UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q


       QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                               EXCHANGE ACTOF 1934


                For the Quarterly Period Ended February 28, 1999 


                         Commission File Number 1-8368 


                               SAFETY-KLEEN CORP.
             (Exact name of registrant as specified in its charter)


               Delaware                                           51-0228924 
-------------------------------                               ------------------
(State or other jurisdiction of                              (I.R.S. Employer   
 incorporation or organization)                              Identification No.)


1301 Gervais Street, Suite 300, Columbia, South Carolina                29201   
--------------------------------------------------------             ----------
(Address of principal executive offices)                              (Zip Code)

       (803) 933-4200 (Registrant's telephone number, including area code)

    -------------------------------------------------------------------------
   (Former name, address and former fiscal year, if changed since last report)

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the  Securities  Exchange Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

                            Yes   X     No ____

         The number of shares of the  issuer's  common stock  outstanding  as of
April 9, 1999 was 88,387,466.


                                    
<PAGE>


<TABLE>




                               SAFETY-KLEEN CORP.
<CAPTION>


                                      INDEX

<S>        <C>                                                                                                     <C>

PART 1     FINANCIAL INFORMATION

Item 1     Financial Statements

           Consolidated Statements of Income for the Three and Six Months Ended
                February 28, 1999 and 1998.........................................................................2

           Consolidated Statements of Comprehensive Income for the Three and Six Months Ended
                February 28, 1999 and 1998.........................................................................3

           Consolidated Balance Sheets as of February 28, 1999 and August 31, 1998.................................4

           Consolidated Statements of Cash Flows for the Six Months Ended
                February 28, 1999 and 1998.........................................................................5

           Notes to Unaudited Consolidated Financial Statements....................................................6

Item 2     Management's Discussion and Analysis of Financial Condition and Results of Operations  .................13


PART II    OTHER INFORMATION

Item 1     Legal Proceedings.......................................................................................21

Item 5     Other Information.......................................................................................23

Item 6     Exhibits and Reports on Form 8-K........................................................................24


Signatures.........................................................................................................29
</TABLE>


                                       1
<PAGE>
<TABLE>
<CAPTION>

                               SAFETY-KLEEN CORP.
                        CONSOLIDATED STATEMENTS OF INCOME
                   ($ in Thousands, Except Per Share Amounts)
                                   (Unaudited)

                                                         Three Months Ended               Six Months Ended
                                                            February 28,                    February 28,
                                                       ------------------------         -------------------
                                                        1999            1998            1999           1998
                                                        ----            ----            ----           ----
<S>                                                   <C>             <C>            <C>            <C>

Revenues ..........................................   $402,135        $173,215        $869,154       $384,767
                                                      --------         --------       --------       --------
Expenses:
   Operating ......................................    261,851         123,780         566,899        269,105
   Depreciation and amortization ..................     33,678          10,924          70,973         24,819
   Selling, general and administrative ............     32,740          18,835          67,240         39,236
                                                      --------        --------       --------        --------
      Total expenses ..............................    328,269         153,539         705,112        333,160
                                                      --------        --------        --------       --------
Operating income ..................................     73,866          19,676         164,042         51,607
Interest expense, net .............................     42,726          13,607          86,683         28,246
Equity in earnings of associated company ..........      1,102            --             1,102            --
                                                      --------        --------        --------       --------
Income before income tax expense ..................     32,242           6,069          78,461         23,361
Income tax expense ................................     14,335           2,328          33,655          9,555
                                                      --------        --------        --------       --------
Income from continuing operations before
   minority interest ..............................     17,907           3,741          44,806         13,806
Minority interest .................................        338            (185)          1,211           (106)
                                                      --------        --------        --------       --------
Net income ........................................   $ 18,245        $  3,556        $ 46,017       $ 13,700
                                                      ========        ========        ========       ========

Basic income per share:
   Net income .....................................   $   0.21        $   0.08        $   0.53       $   0.30
                                                      ========        ========        ========       ========
   Weighted average common stock outstanding (000s)     88,386          45,571          88,120         45,381
                                                      ========        ========        ========       ========
 
Diluted income per share:
   Net income .....................................   $   0.19        $   0.08        $   0.46       $   0.28
                                                      ========        ========        ========       ========
   Weighted average common stock outstanding and
   assumed conversions (000s) .....................    111,750          45,661         111,502         68,827
                                                      ========        ========        ========       ========
</TABLE>
                                                                            
      See Accompanying Notes to Unaudited Consolidated Financial Statements

                                       2
<PAGE>
<TABLE>
<CAPTION>



                               SAFETY-KLEEN CORP.
                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                ($ in Thousands)
                                   (Unaudited)

                                                                Three Months Ended       Six Months Ended
                                                                   February 28,             February 28,
                                                                ------------------       ----------------

                                                                 1999        1998        1999        1998
                                                                 ----        ----        ----       ----
<S>                                                           <C>         <C>         <C>          <C>    
Net income ............................................       $ 18,245    $  3,556    $ 46,017     $ 13,700
                                                              --------    --------    --------     --------
Other comprehensive income, net of tax:
  Unrealized foreign currency translation adjustments .         (1,556)        112         (64)      (2,265)
  Unrealized gain on securities available for sale, net
     of tax of $(225) and $1,247 ......................           --          (339)        --         1,870
                                                              --------    --------    --------     --------
                                                                                  
Other comprehensive income ............................         (1,556)       (227)        (64)        (395)
                                                              --------    --------    --------     --------
Comprehensive income ..................................       $ 16,689    $  3,329    $ 45,953     $ 13,305
                                                              ========    ========    ========     ========

      See Accompanying Notes to Unaudited Consolidated Financial Statements
</TABLE>

                                       3
<PAGE>


<TABLE>
<CAPTION>



                               SAFETY-KLEEN CORP.
                           CONSOLIDATED BALANCE SHEETS
                                ($ in Thousands)

                                                                   February 28, 1999
                                                                      (Unaudited)       August 31, 1998
                                                                   -----------------    --------------- 
<S>                                                                 <C>                 <C>   
ASSETS
Current assets
   Cash and cash equivalents ..............................          $    10,949        $    16,333
   Trade and other accounts receivable ....................              357,327            320,048
   Inventories ............................................               55,435             53,759
   Deferred income taxes ..................................               66,965             69,426
   Income taxes recoverable ...............................               --                 37,495
   Other current assets ...................................               52,723             53,750
                                                                     -----------        -----------
        Total current assets ..............................              543,399            550,811
Long-term investments .....................................               75,671             35,926
Property, plant and equipment, net ........................            2,551,533          2,850,502
Goodwill ..................................................            1,124,928          1,023,154
Other assets ..............................................               16,862             16,979
                                                                     -----------        -----------
   Total assets ...........................................          $ 4,312,393        $ 4,477,372
                                                                     ===========        ===========

LIABILITIES
Current liabilities
   Accounts payable .......................................          $   158,687        $   128,560
   Accrued liabilities ....................................              188,643            219,352
   Current portion of long-term debt ......................               77,441             77,004
                                                                     -----------        -----------    
        Total current liabilities .........................              424,771            424,916
Environmental and other long-term liabilities .............              339,445            259,459
Long-term debt ............................................            1,670,955          1,853,164
Subordinated convertible debenture ........................              350,000            350,000
Deferred income taxes .....................................              457,720            575,127
                                                                     -----------        -----------    
        Total liabilities .................................            3,242,891          3,462,666
                                                                     -----------        -----------   

Commitments and contingencies .............................              --                 --

STOCKHOLDERS' EQUITY
Common stock, par value $1.00 per share; authorized                                  
   250,000,000; issued and outstanding 88,387,466 - 
   February 28, 1999;  87,746,243 - August 31, 1998........               88,387             87,746
Additional paid-in capital ................................            1,190,749          1,182,547
Accumulated other comprehensive income ....................              (18,892)           (18,828)
Accumulated deficit .......................................             (190,742)          (236,759)
                                                                     -----------        -----------    
   Total stockholders' equity .............................            1,069,502          1,014,706
                                                                     -----------        -----------
   Total liabilities and stockholders' equity .............          $ 4,312,393        $ 4,477,372
                                                                     ===========        ===========
</TABLE>

      See Accompanying Notes to Unaudited Consolidated Financial Statements


                                       4
<PAGE>


                                                                 

<TABLE>
<CAPTION>

                               SAFETY-KLEEN CORP.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                ($ in Thousands)
                                   (Unaudited)

                                                                                  Six Months Ended
                                                                                    February 28,
                                                                                  -----------------
                                                                                  1999         1998
                                                                                  ----         ----
<S>                                                                           <C>         <C>  

Cash flows from operating activities:
   Net income ............................................................   $  46,017    $  13,700
   Adjustments to reconcile net income to net cash provided by operations:
      Depreciation and amortization ......................................      70,973       24,819
      Deferred income taxes ..............................................      27,217        5,986
      Change in working capital ..........................................     (13,687)       8,080
      Decrease in liabilities assumed upon acquisition ...................     (48,772)     (20,237)
                                                                             ---------    ---------
Net cash provided by operating activities ................................      81,748       32,348
                                                                             ---------    ---------

Cash flows from investing activities:
   Cash expended on acquisition of business ..............................      (4,394)        --
   Proceeds from sale of business ........................................     138,714       33,675
   Purchase of property, plant and equipment .............................     (29,682)     (16,431)
   Change in other, net ..................................................         488      (14,579)
                                                                             ---------    ---------
Net cash provided by investing activities ................................     105,126        2,665
                                                                             ---------    ---------

Cash flows from financing activities:
   Issuance of common stock on exercise of stock options .................        --            414
   Net repayments of long-term debt ......................................    (186,706)     (34,640)
   Change in other, net ..................................................        (270)        --
                                                                              --------    ---------
Net cash used in financing activities ....................................    (186,976)     (34,226)
                                                                             ---------    ---------

Effect of exchange rate changes on cash ..................................      (5,282)        (181)
                                                                             ---------    ---------

Net increase (decrease) in cash and cash equivalents .....................      (5,384)         606
Cash and cash equivalents at:
   Beginning of period ...................................................      16,333       11,160
                                                                             ---------    ---------
   End of period .........................................................   $  10,949    $  11,766
                                                                             =========    =========

NONCASH INVESTING AND FINANCING ACTIVITIES:
    Issuance of common stock to satisfy interest payment due on
        subordinated convertible debenture ...............................   $   8,750    $   8,750
    Issuance of common stock for payment of directors' fees ..............   $      93    $    --
    Net unrealized gain on securities available for sale .................   $     --     $   1,870
    Noncash transactions arising from sale of business:
        Promissory note receivable .......................................   $     --     $   8,000
        Reduction of debt ................................................   $     --     $  40,814

      See Accompanying Notes to Unaudited Consolidated Financial Statements

</TABLE>


                                       5
<PAGE>


                                                                 
                               SAFETY-KLEEN CORP.
              Notes to Unaudited Consolidated Financial Statements
                   For the Six Months Ended February 28, 1999



NOTE 1 - BASIS OF PRESENTATION

The accompanying  unaudited interim consolidated  financial statements have been
prepared  in  accordance  with the  instructions  to Form 10-Q and Rule 10-01 of
Regulation S-X and, therefore, do not include all of the disclosures required by
generally accepted accounting principles for annual financial statements. In the
opinion  of  management,   all  adjustments  considered  necessary  for  a  fair
presentation  of the  interim  period  results  have  been  included;  all  such
adjustments are of a normal recurring  nature.  Operating  results for the three
and six months ended  February 28, 1999 are not  necessarily  indicative  of the
results  that may be expected  for the full fiscal year ending  August 31, 1999.
These statements  should be read in conjunction with the consolidated  financial
statements, including the accounting policies, and notes thereto included in the
Registrant's  Annual Report on Form 10-K, filed with the Securities and Exchange
Commission on October 29, 1998.  Certain amounts as of August 31, 1998 have been
reclassified to conform to the current period's presentations.

In June 1997, the Financial Accounting Standards Board ("FASB") issued Statement
No. 130,  "Reporting  Comprehensive  Income"  ("SFAS  130").  This  standard was
adopted by the Company for the fiscal year beginning September 1, 1998. SFAS 130
establishes standards for reporting and displaying  comprehensive income and its
components.  Comprehensive  income is defined  as the change in equity  during a
period from  transactions  and other  events and  circumstances  from  non-owner
sources  and  includes  all  changes  in  equity  during a period  except  those
resulting from  investments by and  distributions  to owners.  All prior periods
presented have been restated.

NOTE 2 - SHAREHOLDER MATTERS

At the annual meeting of  shareholders  held on November 24, 1998,  shareholders
approved the change in the Company's name from Laidlaw  Environmental  Services,
Inc. to Safety-Kleen Corp.

                                                                                
In addition,  the shareholders approved a one-for-four reverse stock split which
became  effective at the close of business on November  30, 1998.  For each four
shares of Safety-Kleen  common stock, one share of new Safety-Kleen common stock
will be issued. In connection with the reverse stock split, the number of common
shares available for issuance was reduced from 750 million to 250 million.  As a
result,  prior period shares issued and  outstanding,  weighted  average  common
stock  outstanding  and basic and diluted income per share have been restated to
reflect the reverse split.


                                       6
<PAGE>


NOTE 3 - COMMITMENTS AND CONTINGENCIES

Legal Proceedings:

TAX MATTERS: On March 1, 1999, Laidlaw Inc.  ("Laidlaw")  announced a settlement
of a dispute between  Laidlaw's United States  subsidiaries and the Commissioner
of Internal Revenue relating to the timing and deductibility for tax purposes of
interest attributable to loans owing to related foreign persons during the years
from 1986 to 1994.

The total net after tax cash cost to Laidlaw will be approximately $226 million.
The payment includes  approximately $121 million in taxes together with interest
of approximately $161 million ($105 million after tax).

This settlement  resolves  matters in the United States Tax Court  (captioned as
Laidlaw Transportation, Inc. and Subsidiaries et. al v. Commissioner of Internal
Revenue,  Docket Nos.  9361-94 and 9362-94)  relating to the 1986 to 1991 fiscal
years as well as claims  raised in a thirty day letter  relating  to the 1992 to
1994 fiscal years.  The  Commissioner  of Internal  Revenue had asserted  claims
totaling approximately $500 million.

Pursuant to the agreement dated February 6, 1997 among the Company,  Laidlaw and
Laidlaw  Transportation,  Inc. ("LTI"),  Laidlaw and LTI are responsible for any
tax  liabilities  resulting  from these  matters.  Based upon  discussions  with
Laidlaw,  the  Company's  income tax provision  determined on a separate  return
basis during the period audited by the Internal  Revenue  Service was sufficient
and no  additional  taxes or interest  are due to or from Laidlaw as a result of
the settlement.

NOTE 4 - EUROPEAN OPERATIONS

On December 23, 1998, the Company announced the recapitalization of its European
operations  resulting  in the sale of 56% of the  Company's  equity  interest in
those operations. As a result of the recapitalization,  the Company will receive
gross  proceeds  totaling  $154.0  million,  which  will  be  used  to pay  down
borrowings  under the  revolver  tranche  of the  Senior  Credit  Facility.  The
transaction resulted in no gain or loss.

Effective December 1, 1998, the Company ceased to consolidate the results of the
European  operations  and began to  account  for the  investment  by the  equity
method.

NOTE 5 - PURCHASE PRICE ALLOCATION

The  acquisition  of the  former  Safety-Kleen  Corp.  in  fiscal  year 1998 was
accounted for under the purchase method. The purchase price was allocated to the
assets acquired and liabilities assumed based upon management's best estimate of
their  fair  value  at the time of the  acquisition.  The  areas  of  particular
complexity   included  the   valuation  of  long-lived   assets,   environmental
liabilities,   pre-acquisition   contingencies  and  the  related  deferred  tax
consequences.  The  determination  of the fair  value of  these  items  has been
substantially  completed and, as a result,


                                       7
<PAGE>

the  purhase  price  has  been  increased  by  approximately  $100  million  due
principally to fixed asset fair value  adjustments  and the recording of certain
pre-acquisition  contingencies  evaluated  by  the  Company  subsequent  to  the
acquisition.

NOTE 6 - STOCKHOLDERS' EQUITY

Changes in the components of  stockholders'  equity,  restated for the effect of
the one-for-four  reverse stock split, since September 1, 1998 are as follows ($
in thousands):

<TABLE>
<CAPTION>

                                                              Accumulated
                                               Additional       Other                       Total
                                   Common       Paid-In      Comprehensive  Accumulated   Stockholders'
                                   Stock        Capital         Income        Deficit        Equity
                                   -----        -------         ------        -------        ------
<S>                            <C>           <C>           <C>            <C>            <C>    

Balance at September 1,1998    $    87,746   $ 1,182,547   $   (18,828)   $  (236,759)   $ 1,014,706
Net income for period ......          --            --            --           46,017         46,017
Issuance of shares (Note A)            641         8,202          --             --            8,843
Cumulative foreign
  currency translation
  adjustment ...............          --            --             (64)          --              (64)
                               -----------   -----------   -----------    -----------    -----------
Balance at February 28, 1999   $    88,387   $ 1,190,749   $   (18,892)   $  (190,742)   $ 1,069,502
                               ===========   ===========   ===========    ===========    ===========
</TABLE>

Note A: Includes  635,208  shares  issued to satisfy  November 15, 1998 interest
        payment on subordinated convertible debenture.

NOTE 7 - SUMMARIZED FINANCIAL INFORMATION

The Senior  Subordinated  Notes (the "Notes") issued by  Safety-Kleen  Services,
Inc.,  a  consolidated  subsidiary  of the  Company,  are jointly and  severally
guaranteed by Safety-Kleen Corp. and all wholly-owned  domestic  subsidiaries of
the  Company  on a full and  unconditional  basis.  The  Notes  contain  certain
covenants,  which,  among other things,  restrict the payment of dividends  from
Safety-Kleen Services,  Inc. and its subsidiary guarantors to Safety-Kleen Corp.
Summarized  financial  information for each of Safety-Kleen Corp.,  Safety-Kleen
Services, Inc., the subsidiary guarantors,  and the subsidiary non-guarantors on
a consolidating  basis are presented below.  Separate  financial  statements and
other disclosures  concerning the subsidiary guarantors are not included because
management believes that they are not material to investors.


                                       8
<PAGE>


<TABLE>
<CAPTION>


                      Consolidating Condensed Balance Sheet
                                February 28, 1999
                                   (unaudited)

                                                                                        Subsidiary    Consolidating
                                            Safety-Kleen  Safety-Kleen    Subsidiary      Non-        Eliminating    Consolidated
($ in Thousands)                                Corp.     Services, Inc.  Guarantors    Guarantors      Entries          Total
                                            ------------  -------------- ----------     ----------      -------          -----
<S>                                         <C>           <C>             <C>           <C>           <C>            <C>

ASSETS
Current assets ..........................   $      --     $      --       $   445,506   $    97,893   $       --     $   543,399
Property, plant and equipment, net ......          --            --         2,358,324       193,209           --       2,551,533
Investment in Subsidiaries ..............     1,551,577     2,651,371       1,681,569         5,507     (5,890,024)         --
Goodwill ................................          --            --         1,045,086        79,842           --       1,124,928
Other non-current assets ................          --            --            91,188         1,345           --          92,533
                                            -----------   -----------     -----------   -----------    -----------   -----------
Total assets ............................   $ 1,551,577   $ 2,651,371     $ 5,621,673   $   377,796   $ (5,890,024)  $ 4,312,393
                                            ===========   ===========     ===========   ===========   ===========    ===========

LIABILITIES
Current liabilities .....................   $     6,875   $    78,891     $   235,890   $   103,115   $       --     $   424,771
Non-current liabilities .................          --            --           798,101          (936)          --         797,165
Long-term debt ..........................       125,200     1,483,720          15,791        46,244           --       1,670,955
Subordinated convertible debenture ......       350,000          --              --            --             --         350,000
                                            -----------   -----------     -----------   -----------    -----------   -----------
Total liabilities .......................       482,075     1,562,611       1,049,782       148,423           --       3,242,891

STOCKHOLDERS' EQUITY ....................     1,069,502     1,088,760       4,571,891       229,373     (5,890,024)    1,069,502
                                            -----------   -----------     -----------   -----------    -----------   -----------
Total liabilities and stockholders equity   $ 1,551,577   $ 2,651,371     $ 5,621,673   $   377,796    $(5,890,024)  $ 4,312,393
                                            ===========   ===========     ===========   ===========    ===========   ===========

</TABLE>


<TABLE>
<CAPTION>


                   Consolidating Condensed Statement of Income
                      Three Months Ended February 28, 1999
                                   (unaudited)

                                                                                 Subsidiary   Consolidating
                                       Safety-Kleen  Safety-Kleen    Subsidiary      Non-      Eliminating     Consolidated
($ in Thousands)                           Corp.     Services, Inc.  Guarantors  Guarantors      Entries           Total
                                       ------------  --------------  ----------  ----------      -------           -----
<S>                                      <C>           <C>            <C>         <C>           <C>              <C>

Total revenues .......................   $   --        $   --         $359,336    $ 40,990      $  1,809         $402,135
Operating expenses ...................       --            --          294,877      31,583         1,809          328,269
                                         --------      --------       --------    --------      --------         --------
Operating income .....................       --            --           64,459       9,407         --              73,866
Interest expense (income), net .......      6,415        33,628         10,822      (8,477)         --             42,388
Undistributed earnings of subsidiaries     21,920        41,170          1,102        --         (63,090)           1,102
                                         --------      --------       --------    --------      --------         --------
Income before income tax expense .....     15,505         7,542         54,739      17,884       (63,090)          32,580
Income tax expense (benefit) .........     (2,740)      (14,378)        23,442       8,011          --             14,335
                                         --------      --------       --------    --------      --------         --------
Net income ...........................   $ 18,245      $ 21,920       $ 31,297    $  9,873      $(63,090)        $ 18,245
                                         ========      ========       ========    ========      ========         ========
</TABLE>


                                       9
<PAGE>


<TABLE>
<CAPTION>

                   Consolidating Condensed Statement of Income
                       Six Months Ended February 28, 1999
                                   (unaudited)

                                                                                   Subsidiary   Consolidating
                                       Safety-Kleen  Safety-Kleen    Subsidiary       Non-       Eliminating     Consolidated
($ in Thousands)                           Corp.     Services, Inc.  Guarantors    Guarantors      Entries          Total
                                       ------------  --------------  ----------    ----------   ------------     ------------
<S>                                      <C>           <C>            <C>           <C>          <C>             <C>

Total revenues .......................   $    --       $    --        $ 713,698     $ 164,161    $  (8,705)      $ 869,154
Operating expenses ...................        --            --          595,259       118,558       (8,705)        705,112
                                         ---------     ---------      ---------     ---------    ---------       ---------
Operating income .....................        --            --          118,439        45,603         --           164,042
Interest expense (income), net .......      12,827        70,219          3,422          (996)        --            85,472
Undistributed earnings of subsidiaries      53,424        93,970          1,102          --       (147,394)          1,102
                                         ---------     ---------      ---------     ---------    ---------       ---------
Income before income tax expense .....      40,597        23,751        116,119        46,599     (147,394)         79,672
Income tax expense (benefit) .........      (5,420)      (29,673)        49,081        19,667         --            33,655
                                         ---------     ---------      ---------     ---------    ---------       ---------
Net income ...........................   $  46,017     $  53,424      $  67,038     $  26,932    $(147,394)      $  46,017
                                         =========     =========      =========     =========    =========       =========
</TABLE>




<TABLE>
<CAPTION>

                 Consolidating Condensed Statement of Cash Flows
                       Six Months Ended February 28, 1999
                                   (unaudited)

                                                                                       Subsidiary   Consolidating
                                           Safety-Kleen  Safety-Kleen     Subsidiary      Non-       Eliminating    Consolidated
($ in Thousands)                              Corp.      Services, Inc.   Guarantors   Guarantors      Entries        Total
                                           ------------  --------------   ----------   ----------   -------------   ------------
<S>                                         <C>           <C>             <C>          <C>          <C>              <C>

Net cash provided by (used in)
    operating activities ...............    $  (4,055)    $ (75,916)      $ 159,543    $   2,176    $    --          $  81,748
                                            ---------     ---------       ---------    ---------     ---------       ---------
Cash flows from investing activities:
Cash expended on acquisition of business         --            --            (4,394)        --           --             (4,394)
Proceeds from sale of business .........         --            --           138,714         --           --            138,714
Purchase of property, plant
    and equipment ......................         --            --           (23,730)      (5,952)        --            (29,682)
Change in other, net ...................         --            --               357          131         --                488
                                            ---------     ---------       ---------    ---------    ----------       ---------
Net cash provided by (used in)
    investing activities ...............         --            --           110,947       (5,821)        --            105,126
                                            ---------     ---------       ---------    ---------    ----------       ---------
Cash flows from financing activities:
Net repayment of long-term debt ........         --        (181,500)            (43)      (5,163)        --           (186,706)
Intercompany payable (receivable) ......        4,055       257,686        (264,586)       2,845         --               --
Changes in other, net ..................         --            (270)           --           --           --               (270)
                                            ---------     ---------       ---------    ---------    ----------       ---------
Net cash provided by (used in)
    financing activities ...............        4,055        75,916        (264,629)      (2,318)        --           (186,976)
                                            ---------     ---------       ---------    ---------    ----------       ---------
Effect of exchange rate changes on cash          --            --              --         (5,282)        --             (5,282)
                                            ---------     ---------       ---------    ---------    ----------       ---------
Net increase (decrease) in cash and
    cash equivalents ...................         --            --             5,861      (11,245)        --             (5,384)
Cash and cash equivalents at:
     Beginning of period ...............         --            --             4,343       11,990         --             16,333
                                            ---------     ---------       ---------    ---------    ----------       ---------
     End of period .....................    $    --       $    --         $  10,204    $     745    $    --          $  10,949
                                            =========     =========       =========    =========    ==========       =========
</TABLE>


                                       10
<PAGE>


<TABLE>
<CAPTION>


                      Consolidating Condensed Balance Sheet
                                 August 31, 1998
                                   (unaudited)

                                                                                          Subsidiary   Consolidating
                                             Safety-Kleen   Safety-Kleen    Subsidiary       Non-       Eliminating    Consolidated
($ in Thousands)                                Corp.       Services, Inc.  Guarantors    Guarantors      Entries         Total
                                             ------------   --------------  ----------   ----------      -------        -----
<S>                                          <C>             <C>          <C>            <C>            <C>            <C>
ASSETS
Current assets ..........................    $     --        $    --      $   439,751    $   111,060    $      --      $   550,811
Property, plant and equipment, net ......          --             --        2,454,211        396,331            (40)     2,850,502
Investment in Subsidiaries ..............      1,496,759      2,776,635     1,322,059            166     (5,595,619)          --
Goodwill ................................          --            --           951,655         71,499           --        1,023,154
Other non-current assets ................          --            --            52,134            771           --           52,905
                                             -----------    -----------   -----------    -----------    -----------    -----------
Total assets ............................    $ 1,496,759    $ 2,776,635   $ 5,219,810    $   579,827    $(5,595,659)   $ 4,477,372
                                             ===========   ===========    ===========     ===========    ===========    ===========

LIABILITIES
Current liabilities .....................    $     6,853    $    88,089   $   246,359    $    83,617    $        (2)   $   424,916
Non-current liabilities .................           --             --         722,622        111,964           --          834,586
Long-term debt ..........................        125,200      1,661,989        16,334         49,641           --        1,853,164
Subordinated convertible debenture ......        350,000          --             --              --            --          350,000
                                             -----------    -----------   -----------    -----------    -----------    -----------
Total liabilities .......................        482,053      1,750,078       985,315        245,222             (2)     3,462,666

STOCKHOLDERS' EQUITY ....................      1,014,706      1,026,557     4,234,495        334,605     (5,595,657)     1,014,706
                                             -----------    -----------   -----------    -----------     -----------    -----------
Total liabilities and stockholders equity    $ 1,496,759    $ 2,776,635   $ 5,219,810    $   579,827    $(5,595,659)   $ 4,477,372
                                             ===========    ===========   ===========    ===========    ===========    ===========
</TABLE>



<TABLE>
<CAPTION>

                   Consolidating Condensed Statement of Income
                      Three Months Ended February 28, 1998
                                   (unaudited)

                                                                                           Subsidiary   Consolidating
                                            Safety-Kleen    Safety-Kleen     Subsidiary       Non-       Eliminating    Consolidated
($ in Thousands)                               Corp.        Services, Inc.   Guarantors    Guarantors      Entries         Total
                                            ------------    --------------   ----------   -----------   -------------   ------------
<S>                                           <C>            <C>              <C>           <C>          <C>             <C>

Total revenues .......................        $    --        $   --           $139,601      $ 33,614     $  --           $ 173,215
Operating expenses ...................             --            --            125,036        28,503        --             153,539
                                              --------       --------         --------      --------     --------         --------
Operating income .....................             --            --             14,565         5,111        --              19,676
Interest expense (income), net .......           6,390          5,964              541           897        --              13,792
Undistributed earnings of subsidiaries           7,871         11,939             --            --       (19,810)             --
                                              --------       --------         --------      --------    --------          --------
Income before income tax expense .....           1,481          5,975           14,024         4,214     (19,810)            5,884
Income tax expense (benefit) .........          (2,075)        (1,896)           4,979         1,320        --               2,328
                                              --------       --------         --------      --------    --------          --------
Net income ...........................        $  3,556       $  7,871         $  9,045      $  2,894    $(19,810)         $  3,556
                                              ========       ========         ========      ========    ========          ========
</TABLE>


                                       11
<PAGE>


<TABLE>
<CAPTION>

                   Consolidating Condensed Statement of Income
                       Six Months Ended February 28, 1998
                                   (unaudited)

                                                                                       Subsidiary   Consolidating
                                          Safety-Kleen   Safety-Kleen    Subsidiary       Non-       Eliminating    Consolidated
($ in Thousands)                             Corp.       Services, Inc.  Guarantors    Guarantors      Entries         Total
                                          ------------   --------------  ----------   -----------   -------------   ------------
<S>                                        <C>             <C>           <C>           <C>            <C>            <C>

Total revenues .......................     $   --          $  --         $ 305,202     $  79,565      $    --        $ 384,767
Operating expenses ...................         --             --           269,925        63,235           --          333,160
                                           ---------      ---------      ---------     ---------      ---------      ---------
Operating income .....................        --              --            35,277        16,330           --           51,607
Interest expense (income), net .......        12,760         12,561           (157)        3,188           --           28,352
Undistributed earnings of subsidiaries        21,518         29,214           --            --          (50,732)          --
                                           ---------      ---------      ---------     ---------      ---------      ---------
Income before income tax expense .....         8,758         16,653         35,434        13,142        (50,732)        23,255
Income tax expense (benefit) .........        (4,942)        (4,865)        14,787         4,575           --            9,555
                                           ---------      ---------      ---------     ---------      ---------      ---------
Net income ...........................     $  13,700      $  21,518      $  20,647     $   8,567      $ (50,732)     $  13,700
                                           =========      =========      =========     =========      =========      =========
</TABLE>



<TABLE>
<CAPTION>

                 Consolidating Condensed Statement of Cash Flows
                       Six Months Ended February 28, 1998
                                   (unaudited)

                                                                                          Subsidiary   Consolidating
                                             Safety-Kleen   Safety-Kleen     Subsidiary      Non-       Eliminating     Consolidated
($ in Thousands)                                Corp.       Services, Inc.   Guarantors   Guarantors      Entries          Total
                                             ------------   --------------   ----------   ----------   -------------    ------------
<S>                                           <C>             <C>             <C>          <C>             <C>           <C>

Net cash provided by 
    operating activities ..............       $  1,372        $  1,469        $  1,900     $ 27,607        $ --          $ 32,348
                                              --------        --------        --------    --------          ----         --------
Cash flows from investing activities:
Purchase of plant, property and
    equipment .........................           --              --           (12,384)      (4,047)        --            (16,431)
Proceeds from sale of business ........           --              --            33,675         --           --             33,675
Change in other, net ..................           --              --           (14,380)        (199)        --            (14,579)
                                              --------        --------        --------     --------        ----          --------
Net cash provided by (used in)
    investing activities ..............           --              --             6,911       (4,246)        --              2,665
                                              --------        --------        --------     --------        ----          --------
Cash flows from financing activities:
Issuance of common stock on exercise
    of stock options ..................            414            --              --           --           --                414
Repayment of long-term debt ...........           --           (33,113)           (265)      (1,262)        --            (34,640)
Intercompany payable (receivable) .....         (1,786)         31,644         (27,915)      (1,943)        --               --
                                              --------        --------        --------    --------         ----          --------
Net cash used in 
    financing activities ..............         (1,372)         (1,469)        (28,180)      (3,205)        --            (34,226)
                                              --------        --------        --------     --------        ----          --------
Effect of exchange rate changes on cash           --              --              --           (181)        --               (181)
                                              --------        --------        --------     --------        ----          --------
Net increase (decrease) in cash and
    cash equivalents ..................           --              --           (19,369)      19,975         --                606
Cash and cash equivalents at:
     Beginning of period ..............           --              --            24,770      (13,610)        --             11,160
                                              --------        --------        --------     --------        ----          --------
     End of period ....................       $   --          $   --          $  5,401     $  6,365       $ --           $ 11,766
                                              ========        ========        ========     ========        ====          ========
</TABLE>


                                       12
<PAGE>


MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND RESULTS OF
OPERATIONS


         The following  discussion  and analysis  should be read in  conjunction
with the Company's  consolidated  financial statements and related notes thereto
included elsewhere herein.

         Results  associated with the April 1, 1998  acquisition of Safety-Kleen
Corp.  ("Old  Safety-Kleen")  have been included in the  Company's  consolidated
results as of the date of the acquisition.

         The following  discussion  and analysis  includes  statements  that are
considered  forward-looking  based on the Company's  expectations  and, as such,
these  statements  are subject to  uncertainty  and risk.  See "Factors That May
Affect Future Results" below.


Results of Operations:

     Three  Months  Ended  February  28, 1999  compared  with Three Months Ended
February 28, 1998


Operating results are as follows ($ in millions):

                                               Three Months Ended February 28,
                                                  1999                1998
                                            ------------------------------------
Revenues ..........................         $402.1    100.0%    $173.2    100.0%
Operating expense .................          261.8     65.1%     123.8     71.4%
Depreciation and amortization .....           33.7      8.4%      10.9      6.3%
Selling, general and administrative           32.7      8.1%      18.8     10.9%
                                            ------    -----     ------    ------
Operating income ..................         $ 73.9     18.4%    $ 19.7     11.4%
                                            ======    ======    ======    ======


Revenues

Components of revenue ($ in millions):         Three Months Ended February 28,
                                            ------------------------------------
                                                  1999                1998
                                              ----------------------------------
Collection and Recovery Services
    Industrial Services .................   $193.5     48%      $ 97.4       56%
    Commercial and Institutional Services    132.2     33%         0.0        0%
                                            ------    ----      ------      ----
Total Collection and Recovery Services ..    325.7     81%        97.4       56%

Treatment and Disposal Services .........     76.4     19%        75.8       44%
                                            ------    ----      ------      ----

     Total revenue ......................   $402.1    100%      $173.2      100%
                                            ======    ====      ======      ====


                                       13
<PAGE>


     Revenues  increased $228.9 million,  or 132%, during the three months ended
February 28, 1999 compared to the three months ended February 28, 1998.  Revenue
from collection and recovery  services to industrial  customers  increased $96.1
million,  or 99%,  while the addition of  collection  and  recovery  services to
commercial and institutional  customers  generated an additional $132.2 million.
Increased  revenue from collection and recovery  services reflects the inclusion
of the acquired Old Safety-Kleen  business.  Revenue from treatment and disposal
services increased $0.6 million, or 1%.

         The   Company   eliminates   inter-company   revenues   in   presenting
consolidated  financial results.  The majority of such eliminations occur at the
Company's  disposal  facilities  which  receive waste streams from the Company's
collection and recovery services network.


         Management's estimate of the components of the changes in the Company's
consolidated revenue is as follows:

                                                Percentage Increase (Decrease)
                                                Three Months Ended February 28,
                                                --------------------------------
                                                1999 over 1998    1998 over 1997
                                                --------------    --------------
Expansion of customer base by acquisition .......    130.6%           25.2%
Other, primarily through volume and price changes      3.8%           11.2%
Divestitures and closures .......................     (1.0%)         (12.3%)
Foreign exchange rate changes ...................     (1.2%)          (0.9%)
                                                     ------          ------
     Total ......................................    132.2%           23.2%
                                                     ======          ======


         The comparative increase in revenue for the three months ended February
28, 1999 was primarily  due to the  inclusion of the acquired  operations of Old
Safety-Kleen.  Revenues  from  existing  operations  grew  as a  result  of both
increased  throughput at the Company's  treatment  and disposal  facilities  and
growth in the industrial services component of the Company's  operations.  Prior
year revenues included contributions from a thermal treatment facility which was
closed on August 31, 1998. A reduction in revenues due to foreign  exchange rate
changes  resulted  from a relative  decline in the Canadian  dollar  translation
rate.

         The Company  believes it remains on course to achieve revenue growth of
10 - 12% by the end of fiscal  1999.  The  integration  of the sales and service
groups of Old  Safety-Kleen  and the  Company was  completed  during the quarter
which will  facilitate  the delivery of the expanded  scope of industrial  waste
services to the combined Company's customer base.


                                       14
<PAGE>


Operating Expenses

         Operating expenses increased $138.0 million,  or 111%, during the three
months ended February 28, 1999,  compared to the three months ended February 28,
1998. The increase was primarily attributable to additional business obtained as
part  of the  acquisition  of Old  Safety-Kleen.  As a  percentage  of  revenue,
operating expense decreased to 65.1% from 71.4% in the prior year, primarily due
to the increased utilization of existing facilities and acquisition related cost
reduction measures.

Depreciation and Amortization Expense

         Depreciation and amortization expense increased $22.8 million, or 208%,
during the three months ended February 28, 1999, compared to the prior year. The
increase related to the acquired operations of Old Safety-Kleen. As a percentage
or revenue,  depreciation and amortization expense was 8.4%, compared to 6.3% in
the  prior  year.   The  increase  as  a  percentage  of  revenue  is  primarily
attributable  to the  amortization  of the excess purchase price relating to the
acquisition of Old Safety-Kleen.


Selling, General and Administrative Expenses

         Selling,  general and administrative  expenses increased $13.9 million,
or 74% during the three months ended  February 28, 1999,  versus the prior year.
As a  percentage  of  revenue,  selling,  general  and  administrative  expenses
decreased  to 8.1% from 10.9% in the prior year due to cost  reduction  measures
and economies of scale gained through the acquisition of Old Safety-Kleen.


Interest Expense

         Interest  expense  increased $28.6 million,  or 207%,  during the three
months  ended  February  28,  1999,  over  the  prior  year as a  result  of the
additional   long  term  debt  incurred  to  finance  the   acquisition  of  Old
Safety-Kleen.

Equity in Earnings of Associated Companies

          During the  quarter the Company  sold a 56%  interest in its  European
operations,  realizing gross cash proceeds of $154.0 million.  This  transaction
resulted in no gain or loss.  Effective  December 1, 1998, the Company commenced
accounting  for its remaining  interest in the European  operations on an equity
basis.  The equity  earnings  recorded in the quarter  ended  February 28, 1999,
represent 100% of the European  operations for the month of December,  1998, and
reflect a 44% interest  thereafter.  Thus, the European operations' results have
been excluded from revenue and expenses effective December 1, 1998.


                                       15
<PAGE>


Income Tax Expense

         Income tax expense  increased $12.0 million,  or 516%, during the three
months  ended  February  28,  1999,  over the prior year due to an  increase  in
taxable  income  attributable  to  the  acquisition  of  Old  Safety-Kleen.  The
effective tax rate of 44% has increased over levels  reported in prior quarters,
post the  acquisition of Old  Safety-Kleen,  due primarily to the sale of 56% of
the Company's European operations.  The European operations had an effective tax
rate below that of the overall Company average.

         The Company  expects that the effective tax rate will also be higher in
subsequent quarters due to the impact of the sale of the European operations.


     Results of Operations: Six Months Ended February 28, 1999 compared with Six
Months Ended February 28, 1998


Operating results are as follows ($ in millions):

                                            Six Months Ended February 28,
                                              1999                1998
                                        ------------------------------------
Revenues ..........................     $869.2    100.0%    $384.8    100.0%
Operating expense .................      566.9     65.2%     269.1     69.9%
Depreciation and amortization .....       71.0      8.2%      24.8      6.5%
Selling, general and administrative       67.3      7.7%      39.3     10.2%
                                        ------    ------    ------    ------
Operating income ..................     $164.0     18.9%    $ 51.6     13.4%
                                        ======    ======    ======    ======



Revenues

Components of revenue ($ in millions):            Six Months Ended February 28,
                                                  ------------------------------
                                                        1999             1998
                                                  ------------------------------
Collection and Recovery Services
    Industrial Services .......................   $399.8    46%    $215.8    56%
    Commercial and Institutional Services .....    266.9    31%       0.0     0%
                                                  ------   ----    ------   ----
Total Collection and Recovery Services ........    666.7    77%     215.8    56%

Treatment and Disposal Services ...............    170.8    20%     169.0    44%

European Operations ...........................     31.7     3%       0.0     0%
                                                  ------   ----    ------   ----

     Total revenue ............................   $869.2   100%    $384.8   100%
                                                  ======   ====    ======   ====


                                       16
<PAGE>


         Revenues increased $484.4 million, or 126%, during the six months ended
February 28, 1999  compared to the six months ended  February 28, 1998.  Revenue
from collection and recovery services to industrial  customers  increased $184.0
million,  or 85%,  while the addition of  collection  and  recovery  services to
commercial and institutional  customers  generated an additional $266.9 million.
Increased  revenue from collection and recovery  services reflects the inclusion
of the acquired Old Safety-Kleen  business.  Revenue from treatment and disposal
services  increased  $1.8 million,  or 1%. The acquired  European  operations of
Safety-Kleen  provided an additional $31.7 million in revenue through the period
ended November 30, 1998 and have been reported on an equity basis subsequently.

         The   Company   eliminates   inter-company   revenues   in   presenting
consolidated  financial results.  The majority of such eliminations occur at the
Company's  disposal  facilities  which  receive waste streams from the Company's
collection and recovery services network.


         Management's estimate of the components of the changes in the Company's
consolidated revenue is as follows:

                                                  Percentage Increase (Decrease)
                                                  Six Months Ended February 28,
                                                  ------------------------------
                                                 1999 over 1998   1998 over 1997
                                                 --------------  --------------
Expansion of customer base by acquisition .......     126.0%          24.2%
Other, primarily through volume and price changes      3.7%            7.6%
Divestitures and closures .......................     (2.3%)          (8.2%)
Foreign exchange rate changes ...................     (1.5%)          (0.7%)
                                                     ------           -----
     Total ......................................    125.9%           22.9%
                                                     ======           =====


         The  comparative  increase in revenue for the six months ended February
28, 1999 was primarily  due to the  inclusion of the acquired  operations of Old
Safety-Kleen.  Current  revenues from existing  operations  grew  primarily as a
result  of  increased   throughput  at  the  Company's  treatment  and  disposal
facilities.  Prior year revenues included  contributions  from an industrial and
solid waste  landfill which was divested on December 18, 1997 and from a thermal
treatment  facility which was closed on August 31, 1998. A reduction in revenues
due to foreign  exchange rate changes  resulted  from a relative  decline in the
Canadian dollar translation rate.


Operating Expenses

         Operating  expenses  increased $297.8 million,  or 111%, during the six
months ended  February 28, 1999,  compared to the six months ended  February 28,
1998. The increase was primarily attributable to additional business obtained as
part  of the  acquisition  of Old  Safety-Kleen.  As a  percentage  of  revenue,
operating expense decreased to 65.2% from 69.9% in the prior year, primarily due
to the increased utilization of existing facilities and acquisition related cost
reduction measures.


                                       17
<PAGE>


         The  Company  estimates  that it has  realized  annualized  acquisition
related cash cost savings of approximately $130 million.  Management expects the
annualized  acquisition  related cash cost savings to reach  approximately  $165
million by the end of fiscal year 1999.

Depreciation and Amortization Expense

         Depreciation and amortization expense increased $46.2 million, or 186%,
during the six months ended  February 28, 1999,  compared to the prior year. The
increase related to the acquired operations of Old Safety-Kleen. As a percentage
or revenue,  depreciation and amortization expense was 8.2%, compared to 6.5% in
the  prior  year.   The  increase  as  a  percentage  of  revenue  is  primarily
attributable  to the  amortization  of the excess purchase price relating to the
acquisition of Old Safety-Kleen.


Selling, General and Administrative Expenses

         Selling,  general and administrative  expenses increased $28.0 million,
or 71% during the six months ended February 28, 1999,  versus the prior year. As
a percentage of revenue,  selling, general and administrative expenses decreased
to 7.7%  from  10.2%  in the  prior  year  due to cost  reduction  measures  and
economies of scale gained through the acquisition of Old Safety-Kleen.


Interest Expense

         Interest  expense  increased  $57.1  million,  or 202%,  during the six
months  ended  February  28,  1999,  over  the  prior  year as a  result  of the
additional   long  term  debt  incurred  to  finance  the   acquisition  of  Old
Safety-Kleen.


Income Tax Expense

         Income tax expense  increased  $24.1 million,  or 252%,  during the six
months  ended  February  28,  1999,  over the prior year due to an  increase  in
taxable income attributable to the acquisition of Old Safety-Kleen.


FACTORS THAT MAY AFFECT FUTURE RESULTS

         This report  contains  various  forward-looking  statements  within the
meaning of the  Private  Securities  Litigation  Reform  Act of 1995,  including
financial,  operating  and  other  projections.  These  statements  are based on
current   plans  and   expectations   of  the  Company  and  involve  risks  and
uncertainties   that  could  cause  actual  future  activities  and  results  of
operations   to  be   materially   different   from   those  set  forth  in  the
forward-looking statements.


                                       18
<PAGE>


         Important  factors that could cause actual  results to differ  include,
among others, risks associated with acquisitions and achieving the targeted cost
savings  levels,  fluctuations  in operating  results  because of  acquisitions,
changes in applicable  government  regulations  (environmental  and other),  the
impact of litigation,  competition, and risks associated with the operations and
growth of the newly  acquired  business of Old  Safety-Kleen  and other  factors
described in Part I, Item 1 of the Company's  report on Form 10-K for the Twelve
Months  Ended  August 31,  1998.  As a result of these  factors,  the  Company's
revenue and income could vary  significantly  from quarter to quarter,  and past
financial  performance  should not be considered a reliable  indicator of future
performance.


CAPITALIZATION

          On  November  24,  1998,   the  Company's   shareholders   approved  a
one-for-four reverse stock split which became effective at the close of business
on  November  30,  1998.  As  a  result,  shareholders  received  one  share  of
Safety-Kleen common stock for each four shares previously held.

         On November  15, 1998,  the Company  issued  635,208  shares to satisfy
interest due on the subordinated convertible debenture.


LIQUIDITY

         Total cash provided by operations  during the six months ended February
28, 1999 was $80.7 million.  This was composed of $143.3 million from operations
before financing working capital requirements of $13.8 million and $48.8 million
related to spending on acquisition liabilities.
                                                                                
         On December 23, 1998, the Company announced the recapitalization of its
European  operations  resulting  in the  sale  of 56%  of the  Company's  equity
interest in that entity.  As a result of the  recapitalization  the Company will
receive gross proceeds of $154.0  million.  During the six months ended February
28, 1999, the Company received $138.7 million of net proceeds (net of $5 million
cash left in the European  operations  at the time of sale).  The balance of the
gross  proceeds  will be  received as a dividend  tax refund  within the current
year.

         The  Company's  primary  sources  of  liquidity  are  cash  flows  from
operations,  existing cash and short-term  investments of $10.9 million, and the
short-term  unused  working  capital  bank lines and unused cash  portion of the
Senior Credit Facility's revolver tranche of $340.0 million.

         The Company  expects to fund capital  expenditures,  debt repayment and
environmental liability requirements from cash flows from operations.


                                       19
<PAGE>


CAPITAL EXPENDITURES AND CAPITAL RESOURCES

         Investing  activities  for the six  months  ended  February  28,  1999,
generated cash of $105.1  million.  Net  expenditures  for the purchase of fixed
assets for normal replacement  requirements and increases in services were $29.7
million and net proceeds  from the sale of the European  operations  were $138.7
million.  The  Company's  projected  capital  expenditures  for fiscal  1999 are
approximately $80.0 million. The Company believes that it has adequate resources
to finance these expenditures.

         The Company's Senior Credit Facility contains negative, affirmative and
financial  covenants  customarily  found in  credit  agreements  for  financings
similar to the financing  provided under the Senior Credit  Facility,  including
covenants limiting annual capital  expenditures,  restricting debt,  guaranties,
liens, mergers and consolidations, sales of assets and payment of dividends. The
Company was in compliance with all of its covenants at February 28, 1999.


YEAR 2000 ISSUES

         The Year 2000 ("Y2K") issue is the result of computer  programs using a
two-digit format, as opposed to four digits, to indicate the year. Such computer
programs  will be unable to interpret  dates  beyond the year 1999,  which could
cause a system  failure or other  computer  errors,  leading to  disruptions  in
operations.  The  Company  developed  a  three-phase  program  for  Y2K  systems
compliance.  Phase I identified  those systems with respect to which the Company
has exposure to Y2K issues.  Phase II was the development and  implementation of
action plans for Y2K compliance. Phase III, to be completed by mid-calendar year
1999, is the final testing of the appropriate  major areas of exposure to ensure
compliance.

Phase I was completed in early fiscal year 1998 and identified three major areas
of Y2K non-compliance:

     (1)  certain  modules of the Company's  financial and operational  systems,
     (2)  incinerator   distributed  control  systems,  and  
     (3)  third-party  vendor relationships.

The Phase II action  plans have been  developed  and the  Company  is  currently
implementing  those  remedial  plans.  The  Company's  plan to  bring  deficient
financial systems into compliance  through the previously  scheduled purchase of
software   upgrades  has  been  accomplished  and  these  upgrades  have  tested
satisfactorily.  Remediation  of the  operational  systems will be  accomplished
through a combination of hardware and software upgrades and program changes. The
Company  expects this process to be completed  by  mid-calendar  year 1999.  The
deficiencies in the incinerator  distributed control systems will be remedied by
the  installation,  during the second  calendar  quarter  of 1999,  of  upgrades
purchased from the systems vendors. With respect to the third-party vendors, the
Company has contacted most of its major  suppliers and has received  indications
that they are either  compliant or intend to be compliant by  mid-calendar  year
1999.


                                       20
<PAGE>


         The Company believes it will spend  approximately $10.0 million for Y2K
compliance and will require 20,000  programming  man days to bring the Company's
computer systems into compliance,  including Old Safety-Kleen  issues.  To date,
the Company has completed approximately 17,500 programming man days towards this
effort.  $1.4 million was  incurred in fiscal year 1998,  with the balance to be
incurred in fiscal year 1999.

         The Company believes that the action plans that have been developed and
the implementation  time frames that have been established  adequately allow for
unexpected issues that could arise,  therefore,  contingency plans have not been
prepared.   The  Company  will  monitor  the  remaining  time  to  complete  the
implementation and will review the requirement to prepare contingency plans on a
monthly  basis.  As all Phase II action  plans are  scheduled to be completed by
June 30,  1999,  the  Company  will be in a position to  determine  the need for
contingency plans over the next few months.

                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

GENERAL

         The business of the Company's  hazardous and industrial  waste services
is continuously  regulated by federal,  state,  provincial and local  provisions
that have been enacted or adopted,  regulating  the discharge of materials  into
the environment or primarily for the purpose of protecting the environment.  The
nature of the Company's businesses results in its frequently becoming a party to
judicial or  administrative  proceedings  involving  all levels of  governmental
authorities and other interested parties. The issues that are involved generally
relate to  applications  for  permits  and  licenses  by the  Company  and their
conformity with legal requirements and alleged technical  violations of existing
permits and  licenses.  The Company  does not believe  that these issues will be
material to the  Company's  operations or financial  condition.  At February 28,
1999,  subsidiaries  of the Company  were  involved in four  proceedings  of the
latter type relating  primarily to activities  at waste  treatment,  storage and
disposal  facilities  where the  Company  believes  sanctions  involved  in each
instance may exceed $100,000. The Company believes that the ultimate disposition
of these issues will not have a  materially  adverse  effect upon the  Company's
consolidated financial position or results of operations.

         The Company  frequently  becomes a party to legal  proceedings  wherein
persons claim injury resulting from the use of Company's parts cleaner equipment
and/or  cleaning  products.  A number of legal  proceedings  of this  nature are
currently pending in various courts and jurisdictions  throughout North America.
The Company  believes that the ultimate  disposition of these legal  proceedings
will not have a  materially  adverse  effect  upon  the  Company's  consolidated
financial position or results of operations.


                                       21
<PAGE>


         In the United States, CERCLA imposes financial liability on persons who
are  responsible for the release of hazardous  substances into the  environment.
Present  and  past  owners  and  operators  of  sites  which  release  hazardous
substances,  as well as generators and  transporters of the waste material,  are
jointly and severally liable for remediation costs and environmental  damage. At
February  28,  1999,  the Company had been  notified  that it was a  potentially
responsible  party  in  connection  with 48  locations  in its  hazardous  waste
management and other businesses. The Company continually reviews its status with
respect to each  location  and the  extent of its  alleged  contribution  to the
volume of waste at the location,  the available evidence  connecting the Company
to that location,  and the numbers and financial  soundness of other potentially
responsible parties at the location. Based upon presently available information,
the  Company  does not  believe  that  potential  liabilities  arising  from its
involvement with these locations will be material to the Company's operations or
financial condition.

TAX MATTERS

         On March 1, 1999, Laidlaw Inc. ("Laidlaw")  announced a settlement of a
dispute between  Laidlaw's  United States  subsidiaries  and the Commissioner of
Internal  Revenue relating to the timing and  deductibility  for tax purposes of
interest attributable to loans owing to related foreign persons during the years
from 1986 to 1994.

         The total net after tax cash cost to Laidlaw will be approximately $226
million. The payment includes approximately  $121 million in taxes together with
interest of approximately $161 million ($105 million after tax).

         This  settlement  resolves  matters  in the  United  States  Tax  Court
(captioned  as  Laidlaw   Transportation,   Inc.  and  Subsidiaries  et.  al  v.
Commissioner of Internal  Revenue,  Docket Nos. 9361-94 and 9362-94) relating to
the 1986 to 1991  fiscal  years as well as claims  raised in a thirty day letter
relating to the 1992 to 1994 fiscal years.  The Commissioner of Internal Revenue
has asserted claims totaling approximately $500 million.

         Pursuant to the  agreement  dated  February 6, 1997 among the  Company,
Laidlaw  and  Laidlaw  Transportation,   Inc.  ("LTI"),   Laidlaw  and  LTI  are
responsible  for any tax  liabilities  resulting from these matters.  Based upon
discussions  with Laidlaw,  the Company's  income tax provision  determined on a
separate return basis during the period audited by the Internal  Revenue Service
was sufficient and no additional taxes or interest are due to or from Laidlaw as
a result of the settlement.

VILLE MERCIER FACILITY

         On or about  February 9 and March 12,  1999,  Ville  Mercier  and three
neighboring   municipalities   filed  separate  legal  proceedings  against  the
subsidiary and certain related  companies  together with certain former officers
and directors,  as well as against the Government of Quebec. The lawsuits assert
that the defendants are jointly and severally  responsible for the contamination
of groundwater in the region, which Plaintiffs claim was caused by contamination
from the  former  Ville  Mercier  lagoons,  and which  they  claim  caused  each
municipality  to incur  additional  costs to


                                       22
<PAGE>

supply drinking water for their citizens since the 1970's and early 1980's.  The
four  municipalities  claim a total of  CDN$1,595,000  as damages for additional
costs to obtain drinking water supplies and seek an injunctive order to obligate
the defendants to remediate the groundwater in the region.

         Other than as herein reported there have been no additional significant
legal proceedings nor any material changes in the legal proceedings  reported in
PART II, Item 3 of the  Registrant's  Report on Form 10-K for the twelve  months
ended August 31, 1998.

ITEM 5. OTHER INFORMATION.

PROPOSALS FOR 1999 ANNUAL MEETING OF SHAREHOLDERS

         Shareholders who intend to present  proposals for consideration at next
year's annual meeting are advised that any such proposal must be received by the
secretary  of the Company no later than the close of business on June 29,  1999,
if such  proposal is to be considered  for inclusion in the proxy  statement and
form or proxy relating to that meeting.

         If any shareholder's  proposal is received after September 12, 1999 the
Company's  proxies  for the  1999  Annual  Meeting  may  exercise  discretionary
authority with respect to such proposal at the 1999 Annual  Meeting  without any
reference to such proposal being made in the proxy statement for such meeting.

RESIGNATION OF DIRECTOR AND APPOINTMENT OF SUBSTITUTE DIRECTOR

         Mr. John  Grainger  resigned his position as Director of the Company on
March 30, 1999. In accordance  with Article 3, Section 3.2 of the By-laws of the
Company,  Mr.  Robert Luba was appointed by a majority of the Board of Directors
on  March  30,  1999 to hold  the  office  vacated  by Mr.  Grainger  until  the
expiration of his term, at the Annual Meeting of Shareholders in 2001.


                                       23
<PAGE>


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

(3)(a) Restated  Certificate of  Incorporation of the Company dated May 13, 1997
and  Amendment  to  Certificate  of  Incorporation  dated May 15,  1997 filed as
Exhibit 3(a) to the  Registrant's  Form 10-Q for the Quarter  ended May 31, 1997
and incorporated herein by reference.

(3)(a)(i)  Certificate  of  Correction  Filed to Correct a Certain  Error in the
Restated and Amended  Certificate of  Incorporation of the Company dated October
15, 1997 filed as Exhibit  (3)(a)(i) to the Registrant's  Form 10-K for the Year
ended August 31, 1997, and incorporated herein by reference.

(3)(a)(ii) Certificate of Amendment to the Restated Certificate of Incorporation
of the  Company  dated  November  25, 1998 filed as Exhibit  (3)(a)(iii)  to the
Registrant's  Form 10-Q for the quarter ended November 30, 1998 and incorporated
herein by reference.

(3)(a)(iii)   Certificate   of  Amendment  to  the   Restated   Certificate   of
Incorporation of the Company dated November 30, 1998 filed as Exhibit (3)(a)(iv)
to the  Registrant's  Form 10-Q for the  quarter  ended  November  30,  1998 and
incorporated herein by reference.

(3)(b) Amended and Restated  Bylaws of the Company filed as Exhibit 4(ii) to the
Registrant's  Current  Report on Form 8-K dated July 29,  1997 and  incorporated
herein by reference.

(4)(a)  Registration Rights Agreement dated as of May 29, 1998 between LES, Inc.
(a subsidiary of the Registrant),  the Registrant,  subsidiary guarantors of the
Registrant,  TD Securities (USA) Inc. and NationsBanc  Montgomery Securities LLC
filed as Exhibit 4(a) to the Registrant's  Form S-4  Registration  Statement No.
333-57587 filed June 24, 1998 and incorporated herein by reference.

(4)(b) Indenture dated as of May 29, 1998 between LES, Inc. (a subsidiary of the
Registrant), Registrant, subsidiary guarantors of the Registrant and The Bank of
Nova Scotia Trust  Company of New York,  as trustee filed as Exhibit 4(b) to the
Registrant's  Form S-4 Registration  Statement No. 333-57587 filed June 24, 1998
and incorporated herein by reference.

(4)(c) Rights  Agreement dated as of June 14, 1989 between the Company and First
Chicago Trust Company as successor to Registrar and Transfer Company,  as Rights
Agent filed as Exhibit 4(e) to the Registrant's Current Report on Form 8-K filed
on June 13, 1995 and incorporated herein by reference.

(4)(d)  Amendment  No. 1 dated  as of March  31,  1995 to the  Rights  Agreement
between the Company and First  Chicago  Trust  Company as successor to Registrar
and Transfer Company,  as Rights Agent filed as Exhibit 4(f) to the Registrant's
Current  Report  on  Form  8-K on June  13,  1995  and  incorporated  herein  by
reference.

(4)(e)  Amendment  No. 2 dated  as of April  30,  1997 to the  Rights  Agreement
between the Company and First  Chicago  Trust  Company as successor to Registrar
and Transfer Company, as Rights Agent, filed as Exhibit 4(c) to the Registrant's
Form 10-Q for the quarter ended  November 30, 1997, and  incorporated  herein by
reference.


                                       24
<PAGE>


(4)(f) Amended and Restated  Credit  Agreement among Laidlaw  Chem-Waste,  Inc.,
Laidlaw Environmental Services (Canada) Ltd., Toronto Dominion (Texas) Inc., The
Toronto-Dominion  Bank,  TD  Securities  (USA)  Inc.,  The Bank of Nova  Scotia,
NationsBank,  N.A. and The First National Bank of Chicago and NationsBank,  N.A.
as Syndication Agent dated as of April 3, 1998.

(4)(g)  Supplement to the Amended and Restated  Credit  Agreement  among Laidlaw
Chem-Waste, Inc., Laidlaw Environmental Services (Canada) Ltd., Toronto Dominion
(Texas) Inc., The  Toronto-Dominion  Bank, TD Securities (USA) Inc., The Bank of
Nova  Scotia,  NationsBank,  N.A.  and The First  National  Bank of Chicago  and
NationsBank,  N.A.  as  Syndication  Agent  dated as of April 3, 1998,  filed as
Exhibit 4(e) to a subsidiary of the Registrant's Form S-4 Registration Statement
No. 333-57587 filed June 24, 1998 and incorporated herein by reference.

(4)(h) Waiver and First Amendment to the Amended and Restated  Credit  Agreement
dated  as of May 15,  1998  among  LES,  Inc.,  Laidlaw  Environmental  Services
(Canada) Ltd., the Lenders, Toronto Dominion (Texas), Inc., The Toronto Dominion
Bank, TD Securities (USA) Inc., The Bank of Nova Scotia, NationsBank,  N.A., The
First  National  Bank of Chicago and  Wachovia  Bank filed as Exhibit  4(f) to a
subsidiary of the  Registrant's  Form S-4  Registration  Statement No. 333-57587
filed June 24, 1998 and incorporated herein by reference.

(4)(i)  Commitment  to Increase  Supplement  to the Amended and Restated  Credit
Agreement  dated as of June 3,  1998  among  LES,  Inc.,  Laidlaw  Environmental
Services (Canada) Ltd., the Lenders, Toronto Dominion (Texas), Inc., The Toronto
Dominion Bank, TD Securities  (USA) Inc., The Bank of Nova Scotia,  NationsBank,
N.A., The First National Bank of Chicago and Wachovia Bank filed as Exhibit 4(g)
to a  subsidiary  of  the  Registrant's  Form  S-4  Registration  Statement  No.
333-57587 filed June 24, 1998 and incorporated herein by reference.

(4)(j) Second Amendment to the Amended and Restated Credit Agreement dated as of
November 20, 1998 among  Safety-Kleen  Services,  Inc.  (formerly  known as LES,
Inc.),   Safety-Kleen   Services  (Canada)  Ltd.   (formerly  known  as  Laidlaw
Environmental  Services  (Canada) Ltd.), the Lenders,  Toronto Dominion (Texas),
Inc.,  The Toronto  Dominion  Bank, TD Securities  (USA) Inc.,  The Bank of Nova
Scotia, NationsBank, N.A., The First National Bank of Chicago and Wachovia Bank.

(4)(k) $350,000,000 5% Subordinated  Convertible  Pay-In-Kind Debenture due 2009
issued by Registrant on May 15, 1997 to Laidlaw Transportation, Inc. the form of
which was included as an appendix to the Registrant's Definitive Proxy Statement
on Form DEF 14A, filed on May 1, 1997 and incorporated herein by reference.

(4)(l)  Registration  Rights  Agreement  dated May 15, 1997 between  Registrant,
Laidlaw Transportation,  Inc. and Laidlaw Inc. the form of which was included as
an appendix to the  Registrant's  Definitive  Proxy  Statement  on Form DEF 14A,
filed on May 1, 1997 and incorporated herein by reference.


                                       25
<PAGE>


(4)(m)  Indenture  dated as of May 1, 1993  between the  Industrial  Development
Board  of  the   Metropolitan   Government  of  Nashville  and  Davidson  County
(Tennessee)  and  NationsBank of Tennessee,  N.A.,  filed as Exhibit 4(f) to the
Registrant's  Form 10-Q for the Quarter  ended May 31,  1997,  and  incorporated
herein by reference.

(4)(n)  Indenture of Trust dated as of August 1995 between Tooele  County,  Utah
and West One Bank,  Utah, now known as U.S.  Bank, as Trustee,  filed as Exhibit
4(h) to the  Registrant's  form 10-Q for the  Quarter  ended May 31,  1997,  and
incorporated herein by reference.

(4)(o)  Indenture of Trust dated as of July 1, 1997 between Carbon County,  Utah
and U.S. Bank, a national banking association, as Trustee, filed as Exhibit 4(i)
to the  Registrant's  Form  10-Q  for  the  Quarter  ended  May  31,  1997,  and
incorporated herein by reference.

(4)(p)  Indenture of Trust dated as of July 1, 1997 between Tooele County,  Utah
and U.S. Bank, a national banking association, as Trustee, filed as Exhibit 4(j)
to the  Registrant's  Form  10-Q  for  the  Quarter  ended  May  31,  1997,  and
incorporated herein by reference.

(4)(q) Indenture of Trust dated as of July 1, 1997 between California  Pollution
Control Financing  Authority and U.S. Bank, a national banking  association,  as
Trustee,  filed as Exhibit  4(k) to the  Registrant's  Form 10-Q for the Quarter
ended May 31, 1997, and incorporated herein by reference.

(4)(r)  Promissory  Note  dated  May  15,  1997  for  $60,000,000  from  Laidlaw
Environmental  Services,  Inc. to Westinghouse  Electric  Corporation,  filed as
Exhibit 4(n) to the  Registrant's  Form 10-Q for the Quarter ended May 31, 1997,
and incorporated herein by reference.

(4)(s)  Guaranty  Agreement  dated May 15, 1997 by Laidlaw Inc. to  Westinghouse
Electric  Corporation  guaranteeing  Promissory  Note  dated  May 15,  1997  (as
referenced  in Exhibit  (4)(r)) from  Laidlaw  Environmental  Services,  Inc. to
Westinghouse  Electric  Corporation),  filed as Exhibit 4(o) to the Registrant's
Form  10-Q for the  Quarter  ended  May 31,  1997,  and  incorporated  herein by
reference.

(4)(t) Other instruments defining the rights of holders of nonregistered debt of
the  Registrant  have been  omitted from this exhibit list because the amount of
debt  authorized  under any such  instrument  does not  exceed  10% of the total
assets of the Registrant and its subsidiaries.  The Registrant agrees to furnish
a copy of any such instrument to the Commission upon request.

(10)(a)  Agreement  and Plan of Merger  dated as of March 16,  1998 by and among
Registrant, LES Acquisition, Inc., and Safety-Kleen Corp. included as Annex A of
Safety-Kleen's  Revised Amended  Prospectus on Form 14D-9 filed as Exhibit 62 to
Safety-Kleen's  Amendment  No.  28 to  Schedule  14-9A on March  17,  1998,  and
incorporated herein by reference.

(10)(b) Stock  Purchase  Agreement  between  Westinghouse  Electric  Corporation
(Seller) and Rollins Environmental Services, Inc. (Buyer) for National Electric,
Inc. dated March 7, 1995 filed as Exhibit 2 to the  Registrant's  Current Report
on Form 8-K filed on June 13, 1995 and incorporated herein by reference.


                                       26
<PAGE>


(10)(c) Second  Amendment to Stock Purchase  Agreement (as referenced in Exhibit
(10)(b)  above),  dated May 15, 1997 among  Westinghouse  Electric  Corporation,
Rollins Environmental  Services, Inc. and Laidlaw Inc., filed as Exhibit 4(m) to
the Registrant's  Form 10-Q for the Quarter ended May 31, 1997, and incorporated
herein by reference.

(10)(d) Rollins  Environmental  Services,  Inc. 1982 Incentive Stock Option Plan
filed with Amendment No. 1 to the Company's  Registration  Statement No. 2-84139
on Form S-1 dated June 24, 1983 and incorporated herein by reference.

(10)(e) Rollins Environmental  Services,  Inc. 1993 Stock Option Plan filed with
the  Company's  Proxy  Statement  for the Annual  Meeting of  Shareholders  held
January 28, 1994 and incorporated herein by reference.

(10)(f)  Registrant's  1997  Stock  Option  Plan,  filed as  Exhibit  4.4 to the
Company's  Registration  Statement No.  333-41859 on Form S-8 dated December 10,
1997 and incorporated herein by reference.

(10)(g)  Registrant's  Director's Stock Option Plan, filed as Exhibit 4.5 to the
Company's  Registration  Statement No.  333-41859 on Form S-8 dated December 10,
1997 and incorporated herein by reference.

(10)(h) Stock Purchase  Agreement  dated February 6, 1997 among the  Registrant,
Laidlaw Inc., and Laidlaw  Transportation,  Inc.  included as an appendix to the
Definitive Proxy Statement on Form DEF 14A filed on May 1, 1997 and incorporated
herein by reference.

(10)(i) Corporate  Incentive Plan for fiscal year 1999, filed as Exhibit (10)(i)
to the  Registrant's  Form 10-Q for the  quarter  ended  November  30,  1998 and
incorporated herein by reference.

(10)(j)  Operations  Management  Incentive  Plan for  fiscal  year 1999 filed as
Exhibit (10)(j) to the Registrant's Form 10-Q for the quarter ended November 30,
1998 and incorporated herein by reference.

(10)(k)  Laidlaw  Environmental   Services,  Inc.  U.S.  Supplemental  Executive
Retirement Plan filed as Exhibit 10(g) to the Registrant's  10-Q for the quarter
ended November 30, 1997, and incorporated herein by reference.

(10)(l) Form of Change of Control  Agreement  LES-A1,  filed as Exhibit 10(k) to
the  Registrant's  10-K for the year ended  August 31,  1998,  and  incorporated
herein by reference.

(10)(m) Form of Change of Control Agreement  LES-B-1,  filed as Exhibit 10(l) to
the  Registrant's  10-K for the year ended  August 31,  1998,  and  incorporated
herein by reference.


                                       27
<PAGE>


(10)(n) Form of Change of Control  Agreement  LES-C1,  filed as Exhibit 10(m) to
the  Registrant's  10-K for the year ended  August 31,  1998,  and  incorporated
herein by reference.

(11)     Statement of Computation of Per Share Earnings

(12)     Statement Re: Computation of Ratios

(27)     Financial Data Schedule.

(b)      Reports on Form 8-K.

The Company filed a Current Report on Form 8-K,  dated December 28, 1998,  which
contained Item 5 related to a press release announcing the  recapitalization  of
Safety-Kleen Europe, its U.K. business unit.


                                       28
<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.


   DATE:  April 14, 1999                    SAFETY-KLEEN CORP.
   -----  --------------                    ------------------
                                              (Registrant)



                                              /s/Kenneth W. Winger              
                                      -------------------------------------     
                                      Kenneth W. Winger
                                      President and Chief Executive Officer



                                             /s/Paul R. Humphreys         
                                       ------------------------------------     
                                      Paul R. Humphreys
                                      Senior Vice President-Finance and
                                      Chief Financial Officer


                                       29