BUSINESS COMBINATIONS

9 Months Ended

Sep. 30, 2013

Business Combinations [Abstract]

BUSINESS COMBINATIONS

BUSINESS COMBINATIONS

Evergreen Oil, Inc.

On September 13, 2013, Safety-Kleen, Inc. acquired 100% of the outstanding common shares of Evergreen Oil, Inc. (“Evergreen”) for approximately $57.0 million. The purchase price consisted of an all-cash purchase price of $60.5 million, less a $3.5 million adjustment for the amount by which the estimated net working capital (as defined in the stock purchase agreement) of Evergreen on the closing date was less than $1.0 million. The purchase price is subject to adjustment upon finalization of Evergreen’s net working capital balance as of the closing date. Goodwill of $2.8 million and $0.4 million has been recorded on a preliminary basis in the Oil Re-refining and Recycling and SK Environmental Services segments, respectively, and will not be deductible for tax purposes. Evergreen, headquartered in Irvine, California, specializes in the recovery and re-refining of used oil and is currently the second-largest collector of used oil in California. Evergreen owns and operates one of the only oil re-refining operations in the western United States and also offers other ancillary environmental services, including parts cleaning and containerized waste services, vacuum services and hazardous waste management services.

The Company believes Evergreen is a good strategic fit, enabling Clean Harbors to further (i) penetrate the small quantity waste generator market, (ii) expand its oil re-refining, oil recycling and waste treatment capabilities, (iii) increase the waste volumes into its existing waste disposal treatment network, (v) enhance its commitment to sustainability, (vi) leverage the combined sales forces to maximize cross-selling opportunities, and (viii) leverage operating efficiencies through the combined company.

Safety-Kleen, Inc.

On December 28, 2012, the Company acquired 100% of the outstanding common shares of Safety-Kleen for approximately $1.3 billion. The purchase price consisted of an all-cash purchase price of $1.25 billion, plus a $13.3 million adjustment for the amount by which the net working capital (excluding cash) of Safety-Kleen on the closing date exceeded $50.0 million. The Company incurred acquisition-related costs of approximately $0.9 million and $2.2 million in connection with the transaction which are included in selling, general and administrative expenses in the consolidated statements of income for the three and nine months ended September 30, 2013, respectively. The Company financed the purchase through a combination of approximately $300.0 million of existing cash, $369.3 million in net proceeds from the Company's public offering of 6.9 million shares of Clean Harbors common stock, and approximately $589.0 million in net proceeds from the Company's private debt offering of $600.0 million of 5.125% senior unsecured notes due 2021. Safety-Kleen, headquartered in Richardson, Texas, is the largest re-refiner and recycler of used oil in North America and a leading provider of parts cleaning and environmental services to commercial, industrial and automotive customers. In conjunction with the transaction, Safety-Kleen, Inc. and its subsidiaries became wholly-owned subsidiaries of Clean Harbors.

The fair value of all the acquired identifiable assets and liabilities summarized below is provisional pending finalization of the Company's acquisition accounting. Measurement period adjustments reflect new information obtained about facts and circumstances that existed as of the acquisition date. The Company believes that such preliminary allocations provide a reasonable basis for estimating the fair values of assets acquired and liabilities assumed, but the Company is waiting for additional information necessary to finalize fair value. The Company expects to finalize the valuation and complete the purchase price allocation as soon as practicable but no later than one year from the acquisition date. As the measurement period adjustments are not material to the consolidated balance sheets as of December 31, 2012 nor are they material to the amounts reported in the consolidated statements of income and consolidated statement of cash flows for the three and nine months ended September 30, 2013, the adjustments have been recorded on a prospective basis. Final determination of the fair value may result in further adjustments to the values presented below. The following table summarizes the recognized amounts of identifiable assets acquired and liabilities assumed (in thousands).

	Preliminary Allocations			Year-to-Date Measurement Period Adjustments			Current Estimate of Allocations
Inventories and supplies	$	102,339		$	5,037		$	107,376
Other current assets (i)	152,245			319			152,564
Property, plant and equipment	514,712			779			515,491
Permits and other intangibles	421,400			4,577			425,977
Other assets	4,985			(1,111		)	3,874
Current liabilities	(192,652		)	(5,081		)	(197,733		)
Closure and post-closure liabilities, less current portion	(15,774		)	8,221			(7,553		)
Remedial liabilities, less current portion	(38,370		)	(10,577		)	(48,947		)
Deferred taxes, unrecognized tax benefits and other long-term liabilities	(128,375		)	7,178			(121,197		)
Total identifiable net assets	820,510			9,342			829,852
Goodwill (ii)	436,749			(3,317		)	433,432
Total	$	1,257,259		$	6,025		$	1,263,284

_______________________

(i) The fair value of the assets acquired includes customer receivables with a preliminary aggregate fair value of $133.7 million. Combined gross amounts due were $143.7 million.

(ii) Goodwill represents the excess of the fair value of the net assets acquired over the purchase price. Goodwill of $214.1 million, $147.3 million, $69.9 million, and $2.1 million has been recorded on a preliminary basis in the Oil Re-refining and Recycling, SK Environmental Services, Industrial and Field Services and Technical Services segments, respectively. None of the goodwill related to this acquisition will be deductible for tax purposes.    

The Company has determined that the separate disclosure of Safety-Kleen's revenues and earnings is impracticable for the three and nine months ended September 30, 2013 due to the integration of Safety-Kleen's operations into the Company upon acquisition.

The following unaudited pro forma combined summary financial information presented below gives effect to the following transactions as if they had occurred as of January 1, 2011, and assumes that there were no material, non-recurring pro forma adjustments directly attributable to: (i) the acquisition of Safety-Kleen, (ii) the sale of 6.9 million shares of the Company's common stock, (iii) the issuance of $600.0 million aggregate principal amount of 5.125% senior unsecured notes due 2021, and (iv) the payment of related fees and expenses (in thousands):

	For the Three Months Ended		For the Nine Months Ended
	September 30, 2012		September 30, 2012
Pro forma combined revenues	$	851,376	$	2,691,025
Pro forma combined net income	$	13,480	$	90,546

This pro forma financial information is not necessarily indicative of the Company's consolidated operating results that would have been reported had the transactions been completed as described herein, nor is such information necessarily indicative of the Company's consolidated results for any future period.

Other 2012 Acquisitions

The Company acquired (i) during the second quarter of 2012, all of the outstanding stock of a privately owned Canadian company which provides workforce accommodations, camp catering and fresh food services; (ii) during the third quarter of 2012, certain assets of a privately owned U.S. company that is engaged in the business of materials handling services that includes a variety of support equipment to provide customers with a sole source for any dredging and dewatering project; and (iii) during the fourth quarter of 2012, the shares and assets of certain subsidiaries of a privately owned company that is engaged in the business of providing catalyst loading and unloading services in the United States and Canada. The combined purchase price for these acquisitions was approximately $108.9 million, including the assumption and payment of debt of $7.7 million and post-closing adjustments of $2.1 million based upon finalization of the working capital balances as of the closing date. Management has determined the purchase price allocations based on estimates of the fair values of all tangible and intangible assets acquired and liabilities assumed. The Company believes that such information provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed.

As of September 30, 2013, the Company had finalized the acquisition accounting of the identified acquired assets and liabilities for the other 2012 acquisitions, the impact of which was not material to the financial statements. The following table summarizes the recognized amounts of identifiable assets acquired and liabilities assumed (in thousands).

	Preliminary Allocations			Year-to-Date Measurement Period Adjustments			Final Allocations
Current assets (i)	$	20,270		$	117		$	20,387
Property, plant and equipment	51,901			(8		)	51,893
Customer relationships and other intangibles	21,770			(1		)	21,769
Other assets	53			4			57
Current liabilities	(5,277		)	(22		)	(5,299		)
Other liabilities	(5,133		)	(79		)	(5,212		)
Total identifiable net assets	83,584			11			83,595
Goodwill (ii)	23,956			1,308			25,264
Total	$	107,540		$	1,319		$	108,859

______________________

(i) The fair value of the financial assets acquired included customer receivables with an aggregate fair value of $13.2 million. Combined gross amounts due were $13.5 million.  

(ii) Goodwill represents the excess of the fair value of the net assets acquired over the purchase price attributed to expected operating and cross selling synergies. The goodwill has been assigned to the Industrial and Field Services segment and will not be deductible for tax purposes.

The following unaudited pro forma combined financial data presents information as if the 2012 acquisitions had been acquired as of January 1, 2011 and assumes that there were no material, non-recurring pro forma adjustments directly attributable to those acquisitions. The pro forma financial information does not necessarily reflect the actual results that would have been reported had the Company and those three acquisitions been combined during the periods presented, nor is it necessarily indicative of the future results of operations of the combined companies (in thousands).

	For the Three Months Ended		For the Nine Months Ended
	September 30, 2012		September 30, 2012
Pro forma combined revenues	$	545,393	$	1,698,246
Pro forma combined net income	$	11,982	$	72,351

Acquisition-related costs of $0.2 million for the other 2012 acquisitions were included in selling, general and administrative expenses in the Company's consolidated statements of income for the nine months ended September 30, 2013.