Nov. 16, 2006 — Schnitzer Steel Industries, Inc. reported record quarterly net income of $50 million on revenues of $605 million for the fiscal 2006 fourth quarter, and net income of $143 million for the fiscal year ended August 31, 2006.

Fourth Quarter Results—The $50 million net income ($1.62 per diluted share) reflects a gain of $1 million (after tax) related to finalization of purchase accounting for the separation of its joint ventures with Hugo Neu Corp. Excluding the additional gain, net income for the quarter was a record $49 million ($1.58 per diluted share). Revenues of $605 million and operating income of $77 million were also quarterly records.

Full Year Results—Net income of $143 million ($4.65 per diluted share) reflects a gain of $35 million (after tax) related to the disposition of the Hugo Neu joint venture assets. Net income was reduced by a charge of $15 million relating to a reserve taken by the company for the estimated settlement of the 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, fiscal 2006 net income was $122 million, or $3.97 per diluted share.

Share Repurchase—The company’s Board of Directors has approved the repurchase of up to 4.7 million shares, or 15% of the total shares outstanding. The company had 1.7 million shares remaining under previous Board approvals. The Board has increased that authority by 3.0 million shares. The company's management will determine the timing and amount of repurchases based on a number of factors, including the availability of capital, other capital allocation alternatives and market conditions for the company's common stock. The share repurchase program does not require the company to acquire any specific number of shares, may be suspended, extended or terminated by the company at any time without prior notice and may be executed through open market purchases or privately negotiated transactions or utilizing Rule 10b5-1 programs.

Management Comments—"2006 was a transformational year for Schnitzer Steel as we closed and substantially completed the integration of several acquisitions which significantly increased the company's size and geographic presence," said John Carter, President and CEO. "We also made good progress on several major capital improvement projects designed to improve our long-term competitiveness. We continued our 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. We are pleased with our results for the year and are optimistic about the outlook for 2007."

Commenting on the share repurchase program, Mr. Carter said, "We believe the company continues to have attractive opportunities to create value for our shareholders by reinvesting capital in improvements to our equipment and infrastructure and through disciplined acquisitions in the Metals Recycling and Auto Parts Businesses. Our strong operating cash flows and balance sheet provide us with the flexibility to continue these initiatives while returning capital to our shareholders through the repurchase of outstanding shares."

Turning to the company's strong fourth quarter results, Mr. Carter said, "We achieved record net income due to impressive performance by all of our business segments. The Metals Recycling Business had another substantial quarter over quarter increase in operating income due to an increase in sales volumes, higher prices for both ferrous and nonferrous metal and improved productivity. Export selling prices outpaced the rise in domestic ferrous prices, which resulted in a widening of margins."

"Our Steel Manufacturing Business ended a record year by continuing to benefit from strong West Coast demand for steel products and productivity improvements at the mill. Our Auto Parts Business posted record quarterly operating income due to improved performance at our recently acquired full-service operation as well as higher retail and wholesale sales."

Steel Manufacturing Business Outlook—The company says it continues to see good demand for all its products despite some slowing in the residential construction market on the West Coast. Even with significant on-going competition from imports, the company expects average prices for the first quarter to remain strong and decline only $10-$15 from the record prices in the recently completed fourth quarter. Prices are also expected to be higher than the $517/ton average in the first quarter of 2006.

The company continues to see good demand for finished steel products, but believes slightly softer demand will impact product delivered. As a result, first quarter sales volumes are expected to be higher than the 166,000 tons shipped in the first quarter of 2006 and lower than the 181,000 tons shipped during the fourth quarter.

Executive Appointment—The company announced the appointment of Tamara Adler Lundgren to the position of Executive Vice President and Chief Operating Officer. Ms. Lundgren joined the company in September 2005 and most recently held the position of Executive Vice President, Strategy and Investments. Prior to joining the company, she was an investment banker. In her new role, Ms. Lundgren will be responsible for the day to day operations of the company and continue to report to John D. Carter, President and CEO.

Schnitzer Steel Industries is one of the largest manufacturers and exporters of recycled ferrous metal 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. The company's vertically integrated operating platform also includes its auto parts and steel manufacturing businesses. The company's auto parts business sells used auto parts through its 35 self-service facilities and 17 full service facilities located in 14 states and in western Canada. With an annual production capacity of 700,000 tons, the company's steel manufacturing business—Cascade Steel Rolling Mills—produces finished steel products, including rebar, wire rod and other specialty products. The company commenced its 100th year of operations in 2006.