10-Q
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 SEPTEMBER 30, 2015
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
 
57,587,689
(Class)
 
(Outstanding as of October 30, 2015)



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)

 
September 30, 2015
 
December 31, 2014
ASSETS
(unaudited)
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
179,191

 
$
246,879

Accounts receivable, net of allowances aggregating $30,271 and $25,661, respectively
600,283

 
557,131

Unbilled accounts receivable
41,562

 
40,775

Deferred costs
19,096

 
19,018

Inventories and supplies
150,255

 
168,663

Prepaid expenses and other current assets
44,880

 
57,435

Deferred tax assets
37,288

 
36,532

Total current assets
1,072,555

 
1,126,433

Property, plant and equipment, net
1,531,548

 
1,558,834

Other assets:
 
 
 
Deferred financing costs
15,121

 
17,580

Goodwill
447,918

 
452,669

Permits and other intangibles, net
518,995

 
530,080

Other
13,724

 
18,682

Total other assets
995,758

 
1,019,011

Total assets
$
3,599,861

 
$
3,704,278

 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
Current liabilities:
 
 
 
Current portion of capital lease obligations
$
11

 
$
536

Accounts payable
295,476

 
267,329

Deferred revenue
62,837

 
62,966

Accrued expenses
244,790

 
219,549

Current portion of closure, post-closure and remedial liabilities
21,902

 
22,091

Total current liabilities
625,016

 
572,471

Other liabilities:
 
 
 
Closure and post-closure liabilities, less current portion of $5,403 and $4,999, respectively
47,861

 
45,702

Remedial liabilities, less current portion of $16,499 and $17,092, respectively
126,816

 
138,029

Long-term obligations
1,395,000

 
1,395,000

Deferred taxes, unrecognized tax benefits and other long-term liabilities
282,447

 
290,205

Total other liabilities
1,852,124

 
1,868,936

Commitments and contingent liabilities (See Note 14)


 


Stockholders’ equity:
 
 
 
Common stock, $.01 par value:
 
 
 
Authorized 80,000,000; shares issued and outstanding 57,664,992 and 58,903,482
 shares, respectively
577

 
589

Shares held under employee participation plan
(469
)
 
(469
)
Additional paid-in capital
740,070

 
805,029

Accumulated other comprehensive loss
(229,555
)
 
(110,842
)
Accumulated earnings
612,098

 
568,564

Total stockholders’ equity
1,122,721

 
1,262,871

Total liabilities and stockholders’ equity
$
3,599,861

 
$
3,704,278

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

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CLEAN HARBORS, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(in thousands except per share amounts)

 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2015
 
2014
 
2015
 
2014
Revenues:
 
 
 
 
 
 
 
Service revenues
$
760,667

 
$
657,221

 
$
2,158,344

 
$
1,962,071

Product revenues
132,699

 
194,244

 
403,749

 
594,541

Total revenues
893,366

 
851,465

 
2,562,093

 
2,556,612

Cost of revenues (exclusive of items shown separately below)
 
 
 
 
 
 
 
Service revenues
523,676

 
440,261

 
1,484,936

 
1,333,443

Product revenues
110,970

 
158,146

 
348,905

 
497,633

Total cost of revenues
634,646

 
598,407

 
1,833,841

 
1,831,076

Selling, general and administrative expenses
93,113

 
99,701

 
321,246

 
334,394

Accretion of environmental liabilities
2,577

 
2,642

 
7,795

 
7,975

Depreciation and amortization
69,060

 
70,049

 
205,189

 
205,480

Goodwill impairment charge

 
123,414

 
31,992

 
123,414

Income (loss) from operations
93,970

 
(42,748
)
 
162,030

 
54,273

Other (expense) income
(139
)
 
613

 
(390
)
 
4,136

Interest expense, net of interest income of $126, $174, $465 and $590, respectively
(19,017
)
 
(19,494
)
 
(57,704
)
 
(58,430
)
Income (loss) before provision for income taxes
74,814

 
(61,629
)
 
103,936

 
(21
)
Provision for income taxes
34,586

 
31,708

 
60,402

 
55,684

Net income (loss)
$
40,228

 
$
(93,337
)
 
$
43,534

 
$
(55,705
)
Earnings (loss) per share:
 
 
 
 
 
 
 
Basic
$
0.69

 
$
(1.55
)
 
$
0.74

 
$
(0.92
)
Diluted
$
0.69

 
$
(1.55
)
 
$
0.74

 
$
(0.92
)
Shares used to compute earnings (loss) per share - Basic
58,161

 
60,369

 
58,799

 
60,585

Shares used to compute earnings (loss) per share - Diluted
58,268

 
60,369

 
58,898

 
60,585


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

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CLEAN HARBORS, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands)
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2015
 
2014
 
2015
 
2014
Net income (loss)
$
40,228

 
$
(93,337
)
 
$
43,534

 
$
(55,705
)
Other comprehensive loss:
 
 
 
 
 
 
 
Unrealized gains on available-for-sale securities (net of taxes of $0, $18, $0, $159 respectively)

 
102

 

 
901

Reclassification adjustment for gains on available-for-sale securities included in net income (net of taxes of $0, $4, $0, $508 respectively)

 
(23
)
 

 
(2,880
)
Foreign currency translation adjustments
(53,541
)
 
(49,171
)
 
(118,713
)
 
(52,582
)
Other comprehensive loss
(53,541
)
 
(49,092
)
 
(118,713
)
 
(54,561
)
Comprehensive loss
$
(13,313
)
 
$
(142,429
)
 
$
(75,179
)
 
$
(110,266
)

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


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CLEAN HARBORS, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)
 
Nine Months Ended
 
September 30,
 
2015
 
2014
Cash flows from operating activities:
 
 
 
Net income
$
43,534

 
$
(55,705
)
Adjustments to reconcile net income to net cash from operating activities:
 
 
 
Depreciation and amortization
205,189

 
205,480

Goodwill impairment charge
31,992

 
123,414

Allowance for doubtful accounts
5,631

 
6,743

Amortization of deferred financing costs and debt discount
2,459

 
2,457

Accretion of environmental liabilities
7,795

 
7,975

Changes in environmental liability estimates
(2,200
)
 
(2,991
)
Deferred income taxes
(18,994
)
 
8,506

Stock-based compensation
6,550

 
6,446

Excess tax benefit of stock-based compensation
(102
)
 
(829
)
Net tax (deficiency) benefit on stock based awards
(78
)
 
829

Other expense (income)
390

 
(4,136
)
Environmental expenditures
(16,773
)
 
(12,130
)
Changes in assets and liabilities, net of acquisitions
 
 
 
Accounts receivable and unbilled accounts receivable
(63,222
)
 
(35,708
)
Inventories and supplies
14,708

 
(20,675
)
Other current assets
18,706

 
(10,048
)
Accounts payable
47,051

 
(53,352
)
Other current and long-term liabilities
26,957

 
29,763

Net cash from operating activities
309,593

 
196,039

Cash flows from investing activities:
 
 
 
Additions to property, plant and equipment
(189,999
)
 
(198,877
)
Proceeds from sales of fixed assets
3,740

 
5,913

Proceeds from sales of marketable securities

 
12,947

Acquisitions, net of cash acquired
(79,610
)
 
(6,150
)
Additions to intangible assets, including costs to obtain or renew permits
(4,633
)
 
(5,443
)
Other

 
914

Net cash used in investing activities
(270,502
)
 
(190,696
)
Cash flows from financing activities:
 
 
 
Change in uncashed checks
(21,882
)
 
(591
)
Proceeds from exercise of stock options
397

 

Issuance of restricted shares, net of shares remitted
(2,027
)
 
(2,668
)
Repurchases of common stock
(69,155
)
 
(48,329
)
Proceeds from employee stock purchase plan

 
4,364

Repayment of long-term obligations

 
(5,000
)
Payments on capital leases
(500
)
 
(1,682
)
Excess tax benefit of stock-based compensation
102

 
829

Net cash from financing activities
(93,065
)
 
(53,077
)
Effect of exchange rate change on cash
(13,714
)
 
(4,318
)
Decrease in cash and cash equivalents
(67,688
)
 
(52,052
)
Cash and cash equivalents, beginning of period
246,879

 
310,073

Cash and cash equivalents, end of period
$
179,191

 
$
258,021

Supplemental information:
 
 
 
Cash payments for interest and income taxes:
 
 
 
Interest paid
$
58,613

 
$
58,446

Income taxes paid
32,276

 
21,737

Non-cash investing and financing activities:
 
 
 
Accrual for repurchased shares
658

 
5,464

Property, plant and equipment accrued
29,549

 
23,976

Receivable for estimated purchase price adjustment
2,518

 

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

4


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, 2015
58,903

 
$
589

 
$
(469
)
 
$
805,029

 
$
(110,842
)
 
$
568,564

 
$
1,262,871

Net income

 

 

 

 

 
43,534

 
43,534

Other comprehensive loss

 

 

 

 
(118,713
)
 

 
(118,713
)
Stock-based compensation

 

 

 
6,550

 

 

 
6,550

Issuance of restricted shares, net of shares remitted
94

 
1

 

 
(2,028
)
 

 

 
(2,027
)
Repurchases of common stock
(1,344
)
 
(13
)
 

 
(69,800
)
 

 

 
(69,813
)
Exercise of stock options
12

 

 

 
397

 

 

 
397

Net tax deficiency on stock based awards

 

 

 
(78
)
 

 

 
(78
)
Balance at September 30, 2015
57,665

 
$
577

 
$
(469
)
 
$
740,070

 
$
(229,555
)
 
$
612,098

 
$
1,122,721



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


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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. Management has made estimates and assumptions affecting the amounts reported in the Company's consolidated interim financial statements and accompanying footnotes, actual results could differ from those estimates and judgments. 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, 2014, which includes the audited consolidated balance sheet as of December 31, 2014 from which the one presented herein was derived.
On October 26, 2015, the Company announced the Oil Re-refining and Recycling segment will be renamed to Kleen Performance Products. As such, all current and historical results of the formerly named Oil Re-refining and Recycling segment are shown under the Kleen Performance Products heading within this report.
(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, 2014. There have been no material changes in these policies or their application.
Recent Accounting Pronouncements
Standards implemented
In April 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“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. The adoption of ASU 2014-08 did not have an impact on the Company's consolidated financial statements.
Standards to be implemented
In May 2014, FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. In August 2015, FASB issued ASU 2015-14 which deferred the effective date of ASU 2014-09 for all entities by one year. This new guidance is currently effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2017.
In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810). The amendment provides guidance regarding amendments to the consolidation analysis. The amendments in this update are currently effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2015.
The Company is currently evaluating the impact that the above standards to be implemented will have on the Company's consolidated financial statements.
In April 2015, FASB issued ASU 2015-03, Interest - Imputation of Interest (Subtopic 835-30). The amendment provides guidance that requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the debt liability rather than as an asset. The recognition and measurement guidance for debt issuance costs are not affected by the accounting standard update. The standard will be effective for annual periods and interim periods within those annual periods beginning after December 15, 2015, with early adoption permitted. The revised standard will be adopted by the Company on January 1, 2016, at which time it will be applied retrospectively and will require reclassifications within the Company’s consolidated balance sheets.  The revised standard only affects presentation and therefore will not have an impact on the Company’s results of operations.
In July 2015, FASB issued ASU 2015-11, Inventory (Topic 330). The amendment provides guidance regarding the measurement of inventory. Entities should measure inventory within the scope of this update at the lower of cost and net realizable

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value. The amendments in this update are currently effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2016. Adoption is not expected to have a material impact on the Company's consolidated financial statements.
In September 2015, FASB issued ASU 2015-16, Business Combinations (Topic 805). The amendment provides guidance to simplify the accounting for adjustments made to provisional amounts recognized in a business combination. This amendment eliminates the requirement to retrospectively account for those adjustments. The amendment in this update is currently effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2015. Adoption is not expected to have a material impact on the Company's consolidated financial statements.
(3) BUSINESS COMBINATIONS
2015 Acquisition

On April 11, 2015, the Company completed the acquisition of Heckmann Environmental Services, Inc. (“HES”) and Thermo Fluids Inc. (“TFI”), a wholly-owned subsidiary of HES. The acquisition was accomplished through a purchase by Safety-Kleen, Inc., a wholly-owned subsidiary of the Company, of all of the issued and outstanding shares of HES from Nuverra Environmental Solutions, Inc. HES is a holding company that does not conduct any operations. TFI provides environmental services, including used oil recycling, used oil filter recycling, antifreeze products, parts washers and solvent recycling, and industrial waste management services, including vacuum services, remediation, lab pack and hazardous waste management. The Company acquired TFI for an estimated preliminary purchase price of $77.1 million inclusive of current estimates of and subject to certain closing and post-closing adjustments relating to working capital and other assumed liabilities. The acquisition was financed with cash on hand and expands the Company’s environmental services customer base while also complimenting the SK Environmental Services network and presence in the western United States. The amount of revenue from TFI included in the Company's results of operations for the three and nine months ended September 30, 2015 was $13.1 million and $24.8 million. During the three and nine months ended September 30, 2015, the Company incurred acquisition-related costs of approximately $0.1 million and $0.5 million, respectively, in connection with the transaction which are primarily included in selling, general and administrative expenses in the consolidated statements of income. Results of TFI since acquisition have been included within the SK Environmental Services segment.

The allocation of the purchase price was based on preliminary estimates of the fair value of assets acquired and liabilities assumed as of April 11, 2015, as the Company is continuing to obtain information to complete its valuation of these accounts and the associated tax accounting. The components and preliminary allocation of the purchase price consist of the following amounts (in thousands):
 
At acquisition date
April 11, 2015
 
Measurement Period Adjustments
 
At acquisition date as reported at
September 30, 2015
Accounts receivable
7,109

 
$
(444
)
 
$
6,665

Inventories and supplies
1,791

 

 
1,791

Prepaid and other current assets
1,749

 
8

 
1,757

Property, plant and equipment
30,468

 
(1,606
)
 
28,862

Permits and other intangibles
20,000

 
(1,500
)
 
18,500

Current liabilities
(5,859
)
 

 
(5,859
)
Closure and post-closure liabilities
(1,676
)
 

 
(1,676
)
Deferred taxes, unrecognized tax benefits and other long-term liabilities
(13,081
)
 
1,832

 
(11,249
)
Total identifiable net assets
40,501

 
(1,710
)
 
38,791

Goodwill
36,591

 
1,710

 
38,301

Total
$
77,092

 
$

 
$
77,092

Pro forma revenue and earnings amounts on a combined basis as if TFI had been acquired on January 1, 2014 are immaterial to the consolidated financial statements of the Company since that date.


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(4) INVENTORIES AND SUPPLIES
Inventories and supplies consisted of the following (in thousands):
 
September 30, 2015
 
December 31, 2014
Oil and oil products
$
35,484

 
$
62,111

Supplies and drums
75,357

 
68,547

Solvent and solutions
9,742

 
9,355

Modular camp accommodations
14,738

 
15,776

Other
14,934

 
12,874

Total inventories and supplies
$
150,255

 
$
168,663

As of September 30, 2015 and December 31, 2014, other inventories consisted primarily of cleaning fluids, such as absorbents and wipers, and automotive fluids, such as windshield washer fluid and antifreeze.
(5) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following (in thousands):
 
September 30, 2015
 
December 31, 2014
Land
$
100,811

 
$
98,507

Asset retirement costs (non-landfill)
12,455

 
10,871

Landfill assets
126,904

 
110,984

Buildings and improvements
338,791

 
338,242

Camp equipment
155,363

 
180,575

Vehicles
495,270

 
471,615

Equipment
1,312,699

 
1,302,424

Furniture and fixtures
5,330

 
5,517

Construction in progress
103,484

 
45,605

 
2,651,107

 
2,564,340

Less - accumulated depreciation and amortization
1,119,559

 
1,005,506

Total property, plant and equipment, net
$
1,531,548

 
$
1,558,834

Interest in the amount of $0.6 million and $1.2 million was capitalized to fixed assets during the three and nine months ended September 30, 2015, respectively. Interest in the amount of $0.1 million and $0.4 million was capitalized to fixed assets during the three and nine months ended September 30, 2014, respectively. Depreciation expense, inclusive of landfill amortization was $59.2 million and $175.5 million for the three and nine months ended September 30, 2015, respectively. Depreciation expense, inclusive of landfill amortization was $60.9 million and $178.0 million for the three and nine months ended September 30, 2014, respectively.

(6) GOODWILL AND OTHER INTANGIBLE ASSETS
The changes to goodwill for the nine months ended September 30, 2015 were as follows (in thousands):
 
2015
Balance at January 1, 2015
$
452,669

Acquired from TFI acquisition
38,301

Measurement period adjustment from prior acquisitions
3,841

Goodwill impairment charge
(31,992
)
Foreign currency translation
(14,901
)
Balance at September 30, 2015
$
447,918

The Company assesses goodwill for impairment on an annual basis as of December 31, or at an interim date when events or changes in the business environment would more likely than not reduce the fair value of a reporting unit below its carrying value. The Company conducted the annual impairment test of goodwill for all reporting units as of December 31, 2014 and determined that no adjustment to the carrying value of goodwill for any reporting unit was necessary because the fair value of each of the reporting units exceeded that reporting unit's respective carrying value.


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As disclosed in the Company's annual report on Form 10-K for the year ended December 31, 2014, the fair value of the Oil and Gas Field Services reporting unit did not significantly exceed its carrying amount. During the second quarter of 2015, certain events and changes in circumstances arose which led management of the Company to conclude that the fair value of the Oil and Gas Field Services reporting unit may be less than its carrying value and therefore an interim impairment test was conducted relative to goodwill recorded by the Oil and Gas Field Services reporting unit. The primary events and changes in circumstances which led to this conclusion were:    

The second quarter is the period of time where greater levels of communication with customers and the receipt of bids and proposals for project work take place and provide management with more clarity into levels of activity and other economic and business indicators for the latter half of the fiscal year and on into the first quarter of the following year. During the quarter ended June 30, 2015, it became apparent that oil and gas exploration and production activity would continue to be lower than historical periods and lower than previously anticipated by the Company. This was evidenced by reduced volume in bid and proposal requests from customers and communications indicating the reduction in customer budgets in these areas as well as lower than anticipated pricing for our services.

Market and industry reports which management looks to in projecting business conditions and establishing forecast information evidenced more pessimistic views in the near term. The continued depressed price of oil without any upward momentum since December 2014, as well as declining and expected continued decline in rig count for the remainder of 2015, have resulted in lower estimates of industry activity in the second half of 2015 and early 2016.

In recognition of lower than anticipated business results and less optimistic market indicators, management significantly lowered its 2015 forecasts relative to the Oil and Gas Field Services reporting unit.

In performing Step I of this interim goodwill impairment test, the estimated fair value of the Oil and Gas Field Services reporting unit was determined using an income approach based upon discounted cash flows and was compared to the reporting unit's carrying value as of June 30, 2015. Based on the results of that valuation, the carrying amount of the reporting unit, including $32.0 million of goodwill, exceeded its estimated fair value and as a result the Company performed Step II of the goodwill impairment test to determine the amount of goodwill impairment charge to be recorded.

Step II of the goodwill impairment test required the Company to perform a theoretical purchase price allocation for the reporting unit to determine the implied fair value of goodwill and to compare the implied fair value of goodwill to the recorded amount. The estimates of the fair values of intangible assets identified in performing this theoretical purchase price allocation and resulting implied fair value of goodwill required significant judgment. Based on the results of this goodwill impairment test the implied value of goodwill was $0 and as such the Company recognized a goodwill impairment charge equal to the recorded amount of goodwill or $32.0 million as of June 30, 2015.

The factors contributing to the $32.0 million goodwill impairment charge principally related to events and changes in circumstances discussed above which had negative impacts on the Company’s prospective financial information utilized in its discounted cash flow model prepared in connection with the interim impairment test. The currently projected lower levels of activity and pricing in the latter half of the year which became evident during the second quarter decreased the reporting unit’s anticipated future cash flows for 2015 as compared to those estimated previously. These factors have also provided evidence of a longer than expected overall recovery from current industry lows which negatively impacted the estimated levels of cash flows in future periods that are assumed in the cash flow models utilized in the interim impairment test. These factors adversely affected the estimated fair value of the reporting unit as of June 30, 2015 and ultimately led to the recognition of the goodwill impairment charge.

As disclosed in the Company's annual report on Form 10-K for the year ended December 31, 2014, during the third quarter of 2014 the Company recorded a goodwill impairment charge of $123.4 million related to goodwill associated with the Kleen Performance Products segment. This impairment charge resulted from decreases in market prices of oil products sold by the Kleen Performance Products business which took place during the third quarter of 2014.

Significant judgments and unobservable inputs categorized as Level III in the fair value hierarchy are inherent in the impairment tests performed 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 its annual and any interim date impairment tests are reasonable, but variations in any of the assumptions may result in different calculations of fair values and impairment charges.

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The performance of the Company's reporting units will continue to be monitored. If the Company's reporting units do not achieve the financial performance that the Company expects, it is possible that additional goodwill impairment charge may result. There can therefore be no assurance that future events will not result in an impairment of goodwill.
The Company continues to assess whether the Oil and Gas Field Services carrying values of finite-lived intangible and other long-lived assets are recoverable. As of September 30, 2015 the Oil and Gas Field Services reporting unit had property, plant and equipment, net of $168.6 million, other intangible assets of $17.7 million consisting of customer and supplier relationships of $9.2 million and other intangible assets of $8.5 million. Based on current analyses, sufficient undiscounted cash flows are expected to be generated over these assets' remaining lives to demonstrate these asset carrying values will be recovered and thus no impairment exists.
Below is a summary of amortizable other intangible assets (in thousands):
 
September 30, 2015
 
December 31, 2014
 
Cost
 
Accumulated
Amortization
 
Net
 
Weighted
Average
Remaining Amortization
Period
(in years)
 
Cost
 
Accumulated
Amortization
 
Net
 
Weighted
Average
Remaining Amortization
Period
(in years)
Permits
$
161,641

 
$
60,091

 
$
101,550

 
18.9
 
$
156,692

 
$
55,318

 
$
101,374

 
19.0
Customer and supplier relationships
377,373

 
93,786

 
283,587

 
10.3
 
370,373

 
77,697

 
292,676

 
11.0
Other intangible assets
31,943

 
21,165

 
10,778

 
2.2
 
31,540

 
19,074

 
12,466

 
3.2
Total amortizable permits and other intangible assets
570,957

 
175,042

 
395,915

 
10.4
 
558,605

 
152,089

 
406,516

 
11.4
Trademarks and trade names
123,080

 

 
123,080

 
Indefinite
 
123,564

 

 
123,564

 
Indefinite
Total permits and other intangible assets
$
694,037

 
$
175,042

 
$
518,995

 

 
$
682,169

 
$
152,089

 
$
530,080

 

Amortization expense of permits and other intangible assets for the three and nine months ended September 30, 2015 and was $9.9 million and $29.7 million, respectively. Amortization expense of permits and other intangible assets for the three and nine months ended September 30, 2014 was $9.1 million and $27.5 million, respectively.
Below is the expected future amortization of the net carrying amount of finite-lived intangible assets at September 30, 2015 (in thousands):
Years Ending December 31,
Expected Amortization
2015 (three months)
$
9,466

2016
37,397

2017
34,702

2018
31,409

2019
28,248

Thereafter
254,693

 
$
395,915


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(7) ACCRUED EXPENSES
Accrued expenses consisted of the following (in thousands):
 
September 30, 2015
 
December 31, 2014
Insurance
$
55,114

 
$
58,931

Interest
17,623

 
20,527

Accrued compensation and benefits
49,083

 
59,006

Income, real estate, sales and other taxes
77,837

 
38,297

Other
45,133

 
42,788

Total accrued expenses
$
244,790

 
$
219,549

(8) CLOSURE AND POST-CLOSURE LIABILITIES
The changes to closure and post-closure liabilities (also referred to as “asset retirement obligations”) for the nine months ended September 30, 2015 were as follows (in thousands):
 
Landfill
Retirement
Liability
 
Non-Landfill
Retirement
Liability
 
Total
Balance at January 1, 2015
$
29,932

 
$
20,769

 
$
50,701

Liabilities assumed in acquisitions

 
1,676

 
1,676

New asset retirement obligations
2,325

 

 
2,325

Accretion
1,887

 
1,567

 
3,454

Changes in estimates recorded to statement of income
13

 

 
13

Changes in estimates recorded to balance sheet
1,370

 

 
1,370

Expenditures
(5,490
)
 
(259
)
 
(5,749
)
Currency translation and other
(323
)
 
(203
)
 
(526
)
Balance at September 30, 2015
$
29,714

 
$
23,550

 
$
53,264

All of the landfill facilities included in the above were active as of September 30, 2015. New asset retirement obligations incurred during the first nine months of 2015 were discounted at the credit-adjusted risk-free rate of 5.99%. There were no significant charges (benefits) in 2015 resulting from changes in estimates for closure and post-closure liabilities.
(9) REMEDIAL LIABILITIES 
The changes to remedial liabilities for the nine months ended September 30, 2015 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, 2015
$
5,420

 
$
68,528

 
$
81,173

 
$
155,121

Accretion
187

 
2,185

 
1,969

 
4,341

Changes in estimates recorded to statement of income
(2,547
)
 
(250
)
 
584

 
(2,213
)
Expenditures
(110
)
 
(3,283
)
 
(7,631
)
 
(11,024
)
Currency translation and other
(335
)
 
(99
)
 
(2,476
)
 
(2,910
)
Balance at September 30, 2015
$
2,615

 
$
67,081

 
$
73,619

 
$
143,315

During the nine months ended September 30, 2015, the Company reduced its remedial liabilities for landfill sites by $2.5 million due to a change in estimate of the related liability. This change in estimate was triggered primarily as a result of the Company's receiving Provincial approval for a planned expansion of one its landfills in Canada. The planned expansion project will remediate the Company's previously recognized corrective actions.

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(10) FINANCING ARRANGEMENTS 
The following table is a summary of the Company’s financing arrangements (in thousands):
 
September 30, 2015
 
December 31, 2014
Senior unsecured notes, at 5.25%, due August 1, 2020 ("2020 Notes")
$
800,000

 
$
800,000

Senior unsecured notes, at 5.125%, due June 1, 2021 ("2021 Notes")
595,000

 
595,000

Long-term obligations
$
1,395,000

 
$
1,395,000

   
At September 30, 2015 and December 31, 2014, the fair value of the Company's 2020 Notes was $812.0 million and $804.0 million, respectively, based on quoted market prices for the instrument. The fair value of the 2020 Notes is considered a Level 2 measure according to the fair value hierarchy.
At September 30, 2015 and December 31, 2014, the fair value of the Company's 2021 Notes was $602.4 million and $595.0 million, respectively, based on quoted market prices for the instrument. 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 September 30, 2015 and December 31, 2014 had no outstanding loan balances. At September 30, 2015, $232.0 million was available to borrow and outstanding letters of credit were $144.3 million. At December 31, 2014, $238.4 million was available to borrow and outstanding letters of credit were $134.5 million.
Available credit for Clean Harbors, Inc. ("Parent") and its domestic subsidiaries is limited to 85% of their eligible accounts receivable and 100% of their cash deposited in a controlled account with the agent. The revolving credit facility is guaranteed by all of Parent’s domestic subsidiaries and secured by substantially all of Parent’s and its domestic subsidiaries’ assets. Available credit for Parent’s Canadian subsidiaries is limited to 85% of their eligible accounts receivable and 100% of their cash deposited in a controlled account with the agent’s Canadian affiliate. The obligations of the Canadian subsidiaries under the revolving credit facility are guaranteed by all of Parent’s Canadian subsidiaries and secured by the accounts receivable of the Canadian subsidiaries, but the Canadian subsidiaries do not guarantee and are not otherwise responsible for the obligations of Parent or its domestic subsidiaries.

(11) EARNINGS (LOSS) PER SHARE     
The following are computations of basic and diluted earnings (loss) per share (in thousands except for per share amounts):
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2015
 
2014
 
2015
 
2014
Numerator for basic and diluted earnings per share:
 

 
 

 
 
 
 
Net income (loss)
$
40,228

 
$
(93,337
)
 
$
43,534

 
$
(55,705
)
 
 
 
 
 
 
 
 
Denominator:
 

 
 

 
 
 
 
Basic shares outstanding
58,161

 
60,369

 
58,799

 
60,585

Dilutive effect of equity-based compensation awards
107

 

 
99

 

Dilutive shares outstanding
58,268

 
60,369

 
58,898

 
60,585

 
 
 
 
 
 
 
 
Basic earnings (loss) per share:
$
0.69

 
$
(1.55
)
 
$
0.74

 
$
(0.92
)
 
 

 
 

 
 

 
 

Diluted earnings (loss) per share:
$
0.69

 
$
(1.55
)
 
$
0.74

 
$
(0.92
)
For the three and nine months ended September 30, 2015, the dilutive effect of all then outstanding stock options, restricted stock awards and performance awards is included in the EPS calculations above except for 274,257 of outstanding performance stock awards for which the performance criteria were not attained at that time and 10,704 and 42,642, respectively, restricted stock awards which were excluded from the calculation of diluted earnings per share as their inclusion would have an antidilutive effect. As a result of the net loss reported in the three and nine months ended September 30, 2014, all outstanding restricted stock awards and performance awards totaling 624,145 instruments were excluded from the calculation of diluted earnings per share as their inclusion would have an antidilutive effect.


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(12) ACCUMULATED OTHER COMPREHENSIVE LOSS
The changes in accumulated other comprehensive loss by component and related tax effects for the nine months ended September 30, 2015 were as follows (in thousands):    
 
Foreign Currency Translation
 
Unfunded Pension Liability
 
Total
Balance at January 1, 2015
$
(108,889
)
 
$
(1,953
)
 
$
(110,842
)
Other comprehensive loss before reclassifications
(118,713
)
 

 
(118,713
)
Tax effects

 

 

Other comprehensive loss
$
(118,713
)
 
$

 
$
(118,713
)
Balance at September 30, 2015
$
(227,602
)
 
$
(1,953
)
 
$
(229,555
)
The amounts reclassified out of accumulated other comprehensive loss into the consolidated statement of income (loss), with presentation location during the three and nine months ended September 30, 2014, were as follows (in thousands):
 
 
For the Three Months Ended
 
For the Nine Months Ended
 
 
Comprehensive Loss Components
 
September 30, 2014
 
September 30, 2014
 
Location
Unrealized gains on available-for-sale investments
 
$
27

 
$
3,388

 
Other (expense) income

There were no reclassifications out of accumulated other comprehensive loss into the consolidated statement of income during the three and nine months ended September 30, 2015.

(13) STOCK-BASED COMPENSATION
Total stock-based compensation cost charged to selling, general and administrative expenses for the three and nine months ended September 30, 2015 was $0.5 million and $6.6 million, respectively. During the three months ended September 30, 2015, the Company reversed $1.4 million of stock based compensation for performance stock awards originally issued in 2014 as management determined it was no longer probable that a portion of the performance targets would be earned. As a result, the Company has recorded $0.9 million of stock based compensation associated with these performance awards in the nine months ended September 30, 2015. Total stock-based compensation cost charged to selling, general and administrative expenses for the three and nine months ended September 30, 2014 was $2.1 million and $6.4 million, respectively. The total income tax benefit recognized in the consolidated statements of income from stock-based compensation was $0.1 million and $1.8 million for the three and nine months ended September 30, 2015, respectively. The total income tax benefit recognized in the consolidated statements of income from stock-based compensation was $0.5 million and $1.5 million for the three and nine months ended September 30, 2014, respectively.
Restricted Stock Awards
The following information relates to restricted stock awards that have been granted to employees and directors under the Company's Plans. The restricted stock awards are not transferable until vested and the restrictions generally lapse upon the achievement of continued employment over a three-to-five-year period or service as a director until the following annual meeting of shareholders. The fair value of each restricted stock grant is based on the closing price of the Company's common stock on the date of grant and is amortized to expense over its vesting period.
    
The following table summarizes information about restricted stock awards for the nine months ended September 30, 2015:
Restricted Stock
Number of Shares
 
Weighted Average
Grant-Date
Fair Value
Unvested January 1, 2015
383,021

 
$
56.51

Granted
142,434

 
$
55.00

Vested
(124,822
)
 
$
55.85

Forfeited
(37,972
)
 
$
56.48

Unvested September 30, 2015
362,661

 
$
56.15


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As of September 30, 2015, there was $13.2 million of total unrecognized compensation cost arising from restricted stock awards under the Company's Plans. This cost is expected to be recognized over a weighted average period of 3.2 years. The total fair value of restricted stock vested during the three and nine months ended September 30, 2015 was $0.6 million and $6.8 million, respectively. The total fair value of restricted stock vested during the three and nine months ended September 30, 2014 was $1.5 million and $9.1 million, respectively.
    
Performance Stock Awards

The following information relates to performance stock awards that have been granted to employees under the Company's Plans. Performance stock awards are subject to performance criteria established by the compensation committee of the Company's board of directors prior to or at the date of grant. The vesting of the performance stock awards is based on achieving such targets typically based on revenue, Adjusted EBITDA margin, ROIC percentage and Total Recordable Incident Rate. In addition performance stock awards include continued service conditions. The fair value of each performance stock award is based on the closing price of the Company's common stock on the date of grant and is amortized to expense over the service period if achievement of performance measures is considered probable.

The following table summarizes information about performance stock awards for the nine months ended September 30, 2015:
Performance Stock
Number of Shares
 
Weighted Average
Grant-Date
Fair Value
Unvested January 1, 2015
143,875

 
$
60.94

Granted
167,906

 
$
56.41

Vested
(6,129
)
 
$
54.28

Forfeited
(20,049
)
 
$
59.39

Unvested September 30, 2015
285,603

 
$
58.53


As of September 30, 2015, there was $0.9 million of total unrecognized compensation cost arising from unvested performance stock awards deemed probable of vesting under the Company's Plans. The total fair value of performance awards vested during the nine months ended September 30, 2015 was $0.3 million. No performance awards vested during the three months ended September 30, 2015 and the three and nine months ended September 30, 2014.

Common Stock Repurchases
On March 13, 2015, the Company's board of directors increased the size of the Company’s current share repurchase program from $150 million to $300 million. During the three and nine months ended September 30, 2015, the Company repurchased a total of 0.8 million shares and 1.3 million shares, respectively, of the Company's common stock for a total of $37.6 million and $69.8 million, respectively. During the three and nine months ended September 30, 2014, the Company repurchased a total of 0.6 million shares and 0.9 million shares, respectively, of the Company's common stock for a total of $37.6 million and $53.8 million, respectively. As of September 30, 2015, the Company had repurchased and retired a total of approximately 3.3 million shares of the Company's common stock for approximately $174.2 million under this program. As of September 30, 2015, an additional $125.8 million remains available for repurchase of shares under the current authorized program.

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(14) 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 September 30, 2015 and December 31, 2014, the Company had recorded reserves of $30.0 million and $33.6 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 September 30, 2015 and December 31, 2014, the Company also believed that it was reasonably possible that the amount of these potential liabilities could be as much as $2.4 million and $2.9 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 September 30, 2015 and December 31, 2014, the $30.0 million and $33.6 million, respectively, of reserves consisted of (i) $23.4 million and $27.7 million related to pending legal or administrative proceedings, including Superfund liabilities, which were included in remedial liabilities on the consolidated balance sheets, and (ii) $6.6 million and $5.9 million, respectively, primarily related to federal, state and provincial enforcement actions, which were included in accrued expenses on the consolidated balance sheets.
As of September 30, 2015, the principal legal and administrative proceedings in which the Company was involved, or which had been terminated during 2015, 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 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. The parties are currently attempting to negotiate a resolution and hearings on the motions have been delayed. 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 September 30, 2015 and December 31, 2014, the Company had accrued $11.2 million and $12.7 million, respectively, for remedial liabilities relating to the Ville Mercier legal proceedings. The decrease was due to a weakening of the Canadian dollar.
Refinery Incident. In September 2014, a customer filed suit against the Company and two other contractors and their respective insurers seeking to be named as an additional insured on the Company’s and the other contractors’ liability policies for an April 2013 industrial fire that occurred at the customer’s refining facility. The Company and its insurers have resolved the dispute relating to the customer’s additional insured status and the customer has agreed to indemnify the Company from any additional losses relating to the matter.  The Company does not believe that this matter will have a material effect on its financial position or the results of operations.


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Safety-Kleen Legal Proceedings. On December 28, 2012, the Company acquired Safety-Kleen, Inc. and thereby became subject to the legal proceedings in which Safety-Kleen and its subsidiaries (collectively "Safety-Kleen") were 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 September 30, 2015 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 54 proceedings (excluding cases which have been settled but not formally dismissed) as of September 30, 2015, 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 a 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 September 30, 2015. From January 1, 2015 to September 30, 2015, 29 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. In 2012, similar lawsuits were filed by the same law firm in California and Missouri, adding a claim in the California lawsuit challenging the Company’s late fee policy. On January 15, 2015, the Company reached a tentative settlement of the pending class action lawsuits, which were broadened to include similar claims on behalf of customers in Florida, West Virginia and Arkansas. A final settlement in the amount of $0.1 million was approved by the court in a fairness hearing in June 2015.  Such settlement is subject to limited appeal; however, any adjustment to the amount would not be material.
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 identified as potentially responsible parties ("PRPs") or potential PRPs in connection with 128 sites which are subject to or are proposed to become subject to proceedings under federal or state Superfund laws. Of the 128 sites, two (the Wichita Facility and the BR Facility described below) involve facilities that are now owned by the Company and 126 involve third party sites to which either the Company or the prior owners of certain of the Company’s facilities shipped wastes. Of the 126 third party sites, 29 are now settled, 22 are currently requiring expenditures on remediation and 75 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 described below, Clean Harbors believes its potential liability could exceed $100,000 at 12 of the 126 third party sites.
Wichita Property.    The Company acquired in 2002 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

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acquired rights under an indemnification agreement between the former owner and an earlier owner of the Wichita Property. The Company filed suit against the earlier owner in July of 2015 to recover costs incurred during the cleanup of the property.
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, 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 126 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 six 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 17 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 17 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 126 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 September 30, 2015 and December 31, 2014, there were five and four, respectively, proceedings 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 and in the aggregate, not have a material effect on its financial condition, results of operations or cash flows.
(15) INCOME TAXES 
Effective tax rates for the three and nine months ended September 30, 2015 were 46.2% and 58.1%. The Company did not record any tax charges or benefits as a result of the goodwill impairment charge recorded in the second quarter of 2015. Absent the impact of the impairment charge on pre-tax income from operations, the Company’s effective tax rate for the nine months ended September 30, 2015 was 44.4%. As a result of the goodwill impairment charge recorded in the third quarter of 2014, the Company recorded an income tax benefit of $2.7 million. Absent the impact of the impairment charge on pre-tax income from operations the Company’s effective tax rate for the three and nine months ended September 30, 2014 was 55.6% and 47.3%. The decrease in the effective rates absent the impact of impairment charges for the three and nine months ended September 30, 2015 was primarily due to discrete items recorded in the third quarter of 2014 which did not reoccur in 2015.
As of September 30, 2015 and December 31, 2014, the Company had recorded $2.2 million and $2.5 million, respectively, of liabilities for unrecognized tax benefits and $0.4 million of interest, respectively.
Due to an audit settlement for one of our foreign entities, the Company believes that total unrecognized tax benefits will decrease by approximately $0.5 million within the next 12 months.
(16) SEGMENT REPORTING 
Segment reporting is prepared on the same basis that the Company's chief executive officer, who is the Company's chief operating decision maker, manages the business, makes operating decisions and assesses performance.

Third party revenue is revenue billed to outside customers by a particular segment. Direct revenue is revenue allocated to the segment performing the provided service. Intersegment revenues represent the sharing of third party revenues among the

17

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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. The operations not managed through the Company’s six 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 six 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 six reportable segments. Performance of the segments is evaluated on several factors, of which the primary financial measure is “Adjusted EBITDA,” which consists of net income (loss) plus accretion of environmental liabilities, depreciation and amortization, net interest expense, provision for income taxes, other non-cash charges not deemed representative of fundamental segment results and excludes other (expense) income. Transactions between the segments are accounted for at the Company’s best estimate based on similar transactions with outside customers. 
The following table reconciles third party revenues to direct revenues for the three and nine months ended September 30, 2015 and 2014 (in thousands):
 
For the Three Months Ended September 30, 2015
 
For the Three Months Ended September 30, 2014
 
Third party revenues
 
Intersegment revenues, net
 
Corporate Items, net
 
Direct revenues
 
Third party revenues
 
Intersegment revenues, net
 
Corporate Items, net
 
Direct revenues
Technical Services
$
253,069

 
$
34,819

 
$
506

 
$
288,394

 
$
272,478

 
$
39,296

 
$
1,628

 
$
313,402

Industrial and Field Services
307,226

 
(6,973
)
 
(313
)
 
299,940

 
163,582

 
(9,234
)
 
29

 
154,377

Kleen Performance Products
100,827

 
(23,744
)
 
(6
)
 
77,077

 
140,345

 
(52,606
)
 

 
87,739

SK Environmental Services
171,832

 
(5,947
)
 
2

 
165,887

 
170,980

 
21,212

 

 
192,192

Lodging Services
13,507

 
743

 
30

 
14,280

 
36,582

 
697

 
26

 
37,305

Oil and Gas Field Services
46,788

 
1,102

 
92

 
47,982

 
67,370

 
635

 
4

 
68,009

Corporate Items
117

 

 
(311
)
 
(194
)
 
128

 

 
(1,687
)
 
(1,559
)
Total
$
893,366

 
$

 
$

 
$
893,366

 
$
851,465

 
$

 
$

 
$
851,465

 
For the Nine Months Ended September 30, 2015
 
For the Nine Months Ended September 30, 2014
 
Third party revenues
 
Intersegment revenues, net
 
Corporate Items, net
 
Direct revenues
 
Third party revenues
 
Intersegment revenues, net
 
Corporate Items, net
 
Direct revenues
Technical Services
$
741,419

 
$
108,037

 
$
2,886

 
$
852,342

 
$
766,057

 
$
116,812

 
$
2,805

 
$
885,674

Industrial and Field Services
807,423

 
(24,764
)
 
(636
)
 
782,023

 
510,696

 
(32,039
)
 
220

 
478,877

Kleen Performance Products
296,738

 
(63,429
)
 
(8
)
 
233,301

 
413,282

 
(155,583
)
 
(5
)
 
257,694

SK Environmental Services
508,392

 
(26,331
)
 
5

 
482,066

 
503,692

 
64,476

 
(58
)
 
568,110

Lodging Services
68,782

 
1,899

 
127

 
70,808

 
136,148

 
1,991

 
52

 
138,191

Oil and Gas Field Services
138,992

 
4,588

 
141

 
143,721

 
226,319

 
4,343

 
(6
)
 
230,656

Corporate Items
347

 

 
(2,515
)
 
(2,168
)
 
418

 

 
(3,008
)
 
(2,590
)
Total
$
2,562,093

 
$

 
$

 
$
2,562,093

 
$
2,556,612

 
$

 
$

 
$
2,556,612


18

Table of Contents

The following table presents Adjusted EBITDA 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, other non-cash charges not deemed representative of fundamental segment results, and other expense (income) to its segments.    
 
For the Three Months Ended
 
For the Nine Months Ended
 
September 30,
 
September 30,
 
2015
 
2014
 
2015
 
2014
Adjusted EBITDA:
 

 
 

 
 
 
 
Technical Services
$
79,048

 
$
86,928

 
$
219,257

 
$
233,402

Industrial and Field Services
62,460

 
20,303

 
145,850

 
67,391

Kleen Performance Products
12,123

 
21,473

 
23,471

 
49,252

SK Environmental Services
40,096

 
30,853

 
108,540

 
84,985

Lodging Services
1,827

 
15,972

 
12,589

 
49,196

Oil and Gas Field Services
1,579

 
9,545

 
800

 
27,688

Corporate Items
(31,526
)
 
(31,717
)
 
(103,501
)
 
(120,772
)
Total
$
165,607

 
$
153,357

 
$
407,006

 
$
391,142

Reconciliation to Consolidated Statements of Income:
 

 
 

 
 
 
 
Accretion of environmental liabilities
2,577

 
2,642

 
7,795

 
7,975

Depreciation and amortization
69,060

 
70,049

 
205,189

 
205,480

Goodwill impairment charge

 
123,414

 
31,992

 
123,414

Income (loss) from operations
93,970

 
(42,748
)
 
162,030

 
54,273

Other expense (income)
139

 
(613
)
 
390

 
(4,136
)
Interest expense, net of interest income
19,017

 
19,494

 
57,704

 
58,430

Income (loss) before provision for income taxes
$
74,814

 
$
(61,629
)
 
$
103,936

 
$
(21
)
The following table presents certain assets by reportable segment and in the aggregate (in thousands):
 
September 30, 2015
 
Technical
Services
 
Industrial and Field
Services
 
Kleen Performance Products
 
SK Environmental Services
 
Lodging Services
 
Oil and Gas Field
Services
 
Corporate
Items
 
Totals
Property, plant and equipment, net
$
464,705

 
$
242,007

 
$
193,576

 
$
258,178

 
$
112,708

 
$
168,630

 
$
91,744

 
$
1,531,548

Goodwill
49,426

 
106,043

 
49,972

 
209,089

 
33,388

 

 

 
447,918

Permits and other intangible, net
74,885

 
15,375

 
142,898

 
260,327

 
7,791

 
17,719

 

 
518,995

Total assets
$
806,451

 
$
392,284

 
$
497,627

 
$
793,163

 
$
187,461

 
$
264,910

 
$
657,965

 
$
3,599,861

 
December 31, 2014
 
Technical
Services
 
Industrial and Field
Services
 
Kleen Performance Products
 
SK Environmental Services
 
Lodging Services
 
Oil and Gas Field
Services
 
Corporate
Items
 
Totals
Property, plant and equipment, net
$
412,323

 
$
245,115

 
$
201,451

 
$
240,078

 
$
141,965

 
$
215,574

 
$
102,328

 
$
1,558,834

Goodwill
50,092

 
109,214

 
50,883

 
173,873

 
34,863

 
33,744

 

 
452,669

Permits and other intangible, net
74,870

 
17,801

 
151,041

 
252,897

 
10,744

 
22,727

 

 
530,080

Total assets
$
756,169

 
$
392,652

 
$
538,921

 
$
731,072

 
$
231,782

 
$
361,223

 
$
692,459

 
$
3,704,278


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The following table presents total assets by geographical area (in thousands):
 
September 30, 2015
 
December 31, 2014
United States
$
2,681,409

 
$
2,572,494

Canada
914,690

 
1,128,458

Other foreign
3,762

 
3,326

Total
$
3,599,861

 
$
3,704,278

(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 100% 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.
Revision of Previously Reported Condensed Consolidating Information - As discussed further in the Company's 2014 Annual Report on Form 10-K, during preparation of the December 31, 2014 financial statements, management determined that certain amounts in the Company’s condensed consolidating financial information as previously presented in this Guarantor And Non-Guarantor Subsidiaries footnote for the period ended September 30, 2014 was not presented in accordance with the requirements of Rule 3-10 of SEC Regulation S-X (“Rule 3-10”). The accompanying financial information related to the period ended September 30, 2014 has therefore been revised to correct the historical presentation. The revisions primarily relate to the following items:
(Benefit) provision for income taxes - Excess provision for income taxes was allocated to Clean Harbors, Inc. and under allocated to U.S. Guarantor Subsidiaries.

Equity in earnings of subsidiaries, net of tax - interest expense resulting from transactions between the U.S. Guarantor Subsidiaries and Foreign Non-Guarantor Subsidiaries was incorrectly excluded in the application of the equity method of accounting required by Rule 3-10 resulting in an overstatement of equity in earnings of subsidiaries, net of tax, as reflected in the financial information for the U.S. Guarantor Subsidiaries.

These revisions impacted the condensed consolidating information for the period ended September 30, 2014 as presented in this footnote only and did not affect any of the Company's consolidated financial statements or ratios based thereon. There was no impact to the Company's loan covenants as a result of these corrections.

20

Table of Contents

Following is the condensed consolidating balance sheet at September 30, 2015 (in thousands):
 
Clean
Harbors, Inc.
 
U.S. Guarantor
Subsidiaries
 
Foreign
Non-Guarantor
Subsidiaries
 
Consolidating
Adjustments
 
Total
Assets:
 

 
 

 
 

 
 

 
 

Cash and cash equivalents
$
11,008

 
$
66,074

 
$
102,109

 
$

 
$
179,191

Intercompany receivables
156,833

 
210,159

 
30,572

 
(397,564
)
 

Accounts receivable, net

 
493,459

 
106,824

 

 
600,283

Other current assets

 
220,901

 
72,180

 

 
293,081

Property, plant and equipment, net

 
1,056,190

 
475,358

 

 
1,531,548

Investments in subsidiaries
2,566,095

 
547,520

 

 
(3,113,615
)
 

Intercompany debt receivable

 
285,385

 
3,701

 
(289,086
)
 

Goodwill

 
359,068

 
88,850

 

 
447,918

Permits and other intangibles, net

 
441,639

 
77,356

 

 
518,995

Other long-term assets
14,342

 
9,039

 
5,464

 

 
28,845

Total assets
$
2,748,278

 
$
3,689,434

 
$
962,414

 
$
(3,800,265
)
 
$
3,599,861

Liabilities and Stockholders’ Equity:
 

 
 

 
 

 
 

 
 

Current liabilities
$
18,558

 
$
523,971

 
$
82,487

 
$

 
$
625,016

Intercompany payables
208,298

 
187,406

 
1,860

 
(397,564
)
 

Closure, post-closure and remedial liabilities, net

 
155,386

 
19,291

 

 
174,677

Long-term obligations
1,395,000

 

 

 

 
1,395,000

Intercompany debt payable
3,701

 

 
285,385

 
(289,086
)
 

Other long-term liabilities

 
256,576

 
25,871

 

 
282,447

Total liabilities
1,625,557

 
1,123,339

 
414,894

 
(686,650
)
 
2,477,140

Stockholders’ equity
1,122,721

 
2,566,095

 
547,520

 
(3,113,615
)
 
1,122,721

Total liabilities and stockholders’ equity
$
2,748,278

 
$
3,689,434

 
$
962,414

 
$
(3,800,265
)
 
$
3,599,861



21

Table of Contents

Following is the condensed consolidating balance sheet at December 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

 
$
154,147

 
$
91,726

 
$

 
$
246,879

Intercompany receivables
133,219

 
156,920

 
39,724

 
(329,863
)
 

Accounts receivables

 
414,205

 
142,926

 

 
557,131

Other current assets

 
241,232

 
81,191

 

 
322,423

Property, plant and equipment, net

 
970,757

 
588,077

 

 
1,558,834

Investments in subsidiaries
2,694,727

 
663,191

 

 
(3,357,918
)
 

Intercompany debt receivable

 
327,634

 
3,701

 
(331,335
)
 

Goodwill

 
324,930

 
127,739

 

 
452,669

Permits and other intangibles, net

 
435,906

 
94,174

 

 
530,080

Other long-term assets
16,801

 
12,959

 
6,502

 

 
36,262

Total assets
$
2,845,753

 
$
3,701,881

 
$
1,175,760

 
$
(4,019,116
)
 
$
3,704,278

Liabilities and Stockholders’ Equity: