Schnitzer Steel Industries, Inc. reported net income of $34.4 million on revenues of $195.7 million for the fourth quarter, and record net income of $146.9 million on revenues of $853.1 million for the fiscal year ended August 31, 2005.

Fourth Quarter Results — Net income of $34.4 million ($1.11 per diluted share) compares to net income of $37.9 million ($1.22 per diluted share) for the fourth quarter of fiscal 2004. Revenues of $195.7 million compare to revenues of $204.5 million for the same quarter last year.

Fiscal Year Results — Record net income of $146.9 million ($4.72 per diluted share) compares to net income of $111.2 million ($3.58 per diluted share) for fiscal 2004. Revenues of $853.1 million compare to revenues of $688.2 million for fiscal 2004.

Comments — "Schnitzer Steel completed another strong quarter that resulted in a record year for earnings and revenues not only for the company as a whole, but also for each of our three business segments," said John D. Carter, President and CEO. "We continue to see good demand for all our products and remain optimistic regarding the fundamentals underpinning our businesses."

"We feel that our recent transactions to grow Schnitzer will position it well for the positive market conditions we anticipate in 2006. We are pleased with the initial progress in integrating the businesses that we acquired through the separation of our joint ventures with Hugo Neu. We will further strengthen the recently acquired New England metals recycling operation when we acquire the minority interests in the Rhode Island business. Finally, we believe our Greenleaf acquisition will enable a significant expansion of our Pick-N-Pull Auto Parts Business in a region where supplies are growing," added Mr. Carter.

Commenting on the fourth quarter's results, Mr. Carter said, "We are pleased with our strong performance. In particular, we are pleased with the strong margins our wholly-owned metals recycling business has consistently produced despite volatile pricing conditions. The sales volumes in our wholly-owned scrap business were below our average quarterly run rate; this reflects low inventory levels in our yards, driven in part by necessary operational adjustments while we carry out our capital investment program and install new equipment."

"As we anticipated, our Steel Manufacturing Business saw average selling prices decline from the levels reported in the fiscal third quarter of 2005, but as the fourth quarter ended we saw market prices rising that should benefit our company in the first quarter of 2006," Carter continued. "Finally, as we expected, our Auto Parts Business experienced margin compression in the recent quarter, which resulted from the combination of higher cost inventory coupled with lower prices received on the sale of auto-bodies and other ferrous metal."

Outlook — Prices for ferrous recycled metal remained volatile during the fourth quarter of fiscal 2005. Early in the quarter export prices declined, but firmed and rose throughout August and into early September. The company's Metals Recycling Business traditionally takes ferrous export orders 60 to 90 days ahead of shipment, which tends to provide management with the ability to adjust its buying prices to minimize the margin impact of changing selling prices. Based upon the previously wholly-owned Metals Recycling Businesses' current order backlog, contracted average net selling prices that are anticipated to be shipped in the first fiscal quarter of 2006 should approximate the levels in the fourth quarter of fiscal 2005. Ocean freight rates are expected to rise modestly from the fourth quarter level, but be approximately 15% to 20% below the rates reported in the first quarter of fiscal 2005.

Sales volumes from the company's West Coast based business should approximate 450,000 to 475,000 tons of ferrous metal. The processing businesses received as part of the joint venture separation will be adversely affected by the temporary shut-down of the shredder in Rhode Island and low inventory levels, resulting in unusually low ferrous sales volume.

The self-service portion of the Auto Parts Business generally experiences modest seasonal increases in retail demand in the fall months due to moderating weather conditions increasing customer admissions. For the first quarter of 2006, wholesale revenues are anticipated to rise due to favorable pricing for auto-bodies and other unprocessed recycled metal. Over the last few quarters the business has incurred increasing costs to procure automobile inventories due to rising ferrous metal prices. This trend is anticipated to continue into the first quarter of fiscal 2006. The stores acquired as part of the Greenleaf acquisition are anticipated to generate a modest loss in the first quarter as the integration and transition process begins.

West Coast consumption of finished steel long products remains strong and the Steel Manufacturing Business continues to experience good overall demand. Effective September 8, 2005, the company announced a $45 per ton price increase for rebar and merchant bar products, which was in reaction to rising scrap metal prices and increases from other West Coast competitors. In addition, in late September the company announced a further price increase on rebar and merchant bar products of $20 per ton that took effect on October 3, 2005. The announced price increases are anticipated to result in modestly higher average selling prices for the first quarter of fiscal 2006 as compared to the fourth quarter of fiscal 2005. This increase in average selling prices is anticipated to be partially offset by a modest seasonal decline in sales volume and higher ferrous metal purchase prices.

Schnitzer estimates the effective tax rate for the first quarter of fiscal 2006 will be approximately 36%.

Schnitzer Steel Industries is one of the nation's largest recyclers of ferrous metals, a used auto parts retailer with more than 50 locations across the U.S. and in Canada, and a manufacturer of finished steel products. The company has a significant metals presence on both the West Coast and Northeastern seaboard, as well as a trading business that principally sells recycled metal products in foreign markets. In addition, the company's steel mill — Cascade Steel Rolling Mills — has an annual production capacity of approximately 700,000 tons of finished steel products.