GUARANTOR AND NON-GUARANTOR SUBSIDIARIES FINANCIAL INFORMATION | GUARANTOR AND NON-GUARANTOR SUBSIDIARIES FINANCIAL INFORMATION The 2020 Notes and the 2021 Notes are guaranteed by substantially all of the Company's subsidiaries organized in the United States (the "U.S. Guarantor Subsidiaries"). Each U.S. Guarantor Subsidiary is a 100% owned subsidiary of Clean Harbors, Inc. ("Parent") 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 U.S. Guarantor Subsidiary will be released if we sell such subsidiary to an unrelated third party in accordance with the terms of the indenture which governs the notes. The 2020 Notes and the 2021 Notes are not guaranteed by Parent's Canadian or other foreign subsidiaries (the "Foreign Non-Guarantor Subsidiaries"). The following presents supplemental condensed consolidating financial information for Parent, the U.S. Guarantor Subsidiaries and the Foreign Non-Guarantor Subsidiaries, respectively. As discussed further in Note 10, “Financing Arrangements,” to our consolidated financial statements included herein, on March 14, 2016, Parent issued through a private placement, $ 250.0 million aggregate principal amount as additional notes under the 2021 Notes. In connection with this offering the proceeds were then transferred to the US Guarantor Subsidiaries and are reflected as an investment of Parent in the U.S. Guarantor Subsidiaries for the period ending June 30, 2016. Following is the condensed consolidating balance sheet at June 30, 2016 (in thousands): Clean Harbors, Inc. U.S. Guarantor Subsidiaries Foreign Non-Guarantor Subsidiaries Consolidating Adjustments Total Assets: Cash and cash equivalents $ 51,291 $ 224,493 $ 77,139 $ — $ 352,923 Intercompany receivables 181,741 302,354 30,741 (514,836 ) — Accounts receivable, net — 407,601 96,148 — 503,749 Other current assets 378 198,612 63,472 — 262,462 Property, plant and equipment, net — 1,138,285 456,702 — 1,594,987 Investments in subsidiaries 2,833,394 514,708 — (3,348,102 ) — Intercompany debt receivable — 277,623 3,701 (281,324 ) — Goodwill — 369,978 91,513 — 461,491 Permits and other intangibles, net — 423,932 68,292 — 492,224 Other long-term assets 1,412 9,559 13,574 — 24,545 Total assets $ 3,068,216 $ 3,867,145 $ 901,282 $ (4,144,262 ) $ 3,692,381 Liabilities and Stockholders’ Equity: Current liabilities $ 21,852 $ 427,367 $ 71,202 $ — $ 520,421 Intercompany payables 294,439 217,430 2,967 (514,836 ) — Closure, post-closure and remedial liabilities, net — 150,182 15,252 — 165,434 Long-term obligations 1,631,881 — — — 1,631,881 Intercompany debt payable 3,701 — 277,623 (281,324 ) — Other long-term liabilities — 238,772 19,530 — 258,302 Total liabilities 1,951,873 1,033,751 386,574 (796,160 ) 2,576,038 Stockholders’ equity 1,116,343 2,833,394 514,708 (3,348,102 ) 1,116,343 Total liabilities and stockholders’ equity $ 3,068,216 $ 3,867,145 $ 901,282 $ (4,144,262 ) $ 3,692,381 Following is the condensed consolidating balance sheet at December 31, 2015 (in thousands): Clean Harbors, Inc. U.S. Guarantor Subsidiaries Foreign Non-Guarantor Subsidiaries Consolidating Adjustments Total Assets: Cash and cash equivalents $ 11,017 $ 83,479 $ 90,212 $ — $ 184,708 Intercompany receivables 164,709 213,243 39,804 (417,756 ) — Accounts receivables, net — 404,580 91,424 — 496,004 Other current assets — 179,969 60,515 — 240,484 Property, plant and equipment, net — 1,082,466 450,001 — 1,532,467 Investments in subsidiaries 2,547,307 522,067 — (3,069,374 ) — Intercompany debt receivable — 260,957 3,701 (264,658 ) — Goodwill — 367,306 85,799 — 453,105 Permits and other intangibles, net — 435,080 71,738 — 506,818 Other long-term assets 1,068 10,274 6,500 — 17,842 Total assets $ 2,724,101 $ 3,559,421 $ 899,694 $ (3,751,788 ) $ 3,431,428 Liabilities and Stockholders’ Equity: Current liabilities $ 20,813 $ 424,588 $ 71,719 $ — $ 517,120 Intercompany payables 220,762 195,287 1,707 (417,756 ) — Closure, post-closure and remedial liabilities, net — 153,190 14,656 — 167,846 Long-term obligations 1,382,543 — — — 1,382,543 Intercompany debt payable 3,701 — 260,957 (264,658 ) — Other long-term liabilities — 239,049 28,588 — 267,637 Total liabilities 1,627,819 1,012,114 377,627 (682,414 ) 2,335,146 Stockholders’ equity 1,096,282 2,547,307 522,067 (3,069,374 ) 1,096,282 Total liabilities and stockholders’ equity $ 2,724,101 $ 3,559,421 $ 899,694 $ (3,751,788 ) $ 3,431,428 Following is the consolidating statement of operations for the three months ended June 30, 2016 (in thousands): Clean Harbors, Inc. U.S. Guarantor Subsidiaries Foreign Non-Guarantor Subsidiaries Consolidating Adjustments Total Revenues Service revenues $ — $ 456,013 $ 139,413 $ (10,864 ) $ 584,562 Product revenues — 95,648 19,391 (2,091 ) 112,948 Total revenues — 551,661 158,804 (12,955 ) 697,510 Cost of revenues (exclusive of items shown separately below) Service cost of revenues (587 ) 292,343 107,792 (10,864 ) 388,684 Product cost of revenues — 79,108 14,301 (2,091 ) 91,318 Total cost of revenues (587 ) 371,451 122,093 (12,955 ) 480,002 Selling, general and administrative expenses 37 83,882 23,144 — 107,063 Accretion of environmental liabilities — 2,313 235 — 2,548 Depreciation and amortization — 50,696 22,697 — 73,393 Income (loss) from operations 550 43,319 (9,365 ) — 34,504 Other expense (income) — 400 (589 ) — (189 ) Interest (expense) income (22,962 ) 1,284 31 — (21,647 ) Equity in earnings of subsidiaries, net of taxes 17,413 (9,195 ) — (8,218 ) — Intercompany interest income (expense) — 5,497 (5,497 ) — — (Loss) income before (benefit) provision for income taxes (4,999 ) 41,305 (15,420 ) (8,218 ) 12,668 (Benefit) provision for income taxes (8,965 ) 23,892 (6,225 ) — 8,702 Net income (loss) 3,966 17,413 (9,195 ) (8,218 ) 3,966 Other comprehensive loss (1,178 ) (1,178 ) (597 ) 1,775 (1,178 ) Comprehensive income (loss) $ 2,788 $ 16,235 $ (9,792 ) $ (6,443 ) $ 2,788 Following is the consolidating statement of operations for the three months ended June 30, 2015 (in thousands): Clean Harbors, Inc. U.S. Guarantor Subsidiaries Foreign Non-Guarantor Subsidiaries Consolidating Adjustments Total Revenues Service revenues $ — $ 628,408 $ 190,657 $ (17,718 ) $ 801,347 Product revenues — 115,335 22,444 (2,898 ) 134,881 Total revenues — 743,743 213,101 (20,616 ) 936,228 Cost of revenues (exclusive of items shown separately below) Service cost of revenues — 415,111 147,477 (17,718 ) 544,870 Product cost of revenues — 98,258 12,458 (2,898 ) 107,818 Total cost of revenues — 513,369 159,935 (20,616 ) 652,688 Selling, general and administrative expenses 25 93,677 26,716 — 120,418 Accretion of environmental liabilities — 2,287 312 — 2,599 Depreciation and amortization — 44,602 23,171 — 67,773 Goodwill impairment charge — 4,164 27,828 — 31,992 (Loss) income from operations (25 ) 85,644 (24,861 ) — 60,758 Other income (expense) — 168 (828 ) — (660 ) Interest (expense) income (19,652 ) 324 79 — (19,249 ) Equity in earnings of subsidiaries, net of taxes 22,201 (29,550 ) — 7,349 — Intercompany interest income (expense) — 6,036 (6,036 ) — — Income (loss) before (benefit) provision for income taxes 2,524 62,622 (31,646 ) 7,349 40,849 (Benefit) provision for income taxes (7,871 ) 40,421 (2,096 ) — 30,454 Net income (loss) 10,395 22,201 (29,550 ) 7,349 10,395 Other comprehensive income 12,231 12,231 8,061 (20,292 ) 12,231 Comprehensive income (loss) $ 22,626 $ 34,432 $ (21,489 ) $ (12,943 ) $ 22,626 Following is the consolidating statement of operations for the six months ended June 30, 2016 (in thousands): Clean Harbors, Inc. U.S. Guarantor Subsidiaries Foreign Non-Guarantor Subsidiaries Consolidating Adjustments Total Revenues Service revenues $ — $ 884,490 $ 253,436 $ (23,133 ) $ 1,114,793 Product revenues — 185,236 38,104 (4,540 ) 218,800 Total revenues — 1,069,726 291,540 (27,673 ) 1,333,593 Cost of revenues (exclusive of items shown separately below) Service cost of revenues (587 ) 575,307 211,083 (23,133 ) 762,670 Product cost of revenues — 158,462 27,689 (4,540 ) 181,611 Total cost of revenues (587 ) 733,769 238,772 (27,673 ) 944,281 Selling, general and administrative expenses 61 164,537 46,949 — 211,547 Accretion of environmental liabilities — 4,603 450 — 5,053 Depreciation and amortization — 99,391 42,904 — 142,295 Income (loss) from operations 526 67,426 (37,535 ) — 30,417 Other income (expense) — 312 (851 ) — (539 ) Interest (expense) income (43,105 ) 2,395 83 — (40,627 ) Equity in earnings of subsidiaries, net of taxes 8,642 (35,690 ) — 27,048 — Intercompany interest income (expense) — 10,656 (10,656 ) — — (Loss) income before (benefit) provision for income taxes (33,937 ) 45,099 (48,959 ) 27,048 (10,749 ) (Benefit) provision for income taxes (17,032 ) 36,457 (13,269 ) — 6,156 Net (loss) income (16,905 ) 8,642 (35,690 ) 27,048 (16,905 ) Other comprehensive gain 44,659 44,659 28,330 (72,989 ) 44,659 Comprehensive gain (loss) $ 27,754 $ 53,301 $ (7,360 ) $ (45,941 ) $ 27,754 Following is the consolidating statement of operations for the six months ended June 30, 2015 (in thousands): Clean Harbors, Inc. U.S. Guarantor Subsidiaries Foreign Non-Guarantor Subsidiaries Consolidating Adjustments Total Revenues Service revenues $ — $ 1,046,925 $ 384,110 $ (33,358 ) $ 1,397,677 Product revenues — 231,871 45,648 (6,469 ) 271,050 Total revenues — 1,278,796 429,758 (39,827 ) 1,668,727 Cost of revenues (exclusive of items shown separately below) Service cost of revenues — 692,713 301,905 (33,358 ) 961,260 Product cost of revenues — 213,544 30,860 (6,469 ) 237,935 Total cost of revenues — 906,257 332,765 (39,827 ) 1,199,195 Selling, general and administrative expenses 50 174,661 53,422 — 228,133 Accretion of environmental liabilities — 4,593 625 — 5,218 Depreciation and amortization — 90,403 45,726 — 136,129 Goodwill impairment charge — 4,164 27,828 — 31,992 (Loss) income from operations (50 ) 98,718 (30,608 ) — 68,060 Other income (expense) — 279 (530 ) — (251 ) Interest (expense) income (39,291 ) 502 102 — (38,687 ) Equity in earnings of subsidiaries, net of taxes 26,910 (36,579 ) — 9,669 — Intercompany interest income (expense) — 12,013 (12,013 ) — — (Loss) income before (benefit) provision for income taxes (12,431 ) 74,933 (43,049 ) 9,669 29,122 (Benefit) provision for income taxes (15,737 ) 48,023 (6,470 ) — 25,816 Net income (loss) 3,306 26,910 (36,579 ) 9,669 3,306 Other comprehensive loss (65,172 ) (65,172 ) (42,574 ) 107,746 (65,172 ) Comprehensive loss $ (61,866 ) $ (38,262 ) $ (79,153 ) $ 117,415 $ (61,866 ) Following is the condensed consolidating statement of cash flows for the six months ended June 30, 2016 (in thousands): Clean Harbors, Inc. U.S. Guarantor Subsidiaries Foreign Non-Guarantor Subsidiaries Consolidating Adjustments Total Net cash from (used in) operating activities $ 42,990 $ 65,860 $ 11,201 $ — $ 120,051 Cash flows used in investing activities: Additions to property, plant and equipment — (105,175 ) (18,354 ) — (123,529 ) Proceeds from sales of fixed assets — 694 1,974 — 2,668 Acquisitions, net of cash acquired — (48,989 ) (10,000 ) — (58,989 ) Costs to obtain or renew permits — (908 ) (65 ) — (973 ) Purchase of available-for-sale securities (102 ) — (496 ) — (598 ) Investment in subsidiaries (250,625 ) — — 250,625 — Intercompany — (11,827 ) — 11,827 — Net cash used in investing activities (250,727 ) (166,205 ) (26,941 ) 262,452 (181,421 ) Cash flows from (used in) financing activities: Change in uncashed checks — (9,266 ) (1,756 ) — (11,022 ) Exercise of stock options 184 — — — 184 Issuance of restricted shares, net of shares remitted (1,879 ) — — — (1,879 ) Repurchases of common stock (10,134 ) — — — (10,134 ) Excess tax benefit of stock-based compensation 2 — — — 2 Deferred financing costs paid (2,614 ) — — — (2,614 ) Issuance of senior secured notes, including premium 250,625 250,625 — (250,625 ) 250,625 Intercompany 11,827 — — (11,827 ) — Net cash from (used in) financing activities 248,011 241,359 (1,756 ) (262,452 ) 225,162 Effect of exchange rate change on cash — — 4,423 — 4,423 Increase (decrease) in cash and cash equivalents 40,274 141,014 (13,073 ) — 168,215 Cash and cash equivalents, beginning of period 11,017 83,479 90,212 — 184,708 Cash and cash equivalents, end of period $ 51,291 $ 224,493 $ 77,139 $ — $ 352,923 Following is the condensed consolidating statement of cash flows for the six months ended June 30, 2015 (in thousands): Clean Harbors, Inc. U.S. Guarantor Subsidiaries Foreign Non-Guarantor Subsidiaries Consolidating Adjustments Total Net cash from operating activities $ 4,913 $ 158,241 $ 30,661 $ — $ 193,815 Cash flows used in investing activities: Additions to property, plant and equipment — (104,068 ) (20,077 ) — (124,145 ) Proceeds from sale of fixed assets — 368 2,278 — 2,646 Acquisitions, net of cash acquired — (79,610 ) — — (79,610 ) Costs to obtain or renew permits — (4 ) (3,084 ) — (3,088 ) Intercompany — (31,830 ) — 31,830 — Net cash used in investing activities — (215,144 ) (20,883 ) 31,830 (204,197 ) Cash flows used in financing activities: Change in uncashed checks — (16,474 ) (5,686 ) — (22,160 ) Proceeds from exercise of stock options 397 — — — 397 Issuance of restricted shares, net of shares remitted (1,837 ) — — — (1,837 ) Repurchases of common stock (32,203 ) — — — (32,203 ) Excess tax benefit of stock-based compensation 102 — — — 102 Payments of capital leases — (193 ) (278 ) — (471 ) Intercompany 31,830 — — (31,830 ) — Net cash used in financing activities (1,711 ) (16,667 ) (5,964 ) (31,830 ) (56,172 ) Effect of exchange rate change on cash — — (6,704 ) — (6,704 ) Decrease in cash and cash equivalents 3,202 (73,570 ) (2,890 ) — (73,258 ) Cash and cash equivalents, beginning of period 1,006 154,147 91,726 — 246,879 Cash and cash equivalents, end of period $ 4,208 $ 80,577 $ 88,836 $ — $ 173,621 |