designed such internal control over financial reporting, or caused
          such internal control over financial reporting to be designed under
          our supervision, to provide reasonable assurance regarding the
          reliability of financial reporting and the preparation of financial
          statements for external purposes in accordance with generally accepted
          accounting principles;

     c)   Evaluated the effectiveness of the registrant's disclosure controls
          and procedures and presented in this report our conclusions about the
          effectiveness of the disclosure controls and procedures, as of the end
          of the period covered by this report based on such evaluation; and

     d)   Disclosed in this report any change in the registrant's internal
          control over financial reporting that occurred during the registrant's
          most recent fiscal quarter (the registrant's fourth fiscal quarter in
          the case of an annual report) that has materially affected, or is
          reasonably likely to materially affect, the registrant's internal
          control over financial reporting; and

5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation of internal control over financial reporting, to
     the registrant's auditors and the audit committee of the registrant's board
     of directors (or persons performing the equivalent function):

     a)   All significant deficiencies and material weaknesses in the design or
          operation of internal control over financial reporting which are
          reasonably likely to adversely affect the registrant's ability to
          record, process, summarize and report financial information; and

     b)   Any fraud, whether or not material, that involves management or other
          employees who have a significant role in the registrant's internal
          control over financial reporting.


/s/ James E. Declusin
- -------------------------------------
James E. Declusin
President and Chief Executive Officer


Date: August 9, 2005

EX-31.2

EXHIBIT 31.2

                                  CERTIFICATION

     I, L. Ray Adams, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Oregon Steel
     Mills, Inc.;

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material fact or omit to state a material fact necessary to make the
     statements made, in light of the circumstances under which such statements
     were made, not misleading with respect to the period covered by this
     report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the registrant as of, and for, the periods presented in this report;

4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
     financial reporting (as defined in Exchange Act Rules 13a-15(f) and
     15d-15(f)) for the registrant and have:

     a)   Designed such disclosure controls and procedures, or caused such
          disclosure controls and procedures to be designed under our
          supervision, to ensure that material information relating to the
          registrant, including its consolidated subsidiaries, is made known to
          us by others within those entities, particularly during the period in
          which this report is being prepared;

     b)   Designed such internal control over financial reporting, or caused
          such internal control over financial reporting to be designed under
          our supervision, to provide reasonable assurance regarding the
          reliability of financial reporting and the preparation of financial
          statements for external purposes in accordance with generally accepted
          accounting principles;

     c)   Evaluated the effectiveness of the registrant's disclosure controls
          and procedures and presented in this report our conclusions about the
          effectiveness of the disclosure controls and procedures, as of the end
          of the period covered by this report based on such evaluation; and

     d)   Disclosed in this report any change in the registrant's internal
          control over financial reporting that occurred during the registrant's
          most recent fiscal quarter (the registrant's fourth fiscal quarter in
          the case of an annual report) that has materially affected, or is
          reasonably likely to materially affect, the registrant's internal
          control over financial reporting; and

5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation of internal control over financial reporting, to
     the registrant's auditors and the audit committee of the registrant's board
     of directors (or persons performing the equivalent function):

     a)   All significant deficiencies and material weaknesses in the design or
          operation of internal control over financial reporting which are
          reasonably likely to adversely affect the registrant's ability to
          record, process, summarize and report financial information; and

     b)   Any fraud, whether or not material, that involves management or other
          employees who have a significant role in the registrant's internal
          control over financial reporting.


/s/ L. Ray Adams
- ----------------------------------------------------
L. Ray Adams
Vice President - Finance and Chief Financial Officer


Date: August 9, 2005

EX-32.1

EXHIBIT 32.1

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Oregon Steel Mills, Inc. on Form 10-Q
for the quarter ended June 30, 2005, as filed with the Securities and Exchange
Commission on the date hereof (the "Report"), I, James E Declusin, President and
CEO of Oregon Steel Mills, Inc., and I, L. Ray Adams, Vice President of Finance
and CFO of Oregon Steel Mills, Inc., certify, pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that to the best of my knowledge:

(1)  The Report fully complies with the requirements of section 13(a) or 15(d)
     of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78c(d)); and

(2)  The information contained in the Report fairly presents, in all material
     respects, the financial condition and results of operations of Oregon Steel
     Mills, Inc.


/s/ James E. Declusin
- ----------------------------
James E. Declusin
President and CEO

August 9, 2005


/s/ L. Ray Adams
- ----------------------------
L. Ray Adams
Vice President - Finance and
Chief Financial Officer

August 9, 2005