Jan. 12, 2006 — Schnitzer Steel Industries, Inc. reported net income of $42 million on revenues of $389 million for the fiscal 2006 first quarter ended November 30, 2005.

The $42 million ($1.34 per diluted share) net income included a gain of $34 million (after tax) related to the disposition of joint venture assets under the agreement between Schnitzer and Hugo Neu for the termination of their joint ventures. Net income was also reduced by an $11 million charge relating to a reserve taken by the company for the estimated amount to settle the ongoing SEC and Department of Justice investigations into the company's past payment practices in Asia. Excluding this gain and charge, net income would be $19 million ($0.61 per diluted share).

"We are moving closer to completion of the investigation of past payment practices in Asia, and we continue to fully cooperate with the DOJ and the SEC," said John D. Carter, President and CEO. "While the DOJ and SEC investigations are not complete, we now believe the penalties and disgorgement which will be imposed by the DOJ and the SEC will be within a range of $11 to $15 million. In the first fiscal quarter, the company established a reserve totaling $11 million in connection with the amount of penalties and disgorgement we estimate will be imposed. We do not have a definitive time table for closing the investigation, and will provide an update when further information is available.

"Schnitzer Steel began its 100th year of operation with another solid quarter. The positive long-term fundamentals supporting all our business segments remain intact. We are currently working though a number of short-term steps to integrate our newly acquired businesses and build a foundation for the future, and we continue to look to that future with great optimism.

"During the first quarter, we completed several transactions that nearly doubled our revenues. We also continued on a major capital spending program to upgrade and replace infrastructure and equipment across the company. The acquisitions and capital improvements are expected to provide long-term benefits, although we continue to expect they will result in some short-term disruption to our operations," said Carter.

Commenting on the first quarter's results, Mr. Carter said, "Overall, the Metals Recycling Business was impacted by a number of short term factors that reduced sales volume and margins, and as a result, earnings did not reflect what we would consider a normalized state of operations. On the West Coast, sales volume was down significantly due to the timing of several shipments which slipped into the second quarter. On the East Coast, as we stated in our prior guidance, volume at our New England processing facilities was impacted by the scheduled shutdown of our Rhode Island shredder and low beginning inventory levels. Processing costs and margins in New England were also negatively impacted by the low volume of materials. In addition, overall selling prices for ferrous metal showed a modest decline from the fourth quarter as Asian export markets remained unsettled.

"Our Steel Manufacturing Business had record quarterly earnings driven by continued strong West Coast demand for steel products. The Auto Parts Business had a solid quarter, reporting improved earnings over the fourth quarter, primarily due to an increase in retail and core sales at our Pick-N-Pull self-service stores."

A vertically integrated business, Schnitzer Steel Industries, Inc. is one of the nation's largest recyclers of ferrous metals with a significant presence on the U.S. West Coast, the Northeastern seaboard and the Southeast as well as a trading business that sources scrap and sells recycled metals products in foreign markets. The company also owns and operates at approximately 50 used auto parts locations that participate in the self-service and full-service used auto parts business across the U.S. and in western Canada and is a manufacturer of finished steel — Cascade Steel Rolling Mills — with a production capacity of approximately 700,000 tons of finished steel annually.