SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                                    FORM 10-K/A
                                  Amendment No. 1
               ANNUAL REPORT FILED PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2003 COMMISSION FILE NUMBER 1-9887

                            OREGON STEEL MILLS, INC.
             (Exact name of registrant as specified in its charter)

            DELAWARE                                    94-0506370
--------------------------------------------------------------------------------
 (State or other jurisdiction of              (IRS Employer Identification No.)
  incorporation or organization)

        1000 S.W. BROADWAY
             SUITE 2200
         PORTLAND, OREGON                                  97205
--------------------------------------------------------------------------------
 (Address of principal executive office)                 (Zip Code)

     REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:  (503) 223-9228

           SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

 Title of each class                  Name of each exchange on which registered
 ----------------------------         -----------------------------------------
 Common Stock, $.01 par value         New York Stock Exchange
  per share

           SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
                                      None

      Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.[X]

      Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 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
                                                      ---         -----
      Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act).

                                                  Yes  X       No
                                                      ---         ---

      The aggregate market value of the voting and non-voting common equity held
by nonaffiliates of the registrant at June 30, 2003, was approximately
$76,054,076. The aggregate market value was computed by reference to the price
at which the common equity was last sold as of the last business day of the
registrant's most recently completed second fiscal quarter.

      Indicate the number of shares outstanding of each of the registrant's
classes of common stock as of January 31, 2004:

      COMMON STOCK, $.01 PAR VALUE                  26,495,172
      ----------------------------           ------------------------------
            (Title of Class)                 (Number of shares outstanding)

                      DOCUMENTS INCORPORATED BY REFERENCE:

      Proxy statement for the Registrant's Annual Meeting of Stockholders to be
held April 29, 2004 is incorporated by reference into Part III of this report.

<PAGE>

                            OREGON STEEL MILLS, INC.
                                TABLE OF CONTENTS
                                                                            PAGE
                                     PART I
ITEM

   1.    BUSINESS............................................................. 1
               General........................................................ 1
               Products....................................................... 3
               Raw Materials and Semi-finished Slabs ......................... 5
               Marketing and Customers........................................ 6
               Competition and Other Market Factors........................... 7
               Environmental Matters.......................................... 8
               Labor Matters..................................................11
               Employees......................................................13
               Available Information..........................................13

   2.   PROPERTIES............................................................13

   3.   LEGAL PROCEEDINGS.....................................................14

   4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...................14
           Executive Officers of the Registrant...............................15

                                     PART II

   5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND
           RELATED STOCKHOLDER MATTERS........................................16

   6.   SELECTED FINANCIAL DATA...............................................17

   7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF
          FINANCIAL CONDITION AND RESULTS OF OPERATIONS.......................18

   7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
          MARKET RISK.........................................................28

   8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA...........................30

   9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
          ON ACCOUNTING AND FINANCIAL DISCLOSURE..............................59

   9A.  CONTROLS AND PROCEDURES...............................................59

                                    PART III

   10.
and 11. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
          AND EXECUTIVE COMPENSATION..........................................59

   12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
          AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS......................59

   13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS........................60

   14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES................................60

                                     PART IV

   15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
          REPORTS ON FORM 8-K.................................................61
       SIGNATURES.............................................................66


<PAGE>






                                     PART I

ITEM 1.  BUSINESS

GENERAL

         Oregon Steel Mills, Inc. ("Company" or "Registrant") was founded in
1926 by William G. Gilmore and was incorporated in California in 1928. The
Company reincorporated in Delaware in 1974. The Company changed its name in
December 1987 from Gilmore Steel Corporation to Oregon Steel Mills, Inc.

         During 2003, the Company and its subsidiaries operated two steel mills
and nine finishing facilities in the western United States and Canada. The
Company manufactures and markets one of the broadest lines of specialty and
commodity steel products of any domestic steel mill company. The Company
emphasizes the cost efficient production of higher margin specialty steel
products targeted at a diverse customer base located primarily west of the
Mississippi River and in western Canada. The Company's manufacturing flexibility
allows it to manage actively its product mix in response to changes in customer
demand and individual product cycles. The Company is organized into two business
units known as the Oregon Steel Division and Rocky Mountain Steel Mills ("RMSM")
Division.

         The Oregon Steel Division is centered on the Company's steel plate
minimill in Portland, Oregon ("Portland Mill"), which supplies steel for the
Company's steel plate, structural tubing, and large diameter pipe finishing
facilities. The Oregon Steel Division's steel pipe mill in Napa, California
("Napa Pipe Mill") is a large diameter steel pipe mill and fabrication facility.
The Oregon Steel Division also produces large diameter pipe and electric
resistance welded ("ERW") pipe at its 60% owned pipe mill in Camrose, Alberta,
Canada ("Camrose Pipe Mill"). In October 2003, the Oregon Steel Division began
production of structural tube at its Columbia Structural Tubing ("CST")
facility.

         The RMSM Division consists of steelmaking and finishing facilities of
CF&I Steel, LP ("CF&I") (dba Rocky Mountain Steel Mills) located in Pueblo,
Colorado ("Pueblo Mill"). The Company owns 87% of New CF&I, Inc. ("New CF&I"),
which owns a 95.2% general partnership interest in CF&I. In addition, the
Company owns directly a 4.3% limited partnership interest in CF&I. The Pueblo
Mill is a steel minimill which supplies steel for the Company's rail, rod and
bar, and seamless tubular finishing mills.

OREGON STEEL DIVISION

         PORTLAND MILL. The Portland Mill is the only hot-rolled steel plate
minimill and steel plate production facility in the eleven western states. The
Portland Mill melt Shop has the capability to produce slab thicknesses of 6",
7", 8" or 9" and the Rolling Mill can produce finished steel plate in widths up
to 136" and coiled plate in widths up to 120". In May 2003, the Company shut
down its Portland Mill melt shop and recorded an asset impairment charge of
$27.0 million, and is currently producing its finished product from purchased
semi-finished steel.

         During 1997, the Company completed the construction of a Steckel
Combination Mill ("Combination Mill") at its Portland Mill. The project included
installation of a new reheat furnace, a 4-high rolling mill with coiling
furnaces, a vertical edger, a down coiler, on-line accelerated cooling, hot
leveling and shearing equipment, extended roll lines, and a fully automated
hydraulic gauge control system.

         The Combination Mill gives the Company the ability to produce steel
plate in commercially preferred dimensions and sizes, increases its
manufacturing flexibility and supplies substantially all the Company's plate
requirements for large diameter line pipe, as well as coiled plate for
applications such as the smaller diameter ERW pipe manufactured at the Camrose
Pipe Mill and structural tube manufactured at CST. The Combination Mill produces
discrete steel plate in widths from 48" to 136" and in thicknesses from 3/16" to
8". Coiled plate can be produced in widths of 48" to 120" and in thicknesses
that range from 0.09" to 0.75". With the Combination Mill, the Company is in a
position to produce all grades of discrete steel plate and coiled plate for
substantially all of the Company's commodity and specialty markets, including
heat-treated applications.

         NAPA PIPE MILL. The Napa Pipe Mill produces large diameter steel pipe
of a quality suitable for use in high pressure oil and gas transmission
pipelines. The Napa Pipe Mill can produce pipe with an outside diameter ranging
from 16" to 42", with wall thicknesses of up to 1-1/16" and in lengths of up to
80 feet, and can process two different sizes of pipe simultaneously in its two
finishing sections. Although the Portland Mill can supply substantially all of
the Napa Pipe Mill's specialty plate requirements, due to market conditions and
other considerations, the Napa Pipe Mill may purchase steel plate from
third-party suppliers.

                                      -1-
<PAGE>




         CAMROSE PIPE MILL. The Company acquired a 60% interest in the Camrose
Pipe Mill in June 1992 from Stelco, Inc. ("Stelco"), a large Canadian steel
producer. The Camrose Pipe Mill has two pipe manufacturing mills, a large
diameter pipe mill similar to the Napa Pipe Mill and an ERW pipe mill which
produces steel pipe used by the oil and gas industry. The large diameter pipe
mill produces pipe in lengths of up to 80 feet with a diameter ranging from 20"
to 42". The ERW mill produces pipe in sizes ranging from 4 1/2" to 16" in
diameter.

         COLUMBIA STRUCTURAL TUBING. In October 2003, the Company leased (with
an option to buy) the equipment of the former LTV Structural Tube Facility
located in the Rivergate Industrial Park in Portland, Oregon. The lease expires
in March of 2017 and the Company has the option to purchase the assets at the
end of ten years. The equipment leased consists of a slitting line, a structural
tubing mill, a proprietary in-line coating system and a manufacturing/
warehousing structure.  The facility,  known as Columbia Structural Tubing,
is  located  one mile  from the  Portland  Mill.  The CST  structural  mill
produces  rectangular hollow steel sections ("HSS") in sizes ranging from
2-1/2" to 10".

         See Part I, Item 2, "Properties", for discussion of the operating
capacities of the Portland Mill, the Napa Pipe Mill, the Camrose Pipe Mill, and
Columbia Structural Tubing.

RMSM DIVISION

         On March 3, 1993, New CF&I, a wholly owned subsidiary of the Company,
acquired a 95.2% interest in CF&I, a newly formed Delaware limited partnership.
The remaining 4.8% interest was owned by the Pension Benefit Guaranty
Corporation ("PBGC"). CF&I then purchased substantially all of the steelmaking,
fabricating, metals and railroad business assets of CF&I Steel Corporation. In
August 1994, New CF&I sold a 10% equity interest in New CF&I to a subsidiary of
Nippon Steel Corporation ("Nippon"). In connection with that sale, Nippon agreed
to license to the Company a proprietary technology for producing deep
head-hardened ("DHH") rail products as well as to provide certain production
equipment to produce DHH rail. In November 1995, the Company sold equity
interests totaling 3% in New CF&I to two subsidiaries of the Nissho Iwai Group
("Nissho Iwai"), a large Japanese trading company. In 1997, the Company
purchased the 4.8% interest in CF&I owned by the PBGC. In 1998, the Company sold
a 0.5% interest in CF&I to a subsidiary of Nippon.

         Shortly after the acquisition of the Pueblo Mill in 1993, the Company
began a series of major capital improvements designed to increase yields,
improve productivity and quality and expand the Company's ability to offer
specialty rail, rod and bar products. The primary components of the Pueblo Mill
and the related capital improvements, as appropriate, are outlined below.

         STEELMAKING. The Company installed a ladle refining furnace and a
vacuum degassing facility and upgraded both continuous casters. During 1995, the
Company eliminated ingot casting and replaced it with more efficient continuous
casting methods that allow the Company to cast directly into bloom. These
improvements expanded the Pueblo Mill steelmaking capacity to 1.2 million tons.

         ROD AND BAR MILL. At the time of its acquisition, the rod and bar mills
at the Pueblo Mill were relatively old and located in separate facilities, which
resulted in significant inefficiencies as the Company shifted production between
them in response to market conditions. In 1995, the Company commenced operation
of a new combination rod and bar mill with a new reheat furnace and a high speed
rod train, capable of producing commodity and specialty grades of rod and bar
products. These improvements enable the Company to produce a wider range of high
margin specialty products, such as high-carbon rod, merchant bar and other
specialty bar products, and larger rod coil sizes, which the Company believes
are preferred by many of its customers.

         RAIL MANUFACTURING. At the time of the Company's acquisition of the
Pueblo Mill, rail was produced by ingot casting using energy-intensive processes
with significant yield losses as the ingots were reheated, reduced to blooms and
then rolled into rail. Continuous casting has increased rail yields and
decreased rail manufacturing costs. In 1996, the Company invested in its
railmaking capacity by entering into the agreement with Nippon for the license
of its proprietary technology to produce DHH rail, and acquired the production
equipment necessary to produce the specialty rail. DHH rail is considered by the
rail industry to be longer lasting and of higher quality than rail produced
using conventional methods and, accordingly, the DHH rail usually has a
corresponding higher average selling price. The Company believes it is able
to meet the needs of a broad array of rail customers with both traditional
and DHH rail.

         SEAMLESS PIPE. Seamless pipe produced at the Pueblo Mill consists of
seamless casing, coupling stock and standard and line pipe. Seamless pipe casing
is used as a structural retainer for the walls of oil or gas wells. Standard and
line pipes are used to transport liquids and gasses both above and underground.
The Company's seamless pipe mill is equipped to produce the most widely used
sizes of seamless pipe (5" outside diameter through 10-3/4" outside diameter) in
all standard lengths. The Company's production capability includes carbon and
heat-treated tubular

                                      -2-
<PAGE>

products. The Company also sells semi-finished seamless pipe (referred to
as green tubes) for processing and finishing by others.

         See Part I, Item 2, "Properties", for discussion of the operating
capacities of the Pueblo Mill.

PRODUCTS

OVERVIEW

         The Company manufactures and markets one of the broadest lines of
specialty and commodity steel products of any domestic minimill company. Through
acquisitions and capital improvements, the Company has expanded its range of
finished products from two in 1991, discrete plate and large diameter welded
pipe, to nine currently by adding ERW pipe, rail, rod, bar, seamless pipe,
coiled plate and structural tube. It has also expanded its primary selling
region from the western United States to national and international markets.
(See Note 3 to the Consolidated Financial Statements.)

         The following chart identifies the Company's principal products and the
primary markets for those products.
<TABLE>
<CAPTION>

                            PRODUCTS                             MARKETS
                            --------                             -------
<S>                         <C>                                  <C>
OREGON STEEL DIVISION       Specialty steel and coiled plate     Steel service centers
                                                                 Heavy equipment manufacturers
                                                                 Railcar manufacturers
                                                                 Pressure vessel manufacturers
                                                                 Welded pipe mills

                            Commodity steel and coiled plate     Steel service centers
                                                                 Construction
                                                                 Ship and barge manufacturers
                                                                 Heavy equipment manufacturers

                            Large diameter steel pipe            Oil and petroleum natural
                                                                    gas transmission pipelines
                                                                 Construction

                            Electric resistance welded (ERW)     Oil and natural gas line pipe
                            pipe                                 Construction

                            Structural tube                      Steel service centers
                                                                 Construction
                                                                 Ship and barge manufacturers
                                                                 Heavy equipment manufacturers


RMSM DIVISION               Rail                                 Rail transportation

                            Rod and Bar products                 Construction
                                                                 Durable goods
                                                                 Capital equipment
                            Seamless pipe                        Oil and petroleum producers
</TABLE>



       The following table sets forth for the period indicated the tonnage
shipped and the Company's total shipments by product class:

                                      -3-
<PAGE>



                                                     TONS SHIPPED
                                                     ------------
               PRODUCT CLASS                    2003       2002       2001
                                                ----       ----       ----

Oregon Steel Division:
    Steel Plate                              424,500     402,000     463,100
    Coiled Plate                              76,800      65,600       8,900
    Large Diameter Steel Pipe                181,200     444,600     281,300
    Electric Resistance Welded Pipe           56,600      34,800      76,400
    Structural Tubing FN1                      1,600          --          --
                                           ---------   ---------   ---------
        Total Oregon Steel Division          740,700     947,000     829,700
                                           ---------   ---------   ---------

RMSM Division:
    Rail                                     360,400     384,100     246,000
    Rod and  Bar                             482,400     419,700     432,500
    Seamless Pipe FN2                         51,300      30,000      97,700
    Semi-finished                                 --       2,700       4,700
                                           ---------   ---------   ---------
        Total RMSM Division                  894,100     836,500     780,900
                                           ---------   ---------   ---------
        Total Company                      1,634,800   1,783,500   1,610,600
                                           =========   =========   =========

----------------------
FN1  The Company began operations at the structural tube facility in October
     2003.
FN2  The Company suspended operation at the seamless pipe mill from November
     2001 to April 2002, from mid-August 2002 to mid-September 2002, and from
     mid-November 2003 to date.

OREGON STEEL DIVISION

         STEEL PLATE AND COIL. The Company's specialty grade and commodity steel
plate is produced at the Portland Mill on the Combination Mill. The Combination
Mill allows for the production of discrete plate widths up to 136" and coiled
plate up to 120" wide. The majority of steel plate is commonly produced and
consumed in standard widths and lengths, such as 96" x 240". Specialty steel
plate consists of hot-rolled carbon, high-strength-low-alloy, alloy and
heat-treated steel plate. Specialty steel plate has superior strength and
performance characteristics as compared to commodity steel plate and is
typically made to order for customers seeking specific properties, such as
improved malleability, hardness or abrasion resistance, impact resistance or
toughness, higher strength and the ability to be more easily machined and
welded. These improved properties are achieved by chemically refining the steel
by either adding or removing specific elements, and by accurate temperature
control while hot-rolling or heat-treating the plate. Specialty steel plate is
used to manufacture railroad cars, mobile equipment, bridges and buildings,
pressure vessels and machinery components. Commodity steel plate is used in a
variety of applications such as the manufacture of storage tanks, machinery
parts, ships and barges, and general load bearing structures. Coiled plate is
the feeder stock for the manufacture of ERW pipe, structural tubing, spiral
welded pipe and for conversion into cut-to-length plate.

         The heat-treating process of quenching and tempering improves the
strength, toughness, and hardness of the steel. Quenched and tempered steel is
used extensively in the mining industry, the manufacture of heavy transportation
equipment, construction and logging equipment, and armored vehicles for the
military. In early 1994, the Company installed a hot leveler at the heat-treat
facility which flattens the steel plate following heat-treatment and ensures
that the steel plate will retain its desired shape after cooling. These
additions enable the Company to manufacture a superior hardened plate product.

         LARGE DIAMETER STEEL PIPE. The Company manufactures large diameter,
double submerged arc-welded ("DSAW") steel pipe at its Napa and Camrose Pipe
Mills. Large diameter pipe is manufactured to demanding specifications and is
produced in sizes ranging from 16" to 42" in outside diameter with wall
thickness of up to 1 1/16" and in lengths of up to 80 feet. At the pipe mills
the Company also offers customers several options, which include internal
linings, external coatings, double end pipe joining and at the Napa Pipe Mill,
full body ultrasonic inspection. Ultrasonic inspection allows examination of the
ends, long seam welds and the entire pipe body for steelmaking or pipemaking
defects and records the results. The Company's large diameter pipe is used
primarily in pressurized underground or underwater oil and gas transmission
pipelines where high quality is absolutely necessary.

         ERW PIPE. The Company produces smaller diameter ERW pipe at the Camrose
Pipe Mill. ERW pipe is produced in sizes ranging from approximately 4.5" to 16"
in diameter. The pipe is manufactured using coiled steel formed on a high
frequency ERW mill. The principal customers for this product are oil and gas
companies that use it for gathering lines to supply product to feed larger
pipeline systems.


                                      -4-
<PAGE>

         STRUCTURAL TUBING. The Company produces rectangular HSS in sizes
ranging from 2 1/2" to 10". These products have a wide variety of uses,
including construction applications, structural support, safety and ornamental
tubing for buildings, bridges, and highways and is also used for an extensive
range of applications in industrial, transportation and agricultural equipment.

RMSM DIVISION

         RAIL. The Company produces standard carbon and high-strength
head-hardened rail at its Pueblo Mill. The Pueblo Mill is the sole manufacturer
of rail west of the Mississippi River and one of only three rail manufacturers
in the Western Hemisphere. Rails are manufactured in the six most popular rail
weights (ranging from 115 lb/yard through 141 lb/yard), in 39 and 80-foot
lengths. The primary customers for the Pueblo Mill's rail are the major western
railroads, with an increased share of the eastern railroad business in recent
years. The Company has also developed a major presence in the Canadian and
Mexican rail markets. Rail is also sold directly to rail contractors, transit
districts and short-line railroads.

         As part of its capital improvement program, the Company improved its
rail manufacturing facilities to include the production of in-line head-hardened
rail. In-line head-hardened rail is produced through a proprietary technology,
known as deep head-hardened or DHH technology, which is licensed from a third
party. In 2003, the Company produced approximately 157,000 tons of head-hardened
product using the DHH technology. The in-line DHH technology allows the Company
to produce head-hardened product up to the capacity of the rail facility. Rail
produced using the improved in-line technology is considered by many rail
customers to be longer lasting and of higher quality than rail produced with
traditional off-line techniques. In 2001, the Pueblo Mill also began producing
and marketing an improved head-hardened rail called High Carbon Pearlite. This
rail metallurgy was designed for heavy application situations such as heavy
tonnage curves.

         ROD AND BAR PRODUCTS. The Company's rod and bar mill located at the
Pueblo Mill is able to produce coils of up to 6,000 pounds. The improved steel
quality and finishing capabilities allow the Company to manufacture rods up to
1" in diameter, and to manufacture a variety of high-carbon rod products such as
those used for spring wire, wire rope and tire bead. The Company produces
several sizes of coiled rebar in the most popular grades for the reinforcement
of concrete products.

         SEAMLESS PIPE. The Company's seamless pipe mill at the Pueblo Mill
produces seamless casing and standard and line pipe. The primary use of these
products is in the transmission and recovery of oil and natural gas resources,
through either above ground or subterranean pipelines. The seamless mill
produces both carbon and heat-treated tubular products. The Company also markets
green tubes to other tubular mills for processing and finishing. Due to market
conditions, operation at the seamless pipe mill was suspended from November 2001
to April 2002, from mid-August 2002 to mid-September 2002, and from mid-November
2003 to date.

RAW MATERIALS AND SEMI-FINISHED SLABS

          The Company's principal raw material for the Pueblo Mill is ferrous
scrap metal derived from, among other sources, junked automobiles, railroad cars
and railroad track materials and demolition scrap from obsolete structures,
containers and machines. In addition, direct-reduction iron, hot-briquetted iron
and pig iron (collectively "alternate metallics") can substitute for a limited
portion of the scrap used in minimill steel production, although the sources and
availability of alternate metallics are substantially more limited than
those of scrap. The purchase prices for scrap and alternate metallics are
subject to market forces largely beyond the control of the Company, and are
impacted by demand from domestic and foreign steel producers, freight
costs, speculation by scrap brokers and other conditions. The cost of scrap
and alternate metallics to the Company can vary significantly, and the
Company's product prices often cannot be adjusted, especially in the
short-term, to recover the costs of increases in scrap and alternate
metallics prices.

         The long-term demand for steel scrap and its importance to the domestic
steel industry may increase as steelmakers continue to expand scrap-based
electric arc furnace capacity; however, the Company believes that near-term
supplies of steel scrap will continue to be available in sufficient quantities
at competitive prices. In addition, while alternate metallics are not currently
cost competitive with steel scrap, a sustained increase in the price of steel
scrap could result in increased implementation of these alternative materials.

         With the expanded finishing capability available to the Company from
the 1997 completion of the Combination Mill, along with the manufacturing
flexibility to purchase semi-finished steel slabs at a lower cost, the Company
has consequently purchased material quantities of semi-finished steel slabs on
the open market for the Portland Mill since 1999

                                      -5-
<PAGE>

and each year thereafter. The slab market and pricing are subject to
significant volatility and slabs may not be available at reasonable prices in
the future.

         In May 2003, the Company shut down its Portland Mill melt shop. The
determination to close the melt shop was based on 1) the Company's ability to
obtain semi-finished slab through purchases from suppliers on the open market,
and 2) high energy and raw material costs and the yield losses associated with
the inefficient casting technology in use at the Portland Mill. The Company
believes that future semi-finished slab purchases for the Portland Mill,
combined with existing inventory on hand, will meet the production needs of the
Portland Mill finishing operation for the remainder of 2004 and into the
foreseeable future. The Company intends to maintain the melt shop in operating
condition.

MARKETING AND CUSTOMERS

         Steel products are sold by the Company principally through its own
sales organizations, which have sales offices at various locations in the United
States and Canada and, as appropriate, through foreign sales agents. In addition
to selling to customers who consume steel products directly, the Company also
sells to intermediaries such as steel service centers, distributors, processors
and converters.

          The sales force is organized both geographically and by product line.
The Company has separate sales forces for plate and coiled plate, large diameter
steel pipe, ERW pipe, structural tube, rod and bar, seamless pipe and rail
products. Most of the Company's sales are initiated by contacts between sales
representatives and customers. Accordingly, the Company does not incur
substantial advertising or other promotional expenses for the sale of its
products. Except for contracts entered into from time to time to supply rail and
large diameter steel pipe to significant projects (see Part II, Item 7
"Management's Discussion and Analysis of Financial Condition and Results of
Operations"), the Company does not have any significant ongoing contracts with
customers, and orders placed with the Company generally are cancelable by the
customer prior to production. Although no single customer or group of affiliated
customers represented more than 10% of the Company's sales revenue in 2003 and
2001, during 2002 the Company had sales to one customer, Kern River Gas
Transmission Company, which accounted for nearly 20% of its total revenue for
the year.

         The Company does not have a general policy permitting return of
purchased steel products except for product defects. The Company does not
routinely offer extended payment terms to its customers.

         The demand for a majority of the Company's products is not generally
subject to significant seasonal trends. The Company's rail products are impacted
by seasonal demand, as dictated by the major railroads' procurement schedules.
Demand for oil country tubular goods ("OCTG"), which include both seamless pipe
and ERW pipe, can be subject to seasonal factors, particularly for sales to
Canadian customers. Overall demand for OCTG is subject to significant
fluctuations due to the volatility of oil and gas prices and North American
drilling activity as well as other factors including competition from imports.
The Company does not have material contracts with the United States government
and does not have any major supply contracts subject to renegotiation.


OREGON STEEL DIVISION

       SPECIALTY STEEL PLATE. Customers for specialty steel are located
throughout the United States, but the Company is most competitive west of the
Mississippi River, where transportation costs are less of a factor. Typical
customers include steel service centers and equipment manufacturers. Typical end
uses include pressure vessels, construction and mining equipment, machine parts,
rail cars and military armor.

       COMMODITY STEEL PLATE. Most of the customers for the Company's commodity
steel plate are located in the western United States, primarily in the Pacific
Northwest. The Company's commodity steel plate is typically sold to steel
service centers, fabricators and equipment manufacturers. Service centers
typically resell to other users with or without additional processing such as
cutting to a specific shape. Frequent end uses of commodity steel plate include
the manufacture of rail cars, storage tanks, machinery parts, bridges, barges
and ships.

        LARGE DIAMETER STEEL PIPE. Large diameter steel pipe is marketed on a
global basis, and sales generally consist of a small number of large orders from
natural gas pipeline companies, public utilities and oil and gas producing
companies. The Company believes that the quality of its pipe enables it to
compete effectively in international as well as domestic markets. Domestically,
the Company has historically been most competitive in the steel pipe market west
of the


                                      -6-
<PAGE>

Mississippi River. The Camrose Pipe Mill is most competitive in western
Canada. Sales of large diameter pipe generally involve the Company
responding to requests to submit bids.

        ERW PIPE. The principal customers for ERW pipe produced at the Camrose
Pipe Mill are in the provinces of Alberta and British Columbia, where most of
Canada's natural gas and oil reserves are located. The Company believes its
proximity to these gas fields gives the Company a competitive advantage. Demand
for ERW pipe produced at the Camrose Pipe Mill is largely dependent on the level
of exploration and drilling activity in the gas fields of western Canada.

       STRUCTURAL TUBE. The majority of customers for the Company's tube
products are steel service centers located in Oregon and Washington. The Company
has also started to expand into other regions including Alaska, British
Columbia, Montana, and Idaho.

RMSM DIVISION

         RAIL. The primary customers for the Pueblo Mill's rail are the major
western railroads, with an increased share of the eastern railroad business in
recent years. The Company has also developed a major presence in the Canadian
and Mexican rail markets. Rail is also sold directly to rail distributors,
transit districts and short-line railroads. The Company believes its proximity
to the North American rail markets benefits the Company's marketing efforts.

         BAR PRODUCTS. The Company sells its bar products, primarily reinforcing
bar, to fabricators and distributors. The majority of these customers are
located in the United States, west of the Mississippi River.

         ROD PRODUCTS. The Company's wire rod products are sold primarily to
wire drawers ranging in location from the Midwest to the West Coast. The demand
for wire rod is dependent upon a wide variety of markets, including
agricultural, construction, capital equipment and the durable goods segments.
The Company entered the high carbon rod market during 1995 as a direct result of
the investment in the new rolling facility. Since that time, the Company's
participation in the higher margin, high carbon rod market has steadily
increased, to the point where it now represents over two-thirds of total rod
product shipments. Typical end uses of high carbon rod include spring wire, wire
rope and tire bead.

         SEAMLESS PIPE. The Company's seamless pipe is sold primarily through
its internal sales force to a large number of oil exploration and production
companies and directly to companies outside of the OCTG industry, such as
construction companies. The market for the Company's seamless pipe is primarily
domestic. The demand for this product is determined in large part by the number
and drilling depths of the oil and gas drilling rigs working in the United
States.

COMPETITION AND OTHER MARKET FACTORS

         The steel industry is cyclical in nature, and high levels of steel
imports, worldwide production overcapacity and other factors have adversely
affected the domestic steel industry in recent years. The Company is also
subject to industry trends and conditions, such as the presence or absence
of sustained economic growth and construction activity, currency exchange
rates and other factors. The Company is particularly sensitive to trends in
the oil and gas, construction, capital equipment, rail transportation and
durable goods segments, because these industries are significant markets
for the Company's products.

         Competition within the steel industry is intense. The Company competes
primarily on the basis of product quality, price and responsiveness to customer
needs. Many of the Company's competitors are larger and have substantially
greater capital resources, more modern technology and lower labor and raw
material costs than the Company. Moreover, U.S. steel producers have
historically faced significant competition from foreign producers. The highly
competitive nature of the industry, combined with excess production capacity in
some products, results in significant sales pricing pressure for certain of the
Company's products.

OREGON STEEL DIVISION

         SPECIALTY STEEL PLATE. The Company's principal domestic competitor in
the specialty steel plate market is International Steel Group ("ISG"), the
largest plate producer in North America - with six plate mills located in the
Midwest and East. ISG's estimated plate-making capacity now exceeds 3 million
tons, including the largest plate heat-treating tonnage capacity in North
America. ISG aggressively markets to major national accounts in fabrication and
heavy-duty manufacturing as a single source supplier.

                                      -7-
<PAGE>


         COMMODITY STEEL PLATE. The Company's principal domestic commodity plate
competitor is IPSCO Inc. ("IPSCO"). IPSCO brought into production a green field
120" wide Steckel mill in Iowa in 1998, with that mill operating to nearly the
same specifications as the Portland Mill. IPSCO also operates a smaller 72" wide
Steckel mill in Saskatchewan, Canada, and in early 2001, completed a new 120"
wide Steckel mill in Mobile, Alabama. IPSCO's rated plate and plate coil
capacity exceeds 2 million tons annually. IPSCO also operates cut-to-length
lines (to convert coiled plate into flat sheets) in five strategic market
locations throughout North America. IPSCO competes primarily in the Midwest
commodity plate market, in other selected target markets, and in the coiled
plate market throughout the United States. Nucor Corporation completed a new
green field plate mill in 2001 at Hertford, North Carolina with an operating
capacity of one million tons per year, which has further increased competition
in the steel plate market.

         Until its shut down in November 2001 and subsequent Chapter 11
bankruptcy filing in January 2002, Geneva Steel ("Geneva") was a major
competitor of the Company in the commodity plate market. Geneva, located in
Provo, Utah, was the only integrated steelmaking facility west of the
Mississippi, and historically produced approximately 1.8 million tons of
commodity plate and coil per year. Geneva has not restarted and the plant is
expected to be dismantled.

         LARGE DIAMETER PIPE. The Company's principal domestic competitors in
the large diameter steel pipe market are Berg Steel Pipe Corporation, located in
Florida, and South Texas Steel, located in Texas. International competitors
consist primarily of pipe producers from Japan, Europe and Canada, with the
principal Canadian competitor being IPSCO. Demand for the Company's pipe in
recent years is primarily a function of new construction of oil and gas
transportation pipelines and to a lesser extent maintenance and replacement of
existing pipelines. Construction of new pipelines domestically depends to some
degree on the level of oil and gas exploration and drilling activity.

          ERW PIPE. The competition in the market for ERW pipe is based on
availability, price, product quality and responsiveness to customers. The need
for this product has a direct correlation to the number of drilling rigs in the
United States and Canada. Principal competitors in the ERW product in western
Canada are IPSCO and Prudential Steel Ltd., a wholly-owned subsidiary of
Maverick Tube Corporation, located in Calgary, Alberta.

          STRUCTURAL TUBE. The Company's primary competitors in the tube market
are Maruichi America Corporation, and Vest Industries both located in the Los
Angeles, California vicinity. Other competitors are located in the Mid and
Western United States as well as importers from Asia.

RMSM DIVISION

         RAIL. The majority of current rail requirements in the United States
are replacement rails for existing rail lines. Imports have been a significant
factor in the domestic rail market in recent years. The Company's capital
expenditure program at the Pueblo Mill provided the rail production facilities
with continuous cast steel capability and in-line head-hardening rail
capabilities necessary to compete with other producers. ISG is the only other
qualified domestic rail producer at this time.

         ROD AND BAR. The competition in bar products includes a group of
minimills that have a geographical location close to the markets in or around
the Rocky Mountains. The Company's market for wire rod ranges from the Midwest
to the West Coast. Domestic rod competitors include North Star Steel, Cascade
Steel Rolling Mills, Keystone Steel and Wire for commodity grades and GS
Industries, Ivaco Rolling Mills and North Star Steel for high carbon rod
products.

         SEAMLESS PIPE. The Company's primary competitors in seamless pipe
include a number of domestic and foreign manufacturers. The Company has the
flexibility to produce relatively small volumes of specified products on short
notice in response to customer requirements. Principal domestic competitors
include U.S. Steel Corporation and North Star Steel for seamless product. Lone
Star Steel competes with its welded ERW pipe in lieu of seamless, which is
acceptable for some applications.

ENVIRONMENTAL MATTERS

         The Company is subject to extensive United States and foreign, federal,
state and local environmental laws and regulations concerning, among other
things, wastewater, air emissions, toxic use reduction and hazardous materials
disposal. The Portland and Pueblo Mills are classified in the same manner as
other similar steel mills in the industry as generating hazardous waste
materials because the melting operation of the electric arc furnace produces
dust that contains heavy metals. This dust, which constitutes the largest waste
stream generated at these facilities, must be managed in accordance with
applicable laws and regulations.

                                      -8-
<PAGE>


       The Clean Air Act Amendments ("CAA") of 1990 imposed responsibilities on
many industrial sources of air emissions, including the Company's plants. In
addition, the monitoring and reporting requirements of the law subject all
companies with significant air emissions to increased regulatory scrutiny. The
Company submitted applications in 1995 to the Oregon Department of Environmental
Quality ("DEQ") and the Colorado Department of Public Health and Environment
("CDPHE") for permits under Title V of the CAA for the Portland and Pueblo
Mills, respectively. A Title V permit was issued for the Portland Mill and
related operations in December 2000 and modified in April 2002. See
"Environmental Matters-RMSM Division" below for a description of CAA compliance
issues relating to the Pueblo Mill. The Company does not know the ultimate cost
of compliance with the CAA, which will depend on a number of site-specific
factors. Regardless of the outcome of the matters discussed below, the Company
anticipates that it will be required to incur additional expenses and make
additional capital expenditures as a result of the CAA and future laws
regulating air emissions.

       The Company's future expenditures for installation of, and improvements
to, environmental control facilities, remediation of environmental conditions,
penalties for violations of environmental laws, and other similar matters are
difficult to predict accurately. It is likely that the Company will be subject
to increasingly stringent environmental standards, including those relating to
air emissions, waste water and storm water discharge and hazardous materials
use, storage, handling and disposal. It is also likely that the Company will be
required to make potentially significant expenditures relating to environmental
matters, including environmental remediation, on an ongoing basis. Although the
Company has established reserves for the environmental matters described below,
additional measures may be required by environmental authorities or as a result
of additional environmental hazards, identified by such authorities, the Company
or others each necessitating further expenditure. Accordingly, the costs of
environmental matters may exceed the amounts reserved. Expenditures of the
nature described below or liabilities resulting from hazardous substances
located on the Company's currently or previously owned properties or used or
generated in the conduct of its business, or resulting from circumstances,
actions, proceedings or claims relating to environmental matters, may have a
material adverse effect on the Company's consolidated financial condition,
results of operations, or cash flows.

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 will approximate $985,000
over the next two years. Based on a best estimate, the Company has accrued a
liability of $985,000 as of December 31, 2003. The Company has also recorded a
$985,000 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. The Company is unable at this time to determine if the
likelihood of an unfavorable outcome or loss is either probable or remote,
or to estimate a dollar amount range for a potential loss.

         In a related manner, 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 entities have signed an Administrative Order
of 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 take three to five years to complete. The Company is a member of
the Lower Willamette Group, which is funding that investigation, and it signed a
Coordination and Cooperation Agreement with the EPA that binds it to all terms
of the AOC. The Company's cost associated with the RI/FS as of December 31, 2003
is approximately $441,000, all of which has been covered by the Company's
insurer. As a best estimate of the RI/FS costs for years after 2003, the Company
has accrued a liability of $740,000 as of December 31, 2003. The Company has
also recorded a $740,000 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. Although the EPA has not yet defined the boundaries of the Portland
Harbor Superfund Site, the AOC requires the RI/FS to focus on an "initial study

                                      -9-
<PAGE>


area" that does not now include the portion of the Willamette River adjacent to
the Portland Mill. The study area, however, may be expanded. 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 June 2003, the
Company signed a Funding and Participating Agreement whereby it, 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 estimates its financial commitment in connection
with this agreement to be approximately $590,000 for years after 2003. Based on
this estimate, the Company has accrued a liability of $590,000 as of December
31, 2003. The Company has also recorded a $590,000 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 costs as incurred. This effort is expected to last until
2006. A determination that the Company is a PRP could cause the Company to incur
costs associated with 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.

         On April 18, 2001, the United Steelworkers of America (the "Union"),
along with two other groups, filed suit against the Company under the citizen
suit provisions of the Clean Air Act ("CAA") in U.S. District Court in Portland,
Oregon. The suit alleged that the Company has violated various air emission
limits and conditions of its operating permits at the Portland Mill
approximately 100 times since 1995. The suit sought injunctive relief and
unspecified civil penalties. The parties reached a settlement in April 2003. A
Consent Decree has been finalized and approved by the EPA. The U.S. District
Court signed and entered the Consent Decree on October 7, 2003. The Consent
Decree financial provisions were not material to the operations of the Company.

RMSM DIVISION

         In connection with the acquisition of the steelmaking and finishing
facilities located at 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 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 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 at the facility and continue to address projects on a prioritized
corrective action schedule which substantially reflects a straight-line
rate of expenditure 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 presently believed to
exist. At December 31, 2003, the accrued liability was $28.8 million, of
which $24.9 million was classified as non-current on the 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 $300,000 in penalties, fund $1.5 million of community
projects, and to pay approximately $400,000 for consulting services. CF&I is
also required to make certain capital improvements expected to cost
approximately $25 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. CF&I applied for the PSD permit
in April 2002 and the draft permit was issued for public comment on October 2,
2003.

         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
NSPS AAa compliant furnace (demonstrating full compliance 21 months after permit
approval and expected to cost, with all related emission control improvements,
approximately $25 million), and to pay approximately $450,000 in penalties and
fund certain supplemental environmental projects valued at approximately

                                      -10-
<PAGE>

$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.

         In response to the CDPHE settlement and the resolution of the EPA
action, CF&I expensed $2.8 million in 2001 for possible fines and non-capital
related expenditures. As of December 31, 2003, the accrued liability was
approximately $600,000.

         In December 2001, the State of Colorado issued a Title V air emission
permit to CF&I under the CAA requiring that the furnace subject to the EPA
action operate in compliance with NSPS AA standards. This permit was modified in
April 2002 to incorporate the longer compliance schedule that is part of the
settlement with the CDPHE and the EPA. In September 2002, the Company submitted
a request for a further extension of certain Title V compliance deadlines,
consistent with a joint petition by the State and the Company for an extension
of the same deadlines in the State Consent Decree. This modification 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. Any 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 to a much lessor degree,
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.

         In a related matter, in April 2000, the Union filed suit in U.S.
District Court in Denver, Colorado, asserting that the Company and CF&I had
violated the CAA at the Pueblo Mill for a period extending over five years. The
Union sought declaratory judgement regarding the applicability of certain
emission standards, injunctive relief, civil penalties and attorney's fees. On
July 6, 2001, the presiding judge dismissed the suit. The 10th Circuit Court of
Appeals on March 3, 2003 reversed the District Court's dismissal of the case and
remanded the case for further hearing to the District Court. The parties to the
above-referenced litigation have negotiated what purports to be an agreement to
settle the labor dispute and all associated litigation, including that
referenced above. See "Labor Matters" for a description of the settlement. If,
for any reason, that settlement is not finalized, the Company does not believe
the suit will have a material adverse effect on its results of operations;
however, the result of litigation such as this is difficult to predict and an
adverse outcome with significant penalties is possible.


LABOR MATTERS
CF&I LABOR DISPUTE AND RESULTANT LITIGATION

         The labor contract at CF&I expired on September 30, 1997. After a brief
contract extension intended to help facilitate a possible agreement, on October
3, 1997, the Union initiated a strike at CF&I for approximately 1,000 bargaining
unit employees. The parties, however, failed to reach final agreement on a new
labor contract due to differences on economic issues. As a result of contingency
planning, CF&I was able to avoid complete suspension of operations at the Pueblo
Mill by utilizing a combination of new hires, striking employees who returned to
work, contractors and salaried employees.

         On December 30, 1997, the Union called off the strike and made an
unconditional offer on behalf of its members to return to work. At the time of
this offer, because CF&I had permanently replaced the striking employees, only a
few vacancies existed at the Pueblo Mill. Since that time, vacancies have
occurred and have been filled by formerly striking employees ("Unreinstated
Employees"). As of December 31, 2003, approximately 819 Unreinstated Employees
have either returned to work or have declined CF&I's offer of equivalent work.
At December 31, 2003, approximately 131 Unreinstated Employees remain
unreinstated.

         On February 27, 1998, the Regional Director of the National Labor
Relations Board ("NLRB") Denver office issued a complaint against CF&I, alleging
violations of several provisions of the National Labor Relations Act ("NLRA").
On August 17, 1998, a hearing on these allegations commenced before an
Administrative Law Judge ("Judge"). Testimony and other evidence were presented
at various sessions in the latter part of 1998 and early 1999, concluding on
February 25, 1999. On May 17, 2000, the Judge rendered a decision which, among
other things, found CF&I liable for certain unfair labor practices and ordered
as remedy the reinstatement of all 1,000 Unreinstated Employees, effective as of
December 30, 1997, with back pay and benefits, plus interest, less interim
earnings. Since January 1998, the Company has been returning unreinstated
strikers to jobs, as positions became open. As noted above, there were
approximately 131 Unreinstated Employees as of December 31, 2003. On August 2,
2000, CF&I filed an appeal with the NLRB in Washington, D.C. A separate hearing
concluded in February 2000, with the judge for that hearing rendering a decision
on August 7, 2000, that certain of the Union's actions undertaken since the
beginning of the strike did constitute misconduct and violations of certain
provisions of the NLRA. The Union has appealed this determination to the NLRB.
In both cases, the non-prevailing party in the NLRB's decision will be entitled
to appeal to the appropriate U.S. Circuit Court of Appeals. CF&I

                                      -11-
<PAGE>

believes both the facts and the law supports its position that the
strike was economic in nature and that it was not obligated to displace the
properly hired replacement employees.

         In the event there is an adverse determination on these issues,
Unreinstated Employees could be entitled to back pay, including benefits, plus
interest, from the date of the Union's unconditional offer to return to work
through the date of their reinstatement or a date deemed appropriate by the NLRB
or an appellate court. The number of Unreinstated Employees entitled to back pay
may be limited to the number of past and present replacement workers; however,
the Union might assert that all Unreinstated Employees should be entitled to
back pay. Back pay is generally determined by the quarterly earnings of those
working less interim wages earned elsewhere by the Unreinstated Employees. In
addition to other considerations, each Unreinstated Employee has a duty to take
reasonable steps to mitigate the liability for back pay by seeking employment
elsewhere that has comparable working conditions and compensation. Any estimate
of the potential liability for back pay will depend significantly on the ability
to assess the amount of interim wages earned by these employees since the
beginning of the strike, as noted above. Due to the lack of accurate information
on interim earnings for both reinstated and Unreinstated Employees and sentiment
of the Union towards the Company, it is not currently possible to obtain the
necessary data to calculate possible back pay. In addition, the NLRB's findings
of misconduct by the Union may mitigate any back pay award with respect to any
Unreinstated Employees proven to have taken part or participated in acts of
misconduct during and after the strike.

CF&I LABOR DISPUTE SETTLEMENT

         On January 15, 2004 the Company announced a tentative agreement to
settle the labor dispute between the Union and CF&I ("Settlement"). The
Settlement is conditioned on, among other things, (1) its approval by
shareholders of New CF&I, (2) ratification of a new collective bargaining
agreement being executed between CF&I and the Union, (3) approval of the
Settlement by the NLRB and the dismissal of cases pending before the NLRB
related to the labor dispute and (4) various pending legal actions between the
Company, New CF&I and CF&I and the Union being dismissed. The Settlement, if
approved, will provide remedies for all outstanding unfair labor practices
between CF&I and the Union and sets the stage for the ratification of a new
five-year collective bargaining agreement. The Settlement includes the creation
of a labor dispute settlement trust ("Trust") that will hold assets to be
contributed by either the Company or CF&I. Assets of the Trust will include: (1)
four million shares of the Company's common stock, (2) a cash contribution of
$2,500 for each beneficiary of the trust, estimated to be in total $2.5 million,
and (3) beginning on the effective date of the Settlement, a ten year profit
participation obligation consisting of 25% of CF&I operating income, as defined,
not to exceed $3 million per year for years one through five and $4 million per
year for years six through ten. The beneficiaries of the Trust 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 will be effected through the new five-year
collective bargaining agreement, 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 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 its Board of Directors, and to a
broad based neutrality clause for certain of the Company's facilities in the
future.

CF&I LABOR DISPUTE SETTLEMENT - ACCOUNTING

         The Company has recorded a charge of $31.1 million in the fourth
quarter of 2003 related to the Settlement, the final amount of which is
dependant upon the price of the Company's common stock on the effective date of
the Settlement. The charge consisted of (1) $23.2 million for the value of 4
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. The Company will adjust the amount of the common
stock charge, either up or down, for the change in the price of the common stock
between December 31, 2003 and the effective date of the Settlement. The accrual
for the LTD

                                      -12-
<PAGE>

benefits may also change, as better claims information becomes available.
As employees accept the early retirement benefits, the Company will record
an additional charge totaling approximately $7.0 million related to these
benefits. The enhancements to pension and post-retirement medical benefits
for non-early retirees will be accounted for prospectively on the date at
which plan amendments occur pursuant to the new five-year collective
bargaining agreement in accordance with SFAS 87 and SFAS 106.

EMPLOYEES

       As of December 31, 2003, the Company had approximately 1,400 full-time
employees. Within the Oregon Steel Division the employees of the Portland Mill,
the Napa Pipe Mill, CST, and the corporate headquarters are not represented by a
union. Approximately 79 employees at the Camrose Pipe Mill are members of the
Canadian Autoworkers Union ("CAW") and are working under the terms of a
collective bargaining agreement that expires in 2006. Approximately 560
employees of the RMSM Division work under collective bargaining agreements with
several unions, including the United Steelworkers of America. The Company and
the United Steelworkers of America had been unable to agree on terms for a new
labor agreement and are operating under the terms of the Company's last contract
offer, which was implemented in 1998. See "BUSINESS-LABOR MATTERS".

       The domestic employees of the Oregon Steel Division (exclusive of CST)
participate in the Employee Stock Ownership Plan ("ESOP"). As of December 31,
2003, the ESOP owned approximately 2.1% of the Company's outstanding common
stock. At the discretion of the Board of Directors, common stock is contributed
to the ESOP. The Company also has profit participation plans for its employees,
with the exception of bargaining unit employees of Camrose and executive
officers of the Company, which permit eligible employees to share in the pretax
income of their operating unit. The Company may modify, amend or terminate the
plans, at any time, subject to the terms of various labor agreements.

AVAILABLE INFORMATION

         The public may read and copy any materials the Company files with the
Securities and Exchange Commission ("SEC") at the SEC's Public Reference Room at
450 Fifth Street, NW, Washington DC 20549. The public may obtain information on
the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.

         The SEC maintains an internet site that contains reports, proxy and
information statements, and other information regarding issuers that file
electronically with the SEC and the address of that site is www.sec.gov.
                                                            -----------

         The Company's web site is www.osm.com. The Company makes available free
                                   -----------
of charge, on or through its web site, its annual, quarterly and current
reports, and any amendments to those reports, as soon as reasonably practicable
after electronically filing such reports with the SEC. Information contained on
the Company's web site is not part of this report.


ITEM 2.  PROPERTIES

OREGON STEEL DIVISION

         The Portland Mill is located on approximately 143 acres owned by the
Company in the Rivergate Industrial Park in Portland, Oregon, near the
confluence of the Columbia and Willamette rivers. The operating facilities
principally consist of an electric arc furnace, ladle metallurgy station, vacuum
degasser, slab casting equipment and the Combination Mill, as well as an
administrative office building. In May 2003, the Company shut down its Portland
melt shop which includes the electric arc furnace, ladle metallurgy station,
vacuum degasser, and slab casting equipment. The Company's heat-treating
facilities are located nearby on a 5-acre site owned by the Company.

         The Company owns approximately 152 acres in Napa, California, with the
Napa Pipe Mill occupying approximately 92 of these acres. The Company also owns
a 325,000 square foot steel fabricating facility adjacent to the Napa Pipe Mill.
The fabricating facility is not currently operated by the Company, but is
instead leased to operators on a short-term basis, and consists of industrial
buildings containing equipment for the production and assembly of large steel
products or components.

         The Camrose Pipe Mill is located on approximately 67 acres in Camrose,
Alberta, Canada, with the large diameter pipe mill and the ERW pipe mill
occupying approximately four acres and three acres, respectively. In addition,
there is a 3,600 square foot office building on the site. The sales staff leases
office space in Calgary, Alberta, Canada. The property, plant and equipment of
Camrose, and certain other assets, are collateral for the Camrose (CDN) $15
million revolving credit facility (see Note 6 to the Consolidated Financial
Statements).

                                      -13-
<PAGE>


         The Company leases equipment and approximately 25 acres in the
Rivergate Industrial Park in Portland, Oregon with the CST operations and sales
staff occupying the site. The equipment consists of a slitting line, a
structural tubing mill, a proprietary in-line coating system and a
manufacturing/warehousing structure.


RMSM DIVISION

         The Pueblo Mill is located in Pueblo, Colorado on approximately 570
acres. The operating facilities principally consist of two electric arc
furnaces, a ladle refining furnace and vacuum degassing system, two 6-strand
continuous round casters for producing semi-finished steel (one of which has not
operated since 1998 and for accounting purposes is considered an impaired
asset), and three finishing mills (a rail mill, a seamless pipe mill, and a rod
and bar mill). Due to market conditions, operations at the seamless pipe mill
were suspended from November 2001 to April 2002, from mid-August 2002 to
mid-September 2002, and from mid-November 2003 to date.


         At December 31, 2003, the Company had the following nominal capacities,
which are affected by product mix:

                                                       PRODUCTION    PRODUCTION
                                                       CAPACITY       IN 2003
                                                       ----------    ----------
                                                                (TONS)
         Portland Mill:         Melting FN1               840,000       148,500
                                Finishing               1,200,000       691,100
         Napa Pipe Mill:        Steel Pipe                400,000       200,600
         Camrose Pipe Mill:     Steel Pipe                320,000        49,500
         CST Tube Mill:         Steel Tube                150,000         4,500
         Pueblo Mill:           Melting                 1,200,000       876,500
                                Finishing Mills FN2     1,200,000       894,300

-------------------------
FN1 In May 2003, the Company shut down its Portland Mill melt shop.
FN2 Includes the production capacity and production in 2003 of 150,000 tons and
    46,600 tons, respectively, of the seamless pipe mill.


         The Company's 10% First Mortgage Notes due 2009 ("10% Notes") are
secured, in part, by a lien on substantially all of the property, plant and
equipment of the Company, exclusive of Camrose and CST. New CF&I and CF&I
(collectively, the "Guarantors") have pledged substantially all of their
property, plant and equipment and certain other assets as security for their
guarantees of the 10% Notes. (See Note 6 to the Consolidated Financial
Statements.)


ITEM 3.  LEGAL PROCEEDINGS

         See Part I, Item 1, "Business - Environmental Matters", for discussion
of (a) the lawsuits initiated by the Union alleging violations of the CAA, and
(b) the environmental issues at the Portland Mill and RMSM.

         See Part I, Item 1, "Business - Labor Matters", for the status of the
labor dispute at RMSM.

         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 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. 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

         No matters were voted upon during the fourth quarter of the year ended
December 31, 2003.



                                      -14-
<PAGE>


                      EXECUTIVE OFFICERS OF THE REGISTRANT

         Officers are elected by the Board of Directors of the Company to serve
for a period ending with the next succeeding annual meeting of the Board of
Directors held immediately after the annual meeting of stockholders.

         The name of each executive officer of the Company, age as of February
1, 2004 and position(s) and office(s) held by each executive officer are as
follows:

                                                             DATE ASSUMED
NAME                  AGE    POSITION(S)                     PRESENT POSITION(S)
--------------------  ---    ------------------------        -------------------

James E. Declusin     61     President and                   August 2003
                             Chief Executive Officer

L. Ray Adams          53     Vice President, Finance         March 1991
                             Chief Financial Officer
                             and Treasurer

Steven M. Rowan       58     Vice President,                 February 1992
                             Materials and Transportation

Robert A. Simon       42     Vice President and              September 2000
                             General Manager -
                             RMSM Division

Jennifer R. Murray    47     Vice President Administration   August 2001
                             and Secretary

Jeff S. Stewart       42     Corporate Controller            January 2000

         The Company has employed each of the executive officers named above,
except James E. Declusin, in an executive or managerial role for at least five
years. James E. Declusin retired from California Steel Industries ("CSI") as
Executive Vice President and Chief Operating Officer in 2000. Prior to joining
CSI, Mr. Declusin spent seventeen years with Kaiser Steel Corporation. Mr.
Declusin has been a director of Oregon Steel Mills since 2000.


                                      -15-
<PAGE>



PART II

ITEM 5.      MARKET FOR REGISTRANT'S COMMON EQUITY AND
                  RELATED STOCKHOLDER MATTERS

         The Company's common stock is traded on the New York Stock Exchange. At
December 31, 2003, the number of common stockholders of record was 1,062.
Information on quarterly dividends and common stock prices is shown on page 30
and incorporated herein by reference.

         The Indenture under which the Company's 10% Notes were issued contains
potential restrictions on new indebtedness and various types of disbursements,
including common stock dividends. One of the restrictions on cash dividends is
based on the cumulative amount of the Company's consolidated net income, as
defined. Under that restriction, there was no amount available for cash
dividends at December 31, 2003. In addition, the Company cannot pay cash
dividends under its Credit Agreement without prior approval from its lenders.
(See Note 6 to the Consolidated Financial Statements and Part II, Item 7,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources").

                                      -16-
<PAGE>



ITEM 6.      SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>

                                                                                YEAR ENDED DECEMBER 31,
                                                        ----------------------------------------------------------------------------
                                                                2003            2002          2001           2000           1999
                                                        ----------------------------------------------------------------------------
                                                         (IN THOUSANDS, EXCEPT TONNAGE, PER TON AND PER SHARE AMOUNTS)
<S>                                                         <C>            <C>            <C>            <C>            <C>
INCOME STATEMENT DATA:
   Sales FN1                                                $   723,297    $   904,950    $   780,887    $   672,017    $   884,649
   Cost of sales                                                713,601        783,940        694,941        619,016        756,461
   Settlement of litigation                                          --             --         (3,391)            --         (7,027)
   Labor dispute settlement charges                              31,089             --             --             --             --
   Fixed and other asset impairment charges                      36,113             --             --             --             --
   Loss (gain) on sale of assets                                 (1,835)        (1,283)           (10)          (290)           501
   Selling, general and administrative expenses                  50,477         58,600         64,300         51,486         55,992
   Incentive compensation                                           354          3,761            244            698         10,540
                                                            -----------    -----------    -----------    -----------    -----------
          Operating income (loss)                              (106,502)        59,932         24,803          1,107         68,182
   Interest expense                                             (33,620)       (36,254)       (35,595)       (34,936)       (35,027)
   Other income, net                                              1,448            961          3,044          4,355          1,290
   Minority interests                                             6,108         (3,036)          (339)            (7)        (1,475)
                                                            -----------    -----------    -----------    -----------    -----------
   Income (loss) before tax                                    (132,566)        21,603         (8,087)       (29,481)        32,970
   Income tax benefit (expense)                                   6,617         (9,244)         2,159         11,216        (13,056)
                                                            -----------    -----------    -----------    -----------    -----------
   Net income (loss) before cumulative effect
      of change in accounting principle                        (125,949)        12,359         (5,928)       (18,265)        19,914
   Cumulative effect of change in accounting
      principle, net of tax                                          --        (17,967)            --             --             --
                                                            -----------    -----------    -----------    -----------    -----------
                Net income (loss)                           $  (125,949)   $    (5,608)   $    (5,928)   $   (18,265)   $    19,914
                                                            ===========    ===========    ===========    ===========    ===========

COMMON STOCK INFORMATION:
Basic earnings (loss) per share                                  $(4.77)        $(0.21)        $(0.22)        $(0.69)         $0.76
Diluted earnings (loss) per share                                $(4.77)        $(0.21)        $(0.22)        $(0.69)         $0.76
Cash dividends declared per share                                $   --         $   --         $   --         $ 0.06          $0.56
Weighted average common shares &
   common equivalents outstanding
   Basic                                                         26,392         26,388         26,378         26,375         26,375
   Diluted                                                       26,392         26,621         26,378         26,375         26,375
BALANCE SHEET DATA (AT DECEMBER 31):
Net Working capital                                         $   126,727    $   171,521    $    62,145    $   108,753    $   101,177
Total assets                                                    763,978        844,320        869,576        880,354        877,254
Current liabilities                                             131,833        118,899        196,924        126,748        101,660
Long-term debt                                                  301,832        301,428        233,542        314,356        298,329
Total stockholders' equity                                      187,252        306,990        318,586        331,645        352,402

OTHER DATA:
Depreciation and amortization                               $    40,809    $    45,868    $    46,097    $    46,506    $    47,411
Capital expenditures                                        $    19,754    $    18,246    $    12,933    $    16,684    $    15,908
Total tonnage sold:
   Oregon Steel Division                                        740,700        947,000        829,700        871,500        969,800
   RMSM Division                                                894,100        836,500        780,900        757,000        734,900
                                                            -----------    -----------    -----------    -----------    -----------
      Total tonnage sold                                      1,634,800      1,783,500      1,610,600      1,628,500      1,704,700
                                                            ===========    ===========    ===========    ===========    ===========
</TABLE>

----------------------------------
FN1 Includes freight revenues of $38.9 million, $54.5 million, $54.8 million and
$36.1 million in 2003, 2002, 2001, and 2000, respectively, and sales of
electricity of $19.1 million and $2.8 million in 2001 and 2000, respectively.
During 2001, the Portland Mill was the beneficiary of a committed power supply
contract with a local utility company. Under the contract the utility guaranteed
to supply an amount of electricity to the mill at a fixed rate. During the west
coast electricity shortage in 2000 and 2001, the Company agreed not to use a
daily determined portion of the guaranteed supply and was compensated by the
local utility at a daily-determined rate per megawatt/hour. The revenue from
this was included in operating income because the Company made an operational
choice to not use power in return for compensation rather than to produce
product. There was no direct cost of sales associated with this transaction and,
accordingly, the net revenue (compensation in excess of contracted price) fully
impacted operating income for the period.

                                      -17-

<PAGE>



ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

         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,"
"estimate," "continue," "may," "will," "would," "could," 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, general business
and economic conditions; competitive products and pricing, as well as
fluctuations in demand; the supply of imported steel and subsidies provided by
foreign governments to support steel companies domiciled in their countries;
changes in U.S. or foreign trade policies affecting steel imports or exports;
potential equipment malfunction; work stoppages; plant construction and repair
delays; reduction in electricity supplies and the related increased costs and
possible interruptions of supply; changes in the availability and costs of raw
materials and supplies used by the Company; costs of environmental compliance
and the impact of governmental regulations; risks related to the outcome of the
pending union dispute; and failure of the Company to predict the impact of lost
revenues associated with interruption of the Company's, its customers' or
suppliers' operations.

OVERVIEW

         The consolidated financial statements include the accounts of the
Company and its subsidiaries, which include wholly-owned Camrose Pipe
Corporation, which owns 100% of Columbia Structural Tubing and through ownership
in another corporation holds a 60% interest in Camrose Pipe Company ("Camrose");
and 87% owned New CF&I, which owns a 95.2% interest in CF&I. The Company also
directly owns an additional 4.3% interest in CF&I. In January 1998, CF&I assumed
the trade name Rocky Mountain Steel Mills. All significant intercompany balances
and transactions have been eliminated.

         The Company currently has two aggregated operating divisions known as
the Oregon Steel Division and the RMSM Division. (See Note 2 to the Consolidated
Financial Statements on discussion of the Company's aggregate reporting of its
operating units). The Oregon Steel Division is centered at the Portland Mill. In
addition to the Portland Mill, the Oregon Steel Division includes the Napa Pipe
Mill, the Camrose Pipe Mill and Columbia Structural Tubing. The RMSM Division
consists of the steelmaking and finishing facilities of the Pueblo Mill, as well
as certain related operations.

         In May 2003, the Company shut down its Portland Mill melt shop. The
determination to close the melt shop was based on 1) the Company's ability to
obtain semi-finished slab through purchases from suppliers on the open market,
and 2) high energy and raw material costs and the yield losses associated with
the inefficient casting technology in use at the Portland Mill. The Company
forecasts that future semi-finished slab purchases for the Portland Mill,
combined with existing inventory on hand, will meet the production needs of the
Portland Mill finishing operation for the remainder of 2004 and into the
foreseeable future. The Company intends to maintain the melt shop in operating
condition. In addition, CF&I determined in the second quarter of 2003 that the
new single furnace operation (as referenced in Note 16 to the Consolidated
Financial Statements) will not have the capacity to support a two caster
operation and therefore CF&I has determined that one caster and other related
assets have no future service potential. The Company recorded a pre-tax charge
to earnings of approximately $36 million in the second quarter of 2003 related
to these asset impairments. For a discussion of these impairments, see
"IMPAIRMENT CHARGES" section below.

         On January 15, 2004 the Company announced a tentative agreement to
settle the labor dispute between the Union and CF&I. The Company has recorded a
charge of $31.1 million in the fourth quarter of 2003 related to the tentative
settlement. See "LABOR DISPUTE SETTLEMENT CHARGES" section below for further
discussion of this tentative agreement.

                                      -18-
<PAGE>


OPERATIONS

         The following table sets forth, for the periods indicated, the
percentage of sales represented by selected income statement items and
information regarding selected balance sheet data.

<TABLE>
<CAPTION>


                                                                         YEAR ENDED DECEMBER 31,
                                                               -----------------------------------------------
                                                                   2003            2002             2001
                                                               -------------  --------------  ----------------
<S>                                                            <C>            <C>             <C>
INCOME STATEMENT DATA:
    Sales                                                           100.0 %         100.0 %           100.0 %
    Cost of sales                                                    98.7            86.6              89.0
    Settlement of litigation                                           --              --              (0.4)
    Labor dispute settlement charges                                  4.3              --                --
    Fixed and other asset impairment charges                          5.0              --                --
    Loss (gain) on sale of assets                                    (0.3)           (0.1)               --
    Selling, general and administrative expenses                      7.0             6.5               8.2
    Incentive compensation                                             --             0.4                --
                                                               ----------     -----------     -------------
       Operating income (loss)                                      (14.7)            6.6               3.2
    Interest expense                                                 (4.6)           (4.0)             (4.6)
    Other income, net                                                 0.2             0.1               0.4
    Minority interests                                                0.8            (0.3)             (0.1)
                                                               ----------     -----------     -------------
       Pretax income (loss)                                         (18.3)            2.4              (1.1)
    Income tax benefit (expense)                                      0.9            (1.0)              0.3
                                                               ----------     -----------     -------------
    Net income (loss) before cumulative effect of
       change in accounting principle                               (17.4)            1.4              (0.8)
    Cumulative effect of change in accounting principle,
       net of tax                                                      --            (2.0)               --
                                                               ----------     -----------     -------------
          Net loss                                                  (17.4)%          (0.6)%            (0.8)%
                                                               =============  ==============  =============

BALANCE SHEET DATA (AT DECEMBER 31):
    Current ratio                                                  2.0 : 1         2.4 : 1           1.3 : 1
    Total debt as a percentage of capitalization FN1                 61.8%           49.6%             51.6%
    Net book value per share                                         $7.09          $11.90            $12.35
</TABLE>

-----------------
FN1 Calculation of debt, as a percentage of capitalization is equal to total
debt (short and long-term) divided by the sum of adjusted stockholders' equity
(total equity less net goodwill) and total debt.

                                      -19-
<PAGE>


         The following table sets forth by division, for the periods indicated,
tonnage sold, revenues and average selling price per ton.
<TABLE>
<CAPTION>


                                                                YEAR ENDED DECEMBER 31,
                                                     ----------------------------------------------
        TOTAL TONNAGE SOLD:                              2003              2002           2001
                                                     --------------     -----------    ------------
     <S>                                             <C>                <C>            <C>

     Oregon Steel Division:
        Plate and Coil                                   501,300            467,600         472,000
        Welded Pipe                                      237,800            479,400         357,700
        Structural Tube FN1
                                                           1,600                 --              --
                                                      ----------         ----------      ----------
             Total Oregon Steel Division                 740,700            947,000         829,700
                                                      ----------         ----------      ----------
      RMSM Division:
        Rail                                             360,400            384,100         246,000
        Rod and Bar                                      482,400            419,700         432,500
        Seamless Pipe FN2                                 51,300             30,000          97,700
        Semi-finished                                         --              2,700           4,700
                                                      ----------         ----------      ----------
             Total RMSM                                  894,100            836,500         780,900
                                                      ----------         ----------      ----------
              Total Company                            1,634,800          1,783,500       1,610,600
                                                      ==========         ==========      ==========
 PRODUCT REVENUES (IN THOUSANDS): FN3
     Oregon Steel Division                            $  343,755         $  535,049      $  414,994
     RMSM Division                                       340,658            315,448         291,993
                                                      ----------         ----------      ----------
              Total Company                           $  684,413         $  850,497      $  706,987
                                                      ==========         ==========      ==========
AVERAGE SELLING PRICE PER TON:FN3
     Oregon Steel Division                            $      464         $      565      $      500
     RMSM Division                                    $      381         $      377      $      374
            Company Average                           $      419         $      477      $      439

</TABLE>

-----------------------
FN1 The Company began operations at the structural tube facility in October
    2003.

FN2 The Company suspended operation of the seamless pipe mill from November 2001
    to April 2002, from mid-August 2002 to mid-September 2002, and from
    mid-November 2003 to date.

FN3 Product sales and average selling price per ton exclude freight revenues of
    $38.9 million, $54.5 million and $54.8 million, in 2003, 2002, and 2001,
    respectively, and sale of electricity of $19.1 million in 2001. During 2001,
    the Portland Mill was the beneficiary of a committed power supply contract
    with a local utility company. Under the contract the utility guaranteed to
    supply an amount of electricity to the mill at a fixed rate. During the west
    coast electricity shortage in 2001, the Company agreed not to use a daily
    determined portion of the guaranteed supply and was compensated by the local
    utility at a daily-determined rate per megawatt/hour. The revenue from this
    was included in operating income because the Company made an operational
    choice to not use power in return for compensation rather than to produce
    product. There was no direct cost of sales associated with this transaction
    and, accordingly, the net revenue (compensation in excess of contracted
    price) fully impacted operating income for the period.

         The Company's operating results were affected in 2003 by, among other
things, reduced demand and pricing for welded pipe products and increased
pricing pressure in plate and coil products and higher scrap and energy costs.
The specialty and commodity plate markets have been impacted by both new sources
of domestic supply and continued imports from foreign suppliers, which have
adversely affected average selling prices for the Company's plate products. In
addition, the Company believes that high fixed costs motivate steel producers to
maintain high output levels even in the face of falling prices, thereby
increasing further downward pressures on selling prices. Operating income was
further reduced by the recognition of impairment to fixed assets and by the
charge for the tentative settlement of the labor dispute. The domestic steel
industry and the Company's business are highly cyclical in nature and these
factors have adversely affected the profitability of the Company.

         On December 4, 2003, President Bush lifted the tariffs on imports of
steel that were imposed March 5, 2002. The tariffs were designed to give the
U.S. Steel Industry time to restructure and become competitive in the global
steel market. During the time that the tariffs were in effect, the Company
believes that the tariffs did not materially impact either the supply of, or the
cost of, steel slabs purchased by the Company on the open market for processing
into steel plate and coil. Since the lifting of the tariffs, the steel industry
has seen a dramatic increase in both the cost of raw materials and the selling
price of most steel products. The Company believes that current market
conditions are the result of the combination of a strong steel demand in China,
a weak United States dollar, and an increase in ocean freight costs. The Company
anticipates that market

                                      -20-
<PAGE>

conditions will remain unsettled until demand in China stabilizes. During
this period of time, the Company believes that it will continue to incur
increased costs for steel scrap, slabs, and ocean freight, and achieve increased
selling prices to offset these higher costs.

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.

         The Company believes the following critical accounting policies
affect its more significant judgments and estimates used in the preparation of
its consolidated financial statements.

         EMPLOYEE BENEFITS PLANS AND OTHER POST-RETIREMENT BENEFITS. Annual
pension and other post-retirement benefits ("OPRB") expenses are calculated by
third party actuaries using standard actuarial methodologies. The actuaries
assist the Company in making estimates based on both historical and current
information and estimates about future events and circumstances. Significant
assumptions used in the valuation of pension and OPRB include expected return on
plan assets, discount rate, rate of increase in compensation levels and the
health care cost trend rate. The Company accounts for the defined benefit
pension plans using Statement of Financial Accounting Standards No. 87,
"EMPLOYER'S ACCOUNTING FOR PENSIONS". As a result of continuing declines in
interest rates being offset by favorable investment returns of the Company's
defined benefit pension plans' assets, the Company reduced the minimum pension
liability at December 31, 2003 by $0.8 million after tax effect. This adjustment
did not impact current earnings. For further details regarding the Company's
benefits and post-retirement plans, see Note 11 to the Consolidated Financial
Statements.

         ENVIRONMENTAL LIABILITIES. All material environmental remediation
liabilities for non-capital expenditures, which are both 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 when estimated time periods are changed, thereby affecting 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. Even though the Company has established certain reserves
for environmental remediation, environmental authorities may require additional
remedial measures, and additional environmental hazards, necessitating further
remedial expenditures, may be asserted by these authorities or by private
parties. Accordingly, the costs of remedial measures may exceed the amounts
reserved.

         DEFERRED TAXES. Deferred income taxes reflect the differences between
the financial reporting and tax bases of assets and liabilities at year-end
based on enacted tax laws and statutory tax rates. Tax credits are recognized as
a reduction of income tax expense in the year the credit arises. A valuation
allowance is established when necessary to reduce deferred tax assets to the
amount more likely than not to be realized.

         ALLOWANCE FOR DOUBTFUL ACCOUNTS. The Company maintains allowances for
doubtful accounts for estimated losses resulting from the inability of its
customers to make required payments. As of December 31, 2003, the allowance of
doubtful accounts was approximately $3.7 million. In establishing a proper
allowance for doubtful accounts, the Company evaluates the collectibility of its
accounts receivable based on a combination of factors. In cases where management
is aware of the circumstances that may impair a specific customer's ability to
meet its financial obligations, the Company records a specific allowance against
amounts due from customers, and thereby reduces the net recognized receivable
amount the Company reasonably believes will be collected. For all other
customers, the Company evaluates the allowance for doubtful accounts based on
the length of time the receivables are past due, historical collection
experience, customer credit-worthiness and economic trends.

         LONG-LIVED ASSET IMPAIRMENTS. Long-lived asset impairments are
recognized when the carrying value of those productive assets exceeds their
aggregate projected undiscounted cash flows. These undiscounted cash flows are
based on the Company's long range estimates of market conditions, with due
consideration to historical, cyclical, operating cash flows and the overall
performance associated with the individual asset. If future demand and market
conditions are less favorable than those projected by the Company, or if the
probability of disposition of the assets differs from that previously estimated
by the Company, additional asset write-downs may be required.

                                      -21-
<PAGE>


         CONTINGENCIES. The Company is subject to the possibility of loss
contingencies arising in the normal course of business. The Company considers
the likelihood of loss or impairment of an asset or the incurrence of a
liability, as well as its ability to reasonably estimate the amount of loss in
determining loss contingencies. An estimated loss is accrued when it is probable
that an asset has been impaired or a liability has been incurred and the amount
can be reasonably estimated. The Company regularly evaluates current information
available to determine whether such accruals should be adjusted. See Note 16 to
the Consolidated Financial Statements for a discussion of contingencies.


DISCUSSION AND ANALYSIS OF INCOME


COMPARISON OF 2003 TO 2002
 (In thousands except tons, per ton, and percentages)
<TABLE>
<CAPTION>


                                                              YEAR ENDED DECEMBER 31,
                                              -----------------------------------------------------
                                                  2003          2002          CHANGE       % CHANGE
                                                  ----          ----          ------       --------
<S>                                           <C>            <C>            <C>            <C>
Product Sales
-------------
Oregon Steel Division                         $  343,755     $  535,049     $ (191,294)       (35.8)%
RMSM Division                                 $  340,658     $  315,448     $   25,210          8.0%
                                              ----------     ----------     ----------       ------
  Consolidated                                $  684,413     $  850,497     $ (166,084)       (19.5)%
                                              ==========     ==========     ==========       ======

Tons shipped
------------
Oregon Steel Division:
   Plate and Coil                                501,300        467,600         33,700          7.2%
   Welded Pipe                                   237,800        479,400       (241,600)       (50.4)%
   Structural Tube                                 1,600             --          1,600        100.0%
                                               ---------     ----------     ----------       ------
         Total Oregon Steel Division             740,700        947,000       (206,300)       (21.8)%
                                               ---------     ----------     ----------       ------

RMSM Division:
   Rail                                          360,400        384,100        (23,700)        (6.2)%
   Rod and Bar                                   482,400        419,700         62,700         14.9%
   Seamless Pipe                                  51,300         30,000         21,300         71.0%
   Semi-finished                                      --          2,700         (2,700)      (100.0)%
                                               ---------      ---------     ----------       ------

        Total RMSM Division                      894,100        836,500         57,600          6.9%
                                               ---------      ---------     ----------       ------
        Consolidated                           1,634,800      1,783,500       (148,700)        (8.3)%
                                               =========      =========     ==========       ======

Sales price per ton
-------------------
Oregon Steel Division                         $      464     $      565     $     (101)       (17.9)%
RMSM Division                                 $      381     $      377     $        4          1.1%
                                              ----------     ----------     ----------       ------
  Consolidated                                $      419     $      477     $      (58)       (12.2)%
                                              ==========     ==========     ==========       ======
</TABLE>


         SALES. The decrease in consolidated product sales and average sales
price was primarily due to a reduction in welded pipe sales at the Oregon Steel
Division. During 2002, the Oregon Steel Division sales were higher due to a
large pipe contract for the Kern River Gas Transmission Company at the Napa Pipe
Mill. No similar large pipe contract was in place in 2003 and consequently the
Oregon Steel Division's sales, shipments, and sales price per ton were
significantly reduced. The RMSM Division's sales, shipments and sales price per
ton all increased in 2003 due to higher shipments of rod and bar products as a
result of higher rod production and a reduction in domestic capacity.

GROSS PROFIT
                                 2003          2002         CHANGE      % CHANGE
                                 ----          ----         ------      --------

              Gross Profit      $9,696       $121,010     $(111,314)    (92.0)%


         The decrease in gross profit was a result of the decreased sales and
average sales price of high-priced welded pipe from the Napa Pipe Mill, and to
an increase in the Company's costs due to increased costs in scrap, slab, and
energy costs for electricity and natural gas.

                                      -22-
<PAGE>


SELLING, GENERAL AND ADMINISTRATIVE
                                          2003       2002      CHANGE   % CHANGE
                                          ----       ----      ------   --------

    Selling, General and Administrative   $50,477    $58,600   $(8,123)  (13.9)%


         The decrease in selling, general and administrative expenses ("SG&A")
for 2003 was the result of a decrease of $5.5 million in expenses related to the
handling and loading of goods for sale, which was due to a decrease in the
volume of tons shipped in 2003; a decrease of $1.0 million in expenses for
information technology support and equipment, and a decrease of $0.7 million in
bad debt expense.

INTEREST EXPENSE

                                  2003         2002        CHANGE      % CHANGE
                                  ----         ----        ------      --------

          Interest Expense       $33,620      $36,254     $(2,634)      (7.3)%


         The decrease in interest expense was primarily due to a decreased
borrowing rate during 2003. The Company issued its 10% First Mortgage Notes due
2009 ("10% Notes") on July 15, 2002 in order to refinance its 11% First Mortgage
Notes due 2003 ("11% Notes"). The Company also incurred additional interest
expense in 2002 due to interest accrued on the 11% Notes which were outstanding
concurrently with the 10% Notes for the period of July 15 to August 14, 2002.

INCOME TAX BENEFIT (EXPENSE)

                                         2003       2002      CHANGE    % CHANGE
                                         ----       ----      ------    --------

      Income Tax Benefit (Expense)     $6,617    $(9,244)    $15,861     171.6%

         The effective income tax benefit rate was 5.0% in 2003, compared to the
tax expense rate of 42.8% in 2002. The effective income tax rate for 2003 varied
from the combined state and federal statutory rate principally because the
Company established a valuation allowance for certain federal and state net
operating loss carry-forwards, state tax credits, and alternative minimum tax
credits. 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 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 recorded a valuation allowance of $48.2 million in 2003
due to uncertainties regarding the realization of these deferred tax assets. 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 allowance.

                                      -23-
<PAGE>


COMPARISON OF 2002 TO 2001
(In thousands except tons, per ton, and percentages)
<TABLE>
<CAPTION>


                                                             YEAR ENDED DECEMBER 31,
                                                -------------------------------------------------
                                                  2002            2001          CHANGE      % CHANGE
                                                --------       ----------     ----------    ---------
<S>                                             <C>            <C>            <C>           <C>
Product Sales
-------------
Oregon Steel Division                           $  535,049     $  414,994     $  120,055        28.9%
RMSM Division                                   $  315,448     $  291,993     $   23,455         8.0%
                                                ----------     ----------     ----------      ------
  Consolidated                                  $  850,497     $  706,987     $  143,510        20.3%
                                                ==========     ==========     ==========      ======

Tons shipped
------------
Oregon Steel Division:
   Plate and Coil                                  467,600        472,000         (4,400)       (0.9)%

   Welded Pipe                                     479,400        357,700        121,700        34.0%
                                                ----------     ----------     ----------      ------
        Total Oregon Steel Division                947,000        829,700        117,300        14.1%
                                                ----------     ----------     ----------      ------

RMSM Division:
--------------
   Rail                                            384,100        246,000        138,100        56.1%
   Rod and Bar                                     419,700        432,500        (12,800)        (3.0)%
   Seamless Pipe                                    30,000         97,700        (67,700)       (69.3)%
   Semi-finished                                     2,700          4,700         (2,000)       (42.6)%
                                                ----------     ----------     ----------       ------
        Total RMSM Division                        836,500        780,900         55,600          7.1%
                                                ----------     ----------     ----------       ------
        Consolidated                             1,783,500      1,610,600        172,900         10.7%
                                                ==========     ==========     ==========       ======

Sales price per ton
-------------------
Oregon Steel Division                           $      565     $      500     $       65        13.0%
RMSM Division                                   $      377     $      374     $        3         0.8%
                                                ----------     ----------     ----------      ------
  Consolidated                                  $      477     $      439     $       38         8.7%
                                                ==========     ==========     ==========      ======
</TABLE>


         SALES. Growth in both product sales and related average selling prices
were primarily due to higher shipments of welded pipe and rail products and
higher rod and bar prices in 2002. The increase in sales at the Oregon Steel
Division was due to significantly higher shipments of welded pipe resulting from
the supply of more than 364,000 tons of large diameter pipe to Kern River Gas
Transmission Company. The increase in sales at the RMSM Division was due to
higher shipments of rail products, partially offset by decreased rod and bar
shipments, as well as decreased shipments of seamless pipe and semi-finished
products. The shift of product mix to rail in 2002 was the principal reason for
the improvement in average sales price. In addition, the demand for seamless
pipe remained sluggish throughout 2002, and as a result, the seamless mill was
temporarily shut down for the periods from November 2001 to April 2002 and from
mid-August 2002 to mid-September of 2002.

GROSS PROFIT
                               2002          2001         CHANGE      % CHANGE
                               ----          ----         ------      --------

           Gross Profit      $121,010       $85,946      $35,064       40.8%

         The increase of $35.1 million in gross profit was due to increased
sales of high-priced welded pipe from the Napa Pipe Mill and increased sales of
rail products and higher rod and bar prices at the RMSM Division.

SELLING, GENERAL AND ADMINISTRATIVE

                                           2002     2001      CHANGE   % CHANGE
                                           ----     ----      ------   --------

   Selling, General and Administrative   $58,600   $64,300   $(5,700)   (8.9)%

         SG&A decreased as a percentage of total sales to 6.5% in 2002 from 8.2%
in 2001. The decrease was due to higher general administrative costs in 2001,
including $3.1 million of seamless pipe commission fees and $4.0 million of
environmental and other legal expenses.

                                      -24-
<PAGE>


INTEREST EXPENSE

                                      2002        2001       CHANGE    % CHANGE
                                      ----        ----       ------    --------

                Interest Expense     $36,254     $35,595      $659       1.9%


         Total interest expense increased as a result of refinancing activities
in 2002. The Company issued its 10% Notes on July 15, 2002 in order to refinance
its outstanding 11% Notes. Although the Company's 10% Notes bear a lower
interest rate than the 11% Notes, the Company incurred increased interest
expense primarily attributable to the additional interest accrued on the 11%
Notes which were outstanding concurrently with the 10% Notes for the period of
July 15 to August 14, 2002. This was partially offset by the lower average
borrowing levels on the Company's credit facility in 2002. In 2001, interest
expense included additional expensed loan fees due to an amendment of the
Company's credit facility.

INCOME TAX (EXPENSE) BENEFIT

                                       2002       2001       CHANGE    % CHANGE
                                       ----       ----       ------    --------

       Income Tax (Expense) Benefit   $(9,244)   $2,159    $(11,403)   (528.2)%


         The effective income tax expense rate was 42.8% for 2002 versus an
effective income tax benefit rate of 26.7% for 2001. The effective income tax
rate for 2002 varied principally from the combined state and federal statutory
rate due to a $1.7 million increase in the valuation allowance for state tax
credit carryforwards.

IMPAIRMENT CHARGES

         In May 2003, the Company shut down its Portland Mill melt shop. The
determination to close the melt shop was based on 1) the Company's ability to
obtain semi-finished slab through purchases from suppliers on the open market,
and 2) high energy and raw material costs and the yield losses associated with
the inefficient casting technology in use at the Portland Mill. The Company
believes that future semi-finished slab purchases for the Portland Mill will
meet the production needs of the Portland Mill finishing operation for the
remainder of 2004 and into the foreseeable future. The Company intends to
maintain the melt shop in operating condition.

         In connection with the melt shop closure, the Company has determined
the value of the related assets to be impaired. Accordingly, the Company
recorded a pre-tax impairment charge to earnings of $27.0 million for the melt
shop and other related assets in the quarter ended June 30, 2003. Of this
impairment charge recognized, $18.3 million represented impairment of fixed
assets and $8.4 million pertained to reduction of dedicated stores and operating
supplies to net realizable value. Following the impairment charge, the carrying
value of the fixed assets was approximately $1.4 million. The fair value of the
impaired fixed assets was determined using the Company's estimate of market
prices for similar assets.

         As part of the settlement with the CDPHE and the EPA, CF&I is required
to install one new electric arc furnace, and thus the two existing furnaces with
a combined melting and casting capacity of approximately 1.2 million tons
through two continuous casters will be shut down. CF&I has determined that the
new single furnace operation will not have the capacity to support a two caster
operation and therefore CF&I has determined that one caster and other related
assets have no future service potential. Accordingly, the Company recorded a
pre-tax impairment charge to earnings of $9.1 million in the quarter ended June
30, 2003. Of the impairment charge recognized, $8.1 million represented
impairment of fixed assets and $1.0 million pertained to reduction of related
stores items to net realizable value. Because it is believed the caster has no
salvage value, the carrying value of the fixed assets was zero after the effect
of the impairment charge.

LABOR DISPUTE SETTLEMENT CHARGES


         On January 15, 2004 the Company announced a tentative agreement to
settle the labor dispute between the Union and CF&I ("Settlement"). The
Settlement is conditioned on, among other things, (1) its approval by
shareholders of New CF&I, (2) ratification of a new collective bargaining
agreement being executed between CF&I and the Union, (3) approval of the
Settlement by the NLRB and the dismissal of cases pending before the NLRB
related to the labor dispute and (4) various pending legal actions between the
Company, New CF&I and CF&I and the Union being dismissed. The Settlement, if
approved, will provide remedies for all outstanding unfair labor practices
between CF&I and the Union and sets the stage

                                      -25-
<PAGE>


for the ratification of a new five-year collective bargaining agreement.
The Settlement includes the creation of a labor dispute settlement trust
("Trust") that will hold assets to be contributed by either the Company or
CF&I. Assets of the Trust will include: (1) four million shares of the
Company's common stock, (2) a cash contribution of $2,500 for each
beneficiary of the trust, estimated to be in total $2.5 million, and (3)
beginning on the effective date of the Settlement, a ten year profit
participation obligation consisting of 25% of CF&I operating income, as
defined, not to exceed $3 million per year for years one through five and
$4 million per year for years six through ten. The beneficiaries of the
Trust 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 will be
effected through the new five-year collective bargaining agreement, 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 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 its Board of Directors,
and to a broad based neutrality clause for certain of the Company's
facilities in the future.


CF&I LABOR DISPUTE SETTLEMENT - ACCOUNTING

         The Company has recorded a charge of $31.1 million in the fourth
quarter of 2003 related to the Settlement, the final amount of which is
dependant upon the price of the Company's common stock on the effective date of
the Settlement. The charge consisted of (1) $23.2 million for the value of 4
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. The Company will adjust the amount of the common
stock charge, either up or down, for the change in the price of the common stock
between December 31, 2003 and the effective date of the Settlement. The accrual
for the LTD benefits may also change, as better claims information becomes
available. As employees accept the early retirement benefits, the Company will
record an additional charge totaling approximately $7.0 million related to these
benefits. The enhancements to pension and post-retirement medical benefits for
non-early retirees will be accounted for prospectively on the date at which plan
amendments occur pursuant to the new five-year collective bargaining agreement
in accordance with SFAS 87 and SFAS 106.


LIQUIDITY AND CAPITAL RESOURCES

         At December 31, 2003, the Company's liquidity, comprised of cash, cash
equivalents, and funds available under its $65 million revolving credit
agreement ("Credit Agreement"), totaled approximately $49.7 million, compared to
$89.9 million at December 31, 2002. The reduction in liquidity is primarily the
result of a reduction in cash on hand of $22.2 million, a reduction in the
credit facility of $10.0 million, as well as increased outstanding letters of
credit of $7.8 million.

         Cash flow used in operations for 2003 was $5.0 million compared to
$49.1 million of cash provided by operations in 2002. The items primarily
affecting the $54.1 million decrease in operating cash flows were a) an increase
of $120.4 million in net loss including non-cash transactions of (1) an
impairment of fixed and other assets of $36.1 million related to the Portland
Mill melt shop and the caster at the Pueblo Mill; (2) the write-off of $31.9
million of goodwill during the first quarter of 2002 resulting in a cumulative
effect of change in accounting principle of $18.0 million (net of a $11.3
million tax effect and $2.6 million of minority interest); (3) estimated
settlement costs of $31.1 million related to the tentative agreement with the
Union, (4) an allowance for deferred income taxes of $(7.9) million in 2003
versus $9.1 million in 2002, and (5) a reduction in depreciation and
amortization of $5.1 million in 2003 that resulted from the impairment charges
to fixed assets (see item 1 above); and b) changes in working capital including:
(1) a decrease in inventories of $14.4 million versus an increase of $30.4
million in 2002; (2) a decrease of $6.5 million in net accounts receivable in
2003

                                      -26-
<PAGE>

versus a decrease of $4.6 million in 2002; (3) a $7.6 million increase in
other assets in 2003 versus a $0.7 million decrease in 2002; and (4) a $14.8
million increase in operating liabilities in 2003 verses a $4.1 million increase
in 2002.

         Net cash used in financing activities in 2003 was $3.3 million compared
to $19.7 million used in 2002. Net cash used in financing activities during 2002
was primarily for issue costs of the Company's 10% Notes issued on July 15,
2002.

         Net working capital at December 31, 2003 decreased $44.8 million
compared to December 31, 2002, reflecting a $31.9 million decrease in current
assets and a $12.9 million increase in current liabilities. The decrease in
current assets was primarily due to decreased cash, accounts receivable, and
inventories ($22.2 million, $6.5 million, and $23.2 million, respectively). An
offset to the decrease in current assets was an increase in the deferred tax
asset of $11.4 million and an increase in other assets of $8.7 million. The
accounts receivable turnover for the year ended December 31, 2003, as measured
in average daily sales outstanding, decreased to 34 days, as compared to 35 days
for the year ended December 31, 2002. The decrease was attributable to a faster
turnover of product receivables from customers paying earlier in order to
utilize cash discounts, and an increased effort on collections of receivables.
The change in current liabilities was due primarily to a decrease in accrued
sales taxes for welded pipe sales of $8.4 million in 2002.

          The following table summarizes the Company's contractual obligations
at December 31, 2003, and the effect such obligations are expected to have on
liquidity and cash flow in future periods.
<TABLE>
<CAPTION>



                                                                         PAYMENTS DUE BY PERIOD
                                                        ---------------------------------------------------------
                                                                    LESS THAN                            MORE THAN
    CONTRACTUAL OBLIGATIONS                                 TOTAL   1 YEAR       1-3 YEARS   3-5 YEARS    5 YEARS
    -----------------------                                 -----   ---------    ---------   ---------    -------
                                                                              (IN THOUSANDS)
    <S>                                                  <C>            <C>        <C>         <C>       <C>
    Long-term debt FN1                                   $305,000       $   -      $   -       $   -     $305,000
    Capital lease obligations
                                                              814         315        499           -            -
    Operating lease obligations
                                                           46,476       4,830      9,342       9,043       23,261
    Purchase obligations FN2                               25,592       3,456      5,962       5,712       10,462

    Electric arc furnace improvements FN3                  22,632       8,615     14,017           -            -
    Pension obligations                                      FN6          471        FN4         FN4          FN4
    Other post-retirement benefits FN5                       FN6        1,300      1,300       1,300          FN5

</TABLE>

 ---------------------------
    FN1  Principal payments on the Company's 10% Notes due 2009. See Note 6 to
         the Consolidated Financial Statements.
    FN2  Includes minimum electricity purchase commitment, and oxygen supply
         contracts where the future amounts are estimated based on current
         prices. See Note 16 to the Consolidated Financial Statements.
    FN3  Amounts required to satisfy the CDPHE settlement and the EPA action.
         These amounts are to be expended over a 16 month period after approval
         of the PSD air permit.
    FN4  The Company's obligation is limited to the next year's minimum current
         ERISA obligation. It is not possible to determine the future ERISA
         minimum required contributions beyond 2004.
    FN5  The Company has estimated the future obligations based upon the recent
         history of benefits paid. Amounts in excess of 5 years cannot be
         reliably estimated.
    FN6  Totals cannot be determined because future obligations cannot be
         determined.



         As of December 31, 2003, principal payments on debt are due as follows
(in thousands):

                2004                                          $      -
                2005-2008                                            -
                2009                                           305,000
                                                              --------
                                                              $305,000
                                                              ========


         On July 15, 2002, the Company issued $305 million of 10% Notes at a
discount of 98.772% and an interest rate of 10%. Interest is payable on January
15 and July 15 of each year. The proceeds of this issuance were used to redeem
the Company's 11% Notes, (including interest accrued from June 16, 2002 until
the redemption date of August 14, 2002), refinance its existing credit
agreement, and for working capital and general corporate purposes. 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 Camrose and OFP),
excluding accounts receivable, inventory, and certain other assets. As of
December 31, 2003, the Company had outstanding $305 million of principal amount
under the 10% Notes. The Indenture under which the Notes were issued

                                      -27-
<PAGE>

contains restrictions on new indebtedness and various types of
disbursements, including dividends, based on the cumulative amount of the
Company's net income, as defined. Under these restrictions, there was no
amount available for cash dividends at December 31, 2003. New CF&I and CF&I
(collectively "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 assets of the Company and the
Guarantors, excluding accounts receivable, inventory, and certain other
assets.

         As of December 31, 2003, the Company maintained a Credit Agreement,
which will expire on June 30, 2005. At December 31, 2003, $5.0 million was
restricted under the Credit Agreement, $16.0 million was restricted under the
outstanding letters of credit, and $43.8 million was available for use. Amounts
under the Credit Agreement bear interest based on either (1) the prime rate plus
a margin ranging from 0.25% to 1.00%, or (2) the adjusted LIBO rate plus a
margin ranging from 2.50% to 3.25%. Unused commitment fees range from 0.25% to
0.50%. During the year, short-term borrowings ranged from zero to $17 million,
at an interest rate of approximately 5%. As of December 31, 2003, there was no
outstanding balance due under the Credit Agreement. Had there been an
outstanding balance, the average interest rate for the Credit Agreement would
have been 5.0%. The unused line fees were 0.75%. The margins and unused
commitment fees will be subject to adjustment within the ranges discussed above
based on a quarterly leverage ratio. The Credit Agreement contains various
restrictive covenants including minimum consolidated tangible net worth amount,
a minimum earnings before interest, taxes, depreciation and amortization
("EBITDA") amount, a minimum fixed charge coverage ratio, limitations on maximum
annual capital and environmental expenditures, a borrowing availability
limitation relating to inventory, limitations on stockholder dividends and
limitations on incurring new or additional debt obligations other than as
allowed by the Credit Agreement. The Company cannot pay cash dividends without
prior approval from the lenders. At December 31, 2003, the Company was in
compliance with the Credit Agreement covenants.

         Camrose maintains a CDN $15 million revolving credit facility with a
Canadian bank, the proceeds of which may be used for working capital and general
business purposes of Camrose. 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. This facility
expires in September 2005. As of December 31, 2003, the interest rate of this
facility was 4.5%. Annual commitment fees are 0.25% of the unused portion of the
credit line. At December 31, 2003, there was no outstanding balance due under
the credit facility. At December 31, 2003, Camrose was in compliance with
the revolving credit facility covenants.

         The Company expects to ship approximately 1.7 million tons of product
during 2004. The Oregon Steel Division anticipates that it will ship
approximately 590,000 tons of plate and coil products, approximately
230,000 tons of welded pipe, and approximately 50,000 tons of structural
tube during 2004. The product mix, in terms of tons, is expected to be at
68% of plate and coil, 26% of welded pipe, and 6% of structural tube in
2004. Selling prices for the Company's plate and coil products are expected
to increase in 2004, which will have a positive impact on the division's
operating income. The RMSM Division anticipates that it will ship
approximately 370,000 tons of rail, and approximately 470,000 tons of rod
and bar products. Seamless pipe shipments will be dependent on market
conditions in the drilling industry. The Company anticipates that product
category average selling prices in 2004 will be higher than those of 2003,
although higher raw material and energy costs are expected to somewhat
reduce the positive impact of higher selling prices on the operating income
for the division. Accordingly, the Company expects consolidated operating
income to be higher in 2004 versus 2003. The Company expects liquidity to
remain adequate through 2004 unless there is a substantial negative change
in overall economic markets.

NEW ACCOUNTING PRONOUNCEMENTS

         See Note 2, in Part II, Item 8, "Financial Statements and Supplementary
Data - Notes to Consolidated Financial Statements."

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The Company has entered into certain market-risk-sensitive financial
instruments for other than trading purposes, principally short-term debt.

         The following discussion of market risks necessarily includes
forward-looking statements. Actual changes in market conditions and rates and
fair values may differ materially from those used in the sensitivity and fair
value calculations discussed. Factors which may cause actual results to differ
materially include, but are not limited to: greater than 10% changes in interest
rates or foreign currency exchange rates, changes in income or cash flows
requiring significant changes in the use of debt instruments or the cash flows
associated with them, or changes in commodity market conditions affecting
availability of materials in ways not predicted by the Company.

                                      -28-
<PAGE>


INTEREST RATE RISK

         Sensitivity analysis was used to determine the potential impact that
market risk exposure may have on the fair values of the Company's financial
instruments, including debt and cash equivalents. The Company has assessed the
potential risk of loss in fair values from hypothetical changes in interest
rates by determining the effect on the present value of the future cash flows
related to these market sensitive instruments. The discount rates used for these
present value computations were selected based on market interest rates in
effect at December 31, 2003, plus or minus 10%.

          All of the Company's debt is fixed-rate debt. A hypothetical 10%
decrease in interest rates with all other variables held constant would result
in an increase in the fair value of the Company's fixed-rate debt by $17.7
million. A hypothetical 10% increase in interest rates with all other variables
held constant would result in a decrease in the fair value of the Company's
fixed-rate debt by $16.4 million. The fair value of the Company's fixed-rate
debt was estimated by considering the impact of the hypothetical interest rates
on quoted market prices and current yield. While changes in interest rates
impact the fair value of this debt, there is no impact to earnings and cash
flows because the Company intends to hold these obligations to maturity unless
the Company elects to repurchase its outstanding debt securities at prevailing
market prices.


FOREIGN CURRENCY RISK

         In general, the Company uses a single functional currency for all
receipts, payments and other settlements at its facilities. Occasionally,
transactions will be denominated in another currency and a foreign currency
forward exchange contract is used to hedge currency gains and losses; however,
at December 31, 2003, the Company did not have any open forward contracts.


                                      -29-
<PAGE>



ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
<CAPTION>

                                                      QUARTERLY FINANCIAL DATA - UNAUDITED


                                 ---------------------------------------------- ---------------------------------------------------
                                                     2003                                            2002
                                 ---------------------------------------------- ---------------------------------------------------
                                    4TH          3RD          2ND          1ST          4TH          3RD         2ND          1ST
                                    ---          ---          ---          ---          ---          ---         ----         ---
                                                            (IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<S>                                <C>          <C>          <C>          <C>          <C>          <C>         <C>          <C>

Sales                              $168.9       $188.8       $189.9       $175.7       $240.1       $234.5      $231.3       $199.1
Cost of sales                       165.3        188.8        189.9        169.6        210.1        199.0       197.4        177.4
Gross profit                          3.6           --           --          6.1         30.0         35.5        33.9         21.7
Operating income (loss) FN1         (38.5)       (12.8)       (48.6)        (6.6)        15.0         19.8        17.0          8.1
Loss before extraordinary
items and cumulative effect of
change in accounting principle
                                    (44.2)       (20.9)       (51.9)        (9.0)         3.3          5.1         5.2         (0.1)
Net income (loss)  FN2              (44.2)       (20.9)       (51.9)        (9.0)         3.3          4.0         5.2        (18.1)
Basic income (loss) per share:
Before extraordinary  items
and cumulative effect of
change in accounting principle     $(1.67)      $(0.79)      $(1.97)      $(0.34)       $0.13        $0.19       $0.20       $(0.01)
Net income                         $(1.67)      $(0.79)      $(1.97)      $(0.34)       $0.13        $0.15       $0.20       $(0.69)
Diluted income (loss) per
share:
Before extraordinary items
and cumulative effect of
change in accounting principle
                                   $(1.67)      $(0.79)      $(1.97)      $(0.34)       $0.13        $0.19       $0.20       $(0.01)
Net income                         $(1.67)      $(0.79)      $(1.97)      $(0.34)       $0.13        $0.15       $0.20       $(0.69)

Dividends declared per
   common share                        $-           $-           $-           $-           $-           $-          $-           $-
Common stock price per
   share range:
      High                          $6.02        $3.55        $3.50        $4.07        $6.50        $7.46       $8.13        $7.60
      Low                           $2.95        $2.53        $2.11        $2.08        $3.81        $5.62       $5.00        $4.70
Average shares and equivalents
 outstanding:
       Basic                         26.4         26.4         26.4         26.4         26.4         26.4        26.4         26.4
       Diluted                       26.5         26.5         26.4         26.4         26.5         26.7        26.7         26.4

-----------------
FN1  Includes $36.1 million in asset impairment charges in the 2nd quarter of
     2003, and $31.1 million for labor dispute settlement charges in the 4th
     quarter of 2003.

FN2  Includes $17.9 million cumulative effect of change in accounting principle
     net of tax, net of minority interests for the write off of goodwill in the
     1st quarter of 2002.
</TABLE>

                                      -30-

<PAGE>
             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




The Board of Directors and Stockholders
Oregon Steel Mills, Inc.:

We have audited the accompanying consolidated balance sheet of Oregon Steel
Mills, Inc. (a Delaware corporation) and subsidiaries as of December 31, 2003,
and the related consolidated statements of income, changes in stockholders'
equity, and cash flows for the year then ended. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit.

We conducted our audit in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.

In our opinion, the 2003 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Oregon Steel
Mills, Inc. and subsidiaries as of December 31, 2003, and the results of their
operations and their cash flows for the year then ended in conformity with
United States generally accepted accounting priniples.

/s/ KPMG LLP
Portland, Oregon
March 5, 2004




                                      -31-

<PAGE>


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and
Stockholders of Oregon Steel Mills, Inc.:


In our opinion, the consolidated financial statements listed in the index
appearing under Item 15(a)(iii) present fairly, in all material respects, the
financial position of Oregon Steel Mills, Inc. and its subsidiaries at December
31, 2002 and 2001, and the results of their operations and their cash flows for
each of the two years in the period ended December 31, 2002 in conformity with
accounting principles generally accepted in the United States of America. In
addition, in our opinion, the financial statement schedule listed in the index
appearing under Item 15(a)(iv) presents fairly, in all material respects, the
information set forth therein when read in conjunction with the related
consolidated financial statements. These financial statements and financial
statement schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits. We conducted our audits of
these statements in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

As discussed in Notes 2 and 7 to the financial statements, the Company changed
its method of accounting for goodwill in 2002.


/s/ PricewaterhouseCoopers LLP

Portland, Oregon
March 3, 2003



                                      -32-
<PAGE>
<TABLE>
<CAPTION>


                                      OREGON STEEL MILLS, INC.
                                     CONSOLIDATED BALANCE SHEETS
                                  (IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
                                                                                  AS OF DECEMBER 31,
                                                                        ---------------------------------------
                                                                          2003           2002            2001
                                                                        ---------      ---------      ---------
<S>                                                                     <C>            <C>            <C>
                                                  ASSETS
  Current assets:
        Cash and cash equivalents                                       $   5,770      $  28,008      $  12,278
        Trade accounts receivable, less allowance for
         doubtful accounts of $3,665, $4,346 and $4,299                    78,026         84,547         89,132
        Inventories                                                       139,623        162,834        132,402
        Deferred tax asset                                                 19,545          8,109         17,998
        Other                                                              15,596          6,922          7,259
                                                                        ---------      ---------      ---------
            Total current assets                                          258,560        290,420        259,069
  Property, plant and equipment:
        Land and improvements                                              33,337         30,936         30,177
        Buildings                                                          54,144         52,653         52,463
        Machinery and equipment                                           817,053        793,537        787,156
        Construction in progress                                           13,654         17,444          9,644
                                                                        ---------      ---------      ---------
                                                                          918,188        894,570        879,440
        Accumulated depreciation                                         (440,607)      (371,192)      (328,386)
                                                                        ---------      ---------      ---------
            Net property, plant and equipment                             477,581        523,378        551,054
        Goodwill                                                              520            520         32,384
        Intangibles, net                                                   11,803         12,377         12,661
        Other assets                                                       15,514         17,625         14,408
                                                                        ---------      ---------      ---------
                  TOTAL ASSETS                                          $ 763,978      $ 844,320      $ 869,576
                                                                        =========      =========      =========
                                              LIABILITIES
  Current liabilities:
        Current portion of long-term debt                               $      --      $      --      $   9,464
        Short-term debt                                                        --             --         61,638
        Accounts payable                                                   83,310         58,283         81,270
        Accrued expenses                                                   48,523         60,616         44,552
                                                                        ---------      ---------      ---------
            Total current liabilities                                     131,833        118,899        196,924

  Long-term debt                                                          301,832        301,428        233,542
  Deferred employee benefits                                               49,887         44,366         32,760
  Labor dispute settlement                                                 27,844             --             --
  Environmental liability                                                  28,317         30,482         31,350
  Deferred income taxes                                                    20,442         16,895         29,102
                                                                        ---------      ---------      ---------
            Total liabilities                                             560,155        512,070        523,678
                                                                        ---------      ---------      ---------
  Minority interests                                                       16,571         25,260         27,312
                                                                        ---------      ---------      ---------
  Contingencies (Note 16)
                                        STOCKHOLDERS' EQUITY
  Capital stock:
  Preferred Stock, par value $.01 per share; 1,000 shares
    authorized; none issued                                                    --             --             --
  Common stock, par value $.01 per share; authorized 45,000 shares;
  26,398, 25,790 and 25,787 shares issued and outstanding                     264            258            258
  Additional paid-in capital                                              227,703        227,639        227,618
  Retained earnings (accumulated deficit)                                 (26,339)        99,610        105,218
  Accumulated other comprehensive loss:
        Cumulative foreign currency translation adjustment                 (3,473)        (8,851)        (9,003)
        Minimum pension liability                                         (10,903)       (11,666)        (5,505)
                                                                        ---------      ---------      ---------
            Total stockholders' equity                                    187,252        306,990        318,586
                                                                        ---------      ---------      ---------
                  TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY            $ 763,978      $ 844,320      $ 869,576
                                                                        =========      =========      =========

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

</TABLE>
                                      -33-
<PAGE>
<TABLE>
<CAPTION>

                                               OREGON STEEL MILLS, INC.
                                          CONSOLIDATED STATEMENTS OF INCOME
                                       (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

                                                                             YEAR ENDED DECEMBER 31,
                                                            -----------------------------------------------------------
                                                                2003                 2002                 2001
                                                                ----                 ----                 ----
<S>                                                         <C>                  <C>                  <C>
SALES
      Product sales                                         $ 684,413            $ 850,497            $ 706,987
      Freight                                                  38,884               54,453               54,804
      Electricity sales                                            --                   --               19,096
                                                            ---------            ---------            ---------
                                                              723,297              904,950              780,887
COSTS AND EXPENSES:
      Cost of sales                                           713,601              783,940              694,941
      Fixed and other asset impairment charges                 36,113                   --                   --
      Labor dispute settlement charges                         31,089                   --                   --
      Selling, general and administrative expenses             50,477               58,600               64,300
      Settlement of litigation                                     --                   --               (3,391)
      Gain on sale of assets                                   (1,835)              (1,283)                 (10)
      Incentive compensation                                      354                3,761                  244
                                                            ---------            ---------            ---------
                                                              829,799              845,018              756,084
                                                            ---------            ---------            ---------
              Operating income (loss)                        (106,502)              59,932               24,803
OTHER INCOME (EXPENSE):
      Interest expense                                        (33,620)             (36,254)             (35,595)
      Minority interests                                        6,108               (3,036)                (339)
      Other income, net                                         1,448                  961                3,044
                                                            ---------            ---------            ---------
              Income (loss) before income taxes              (132,566)              21,603               (8,087)
INCOME TAX BENEFIT (EXPENSE)                                    6,617               (9,244)               2,159
                                                            ---------            ---------            ---------
Income (loss) before cumulative effect of
      change in accounting principle                         (125,949)              12,359               (5,928)
Cumulative effect of change in accounting principle,
      net of tax of $11,264, net of minority
      interest of $2,632                                           --              (17,967)                  --
                                                            ---------            ---------            ---------
NET LOSS                                                    $(125,949)           $  (5,608)           $  (5,928)
                                                            =========            =========            =========
BASIC EARNINGS (LOSS) PER SHARE:
Income (loss) before cumulative effect of
      change in accounting principle                        $   (4.77)           $    0.47            $   (0.22)
Cumulative effect of change in accounting
      principle                                                    --                (0.68)                  --
                                                            ---------            ---------            ---------
          Net loss per share                                $   (4.77)           $   (0.21)           $   (0.22)
                                                            =========            =========            =========
DILUTED EARNINGS (LOSS) PER SHARE:
Income (loss) before cumulative effect of
      change in accounting principle                        $   (4.77)           $    0.46            $   (0.22)
Cumulative effect of change in accounting
      principle                                                    --                (0.67)                  --
                                                            ---------            ---------            ---------
          Net loss per share                                $   (4.77)           $   (0.21)           $   (0.22)
                                                            =========            =========            =========


                The accompanying notes are an integral part of the consolidated
financial statements.
</TABLE>

                                      -34-
<PAGE>
<TABLE>
<CAPTION>



                                                   OREGON STEEL MILLS, INC.
                                  CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                                        (IN THOUSANDS)

                                                                                   RETAINED       ACCUMULATED
                                                                  ADDITIONAL       EARNINGS          OTHER
                                             COMMON STOCK           PAID-IN        (ACCUMULATED    COMPREHENSIVE
                                             ------------
                                       SHARES         AMOUNT        CAPITAL        DEFICIT)           LOSS           TOTAL
                                     ------------   -----------   ------------   --------------   -------------   -------------
<S>                                  <C>            <C>           <C>            <C>              <C>             <C>

BALANCES, DECEMBER 31, 2000               25,777         $ 258      $ 227,584        $ 111,146        $ (7,343)       $331,645
     Net loss                                                                           (5,928)                         (5,928)
     Foreign currency translation
     adjustment                                                                                         (1,660)         (1,660)
     Minimum liability adjustment
     (Note 11)                                                                                          (5,505)         (5,505)
                                                                                                                  -------------
     Comprehensive loss                                                                                                (13,093)

     Issuance of common stock                 10                           34                                               34
                                     ------------   -----------   ------------   --------------   -------------   -------------
BALANCES, DECEMBER 31, 2001               25,787         $ 258       $227,618        $ 105,218       $ (14,508)       $318,586

     Net loss                                                                           (5,608)                         (5,608)
     Foreign currency translation
     adjustment                                                                                            152             152
     Minimum liability adjustment
     (Note 11)                                                                                          (6,161)         (6,161)
                                                                                                                  -------------
     Comprehensive loss                                                                                                (11,617)

     Tax benefit on stock options                                          15                                               15
     Issuance of common stock                  3                            6                                                6
                                     ------------   -----------   ------------   --------------   -------------   -------------
BALANCES, DECEMBER 31, 2002               25,790         $ 258      $ 227,639         $ 99,610       $ (20,517)      $ 306,990

     Net loss                                                                         (125,949)                       (125,949)
     Foreign currency translation
     adjustment                                                                                          5,378           5,378
     Minimum liability adjustment
     (Note 11)                                                                                             763             763
                                                                                                                  -------------
     Comprehensive loss                                                                                               (119,808)

     Tax benefit on stock options                                           4                                                4
     Issuance of common stock                608             6             60                                               66
                                     ------------   -----------   ------------   --------------   -------------   -------------
BALANCES, DECEMBER 31, 2003               26,398         $ 264      $ 227,703        $ (26,339)      $ (14,376)       $187,252
                                     ============   ===========   ============   ==============   =============   =============


                    The accompanying notes are an integral part of the
                    consolidated financial statements.
</TABLE>

                                  -35-

<PAGE>
<TABLE>
<CAPTION>

                                             OREGON STEEL MILLS, INC.
                                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                  (IN THOUSANDS)
                                                                              YEAR ENDED DECEMBER 31,
                                                                   ------------------------------------------
                                                                      2003             2002            2001
                                                                      ----             ----            ----
<S>                                                                <C>             <C>             <C>
Cash flows from operating activities:
     Net loss                                                      $(125,949)      $  (5,608)      $  (5,928)
     Adjustments to reconcile net loss to net cash
         provided (used) by operating activities:
            Depreciation and amortization                             40,809          45,868          46,097
            Write off of goodwill                                         --          17,967              --
            Fixed and other asset impairment charges                  36,113              --              --
            Labor dispute settlement charges                          31,089              --              --
            Deferred income taxes, net                                (7,889)          9,104          (4,415)
            Gain on sale of assets and investments                    (1,835)         (1,283)            (10)
            Minority interests' share of income (loss)                (6,108)          3,036             339
            Other, net                                                   841             394          (1,227)
         Changes in current assets and liabilities:
                Trade accounts receivable                              6,521           4,585           2,017
                Inventories                                           14,381         (30,432)         (2,601)
                Income taxes                                            (115)            609            (134)
                Operating liabilities                                 14,754           4,076          17,963
                Other                                                 (7,651)            733          (2,571)
                                                                   ---------       ---------       ---------
            NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES          (5,039)         49,049          49,530
                                                                   ---------       ---------       ---------
Cash flows from investing activities:
     Additions to property, plant and equipment                      (19,754)        (18,246)        (12,933)
     Proceeds from disposal of property and equipment                  1,908           1,287             114
     Other, net                                                          796           3,201           1,014
                                                                   ---------       ---------       ---------
            NET CASH USED BY INVESTING ACTIVITIES                    (17,050)        (13,758)        (11,805)
                                                                   ---------       ---------       ---------
Cash flows from financing activities:
     Net borrowings (repayments) under Canadian bank
         revolving loan facility                                          --            (223)         (1,530)
     Proceeds from bank debt                                          92,093         435,061         732,476
     Payments on bank and long term debt                             (92,173)       (513,734)       (755,613)
     Deferred credit facility financing costs                           (300)         (1,890)             --
     Redemption of 11% notes due 2003                                     --        (228,250)             --
     Issuance of 10% notes due 2009                                       --         301,255              --
     Debt issuance costs                                                  --          (9,903)             --
     Issue common stock                                                   66               6              34
     Minority share of subsidiary's distribution                      (2,953)         (2,035)         (2,524)
                                                                   ---------       ---------       ---------
            NET CASH USED BY FINANCING ACTIVITIES                     (3,267)        (19,713)        (27,157)
                                                                   ---------       ---------       ---------

Effects of foreign currency exchange rate changes on cash              3,118             152          (1,660)
                                                                   ---------       ---------       ---------
Net increase (decrease) in cash and cash equivalents                 (22,238)         15,730           8,908
Cash and cash equivalents at the beginning of year                    28,008          12,278           3,370
                                                                   ---------       ---------       ---------
Cash and cash equivalents at the end of year                       $   5,770       $  28,008       $  12,278
                                                                   =========       =========       =========

Supplemental disclosures of cash flow information:
   Cash paid for:
   -------------

      Interest                                                     $  31,342       $  18,341       $  27,149
      Income taxes                                                 $   1,780       $     243       $     427
   Non Cash Activities:
   -------------------

      Interest applied to loan balance                             $      80       $   2,499       $   6,394

               The accompanying notes are an integral part of the consolidated
               financial statements
</TABLE>
                                      -36-
<PAGE>


                            OREGON STEEL MILLS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1. NATURE OF OPERATIONS

         Oregon Steel Mills, Inc. and subsidiaries ("Company") manufactures
various specialty and commodity steel products with operations in the United
States and Canada. The principal markets for the Company's products are steel
service centers, steel fabricators, railroads, oil and gas producers and
distributors and other industrial concerns. The Company's products are primarily
marketed in the United States west of the Mississippi River and western Canada.
The Company also markets products outside North America.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

         The consolidated financial statements include all wholly-owned and
those majority-owned subsidiaries over which the Company exerts management
control. Non-controlled majority-owned subsidiaries and affiliates are accounted
for using the equity method. Material wholly-owned and majority-owned
subsidiaries of the Company are Camrose Pipe Corporation ("CPC"), dba Columbia
Structural Tubing ("CST") and through ownership in another corporation
holds a 60% interest in Camrose Pipe Company ("Camrose"), and 87% owned New
CF&I, Inc. ("New CF&I") which owns a 95.2% interest in CF&I Steel, LP
("CF&I"). The Company also owns directly an additional 4.3% interest in
CF&I. In January 1998, CF&I assumed the trade name of Rocky Mountain Steel
Mills ("RMSM"). All significant inter-company transactions and account
balances have been eliminated.

USE OF ESTIMATES

         The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial
statements and the amounts of revenues and expenses during the reporting
periods. Actual results could differ from those estimates.

REVENUE RECOGNITION

         The Company recognizes revenues when title passes, the earnings process
is substantially complete, and the Company is reasonably assured of the
collection of the proceeds from the exchange, all of which generally occur
either upon shipment of the Company's products or delivering of the product at
the destination specified by customer.

CASH AND CASH EQUIVALENTS

         Cash and cash equivalents include short-term securities that have an
original maturity date of 90 days or less.

CONCENTRATIONS OF CREDIT RISK

         Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of cash and cash equivalents
and trade receivables. The Company places its cash in high credit quality
investments and limits the amount of credit exposure to any one financial
institution. At times, cash balances are in excess of the Federal Deposit
Insurance Corporation insurance limit of $100,000. The Company believes that
risk of loss on its trade receivables is reduced by ongoing credit evaluation of
customer financial condition and requirements for collateral, such as letters of
credit and bank guarantees.

INVENTORY

         The Company's inventory consists of raw materials, semi-finished,
finished products and operating stores and supplies. At December 31, 2003,
inventory was approximately $139.6 million. Effective January 1, 2003, the
Company changed the method of computing the market valuation of inventories in
applying the lower of manufacturing cost or market (LCM) accounting policy.
Under the new accounting method, the Company evaluates the market value of its
inventory for potential LCM write-downs at the product group level. The Company
believes this change is preferable because it better reflects a more precise
measure of expense in the period in which an impairment in value is identified.
As of December 31, 2003, the Company recognized approximately $0.9 million of
LCM charges. Under the Company's past practices, there

                                      -37-
<PAGE>

would not have been an impairment charge during this period. Manufacturing
cost is determined using the average cost method.

PROPERTY, PLANT AND EQUIPMENT

         Property, plant and equipment are stated at cost, including capitalized
interest during construction of $1,169,000, $874,000 and $683,000 in 2003, 2002
and 2001, respectively. Depreciation is determined using principally the
straight-line and the units of production methods over the estimated useful
lives of the assets. The original cost of machinery, which is being depreciated
using the units of production method, is approximately $244 million. Total
finished goods production for the years ended 2003, 2002 and 2001 were 1,840,000
tons, 2,184,000 tons and 1,942,000 tons, respectively. The estimated useful
lives of most of the Company's operating machinery and equipment are from 20 to
30 years. Maintenance and repairs are expensed as incurred and costs of
improvements are capitalized. Maintenance and repair expense for 2003, 2002 and
2001 were $58.1 million, $68.0 million and $53.5 million, respectively. Upon
disposal, cost and accumulated depreciation are removed from the accounts and
gains or losses are reflected in results of operations.

GOODWILL AND INTANGIBLE ASSETS

         The Company adopted Statement of Financial Accounting Standard (SFAS)
No. 142, "GOODWILL AND OTHER INTANGIBLE ASSETS," effective January 1, 2002. As
required under the transitional accounting provisions of SFAS No. 142, the
Company completed the steps required to identify and measure goodwill impairment
at each reporting unit. The reporting units were measured for impairment by
comparing implied fair value of the reporting units' goodwill with the carrying
amount of the goodwill. As a result, the entire goodwill at CF&I was written off
in the amount of $31.9 million, and a net charge of $18.0 million (after tax and
minority interest) was recognized as a cumulative effect of a change in
accounting principle during the first quarter of 2002. In accordance with SFAS
No. 142, goodwill is no longer amortized, but is reviewed at least annually for
impairment. Intangible assets consisted of proprietary technology and water
rights at CF&I, presented at cost, net of accumulated amortization. The
proprietary technology is amortized over their estimated useful lives of sixteen
years using the straight-line method and the water rights are considered
indefinite-lived.

IMPAIRMENT OF LONG-LIVED ASSETS

         When events or circumstances indicate the carrying value of a
long-lived asset may be impaired, the Company uses an estimate of the future
undiscounted cash flows to be derived from the remaining useful life of the
asset to assess whether or not the asset is recoverable. If the future
undiscounted cash flows to be derived over the life of the asset do not exceed
the asset's net book value, the Company then considers estimated fair market
value versus carrying value in determining any potential impairment. Impairment
charges of $36.1 million were recorded in the second quarter of 2003 related to
the impairment of melt shop and other assets at the Portland and Pueblo Mills,
as discussed in Note 17 to the Consolidated Financial Statements.

INCOME TAXES

         Deferred income taxes are provided for temporary differences between
the amount of assets and liabilities for financial and tax reporting purposes.
Deferred tax assets are reduced by a valuation allowance when it is estimated to
be more likely than not that some portion of the deferred tax assets will not be
realized.

FINANCIAL INSTRUMENTS

         The Company uses foreign currency forward exchange contracts
occasionally to reduce its exposure to fluctuations in foreign currency exchange
rates. Gains and losses on these contracts are deferred and recognized in income
as part of the related transaction. As of December 31, 2003, no such contracts
were outstanding.

FOREIGN CURRENCY TRANSLATION

         Assets and liabilities subject to foreign currency fluctuations are
translated into U.S. dollars at the period-end exchange rate, and revenue and
expenses are translated at average rates for the period. Translation adjustments
are included in "accumulated other comprehensive income," a separate component
of stockholders' equity.

DERIVATIVE FINANCIAL INSTRUMENTS

         Effective January 1, 2001, the Company adopted SFAS No. 133,
"ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES," which requires
that all derivative instruments be recorded on the balance sheet at fair value.
The adoption of SFAS No. 133 did not have material effect on the Company's
results of operations or its financial position. The Company

                                      -38-
<PAGE>

did not have any derivative financial instruments outstanding at the time
of adoption. See disclosure regarding Financial Instruments in Note 8 to
the Consolidated Financial Statements.

STOCK OPTION PLANS

         In 2000, the Company adopted the 2000 Nonqualified Stock Option Plan
(the "Plan"). The Plan authorizes the Board of Directors, or a committee
appointed by the Board of Directors, to grant options to certain executives and
management personnel. 1,000,000 shares of the Company's $.01 par value common
stock are issuable under the Plan.

         In 2002, the Company adopted the 2002 Non-Employee Director Stock
Option Plan (the "Director Plan"). The Director Plan authorizes the Board of
Directors to grant options to individuals who are Non-Employee Directors.
150,000 shares of the Company's $.01 par value common stock are issuable under
the Director Plan.

         The Company accounts for the stock option plans in accordance with
Accounting Principles Board (APB) Opinion No. 25, "ACCOUNTING FOR STOCK ISSUED
TO EMPLOYEES." The Company provides pro forma net income (loss) and pro forma
earnings (loss) per share disclosure prescribed by SFAS No. 123, "ACCOUNTING FOR
STOCK-BASED COMPENSATION." The Company currently discloses the effects of
stock-based employee compensation and does not intend to voluntarily change to
the alternative accounting principle prescribed in SFAS No. 148, "ACCOUNTING FOR
STOCK-BASED COMPENSATION - TRANSITION AND DISCLOSURE." The following table
illustrates the effect on net income and earnings per share if the Company had
applied the fair value recognition provisions of SFAS No. 123:
<TABLE>
<CAPTION>


                                                                              YEAR ENDED DECEMBER 31,
                                                                     -------------------------------------------
                                                                        2003               2002           2001
                                                                     ----------         --------        --------
                                                                       (In thousands except per share amounts)
<S>                                                                  <C>                <C>             <C>

Net loss, as reported                                                $(125,949)         $(5,608)        $(5,928)
Add: compensation expense included in net loss                              33               --              --
Deduct: total stock-based compensation expense determined
   under fair value based method for all awards, net
   of related tax effects                                                 (223)            (184)           (490)
                                                                     ---------          -------         -------
Pro forma net loss                                                   $(126,139)         $(5,792)        $(6,418)
                                                                     =========          =======         =======

Loss per share:
      Basic - as reported                                               $(4.77)          $(0.21)         $(0.22)
      Basic - pro forma                                                  (4.78)           (0.22)          (0.24)

      Diluted - as reported                                             $(4.77)          $(0.21)         $(0.22)
      Diluted - pro forma                                                (4.78)           (0.22)          (0.24)

</TABLE>


NET INCOME (LOSS) PER SHARE

         Basic earnings per share ("EPS") is determined using the weighted
average number of common shares outstanding during the period. The diluted EPS
calculation assumes that all stock options granted were exercised at the
beginning of the period.

         For purposes of computing diluted EPS, stock options with an exercise
price that exceeded the average fair market value of the common stock for the
period were excluded from the diluted weighted average number of common shares.
In addition, common stock equivalent shares are excluded from the EPS
computation if their effect is antidilutive.


SEGMENT REPORTING

          In accordance with the criteria of SFAS No. 131, "DISCLOSURES ABOUT
SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION," the Company operates in a
single reportable segment, the steel industry. All of the products of the
Company are steel products in finished or semi-finished form. Production is the
standard "mini-mill" process where electric arc furnaces are used to melt scrap
and other metallics. Liquid steel is cast and cooled, then reheated for
additional forming. These processes occur at different locations, but are not
dissimilar. The Company markets and sells the majority of its products through
its own sales organization to customers primarily in the transportation,
construction, or oil and gas industries. The Company distributes product at
various locations in the United States and Canada, and as appropriate, through
foreign sales agents.

                                      -39-
<PAGE>


         The Company currently has two aggregated operating divisions: the
Oregon Steel Division and RMSM Division (see Note 3 for geographic disclosure).

SHIPPING AND HANDLING COST

         All shipping billed to customers is recorded as revenue with the
related cost being recorded under cost of sales. Internal handling costs
incurred to store, move, or prepare goods for shipment are recorded under
Selling, General, and Administration expenses. For the years of 2003, 2002, and
2001, internal handling costs were $12.3 million, $17.7 million and $17.6
million, respectively.

RECLASSIFICATIONS

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

NEW ACCOUNTING PRONOUNCEMENTS

         In August 2001, the Financial Accounting Standards Board  ("FASB")
issued SFAS No. 143, "ACCOUNTING FOR ASSET RETIREMENT OBLIGATIONS." SFAS No. 143
addresses financial accounting and reporting for obligations associated with the
retirement of tangible long-lived assets and the associated retirement costs.
This statement requires that the Company record a liability for the fair value
of an asset retirement obligation when the Company has a legal obligation to
remove the asset. SFAS No. 143 is effective for the Company beginning January 1,
2003. The adoption of SFAS No. 143 did not have a material impact on the
consolidated financial statements.

          In May 2002, the FASB issued SFAS No. 145, "RECISSION OF FAS NOS. 4,
44, AND 64, AMENDMENT OF FAS 13, AND TECHNICAL CORRECTIONS." Among other things,
SFAS No. 145 rescinds various pronouncements regarding early extinguishment of
debt and allows extraordinary accounting treatment for early extinguishment only
when the provisions of Accounting Principles Board Opinion No. 30, "REPORTING
THE RESULTS OF OPERATIONS - REPORTING THE EFFECTS OF DISPOSAL OF A SEGMENT OF A
BUSINESS, AND EXTRAORDINARY, UNUSUAL AND INFREQUENTLY OCCURRING EVENTS AND
TRANSACTIONS" are met. SFAS No. 145 provisions regarding early extinguishment of
debt are generally effective for fiscal years beginning after May 15, 2002. In
mid-July 2002, the Company refinanced its credit facility and redeemed its 11%
First Mortgage Notes due 2003, resulting in a $1.1 million extraordinary loss,
net of taxes, on the early extinguishment of debt. The amount recognized
consisted primarily of the write-off of unamortized fees and expenses. The
adoption of SFAS 145 by the Company in 2003 caused a 2002 reclassification of
the extraordinary loss from extinguishment of debt to interest expense.

         In November 2002, the FASB issued Interpretation No. ("FIN") 45,
"GUARANTOR'S ACCOUNTING AND DISCLOSURE REQUIREMENTS FOR GUARANTEES, INCLUDING
INDIRECT GUARANTEES OF INDEBTEDNESS OF OTHERS." It clarifies that a guarantor is
required to recognize, at the inception of a guarantee, a liability for the fair
value of the obligation undertaken in issuing the guarantee, including its
ongoing obligation to stand ready to perform over the term of the guarantee in
the event that the specified triggering events or conditions occur. FIN 45 is
effective for guarantees issued or modified after December 31, 2002. The
disclosure requirements were effective for the year ending December 31, 2002,
which expand the disclosures required by a guarantor about its obligations under
a guarantee. The Company will record the fair value of future material
guarantees, if any.

         In January 2003, the FASB issued FIN 46 (revised December 2003),
"CONSOLIDATION OF VARIABLE INTEREST ENTITIES, AN INTERPRETATION OF ARB NO. 51,"
("FIN 46R") which requires a variable interest entity to be consolidated by a
company if that company is subject to a majority of the risk of loss from the
variable interest entity's activities or entitled to receive a majority of the
entity's residual returns or both. FIN 46R also requires disclosures about
variable interest entities that a company is not required to consolidate but in
which it has a significant variable interest. FIN 46R applies immediately to
variable interest entities created after January 31, 2003 and to existing
variable interest entities in the periods beginning after March 31, 2004. Since
no variable interest entities have been created since January 31, 2003, the
application of FIN 46R had no effect on the Company's financial position and
results of operations at December 31, 2003. The Company is currently evaluating
the impact of adoption of FIN 46R on the financial position and results of
operations for its existing variable interest entities.

         In May 2003, the FASB issued SFAS No. 150, "ACCOUNTING FOR CERTAIN
FINANCIAL INSTRUMENTS WITH CHARACTERISTICS OF BOTH LIABILITIES AND EQUITY." SFAS
No. 150 changes the accounting for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. SFAS
No. 150 is generally effective for financial instruments entered into or
modified after May 31, 2003, and otherwise is generally effective at the
beginning of the first interim period beginning after June 15, 2003. The
adoption of SFAS No. 150 did not have a material impact on the consolidated
financial statements.

                                      -40-
<PAGE>


         In December 2003, the FASB issued SFAS No. 132 (revised), "EMPLOYER'S
DISCLOSURES ABOUT PENSIONS AND OTHER POSTRETIREMENT BENEFITS." SFAS No. 132
(revised) prescribes employers' disclosures about pension plans and other
postretirement benefit plans; it does not change the measurement or recognition
of those plans. SFAS No. 132 (revised) retains and revises the disclosure
requirement contained in the original SFAS No. 132. It also requires additional
disclosures about the assets, obligations, cash flows, and net periodic benefit
cost of defined benefit pension plans and other postretirement benefit plans.
SFAS No. 132 (revised) generally is effective for fiscal years ending after
December 15, 2003. The company discloses the requirements of SFAS No. 132
(revised) in Note 15 to the Consolidated Financial Statements.



3. GEOGRAPHIC INFORMATION

         Geographical information was as follows:

                                          2003           2002          2001
                                         --------      --------      --------
                                                    (IN THOUSANDS)
Sales from External Customers:
    United States                        $686,995      $883,462      $729,707
    Canada FN1                             36,302        21,488        51,180
                                         --------      --------      --------
                                         $723,297      $904,950      $780,887
                                         ========      ========      ========
Sales by Division:
    Oregon Steel Division                $367,365      $575,243      $470,098
    RMSM Division                         355,932       329,707       310,789
                                         --------      --------      --------
                                         $723,297      $904,950      $780,887
                                         ========      ========      ========
Assets by Location:
    United States                        $729,875      $804,021      $792,798
    Canada                                 32,738        38,673        31,670
                                         --------      --------      --------
                                         $762,613      $842,694      $824,468
                                         ========      ========      ========
Assets by Division:
    Oregon Steel Division                $474,548      $534,203      $528,274
    RMSM Division                         288,065       308,491       296,194
                                         --------      --------      --------
                                         $762,613      $842,694      $824,468
                                         ========      ========      ========

-------------------------

FN1 Sales attributed to Canada are earned by the Camrose Pipe Mill, which is
domiciled there. Revenues attributed to other countries are insignificant.

4.       INVENTORIES

         Inventories were as follows at December 31:

                                         2003           2002           2001
                                         ----           ----           ----
                                                    (IN THOUSANDS)

Raw materials                          $  5,214       $  6,959       $ 11,419
Semi-finished product                    55,864         63,431         51,777
Finished product                         49,478         56,997         41,201
Stores and operating supplies            29,067         35,447         28,005
                                       --------       --------       --------
     Total inventory                   $139,623       $162,834       $132,402
                                       ========       ========       ========

                                      -41-
<PAGE>


5. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

         Accounts payable includes book overdrafts of $9.2 million and $5.1
million at December 31, 2003 and 2001, respectively.

         Accrued expenses consist of the following:

                                            2003        2002        2001
                                            ----        ----        ----
                                                   (IN THOUSANDS)

Accrued interest                          $14,190     $14,192     $ 1,896
Accrued payroll and benefits               13,379      15,029      11,277
Accrued payables and expenses               6,622      12,046      12,466
Accrued labor dispute settlement            3,287          --          --
Accrued defined benefit plan and
  post-retirement obligations               2,135       2,492      12,079
Accrued sales taxes                             5       8,381         307
Other                                       8,905       8,476       6,527
                                          -------     -------     -------
     Total accrued expenses               $48,523     $60,616     $44,552
                                          =======     =======     =======


6. DEBT, FINANCING ARRANGEMENTS AND LIQUIDITY

         Debt balances were as follows at December 31:
<TABLE>
<CAPTION>


                                                          2003             2002             2001
                                                          ----             ----             ----
                                                                      (IN THOUSANDS)
      <S>                                                 <C>            <C>              <C>

      11% First Mortgage Notes due 2003 ("11% Notes")     $      --      $      --        $ 228,250
      10% First Mortgage Notes due 2009 ("10% Notes")       305,000        305,000               --
      Revolving credit facility                                  --             --           61,638
      CF&I acquisition term loan                                 --             --           14,536
      Camrose revolving bank loan                                --             --              220
                                                          ---------      ---------        ---------
                                                            305,000        305,000          304,644
      Less unamortized discount on 10% Notes                 (3,168)        (3,572)              --
      Less current maturities and short-term debt                --             --          (71,102)
                                                          ---------      ---------        ---------
           Non-current maturity of long-term debt         $ 301,832      $ 301,428        $ 233,542
                                                          =========      =========        =========
</TABLE>



         On July 15, 2002, the Company issued $305 million of 10% Notes at a
discount of 98.772% and an interest rate of 10%. Interest is payable on January
15 and July 15 of each year. The proceeds of this issuance were used to redeem
the Company's 11% Notes, (including interest accrued from June 16, 2002 until
the redemption date of August 14, 2002), refinance its existing credit
agreement, and for working capital and general corporate purposes. 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  Camrose  and OFP),
excluding  accounts  receivable,  inventory,  and certain  other  assets.  As of
December 31, 2003, the Company had outstanding  $305 million of principal amount
under the 10% Notes.  The Indenture  under which the Notes were issued  contains
restrictions on new indebtedness and various types of  disbursements,  including
dividends,  based on the  cumulative  amount of the  Company's  net  income,  as
defined.  Under  these  restrictions,  there  was no amount  available  for cash
dividends at December 31, 2003.  New CF&I and CF&I  (collectively  "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
assets  of the  Company  and  the  Guarantors,  excluding  accounts  receivable,
inventory, and certain other assets.

         As of December 31, 2003, the Company maintained a Credit Agreement,
which will expire on June 30, 2005. At December 31, 2003, $5.0 million was
restricted under the Credit Agreement, $16.0 million was restricted under the
outstanding letters of credit, and $43.8 million was available for use. Amounts
under the Credit Agreement bear interest based on either (1) the prime rate plus
a margin ranging from 0.25% to 1.00%, or (2) the adjusted LIBO rate plus a
margin ranging from 2.50% to 3.25%. Unused commitment fees range from 0.25% to
0.50%. During the year, short-term borrowings ranged from zero to $17 million,
at an interest rate of approximately 5%. As of December 31, 2003, there was no
outstanding balance due under the Credit Agreement. Had there been an
outstanding balance, the average interest rate for the Credit Agreement would
have been 5.0%. The unused line fees were 0.75%. The margins and unused
commitment fees will be subject to adjustment within the ranges discussed above
based on a quarterly leverage ratio. The Credit

                                      -42-
<PAGE>

Agreement contains various restrictive covenants including minimum
consolidated tangible net worth amount, a minimum earnings before interest,
taxes, depreciation and amortization ("EBITDA") amount, a minimum fixed
charge coverage ratio, limitations on maximum annual capital and
environmental expenditures, a borrowing availability limitation relating to
inventory, limitations on stockholder dividends and limitations on
incurring new or additional debt obligations other than as allowed by the
Credit Agreement. The Company cannot pay cash dividends without prior
approval from the lenders. At December 31, 2003, the Company was in
compliance with the Credit Agreement covenants.

         Camrose maintains a CDN $15 million revolving credit facility with a
Canadian bank, the proceeds of which may be used for working capital and general
business purposes of Camrose. 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. This facility
expires in September 2005. As of December 31, 2003, the interest rate of this
facility was 4.5%. Annual commitment fees are 0.25% of the unused portion of the
credit line. At December 31, 2003, there was no outstanding balance due under
the credit facility. At December 31, 2003, Camrose was in compliance with
the revolving credit facility covenants.

      As of December 31, 2003, principal payments on debt are due as follows (in
thousands):

                2004                           $      -
                2005-2008                             -
                2009                            305,000
                                                -------
                                               $305,000
                                               ========


7. GOODWILL AND INTANGIBLE ASSETS

         Effective January 1, 2002, the Company adopted SFAS No.142, "GOODWILL
AND OTHER INTANGIBLE ASSETS." As part of this adoption, the Company ceased
amortizing all goodwill and assessed goodwill for possible impairment. As an
initial step, the Company tested goodwill impairment within its two business
units - the Oregon Steel Division and the RMSM Division. These two business
units qualify as reporting units in that they are one level below the Company's
single reportable segment (as defined in SFAS No. 131, "DISCLOSURES ABOUT
SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION"). The aggregation of these
reporting units, under SFAS No. 131, is appropriate given that both business
units operate in a single reportable segment, the steel industry.

         As required under the transitional accounting provisions of SFAS No.
142, the Company completed the steps required to identify and measure goodwill
impairment at each reporting unit. The reporting units were measured for
impairment by comparing implied fair value of the reporting units' goodwill with
the carrying amount of the goodwill. As a result, the entire goodwill at the
RMSM Division was written off in the amount of $31.9 million, and a net charge
of $18.0 million (after tax and minority interest) was recognized as a
cumulative effect of a change in accounting principle during the first quarter
of 2002. Historical earnings and applying an earnings multiple resulted in the
identification of an impairment that was recognized at the reporting units. The
implementation of SFAS No. 142 required the use of judgements, estimates and
assumptions in the determination of fair value and impairment amounts related to
the required testing. Prior to adoption of SFAS No. 142, the Company had
historically evaluated goodwill for impairment by comparing the entity level
unamortized balance of goodwill to projected undiscounted cash flows, which did
not result in an indicated impairment.

         Additionally, pursuant to SFAS No. 142, the Company completed its
reassessment of finite and indefinite intangible asset lives, which consists of
proprietary technology and water rights at the RMSM Division. Based on this
reassessment, no adjustment was needed on the proprietary technology or the
water rights. The Company does not have any other acquired intangible assets,
whether finite or indefinite lived assets.

         Listed below are details of the goodwill and intangibles of the
Company, including a schedule of what adjusted earnings per share would have
been if amortization had not taken place for the year ended December 31, 2001.

                                      -43-
<PAGE>


         The following adjusts reported net loss and loss per share to exclude
goodwill amortization for the year ended December 31,2001:

                                                                    2001
                                                                    ----
                                                               (IN THOUSANDS)

Goodwill amortization                                             $(1,036)
                                                                  =======

Net loss                                                           (5,928)
Add back:  Goodwill amortization,
    net of tax, net of minority interest                              582
                                                                  -------
Adjusted net loss                                                 $(5,346)
                                                                  =======

Basic loss per share                                              $ (0.22)
Add back:  Goodwill amortization,
    net of tax, net of minority interest                          $  0.02
                                                                  -------
Adjusted basic income (loss) per share                            $ (0.20)
                                                                  =======

Diluted income (loss) per share                                   $ (0.22)
Add back:  Goodwill amortization,
    net of tax, net of minority interest                          $  0.02
                                                                  -------
Adjusted diluted income (loss) per share                          $ (0.20)
                                                                  =======


         The carrying amount of intangible assets and the associated
amortization expenses are as follows:

                                                 AS OF DECEMBER 31, 2003
                                          -------------------------------------
                                          GROSS CARRYING         ACCUMULATED
                                            AMOUNT               AMORTIZATION
                                          --------------         ------------
                                                      (IN THOUSANDS)
    AMORTIZED INTANGIBLE ASSETS:
    ----------------------------
         Proprietary technology FN1           $ 1,653                $(808)
         Water rights FN2                     $11,523                $(565)

    AGGREGATE AMORTIZATION EXPENSE:             2003                  2002
    -------------------------------             ----                  ----
         For the year ended                     $116                 $ 122

    ESTIMATED AMORTIZATION EXPENSE:
    ------------------------------
        For the year ended 12/31/04             $110
        For the year ended 12/31/05             $110
        For the year ended 12/31/06             $110
        For the year ended 12/31/07             $110

FN1 Weighted average amortization period is 16 years.
FN2 In accordance with SFAS 142, the Company ceased amortization in 2001

8. FAIR VALUES OF FINANCIAL INSTRUMENTS

         The estimated fair values of the Company's financial instruments were
as follows as of December 31:
<TABLE>
<CAPTION>

                                                  2003                           2002                         2001
                                       ---------------------------     -------------------------   ----------------------------
                                           CARRYING       FAIR             CARRYING        FAIR       CARRYING        FAIR
                                            AMOUNT        VALUE             AMOUNT         VALUE       AMOUNT         VALUE
                                       ------------- -------------     ------------- -----------   ------------   ------------
                                                                               (IN THOUSANDS)
<S>                                    <C>           <C>               <C>           <C>           <C>            <C>
Cash  and cash equivalents                 $5,770         $5,770           $28,008       $28,008      $12,278        $12,278
Short-term debt                                --             --                --            --       61,638         61,959
Long-term debt, including
     current portion                      301,832        287,129           301,428       284,023      243,006        233,834
</TABLE>
                                      -44-
<PAGE>

         The carrying amounts of cash or cash equivalents approximate fair value
due to their nature. The fair value of short-term debt and long-term debt,
including current portion, is estimated based on quoted market prices or by
discounting future cash flows based on the Company's incremental borrowing rate
for similar types of borrowing arrangements.

         On limited occasions, the Company uses foreign currency forward
exchange contracts to reduce its exposure to fluctuations in foreign currency
exchange rates. Such contracts are typically short-term in duration and relate
to specific transactions. At December 31, 2003, the Company had no open forward
exchange contracts. During 2003, 2002, and 2001, the use of such contracts has
been minimal.


9. INCOME TAXES

         The geographical components of income (loss) before income taxes are
summarized below:

                                             2003          2002          2001
                                          ----------    ---------     ----------
                                                     (IN THOUSANDS)
U.S.                                      $(131,495)    $  19,162     $ (10,089)
Non-U.S., principally Canada                 (1,071)        2,441         2,002
                                          ---------     ---------     ---------
      Total income (loss) before taxes    $(132,566)    $  21,603     $  (8,087)
                                          =========     =========     =========


         The income tax benefit (expense) consisted of the following:

                                   2003          2002          2001
                                   ----          ----          ----
                                            (IN THOUSANDS)
Current:
     Federal                    $   (115)     $  5,349      $  1,851
     State                            31          (151)         (235)
     Foreign                      (1,559)         (659)         (169)
                                --------      --------      --------
                                  (1,643)        4,539         1,447
                                --------      --------      --------

Deferred:
     Federal                      11,710       (10,816)       (3,332)
     State                        (4,471)       (2,891)        4,742
     Foreign                       1,021           (76)         (698)
                                --------      --------      --------
                                   8,260       (13,783)          712
                                --------      --------      --------
Income tax benefit (expense)    $  6,617      $ (9,244)     $  2,159
                                ========      ========      ========



         A reconciliation of the statutory benefit (tax) rate to the effective
benefit (tax) rate on income before income taxes is as follows:


                                                  2003        2002         2001
                                                -------      ------      -------

U.S. statutory income benefit (tax) rate          35.0%       (35.0)%      35.0%
State taxes, net                                  (2.2)        (9.2)        5.2
Fines and penalties                               (0.0)        (0.1)       (9.4)
Permanent differences                             (0.0)        (0.6)        3.0
Tax impact of foreign operations                   0.2          4.1        (7.1)
Change in valuation allowance - federal          (28.6)          --          --
Other                                              0.6         (2.0)         --
                                                  ----        -----        ----
                                                   5.0%       (42.8)%      26.7%
                                                  ====        =====        ====

                                      -45-
<PAGE>


         The current and noncurrent components of the net deferred tax assets
and liabilities were as follows as of December 31:
<TABLE>
<CAPTION>

                                                               2003             2002          2001
                                                               ----             ----          ----
                                                                             (IN THOUSANDS)
<S>                                                          <C>            <C>            <C>
Net current deferred tax asset:
     Assets
          Inventories                                        $   2,073      $   2,178      $   2,423
          Accrued expenses                                      15,617          5,119          3,332
          Net operating loss carryforward                          120            284         12,073
          Other                                                  1,710          1,662          1,351
                                                             ---------      ---------      ---------
                                                                19,520          9,243         19,179
     Liabilities
          Other                                                    (25)         1,134          1,181
                                                             ---------      ---------      ---------
Net current deferred tax asset                               $  19,545      $   8,109      $  17,998
                                                             =========      =========      =========

Net noncurrent deferred income tax liability:
     Assets
          Postretirement benefits other than pensions        $   3,196      $   2,984      $   2,869
          State tax credits                                      6,359          5,824          5,997
          Alternative minimum tax credit                        13,485         13,494         18,131
          Environmental liability                               13,144         13,342         11,960
          Net operating loss carryforward                      105,409         75,730         68,669
          Pension mimimum liability adjustment                   7,204          7,579          3,544
          Other                                                 15,671          9,686          9,855
                                                             ---------      ---------      ---------
                                                               164,468        128,639        121,025
          Valuation allowance                                  (53,427)        (5,162)        (3,424)
                                                             ---------      ---------      ---------
                                                               111,041        123,477        117,601
                                                             ---------      ---------      ---------

     Liabilities
          Property, plant and equipment                        128,835        138,826        135,324
          Cost in excess of net assets acquired                     --             --          9,309
          Other                                                  2,648          1,546          2,070
                                                             ---------      ---------      ---------
                                                               131,483        140,372        146,703
                                                             ---------      ---------      ---------
 Net noncurrent deferred income tax liability                $  20,442      $  16,895      $  29,102
                                                             =========      =========      =========
</TABLE>


         At December 31, 2003, the Company has state tax credits of $6.4 million
expiring 2006 through 2015, which are available to reduce future income taxes
payable.

         At December 31, 2003, the Company has $267.7 million in federal net
operating loss carryforwards expiring in 2012 through 2023. In addition, the
Company has $266.9 million in state net operating loss carryforwards expiring in
2004 through 2023.

         The Company maintained a valuation allowance of $53.4 million, $5.2
million and $3.4 million at December 31, 2003, 2002, and 2001, respectively, for
federal and state net operating loss carryforwards, alternative minimum tax
credits and state tax credit carryforwards. The valuation allowance increased by
$48.2 million from 2002 to 2003, and increased by $1.8 million from 2001 to
2002. SFAS No. 109, "ACCOUNTING OF INCOME TAXES," requires that tax benefits for
federal and state net operating loss carryforwards, alternative minimum tax
credits and state tax credit carryforwards 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 has recorded a valuation allowance in 2003 due to
uncertainties regarding the realization of these deferred tax assets. The
Company will continue to reevaluate the need for a valuation allowance in the
future. Changes in estimated future taxable income and other underlying factors
may lead to adjustments to the valuation allowance in the future.

         The Company has indefinitely reinvested approximately $3.2 million of
the cumulative undistributed earnings of its foreign subsidiary. Such earnings
would be subject to U.S. taxation if repatriated to the U.S. The amount of
unrecognized deferred tax liability associated with the undistributed earnings
is not expected to be material.

         During the year ended December 31, 2003, 2002, and 2001, the Company's
tax benefits related to the exercise of employee stock options were immaterial
to the Company's Consolidated Financial Statements.

                                      -46-
<PAGE>


10. NET INCOME (LOSS) PER SHARE

         Basic and diluted net income (loss) per share was as follows:
<TABLE>
<CAPTION>

                                                               2003            2002          2001
                                                            ---------      ---------     ----------
                                                            (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>     <C>    <C>    <C>    <C>    <C>    <C>
Weighted average number of common
    shares outstanding                                         26,392         25,790         25,780
Shares of common stock to be issued March 2003                     --            598            598
                                                            ---------      ---------      ---------
Basic weighted average shares outstanding                      26,392         26,388         26,378
Dilutive effect of:
   Employee stock options                                          --            233             --
                                                            ---------      ---------      ---------
Weighted average number of common shares outstanding:
    Assuming dilution                                          26,392         26,621         26,378
                                                            =========      =========      =========
Net income (loss) before cumulative
    effect of change in accounting principle                $(125,949)     $  12,359      $  (5,928)
Cumulative effect of change in
    accounting principle, net of tax,
    net of minority interest                                       --        (17,967)            --
                                                            ---------      ---------      ---------
Net loss                                                    $(125,949)     $  (5,608)     $  (5,928)
                                                            =========      =========      =========

Basic income (loss) per share:
   Before cumulative effect of change
      in accounting principle                               $   (4.77)     $    0.47      $ (0.22)
   Cumulative effect of change in
      accounting principle                                         --          (0.68)          --
Basic loss per share                                        $   (4.77)     $   (0.21)     $ (0.22)
                                                            =========      =========      =======

Diluted income (loss) per share:
   Before cumulative effect of change
      in accounting principle                               $   (4.77)     $    0.46      $ (0.22)
   Cumulative effect of change in
      accounting principle                                         --          (0.67)          --
                                                            ---------      ---------      -------
Diluted loss per share                                      $   (4.77)     $   (0.21)     $ (0.22)
                                                            =========      =========      =======
</TABLE>



         Weighted average common shares outstanding, assuming dilution, includes
the incremental shares that would be issued upon the assumed exercise of stock
options for the period they were outstanding. For the years of 2003, 2002 and
2001, approximately 595,200, 32,000 and 190,284 shares, respectively, were
excluded from the diluted earnings per share calculation, as to include them
would have been antidilutive.


11. EMPLOYEE BENEFIT PLANS

         The Company has noncontributory defined benefit retirement plans
covering all of its eligible domestic employees. The plans provide benefits
based on a participant's years of service and compensation. The Company funds at
least the minimum annual contribution required by ERISA. The Company also has
noncontributory defined benefit retirement plans covering all of its eligible
Camrose employees. The plans provide benefits based on participants' years of
service and compensation.

                                      -47-
<PAGE>



         The table below sets forth the funded status of the plans and the
amounts recognized in the Company's consolidated balance sheets at December 31.
All plans have accumulated benefit obligations in excess of plan assets:
<TABLE>
<CAPTION>

                                                       UNITED STATES (U.S.) PLANS                     CANADIAN PLANS
                                                    ----------------------------------       ---------------------------------
                                                     2003         2002         2001          2003         2002         2001
                                                     ----         ----         ----          ----         ----         ----
                                                              (IN THOUSANDS)                         (IN THOUSANDS)
<S>                                                  <C>          <C>          <C>         <C>           <C>           <C>
Change in benefit obligation:
   Projected benefit obligation at January 1         $83,971      $76,702      $64,999     $14,258       $14,787       $11,678
   Service cost                                        4,393        3,646        3,030         458           399           313
   Interest cost                                       5,551        5,253        4,765       1,075           925           859
   Plan amendments                                        --           --           --         218            --           273

   Benefits paid                                      (3,677)      (3,135)      (3,074)       (672)         (513)         (648)
   Actuarial loss (gain)                               9,018        1,505        6,982         454        (1,069)        3,083
   Foreign currency exchange rate change                  --           --           --       3,240          (271)         (771)
                                                    --------      -------      -------     -------       -------       -------
   Projected benefit obligation at December 31        99,256       83,971       76,702      19,031        14,258        14,787
                                                    --------      -------      -------     -------       -------       -------


Change in plan assets:
   Fair value of plan assets at January 1             59,386       56,846       62,085      10,846        12,043        14,102
   Actual gain (loss) on plan assets                  14,819       (4,837)      (3,365)      1,508          (867)       (1,315)
   Company contribution                                   --       10,512        1,200         753           395           395
   Benefits paid                                      (3,677)      (3,135)      (3,074)       (672)         (513)         (648)
   Foreign currency exchange rate change                  --           --           --       2,506          (212)         (491)
                                                    --------      -------      -------     -------       -------       -------
   Fair value of plan assets at December 31           70,528       59,386       56,846      14,941        10,846        12,043
                                                    --------      -------      -------     -------       -------       -------


Projected benefit obligation in excess of plan
    assets                                           (28,728)     (24,585)     (19,856)     (4,090)       (3,412)       (2,744)
Unrecognized prior service cost                           --           26          146         780           474           513
Unrecognized net gain                                 19,797       21,797       11,090       6,001         5,256         4,874
                                                    --------      -------      -------     -------       -------       -------

Net amount recognized                                 (8,931)      (2,762)      (8,620)      2,691         2,318         2,643
Minimum liability                                    (16,084)     (17,987)      (7,435)     (2,566)       (1,983)       (2,038)
                                                    --------     --------     --------     -------       -------       -------

Total pension liability recognized in
  consolidated balance sheet                        $(25,015)    $(20,749)    $(16,055)    $   125       $   335       $   605
                                                    ========     ========     ========     =======       =======       =======

</TABLE>
<TABLE>
<CAPTION>


                                                       UNITED STATES (U.S.) PLANS                     CANADIAN PLANS
                                                    ----------------------------------       ---------------------------------
                                                       2003         2002         2001         2003         2002         2001
                                                       ----         ----         ----         ----         ----         ----
                                                               (IN THOUSANDS)                          (IN THOUSANDS)
<S>                                                  <C>          <C>          <C>         <C>          <C>          <C>
Components of net periodic benefit cost:
  Service cost                                         4,393        3,646        3,030         458           399         313
  Interest cost                                        5,551        5,253        4,765       1,075           925         859
  Expected return on plan assets                      (5,079)      (4,713)      (5,152)     (1,012)       (1,010)     (1,144)
  Recognized gains / losses                            1,278          348            -         316           234         (13)
  Recognized prior service cost                           26          120          120          33            30          30
  Amortization of transition obligation                   --           --           73          --            --          --
                                                     -------      -------      -------     -------       -------     -------
Net periodic pension cost                            $ 6,169      $ 4,654      $ 2,836     $   870       $   578     $    45
                                                     =======      =======      =======     ========      =======     =======
</TABLE>


         For the U.S. plans, the accumulated benefit obligation as of December
31, 2003 and 2002 was $95.5 million and $80.1 million, respectively. The minimum
employer contribution for 2003, due in 2004 is $31,000. The Company believes
$31,000 will also be its 2004 contribution.

         For the Canadian plans, the accumulated benefit obligation as of
December 31, 2003 and 2002 was $17.2 million and $12.3 million, respectively.
The expected employer contribution for 2004 is $440,000.

         For the U.S. plans, assets are invested to maximize returns and
minimize the risk to the participants in the plans. This strategy also involves
monitoring investment portfolios to ensure appropriate diversification of assets
and performance. The Company has established targeted asset allocations for the
portfolios. These targets do not represent strict requirements, but are intended
as general guidelines. The plans do not invest in securities of the Company. The
targeted allocation percentages

                                      -48-
<PAGE>

for 2003 were: 48% U.S. equity, 12% non-U.S. equity, 18% fixed income
securities, 10% real estate, and 12% absolute return strategies. Plan
assets are invested as follows as of December 31 (U.S. pension plans'
measurement date):



                                                       2003          2002
                                                       ----          ----
                                                          (IN THOUSANDS)
Information about U.S. plan assets
   Cash                                                 0.0%          2.0%
   Corporate stocks                                     0.0%          9.6%
   Fixed income securities                             17.5%         19.2%
   Real estate funds                                    9.0%          9.7%
   Mutual funds - domestic equities                    46.7%         33.1%
   Mutual funds - international equities               15.5%         13.1%
   Absolute return strategy funds                      11.3%         13.3%
                                                      ------        ------
   Total plan assets                                  100.0%        100.0%
                                                      ======        ======

           Improved financial market conditions resulted in improved investment
returns in the pension plans for the year 2003. Pension assets continued to be
lower than actuarial liabilities, with a net reduction in additional minimum
liability of $1.9 million for the U.S. plans. For the Canadian plans, the
minimum liability increased by $0.6 million as a result of unfavorable foreign
exchange rate fluctuations. The total additional liability is tax-affected when
recorded to retained earnings and shown as a component of accumulated other
comprehensive income.

         The following table sets forth the significant actuarial assumptions
for the United States and Canadian pension plans:
<TABLE>
<CAPTION>

                                                              NET BENEFIT OBLIGATION                    NET BENEFIT COST
                                                           -----------------------------          ------------------------------
                                                           2003         2002         2001         2003         2002         2001
                                                           ----         ----         ----         ----         ----         ----
<S>                                                        <C>          <C>          <C>          <C>          <C>          <C>
Discount rate
     U.S. plans                                            6.0%         6.8%         7.0%         6.8%         7.0%         7.5%
     Canadian plan                                         6.5%         6.3%         6.3%          N/A          N/A          N/A
Rate of increase in future compensation levels:
     U.S. plans                                            4.0%         4.0%         4.0%         4.0%         4.0%         4.0%
     Canadian plan                                         4.5%         4.5%         4.5%          N/A          N/A          N/A
Expected long-term rate of return on plan assets           8.5%         8.5%         8.5%         8.5%         8.5%         8.5%
</TABLE>


         The expected long-term rate of return on pension plan assets represents
the weighted average asset return for each forecasted asset class return
over several market cycles.

POSTRETIREMENT HEALTH CARE AND LIFE INSURANCE BENEFITS
------------------------------------------------------

         The Company provides certain health care and life insurance benefits
for substantially all of its retired employees. Employees are generally eligible
for benefits upon retirement after completion of a specified number of years of
service. The benefit plans are unfunded.

                                      -49-
<PAGE>


         The following table sets forth the unfunded status and the amounts
recognized at December 31:
<TABLE>
<CAPTION>

                                                           2003         2002          2001
                                                          -----         ----          ----
                                                                   (IN THOUSANDS)
<S>                                                     <C>           <C>           <C>
Change in benefit obligation:
   Accumulated postretirement benefit
     obligation at January 1                            $ 25,728      $ 22,542      $ 22,672
   Service cost                                              557           478           518
   Interest cost                                           1,723         1,512         1,629
   Benefits paid                                          (1,310)       (1,172)       (1,339)
   Plan amendment                                             --            --        (1,913)
   Actuarial loss                                            951         2,434         1,423
   Foreign currency exchange rate change                     887           (66)         (448)
                                                        --------      --------      --------

   Accumulated postretirement benefit
      obligation at December 31                           28,536        25,728        22,542
                                                        --------      --------      --------

Accumulated benefit obligation in excess
  of plan assets                                         (28,536)      (25,728)      (22,542)
Unrecognized transition obligation                         1,400         1,596         1,792
Unrecognized prior service cost                              411           486           561
Unrecognized net loss                                      5,718         4,910         2,341
                                                        --------      --------      --------

Postretirement liability recognized in
   consolidated balance sheet                           $(21,007)     $(18,736)     $(17,848)
                                                        ========      ========      ========

Components of net periodic benefit cost:
  Service cost                                               557           478           518
  Interest cost                                            1,723         1,512         1,629
  Recognized gains / losses                                   45            91            34
  Recognized prior service cost                               75            75            75
  Amortization of transition obligation                      196           196           408
                                                        --------      --------      --------
Net periodic pension cost                               $  2,596      $  2,352      $  2,664
                                                        ========      ========      ========
</TABLE>



         The 2003 changes in Medicare regulations do not apply to the Company's
postretirement medical benefits because the plan provides only a fixed benefit
to retirees.

         The discount rate used for the U.S. plans in determining the
accumulated postretirement benefit obligation was 6.0%, 6.8% and 7.0% for 2003,
2002 and 2001, respectively. The Canadian plan used a discount rate of 6.5% for
2003, and 6.3% for 2002 and 2001.

         The assumed health care cost trend rates used in measuring the
accumulated postretirement benefit obligation for the U.S. and Canadian plans
were 9.5% and 9.0%, respectively, for 2003 and assumed to gradually decline to
4.0% for the U.S. plan and 4.5% by 2009 for the Canadian plan. In subsequent
years, the health care trend rates for both countries are assumed to remain
constant at 4.0% for the U.S. plan and 4.5% for the Canadian plan. A
one-percentage-point change in the assumed health care cost trend rates would
have the following effect:

                                                      1 PERCENTAGE POINT CHANGE
                                                      -------------------------
                                                      INCREASE         DECREASE
                                                      --------         --------
                                                           (IN THOUSANDS)

Accumulated postretirement benefit obligation           $1,190            $(994)
Service and interest costs                                  86              (71)

OTHER EMPLOYEE BENEFIT PLANS
----------------------------

         The Company has an unfunded supplemental retirement plan designed to
maintain benefits for eligible non-union domestic employees at the plan formula
level. The amount expensed for this plan in 2003, 2002 and 2001 was $214,000,
$254,000 and $299,000, respectively. The Company has a similar plan for Canadian
employees, and the amount expensed for this plan in 2003, 2002 and 2001 was
$57,000, $148,000, and $241,000, respectively. At December 31, 2003, 2002, and
2001, the accumulated benefit obligation for the supplemental retirement plan
was $2,333,000, $2,003,000, and $1,884,000, respectively.

                                      -50-
<PAGE>


         The Company has an Employee Stock Ownership Plan ("ESOP")
noncontributory qualified stock bonus plan for eligible domestic employees.
Contributions to the plan are made at the discretion of the Board of Directors
and are in the form of newly issued shares of the Company's common stock. Shares
are allocated to eligible employees' accounts based on annual compensation. At
December 31, 2003, the ESOP held 545,193 shares of Company common stock.

         The Company has profit participation plans under which it distributes
quarterly to eligible employees 12% to 20% depending on operating unit, of its
pretax income after adjustments for certain non-operating items. Each eligible
employee receives a share of the distribution based upon the employee's base
compensation in relation to the total base compensation of all eligible
employees of the operating unit. The Company may modify, amend or terminate the
plans, at any time, subject to the terms of various labor agreements.

         The Company has qualified Thrift (401(k)) plans for eligible domestic
employees under which the Company matches 25% of the first 4% or 6%, depending
on location, of the participants' deferred compensation. The Company's
contribution expense in 2003, 2002 and 2001 was $0.6 million, $0.8 million and
$1.2 million, respectively.

12. MAJOR CUSTOMERS

          Sales to a single customer, related to a significant pipeline
contract, were $166.7 million in 2002.

13. OPERATING LEASE COMMITMENTS

         At December 31, 2003, the future minimum lease payments under operating
leases, primarily for real property, machinery and equipment, are as follows (in
thousands):

                2004                                         $4,830
                2005                                         $4,734
                2006                                         $4,608
                2007                                         $4,537
                2008                                         $4,506
                Beyond                                      $23,261

14. RELATED PARTY TRANSACTIONS

STELCO, INC.

         Camrose purchases steel coil and plate under a steel supply agreement
with Stelco, Inc. ("Stelco"), a 40% owner of Camrose. Transactions under the
agreement are at negotiated market prices. The following table summarizes the
transactions between Camrose and Stelco:
<TABLE>
<CAPTION>

                                                   2003           2002         2001
                                                   ----           ----         ----
                                                             (IN THOUSANDS)
<S>                                               <C>           <C>          <C>

Sales to Stelco                                   $   698       $   222      $   193
Purchases from Stelco                              21,389        12,006       23,486
Accounts receivable from Stelco at December 31         --            --          155
Accounts payable to Stelco at December 31           3,982         2,722          227

                                      -50-
<PAGE>


         Under the acquisition agreement for Camrose, either the Company or
Stelco may initiate a buy-sell procedure pursuant to which the initiating party
establishes a price for Camrose and the other party must either sell its
interest at that price or purchase the initiating party's interest at that
price.


15. JOINT VENTURE

         In June 1999, a wholly-owned subsidiary of the Company and Feralloy
Oregon Corporation ("Feralloy") formed Oregon Feralloy Partners (the "Joint
Venture") 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 plate mill in Portland, Oregon. The
Facility commenced operations in May 2001. The Company has a 60% profit/loss
interest and

                                      -51-
<PAGE>

Feralloy, the managing partner, has a 40% profit/loss interest in the Joint
Venture. Each partner holds 50% voting rights as owners of the Joint
Venture. The Company is not required to, nor does it currently anticipate
it will, make other contributions of capital to fund operations of the
Joint Venture. 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 the Joint
Venture operates at less than breakeven (as defined in the Joint Venture
Agreement), then the Company is required to make a payment to the Joint
Venture at the end of the three month period equal to the shortfall. As of
December 31, 2003, total assets and total liabilities of the Joint Venture
were $15.7 million and $10.1 million, respectively. The Company's
investment in the Joint Venture is $3.4 million as of December 31, 2003.
The investment in this non-controlled majority-owned affiliate is accounted
for by the equity method.


16. 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 will approximate $985,000 over the next two years. Based on a best
estimate, the Company has accrued a liability of $985,000 as of December 31,
2003. The Company has also recorded a $985,000 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. The Company is unable at this time to determine if the
likelihood of an 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 entities have signed an Administrative Order
of 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 take three to five years to complete. The Company is a member of
the Lower Willamette Group, which is funding that investigation, and it signed a
Coordination and Cooperation Agreement with the EPA that binds it to all terms
of the AOC. The Company's cost associated with the RI/FS as of December 31, 2003
is approximately $441,000, all of which has been covered by the Company's
insurer. As a best estimate of the RI/FS costs for years after 2003, the Company
has accrued a liability of $740,000 as of December 31, 2003. The Company has
also recorded a $740,000 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. Although the EPA has not yet defined the boundaries of the Portland
Harbor Superfund Site, the AOC requires the RI/FS to focus on an "initial study
area" that does not now include the portion of the Willamette River adjacent to
the Portland Mill. The study area, however, may be expanded. 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 June 2003, the
Company signed a Funding and Participating Agreement whereby it, 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 estimates its financial commitment in connection
with this agreement to be approximately $590,000 for years after 2003. Based on
this estimate, the Company has accrued a liability of $590,000 as of December
31, 2003. The Company has also

                                      -52-
<PAGE>


recorded a $590,000 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
costs as incurred. This effort is expected to last until 2006. A
determination that the Company is a PRP could cause the Company to incur
costs associated with 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.

         On April 18, 2001, the United Steelworkers of America (the "Union"),
along with two other groups, filed suit against the Company under the citizen
suit provisions of the Clean Air Act ("CAA") in U.S. District Court in Portland,
Oregon. The suit alleged that the Company has violated various air emission
limits and conditions of its operating permits at the Portland Mill
approximately 100 times since 1995. The suit sought injunctive relief and
unspecified civil penalties. The parties reached a settlement in April 2003. A
Consent Decree has been finalized and approved by the EPA. The U.S. District
Court signed and entered the Consent Decree on October 7, 2003. The Consent
Decree financial provisions were not material to the operations of the Company.

RMSM DIVISION

         In connection with the acquisition of the steelmaking and finishing
facilities located at 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 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 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 at the facility and continue to address projects on a prioritized
corrective action schedule which substantially reflects a straight-line rate of
expenditure 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 presently believed to exist. At December 31,
2003, the accrued liability was $28.8 million, of which $24.9 million was
classified as non-current on the 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 $300,000 in penalties, fund $1.5 million of community
projects, and to pay approximately $400,000 for consulting services. CF&I is
also required to make certain capital improvements expected to cost
approximately $25 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. CF&I applied for the PSD permit
in April 2002 and the draft permit was issued for public comment on October 2,
2003.

         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
NSPS AAa compliant furnace (demonstrating full compliance 21 months after permit
approval and expected to cost, with all related emission control improvements,
approximately $25 million), and to pay approximately $450,000 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.

         In response to the CDPHE settlement and the resolution of the EPA
action, CF&I expensed $2.8 million in 2001 for possible fines and non-capital
related expenditures. As of December 31, 2003, the accrued liability was
approximately $600,000.

                                      -53-
<PAGE>


         In December 2001, the State of Colorado issued a Title V air emission
permit to CF&I under the CAA requiring that the furnace subject to the EPA
action operate in compliance with NSPS AA standards. This permit was modified in
April 2002 to incorporate the longer compliance schedule that is part of the
settlement with the CDPHE and the EPA. In September 2002, the Company submitted
a request for a further extension of certain Title V compliance deadlines,
consistent with a joint petition by the State and the Company for an extension
of the same deadlines in the State Consent Decree. This modification 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. Any 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 to a much lessor degree,
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.

         In a related matter, in April 2000, the Union filed suit in U.S.
District Court in Denver, Colorado, asserting that the Company and CF&I had
violated the CAA at the Pueblo Mill for a period extending over five years. The
Union sought declaratory judgement regarding the applicability of certain
emission standards, injunctive relief, civil penalties and attorney's fees. On
July 6, 2001, the presiding judge dismissed the suit. The 10th Circuit Court of
Appeals on March 3, 2003 reversed the District Court's dismissal of the case and
remanded the case for further hearing to the District Court. The parties to the
above-referenced litigation have negotiated what purports to be an agreement to
settle the labor dispute and all associated litigation, including that
referenced above. See "Labor Matters" for a description of the settlement. If,
for any reason, that settlement is not finalized, the Company does not believe
the suit will have a material adverse effect on its results of operations;
however, the result of litigation such as this is difficult to predict and an
adverse outcome with significant penalties is possible.

LABOR MATTERS
CF&I LABOR DISPUTE AND RESULTANT LITIGATION

          The labor contract at CF&I expired on September 30, 1997. After a
brief contract extension intended to help facilitate a possible agreement, on
October 3, 1997, the Union initiated a strike at CF&I for approximately 1,000
bargaining unit employees. The parties, however, failed to reach final agreement
on a new labor contract due to differences on economic issues. As a result of
contingency planning, CF&I was able to avoid complete suspension of operations
at the Pueblo Mill by utilizing a combination of new hires, striking employees
who returned to work, contractors and salaried employees.

          On December 30, 1997, the Union called off the strike and made an
unconditional offer on behalf of its members to return to work. At the time of
this offer, because CF&I had permanently replaced the striking employees, only a
few vacancies existed at the Pueblo Mill. Since that time, vacancies have
occurred and have been filled by formerly striking employees ("Unreinstated
Employees"). As of December 31, 2003, approximately 819 Unreinstated Employees
have either returned to work or have declined CF&I's offer of equivalent work.
At December 31, 2003, approximately 131 Unreinstated Employees remain
unreinstated.

          On February 27, 1998, the Regional Director of the National Labor
Relations Board ("NLRB") Denver office issued a complaint against CF&I, alleging
violations of several provisions of the National Labor Relations Act ("NLRA").
On August 17, 1998, a hearing on these allegations commenced before an
Administrative Law Judge ("Judge"). Testimony and other evidence were presented
at various sessions in the latter part of 1998 and early 1999, concluding on
February 25, 1999. On May 17, 2000, the Judge rendered a decision which, among
other things, found CF&I liable for certain unfair labor practices and ordered
as remedy the reinstatement of all 1,000 Unreinstated Employees, effective as of
December 30, 1997, with back pay and benefits, plus interest, less interim
earnings. Since January 1998, the Company has been returning unreinstated
strikers to jobs, as positions became open. As noted above, there were
approximately 131 Unreinstated Employees as of December 31, 2003. On August 2,
2000, CF&I filed an appeal with the NLRB in Washington, D.C. A separate hearing
concluded in February 2000, with the judge for that hearing rendering a decision
on August 7, 2000, that certain of the Union's actions undertaken since the
beginning of the strike did constitute misconduct and violations of certain
provisions of the NLRA. The Union has appealed this determination to the NLRB.
In both cases, the non-prevailing party in the NLRB's decision will be entitled
to appeal to the appropriate U.S. Circuit Court of Appeals. CF&I believes both
the facts and the law supports its position that the strike was economic in
nature and that it was not obligated to displace the properly hired replacement
employees.

         In the event there is an adverse determination on these issues,
Unreinstated Employees could be entitled to back pay, including benefits, plus
interest, from the date of the Union's unconditional offer to return to work
through the date of their reinstatement or a date deemed appropriate by the NLRB
or an appellate court. The number of Unreinstated Employees entitled to back pay
may be limited to the number of past and present replacement workers; however,
the Union

                                      -54-
<PAGE>

might assert that all Unreinstated Employees should be entitled to back
pay. Back pay is generally determined by the quarterly earnings of those
working less interim wages earned elsewhere by the Unreinstated Employees.
In addition to other considerations, each Unreinstated Employee has a duty
to take reasonable steps to mitigate the liability for back pay by seeking
employment elsewhere that has comparable working conditions and
compensation. Any estimate of the potential liability for back pay will
depend significantly on the ability to assess the amount of interim wages
earned by these employees since the beginning of the strike, as noted
above. Due to the lack of accurate information on interim earnings for both
reinstated and Unreinstated Employees and sentiment of the Union towards
the Company, it is not currently possible to obtain the necessary data to
calculate possible back pay. In addition, the NLRB's findings of misconduct
by the Union may mitigate any back pay award with respect to any
Unreinstated Employees proven to have taken part or participated in acts of
misconduct during and after the strike.

CF&I LABOR DISPUTE SETTLEMENT

         On January 15, 2004 the Company announced a tentative agreement to
settle the labor dispute between the Union and CF&I ("Settlement"). The
Settlement is conditioned on, among other things, (1) its approval by
shareholders of New CF&I, (2) ratification of a new collective bargaining
agreement being executed between CF&I and the Union, (3) approval of the
Settlement by the NLRB and the dismissal of cases pending before the NLRB
related to the labor dispute and (4) various pending legal actions between the
Company, New CF&I and CF&I and the Union being dismissed. The Settlement if
approved will provide remedies for all outstanding unfair labor practices
between CF&I and the Union and sets the stage for the ratification of a new
five-year collective bargaining agreement. The Settlement includes the creation
of a labor dispute settlement trust ("Trust") that will hold assets to be
contributed by either the Company or CF&I. Assets of the Trust will include: (1)
four million shares of the Company's common stock, (2) a cash contribution of
$2,500 for each beneficiary of the trust, estimated to be in total $2.5 million,
and (3) beginning on the effective date of the Settlement, a ten year profit
participation obligation consisting of 25% of CF&I operating income, as defined,
not to exceed $3 million per year for years one through five and $4 million per
year for years six through ten. The beneficiaries of the Trust 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 will be effected through the new five-year
collective bargaining agreement, 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 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 its Board of Directors, and to a
broad based neutrality clause for certain of the Company's facilities in the
future.


CF&I LABOR DISPUTE SETTLEMENT - ACCOUNTING

         The Company has recorded a charge of $31.1 million in the fourth
quarter of 2003 related to the Settlement, the final amount of which is
dependant upon the price of the Company's common stock on the effective date of
the Settlement. The charge consisted of (1) $23.2 million for the value of 4
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. The Company will adjust the amount of the common
stock charge, either up or down, for the change in the price of the common stock
between December 31, 2003 and the effective date of the Settlement. The accrual
for the LTD benefits may also change, as better claims information becomes
available. As employees accept the early retirement benefits, the Company will
record an additional charge totaling approximately $7.0 million related to these
benefits. The enhancements to pension and post-retirement medical benefits for
non-early retirees will be accounted for prospectively on the date at which plan
amendments occur pursuant to the new five-year collective bargaining agreement
in accordance with SFAS 87 and SFAS 106.

                                      -55-
<PAGE>



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
December 31, 2003 was approximately $123,000. A similar contract to purchase
oxygen for the Pueblo Mill was entered into on February 2, 1993 by CF&I, and was
subsequently amended on August 4, 1994. 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 December 31, 2003
was $118,000.

         The Company has entered into an agreement, which expires in May 2005,
for the purchase of electricity used at the Portland Mill from an
independent third party. This commitment specifies that the Company will
pay a minimum monthly charge that fluctuates seasonally and which averages
$50,000 per month.

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.

17. ASSET IMPAIRMENTS

         In May 2003, the Company shut down its Portland Mill melt shop. The
determination to close the melt shop was based on 1) the Company's ability to
obtain semi-finished slab through purchases from suppliers on the open market,
and 2) high energy and raw material costs and the yield losses associated with
the inefficient casting technology in use at the Portland Mill. The Company
believes that future semi-finished slab purchases for the Portland Mill will
meet the production needs of the Portland Mill finishing operation for the
remainder of 2004 and into the foreseeable future. The Company intends to
maintain the melt shop in operating condition.

         In connection with the melt shop closure, the Company has determined
the value of the related assets to be impaired. Accordingly, the Company
recorded a pre-tax impairment charge to earnings of $27.0 million for the melt
shop and other related assets in the quarter ended June 30, 2003. Of this
impairment charge recognized, $18.3 million represented impairment of fixed
assets and $8.4 million pertained to reduction of dedicated stores and operating
supplies to net realizable value. Following the impairment charge, the carrying
value of the fixed assets was approximately $1.4 million. The fair value of the
impaired fixed assets was determined using the Company's estimate of market
prices for similar assets.

         As noted in Note 16 above, as part of the settlement with the CDPHE and
the EPA, CF&I is required to install one new electric arc furnace, and thus the
two existing furnaces with a combined melting and casting capacity of
approximately 1.2 million tons through two continuous casters will be shut down.
CF&I has determined that the new single furnace operation will not have the
capacity to support a two caster operation and therefore CF&I has determined
that one caster and other related assets have no future service potential.
Accordingly, the Company recorded a pre-tax impairment charge to earnings of
$9.1 million in the quarter ended June 30, 2003. Of the impairment charge
recognized, $8.1 million represented impairment of fixed assets and $1.0 million
pertained to reduction of related stores items to net realizable value. Because
it is believed the caster has no salvage value, the carrying value of the fixed
assets was zero after the effect of the impairment charge.

                                      -56-
<PAGE>



18. CAPITAL STOCK

COMMON STOCK

         In connection with the 1993 acquisition of the assets of CF&I, the
Company issued 598,400 shares of its common stock on March 31, 2003 to specified
creditors of CF&I Steel. At the date of acquisition, the stock was valued at
$11.2 million using the Black-Scholes option pricing model.

STOCKHOLDER RIGHTS PLAN

         The Company has issued preferred stock purchase rights ("Rights") to
its common stockholders. The Rights generally become exercisable after a person
or group announces a tender offer that would result in that person or group
owning 15% or more of the Company's common stock. In that event, a holder will
be entitled to buy from the Company a unit consisting of one one-thousandth of a
share of participating preferred stock of the Company at a purchase price of
$42. The Rights also become exercisable after a person or group acquires 15% or
more of the Company's outstanding common stock. In that event, each Right,
excluding those held by the acquirer, would become exercisable for preferred
stock of the Company having a market value equal to twice the exercise price of
the Right. Alternatively, if the Company is acquired in a merger or other
business combination, each Right, excluding those held by the acquirer, would be
exercisable for common stock of the acquirer having a market value equal to
twice the exercise price of the Right. The Company may redeem the Rights prior
to a change in control at a price of $.001 per Right. The Rights will expire
December 22, 2009 if not exercised prior to that date.

STOCK OPTIONS

         The Company maintains a Non-Qualified Stock Option Plan ("Plan"),
effective January 1, 2000. As of December 31, 2003, the Company has granted
options to purchase 620,000 shares to certain senior management employees under
the provisions of the Plan. The exercise price is the fair value per share on
the date of grant. The term of each option is 10 years from grant date. One-half
of the options granted vest immediately upon grant, and the remaining one-half
vest ratably over a three-year period. At December 31, 2003, there were 380,000
shares reserved for future issuance under the Plan.

         The Company also maintains a Non-Employee Director Stock Option Plan
("Director Plan"), effective April 26, 2002. As of December 31, 2003, the
Company has granted options to purchase 44,000 shares of its common stock to
individuals who are Non-Employee Directors under the provisions of the Director
Plan at fair market value on the date of the grant. Options vest over one to
three years, one-third of the options granted vest ratably over a three year
period, and expire no later than ten years from the date of the grant. At
December 31, 2003, there were 106,000 shares reserved for future issuance under
the Director Plan.


     A summary of option activity is as follows:

                                                 2003                       2002                       2001
                                      -------------------------------------------------------------------------------
                                          Shares      Weighted       Shares       Weighted      Shares      Weighted
                                                      Average                     Average                   Average
                                                      Exercise                    Exercise                  Exercise
                                                      Price                       Price                     Price
Options Outstanding
-------------------

Outstanding at beginning of period       628,900      $  3.83        599,900      $ 3.64        188,500     $  1.94

New Grants                                12,000      $  2.33         32,000      $ 7.25        431,500     $  4.37

Exercised                                 (9,416)     $  1.94         (3,000)     $ 1.94        (10,050)    $  3.37

Terminated                               (36,284)     $  4.40             --      $   --        (10,050)    $  3.37
                                     ------------------------   ------------------------   -------------------------
Outstanding at end of period             595,200      $  3.79        628,900      $ 3.83        599,900     $  3.64

Outstanding but not exercisable          (97,906)     $  4.73       (181,193)     $ 4.26       (270,333)    $  3.82
                                     ------------------------   ------------------------   -------------------------
Exercisable at end of period             497,294      $  3.61        447,707      $ 3.66        329,567     $  3.48
                                     ========================   ========================   =========================
</TABLE>
                                      -57-
<PAGE>



         The estimated fair value as of grant date of options granted in 2003,
2002 and 2001, using the Black-Scholes option pricing model, was as follows:

                                                   2003       2002      2001
                                                   ----       ----      ----

The weighted average fair value of options
     granted during the year per share          $  1.65    $  4.72   $  2.97
Assumptions:
     Annualized Dividend Yield                       0%         0%        0%
     Common Stock Price Volatility                73.8%      64.4%     66.1%
     Risk-Free Rate of Return                      3.5%       4.9%      4.7%
     Expected option term (in years)                 7          7         7


         A summary of options outstanding at December 31, 2003, was as follows:
<TABLE>
<CAPTION>


                                               OPTIONS OUTSTANDING                           OPTIONS EXERCISABLE
                              ------------------------------------------------------    ------------------------------
                                                      WEIGHTED
                                   NUMBER             AVERAGE                              NUMBER          WEIGHTED
                               OUTSTANDING AT        REMAINING        WEIGHTED          EXERCISABLE AT     AVERAGE
                                DECEMBER 31,       CONTRACTUAL        AVERAGE            DECEMBER 31,     EXERCISE
RANGE OF EXERCISE PRICE              2003              LIFE         EXERCISE PRICE            2003           PRICE
-----------------------              -----             ----         --------------            ----           -----
<S>                                <C>                 <C>              <C>                 <C>              <C>

$0.01 to $2.00                     163,700             6.82             $1.94               163,700          $1.94
$2.01 to $4.00                     220,100             7.79             $3.70               173,424          $3.78
$4.01 to $6.00                     179,400             7.30             $4.99               149,506          $4.99
$6.01 to $7.25                      32,000             8.32             $7.25                10,664          $7.25
                                   -------                                                  -------
                                   595,200                                                  497,294
                                   =======                                                  =======

</TABLE>

19. SALES OF SUBSIDIARY'S COMMON STOCK

         In 1994, New CF&I sold a 10% equity interest to a subsidiary of Nippon
Steel Corporation ("Nippon"). In connection with the sale, New CF&I and the
Company entered into a stockholders' agreement with Nippon pursuant to which
Nippon was granted a right to sell all, but not less than all, of its equity
interest in New CF&I back to New CF&I at the then fair market value in certain
circumstances. Those circumstances include, among other things, a change of
control, as defined, in New CF&I, certain changes involving the composition of
the board of directors of New CF&I, and the occurrence of certain other events
that are within the control of New CF&I or the Company. The Company also agreed
not to transfer voting control of New CF&I to a nonaffiliate except in those
circumstances where Nippon is offered the opportunity to sell its interest in
New CF&I to the transferee at the same per share price obtained by the Company.
New CF&I retains a right of first refusal in the event that Nippon desires to
transfer its interest in New CF&I to a nonaffiliate. During 1995, the Company
sold a 3% equity interest in New CF&I to the Nissho Iwai Group under
substantially the same terms and conditions of the Nippon transaction. The
Company believes that it is not probable that the conditions that would permit a
subsidiary stock redemption will occur.

20. UNUSUAL AND NONRECURRING ITEMS

SETTLEMENT OF LITIGATION

         Operating income for 2001 includes $3.4 million in proceeds from a
settlement of outstanding litigated claims with certain graphite electrode
suppliers.

PROCEEDS FROM INSURANCE COMPANY

         Other income for 2001 includes $2.3 million received from the Company's
life insurance provider due to its de-mutualization capital structure change
into a public company.

                                     -58-
<PAGE>


ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL  DISCLOSURE

         On July 7, 2003, Oregon Steel Mills, Inc. (the "Registrant" or the
"Company") dismissed PricewaterhouseCoopers LLP ("PricewaterhouseCoopers") and
engaged KPMG LLP ("KPMG") as its certifying accountants for the 2003 fiscal
year. The audit reports of PricewaterhouseCoopers on the financial statements of
the Company for the years ended December 31, 2002 and 2001 did not contain any
adverse opinion or disclaimer of opinion and were not qualified or modified as
to uncertainty, audit scope or accounting principles. The decision to dismiss
PricewaterhouseCoopers and engage KPMG was approved by the Company's Audit
Committee. During the Company's two most recent fiscal years and through July 7,
2003, there were no disagreements with PricewaterhouseCoopers on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure, which disagreements, if not resolved to the satisfaction of
PricewaterhouseCoopers, would have caused PricewaterhouseCoopers to make
reference thereto in connection with its reports on the financial statements for
such years. During the two most recent fiscal years and subsequent interim
periods preceding the dismissal, there were no reportable events (as such term
is defined in Item 304(a)(1)(v) of Regulation S-K).

         During the Registrant's two most recent fiscal years and through July
7, 2003, the Registrant did not consult with KPMG regarding either (1) the
application of accounting principles to a specified transaction, either
completed or proposed; or the type of audit opinion that might be rendered on
the Registrant's financial statements, and neither a written report was provided
to the Registrant or oral advice was provided that KPMG concluded was an
important factor considered by the Registrant in reaching a decision as to the
accounting, auditing, or financial reporting issue; or (2) any matter that was
either the subject of a disagreement, as defined in Item 304(a)(1)(iv) of
Regulation S-K, or a reportable event pursuant to Item 304(a)(1)(v) of
Regulation S-K.



ITEM 9A.       CONTROLS AND PROCEDURES

         As of December 31, 2003, 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. There were no significant changes in the
Company's internal controls or in other factors that could significantly affect
these controls including any corrective actions with regard to significant
deficiencies and material weaknesses subsequent to the date the Company
completed its evaluation.


                                    PART III


ITEMS 10. AND 11.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT AND
                     EXECUTIVE COMPENSATION

         In addition to the information under the caption "Executive Officers of
the Registrant" in "Part I, Item 4" of this Report, the information required by
these Items is incorporated herein by reference from the material under the
headings "Proposal 1: Nomination and Election of Class A Directors," "Directors'
Compensation, Meetings, Standing Committees, and Board Policies," "Executive
Compensation," "Option Grants During Fiscal 2003," "Aggregated Option Exercises
in Last Fiscal Year and FY-End Option Values," "Defined Benefit Retirement
Plans," "Employment Contracts and Termination of Employment and Change in
Control Arrangements," "Board Compensation Committee Report on Executive
Compensation," "Audit Committee Report of the Board of Directors," and "Section
16(a) Beneficial Ownership Reporting Compliance" in the Company's Proxy
Statement for the 2004 Annual Meeting of Stockholders, which will be filed with
the Securities and Exchange Commission.



ITEM 12.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
             RELATED STOCKHOLDER MATTERS

         Part of the information required by this Item is incorporated by
reference from the material under the caption "Principal Stockholders" in the
Company's Proxy Statement for the 2004 Annual Meeting of Stockholders.

                                      -59-
<PAGE>



         The following table summarizes information with respect to options
under the Company's equity compensation plans at December 31, 2003:
<TABLE>
<CAPTION>

                                                                                                 Number of securities
                                                                                                remaining available for
                                  Number of securities to be   Weighted-average exercise       future issuance under equity
                                   issued upon exercise of        price of outstanding           compensation plans
                                     outstanding options,        options, warrants, and          (excluding securities
                                     warrants, and rights                 rights               reflected in Column (a))
                                             (a)                           (b)                            (c)
                                 ----------------------------- ----------------------------- ------------------------------
<S>                              <C>                           <C>                           <C>
Equity compensation plans                  551,200                        $4.02                         380,000
approved by security holders

Equity  compensation  plans not
approved by security holders                44,000                        $5.91                         106,000
                                 ----------------------------- ----------------------------- ------------------------------
       Total                               595,200                        $3.79                         486,000
                                           =======                                                      =======
</TABLE>


         The equity compensation plans not approved by security holders have
generally the same features as those approved by security holders. For further
details regarding the Company's equity compensation plans, including the
Non-Employee Director Stock Option Plan which was not approved by security
holders, see Note 18 to the Consolidated Financial Statements.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The information required by this Item is incorporated by reference from
the material under the captions "Nomination and Election of Class A Directors,"
"Executive Compensation", "Option Grants During Fiscal 2003", "Aggregated Option
Exercises in Last Fiscal Year and FY-End Option Values", and "Employment
Contracts and Termination of Employment and Change in Control Arrangements" in
the Company's Proxy Statement for the 2004 Annual Meeting of Stockholders.

ITEM 14.          PRINCIPAL ACCOUNTANT FEES AND SERVICES

         The information required by this Item is incorporated by reference from
the material under the captions "Audit Committee Report of the Board of
Directors" and "Relationship with Independent Accountants" in the Company's
Proxy Statement for the 2004 Annual Meeting of Stockholders.

                                      -60-
<PAGE>



                                     PART IV


ITEM 15.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
                       ON FORM 8-K
                                                                            PAGE
                                                                            ----


(a)         FINANCIAL STATEMENTS:
     (i)    Independent Auditors' Report - 2003  .............................31
     (ii)   Report of Independent Accountants - 2002 and  2001................32
     (iii)  Consolidated Financial Statements:
                Balance Sheets at December 31, 2003, 2002 and  2001 ..........33
                Statements of Income for each of the three years
                  in the period ended December 31, 2003.......................34
                Statements of Changes in Stockholders' Equity for each of the
                  three years in the period ended December 31, 2003...........35
                Statements of Cash Flows for each of the three years
                  in the period ended December 31, 2003.......................36
                Notes to Consolidated Financial Statements....................37
     (iv)       Financial Statement Schedule for each of the three
                years in the period ended December 31, 2003:
                Independent Auditors' Report - 2003...........................62
                Schedule II - Valuation and Qualifying Accounts...............63
     (v)    Exhibits:  Reference is made to the index of exhibits on
               pages 64 and 65 of this report.

(b)         REPORTS ON FORM 8-K:

            On October 1, 2003, the Company filed a report on Form 8-K
            announcing the lease of a structural tube and coil
            slitting facility.

            On November 5, 2003, the Company filed a report on Form
            8-K in relation to a press release announcing its
            financial results for the third quarter ended September
            30, 2003.


                                      -61-

<PAGE>

                          INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
Oregon Steel Mills, Inc.:

Under date of March 5, 2004, we reported on the consolidated balance sheet of
Oregon Steel Mills, Inc. and subsidiaries as of December 31, 2003, and the
related consolidated statements of income, changes in stockholders' equity, and
cash flows for the year then ended, which are included in this Form 10-K. In
connection with our audit of the aforementioned consolidated financial
statements, we also audited the related Schedule II - Valuation and Qualifying
Accounts, for the year ended December 31, 2003. This financial statement
schedule is the responsibility of the Company's management. Our responsibility
is to express an opinion on this financial statement schedule based on our
audit.

In our opinion, such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.


/s/ KPMG LLP

Portland, Oregon
March 5, 2004

                                      -62-
<PAGE>



<TABLE>



                            OREGON STEEL MILLS, INC.
                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
                         FOR THE YEARS ENDED DECEMBER 31
                                 (IN THOUSANDS)

<CAPTION>

COLUMN A                                       COLUMN B                    COLUMN C              COLUMN D        COLUMN E
--------                                       --------          --------------------------      --------        --------
                                                                 ADDITIONS
                                                 BALANCE AT      CHARGED TO       CHARGED                        BALANCE AT
                                                 BEGINNING       COSTS AND        TO OTHER                         END OF
CLASSIFICATION                                   OF PERIOD        EXPENSES        ACCOUNTS       DEDUCTIONS        PERIOD
--------------                                   ----------      ----------       ---------      ----------      ----------
<S>                                              <C>             <C>              <C>            <C>             <C>

   2003
   ----
Allowance for doubtful accounts                    $4,346          $1,254            $ -          $(1,935)         $3,665

   2002
   ----
Allowance for doubtful accounts                    $4,299          $2,535            $ -          $(2,488)         $4,346

   2001
   ----
Allowance for doubtful accounts                    $1,528          $3,127            $ -          $  (356)         $4,299

</TABLE>


                                      -63-

<PAGE>


INDEX OF EXHIBITS*

  2.0   Asset Purchase Agreement dated as of January 2, 1992, by and
        between Camrose Pipe Company (a partnership) and Stelco Inc.
        (Filed as exhibit 2.0 to Form 8-K dated June 30, 1992.)
  2.1   Asset Purchase Agreement dated as of March 3, 1993, among CF&I Steel
        Corporation, Denver Metals Company, Albuquerque Metals Company, CF&I
        Fabricators of Colorado, Inc., CF&I  Fabricators of Utah, Inc., Pueblo
        Railroad Service Company, Pueblo Metals Company,  Colorado & Utah Land
        Company, the Colorado and Wyoming Railway Company, William J. Westmark
        as trustee for the estate of The Colorado and Wyoming Railway Company,
        CF&I Steel, L.P., New CF&I, Inc. and Oregon Steel Mills, Inc. (Filed
        as exhibit 2.1 to Form 8-K dated March 3, 1993.)
  3.1   Restated Certificate of Incorporation of the Company, as amended.
        (Filed as exhibit 3.1 to Form 10-Q for the period ended June 30, 2003.)
  3.2   Bylaws of the Company (as amended and restated on May 1, 2003).
        (Filed as exhibit 3.2 to Form 10-Q for the period ended June 30, 2003.)
  4.1   Specimen Common Stock Certificate.  (Filed as exhibit 4.1 to Form S-1
        Registration Statement 33-38379.)
  4.2   Rights Agreement between Oregon Steel Mills, Inc. and ChaseMellon
        Shareholder Services, LLC (now Mellon Investor Services, LLC), as
        Rights Agent.  (Filed as Exhibit 1 to the Company's Registration
        Statement on Form 8-A (SEC Reg. No. 1-9987.)
  4.3   Indenture,  dated as of July 15, 2002, by and among Oregon Steel Mills,
        Inc., U.S. Bank National Association, as trustee, and New CF&I, Inc.,
        and CF&I Steel, L.P., as  guarantors.  (Filed as exhibit  4.1 to the
        Registration statement on Form S-4 (SEC Reg. No. 333-98249).)
  4.4   First  Amendment to Oregon Steel Mills,  Inc. Indenture.  (Filed as
        Exhibit 4.2 to Form 10-Q for the period ended September 30, 2002.)
  4.5   Exchange and Registration  Rights Agreement, dated July 15, 2002,
        between Oregon Steel Mills, Inc. and Goldman, Sachs & Co.  (Filed as
        exhibit 4.2 to the Registration Statement on Form S-4 (SEC Reg.
        No. 333-98249) and incorporated by reference herein.)
  4.6   Security Agreement, dated as of July 15, 2002, between  Oregon Steel
        Mills and U.S. Bank National Association. (Filed as exhibit 4.3 to the
        Registration Statement on Form S-4 (SEC Reg. No. 333-98249).)
  4.7   Security Agreement, dated as of July 15, 2002, between CF&I Steel, L.P.
        and U.S. Bank National Association.  (Filed as exhibit 4.4 to the
        Registration Statement on Form S-4 (SEC Reg. No. 333-98249) and
        incorporated by reference herein.)
  4.8   Security Agreement, dated as of July 15, 2002, between New CF&I, Inc.
        and U.S. Bank National Association.  (Filed as exhibit 4.5 to the
        Registration Statement on Form S-4 (SEC Reg. No. 333-98249).)
  4.9   Intercreditor Agreement, dated July 15, 2002 between  U.S. Bank
        National Association and Textron Financial Corporation. (Filed as
        exhibit 4.6 to the Registration Statement on Form S-4 (SEC Reg.
        No. 333-98249).)
  4.10  Form of Deed of Trust, Assignment of Rents and Leases and Security
        Agreement.  (Filed as exhibit 4.7 to the Registration Statement on
        Form S-4 (SEC Reg. No. 333-98249).)
  4.11  Form of Global Note. (Filed as exhibit 4.8 to the Registration
        Statement on Form S-4 (SEC Reg. No. 333-98249).)
  4.12  Guarantee of CF&I Steel, L.P.  (Filed as exhibit 4.9 to the
        Registration Statement on Form S-4 (SEC Reg. No. 333-98249).)
  4.13  Guarantee of New  CF&I, Inc. (Filed as exhibit 4.10 to the Registration
        Statement on Form S-4 (SEC Reg. No. 333-98249).)
 10.1** Form of Indemnification Agreement between the Company and its directors.
        (Filed as exhibit 10.3 to Form 10-Q for the period ended June 30, 2003.)
 10.2** Form of Indemnification Agreement between the Company and its executive
        officers.  (Filed as exhibit 10.2 to Form 10-Q for the period ended
        June 30, 2003.)
 10.3   Agreement for Electric Power Service between  Registrant and Portland
        General Electric Company.  (Filed as exhibit 10.20 to Form S-1
        Registration Statement 33-20407.)
 10.4** Form of Key Employee  Contract  between the Company and its executive
        officers.  (Filed as exhibit 10.2 to Form 10-Q for the period ended
        September 30, 2000.)
 10.5   Summary of Rights to Purchase Participating Preferred Stock.  (Filed as
        exhibit 2 to the Company's Registration Statement on Form 8-A (SEC Reg.
        No. 1-9987).)
 10.6   Form of Rights Certificate and Election to Purchase. (Filed as exhibit 3
        to the Company's Registration Statement on Form 8-A (SEC Reg.
        No. 1-9987).)
 10.7** 2002 Annual Incentive Plan for certain of the Company's management
        employees.  (Filed as exhibit 10.11 to Form 10-K for the period ended
        December 31, 2001.)
 10.8** 2000  Non-Qualified Stock Option Plan.  (Filed as exhibit 99.1 to the
        Company's Registration Statement on Form S-8 (see Reg. No. 333-68732).)

                                      -64-
<PAGE>

10.9**  2002 Non-Employee Director's Stock Option Plan.  (Filed as exhibit  99.1
        to the Company's Registration Statement on Form S-8 (SEC Reg. No.
        333-86980).)
10.10***Credit Agreement, dated as of July 12, 2002, among Oregon Steel Mills,
        Inc., New CF&I, Inc., CF&I Steel, L.P. and Colorado & Wyoming Railway
        Company as borrowers, the financial institutions  that are or may from
        time to time become parties thereto, as Lenders, Textron Financial
        Corporation, as Agent for the Lenders, and GMAC Business Credit LLC, as
        Co-Managing Agent. (Filed as exhibit 10.1 to the Registration Statement
        on Form S-4 (SEC Reg. No. 333-98249).
10.11   Amendment  No. 1 to Credit Agreement dated as of December 13, 2002.
        (Filed as exhibit 10.11 on Form 10-K for the period ended December 31,
        2002.)
10.12   Amendment No. 2 to Credit Agreement, dated as of June 30, 2003.
        (Filed as exhibit 10.1 on Form 10-Q for the period ended June 30, 2003.)
10.13   Security Agreement, dated as of July 12, 2002, among Oregon Steel Mills,
        Inc., New CF&I, Inc., CF&I Steel, L.P. and the Agent for the Lenders.
        (Filed as exhibit 10.2 to the Registration Statement on Form S-4 (SEC
        Reg. No. 333-98249.)
10.14   Employment Agreement dated August 1, 2003,  between the Company and
        James E. Declusin.  (Filed as exhibit 10.1 on Form 10-Q for the period
        ended September 30, 2003.)
10.15   Separation  Agreement and General Release dated  September 16, 2003,
        between the Company and its subsidiaries and Joe E. Corvin.
        (Filed as exhibit 10.2 on Form 10-Q for the period ended September 30,
        2003.)
10.16   Amendment No. 3 to Credit Agreement dated as of September 26, 2003.
        (Filed as exhibit 10.3 on Form 10-Q for the period ended September 30,
        2003.)
10.17   Amendment No. 4 to Credit Agreement dated as of November 13, 2003.
        (Filed as exhibit 10.4 on Form 10-Q for the period ended September 30,
        2003.)
18.0    Certifying Accountant's Preferability Letter. (Filed as exhibit 18.0
        on Form 10-Q for the period ended June 30, 2003.)
21.0    Subsidiaries of registrant. (Filed as exhibit 21.0 for the period
        ended December 31, 2003.)
23.0    Consent of Independent Accountants - PricewaterhouseCoopers LLP.
23.1    Consent of Independent Accountants - KPMG LLP.
31.1    CEO Certification pursuant to Section 302 of the Sarbanes-Oxley Act
        of 2002.(Filed as exhibit 31.1 for the period ended December 31, 2003.)
31.2    CFO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of
        2002. Filed as exhibit 31.2 for the period ended December 31, 2003.)
32.1    CEO and CFO Certification pursuant to Section 906 of the Sarbanes-Oxley
        Act of 2002.(Filed as exhibit 32.0 for the period ended December 31,
        2003.)
99.0    Partnership Agreement dated as of January 2, 1992, by and between
        Camrose Pipe Corporation and Stelcam Holding, Inc. (Filed as
        exhibit 28.0 to Form 8-K dated June 30, 1992.)


----------------------

*    The Company will furnish to stockholders a copy of the exhibit upon payment
     of $.35 per page to cover the expense of furnishing such copies. Requests
     should be directed to Jeff S. Stewart, Corporate Controller, Oregon Steel
     Mills, Inc., PO Box 5368, Portland, Oregon 97228.

**   Management contract or compensatory plan.

***  Certain Exhibits and Schedules to this Exhibit are omitted. A list of
     omitted Exhibits is provided in the Exhibit and the Registrant agrees to
     furnish to the Commission as a supplement a copy of any omitted Exhibits or
     Schedules upon request.

                                      -65-
<PAGE>


                        SIGNATURES REQUIRED FOR FORM 10-K

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Oregon Steel Mills, Inc. has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

                            OREGON STEEL MILLS, INC.
                            (Registrant)

                            By    /s/ James E. Declusin
                               --------------------------------------------
                                   Chief Executive Officer





                                      -66-