830260--3/1/2006--OREGON_STEEL_MILLS

related topics

{cost, contract, operation}

{debt, indebtedness, cash}

{condition, economic, financial}

{gas, price, oil}

{cost, regulation, environmental}

{operation, natural, condition}

{cost, operation, labor}

{stock, price, operating}

{personnel, key, retain}

{product, market, service}

The steel industry is cyclical, and has experienced periods of weak demand for products, excess capacity and low prices. If those conditions return the Company could be required to reduce prices for its products and profitability could be adversely impacted. Increased levels of imports could have an adverse effect on the Company s business. The inputs used in production are subject to price fluctuations that could increase the costs of production and adversely affect the Company s profitability. Supply limitations or delays, including those resulting from trade tariffs or quotas or port closures, would constrain the Company s production and could materially and adversely affect its sales and profitability. The Company services cyclical industries and generally does not have long-term contracts with its customers, and therefore any downturn in these industries could reduce revenue and profitability. The Company s substantial amount of debt could materially and adversely affect its financial health in a number of ways, including limiting its ability to obtain additional financing and reducing its ability to use cash flow for purposes other than debt payments, and prevent the Company from fulfilling its obligations under the outstanding debt. The Company may not be able to generate sufficient cash flow to service its debt which could prevent the Company from fulfilling its obligations under its outstanding debt. The Company s pension plans are currently underfunded and are at risk of becoming more underfunded due to changes in interest rates or due to the performance of pension plan assets that are invested in capital markets. The Company faces significant competition in its principal markets, and increased competition could reduce gross margins and net income. Unplanned repairs, equipment outages, and delays in capital expansion projects could interrupt production and reduce income or cash flow. The resolution of pending environmental actions and the costs of compliance with environmental orders and regulations may materially and adversely affect the Company s competitiveness and profitability. A portion of the Company s workforce is unionized; any labor disruptions, work stoppages or significant negotiated wage increases could reduce sales or increase costs, and accordingly could have an adverse effect on the Company s business. The Company offers stock compensation to certain employees and non-employee directors which can vary based on the Company s operating performance, as well as market related factors which are outside the Company s control. In addition, a portion of the expense associated with the awards varies based on the price of the Company s common stock, which may fluctuate substantially. Senior management may be difficult to replace if they leave.

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830260--3/1/2006--OREGON_STEEL_MILLS_INC