GUARANTOR AND NON-GUARANTOR SUBSIDIARIES FINANCIAL INFORMATION | 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”). Following is the condensed consolidating balance sheet at June 30, 2017 (in thousands): Clean Harbors, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating Adjustments Total Assets: Cash and cash equivalents $ 51,391 $ 303,996 $ 90,979 $ — $ 446,366 Intercompany receivables 220,885 314,705 38,312 (573,902 ) — Accounts receivables, net — 419,338 93,037 — 512,375 Other current assets 897 222,283 59,658 (6,845 ) 275,993 Property, plant and equipment, net — 1,198,630 403,823 — 1,602,453 Investments in subsidiaries 2,893,232 570,837 — (3,464,069 ) — Intercompany debt receivable — 89,441 24,701 (114,142 ) — Goodwill — 416,775 56,044 — 472,819 Permits and other intangibles, net — 421,793 61,035 — 482,828 Other long-term assets 2,363 7,555 4,598 (1,068 ) 13,448 Total assets $ 3,168,768 $ 3,965,353 $ 832,187 $ (4,160,026 ) $ 3,806,282 Liabilities and Stockholders’ Equity: Current liabilities $ 123,095 $ 375,919 $ 127,131 $ (6,845 ) $ 619,300 Intercompany payables 314,530 257,453 1,919 (573,902 ) — Closure, post-closure and remedial liabilities, net — 145,777 16,475 — 162,252 Long-term obligations 1,626,505 — — — 1,626,505 Intercompany debt payable 3,701 21,000 89,441 (114,142 ) — Other long-term liabilities — 278,833 19,523 (1,068 ) 297,288 Total liabilities 2,067,831 1,078,982 254,489 (695,957 ) 2,705,345 Stockholders’ equity 1,100,937 2,886,371 577,698 (3,464,069 ) 1,100,937 Total liabilities and stockholders’ equity $ 3,168,768 $ 3,965,353 $ 832,187 $ (4,160,026 ) $ 3,806,282 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 Following is the consolidating statement of operations for the three months ended June 30, 2017 (in thousands): Clean Harbors, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating Adjustments Total Revenues Service revenues $ — $ 474,801 $ 147,924 $ (11,785 ) $ 610,940 Product revenues — 125,859 18,730 (2,741 ) 141,848 Total revenues — 600,660 166,654 (14,526 ) 752,788 Cost of revenues (exclusive of items shown separately below) Service cost of revenues — 306,960 117,181 (11,785 ) 412,356 Product cost of revenues — 98,645 11,543 (2,741 ) 107,447 Total cost of revenues — 405,605 128,724 (14,526 ) 519,803 Selling, general and administrative expenses 27 92,504 19,763 — 112,294 Accretion of environmental liabilities — 2,181 235 — 2,416 Depreciation and amortization — 51,937 19,594 — 71,531 (Loss) income from operations (27 ) 48,433 (1,662 ) — 46,744 Other expense (76 ) (406 ) (351 ) — (833 ) Loss on early extinguishment of debt (6,045 ) — — — (6,045 ) Gain on sale of business — 31,722 — — 31,722 Interest (expense) income (22,614 ) 240 (118 ) — (22,492 ) Equity in earnings of subsidiaries, net of taxes 43,167 (5,332 ) — (37,835 ) — Intercompany interest income (expense) — 1,268 (1,268 ) — — Income (loss) before (benefit) provision for income taxes 14,405 75,925 (3,399 ) (37,835 ) 49,096 (Benefit) provision for income taxes (11,475 ) 31,981 2,710 — 23,216 Net income (loss) 25,880 43,944 (6,109 ) (37,835 ) 25,880 Other comprehensive income 15,098 15,098 12,837 (27,935 ) 15,098 Comprehensive income $ 40,978 $ 59,042 $ 6,728 $ (65,770 ) $ 40,978 Following is the consolidating statement of operations for the three months ended June 30, 2016 (in thousands): Clean Harbors, Inc. Guarantor Subsidiaries 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 income (expense) — 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 six months ended June 30, 2017 (in thousands): Clean Harbors, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating Adjustments Total Revenues Service revenues $ — $ 918,106 $ 278,995 $ (25,947 ) $ 1,171,154 Product revenues — 242,509 34,061 (5,995 ) 270,575 Total revenues — 1,160,615 313,056 (31,942 ) 1,441,729 Cost of revenues (exclusive of items shown separately below) Service cost of revenues — 601,105 228,285 (25,947 ) 803,443 Product cost of revenues — 195,150 23,790 (5,995 ) 212,945 Total cost of revenues — 796,255 252,075 (31,942 ) 1,016,388 Selling, general and administrative expenses 51 184,675 39,789 — 224,515 Accretion of environmental liabilities — 4,236 470 — 4,706 Depreciation and amortization — 103,837 40,106 — 143,943 (Loss) income from operations (51 ) 71,612 (19,384 ) — 52,177 Other expense (222 ) (1,795 ) (365 ) — (2,382 ) Loss on early extinguishment of debt (6,045 ) — — — (6,045 ) Gain on sale of business — 31,722 — — 31,722 Interest (expense) income (45,273 ) 359 (154 ) — (45,068 ) Equity in earnings of subsidiaries, net of taxes 35,530 (27,156 ) — (8,374 ) — Intercompany interest income (expense) — 2,565 (2,565 ) — — (Loss) income before (benefit) provision for income taxes (16,061 ) 77,307 (22,468 ) (8,374 ) 30,404 (Benefit) provision for income taxes (20,548 ) 41,618 4,847 — 25,917 Net income (loss) 4,487 35,689 (27,315 ) (8,374 ) 4,487 Other comprehensive income 21,149 21,149 17,869 (39,018 ) 21,149 Comprehensive income (loss) $ 25,636 $ 56,838 $ (9,446 ) $ (47,392 ) $ 25,636 Following is the consolidating statement of operations for the six months ended June 30, 2016 (in thousands): Clean Harbors, Inc. Guarantor Subsidiaries 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 income 44,659 44,659 28,330 (72,989 ) 44,659 Comprehensive income (loss) $ 27,754 $ 53,301 $ (7,360 ) $ (45,941 ) $ 27,754 Following is the condensed consolidating statement of cash flows for the six months ended June 30, 2017 (in thousands): Clean Harbors, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating Adjustments Total Net cash (used in) from operating activities $ (93,808 ) $ 206,496 $ 4,243 $ — $ 116,931 Cash flows from (used in) investing activities: Additions to property, plant and equipment — (75,152 ) (13,590 ) — (88,742 ) Proceeds from sales of fixed assets — 984 1,137 — 2,121 Acquisitions, net of cash acquired — (9,277 ) — — (9,277 ) Proceeds on sale of businesses, net of transactional costs — 46,210 181 — 46,391 Additions to intangible assets, including costs to obtain or renew permits — (888 ) (351 ) — (1,239 ) Proceeds from sale of investments 376 — — — 376 Intercompany — (14,343 ) — 14,343 — Net cash from (used in) investing activities 376 (52,466 ) (12,623 ) 14,343 (50,370 ) Cash flows from (used in) financing activities: Change in uncashed checks — (5,977 ) (2,384 ) — (8,361 ) Proceeds from exercise of stock options 46 — — — 46 Issuance of restricted shares, net of shares remitted (2,132 ) — — — (2,132 ) Repurchases of common stock (12,257 ) — — — (12,257 ) Deferred financing costs paid (4,727 ) — — — (4,727 ) Premiums paid on early extinguishment of debt (4,665 ) — — — (4,665 ) Principal payment on debt (296,202 ) — — — (296,202 ) Issuance of senior secured notes, net of discount 399,000 — — — 399,000 Intercompany 14,343 — — (14,343 ) — Net cash from (used in) financing activities 93,406 (5,977 ) (2,384 ) (14,343 ) 70,702 Effect of exchange rate change on cash — — 2,106 — 2,106 (Decrease) increase in cash and cash equivalents (26 ) 148,053 (8,658 ) — 139,369 Cash and cash equivalents, beginning of period 51,417 155,943 99,637 — 306,997 Cash and cash equivalents, end of period $ 51,391 $ 303,996 $ 90,979 $ — $ 446,366 Following is the condensed consolidating statement of cash flows for the six months ended June 30, 2016 (in thousands): Clean Harbors, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating Adjustments Total Net cash from 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 ) Additions to intangible assets, including costs to obtain or renew permits — (908 ) (65 ) — (973 ) Purchases of available-for-sale securities (102 ) — (496 ) — (598 ) Intercompany — (11,827 ) — 11,827 — Investment in subsidiaries (250,625 ) — — 250,625 — 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 ) Proceeds from 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 unsecured 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 |