Safety - Kleen Corp. Stockholders Litigation

This litigation (the "Action") is pending in the United States District Court for the District of South Carolina (the "Court"). The Action was brought pursuant to Sections 10(b), 14(a) and 20(a) of the Securities Exchange Act of 1934 (the "Exchange Act"), as well as Rule 10b-5 promulgated thereunder, and pursuant to Sections 11, 12(a)(2), and 15 of the Securities Act of 1933 against former officers and directors of Safety-Kleen Corp. ("Safety-Kleen" or the "Company") Kenneth W. Winger, Paul R. Humphreys, Michael J. Bragagnolo, James R. Bullock, John R. Grainger, Leslie W. Haworth, John W. Rollins, Jr., David E. Thomas, Jr., Henry B. Tippie, James L. Wareham, and Grover C. Wrenn, and against Safety-Kleen's former auditor, PwC (collectively, "Defendants"). Safety-Kleen has filed for bankruptcy and is not a party to this Action.

In May 1997, Rollins Environmental, Inc. ("Rollins"), the largest hazardous waste incineration company in North America, acquired Laidlaw's hazardous and industrial waste division and changed its name to LES. LES' financial strategy was to grow through acquisitions. LES acquired Old Safety-Kleen in April 1998 for $2.1 billion, with LES paying $18.30 in cash per share and 2.8 LES shares for each Old Safety-Kleen share (including those tendered in response to earlier offers). As part of the Merger, certain Defendants who held executive positions with LES assumed similar positions with the new combined entity, effectively assuming management control over the Company. On June 22, 1998, LES announced that effective July 1, 1998, it would begin doing business as "Safety-Kleen."

The Complaint alleges that beginning at least as early as 1997, Defendants caused LES to artificially inflate its reported revenue and income by a wide variety of fraudulent practices. In each case, plaintiffs allege that LES (and later Safety-Kleen) reported revenue and income in a manner not in conformity with generally accepted accounting principles, or "GAAP." To that end, during the Class Period, Defendants allegedly employed, inter alia, the following devices to improperly inflate Safety-Kleen's revenues and income:

• Improper Accounting For Landfills And Environmental Liabilities
• Double Billing
• Fictitious Revenue Entries
• Improper Purchase Accounting and
• Improper Capitalization Of Costs.

According to Safety-Kleen's own restatement, Safety-Kleen's reported income was overstated throughout the Class Period. In fiscal 1997, Safety-Kleen's reported income was overstated by $118,112,000. In fiscal 1998, Safety- Kleen's reported income was overstated by $103,416,000. In fiscal 1999, Safety-Kleen's reported income was overstated by $312,031,000. The total increase in net loss for fiscal years 1997-1999, as restated, is $533,559,000.

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