July 11, 2006 — Schnitzer Steel Industries, Inc. reported net income of $30 million on revenues of $506 million for the third quarter, and net income of $93 million on revenues of $1,250 million for the nine months ended May 31, 2006.

Third Quarter Results—The $30 million net income ($0.98 per diluted share) was reduced by a $4 million charge related to settlement of the ongoing SEC and Department of Justice investigations into the company's past payment practices in Asia. Excluding the charge, net income was $34 million ($1.11 per diluted share), a 62% increase from the second quarter. The increase in net income resulted from margin expansion in all of the company's business segments, and a 25% increase in consolidated revenues.

Nine Month Results—Net income of $93 million ($3.02 per diluted share) included a $34 million (after tax) gain related to the disposition of joint venture assets under the agreement between the Company and Hugo Neu. Net income was also reduced by a $15 million charge related to a reserve taken by the company for settlement of the ongoing SEC and Department of Justice investigations into the company's past payment practices in Asia. Excluding the gain from the disposition of joint venture assets and the charge for the investigation reserve, year-to-date net income was $74 million ($2.40 per diluted share).

Management Comments—"During the quarter we continued to focus on managing the operating factors within our control in order to take maximum advantage of the positive long-term markets in which we operate," said John Carter, President and CEO. "We are pleased with our good progress in these efforts and our outlook remains optimistic."

Commenting on the third quarter's results, Mr. Carter said, "Overall, the performance of each of our business segments continues to be solid. The Metals Recycling Business had a substantial quarter over quarter increase in operating income due to significantly higher non-ferrous revenues and lower processing costs related to an increase in the ferrous volumes processed in our yards. Our Northeast operation, which was a recent acquisition, also demonstrated improved operating performance from the second quarter. While domestic scrap purchase prices continued to rise, export market prices rose at a similar pace, which allowed us to stem the margin squeeze that occurred in the second quarter."

"Our Steel Manufacturing Business had its third consecutive record quarter for operating income, driven by continued strong West Coast demand for steel products. As expected, operating income in the Auto Parts Business increased due to seasonal factors which improved retail sales at our self-service Pick-N-Pull stores and the posting of positive operating income at our recently acquired GreenLeaf full-service operation."

Turning to the SEC and Department of Justice investigations, Mr. Carter commented, "We have taken an additional step toward bringing the investigations to a close as the company has determined that the monetary component of the settlement of the investigations, including pre-judgment interest, will be at the high end of the range previously disclosed by the company. As a consequence, the company has accrued an additional reserve of $4 million pending finalization of the settlement."

Steel Manufacturing Business Outlook—The company says it continues to see good demand for all its products, particularly rebar. In addition, import prices have risen in response to the strong customer demand and appear to be less of a near term risk of providing downward pressure on pricing. Based on current market conditions, the company expects average prices for the fourth quarter to rise $10-$20 per ton from the third quarter of this year.

The company also continues to see strong demand for finished steel products, and expects customer inventories to remain low. As a result, the company expects fourth quarter sales volumes to approximate the 190,000 tons shipped during the third quarter and be 10-15% higher than the fourth quarter of 2005.

Schnitzer Steel Industries is one of the largest manufacturers and exporters of recycled ferrous metals products in the United States with 28 operating facilities located in 11 states throughout the country, including six export facilities located on both the East and West Coasts and in Hawaii. Schnitzer's vertically integrated operating platform also includes its auto parts and steel manufacturing businesses. Schnitzer's auto parts business sells used auto parts through its 33 Pick-N-Pull self service facilities and 18 GreenLeaf full service facilities located in 14 states and western Canada. With an annual production capacity of 700,000 tons, Schnitzer's steel manufacturing business — Cascade Steel Rolling Mills — produces finished steel products, including rebar, wire rod and other specialty products. Schnitzer commenced its 100th year of operations in 2006.