CLH-3.31.2014-Q1
Table of Contents

UNITED STATES OF AMERICA
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________________
FORM 10-Q
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2014
OR
 
 
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM         TO       

Commission File Number 001-34223
_______________________
CLEAN HARBORS, INC.
(Exact name of registrant as specified in its charter)
Massachusetts
 
04-2997780
(State or Other Jurisdiction of Incorporation or Organization)
 
(IRS Employer Identification No.)
 
 
 
42 Longwater Drive, Norwell, MA
 
02061-9149
(Address of Principal Executive Offices)
 
(Zip Code)
(781) 792-5000
(Registrant’s Telephone Number, Including area code)
_______________________
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 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 o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  x  No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer x
 
Accelerated filer o
 
 
 
Non-accelerated filer o
 
Smaller reporting company o
(Do not check if a smaller reporting company)
 
 

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes o  No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Stock, $.01 par value
 
60,765,766
(Class)
 
(Outstanding as of May 5, 2014)



CLEAN HARBORS, INC.

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

 
Page No.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



Table of Contents



CLEAN HARBORS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands)

 
March 31, 2014
 
December 31, 2013
ASSETS
(unaudited)
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
249,007

 
$
310,073

Marketable securities
213

 
12,435

Accounts receivable, net of allowances aggregating $20,094 and $18,106, respectively
566,394

 
579,394

Unbilled accounts receivable
40,832

 
26,568

Deferred costs
16,523

 
16,134

Inventories and supplies
152,443

 
152,096

Prepaid expenses and other current assets
56,677

 
41,962

Deferred tax assets
32,469

 
32,517

Total current assets
1,114,558

 
1,171,179

Property, plant and equipment, net
1,588,286

 
1,602,170

Other assets:
 
 
 
Deferred financing costs
20,036

 
20,860

Goodwill
565,062

 
570,960

Permits and other intangibles, net
557,211

 
569,973

Other
18,802

 
18,536

Total other assets
1,161,111

 
1,180,329

Total assets
$
3,863,955

 
$
3,953,678

 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
Current liabilities:
 
 
 
Current portion of capital lease obligations
$
1,119

 
$
1,329

Accounts payable
284,768

 
316,462

Deferred revenue
56,469

 
55,454

Accrued expenses
213,096

 
236,829

Current portion of closure, post-closure and remedial liabilities
31,866

 
29,471

Total current liabilities
587,318

 
639,545

Other liabilities:
 
 
 
Closure and post-closure liabilities, less current portion of $7,629 and $5,884, respectively
40,809

 
41,201

Remedial liabilities, less current portion of $24,237 and $23,587, respectively
144,485

 
148,911

Long-term obligations
1,400,000

 
1,400,000

Capital lease obligations, less current portion
913

 
1,435

Deferred taxes, unrecognized tax benefits and other long-term liabilities
244,795

 
246,947

Total other liabilities
1,831,002

 
1,838,494

Stockholders’ equity:
 
 
 
Common stock, $.01 par value:
 
 
 
Authorized 80,000,000; shares issued and outstanding 60,717,774 and 60,672,180
 shares, respectively
607

 
607

Shares held under employee participation plan
(469
)
 
(469
)
Additional paid-in capital
900,726

 
898,165

Accumulated other comprehensive loss
(61,081
)
 
(19,556
)
Accumulated earnings
605,852

 
596,892

Total stockholders’ equity
1,445,635

 
1,475,639

Total liabilities and stockholders’ equity
$
3,863,955

 
$
3,953,678

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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Table of Contents

CLEAN HARBORS, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

(in thousands except per share amounts)

 
Three Months Ended
 
March 31,
 
2014
 
2013
Revenues:
 
 
 
Service revenues
$
660,095

 
$
672,622

Product revenues
186,572

 
189,541

Total revenues
846,667

 
862,163

Cost of revenues (exclusive of items shown separately below)
 
 
 
Service revenues
466,799

 
468,372

Product revenues
158,920

 
167,652

Total cost of revenues
625,719

 
636,024

Selling, general and administrative expenses
118,962

 
128,470

Accretion of environmental liabilities
2,724

 
2,835

Depreciation and amortization
69,356

 
60,006

Income from operations
29,906

 
34,828

Other income
4,178

 
525

Interest expense, net of interest income of $205 and $111, respectively
(19,554
)
 
(19,873
)
Income before provision for income taxes
14,530

 
15,480

Provision for income taxes
5,570

 
4,978

Net income
$
8,960

 
$
10,502

Earnings per share:
 
 
 
Basic
$
0.15

 
$
0.17

Diluted
$
0.15

 
$
0.17

Shares used to compute earnings per share - Basic
60,720

 
60,464

Shares used to compute earnings per share - Diluted
60,861

 
60,630


The accompanying notes are an integral part of these unaudited consolidated financial statements.

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Table of Contents

CLEAN HARBORS, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands)
 
Three Months Ended
 
March 31,
 
2014
 
2013
Net income
$
8,960

 
$
10,502

Other comprehensive loss:
 
 
 
Unrealized gains (losses) on available-for-sale securities (net of taxes of $152 and $70 respectively)
860

 
(549
)
Reclassification adjustment for gains on available-for-sale securities included in net income (net of taxes of $496)
(2,812
)
 

Foreign currency translation adjustments
(39,573
)
 
(23,312
)
Other comprehensive loss
(41,525
)
 
(23,861
)
Comprehensive loss
$
(32,565
)
 
$
(13,359
)

The accompanying notes are an integral part of these unaudited consolidated financial statements.


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Table of Contents

CLEAN HARBORS, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)
 
Three Months Ended
 
March 31,
 
2014
 
2013
Cash flows from operating activities:
 
 
 
Net income
$
8,960

 
$
10,502

Adjustments to reconcile net income to net cash from operating activities:
 
 
 
Depreciation and amortization
69,356

 
60,006

Pre-tax, non-cash acquisition accounting inventory adjustments

 
13,559

Allowance for doubtful accounts
2,086

 
1,823

Amortization of deferred financing costs and debt discount
824

 
846

Accretion of environmental liabilities
2,724

 
2,835

Changes in environmental liability estimates
(821
)
 
(58
)
Deferred income taxes

 
32

Stock-based compensation
2,278

 
1,887

Excess tax benefit of stock-based compensation
(117
)
 
(1,227
)
Income tax benefit related to stock option exercises
117

 
1,216

Other income
(4,178
)
 
(525
)
Environmental expenditures
(4,186
)
 
(5,291
)
Changes in assets and liabilities, net of acquisitions
 
 
 
Accounts receivable
3,741

 
(28,726
)
Inventories and supplies
(1,709
)
 
13,573

Other current assets
(30,532
)
 
6,377

Accounts payable
(23,374
)
 
(16,112
)
Other current and long-term liabilities
(20,573
)
 
(21,128
)
Net cash from operating activities
4,596

 
39,589

Cash flows from investing activities:
 
 
 
Additions to property, plant and equipment
(75,005
)
 
(72,249
)
Proceeds from sales of fixed assets
876

 
921

Proceeds from sales of marketable securities
12,870

 

Acquisitions, net of cash acquired

 
(197
)
Additions to intangible assets, including costs to obtain or renew permits
(1,075
)
 
(725
)
Net cash used in investing activities
(62,334
)
 
(72,250
)
Cash flows from financing activities:
 
 
 
Change in uncashed checks
21

 
26,419

Proceeds from exercise of stock options

 
397

Remittance of shares, net
(750
)
 
(41
)
Repurchases of common stock
(1,225
)
 

Proceeds from employee stock purchase plan
2,141

 
1,546

Deferred financing costs paid

 
(2,318
)
Payments on capital leases
(638
)
 
(1,346
)
Issuance costs related to 2012 issuance of common stock

 
(250
)
Excess tax benefit of stock-based compensation
117

 
1,227

Net cash from financing activities
(334
)
 
25,634

Effect of exchange rate change on cash
(2,994
)
 
(705
)
Decrease in cash and cash equivalents
(61,066
)
 
(7,732
)
Cash and cash equivalents, beginning of period
310,073

 
229,836

Cash and cash equivalents, end of period
$
249,007

 
$
222,104

Supplemental information:
 
 
 
Cash payments for interest and income taxes:
 
 
 
Interest paid
$
21,436

 
$
21,725

Income taxes paid
5,389

 
3,662

Non-cash investing and financing activities:
 
 
 
Property, plant and equipment accrued
26,715

 
21,722

Transfer of inventory to property, plant and equipment

 
11,369

The accompanying notes are an integral part of these unaudited consolidated financial statements.



CLEAN HARBORS, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

 
Common Stock
 
Shares Held
Under
Employee
Participation
Plan
 
 
 
Accumulated
Other
Comprehensive Loss
 
 
 
 
 
Number
of
Shares
 
$ 0.01
Par
Value
 
 
Additional
Paid-in
Capital
 
 
Accumulated
Earnings
 
Total
Stockholders’
Equity
Balance at January 1, 2014
60,672

 
$
607

 
$
(469
)
 
$
898,165

 
$
(19,556
)
 
$
596,892

 
$
1,475,639

Net income

 

 

 

 

 
8,960

 
8,960

Other comprehensive loss

 

 

 

 
(41,525
)
 

 
(41,525
)
Stock-based compensation
42

 

 

 
2,278

 

 

 
2,278

Issuance of restricted shares, net of shares remitted
(14
)
 

 

 
(750
)
 

 

 
(750
)
Repurchases of common stock
(25
)
 

 

 
(1,225
)
 

 

 
(1,225
)
Net tax benefit on exercise of stock-based awards

 

 

 
117

 

 

 
117

Employee stock purchase plan
43

 

 

 
2,141

 

 

 
2,141

Balance at March 31, 2014
60,718

 
$
607

 
$
(469
)
 
$
900,726

 
$
(61,081
)
 
$
605,852

 
$
1,445,635


The accompanying notes are an integral part of these unaudited consolidated financial statements.


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Table of Contents

CLEAN HARBORS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(1) BASIS OF PRESENTATION

The accompanying consolidated interim financial statements are unaudited and include the accounts of Clean Harbors, Inc. and its subsidiaries (collectively, “Clean Harbors,” the “Company” or "we") and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and, in the opinion of management, include all adjustments which are of a normal recurring nature, necessary for a fair presentation of the financial position, results of operations, and cash flows for the periods presented. The results for interim periods are not necessarily indicative of results for the entire year or any other interim periods. The financial statements presented herein should be read in connection with the financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.
    
(2) SIGNIFICANT ACCOUNTING POLICIES
The Company's significant accounting policies are described in Note 2, "Significant Accounting Policies," in the Company's Annual Report on Form 10-K for the year ended December 31, 2013. There have been no material changes in these policies or their application.
Recent Accounting Pronouncements
Standards implemented
On January 1. 2014, the Company adopted the Financial Accounting Standards Board (“FASB”) Accounting Standard Update (“ASU”) 2013-11 Income Taxes (Topic 740) - Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. This standard provides guidance regarding when an unrecognized tax benefit should be classified as a reduction to a deferred tax asset or when it should be classified as a liability in the consolidated balance sheet. The adoption of ASU 2013-11 did not have an impact on the Company's consolidated balance sheets.
Standards to be implemented
In April 2014, FASB issued ASU 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360). The amendments in ASU 2014-08 provide guidance for the recognition and disclosure of discontinued operations. ASU 2014-08 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2014. The Company is still evaluating the impact that ASU No. 2014-08 will have on the Company's consolidated financial statements.

(3) BUSINESS COMBINATIONS
Evergreen
On September 13, 2013, the Company acquired 100% of the outstanding common shares of Evergreen Oil, Inc. (“Evergreen”) for approximately $55.9 million in cash, net of cash acquired. The final purchase price remains subject to adjustment upon finalization of Evergreen’s net working capital balance as of the closing date. Evergreen, headquartered in Irvine, California, specializes in the recovery and re-refining of used oil and is currently the second-largest collector of used oil in California. Evergreen owns and operates one of the only oil re-refining operations in the western United States and also offers other ancillary environmental services, including parts cleaning and containerized waste services, vacuum services and hazardous waste management services. The acquisition of Evergreen enables the Company to further penetrate the small quantity waste generator market and further expand its oil re-refining, oil recycling and waste treatment capabilities.
Management determined the purchase price allocations based on estimates of the fair values of all tangible and intangible assets acquired and liabilities assumed. The Company believes that such information provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed. As of March 31, 2014, the Company has finalized the purchase accounting for the acquisition of Evergreen, except for the other assets, environmental liabilities, taxes and goodwill. The impact of the purchase price measurement period adjustments and related tax impacts recorded in the current period was not material to the consolidated financial statements and accordingly, the effects have not been retrospectively applied.

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The following table summarizes the recognized amounts of assets acquired and liabilities assumed at September 13, 2013 (in thousands):
 
At acquisition date as reported at
December 31, 2013
 
Measurement Period Adjustments
 
At acquisition date as reported at
March 31, 2014
Inventories and supplies
$
1,089

 
$

 
$
1,089

Prepaid and other current assets
1,291

 

 
1,291

Property, plant and equipment
40,563

 

 
40,563

Permits and other intangibles
17,100

 

 
17,100

Deferred tax assets, less current portion
2,368

 

 
2,368

Other assets
3,607

 
(37
)
 
3,570

Current liabilities
(6,198
)
 
(66
)
 
(6,264
)
Closure and post-closure liabilities
(659
)
 

 
(659
)
Remedial liabilities, less current portion
(2,103
)
 
103

 
(2,000
)
Other long-term liabilities
(1,139
)
 

 
(1,139
)
Total identifiable net assets
55,919

 

 
55,919

Goodwill

 

 

Total
$
55,919

 
$

 
$
55,919

(4) MARKETABLE SECURITIES
The Company classifies its marketable securities as available-for-sale and, accordingly, carries such securities at fair value based upon readily available quoted market prices of the securities. Unrealized gains and losses are reported, net of tax, as a component of other comprehensive income. On March 31, 2014 and December 31, 2013, marketable securities held by the Company were recorded at $0.2 million and $12.4 million, respectively. Marketable securities are classified as Level 1 in the fair value hierarchy.
During the quarter ended March 31, 2014 the Company sold marketable securities and recognized a gain of $3.3 million recorded as other income in the consolidated statement of income.
(5) INVENTORIES AND SUPPLIES
Inventories and supplies consisted of the following (in thousands):
 
March 31, 2014
 
December 31, 2013
Oil and oil products
$
59,242

 
$
59,639

Supplies and drums
65,882

 
64,471

Solvent and solutions
9,955

 
10,100

Other
17,364

 
17,886

Total inventories and supplies
$
152,443

 
$
152,096


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Table of Contents

(6) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following (in thousands):
 
March 31, 2014
 
December 31, 2013
Land
$
99,338

 
$
99,794

Asset retirement costs (non-landfill)
10,909

 
10,938

Landfill assets
101,540

 
100,983

Buildings and improvements
331,969

 
327,956

Camp equipment
180,874

 
187,831

Vehicles
432,849

 
425,296

Equipment
1,220,857

 
1,201,296

Furniture and fixtures
5,260

 
5,260

Construction in progress
68,123

 
58,010

 
2,451,719

 
2,417,364

Less - accumulated depreciation and amortization
863,433

 
815,194

Total property, plant and equipment, net
$
1,588,286

 
$
1,602,170

(7) GOODWILL AND OTHER INTANGIBLE ASSETS
The changes to goodwill for the three months ended March 31, 2014 were as follows (in thousands):
 
2014
Balance at January 1, 2014
$
570,960

Foreign currency translation
(5,898
)
Balance at March 31, 2014
$
565,062

The Company assesses goodwill for impairment at least on an annual basis as of December 31, or when events or changes in the business environment indicate that the carrying value of the reporting unit may exceed its fair value. The Company conducted the annual impairment test of goodwill for all reporting units as of December 31, 2013 and determined that no adjustment to the carrying value of goodwill for any reporting unit was necessary because the fair values of the reporting units exceeded their respective carrying values.
The fair value of the Oil Re-refining and Recycling reporting unit exceeded the carrying value by less than 10% at December 31, 2013. During the first quarter of fiscal 2014 the reporting unit has experienced lower than anticipated financial results primarily due to lower overall oil pricing and sales mix between base oils and higher priced blended oils. The lower sales prices reflected general economic conditions in the oil industry during these periods. The financial performance of this reporting unit, which had a goodwill balance of approximately $170.1 million at March 31, 2014, is affected by fluctuations in oil prices and sales mix. In light of the reporting units performance the Company continues to evaluate the risk of goodwill impairment and during the first quarter of 2014 has performed analysis surrounding the impact of the lower than anticipated results on the reporting unit's fair value. Based on such analysis the Company continues to conclude that the fair value of the reporting unit more likely than not exceeds its carrying value at March 31, 2014.
The fair value of the Oil and Gas Field Services reporting unit exceeded its carrying value by more than 10% at December 31, 2013. The financial performance of this reporting unit, which had a goodwill balance of approximately $36.3 million at March 31, 2014, was affected in the first quarter by decreased surface rentals and low rig counts. During the first quarter of 2014, due to lower than anticipated results in the Oil and Gas Field Services reporting unit, the Company performed an interim analysis of the impact of the lower than anticipated results on the reporting unit's fair value in the quarter, and concluded the fair value of the reporting unit more likely than not exceeded its carrying value at March 31, 2014.
Significant judgments are inherent in the annual impairment tests and analysis performed at interim dates and include assumptions about the amount and timing of expected future cash flows, growth rates, and the determination of appropriate discount rates. The Company believes that the assumptions used in the impairment analysis are reasonable, but variations in any of the assumptions may result in different calculations of fair values that could result in a material impairment charge. The impairment analysis performed during the year ended December 31, 2013 utilized future annual budgeted amounts. The discount rate assumptions were based on an assessment of the Company's weighted average cost of capital. Analysis performed in the first quarter of 2014 included a comparison of actual versus budgeted results and considerations as to whether the other significant assumptions utilized as of December 31, 2013 remained reasonable.

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The performance of the reporting unit and risk that its fair value will reduce to a level that does not exceed its carrying value will continue to be monitored going forward. There can be no assurance that future events and performance of the Oil Re-refining and Recycling reporting unit and Oil and Gas Field Services reporting unit will not result in an impairment of goodwill.
Below is a summary of amortizable other intangible assets (in thousands):
 
March 31, 2014
 
December 31, 2013
 
Cost
 
Accumulated
Amortization
 
Net
 
Weighted
Average
Remaining Amortization
Period
(in years)
 
Cost
 
Accumulated
Amortization
 
Net
 
Weighted
Average
Remaining Amortization
Period
(in years)
Permits
$
156,502

 
$
51,644

 
$
104,858

 
20.8
 
$
157,327

 
$
50,858

 
$
106,469

 
19.6
Customer and supplier relationships
374,593

 
59,142

 
315,451

 
11.7
 
377,899

 
52,814

 
325,085

 
12.1
Other intangible assets
29,137

 
16,395

 
12,742

 
2.9
 
29,299

 
15,518

 
13,781

 
3.3
Total amortizable permits and other intangible assets
560,232

 
127,181

 
433,051

 
11.9
 
564,525

 
119,190

 
445,335

 
12.2
Trademarks and trade names
124,160

 

 
124,160

 
Indefinite
 
124,638

 

 
124,638

 
Indefinite
Total permits and other intangible assets
$
684,392

 
$
127,181

 
$
557,211

 

 
$
689,163

 
$
119,190

 
$
569,973

 

Below is the expected future amortization of the net carrying amount of finite lived intangible assets at March 31, 2014 (in thousands):
Years Ending December 31,
Expected Amortization
2014 (nine months)
$
26,555

2015
35,149

2016
34,362

2017
32,448

2018
29,732

Thereafter
274,805

 
$
433,051

(8) ACCRUED EXPENSES
Accrued expenses consisted of the following (in thousands):
 
March 31, 2014
 
December 31, 2013
Insurance
$
62,478

 
$
57,993

Interest
17,909

 
20,731

Accrued compensation and benefits
49,821

 
60,902

Income, real estate, sales and other taxes
35,510

 
38,938

Other
47,378

 
58,265

Total accrued expenses
$
213,096

 
$
236,829


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Table of Contents

(9) CLOSURE AND POST-CLOSURE LIABILITIES
The changes to closure and post-closure liabilities (also referred to as “asset retirement obligations”) for the three months ended March 31, 2014 were as follows (in thousands):
 
Landfill
Retirement
Liability
 
Non-Landfill
Retirement
Liability
 
Total
Balance at January 1, 2014
$
27,604

 
$
19,481

 
$
47,085

New asset retirement obligations
921

 

 
921

Accretion
716

 
456

 
1,172

Changes in estimates recorded to statement of income

 
216

 
216

Changes in estimates recorded to balance sheet
165

 

 
165

Expenditures
(576
)
 
(336
)
 
(912
)
Currency translation and other
(97
)
 
(112
)
 
(209
)
Balance at March 31, 2014
$
28,733

 
$
19,705

 
$
48,438

All of the landfill facilities included in the above were active as of March 31, 2014. New asset retirement obligations incurred during the first three months of 2014 were discounted at the credit-adjusted risk-free rate of 6.54%. There were no significant charges (benefits) in 2014 resulting from changes in estimates for closure and post-closure liabilities.
(10) REMEDIAL LIABILITIES 
The changes to remedial liabilities for the three months ended March 31, 2014 were as follows (in thousands):
 
Remedial
Liabilities for
Landfill Sites
 
Remedial
Liabilities for
Inactive Sites
 
Remedial
Liabilities
(Including
Superfund) for
Non-Landfill
Operations
 
Total
Balance at January 1, 2014
$
5,624

 
$
74,262

 
$
92,612

 
$
172,498

Adjustments during the measurement period related to Evergreen

 

 
(125
)
 
(125
)
Accretion
66

 
756

 
730

 
1,552

Changes in estimates recorded to statement of income
(126
)
 
(259
)
 
(652
)
 
(1,037
)
Expenditures
(32
)
 
(1,399
)
 
(1,843
)
 
(3,274
)
Currency translation and other
(108
)
 
(40
)
 
(744
)
 
(892
)
Balance at March 31, 2014
$
5,424

 
$
73,320

 
$
89,978

 
$
168,722

In the three months ended March 31, 2014, the reduction in changes in estimates recorded to the statement of income was $1.0 million and primarily related to timing changes for various projects.
(11) FINANCING ARRANGEMENTS 
The following table is a summary of the Company’s financing arrangements (in thousands):
 
March 31, 2014
 
December 31, 2013
Senior unsecured notes, at 5.25%, due August 1, 2020
$
800,000

 
$
800,000

Senior unsecured notes, at 5.125%, due June 1, 2021
600,000

 
600,000

Long-term obligations
$
1,400,000

 
$
1,400,000

   
On July 30, 2012, the Company issued through a private placement $800.0 million aggregate principal amount of 5.25% senior unsecured notes due August 1, 2020 ("2020 Notes") with semi-annually fixed interest payments on February 1 and August 1 of each year, which commenced on February 1, 2013. At March 31, 2014 and December 31, 2013, the fair value of the Company's 2020 Notes was $811.1 million and $804.2 million, respectively, based on quoted market prices or other available market data. The fair value of the 2020 Notes is considered a Level 2 measure according to the fair value hierarchy.
On December 7, 2012, the Company issued through a private placement $600.0 million aggregate principal amount of 5.125% senior unsecured notes due 2021 ("2021 Notes") with semi-annually fixed interest payments on June 1 and December 1 of each year, which commenced on June 1, 2013. At March 31, 2014 and December 31, 2013, the fair value of the Company's 2021

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Notes was $603.2 million and $601.6 million, respectively, based on quoted market prices or other available market data. The fair value of the 2021 Notes is considered a Level 2 measure according to the fair value hierarchy.
The Company also maintains a revolving credit facility which as of March 31, 2014 and December 31, 2013 had no outstanding loan balances. At March 31, 2014, $251.1 million was available to borrow and outstanding letters of credit were $148.9 million. At December 31, 2013, $259.7 million was available to borrow and outstanding letters of credit were $140.3 million December 31, 2013.     
(12) INCOME TAXES 
The Company’s effective tax rate for the three months ended March 31, 2014 was 38.3% compared to 32.2% for the same period in 2013.
As of March 31, 2014 and December 31, 2013, the Company had recorded $1.3 million of liabilities for unrecognized tax benefits and $0.2 million of interest, respectively.
Due to expiring statute of limitation periods, the Company believes that total unrecognized tax benefits will decrease by approximately $0.1 million within the next twelve months. 
(13) EARNINGS PER SHARE     
The following are computations of basic and diluted earnings per share (in thousands except for per share amounts):
 
Three Months Ended
 
March 31,
 
2014
 
2013
Numerator for basic and diluted earnings per share:
 

 
 

Net income
$
8,960

 
$
10,502

 
 
 
 
Denominator:
 

 
 

Basic shares outstanding
60,720

 
60,464

Dilutive effect of equity-based compensation awards
141

 
166

Dilutive shares outstanding
60,861

 
60,630

 
 
 
 
Basic earnings per share:
$
0.15

 
$
0.17

 
 

 
 

Diluted earnings per share:
$
0.15

 
$
0.17

For the three months ended March 31, 2014, the dilutive effect of all then outstanding options, restricted stock and performance awards is included in the EPS calculations above except for 101,059 outstanding performance stock awards for which the performance criteria were not attained at that time. For the three months ended March 31, 2013, the EPS calculations above include the dilutive effects of all then outstanding options, restricted stock, and performance awards except for 61,000 outstanding performance stock awards for which the performance criteria were not attained at that time.

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(14) ACCUMULATED OTHER COMPREHENSIVE LOSS
The changes in accumulated other comprehensive loss by component and related tax effects for the three months ended March 31, 2014 were as follows (in thousands):    
 
Foreign Currency Translation
 
Unrealized Gains (Losses) on Available-For-Sale Securities
 
Unfunded Pension Liability
 
Total
Balance at January 1, 2014
$
(20,164
)
 
$
1,904

 
$
(1,296
)
 
$
(19,556
)
Other comprehensive loss before reclassifications
(39,573
)
 
1,012

 

 
(38,561
)
Amounts reclassified out of accumulated other comprehensive loss
$

 
$
(3,308
)
 
$

 
$
(3,308
)
Tax effects
$

 
$
344

 
$

 
$
344

Other comprehensive loss
$
(39,573
)
 
$
(1,952
)
 
$

 
$
(41,525
)
Balance at March 31, 2014
$
(59,737
)
 
$
(48
)
 
$
(1,296
)
 
$
(61,081
)
The amounts reclassified out of accumulated other comprehensive loss into the consolidated statement of income, with presentation location during the three months ended March 31, 2014 were as follows (in thousands):
Comprehensive Loss Components
 
March 31, 2014
 
Location
Unrealized holding gains on available-for-sale investments
 
$
(3,308
)
 
Other income

(15) COMMITMENTS AND CONTINGENCIES
Legal and Administrative Proceedings
The Company and its subsidiaries are subject to legal proceedings and claims arising in the ordinary course of business. Actions filed against the Company arise from commercial and employment-related claims including alleged class actions related to sales practices and wage and hour claims. The plaintiffs in these actions may be seeking damages or injunctive relief or both. These actions are in various jurisdictions and stages of proceedings, and some are covered in part by insurance. In addition, the Company’s waste management services operations are regulated by federal, state, provincial and local laws enacted to regulate discharge of materials into the environment, remediation of contaminated soil and groundwater or otherwise protect the environment. This ongoing regulation results in the Company frequently becoming a party to legal or administrative proceedings involving all levels of governmental authorities and other interested parties. The issues involved in such proceedings generally relate to alleged violations of existing permits and licenses or alleged responsibility under federal or state Superfund laws to remediate contamination at properties owned either by the Company or by other parties (“third party sites”) to which either the Company or the prior owners of certain of the Company’s facilities shipped wastes.
At March 31, 2014 and December 31, 2013, the Company had recorded reserves of $42.3 million and $41.7 million, respectively, in the Company's financial statements for actual or probable liabilities related to the legal and administrative proceedings in which the Company was then involved, the principal of which are described below. At March 31, 2014 and December 31, 2013, the Company also believed that it was reasonably possible that the amount of these potential liabilities could be as much as $3.4 million and $3.5 million more, respectively. The Company periodically adjusts the aggregate amount of these reserves when actual or probable liabilities are paid or otherwise discharged, new claims arise, or additional relevant information about existing or probable claims becomes available. As of March 31, 2014, the $42.3 million of reserves consisted of (i) $33.8 million related to pending legal or administrative proceedings, including Superfund liabilities, which were included in remedial liabilities on the consolidated balance sheets, and (ii) $8.5 million primarily related to federal and state enforcement actions, which were included in accrued expenses on the consolidated balance sheets.
As of March 31, 2014, the principal legal and administrative proceedings in which the Company was involved, or which had been terminated during 2014, were as follows:
Ville Mercier.    In September 2002, the Company acquired the stock of a subsidiary (the "Mercier Subsidiary") which owns a hazardous waste incinerator in Ville Mercier, Quebec (the "Mercier Facility"). The property adjacent to the Mercier Facility, which is also owned by the Mercier Subsidiary, is now contaminated as a result of actions dating back to 1968, when the Government of Quebec issued to a company unrelated to the Mercier Subsidiary two permits to dump organic liquids into lagoons on the property. In 1999, Ville Mercier and three neighboring municipalities filed separate legal proceedings against the Mercier Subsidiary and the Government of Quebec. In 2012, the municipalities amended their existing statement of claim to seek $2.9 million (cdn) in general

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damages and $10.0 million (cdn) in punitive damages, plus interest and costs, as well as injunctive relief. Both the Government of Quebec and the Company have filed summary judgment motions against the municipalities that are scheduled to be heard in September of 2014. In September 2007, the Quebec Minister of Sustainable Development, Environment and Parks issued a Notice pursuant to Section 115.1 of the Environment Quality Act, superseding Notices issued in 1992, which are the subject of the pending litigation. The more recent Notice notifies the Mercier Subsidiary that, if the Mercier Subsidiary does not take certain remedial measures at the site, the Minister intends to undertake those measures at the site and claim direct and indirect costs related to such measures.
The Mercier Subsidiary continues to assert that it has no responsibility for the groundwater contamination in the region and will contest any action by the Ministry to impose costs for remedial measures on the Mercier Subsidiary. The Company also continues to pursue settlement options. At March 31, 2014 and December 31, 2013, the Company had accrued $13.3 million and $13.6 million, respectively, for remedial liabilities relating to the Ville Mercier legal proceedings.
Safety-Kleen Legal Proceedings. On December 28, 2012, the Company acquired Safety-Kleen and thereby became subject to the legal proceedings in which Safety-Kleen was a party on that date. In addition to certain Superfund proceedings in which Safety-Kleen has been named as a potentially responsible party as described below under “Superfund Proceedings,” the principal such legal proceedings involving Safety-Kleen which were outstanding as of March 31, 2014 were as follows:
Product Liability Cases. Safety-Kleen is named as a defendant in various lawsuits that are currently pending in various courts and jurisdictions throughout the United States, including approximately 63 proceedings (excluding cases which have been settled but not formally dismissed) as of March 31, 2014, wherein persons claim personal injury resulting from the use of Safety-Kleen's parts cleaning equipment or cleaning products. These proceedings typically involve allegations that the solvent used in Safety-Kleen's parts cleaning equipment contains contaminants and/or that Safety-Kleen's recycling process does not effectively remove the contaminants that become entrained in the solvent during their use. In addition, certain claimants assert that Safety-Kleen failed to warn adequately the product user of potential risks, including an historic failure to warn that solvent contains trace amounts of toxic or hazardous substances such as benzene. Safety-Kleen maintains insurance that it believes will provide coverage for these claims (over amounts accrued for self-insured retentions and deductibles in certain limited cases), except for punitive damages to the extent not insurable under state law or excluded from insurance coverage. Safety-Kleen believes that these claims lack merit and has historically vigorously defended, and intends to continue to vigorously defend, itself and the safety of its products against all of these claims. Such matters are subject to many uncertainties and outcomes are not predictable with assurance. Consequently, Safety-Kleen is unable to ascertain the ultimate aggregate amount of monetary liability or financial impact with respect to these matters as of March 31, 2014. From December 31, 2013 to March 31, 2014, six product liability claims were settled or dismissed. Due to the nature of these claims and the related insurance, the Company did not incur any expense as Safety-Kleen's insurance provided coverage in full for all such claims. Safety-Kleen may be named in similar, additional lawsuits in the future, including claims for which insurance coverage may not be available.    
Fee Class Action Claims. In October 2010, two customers filed a complaint, individually and on behalf of all similarly situated customers in the State of Alabama, alleging that Safety-Kleen improperly assessed fuel surcharges and extended area service fees. Safety-Kleen disputes the basis of the claims on numerous grounds, including that Safety-Kleen has contracts with numerous customers authorizing the assessment of such fees and that in cases where no contract exists Safety-Kleen provides customers with a document at the time of service reflecting the assessment of the fee, followed by an invoice itemizing the fee. It is Safety-Kleen's position that it had the right to assess fuel surcharges, that the customers consented to the charges and that the surcharges were voluntarily paid by the customers when presented with an invoice. The lawsuit is still in its initial stages of discovery, with the focus being whether a class will be certified. The class certification-related fact discovery cutoff was extended to June 4, 2014, and a hearing on class certification will be scheduled to occur after October 15, 2014. The plaintiff has filed a motion to extend the discovery cutoff and trial date, but the court has not ruled on these requests. In late June 2012, a nearly identical lawsuit was filed by the same law firm on behalf of a California-based customer. That lawsuit contends, under various state law theories, that Safety-Kleen impermissibly assessed fuel surcharges and late payment fees and seeks certification of a class of California customers only. Safety-Kleen will assert the same defenses as in the Alabama litigation. In December 2012, a similar suit was filed by the same law firm on behalf of a Missouri-based customer which contends under various state law theories that Safety-Kleen impermissibly assessed fuel surcharges and seeks certification of a class of Missouri customers only. Safety-Kleen will assert the same defenses as in the Alabama and California cases. Plaintiff’s class certification brief must be filed by May 1, 2014, with Safety-Kleen’s opposition due by June 2, 2014. Trial has been set for May 18, 2015. The Company is unable to ascertain the ultimate aggregate amount of monetary liability or financial impact, if any, with respect to these matters as of March 31, 2014, and no reserve has been recorded.
Superfund Proceedings
The Company has been notified that either the Company (which, since December 28, 2012, includes Safety-Kleen) or the prior owners of certain of the Company's facilities for which the Company may have certain indemnification obligations have been

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identified as potentially responsible parties ("PRPs") or potential PRPs in connection with 124 sites which are subject to or are proposed to become subject to proceedings under federal or state Superfund laws. Of the 124 sites, two (the Wichita Facility and the BR Facility described below) involve facilities that are now owned by the Company and 122 involve third party sites to which either the Company or the prior owners of certain of the Company’s facilities shipped wastes. Of the 122 third party sites, 29 are now settled, 21 are currently requiring expenditures on remediation and 72 are not currently requiring expenditures on remediation.
In connection with each site, the Company has estimated the extent, if any, to which it may be subject, either directly or as a result of any indemnification obligations, for cleanup and remediation costs, related legal and consulting costs associated with PRP investigations, settlements, and related legal and administrative proceedings. The amount of such actual and potential liability is inherently difficult to estimate because of, among other relevant factors, uncertainties as to the legal liability (if any) of the Company or the prior owners of certain of the Company's facilities to contribute a portion of the cleanup costs, the assumptions that must be made in calculating the estimated cost and timing of remediation, the identification of other PRPs and their respective capability and obligation to contribute to remediation efforts, and the existence and legal standing of indemnification agreements (if any) with prior owners, which may either benefit the Company or subject the Company to potential indemnification obligations. In addition to the Wichita Property and the BR Facility, Clean Harbors believes its potential liability could exceed $100,000 at 16 of the 122 third party sites.
Wichita Property.    The Company acquired in 2002 as part of the CSD assets a service center located in Wichita, Kansas (the "Wichita Property"). The Wichita Property is one of several properties located within the boundaries of a 1,400 acre state-designated Superfund site in an old industrial section of Wichita known as the North Industrial Corridor Site. Along with numerous other PRPs, the former owner executed a consent decree relating to such site with the U.S. Environmental Protection Agency (the "EPA"), and the Company is continuing an ongoing remediation program for the Wichita Property in accordance with that consent decree. The Company also acquired rights under an indemnification agreement between the former owner and an earlier owner of the Wichita Property which the Company anticipates but cannot guarantee will be available to reimburse certain such cleanup costs.
BR Facility.    The Company acquired in 2002 a former hazardous waste incinerator and landfill in Baton Rouge (the "BR Facility"), for which operations had been previously discontinued by the prior owner. In September 2007, the EPA issued a special notice letter to the Company related to the Devil's Swamp Lake Site ("Devil's Swamp") in East Baton Rouge Parish, Louisiana. Devil's Swamp includes a lake located downstream of an outfall ditch where wastewater and stormwater have been discharged, and Devil's Swamp is proposed to be included on the National Priorities List due to the presence of Contaminants of Concern ("COC") cited by the EPA. These COCs include substances of the kind found in wastewater and storm water discharged from the BR Facility in past operations. The EPA originally requested COC generators to submit a good faith offer to conduct a remedial investigation feasibility study directed towards the eventual remediation of the site. The Company is currently performing corrective actions at the BR Facility under an order issued by the Louisiana Department of Environmental Quality (the "LDEQ"), and has begun conducting the remedial investigation and feasibility study under an order issued by the EPA. The Company cannot presently estimate the potential additional liability for the Devil's Swamp cleanup until a final remedy is selected by the EPA.
Third Party Sites.    Of the 122 third party sites at which the Company has been notified it is a PRP or potential PRP or may have indemnification obligations, Clean Harbors has an indemnification agreement at 11 of these sites with ChemWaste, a former subsidiary of Waste Management, Inc., and at five additional of these third party sites, Safety-Kleen has a similar indemnification agreement with McKesson Corporation. These agreements indemnify the Company (which now includes Safety-Kleen) with respect to any liability at the 16 sites for waste disposed prior to the Company's (or Safety-Kleen's) acquisition of the former subsidiaries of Waste Management or McKesson which had shipped wastes to those sites. Accordingly, Waste Management or McKesson are paying all costs of defending those subsidiaries in those 16 cases, including legal fees and settlement costs. However, there can be no guarantee that the Company's ultimate liabilities for those sites will not exceed the amount recorded or that indemnities applicable to any of these sites will be available to pay all or a portion of related costs. Except for the indemnification agreements which the Company holds from ChemWaste and McKesson, the Company does not have an indemnity agreement with respect to any of the 122 third party sites discussed above.
Federal, State and Provincial Enforcement Actions
From time to time, the Company pays fines or penalties in regulatory proceedings relating primarily to waste treatment, storage or disposal facilities. As of March 31, 2014 and December 31, 2013, there were four and five proceedings, respectively, for which the Company reasonably believed that the sanctions could equal or exceed $100,000. The Company believes that the fines or other penalties in these or any of the other regulatory proceedings will, individually or in the aggregate, not have a material effect on its financial condition, results of operations or cash flows.

14

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(16) SEGMENT REPORTING 
The Company's operations are managed in five reportable segments: Technical Services, Oil Re-refining and Recycling, SK Environmental Services, Industrial and Field Services and Oil and Gas Field Services.
Performance of the segments is evaluated on several factors, of which the primary financial measure is “Adjusted EBITDA,” which consists of net income plus accretion of environmental liabilities, depreciation and amortization, net interest expense, provision for income taxes and pre-tax, non-cash acquisition accounting adjustments. Also excluded is other income as it is not considered part of usual business operations. Transactions between the segments are accounted for at the Company’s estimate of fair value based on similar transactions with outside customers. 
The operations not managed through the Company’s five reportable segments are recorded as “Corporate Items.” Corporate Items revenues consist of two different operations for which the revenues are insignificant. Corporate Items cost of revenues represents certain central services that are not allocated to the five segments for internal reporting purposes. Corporate Items selling, general and administrative expenses include typical corporate items such as legal, accounting and other items of a general corporate nature that are not allocated to the Company’s five reportable segments. 
The following table reconciles third party revenues to direct revenues for the three months ended March 31, 2014 and 2013 (in thousands). Third party revenue is revenue billed to outside customers by a particular segment. Direct revenue is the revenue allocated to the segment performing the provided service. The Company analyzes results of operations based on direct revenues because the Company believes that these revenues and related expenses best reflect the manner in which operations are managed. Intersegment revenues represent the sharing of third party revenues among the segments based on products and services provided by each segment as if the products and services were sold directly to the third party. The intersegment revenues are shown net. The negative intersegment revenues are due to more transfers out of customer revenues to other segments than transfers in of customer revenues from other segments.
 
For the Three Months Ended March 31, 2014
 
Technical
Services
 
Oil Re-refining and Recycling
 
SK Environmental Services
 
Industrial and Field
Services
 
Oil and Gas Field
Services
 
Corporate
Items
 
Totals
Third party revenues
$
236,781

 
$
137,986

 
$
152,322

 
$
215,676

 
$
103,751

 
$
151

 
$
846,667

Intersegment revenues, net
37,434

 
(56,213
)
 
28,054

 
(11,113
)
 
1,838

 

 

Corporate Items, net
399

 

 
(58
)
 
156

 
12

 
(509
)
 

Direct revenues
$
274,614

 
$
81,773

 
$
180,318

 
$
204,719

 
$
105,601

 
$
(358
)
 
$
846,667

 
For the Three Months Ended March 31, 2013
 
Technical
Services
 
Oil Re-refining and Recycling
 
SK Environmental Services
 
Industrial and Field
Services
 
Oil and Gas Field
Services
 
Corporate
Items
 
Totals
Third party revenues
$
233,939

 
$
146,931

 
$
152,955

 
$
221,418

 
$
116,696

 
$
(9,776
)
 
$
862,163

Intersegment revenues, net
24,419

 
(56,561
)
 
41,405

 
(13,356
)
 
4,093

 

 

Corporate Items, net
852

 

 
84

 
138

 
(151
)
 
(923
)
 

Direct revenues
$
259,210

 
$
90,370

 
$
194,444

 
$
208,200

 
$
120,638

 
$
(10,699
)
 
$
862,163


15

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The following table presents information used by management for each reportable segment (in thousands). The Company does not allocate interest expense, income taxes, depreciation, amortization, accretion of environmental liabilities, pre-tax, non-cash acquisition accounting adjustments, and other income, to its segments.    
 
For the Three Months Ended
 
March 31,
 
2014
 
2013
Adjusted EBITDA:
 

 
 

Technical Services
$
62,177

 
$
60,045

Oil Re-refining and Recycling
13,432

 
15,312

SK Environmental Services
21,976

 
27,040

Industrial and Field Services
34,141

 
36,346

Oil and Gas Field Services
16,299

 
27,551

Corporate Items
(46,039
)
 
(55,066
)
Total
$
101,986

 
$
111,228

Reconciliation to Consolidated Statements of Income:
 

 
 

Pre-tax, non-cash acquisition accounting inventory adjustment

 
13,559

Accretion of environmental liabilities
2,724

 
2,835

Depreciation and amortization
69,356

 
60,006

Income from operations
29,906

 
34,828

Other income
(4,178
)
 
(525
)
Interest expense, net of interest income
19,554

 
19,873

Income before provision for income taxes
$
14,530

 
$
15,480

The following table presents certain assets by reportable segment and in the aggregate (in thousands):
 
March 31, 2014
 
Technical
Services
 
Oil Re-refining and Recycling
 
SK Environmental Services
 
Industrial and Field
Services
 
Oil and Gas Field
Services
 
Corporate
Items
 
Totals
Property, plant and equipment, net
$
401,130

 
$
208,977

 
$
244,984

 
$
389,686

 
$
238,228

 
$
105,281

 
$
1,588,286

Goodwill
45,384

 
170,073

 
171,314

 
142,014

 
36,277

 

 
565,062

Permits and other intangible, net
78,405

 
157,966

 
261,894

 
32,751

 
26,195

 

 
557,211

Total assets
$
701,399

 
$
631,238

 
$
770,402

 
$
624,200

 
$
386,721

 
$
749,995

 
$
3,863,955

 
December 31, 2013
 
Technical
Services
 
Oil Re-refining and Recycling
 
SK Environmental Services
 
Industrial and Field
Services
 
Oil and Gas Field
Services
 
Corporate
Items
 
Totals
Property, plant and equipment, net
$
400,544

 
$
211,513

 
$
239,596

 
$
405,327

 
$
237,335

 
$
107,855

 
$
1,602,170

Goodwill
45,599

 
171,161

 
172,308

 
144,385

 
37,507

 

 
570,960

Permits and other intangible, net
80,302

 
160,807

 
265,104

 
35,332

 
28,428

 

 
569,973

Total assets
$
699,675

 
$
643,256

 
$
774,401

 
$
634,541

 
$
395,805

 
$
806,000

 
$
3,953,678

The following table presents total assets by geographical area (in thousands):
 
March 31, 2014
 
December 31, 2013
United States
$
2,652,218

 
$
2,684,686

Canada
1,209,350

 
1,266,505

Other foreign
2,387

 
2,487

Total
$
3,863,955

 
$
3,953,678


16

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(17) GUARANTOR AND NON-GUARANTOR SUBSIDIARIES FINANCIAL INFORMATION
The 2020 Notes and 2021 Notes are guaranteed by substantially all of the Company's subsidiaries organized in the United States. Each guarantor for the 2020 Notes and 2021 Notes is a wholly-owned subsidiary of the Company and its guarantee is both full and unconditional and joint and several.  The 2020 Notes and 2021 Notes are not guaranteed by the Company’s Canadian or other foreign subsidiaries. The following presents supplemental condensed consolidating financial information for the parent company, the guarantor subsidiaries and the non-guarantor subsidiaries, respectively.
Following is the condensed consolidating balance sheet at March 31, 2014 (in thousands):
 
Clean
Harbors, Inc.
 
U.S. Guarantor
Subsidiaries
 
Foreign
Non-Guarantor
Subsidiaries
 
Consolidating
Adjustments
 
Total
Assets:
 

 
 

 
 

 
 

 
 

Cash and cash equivalents
$
1,006

 
$
200,691

 
$
47,310

 
$

 
$
249,007

Intercompany receivables
255,774

 
2,418

 
212,558

 
(470,750
)
 

Accounts receivable, net

 
374,008

 
192,386

 

 
566,394

Other current assets
24,087

 
201,731

 
73,339

 

 
299,157

Property, plant and equipment, net

 
954,458

 
633,828

 

 
1,588,286

Investments in subsidiaries
2,671,744

 
952,030

 
144,953

 
(3,768,727
)
 

Intercompany debt receivable

 
475,548

 
3,701

 
(479,249
)
 

Goodwill

 
415,453

 
149,609

 

 
565,062

Permits and other intangibles, net

 
453,122

 
104,089

 

 
557,211

Other long-term assets
22,946

 
7,263

 
8,629

 

 
38,838

Total assets
$
2,975,557

 
$
4,036,722

 
$
1,570,402

 
$
(4,718,726
)
 
$
3,863,955

Liabilities and Stockholders’ Equity:
 

 
 

 
 

 
 

 
 

Current liabilities
$
37,586

 
$
424,583

 
$
125,149

 
$

 
$
587,318

Intercompany payables

 
468,281

 
2,469

 
(470,750
)
 

Closure, post-closure and remedial liabilities, net

 
154,440

 
30,854

 

 
185,294

Long-term obligations
1,400,000

 

 

 

 
1,400,000

Capital lease obligations, net

 
152

 
761

 

 
913

Intercompany debt payable
3,701

 

 
475,548

 
(479,249
)
 

Other long-term liabilities
88,635

 
103,107

 
53,053

 

 
244,795

Total liabilities
1,529,922

 
1,150,563

 
687,834

 
(949,999
)
 
2,418,320

Stockholders’ equity
1,445,635

 
2,886,159

 
882,568

 
(3,768,727
)
 
1,445,635

Total liabilities and stockholders’ equity
$
2,975,557

 
$
4,036,722

 
$
1,570,402

 
$
(4,718,726
)
 
$
3,863,955



17

Table of Contents

Following is the condensed consolidating balance sheet at December 31, 2013 (in thousands):
 
Clean
Harbors, Inc.
 
U.S. Guarantor
Subsidiaries
 
Foreign
Non-Guarantor
Subsidiaries
 
Consolidating
Adjustments
 
Total
Assets:
 

 
 

 
 

 
 

 
 

Cash and cash equivalents
$
1,006

 
$
235,445

 
$
73,622

 
$

 
$
310,073

Intercompany receivables
269,580

 
2,448

 
230,224

 
(502,252
)
 

Accounts receivables

 
387,006

 
192,388

 

 
579,394

Other current assets
24,087

 
182,881

 
74,744

 

 
281,712

Property, plant and equipment, net

 
945,280

 
656,890

 

 
1,602,170

Investments in subsidiaries
2,683,158

 
967,186

 
144,953

 
(3,795,297
)
 

Intercompany debt receivable

 
493,402

 
3,701

 
(497,103
)
 

Goodwill

 
415,541

 
155,419

 

 
570,960

Permits and other intangibles, net

 
458,917

 
111,056

 

 
569,973

Other long-term assets
23,770

 
7,018

 
8,608

 

 
39,396

Total assets
$
3,001,601

 
$
4,095,124

 
$
1,651,605

 
$
(4,794,652
)
 
$
3,953,678

Liabilities and Stockholders’ Equity:
 

 
 

 
 

 
 

 
 

Current liabilities
$
33,626

 
$
466,454

 
$
139,465

 
$

 
$
639,545

Intercompany payables

 
499,749

 
2,503

 
(502,252
)
 

Closure, post-closure and remedial liabilities, net

 
158,298

 
31,814

 

 
190,112

Long-term obligations
1,400,000

 

 

 

 
1,400,000

Capital lease obligations, net

 
191

 
1,244

 

 
1,435

Intercompany debt payable
3,701

 

 
493,402

 
(497,103
)
 

Other long-term liabilities
88,635

 
103,125

 
55,187

 

 
246,947

Total liabilities
1,525,962

 
1,227,817

 
723,615

 
(999,355
)
 
2,478,039

Stockholders’ equity
1,475,639

 
2,867,307

 
927,990

 
(3,795,297
)
 
1,475,639

Total liabilities and stockholders’ equity
$
3,001,601

 
$
4,095,124

 
$
1,651,605

 
$
(4,794,652
)
 
$
3,953,678



18

Table of Contents

Following is the consolidating statement of (loss) income for the three months ended March 31, 2014 (in thousands):
 
Clean
Harbors, Inc.
 
U.S. Guarantor
Subsidiaries
 
Foreign
Non-Guarantor
Subsidiaries
 
Consolidating
Adjustments
 
Total
Revenues
 
 
 
 
 
 
 
 


Service revenues
$

 
$
443,874

 
$
219,005

 
$
(2,784
)
 
$
660,095

Product revenues

 
134,875

 
52,493

 
(796
)
 
186,572

   Total revenues

 
578,749

 
271,498

 
(3,580
)
 
846,667

Cost of revenues (exclusive of items shown separately below)
 
 
 
 
 
 
 
 


Service cost of revenues

 
304,641

 
164,942

 
(2,784
)
 
466,799

Product cost of revenues

 
114,928

 
44,788

 
(796
)
 
158,920

   Total cost of revenues

 
419,569

 
209,730

 
(3,580
)
 
625,719

Selling, general and administrative expenses
31

 
87,553

 
31,378

 

 
118,962

Accretion of environmental liabilities

 
2,348

 
376

 

 
2,724

Depreciation and amortization

 
42,732

 
26,624

 

 
69,356

Income from operations
(31
)
 
26,547

 
3,390

 

 
29,906

Other income

 
909

 
3,269

 

 
4,178

Interest (expense) income
(19,734
)
 
230

 
(50
)
 

 
(19,554
)
Equity in earnings of subsidiaries
30,109

 
8,462

 

 
(38,571
)
 

Intercompany dividend income

 

 
3,100

 
(3,100
)
 

Intercompany interest income (expense)

 
9,384

 
(9,384
)
 

 

Income before provision for income taxes
10,344

 
45,532

 
325

 
(41,671
)
 
14,530

Provision for income taxes
1,384

 
4,105

 
81

 

 
5,570

Net income
8,960

 
41,427

 
244

 
(41,671
)
 
8,960

Other comprehensive (loss) income
(41,525
)
 
(41,525
)
 
19,682

 
21,843

 
(41,525
)
Comprehensive (loss) income
$
(32,565
)
 
$
(98
)
 
$
19,926

 
$
(19,828
)
 
$
(32,565
)


19

Table of Contents

Following is the consolidating statement of (loss) income for the three months ended March 31, 2013 (in thousands):
 
Clean
Harbors, Inc.
 
U.S. Guarantor
Subsidiaries
 
Foreign
Non-Guarantor
Subsidiaries
 
Consolidating
Adjustments
 
Total
Revenues
 
 
 
 
 
 
 
 
 
Service revenues
$

 
$
399,235

 
$
281,419

 
$
(8,032
)
 
$
672,622

Product revenues

 
160,863

 
30,942

 
(2,264
)
 
189,541

   Total revenues

 
560,098

 
312,361

 
(10,296
)
 
862,163

Cost of revenues (exclusive of items shown separately below)
 
 
 
 
 
 
 
 
 
Service cost of revenues

 
274,172

 
202,232

 
(8,032
)
 
468,372

Product cost of revenues

 
143,641

 
26,275

 
(2,264
)
 
167,652

   Total cost of revenues

 
417,813

 
228,507

 
(10,296
)
 
636,024

Selling, general and administrative expenses
25

 
95,561

 
32,884

 

 
128,470

Accretion of environmental liabilities

 
2,400

 
435

 

 
2,835

Depreciation and amortization

 
37,289

 
22,717

 

 
60,006

Income from operations
(25
)
 
7,035

 
27,818

 

 
34,828

Other income (expense)

 
720

 
(195
)
 

 
525

Interest expense
(19,800
)
 

 
(73
)
 

 
(19,873
)
Equity in earnings of subsidiaries
30,221

 
21,413

 

 
(51,634
)
 

Intercompany dividend income

 

 
3,645

 
(3,645
)
 

Intercompany interest income (expense)

 
10,338

 
(10,338
)
 

 

Income before provision for income taxes
10,396

 
39,506

 
20,857

 
(55,279
)
 
15,480

(Benefit) provision for income taxes
(106
)
 
(474
)
 
5,558

 

 
4,978

Net income
10,502

 
39,980

 
15,299

 
(55,279
)
 
10,502

Other comprehensive (loss) income
(23,861
)
 
(23,861
)
 
11,772

 
12,089

 
(23,861
)
Comprehensive (loss) income
$
(13,359
)
 
$
16,119

 
$
27,071

 
$
(43,190
)
 
$
(13,359
)