**Exhibit 99.1****RISK FACTORS**     *In addition to general investment risks and the other information contained in or incorporatedby reference into this document, including the matters under the caption “Cautionary StatementsRegarding Forward-Looking Information” and the matters discussed under the caption “Risk Factors”included in the Annual Report on**Form 10-K**filed by Metal Management for the 12-month period endedMarch 31, 2007, as updated by subsequently filed Forms 8-K and 10-Q, you should carefully considerthe following factors in deciding whether to vote for adoption of the merger agreement.***Risks Relating to the Merger*****Because the market price of Sims ordinary shares will fluctuate, Metal Management stockholderscannot be sure of the value of the consideration they will receive in the merger.***     Upon completion of the merger, each share of Metal Management’s common stock will be convertedinto the right to receive 2.05 Sims ADSs. Each Sims ADS will represent one Sims ordinary share,and the value of the Sims ADSs is accordingly expected to fluctuate based, to a significant extent,on corresponding changes in the value of Sims ordinary shares. The value of Sims ordinary sharesmay vary significantly from the closing price of Sims ordinary shares on the date the merger wasannounced, the date that this document was mailed to Metal Management stockholders, the date of thespecial meeting of Metal Management stockholders and the last trading day preceding the closingdate. There will be no adjustment to the exchange ratio for changes in the market price of Simsordinary shares or Metal Management common stock. Neither company is permitted to terminate themerger agreement, and the Metal Management board of directors is not permitted to change itsrecommendation to its stockholders to approve the merger, solely because of changes in the marketprice of either company’s stock. The market value of Sims ADSs to be received in the merger willcontinue to fluctuate following completion of the merger. Stock price changes may result from avariety of factors, including general market and economic conditions, changes in Sims MetalManagement’s businesses, operations and prospects, and regulatory considerations. Many of thesefactors will be beyond the control of Sims Metal Management and its management. Before decidingwhether to vote for adoption of the merger agreement, you should obtain current market quotationsfor Sims ordinary shares and shares of Metal Management common stock.***The value of Sims ADSs to be received in the merger will be subject to currency fluctuations.***     Prior to the completion of the merger, any change in the U.S. dollar — Australian dollarexchange rate will affect the U.S. dollar market value of the consideration that Metal Managementstockholders will receive upon completion of the merger. There will be no adjustment to theexchange ratio for changes in the U.S. dollar — Australian dollar exchange rate. Neither companyis permitted to terminate the merger agreement, and the Metal Management board of directors is notpermitted to change its recommendation to its stockholders to approve the merger, solely because ofchanges in currency exchange rates. Following completion of the merger, fluctuations in theexchange rate between the U.S. dollar and the Australian dollar will continue to affect the U.S.dollar equivalent of the Australian dollar price of Sims ordinary shares listed on the ASX and themarket price of Sims ADSs traded on the NYSE. Before deciding whether to vote for adoption of themerger agreement, you should obtain information regarding the U.S. dollar — Australian dollarexchange rate.***Stockholders in the United States may decide to sell Metal Management common stock or Sims ADSs,which could cause a decline in their respective market prices.***     Some United States holders of Metal Management common stock may be disinclined to own sharesof a company that is organized and has its primary listing outside of the United States. Thiscould result in the sale of Metal Management shares prior to the completion of the merger or thesale of Sims ADSs
 

 
received in the merger, some of which may be purchased by Australian and other non-U.S.investors. In addition, the market price of Metal Management common stock, Sims ordinary sharesand Sims ADSs may be adversely affected by arbitrage activities occurring prior to the completionof the merger. These sales, or the prospects of such sales in the future, could adversely affectthe market price for, and the ability to sell in the market, shares of Metal Management commonstock before the merger is completed and Sims ADSs after the merger is completed.***Sims ADSs may not be as liquid as Metal Management common stock.***     Some companies that have issued ADSs on United States stock exchanges have experienced lowerlevels of liquidity in their ADSs than is the case for their ordinary shares listed on theirdomestic exchange. There is a possibility that Sims ADSs will be less liquid than Sims ordinaryshares listed on the ASX or less liquid than Metal Management common stock. In addition, investorsmay incur higher transaction costs when buying and selling Sims ADSs than they would incur inbuying and selling Metal Management common stock.***The rights of holders of Sims ADSs to be issued in the merger will not be the same as the rightsof holders of Metal Management common stock or Sims ordinary shares.***     Metal Management is a corporation organized under the laws of Delaware. The rights of holdersof Metal Management common stock are governed by the Delaware General Corporation Law, thecertificate of incorporation and bylaws of Metal Management and the listing rules of the NYSE.Sims is a company organized under the laws of Australia. Upon completion of the merger, the formerholders of Metal Management common stock will receive Sims ADSs, which represent a beneficialownership interest in Sims ordinary shares. The rights of holders of Sims ADSs will be governed bythe Australian Corporations Act 2001 (Cth), which is referred to as the Corporations Act, Sims’sconstitution, the listing rules of the ASX and the NYSE and the deposit agreement pursuant to whichthe ADSs will be issued. There are differences between the rights presently enjoyed by holders ofMetal Management common stock and the rights to which the holders of Sims ADSs will be entitledfollowing the merger. In some cases, the holders of Sims ADSs to be issued in the merger may notbe entitled to important rights to which they would have been entitled as holders of MetalManagement common stock. The rights and terms of the Sims ADSs are designed to replicate, to theextent reasonably practicable, the rights attendant to Sims ordinary shares, for which there iscurrently no active trading market in the United States. However, because of aspects of Australianlaw, Sims’s constitution and the terms of the deposit agreement under which the Sims ADSs will beissued, the rights of holders of Sims ADSs will not be identical to and, in some respects, may beless favorable than, the rights of holders of Sims ordinary shares. For more information regardingthe characteristics of, and differences between, Metal Management common stock, Sims ordinaryshares and Sims ADSs, please refer to “Description of Sims Ordinary Shares,” “Description of SimsAmerican Depositary Shares,” and “Comparative Rights of Stockholders.”***After the completion of the merger, the market price of Sims ADSs may not be identical, in U.S.dollar terms, to the market price of Sims ordinary shares.***     While the market price of Sims ADSs is expected to fluctuate according to the market price ofSims ordinary shares and according to changes in the U.S. dollar — Australian dollar exchange rate,there is no guarantee that this relationship will be observed at all times, or at any time. Themarket price of Sims ADSs may differ from the market price of Sims ordinary shares in U.S. dollarterms for a number of reasons, including the relative liquidity of Sims ADSs and Sims ordinaryshares.***After the completion of the merger, the market price of Sims ordinary shares may be affected bydifferent factors than those currently affecting Sims ordinary shares or Metal Management commonstock.***     The businesses of Sims and Metal Management differ in some respects and, accordingly, theresults of operations of the combined company following the consummation of the merger and themarket price
 

 
of Sims ordinary shares and Sims ADSs following the transaction may be affected by factorsdifferent from those currently affecting the independent results of operations of each of Sims andMetal Management. In particular, Sims operates significant businesses outside of the United Statesand has a greater exposure to markets and economies outside the United States than Metal Managementcurrently does. For a discussion of the businesses of Sims and Metal Management and of certainfactors to consider in connection with those businesses, see “The Companies — Sims,” “The Companies— Metal Management, Inc.” and the documents incorporated by reference in this document and referredto under “Where You Can Find More Information.”***Sims Metal Management will experience significant changes in the composition of its board ofdirectors and senior management as a result of the merger, which could result in disruption inits business and delay or prevent the successful integration of the businesses of Sims and MetalManagement.***     Following completion of the merger, Sims Metal Management will experience significant changesin the composition of its board of directors and senior management. The board of directors of thecombined company will be expanded to 12 members, with the current directors of Metal Managementjoining the Sims Metal Management board. In addition, Metal Management’s current chief executiveofficer and chief financial officer will become the chief executive officer and chief financialofficer of Sims Metal Management following the merger. After the merger, the executive offices ofSims Metal Management will be relocated to New York, New York, while the group accountingconsolidation and external financial reporting processes will be progressively relocated to theUnited States until approximately September 2008. The success of Sims Metal Management followingthe merger will depend, to a significant extent, on the performance of its new board of directorsand senior management team. Following the merger, Sims Metal Management will be subject to risksassociated with its post-transaction management structure, including risks relating to officer andemployee integration, potential loss of the services of key officers or employees, managerialefficiency and effectiveness and familiarity with the combined business and operations. Inaddition, Sims Metal Management will be subject to risks associated with the division of managementresponsibilities between Mr. Dienst, who will become group chief executive officer and chair of thecombined North American metal recycling business, and Mr. Sutcliffe, who will continue as anexecutive director and will chair Sims Metal Management’s metal recycling business in Australasiaand Europe as well as Sims Recycling Solutions globally. While the respective roles of Mr. Dienstand Mr. Sutcliffe have been delineated, there is a risk that the management structure will notyield the intended benefits and may cause difficulties for the execution of group strategies.***Sims Metal Management will be a “foreign private issuer” under the rules and regulations of theSEC and, as a result, will be exempt from a number of rules under the Exchange Act and will bepermitted to file less information with the SEC than a company incorporated in the United States.***     Following completion of the merger, Sims Metal Management will continue to be incorporated inAustralia and will be deemed to be a “foreign private issuer” under the rules and regulations ofthe SEC. As a foreign private issuer, Sims Metal Management will be exempt from certain rulesunder the Exchange Act that would otherwise apply if Sims Metal Management were a companyincorporated in the United States, including: **•** the requirement to file periodic reports and financial statements with the SEC asfrequently or as promptly as United States companies with securities registered under theExchange Act;  **•** the requirement to file financial statements prepared in accordance with U.S. GAAP;  **•** the proxy rules, which impose certain disclosure and procedural requirements for proxysolicitations; and
 

 
 **•** the requirement to comply with Regulation FD, which imposes certain restrictions on theselective disclosure of material information.     In addition, Sims Metal Management’s officers, directors and principal shareholders will beexempt from the reporting and “short-swing” profit recovery provisions of Section 16 of theExchange Act and the related rules with respect to their purchases and sales of Sims ordinaryshares and Sims ADSs. Accordingly, after the completion of the merger, if you hold Sims ADSs, youmay receive less information about the combined company than you currently receive about MetalManagement and be afforded less protection under the United States federal securities laws than youare entitled to currently.     In addition, if Sims Metal Management loses its status as a foreign private issuer that isexempt from such SEC reporting obligations at some future time, then it will no longer be exemptfrom such rules and, among other things, will be required to file periodic reports and financialstatements as if it were a company incorporated in the United States. The costs incurred infulfilling these additional regulatory requirements could be substantial.***As a foreign private issuer, Sims Metal Management will not be required to comply with most ofthe corporate governance standards of the NYSE applicable to companies incorporated in the UnitedStates.***     Following completion of the merger, the Sims Metal Management board of directors will berequired to maintain an audit committee comprised solely of three or more directors satisfying theindependence standards of the NYSE applicable to audit committee members. As a foreign privateissuer, however, Sims Metal Management will not be required to comply with most of the othercorporate governance rules of the NYSE, including the requirement to maintain a majority ofindependent directors, and nominating and compensation committees of its board of directorscomprised solely of independent directors. Holders of Sims ADSs may therefore not be afforded thebenefits of the corporate governance standards of the NYSE applicable to companies incorporated inthe United States.***Following the completion of the merger, Sims Metal Management will continue to prepare itsfinancial statements using Australian dollars as its reporting currency.***     Sims Metal Management will continue to use the Australian dollar as its financial statementreporting currency following completion of the merger. Sims Metal Management’s financial resultsreported in Australian dollars may differ materially from its results if reported in U.S. dollarsdue to changes in the exchange rates of the Australian dollar, the U.S. dollar and the currenciesof other countries in which Sims Metal Management does business. Future changes in currencyexchange rates could have a material adverse effect on Sims Metal Management’s financial results.***Sims’s largest shareholder will have significant influence after the merger over transactionsrequiring shareholder approval.***     Mitsui Raw Materials Development Pty Limited currently holds approximately 19.9% of theoutstanding ordinary shares of Sims and is Sims’s largest shareholder. Under Sims’s constitution,Mitsui & Co., Ltd and any of its related bodies corporate, which are collectively referred to asMitsui, have the right to designate a representative director to serve on the Sims board ofdirectors so long as Mitsui holds 5% or more of Sims ordinary shares and, so long as Mitsui holds15% or more of Sims ordinary shares, then Mitsui has the right to designate both a representativedirector and an independent director to serve on the Sims board of directors. Under Sims’sconstitution, Mitsui also has a 12-month period in which to reestablish a 15% or greatershareholding in Sims and retain its additional board designation right if its interest is dilutedunder certain circumstances. These rights of Mitsui will continue to be binding on Sims MetalManagement following the merger. Immediately after the merger, Mitsui is expected to holdapproximately 14% of the ordinary shares of Sims Metal Management and will therefore have the rightto designate a representative director to serve on the Sims board of directors. Under an agreementwith Sims, Mitsui is entitled to retain its right to designate an additional independent directorif
 

 
itreestablishes a 15% or greater shareholding in Sims Metal Management within 12 months after the date ofcompletion of the merger. Mitsui may therefore decide to increase its shareholding in Sims MetalManagement in order to maintain its additional board designation right. As a result, after thecompletion of the merger, Mitsui may increase its shareholding in Sims Metal Management, whichwould give Mitsui significant influence over transactions requiring approval of Sims MetalManagement’s shareholders. Mitsui may have interests with respect to its investment in Sims MetalManagement that are different from, or in addition to, the interests of other holders of Simsordinary shares or Sims ADSs. The extent of Mitsui’s shareholding in Sims Metal Management couldalso have the effect of discouraging offers to acquire control of Sims Metal Management and maypreclude holders of Sims ordinary shares or Sims ADSs from receiving any premium above the marketprice for their shares that may be offered in connection with any attempt to acquire control ofSims Metal Management.***The merger agreement limits Metal Management’s ability to pursue alternatives to the merger.***     The merger agreement contains non-solicitation provisions that, subject to limited exceptions,restrict Metal Management’s ability to discuss, facilitate or commit to competing third-partyproposals to acquire all or a significant part of Metal Management. Further, there are onlylimited exceptions to Metal Management’s agreement that the Metal Management board of directorswill not withdraw or modify in a way adverse to Sims its recommendation to Metal Management’sstockholders that they vote in favor of the merger, or recommend any other acquisition proposal.Although the Metal Management board of directors is permitted to take these actions in connectionwith receipt of an unsolicited superior acquisition proposal from another party if it determinesthat the failure to do so would be reasonably likely to result in a breach of its fiduciary duties,doing so under certain circumstances would entitle Sims to terminate the merger agreement and toreceive a termination fee in the amount of $25 million. See “The Merger Agreement — TerminationFee and Expense Reimbursement.” Sims required Metal Management to agree to these provisions as acondition to Sims’s willingness to enter into the merger agreement. However, these provisionsmight discourage a potential competing acquirer that might have an interest in acquiring all or asignificant part of Metal Management from considering or proposing that acquisition, even if itwere prepared to pay consideration with a higher per share market price than that proposed in themerger, or it might result in a potential competing acquirer proposing to pay a lower per shareprice to acquire Metal Management than it might otherwise have proposed to pay.***Metal Management’s executive officers and directors have financial interests in the merger thatare different from, or in addition to, your interests.***     Executive officers of Sims and Metal Management negotiated the terms of the merger agreement,and the Metal Management board of directors approved and recommended that Metal Management’sstockholders vote to adopt the merger agreement. In considering these facts and the otherinformation contained in this document, you should be aware that Metal Management’s executiveofficers and directors have financial interests in the transaction that are different from, or inaddition to, the interests of Metal Management’s stockholders. For instance, each outstandingunvested Metal Management stock option and share of restricted stock held by any director, officeror employee will become fully vested upon completion of the merger. Also, Metal Management’s chiefexecutive officer and chief financial officer have entered into modifications to their respectiveemployment agreements pursuant to which their compensation will increase following the merger. TheMetal Management board of directors was aware of these interests and considered them, among othermatters, in approving the merger agreement and the transactions contemplated thereby. See “TheMerger — Interests of Directors and Executive Officers in the Merger” for information about thesefinancial interests.***The merger is subject to the receipt of consents and approvals from government entities that mayimpose conditions that could have an adverse effect on Sims Metal Management and the failure toobtain any such consent or approval may result in the termination of the merger.***     Before the merger may be completed, consents, authorizations, orders and approvals of orfilings with various governmental commissions, boards or other regulatory authorities in the UnitedStates and certain other countries must be obtained. These governmental entities, including theAntitrust Division of
 

 
the United States Department of Justice and the United States Federal Trade Commission, mayimpose conditions on the completion of the merger or require changes to the terms of the merger.While Sims and Metal Management do not currently expect that any such conditions or changes will beimposed, there can be no assurance that there will not be, and such conditions or changes couldhave the effect of delaying completion of the merger or imposing additional costs on, or limitingthe revenues of, the combined company, any of which might have a material adverse effect on thecombined company following completion of the merger. Each of Sims and Metal Management isobligated to use its reasonable best efforts to obtain all such governmental consents andapprovals, but neither party is obligated to enter into any agreement or take any other action inorder to obtain any such governmental consent or approval if such agreement or action would resultin reduction of 5% or more of the aggregate tonnage of ferrous metal processed, on an annual basis,by Sims and Metal Management, taken as a whole, compared with the operations of Sims and MetalManagement for the 12 months ended June 30, 2007, or would otherwise have a material adverse effecton the business of Sims or Metal Management or on the ability of Sims or Metal Management toconsummate the merger and perform their respective obligations under the merger agreement.**Risks Relating to the Operations of Sims Metal Management Following the Merger**     Set forth below are risks that the boards of directors of Sims and Metal Management believemay be material to the combined business operations of Sims Metal Management after completion ofthe merger. Additional risks and uncertainties that are presently unknown or deemed to beimmaterial may also impair the business operations of the combined company after completion of themerger.***The parties may not realize all of the anticipated benefits of the merger.***     The success of the merger will depend, in part, on the ability to realize the anticipatedbenefits from combining the businesses of Sims and Metal Management. However, to realize theseanticipated benefits, Sims and Metal Management must successfully combine their businesses, whichare currently principally conducted in different countries by management and employees coming fromdifferent cultural backgrounds. If Sims and Metal Management are not able to achieve theseobjectives, the anticipated benefits of the transaction may not be realized fully, may take longerto realize than expected or may not be realized at all. Sims and Metal Management have operatedand, until the completion of the merger, will continue to operate, independently. It is possiblethat the integration process could result in the loss of key employees, the disruption of eachcompany’s ongoing businesses or inconsistencies in standards, controls, procedures and policiesthat adversely affect the ability of the combined company to maintain relationships with customers,suppliers and employees or to achieve the anticipated benefits of the merger. Integration effortsbetween the two companies will also divert management’s attention and resources. These integrationmatters could have an adverse effect on each of Metal Management and Sims during the transitionperiod and on the combined company following completion of the merger.***The metal recycling industry has historically been, and is expected to remain, highly cyclicaland demand from individual export markets, which will be important to Sims Metal Management, isvolatile.***     The operating results of the metal recycling industry, in general, have historically been, andare expected to remain, highly cyclical in nature and Sims Metal Management’s operations,specifically, are expected to be highly cyclical in nature. The results of Sims Metal Management’soperations will tend to reflect, and be amplified by, changes to general economic conditions, bothdomestically and internationally. Historically, in periods of recession or periods of slowingeconomic growth, the results from operations of metal recycling companies have been materially andadversely affected. For example, during recessions or periods of slowing economic growth, theautomobile and the construction industries typically experience major cutbacks in production,resulting in decreased demand for steel, copper and aluminum, and it would be expected that, duringsuch periods, there would be significant fluctuations in demand and pricing for Sims MetalManagement’s products. Economic downturns in the United States or internationally will likelymaterially and adversely affect Sims Metal Management’s results of operations and financialcondition. Sims Metal Management’s ability to withstand significant economic
 

 
downturns or recessions in the future will depend, in part, on its level of capital andliquidity at the time. Sims Metal Management’s business may also be adversely affected byincreases in steel imports into the United States or other significant market regions, such asAustralia, the United Kingdom and New Zealand, which may have an adverse impact on steel productionin such market regions and a corresponding adverse impact on the demand for recycled metals fromsome of Sims Metal Management’s facilities within such market regions. Additionally, the combinedcompany’s business could be negatively affected by changes in currency exchange rates, changes intariffs, or increased freight costs which could negatively impact export sales or attract importsof recycled metal or metal substitutes, reducing demand for the combined company’s recycled metals.When metals markets weaken, if Sims Metal Management is unable to reduce its costs commensurately,the combined company could experience a material decline in earnings. A material decline inearnings could negatively affect cash flows and capitalization and the market price for Simsordinary shares and Sims ADSs.***Sims Metal Management will be subject to significant risks relating to changes in commodityprices, currency exchange rates and interest rates, and may not be able to effectively protectagainst these risks.***     Sims Metal Management will be exposed to commodity price risk during the period that it hastitle to products that are held in inventory for processing or resale. Prices of commodities,including recycled metals, can be volatile due to numerous factors beyond the combined company’scontrol. In an increasing price environment for raw materials, competitive conditions may limitSims Metal Management’s ability to pass on price increases to its consumers. In a decreasing priceenvironment for processed recycled metal, the combined company may not have the ability to fullyrecoup the cost of raw materials it procures, processes and sells to its customers. New entrantsinto its markets could result in higher purchase prices for raw materials and lower margins fromits recycled metal. Sims Metal Management will not be able to hedge positions in certaincommodities, such as recycled ferrous metal, where no established futures market exists. Thus,Sims Metal Management’s sales and inventory position will be vulnerable to adverse changes incommodity prices, which could materially adversely impact the combined company’s operating andfinancial performance. Sims Metal Management will operate a global trading business that isinvolved in the purchase and sale of ferrous steel making raw materials without a correspondingsale or purchase. At any one time, this global trading business may have a material number of“open” or at risk trading positions. To the extent that markets move in an adverse direction andSims Metal Management has not hedged its position, this will have an adverse impact onprofitability. As a company that will operate in many countries, Sims Metal Management will alsobe exposed to movements in currency exchange rates, the impact of which cannot be reliablypredicted. Following completion of the merger, Sims Metal Management will report its financialresults in Australian dollars. The combined company will have significant assets, liabilities andearnings denominated in currencies other than the Australian dollar, in particular U.S. dollars,pounds sterling and euros. These assets, liabilities and earnings, therefore, will be exposed tofluctuations in exchange rates between these currencies and the Australian dollar. Currencyexchange rates have been extremely volatile in recent periods. In addition, Sims Metal Managementwill have significant indebtedness for borrowed money, some or all of which may provide forvariable interest rates. It may not be possible for Sims Metal Management to effectively hedgeagainst changes in interest rates at all or on an economically reasonable basis. Increases ininterest rates could materially increase the borrowing costs of the combined company and could havea material adverse effect on its results of operations and financial condition.***The loss of export sales could adversely affect the results of operations and financial conditionof Sims Metal Management.***     A significant portion of the sales of recycled metal by Sims Metal Management followingcompletion of the merger is expected to be exported to markets outside of the United States andAustralia, with significant sales to customers in China, Turkey, India, Malaysia and otherindividual markets. If sales to these individual markets were to decline significantly for anyreason and alternative markets could not be found at comparable market prices, it could materiallyadversely affect the results of operations and financial condition of Sims Metal Management. Otherrisks associated with the export
 

 
business of the combined company include, among other factors, political and economic factors,economic conditions in the world’s economies, changes in legal and regulatory requirements, changesin currency exchange rates applicable to the U.S. dollar, Australian dollar and the currencies ofother countries in which Sims Metal Management operates, purchases or exports recycled metal,freight costs and customer collection risks. Any of these factors could result in lower exportsales, which could have a material adverse effect on the results of operations and financialcondition of Sims Metal Management.***Sims Metal Management will be subject to increasing competition from containerized recycled metalexports.***     Sims Metal Management will generate a significant proportion of its earnings from the exportof recycled metals. Recently, there has been a significant increase in the number of emptycontainers at ports in the United States, Australia, the United Kingdom and elsewhere which may beused for exporting materials at a relatively low cost because vessel operators provide lowerfreight costs to container shippers relative to bulk shippers. Small recycled metal operators havetaken advantage of this situation by exporting significant quantities of recycled metals incontainers in competition with Sims and Metal Management. The increasing competition fromcontainerized recycled metal exports may reduce Sims Metal Management’s export gross margin onsales or volumes and, accordingly, may have a material adverse impact on the results of operationsand financial condition of Sims Metal Management.***The concentration of the customers of Sims Metal Management or the termination of materialcustomer contracts could have a material adverse effect on the results of operations andfinancial condition of the combined company.***     Sales to the 10 largest customers of Sims and Metal Management represented approximately 25%of combined consolidated net sales on a pro forma basis for the 12-month period ended June 30,2007. Accounts receivable balances from these customers comprised approximately 20% of combinedconsolidated accounts receivable on a pro forma basis as of June 30, 2007. Sims and MetalManagement have not generally had long term contracts with their customers and it is not expectedthat Sims Metal Management will have a significant number of long term contracts with its customersfollowing completion of the merger. The customers of Sims Metal Management will thereforegenerally have the ability to terminate or modify their contracts with the combined company onshort notice without the payment of penalties or other amounts. The loss of significant customersof the combined company, a deterioration in the financial condition of significant customers of thecombined company, or the termination of one or more material customer contracts could have amaterial adverse effect on the results of operations and financial condition of Sims MetalManagement.***Potential credit losses from Sims Metal Management’s significant customers could adversely affectthe combined company’s results of operations and financial condition.***     In connection with the sale of products, Sims Metal Management generally will not requirecollateral as security for customer receivables nor will it necessarily purchase credit insurance.Sims Metal Management and certain of its subsidiaries may have significant balances owing fromcustomers that operate in cyclical industries and under leveraged conditions that may impair thecollectibility of those receivables. Failure to collect a significant portion of amounts due onthose receivables could have a material adverse effect on Sims Metal Management’s results ofoperations and financial condition.***The profitability of the metal recycling operations of Sims Metal Management will depend, inpart, on the availability of an adequate source of supply.***     Following completion of the merger, Sims Metal Management will procure its recyclable metalinventory from numerous sources, as each of Sims and Metal Management has done historically. Thesesuppliers generally are not bound by long-term contracts and will have no obligation to sellrecyclable metal to the combined company. In periods of low industry prices, suppliers may electto hold recyclable metal to wait for higher prices or intentionally slow their metal collectionactivities. If a substantial number of suppliers cease selling recyclable metal to Sims MetalManagement, the combined company
 

 
will be unable to recycle metals at desired levels and its results of operations and financialcondition could be materially adversely affected. In addition, a slowdown of industrial productionin the United States or certain other countries would reduce the supply of industrial grades ofmetal to the metal recycling industry, resulting in Sims Metal Management having less recyclablemetal available to process and market.***A significant increase in the use of substitute materials by consumers of processed recycledferrous metal could reduce demand for the products of Sims Metal Management.***     During periods of high demand, tightness can develop in the available supply of recycledferrous metal. The relative scarcity of recycled ferrous metal, particularly prime or industrialgrades, during such periods, provides opportunities for producers of substitute products, such aspig iron and direct reduced iron pellets. It cannot be assured that the use of substitutes torecycled ferrous metal will not proliferate in the future if the prices for recycled metal rise orif the supply of available unprepared ferrous metal tightens. A number of third parties around theworld are working on ways to produce recycled ferrous metal substitutes. If these efforts provesuccessful, they could become significant competitors and materially adversely impact the resultsof operations and financial condition of Sims Metal Management.***Sims Metal Management’s operations will be subject to extensive governmental regulation in eachof the jurisdictions in which it operates.***     In each of the jurisdictions in which it will operate, Sims Metal Management will be subjectto a variety of laws and regulations relating to trade, competition, taxes, employees and employeebenefits, worker health and safety, land use, the environment and other matters. Sims MetalManagement may be required to make significant expenditures and to devote substantial managementtime and attention in order to operate its business in compliance with such laws and regulations.In addition, changes in these laws or regulations or their interpretations or enforcement mayrequire Sims Metal Management to make significant additional expenditures or to change its businesspractices. If Sims Metal Management fails to comply with applicable laws and regulations, it couldincur criminal or civil fines, penalties, assessments or other damages, which could be substantial,and could have material restrictions or limitations placed on its business operations. In certaincases, governmental compliance actions may also give rise to potential claims for damages byprivate parties.***Sims Metal Management’s operations will be subject to stringent environmental laws andregulations.***     Following completion of the merger, Sims Metal Management will be subject to comprehensivestatutory and regulatory environmental requirements relating to, among others: **•** the acceptance, storage, treatment, handling and disposal of solid, hazardous and toxicwaste;  **•** the discharge of materials into the air;  **•** the management and treatment of wastewater and storm water;  **•** the remediation of soil and groundwater contamination; and  **•** the protection of employee health and safety.     The nature of Sims Metal Management’s business and previous operations by others at facilitiescurrently or formerly owned or operated or otherwise used by the combined company will expose thecombined company to risks of claims under environmental laws and regulations, especially for theremediation of soil or groundwater contamination. Sims Metal Management may be required to makematerial expenditures for remedial activities or capital improvements with regard to sitescurrently or formerly owned or operated or otherwise used by the combined company.
 

 
     Environmental statutes and regulations have changed rapidly in recent years by requiringgreater and more expensive protective measures, and it is possible that Sims Metal Management willbe subject to even more stringent environmental standards in the future. For example, in manyjurisdictions in which Sims Metal Management will operate, there is the potential for regulationand or legislation relating to mercury contaminants. Automobile hulks that are purchased andprocessed by the combined company may contain mercury switches. Legislation or regulations thatmay be enacted in the future cannot be presently known and neither can the effects, if any, thatany such law or regulation could have on Sims Metal Management’s business. For these reasons andothers, the future capital expenditures for pollution control equipment, remediation or otherinitiatives that may be required cannot be predicted with accuracy. However, it is generallyexpected that environmental standards will become increasingly more stringent and that theexpenditures necessary to comply with those heightened standards will correspondingly increase.     Sims Metal Management will be required to maintain, and to comply with, various permits andlicenses to conduct its operations. Failure to maintain, or violations of, any permit or license,if not remedied, could result in the combined company incurring substantial fines, suspension ofoperations or closure of a site. Further, Sims Metal Management’s operations are conductedprimarily outdoors and, as such, depending on the nature of the ground cover, such outdooroperations will involve the risk of releases of wastes and other regulated materials to the soiland, possibly, to groundwater. As part of the combined company’s continuous improvement programs,the combined company will incur costs to improve environmental control systems.     Because companies in the metal recycling industry have the potential for discharging wastes orother regulated materials into the environment, in any given year, a significant portion of SimsMetal Management’s capital expenditures could be related, directly or indirectly, to pollutioncontrol or environmental remediation.***The operations of Sims Metal Management will generate waste that will need to be treated, storedand disposed of in accordance with applicable environmental laws.***     Sims Metal Management’s metal recycling operations will produce significant amounts of wastethat it will be required to pay to have treated or discarded. For example, Sims Metal Managementwill operate shredders for which the primary feedstock is automobile hulks and obsolete householdappliances. Approximately 20% of the weight of an automobile hulk consists of non-metallicmaterial, commonly referred to as shredder fluff or automobile shredder residue, which is referredto as ASR, which constitutes the remnant material after the separation of saleable ferrous andnon-ferrous metals. Environmental regulations in the United States and many other countries inwhich Sims Metal Management will operate will require that Sims Metal Management test ASR todetermine if it is to be classified as hazardous waste before disposing of it off-site in permittedlandfills. Sims Metal Management’s other waste streams in the United States and other countries inwhich it will operate will be subject to similar requirements. Additionally, Sims Metal Managementwill employ significant source control programs to ensure, to the fullest extent possible, thatprohibited hazardous materials do not enter its raw materials stream. However, it cannot beassured that such materials will be successfully removed from Sims Metal Management’s sourcestreams and resultant recycling by-products. As a result, Sims Metal Management’s waste streamsmay, from time to time, be classified as a hazardous waste in which case the combined company mayincur higher costs for disposal of these waste products.     Environmental assessments, conducted by independent environmental consulting firms, of certainof the operating sites that Sims Metal Management will own upon the completion of the merger haverevealed that some soil impacts, potentially including impacts associated with various metals,petrochemical by-products, waste oils, polychlorinated biphenyls, which are referred to as PCBs,and volatile organic compounds are, or may be, present at varying levels. It is likely that suchimpacts at varying levels may exist at some of the sites and it is expected that some of thesesites could require investigation, monitoring and remediation in the future. The costs of suchremediation could be significant. The existence of such impacts at some of the facilities of SimsMetal Management
 

 
potentially could require the combined company to incur significant costs to remediate andcould materially adversely affect the combined company’s ability to sell those properties.***Following completion of the merger, Sims Metal Management may have potential environmentalinvestigation and cleanup liabilities.***     Certain U.S. subsidiaries of Metal Management have received notices from the United StatesEnvironmental Protection Agency, which is referred to as the USEPA, state agencies or third partiesthat they have been identified as potentially responsible for the cost of investigation and cleanupof landfills or other sites where the subsidiary’s material was shipped. In most cases, many otherparties are also named as potentially responsible parties. The Comprehensive EnvironmentalResponse, Compensation and Liability Act, which is referred to as CERCLA, enables USEPA and otherUnited States’ regulatory agencies to recover from owners, operators, generators and transportersthe cost of investigation and cleanup of sites which pose serious threats to the environment orpublic health. In certain circumstances, a potentially responsible party can be held jointly andseverally liable for the cost of cleanup. In other cases, a party who is liable may only be liablefor a divisible share. Liability can be imposed even if the party shipped materials in a lawfulmanner at the time of shipment. Liability for investigation and cleanup costs can be significant,particularly in cases where joint and several liability may be imposed. CERCLA, including theSuperfund Recycling Equity Act of 1999, limits the exposure of metals recyclers for sales ofcertain recyclable material under certain circumstances. However, the recycling defense is subjectto conducting reasonable care evaluations of current and potential consumers. Because CERCLA canbe imposed retroactively on shipments that occurred many years ago, and because USEPA and stateagencies are still discovering sites that present problems to public health or the environment, itcannot be assured that Sims Metal Management will not become liable in the future for significantcosts associated with investigation and remediation of CERCLA waste sites.***Sims Metal Management will not have environmental impairment insurance.***     In general, because it believes that the cost of the premiums outweighs the benefit ofcoverage, Sims Metal Management is not expected to carry environmental impairment liabilityinsurance. If Sims Metal Management were to incur significant liability for environmental damage,such as a claim for soil or groundwater remediation, its results of operations and financialcondition could be materially adversely affected.***Sims Metal Management’s operations will present risk of injury or death.***     Because of the heavy industrial activities that will be conducted at Sims Metal Management’sfacilities, there exists a risk of serious injury or death to Sims Metal Management’s employees orother visitors to its operations, notwithstanding the safety precautions that are taken. SimsMetal Management’s United States operations and its operations in certain other countries will besubject to regulation by governmental agencies responsible for employee health and safety. Simsand Metal Management currently have in place policies to minimize the risk to employees and othervisitors to their respective facilities and, accordingly, to minimize the risk that Sims and MetalManagement will incur government fines for violations of such regulations. Sims Metal Managementmay, nevertheless, be unable to avoid material liabilities for any death or injury that may occurin the future and these types of incidents may have a material adverse effect on Sims MetalManagement’s results of operations and financial condition.***The loss of any member of the senior management team of Sims Metal Management or a significantnumber of its managers could have a material adverse effect on Sims Metal Management’s results ofoperations and financial condition.***     After the completion of the merger, Sims Metal Management’s operations will depend heavily onthe skills and efforts of its senior management team. In addition, Sims Metal Management will relysubstantially on the experience of the management of its businesses with regard to day-to-dayoperations. While Sims Metal Management will have employment agreements with certain of themembers of its
 

 
senior management team, the combined company may be unable to retain the services of any ofthose individuals. The loss of any member of the senior management team of Sims Metal Managementor a significant number of managers could have a material adverse effect on the combined company’sresults of operations and financial condition.***Sims Metal Management may not be able to negotiate future labor contracts on favorable terms.***     A significant percentage of Sims Metal Management’s employees will be represented by variouslabor unions. As the agreements with those unions expire, Sims Metal Management may not be able tonegotiate extensions or replacements on terms favorable to it, or at all, or avoid strikes,lockouts or other labor actions from time to time. Therefore, it cannot be assured that new laboragreements will be reached with Sims Metal Management’s unions as those labor contracts expire oron terms that Sims Metal Management finds desirable. Any labor action resulting from the failureto reach an agreement with Sims Metal Management’s unions could have an adverse effect on thecombined company’s results of operations and financial condition.***Sims Metal Management will be obligated to contribute to defined benefit pension plans, some ofwhich are underfunded.***     Metal Management and Sims currently contribute to defined benefit pension plans that covervarious categories of employees and retirees. The obligation to make contributions to fund benefitobligations under these pension plans is based on actuarial valuations, which are based on certainassumptions, including the long-term return on plan assets and discount rate. Three of the MetalManagement defined benefit pension plans were underfunded by approximately $1.8 million as of June30, 2007. Sims Metal Management will have to make additional contributions following completion ofthe merger to fund its pension benefit plans. Contributions will negatively impact its cash flowand results of operations. In addition, Sims Metal Management will contribute to variousmulti-employer pension plans which cover employees under collective bargaining agreements. Therequired contributions are specified in such collective bargaining agreements. However, Sims MetalManagement may be required to fund additional amounts in the future if one or more of thesemulti-employer plans do not meet the Employee Retirement Income Security Act funding guidelines.Additional contributions will negatively impact Sims Metal Management’s cash flow, results ofoperations and financial condition.***Sims Metal Management will incur higher expense related to the amortization of intangible assetsand may be required to report losses resulting from the impairment of goodwill or other assetsrecorded in connection with the merger or other completed or future acquisitions.***     The merger will be treated as an acquisition of Metal Management by Sims for accountingpurposes. Both Sims and Metal Management have in the past expanded their operations through otheracquisitions and joint ventures involving metal recycling businesses owned by third parties. SimsMetal Management expects to continue to complete selected acquisitions and joint venturetransactions in the future. In connection with acquisition and joint venture transactions,applicable accounting rules generally require the tangible and certain intangible assets of theacquired business to be recorded on the balance sheet of the acquiror at their fair market value.Intangible assets other than goodwill will be required to be amortized over their estimated usefullives and this expense may be significant. Any excess in the purchase price paid by the acquirorover the fair market value of tangible and intangible assets of the acquired business is recordedas goodwill. If it is later determined that the anticipated future cash flows from the acquiredbusiness will be less than the fair market value of the assets and goodwill of the acquiredbusiness recorded at the time of the acquisition, the assets or goodwill may be deemed to beimpaired. In this case, the acquiror may be required under applicable accounting rules to writedown the value of the assets or goodwill on its balance sheet to reflect the extent of theimpairment. This write down of assets or goodwill is generally recognized as a non-cash expense inthe statement of operations of the acquiror for the accounting period during which the write downoccurs. If Sims Metal Management determines that any of the assets or goodwill recorded inconnection with the merger or any other prior or future acquisitions or joint venture transactionshave become impaired, Sims Metal Management will be required to record a loss resulting from theimpairment. The metal recycling
 

 
industry is highly cyclical and, as a result, Sims Metal Management may be more likely thancompanies in other industries to incur impairment losses. Impairment losses could be significantand could have a material adverse effect on the results of operations and financial condition ofSims Metal Management, and could have a material adverse affect on its ability to pay dividends.***Since Sims was not subject to SEC rules prior to the merger, significant expenditures and seniormanagement time may be required with respect to Sims Metal Management’s internal controls toensure compliance with the requirements of Section 404 of the Sarbanes Oxley Act of 2002.***     Section 404 of the Sarbanes Oxley Act of 2002 and the regulations of the SEC thereunder willrequire senior executive and senior financial officers of Sims Metal Management to assess theeffectiveness of its internal control over financial reporting on an annual basis commencing withthe 12-month period ending June 30, 2009. Sims Metal Management’s independent registered publicaccounting firm will also be required to provide a report with respect to Sims Metal Management’sinternal control over financial reporting annually commencing with the 12-month period ending June30, 2009. To the extent that Sims Metal Management is discovered to have deficient internalcontrols, the combined company may be required to allocate significant monetary and managementresources to remedy the deficiencies that could otherwise be devoted to its business operations.Management for Sims and Metal Management believe that Sims Metal Management may incur additionalexpenditures of approximately $3 million in its first year after completion of the merger to ensurecompliance with the requirements of Section 404 of the Sarbanes Oxley Act of 2002.***Sims Metal Management will be exposed to the risk of legal claims and other liabilities that mayhave a material adverse effect on its results of operations and financial condition.***     Sims Metal Management will be exposed to the risk of legal claims and other liabilitiesarising in connection with the operation of its business that may have a material adverse effect onthe results of operations and financial condition of Sims Metal Management. These claims andliabilities may include claims by employees or former employees relating to personal injury,compensation or employment law violations, environmental, land use and other claims arising out ofthe ownership or operation of facilities, and disputes with customers, suppliers and other businessrelations. The nature of Sims Metal Management’s business may make the company more likely thansome other companies to be exposed to the risk of legal claims and other liabilities. Inparticular, metal recycling companies are generally exposed to higher risks of environmental claimsand liabilities than companies in non-manufacturing industries, and employees working in the metalrecycling industry may be more likely to suffer workplace injuries than employees of companies inother industries. The resolution of these claims and other liabilities may require Sims MetalManagement to pay material damages or other costs to third parties, including potentially punitive,treble, exemplary or other special damages. Resolution of claims may also involve an extensivecommitment of senior management time and attention, and may require changes in the businesspractices resulting in decreased revenues or profits or additional costs. Even if claims or otherliabilities are resolved successfully, Sims Metal Management may incur significant legal and otherexpenses in defending against such matters.***The tax liabilities of Sims Metal Management may substantially increase if the tax laws andregulations in the countries in which it will operate change or become subject to adverseinterpretations or inconsistent enforcement.***     Taxes payable by companies in many of the countries in which Sims Metal Management willoperate are substantial and include value added tax, excise duties, taxes on income (includingprofits and capital gains), payroll related taxes, property taxes and other taxes. Tax laws andregulations in some of these countries may be subject to frequent change, varying interpretationand inconsistent enforcement. In addition, many of the jurisdictions in which Sims MetalManagement will operate have adopted transfer pricing legislation. If tax authorities imposesignificant additional tax liabilities as a result of transfer pricing adjustments, it could have amaterial adverse effect on Sims Metal Management’s results of operations and financial condition.It is possible that taxing authorities in the countries in which Sims Metal Management will operatewill introduce additional revenue raising measures. The introduction of
 

 
any such provisions may affect the overall tax efficiency of the combined company and couldresult in significant additional taxes becoming payable. Any such additional tax exposure couldhave a material adverse effect on Sims Metal Management’s results of operations and financialcondition. Sims Metal Management may face a significant increase in its income taxes if tax ratesincrease or the tax laws or regulations in the jurisdictions in which it will operate or treatiesbetween those jurisdictions are modified in an adverse manner. This may adversely affect SimsMetal Management’s cash flows, liquidity and ability to pay dividends.***The operations of Sims Metal Management will be subject to risks and uncertainties relating tointernational conflicts and terrorism.***     Sims Metal Management will be subject to risks relating to international conflicts, wars,internal civil unrest, trade embargoes and acts of terrorism. Sims Metal Management may be subjectto a higher level of risks of this type than some other companies due to its extensiveinternational operations. These operations will include sales in developing countries, which maybe more likely than developed countries to be affected by international conflicts and terrorism.Risks of this type may affect facilities owned or operated by Sims Metal Management or facilitiesof its suppliers or customers. In addition, risks of this type may affect port facilities or othertransportation infrastructure owned or used by Sims Metal Management in the operation of itsbusiness.***United States investors may have difficulty enforcing civil liabilities against Sims MetalManagement and its directors and senior management.***     Sims Metal Management will be organized under the laws of Australia. Following the merger,several of Sims Metal Management’s directors and many members of its senior management will beresidents of jurisdictions outside the United States. A significant portion of Sims MetalManagement’s assets and the assets of these persons will be located outside the United States. Asa result, United States investors may find it difficult to effect service of process within theUnited States upon Sims Metal Management or these persons or to enforce outside the United Statesjudgments obtained against Sims Metal Management or these persons in United States courts,including actions predicated upon the civil liability provisions of the United States federalsecurities laws. Likewise, it may also be difficult for an investor to enforce in United Statescourts judgments obtained against Sims Metal Management or these persons in courts in jurisdictionsoutside the United States, including actions predicated upon the civil liability provisions of theUnited States federal securities laws. It may also be difficult for a United States investor tobring an original action in an Australian court predicated upon the civil liability provisions ofthe United States federal securities laws against the combined company’s directors and seniormanagement and non-United States experts named in this proxy statement/prospectus.