NOTE 4 – RESTRUCTURING, DIVESTITURES AND ASSETS HELD FOR SALE

Restructuring - Business Transformation

Stericycle is focused on driving long-term growth, profitability and delivering enhanced shareholder value.

As part of our business strategy, in the third quarter of 2017, we initiated a comprehensive multi-year Business Transformation with the objective to improve long-term operational and financial performance which we expect to complete by 2022, see Note 3 - Restructuring, Divestitures, and Assets Held For Sale to our Consolidated Financial Statements included in the 2017 Form 10-K. We anticipate we will incur approximately $20.0 million of employee termination charges in connection with this restructuring, of which $8.0 million and $1.0 million is expected to impact our Domestic and Canada RCS and International reportable segments, respectively, with the remaining $11.0 million impacting All Other, see Note 13 – Segment Reporting.

For the year ended December 31, 2017, we incurred restructuring charges of $13.9 million related to employee termination benefits of $11.5 million and non-cash long-lived assets impairment charges of $2.4 million. Our Domestic and Canada RCS and International RCS reportable segments incurred $5.5 million and $3.3 million, respectively, with the remaining $5.1 million impacting All Other. The remaining liability of $2.2 million at December 31, 2017 was paid in the first quarter of 2018.

There could be additional initiatives in the future to further streamline our operations. As such, the Company expects further charges related to workforce reductions and other facility rationalization costs when those restructuring plans are finalized and related charges are estimable.

Divestitures and Assets Held for Sale

During the six months ended June 30, 2018, the Company completed the sale of a business in the U.K. for consideration of approximately $11.5 million of which $8.2 million was received in cash and $3.3 million is held in escrow. Prior to sale, we had recorded total non-cash impairment charges of $14.8 million in connection with reclassifying the assets and liabilities as held for sale and subsequent changes in the fair value of these assets: $0.1 million and $4.2 million during the three and six months ended June 30, 2018; $6.8 million for the year ended December 31, 2017; and $3.8 million for the year ended December 31, 2016. These charges were included in SG&A in the Condensed Consolidated Statements of Income (Loss) in the respective periods.

During the six months ended June 30, 2017, we sold certain assets in the U.K. for $1.2 million, resulting in a pre-tax loss of $3.6 million ($2.9 million, net of tax), relating to non-cash asset impairment charges arising from changes in the fair value of assets held for sale, which is included in SG&A in the Condensed Consolidated Statements of Income (Loss).

During the three months ended June 30 2018, we entered into an agreement to sell a business that was part of our Domestic and Canada RCS reportable segment, which closed on August 1, 2018. The assets and liabilities of this business were classified as held for sale as of June 30, 2018 on the Condensed Consolidated Balance Sheets. For the three and six months ended June 30, 2018, we recorded non-cash impairment charges of $6.9 million in SG&A in the Condensed Consolidated Statements of Income (Loss) in connection with reclassifying the assets and liabilities 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 on the Condensed Consolidated Balance Sheets as of June 30, 2018 and December 31, 2017:

In millions
	June 30, 2018		December 31, 2017
Total current assets	$	2.1	$	7.7
Fixed assets		1.0		8.5
Goodwill		-		1.6
Intangibles		14.4		2.6
Other assets		-		0.4
Assets held for sale	$	17.5	$	20.8

Total current liabilities	$	0.5	$	4.7
Deferred income taxes		-		0.4
Liabilities held for sale	$	0.5	$	5.1

We determined that the operations included in the table above did not meet the criteria to be classified as discontinued operations as of June 30, 2018 and December 31, 2017.