<PAGE>
================================================================================
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 thirty-six weeks ended September 7, 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 September 7, 1996 were 58,242,839.
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 September 7, 1996 and December 30, 1995, results of
operations for the twelve and thirty-six week periods ended September 7, 1996
and September 9, 1995 and cash flows for the thirty-six week periods ended
September 7, 1996 and September 9, 1995. The 1996 interim results reported
herein may not necessarily be indicative of the results of operations for the
full year 1996.
2
<PAGE>
SAFETY-KLEEN CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollar amounts are in thousands except per share data)
ASSETS
<TABLE>
<CAPTION>
September 7, 1996 December 30, 1995
----------------- -----------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 16,264 $ 22,238
Trade accounts receivable,
less allowances of $8,056
and $7,969, respectively 129,739 110,120
Inventories 42,745 36,020
Prepaid expenses and other 48,882 37,830
----------------- -----------------
Total current assets 237,630 206,208
----------------- -----------------
Equipment at customers and
components, at cost, less
accumulated depreciation of
$46,211 and $44,072,
respectively 124,042 117,383
Property, plant and
equipment, at cost, less
accumulated depreciation of
$341,956 and $315,092,
respectively 530,184 529,553
Intangible assets, at cost,
less accumulated
amortization of $71,962 and
$68,008, respectively 132,642 127,302
Other assets 30,703 28,604
----------------- -----------------
$1,055,201 $1,009,050
================= =================
LIABILITY AND SHAREHOLDERS' EQUITY
Current liabilities:
Dividends payable $ 5,244 $ -
Trade accounts payable 68,261 62,795
Accrued expenses 70,484 69,695
Restructure liability 5,040 10,450
Income taxes payable 19,036 8,175
Accrued environmental liabilities 8,674 11,561
----------------- -----------------
Total current liabilities 176,739 162,676
----------------- -----------------
Long-term debt 289,896 283,715
----------------- -----------------
Deferred income taxes 43,559 43,111
----------------- -----------------
Restructure liability 11,736 12,069
----------------- -----------------
Accrued environmental liabilities 42,236 42,713
----------------- -----------------
Other liabilities 28,686 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
58,242,839 and
57,868,541 shares,
respectively) 5,824 5,787
Additional paid-in capital 192,049 186,365
Retained earnings 281,046 256,052
Minimum pension liability adjustment (1,226) (1,226)
Cumulative translation adjustments (15,344) (13,543)
----------------- -----------------
462,349 433,435
----------------- -----------------
$1,055,201 $1,009,050
================= =================
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
SAFETY-KLEEN CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(amounts are in thousands except per share data)
<TABLE>
<CAPTION>
Twelve Weeks Ended Thirty-Six Weeks Ended
------------------------------ ------------------------------
Sept. 7, 1996 Sept. 9, 1995 Sept. 7, 1996 Sept. 9, 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenue $213,098 $197,529 $626,176 $595,280
------------- ------------- ------------- -------------
Costs and expenses:
Operating costs and expenses 155,274 145,239 455,885 436,642
Selling and administrative expenses 30,456 29,087 90,283 85,980
Interest income (208) (171) (640) (656)
Interest expense 4,388 4,671 13,098 14,058
------------- ------------- ------------- -------------
189,910 178,826 558,626 536,024
------------- ------------- ------------- -------------
Earnings before income taxes 23,188 18,703 67,550 59,256
Income taxes 9,184 7,577 26,865 23,928
------------- ------------- ------------- -------------
Net earnings $ 14,004 $ 11,126 $ 40,685 $ 35,328
============= ============= ============== ============
Earnings per common and common
equivalent share: $ 0.24 $ 0.19 $ 0.70 $ 0.61
============= ============= ============== ============
Average number of common and
common equivalent shares outstanding 58,330 57,849 58,078 57,854
============= ============= ============== ============
Cash dividends per common share $ 0.09 $ 0.09 $ 0.27 $ 0.27
============= ============= ============== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
SAFETY-KLEEN CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollar amounts are in thousands)
<TABLE>
<CAPTION>
Thirty-Six Weeks Ended
Sept. 7, 1996 Sept. 9, 1995
------------- -------------
<S> <C> <C>
Net cash provided by operating
activities $ 70,984 $ 84,998
------------- -------------
Cash flows used in investing activities:
Equipment at customers and component
additions (17,470) (26,832)
Property, plant and equipment additions (23,755) (26,378)
Business acquisitions and other (32,889) (20,077)
------------- -------------
Net cash used in investing activities (74,114) (73,287)
------------- -------------
Cash flows from (used in) financing
activities:
Net borrowings (payments) 6,181 13,212
Dividends (10,446) (10,400)
Other 1,514 1,931
------------- -------------
Net cash provided from (used
in) financing activities (2,751) 4,743
------------- -------------
Effect of exchange rate changes on cash (93) 142
------------- -------------
Net increase (decrease) in cash and
cash equivalents (5,974) 16,596
Cash and cash equivalents at beginning
of year 22,238 21,015
------------- -------------
Cash and cash equivalents at end of the
reporting period $ 16,264 $ 37,611
============= =============
Supplemental disclosures of
cash paid during
the reporting period:
Interest (net of amount capitalized) $ 11,719 $ 11,122
============= =============
Income taxes paid (net of
refunds received) $ 13,513 $ 5,149
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
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 September 7, 1996 and December 30, 1995 were $4.9 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
September 7, 1996 and unchanged at December 30, 1995.
2. ACQUISITIONS
During the third interim period, the Company acquired certain assets of
Pure Solve Inc., a parts cleaner and paint gun cleaner service company with
operations in the southeastern United States and the United Kingdom. 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. These
acquisitions were accounted for using the purchase method, and, accordingly,
their operating results have been included in the Company's Consolidated
Statements of Earnings only since the date of acquisition. All acquisitions,
individually or in the aggregate, were 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 $60.9 million at September 7, 1996. Year-to-date capital spending for
equipment at customers and property, plant and equipment additions excluding
business acquisitions totaled $41.2 million. These expenditures were mainly
financed by internally generated cash. The Company's total long-term debt
increased $6.2 million during the first thirty-six weeks of 1996 to $289.9
million at September 7, 1996.
The Company's long-term debt to total capital ratio was 38.5% at
September 7, 1996 and 39.6% at December 30, 1995.
The Company's restructure liabilities declined $5.7 million during the
first thirty-six weeks of 1996 from $22.5 million to $16.8 million.
7
<PAGE>
RESULTS OF OPERATIONS
---------------------
COMPARISON OF THE TWELVE WEEK PERIODS ENDED
-------------------------------------------
SEPTEMBER 7, 1996 AND SEPTEMBER 9, 1995
---------------------------------------
REVENUE
- -------
Revenue for the twelve weeks ended September 7, 1996 was $213 million, up
$16 million, or 8%, from the comparable period last year.
Revenue derived from the Company's North American and European operations
during the twelve weeks ended September 7, 1996 and September 9, 1995 was as
follows:
<TABLE>
<CAPTION>
Thousands of Dollars
--------------------
Percentage
Increase
Sept. 7, 1996 Sept. 9, 1995 (Decrease)
------------- ------------- ----------
<S> <C> <C> <C>
North America
Automotive/Retail Repair Services $ 56,200 $ 54,415 3%
Industrial Services 62,807 55,855 12%
Oil Recovery Services 36,015 30,263 19%
Other Services 34,583 34,450 -
-------- --------
Total North America 189,605 174,983 8%
Europe 23,493 22,546 4%
-------- --------
Consolidated $213,098 $197,529 8%
======== ========
</TABLE>
NORTH AMERICAN AUTOMOTIVE/RETAIL REPAIR SERVICES. The introduction of the
new Vacuum Services business increased the Company's North American
Automotive/Retail Repair Services revenue by approximately $1.3 million in the
current reporting period. In this service, Safety-Kleen representatives utilize
a vacuum truck to remove residual oil and sludge from automotive and small
industrial customers' oil/water separators on a regularly scheduled basis.
The remaining revenue increase in the Company's North American
Automotive/Retail Repair Services was caused by price increases that averaged
approximately 5% compared to the third interim period of 1995. The effect of
the price increase was partially offset by lower volume which resulted mainly
from fewer machines in service and a lengthening of the average service
interval.
8
<PAGE>
NORTH AMERICAN INDUSTRIAL SERVICES. The Company's North American
Industrial Services revenue for the current reporting period includes $33.2
million from the Fluid Recovery Service, which represents an 18% increase over
the comparable period of 1995. Approximately three percentage points of this
revenue increase resulted from improved drum pricing due mainly to a reduction
of discounts. The balance of the increase is mainly attributable to improved
drum volume and product line expansion.
The North American Industrial Parts Cleaner Service accounts for the
remaining $29.6 million of revenue, which represents an increase of $2.0
million, or 7%, from the comparable period of 1995. The revenue increase
included price increases averaging approximately 4%. The improved volume
experienced during the current quarter resulted from machine growth and
favorable mix which were partially offset by a slight lengthening in the average
service interval.
NORTH AMERICAN OIL RECOVERY SERVICES. Revenue from North American Oil
Recovery Services was up $5.8 million, or 19%, from the comparable period of
1995. Approximately $3.7 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 increased $0.1 million from the comparable period of
1995. Imaging Services revenue increased by $0.7 million in the current period.
EUROPE. European revenues of $23.5 million were up $1.0 million, or 4%,
from the comparable period of 1995. Changes in foreign currency exchange rates
resulted in approximately $0.8 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 72.9% in the
current reporting period, compared to 73.5% for the third interim period of
1995. This increase in the gross profit margin is mainly attributable to the
higher waste-derived fuel processing costs the Company experienced in the third
quarter of 1995 as a result of kiln outages. The Company's fuel plants and
recycle operations have operated efficiently during the first three quarters of
1996. 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 $3.7
million in revenue but was break-even at the gross profit level.
9
<PAGE>
SELLING AND ADMINISTRATIVE EXPENSES
- -----------------------------------
Selling and administrative expenses decreased from 14.7% of revenue in 1995
to 14.3% of revenue in 1996.
INTEREST EXPENSE
- ----------------
Interest expense decreased $0.3 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 39.6% for the twelve weeks
ended September 7, 1996 and 40.5% 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 THIRTY-SIX WEEK PERIODS ENDED
-----------------------------------------------
SEPTEMBER 7, 1996 AND SEPTEMBER 9, 1995
---------------------------------------
REVENUE
- -------
Revenue for the thirty-six weeks ended September 7, 1996 was $626 million,
up $31 million, or 5%, from the comparable period last year.
Revenue derived from the Company's North American and European operations
during the thirty-six weeks ended September 7, 1996 and September 9, 1995 was as
follows:
<TABLE>
<CAPTION>
Thousands of Dollars
--------------------
Percentage
Increase
Sept. 7, 1996 Sept. 9, 1995 (Decrease)
------------- ------------- ----------
<S> <C> <C> <C>
North America
Automotive/Retail Repair Services $165,307 $166,354 (1%)
Industrial Services 183,861 166,385 11%
Oil Recovery Services 102,488 88,234 16%
Other Services 102,595 105,999 (3%)
-------- --------
Total North America 554,251 526,972 5%
Europe 71,925 68,308 5%
-------- --------
Consolidated $626,176 $595,280 5%
======== ========
</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 resulted mainly from fewer machines in service 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
thirty-six weeks of 1995.
NORTH AMERICAN INDUSTRIAL SERVICES. The Company's North American
Industrial Services revenue for the first thirty-six weeks of 1996 includes
$96.6 million from the Fluid Recovery Service, which represents a 14% increase
over the comparable period of 1995. Approximately three percentage points of
this revenue increase resulted from improved drum pricing due mainly to a
reduction of discounts. The balance of the increase is mainly attributable to
improved drum volume and product line expansion.
11
<PAGE>
The North American Industrial Parts Cleaner Service accounts for the
remaining $87.3 million of revenue, which represents an increase of $5.5
million, or 7%, from the comparable period of 1995. The revenue increase
included price increases averaging approximately 5%. The improved volume
experienced in the current year-to-date period resulted from machine growth and
favorable mix which were 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 thirty-six weeks of 1996 was up $14.3 million,
or 16%, from the comparable period of 1995. Approximately $6.0 million of the
increase is attributable to revenue from the ISC acquisition completed in the
second interim period of 1996. Another $2.1 million of the revenue increase is
mainly due to an increase in the volume and product mix 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 year-to-date period decreased $3.4 million, or 3%, from the comparable
period of 1995. Revenue from the Imaging Services business declined by
approximately $1.5 million during the first thirty-six weeks of 1996 from the
comparable period of 1995. This revenue decline was caused by the elimination
of approximately $10.9 million of lower-margin broker business revenue which was
included in the comparable period of 1995, partially offset by an increase of
$9.4 million in revenue realized from servicing customers directly through the
branch network. The remaining $1.9 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 thirty-six weeks of 1996 were
$71.9 million, up $3.6 million, or 5%, from the comparable period of 1995.
Changes in foreign currency exchange rates reduced revenues by approximately
$1.8 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 thirty-six weeks of 1996, compared to 73.4% 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. Higher
waste-derived fuel processing costs experienced in the third quarter of 1995
caused by kiln outages also adversely affected the Company's gross profit margin
in 1995.
SELLING AND ADMINISTRATIVE EXPENSES
- -----------------------------------
Selling and administrative expenses as a percent of revenue were 14.4% for
the current year-to-date period, unchanged from the comparable period of 1995.
12
<PAGE>
INTEREST EXPENSE
- ----------------
Interest expense decreased $1.0 million to $13.1 million during the first
thirty-six weeks of 1996 due primarily to lower interest rates.
INCOME TAXES
- ------------
The Company's effective income tax rate was 39.8% for the thirty-six weeks
ended September 7, 1996 and 40.4% for the comparable period of 1995.
PRIVATE SECURITIES LITIGATION REFORM ACT DISCLOSURE
---------------------------------------------------
In an effort to encourage companies to provide investors with revenue and
earnings projections and other "forward-looking" statements about their business
prospects, Congress recently passed the Private Securities Litigation Reform Act
which, under certain circumstances, creates a "safe harbor" from private actions
based on such forward-looking statements. In order to take advantage of the
Act's safe harbor, the Company wishes to inform the reader that this quarterly
report contains various forward-looking statements, including revenue
projections. There are many factors that could cause actual results to differ
materially, such as: adoption of new environmental laws and regulations and
changes in the way such laws and regulations are interpreted and enforced;
general business conditions, such as the level of competition, changes in demand
for the Company's services and the strength of the economy in general; and
prices for petroleum based products.
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 September 7, 1996.
The Company settled one such case during the twelve week period ended
September 7, 1996. In this case, the Company and the State of New York entered
into a settlement agreement to resolve alleged violations relating to the Booth
Oil Katherine Street facility in Buffalo, New York. The case was resolved for a
penalty of $100,000.
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
14
<PAGE>
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.
On April 19, 1996, the U.S. Environmental Protection Agency ("EPA")
published its proposed Hazardous Waste Combustor 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, has amended its rule
setting the allowable volatile organic compound ("VOC") content of materials
used for remote reservoir repair and maintenance cleaning. The amended rule
will, in effect, ban remote reservoir parts cleaning with solutions containing
VOCs in excess of fifty grams per liter as of January 1, 1999, except in certain
applications. Substantially all of the Company's parts cleaners currently
placed with SCAQMD customers utilize solvents containing VOCs in excess of fifty
grams per liter. The Company offers aqueous parts cleaning systems which meet
the 1999 SCAQMD requirements and is working with its SCAQMD customers to
identify which customers will need to convert their solvent parts cleaners to an
alternative cleaning solvent or solution prior to January 1, 1999. In addition,
the Company will continue to actively work with the SCAQMD to identify
appropriate exemptions and develop alternatives to the 1999 VOC limits for
materials used for remote reservoir parts cleaning.
15
<PAGE>
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
EX-27 Financial Data Schedule (EDGAR filing only).
EX-99.1 Press release issued September 30, 1996 regarding the
Company's results of operations during the twelve weeks ended
September 7, 1996.
EX-99.2 Press release issued October 10, 1996 announcing the
Company's new Vacuum Service.
(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 21st day of October, 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>
<PAGE>
<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> SEP-07-1996
<CASH> 16,264
<SECURITIES> 0
<RECEIVABLES> 137,795
<ALLOWANCES> 8,056
<INVENTORY> 42,745
<CURRENT-ASSETS> 237,630
<PP&E> 872,140
<DEPRECIATION> 341,956
<TOTAL-ASSETS> 1,055,201
<CURRENT-LIABILITIES> 176,739
<BONDS> 289,896
<COMMON> 5,824
0
0
<OTHER-SE> 456,525
<TOTAL-LIABILITY-AND-EQUITY> 1,055,201
<SALES> 0
<TOTAL-REVENUES> 626,176
<CGS> 0
<TOTAL-COSTS> 455,885
<OTHER-EXPENSES> 90,283
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,098
<INCOME-PRETAX> 67,550
<INCOME-TAX> 26,865
<INCOME-CONTINUING> 40,685
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 40,685
<EPS-PRIMARY> 0.70
<EPS-DILUTED> 0
</TABLE>
<PAGE>
Exhibit 99.1
[LETTERHEAD OF SAFETY-KLEEN]
news
FOR IMMEDIATE RELEASE CONTACT: LAURENCE RUDNICK
(847) 468-2408
MAUREEN FISK
(847) 468-2452
SAFETY-KLEEN REPORTS INCREASED REVENUE
--------------------------------------
AND EARNINGS FOR THIRD INTERIM PERIOD 1996
------------------------------------------
Elgin, Illinois -- September 30, 1996 -- Safety-Kleen Corp. (NYSE:SK) today
announced results for the third interim period ended Sept. 7, 1996. Consolidated
revenue for the 12-week period was $213 million, an increase of 8% compared with
the similar period in 1995. Net earnings rose to $14.0 million, an increase of
26% over the $11.1 million reported in the third quarter of 1995. On a per share
basis, earnings were $0.24, compared with $0.19 in the same quarter one year
ago.
For the first thirty-six weeks of 1996, consolidated revenue increased 5%
to $626 million. Net earnings rose 15% to $40.7 million from $35.3 million
during the same period one year ago. Year-to-date earnings per share were $0.70
compared with $0.61 in 1995.
Commenting on the results, President and Chief Executive Officer, John G.
Johnson, Jr. noted, "Revenue growth year over year improved from 4% in each of
the first two quarters of the year to 8% in the third quarter. The stronger
growth in the third quarter reflects improvement in our Industrial Parts Cleaner
Service business as well as in our Fluid Recovery Service. In addition, our Oil
Recovery Service revenue increased 19% compared with the third quarter of 1995
reflecting, in part, the additional revenue contribution from the 1996
acquisition of Industrial Service Corp. The integration of this acquisition as
well as two
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[LOGO] PRINTED ON RECYCLED PAPER.
<PAGE>
[SAFETY-KLEEN LOGO]
smaller acquisitions in the oil recovery business have extended Safety-Kleen's
presence in the central and western United States." Johnson noted.
Johnson further added, "We are pleased to report that our fuel plants and
recycle operations have continued to run smoothly and efficiently in 1996."
Reflected in the earnings comparison are unusually high costs incurred in the
third quarter of 1995 associated with the disposal of waste-derived fuels due to
kiln outages.
During the third quarter, Safety-Kleen acquired the business of a parts
cleaner and paint refinishing service company with operations in both the United
States and the U.K.. The acquisition should ultimately add 11,000 customers and
15,000 units. Approximately 3,500 of these units were signed up by the end of
the third quarter. "Revenue from the Automotive/Retail Repairs Service increased
3% in the third quarter of 1996 compared with the similar quarter in 1995. The
increase is a result of acquisitions as well as new service offerings."
Johnson concluded, "We are pleased with the acceleration of revenue growth
in the third quarter and expect further improvement in the remaining quarter of
the year."
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>
[SAFETY-KLEEN LOGO]
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF EARNINGS
(thousands, except per share amounts)
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
TWELVE THIRTY-SIX
WEEKS ENDED WEEKS ENDED
-------------------------------------------------------------------------------
Sept. 7, 1996 Sept. 9, 1995 Sept. 7, 1996 Sept. 9, 1995
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue
North America
Automotive/Retail Repair Services $ 56,200 $ 54,415 $165,307 $166,354
-------------------------------------------------------------------------------
Industrial Services
Parts Cleaner 29,641 27,644 87,274 81,809
Fluid Recovery 33,166 28,211 96,587 84,576
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Total Industrial 62,807 55,855 183,861 166,385
Oil Recovery Services 36,015 30,263 102,488 88,234
Other 34,583 34,450 102,595 105,999
-------------------------------------------------------------------------------
Total North America 189,605 174,983 554,251 526,972
Europe 23,493 22,546 71,925 68,308
-------------------------------------------------------------------------------
Consolidated Revenue 213,098 197,529 626,176 595,280
Operating costs and expenses 155,274 145,239 455,885 436,642
Selling and administrative expenses 30,456 29,087 90,283 85,980
-------------------------------------------------------------------------------
Operating income 27,368 23,203 80,008 72,658
Interest income 208 171 640 656
Interest expense (4,388) (4,671) (13,098) (14,058)
-------------------------------------------------------------------------------
Earnings before income taxes 23,188 18,703 67,550 59,256
Income taxes 9,184 7,577 26,865 23,928
-------------------------------------------------------------------------------
Net earnings $ 14,004 $ 11,126 $ 40,685 $ 35,328
===============================================================================
Earnings per common and common
equivalent share $ 0.24 $ 0.19 $ 0.70 $ 0.61
===============================================================================
Average number of common and common
equivalent shares outstanding 58,330 57,849 58,078 57,854
===============================================================================
Cash dividends per common share $ 0.09 $ 0.09 $ 0.27 $ 0.27
===============================================================================
</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>
[SAFETY-KLEEN LOGO]
SAFETY-KLEEN CORP.
Key Statistics
Twelve Weeks Ended September 7, 1996
<TABLE>
<CAPTION>
------------------------------------------------------------
Percent
1996 1995 Change Change
============================================================
Parts Cleaners In Service at Quarter End
- ----------------------------------------
<S> <C> <C> <C> <C>
Industrial 150,063 146,739 3,324 2.3%
All Other 458,497 466,512 (8,015) (1.7%)
Total 608,560 613,251 (4,691) (0.8%)
Average Service Interval in Weeks 8.85 8.69 0.16 1.8%
Oil Recovery Service
- --------------------
Branch Collection:
Used Oil/Glycol/Oily Water Gallons Collected
Quarter 41.2 Million 29.9 Million 11.3 Million 37.8%
Year-to-date 103.2 Million 88.6 Million 14.6 Million 16.5%
Avg. Revenue Per Used Oil/Glyco/Oily Water Gal. Collected
Quarter $0.243 $0.276 ($0.033) (12.0%)
Year-to-date $0.269 $0.257 $0.012 4.7%
Avg. Base Oil Selling Price Per Gallon
Quarter $0.986 $0.993 ($0.007) (0.7%)
Year-to-date $0.995 $0.995 $0.000 0.0%
------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit 99.2
NEWS RELEASE
FOR IMMEDIATE RELEASE CONTACT: MAUREEN FISK
(847) 468-2452
SAFETY-KLEEN CORP.
ANNOUNCES NEW VACUUM SERVICE
Elgin, Illinois, October 10, 1996 -- Safety-Kleen Corp. (NYSE/SK)
announced today the introduction of a new business within its Automotive/Retail
Repair Service. Safety-Kleen's new Vacuum Service will focus on automotive and
small industrial shops that have oil/water separators that must be cleaned of
residual oil and sludge on a regular basis. Safety-Kleen is adding a new fleet
of specialized trucks to efficiently meet an underserved customer need. The
Company expects this new service to renew growth in its traditional automotive
market.
"The new Vacuum Service has been in a rollout phase and by year-end we
expect to offer this service in a third of our branches across the U.S.," noted
John G. Johnson, Jr., President and Chief Executive Officer of Safety-Kleen.
"This business is a natural fit with our branch network and allows us to offer
another valued service to our current automotive customer base. Our larger
customers have asked Safety-Kleen to provide this service nationally, and we
plan to achieve this. We believe the Vacuum Service will grow to over $50
million of annual revenues over the next three years."
At a Company sponsored conference held today in Chicago, Safety-Kleen also
discussed the expansion of its used oil collection network and the addition of
re-refinery capacity at its facilities in East Chicago, Indiana and Breslau,
Ontario, Canada in the second half of 1996 and 1997. "Safety-Kleen's focus on
the small quantity generator has allowed us to create an efficient collection
network that we continue to expand geographically," stated Joseph Chalhoub,
Senior Vice President, Operations, Oil Recovery
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<PAGE>
and Envirosystems. "The incremental plant expansions will increase our total re-
refining capacity by more than 25%," Chalhoub concluded.
Safety-Kleen also announced projected revenue goals for 1996 and 1999.
Revenue for the current year is expected to reach approximately $920 million.
The Company said that it expects improved revenue growth in the future as a
result of the new Vacuum Service business, expansion of the Oil Recovery
business and continued growth in its Industrial Services business. Revenue was
projected to grow at a compound rate of approximately 11% through 1999.
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".
Private Securities Litigation Reform Act Disclosure
- ---------------------------------------------------
This press release contains various forward-looking statements, including
revenue projections. There are many factors that could cause actual results to
differ materially, such as: adoption of new environmental laws and regulations
and changes in the way such laws and regulations are interpreted and enforced;
general business conditions, such as the level of competition, changes in demand
for the Company's services and the strength of the economy in general; and
prices for petroleum based products.
-END-
