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SCHEDULE 14A INFORMATION
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SAFETY-KLEEN CORP.
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Safety-Kleen Announces Record Fourth Quarter and Year End Results
ELGIN, Ill. Feb. 13 /PRNewswire/ -- Safety-Kleen Corp. (NYSE: SK - news)
today announced record fourth quarter and full year results for the period
ended Jan. 3, 1998. The fourth quarter 1997 and full year pre-tax earnings
were negatively impacted by $3.2 million for merger related expenses.
For the seventeen week period, consolidated revenue was $327.7 million, up
10% or $31 million compared with the similar period one year ago. In 1997,
there were 17 weeks in the final quarter versus 16 weeks in 1996. Net
income was $22.9 million or 12% higher than in the fourth quarter of 1996.
For the period, diluted earnings per share were $0.38.
Revenue for the year was $1.008 billion, up 9% or $85 million over 1996
revenue of $923 million. Net earnings for 1997 were $63.2 million or $1.07
diluted earnings per share, an increase of $2.1 million. This compares with
diluted earnings per share of $1.05 in 1996. The average number of shares
and equivalent shares outstanding for the year was 58.9 million. The
effective tax rate for 1997 was 37%, down from 40% in 1996 due to the
timing of certain tax benefits realized.
Safety-Kleen President and Chief Operating Officer Joseph Chalhoub was
extremely pleased with the results, stating that numerous markets achieved
strong revenue gains for the year. "In particular, our North American
Automotive Retail/Repair Service revenue increased $23 million due
primarily to significant gains in our Vacuum Service. Imaging Services and
Envirosystems in North America also achieved revenue gains of 33% and 16%
respectively. In addition, we are very pleased with the improvement in our
Fluid Recovery Service ("FRS") which has seen growth of $22.1 million
year over year, or 15%. The majority of the increase came from the
Technical Field Service or "Lab Pack" business we initiated early in 1997
which contributed approximately $12.5 million to the FRS revenue total. New
service offerings including Imaging, Vacuum, and Lab Pack contributed
revenue in excess of $60 million in 1997, exceeding our goal by $10
million," said Chalhoub.
The Company further noted that European revenues were strong and under
constant exchange rates, revenue would have been approximately $7 million
higher or approximately 10% over last year.
Chalhoub stated that while the Company's Oil Recovery Service ("ORS")
continues to be impacted by lower base and blended lube oil selling prices,
ORS still achieved an overall revenue gain for the year due to higher
volume of blended lube oil as well as higher used oil collection prices
realized as a prior acquisition is further integrated into the Safety-Kleen
structure. The average combined
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collection fee for oil, oily water and glycol for 1997 was $0.283 per gallon
compared with $0.264 during 1996. Base lube oil selling prices for the year
averaged $0.83 per gallon compared with $0.97 per gallon in 1996 and $0.99 per
gallon in 1995.
The Company further added that SG&A expense trends are positive. SG&A
expenses were 13.7% of 1997 revenue, as compared to 14.3% of revenue in
1996. The final quarter of 1997 saw this rate decrease to 12.8%. "We have
made extensive efforts to bring our spending levels down and have seen
definite improvement as a result," noted Chalhoub.
Safety-Kleen remains committed to its $27 per share all-cash merger
agreement with SK Parent Corp. that was entered into November 20, 1997
after several months of evaluating strategic alternatives. "The Board has
made very difficult decisions with respect to the future of Safety-Kleen
and the enhancement of shareholder value. We believe that the all-cash
merger is in the best interests of shareholders and we remain focused on
seeking shareholder approval of the merger at a special meeting of
shareholders on February 25, 1998," Chalhoub concluded.
Safety-Kleen is an industrial and environmental service company dedicated
to helping nearly 400,000 industrial and automotive customers recycle and
process their waste streams.
CONSOLIDATED STATEMENT OF EARNINGS
($ in thousands, except per share amounts)
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<CAPTION>
SEVENTEEN SIXTEEN FIFTY-THREE FIFTY-TWO
WEEKS ENDED WEEKS ENDED WEEKS ENDED WEEKS ENDED
Jan. 3, 1998 Dec. 28, 1996 Jan. 3. 1998 Dec. 28, 1996
<S> <C> <C> <C> <C>
Revenue
North America
Industrial Services
Parts Cleaner $46,175 $41,527 $140,922 $128,801
Fluid Recovery 54,084 46,451 165,147 143,038
Total Industrial 100,259 87,978 306,069 271,839
Automotive/Retail
Repair Services 86,163 79,662 267,997 244,969
Oil Recovery Services 50,123 48,350 156,259 150,838
Other 55,943 46,561 167,700 149,156
Total North America 292,488 262,551 898,025 816,802
Europe 35,243 34,399 109,878 106,324
Consolidated Revenue 327,731 296,950 1,007,903 923,126
Operating costs and
expenses 241,843 216,086 748,986 671,971
Gross profit 85,888 80,864 258,917 251,155
Selling and administrative
expenses 41,913 41,382 138,492 131,665
Operating income 43,975 39,482 120,425 119,490
Merger related costs 3,231 0 3,231 0
Interest expense, net 5,161 5,384 16,694 17,842
Earnings before income
taxes 35,583 34,098 100,500 101,648
Income taxes 12,710 13,674 37,330 40,539
Net earnings $22,873 $20,424 $63,170 $61,109
</TABLE>
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<TABLE>
<S> <C> <C> <C> <C>
Earnings per share:
Basic $0.39 $0.35 $1.08 $1.05
Diluted $0.38 $0.35 $1.07 $1.05
Average number of shares
outstanding 58,662 58,246 58,415 58,089
Average number of common
and common equivalent
shares outstanding 59,921 58,364 58,926 58,152
Cash dividends per common
share $0.09 $0.09 $0.36 $0.36
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A. The Company's interim reporting periods are twelve weeks each for the
first three reporting periods of the year and seventeen and sixteen weeks
for the fourth reporting period of 1997 and 1996, respectively.
