-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JQJeHjiDKVBOyy2NCA7Ex1qESCH0ldHpFicp9Z7USo5gw1lXEsGLMFNirWBqzUIH fCfrOAJC6EimPIkpM81gvA== 0001157523-06-010964.txt : 20061107 0001157523-06-010964.hdr.sgml : 20061107 20061107083018 ACCESSION NUMBER: 0001157523-06-010964 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20061106 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20061107 DATE AS OF CHANGE: 20061107 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SCHNITZER STEEL INDUSTRIES INC CENTRAL INDEX KEY: 0000912603 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-MISC DURABLE GOODS [5090] IRS NUMBER: 930341923 STATE OF INCORPORATION: OR FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-22496 FILM NUMBER: 061192078 BUSINESS ADDRESS: STREET 1: 3200 NW YEON AVE STREET 2: P O BOX 10047 CITY: PORTLAND STATE: OR ZIP: 97210-0047 BUSINESS PHONE: 5032249900 MAIL ADDRESS: STREET 1: P O BOX 10047 CITY: PORTLAND STATE: OR ZIP: 97210 8-K 1 a5266922.txt SCHNITZER STEEL INDUSTRIES, 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported): November 6, 2006 Schnitzer Steel Industries, Inc. (Exact Name of Registrant as Specified in Its Charter) Oregon 0-22496 93-0341923 ------ ------- ---------- (State or Other Jurisdiction of (Commission File Number) (IRS Employer Incorporation) Identification No.) 3200 N.W. Yeon Ave. P.O. Box 10047 Portland, OR 97296-0047 ------------ ---------- (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number Including Area Code: (503) 224-9900 NO CHANGE (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [_] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [_] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [_] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02 Results of Operations and Financial Condition On November 7, 2006, Schnitzer Steel Industries, Inc. (the "Company") issued a press release announcing financial results for the fiscal quarter and fiscal year ended August 31, 2006. A copy of this press release is being furnished as Exhibit 99.1 to this report on Form 8-K. Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers On November 6, 2006, Tamara L. Lundgren was elected Executive Vice President and Chief Operating Officer of the Company. Ms. Lundgren, 49, joined the Company in September 2005 as Vice President and Chief Strategy Officer and became Executive Vice President, Strategy and Investments in April 2006. Prior to joining the Company, Ms. Lundgren was an investment banker, most recently as a Managing Director at JPMorgan Chase, which she joined in 2001. From 1996 until 2001, Ms. Lundgren was a Managing Director at Deutsche Bank AG in New York and London. Prior to joining Deutsche Bank, Ms. Lundgren was a partner at the law firm of Hogan & Hartson, LLP in Washington, D.C. The Employment Agreement and Change in Control Severance Agreement entered into by the Company and Ms. Lundgren on April 10, 2006, remain in effect. Summaries of the agreements can be found in Item 1.01 of the Company's Current Report on Form 8-K filed on April 12, 2006 and are incorporated herein by reference. The summaries are qualified in their entirety by reference to the actual agreements, which are filed as exhibits to this report on Form 8-K. Item 9.01 Financial Statements and Exhibits (d) Exhibits 10.1 Employment Agreement between Tamara L. Lundgren and Schnitzer Steel Industries, Inc. Filed as Exhibit 10.1 to the Company's Current Report on Form 8-K, filed on April 12, 2006 and incorporated herein by reference. 10.2 Change in Control Severance Agreement between Tamara L. Lundgren and Schnitzer Steel Industries, Inc. Filed as Exhibit 10.2 to the Company's Current Report on Form 8-K, filed on April 12, 2006 and incorporated herein by reference. 99.1 Press Release of Schnitzer Steel Industries, Inc. issued on November 7, 2006. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Schnitzer Steel Industries, Inc. (Registrant) Dated: November 7, 2006 By: /s/Gregory J. Witherspoon -------------------------- Name: Gregory J. Witherspoon Title: Chief Financial Officer Exhibit Index Exhibit No. Description - ----------- ----------- 10.1 Employment Agreement between Tamara L. Lundgren and Schnitzer Steel Industries, Inc. Filed as Exhibit 10.1 to the Company's Current Report on Form 8-K, filed on April 12, 2006 and incorporated herein by reference. 10.2 Change in Control Severance Agreement between Tamara L. Lundgren and Schnitzer Steel Industries, Inc. Filed as Exhibit 10.2 to the Company's Current Report on Form 8-K, filed on April 12, 2006 and incorporated herein by reference. 99.1 Press Release of Schnitzer Steel Industries, Inc. issued on November 7, 2006. EX-99.1 2 a5266922ex99_1.txt SCHNITZER STEEL INDUSTRIES, EXHIBIT 99.1 Exhibit 99.1 Schnitzer Steel Reports Record Quarterly Results Company Announces Increased Share Repurchase Authority PORTLAND, Ore.--(BUSINESS WIRE)--Nov. 7, 2006--Schnitzer Steel Industries, Inc. (Nasdaq:SCHN) today reported record quarterly net income for the fiscal 2006 fourth quarter ended August 31, 2006 of $50 million, or $1.62 per diluted share. During the quarter, the Company finalized the purchase accounting for the separation of its joint ventures with Hugo Neu Corporation and as a result, net income was increased by the recognition of an additional gain of $1 million (after tax). Excluding the additional gain, net income for the quarter was a record $49 million, or $1.58 per diluted share. Revenues of $605 million and operating income of $77 million were also quarterly records. For the year ended August 31, 2006 the Company reported net income of $143 million, or $4.65 per diluted share. Included in year-to-date net income was a gain of $35 million (after tax) related to the disposition of the Hugo Neu joint venture assets. Net income was also 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. (in millions, except per- Fourth Fourth Third share data) Quarter Quarter Quarter Fiscal Fiscal 2006 2005 2006 2006 2005 - ---------------------------------------------------------------------- Revenues $ 605 $ 196 $ 506 $1,855 $ 853 - ---------------------------------------------------------------------- Net Income $ 50 $ 34 $ 30 $ 143 $ 147 - ---------------------------------------------------------------------- Diluted EPS $1.62 $1.11 $0.98 $ 4.65 $4.72 - ---------------------------------------------------------------------- Gain on Asset Disposition (net of tax) $ 1 -- -- $ 35 -- - ---------------------------------------------------------------------- Charge for Investigation Reserve -- -- ($ 4) ($15) -- - ---------------------------------------------------------------------- Net Income excluding Gain on Asset Disposition and Charge for Investigation Reserve $ 49 $ 34 $ 34 $ 122 $ 147 - ---------------------------------------------------------------------- Diluted EPS excluding Gain on Asset Disposition and Charge for Investigation Reserve $1.58 $1.11 $1.11 $ 3.97 $4.72 - ---------------------------------------------------------------------- Share Repurchase: The Company announced today that its 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 timing and amount of the repurchases will be determined at the discretion of the Company's management 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. "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." Metals Recycling Business The Metals Recycling segment continues to benefit from strong worldwide fundamentals for scrap metal producers and improved operating efficiencies as it posted its third consecutive quarterly increase in operating income. ($ in millions, except selling prices; ferrous volume in thousand long tons, non- ferrous volumes Fourth Fourth Third in million Quarter Quarter Quarter Fiscal Fiscal pounds) 2006 2005 2006 2006 2005 - ---------------------------------------------------------------------- Total Revenues $ 487 $ 117 $ 383 $ 1,407 $ 580 - ---------------------------------------------------------------------- Ferrous Revenues $ 387 $ 97 $ 297 $ 1,132 $ 488 - ---------------------------------------------------------------------- Ferrous Volumes (Processing/ Trading) 942/459 418/-- 886/351 3,289/1,272 1,865/-- - ---------------------------------------------------------------------- Avg. Net Ferrous Sales Prices ($/LT)(1) (Processing/ Trading) $243/253 $211/-- $210/222 $ 215/226 $ 230/-- - ---------------------------------------------------------------------- Non-Ferrous Volumes 87 32 92 301 126 - ---------------------------------------------------------------------- Avg. Net Non- Ferrous Sales Prices ($/LB)(1) $ 1.08 $ .58 $ .92 $ .87 $ .56 - ---------------------------------------------------------------------- Operating Income $ 60 $ 22 $ 33 $ 128 $ 112 - ---------------------------------------------------------------------- (1) Sales prices are shown net of freight Revenues from the Metals Recycling Business increased 27% over the third quarter of fiscal 2006. The increase was a result of higher ferrous sales volumes and higher sales prices for ferrous and nonferrous materials. The worldwide markets for scrap metal strengthened during the quarter, and export prices rose more quickly than domestic prices. Operating income improved 84% from the third quarter due to higher shipping volumes, higher ferrous and nonferrous selling prices and lower unit processing costs. The Company also recognized approximately $8 million in income from the reassessment of inventory values at its Tacoma and Portland facilities. The Company estimates the value of recycled metal in cost of goods sold based on a number of assumptions, which can be evaluated when scrap piles are reduced to minimal levels due to sales activity. When actual levels differ from estimates, the inventory is revalued and any change flows directly into operating income. Revenues and operating income in the Global Trading business increased significantly from the third quarter due to higher shipping volumes and higher average prices. Auto Parts Business The Auto Parts Business reported record quarterly operating income. ($ in millions, except Fourth Fourth Third locations) Quarter Quarter Quarter Fiscal Fiscal 2006 2005 2006 2006 2005 - ---------------------------------------------------------------------- Revenues $64 $29 $58 $218 $108 - ---------------------------------------------------------------------- Operating Income $ 9 $ 6 $ 8 $ 28 $ 28 - ---------------------------------------------------------------------- Locations (end of quarter) 51 30 50 51 30 - ---------------------------------------------------------------------- Revenues for the Auto Parts Business increased slightly over the seasonally stronger third quarter due to the impact of recently converted self-service stores, higher prices for scrapped cars and improved full-service revenue. Fourth quarter operating income increased 18% from the third quarter's primarily due to higher overall revenues and wider margins from the full-service operation and from the sale of cores and scrapped cars. The full service operation recorded its second consecutive quarter of profitability as the Company's initiatives to integrate its operations continued ahead of schedule. Steel Manufacturing Business The Steel Manufacturing Business completed a record year for operating income with its fourth consecutive record quarter. ($ in millions, except Fourth Fourth Third selling prices; volume Quarter Quarter Quarter Fiscal Fiscal in thousand tons) 2006 2005 2006 2006 2005 - ---------------------------------------------------------------------- Revenues $104 $ 87 $104 $387 $315 - ---------------------------------------------------------------------- Avg. Net Sales Prices ($/T) $548 $493 $523 $528 $512 - ---------------------------------------------------------------------- Sales Volume 181 170 190 703 593 - ---------------------------------------------------------------------- Operating Income $ 21 $ 11 $ 21 $ 75 $ 43 - ---------------------------------------------------------------------- Revenues for the Steel Manufacturing Business approximated the third quarter of fiscal 2006 as record selling prices were offset by slightly lower production and sales volumes. On a year-over-year basis, revenues rose 19% compared to the fourth quarter of fiscal 2005 due to higher prices and sales volumes. The West Coast market for long steel products remained strong. Operating income approximated the record levels of the third quarter and was 91% higher than in the same period last year. Higher net sales prices more than offset higher purchase costs for scrap metal and lower volumes, resulting in margins which were up slightly from the third quarter. Outlook The Company said the factors that will affect its results in the first quarter of fiscal 2007 include: Metals Recycling Business: Pricing. The export markets are expected to remain strong, but volatile. Based on sales booked to date and the Company's current view of the market, average net selling prices are expected to be $10-$20 per ton lower than the near-record prices received in the fourth quarter. In addition, the average prices obtained for nonferrous materials are expected to be 15-20% lower than fourth quarter prices, resulting in lower margins from nonferrous materials obtained through the Company's shredding operations. Sales volumes. Ferrous scrap volumes in the domestic processing business are expected approximate the fourth quarter. First quarter shipments from the Boston facility originally planned for the fourth quarter are expected to offset lower volumes due to the shutdown of the Oakland shredder and the timing of Portland and Tacoma shipments which occurred late in the fourth quarter. Based on sales booked to date, ferrous processing sales volumes in the first quarter are currently expected to be between 900 and 950 thousand tons. The lower volume of material being processed through the Company's shredders will also result in a 10-15% reduction in overall nonferrous volumes. Margins. The shutdown of the Oakland facility will contribute to higher processing costs and lower overall West Coast volumes, which typically carry higher margins than sales in other regions. These factors, along with lower overall market prices, are expected to result in margins during the first quarter which are significantly lower than fourth quarter margins, which also benefited from positive adjustments to inventory valuations. A number of these factors are expected to be temporary in nature and are not expected to have the same impact on margins during the remainder of fiscal 2007. In addition, first quarter margins are expected to be improved over the first quarter of fiscal 2006. Auto Parts Business: Revenues. Revenues are expected to decline slightly from the fourth quarter of fiscal 2006 as lower prices for cores and scrapped cars offset normal seasonal improvements in retail parts sales and admissions revenues. Compared to the first quarter of fiscal 2006, revenues are expected to be higher due to improved revenues from the full-service operation, higher prices for cores and scrapped cars and the impact of the self-service conversion stores. Margins. Margins in the first quarter are expected to improve slightly from the fourth quarter due to higher same store retail sales, improved results at the self-service conversion stores and a lower average inventory cost for purchased autos than during the fourth quarter of fiscal 2006. The integration of the GreenLeaf operation resulted in the conversion of one additional full-service location to a self-service store in October 2006, bringing the number of self-service stores to 35. Margins on the five conversion stores will continue to lag the existing self-service stores until such time as they become established in the markets in which they operate. The full-service operation is expected to be profitable for the third consecutive quarter. Steel Manufacturing Business: Pricing. The Company 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. Sales Volumes. 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 today 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 Chief Executive Officer. Fourth Quarter 2006 Conference Call A conference call to discuss results will be held today, November 7, 2006, at 11:30 a.m. EDT, hosted by John Carter, President and Chief Executive Officer, and Greg Witherspoon, Chief Financial Officer. The call will be webcast and is accessible on Schnitzer Steel's web site at www.schnitzersteel.com. Schnitzer Steel Industries, Inc. 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 produces finished steel products, including rebar, wire rod and other specialty products. The Company commenced its 100th year of operations in 2006. This news release includes four non-GAAP financial measures: net income and net income per diluted share excluding a gain on disposition of joint venture assets and net income and net income per diluted share excluding a gain on disposition of joint venture assets and charge for investigation reserve. Management believes that by excluding the impact of the gain and the charge for the investigation reserve, these measures allow for better comparisons to prior periods and provide a better insight into the Company's operating performance. This news release, particularly the "Outlook" section, contains forward-looking statements, within the meaning of Section 21E of the Securities Exchange Act of 1934, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, without limitation, statements regarding the Company's outlook for the business and statements as to expected pricing, sales volume, margins and operating income, and such statements can be identified generally because they contain "expect," "believe," "anticipate," "estimate" and other words that convey a similar meaning. One can also identify these statements as statements that do not relate strictly to historical or current facts. Examples of factors affecting the Company that could cause actual results to differ materially from those included in, or implied by, such forward-looking statements,are the following: volatile supply and demand conditions affecting prices and volumes in the markets for both the Company's products and raw materials it purchases; world economic conditions; world political conditions; changes in federal and state income tax laws; impact of pending or new laws and regulations regarding imports and exports into the United States and other foreign countries; foreign currency fluctuations; competition; seasonality, including weather; energy supplies; freight rates; loss of key personnel; business integration issues relating to acquisitions of businesses; the Company's ability to successfully implement its compliance program; the market price for the Company's common stock; and business disruptions resulting from installation or replacement of major capital assets, as discussed in more detail under the heading "Factors That Could Affect Future Results" in the Company's most recent annual report on Form 10-K or quarterly report on Form 10-Q. One should understand that it is not possible to predict or identify all factors that could cause actual results to differ from the Company's forward-looking statements. Consequently, the reader should not consider any such list to be a complete statement of all potential risks or uncertainties. The Company does not assume any obligation to update any forward-looking statement. For more information about Schnitzer Steel Industries, Inc. go to www.schnitzersteel.com. SCHNITZER STEEL INDUSTRIES, INC. FINANCIAL HIGHLIGHTS (in thousands, except per share amounts) (Unaudited) For the Three Months For the Twelve Months Ended Ended --------------------- ----------------------- August 31, August 31, August 31, August 31, 2006 2005 2006 2005 ---------- ---------- ------------ ---------- REVENUES: Metals Recycling Business: Ferrous sales: Processing $258,738 $ 96,883 $ 801,223 $ 488,206 Trading 128,697 330,296 Nonferrous sales 95,989 18,710 266,421 70,747 Other sales 3,816 1,386 8,843 21,194 ---------- ---------- ------------ ---------- Total sales 487,240 116,979 1,406,783 580,147 Auto Parts Business 63,989 28,994 218,130 107,808 Steel Manufacturing Business 103,867 87,283 386,610 315,476 Intercompany sales eliminations (50,467) (37,576) (156,808) (150,353) ---------- ---------- ------------ ---------- Total $604,629 $195,680 $ 1,854,715 $ 853,078 ========== ========== ============ ========== INCOME (LOSS) FROM OPERATIONS: Metals Recycling Business: Processing $ 59,556 $ 18,717 $ 125,559 $ 111,702 Trading 2,093 2,130 Auto Parts Business 9,195 6,036 28,334 28,080 Steel Manufacturing Business 21,424 11,135 74,791 42,661 Joint ventures 21,809 69,630 Corporate expense (14,420) (6,324) (55,693) (20,817) Intercompany eliminations (1,201) 1,808 (57) (185) ---------- ---------- ------------ ---------- Total $ 76,647 $ 53,181 $ 175,064 $ 231,071 ========== ========== ============ ========== NET INCOME $ 50,215 $ 34,442 $ 143,068 $ 146,867 ========== ========== ============ ========== BASIC EARNINGS PER SHARE $ 1.63 $ 1.13 $ 4.68 $ 4.83 ========== ========== ============ ========== DILUTED EARNINGS PER SHARE $ 1.62 $ 1.11 $ 4.65 $ 4.72 ========== ========== ============ ========== SHARE INFORMATION (THOUSANDS): Basic shares outstanding 30,754 30,473 30,597 30,427 ========== ========== ============ ========== Diluted shares outstanding 30,927 31,012 30,796 31,096 ========== ========== ============ ========== SCHNITZER STEEL INDUSTRIES, INC. CONSOLIDATED STATEMENT OF INCOME (in thousands, except per share amounts) (Unaudited) For the Three Months For the Twelve Months Ended Ended ----------------------- ----------------------- August 31, August 31, August 31, August 31, 2006 2005 2006 2005 ----------- ----------- ----------- ----------- Revenues $604,629 $195,680 $1,854,715 $853,078 ----------- ----------- ----------- ----------- Cost of goods sold 485,818 147,570 1,526,990 621,583 Environmental matter 11,951 Selling, general and administrative 43,655 16,737 156,862 58,103 ----------- ----------- ----------- ----------- Income from wholly- owned operations 75,156 31,373 170,863 161,441 Operating income from joint ventures 1,491 21,809 4,201 69,630 ----------- ----------- ----------- ----------- Operating income 76,647 53,182 175,064 231,071 Other income (expense): Interest expense (1,635) (107) (3,498) (847) Other income (expense), net 1,994 122 60,123 662 ----------- ----------- ----------- ----------- 359 15 56,625 (185) ----------- ----------- ----------- ----------- Income before income taxes and minority interests 77,006 53,197 231,689 230,886 Income tax provision (26,171) (18,265) (86,871) (81,522) ----------- ----------- ----------- ----------- Income before minority interests 50,835 34,932 144,818 149,364 Minority interests, net of tax (620) (490) (1,934) (2,497) Pre-acquisition interests, net of tax 184 ----------- ----------- ----------- ----------- Net income $ 50,215 $ 34,442 $ 143,068 $146,867 =========== =========== =========== =========== Basic earnings per share $ 1.63 $ 1.13 $ 4.68 $ 4.83 =========== =========== =========== =========== Diluted earnings per share $ 1.62 $ 1.11 $ 4.65 $ 4.72 =========== =========== =========== =========== Schnitzer Steel Industries, Inc. Selected Operating Statistics (Unaudited) Total Q1 FY06 Q2 FY06 Q3 FY06 Q4 FY06 FY06 -------- ---------- ---------- ---------- ---------- Metals Recycling Business Ferrous Recycled Metal Sales Prices ($/LT)(1) Domestic $207 $203 $215 $238 $217 Exports 204 196 206 245 214 Total Processing 205 198 210 243 215 Trading 216 178 222 253 226 Ferrous Processing Sales Volume (LT)(2)(3) Cascade 154,146 147,986 174,833 190,971 667,936 Domestic 58,343 158,177 176,339 130,164 523,023 Export 336,712 605,386 534,966 621,182 2,098,246 ---------------------------------------------------- Total Processed 549,201 911,549 886,138 942,317 3,289,205 ---------------------------------------------------- Ferrous Trading Sales Volume (LT)(3) Trading 306,716 154,387 351,173 459,323 1,271,599 ---------------------------------------------------- Total Ferrous Sales Volume (LT)(2)(3) 855,917 1,065,936 1,237,311 1,401,640 4,560,804 ==================================================== Nonferrous Sales Volume (pounds, in thousands)(3) 50,035 71,800 91,610 87,838 301,283 Steel Manufacturing Business Sales Prices ($/NT)(1)(2) Average $517 $522 $523 $548 $528 Sales Volume (NT) Rebar 98,101 89,114 103,623 98,765 389,603 Coiled Products 48,716 57,061 66,093 61,504 233,374 Merchant Bar and Other 19,241 18,540 20,783 21,188 79,752 ---------------------------------------------------- Total 166,058 164,715 190,499 181,457 702,729 ==================================================== Auto Parts Business Number of self- service locations at end of quarter 30 31 32 34 34 Number of full- service sites at end of quarter (4) 19 18 18 17 17 Q1 FY05 Q2 FY05 Q3 FY05 Q4 FY05 FY05 -------- -------- -------- -------- ---------- Metals Recycling Business Ferrous Recycled Metal Sales Prices ($/LT)(1) Domestic $228 $229 $222 $206 $217 Exports 245 247 237 216 238 Total Processing 236 240 231 211 230 Trading - - - - - Ferrous Processing Sales Volume (LT)(2)(3) Cascade 159,463 110,033 189,559 166,268 625,323 Domestic 16,500 9,440 16,903 21,986 64,829 Export 294,900 356,607 293,746 229,921 1,175,174 ------------------------------------------------ Total Processed 470,863 476,080 500,208 418,175 1,865,326 ------------------------------------------------ Ferrous Trading Sales Volume (LT)(3) Trading - - - - - ------------------------------------------------ Total Ferrous Sales Volume (LT)(2)(3) 470,863 476,080 500,208 418,175 1,865,326 ================================================ Nonferrous Sales Volume (pounds, in thousands)(3) 29,368 30,932 33,600 31,843 125,743 Steel Manufacturing Business Sales Prices ($/NT)(1)(2) Average $534 $517 $510 $493 $512 Sales Volume (NT) Rebar 55,956 62,302 103,973 93,331 315,562 Coiled Products 56,679 50,391 51,579 57,306 215,955 Merchant Bar and Other 13,703 11,957 16,349 19,161 61,170 ------------------------------------------------ Total 126,338 124,650 171,901 169,798 592,687 ================================================ Auto Parts Business Number of self- service locations at end of quarter 26 30 30 30 NA Number of full- service sites at end of quarter (4) - - - - NA (1) Price information is shown after a reduction for the cost of freight incurred to deliver the product to the customer. (2) Includes sales to the Steel Manufacturing Business for all quarters. (3) The Company elected to consolidate results of the businesses formed from the Hugo Neu Corporation separation agreement and Regional Recycling as though the transactions had occurred at the beginning of the fiscal year. (4) Reflects the addition of Greenleaf Auto Recyclers to the Auto Parts Business in the first quarter of 2006. CONTACT: Schnitzer Steel Industries, Inc. Investor Relations: Rob Stone, 503-224-9900 Press Relations: Tom Zelenka, 503-323-2821 www.schnitzersteel.com ir@schn.com -----END PRIVACY-ENHANCED MESSAGE-----