================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the twelve and twenty-four weeks ended June 15,
1996.
___ Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from _________ to
____________.
Commission File #1-8513
SAFETY-KLEEN CORP.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Wisconsin 39-6090019
- ------------------------------------- --------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1000 North Randall Road, Elgin, Illinois 60123-7857
- --------------------------------------------------------------------------------
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code 847/697-8460
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No __
Shares of common stock outstanding at June 15, 1996 were 58,144,753.
1
<PAGE>
SAFETY-KLEEN CORP. AND SUBSIDIARIES
PART I. FINANCIAL STATEMENTS
The condensed financial statements included herein have been prepared by the
Company, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are adequate to
make the information presented not misleading. These financial statements should
be read in conjunction with the financial statements and notes thereto included
in the Company's Annual Report on Form 10-K for the year ended December 30,
1995. In the opinion of management, these statements contain all adjustments,
consisting of only normal recurring adjustments, necessary to present fairly the
financial position as of June 15, 1996 and December 30, 1995, results of
operations for the twelve and twenty-four week periods ended June 15, 1996 and
June 17, 1995 and cash flows for the twenty-four week periods ended June 15,
1996 and June 17, 1995. The 1996 interim results reported herein may not
necessarily be indicative of the results of operations for the full year 1996.
2
<PAGE>
<TABLE>
<CAPTION>
SAFETY-KLEEN CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollar amounts are in thousands except per share data)
ASSETS
June 15, 1996 December 30, 1995
------------- -----------------
Current assets:
<S> <C> <C>
Cash and cash equivalents ........................... $ 32,108 $ 22,238
Trade accounts receivable, less allowances
of $7,619 and $7,969, respectively ................ 111,180 110,120
Inventories ......................................... 40,526 36,020
Prepaid expenses and other .......................... 45,454 37,830
----------- -----------
Total current assets ............................ 229,268 206,208
----------- -----------
Equipment at customers and components, at cost,
less accumulated depreciation of $45,202
and $44,072, respectively ........................... 119,842 117,383
Property, plant and equipment, at cost, less
accumulated depreciation of $331,621 and
$315,092, respectively .............................. 527,101 529,553
Intangible assets, at cost, less accumulated
amortization of $68,089 and $68,008,
respectively ........................................ 132,715 127,302
Other assets ............................................ 27,934 28,604
----------- -----------
$ 1,036,860 $ 1,009,050
=========== ===========
LIABILITY AND SHAREHOLDERS' EQUITY
Current liabilities:
Dividends payable ................................... $ 5,236 $ -
Trade accounts payable .............................. 62,745 62,795
Accrued expenses .................................... 67,075 69,695
Restructure liability ............................... 6,266 10,450
Income taxes payable ................................ 19,515 8,175
Accrued environmental liabilities ................... 8,724 11,561
----------- -----------
Total current liabilities ....................... 169,561 162,676
----------- -----------
Long-term debt .......................................... 287,822 283,715
----------- -----------
Deferred income taxes ................................... 43,715 43,111
----------- -----------
Restructure liability ................................... 11,778 12,069
----------- -----------
Accrued environmental liabilities ....................... 44,045 42,713
----------- -----------
Other liabilities ....................................... 29,410 31,331
----------- -----------
Shareholders' equity:
Preferred stock ($.10 par value; authorized
1,000,000 shares, none issued) ................... - -
Common stock ($.10 par value; authorized
300,000,000 shares; issued and outstanding
58,144,753 and 57,868,541 shares, respectively.... 5,814 5,787
Additional paid-in capital .......................... 190,524 186,365
Retained earnings ................................... 272,287 256,052
Minimum pension liability adjustment ................ (1,226) (1,226)
Cumulative translation adjustments .................. (16,870) (13,543)
----------- -----------
450,529 433,435
----------- -----------
$ 1,036,860 $ 1,009,050
=========== ===========
The accompanying notes are an integral part of these financial statements.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
SAFETY-KLEEN CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(dollar amounts are in thousands except per share data)
Twelve Weeks Ended Twenty-four Weeks Ended
------------------------ -------------------------
June 15, June 17, June 15, June 17,
1996 1995 1996 1995
--------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Revenue ......................... $ 211,355 $ 203,192 $ 413,078 $ 397,751
--------- --------- --------- ---------
Costs and expenses:
Operating costs and expenses.. 154,788 148,986 300,611 291,403
Selling and administrative
expenses ................... 30,099 29,323 59,827 56,893
Interest income .............. (252) (225) (432) (485)
Interest expense ............. 4,446 4,843 8,710 9,387
--------- --------- --------- ---------
189,081 182,927 368,716 357,198
--------- --------- --------- ---------
Earnings before income taxes .... 22,274 20,265 44,362 40,553
Income taxes .................... 8,670 8,134 17,681 16,351
--------- --------- --------- ---------
Net earnings .................... $ 13,604 $ 12,131 $ 26,681 $ 24,202
========= ========= ========= =========
Earnings per common and common
equivalent share: ............ $ 0.23 $ 0.21 $ 0.46 $ 0.42
========= ========= ========= =========
Average number of common and common
equivalent shares outstanding.. 58,041 57,906 57,983 57,847
========= ========= ========= =========
Cash dividends per common share.. $ 0.09 $ 0.09 $ 0.18 $ 0.18
========= ========= ========= =========
The accompanying notes are an integral part of these financial statements.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
SAFETY-KLEEN CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollar amounts are in thousands)
Twenty-four Weeks Ended
June 15, 1996 June 17, 1995
------------- -------------
<S> <C> <C>
Net cash provided by operating activities ............ $ 56,094 $ 41,250
-------- --------
Cash flows used in investing activities:
Equipment at customers and component additions .. (11,410) (20,557)
Property, plant and equipment additions ......... (15,571) (17,306)
Business acquisitions and other ................. (18,014) (16,967)
-------- --------
Net cash used in investing activities ....... (44,995) (54,830)
-------- --------
Cash flows from (used in) financing activities:
Net borrowings (payments) ....................... 4,107 16,892
Dividends ....................................... (5,210) (5,200)
Other ........................................... 0 25
-------- --------
Net cash provided from (used in) financing
activities ................................... (1,103) 11,717
-------- --------
Effect of exchange rate changes on cash .............. (126) 179
-------- --------
Net increase (decrease) in cash and cash equivalents . 9,870 (1,684)
Cash and cash equivalents at beginning of year ....... 22,238 21,015
-------- --------
Cash and cash equivalents at end of the reporting
period ............................................... $ 32,108 $ 19,331
======== ========
Supplemental disclosures of cash paid during the reporting period:
Interest (net of amount capitalized).......... $9,242 $8,713
======== ========
Income taxes paid (net of refunds received)... $6,179 $4,990
======== ========
The accompanying notes are an integral part of these financial statements.
</TABLE>
5
<PAGE>
SAFETY-KLEEN CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. INVENTORIES
The Company's inventories consist primarily of solvent, oil and
supplies. LIFO inventories at June 15, 1996 and December 30, 1995 were $5.5 and
$5.3 million, respectively. Under the FIFO method of accounting (which
approximates current or replacement cost), inventories would have been $1.0
million higher at June 15, 1996 and unchanged at December 30, 1995.
2. ACQUISITIONS
During the second interim period of 1996, the Company acquired certain
assets of Industrial Services Corporation and Mid-Continent Fuel Co., a
processor and collector of used oil over a 12 state region in the south central
United States. This acquisition was accounted for using the purchase method and,
accordingly, its operating results have been included in the Company's
Consolidated Statements of Earnings only since the date of acquisition. The
acquisition was not material.
3. INTERIM REPORTING PERIODS
The Company's interim reporting periods are twelve weeks each for the
first three reporting periods of the year, and sixteen weeks for the fourth
reporting period.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FINANCIAL CONDITION
The Company's working capital increased from $43.5 million at December
30, 1995 to $59.7 million at June 15, 1996. Year-to-date capital spending for
equipment at customers and property, plant and equipment additions excluding
business acquisitions totaled $27.0 million. These expenditures were mainly
financed by internally generated cash. The Company's total long-term debt
increased $4.1 million during the first twenty-four weeks of 1996 to $287.8
million at June 15, 1996.
The Company's long-term debt to total capital ratio was 39.0% at June
15, 1996 and 39.6% at December 30, 1995. The Company expects its long-term debt
to total capital ratio to decline slightly during the balance of 1996.
The Company's restructure liabilities declined $4.5 million during the
first twenty-four weeks of 1996 from $22.5 million to $18.0 million.
7
<PAGE>
RESULTS OF OPERATIONS
COMPARISON OF THE TWELVE WEEK PERIODS ENDED
JUNE 15, 1996 AND JUNE 17, 1995
REVENUE
Revenue for the twelve weeks ended June 15, 1996 was $211 million, up $8
million, or 4%, from the comparable period last year.
Revenue derived from the Company's North American and European
operations during the twelve weeks ended June 15, 1996 and June 17, 1995 was as
follows:
<TABLE>
<CAPTION>
Thousands of Dollars
Percentage
Increase
June 15, 1996 June 17, 1995 (Decrease)
North America
<S> <C> <C> <C>
Automotive/Retail Repair Services.... $ 54,498 $ 55,911 (3%)
Industrial Services ................. 61,843 56,101 10%
Oil Recovery Services ............... 36,074 30,993 16%
Other Services ...................... 34,978 37,019 (6%)
-------- ---------
Total North America ................... 187,393 180,024 4%
Europe ................................ 23,962 23,168 3%
-------- --------
Consolidated .......................... $211,355 $203,192 4%
======== ========
</TABLE>
NORTH AMERICAN AUTOMOTIVE/RETAIL REPAIR SERVICES. The revenue decline in
the Company's North American Automotive/Retail Repair Services was caused by a
decrease in volume which was due mainly to machine mix and a lengthening of the
average service interval. This volume decrease was partially offset by price
increases that averaged approximately 4% compared to the second interim period
of 1995.
NORTH AMERICAN INDUSTRIAL SERVICES. The Company's North American
Industrial Services revenue for the current reporting period includes $33.0
million from the Fluid Recovery Service, which represents a 14% increase over
the comparable period of 1995. Approximately four percentage points of this
revenue increase resulted from improved pricing due mainly to a reduction of
discounts. The balance of the increase is attributable to product line expansion
and volume.
8
<PAGE>
The North American Industrial Parts Cleaner Service accounts for the
remaining $28.9 million of revenue, which represents an increase of $1.6
million, or 6%, from the comparable period of 1995. The revenue increase
included price increases averaging approximately 6%. The impact of machine
growth and price increases was partially offset by a lengthening in the average
service interval.
NORTH AMERICAN OIL RECOVERY SERVICES. Revenue from North American Oil
Recovery Services was up $5.1 million, or 16%, from the comparable period of
1995. Approximately $2.3 million of this increase in revenue was derived from
the acquisition of certain assets of Industrial Services Corp. and Mid-Continent
Fuel Co. (the "ISC acquisition") completed during the second interim period of
1996. Price increases in the automotive oil collection business and a higher
volume of automotive oily water gallons collected accounted for most of the
remaining revenue increase.
NORTH AMERICAN OTHER SERVICES. Revenue from Other Services during the
current reporting period decreased $2.0 million, or 6%, from the comparable
period of 1995 due mainly to a decline of $2.2 million from the Imaging Services
business. This revenue decline in Imaging Services was caused by the elimination
of approximately $4.4 million of lower-margin broker business revenue which was
included in the comparable period of 1995, partially offset by an increase of
$2.2 million in revenue realized from servicing customers directly through the
branch network.
EUROPE. European revenues of $24.0 million were up $0.8 million, or 3%,
from the comparable period of 1995. Changes in foreign currency exchange rates
resulted in approximately $1.0 million less revenue in 1996 than the comparable
period in 1995. All major businesses except the Envirosystems business in
Germany showed increases in local currency revenues. These revenue increases
were mainly attributable to higher volume.
OPERATING COSTS AND EXPENSES
Operating costs and expenses as a percentage of revenue were 73.2% in
the current reporting period, compared to 73.3% for the second interim period of
1995. Improved gross profit margin percentages resulting from favorable pricing
in selected markets were offset by a decrease in the gross margin percentage of
the Oil Recovery business as a result of the ISC acquisition which added $2.3
million in revenue but was break-even at the gross profit level.
SELLING AND ADMINISTRATIVE EXPENSES
Selling and administrative expenses decreased from 14.4% of revenue in
1995 to 14.2% of revenue in 1996.
9
<PAGE>
INTEREST EXPENSE
Interest expense decreased $0.4 million to $4.4 million during the
current reporting period due primarily to lower interest rates.
INCOME TAXES
The Company's effective income tax rate was 38.9% for the twelve weeks
ended June 15, 1996 and 40.1% for the comparable period of 1995. The Company's
effective tax rate in the current period was favorably impacted by the timing of
certain tax benefits. The Company expects the effective tax rate for the full
year 1996 to be approximately 40%.
10
<PAGE>
RESULTS OF OPERATIONS
COMPARISON OF THE TWENTY-FOUR WEEK PERIODS ENDED
JUNE 15, 1996 AND JUNE 17, 1995
REVENUE
Revenue for the twenty-four weeks ended June 15, 1996 was $413 million,
up $15 million, or 4%, from the comparable period last year.
Revenue derived from the Company's North American and European
operations during the twenty-four weeks ended June 15, 1996 and June 17, 1995
was as follows:
<TABLE>
<CAPTION>
Thousands of Dollars
Percentage
Increase
June 15, 1996 June 17, 1995 (Decrease)
North America
<S> <C> <C> <C>
Automotive/Retail Repair Services.. $109,107 $111,939 (3%)
Industrial Services ............... 121,054 110,530 10%
Oil Recovery Services ............. 66,473 57,971 15%
Other Services .................... 68,012 71,549 (5%)
-------- -------
Total North America ................. 364,646 351,989 4%
Europe .............................. 48,432 45,762 6%
-------- --------
Consolidated ........................ $413,078 $397,751 4%
======== ========
</TABLE>
NORTH AMERICAN AUTOMOTIVE/RETAIL REPAIR SERVICES. The revenue decline in
the Company's North American Automotive/Retail Repair Services was caused by a
decrease in volume which was due mainly to machine mix and a lengthening of the
average service interval. This volume decrease was partially offset by price
increases that averaged approximately 4% compared to the first twenty-four weeks
of 1995.
NORTH AMERICAN INDUSTRIAL SERVICES. The Company's North American
Industrial Services revenue for the first twenty-four weeks of 1996 includes
$63.4 million from the Fluid Recovery Service, which represents a 13% increase
over the comparable period of 1995. Approximately four percentage points of this
revenue increase resulted from improved pricing due mainly to a reduction of
discounts. The balance of the increase is attributable to product line expansion
and volume.
11
<PAGE>
The North American Industrial Parts Cleaner Service accounts for the
remaining $57.6 million of revenue, which represents an increase of $3.5
million, or 6%, from the comparable period of 1995. The revenue increase
included price increases averaging approximately 6%. The impact of machine
growth and price increases was partially offset by a lengthening of the average
service interval.
NORTH AMERICAN OIL RECOVERY SERVICES. Revenue from North American Oil
Recovery Services for the first twenty-four weeks of 1996 was up $8.5 million,
or 15%, from the comparable period of 1995. Approximately $2.3 million of the
increase is attributable to revenue from the ISC acquisition completed in the
second interim period of 1996. Another $1.7 million of the revenue increase is
mainly due to a 4% increase in the volume of lube oil sold. Price increases in
the automotive oil collection business and a higher volume of automotive oily
water gallons collected were the major factors contributing to the remaining
revenue increase.
NORTH AMERICAN OTHER SERVICES. Revenue from Other Services during the
current reporting period decreased $3.5 million, or 5%, from the comparable
period of 1995. Revenue from the Imaging Services business declined by
approximately $2.2 million during the first twenty-four weeks of 1996 from the
comparable period of 1995. This revenue decline was caused by the elimination of
approximately $6.4 million of lower-margin broker business revenue which was
included in the comparable period of 1995, partially offset by an increase of
$4.2 million in revenue realized from servicing customers directly through the
branch network. The remaining $1.3 million decline in revenue from Other
Services was primarily attributable to a decline in revenue from the
Envirosystems and Dry Cleaner Service businesses due mainly to decreases in
volume.
EUROPE. European revenues for the first twenty-four weeks of 1996 were
$48.4 million, up $2.7 million, or 6%, from the comparable period of 1995.
Changes in foreign currency exchange rates reduced revenues by approximately
$1.0 million in 1996 from 1995. All major businesses except the Envirosystems
business in Germany showed increases in local currency revenue. These revenue
increases were mainly attributable to higher volume.
OPERATING COSTS AND EXPENSES
Operating costs and expenses as a percentage of revenue were 72.8% for
the first twenty-four weeks of 1996, compared to 73.3% for the comparable period
of 1995. Most of this decrease resulted from improved pricing in selected
markets and the elimination of lower-margin Imaging Services broker business.
12
<PAGE>
SELLING AND ADMINISTRATIVE EXPENSES
Selling and administrative expenses increased from 14.3% of revenue for
the first twenty-four weeks of 1995 to 14.5% of revenue during the comparable
period of 1996. The increase is largely due to higher employee related costs.
INTEREST EXPENSE
Interest expense decreased $0.7 million to $8.7 million during the first
twenty-four weeks of 1996 due primarily to lower interest rates.
INCOME TAXES
The Company's effective income tax rate was 39.9% for the twenty-four
weeks ended June 15, 1996 and 40.3% for the comparable period of 1995.
13
<PAGE>
PART II.
Item 1. LEGAL PROCEEDINGS
The Company's goal is to fully comply with all environmental
regulations, but the nature of the Company's business will likely cause it to
incur governmental fines and penalties from time to time as a consequence of its
business operations. In the majority of situations where proceedings are
commenced by governmental authorities, the matters involved relate to alleged
technical violations of permits or orders under which the Company operates, or
laws and regulations to which its operations are subject, and are often the
result of varying interpretations of the applicable requirements. Generally,
these proceedings result from routine inspections conducted by federal and state
regulatory agencies.
From time to time, the Company becomes subject to claims which allege
more than technical violations or in which the claimant seeks remedies which
involve potentially higher costs than routine technical violation claims. These
claims can be brought by either governmental authorities or private claimants.
The relief sought can involve remediation of the alleged environmental damage,
payment of damages, and in the case of claims brought by governmental
authorities, fines and penalties.
In some cases, governmental authorities may seek fines and/or penalties
from the Company which exceed $100,000 in each case. In these cases, the
governmental authorities may allege, among other things, that the Company is
responsible for releases or threatened releases of hazardous substances, that
the Company engaged in soil excavation or clean-up activities without obtaining
requisite advance approvals and/or that the Company committed certain
manifesting, storage or waste handling violations. Only two such proceedings
against the Company were pending or known to be contemplated by governmental
authorities at June 15, 1996.
The Company's practice is to attempt to negotiate resolution of claims
against the Company and its facilities. The Company has to date been able to
resolve cases on generally satisfactory terms. The Company is, however, prepared
to contest claims or remedies which the Company believes to be inappropriate
unless and until satisfactory settlement terms can be agreed upon.
Based on its past experience and its knowledge of pending cases, the
Company believes it is unlikely that the Company's actual liability for the
cases now pending will be materially adverse to the Company's financial
condition. It should be noted, however, that many environmental laws are written
in a way in which the Company's potential liability can be large, and it is
always possible that the Company's actual liability with respect to any
particular environmental claim will prove to be larger than anticipated and
accrued for by the Company. It is also possible that expenses incurred in any
particular reporting period for remediation costs or for fines, penalties, or
judgments could have a material impact on the Company's earnings for that
period.
14
<PAGE>
On April 19, 1996, the U.S. Environmental Protection Agency ("EPA")
published its proposed Hazardous Waste Combuster Rule. This proposed rule will
set emissions standards for incinerators, cement kilns and lightweight aggregate
kilns that burn hazardous waste. As proposed, these standards will require
cement kilns, who are major outlets for the Company's waste-derived fuels, to
make capital improvements which would increase the cost of burning hazardous
waste fuels in cement kilns. However, due to the complexity of the proposed
rule, the lengthy adoption process to which it is subject, and the likelihood
that the rule will undergo changes prior to its adoption, the effect of the
final rule is unknown.
The South Coast Air Quality Management District ("SCAQMD"), the air
district for the greater Los Angeles, California area, is considering amendment
of a rule that would significantly reduce the allowable volatile organic
compound ("VOC") content of materials used for repair and maintenance cleaning.
The proposal being reviewed would, in effect, ban parts cleaning with solutions
containing VOCs in excess of fifty grams per liter as of January 1, 1999. The
SCAQMD contends this proposed amendment will help it meet ozone attainment
standards under the Clean Air Act. The Company is actively working with the
SCAQMD to develop alternatives to the proposed restrictions on parts cleaning.
If the amendment being studied is adopted in its current form, it would require
the Company to convert its SCAQMD solvent parts cleaner customers to an
alternative cleaning solvent or solution.
15
<PAGE>
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's Annual Meeting of Shareholders was held on May 10, 1996.
At the meeting, the Company's shareholders (i) elected the three individuals who
had been nominated by management to the Board of Directors, (ii) approved an
amendment to the 1993 Stock Option Plan, (iii) rejected a shareholder proposal
requesting that the Company declassify the Board of Directors and (iv) rejected
a shareholder proposal regarding "Golden Parachute" agreements. The following
table sets forth the voting results:
<TABLE>
<CAPTION>
---------------------------------------------------------------
Abstentions and
For Against Withheld Broker Non-Votes
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Election of Directors
D.W. Brinckman ............... 47,492,285 -- 462,791 --
M.E. Williams ................ 47,093,276 -- 861,800 --
W.G. Wood .................... 47,457,569 -- 497,507 --
- ------------------------------------------------------------------------------------------------
1993 Stock Option Plan
Amendment .................... 44,612,295 5,416,709 -- 287,172
- ------------------------------------------------------------------------------------------------
Shareholder Proposal
regarding Declassifying
Board ........................ 18,559,395 26,065,600 -- 5,691,181
- ------------------------------------------------------------------------------------------------
Shareholder Proposal
regarding Golden Parachutes... 15,334,231 28,529,058 -- 6,452,887
- ------------------------------------------------------------------------------------------------
</TABLE>
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
EX-27 Financial Data Schedule (EDGAR filing only).
EX-99 Press release issued July 10, 1996 regarding the
Company's results of operations during the twelve
weeks ended June 15, 1996.
(b) Reports on Form 8-K
None.
16
<PAGE>
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 thereunto duly authorized on this 29th day of July, 1996.
SAFETY-KLEEN CORP.
/s/ ROBERT W. WILLMSCHEN, JR.
Robert W. Willmschen, Jr.
Senior Vice President Finance
and Secretary - Chief Financial Officer
17
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Corporation's Consolidated Balance Sheet and Consolidated Statement of Earnings
and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-START> DEC-31-1995
<PERIOD-END> JUN-15-1996
<CASH> 32,108
<SECURITIES> 0
<RECEIVABLES> 118,799
<ALLOWANCES> 7,619
<INVENTORY> 40,526
<CURRENT-ASSETS> 229,268
<PP&E> 858,722
<DEPRECIATION> 331,621
<TOTAL-ASSETS> 1,036,860
<CURRENT-LIABILITIES> 169,561
<BONDS> 287,822
0
0
<COMMON> 5,814
<OTHER-SE> 444,715
<TOTAL-LIABILITY-AND-EQUITY> 1,036,860
<SALES> 0
<TOTAL-REVENUES> 413,078
<CGS> 0
<TOTAL-COSTS> 300,611
<OTHER-EXPENSES> 59,827
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,710
<INCOME-PRETAX> 44,362
<INCOME-TAX> 17,681
<INCOME-CONTINUING> 26,681
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 26,681
<EPS-PRIMARY> 0.46
<EPS-DILUTED> 0
</TABLE>
[LOGO] Safety-Kleen Corp.
1000 N. Randall Road
Elgin, IL 60123
(847) 697-8460
For further information:
FOR IMMEDIATE RELEASE CONTACT: MAUREEN FISK
(847) 468-2452
SAFETY-KLEEN REPORTS 12% EARNINGS INCREASE
FOR SECOND INTERIM PERIOD 1996
------------------------------
ELGIN, ILLINOIS -- JULY 10, 1996 -- Safety-Kleen Corp. (NYSE:SK) today
announced results for the second interim period ended June 15, 1996.
Consolidated revenue for the 12-week period was $211 million, an increase of 4%
compared with the similar period in 1995. Net earnings rose to $13.6 million, an
increase of 12% over the second quarter in 1995. On a per share basis, earnings
were $0.23, compared with $0.21 in the same quarter one year ago.
For the first twenty-four weeks of 1996, consolidated revenue increased 4%
to $413 million. Net earnings rose 10% to $26.7 million from $24.2 million
during the same period one year ago. Earnings per share were $0.46 compared with
$0.42 in 1995.
Commenting on the results, President and Chief Executive Officer, John G.
Johnson, Jr., noted, "As anticipated, our Fluid Recovery ("FRS") and Oil
Recovery Services produced the strongest revenue growth in the second quarter
with increases of 14% and 16%, respectively, compared with the second quarter of
1995. FRS revenue was up $2.5 million over the first quarter of 1996 and Oil
Recovery revenue rose $5.7 million, or 19% , to $36.1 million during the quarter
compared with the first quarter of 1996," added Johnson. Approximately $2.3
million of the increase in Oil Recovery revenue was derived from the acquisition
of certain assets of Industrial Service Corp ("ISC"). The ISC acquisition,
completed in late April of 1996, enhances Safety-Kleen's used oil collection
network and volumes.
- MORE -
<PAGE>
Johnson further added, "We are pleased that the average time interval
between services in our parts cleaner business remained unchanged from year-end
1995. As we discussed in the first quarter results, this is a positive for the
Company in that it represents a departure from the lengthening intervals
witnessed for the previous six years. We are hopeful that this trend will
continue in the future." Johnson noted, "In addition, our plant and recycle
operations are running smoothly and efficiently. The perpetuation of these
factors along with continued growth in our Imaging, Fluid Recovery, and Oil
Recovery Services should produce solid revenue and earnings momentum in the
second half of 1996."
Imaging Services revenue for the second quarter of 1996 effectively
increased $2.2 million when the prior year quarter is adjusted to reflect the
elimination of approximately $4.4 million of broker-related business that
Safety-Kleen has discontinued. Costs associated with the addition and training
of Branch Imaging Specialists as well as facility consolidation costs impacted
profitability in the quarter. "Year-to-date, Imaging revenue and gross profit
are in line with our expectations," Johnson noted. European revenues were up 3%
to $24 million in the second quarter and net earnings more than doubled to
approximately $600,000.
Safety-Kleen is a leading service company specializing in the recovery and
recycling of waste fluids, including the collection and re-refining of used
motor oil. Safety-Kleen stock is traded on the New York Stock Exchange under the
symbol "SK".
- END -
<PAGE>
<TABLE>
CONSOLIDATED STATEMENT OF EARNINGS
(thousands, except per share amounts)
<CAPTION>
-----------------------------------------------------------
TWELVE TWENTY-FOUR
WEEKS ENDED WEEKS ENDED
-----------------------------------------------------------
June 15, June 16, June 15, June 16,
1996 1995 1996 1995
-----------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue
North America
Automotive/Retail Repair Services $ 54,498 $ 55,911 $ 109,107 $ 111,939
Industrial Services
Parts Cleaner ................. $ 28,870 27,260 57,633 54,165
Fluid Recovery ................ $ 32,973 28,841 63,421 56,365
Total Industrial .............. $ 61,843 56,101 121,054 110,530
Oil Recovery Services ........... $ 36,074 30,993 66,473 57,971
Other ........................... $ 34,978 37,019 68,012 71,549
Total North America ............. $ 187,393 180,024 364,646 351,989
Europe ............................. $ 23,962 23,168 48,432 45,762
Consolidated Revenue ................. $ 211,355 203,192 413,078 397,751
Operating costs and expenses ......... $ 154,788 148,986 300,611 291,403
Selling and administrative expenses .. $ 30,099 29,323 59,827 56,893
Operating income ..................... $ 26,468 24,883 52,640 49,455
Interest income ...................... $ 252 225 432 485
Interest expense ..................... ($ 4,446) (4,843) (8,710) (9,387)
Earnings before income taxes ......... $ 22,274 20,265 44,362 40,553
Income taxes ......................... $ 8,670 8,134 17,681 16,351
Net earnings ......................... $ 13,604 $ 12,131 $ 26,681 $ 24,202
Earnings per common and common
equivalent share ................... $ 0.23 $ 0.21 $ 0.46 $ 0.42
Average number of common and common
equivalent shares outstanding ...... 58,041 57,906 57,983 57,847
Cash dividends per common share ...... $ 0.09 $ 0.09 $ 0.18 $ 0.18
</TABLE>
- -----------------------------
1. The Company's interim reporting periods are twelve weeks each for the first
three reporting periods of the year and sixteen weeks for the fourth
reporting period.
<PAGE>
<TABLE>
SAFETY-KLEEN CORP.
Key Statistics
TWELVE WEEKS ENDED JUNE 15, 1996
<CAPTION>
1996 1995 Change
---- ---- ------
<S> <C> <C> <C>
Parts Cleaners In Service at Quarter End
- ----------------------------------------
Industrial .............................................. 149,535 144,145 5,390
All Other ............................................... 460,239 466,944 (6,705)
Total ................................................... 609,774 611,089 (1,315)
Average Service Interval in Weeks........................ 8.85 8.47 0.38
Oil Recovery Service
- --------------------
Branch Collection:
Used Oil/Glycol/Oily Water Gallons Collected
Quarter ............................................ 35.8 Million 30.5 Million 5.3 Million
Year-to-date ....................................... 62.0 Million 58.8 Million 3.2 Million
Avg Revenue Per Used Oil/Glycol/Oily
Water Gal. Collected
Quarter ............................................ $0.267 $0.256 $0.011
Year-to-date ....................................... $0.285 $0.247 $0.038
Avg. Base Oil Selling Price Per Gallon
Quarter ............................................ $1.004 $1.000 $0.004
Year-to-date ....................................... $0.999 $0.995 $0.004
</TABLE>
