PORTLAND, Ore.--(BUSINESS WIRE)--October 28, 2008--Schnitzer Steel Industries, Inc. (Nasdaq:SCHN) today reported record net income of $126 million, or $4.38 per diluted share, for the fiscal fourth quarter ended August 31, 2008. Revenues of $1.3 billion were also a record, marking the first time that quarterly revenues exceeded one billion dollars. Compared to the fourth quarter of fiscal 2007, diluted earnings per share increased 242%.

For the fiscal year, the Company reported record net income of $249 million, or $8.61 per diluted share. Consolidated revenues of $3.6 billion were also a record. Compared to the prior year, revenues increased 42%, while diluted earnings per share increased 99%.

(in millions, except per-share data)	Fourth Quarter 2008		Fourth Quarter 2007		Third Quarter 2008		Fiscal 2008		Fiscal 2007
Revenues	$	1,314	$	749	$	972	$	3,642	$	2,572
Operating Income	$	200	$	63	$	102	$	402	$	214
Net Income	$	126	$	38	$	62	$	249	$	131
Diluted EPS	$	4.38	$	1.28	$	2.14	$	8.61	$	4.32

“The fourth quarter proved to be a very successful end to another outstanding year for Schnitzer Steel,” said John Carter, President and CEO. “We turned in a strong operating performance and continued to invest in technology and infrastructure to prepare our Company for future growth. Our operating platform and deep water port facilities allowed us to maximize the benefits from the robust markets in which we operated during the year, leading to record net income and strong operating cash flows. I’d like to thank all of our 3700 employees for their hard work in delivering these record quarterly and annual financial results.”

“As we enter a new fiscal year, there is no question that the near-term market environment has changed. While we continue to be optimistic about the long-term forecasted growth in steel consumption around the world and the demand for recycled metals, the markets in the early part of fiscal 2009 have significantly weakened, and it is uncertain when we might see improvements. We believe, however, that our strong balance sheet, positive cash flows and many of the actions we have taken which contributed to an outstanding 2008 will serve us well in this challenging environment.”

“During the year, we increased our focus on our continuous improvement program, continued to make capital investments in technology that provided greater recovery of nonferrous materials and improved operating efficiencies, and again delivered higher asset utilization and production volumes,” continued Tamara Lundgren, Executive Vice President and COO. “In addition, our global market visibility allowed us to maximize the benefits from rising markets and react swiftly to reduce our buy prices in the face of rapidly slowing worldwide demand. This allowed us to partially mitigate the impact of the significant decline in prices which occurred late in the fourth quarter and, along with our actions to adjust our production to match lower current demand, should help to maintain strong metal spreads and contribute to positive operating cash flow in the first fiscal quarter of 2009.”

The Metals Recycling Business continued to utilize its bi-coastal export platform to take advantage of robust overseas markets for recycled metals.

($ in millions, except selling prices; ferrous volume in thousands of long tons, non-ferrous volumes in millions of pounds)	Fourth Quarter 2008		Fourth Quarter 2007		Third Quarter 2008		Fiscal 2008		Fiscal 2007
Total Revenues	$	1,174	$	616	$	810	$	3,063	$	2,089
Ferrous Revenues	$	1,038	$	501	$	668	$	2,591	$	1,682
Ferrous Volumes (Processing/ Trading)		1,489/8		1,252/253		1,137/151		4,754/444		4,291/1,212
Avg. Net Ferrous Sales Prices ($/LT)⁽¹⁾ (Processing/ Trading)	$	623/590	$	287/298	$	463/440	$	442/370	$	263/279
Nonferrous Volumes		126		105		129		439		383
Avg. Net Nonferrous Sales Prices ($/LB)⁽¹⁾	$	1.05	$	1.05	$	1.07	$	1.03	$	1.02
Operating Income ⁽²⁾	$	182	$	46	$	94	$	357	$	166

(1) Sales prices are shown net of freight
(2) Includes operating income from joint ventures

Revenues from the Metals Recycling Business increased 45% over the third quarter of fiscal 2008 and 91% over the fourth quarter of 2007, driven by record ferrous volumes and sales prices. Processed ferrous sales volumes of 1.5 million tons increased 31% quarter over quarter and 19% year over year. Processed ferrous average net selling prices of $623/ton increased 35% over the third quarter of fiscal 2008 and 117% over the fourth quarter of 2007. During the quarter, nonferrous volumes and prices also remained strong.

Operating income increased 295% over the fourth quarter of fiscal 2007 and nearly doubled the previous record for operating income established in the third quarter of fiscal 2008. During the quarter, the rise in export sales prices significantly outpaced domestic raw material purchase costs, resulting in substantially wider margins and, coupled with higher ferrous sales volumes, led to the record operating income. However, toward the end of the quarter the markets for recycled metals began to weaken substantially. As a result of the significant fall in forward selling prices, the Company recognized a $49 million pre-tax charge to adjust year-end inventory values to the lower of cost or market which was included in the fourth quarter results.

The Auto Parts Business reported record quarterly and annual revenues and operating income.

($ in millions, except locations)	Fourth Quarter 2008		Fourth Quarter 2007		Third Quarter 2008		Fiscal 2008		Fiscal 2007
Revenues	$	103	$	74	$	101	$	353	$	266
Operating Income	$	16	$	10	$	17	$	47	$	29
Locations (end of quarter)		56		52		53		56		52

Revenues for the Auto Parts Business increased 38% over the fourth quarter of 2007, primarily as a result of higher core and scrap prices, improved parts sales and higher car volumes.

Fourth quarter operating income increased 62% over the fourth quarter of 2007 and was narrowly higher than the record operating income in the third quarter of this year. Higher car volumes and improved margins on core and scrap sales led to the year over year increase in operating income.

The Steel Manufacturing Business benefited from record high prices and strong sales volumes.

($ in millions, except selling prices; volume in thousands of tons)	Fourth Quarter 2008		Fourth Quarter 2007		Third Quarter 2008		Fiscal 2008		Fiscal 2007
Revenues	$	182	$	117	$	168	$	603	$	425
Avg. Net Sales Prices ($/T)	$	958	$	617	$	744	$	728	$	575
Sales Volume		185		184		218		808		713
Operating Income	$	22	$	20	$	23	$	72	$	64

Revenues for the Steel Manufacturing business rose 56% compared to the fourth quarter of fiscal 2007 and 9% from the third quarter of 2008. Average net sales prices rose sharply despite softening demand toward the end of the quarter, reflecting a continuing lack of competition from imported steel products.

Year over year operating income increased slightly as sales prices increased at a greater rate than raw material costs. On a quarter over quarter basis, lower sales volumes resulted in a slight decline in operating income.

During the quarter, the Company repurchased 250,000 shares of its Class ‘A’ common stock. Since November 2006, the Company has repurchased 3.2 million shares, or approximately 10% of the total shares outstanding. Under the authority granted by its Board of Directors, the Company may repurchase an additional 1.5 million shares.

Current market conditions are extremely unsettled and forward visibility is limited. In light of the short period of time remaining between the date of this release and the end of the Company’s first fiscal quarter, the Company is able to provide limited qualitative guidance on first quarter results. Investors are cautioned that a great deal of uncertainty remains regarding near-term market conditions, and the Company does not assume responsibility for updating this guidance prior to the first quarter earnings release.

The factors that may affect the Company’s results in the first quarter of fiscal 2009 include:

Pricing. While the Company’s long-term outlook for scrap demand remains positive, substantially diminished short-term demand has resulted in a significant drop in ferrous scrap prices from the record levels achieved in the recently completed fourth quarter. Based on sales made to date, average net ferrous selling prices for the first quarter are expected to range from $300/ton to $375/ton, which would exceed the average net prices realized in the first quarter of fiscal 2008. This range reflects prices which were higher in September than are expected in November. Average net nonferrous sales prices are expected to decline 20-25% from the levels achieved throughout fiscal 2008. Raw material purchase prices have been reduced in response to the declining selling prices.

Sales volumes. First quarter ferrous scrap volumes are currently expected to decline 10-25% from the one million tons shipped during the first quarter of fiscal 2008. It should be noted that quarterly results will be highly dependent on currently contracted shipments occurring as scheduled. Nonferrous sales volumes are expected to increase 10-20% on a year over year basis. Overall raw material purchases have been reduced to reflect the lower expected ferrous sales volumes.

Margins. Notwithstanding the Company’s actions to quickly reduce raw material purchase prices, the significant fall in selling prices for both ferrous and nonferrous metals during the first quarter, combined with the impact of average inventory costing, are currently expected to result in reported margins which approximate the margins in the first quarter of fiscal 2008 but are lower than the record results in the fourth quarter. Actual margins will be highly dependent on currently contracted shipments occurring as scheduled, as well as changes in current and forward market conditions.

Revenues. Higher self-service parts sales are expected to be offset by lower prices for scrapped vehicles and cores and a weakening economic environment leading to fewer collision repairs. As a result, revenues are expected to be flat on a year over year basis.

Margins. The Company’s actions to reduce purchase prices for scrapped vehicles are currently expected to help to maintain a positive cash spread between core and scrap selling prices and the cost of scrapped vehicles. However, prices for scrap and cores are expected to decline more than the average inventory costs, and combined primarily with weaker full-service parts sales, are expected to more than offset the higher self-service parts sales and result in negative operating margins.

Pricing. Despite reduced demand from West Coast construction, first quarter net sales prices for finished goods are expected to remain 30-40% higher than the prices received in the first quarter of fiscal 2008, but decline 10-15% from the record prices achieved in the recently completed fourth quarter.

Sales Volumes. Lower demand and increased competition is expected to result in first quarter sales volumes declining to between 105,000 and 115,000 tons. Output in the melt shop and rolling mills has been reduced to reflect lower current demand.

Margins. Despite current period scrap costs which have declined more than average sales prices, the impact of average inventory costing is expected to result in an operating margin per ton which approximates the first quarter of 2008 but is lower than the fourth quarter.

A conference call and slide presentation to discuss results will be held today, October 28, 2008, at 11:30 a.m. EDT, hosted by John Carter, President and Chief Executive Officer, Tamara Lundgren, Chief Operating Officer and Richard Peach, Chief Financial Officer. The call and the slides will be webcast and 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 39 operating facilities located in 12 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 38 self-service facilities and 18 full-service facilities located in 16 states and in western Canada. With an annual production capacity of nearly 800,000 tons, the Company’s steel manufacturing business produces finished steel products, including rebar, wire rod and other specialty products. The Company commenced its 103rd year of operations in fiscal 2009.

This news release, particularly the Outlook section, contains forward-looking statements, within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) 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, operating margins and operating income. Such statements can generally be identified 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 current expectations are the following: volatile supply and demand conditions affecting prices and volumes in the markets for both the Company’s products and the raw materials it purchases; world economic conditions; world political conditions; unsettled credit markets; changes in federal and state income tax laws; government regulations and environmental matters; 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 and availability of transportation; loss of key personnel; expectations regarding the Company’s compliance program; the inability to obtain sufficient quantities of scrap metal to support current orders; purchase price estimates made during acquisitions; business integration issues relating to acquisitions of businesses; new accounting pronouncements; availability of capital resources; creditworthiness of and availability of credit to suppliers and customers; and business disruptions resulting from installation or replacement of major capital assets, as discussed in more detail in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” 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.
CONSOLIDATED STATEMENT OF INCOME
(in thousands, except per share amounts)
(Unaudited)

		For the Three Months Ended				For the Twelve Months Ended
		August 31,		August 31,		August 31,		August 31,
		2008		2007		2008		2007


Revenues		$	1,314,039	$	748,520	$	3,641,550	$	2,572,265


Cost of goods sold			1,052,947		634,052		3,013,250		2,178,113
Selling, general and administrative			66,741		53,219		237,723		186,030
(Income) from joint ventures			(5,476)		(1,704)		(11,706)		(5,441)


Operating income			199,827		62,953		402,283		213,563

Other income (expense):
	Interest expense		(1,946)		(1,994)		(8,649)		(8,213)
	Other income (expense), net		1,055		1,021		2,644		3,615
			(891)		(973)		(6,005)		(4,598)


Income before income taxes and minority interests			198,936		61,980		396,278		208,965

Income tax expense			(71,477)		(23,366)		(144,203)		(75,333)

Income before minority interests and pre-acquisition interests			127,459		38,614		252,075		133,632
Minority interests, net of tax			(1,077)		(638)		(3,392)		(2,298)
Net income		$	126,382	$	37,976	$	248,683	$	131,334


Basic earnings per share		$	4.49	$	1.29	$	8.79	$	4.38

Diluted earnings per share		$	4.38	$	1.28	$	8.61	$	4.32



SCHNITZER STEEL INDUSTRIES, INC.
FINANCIAL HIGHLIGHTS
(in thousands, except per share amounts)
(Unaudited)

			For the Three Months Ended				For the Twelve Months Ended
			August 31,		August 31,		August 31,		August 31,
			2008		2007		2008		2007

REVENUES:

Metals Recycling Business:
	Ferrous sales:
		Processing	$	1,032,299	$	416,806	$	2,405,081	$	1,300,787
		Trading		5,231		84,560		185,715		381,066
	Nonferrous sales			134,842		111,125		460,639		395,737
	Other sales			2,029		3,185		11,415		11,681
		Total sales		1,174,401		615,676		3,062,850		2,089,271

Auto Parts Business				102,545		74,322		352,682		266,354
Steel Manufacturing Business				182,333		117,101		603,189		424,550
Intercompany sales eliminations				(145,240)		(58,579)		(377,171)		(207,910)
		Total	$	1,314,039	$	748,520	$	3,641,550	$	2,572,265


INCOME (LOSS) FROM OPERATIONS:

Metals Recycling Business:
		Processing	$	183,356	$	46,935	$	351,819	$	164,964
		Trading		(1,576)		(897)		5,054		635
Auto Parts Business				16,260		10,028		46,734		29,050
Steel Manufacturing Business				22,024		19,520		72,300		64,355
Corporate expense				(17,119)		(14,218)		(63,990)		(45,684)
Intercompany eliminations				(3,118)		1,585		(9,634)		243

		Total	$	199,827	$	62,953	$	402,283	$	213,563



NET INCOME			$	126,382	$	37,976	$	248,683	$	131,334

BASIC EARNINGS PER SHARE			$	4.49	$	1.29	$	8.79	$	4.38

DILUTED EARNINGS PER SHARE			$	4.38	$	1.28	$	8.61	$	4.32

SHARE INFORMATION (THOUSANDS):
	Basic shares outstanding			28,165		29,388		28,278		29,997

	Diluted shares outstanding			28,834		29,781		28,894		30,400

Schnitzer Steel Industries, Inc.
Selected Operating Statistics
(Unaudited)
											Total										Total
			Q1 FY08		Q2 FY08		Q3 FY08		Q4 FY08		FY08		Q1 FY07		Q2 FY07		Q3 FY07		Q4 FY07		FY07
Metals Recycling Business
	Ferrous Recycled Metal Sales Prices ($/LT)⁽¹⁾
		Domestic	$	279	$	321	$	464	$	583	$	416	$	219	$	233	$	293	$	273	$	256
		Exports		280		329		463		636		455		230		238		295		292		266
		Total Processing		280		327		463		623		442		226		237		294		287		263
		Trading		313		337		440		590		370		252		257		308		298		279

	Ferrous Processing Sales Volume (LT)⁽²⁾
		Cascade		179,686		170,221		186,696		200,523		737,126		191,090		151,383		185,281		176,768		704,522
		Domestic		178,833		210,824		226,961		188,801		805,419		155,970		174,752		199,587		191,250		721,559
		Export		642,142		746,736		722,973		1,099,203		3,211,054		521,200		816,683		643,031		884,104		2,865,018
		Total Processed		1,000,661		1,127,781		1,136,630		1,488,527		4,753,599		868,260		1,142,818		1,027,899		1,252,122		4,291,099

	Ferrous Trading Sales Volume (LT)
		Trading		134,957		148,899		151,324		8,407		443,587		320,018		276,220		362,305		253,281		1,211,824

	Total Ferrous Sales Volume (LT)⁽²⁾			1,135,618		1,276,680		1,287,954		1,496,934		5,197,186		1,188,278		1,419,038		1,390,204		1,505,403		5,502,923

	Nonferrous Average Price ($/pound)⁽¹⁾		$	1.000	$	0.980	$	1.069	$	1.053	$	1.030	$	1.017	$	0.964	$	1.049	$	1.042	$	1.020

	Nonferrous Sales Volume (pounds, in thousands)			88,808		96,278		128,858		125,525		439,469		79,729		90,140		108,149		105,068		383,086


Steel Manufacturing Business
	Sales Prices ($/NT)^{(1) (2) (3)}
		Average	$	601	$	616	$	744	$	958	$	728	$	546	$	536	$	596	$	617	$	575

	Sales Volume (NT)⁽³⁾
		Rebar		108,856		127,732		128,597		104,926		470,111		98,491		111,136		125,515		116,482		451,624
		Coiled Products		49,343		57,096		74,270		65,397		246,106		51,823		50,134		40,407		50,483		192,847
		Merchant Bar and Other		16,031		17,332		15,033		11,576		59,972		19,281		16,031		16,505		16,670		68,487
		Total		174,230		202,160		217,900		181,899		776,189		169,595		177,301		182,427		183,635		712,958

Auto Parts Business
	Number of self-service locations at end of quarter			35		35		35		38		38		35		35		35		35		35
	Number of full-service sites at end of quarter			17		17		17		18		18		17		17		17		17		17

(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) Excludes billet sales.

SCHNITZER STEEL INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands, except per share amounts)


			August 31, 2008		August 31, 2007
Assets
Current assets:
	Cash and cash equivalents	$	15,039	$	13,410
	Accounts receivable, net		314,993		170,212
	Inventories		429,061		258,568
	Other current assets		20,433		19,286
	Total current assets		779,526		461,476

Property, plant and equipment, net			431,898		383,910

Goodwill and other assets			343,429		306,028

	Total assets	$	1,554,853	$	1,151,414

Liabilities and Shareholders’ Equity
Current liabilities:
	Short-term borrowings	$	25,490	$	20,275
	Other current liabilities		319,432		171,914
	Total current liabilities		344,922		192,189


Long-term debt			158,933		124,079

Other long-term liabilities			68,447		64,709

Minority interests			4,399		5,373

Shareholders’ equity			978,152		765,064

	Total liabilities and shareholders’ equity	$	1,554,853	$	1,151,414

CONTACT:
Schnitzer Steel Industries, Inc.
Investor Relations Contact
Rob Stone, 503-224-9900
or
Press Relations Contact
Tom Zelenka, 503-323-2821
Website: www.schnitzersteel.com
Email: ir@schn.com

Item 9.01	Financial Statements and Exhibits

(d)	Exhibits

99.1	Press Release of Schnitzer Steel Industries, Inc. issued on October 28, 2008.

		Schnitzer Steel Industries, Inc.
		(Registrant)


Dated:	October 28, 2008	By:	/s/ Richard D. Peach
		Name:	Richard D. Peach
		Title:	Chief Financial Officer

Exhibit No.	Description

99.1	Press Release of Schnitzer Steel Industries, Inc. issued on October 28, 2008.