Appliance Recycling Centers of America - ARCA - Expects 1995 Net Loss Due to Non-recurring Fourth Quarter Charge Related to Utility Business.

MINNEAPOLIS--(BUSINESS WIRE)--Feb. 15, 1996--Appliance Recycling Centers of America, Inc. (NASDAQ/NMS: ARCI) today announced that it expects to report a net loss in the range of $.22 to $.25 per share for 1995, due primarily to a non-recurring fourth quarter restructuring charge, including equipment and other non-cash items related to the Company's business of supporting energy conservation programs for electric utilities.

Excluding the one-time charge, the Company anticipates near-breakeven results from operations for the year. Final 1995 results will be released later this month.

Edward R. (Jack) Cameron, president and chief executive officer, said the fourth quarter restructuring provision of approximately $1.3 million (pre-tax) was taken after it became fully apparent recently that the outlook for utility-sponsored demand-side energy conservation programs was becoming increasingly negative. The Company had expected some rebound in this market over the next few years with the clarification of regulatory uncertainties. However, the decision to take the charge at this time was prompted by clear indications from growing numbers of utilities that funding for demand-side energy conservation programs in the foreseeable future is increasingly doubtful. As a result, the Company will focus its resources and management attention primarily on its emerging Encore appliance reuse business going forward.

Cameron said he is encouraged by the Company's near-breakeven operating results in 1995, excluding the impact of the restructuring charge, in view of substantial investments already made in its appliance reuse business. Ten Encore stores were operating by year-end 1995, and another 8 to 10 are expected to open during the first quarter of 1996. The Company is also incurring costs related to providing 11 of its recycling facilities with the capability to recondition used appliances for resale. Unwanted appliances that cannot be retailed will continue to be recycled in an environmentally responsible manner.

As previously announced, the Company anticipates lower sales and a significant net loss in the first quarter of 1996, reflecting reduced volumes of utility-related business and expenses associated with implementing the Encore strategy. The company added that the initial positive impact of its appliance reuse business is not expected to be realized until the second half of 1996.

Statements regarding the Company's performance and results for 1996 discussed in this news release are forward looking statements and therefore contains risks and uncertainties, including the timely opening of new Encore stores, the speed in which stores reach profitability, higher than planned conversion expenses, the Company's ability to secure an adequate supply of used appliances for resale, and the other risks detailed form time to time in the Company's SEC reports, including the report on Form 10-Q for the quarter ended September 30, 1995.

ARCA, the nation's largest recycler of major household appliances, provides an integrated range of collection, reuse and recycling services. The Company's common stock is traded on the Nasdaq National Market System under the symbol ARCI.

CONTACT: Appliance Recycling Centers of America (ARCA)

Kent S. McCoy, 612/930-9000