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SAFETY-KLEEN CORP. REPORTS RECORD REVENUE, DECLINE IN EARNINGS FOR 1992

 ELGIN, Ill., Feb. 5 /PRNewswire/ -- Donald W. Brinckman, chairman and chief executive officer of Safety-Kleen Corp. (NYSE: SK), announced today that Safety-Kleen achieved record revenue, but lower net earnings for both the fourth interim reporting period and the full year of 1992. He said that the revenues and net earnings are in line with a public projection made by the company on Dec. 15, 1992.
 Revenue in 1992 was $794,542,000, an increase of $99,541,000, or 14 percent over 1991. Net earnings, before the cumulative effect of accounting changes, were $45,337,000, down 12 percent from 1991. The company adopted Statement and Financial Accounting Standards (SFAS) No. 109 on accounting for income taxes in the first interim period of 1992. The company also adopted SFAS No. 106 retroactively to the first interim period of 1992. Earnings per share, before the cumulative effect of accounting changes, were $.78 in 1992, down from $.90 in 1991. The cumulative effect of SFAS No. 109 increased net earnings by $3.2 million, or $.06 per share. The cumulative effect of SFAS No. 106 reduced net earnings by $2.9 million, or $.05 per share.
 Revenue for the 17 weeks ended Jan. 2, 1993, was $251,867,000, an increase of 13 percent over 1991. Net earnings for the current period were $12,610,000, a decrease of $1,249,000 from 1991. Earnings per share were $.22, down from $.24 in the prior year.
 Brinckman said, "Our operations in the second half of 1992 have been adversely impacted by a number of factors. In the third quarter, we reported a $7.6 million charge to net earnings for costs associated with environmental problems found during an internal investigation in Puerto Rico. In the fourth quarter, we settled a dispute with the state of Kentucky regarding hazardous waste fees and environmental penalties, resulting in a net earnings charge of approximately $1.4 million ($2.0 million pre-tax)."
 Brinckman added, "Operating results in the fourth quarter were also adversely affected by constraints encountered at cement kilns we use as outlets for waste-derived fuels in the U.S. and Puerto Rico. All cement kilns in the United States and Puerto Rico that burn waste-derived fuels will have to meet the requirements of the new Boiler and Industrial Furnace (BIF) regulations, including passing certain environmental tests. These regulations are complex and much of the cement producing industry has experienced difficulty meeting the requirements of the new regulations while operating their fuels programs at optimum rates.
 "Our Puerto Rico operations incurred a net loss of approximately $1.8 million in the fourth quarter of 1992, compared to net income of $1.8 million in the fourth quarter of 1991," Brinckman added. "During the fourth quarter, substantially all of the alternative fuel produced at our Manati, Puerto Rico, plant was shipped to the U.S. mainland, resulting in substantially higher costs. Although we instituted surcharges to our customers in Puerto Rico to cover a portion of the added costs, revenue from the Puerto Rico operations declined approximately 40 percent in the fourth quarter 1992, as compared to the fourth quarter of 1991. The reduction in revenue was due primarily to lower volumes received from customers, including a limitation in the types of waste streams handled. If the cement kiln in Puerto Rico is able to pass the BIF tests and operate on a consistent and sustained basis, we will be able to send most, if not all, of the fuel produced at our Manati plant to the local cement kiln, substantially reducing our operating costs in Puerto Rico. Until this occurs, we expect to continue to incur operating losses in Puerto Rico. Even if the cement kiln returns to consistent and sustained burn rates, we expect the earnings of our Puerto Rico operations for the foreseeable future will be well below the $5.7 million level achieved in 1991."
 Brinckman said, "As a result of the new BIF regulations, one of the U.S. kilns we use has been unable to burn waste-derived fuels at the same rate that it had prior to the BIF requirements. Until it is able to meet the requirements of the BIF regulations and maintain operating rates, we are incurring higher costs for reduced fourth quarter earnings by approximtely $1 million. We expect the affected kiln will be able to meet the BIF regulations and return to normal burn rates within the next several months."
 Brinckman added, "Revenue of our North American Automotive/Retail Repair Parts Cleaner Service in 1992 was $251,069,000, up 7 percent from 1991. Revenue of the North American Industrial Parts Cleaner and Fluid Recovery Services grew 20 percent in 1992 to $197,270,000. Included in Industrial Services is $85,027,000 of revenue from the Industrial Fluid Recovery Service, an increase of 28 percent over 1991."
 Brinckman continued, "Revenue of the Oil Recovery Service was $114,671,000 for 1992, up 20 percent from last year. This business generated a net loss of approximately $670,000 in 1992, a major improvement from approximately a $5 million loss in 1991. For the fourth quarter, the Oil Recovery Service generated net earnings of $555,000, compared to a net loss of $1,750,000 last year.
 "Our European operations showed improved operating results," Brinckman said. "These operations had a net loss of approximately $1,100,000 in 1992, compared to a net loss of $1,900,000 last year."
 Brinckman added, "1992 was a disappointing year for Safety-Kleen. The environmental problems at our Puerto Rico operations, constraints at the cement kilns as a result of the BIF regulations and the Kentucky settlement all eroded our margins. Further, although consolidated revenue grew in excess of 14 percent in 1992, we believe we have experienced little benefit from the economic recovery."
 Brinckman concluded, "Despite the problems encountered in 1992, we made substantial progress in a number of areas. We saw continued good growth in our Industrial Parts Cleaner and Fluid Recovery Services and our Oil Recovery Service. We also continued to make substantial investments in facilities and equipment to support future growth. We developed and test marketed new parts cleaner services aimed at waste minimization and test marketed a new service to collect and process wastes generated by photo processors. We feel we are well positioned to continue to build on our premier position as the leading handler of automotive and industrial fluid wastes."
 Safety-Kleen Corp. is the world's largest recycler of automotive and industrial hazardous and non-hazardous fluids. Safety-Kleen's common stock is traded on the New York Stock Exchange under the trading symbol SK.
 -0- 2/5/93
 /CONTACT: Robert W. Willmschen of Safety-Kleen, 708-697-8460/
 /FIRST AND FINAL ADD -- TABULAR MATERIAL -- TO FOLLOW/
 (SK)


CO: Safety-Kleen Corp. ST: Illinois IN: SU: ERN

GK -- NY040 -- 3604 02/05/93 14:40 EST
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Publication:PR Newswire
Date:Feb 5, 1993
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