PSC Reports Loss for Quarter

Philip Services Corp. announced its consolidated financial results for the quarter ended June 30, 2002.

PSC reported second quarter operating income of $12.4 million, compared to $4.7 million during the same time last year. The improvement occurred despite a drop in revenue between the two years. PSC also reported a net loss of $6.3 million for the second quarter primarily due to an increase in interest expense and losses on discontinued operations.

"The improvement in operating income comes in the midst of industry-wide softness in our key industrial outsourcing markets, most notably refining and petrochemical," said Michael Ramirez, CFO. "We continue to manage through a difficult economy with a clear focus on client service and the implementation of programs to reduce costs, improve our balance sheet and exit unprofitable businesses."

Revenue for the quarter was $351.7 million compared to $391.3 million for the same period in 2001. For the first six months of the year revenue was $712.6 million compared to $799.4 million for the same period in 2001. The reduction in revenue is due primarily to the decline in market conditions surrounding the refining, petrochemical, power, pulp/paper, manufacturing and waste industries, partially offset by the increased revenue associated with price increases for ferrous scrap metal.

Income from operations was $12.4 million or 3.5 percent of revenue for the three-month period ended June 30, 2002, compared with $4.7 million or 1.2 percent of revenue for the same time last year. For the six-month period income from operations was $14.7 million or 2.1 percent of revenue compared with $4.5 million or 0.6 percent of revenue for the same time last year.

The company also reported that revenue for its Metals Services was $141.9 million for the three-month period ending June 30, 2002, compared to $134.9 million for the same period of 2001. The increase in revenue is due to a 24 percent improvement in ferrous scrap metal prices for the current period compared to last year.

The volumes of scrap managed by the Group decreased 4 percent compared to the same period last year. The increase in ferrous scrap metal prices is directly related to the reduction in foreign steel imports, the improvement in the U.S. steel industry operating rate and the corresponding increase in demand for ferrous scrap.