Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2017 | May 04, 2017 | |
Document Document And Entity Information [Abstract] | ||
Entity Registrant Name | STERICYCLE INC | |
Entity Central Index Key | 861,878 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | SRCL | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 85,268,109 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Current Assets: | ||
Cash and cash equivalents | $ 47,023 | $ 44,189 |
Accounts receivable, less allowance for doubtful accounts of $48,181 in 2017 and $49,645 in 2016 | 615,348 | 634,902 |
Prepaid expenses | 51,926 | 46,214 |
Assets held for sale | 9,628 | 9,134 |
Other current assets | 35,999 | 39,179 |
Total Current Assets | 759,924 | 773,618 |
Property, plant and equipment, less accumulated depreciation of $522,053 in 2017 and $495,215 in 2016 | 725,420 | 723,894 |
Goodwill | 3,622,793 | 3,591,020 |
Intangible assets, less accumulated amortization of $302,336 in 2017 and $271,568 in 2016 | 1,857,209 | 1,861,973 |
Other assets | 31,510 | 29,556 |
Total Assets | 6,996,856 | 6,980,061 |
Current Liabilities: | ||
Current portion of long-term debt | 96,301 | 72,822 |
Accounts payable | 133,119 | 152,881 |
Accrued liabilities | 243,871 | 228,526 |
Deferred revenues | 17,974 | 17,902 |
Liabilities held for sale | 3,172 | 2,858 |
Other current liabilities | 85,124 | 67,864 |
Total Current Liabilities | 579,561 | 542,853 |
Long-term debt, net | 2,767,035 | 2,877,315 |
Deferred income taxes | 657,865 | 645,371 |
Other liabilities | 99,914 | 98,136 |
Equity: | ||
Preferred stock (par value $0.01 per share, 1,000,000 shares authorized), mandatory convertible preferred stock, Series A, 711,930 issued and outstanding in 2017 and 726,500 issued and outstanding in 2016 | 7 | 7 |
Common stock (par value $.01 per share, 120,000,000 shares authorized, 85,261,769 issued and outstanding in 2017 and 85,152,700 issued and outstanding in 2016) | 853 | 852 |
Additional paid-in capital | 1,161,983 | 1,166,457 |
Accumulated other comprehensive loss | (341,119) | (367,643) |
Retained earnings | 2,059,452 | 2,006,064 |
Total Stericycle, Inc.’s Equity | 2,881,176 | 2,805,737 |
Noncontrolling interests | 11,305 | 10,649 |
Total Equity | 2,892,481 | 2,816,386 |
Total Liabilities and Equity | $ 6,996,856 | $ 6,980,061 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Statement Of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ 48,181 | $ 49,645 |
Property, plant and equipment, accumulated depreciation | 522,053 | 495,215 |
Intangible assets, accumulated amortization | $ 302,336 | $ 271,568 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, authorized (in shares) | 1,000,000 | 1,000,000 |
Preferred stock, issued (in shares) | 711,930 | 726,500 |
Preferred stock, outstanding (in shares) | 711,930 | 726,500 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized (in shares) | 120,000,000 | 120,000,000 |
Common stock, issued (in shares) | 85,261,769 | 85,152,700 |
Common stock, outstanding (in shares) | 85,261,769 | 85,152,700 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Income Statement [Abstract] | ||
Revenues | $ 892,399 | $ 874,181 |
Costs and Expenses: | ||
Cost of revenues (exclusive of depreciation shown below) | 500,830 | 483,751 |
Depreciation - cost of revenues | 22,907 | 23,850 |
Selling, general and administrative expenses (“SG&A” - exclusive of depreciation and amortization shown below) | 218,841 | 201,093 |
Depreciation – SG&A | 6,183 | 6,290 |
Intangible amortization – SG&A | 29,089 | 18,274 |
Total Costs and Expenses | 777,850 | 733,258 |
Income from Operations | 114,549 | 140,923 |
Other Income (Expense): | ||
Interest income | 74 | 21 |
Interest expense | (23,374) | (24,062) |
Other expense, net | (1,544) | (1,251) |
Total Other Expense | (24,844) | (25,292) |
Income Before Income Taxes | 89,705 | 115,631 |
Income tax expense | 31,148 | 38,036 |
Net Income | 58,557 | 77,595 |
Less: net income attributable to noncontrolling interests | 368 | 809 |
Net Income Attributable to Stericycle, Inc. | 58,189 | 76,786 |
Mandatory convertible preferred stock dividend | 9,364 | 10,106 |
Gain on repurchase of preferred stock | (4,563) | 0 |
Net Income Attributable to Stericycle, Inc. Common Shareholders | $ 53,388 | $ 66,680 |
Earnings Per Common Share Attributable to Stericycle, Inc. Common Shareholders: | ||
Basic | $ 0.63 | $ 0.79 |
Diluted | $ 0.62 | $ 0.78 |
Weighted Average Number of Common Shares Outstanding: | ||
Basic | 85,220,228 | 84,705,000 |
Diluted | 85,572,409 | 85,845,501 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Statement Of Income And Comprehensive Income [Abstract] | ||
Net Income | $ 58,557 | $ 77,595 |
Other Comprehensive Income: | ||
Foreign currency translation adjustments | 26,525 | 17,164 |
Amortization of cash flow hedge into income, net of tax expense ($171 and $172 for the three months ended March 31, 2017 and 2016, respectively) | 266 | 269 |
Change in fair value of cash flow hedge, net of tax expense ($8 and $89 for the three months ended March 31, 2017 and 2016, respectively) | 21 | 242 |
Total Other Comprehensive Income | 26,812 | 17,675 |
Comprehensive Income | 85,369 | 95,270 |
Less: comprehensive income attributable to noncontrolling interests | 656 | 871 |
Comprehensive Income Attributable to Stericycle, Inc. Common Shareholders | $ 84,713 | $ 94,399 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Statement Of Income And Comprehensive Income [Abstract] | ||
Amortization of cash flow hedge into income, tax expense | $ 171 | $ 172 |
Change in fair value of cash flow hedge, tax expense | $ 8 | $ 89 |
CONDENSED CONSOLIDATED STATEME7
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
OPERATING ACTIVITIES: | ||
Net Income | $ 58,557 | $ 77,595 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Stock-based compensation expense | 5,999 | 6,105 |
Depreciation | 29,090 | 30,140 |
Intangible amortization | 29,089 | 18,274 |
Deferred income taxes | 8,722 | 6,932 |
Other, net | 3,020 | (2,644) |
Changes in operating assets and liabilities, net of effect of acquisitions and divestitures: | ||
Accounts receivable | 25,546 | (3,918) |
Accounts payable | (15,162) | (15,203) |
Accrued liabilities | 14,138 | 21,151 |
Other assets and liabilities | 16,321 | 18,517 |
Net cash provided by operating activities | 175,320 | 156,949 |
INVESTING ACTIVITIES: | ||
Payments for acquisitions, net of cash acquired | (16,871) | (24,884) |
Capital expenditures | (33,136) | (34,185) |
Proceeds from sale of property and equipment | 250 | 766 |
Other | 7 | |
Net cash used in investing activities | (49,757) | (58,296) |
FINANCING ACTIVITIES: | ||
Repayments of long-term debt and other obligations | (12,779) | (6,879) |
Proceeds from foreign bank debt | 301 | 15,607 |
Repayments of foreign bank debt | (2,936) | (18,721) |
Repayment of term loan | (30,000) | (171,000) |
Proceeds from senior credit facility | 383,929 | 457,959 |
Repayments of senior credit facility | (446,248) | (353,520) |
Payments of capital lease obligations | (940) | (1,381) |
Payments for repurchase of mandatory convertible preferred stock | (9,570) | |
Payments for repurchase of common stock | (37,693) | |
Proceeds from issuance of common stock | 3,503 | 22,310 |
Dividends paid on mandatory convertible preferred stock | (9,364) | (10,106) |
Payments to noncontrolling interests | (4,997) | |
Net cash used in financing activities | (124,104) | (108,421) |
Effect of exchange rate changes on cash and cash equivalents | 1,375 | (211) |
Net change in cash and cash equivalents | 2,834 | (9,979) |
Cash and cash equivalents at beginning of period | 44,189 | 55,634 |
Cash and cash equivalents at end of period | 47,023 | 45,655 |
NON-CASH ACTIVITIES: | ||
Issuances of obligations for acquisitions | $ 13,945 | $ 13,013 |
CONDENSED CONSOLIDATED STATEME8
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - USD ($) shares in Thousands, $ in Thousands | Total | Preferred Stock | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Noncontrolling Interests |
Beginning Balance (in shares) at Dec. 31, 2015 | 770 | 84,853 | |||||
Beginning Balance at Dec. 31, 2015 | $ 2,747,838 | $ 8 | $ 849 | $ 1,143,020 | $ 1,868,645 | $ (282,631) | $ 17,947 |
Net Income | 207,899 | 206,359 | 1,540 | ||||
Currency translation adjustment | (86,575) | (86,340) | (235) | ||||
Change in qualifying cash flow hedge, net of tax | 1,328 | 1,328 | |||||
Issuance of common stock for stock-based compensation awards and employee stock purchases | 661 | ||||||
Issuance of common stock for stock-based compensation awards and employee stock purchases | 44,769 | $ 6 | 44,763 | ||||
Purchase and cancellation of treasury stock (in shares) | (361) | ||||||
Purchase and cancellation of treasury stock | (40,814) | $ (3) | (40,811) | ||||
Purchase and cancellation of convertible preferred stock (in shares) | (44) | ||||||
Purchase and cancellation of convertible preferred stock | (30,910) | $ (1) | (42,194) | 11,285 | |||
Preferred stock dividend | (39,414) | (39,414) | |||||
Stock-based compensation expense | 20,455 | 20,455 | |||||
Reduction to noncontrolling interests due to additional ownership | (8,190) | 413 | (8,603) | ||||
Ending Balance (in shares) at Dec. 31, 2016 | 726 | 85,153 | |||||
Ending Balance at Dec. 31, 2016 | 2,816,386 | $ 7 | $ 852 | 1,166,457 | 2,006,064 | (367,643) | 10,649 |
Net Income | 58,557 | 58,189 | 368 | ||||
Currency translation adjustment | 26,525 | 26,237 | 288 | ||||
Change in qualifying cash flow hedge, net of tax | 287 | 287 | |||||
Issuance of common stock for stock-based compensation awards and employee stock purchases | 109 | ||||||
Issuance of common stock for stock-based compensation awards and employee stock purchases | 3,661 | $ 1 | 3,660 | ||||
Purchase and cancellation of convertible preferred stock (in shares) | (14) | ||||||
Purchase and cancellation of convertible preferred stock | (9,570) | (14,133) | 4,563 | ||||
Preferred stock dividend | (9,364) | (9,364) | |||||
Stock-based compensation expense | 5,999 | 5,999 | |||||
Ending Balance (in shares) at Mar. 31, 2017 | 712 | 85,262 | |||||
Ending Balance at Mar. 31, 2017 | $ 2,892,481 | $ 7 | $ 853 | $ 1,161,983 | $ 2,059,452 | $ (341,119) | $ 11,305 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2017 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | NOTE 1 — BASIS OF PRESENTATION The accompanying condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with United States Generally Accepted Accounting Principles (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations. However, the Company believes the disclosures included in the accompanying condensed consolidated financial statements are adequate to make the information presented not misleading. In our opinion, all adjustments necessary for a fair presentation for the periods presented have been reflected and are of a normal recurring nature. These condensed consolidated financial statements should be read in conjunction with the Stericycle, Inc. and Subsidiaries consolidated financial statements and notes thereto, as filed with our Annual Report on Form 10-K for the year ended December 31, 2016. The results of operations for the three months ended March 31, 2017 are not necessarily indicative of the results that may be achieved for the entire year ending December 31, 2017. There were no material changes in the Company’s significant accounting policies since the filing of its 2016 Form 10-K. As discussed in the 2016 Form 10-K, the preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the amount of reported assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and revenues and expenses during the periods reported. Actual results may differ from those estimates. Certain amounts in previously issued financial statements have been reclassified to conform to the current period presentation. During the three months ended March 31, 2017, we presented certain rent, utility and depreciation expenses in cost of revenues that had historically been recorded in selling, general and administrative expense (“SG&A”). We have reclassified $2.6 million of which $1.4 million was for rent and utility expenses and $1.2 million was for depreciation expenses from SG&A to cost of revenues for the three months ended March 31, 2016 to conform to the current period presentation. |
NEW ACCOUNTING STANDARDS
NEW ACCOUNTING STANDARDS | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Changes And Error Corrections [Abstract] | |
NEW ACCOUNTING STANDARDS | NOTE 2 – NEW ACCOUNTING STANDARDS Adoption of New Accounting Standards Intangibles – Goodwill and Other – Simplifying the Test for Goodwill Impairment Effective January 1, 2017, the Company early adopted the guidance in Accounting Standards Update (“ASU”) 2017-04, “Intangibles – Goodwill and Other (Topic 350) – Simplifying the Test for Goodwill Impairment.” Statement of Cash Flows Effective January 1, 2017, the Company early adopted the guidance in ASU No. 2016-15 “Statement of Cash Flows” (Topic 230) Accounting Standards Issued But Not Yet Adopted Revenue From Contracts With Customers In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers" (Topic 606) Leases In February 2016, the FASB issued ASU No. 2016-02, “ Leases” (Topic 842) Intra-Entity Transfers of Assets Other Than Inventory In October 2016, the FASB issued ASU No. 2016-16, “Intra-Entity Transfers of Assets Other Than Inventory. annual |
ACQUISITIONS, DIVESTITURES, AND
ACQUISITIONS, DIVESTITURES, AND ASSETS HELD FOR SALE | 3 Months Ended |
Mar. 31, 2017 | |
Acquisitions Divestitures And Assets Held For Sale [Abstract] | |
ACQUISITIONS, DIVESTITURES, AND ASSETS HELD FOR SALE | NOTE 3 – ACQUISITIONS, DIVESTITURES, AND ASSETS HELD FOR SALE Acquisitions During the three months ended March 31, 2017, we completed thirteen acquisitions. Domestically and in Canada, we acquired 100% of the stock of one and selected assets and liabilities of seven secure information destruction businesses, Internationally (exclusive of Canada), we acquired selected assets and liabilities of one regulated waste business The acquisitions were all considered to be business combinations. The following table summarizes the locations of our acquisitions for the three months ended March 31, 2017: Acquisition Locations 2017 United States 8 Canada 1 Netherlands 2 Portugal 1 Spain 1 Total 13 The following table summarizes the acquisition date fair value of consideration transferred for the current period acquisitions and the adjustments to the consideration transferred for prior year acquisitions during the three months ended March 31, 2017: In thousands Three Months Ended March 31, 2017 Current Period Acquisitions Adjustments to Prior Year Acquisitions Total Cash $ 16,833 $ 38 $ 16,871 Promissory notes 13,104 (213 ) 12,891 Deferred consideration 1,001 — 1,001 Contingent consideration 53 — 53 Total purchase price $ 30,991 $ (175 ) $ 30,816 For financial reporting purposes, our acquisitions were accounted for using the acquisition method of accounting. These acquisitions resulted in the recognition of goodwill in our financial statements reflecting the premium paid to acquire businesses that we believe are complementary to our existing operations and fit our growth strategy. During the three months ended March 31, 2017, we recognized an increase in goodwill of $19.1 million related to current period acquisitions, excluding the effect of foreign currency translation. Approximately $16.9 million of the goodwill recognized from current period acquisitions will be deductible for income taxes. During the three months ended March 31, 2017, we recognized an increase of $11.5 million in the estimated fair value of acquired customer relationships for the current period acquisitions, excluding the effect of foreign currency translation, with amortizable lives of 10 to 20 years. The fair value of consideration transferred in a business combination is allocated to the tangible and intangible assets assumed at the acquisition date, with the remaining unallocated amount recorded as goodwill. The allocations of the acquisition price for recent acquisitions have been prepared on a preliminary basis, pending completion of certain intangible asset valuations and finalization of the respective opening balance sheets. The following table summarizes the preliminary purchase price allocation for current period acquisitions and various adjustments to our prior year acquisitions during the three months ended March 31, 2017: In thousands Three Months Ended March 31, 2017 Current Period Acquisitions Adjustments to Prior Year Acquisitions Total Fixed assets $ 517 $ (675 ) $ (158 ) Intangibles 11,515 2,124 13,639 Goodwill 19,107 (216 ) 18,891 Net other assets/(liabilities) 166 (10 ) 156 Net deferred tax liabilities (314 ) (1,398 ) (1,712 ) Total purchase price allocation $ 30,991 $ (175 ) $ 30,816 During the three months ended March 31, 2017 and 2016, the Company incurred $19.8 million Divestitures There were no divestitures during the three months ended March 31, 2017 and 2016. Assets and Liabilities Held for Sale As of March 31, 2017, we have certain of our international operations classified as held for sale. No material changes to the fair value of these assets and liabilities held for sale were recorded during the three months ended March 31, 2017. Fair value of these assets and liabilities held for sale is subject to changes in estimates as a result of evolving market conditions, negotiations, and other matters. The assets and liabilities of the disposal groups are presented in Assets held for sale and Liabilities held for sale in the Condensed Consolidated Balance Sheet. The following table presents information related to the major classes of assets and liabilities that were classified as held for sale in the Condensed Consolidated Balance Sheet at March 31, 2017: In thousands Accounts receivable $ 2,756 Inventory 226 Prepaid expenses 284 Fixed assets 5,189 Goodwill 63 Intangibles 765 Other assets 345 Assets held for sale $ 9,628 Current portion of long-term debt $ 1,010 Accounts payable 984 Accrued liabilities 843 Other current liabilities 1 Deferred income taxes 334 Liabilities held for sale $ 3,172 |
RESTRUCTURING, CONTRACT EXIT AN
RESTRUCTURING, CONTRACT EXIT AND PLANT CONVERSION EXPENSES | 3 Months Ended |
Mar. 31, 2017 | |
Restructuring And Related Activities [Abstract] | |
RESTRUCTURING, CONTRACT EXIT AND PLANT CONVERSION EXPENSES | NOTE 4 – RESTRUCTURING, CONTRACT EXIT AND PLANT CONVERSION EXPENSES During the first quarter of 2017, management began executing a realignment of our operations to reduce labor redundancies and facility costs in our Latin American countries. Various operating locations, primarily in Brazil, have been consolidated to increase efficiency while reducing headcount. For the three months ended March 31, 2017 $0.6 million of restructuring expenses, which are reflected as part of SG&A in our Condensed Consolidated Statements of Income For the three months ended March 31, 2017, the Company recorded $1.4 million of expenses to exit certain of our patient transportation services contracts in the UK which are reflected as part of SG&A in our Condensed Consolidated Statements of Income For the three months ended March 31, 2017, the Company recorded $0.9 million of plant conversion expenses for the impairment of an operating permit and other costs due to rationalizing our operations which are reflected as part of SG&A in our Condensed Consolidated Statements of Income |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 5 – INCOME TAXES We file income tax returns in the U.S., in various states and in certain foreign jurisdictions. The Company has recorded liabilities to cover certain uncertain tax positions. Such uncertain tax positions relate to additional taxes that the Company may be required to pay in various tax jurisdictions. During the course of examinations by various taxing authorities, proposed adjustments may be asserted. The Company evaluates such items on a case-by-case basis and adjusts the liability for uncertain tax positions as deemed necessary. During the three months ended March 31, 2017, we released uncertain tax positions (“UTPs”) in the amount of $1.2 million and there were no other material changes to our liabilities related to previous or current UTPs. The effective tax rates for the three months ended March 31, 2017 and 2016 were 34.7% and 32.9%, respectively. The increase in the current period tax rate, when compared to the prior year, is primarily related to higher discrete tax benefits recognized in 2016, as well as a higher proportion of pre-tax income in 2017 in the United States which has a higher statutory tax rate, compared to international operations. |
STOCK BASED COMPENSATION
STOCK BASED COMPENSATION | 3 Months Ended |
Mar. 31, 2017 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
STOCK BASED COMPENSATION | NOTE 6 – STOCK-BASED COMPENSATION At March 31, 2017, we had the following incentive stock plans: • the 2014 Incentive Stock Plan, which our stockholders approved in May 2014; • the 2011 Incentive Stock Plan, which our stockholders approved in May 2011; • the 2008 Incentive Stock Plan, which our stockholders approved in May 2008; • the 2005 Incentive Stock Plan, which our stockholders approved in April 2005; • the 2000 Non-statutory Stock Option Plan, which expired in February 2010; • the Employee Stock Purchase Plan ("ESPP"), which our stockholders approved in May 2001. Stock Based Compensation Expense: The following table presents the total stock-based compensation expense resulting from stock option awards, restricted stock units (“RSUs”), performance-based restricted stock units (“PSUs”), and the ESPP included in the Condensed Consolidated Statements of Income: In thousands Three Months March 31, 2017 2016 Cost of revenues - stock option plan $ 13 $ 15 Selling, general and administrative - stock option plan 4,080 4,752 Selling, general and administrative - RSUs 1,401 559 Selling, general and administrative - PSUs 188 — Selling, general and administrative - ESPP 317 779 Total pre-tax expense $ 5,999 $ 6,105 Stock Options: Options granted to directors vest in one year and options granted to officers and employees generally vest over five years. Expense related to options with graded vesting is recognized using the straight-line method over the vesting period. Stock option activity for the three months ended March 31, 2017, is summarized as follows: Number of Options Weighted Average Exercise Price per Share Weighted Average Remaining Contractual Life Total Aggregate Intrinsic Value (in years) (in thousands) Outstanding as of January 1, 2017 5,468,732 $ 96.90 Granted 425,599 83.19 Exercised (90,856 ) 48.52 Forfeited (35,755 ) 113.59 Cancelled or expired (44,687 ) 98.31 Outstanding as of March 31, 2017 5,723,033 $ 96.53 5.28 $ 27,811 Exercisable as of March 31, 2017 3,598,309 $ 89.19 4.52 $ 27,740 At March 31, 2017, there was $41.2 million of total unrecognized compensation expense related to stock options, which The following table sets forth the intrinsic value of options exercised for the three months ended March 31: In thousands Three Months Ended March 31, 2017 2016 Total intrinsic value of options exercised $ 2,908 $ 13,229 The intrinsic value represents the total pre-tax intrinsic value (the difference between the fair value on the trading day the option was exercised and the exercise price associated with the respective option). The Company uses historical data to estimate expected life and volatility. The estimated fair value of stock options at the time of the grant using the Black-Scholes option pricing model was as follows: Three Months Ended March 31, 2017 2016 Stock options granted (shares) 425,599 1,008,569 Weighted average fair value at grant date $ 19.53 $ 20.19 Assumptions: Expected term (in years) 4.82 4.76 Expected volatility 22.66 % 18.02 % Expected dividend yield — % — % Risk free interest rate 1.91 % 1.26 % Restricted Stock Units: The fair value of RSUs 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. Our 2008, 2011 and 2014 Plans include a share reserve related to RSUs granted at a 2-1 ratio. A summary of our RSU activity during the three months ended March 31, 2017, is as follows: Number of Units Weighted Average Grant Date Fair Value Weighted Average Remaining Contractual Life Total Aggregate Intrinsic Value Outstanding as of January 1, 2017 114,838 $ 104.22 Granted 183,940 83.24 Vested and released (30,000 ) 76.87 Forfeited (1,627 ) 110.46 Outstanding as of March 31, 2017 267,151 $ 92.68 2.56 $ 24,760 At March 31, 2017, there was $24.0 million of total unrecognized compensation expense related to RSUs, which is expected to be recognized over a weighted average period of 4.08 years. Performance-Based Restricted Stock Units: In February 2017 under the incentive stock plan, our executive officers were granted PSUs. PSUs vest, or not, in three equal annual installments based on the achievement of pre-determined annual earnings per share performance goals as approved by the Compensation Committee. Each of the units granted represent the right to receive one share of the Company’s common stock at a specified future date. The maximum number of common shares issuable upon vesting of these PSUs under the first installment is 10,348 shares. The grant date fair value was $83.35 per share and the total grant date fair value of the shares for which the performance conditions are expected to be met for 2017 was $0.9 million. |
PREFERRED STOCK
PREFERRED STOCK | 3 Months Ended |
Mar. 31, 2017 | |
Equity [Abstract] | |
PREFERRED STOCK | NOTE 7 – PREFERRED STOCK At March 31, 2017, we had 1,000,000 authorized shares of preferred stock and 711,930 shares issued and outstanding of mandatory convertible preferred stock. Series A Mandatory Convertible Preferred Stock Offering: On September 15, 2015, we completed a registered public offering of 7,700,000 depositary shares, each representing a 1/10th interest in a share of our 5.25% Series A mandatory convertible preferred stock, par value $0.01 per share (the "Series A Preferred Stock"), at a public offering price of $100.00 per depository share for total gross proceeds of $770.0 million. Unless earlier converted or redeemed, each share of the Series A Preferred Stock will automatically convert into between 5.8716 and 7.3394 shares of our common stock, subject to anti-dilution and other adjustments, on the mandatory conversion date, which is expected to be September 15, 2018. The number of shares of our common stock issuable on conversion will be determined based on the volume-weighted average price of our common stock over the 20 trading day period commencing on and including the 23rd scheduled trading day prior to September 15, 2018. Subject to certain restrictions, at any time prior to September 15, 2018, holders of the Series A Preferred Stock may elect to convert all or a portion of their shares into common stock at the minimum conversion rate of 5.8716 shares of common stock per share of Series A Preferred Stock, subject to adjustment. Dividends on shares of the Series A Preferred Stock are payable on a cumulative basis when, as and if declared by our board of directors, or an authorized committee thereof, at an annual rate of 5.25% on the liquidation preference of $1,000 per share (and, correspondingly, $100.00 per share with respect to the depositary shares). The dividends may be payable in cash, or subject to certain limitations, in shares of our common stock, or any combination of cash and shares of our common stock, on March 15, June 15, September 15 and December 15 of each year, commencing on December 15, 2015, and to, and including, September 15, 2018. We declared and paid dividends of $9.4 million and $10.1 million to the preferred stock shareholders during the three months ended March 31, 2017 and 2016, respectively. The following table provides information about our repurchases of depository shares of mandatory convertible preferred stock during the three months ended March 31, 2017: Period Number of Depository Shares Repurchased Amount Paid for Repurchases Average Price Paid per Share (in thousands) January 1 - January 31, 2017 100,000 $ 6,551 $ 65.51 February 1 - February 28, 2017 40,694 2,668 65.57 March 1 - March 31, 2017 5,006 351 70.00 Total 145,700 $ 9,570 $ 65.68 Repurchases of our mandatory convertible preferred stock resulted in a $4.6 million increase to retained earnings, because we redeemed the preferred stock at a discount. The 145,700 depository shares are equivalent to 14,570 units of preferred stock. |
EARNINGS PER COMMON SHARE
EARNINGS PER COMMON SHARE | 3 Months Ended |
Mar. 31, 2017 | |
Earnings Per Share [Abstract] | |
EARNINGS PER COMMON SHARE | NOTE 8 – EARNINGS PER COMMON SHARE Basic earnings per share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include outstanding stock options, shares to be purchased under the Company’s employee stock purchase plan, RSUs, PSUs, and the assumed conversion of mandatory convertible preferred stock. The effect of potentially dilutive securities is reflected in diluted earnings per share by application of the "treasury stock method" for outstanding stock-based compensation awards. Under the treasury stock method, an increase in the fair market value of the Company’s common stock can result in a greater dilutive effect from potentially dilutive securities. For the issue of the mandatory convertible preferred stock, we use the "if-converted method." Under the if-converted method, the preferred dividend applicable to convertible preferred stock is added back as an adjustment to the numerator. The mandatory convertible preferred shares are assumed to be converted to common shares at the beginning of the period or, if later, at the time of issuance, and the resulting common shares are included in the denominator. In applying the if-converted method, conversion shall not be assumed for purposes of computing diluted EPS if the effect would be anti-dilutive. The numerator is also adjusted for any premium or discount arising from redemption of the preferred stock. The following table sets forth the computation of basic and diluted earnings per share: In thousands, except share and per share data Three Months Ended March 31, 2017 2016 Numerator: Net income attributable to Stericycle, Inc. $ 58,189 $ 76,786 Mandatory convertible preferred stock dividend 9,364 10,106 Gain on repurchase of preferred stock (4,563 ) — Numerator for basic earnings per share attributable to Stericycle, Inc. common shareholders $ 53,388 $ 66,680 Denominator: Denominator for basic earnings per share - weighted average shares 85,220,228 84,705,000 Effect of diluted securities: Dilutive effect of stock-based compensation awards 352,181 1,140,501 Mandatory convertible preferred stock (a) — — Denominator for diluted earnings per share - adjusted weighted average shares and after assumed exercises 85,572,409 85,845,501 Earnings per share – Basic $ 0.63 $ 0.79 Earnings per share – Diluted $ 0.62 $ 0.78 (a) For the three months ended March 31, 2017 and 2016, the weighted average common shares issuable upon the assumed conversion of the mandatory convertible preferred stock totaling of 5,264,188 and 5,651,376, respectively, were excluded from the computation of diluted earnings per share as such conversion would have been anti-dilutive. For the three months ended March 31, 2017 and 2016, options to purchase shares of 4,660,568 and 2,309,479, respectively, were not included in the computation of diluted earnings per share because the effect would have been anti-dilutive. For the three months ended March 31, 2017 and 2016, RSUs of 135,309 and 500, respectively, were not included in the computation of diluted earnings per share because the effect would have been anti-dilutive. The Company had outstanding PSUs during the three months ended March 31, 2017 that were eligible to vest into a maximum of 10,348 shares of common stock subject to the achievement of specified performance conditions. Contingently issuable shares are excluded from the computation of diluted earnings per share if, based on current period results, the shares would not be issuable if the end of the reporting period were the end of the contingency period. These outstanding PSUs have been excluded from the earnings per share calculation for the three months ended March 31, 2017 as the performance conditions were not satisfied as of the end of the period. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Mar. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | NOTE 9 – FAIR VALUE MEASUREMENTS Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity's own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels as described below: Level 1 – Quoted prices in active markets for identical assets or liabilities (highest priority). Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 – Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability (lowest priority). Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of assets and liabilities and their placement within the fair value hierarchy levels. The impact of our creditworthiness and non-performance risk has been considered in the fair value measurements noted below. There were no movements of items between fair value hierarchies in the periods presented. The following table summarizes the bases used to measure financial assets and liabilities that are carried at fair value on a recurring basis in the Condensed Consolidated Balance Sheets: In thousands Fair Value Measurements Using Total as of March 31, 2017 Level 1 Inputs Level 2 Inputs Level 3 Inputs Assets: Short-term investments $ 62 $ 62 $ — $ — Derivative financial instruments 790 — 790 — Total $ 852 $ 62 $ 790 $ — Liabilities: Contingent consideration $ 24,877 $ — $ — $ 24,877 In thousands Fair Value Measurements Using Total as of December 31, 2016 Level 1 Inputs Level 2 Inputs Level 3 Inputs Assets: Short-term investments $ 62 $ 62 $ — $ — Derivative financial instruments 816 — 816 — Total $ 878 $ 62 $ 816 $ — Liabilities: Contingent consideration $ 24,119 $ — $ — $ 24,119 For our derivative financial instruments, we use a market approach valuation technique based on observable market transactions of spot and forward rates. We recorded a $0.8 million asset related to the fair value of the U.S. dollar-Canadian dollar foreign currency swap which was classified as Other assets at March 31, 2017. The objective of the swap is to offset the foreign exchange risk to the U.S. dollar equivalent cash outflows for our Canadian subsidiary. Our contingent consideration liabilities are recorded using Level 3 inputs and were $24.9 million as of March 31, 2017, of which $8.7 million was classified as Current liabilities. Contingent consideration liabilities were $24.1 million at December 31, 2016, of which $8.1 million was classified as Current liabilities. Contingent consideration represents amounts expected to be paid as part of acquisition consideration only if certain future events occur. These events are usually targets for revenues, earnings, or other milestones related to the business acquired. We arrive at the fair value of contingent consideration by applying a weighted probability of potential payment outcomes. The calculation of these potential outcomes is dependent on both past financial performance and management assumptions about future performance. If the financial performance measures were all fully met, our maximum liability would be $25.7 million at March 31, 2017. Contingent consideration liabilities are reassessed each reporting period and are reflected in the Condensed Consolidated Balance Sheets as part of Other current liabilities and Other liabilities. Changes to contingent consideration are reflected in the table below: In thousands Contingent consideration as of January 1, 2017 $ 24,119 Increases due to acquisitions 53 Changes due to foreign currency fluctuations 304 Changes in fair value reflected in selling, general, and administrative expenses 401 Contingent consideration as of March 31, 2017 $ 24,877 At March 31, 2017, the fair value of the Company’s debt obligations was estimated, using Level 2 inputs, at $2.88 billion compared to a carrying amount of $2.87 billion. At December 31, 2016, the fair value of the Company’s debt obligations was estimated, using Level 2 inputs, at $2.97 billion compared to a carrying amount of $2.96 billion. The fair values were estimated using an income approach by applying market interest rates for comparable instruments. Accounts receivable, Accounts payable and Accrued liabilities are financial assets and liabilities, respectively, with carrying values that approximate fair value. If measured at fair value in the financial statements, these financials instruments would be classified as Level 3 in the fair value hierarchy. |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 3 Months Ended |
Mar. 31, 2017 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
GOODWILL AND OTHER INTANGIBLE ASSETS | NOTE 10 – GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill: The changes in the carrying amount of goodwill since January 1, 2016, by reportable segment and for the “Other” category (see Note 13 – Segment Reporting), were as follows: In thousands Domestic and Canada RCS International RCS Other Total Balance as of January 1, 2016 $ 2,842,711 $ 632,491 $ 282,975 $ 3,758,177 Goodwill acquired during the year 41,517 8,381 2,871 52,769 Purchase accounting adjustments (77,247 ) (78,894 ) (5,048 ) (161,189 ) Other changes — (7,486 ) — (7,486 ) Changes due to foreign currency fluctuations 4,820 (56,071 ) — (51,251 ) Balance as of December 31, 2016 2,811,801 498,421 280,798 3,591,020 Goodwill acquired during the period 11,782 2,706 4,619 19,107 Purchase accounting adjustments (168 ) (76 ) 28 (216 ) Other changes — 20 — 20 Changes due to foreign currency fluctuations 1,278 11,584 — 12,862 Balance as of March 31, 2017 $ 2,824,693 $ 512,655 $ 285,445 $ 3,622,793 Current period adjustments to goodwill for certain 2016 acquisitions are primarily due to the finalization of intangible asset valuations. Other Intangible Assets: At March 31, 2017 and December 31, 2016, the values of other intangible assets were as follows: In thousands March 31, 2017 December 31, 2016 Gross Carrying Amount Accumulated Amortization Net Value Gross Carrying Amount Accumulated Amortization Net Value Amortizable intangibles: Customer relationships $ 1,575,206 $ 291,414 $ 1,283,792 $ 1,553,398 $ 261,306 $ 1,292,092 Covenants not-to-compete 9,360 6,517 2,843 9,491 6,371 3,120 Tradenames 5,760 1,469 4,291 5,708 1,365 4,343 Other 19,807 2,936 16,871 19,076 2,526 16,550 Indefinite lived intangibles: Operating permits 231,938 — 231,938 229,396 — 229,396 Tradenames 317,474 — 317,474 316,472 — 316,472 Total $ 2,159,545 $ 302,336 $ 1,857,209 $ 2,133,541 $ 271,568 $ 1,861,973 The changes in the carrying amount of intangible assets since January 1, 2016 were as follows: In thousands Balance as of January 1, 2016 $ 1,842,561 Intangible assets acquired during the year 35,564 Valuation adjustments for prior year acquisitions 168,979 Intangible write-offs due to disposition and assets held for sale (15,961 ) Impairments during the year (1,406 ) Intangible amortization during the year (129,300 ) Changes due to foreign currency fluctuations (38,464 ) Balance as of December 31, 2016 1,861,973 Intangible assets acquired during the period 11,515 Valuation adjustments for prior year acquisitions 2,124 Impairments during the period (408 ) Intangible amortization during the period (29,089 ) Changes due to foreign currency fluctuations 11,094 Balance as of March 31, 2017 $ 1,857,209 Our indefinite-lived intangible assets include permits and certain tradenames. We have determined that our permits and certain tradenames have indefinite lives due to our ability to renew them with minimal additional cost, and therefore these are not amortized. Our finite-lived intangible assets are amortized over their useful lives. We have determined that our customer relationships have useful lives ranging from 5 to 40 years based upon the type of customer and a weighted average remaining useful life of 15.1 years. We have covenants not-to-compete intangibles with useful lives ranging from 5 to 14 years and a weighted average remaining useful life of 3.0 years. We have tradename intangibles with useful lives ranging from 10 to 40 years and a weighted average remaining useful life of 16.2 years. Other intangibles mainly consist of landfill air rights and have a weighted average remaining useful life of 17.2 years. During the three months ended March 31, 2017 and 2016, the aggregate intangible amortization expense was $29.1 million and $18.3 million, respectively. The estimated amortization expense for each of the next five years, assuming no additional amortizable intangible assets, is as follows for the years ended December 31: In thousands 2017 $ 116,974 2018 117,115 2019 116,751 2020 116,014 2021 115,587 The estimates for amortization expense noted above are based upon foreign exchange rates at March 31, 2017. |
DEBT
DEBT | 3 Months Ended |
Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
DEBT | NOTE 11 – DEBT Long-term debt consisted of the following: In thousands March 31, 2017 December 31, 2016 Obligations under capital leases $ 10,820 $ 11,121 $1.2 billion senior credit facility weighted average rate 2.23%, due in 2019 346,506 407,119 $1.0 billion term loan weighted average rate 2.33%, due in 2020 970,000 1,000,000 $175 million private placement notes 3.89%, due in 2017 175,000 175,000 $125 million private placement notes 2.68%, due in 2019 125,000 125,000 $225 million private placement notes 4.47%, due in 2020 225,000 225,000 $150 million private placement notes 2.89%, due in 2021 150,000 150,000 $125 million private placement notes 3.26%, due in 2022 125,000 125,000 $200 million private placement notes 2.72%, due in 2022 200,000 200,000 $100 million private placement notes 2.79%, due in 2023 100,000 100,000 $150 million private placement notes 3.18%, due in 2023 150,000 150,000 Promissory notes and deferred consideration weighted average rate of 2.39% and weighted average maturity of 3.3 years 193,208 191,648 Foreign bank debt weighted average rate 6.25% and weighted average maturity of 1.9 years 101,341 99,428 Total debt 2,871,875 2,959,316 Less: current portion of total debt 96,301 72,822 Less: unamortized debt issuance costs 8,539 9,179 Long-term portion of total debt $ 2,767,035 $ 2,877,315 Our senior credit facility, term loan, and the private placement notes all require us to comply with the same financial, reporting and other covenants and restrictions, including a restriction on dividend payments. At March 31, 2017, we were in compliance with all of our financial debt covenants. Our senior credit facility, term loan, and the private placement notes rank pari passu to each other and all other unsecured debt obligations. At March 31, 2017 and December 31, 2016, we had $138.9 million and $138.0 million, respectively, committed to outstanding letters of credit under our We classified our $175.0 million private placement notes that mature in October 2017 as long-term debt due to our intent to settle this obligation by borrowing on the available and unused capacity on our $1.2 billion senior credit facility due in 2019. |
ENVIRONMENTAL REMEDITATION LIAB
ENVIRONMENTAL REMEDITATION LIABILITIES | 3 Months Ended |
Mar. 31, 2017 | |
Environmental Remediation Obligations [Abstract] | |
ENVIRONMENTAL REMEDITATION LIABILITIES | NOTE 12 – ENVIRONMENTAL REMEDITATION LIABILITIES We record a liability for environmental remediation when such liability becomes probable and the costs or damages can be reasonably estimated. We accrue environmental remediation costs, on an undiscounted basis, associated with identified sites where an assessment has indicated that cleanup costs are probable and can be reasonably estimated, but the timing of such payments is not fixed and determinable. Such accruals are based on currently available information, estimated timing of remedial actions, existing technology, and enacted laws and regulations. The liability for environmental remediation is included in the Condensed Consolidated Balance Sheets in current liabilities within Accrued liabilities and in noncurrent liabilities within Other liabilities. At March 31, 2017 and December 31, 2016, the total environmental remediation liabilities recorded were $31.4 million and $30.9 million of which $2.6 million and $2.4 million were presented in Accrued liabilities in the Condensed Consolidated Balance Sheets, respectively. We project costs over approximately 30 years |
SEGMENT REPORTING
SEGMENT REPORTING | 3 Months Ended |
Mar. 31, 2017 | |
Segment Reporting [Abstract] | |
SEGMENT REPORTING | NOTE 13 – SEGMENT REPORTING Our three operating segments are: • Domestic and Canada Regulated Waste and Compliance Services (“Domestic and Canada RCS”), • Domestic Communication and Related Services (“Domestic CRS”) , and • International Regulated Waste and Compliance Services (“International RCS”). Domestic CRS does not meet the quantitative criteria to be a separate reportable segment and therefore is included in All other. Costs related to our corporate headquarter functions are also included in All other. Our Domestic and Canada, and International Regulated Waste and Compliance Services segments include medical waste disposal, pharmaceutical waste disposal, hazardous waste management, sustainability solutions for expired or unused inventory, secure information destruction of documents and e-media, training and consulting through our Steri-Safe® and Clinical Services programs, and other regulatory compliance services. Our Domestic Communication and Related Services segment consists of inbound/outbound communication, automated patient reminders, online scheduling, notifications, product retrievals, product returns, and quality audits. Our two reportable segments are: • Domestic and Canada RCS, • International RCS. The following tables show financial information for the Company's reportable segments: In thousands Three Months Ended March 31, 2017 2016 Revenues Domestic and Canada RCS $ 633,733 $ 616,131 International RCS 181,580 188,009 All other 77,086 70,041 Total $ 892,399 $ 874,181 Gross Profit Domestic and Canada RCS $ 278,103 $ 273,915 International RCS 58,492 60,733 All other 32,067 31,932 Total $ 368,662 $ 366,580 Intangible amortization Domestic and Canada RCS $ 21,700 $ 11,317 International RCS 5,344 4,977 All other 2,045 1,980 Total $ 29,089 $ 18,274 Adjusted EBITA (a) Domestic and Canada RCS $ 186,449 $ 184,852 International RCS 20,045 18,931 All other (36,124 ) (23,431 ) Total $ 170,370 $ 180,352 (a) Adjusted EBITA is defined as income from operations exclusive of intangible amortization and other adjusting items reconciled in the table below. The following table reconciles the Company's primary measure of segment profitability (EBITA) to income from operations: In thousands Three Months Ended March 31, 2017 2016 Adjusted EBITA (a) $ 170,370 $ 180,352 Intangible amortization expenses (see Note 10) (29,089 ) (18,274 ) Acquisition and integration expenses (see Note 3) (19,820 ) (22,258 ) Litigation and professional services expenses (b) (3,620 ) (1,300 ) Restructuring, contract exit and plant conversion expenses (see Note 4) (2,891 ) (241 ) Change in fair value of contingent consideration (see Note 9) (401 ) 2,644 Income from operations $ 114,549 $ 140,923 (b) Litigation and professional services expenses generally consist of legal expenses to defend significant lawsuits and any related settlements as well as certain advisory and consultative services for significant project initiatives which are reflected as part of SG&A in our Condensed Consolidated Statements of Income. The following table shows consolidated revenues by service: In thousands Three Months Ended March 31, 2017 2016 Regulated Waste and Compliance Services $ 511,177 $ 506,581 Secure Information Destruction Services 204,075 184,630 Communication and Related Services 93,516 87,949 Manufacturing and Industrial Services 83,631 95,021 Revenues $ 892,399 $ 874,181 |
LEGAL PROCEEDINGS
LEGAL PROCEEDINGS | 3 Months Ended |
Mar. 31, 2017 | |
Commitments And Contingencies Disclosure [Abstract] | |
LEGAL PROCEEDINGS | NOTE 14 – LEGAL PROCEEDINGS We operate in highly regulated industries and must deal with regulatory inquiries or investigations from time to time that may be initiated for a variety of reasons. We are also involved in a variety of civil litigation from time to time. The Company establishes an accrued liability for loss contingencies related to legal and regulatory matters when the loss is both probable and reasonably estimable. If a loss is not probable or a probable loss is not reasonably estimable, no liability is recorded. These accruals represent management’s best estimate of probable losses and, in such cases, there may be an exposure to loss in excess of the amounts accrued. Legal and regulatory matters inherently involve significant uncertainties based on, among other factors, the stage of the proceedings, developments in the applicable facts or law, and the unpredictability of the ultimate determination of the merits of any claim, any defenses the Company may assert against that claim and the amount of any damages that may be awarded. The Company’s accrued liabilities for loss contingencies related to legal and regulatory matters may change in the future as a result of new developments, including, but not limited to, the occurrence of new legal matters, changes in the law or regulatory environment, adverse or favorable rulings, newly discovered facts relevant to the matter, or changes in the strategy for the matter. Regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors. Contract Class Action Lawsuits. As we have previously disclosed, we were served on March 12, 2013 with a class action complaint filed in the U.S. District Court for the Western District of Pennsylvania by an individual plaintiff for itself and on behalf of all other “similarly situated” customers of ours. The complaint alleges, among other things, that we imposed unauthorized or excessive price increases and other charges on our customers in breach of our contracts and in violation of the Illinois Consumer Fraud and Deceptive Business Practices Act. The complaint sought certification of the lawsuit as a class action and the award to class members of appropriate damages and injunctive relief. The Pennsylvania class action complaint was filed in the wake of a settlement with the State of New York of an investigation under the New York False Claims Act which arose out of the qui tam (or “whistle blower”) action captioned United States of America ex rel. Jennifer D. Perez v. Stericycle, Inc., Case No. 1:08-cv-2390, which was settled in the fourth quarter of 2015 as previously disclosed. Following the filing of the Pennsylvania class action complaint, we were served with class action complaints filed in federal and state courts in several jurisdictions. These complaints asserted claims and allegations substantially similar to those made in the Pennsylvania class action complaint. All of these cases appear to be follow-on litigation to our settlement with the State of New York. On August 9, 2013, the Judicial Panel on Multidistrict Litigation granted our Motion to Transfer these related actions to the United States District Court for the Northern District of Illinois for centralized pretrial proceedings (the “MDL Action”). On December 10, 2013, we filed our answer to the Amended Consolidated Class Action Complaint in the MDL Action, generally denying the allegations therein. Plaintiffs subsequently filed a Second Amended Consolidated Complaint on March 8, 2016, and we filed an answer to that pleading on March 25, 2016, generally denying the allegations therein and asserting a variety of affirmative defenses. Plaintiffs filed a motion for class certification on January 29, 2016. On February 16, 2017, the Court entered an order granting Plaintiffs’ motion for class certification. The Court certified a class of “[a]ll persons and entities that, between March 8, 2003 through the date of trial resided in the United States (except Washington and Alaska), were identified by Stericycle as ‘Small Quantity’ or ‘SQ’ customer, and were charged and paid more than their contractually-agreed price for Stericycle’s medical waste disposal good and services pursuant to Stericycle’s automated price increase policy. Governmental entities whose claims were asserted in United States ex rel. Perez v. Stericycle Inc. shall be excluded from the class.” On March 2, 2017, Stericycle filed a motion for reconsideration and clarification relating to the Court’s class certification decision. That motion is currently pending while the parties consider whether there would be any benefit to engaging in mediation. Discussions through and overseen by a mediator have ensued between the parties, and the parties may determine to take further steps toward engaging in formal mediation or take other steps toward a consensual resolution of the matter. The case remains ongoing. We believe that we have operated in accordance with the terms of our customer contracts and that these complaints are without merit. We will continue to vigorously defend ourselves against each of these lawsuits. We have not accrued any amounts in respect of these class action lawsuits, and we cannot estimate the reasonably possible loss or the range of reasonably possible losses that we may incur. We are unable to make such an estimate because (i) litigation is by its nature uncertain and unpredictable, (ii) we do not know whether the class currently certified by the Court will remain certified through trial and judgment, or whether or how the class definition might be altered, (iii) we do not know how many individual plaintiffs will be determined to meet the court’s definition of the class, (iv) we do not know what the ultimate disposition on the merits of any class claim as well as our defenses to that claim may be, (v) we do not know whether formal mediation or other steps may lead to a consensual resolution of the matter and the discussions to date have not provided us with a basis to make such an estimate, and (vi) in our judgment, the factual and legal allegations asserted by plaintiffs are sufficiently unique that we are unable to identify other proceedings with circumstances sufficiently comparable to provide guidance in making estimates. Securities Class Action Lawsuit. On July 11, 2016, two purported stockholders filed a putative class action complaint in the U.S. District Court for the Northern District of Illinois. The plaintiffs purported to sue for themselves and on behalf of all purchasers of our publicly traded securities between February 7, 2013 and April 28, 2016, inclusive, and all those who purchased securities in our public offering of depositary shares, each representing a 1/10th interest in a share of our mandatory convertible preferred stock, on or around September 15, 2015. The complaint named as defendants the Company, our directors and certain of our current and former officers, and certain of the underwriters in the public offering. The complaint purports to assert claims under Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as well as SEC Rule 10b-5, promulgated thereunder. The complaint alleges, among other things, that the Company imposed unauthorized or excessive price increases and other charges on its customers in breach of its contracts, and that defendants failed to disclose those alleged practices in public filings and other statements issued during the proposed class period beginning February 7, 2013 and ending April 28, 2016. On August 4, 2016, plaintiffs filed an Amended Complaint that purports to assert additional misrepresentations in public statements through July 28, 2016, and therefore to change the putative class period to the period from February 7, 2013 to July 28, 2016, inclusive. On October 21, 2016, plaintiffs filed a Corrected Amended Complaint adding the Company as a named defendant in plaintiff’s claim under Section 11 of the Securities Act, which had previously been asserted only against the Underwriters and certain officers and directors. On November 1, 2016, the Court appointed the Public Employees’ Retirement System of Mississippi and the Arkansas Teacher Retirement System as Lead Plaintiffs and their counsel as Lead Counsel. On February 1, 2017, Lead Plaintiff filed a Consolidated Amended Complaint with additional purported factual material supporting the same legal claims from the prior complaints. Defendants filed a motion to dismiss the Consolidated Amended Complaint on April 1, 2017. Plaintiffs’ response to that motion is due May 19, 2017. We intend to vigorously defend ourselves against this lawsuit. We have not accrued any amounts in respect of this lawsuit, and we cannot estimate the reasonably possible loss or the range of reasonably possible losses that we may incur. We are unable to make such an estimate because (i) litigation is by its nature uncertain and unpredictable, (ii) we do not know whether the court will certify any class of plaintiffs or, if any class is certified, how the class would be defined, and (iii) in our judgment, the factual and legal allegations asserted by plaintiffs are sufficiently unique that we are unable to identify other proceedings with circumstances sufficiently comparable to provide guidance in making estimates. Shareholder Derivative Lawsuits. On September 1, 2016, a purported stockholder filed a putative derivative action complaint in the Circuit Court of Cook County, Illinois against certain officers and directors of the Company, naming the Company as nominal defendant. The complaint alleges that defendants breached their fiduciary duties to the Company and its stockholders by causing the Company to allegedly overcharge certain customers in breach of those customers’ contracts, otherwise provide unsatisfactory customer service and injure customer relationships, and make materially false and misleading statements and omissions regarding the Company’s business, operational and compliance policies between February 7, 2013 and the present. On March 1, 2017, another purported stockholder filed a putative derivative action complaint containing substantially similar allegations in the Circuit Court of Cook County, Illinois against certain officers and directors of the Company, naming the Company as nominal defendant. The Company notes, among other things, that both of these filings are in violation of the Company’s Bylaws, which require any such actions to be brought in a court in Delaware. None of the defendants in either of these derivative actions has been served with the applicable complaint. We have not accrued any amounts in respect of these lawsuits, and we cannot estimate the reasonably possible loss or the range of reasonably possible losses that we may incur. We are unable to make such an estimate because (i) litigation is by its nature uncertain and unpredictable and (ii) in our judgment, the factual and legal allegations asserted by plaintiffs are sufficiently unique that we are unable to identify other proceedings with circumstances sufficiently comparable to provide guidance in making estimates. Shareholder Demand Letter. On October 18, 2016, the Company received a letter from an attorney purporting to represent a current stockholder of the Company demanding, pursuant to Del. Ct. Ch. R. 23.1, that the Company’s Board of Directors take action to remedy alleged breaches of fiduciary duties by certain officers and directors of the Company. The factual allegations set forth in the letter are similar to those asserted in the Securities Class Action Lawsuit and the Shareholder Derivative Lawsuit. The letter asserts breaches of fiduciary duty in connection with the management, operation and oversight of the Company’s business and in connection with alleged false, misleading and/or incomplete statements regarding the Company’s business practices. The Company’s Board of Directors has constituted a Special Demand Review Committee to investigate the claims made in the demand letter, which investigation is ongoing. TCPA Lawsuit. On June 3, 2016, a plaintiff filed a putative class action, captioned Ibrahim v. Stericycle, Inc., No. 16-cv-4294 (N.D. Ill.), against us and our wholly-owned subsidiary, Stericycle Communication Solutions, Inc., under the Telephone Consumer Protection Act (“TCPA”), asserting that the defendants called plaintiff and others in violation of that statute. Plaintiff challenges our use of pre-recorded messages that urge the owners of recalled products to return or obtain repairs for those products. Plaintiff seeks certification of two nationwide classes. One class includes people who received one or more cellular telephone calls from Stericycle featuring a prerecorded or artificial voice message relating to a product recall, where the called party was not the same individual who, according to Stericycle’s records, was the intended recipient of the call. The second class includes people who received one or more cellular telephone calls from Stericycle featuring a prerecorded or artificial voice message relating to a product recall after such person had communicated to Stericycle that Stericycle did not have consent to make any such calls to their cellular telephone number. On July 28, 2016, we answered the complaint, denying the material allegations and raising certain affirmative defenses. Among the asserted defenses is the “emergency” exception to the TCPA, which exempts calls made to promote public health and safety. On December 19, 2016, before any substantial discovery in the case, we filed a motion for summary judgment primarily on the basis of the “emergency” exception. On February 1, 2017, plaintiff responded to our motion by requesting additional discovery. The court permitted plaintiff to obtain some but not all of the requested discovery, and we have provided additional documents in response to that order. On April 5, 2017, plaintiff sought leave to file an amended complaint which would add a claim under the Illinois Automatic Telephone Dialers Act (which does not include an “emergency” exception) and certain additional allegations. We filed an opposition to this motion on April 28, 2017, contending that the proposed amendments are futile and that we are entitled to summary judgment. We have not accrued any amounts in respect of this lawsuit, and we cannot estimate the reasonably possible loss or the range of reasonably possible losses that we may incur. We are unable to make such an estimate because (i) litigation is by its nature uncertain and unpredictable, (ii) we do not know whether the court will certify any class of plaintiffs or, if any class is certified, how the class would be defined, and (iii) in our judgment, the factual and legal allegations asserted by plaintiff are sufficiently unique that we are unable to identify other proceedings with circumstances sufficiently comparable to provide guidance in making estimates. Environmental Matters. Our Environmental Solutions business is regulated by federal, state and local laws enacted to regulate the discharge of materials into the environment, remediate contaminated soil and groundwater or otherwise protect the environment. As a result of this continuing regulation, we frequently become a party to legal or administrative proceedings involving various governmental authorities and other interested parties. The issues involved in these 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 us or by other parties to which either we or the prior owners of certain of its facilities shipped wastes. From time to time, we may be subject to fines or penalties in regulatory proceedings relating primarily to waste treatment, storage or disposal facilities. On February 29, 2016, we entered into a statute of limitations tolling agreement with the United States Attorney’s Office for the District of Utah relating to that Office’s investigation of the same facts underlying the notice of violation (the “NOV”) issued by the State of Utah Division of Air Quality (the “DAQ”) that resulted in our December 2014 settlement with the DAQ that we have previously disclosed. The U.S. Attorney’s Office is investigating whether the matters forming the basis of the NOV constitute criminal or civil violations of the Clean Air Act and other federal statutes. On May 9, 2017, we extended the tolling agreement to June 30, 2017. Under the tolling agreement as extended, the period from March 1, 2016 through June 30, 2017 will be excluded from any calculation of time for the purpose of determining the statute of limitations concerning any charges that we violated federal statutes. The agreement does not constitute an admission of guilt or wrongdoing on our part and cannot be construed as a waiver of any other rights or defenses that we may have in any resulting action or proceeding. We continue to cooperate with the investigation and have engaged in discussions with the U.S. Attorney’s Office regarding their current factual and legal positions. We are evaluating the U.S. Attorney’s positions and, after we have completed our factual and legal review, intend to explore a number of potential alternatives, including a negotiated resolution and potential litigation. We have not accrued any amounts in respect of this investigation, and we cannot estimate the reasonably possible loss or the range of reasonably possible losses that we may incur. We are unable to make such an estimate because (i) the Company and the U.S. Attorney’s Office continue to exchange information and develop their respective factual and legal positions, and (ii) in our judgment, the factual and legal issues raised in the investigation are sufficiently unique that we are unable to identify other investigations with circumstances sufficiently comparable to provide guidance in making estimates. |
NEW ACCOUNTING STANDARDS (Polic
NEW ACCOUNTING STANDARDS (Policies) | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Changes And Error Corrections [Abstract] | |
New Accounting Standards | Adoption of New Accounting Standards Intangibles – Goodwill and Other – Simplifying the Test for Goodwill Impairment Effective January 1, 2017, the Company early adopted the guidance in Accounting Standards Update (“ASU”) 2017-04, “Intangibles – Goodwill and Other (Topic 350) – Simplifying the Test for Goodwill Impairment.” Statement of Cash Flows Effective January 1, 2017, the Company early adopted the guidance in ASU No. 2016-15 “Statement of Cash Flows” (Topic 230) Accounting Standards Issued But Not Yet Adopted Revenue From Contracts With Customers In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers" (Topic 606) Leases In February 2016, the FASB issued ASU No. 2016-02, “ Leases” (Topic 842) Intra-Entity Transfers of Assets Other Than Inventory In October 2016, the FASB issued ASU No. 2016-16, “Intra-Entity Transfers of Assets Other Than Inventory. annual |
ACQUISITIONS, DIVESTITURES, A24
ACQUISITIONS, DIVESTITURES, AND ASSETS HELD FOR SALE (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Summary of Location of Acquisitions | The following table summarizes the locations of our acquisitions for the three months ended March 31, 2017: Acquisition Locations 2017 United States 8 Canada 1 Netherlands 2 Portugal 1 Spain 1 Total 13 |
Summary of Fair Value of Consideration Transferred for Current Period and Prior Year Acquisitions | The following table summarizes the acquisition date fair value of consideration transferred for the current period acquisitions and the adjustments to the consideration transferred for prior year acquisitions during the three months ended March 31, 2017: In thousands Three Months Ended March 31, 2017 Current Period Acquisitions Adjustments to Prior Year Acquisitions Total Cash $ 16,833 $ 38 $ 16,871 Promissory notes 13,104 (213 ) 12,891 Deferred consideration 1,001 — 1,001 Contingent consideration 53 — 53 Total purchase price $ 30,991 $ (175 ) $ 30,816 |
Purchase Price Allocation | The following table summarizes the preliminary purchase price allocation for current period acquisitions and various adjustments to our prior year acquisitions during the three months ended March 31, 2017: In thousands Three Months Ended March 31, 2017 Current Period Acquisitions Adjustments to Prior Year Acquisitions Total Fixed assets $ 517 $ (675 ) $ (158 ) Intangibles 11,515 2,124 13,639 Goodwill 19,107 (216 ) 18,891 Net other assets/(liabilities) 166 (10 ) 156 Net deferred tax liabilities (314 ) (1,398 ) (1,712 ) Total purchase price allocation $ 30,991 $ (175 ) $ 30,816 |
Assets and Liabilities Held for Sale, Not Discontinued Operations | |
Summary of Major Classes of Assets and Liabilities Classified as Held for Sale | The following table presents information related to the major classes of assets and liabilities that were classified as held for sale in the Condensed Consolidated Balance Sheet at March 31, 2017: In thousands Accounts receivable $ 2,756 Inventory 226 Prepaid expenses 284 Fixed assets 5,189 Goodwill 63 Intangibles 765 Other assets 345 Assets held for sale $ 9,628 Current portion of long-term debt $ 1,010 Accounts payable 984 Accrued liabilities 843 Other current liabilities 1 Deferred income taxes 334 Liabilities held for sale $ 3,172 |
STOCK BASED COMPENSATION (Table
STOCK BASED COMPENSATION (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Stock-Based Compensation Expense Resulting from Stock Option Awards, RSUs, PSUs and ESPP | The following table presents the total stock-based compensation expense resulting from stock option awards, restricted stock units (“RSUs”), performance-based restricted stock units (“PSUs”), and the ESPP included in the Condensed Consolidated Statements of Income: In thousands Three Months March 31, 2017 2016 Cost of revenues - stock option plan $ 13 $ 15 Selling, general and administrative - stock option plan 4,080 4,752 Selling, general and administrative - RSUs 1,401 559 Selling, general and administrative - PSUs 188 — Selling, general and administrative - ESPP 317 779 Total pre-tax expense $ 5,999 $ 6,105 |
Stock Option Activity | Stock option activity for the three months ended March 31, 2017, is summarized as follows: Number of Options Weighted Average Exercise Price per Share Weighted Average Remaining Contractual Life Total Aggregate Intrinsic Value (in years) (in thousands) Outstanding as of January 1, 2017 5,468,732 $ 96.90 Granted 425,599 83.19 Exercised (90,856 ) 48.52 Forfeited (35,755 ) 113.59 Cancelled or expired (44,687 ) 98.31 Outstanding as of March 31, 2017 5,723,033 $ 96.53 5.28 $ 27,811 Exercisable as of March 31, 2017 3,598,309 $ 89.19 4.52 $ 27,740 |
Intrinsic Value of Options Exercised | The following table sets forth the intrinsic value of options exercised for the three months ended March 31: In thousands Three Months Ended March 31, 2017 2016 Total intrinsic value of options exercised $ 2,908 $ 13,229 |
Assumptions Used in Black-Scholes Option Pricing Model | The estimated fair value of stock options at the time of the grant using the Black-Scholes option pricing model was as follows: Three Months Ended March 31, 2017 2016 Stock options granted (shares) 425,599 1,008,569 Weighted average fair value at grant date $ 19.53 $ 20.19 Assumptions: Expected term (in years) 4.82 4.76 Expected volatility 22.66 % 18.02 % Expected dividend yield — % — % Risk free interest rate 1.91 % 1.26 % |
Summary of RSU Activity | A summary of our RSU activity during the three months ended March 31, 2017, is as follows: Number of Units Weighted Average Grant Date Fair Value Weighted Average Remaining Contractual Life Total Aggregate Intrinsic Value Outstanding as of January 1, 2017 114,838 $ 104.22 Granted 183,940 83.24 Vested and released (30,000 ) 76.87 Forfeited (1,627 ) 110.46 Outstanding as of March 31, 2017 267,151 $ 92.68 2.56 $ 24,760 |
PREFERRED STOCK (Tables)
PREFERRED STOCK (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Equity [Abstract] | |
Repurchases of Depository Shares of Mandatory Convertible Preferred Stock | The following table provides information about our repurchases of depository shares of mandatory convertible preferred stock during the three months ended March 31, 2017: Period Number of Depository Shares Repurchased Amount Paid for Repurchases Average Price Paid per Share (in thousands) January 1 - January 31, 2017 100,000 $ 6,551 $ 65.51 February 1 - February 28, 2017 40,694 2,668 65.57 March 1 - March 31, 2017 5,006 351 70.00 Total 145,700 $ 9,570 $ 65.68 |
EARNINGS PER COMMON SHARE (Tabl
EARNINGS PER COMMON SHARE (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Earnings Per Share [Abstract] | |
Earnings Per Common Share | The following table sets forth the computation of basic and diluted earnings per share: In thousands, except share and per share data Three Months Ended March 31, 2017 2016 Numerator: Net income attributable to Stericycle, Inc. $ 58,189 $ 76,786 Mandatory convertible preferred stock dividend 9,364 10,106 Gain on repurchase of preferred stock (4,563 ) — Numerator for basic earnings per share attributable to Stericycle, Inc. common shareholders $ 53,388 $ 66,680 Denominator: Denominator for basic earnings per share - weighted average shares 85,220,228 84,705,000 Effect of diluted securities: Dilutive effect of stock-based compensation awards 352,181 1,140,501 Mandatory convertible preferred stock (a) — — Denominator for diluted earnings per share - adjusted weighted average shares and after assumed exercises 85,572,409 85,845,501 Earnings per share – Basic $ 0.63 $ 0.79 Earnings per share – Diluted $ 0.62 $ 0.78 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Summary of Financial Assets and Liabilities Carried at Fair Value on Recurring Basis | The following table summarizes the bases used to measure financial assets and liabilities that are carried at fair value on a recurring basis in the Condensed Consolidated Balance Sheets: In thousands Fair Value Measurements Using Total as of March 31, 2017 Level 1 Inputs Level 2 Inputs Level 3 Inputs Assets: Short-term investments $ 62 $ 62 $ — $ — Derivative financial instruments 790 — 790 — Total $ 852 $ 62 $ 790 $ — Liabilities: Contingent consideration $ 24,877 $ — $ — $ 24,877 In thousands Fair Value Measurements Using Total as of December 31, 2016 Level 1 Inputs Level 2 Inputs Level 3 Inputs Assets: Short-term investments $ 62 $ 62 $ — $ — Derivative financial instruments 816 — 816 — Total $ 878 $ 62 $ 816 $ — Liabilities: Contingent consideration $ 24,119 $ — $ — $ 24,119 |
Changes to Contingent Consideration | Changes to contingent consideration are reflected in the table below: In thousands Contingent consideration as of January 1, 2017 $ 24,119 Increases due to acquisitions 53 Changes due to foreign currency fluctuations 304 Changes in fair value reflected in selling, general, and administrative expenses 401 Contingent consideration as of March 31, 2017 $ 24,877 |
GOODWILL AND OTHER INTANGIBLE29
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Changes in Carrying Amount of Goodwill | The changes in the carrying amount of goodwill since January 1, 2016, by reportable segment and for the “Other” category (see Note 13 – Segment Reporting), were as follows: In thousands Domestic and Canada RCS International RCS Other Total Balance as of January 1, 2016 $ 2,842,711 $ 632,491 $ 282,975 $ 3,758,177 Goodwill acquired during the year 41,517 8,381 2,871 52,769 Purchase accounting adjustments (77,247 ) (78,894 ) (5,048 ) (161,189 ) Other changes — (7,486 ) — (7,486 ) Changes due to foreign currency fluctuations 4,820 (56,071 ) — (51,251 ) Balance as of December 31, 2016 2,811,801 498,421 280,798 3,591,020 Goodwill acquired during the period 11,782 2,706 4,619 19,107 Purchase accounting adjustments (168 ) (76 ) 28 (216 ) Other changes — 20 — 20 Changes due to foreign currency fluctuations 1,278 11,584 — 12,862 Balance as of March 31, 2017 $ 2,824,693 $ 512,655 $ 285,445 $ 3,622,793 |
Carrying Values of Other Intangible Assets | At March 31, 2017 and December 31, 2016, the values of other intangible assets were as follows: In thousands March 31, 2017 December 31, 2016 Gross Carrying Amount Accumulated Amortization Net Value Gross Carrying Amount Accumulated Amortization Net Value Amortizable intangibles: Customer relationships $ 1,575,206 $ 291,414 $ 1,283,792 $ 1,553,398 $ 261,306 $ 1,292,092 Covenants not-to-compete 9,360 6,517 2,843 9,491 6,371 3,120 Tradenames 5,760 1,469 4,291 5,708 1,365 4,343 Other 19,807 2,936 16,871 19,076 2,526 16,550 Indefinite lived intangibles: Operating permits 231,938 — 231,938 229,396 — 229,396 Tradenames 317,474 — 317,474 316,472 — 316,472 Total $ 2,159,545 $ 302,336 $ 1,857,209 $ 2,133,541 $ 271,568 $ 1,861,973 |
Changes in Carrying Amount of Intangible Assets | The changes in the carrying amount of intangible assets since January 1, 2016 were as follows: In thousands Balance as of January 1, 2016 $ 1,842,561 Intangible assets acquired during the year 35,564 Valuation adjustments for prior year acquisitions 168,979 Intangible write-offs due to disposition and assets held for sale (15,961 ) Impairments during the year (1,406 ) Intangible amortization during the year (129,300 ) Changes due to foreign currency fluctuations (38,464 ) Balance as of December 31, 2016 1,861,973 Intangible assets acquired during the period 11,515 Valuation adjustments for prior year acquisitions 2,124 Impairments during the period (408 ) Intangible amortization during the period (29,089 ) Changes due to foreign currency fluctuations 11,094 Balance as of March 31, 2017 $ 1,857,209 |
Estimated Amortization Expense | The estimated amortization expense for each of the next five years, assuming no additional amortizable intangible assets, is as follows for the years ended December 31: In thousands 2017 $ 116,974 2018 117,115 2019 116,751 2020 116,014 2021 115,587 |
DEBT (Tables)
DEBT (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-term debt consisted of the following: In thousands March 31, 2017 December 31, 2016 Obligations under capital leases $ 10,820 $ 11,121 $1.2 billion senior credit facility weighted average rate 2.23%, due in 2019 346,506 407,119 $1.0 billion term loan weighted average rate 2.33%, due in 2020 970,000 1,000,000 $175 million private placement notes 3.89%, due in 2017 175,000 175,000 $125 million private placement notes 2.68%, due in 2019 125,000 125,000 $225 million private placement notes 4.47%, due in 2020 225,000 225,000 $150 million private placement notes 2.89%, due in 2021 150,000 150,000 $125 million private placement notes 3.26%, due in 2022 125,000 125,000 $200 million private placement notes 2.72%, due in 2022 200,000 200,000 $100 million private placement notes 2.79%, due in 2023 100,000 100,000 $150 million private placement notes 3.18%, due in 2023 150,000 150,000 Promissory notes and deferred consideration weighted average rate of 2.39% and weighted average maturity of 3.3 years 193,208 191,648 Foreign bank debt weighted average rate 6.25% and weighted average maturity of 1.9 years 101,341 99,428 Total debt 2,871,875 2,959,316 Less: current portion of total debt 96,301 72,822 Less: unamortized debt issuance costs 8,539 9,179 Long-term portion of total debt $ 2,767,035 $ 2,877,315 |
SEGMENT REPORTING (Tables)
SEGMENT REPORTING (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Segment Reporting [Abstract] | |
Financial Information Concerning Company's Reportable Segments | The following tables show financial information for the Company's reportable segments: In thousands Three Months Ended March 31, 2017 2016 Revenues Domestic and Canada RCS $ 633,733 $ 616,131 International RCS 181,580 188,009 All other 77,086 70,041 Total $ 892,399 $ 874,181 Gross Profit Domestic and Canada RCS $ 278,103 $ 273,915 International RCS 58,492 60,733 All other 32,067 31,932 Total $ 368,662 $ 366,580 Intangible amortization Domestic and Canada RCS $ 21,700 $ 11,317 International RCS 5,344 4,977 All other 2,045 1,980 Total $ 29,089 $ 18,274 Adjusted EBITA (a) Domestic and Canada RCS $ 186,449 $ 184,852 International RCS 20,045 18,931 All other (36,124 ) (23,431 ) Total $ 170,370 $ 180,352 (a) Adjusted EBITA is defined as income from operations exclusive of intangible amortization and other adjusting items reconciled in the table below. |
Reconciliation of Company's Primary Measure of Segment Profitability (EBITA) to Income from Operations | The following table reconciles the Company's primary measure of segment profitability (EBITA) to income from operations: In thousands Three Months Ended March 31, 2017 2016 Adjusted EBITA (a) $ 170,370 $ 180,352 Intangible amortization expenses (see Note 10) (29,089 ) (18,274 ) Acquisition and integration expenses (see Note 3) (19,820 ) (22,258 ) Litigation and professional services expenses (b) (3,620 ) (1,300 ) Restructuring, contract exit and plant conversion expenses (see Note 4) (2,891 ) (241 ) Change in fair value of contingent consideration (see Note 9) (401 ) 2,644 Income from operations $ 114,549 $ 140,923 (a) Litigation and professional services expenses generally consist of legal expenses to defend significant lawsuits and any related settlements as well as certain advisory and consultative services for significant project initiatives which are reflected as part of SG&A in our Condensed Consolidated Statements of Income. |
Summary of Revenues Details by Service Line | The following table shows consolidated revenues by service: In thousands Three Months Ended March 31, 2017 2016 Regulated Waste and Compliance Services $ 511,177 $ 506,581 Secure Information Destruction Services 204,075 184,630 Communication and Related Services 93,516 87,949 Manufacturing and Industrial Services 83,631 95,021 Revenues $ 892,399 $ 874,181 |
BASIS OF PRESENTATION - Additio
BASIS OF PRESENTATION - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items] | ||
Rent and utility expense | $ 500,830 | $ 483,751 |
Selling, general and administrative expenses (exclusive of depreciation) | 218,841 | 201,093 |
Depreciation included in cost of revenues | 22,907 | 23,850 |
Depreciation included in selling, general and administrative expenses | $ 6,183 | 6,290 |
Restatement adjustment | ||
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items] | ||
Rent and utility expense | 1,400 | |
Selling, general and administrative expenses (exclusive of depreciation) | (1,400) | |
Depreciation included in cost of revenues | 1,200 | |
Depreciation included in selling, general and administrative expenses | (1,200) | |
Selling, general and administrative expenses | Restatement adjustment | ||
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items] | ||
Rent, utility and depreciation expense | (2,600) | |
Cost of revenues | Restatement adjustment | ||
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items] | ||
Rent, utility and depreciation expense | $ 2,600 |
ACQUISITIONS, DIVESTITURES, A33
ACQUISITIONS, DIVESTITURES, AND ASSETS HELD FOR SALE - Additional Information (Detail) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2017USD ($)EntityDivestiture | Mar. 31, 2016USD ($)Divestiture | Dec. 31, 2016USD ($) | |
Business Acquisition [Line Items] | |||
Number of acquisitions | 13 | ||
Net increase (decrease) in goodwill | $ | $ 19,107,000 | $ 52,769,000 | |
Effect of goodwill on income taxes | $ | 16,900,000 | ||
Acquisition and integration related expenses | $ | $ 19,820,000 | $ 22,258,000 | |
Number of divestitures | Divestiture | 0 | 0 | |
Assets and Liabilities Held for Sale, Not Discontinued Operations | |||
Business Acquisition [Line Items] | |||
Change in fair value of asset group | $ | $ 0 | ||
Customer relationships | |||
Business Acquisition [Line Items] | |||
Acquired finite-lived intangible assets | $ | $ 11,500,000 | ||
Customer relationships | Minimum | |||
Business Acquisition [Line Items] | |||
Acquired finite-lived intangible assets, useful life | 10 years | ||
Customer relationships | Maximum | |||
Business Acquisition [Line Items] | |||
Acquired finite-lived intangible assets, useful life | 20 years | ||
United States and Canada | Communication and related services | |||
Business Acquisition [Line Items] | |||
Number of acquisitions | 1 | ||
United States and Canada | Acquisition One | Secure information destruction business | |||
Business Acquisition [Line Items] | |||
Number of acquisitions | 7 | ||
United States and Canada | Acquisition Two | Secure information destruction business | |||
Business Acquisition [Line Items] | |||
Number of acquisitions | 1 | ||
Business acquisition, ownership percentage acquired | 100.00% | ||
Netherlands | |||
Business Acquisition [Line Items] | |||
Number of acquisitions | 2 | ||
Netherlands | Secure information destruction business | International | |||
Business Acquisition [Line Items] | |||
Number of acquisitions | 1 | ||
Netherlands | Regulated waste and compliance services | International | |||
Business Acquisition [Line Items] | |||
Number of acquisitions | 1 | ||
Portugal | |||
Business Acquisition [Line Items] | |||
Number of acquisitions | 1 | ||
Portugal | Regulated waste and compliance services | International | |||
Business Acquisition [Line Items] | |||
Number of acquisitions | 1 | ||
Business acquisition, ownership percentage acquired | 100.00% | ||
Spain | |||
Business Acquisition [Line Items] | |||
Number of acquisitions | 1 | ||
Spain | Regulated waste and compliance services | International | |||
Business Acquisition [Line Items] | |||
Number of acquisitions | 1 | ||
Business acquisition, ownership percentage acquired | 100.00% |
ACQUISITIONS, DIVESTITURES, A34
ACQUISITIONS, DIVESTITURES, AND ASSETS HELD FOR SALE - Summary of Acquisition Location (Detail) | 3 Months Ended |
Mar. 31, 2017Entity | |
Business Acquisition [Line Items] | |
Number of acquisitions | 13 |
United States | |
Business Acquisition [Line Items] | |
Number of acquisitions | 8 |
Canada | |
Business Acquisition [Line Items] | |
Number of acquisitions | 1 |
Netherlands | |
Business Acquisition [Line Items] | |
Number of acquisitions | 2 |
Portugal | |
Business Acquisition [Line Items] | |
Number of acquisitions | 1 |
Spain | |
Business Acquisition [Line Items] | |
Number of acquisitions | 1 |
ACQUISITIONS, DIVESTITURES, A35
ACQUISITIONS, DIVESTITURES, AND ASSETS HELD FOR SALE - Aggregate Purchase Price Paid for Acquisitions and Other Adjustments to Consideration (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Business Acquisition [Line Items] | ||
Cash | $ 16,871 | $ 24,884 |
Promissory notes | 12,891 | |
Deferred consideration | 1,001 | |
Contingent consideration | 53 | |
Total purchase price | 30,816 | |
Current Year Acquisitions | ||
Business Acquisition [Line Items] | ||
Cash | 16,833 | |
Promissory notes | 13,104 | |
Deferred consideration | 1,001 | |
Contingent consideration | 53 | |
Total purchase price | 30,991 | |
Adjustments to Prior Year Acquisitions | ||
Business Acquisition [Line Items] | ||
Cash | 38 | |
Promissory notes | (213) | |
Total purchase price | $ (175) |
ACQUISITIONS, DIVESTITURES, A36
ACQUISITIONS, DIVESTITURES, AND ASSETS HELD FOR SALE - Purchase Price Allocation (Detail) $ in Thousands | Mar. 31, 2017USD ($) |
Business Acquisition [Line Items] | |
Fixed assets | $ (158) |
Intangibles | 13,639 |
Goodwill | 18,891 |
Net other assets/(liabilities) | 156 |
Net deferred tax liabilities | (1,712) |
Total purchase price allocation | 30,816 |
Current Year Acquisitions | |
Business Acquisition [Line Items] | |
Fixed assets | 517 |
Intangibles | 11,515 |
Goodwill | 19,107 |
Net other assets/(liabilities) | 166 |
Net deferred tax liabilities | (314) |
Total purchase price allocation | 30,991 |
Adjustments to Prior Year Acquisitions | |
Business Acquisition [Line Items] | |
Fixed assets | (675) |
Intangibles | 2,124 |
Goodwill | (216) |
Net other assets/(liabilities) | (10) |
Net deferred tax liabilities | (1,398) |
Total purchase price allocation | $ (175) |
ACQUISITIONS, DIVESTITURES, A37
ACQUISITIONS, DIVESTITURES, AND ASSETS HELD FOR SALE - Summary of Major Classes of Assets and Liabilities Classified as Held for Sale (Detail) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items] | ||
Assets held for sale | $ 9,628 | $ 9,134 |
Liabilities held for sale | 3,172 | $ 2,858 |
Assets and Liabilities Held for Sale, Not Discontinued Operations | ||
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items] | ||
Accounts receivable | 2,756 | |
Inventory | 226 | |
Prepaid expenses | 284 | |
Fixed assets | 5,189 | |
Goodwill | 63 | |
Intangibles | 765 | |
Other assets | 345 | |
Assets held for sale | 9,628 | |
Current portion of long-term debt | 1,010 | |
Accounts payable | 984 | |
Accrued liabilities | 843 | |
Other current liabilities | 1 | |
Deferred income taxes | 334 | |
Liabilities held for sale | $ 3,172 |
RESTRUCTURING, CONTRACT EXIT 38
RESTRUCTURING, CONTRACT EXIT AND PLANT CONVERSION EXPENSES - Additional Information (Details) - Selling, general and administrative expenses $ in Millions | 3 Months Ended |
Mar. 31, 2017USD ($) | |
Restructuring Cost And Reserve [Line Items] | |
Restructuring expenses | $ 0.6 |
Expenses to exit certain of patient transportation services | 1.4 |
Plant conversion expenses | $ 0.9 |
INCOME TAXES - Additional Infor
INCOME TAXES - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
Release of uncertain tax positions | $ 1.2 | |
Effective tax rate | 34.70% | 32.90% |
STOCK BASED COMPENSATION - Stoc
STOCK BASED COMPENSATION - Stock-Based Compensation Expense Resulting from Stock Option Awards, RSUs, PSUs and ESPP (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | $ 5,999 | $ 6,105 |
Stock Options | Cost of revenues | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | 13 | 15 |
Stock Options | Selling, general and administrative expenses | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | 4,080 | 4,752 |
Restricted Stock Units (RSUs) | Selling, general and administrative expenses | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | 1,401 | 559 |
Performance-Based Restricted Stock Units | Selling, general and administrative expenses | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | 188 | 0 |
ESPP | Selling, general and administrative expenses | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | $ 317 | $ 779 |
STOCK BASED COMPENSATION - Addi
STOCK BASED COMPENSATION - Additional Information (Detail) $ / shares in Units, $ in Millions | 3 Months Ended |
Mar. 31, 2017USD ($)$ / sharesshares | |
Stock Options | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized compensation expenses related to stock options | $ 41.2 |
Weighted average period of recognition for unrecognized compensation expenses | 3 years 3 months 18 days |
Stock Options | Director | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Award vesting period | 1 year |
Stock Options | Officers And Employees | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Award vesting period | 5 years |
Restricted Stock Units (RSUs) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Weighted average period of recognition for unrecognized compensation expenses | 4 years 29 days |
Ratio of share reserve related to RSUs granted | 200.00% |
Unrecognized compensation expenses related to RSUs | $ 24 |
Share price grant date fair value | $ / shares | $ 83.24 |
Performance-Based Restricted Stock Units | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Share price grant date fair value | $ / shares | $ 83.35 |
Total grant date fair value of shares | $ 0.9 |
Maximum number of common shares issuable upon vesting | shares | 10,348 |
STOCK BASED COMPENSATION - St42
STOCK BASED COMPENSATION - Stock Option Activity (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Number of Options | ||
Outstanding as of January 1, 2017 | 5,468,732 | |
Granted | 425,599 | 1,008,569 |
Exercised | (90,856) | |
Forfeited | (35,755) | |
Cancelled or expired | (44,687) | |
Outstanding as of March 31, 2017 | 5,723,033 | |
Exercisable as of March 31, 2017 | 3,598,309 | |
Weighted Average Exercise Price per Share | ||
Outstanding as of January 1, 2017 | $ 96.90 | |
Granted | 83.19 | |
Exercised | 48.52 | |
Forfeited | 113.59 | |
Cancelled or expired | 98.31 | |
Outstanding as of March 31, 2017 | 96.53 | |
Exercisable as of March 31, 2017 | $ 89.19 | |
Weighted Average Remaining Contractual Life | ||
Outstanding as of March 31, 2017 | 5 years 3 months 11 days | |
Exercisable as of March 31, 2017 | 4 years 6 months 7 days | |
Total Aggregate Intrinsic Value | ||
Outstanding as of March 31, 2017 | $ 27,811 | |
Exercisable as of March 31, 2017 | $ 27,740 |
STOCK BASED COMPENSATION - Intr
STOCK BASED COMPENSATION - Intrinsic Value of Options Exercised (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | ||
Total intrinsic value of options exercised | $ 2,908 | $ 13,229 |
STOCK BASED COMPENSATION - Assu
STOCK BASED COMPENSATION - Assumptions Used in Black-Scholes Option Pricing Model (Detail) - $ / shares | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | ||
Stock options granted (shares) | 425,599 | 1,008,569 |
Weighted average fair value at grant date | $ 19.53 | $ 20.19 |
Expected term (in years) | 4 years 9 months 26 days | 4 years 9 months 4 days |
Expected volatility | 22.66% | 18.02% |
Expected dividend yield | 0.00% | 0.00% |
Risk free interest rate | 1.91% | 1.26% |
STOCK BASED COMPENSATION - Summ
STOCK BASED COMPENSATION - Summary of RSU Activity (Detail) - Restricted Stock Units (RSUs) $ / shares in Units, $ in Thousands | 3 Months Ended |
Mar. 31, 2017USD ($)$ / sharesshares | |
Number of Units | |
Outstanding as of January 1, 2017 | shares | 114,838 |
Granted | shares | 183,940 |
Vested and released | shares | (30,000) |
Forfeited | shares | (1,627) |
Outstanding as of March 31, 2017 | shares | 267,151 |
Weighted Average Grant Date Fair Value Per Share | |
Outstanding as of January 1, 2017 | $ / shares | $ 104.22 |
Granted | $ / shares | 83.24 |
Vested and released | $ / shares | 76.87 |
Forfeited | $ / shares | 110.46 |
Outstanding as of March 31, 2017 | $ / shares | $ 92.68 |
Weighted Average Remaining Contractual Life | |
Outstanding as of March 31, 2017 | 2 years 6 months 22 days |
Total Aggregate Intrinsic Value | |
Outstanding as of March 31, 2017 | $ | $ 24,760 |
PREFERRED STOCK - Additional In
PREFERRED STOCK - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands | Sep. 15, 2015 | Mar. 31, 2017 | Feb. 28, 2017 | Jan. 31, 2017 | Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 |
Class of Stock [Line Items] | |||||||
Preferred stock, authorized (in shares) | 1,000,000 | 1,000,000 | 1,000,000 | ||||
Preferred stock, issued (in shares) | 711,930 | 711,930 | 726,500 | ||||
Preferred stock, outstanding (in shares) | 711,930 | 711,930 | 726,500 | ||||
Depositary shares (in shares) | 7,700,000 | ||||||
Preferred stock, dividend rate | 5.25% | ||||||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | |||
Gross proceeds from issuance of preferred stock | $ 770,000 | ||||||
Preferred stock, liquidation preference (in dollars per share) | $ 1,000 | ||||||
Depositary Shares, Liquidation Preference Per Share | $ 100 | ||||||
Dividends paid on mandatory convertible preferred stock | $ 9,364 | $ 10,106 | |||||
Increase to retained earnings on repurchase of mandatory convertible preferred stock | $ 4,563 | $ 0 | |||||
Depositary shares repurchased during period (in shares) | 5,006 | 40,694 | 100,000 | 145,700 | |||
Depository shares equivalent to preferred stock units (in shares) | 14,570 | 14,570 | |||||
Minimum | |||||||
Class of Stock [Line Items] | |||||||
Common stock issuable upon conversion (in shares) | 5.8716 | ||||||
Maximum | |||||||
Class of Stock [Line Items] | |||||||
Common stock issuable upon conversion (in shares) | 7.3394 | ||||||
Preferred Stock | |||||||
Class of Stock [Line Items] | |||||||
Issuance of preferred stock (in dollars per share) | $ 100 |
PREFERRED STOCK - Repurchases o
PREFERRED STOCK - Repurchases of Depository Shares of Mandatory Convertible Preferred Stock (Detail) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | ||
Mar. 31, 2017 | Feb. 28, 2017 | Jan. 31, 2017 | Mar. 31, 2017 | |
Equity [Abstract] | ||||
Number of Depository Shares Repurchased | 5,006 | 40,694 | 100,000 | 145,700 |
Amount Paid for Repurchases | $ 351 | $ 2,668 | $ 6,551 | $ 9,570 |
Average Price Paid per Share | $ 70 | $ 65.57 | $ 65.51 | $ 65.68 |
EARNINGS PER COMMON SHARE - Com
EARNINGS PER COMMON SHARE - Computation of Basic and Diluted Net Income Per Share (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Numerator: | ||
Net income attributable to Stericycle, Inc. | $ 58,189 | $ 76,786 |
Mandatory convertible preferred stock dividend | 9,364 | 10,106 |
Gain on repurchase of preferred stock | (4,563) | 0 |
Net Income Attributable to Stericycle, Inc. Common Shareholders | $ 53,388 | $ 66,680 |
Denominator: | ||
Denominator for basic earnings per share-weighted average shares (in shares) | 85,220,228 | 84,705,000 |
Effect of diluted securities: | ||
Dilutive effect of stock-based compensation awards (in shares) | 352,181 | 1,140,501 |
Mandatory convertible preferred stock (in shares) | 0 | 0 |
Denominator for diluted earnings per share-adjusted weighted average shares and after assumed exercises (in shares) | 85,572,409 | 85,845,501 |
Earnings per share - Basic (in dollars per share) | $ 0.63 | $ 0.79 |
Earnings per share - Diluted (in dollars per share) | $ 0.62 | $ 0.78 |
EARNINGS PER COMMON SHARE - C49
EARNINGS PER COMMON SHARE - Computation of Basic and Diluted Net Income Per Share (Parenthetical) (Detail) - shares | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Mandatory Convertible Preferred Stock | ||
Antidilutive shares excluded from computation of diluted earnings per share | ||
Antidilutive shares excluded from computation of diluted earnings per share (in shares) | 5,264,188 | 5,651,376 |
EARNINGS PER COMMON SHARE - Add
EARNINGS PER COMMON SHARE - Additional Information (Detail) - shares | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Stock Options | ||
Antidilutive shares excluded from computation of diluted earnings per share | ||
Antidilutive shares excluded from computation of diluted earnings per share (in shares) | 4,660,568 | 2,309,479 |
Restricted Stock Units (RSUs) | ||
Antidilutive shares excluded from computation of diluted earnings per share | ||
Antidilutive shares excluded from computation of diluted earnings per share (in shares) | 135,309 | 500 |
Performance-Based Restricted Stock Units | ||
Antidilutive shares excluded from computation of diluted earnings per share | ||
Antidilutive shares excluded from computation of diluted earnings per share (in shares) | 10,348 |
FAIR VALUE MEASUREMENTS - Summa
FAIR VALUE MEASUREMENTS - Summary of Financial Assets and Liabilities Carried at Fair Value on Recurring Basis (Detail) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Assets: | ||
Short-term investments | $ 62 | $ 62 |
Derivative financial instruments | 790 | 816 |
Total | 852 | 878 |
Liabilities: | ||
Contingent consideration | 24,877 | 24,119 |
Level 1 Inputs [Member] | ||
Assets: | ||
Short-term investments | 62 | 62 |
Derivative financial instruments | 0 | 0 |
Total | 62 | 62 |
Liabilities: | ||
Contingent consideration | 0 | 0 |
Level 2 Inputs [Member] | ||
Assets: | ||
Short-term investments | 0 | 0 |
Derivative financial instruments | 790 | 816 |
Total | 790 | 816 |
Liabilities: | ||
Contingent consideration | 0 | 0 |
Level 3 Inputs [Member] | ||
Assets: | ||
Short-term investments | 0 | 0 |
Derivative financial instruments | 0 | 0 |
Total | 0 | 0 |
Liabilities: | ||
Contingent consideration | $ 24,877 | $ 24,119 |
FAIR VALUE MEASUREMENTS - Addit
FAIR VALUE MEASUREMENTS - Additional Information (Detail) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Derivative asset | $ 790,000 | $ 816,000 |
Contingent consideration liabilities | 24,877,000 | 24,119,000 |
Debt obligations, carrying amount | 2,871,875,000 | 2,959,316,000 |
Maximum | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Maximum contingent liability if financial performance measures were fully met | 25,700,000 | |
Level 3 Inputs [Member] | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Derivative asset | 0 | 0 |
Contingent consideration liabilities | 24,877,000 | 24,119,000 |
Level 3 Inputs [Member] | Current Liabilities [Member] | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Contingent consideration liabilities | 8,700,000 | 8,100,000 |
Level 2 Inputs [Member] | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Derivative asset | 790,000 | 816,000 |
Contingent consideration liabilities | 0 | 0 |
Debt obligations, fair value | $ 2,880,000,000 | $ 2,970,000,000 |
FAIR VALUE MEASUREMENTS - Chang
FAIR VALUE MEASUREMENTS - Changes to Contingent Consideration (Detail) - Contingent Consideration Liability $ in Thousands | 3 Months Ended |
Mar. 31, 2017USD ($) | |
Business Combination, Contingent Consideration, Liability [Roll Forward] | |
Contingent consideration as of January 1, 2017 | $ 24,119 |
Increases due to acquisitions | 53 |
Changes due to foreign currency fluctuations | 304 |
Changes in fair value reflected in selling, general, and administrative expenses | 401 |
Contingent consideration as of March 31, 2017 | $ 24,877 |
GOODWILL AND OTHER INTANGIBLE54
GOODWILL AND OTHER INTANGIBLE ASSETS - Changes in Carrying Amount of Goodwill (Detail) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Goodwill [Roll Forward] | ||
Beginning Balance | $ 3,591,020 | $ 3,758,177 |
Goodwill acquired during the period | 19,107 | 52,769 |
Purchase accounting adjustments | (216) | (161,189) |
Other changes | 20 | (7,486) |
Changes due to foreign currency fluctuations | 12,862 | (51,251) |
Ending Balance | 3,622,793 | 3,591,020 |
Domestic and Canada RCS | ||
Goodwill [Roll Forward] | ||
Beginning Balance | 2,811,801 | 2,842,711 |
Goodwill acquired during the period | 11,782 | 41,517 |
Purchase accounting adjustments | (168) | (77,247) |
Other changes | 0 | 0 |
Changes due to foreign currency fluctuations | 1,278 | 4,820 |
Ending Balance | 2,824,693 | 2,811,801 |
International Regulated and Compliance Services | ||
Goodwill [Roll Forward] | ||
Beginning Balance | 498,421 | 632,491 |
Goodwill acquired during the period | 2,706 | 8,381 |
Purchase accounting adjustments | (76) | (78,894) |
Other changes | 20 | (7,486) |
Changes due to foreign currency fluctuations | 11,584 | (56,071) |
Ending Balance | 512,655 | 498,421 |
Other | ||
Goodwill [Roll Forward] | ||
Beginning Balance | 280,798 | 282,975 |
Goodwill acquired during the period | 4,619 | 2,871 |
Purchase accounting adjustments | 28 | (5,048) |
Other changes | 0 | 0 |
Changes due to foreign currency fluctuations | 0 | 0 |
Ending Balance | $ 285,445 | $ 280,798 |
GOODWILL AND OTHER INTANGIBLE55
GOODWILL AND OTHER INTANGIBLE ASSETS - Carrying Values of Other Intangible Assets (Detail) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Intangible Assets By Major Class [Line Items] | |||
Gross Carrying Amount | $ 2,159,545 | $ 2,133,541 | |
Accumulated Amortization | 302,336 | 271,568 | |
Net Value | 1,857,209 | 1,861,973 | $ 1,842,561 |
Operating permits | |||
Intangible Assets By Major Class [Line Items] | |||
Carrying Amount, Indefinite Lived Intangible Assets | 231,938 | 229,396 | |
Tradenames | |||
Intangible Assets By Major Class [Line Items] | |||
Carrying Amount, Indefinite Lived Intangible Assets | 317,474 | 316,472 | |
Customer relationships | |||
Intangible Assets By Major Class [Line Items] | |||
Gross Carrying Amount | 1,575,206 | 1,553,398 | |
Accumulated Amortization | 291,414 | 261,306 | |
Net Value | 1,283,792 | 1,292,092 | |
Covenants not-to-compete | |||
Intangible Assets By Major Class [Line Items] | |||
Gross Carrying Amount | 9,360 | 9,491 | |
Accumulated Amortization | 6,517 | 6,371 | |
Net Value | 2,843 | 3,120 | |
Tradenames | |||
Intangible Assets By Major Class [Line Items] | |||
Gross Carrying Amount | 5,760 | 5,708 | |
Accumulated Amortization | 1,469 | 1,365 | |
Net Value | 4,291 | 4,343 | |
Other | |||
Intangible Assets By Major Class [Line Items] | |||
Gross Carrying Amount | 19,807 | 19,076 | |
Accumulated Amortization | 2,936 | 2,526 | |
Net Value | $ 16,871 | $ 16,550 |
GOODWILL AND OTHER INTANGIBLE56
GOODWILL AND OTHER INTANGIBLE ASSETS - Changes in Carrying Amount of Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Finite-lived and Indefinite-lived Intangible Assets [Roll Forward] | |||
Beginning of period | $ 1,861,973 | $ 1,842,561 | $ 1,842,561 |
Intangible assets acquired during the period | 11,515 | 35,564 | |
Valuation adjustments for prior year acquisitions | 2,124 | 168,979 | |
Intangible write-offs due to disposition and assets held for sale | (15,961) | ||
Impairments during the period | (408) | (1,406) | |
Intangible amortization during the period | (29,089) | $ (18,274) | (129,300) |
Changes due to foreign currency fluctuations | 11,094 | (38,464) | |
End of period | $ 1,857,209 | $ 1,861,973 |
GOODWILL AND OTHER INTANGIBLE57
GOODWILL AND OTHER INTANGIBLE ASSETS - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Intangible Assets By Major Class [Line Items] | |||
Aggregate intangible amortization expense | $ 29,089 | $ 18,274 | $ 129,300 |
Customer relationships | |||
Intangible Assets By Major Class [Line Items] | |||
Finite-lived intangible assets, weighted average remaining useful life | 15 years 1 month 6 days | ||
Customer relationships | Minimum | |||
Intangible Assets By Major Class [Line Items] | |||
Finite-lived intangible assets, useful life | 5 years | ||
Customer relationships | Maximum | |||
Intangible Assets By Major Class [Line Items] | |||
Finite-lived intangible assets, useful life | 40 years | ||
Covenants not-to-compete | |||
Intangible Assets By Major Class [Line Items] | |||
Finite-lived intangible assets, weighted average remaining useful life | 3 years | ||
Covenants not-to-compete | Minimum | |||
Intangible Assets By Major Class [Line Items] | |||
Finite-lived intangible assets, useful life | 5 years | ||
Covenants not-to-compete | Maximum | |||
Intangible Assets By Major Class [Line Items] | |||
Finite-lived intangible assets, useful life | 14 years | ||
Tradenames | |||
Intangible Assets By Major Class [Line Items] | |||
Finite-lived intangible assets, weighted average remaining useful life | 16 years 2 months 12 days | ||
Tradenames | Minimum | |||
Intangible Assets By Major Class [Line Items] | |||
Finite-lived intangible assets, useful life | 10 years | ||
Tradenames | Maximum | |||
Intangible Assets By Major Class [Line Items] | |||
Finite-lived intangible assets, useful life | 40 years | ||
Other intangibles | |||
Intangible Assets By Major Class [Line Items] | |||
Finite-lived intangible assets, weighted average remaining useful life | 17 years 2 months 12 days |
GOODWILL AND OTHER INTANGIBLE58
GOODWILL AND OTHER INTANGIBLE ASSETS - Estimated Amortization Expense (Detail) $ in Thousands | Mar. 31, 2017USD ($) |
Goodwill And Intangible Assets Disclosure [Abstract] | |
2,017 | $ 116,974 |
2,018 | 117,115 |
2,019 | 116,751 |
2,020 | 116,014 |
2,021 | $ 115,587 |
DEBT - Schedule of Long-Term De
DEBT - Schedule of Long-Term Debt (Detail) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Debt Instrument [Line Items] | ||
Total debt | $ 2,871,875 | $ 2,959,316 |
Less: current portion of total debt | 96,301 | 72,822 |
Less: unamortized debt issuance costs | 8,539 | 9,179 |
Long-term portion of total debt | 2,767,035 | 2,877,315 |
Obligations under capital leases | ||
Debt Instrument [Line Items] | ||
Total debt | 10,820 | 11,121 |
$1.2 billion senior credit facility weighted average rate 2.23%, due in 2019 | ||
Debt Instrument [Line Items] | ||
Total debt | 346,506 | 407,119 |
$1.0 billion term loan weighted average rate 2.33%, due in 2020 | ||
Debt Instrument [Line Items] | ||
Total debt | 970,000 | 1,000,000 |
$175 million private placement notes 3.89%, due in 2017 | ||
Debt Instrument [Line Items] | ||
Total debt | 175,000 | 175,000 |
$125 million private placement notes 2.68%, due in 2019 | ||
Debt Instrument [Line Items] | ||
Total debt | 125,000 | 125,000 |
$225 million private placement notes 4.47%, due in 2020 | ||
Debt Instrument [Line Items] | ||
Total debt | 225,000 | 225,000 |
$150 million private placement notes 2.89%, due in 2021 | ||
Debt Instrument [Line Items] | ||
Total debt | 150,000 | 150,000 |
$125 million private placement notes 3.26%, due in 2022 | ||
Debt Instrument [Line Items] | ||
Total debt | 125,000 | 125,000 |
$200 million private placement notes 2.72%, due in 2022 | ||
Debt Instrument [Line Items] | ||
Total debt | 200,000 | 200,000 |
$100 million private placement notes 2.79%, due in 2023 | ||
Debt Instrument [Line Items] | ||
Total debt | 100,000 | 100,000 |
$150 million private placement notes 3.18%, due in 2023 | ||
Debt Instrument [Line Items] | ||
Total debt | 150,000 | 150,000 |
Promissory notes and deferred consideration weighted average rate of 2.39% and weighted average maturity of 3.3 years | ||
Debt Instrument [Line Items] | ||
Total debt | 193,208 | 191,648 |
Foreign bank debt weighted average rate 6.25% and weighted average maturity of 1.9 years | ||
Debt Instrument [Line Items] | ||
Total debt | $ 101,341 | $ 99,428 |
DEBT - Schedule of Long-Term 60
DEBT - Schedule of Long-Term Debt (Parenthetical) (Detail) | 3 Months Ended |
Mar. 31, 2017USD ($) | |
$1.2 billion senior credit facility weighted average rate 2.23%, due in 2019 | |
Debt Instrument [Line Items] | |
Maximum borrowing capacity of line of credit facility | $ 1,200,000,000 |
Long-term debt, weighted average interest rate | 2.23% |
$1.0 billion term loan weighted average rate 2.33%, due in 2020 | |
Debt Instrument [Line Items] | |
Maximum borrowing capacity of line of credit facility | $ 1,000,000,000 |
Stated interest rate | 2.33% |
$175 million private placement notes 3.89%, due in 2017 | |
Debt Instrument [Line Items] | |
Stated interest rate | 3.89% |
Long-term debt, face amount | $ 175,000,000 |
$125 million private placement notes 2.68%, due in 2019 | |
Debt Instrument [Line Items] | |
Stated interest rate | 2.68% |
Long-term debt, face amount | $ 125,000,000 |
$225 million private placement notes 4.47%, due in 2020 | |
Debt Instrument [Line Items] | |
Stated interest rate | 4.47% |
Long-term debt, face amount | $ 225,000,000 |
$150 million private placement notes 2.89%, due in 2021 | |
Debt Instrument [Line Items] | |
Stated interest rate | 2.89% |
Long-term debt, face amount | $ 150,000,000 |
$125 million private placement notes 3.26%, due in 2022 | |
Debt Instrument [Line Items] | |
Stated interest rate | 3.26% |
Long-term debt, face amount | $ 125,000,000 |
$200 million private placement notes 2.72%, due in 2022 | |
Debt Instrument [Line Items] | |
Stated interest rate | 2.72% |
Long-term debt, face amount | $ 200,000,000 |
$100 million private placement notes 2.79%, due in 2023 | |
Debt Instrument [Line Items] | |
Stated interest rate | 2.79% |
Long-term debt, face amount | $ 100,000,000 |
$150 million private placement notes 3.18%, due in 2023 | |
Debt Instrument [Line Items] | |
Stated interest rate | 3.18% |
Long-term debt, face amount | $ 150,000,000 |
Promissory notes and deferred consideration weighted average rate of 2.39% and weighted average maturity of 3.3 years | |
Debt Instrument [Line Items] | |
Long-term debt, weighted average interest rate | 2.39% |
Long-term debt, maturity | 3 years 3 months 18 days |
Foreign bank debt weighted average rate 6.25% and weighted average maturity of 1.9 years | |
Debt Instrument [Line Items] | |
Long-term debt, weighted average interest rate | 6.25% |
Long-term debt, maturity | 1 year 10 months 24 days |
DEBT - Additional Information (
DEBT - Additional Information (Detail) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
$1.20 billion senior credit facility weighted average rate 2.23%, due in 2019 | ||
Debt Instrument [Line Items] | ||
Revolving credit facility, amount committed to outstanding letters of credit | $ 138,900,000 | $ 138,000,000 |
Revolving credit facility, unused portion | 714,600,000 | $ 654,900,000 |
Maximum borrowing capacity of line of credit facility | 1,200,000,000 | |
$175 million private placement notes 3.89%, due in 2017 | ||
Debt Instrument [Line Items] | ||
Long-term debt, face amount | $ 175,000,000 |
ENVIRONMENTAL REMEDITATION LI62
ENVIRONMENTAL REMEDITATION LIABILITIES - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Dec. 31, 2016 | |
Loss Contingencies [Line Items] | ||
Environmental remediation liabilities | $ 31.4 | $ 30.9 |
Environmental remediation liabilities, projection term | 30 years | |
Accrued Liabilities [Member] | ||
Loss Contingencies [Line Items] | ||
Environmental remediation liabilities | $ 2.6 | $ 2.4 |
SEGMENT REPORTING - Additional
SEGMENT REPORTING - Additional Information (Detail) | 3 Months Ended |
Mar. 31, 2017Segment | |
Segment Reporting [Abstract] | |
Number of operating segments | 3 |
Number of reportable segments | 2 |
SEGMENT REPORTING - Financial I
SEGMENT REPORTING - Financial Information Concerning Company's Reportable Segments (Detail) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Segment Reporting Information [Line Items] | |||
Revenues | $ 892,399 | $ 874,181 | |
Gross Profit | 368,662 | 366,580 | |
Intangible amortization | 29,089 | 18,274 | $ 129,300 |
Adjusted EBITA | 170,370 | 180,352 | |
Domestic and Canada RCS | |||
Segment Reporting Information [Line Items] | |||
Revenues | 633,733 | 616,131 | |
Gross Profit | 278,103 | 273,915 | |
Intangible amortization | 21,700 | 11,317 | |
Adjusted EBITA | 186,449 | 184,852 | |
International Regulated and Compliance Services | |||
Segment Reporting Information [Line Items] | |||
Revenues | 181,580 | 188,009 | |
Gross Profit | 58,492 | 60,733 | |
Intangible amortization | 5,344 | 4,977 | |
Adjusted EBITA | 20,045 | 18,931 | |
All Other Segments | |||
Segment Reporting Information [Line Items] | |||
Revenues | 77,086 | 70,041 | |
Gross Profit | 32,067 | 31,932 | |
Intangible amortization | 2,045 | 1,980 | |
Adjusted EBITA | $ (36,124) | $ (23,431) |
SEGMENT REPORTING - Reconciliat
SEGMENT REPORTING - Reconciliation of Company's Primary Measure of Segment Profitability (EBITA) to Income from Operations (Detail) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Segment Reporting [Abstract] | |||
Adjusted EBITA | $ 170,370 | $ 180,352 | |
Intangible amortization expenses (see Note 10) | (29,089) | (18,274) | $ (129,300) |
Acquisition and integration expenses (see Note 3) | (19,820) | (22,258) | |
Litigation and professional services expenses (b) | (3,620) | (1,300) | |
Restructuring, contract exit and plant conversion expenses (see Note 4) | (2,891) | (241) | |
Change in fair value of contingent consideration (see Note 9) | (401) | 2,644 | |
Income from Operations | $ 114,549 | $ 140,923 |
SEGMENT REPORTING - Summary of
SEGMENT REPORTING - Summary of Revenues Details by Service Line (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Entity Wide Information Revenue From External Customer [Line Items] | ||
Revenues | $ 892,399 | $ 874,181 |
Regulated waste and compliance services | ||
Entity Wide Information Revenue From External Customer [Line Items] | ||
Revenues | 511,177 | 506,581 |
Secure Information Destruction Services | ||
Entity Wide Information Revenue From External Customer [Line Items] | ||
Revenues | 204,075 | 184,630 |
Communication and related services | ||
Entity Wide Information Revenue From External Customer [Line Items] | ||
Revenues | 93,516 | 87,949 |
Manufacturing and Industrial Services | ||
Entity Wide Information Revenue From External Customer [Line Items] | ||
Revenues | $ 83,631 | $ 95,021 |