ACQUISITIONS AND DIVESTITURES

9 Months Ended

Sep. 30, 2014

Business Combinations [Abstract]

ACQUISITIONS AND DIVESTITURES

ACQUISITIONS AND DIVESTITURES

The following table summarizes the locations of our acquisitions for the nine months ended September 30, 2014:

Acquisition Locations	2014
United States	12
Brazil	1
Canada	2
Chile	3
Japan	2
Portugal	5
Romania	3
South Korea	1
Spain	3
United Kingdom	3
Total	35

During the quarter ended March 31, 2014, we completed five acquisitions. Domestically, we acquired selected assets of one regulated waste business and selected assets of one communication solutions business. Internationally, in Portugal, we acquired 100% of the stock of three regulated waste businesses.

During the quarter ended June 30, 2014, we completed fourteen acquisitions. Domestically, we acquired 100% of the stock of one regulated waste business, selected assets of two regulated waste businesses, and one communication solutions business. Internationally, in Brazil, we acquired selected assets of one regulated waste business. In Canada, we acquired 100% of the stock of one communication solutions business. In Chile, we acquired 100% of the stock of one regulated waste business, and 90% of the stock of another. In South Korea, which represents a new market for us, we acquired 75.5% of the stock of one regulated waste business. In Portugal, we acquired 100% of the stock of one regulated waste business. In Romania, we acquired selected assets of one regulated waste business and 100% of the stock of another. In Spain, we acquired selected assets of one regulated waste business. In addition, we acquired selected assets of one regulated waste business in the United Kingdom.

During the quarter ended September 30, 2014, we completed sixteen acquisitions. Domestically, we acquired selected assets of five regulated waste businesses and one communication solutions business. In Canada, we acquired 100% of the stock of one communication solutions business. In Chile, we acquired 100% of the stock of one regulated waste business. In Japan, we acquired 100% of the stock of two regulated waste businesses. In Portugal, we acquired 100% of the stock of one regulated waste business. In Romania, we acquired selected assets of one regulated waste business. In Spain, we acquired 100% of the stock of one regulated waste business and selected assets of one regulated waste business. In addition, we acquired 100% of the stock of two regulated waste businesses in the United Kingdom.

The following table summarizes the aggregate purchase price paid for acquisitions and other adjustments of consideration to be paid for acquisitions during the nine months ended September 30:

In thousands
	Nine Months Ended September 30,
	2014		2013
Cash	$	328,811	$	131,902
Promissory notes	78,325		56,602
Deferred consideration	6,124		28,550
Contingent consideration	16,495		3,378
Total purchase price	$	429,755	$	220,432

For financial reporting purposes, our 2014 and 2013 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 nine months ended September 30, 2014, we recognized a net increase in goodwill of $202.4 million excluding the effect of foreign currency translation (see Note 9 – Goodwill and Other Intangible Assets, in the Notes to the Condensed Consolidated Financial Statements). A net increase of $176.2 million was assigned to our United States reportable segment, and a net increase of $26.2 million was assigned to our International reportable segment. Approximately $99 million of the goodwill recognized during the nine months ended September 30, 2014 will be deductible for income taxes.

During the nine months ended September 30, 2014, we recognized a net increase in intangible assets from acquisitions of $242.8 million, excluding the effect of foreign currency translation. The changes include $97.0 million in the estimated fair value of acquired customer relationships with amortizable lives of 10 to 40 years, $145.3 million in permits with indefinite lives, and $0.2 million in tradename with an amortizable life of 15 years, and $0.3 million in other intangibles with an amortizable life of 10 years.

The purchase prices for these acquisitions in excess of acquired tangible assets have been primarily allocated to goodwill and other intangibles and are preliminary, pending completion of certain intangible asset valuations and completion accounts. The following table summarizes the preliminary purchase price allocation for current period acquisitions and other adjustments to purchase price allocations during the nine months ended September 30:

In thousands
	Nine Months Ended September 30,
	2014			2013
Fixed assets	$	127,621		$	10,683
Intangibles	242,792			79,798
Goodwill	202,391			153,482
Accounts receivable	56,696			9,392
Accounts payable	(32,561		)	(6,100		)
Net other (liabilities)/ assets	(67,564		)	(6,448		)
Debt	(22,097		)	(3,642		)
Net deferred tax liabilities	(70,580		)	(12,521		)
Noncontrolling interests	(6,943		)	(4,212		)
Total purchase price allocation	$	429,755		$	220,432

During the nine months ended September 30, 2014 and 2013, the Company incurred $10.7 million and $6.2 million, respectively, of acquisition related expenses. These expenses are included with "Selling, general and administrative expenses" ("SG&A") on our Condensed Consolidated Statements of Income.

Included in the acquisitions discussed above for the quarter ended June 30, 2014 is the acquisition of 100% of the stock of PSC Environmental Services, LLC ("PSC Environmental"), which was consummated on April 22, 2014. Subject to various adjustments, the total consideration for the PSC Environmental acquisition was $284.0 million, of which $248.2 million was paid in cash, $30.0 million was paid by a two-year promissory note, and $5.8 million of the total purchase price represents contingent consideration which is based on Stericycle's expected future utilization of acquired net operating losses. A portion of the cash payment was applied to pay PSC Environmental’s indebtedness as of the closing date. As part of the PSC Environmental acquisition, we assumed $30.0 million in environmental remediation liabilities (see Note 11 - Environmental Liabilities, in the Notes to the Condensed Consolidated Financial Statements).

Included in the acquisitions discussed above for the quarter ended September 30, 2014 is the acquisition of 100% of the stock of Shiraishi-Sogyo Co. Ltd. ("Shiraishi"). Consideration for the acquisition of Shiraishi included the effective settlement of pre-existing non-interest bearing loans we extended to Shiraishi for $15.7 million and the assumption of Shiraishi's bank debt of $4.7 million.

The results of operations of these acquired businesses have been included in the consolidated statements of income from the date of the acquisition. The pro forma revenues for the nine months ended September 30, 2014 from the aggregate acquisitions was approximately $241 million, which includes $131.7 million estimated impact to 2014 reported revenues. Our pro forma earnings include estimates for intangible asset amortization expense but does not include estimated synergies as the timing and realizability of synergies is uncertain. The following consolidated pro forma information on the impact of these acquisitions to our consolidated revenues is based on the assumption that these acquisitions all occurred on January 1, 2014 and 2013.

In thousands
	Nine Months Ended September 30,
	2014	2013
Revenues	1,987,813	1,815,807
Net income	246,570	236,030