SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
January 4, 2000
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(Date of earliest event reported)
SAFETY-KLEEN CORP.
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(Exact name of Registrant as specified in its charter)
Delaware 001-8368 51-0228924
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(State of (Commission File No.) (IRS Employer
Incorporation) identification No.)
1301 Gervais Street, Suite 300,
Columbia, South Carolina 29201
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(Address of principal executive offices, including zip code)
(803) 933-4200
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name or former address, if changed since last report)
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Item 5. Other Events
On January 4, 2000, Safety-Kleen Corp. (NYSE:SK) issued a press
release, the full text of which is reproduced below. In addition, on January 4,
2000, the Company conducted an analysts' call during which it released certain
other financial information set forth under the caption "Additional
Information."
For Immediate Release
SAFETY-KLEEN CORP. ANNOUNCES
FIRST QUARTER FISCAL 2000 OPERATING RESULTS
Columbia, S.C., -- January 4, 2000 -- Safety-Kleen Corp. (NYSE: SK) today
announced operating results for the first quarter ended November 30, 1999.
Revenue for the first quarter totaled $408.5 million compared to $467.0 million
for the similar quarter one year ago. Revenue for the first quarter last year
included $31.7 million of revenue from the Company's deconsolidated European
operations and $19.4 million from harbor dredging, treatment and placement
related projects, neither of which contributed to the first quarter's revenue
this year.
Operating income for the first quarter was $83.1 compared to $90.2 million in
the prior year. Operating margins increased to 20.3% from 19.3% in the same
quarter of fiscal 1999.
Earnings before interest, taxes, depreciation and amortization ("EBITDA") for
the quarter totaled $116.8 million compared to $127.5 million recorded in the
prior year. EBITDA margins rose to 28.6% from 27.3% in the prior year.
Net income for the first quarter of fiscal 2000 was $24.7 million compared with
$27.8 million in the same quarter in the prior year. On a diluted basis, net
income was $0.25 per share for the quarter compared to $0.27 per share reported
in the prior year. Average shares outstanding for the first quarters of fiscal
2000 and 1999 on a diluted basis were 100.6 million and 111.2 million,
respectively. The reduction in diluted shares reflects the repurchase of the
$350 million 5% subordinated convertible pay-in-kind debenture in August of
1999.
Commenting on the results, President and Chief Executive Office, Kenneth W.
Winger noted, "We continue to see excellent momentum and growth potential in
several of our key lines of business, however, our first quarter industrial
services revenue performance was disappointing overall. Growth was impacted as
we came off a strong year-end sales emphasis while fewer sales/service work-days
in the
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quarter, compared to the fourth quarter, compounded the shortfall. We
remain confident in our growth potential and plans as we continue through the
fiscal year. Continued integration of business systems and procedures will allow
us to better address customer needs, improve cash flows and add value for our
shareholders."
Safety-Kleen Corp. is the leading industrial waste service company for both
hazardous and non-hazardous waster streams. From collection through recycle and
disposal, the Company provides comprehensive waste management services to over
400,000 customers in North America.
For further information contact:
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Kenneth W. Winger, President and Chief Executive Officer - (803) 933-4212
Paul R. Humphreys, Senior Vice President, Finance and Chief Financial Officer -
(803) 933-4261
Safety-Kleen Investor Relations - (803) 933-4285
Private Securities Litigation Reform Act:
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Sections of this release constitute forward-looking statements that involve a
number of risks and uncertainties. Many factors could cause actual results to
differ materially from our expected results. These factors include risks
associated with acquisitions; achievement of synergy objectives; the attainment
of revenue growth targets; the adoption of new environmental laws and
regulations and how they are interpreted and enforced; changes in demand for the
Company's services; competition; and prices for petroleum-based products.
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SAFETY-KLEEN CORP.
CONSOLIDATED STATEMENTS OF INCOME
($ in thousands, except per share data)
(Unaudited)
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Three Months Ended
November 30
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1999 1998
Revenues $ 408,481 $ 467,019
Expenses:
Operating 257,472 305,048
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Selling, general and administrative 34,250 34,500
EBITDA 116,759 127,471
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Depreciation and amortization 33,703 37,295
Operating Income 83,056 90,176
Interest expense, net 40,135 43,084
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Equity in earnings of associated company 1,005 -
Income before income tax expense 43,926 47,092
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Income tax expense 19,219 19,320
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Net income $ 24,707 $ 27,772
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Basic income per share:
Net Income $ 0.25 $ 0.32
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Weighted average common stock outstanding (000s) 100,637 87,844
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Diluted income per share:
Net Income $ 0.25 $ 0.27
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Weighted average common stock outstanding and 100,637 111,242
assumed conversions (000s) ========= =========
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SAFETY-KLEEN CORP. FIRST QUARTER FISCAL 2000
Three Months Ended November 30,
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1999 1998
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Components of revenue ($ in millions):
Collection and Recovery S
Industrial Services $ 193.6 47% $ 206.2 44%
Commercial and Institutional Services 146.0 36% 134.7 29%
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Total Collection and Recovery Services 339.6 83% 340.9 73%
Treatment and Disposal Services 68.9 17% 94.4 20%
European Operations -- -- 31.7 7%
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Total revenue $ 408.5 100% $ 467.0 100%
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Components of revenue change: Percentage Increase (Decrease)
Three Months Ended November 30,
1999 over 1998
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Expansion of customer base by acquisition 1.7%
Other, primarily through volume and price changes (Note 1) (8.0%)
Divestitures and closures (6.8%)
Foreign exchange rate changes 0.6%
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Total (12.5%)
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Note 1: Prior year revenue included approximately $19.4 million of harbor
dredging and placement project revenues for which there was no contribution in
the current period. Excluding revenues from these projects, the price and volume
component of the change in revenue would have been a negative 4.3%.
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Additional Information
On January 5, 2000, the Company announced that its consolidated long
term debt during the first quarter ended November 30, 1999 increased $86 million
to $2,053.4 billion compared to the fourth quarter ended August 31, 1999. This
increase was predominantly attributable to a net increase of $102 million in
working capital, approximately $52 million of which related to an increase in
outstanding consolidated accounts receivable. Although no assurance can be
given, the Company expects to recapture $15 to $20 million of the increased
accounts receivable during the three month period ended February 28, 2000, and
an aggregate of $40 to $50 million during the balance of fiscal 2000. The
increase in working capital was also attributable to a decrease in accounts
payable, the purchase of trucks (which are expected to become lease
arrangements) and increases in used oil held for sale and precious metals
inventory. The Company also had non-recurring expenses of approximately $1
million associated with the consolidation of its corporate activities.
Cash available at November 30, 1999 was approximately $6 million. The
Company had approximately $175 million of availability under its working capital
lines and revolving credit facility as at November 30, 1999.
Cash expenditures for reserved environmental liabilities were
approximately $7 million for the three months ended November 30, 1999. It is
expected that these cash expenditures will range between $25 and $30 million for
the year ended August 31, 2000.
Cash interest was $40 million for the three months ended November 30,
1999. The Company has hedged approximately 65% of its floating rate debt and
based on current market conditions expects to maintain an overall interest rate
of 8.5% for the remainder of fiscal 2000.
Although no assurances can be given, the Company anticipates earnings
per share to grow moderately during the fiscal year ending August 31, 2000
compared to the earnings per fully diluted share of $1.03 during the fiscal year
ended August 31, 1999.
It is expected that revenues will be lower for the three month period
ending February 29, 2000 compared to the three months ended November 30, 1999
due to the traditional seasonality impact of fewer working days and a decrease
in customer activity associated with holiday down-time within their operations.
In addition, the revenues for the three months ended February 28 had previously
included the predecessor Safety-Kleen's year-end sales drive (December 31),
which drive now coincides with the Company's August 31 fiscal year end.
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For the third and fourth quarters of fiscal 2000, the Company
anticipates moderate revenue growth of 1.5% to 1.75% adjusted for differing
business days (on a quarter-to-quarter basis) in its collection and recovery
line of business. The Company also anticipates to generate revenues of
approximately $300 million in fiscal 2000 in its treatment and disposal line of
business. The Company's revenue estimates are based on current market conditions
and could be impacted by any of the factors described in the following
paragraph.
Certain of the foregoing statements constitute forward-looking
statements that involve a number of risks and uncertainties. Please refer to the
statements under the heading "Private Securities Litigation Reform Act"
contained in the press release set forth above for a list of factors that could
cause actual results to differ from expected results. In addition, additional
factors that could impact actual results include the following: impact of
existing and new competitors; successful integration of the former Laidlaw and
Safety-Kleen industrial sales forces; implementation of a common operational
management information system in the industrial services and treatment and
disposal lines of business; general level of economic activity in North America
remaining constant; the ability of the company to effectively introduce new
product offerings; the ability of the company to increase cash collection of
accounts reeivable.
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SIGNATURES
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.
SAFETY-KLEEN CORP.
By: /s/ Kenneth W. Winger
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Name: Kenneth W. Winger
Title: President and Chief Executive Officer
By: /s/ Paul R. Humphreys
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Name: Paul R. Humphreys
Title: Senior Vice President of Finance and
Chief Financial Officer
Date: January 7, 2000
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