FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 28, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-19621
APPLIANCE RECYCLING CENTERS OF AMERICA, INC.
MINNESOTA 41-1454591
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7400 Excelsior Blvd.
Minneapolis, Minnesota 55426-4517
(Address of principal executive
offices)
(612) 930-9000
(Registrant's telephone number, including area code)
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, and (2) has been subject to such filing requirements
for the past 90 days.
YES_X_ NO___
As of August 7, 1997, the number of shares outstanding of the registrant's no
par value common stock was 1,319,325 shares.
<PAGE>
APPLIANCE RECYCLING CENTERS OF AMERICA, INC.
INDEX
PART I. FINANCIAL INFORMATION
Item 1: Financial Statements:
Consolidated Balance Sheets as of
June 28, 1997 and December 28, 1996
Consolidated Statements of Operations for the
Three and Six Months Ended June 28, 1997 and June 29, 1996
Consolidated Statements of Cash Flows for the
Six Months Ended June 28, 1997 and June 29, 1996
Notes to Consolidated Financial Statements
Item 2: Management's Discussion and Analysis
of Financial Condition and Results of Operations
PART II. OTHER INFORMATION
<PAGE>
Appliance Recycling Centers of America, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 28, December 28,
1997 1996
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 307,000 $ 280,000
Accounts receivable, net of allowance of $35,000 in 1997
and $84,000 in 1996 984,000 1,127,000
Inventories 387,000 444,000
Other current assets 100,000 246,000
Income taxes receivable 29,000 400,000
- ------------------------------------------------------------------------------------------------------
Total current assets $ 1,807,000 $ 2,497,000
- ------------------------------------------------------------------------------------------------------
Property and Equipment, at cost
Land $ 2,103,000 $ 2,103,000
Buildings and improvements 3,901,000 3,798,000
Equipment 5,519,000 5,604,000
- ------------------------------------------------------------------------------------------------------
$ 11,523,000 $ 11,505,000
Less accumulated depreciation 4,532,000 4,086,000
- ------------------------------------------------------------------------------------------------------
Net property and equipment $ 6,991,000 $ 7,419,000
- ------------------------------------------------------------------------------------------------------
Other Assets $ 108,000 $ 76,000
- ------------------------------------------------------------------------------------------------------
Total assets $ 8,906,000 $ 9,992,000
======================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Line of credit $ 1,091,000 $ 1,390,000
Current maturities of long-term obligations 161,000 227,000
Accounts payable 792,000 1,391,000
Accrued expenses 898,000 1,160,000
- ------------------------------------------------------------------------------------------------------
Total current liabilities $ 2,942,000 $ 4,168,000
Minority Interest in Subsidiary 53,000 -
Long-Term Obligations, less current maturities 1,662,000 1,711,000
- ------------------------------------------------------------------------------------------------------
Total liabilities $ 4,657,000 $ 5,879,000
- ------------------------------------------------------------------------------------------------------
Shareholders' Equity
Common stock, no par value; authorized 10,000,000
shares; issued and outstanding 1,137,000 shares as of
June 28, 1997 and 1,137,000 shares as of December 28, 1996 $ 10,350,000 $ 10,350,000
Accumulated deficit (6,101,000) (6,237,000)
- ------------------------------------------------------------------------------------------------------
Total shareholders' equity $ 4,249,000 $ 4,113,000
- ------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 8,906,000 $ 9,992,000
======================================================================================================
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
Appliance Recycling Centers of America, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 28, June 29, June 28, June 29,
-----------------------------------------------------------
1997 1996 1997 1996
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues
Recycling revenues $ 1,655,000 $ 1,399,000 $ 3,470,000 $ 3,166,000
Encore revenues 1,029,000 1,351,000 1,967,000 2,185,000
Byproduct revenues 312,000 523,000 802,000 982,000
- -------------------------------------------------------------------------------------------------------------------
Total revenues $ 2,996,000 $ 3,273,000 $ 6,239,000 $ 6,333,000
Cost of Revenues 1,676,000 2,692,000 3,361,000 5,542,000
- -------------------------------------------------------------------------------------------------------------------
Gross profit $ 1,320,000 $ 581,000 $ 2,878,000 $ 791,000
Selling, General and Administrative Expenses 1,219,000 2,209,000 2,667,000 4,256,000
- -------------------------------------------------------------------------------------------------------------------
Operating income (loss) $ 101,000 $(1,628,000) $ 211,000 $(3,465,000)
Other Income (Expense)
Other income 61,000 84,000 119,000 70,000
Interest income 3,000 4,000 4,000 32,000
Interest expense (81,000) (66,000) (174,000) (135,000)
- -------------------------------------------------------------------------------------------------------------------
Income (loss) before provision for income taxes
and minority interest $ 84,000 $(1,606,000) $ 160,000 $(3,498,000)
Provision for (Benefit of) Income Taxes (29,000) -- (29,000) --
- -------------------------------------------------------------------------------------------------------------------
Income (loss) before minority interest $ 113,000 $(1,606,000) $ 189,000 $(3,498,000)
Minority Interest in Net Income of Subsidiary 40,000 -- 53,000 --
- -------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 73,000 $(1,606,000) $ 136,000 $(3,498,000)
===================================================================================================================
Net Earnings (Loss) per Common and
Common Equivalent Share $ 0.06 $ (1.46) $ 0.12 $ (3.21)
===================================================================================================================
Weighted Average Number of Common and
Common Equivalent Shares 1,137,000 1,101,000 1,137,000 1,091,000
===================================================================================================================
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
Appliance Recycling Centers of America, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 28, June 29,
-----------------------------
1997 1996
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash Flows from Operating Activities
Net income (loss) $ 136,000 $(3,498,000)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization 569,000 764,000
Minority interest in subsidiary 53,000 -
Common stock issued for services - 30,000
(Gain) loss on sale of equipment (60,000) (48,000)
Change in assets and liabilities, net of effects from
acquisition of Universal Appliance Company, Inc.
and Universal Appliance Recycling, Inc. in 1996:
(Increase) decrease in:
Receivables 144,000 251,000
Inventories 57,000 (505,000)
Other current assets 98,000 11,000
Income taxes receivable 370,000 40,000
(Increase) decrease in:
Accounts payable (599,000) (37,000)
Accrued expenses (262,000) (237,000)
Income taxes payable - (23,000)
- ---------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities $ 506,000 $(3,252,000)
- ---------------------------------------------------------------------------------------------------
Cash Flows from Investing Activities
Purchase of equipment $ (143,000) $(1,147,000)
Cash acquired for acquisition of Universal Appliance
Company, Inc. and Universal Appliance Recycling, Inc. - 26,000
Payments for noncompete agreements - (110,000)
Proceeds from disposal of equipment 78,000 153,000
- ---------------------------------------------------------------------------------------------------
Net cash used in investing activities $ (65,000) $(1,078,000)
- ---------------------------------------------------------------------------------------------------
Cash Flows from Financing Activities
Payments on line of credit $ (299,000) -
Increase (decrease) in note payable to bank - 250,000
Payments on long-term obligations (115,000) (1,024,000)
Proceeds from placement of common stock - 700,000
Proceeds and tax benefit from stock options - 54,000
- ---------------------------------------------------------------------------------------------------
Net cash used in financing activities $ (414,000) $ (20,000)
- ---------------------------------------------------------------------------------------------------
Effect of foreign currency exchange rate changes
on cash and cash equivalents $ - $ (1,000)
- ---------------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents $ 27,000 $(4,351,000)
Cash and Cash Equivalents
Beginning 280,000 4,605,000
- ---------------------------------------------------------------------------------------------------
Ending $ 307,000 $ 254,000
===================================================================================================
</TABLE>
<PAGE>
Appliance Recycling Centers of America, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS - continued
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 28, June 29,
-------------------------
1997 1996
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Supplemental Disclosures of Cash Flow Information
Cash payments (receipts) for:
Interest $ 174,000 $ 136,000
Income taxes net of refunds $(398,000) $ (9,000)
==================================================================================================
Supplemental Schedule of Non-Cash Investing and
Financing Activities
Acquisition of Universal Appliance Company, Inc. and
Universal Appliance Recycling, Inc.
Working capital acquired, including cash and cash
equivalents of $26,000 $ - $ 118,000
Fair value of other assets acquired, principally
property and equipment and a
noncompete agreement - 176,000
Value assigned to goodwill - 302,000
Long-term debt assumed - (207,000)
- --------------------------------------------------------------------------------------------------
Total consideration, 84,000 shares of common stock $ - $ 389,000
==================================================================================================
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
APPLIANCE RECYCLING CENTERS OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Financial Statements
In the opinion of management of the Company, the accompanying unaudited
consolidated financial statements contain all adjustments (consisting of
only normal, recurring accruals) necessary to present fairly the
financial position of the Company and its subsidiaries as of June 28,
1997, and the results of operations for the three-month and six-month
periods and its cash flows for the six-month periods ended June 28, 1997
and June 29, 1996. The results of operations for any interim period are
not necessarily indicative of the results for the year. These interim
consolidated financial statements should be read in conjunction with the
Company's annual financial statements and related notes in the Company's
Annual Report on Form 10-K for the year ended December 28, 1996.
2. Accrued Expenses
Accrued expenses were as follows:
June 28, December 28,
1997 1996
------------ -----------
Compensation $ 236,000 $ 218,000
Lease contingencies
and closing costs 232,000 466,000
Other 430,000 476,000
------------ -----------
$ 898,000 $ 1,160,000
============ ===========
<PAGE>
PART I: ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis provides information that management
believes is relevant to an assessment and understanding of the Company's level
of operation and financial condition. This discussion should be read with the
consolidated financial statements appearing in Item 1.
RESULTS OF OPERATIONS
The Company generates revenues from three sources: recycling revenues,
Encore(R) revenues and byproduct revenues. Recycling revenues are
fees charged for the disposal of appliances. Encore revenues are retail
and wholesale sales of appliances, extended warranty sales and delivery
fees. Byproduct revenues are sales of materials generated from processed
appliances.
Total revenues for the three and six months ended June 28, 1997 were
$2,996,000 and $6,239,000, respectively, compared to $3,273,000 and
$6,333,000 for the same periods in the prior year. Recycling revenues
for the three and six months ended June 28, 1997 increased by $256,000
or 18% and $304,000 or 10%, respectively, from the same periods in the
prior year. The increase in recycling revenues was primarily due to the
increase in refrigerator recycling volume related to the contract with
Southern California Edison Company ("Edison"). The contract is expected
to generate a minimum of $3.5 million in revenues in 1997. The timing
and amount of revenues will be dependent on the amount and frequency of
advertising sponsored by Edison. The contract with Edison ends December
31, 1997. At this time, the Company does not know if the contract will
be extended into 1998.
Encore revenues for the three and six months ended June 28, 1997
decreased by $322,000 or 24% and $218,000 or 10%, respectively, from the
same periods in the prior year. The decrease in Encore revenues was
primarily due to a lower number of retail locations. As of June 29,
1996, the Company operated 30 retail locations. As of June 28, 1997, the
Company operated 14 retail locations and does not plan to open any new
stores in 1997. Same-store Encore sales increased by 18% for the second
quarter (a sales comparison of 11 stores that were open the entire
second quarter in 1997 and 1996). The Company expects retail sales for
the remainder of 1997 to be lower when compared to 1996 due to fewer
stores but expects a growth in retail sales per store when compared to
1996. The Company believes the improvement in same-store sales is a
result of the growing awareness and market acceptance of Encore stores.
Byproduct revenues for the three and six months ended June 28, 1997
decreased by $211,000 or 40% and $180,000 or 18%, respectively, from the
same periods in the prior year. The decrease was primarily due to lower
sales of reclaimed chlorofluorocarbons ("CFCs") and scrap metals due to
fewer appliances recycled. The Company expects byproduct revenues for
the last six months of 1997 to be lower than the first six months of
1997 because of lower CFC sales.
<PAGE>
RESULTS OF OPERATIONS - continued
Gross profit as a percentage of total revenues for the three and six
months ended June 28, 1997 increased to 44.0% and 46.1%, respectively,
from 17.7% and 12.5%, respectively, for the three and six months ended
June 29, 1996. The increase was primarily due to an increase in
recycling volumes from Edison, significantly lower operating expenses as
a result of the restructuring the Company underwent in the fourth
quarter of 1996, increased efficiencies in the four centers currently
operating and an increase in same-store sales. Gross profit as a
percentage of total revenues for future periods can be affected
favorably or unfavorably by numerous factors, including the volume of
appliances recycled from the Edison contract, the speed at which
appliance sales increase and the price and volume of byproduct revenues.
Selling, general and administrative expenses for the three and six
months ended June 28, 1997 decreased by $990,000 or 44.8% and $1,589,000
or 37.3%, respectively, from the same periods in 1996. Selling expenses
for the three and six months ended June 28, 1997 decreased by $386,000
or 52.4% and $559,000 or 53.2%, respectively, from the same periods in
1996. The decrease in selling expenses was primarily due to a decrease
in costs associated with operating fewer retail stores than in the same
periods in the prior year. The Company closed 18 under-performing stores
during 1996. General and administrative expenses for the three and six
months ended June 28, 1997 decreased by $604,000 or 41.0% and $1,030,000
or 34.7%, respectively, from the same periods of 1996. The decrease in
general and administrative expenses was primarily due to operating fewer
locations in 1997 compared to 1996 and a decrease in personnel costs.
Interest expense was $81,000 for the three months and $174,000 for the
six months ended June 28, 1997 compared to $66,000 and $135,000 for the
same periods in 1996. The increase in interest expense was due to a
higher average borrowed amount in the three and six months ended June
28, 1997 than in the same periods in 1996.
The Company recorded a benefit of income taxes of $29,000 for the six
months ended June 28, 1997 due to the liquidation of its Canadian
subsidiary. The Company also has available net operating loss
carryforwards which total approximately $4,400,000 and expire in 2011.
At June 28, 1997, the Company had a valuation allowance recorded against
its net deferred tax assets of approximately $2,800,000, due to
uncertainty of realization. Realization of deferred tax assets is
dependent upon the generation of sufficient future taxable income during
the period that deductible temporary differences and carryforwards are
expected to become available to reduce taxable income.
ARCA California, Inc., a subsidiary of the Company, is owned 80% by the
Company and 20% by a minority shareholder. Accordingly, a minority
interest was recorded for the three and six months ended June 28, 1997,
of $40,000 and $53,000, respectively.
<PAGE>
RESULTS OF OPERATIONS - continued
The Company recorded net income of $73,000 for the three months and
$136,000 for the six months ended June 28, 1997 compared to a net loss
of $1,606,000 and $3,498,000 in the same periods of 1996. The increase
in income was primarily due to increased recycling volumes from the
Edison contract, significantly lower operating and selling, general and
administrative expenses as a result of the Encore restructuring in the
fourth quarter of 1996, increased efficiencies in the four centers
currently operating and an increase in same-store sales.
LIQUIDITY AND CAPITAL RESOURCES
At June 28, 1997, the Company had a working capital deficit of
$1,135,000 compared to a working capital deficit of $1,671,000 at
December 28, 1996. Cash and cash equivalents increased to $307,000 at
June 28, 1997 from $280,000 at December 28, 1996. Net cash provided by
operating activities was $506,000 for the six months ended June 28, 1997
compared to net cash used in operating activities of $3,252,000 in the
same period of 1996. The increase in cash provided by operating
activities was primarily due to net income of $136,000 as of June 28,
1997 versus a loss of $3,498,000 in the same period in the prior year.
The Company's capital expenditures for the six months ended June 28,
1997 and June 29, 1996 were approximately $143,000 and $1,147,000,
respectively. The 1997 capital expenditures were primarily related to
building improvements. The 1996 capital expenditures were primarily
related to leasehold improvements to the Company's recycling centers and
retail stores.
As of June 28, 1997, the Company had a $2.0 million line of credit with
a lender. The loan rate as of June 28, 1997 was 13-1/2%. The line of
credit is secured by receivables, inventory, equipment, real estate and
other assets of the Company, is subject to borrowing base limitations
and a portion is guaranteed by the President of the Company. The loan
also requires that the Company meet certain financial covenants,
provides payment penalties for noncompliance, limits the amount of other
debt the Company can incur, limits the amount of spending on fixed
assets and limits payments of dividends. At June 28, 1997, the Company
had borrowings of $1,091,000 under this line and had an additional
$462,000 available. Legal proceedings commenced against the Company
on August 6, 1997 constitute a default under this loan. See "Legal
Proceedings."
The Company believes, based on the anticipated revenues from the Edison
contract, the anticipated growth in sales per retail store and the
anticipated improvement in gross profit, that its current cash balance,
funds generated from operations and current line of credit will be
sufficient to finance its operations and capital expenditures through
June 1998. The Company's total capital requirements will depend, among
other things as discussed below, on the number of recycling centers
operating and the number and size of retail stores operating during the
fiscal year.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES - continued
Currently, the Company has four centers and 14 stores in operation. If
revenues are lower than anticipated or expenses are higher than
anticipated or the line of credit cannot be maintained, the Company may
require additional capital to finance operations. Sources of additional
financing, if needed in the future, may include further debt financing
or the sale of equity or other securities. There can be no assurance
that such additional sources of financing will be available or available
on terms satisfactory to the Company or permitted by the Company's
current lender.
Statements regarding the Company's future operations, performance and
results, and anticipated liquidity discussed herein are forward-looking
and therefore are subject to certain risks and uncertainties, including
those discussed herein. In addition, any forward-looking information
regarding the operations of the Company will be affected by the ability
of individual stores to meet planned revenue levels, the speed at which
individual Encore stores reach profitability, costs and expenses being
realized at higher than expected levels, the Company's ability to secure
an adequate supply of used appliances for resale, the continued
availability of the Company's current line of credit, the renewal of the
contract with Edison in 1998 and the ability of Edison to deliver units
under its contracts with the Company and the timing of such delivery.
ISSUED BUT NOT YET ADOPTED ACCOUNTING STANDARD
The FASB has issued Statement No. 128, Earnings per Share, which
supersedes APB Opinion No. 15. Statement No. 128 requires the
presentation of earnings per share by all entities that have common
stock or potential common stock, such as options, warrants and
convertible securities, outstanding that trade in a public market. Those
entities that have only common stock outstanding are required to present
basic earnings per-share amounts. All other entities are required to
present basic and diluted per-share amounts. Diluted per-share amounts
assume the conversion, exercise or issuance of all potential common
stock instruments unless the effect is to reduce a loss or increase the
income per common share from continuing operations. All entities
required to present per-share amounts must initially apply Statement No.
128 for annual and interim periods ending after December 15, 1997.
Earlier application is not permitted. The adoption of Statement No. 128
would have had no effect on reported earnings per share.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
On August 6, 1997, the Company, its subsidiary, Appliance Recycling
Centers of America - California, Inc. ("ARCA-CAL"), and its officers,
directors and controlling shareholders were sued in California State
Court, County of Los Angeles, by the minority (20%) shareholder of
ARCA-CAL. The complaint alleges breach of a shareholders agreement
between the Company and the plaintiffs, breaches of fiduciary duty,
seeks damages in the amount of $2 million, and seeks preliminary and
permanent injunctive relief prohibiting ARCA-CAL from transferring
funds to the Company during the pendency of this action. ARCA-CAL
accounts for all receivables from the Company's contract with Edison.
(See, "Management's Discussion and Analysis of Financial Condition and
Results of Operations.") Temporary injunctive relief restricting
transfer of certain funds to the Company was awarded by the Court on
August 8, 1997. The Company does not believe that such temporary
injunction will have a material adverse effect on its daily oeprations.
A motion to consider permanent injunctive relief is scheduled for
August 25, 1997. The granting of a permanent injunction prohibiting the
Company from receiving any funds from the Edison contract would have a
material adverse effect on the Company. The Company believes that the
claims are without merit; however, there can be no assurance at this
time whether the Court will grant a permanent injunction prohibitng the
transfer of any or all revenues from such contract.
In addition, the Company is involved in certain legal proceedings
arising from the cancellation of leases in connection with the closing
of certain facilities. The Company has established a reserve for lease
settlements and closing costs. (See Note 2 to the Consolidated
Financial Statements.)
ITEM 2 - CHANGES IN SECURITIES - None
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES - None
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On April 24, 1997 the Annual Meeting of Shareholders of Appliance
Recycling Centers of America, Inc. was held to obtain the approval of
shareholders of record as of March 7, 1997 in connection with the four
matters indicated below. Following is a brief description of each
matter voted on at the meeting and the number of votes cast for,
against or withheld, as well as the number of abstentions and broker
nonvotes, as to each matter:
Vote
---------------------------------------------
Matter For Withhold Authority
------ --- ------------------
1. Election of Directors:
Edward R. Cameron 1,064,668 21,973
George B. Bonniwell 1,062,772 23,869
Duane S. Carlson 1,067,185 19,456
Harry W. Spell 1,066,922 19,719
2. Approval of an Amendment to the Articles of Incorporation to
increase the number of authorized shares of common stock to ten
million.
Vote
---------------------------------------------
For Against Abstain Not Voted
--- ------- ------- ---------
1,058,096 22,942 5,603 0
3. Ratification and approval of the Company's 1997 Stock Option Plan.
Vote
---------------------------------------------
For Against Abstain Not Voted
--- ------- ------- ---------
704,687 52,519 4,003 325,432
<PAGE>
4. Ratification of McGladrey & Pullen, LLP as independent public
accountants for 1997.
Vote
---------------------------------------------
For Against Abstain Not Voted
--- ------- ------- ---------
1,076,878 6,597 3,166 0
ITEM 5 - OTHER INFORMATION - None
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit No. 27 - Financial Data Schedule
(b) The Company did not file any reports on Form 8-K during the
three months ended June 28, 1997.
<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.
Appliance Recycling Centers of America, Inc.
Registrant
Date: August 8, 1997 /s/Edward R. Cameron
-------------------------
Edward R. Cameron
President
Date: August 8, 1997 /s/Kent S. McCoy
---------------------
Kent S. McCoy
Vice President of Finance, Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-27-1997
<PERIOD-START> DEC-29-1996
<PERIOD-END> JUN-28-1997
<CASH> 307,000
<SECURITIES> 0
<RECEIVABLES> 1,013,000
<ALLOWANCES> 0
<INVENTORY> 387,000
<CURRENT-ASSETS> 100,000
<PP&E> 11,523,000
<DEPRECIATION> 4,532,000
<TOTAL-ASSETS> 8,906,000
<CURRENT-LIABILITIES> 2,942,000
<BONDS> 0
0
0
<COMMON> 10,350,000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 8,906,000
<SALES> 6,239,000
<TOTAL-REVENUES> 6,239,000
<CGS> 3,361,000
<TOTAL-COSTS> 3,361,000
<OTHER-EXPENSES> 119,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 174,000
<INCOME-PRETAX> 160,000
<INCOME-TAX> (29,000)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 136,000
<EPS-PRIMARY> .12
<EPS-DILUTED> .12
</TABLE>
