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 ELGIN, Ill., Oct. 4 /PRNewswire/ -- Donald W. Brinckman, chairman and chief executive officer of Safety-Kleen Corp. (NYSE: SK), announced today that the company's net earnings declined 6 percent in the third interim reporting period of 1993 on a 1 percent decline in revenue.
 Revenue for the twelve weeks ended Sept. 11, 1993 was $182,047,000, a 1 percent decline from 1992. Net earnings were $5,809,000, down 6 percent from 1992. Earnings per share were $.10 in both 1993 and 1992. The results in the current quarter include additional income tax expense of $2.2. million or $.04 per share, primarily due to an increase in the statutory income tax rate in the United States.
 Year-to-date revenue increased 2 percent to $553,179,000. Net earnings of $24,931,000 declined 24 percent from 1992 earnings before the cumulative effect of changes in accounting principles in 1992. On this basis, earnings per share were $.43 compared to $.56 last year. The cumulative effect of changes in accounting principles, adopted as of the first quarter of 1992, increased 1992 net earnings by $300,000, or $.01 per share.
 "Operating earnings in the current quarter increased $0.6 million from the same time period last year," Brinckman said. "For the twelve- week period ended Sept. 5, 1992, the operating results included a charge of $10 million ($7.6 million net of tax effect) incurred in conjunction with environmental problems in the company's Puerto Rico operations. Excluding this charge, operating earnings have declined $9.4 million from last year. Approximately $2.6 million of the decline in operating earnings is from the Oil Recovery Service, largely due to lower lube oil selling prices and higher used oil collection costs in 1993. The remainder of the decline in operating earnings is primarily due to lack of revenue growth and higher costs in our branch, distribution and recycling network, primarily resulting from expansion and regulatory compliance costs.
 "We are extremely disappointed with our poor operating results during 1993 and have concluded that we will not experience any improvement in our economic environment in the foreseeable future. Given this conclusion, we have begun a comprehensive review of our current businesses and operations to develop a restructuring plan. The plan is expected to be finalized in the fourth quarter of 1993. The goal of the plan will be to better focus on our environmental services businesses, to improve the value of these services to our customers and to reduce our current cost structure. We are reviewing a wide variety of options, including workforce reductions and consolidation of some of the company's existing facilities, to better serve our customers and reduce our future operating costs."
 "As a result of this review, we expect that the company will record a charge to earnings in the fourth quarter of 1993 for possible employee severance costs, writedown of assets and other costs," Brinckman added. "This charge could be material to the company's results of operations for 1993. We have also substantially reduced our capital spending plans.
 "A major factor in our sluggish earnings performance to-date is the lack of growth within our core parts cleaner service," Brinckman said. "North American Parts Cleaner Service volume year-to-date in 1993 has declined from 1992 by 6 percent in the Automotive/Retail Repair market and by 2 percent in the Industrial market. We believe this decline is due to a number of factors, including the sluggish economy and measures taken by customers to reduce costs and/or minimize hazardous waste generation. We have been test marketing a new parts cleaner service which generates substantially less wastes and lowers the customer's annual cost. This service includes a new parts cleaner with a built-in filtration unit which separates out dirt from the solvent during the cleaning process. As a result, the solvent will last longer and the machine will require less frequent servicing. The new unit uses a solvent that is non-hazardous. We have priced the service such that the customer, on an annual basis, will pay approximately 10 percent less than he currently pays for our standard parts cleaner service. However, since the unit is serviced less frequently, our annual service is also lower. If the customer uses the recommended service intervals, we expect our annual gross profit margins on the new service will be higher than on the existing service."
 Brinckman said, "In the test market, customer reaction to the new parts cleaner service has been favorable and we currently have approximately 1,300 of these units in service. We have started full- scale production of the new parts cleaner units and are in the process of distributing them to all of our U.S. branches. Based on our test market results, we believe that this new service has significant growth potential and will improve the operating results of both the Automotive/Retail Repair and Industrial Parts Cleaner Services over time."
 Brinckman concluded, "The top priority of our management team at Safety-Kleen is to improve the profitability of the company to focus on providing better value to our customers and better returns for our shareholders. We expect that the measures we are now undertaking will enable us to achieve these objectives."
 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.
 Consolidated Statement of Earnings
 (thousands, except per share amounts)
 Twelve Weeks Ended Thirty-Six Weeks Ended
 Sept. 11, Sept. 5, Sept. 11, Sept. 5,
 1993 1992 1993 1992
 Revenue $182,047 $184,637 $553,179 $542,675
 Operating costs
 and expenses 138,656 142,697 419,012 401,232
 Selling and
 expenses 27,698 26,845 82,847 77,644
 Operating income 15,693 15,095 51,320 63,799
 Interest income 186 298 646 901
 Interest expense (2,734) (2,776) (7,526) (9,624)
 Earnings before
 taxes and cumulative
 effect of changes
 in accounting
 principles 13,145 12,617 44,440 55,076
 Income taxes 7,336 6,444 19,509 22,349
 Earnings before
 cumulative effect
 of changes in
 principles 5,809 6,173 24,931 32,727
 Cumulative effect
 of changes
 in accounting
 principles -- -- -- 300
 Net Earnings $ 5,809 $ 6,173 $24,931 $33,027
 Earnings per
 common and common
 equivalent share:
 Earnings before cumulative
 effect of changes in
 account principles $0.10 $0.10 $0.43 $0.56
 Cumulative effect of
 changes in accounting
 principles -- -- -- 0.01
 Net earnings $0.10 $0.10 $0.43 $0.57
 Average number of common
 and common equivalent
 shares outstanding 57,681 57,966 57,696 57,836
 Cash dividends
 per common share $0.090 $0.085 $0.270 $0.255
 NOTES: (A) During the current reporting period the company recorded an additional income tax expenses of $2.2 million or $.04 per share primarily due to an increase in the statutory income tax rate in the U.S. Approximately $1.5 million of this additional income tax expense is a result of revaluing the company's fiscal year end 1992 deferred -- tax balances to reflect the tax rate changes. The balance of the increased income tax expense of $0.2 million and $0.5 million is related to the current reporting period and the first twenty-four weeks of 1993, respectively.
 (B) Operating results for the third reporting period of 1992 includes a charge of $10.0 million ($7.6 million after taxes) for estimated costs incurred in conjunction with environmental problems discovered at the company's Puerto Rico operations. The charge was recorded for the estimated costs to reduce excess storage of hazardous waste fluids to permitted levels, provide for environmental remediation of waste water discharges and related penalties.
 (C) The company adopted Statement of Financial Accounting Standard (SFAS) No. 109 on accounting for income taxes during the first interim period of 1992. The cumulative prior years' effect of the change increased net earnings by $3.2 million or $.06 per share. The company also adopted SFAS No. 106 on accounting for employee post retirement benefits. The cumulative prior years' effect of the change reduced net earnings by $2.9 million or $.05 per share.
 (D) The company's interim reporting periods are twelve weeks each for the first three reporting periods of the year, sixteen weeks for the fourth period of 1993 and seventeen weeks for the fourth period of 1992.
 Key Statistics
 Third Quarter Ended Sept. 11, 1993
 1993 1992 Change Percent Change
 Twelve Week Revenues (000s)
 North America
 Repair Services $56,798 $57,078 ($280) -0.5
 Parts Cleaner 26,986 25,966 1,020 3.9
 Fluid Recovery 22,426 20,584 1,842 8.9
 Total Industrial 49,412 46,550 2,862 6.1
 Oil Recovery
 Services 26,221 27,439 (1,218) -4.4
 Other 31,977 34,612 (2,635) -7.6
 Total North
 America 164,408 165,679 (1,271) -0.8
 Europe 17,639 18,958 (1,319) -7.0
 Consolidated 182,047 184,637 (2,590) -1.4
 Thirty-Six Week Revenues (000s)
 North America
 Repair Services 172,346 170,321 2,025 1.2
 Parts Cleaner 80,610 75,848 4,762 6.3
 Fluid Recovery 66,852 57,695 9,157 15.9
 Total Industrial 147,462 133,543 13,919 10.4
 Oil Recovery
 Services 79,687 79,940 (253) -0.3
 Other 97,959 104,642 (6,683) -6.4
 Total North
 America 497,454 488,446 9,008 1.8
 Europe 55,725 54,229 1,496 2.8
 Consolidated 553,179 542,675 10,504 1.9
 Parts Cleaners In Service Qtr. End (A)
 Industrial 127,985 122,480 5,505 4.5
 All Other 465,979 478,007 (12,028) -2.5
 Total 593,964 600,487 6,523 -1.1
 Average Service
 Interval in Weeks 6.30 6.03 0.27 4.5
 North America Fluid Recovery Service
 No. of Drums
 Collected - QTR. 60,367 56,914 3,453 6.1
 No. of Drums
 Collected - YTD 179,490 157,036 22,454 14.3
 Oil Recovery Service
 Used Oil Gallons
 Collected - QTR. 27.0Mill 26.9Mill 0.1Mill 0.4
 Used Oil Gallons
 Collected - YTD 77.9Mill 78.0Mill (0.1Mill) -0.1
 Average Price Per Used Oil Gal.
 Collected - QTR. $0.129 $0.138 ($0.009) -6.5
 Average Price Per Used Oil Gal.
 Collected - YTD. $0.131 $0.135 ($0.004) -3.0
 Average Base Oil Selling Price Per
 Gallon - QTR. $0.980 $1.093 ($0.113) -10.3
 Average Base Oil Selling Price Per
 Gallon - YTD $1.018 $1.040 ($0.022) -2.1
 NOTE: (A) 1992 parts cleaners in service have been restated to exclude licensee machines no longer under license.
 -0- 10/4/93
 /CONTACT: Robert Willmschen 708-468-2002, or Larry Rudnick, 708-468-2408, both of Safety-Kleen/

CO: Safety-Kleen Corporation ST: Illinois IN: ENV SU: ERN

TM -- NY110 -- 8625 10/04/93 22:16 EDT
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Publication:PR Newswire
Date:Oct 4, 1993

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