Document
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, 2017
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, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth 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)
 
Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

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
 
57,209,487
(Class)
 
(Outstanding as of April 28, 2017)



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, 2017
 
December 31, 2016
ASSETS
(unaudited)
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
297,366

 
$
306,997

Accounts receivable, net of allowances aggregating $27,144 and $29,249, respectively
480,044

 
496,226

Unbilled accounts receivable
28,106

 
36,190

Deferred costs
19,037

 
18,914

Inventories and supplies
182,038

 
178,428

Prepaid expenses and other current assets
55,180

 
56,116

Total current assets
1,061,771

 
1,092,871

Property, plant and equipment, net
1,609,490

 
1,611,827

Other assets:
 
 
 
Goodwill
469,860

 
465,154

Permits and other intangibles, net
490,952

 
498,721

Other
13,580

 
13,347

Total other assets
974,392

 
977,222

Total assets
$
3,645,653

 
$
3,681,920

 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
218,676

 
$
229,534

Deferred revenue
64,379

 
64,397

Accrued expenses
183,957

 
190,721

Current portion of closure, post-closure and remedial liabilities
21,569

 
20,016

Total current liabilities
488,581

 
504,668

Other liabilities:
 
 
 
Closure and post-closure liabilities, less current portion of $6,019 and $6,220, respectively
54,332

 
52,111

Remedial liabilities, less current portion of $15,550 and $13,796, respectively
111,057

 
114,211

Long-term obligations
1,633,968

 
1,633,272

Deferred taxes, unrecognized tax benefits and other long-term liabilities
294,085

 
293,417

Total other liabilities
2,093,442

 
2,093,011

Commitments and contingent liabilities (See Note 15)


 


Stockholders’ equity:
 
 
 
Common stock, $.01 par value:
 
 
 
Authorized 80,000,000; shares issued and outstanding 57,188,805 and 57,297,978
shares, respectively
572

 
573

Shares held under employee participation plan

 
(469
)
Additional paid-in capital
720,383

 
725,670

Accumulated other comprehensive loss
(208,275
)
 
(214,326
)
Accumulated earnings
550,950

 
572,793

Total stockholders’ equity
1,063,630

 
1,084,241

Total liabilities and stockholders’ equity
$
3,645,653

 
$
3,681,920

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 OPERATIONS

(in thousands except per share amounts)

 
Three Months Ended
 
March 31,
 
2017
 
2016
Revenues:
 
 
 
Service revenues
$
560,214

 
$
530,231

Product revenues
128,727

 
105,852

Total revenues
688,941

 
636,083

Cost of revenues (exclusive of items shown separately below)
 
 
 
Service revenues
391,087

 
373,986

Product revenues
105,498

 
90,293

Total cost of revenues
496,585

 
464,279

Selling, general and administrative expenses
112,221

 
104,484

Accretion of environmental liabilities
2,290

 
2,505

Depreciation and amortization
72,412

 
68,902

Income (loss) from operations
5,433

 
(4,087
)
Other expense
(1,549
)
 
(350
)
Interest expense, net of interest income of $215 and $150, respectively
(22,576
)
 
(18,980
)
Loss before provision (benefit) for income taxes
(18,692
)
 
(23,417
)
Provision (benefit) for income taxes
2,701

 
(2,546
)
Net loss
$
(21,393
)
 
$
(20,871
)
Loss per share:
 
 
 
Basic
$
(0.37
)
 
$
(0.36
)
Diluted
$
(0.37
)
 
$
(0.36
)
Shares used to compute loss per share - Basic
57,262

 
57,617

Shares used to compute loss per share - Diluted
57,262

 
57,617


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) INCOME

(in thousands)
 
Three Months Ended
 
March 31,
 
2017
 
2016
Net loss
$
(21,393
)
 
$
(20,871
)
Other comprehensive income:
 
 
 
Unrealized gains on available-for-sale securities (net of taxes of $152 and $0, respectively)
82

 

Reclassification adjustment for losses on available-for-sale securities included in net loss (net of taxes of $0 and $0, respectively)
146

 

Foreign currency translation adjustments
5,823

 
45,837

Other comprehensive income
6,051

 
45,837

Comprehensive (loss) income
$
(15,342
)
 
$
24,966


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)
 
Three Months Ended
 
March 31,
 
2017
 
2016
Cash flows from operating activities:
 
 
 
Net loss
$
(21,393
)
 
$
(20,871
)
Adjustments to reconcile net loss to net cash from operating activities:
 
 
 
Depreciation and amortization
72,412

 
68,902

Allowance for doubtful accounts
1,935

 
1,072

Amortization of deferred financing costs and debt discount
829

 
872

Accretion of environmental liabilities
2,290

 
2,505

Changes in environmental liability estimates
102

 
(95
)
Deferred income taxes
196

 
7

Stock-based compensation
2,271

 
2,093

Net tax deficiency on stock based awards

 
(345
)
Other expense
1,549

 
350

Environmental expenditures
(2,938
)
 
(3,518
)
Changes in assets and liabilities, net of acquisitions
 
 
 
Accounts receivable and unbilled accounts receivable
24,301

 
35,839

Inventories and supplies
(2,676
)
 
(2,882
)
Other current assets
(1,277
)
 
1,838

Accounts payable
(13,609
)
 
(36,195
)
Other current and long-term liabilities
(6,873
)
 
(10,283
)
 Net cash from operating activities
57,119

 
39,289

Cash flows used in investing activities:
 
 
 
Additions to property, plant and equipment
(42,462
)
 
(75,781
)
Proceeds from sales of fixed assets
1,030

 
1,273

Acquisitions, net of cash acquired
(11,946
)
 
(34,993
)
Proceeds on sale of business
2,018

 

Additions to intangible assets, including costs to obtain or renew permits
(751
)
 
(512
)
Proceeds from sale of investments
243

 

Net cash used in investing activities
(51,868
)
 
(110,013
)
Cash flows (used in) from financing activities:
 
 
 
Change in uncashed checks
(7,557
)
 
(5,218
)
Proceeds from exercise of stock options
46

 

Issuance of restricted shares, net of shares remitted
(1,021
)
 
(1,425
)
Repurchases of common stock
(6,796
)
 
(4,998
)
Deferred financing costs paid
(108
)
 
(2,190
)
Issuance of senior secured notes, including premium

 
250,625

Net cash (used in) from financing activities
(15,436
)
 
236,794

Effect of exchange rate change on cash
554

 
4,567

(Decrease) increase in cash and cash equivalents
(9,631
)
 
170,637

Cash and cash equivalents, beginning of period
306,997

 
184,708

Cash and cash equivalents, end of period
$
297,366

 
$
355,345

Supplemental information:
 
 
 
Cash payments for interest and income taxes:
 
 
 
Interest paid
$
21,717

 
$
21,808

Income taxes paid
5,519

 
5,848

Non-cash investing and financing activities:
 
 
 
Property, plant and equipment accrued
19,270

 
14,947

Receivable for estimated purchase price adjustment
1,972

 
250

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, 2017
57,298

 
$
573

 
$
(469
)
 
$
725,670

 
$
(214,326
)
 
$
572,793

 
$
1,084,241

Cumulative effect of change in accounting for Stock based compensation

 

 

 
681

 

 
(450
)
 
231

Net loss

 

 

 

 

 
(21,393
)
 
(21,393
)
Other comprehensive income

 

 

 

 
6,051

 

 
6,051

Stock-based compensation

 

 

 
2,271

 

 

 
2,271

Issuance of restricted shares, net of shares remitted
34

 

 

 
(1,021
)
 

 

 
(1,021
)
Shares held under employee participation plan
(25
)
 

 
469

 
(469
)
 

 

 

Repurchases of common stock
(120
)
 
(1
)
 

 
(6,795
)
 

 

 
(6,796
)
Exercise of stock options
2

 

 

 
46

 

 

 
46

Balance at March 31, 2017
57,189

 
$
572

 
$

 
$
720,383

 
$
(208,275
)
 
$
550,950

 
$
1,063,630



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, 2016, which includes the audited consolidated balance sheet as of December 31, 2016 from which the one presented herein was derived.
(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, 2016. There have been no material changes in these policies or their application.

Reclassifications

As disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2016, in the fourth quarter of 2016 the Company changed the manner in which it manages its business, makes operating decisions and assesses the Company's performance. The Company's operations are now managed in six operating segments: Technical Services, Industrial Services, Field Services, Safety-Kleen, Oil and Gas Field Services and Lodging Services. For purposes of segment disclosure the Industrial Services and Field Services operating segments have been aggregated into a single reportable segment based upon their similar economic and other characteristics, and the Oil and Gas Field Services and Lodging Services operating segments have been combined as they do not meet the quantitative thresholds for separate presentation. The amounts presented for the three months ended March 31, 2016 have been recast to reflect the impact of such changes. These reclassifications and adjustments had no effect on consolidated net loss, comprehensive (loss) income, cash flows or stockholders' equity for any of the periods presented.

Recent Accounting Pronouncements

Standards implemented

In July 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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 value. The adoption of ASU 2015-11 was applied prospectively and as of January 1, 2017 did not have an impact on the Company's consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The amendment simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. Stock-based compensation excess tax benefits or deficiencies are now reflected in the Consolidated Statements of Operations as a component of the provision for income taxes, whereas they previously were recognized in equity. Additionally, the Consolidated Statements of Cash Flows now include excess tax benefits as an operating activity. Previously, income tax benefits at settlement of an award were reported as a reduction to operating cash flows and an increase to financing cash flows to the extent that those benefits exceeded the income tax benefits reported in earnings during the award's vesting period. The Company has elected to apply that change in cash flow classification on a prospective basis, leaving previously reported net cash from operating activities and net cash from financing activities in the accompanying Consolidated Statement of Cash Flows for the period ended March 31, 2016 unchanged. Finally, the Company has elected to account for forfeitures as they occur, rather than estimate expected forfeitures. As a result of the adoption of this update, the Company recorded a cumulative-effect adjustment that reduced beginning retained earnings by $0.5 million, net of tax.

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Standard 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. In March 2016, FASB issued ASU 2016-08, which reduces the potential for diversity in practice arising from inconsistent application of the principal versus agent guidance, as well as the cost and complexity of applying Topic 606 both at transition and on an ongoing basis. In April 2016, FASB issued ASU 2016-10, which reduces the potential for diversity in initial application, as well as the cost and complexity of applying Topic 606 both at transition and on an ongoing basis. In May 2016, FASB issued ASU 2016-12, which provided narrow scope improvements and practical expedients on assessing collectability, presentation of sales taxes, noncash consideration, and completed contracts and contract modifications at transition. ASU 2014-09 is currently effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2017. The guidance permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the cumulative catch-up transition method). The Company expects that it will adopt ASU 2014‑09 beginning in the first quarter of 2018 and continues its evaluation of the impact of the new standard on its accounting policies, processes, and system requirements. The Company has assigned internal resources to assist in this implementation project and believes that the project is progressing timely. A final decision regarding the adoption method has not been finalized at this time. The Company’s final determination will depend on a number of factors, such as the significance of the impact of the new standard on its financial results, system readiness, and its ability to accumulate and analyze the information necessary to assess the impact on prior period financial statements, as necessary.
    
In February 2017, the FASB issued ASU 2017-05, Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets. The amendments in this Update are meant to clarify the scope of ASC Subtopic 610-20, Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets and to add guidance for partial sales of nonfinancial assets. The amendments in this Update should be applied using a full retrospective method or a modified retrospective method and are effective at the same time as ASU 2014-09. Further, the Company is required to adopt ASU 2017-05 at the same time that it adopts the guidance in ASU 2014-09. Adoption is not expected to have a material impact on the Company's consolidated financial statements.

(3) BUSINESS COMBINATIONS
2017 Acquisitions
    
On January 31, 2017, the Company acquired a privately held company for a purchase price of approximately $11.9 million in cash, net of cash acquired, and subject to customary post-closing adjustments. The acquired business produces and distributes oil products and therefore complements the Company's closed loop model as it relates to the sale of its oil products. The acquired company is included in the Safety-Kleen operating segment. In connection with this acquisition a preliminary goodwill amount of $4.9 million was recognized.

2016 Acquisitions
    
During 2016, the Company acquired seven businesses that complement the strategy to create a closed loop model as it relates to the sale of the Company's oil products. These acquisitions provided the Company with three additional oil re-refineries while also expanding its used motor oil collection network and providing greater blending and packaging capabilities. These acquisitions also provide the Company with greater access to customers in the West Coast region of the United States and additional locations with Part B permits. Operations of these acquisitions are primarily being integrated into the Safety-Kleen operating segment with certain operations also being integrated into the Technical Services and Industrial Services operating segments.


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The combined purchase price for the seven acquisitions was approximately $205.0 million in cash, net of cash acquired, and subject to customary post-closing adjustments. The purchase price allocation for acquisitions may reflect various fair value estimates and analysis, including preliminary work performed by third-party valuation specialists. In addition, purchase prices for acquisitions may reflect preliminary working capital based adjustments. These estimates are subject to change within the measurement period as valuations and working capital adjustments are finalized. The primary areas of the preliminary purchase price allocation that are subject to change relate to the fair values of certain tangible assets and liabilities acquired, the valuation of intangible assets acquired, certain legal matters, income and income based taxes, and residual goodwill. Measurement period adjustments are recorded in the reporting period in which the estimates are finalized and adjustment amounts are determined.
The components and preliminary allocation of the purchase price consist of the following amounts (in thousands):
 
At Acquisition Dates As Reported
December 31, 2016
 
Measurement Period Adjustments
 
At Acquisition Dates As Reported
March 31, 2017
Accounts receivable
$
15,767

 
$
629

 
$
16,396

Inventories and supplies
12,515

 
173

 
12,688

Prepaid expenses and other current assets
777

 
(25
)
 
752

Property, plant and equipment
143,025

 
625

 
143,650

Permits and other intangibles
28,856

 

 
28,856

Current liabilities
(20,258
)
 
392

 
(19,866
)
Closure and post-closure liabilities

(2,408
)
 
(596
)
 
(3,004
)
Remedial liabilities, less current portion
(2,041
)
 
16

 
(2,025
)
Deferred taxes, unrecognized tax benefits and other long-term liabilities
(17,019
)
 
(456
)
 
(17,475
)
Total identifiable net assets
159,214

 
758

 
159,972

Goodwill
45,791

 
(731
)
 
45,060

Total purchase price, net of cash acquired
$
205,005

 
$
27

 
$
205,032


The excess of the total purchase price, which includes the aggregate cash consideration paid in excess of the fair value of the tangible net assets and intangible asset acquired, was recorded as goodwill. The goodwill recognized is attributable to the expected operating synergies and growth potential that the Company expects to realize from these acquisitions. Goodwill generated from the acquisitions was not deductible for tax purposes.
Pro forma revenue and earnings amounts on a combined basis as if these acquisitions had been completed on January 1, 2016 are immaterial to the consolidated financial statements of the Company since that date.
(4) DISPOSITION OF BUSINESS
On September 1, 2016, the Company completed the sale of its Catalyst Services business, which was a non-core business previously included within the Industrial and Field Services segment. During the first quarter of 2017, the Company and the buyer of the Catalyst Services business agreed to final working capital amounts and as a result the Company received $2.0 million of final sale proceeds.

The following table presents the loss before benefit for income taxes attributable to the Catalyst Services business included in the Company's consolidated results of operations for three months ended March 31, 2016 (in thousands):
 
Three Months Ended
 
March 31, 2016
Loss before benefit for income taxes
1,099



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(5) INVENTORIES AND SUPPLIES
Inventories and supplies consisted of the following (in thousands):
 
March 31, 2017
 
December 31, 2016
Oil and oil products
$
55,872

 
$
52,158

Supplies and drums
91,210

 
90,610

Solvent and solutions
8,865

 
8,566

Modular camp accommodations
14,859

 
15,255

Other
11,232

 
11,839

Total inventories and supplies
$
182,038

 
$
178,428

As of March 31, 2017 and December 31, 2016, other inventories consisted primarily of cleaning fluids, such as absorbents and wipers, and automotive fluids, such as windshield washer fluid and antifreeze.
(6) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following (in thousands):
 
March 31, 2017
 
December 31, 2016
Land
$
122,184

 
$
120,575

Asset retirement costs (non-landfill)
15,173

 
14,567

Landfill assets
140,518

 
139,708

Buildings and improvements
406,562

 
373,160

Camp equipment
151,561

 
152,740

Vehicles
558,175

 
541,022

Equipment
1,591,511

 
1,483,736

Furniture and fixtures
5,507

 
5,492

Construction in progress
42,305

 
146,904

 
3,033,496

 
2,977,904

Less - accumulated depreciation and amortization
1,424,006

 
1,366,077

Total property, plant and equipment, net
$
1,609,490

 
$
1,611,827

Interest in the amount of $0.1 million and $1.2 million was capitalized to fixed assets during the three months ended March 31, 2017 and March 31, 2016, respectively. Depreciation expense, inclusive of landfill amortization, was $63.3 million and $59.3 million for the three months ended March 31, 2017 and March 31, 2016, respectively.

(7) GOODWILL AND OTHER INTANGIBLE ASSETS
The changes in goodwill for the three months ended March 31, 2017 were as follows (in thousands):
 
Technical Services
 
Industrial & Field Services
 
Safety-Kleen
 
Oil, Gas and Lodging Services
 
Totals
Balance at January 1, 2017
$
61,116

 
$
107,968

 
$
296,070

 
$

 
$
465,154

Increase from current period acquisitions

 

 
4,938

 

 
4,938

Measurement period adjustments from prior period acquisitions

 

 
(731
)
 

 
(731
)
Foreign currency translation and other
42

 
163

 
294

 

 
499

Balance at March 31, 2017
$
61,158

 
$
108,131

 
$
300,571

 
$

 
$
469,860

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, 2016 and determined that no adjustment to the carrying value of goodwill for any reporting units 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 of March 31, 2017 and December 31, 2016, the Company's total finite-lived and indefinite-lived intangible assets consisted of the following (in thousands):
 
March 31, 2017
 
December 31, 2016
 
Cost
 
Accumulated
Amortization
 
Net
 
Weighted
Average
Remaining Amortization
Period
(in years)
 
Cost
 
Accumulated
Amortization
 
Net
 
Weighted
Average
Remaining Amortization
Period
(in years)
Permits
$
172,666

 
$
69,151

 
$
103,515

 
19.8
 
$
171,637

 
$
67,301

 
$
104,336

 
18.9
Customer and supplier relationships
394,086

 
134,599

 
259,487

 
11.9
 
393,426

 
127,462

 
265,964

 
12.2
Other intangible assets
34,463

 
29,228

 
5,235

 
7.1
 
34,254

 
28,456

 
5,798

 
7.1
Total amortizable permits and other intangible assets
601,215

 
232,978

 
368,237

 
14.9
 
599,317

 
223,219

 
376,098

 
13.9
Trademarks and trade names
122,715

 

 
122,715

 
Indefinite
 
122,623

 

 
122,623

 
Indefinite
Total permits and other intangible assets
$
723,930

 
$
232,978

 
$
490,952

 

 
$
721,940

 
$
223,219

 
$
498,721

 

Amortization expense of permits and other intangible assets was $9.1 million and $9.6 million for the three months ended March 31, 2017 and March 31, 2016, respectively.
The expected amortization of the net carrying amount of finite-lived intangible assets at March 31, 2017 was as follows (in thousands):
Years Ending December 31,
Expected Amortization
2017 (nine months)
$
27,392

2018
34,072

2019
31,275

2020
29,067

2021
26,640

Thereafter
219,791

 
$
368,237

(8) ACCRUED EXPENSES
Accrued expenses consisted of the following at March 31, 2017 and December 31, 2016 (in thousands):
 
March 31, 2017
 
December 31, 2016
Insurance
$
56,603

 
$
63,061

Interest
21,770

 
21,536

Accrued compensation and benefits
41,109

 
34,641

Income, real estate, sales and other taxes
29,814

 
35,083

Other
34,661

 
36,400

 
$
183,957

 
$
190,721

As of March 31, 2017 and December 31, 2016, other accrued expenses included accrued legal matters of $4.2 million and $3.8 million, respectively, and accrued severance charges of $2.3 million and $2.9 million, respectively.


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(9) CLOSURE AND POST-CLOSURE LIABILITIES
The changes to closure and post-closure liabilities (also referred to as “asset retirement obligations”) from January 1, 2017 through March 31, 2017 were as follows (in thousands):
 
Landfill
Retirement
Liability
 
Non-Landfill
Retirement
Liability
 
Total
Balance at January 1, 2017
$
30,630

 
$
27,701

 
$
58,331

Measurement period adjustments from prior period acquisitions

 
596

 
596

New asset retirement obligations
431

 

 
431

Accretion
534

 
623

 
1,157

Changes in estimates recorded to statement of operations

 
(6
)
 
(6
)
Expenditures
(119
)
 
(73
)
 
(192
)
Currency translation and other
20

 
14

 
34

Balance at March 31, 2017
$
31,496

 
$
28,855

 
$
60,351

All of the landfill facilities included in the above were active as of March 31, 2017. There were no significant charges (benefits) in 2017 resulting from changes in estimates for closure and post-closure liabilities.
New asset retirement obligations incurred during the first three months of 2017 were discounted at the credit-adjusted risk-free rate of 6.12%.
(10) REMEDIAL LIABILITIES 
The changes to remedial liabilities for the three months ended March 31, 2017 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, 2017
$
1,777

 
$
64,151

 
$
62,079

 
$
128,007

Measurement period adjustments from prior period acquisitions

 

 
(16
)
 
(16
)
Accretion
21

 
615

 
497

 
1,133

Changes in estimates recorded to statement of operations
(38
)
 
(94
)
 
240

 
108

Expenditures
(7
)
 
(720
)
 
(2,019
)
 
(2,746
)
Currency translation and other

 
8

 
113

 
121

Balance at March 31, 2017
$
1,753

 
$
63,960

 
$
60,894

 
$
126,607

In the three months ended March 31, 2017, there were no significant charges (benefits) resulting from changes in estimates for remedial liabilities.
(11) FINANCING ARRANGEMENTS 
The following table is a summary of the Company’s financing arrangements (in thousands):
 
March 31, 2017
 
December 31, 2016
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")
845,000

 
845,000

Long-term obligations, at par
$
1,645,000

 
$
1,645,000

Unamortized debt issuance costs and premium, net
(11,032
)
 
(11,728
)
Long-term obligations, at carrying value
$
1,633,968

 
$
1,633,272

   
At March 31, 2017 and December 31, 2016, the fair value of the Company's 2020 Notes was $814.0 million and $820.0 million, respectively, based on quoted market prices for the instrument. At both March 31, 2017 and December 31, 2016, the fair value of the Company's 2021 Notes was $861.9 million based on quoted market prices for the instrument. The fair value of the 2020 Notes and 2021 Notes are considered a Level 2 measure according to the fair value hierarchy.

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The Company also maintains a revolving credit facility which as of March 31, 2017 and December 31, 2016, had no outstanding loan balances. At March 31, 2017, approximately $194.0 million was available to borrow and outstanding letters of credit were $126.0 million. At December 31, 2016, $195.2 million was available to borrow and outstanding letters of credit were $132.6 million.        
(12) LOSS PER SHARE     
The following are computations of basic and diluted loss per share (in thousands except for per share amounts):
 
Three Months Ended
 
March 31,
 
2017
 
2016
Numerator for basic and diluted loss per share:
 

 
 

Net loss
$
(21,393
)
 
$
(20,871
)
 
 
 
 
Denominator:
 

 
 

Basic shares outstanding
57,262

 
57,617

Dilutive effect of equity-based compensation awards

 

Dilutive shares outstanding
57,262

 
57,617

 
 
 
 
Basic loss per share:
$
(0.37
)
 
$
(0.36
)
 
 

 
 

Diluted loss per share:
$
(0.37
)
 
$
(0.36
)
As a result of the net loss reported for the three months ended March 31, 2017 and 2016, all then outstanding restricted stock awards and performance awards totaling 659,558 and 474,318, respectively, were excluded from the calculation of diluted loss per share as their inclusion would have an antidilutive effect. 

(13) ACCUMULATED OTHER COMPREHENSIVE LOSS
The changes in accumulated other comprehensive loss by component and related tax effects for the three months ended March 31, 2017 were as follows (in thousands):    
 
Foreign Currency Translation
 
Unrealized Gains on Available-For-Sale Securities
 
Unfunded Pension Liability
 
Total
Balance at January 1, 2017
$
(212,211
)
 
$
(321
)
 
$
(1,794
)
 
$
(214,326
)
Other comprehensive income before reclassifications
5,823

 
234

 

 
6,057

Amounts reclassified out of accumulated other comprehensive loss

 
146

 

 
146

Tax effects

 
(152
)
 

 
(152
)
Other comprehensive income
$
5,823

 
$
228

 
$

 
$
6,051

Balance at March 31, 2017
$
(206,388
)
 
$
(93
)
 
$
(1,794
)
 
$
(208,275
)
There were no reclassifications out of accumulated other comprehensive loss during the three months ended March 31, 2016.

(14) STOCK-BASED COMPENSATION
Total stock-based compensation cost charged to selling, general and administrative expenses for the three months ended March 31, 2017 and March 31, 2016 was $2.3 million and $2.1 million, respectively. The total income tax benefit recognized in the consolidated statements of operations from stock-based compensation was $0.8 million and $0.5 million for the three months ended March 31, 2017 and March 31, 2016, respectively.
Restricted Stock Awards
The following information relates to restricted stock awards that have been granted to employees and directors under the Company's equity incentive plans (the "Plans"). The restricted stock awards are not transferable until vested and the restrictions

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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 three months ended March 31, 2017:
Restricted Stock
Number of Shares
 
Weighted Average
Grant-Date
Fair Value
Balance at January 1, 2017
510,041

 
$
52.65

Granted
22,794

 
$
55.64

Vested
(26,963
)
 
$
54.45

Forfeited
(29,218
)
 
$
50.97

Balance at March 31, 2017
476,654

 
$
52.80

    
As of March 31, 2017, there was $18.5 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 3.0 years. The total fair value of restricted stock vested during the three months ended March 31, 2017 and March 31, 2016 was $1.5 million and $3.8 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, return on invested capital 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 three months ended March 31, 2017:
Performance Stock
Number of Shares
 
Weighted Average
Grant-Date
Fair Value
Balance at January 1, 2017
220,882

 
$
54.69

Granted
588

 
$
54.44

Vested
(25,168
)
 
$
54.84

Forfeited
(13,398
)
 
$
56.26

Balance at March 31, 2017
182,904

 
$
54.69


As of March 31, 2017, there was $1.0 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 three months ended March 31, 2017 and March 31, 2016 was $1.4 million and $0.4 million, respectively.

Common Stock Repurchases
On March 13, 2015, the Company's board of directors authorized the repurchase of up to $300 million of the Company's common stock. During the three months ended March 31, 2017, the Company repurchased and retired a total of 0.1 million shares of the Company's common stock for a total cost of $6.8 million. Through March 31, 2017, the Company has repurchased and retired a total of 4.0 million shares of the Company's common stock for a total cost of $206.7 million under this program. As of March 31, 2017, an additional $93.3 million remains available for repurchase of shares under the current authorized program.

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(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, 2017 and December 31, 2016, the Company had recorded reserves of $21.9 million and $22.0 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, 2017 and December 31, 2016, the Company also believed that it was reasonably possible that the amount of these potential liabilities could be as much as $1.7 million and $1.9 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 March 31, 2017 and December 31, 2016, the $21.9 million and $22.0 million, respectively, of reserves consisted of (i) $17.7 million and $18.2 million, respectively, related to pending legal or administrative proceedings, including Superfund liabilities, which were included in remedial liabilities on the consolidated balance sheets, and (ii) $4.2 million and $3.8 million, respectively, primarily related to federal, state and provincial enforcement actions, which were included in accrued expenses on the consolidated balance sheets.
As of March 31, 2017, the principal legal and administrative proceedings in which the Company was involved, or which had been terminated during 2017, 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 Company has accrued for costs expected to be incurred relative to the resolution of this matter and believes this matter will not have future material effect on its financial position or results of operations.
Safety-Kleen Legal Proceedings. On December 28, 2012, the Company acquired Safety-Kleen, Inc. ("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, 2017 were as follows:
Product Liability Cases. Safety-Kleen has been named as a defendant in various lawsuits that are currently pending in various courts and jurisdictions throughout the United States, including approximately 58 proceedings (excluding cases which have been settled but not formally dismissed) as of March 31, 2017, 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

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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 product liability 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 also 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, 2017. From January 1, 2017 to March 31, 2017, 9 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.    
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 129 sites which are subject to or are proposed to become subject to proceedings under federal or state Superfund laws. Of the 129 sites, three (including the BR Facility described below) involve facilities that are now owned or leased 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, 33 are now settled, 16 are currently requiring expenditures on remediation and 77 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. The Company believes its potential liability could exceed $100,000 at 11 of the 126 third party sites.
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 storm water 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 and 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, McKesson and one other entity, the Company does not have an indemnity agreement with respect to any of the 126 third party sites discussed above.

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Table of Contents

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, 2017 and December 31, 2016, there were four and five proceedings, respectively, for which the Company reasonably believes 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.
(16) INCOME TAXES 
The Company records a tax provision or benefit on an interim basis using an estimated annual effective tax rate. This rate is applied to the current period ordinary income or loss to determine the income tax provision or benefit allocated to the interim period. Losses from jurisdictions for which no benefit can be recognized and the income tax effects of unusual or infrequent items are excluded from the estimated annual effective tax rate and are recognized in the impacted interim period. The estimated annual effective tax rate may be significantly impacted by projected earnings mix by tax jurisdiction. Adjustments to the estimated annual effective income tax rate are recognized in the period when such estimates are revised.
The Company’s effective tax rate for the three months ended March 31, 2017 was (14.5)% compared to 10.9% for the same periods in 2016. The variations in the effective income tax rates for the three months ended March 31, 2017 as compared to more customary relationships between pre-tax income and the provision for income taxes were primarily due to the Company not recognizing income tax benefits from current operating losses related to certain Canadian entities.
As of both March 31, 2017 and December 31, 2016, the Company had recorded $1.7 million of liabilities for unrecognized tax benefits and $0.3 million of interest.
Due to expiring statute of limitation periods, the Company believes that total unrecognized tax benefits will decrease by $0.5 million within the next 12 months.

(17) 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 its business, makes operating decisions and assesses performance. The Company's operations are managed in six operating segments: Technical Services, Industrial Services, Field Services, Safety-Kleen, Oil and Gas Field Services and Lodging Services. For purposes of segment disclosure the Industrial Services and Field Services operating segments have been aggregated into a single reportable segment based upon their similar economic and other characteristics, and the Oil and Gas Field Services and Lodging Services operating segments have been combined as they do not meet the quantitative thresholds for separate presentation.

Third-party revenue is revenue billed to outside customers by a particular segment. Direct revenue is revenue allocated to the segment providing the product or service. 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. The operations not managed through the Company’s operating segments described above 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 Company's operating 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 operating segments. 
 

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The following table reconciles third party revenues to direct revenues for the three months ended March 31, 2017 and 2016 (in thousands):
 
For the Three Months Ended March 31, 2017
 
For the Three Months Ended March 31, 2016
 
Third party revenues
 
Intersegment revenues, net
 
Corporate Items, net
 
Direct revenues
 
Third party revenues
 
Intersegment revenues, net
 
Corporate Items, net
 
Direct revenues
Technical Services
$
230,218

 
$
40,044

 
$
722

 
$
270,984

 
$
219,105

 
$
34,844

 
$
388

 
$
254,337

Industrial and Field Services
133,557

 
(8,359
)
 
104

 
125,302

 
130,187

 
(6,675
)
 
(13
)
 
123,499

Safety-Kleen
292,901

 
(32,069
)
 
3

 
260,835

 
246,961

 
(28,521
)
 
366

 
218,806

Oil, Gas and Lodging Services
32,132

 
384

 
94

 
32,610

 
39,051

 
352

 
104

 
39,507

Corporate Items
133

 

 
(923
)
 
(790
)
 
779

 

 
(845
)
 
(66
)
Total
$
688,941

 
$

 
$

 
$
688,941

 
$
636,083

 
$

 
$

 
$
636,083

The primary financial measure by which the Company evaluates the performance of its segments is Adjusted EBITDA which consists of net loss plus accretion of environmental liabilities, depreciation and amortization, net interest expense, provision (benefit) for income taxes and excludes other expense, net. Transactions between the segments are accounted for at the Company’s best estimate based on similar transactions with outside customers.
The following table presents Adjusted EBITDA information used by management by reported segment (in thousands):
 
For the Three Months Ended
 
March 31,
 
2017
 
2016
Adjusted EBITDA:
 

 
 

Technical Services
$
58,488

 
$
60,398

Industrial and Field Services
1,913

 
433

Safety-Kleen
52,368

 
40,055

Oil, Gas and Lodging Services
(211
)
 
1,310

Corporate Items
(32,423
)
 
(34,876
)
Total
$
80,135

 
$
67,320

Reconciliation to Consolidated Statements of Operations:
 

 
 

Accretion of environmental liabilities
2,290

 
2,505

Depreciation and amortization
72,412

 
68,902

Income (loss) from operations
5,433

 
(4,087
)
Other expense
1,549

 
350

Interest expense, net of interest income
22,576

 
18,980

Loss before provision (benefit) for income taxes
$
(18,692
)
 
$
(23,417
)

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The following table presents certain assets by reportable segment and in the aggregate (in thousands):
 
March 31, 2017
 
Technical
Services
 
Industrial and Field
Services
 
Safety-Kleen
 
Oil, Gas and Lodging
Services
 
Corporate
Items
 
Totals
Property, plant and equipment, net
$
521,726

 
$
245,250

 
$
589,782

 
$
173,347

 
$
79,385

 
$
1,609,490

Goodwill
61,158

 
108,131

 
300,571

 

 

 
469,860

Permits and other intangibles, net
77,131

 
17,973

 
386,125

 
9,723

 

 
490,952

Total assets
$
856,324

 
$
446,757

 
$
1,477,851

 
$
246,910

 
$
617,811

 
$
3,645,653

 
December 31, 2016
 
Technical
Services
 
Industrial and Field
Services
 
Safety-Kleen
 
Oil, Gas and Lodging
Services
 
Corporate
Items
 
Totals
Property, plant and equipment, net
$
521,134

 
$
245,143

 
$
584,647

 
$
182,038

 
$
78,865

 
$
1,611,827

Goodwill
61,116

 
107,968

 
296,070

 

 

 
465,154

Permits and other intangibles, net
78,625

 
17,817

 
391,390

 
10,889

 

 
498,721

Total assets
$
862,957

 
$
446,826

 
$
1,474,755

 
$
253,242

 
$
644,140

 
$
3,681,920

The following table presents total assets by geographical area (in thousands):
 
March 31, 2017
 
December 31, 2016
United States
$
2,947,064

 
$
2,960,337

Canada
698,589

 
721,583

Total
$
3,645,653

 
$
3,681,920

(18) GUARANTOR AND NON-GUARANTOR SUBSIDIARIES FINANCIAL INFORMATION
The 2020 Notes and the 2021 Notes (collectively, the "Notes") are guaranteed by substantially all of the Company’s subsidiaries organized in the United States. Each guarantor for the Notes is a 100% owned subsidiary of Clean Harbors, Inc. and its guarantee is both full and unconditional and joint and several. The guarantees are, however, subject to customary release provisions under which, in particular, the guarantee of any domestic restricted subsidiary will be released if the Company sells such subsidiary to an unrelated third party in accordance with the terms of the indentures which govern the Notes. The Notes are not guaranteed by the Company’s subsidiaries organized outside the United States. The following supplemental condensed consolidating financial information for the parent company, the guarantor subsidiaries and the non-guarantor subsidiaries, respectively, is presented in conformity with the requirements of Rule 3-10 of SEC Regulation S-X (“Rule 3-10”).
    








18

Table of Contents

Following is the condensed consolidating balance sheet at March 31, 2017 (in thousands):
 
Clean
Harbors, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Consolidating
Adjustments
 
Total
Assets:
 

 
 

 
 

 
 

 
 

Cash and cash equivalents
$
51,726

 
$
139,160

 
$
106,480

 
$

 
$
297,366

Intercompany receivables
209,410

 
396,286

 
40,235

 
(645,931
)
 

Accounts receivable, net

 
400,764

 
79,280

 

 
480,044

Other current assets
1,033

 
235,715

 
59,592

 
(11,979
)
 
284,361

Property, plant and equipment, net

 
1,214,176

 
395,314

 

 
1,609,490

Investments in subsidiaries
2,849,584

 
563,331

 

 
(3,412,915
)
 

Intercompany debt receivable

 
87,215

 
24,701

 
(111,916
)
 

Goodwill

 
417,224

 
52,636

 

 
469,860

Permits and other intangibles, net

 
429,311

 
61,641

 

 
490,952

Other long-term assets
2,421

 
7,661

 
4,566

 
(1,068
)
 
13,580

Total assets
$
3,114,174

 
$
3,890,843

 
$
824,445

 
$
(4,183,809
)
 
$
3,645,653

Liabilities and Stockholders’ Equity:
 

 
 

 
 

 
 

 
 

Current liabilities
$
22,063

 
$
356,914

 
$
121,583

 
$
(11,979
)
 
$
488,581

Intercompany payables
390,812

 
245,871

 
9,248

 
(645,931
)
 

Closure, post-closure and remedial liabilities, net

 
148,992

 
16,397

 

 
165,389

Long-term obligations
1,633,968

 

 

 

 
1,633,968

Intercompany debt payable
3,701

 
21,000

 
87,215

 
(111,916
)
 

Other long-term liabilities

 
276,118

 
19,035

 
(1,068
)
 
294,085

Total liabilities
2,050,544

 
1,048,895

 
253,478

 
(770,894
)
 
2,582,023

Stockholders’ equity
1,063,630

 
2,841,948

 
570,967

 
(3,412,915
)
 
1,063,630

Total liabilities and stockholders’ equity
$
3,114,174

 
$
3,890,843

 
$
824,445

 
$
(4,183,809
)
 
$
3,645,653



19

Table of Contents

Following is the condensed consolidating balance sheet at December 31, 2016 (in thousands):
 
Clean
Harbors, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Consolidating
Adjustments
 
Total
Assets:
 

 
 

 
 

 
 

 
 

Cash and cash equivalents
$
51,417

 
$
155,943

 
$
99,637

 
$

 
$
306,997

Intercompany receivables
200,337

 
354,836

 
49,055

 
(604,228
)
 

Accounts receivables, net

 
417,029

 
79,197

 

 
496,226

Other current assets
3,096

 
234,408

 
69,257

 
(17,113
)
 
289,648

Property, plant and equipment, net

 
1,211,210

 
400,617

 

 
1,611,827

Investments in subsidiaries
2,851,571

 
580,124

 

 
(3,431,695
)
 

Intercompany debt receivable

 
86,409

 
24,701

 
(111,110
)
 

Goodwill

 
412,638

 
52,516

 

 
465,154

Permits and other intangibles, net

 
435,594

 
63,127

 

 
498,721

Other long-term assets
2,446

 
7,582

 
4,387

 
(1,068
)
 
13,347

Total assets
$
3,108,867

 
$
3,895,773

 
$
842,494

 
$
(4,165,214
)
 
$
3,681,920

Liabilities and Stockholders’ Equity:
 

 
 

 
 

 
 

 
 

Current liabilities
$
21,805

 
$
366,831

 
$
133,145

 
$
(17,113
)
 
$
504,668

Intercompany payables
365,848

 
237,058

 
1,322

 
(604,228
)
 

Closure, post-closure and remedial liabilities, net

 
150,682

 
15,640

 

 
166,322

Long-term obligations
1,633,272

 

 

 

 
1,633,272

Intercompany debt payable
3,701

 
21,000

 
86,409

 
(111,110
)
 

Other long-term liabilities

 
275,649

 
18,836

 
(1,068
)
 
293,417

Total liabilities
2,024,626

 
1,051,220

 
255,352

 
(733,519
)
 
2,597,679

Stockholders’ equity
1,084,241

 
2,844,553

 
587,142

 
(3,431,695
)
 
1,084,241

Total liabilities and stockholders’ equity
$
3,108,867

 
$
3,895,773

 
$
842,494

 
$
(4,165,214
)
 
$
3,681,920



20

Table of Contents

Following is the consolidating statement of operations for the three months ended March 31, 2017 (in thousands):
 
Clean
Harbors, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Consolidating
Adjustments
 
Total
Revenues
 
 
 
 
 
 
 
 


Service revenues
$

 
$
443,305

 
$
131,071

 
$
(14,162
)
 
$
560,214

Product revenues

 
116,650

 
15,331

 
(3,254
)
 
128,727

   Total revenues

 
559,955

 
146,402

 
(17,416
)
 
688,941

Cost of revenues (exclusive of items shown separately below)
 
 
 
 
 
 
 
 


Service cost of revenues

 
294,145

 
111,104

 
(14,162
)
 
391,087

Product cost of revenues

 
96,505

 
12,247

 
(3,254
)
 
105,498

   Total cost of revenues

 
390,650

 
123,351

 
(17,416
)
 
496,585

Selling, general and administrative expenses
24

 
92,171

 
20,026

 

 
112,221

Accretion of environmental liabilities

 
2,055

 
235

 

 
2,290

Depreciation and amortization

 
51,900

 
20,512

 

 
72,412

(Loss) income from operations
(24
)
 
23,179

 
(17,722
)
 

 
5,433

Other expense
(146
)
 
(1,389
)
 
(14
)
 

 
(1,549
)
Interest (expense) income
(22,659
)
 
119

 
(36
)
 

 
(22,576
)
Equity in earnings of subsidiaries, net of taxes
(7,637
)
 
(21,824
)
 

 
29,461

 

Intercompany interest income (expense)

 
1,297

 
(1,297
)
 

 

(Loss) income before (benefit) provision for income taxes
(30,466
)
 
1,382

 
(19,069
)
 
29,461

 
(18,692
)
(Benefit) provision for income taxes
(9,073
)
 
9,637

 
2,137

 

 
2,701

Net loss
(21,393
)
 
(8,255
)
 
(21,206
)
 
29,461

 
(21,393
)
Other comprehensive income
6,051

 
6,051

 
5,032

 
(11,083
)
 
6,051

Comprehensive loss
$
(15,342
)
 
$
(2,204
)
 
$
(16,174
)
 
$
18,378

 
$
(15,342
)
















21

Table of Contents

Following is the consolidating statement of operations for the three months ended March 31, 2016 (in thousands):
 
Clean
Harbors, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Consolidating
Adjustments
 
Total
Revenues
 
 
 
 
 
 
 
 
 
Service revenues
$

 
$
428,477

 
$
114,023

 
$
(12,269
)
 
$
530,231

Product revenues

 
89,588

 
18,713

 
(2,449
)
 
105,852

   Total revenues

 
518,065

 
132,736

 
(14,718
)
 
636,083

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

 
282,964

 
103,291

 
(12,269
)
 
373,986

Product cost of revenues

 
79,354

 
13,388

 
(2,449
)
 
90,293

   Total cost of revenues

 
362,318

 
116,679

 
(14,718
)
 
464,279

Selling, general and administrative expenses
24

 
80,655

 
23,805

 

 
104,484

Accretion of environmental liabilities

 
2,290

 
215

 

 
2,505

Depreciation and amortization

 
48,695

 
20,207

 

 
68,902

(Loss) income from operations
(24
)
 
24,107

 
(28,170
)
 

 
(4,087
)
Other expense

 
(88
)
 
(262
)
 

 
(350
)
Interest (expense) income
(20,143
)
 
1,111

 
52

 

 
(18,980
)
Equity in earnings of subsidiaries, net of taxes
(8,771
)
 
(26,495
)
 

 
35,266

 

Intercompany interest income (expense)

 
5,159

 
(5,159
)
 

 

(Loss) income before (benefit) provision for income taxes
(28,938
)
 
3,794

 
(33,539
)
 
35,266

 
(23,417
)
(Benefit) provision for income taxes
(8,067
)