Oregon Steel Mills, Inc. Announces Second Quarter Results.

Business Editors

PORTLAND, Ore.--(BUSINESS WIRE)--Aug. 14, 2003

Oregon Steel Mills, Inc. (NYSE:OS) reported a second quarter net loss of $51.9 million ($1.97 loss per share), including asset impairment charges of $40.4 million after tax ($1.53 loss per share). For the second

The asset impairments in the second quarter of 2003 consisted of fixed assets and related dedicated stores and other assets at the Company's Portland, Oregon, and Pueblo, Colorado, steelmaking facilities totaling $36.1 million pre-tax ($22.9 million after-tax) and a $17.5 million charge to income tax expense due to a valuation allowance on recorded deferred tax assets.

During the second quarter of 2003, the Company shut down its Portland, Oregon, melt shop and has recorded an impairment charge of $27.0 million for the fixed assets and related assets. This decision was predicated on the determination that purchasing steel slabs was a better financial decision than continuing to operate the melt shop over the long term.

In addition, the Company recognized an asset impairment charge of $9.1 million on a caster and related assets at the Rocky Mountain Steel Mills (RMSM) Division. The Company completed design specifications in the second quarter of 2003 for the new single furnace due to begin operation in mid-2004. The new single furnace will only require one caster. Accordingly, it was determined that one of the casters and related assets would have no future service potential.

Product revenues for the second quarter of 2003 were $179.2 million on shipments of 422,400 tons, compared to product revenues of $217.8 million on shipments of 468,200 tons for the comparable 2002 quarter. The decrease in revenue and shipments is due to fewer shipments during the second quarter of 2003 of the Company's welded pipe and rail products. During the second quarter of 2003 the Company shipped 79,000 tons of welded pipe and 86,800 tons of rail, compared to 110,200 tons of welded pipe and 101,200 tons of rail in the second quarter of 2002.

The Company's average selling price per ton decreased 9% to $424 in the second quarter of 2003 compared to $465 during the second quarter of 2002. The reduction in average selling price is primarily related to the shift in product mix discussed above.

Operating loss for the second quarter of 2003, before impairments, was $12.5 million, compared to operating income of $17.0 million for the comparable 2002 quarter. Operating income was negatively impacted by higher-than-expected raw material costs (scrap and slabs), higher energy costs at the Company's RMSM Division and continued depressed pricing and markets for the OSM Division's flat roll products.

At the RMSM Division, energy costs were up $15 a ton compared to the second quarter of 2002 and purchased scrap was $13 per ton higher in the second quarter of 2003 compared to the second quarter of 2002.

Higher manufacturing costs at the Oregon Steel Division were primarily driven by significantly higher overall slab costs, approximately $45 per ton increase in the second quarter of 2003 compared to the second quarter of 2002. Energy costs increased minimally at the Oregon Steel Division.

Earnings before interest, taxes, depreciation and amortization (EBITDA) after fixed asset impairment charges for the quarter were a negative $8.1 million, compared to $29.5 million in the second quarter of 2002.

LIQUIDITY

At June 30, 2003, the Company maintained a $75 million credit facility, of which $5 million was restricted, an additional $8.0 million was restricted under outstanding letters of credit, and $62.0 million was available for use. Total debt outstanding net of cash of $24.7 million was $277 million, compared to $254 million at the end of June 30, 2002.

The Company has entered into an agreement with its lender to amend the $75 million revolving credit facility effective June 30, 2003. Due to the impairment charges recognized in the second quarter of 2003 and the ongoing difficult industry conditions, certain covenants were amended as of June 30, 2003, and for each month through the June 30, 2005, maturity date. This amendment contains an intention by the parties to reduce the credit facility by $10 million. Refer to the Amendment Number 2 to the Credit Facility that was filed as an Exhibit 10.1 to the Company's Second Quarter 10-Q filed with the SEC on August 14, 2003, for further detail regarding these covenants.

OUTLOOK

Although the Company recently announced sales price increases of $20 per ton for plate products, $20 per ton for coil products and $15 per ton for rod/bar products, the Company believes that operating income in the second half of the year will continue to be negatively impacted by higher costs for raw materials and energy. As a result, the Company expects to report losses for the second half of the year.

However, the Company believes that its operating and financial performance for the second half of the year will be better than in the first half of the year with positive EBITDA. Further, the Company believes that its cash position will be positive, and it does not expect to have balances outstanding on its credit facility at year-end.

Jim Declusin, President and CEO, stated, "The charges we took in the second quarter are a significant first step in the repositioning of the Company. We believe our decision to purchase all of our slab requirements is an important and necessary shift in strategic direction for the Company."

Mr. Declusin continued, "An integral component of our new direction is to improve the perception of OSM in the eyes of our customers as a consistent, reliable supplier of quality products under all market conditions. We are aggressively seeking opportunities to rebuild the customer base in our OSM Division.

Our diverse product base makes us very competitive in the market place. We will be well positioned in all of our products when economic conditions improve."

CONFERENCE CALL WEBCAST

You are invited to listen to a live broadcast of the Company's conference call at 8:00 a.m. PDT, August 14, 2003, over the Internet, accessible at www.osm.com on the Investor Relations page.

           Oregon Steel Mills, Inc. and Subsidiary Companies
             Condensed Consolidated Income Statements (1)
         (In thousands, except tonnage and per share amounts)
                              (Unaudited)

                               Three Months Ended   Six Months Ended
                                    June 30,            June 30,
                                 2003      2002      2003      2002
                                 ----      ----      ----      ----

Sales:
  Product                      $179,220  $217,774  $346,151  $405,675
  Freight                        10,674    13,543    19,425    24,710
                                --------  --------  --------  --------
    Total Sales                 189,894   231,317   365,576   430,385
Cost of sales                   190,006   197,443   359,607   374,812
Fixed and other assets
 impairment charges (2)          36,113        --    36,113        --
Loss (gain) on sale of assets      (213)     (111)     (274)   (1,069)
Selling, general and
 administrative expenses         12,551    16,966    25,264    31,550
                                --------  --------  --------  --------
  Operating income              (48,563)   17,019   (55,134)   25,092
Interest expense, net            (8,352)   (8,288)  (16,561)  (16,940)
Other income, net                   459       965       735     1,471
Minority interest                 2,204      (232)    2,462      (364)
                                --------  --------  --------  --------
Income (loss) before income
 taxes                          (54,252)    9,464   (68,498)    9,259
Income tax benefit (expense) (3)  2,305    (4,263)    7,525    (4,179)
                                --------  --------  --------  --------
Net income (loss) before
 cumulative effect of change
 in accounting principle       $(51,947) $  5,201  $(60,973) $  5,080
                                --------  --------  --------  --------
Cumulative effect of change in
 accounting principle (4)            --        --        --   (17,967)
                                ========  ========  ========  ========
    Net income (loss)          $(51,947) $  5,201  $(60,973) $(12,887)
                                ========  ========  ========  ========
Basic net income (loss) per
 share before cumulative
 effect of change in
 accounting principle (4)      $  (1.97) $   0.20  $  (2.31) $   0.19
Basic net income (loss) per
 share after cumulative
 effect of change in
 accounting principle          $  (1.97) $   0.20  $  (2.31) $  (0.49)
Basic weighted average shares
 outstanding                     26,388    26,388    26,388    26,387

Operating income per ton       $(114.97) $  36.35  $ (67.11) $  27.95
Operating margin                 (25.6)%     7.4%    (15.1)%     5.8%

Depreciation and amortization  $ 11,227  $ 11,746  $ 21,691  $ 23,443
EBITDA after impairment
 charges (5)                   $ (8,101) $ 29,498  $ (3,674) $ 49,642

Total tonnage sold:
Oregon Steel Division
  Plate and coil                125,900   138,000   234,600   254,200
  Welded pipe                    79,000   110,200   130,200   211,400
                                --------  --------  --------  --------
                                204,900   248,200   364,800   465,600
                                --------  --------  --------  --------
Rocky Mountain Steel Mills
 Division
  Rail                           86,800   101,200   199,700   199,900
  Rod/Bar                       117,400   109,300   232,900   220,200
  Seamless pipe                  13,300     7,000    24,200     9,300
  Semi-finished                      --     2,500        --     2,600
                                --------  --------  --------  --------
                                217,500   220,000   456,800   432,000
                                --------  --------  --------  --------
    Total Company               422,400   468,200   821,600   897,600
                                ========  ========  ========  ========

Product Sales: (6)
  Oregon Steel Division        $ 97,465  $134,827  $175,808  $244,848
  Rocky Mountain Steel Mills
   Division                      81,755    82,947   170,343   160,827
                                --------  --------  --------  --------
    Total Company              $179,220  $217,774  $346,151  $405,675
                                ========  ========  ========  ========

Average selling price per
 ton: (6)
  Oregon Steel Division        $    476  $    543  $    482  $    526
  Rocky Mountain Steel Mills
   Division                    $    376  $    377  $    373  $    372
Total Company                  $    424  $    465  $    421  $    452


    (1) Certain reclassifications have been made in prior year's
        periods to conform to the current period presentations. Such
        reclassifications do not effect results of operations as
        previously reported.

    (2) The $36.1 million impairment charge consists of a) impairment
        of fixed assets -- $26.6 million, and b) reduction of
        dedicated stores and operating supplies to net realizable
        value -- $9.5 million.

    (3) Includes a direct charge of $17.5 million due to a valuation
        allowance on recorded deferred tax assets.

    (4) Write-off of goodwill related to adoption of FASB 142, net of
        tax and minority interest.

    (5) Excludes cumulative effect of accounting change.

    (6) Product sales and average selling price per ton exclude
        freight revenue and sales of electricity.


           Oregon Steel Mills, Inc. and Subsidiary Companies
                 Condensed Consolidated Balance Sheets
                            (In thousands)

                                                June 30,  December 31,
                                                  2003        2002
                                                  ----        ----
                                               (Unaudited)

Current assets:
  Cash and cash equivalents                       $24,766     $33,050
  Trade accounts receivable, net                   61,297      84,547
  Inventories                                     150,590     162,834
  Deferred taxes and other current assets          17,585      15,031
                                                  -------     -------
                                                  254,238     295,462
Property, plant and equipment, net                488,627     523,378
Goodwill                                              520         520
Intangibles, net                                      900       1,106
Other assets                                       26,463      28,896
                                                  -------     -------
     Total assets                                $770,748    $849,362
                                                  =======     =======

Current liabilities                              $131,945    $145,085
Bank debt                                              --          --
Other long-term debt                              301,624     301,428
Deferred taxes                                     12,113      16,895
Other liabilities                                  53,273      53,704
                                                  -------     -------
                                                  498,955     517,112
Minority interest                                  21,362      25,260
Stockholders' equity                              250,431     306,990
                                                  -------     -------
Total liabilities and stockholders' equity       $770,748    $849,362
                                                  =======     =======


    (1) Certain reclassifications have been made in prior year's
        periods to conform to the current period presentations. Such
        reclassifications do not effect results of operations as
        previously reported.


           Oregon Steel Mills, Inc. and Subsidiary Companies
            Condensed Consolidated Statements of Cash Flows
                            (In thousands)
                              (Unaudited)

                              Three Months Ended   Six Months Ended
                                   June 30,            June 30,
                               2003        2002    2003       2002
                               ----        ----    ----       ----

Operating activities:
  Net income (loss)          $(51,947) $   5,201 $(60,973) $ (12,887)
  Adjustments to reconcile
   net income (loss) to net
   cash provided by operating
   activities:
     Cumulative effect of
      change in accounting
      principle, net of tax,
      net of minority interest     --         --        --     17,967
     Fixed and other asset
      impairment charges (1)   36,113         --    36,113         --
     Depreciation and
      amortization             11,227     11,746    21,691     23,443
     Deferred income taxes,
      net                      (2,361)     4,774    (7,442)     4,610
     Gain on disposal of
      operating and
      non-operating assets       (213)      (111)     (274)    (1,069)
     Minority interests' share
      of income (loss)         (2,204)       232    (2,462)       364
  Changes in current assets
   and liabilities:
     Trade accounts receivable 11,947      6,641    23,250        672
     Inventories                4,086     11,342     3,414      6,733
     Operating liabilities     (2,410)    (3,186)  (12,026)    (2,982)
     Income taxes                (149)       154      (364)       154
     Other, net                  (846)     2,433     1,121      6,947
                              --------  ---------  --------  ---------
       Net cash provided by
        operating activities    3,243     39,226     2,048     43,952
                              --------  ---------  --------  ---------
Investing activities:
  Additions to property,
   plant and equipment         (5,011)    (5,576)  (11,618)    (9,884)
  Proceeds from disposal of
   property, plant and
   equipment                      521          4       582      1,205
  Other, net                     (510)       960      (479)     3,668
                              --------  ---------  --------  ---------
       Net cash used in
        investing activities   (5,000)    (4,612)  (11,515)    (5,011)
                              --------  ---------  --------  ---------
Financing activities:
  Proceeds from bank debt          --    215,259        --    396,093
  Payments on bank debt and
   long-term debt                  --   (245,978)       --   (441,238)
  Net borrowings (repayments)
   under Canadian bank
   revolving loan facility         --        168        --        305
  Minority share of
   subsidiary's distribution   (1,436)        --    (1,436)        --
  Issuance of common stock         --         --        --          4
                              --------  ---------  --------  ---------
       Net cash used in
        financing activities   (1,436)   (30,551)   (1,436)   (44,836)
                              --------  ---------  --------  ---------
Effects of foreign currency
 exchange rate                    682      1,133     2,619      1,075
                              --------  ---------  --------  ---------
Net decrease in cash and cash
 equivalents                   (2,511)     5,196    (8,284)    (4,820)
Cash and cash equivalents at
 the beginning of period       27,277      2,262    33,050     12,278
                              --------  ---------  --------  ---------
Cash and cash equivalents at
 the end of period           $ 24,766  $   7,458  $ 24,766  $   7,458
                              ========  =========  ========  =========


    (1) The $36.1 million impairment charge consists of a) impairment
        of fixed assets -- $26.6 million, and b) reduction of
        dedicated stores and operating supplies to net realizable
        value -- $9.5 million


           Oregon Steel Mills, Inc. and Subsidiary Companies
                         Calculation of EBITDA
                            (In thousands)
                              (Unaudited)

                                 Three Months Ended  Six Months Ended
                                      June 30,           June 30,
                                   2003     2002      2003      2002
                                   ----     ----      ----      ----

Net income (loss)               $(51,947) $ 5,201  $(60,973) $(12,887)
  Add back cumulative effect
   of change in accounting
   principle, net of tax, net
   of minority interest               --       --        --    17,967
                                 --------  -------  --------  --------
Net income (loss) before
 accounting change               (51,947)   5,201   (60,973)    5,080
   Provision for income tax
    (expense) benefit              2,305   (4,263)    7,525    (4,179)
                                 --------  -------  --------  --------
Pre-tax income (loss)            (54,252)   9,464   (68,498)    9,259

Add back:
  Interest expense                 8,352    8,288    16,561    16,940
  Depreciation                    11,197   11,716    21,630    23,382
  Amortization                        30       30        61        61
                                 --------  -------  --------  --------
EBITDA                           (34,673)  29,498   (30,246)   49,642

Add back:
  Fixed asset impairment
   charges                        26,572       --    26,572        --
                                 --------  -------  --------  --------
EBITDA after impairment charges $ (8,101) $29,498  $ (3,674) $ 49,642
                                 ========  =======  ========  ========