Metal Management Issues Stock, Reports Loss for Quarter

Metal Management, Inc., has made an initial distribution of its new common stock. The company also reported results for its most recently concluded quarter.

The company has directed its transfer agent to issue approximately 8.8 million shares of common stock, pursuant to its First Amended Joint Plan of Reorganization which became effective on June 29, 2001. The distribution of new common stock represents a partial distribution to holders of allowed class six claims under the Plan and distribution in full of 100,000 shares of new common stock in settlement of the common stock and preferred stock issued and outstanding as of June 29, 2001. It is expected that a subsequent distribution will be made to holders of allowed class six claims once the final dollar amount of class six claims is determined.

Albert Cozzi, chairman and CEO, remarked, "conditions in the steel and scrap sectors continued to be difficult in the quarter as evidenced by a 31 percent reduction in sales during the first quarter ended June 30, 2001 compared to the quarter ended June 30, 2000. Despite the difficult market conditions and the effects of operating in Chapter 11, we were able to produce better results than in the year ago period. Improvement is evident in our gross margin that improved to 10.3 percent of net sales this year from 9.5 percent of net sales last year and lower administrative expenses that declined by $3.5 million or 23 percent by comparison to the prior year. In connection with the recently completed restructuring under Chapter 11 our debt was reduced by in excess of $200 million, and as a consequence, our interest expense declined by in excess of 50 percent to about $5.2 million in the first quarter ended June 30, 2001 from $10.3 million in the first quarter ended June 30, 2000.

This benefit is also attributable to lower bank borrowings and lower interest rates. Looking forward, I expect interest expense to be even lower and to be approximately $3 million per quarter. Metal Management is in a better position than ever to become profitable. Due to lower processing and administrative expenses coupled with reduced interest expense, our cost structure has improved by approximately $45 million per year. Though market conditions continue to be difficult in our second fiscal quarter our businesses are continuing to generate sufficient cash flow from operations to advance our leadership position in the domestic scrap metal recycling industry. Our employees are the best in the business and are completely focused on the goal of making Metal Management profitable. Once market conditions provide opportunities for organic top line growth, there is no question that our goal for profitability will be realized."

The company reported revenues of $166.3 million and a net loss before reorganization costs, income taxes, cumulative effect of change in accounting principle and extraordinary gain from recurring operations of $4.5 million for the quarter ended June 30, 2001, compared to revenues of $241.9 million and a net loss before reorganization costs, income taxes, cumulative effect of change in accounting principle and extraordinary gain from recurring operations  and preferred stock dividends of $7.6 million for the quarter ended June 30, 2000.