What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2021-02-24 compared with 2020-02-26 · 591 added, 488 removed, 901 unchanged (54% of the section changed)

24 unchanged sentences

Remedial liabilities include the costs of removal or containment of contaminated material, the treatment of potentially contaminated groundwater and maintenance and monitoring costs necessary to comply with regulatory requirements.

Most of the Company's remedial liabilities relate to the active and inactive hazardous waste treatment and disposal facilities which the Company acquired and Superfund sites owned by third parties for which the Company, or the prior owners of certain of the Company's facilities, may have certain indemnification obligations.

The Company's estimate of remedial liabilities involved an analysis of such factors as:

(i) the nature and extent of environmental contamination (if any);

(ii) the terms of applicable permits and agreements with regulatory authorities as to cleanup procedures and whether modifications to such permits and agreements will likely need to be negotiated;

(iii) the cost of performing anticipated cleanup activities based upon current technology;

and (iv) in the case of Superfund and other sites where other parties will also be responsible for a portion of the cleanup costs, the likely allocation of such costs and the ability of such other parties to satisfy the costs which have been apportioned to these other parties.

The estimate of remedial liabilities involves an analysis of numerous factors including:

(i) the nature and extent of environmental contamination, (ii) the terms of applicable permits and level of regulatory oversight, (iii) the cost of performing the cleanup activities, and (iv) the adjudication of certain complex matters, particularly Superfund sites, involving multiple parties.

Remedial liabilities are inherently difficult to estimate and involve a significant amount of judgment.

Estimating remedial liabilities requires that the existing environmental contamination be understood.

There are risks that the actual quantities of contaminants differ from the results of the site investigation, and that contaminants exist that have not been identified by the site investigation.

In addition, the amount of remedial liabilities recorded is dependent on the remedial method selected.

There is a risk that funds will be expended on a remedial solution that is not successful, which could result in the Company incurring incremental costs of an alternative solution.

The Company routinely reviews and evaluates the sites for which remedial liabilities have been recognized to determine if there should be changes in the cost estimates.

1 unchanged sentence

Total remedial liabilities recorded as of December 31, 2020 were $114.8 million.

Given the subjectivity and judgment involved in measuring remedial liabilities due to the (i) uncertainty as to the types and quantities of contaminants to be remediated, (ii) the stage of remediation and extended period over which the remediation efforts are expected to occur, (iii) complexities and uncertainties of the selection of the method of remediation and inherent variability in the efficacy of the selected remediation efforts, and (iv) understanding the effects on the estimates due to changes in technology and changes in laws and regulations, auditing remedial liabilities involved especially subjective judgment and an increased extent of effort, including the need to involve our specialists who have expertise in environmental remediation.

Given the subjectivity and judgment involved in measuring remedial liabilities, auditing remedial liabilities involved especially subjective judgment and an increased extent of effort, including the need to involve our specialists who have expertise in environmental remediation.

How the Critical Audit Matter Was Addressed in the Audit

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• We evaluated management’s ability to accurately forecast future cash flows by comparing actual results to management’s historical forecasts through retrospective reviews.

We evaluated the methods and assumptions used by management to estimate the remedial liabilities by confirming specific facts and circumstances related to a selection of sites with project managers and other Company personnel responsible for monitoring these sites, including internal and external counsel.

• We evaluated the methods and assumptions used by management to estimate the remedial liabilities by confirming specific facts and circumstances related to a selection of sites with project managers and other Company personnel responsible for monitoring these sites, including legal counsel.

• With the assistance of auditor specialists who have expertise in environmental matters and specialized skills and training, we evaluated the reasonableness of the Company’s estimates by:

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Accounts receivable, net of allowances aggregating $ 44,749 and $ 38,711 , respectively

611,534 644,738

Unbilled accounts receivable 55,681 56,326

Deferred costs

Inventories and supplies 220,498 214,744

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Operating lease right-of-use assets 150,341 162,206

Goodwill 527,023 525,013

Permits and other intangibles, net 386,620 419,066

Other 16,516 13,560

Total other assets 1,080,500 1,119,845

Total assets $ 4,131,520 $ 4,108,904

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Current portion of long-term obligations

Current portion of long-term debt $ 7,535 $ 7,535

Accounts payable

195,878 298,375

Deferred revenue

74,066 73,370

Accrued expenses

295,823 276,540

Current portion of closure, post-closure and remedial liabilities

26,093 23,301

Current portion of operating lease liabilities

36,750 40,979

Total current liabilities

636,145 720,100

Other liabilities:

Closure and post-closure liabilities, less current portion of $ 13,903 and $ 7,283 , respectively

74,023 68,368

Remedial liabilities, less current portion of $ 12,190 and $ 16,018 , respectively

Long-term obligations, less current portion

102,623 98,155

Long-term debt, less current portion 1,549,641 1,554,116

Operating lease liabilities, less current portion

Deferred taxes, unrecognized tax benefits and other long-term liabilities

114,258 121,020

Deferred tax liabilities 230,097 231,337

Other long-term liabilities 83,182 45,995

Total other liabilities

2,153,824 2,118,991

Commitments and contingent liabilities (See Note 17)

4 unchanged sentences

Additional paid-in capital

582,749 644,412

Accumulated other comprehensive loss

( 211,477 ) ( 210,051 )

Accumulated earnings

969,731 834,894

Total stockholders' equity

1,341,551 1,269,813

Total liabilities and stockholders' equity

$ 4,131,520 $ 4,108,904

The accompanying notes are an integral part of these consolidated financial statements.

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For the years ended December 31,

2020 2019 2018

Service revenues $ 2,724,584 $ 2,842,881 $ 2,709,239

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Income from operations 251,336 229,456 182,574

Other income (expense), net

Other (expense) income, net ( 290 ) 2,897 ( 4,510 )

Loss on early extinguishment of debt — ( 6,131 ) ( 2,488 )

Gain on sale of businesses

(Loss) gain on sale of businesses ( 3,376 ) 687 —

Interest expense, net of interest income of $ 3,462 , $ 4,227 and $ 2,958 , respectively

Income before provision (benefit) for income taxes

Provision (benefit) for income taxes

( 73,120 ) ( 78,670 ) ( 81,094 )

Income before provision for income taxes 174,550 148,239 94,482

Provision for income taxes 39,713 50,499 28,846

Net income $ 134,837 $ 97,740 $ 65,636

Earnings per share:

Basic $ 2.43 $ 1.75 $ 1.17

Diluted $ 2.42 $ 1.74 $ 1.16

Shares used to compute earnings per share — Basic 55,479 55,845 56,148

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For the years ended December 31,

Other comprehensive income (loss), net of tax:

2020 2019 2018

Net income $ 134,837 $ 97,740 $ 65,636

Other comprehensive (loss) income, net of tax:

Unrealized (losses) gains on available-for-sale securities ( 8 ) ( 120 ) 77

3 unchanged sentences

Foreign currency translation adjustments 11,561 25,130 ( 42,350 )

Unfunded pension liability

Other comprehensive income (loss), net of tax

Unrealized (loss) gain on net pension liability ( 189 ) 44 82

Other comprehensive (loss) income, net of tax ( 1,426 ) 13,320 ( 50,964 )

Comprehensive income $ 133,411 $ 111,060 $ 14,672

5 unchanged sentences

For the years ended December 31,

2020 2019 2018

Cash flows from operating activities:

Net income $ 134,837 $ 97,740 $ 65,636

Adjustments to reconcile net income to net cash from operating activities:

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Deferred income taxes ( 9,748 ) 8,005 19,089

Other (income) expense, net

Other expense (income), net 290 ( 2,897 ) 4,510

Stock-based compensation 18,502 17,816 16,792

Gain on sale of businesses

Loss (gain) on sale of businesses 3,376 ( 687 ) —

Loss on early extinguishment of debt — 6,131 2,488

3 unchanged sentences

Inventories and supplies ( 7,933 ) ( 15,869 ) ( 26,958 )

Other current assets

Other current and non-current assets ( 12,602 ) ( 14,421 ) ( 7,946 )

Accounts payable ( 80,328 ) 7,153 46,915

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Change in uncashed checks 5,404 ( 3,705 ) 132

Proceeds from exercise of stock options

Tax payments related to withholdings on vested restricted stock ( 5,331 ) ( 7,429 ) ( 3,266 )

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Proceeds from issuance of debt, net of discount

Borrowing from revolving credit facility

Payment on revolving credit facility

— 845,000 348,250

Borrowings from revolving credit facility 150,000 — 50,000

Payments on revolving credit facility ( 150,000 ) — ( 50,000 )

Net cash used in financing activities ( 88,946 ) ( 53,425 ) ( 110,997 )

6 unchanged sentences

Interest paid $ 72,535 $ 60,852 $ 89,171

Income taxes paid

Income taxes paid, net of refunds 53,123 27,035 20,036

Non-cash investing activities:

Property, plant and equipment accrued 3,536 30,964 15,657

Transfer of inventory to property, plant and equipment

Payable for estimated purchase price adjustment — — 4,032

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(in thousands)

Participation

Additional Paid-in Capital

Accumulated Other Comprehensive

Common Stock Additional Paid-in Capital Accumulated Other Comprehensive

Stockholders'

Shares $ 0.01 Par

Balance at January 1, 2018 56,501 $ 565 $ 686,962 $ ( 172,407 ) $ 673,082 $ 1,188,202

Net income — — — — 65,636 65,636

Cumulative effect of change in accounting for stock based compensation — — — — ( 1,564 ) ( 1,564 )

Other comprehensive income

Other comprehensive loss — — — ( 50,964 ) — ( 50,964 )

Stock-based compensation — — 16,792 — — 16,792

Issuance of common stock for restricted share vesting, net of employee tax withholding

Exercise of stock options

Issuance of common stock for restricted share vesting, net of employee tax withholdings 160 1 ( 3,267 ) — — ( 3,266 )

Repurchases of common stock ( 814 ) ( 8 ) ( 45,072 ) — — ( 45,080 )

Shares held under employee participation plan

Balance at December 31, 2018 55,847 558 655,415 ( 223,371 ) 737,154 1,169,756

Cumulative effect of change in accounting principle

Other comprehensive loss

Net income — — — — 97,740 97,740

Other comprehensive income — — — 13,320 — 13,320

Stock-based compensation — — 17,816 — — 17,816

Issuance of common stock for restricted share vesting, net of employee tax withholding

Issuance of common stock for restricted share vesting, net of employee tax withholdings 249 3 ( 7,432 ) — — ( 7,429 )

Repurchases of common stock ( 298 ) ( 3 ) ( 21,387 ) — — ( 21,390 )

Balance at December 31, 2019 55,798 558 644,412 ( 210,051 ) 834,894 1,269,813

Other comprehensive income

Net income — — — — 134,837 134,837

Other comprehensive loss — — — ( 1,426 ) — ( 1,426 )

Stock-based compensation — — 18,502 — — 18,502

Issuance of common stock for restricted share vesting, net of employee tax withholding

Issuance of common stock for restricted share vesting, net of employee tax withholdings 179 2 ( 5,333 ) — — ( 5,331 )

Repurchases of common stock ( 1,204 ) ( 12 ) ( 74,832 ) — — ( 74,844 )

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(1) OPERATIONS

Clean Harbors, Inc., through its subsidiaries (collectively, the "Company"), is a leading provider of environmental, energy and industrial services throughout North America.

Clean Harbors, Inc., through its subsidiaries (collectively, the "Company"), is a leading provider of environmental and industrial services throughout North America.

The Company is also the largest re-refiner and recycler of used oil and the largest provider of parts cleaning and related environmental services to commercial, industrial and automotive customers in North America.

A novel strain of coronavirus ("COVID-19") was first identified in December 2019, and subsequently declared a global pandemic by the World Health Organization on March 11, 2020.

As a result of the outbreak, many companies experienced significant disruptions in their operations, workforce and markets served, also resulting in a significant reduction in the demand for petroleum-based products.

Areas of the Company's businesses and operations were adversely impacted by the effects of COVID-19 when circumstances surrounding and responses to the pandemic, including stay-at-home orders, began to materialize in North America.

These disruptions had a significant impact on the Company's operating results for the year ended December 31, 2020.

The Company expects that operations will continue to be impacted.

The full extent of the ongoing COVID-19 pandemic and the resulting changes in demand for oil and the impact on the Company's operations is uncertain.

A prolonged disruption could have a material adverse impact on financial results and business operations of the Company.

(2) SIGNIFICANT ACCOUNTING POLICIES

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Principles of Consolidation

The accompanying consolidated statements include the accounts of Clean Harbors, Inc.

The accompanying consolidated financial statements include the accounts of Clean Harbors, Inc.

and its majority-owned subsidiaries.

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Actual results could differ from those estimates and judgments.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation.

These reclassifications have no impact on previously reported subtotals.

Cash, Cash Equivalents and Uncashed Checks

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bank disbursement accounts that are used to issue vendor and payroll checks.

The program can result in checks outstanding in excess of bank balances in the disbursement accounts.

When checks are presented to the bank for payment, cash deposits in amounts sufficient to fund the checks are made, at the Company's discretion, either from funds provided by other accounts or under the terms of the Company's revolving credit facility.

Therefore, until checks are presented for payment, there is no right of offset by the bank and the Company continues to have control over cash relating to both released as well as unreleased checks.

Checks that have been written to vendors or employees but have not yet been presented for payment at the Company's bank are classified as uncashed checks as part of accounts payable and changes in the balance are reported as a financing activity in the consolidated statements of cash flows.

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Treasury securities, corporate notes and bonds and commercial paper.

As of December 31, 2019 and 2018 , the Company had total marketable securities and cash equivalents as follows (in thousands):

December 31, 2019

December 31, 2018

As of December 31, 2020 and 2019, the Company had

CLEAN HARBORS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

total marketable securities and cash equivalents as follows (in thousands):

December 31, 2020 December 31, 2019

Commercial paper $ — $ 2,395

3 unchanged sentences

Commercial paper — 3,337

Total short-term marketable securities

Total financial assets

CLEAN HARBORS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Realized gains and losses on sales of available-for-sale marketable securities in the years ended December 31, 2019 , 2018 and 2017 were immaterial.

Total marketable securities 51,857 42,421

Total $ 51,857 $ 44,816

Realized gains and losses on sales of available-for-sale marketable securities in the years presented were immaterial.

The majority of the marketable securities have a remaining maturity of less than one year and fair value approximates cost.

Allowances for Doubtful Accounts

On a regular basis, the Company evaluates its accounts receivable and establishes the allowance for doubtful accounts based on an evaluation of certain criteria and evidence of collection certainty including historical collection trends, current economic trends and changes in customer payment patterns.

On a regular basis, the Company evaluates its accounts receivable and establishes the allowance for doubtful accounts based on an evaluation of certain criteria and evidence of collection certainty including historical collection trends, reasonable expectations of future collections, current economic trends and changes in customer payment patterns.

Past-due receivable balances are written off when the Company's internal collection efforts have been deemed unsuccessful in collecting the outstanding balance due.

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The cost of oil and oil products is principally determined on a first-in, first-out ("FIFO") basis.

The cost of supplies and drums, solvent and solution and other inventories is determined on a FIFO or a weighted average cost basis.

The cost of supplies and drums, solvent and solution and other inventories is determined on a FIFO basis.

The Company continually reviews its inventories for obsolete or unsalable items and adjusts its carrying value to reflect estimated realizable values.

Property, Plant and Equipment, net (excluding landfill assets)

Property, Plant and Equipment, net (excluding landfill assets and finance lease right of use assets)

Property, plant and equipment, net is stated at cost less accumulated depreciation.

1 unchanged sentence

Items of an ordinary repair or maintenance nature are charged directly to operating expense as incurred.

Gains and losses on the sale of property, plant and equipment are included in other income (expense), net.

Gains and losses on the sale of property, plant and equipment are included in other (expense) income, net.

During the construction and development period of an asset, the costs incurred are classified as construction-in-progress.

The Company depreciates and amortizes the capitalized cost of these assets, using the straight-line method as follows:

Asset Classification

Estimated Useful Life

Buildings and building improvements

Leasehold and building improvements

Camp and lodging equipment

Capitalized software and computer equipment

Containers and railcars

All other equipment

Furniture and fixtures

The Company recognizes an impairment in the carrying value of long-lived assets when the expected future undiscounted cash flows derived from the assets, or group of assets, are less than their carrying value.

The Company did not record any impairment charges related to long-lived assets in any of the periods presented.

Goodwill is comprised of the purchase price of business acquisitions in excess of the fair value of the net assets acquired.

Goodwill is reviewed for impairment annually as of December 31, or when events or circumstances indicate that the carrying value of the reporting unit may exceed its fair value.

If the carrying value of a reporting unit exceeds the fair value, an

When the asset is ready for its intended use, the asset is reclassified to an appropriate asset classification and depreciation or amortization commences.

The Company depreciates and amortizes the capitalized cost

CLEAN HARBORS, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

impairment loss will be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit.

of these assets, using the straight-line method as follows:

Asset Classification Estimated Useful Life

Buildings and building improvements

Buildings 20 - 42 years

Leasehold and building improvements 2 - 45 years

Camp and lodging equipment 8 - 15 years

Vehicles 2 - 15 years

Capitalized software and computer equipment 3 - 5 years

Containers and railcars 8 - 16 years

All other equipment 4 - 30 years

Furniture and fixtures 5 - 8 years

The Company tests asset groups for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

An impairment in the carrying value of long-lived assets is recognized if the expected future undiscounted cash flows derived from the assets, or group of assets, are less than their carrying value.

The Company did not record any impairment charges related to long-lived assets in the periods presented.

Goodwill is comprised of the purchase price of business acquisitions in excess of the fair value of the net assets acquired.

Goodwill is reviewed for impairment annually as of December 31, or when events or circumstances indicate that the carrying value of the reporting unit may exceed its fair value.

If the carrying value of a reporting unit exceeds the fair value, an impairment loss will be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit.

The Company did not recognize any impairment losses in any of the periods presented.

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Permits relating to landfills are amortized on a units-of-consumption basis.

All other permits are amortized over periods ranging from 5 to 30 years on a straight-line basis.

Finite-lived intangible assets are amortized on a straight-line basis over their respective useful lives, which range from 5 to 20 years.

All other permits are amortized over periods ranging from five to 30 years on a straight-line basis.

Finite-lived intangible assets are amortized on a straight-line basis over their respective useful lives, which range from five to 20 years .

All finite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

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Additionally, where appropriate, as described below, the Company includes probable expansion airspace that has yet to be permitted in the calculation of the total remaining useful life of the landfill.

If it is determined that expansion capacity should no longer be considered in calculating the recoverability of a landfill asset, the Company may be required to recognize an asset impairment or incur significantly higher amortization expense.

If it is determined that expansion capacity should no longer be

CLEAN HARBORS, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

considered in calculating the recoverability of a landfill asset, the Company may be required to recognize an asset impairment or incur significantly higher amortization expense.

If at any time the Company makes the decision to abandon the expansion effort, the capitalized costs related to the expansion effort are expensed immediately.

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Amortization totaled $ 10.9 million, $ 12.3 million and $ 10.3 million for the years ended December 31, 2020, 2019 and 2018, respectively.

Changes in the determination of when the landfill will cease accepting waste, either through a business decision by the Company, determination that expansion capacity should no longer be considered probable or changes in estimates on annual airspace consumption, will impact the amortization expense of the landfill assets.

Changes in estimated costs to complete construction are applied prospectively to the amortization rate.

Landfill capacity —Landfill capacity, which is the basis for the amortization of landfill assets and for the accrual of final closure and post-closure obligations, represents total permitted airspace plus unpermitted airspace that management believes is probable of ultimately being permitted based on established criteria.

The Company applies the following criteria for evaluating the probability of obtaining a permit for future expansion airspace at existing sites, which provides management a basis to evaluate the likelihood of success of unpermitted expansions:

Personnel are actively working to obtain the permit or permit modifications (land use, state and federal) necessary for expansion of an existing landfill, and progress is being made on the project.

Management expects to submit the application within the next year and to receive all necessary approvals to accept waste within the next five years.

At the time the expansion is included in management's estimate of the landfill's useful economic life, it is probable that the required approvals will be received within the normal application and processing time periods for approvals in the jurisdiction in which the landfill is located.

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AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

We have a legal right to use or obtain the right to use the land associated with the expansion plan through title or lease.

There are no significant known political, technical, legal or business restrictions or other issues that could impair the success of such expansion.

Management is committed to pursuing the expansion which is supported by a complete financial feasibility analysis which demonstrates that the expansion will have a positive financial and operational impact.

Additional airspace and related additional costs, including permitting, final closure and post-closure costs have been estimated based on the conceptual design of the proposed expansion.

As of December 31, 2020, there were no unpermitted expansions included in the Company's landfill accounting model.

If actual expansion airspace is significantly different from management's estimate of expansion airspace, the amortization rates used for the units-of-consumption method would change, therefore impacting our profitability.

If we determine that there is less actual expansion airspace at a landfill, this would increase amortization expense recorded and decrease profitability, while if we determine a landfill has more actual expansion airspace, amortization expense would decrease and profitability would increase.

As of December 31, 2020, the Company had 9 active landfill sites (including the Company's two non-commercial landfills), which have estimated remaining lives (based on anticipated waste volumes and remaining highly probable airspace) as follows:

Remaining Highly Probable Airspace

Facility Name Location Remaining

(Years) Permitted Remaining Highly Probable Airspace

(cubic yards) (in thousands)

Facility Name

Grassy Mountain

Ontario, Canada

Lone Mountain

Buttonwillow California 22 5,739

Deer Park Texas 2 67

Deer Trail Colorado 27 1,629

Grassy Mountain Utah 41 4,710

Kimball Nebraska 6 144

Lambton Ontario, Canada 51 4,633

Lone Mountain Oklahoma 32 3,803

Ryley Alberta, Canada 5 575

Sawyer North Dakota 68 3,416

At December 31, 2020 and 2019, the Company had no cubic yards of permitted, but not highly probable, airspace.

The following table presents the remaining highly probable airspace from January 1, 2018 through December 31, 2020 (in thousands of cubic yards):

Remaining capacity at January 1,

2020 2019 2018

Remaining capacity, beginning of year 28,494 29,760 31,113

Changes in highly probable airspace, net ( 2,962 ) — ( 223 )

Remaining capacity at December 31,

Consumed ( 816 ) ( 1,266 ) ( 1,130 )

Remaining capacity, end of year 24,716 28,494 29,760

During the year ended December 31, 2020, the Company took actions to begin the closure of two of the Company's commercial landfill sites, Altair and Westmorland, and is therefore classifying these landfills as inactive as of December 31, 2020.

During 2020, the Altair landfill, a non-hazardous landfill, reached permitted capacity.

Airspace consumed from the Altair landfill in the years ended December 31, 2020, 2019 and 2018 was 25 , 132 and 127 thousand cubic yards, respectively.

During 2020, the Company decided to close the Westmorland landfill, a hazardous landfill, due to the costs of obtaining and

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

maintaining permits and operating the landfill.

No airspace had been consumed at the Westmorland landfill in the years ended December 31, 2020, 2019 and 2018.

The change in the highly probable airspace, net in the table above is predominately the result of the Company's decision to close the Westmorland and Altair landfills.

Amortization of cell construction costs and accrual of cell closure obligations —Landfills are typically comprised of a number of cells, which are constructed within a defined acreage (or footprint).

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In those instances, the Company amortizes cell construction costs over the airspace within the entire trench, such that the cell construction costs will be fully amortized at the end of the trench useful life.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The design and construction of a landfill does not create a landfill asset retirement obligation.

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The Company has material financial commitments for the costs associated with requirements of the Environmental Protection Agency ("EPA") and the comparable regulatory agency in Canada for landfill final closure and post-closure activities.

In the United States, the landfill final closure and post-closure requirements are established under the standards of the EPA, and are implemented and applied on a state-by-state basis.

The Company develops estimates for the cost of these activities based on an evaluation of site-specific facts and circumstances, including the Company's interpretation of current regulatory requirements and proposed regulatory changes.

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Regulatory post-closure periods are generally 30 years after landfill closure.

Final closure and post-closure obligations are accrued on a units-of-consumption basis, such that the present value of the final closure and post-closure obligations are fully accrued at the date the landfill discontinues accepting waste.

Cell closure, final closure and post-closure costs (also referred to as "asset retirement obligations") are calculated by estimating the total obligation in current dollars, adjusted for inflation ( 1.02 % during both 2020 and 2019) and discounted at the Company's credit-adjusted risk-free interest rate ( 5.60 % and 6.02 % during 2020 and 2019, respectively) .

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Post-closure costs, if required, include associated maintenance and monitoring costs as required by the closure permit.

Post-closure periods are performance-based and are not generally specified in terms of years in the closure permit, but generally range from 10 to 30 years or more.

Post-closure periods are performance-based and are not typically specified in terms of years in the closure permit, but generally range from 10 to 30 years or more.

The Company records its non-landfill closure and post-closure liability by:

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(ii) estimates as to when future operations may cease;

(iii) inflating the current cost estimates of closing the non-landfill facility using the inflation rate to the time of closing;

(iii) cost estimates of closing the non-landfill facility using the inflation rate to the time of closing;

and (iv) discounting the future value back to the present using the credit-adjusted risk-free interest rate.

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AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The estimates for non-landfill closure and post-closure liabilities are inherently uncertain due to the possibility that permit and regulatory requirements will change in the future, impacting the estimation of total costs and the timing of the expenditures.

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If a change is made to a fully-amortized asset, the adjustment is charged immediately to expense.

When a change in estimate relates to an asset that has not been fully amortized, the adjustment to the asset recognized in income prospectively as a component of amortization.

When a change in estimate relates to an asset that has not been fully amortized, the adjustment to the asset is recognized in income prospectively as a component of amortization.

Historically, changes to non-landfill closure and post-closure estimates have not been material.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Remedial Liabilities

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The Company periodically evaluates potential remedial liabilities at sites that it owns or operates or to which the Company or the sellers of the Chemical Services Division of Safety-Kleen ("CSD") assets (or the respective predecessors of the Company or such sellers) transported or disposed of waste, including 130 Superfund sites as of December 31, 2020.

The Company periodically reviews and evaluates sites requiring remediation, including Superfund sites, giving consideration to the nature (i.e., owner, operator, arranger, transporter or generator) and the extent (i.e., amount and nature of waste hauled to the location, number of years of site operations or other relevant factors) of the Company's (or such sellers') alleged connection with the site, the extent (if any) to which the Company believes it may have an obligation to indemnify cleanup costs in connection with the site, the regulatory context surrounding the site, the accuracy and strength of evidence connecting the Company (or such sellers) to the location, the number, connection and financial ability of other named and unnamed PRPs and the nature and estimated cost of the likely remedy.

Where the Company concludes that it is probable that a liability has been incurred and an amount can be estimated, a provision is made, based upon management's judgment and prior experience of such estimated liability.

The Company periodically reviews and evaluates sites requiring remediation giving consideration to the nature (i.e., owner, operator, arranger, transporter or generator) and the extent (i.e., amount and nature of waste hauled to the location, number of years of site operations or other relevant factors) of the Company's (or such sellers') alleged connection with the site, the extent (if any) to which the Company believes it may have an obligation to indemnify cleanup costs in connection with the site, the regulatory context surrounding the site, the accuracy and strength of evidence connecting the Company (or such sellers) to the location, the number, connection and financial ability of other named and unnamed PRPs and the nature and estimated cost of the likely remedy.

Where the Company concludes that it is probable that a liability has been incurred and an amount can be estimated, a liability is recognized.

Remedial liabilities are inherently difficult to estimate.

Estimating remedial liabilities requires that the existing environmental contamination be understood.

There are risks that the actual quantities of contaminants differ from the results of the site investigation, and that contaminants exist that have not been identified by the site investigation.

There are risks that the actual quantities of contaminants differ from the results of the site investigation, and that contaminants exist that have not been previously identified.

In addition, the amount of remedial liabilities recorded is dependent on the remedial method selected.

There is a risk that funds will be expended on a remedial solution that is not successful, which could result in the Company incurring the additional incremental costs of an alternative solution.

There is a risk that funds will be expended on a remedial solution that is not successful, which could result in the Company incurring the incremental costs of an alternative solution.

Such estimates, which are subject to change, are subsequently revised if and when additional or new information becomes available.

2 unchanged sentences

Discount rates used in the present value determination of the Company's remedial liabilities range from 1.37 % to 4.90 %.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Self-Insurance Liabilities

The Company self-insures a significant portion of expected losses under its workers' compensation, employee medical, comprehensive general liability and vehicle liability.

Liabilities associated with these losses are recorded based on the Company's estimates of the ultimate cost to settle incurred claims, both reported and not yet reported.

The Company self-insures a significant portion of expected losses related to workers' compensation, employee medical, comprehensive general liability and vehicle liability.

Liabilities associated with these losses are recorded based on the Company's estimates of the ultimate cost to settle incurred claims.

These recorded liabilities are estimated based on independent actuarial estimates and judgments which consider the frequency and settlement amount of historical claims data.

3 unchanged sentences

The Company recognizes revenue when control of the promised goods or services is transferred to the Company's customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.

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The majority of the Company’s revenues are for services, which are recognized based on time and materials incurred at contractually agreed-upon rates.

2 unchanged sentences

The periods between invoicing and when payments are due are not significant.

For all periods presented, any amounts billed to customers related to shipping and handling are classified as revenue and the Company's shipping and handling costs are included in costs of revenues.

Amounts billed to customers related to shipping and handling are classified as revenue, and the Company's shipping and handling costs are included in costs of revenues.

In the course of operations, the Company collects sales tax and other excise taxes from its customers and recognizes a current liability, which is then relieved when the taxes are remitted to the appropriate government authorities.

The Company excludes sales and other excise taxes that it collects from customers from its revenues.

The Company's Environmental Services operating segment generally has the following four sources of revenue:

The Company's Environmental Services operating segment generally has the following three sources of revenue:

Technical Services —Technical Services revenues are generated from fees charged for waste material management and disposal services including onsite environmental management services, collection and transportation, packaging, recycling, treatment and disposal of waste.

3 unchanged sentences

Collection and transportation revenues are recognized over time, as the customer receives and consumes the benefits of the services as they are being performed and the Company has a right to payment for performance completed to date.

The Company uses the input method to recognize revenue over time, based on time and materials incurred.

The Company uses the input method to recognize revenue over time, using time and materials incurred as a basis for measuring the satisfaction of the performance obligation.

Revenues for treatment and disposal of waste are recognized upon completion of treatment, final disposition in a landfill or incineration, or when the waste is shipped to a third-party for processing and disposal.

2 unchanged sentences

the estimated price that a customer would pay for the services on a standalone basis).

Revenues from waste that is not yet completely processed and disposed and the related costs are deferred.

The deferred revenues and costs are recognized when the related services are completed.

Revenues and the related costs from waste that is not yet completely processed and disposed of are deferred.

The deferred revenues and costs are recognized when the disposal services are completed.

The period between collection and transportation and the final processing and disposal ranges depending on location of the customer, but generally is measured in days.

Field and Emergency Response Services —Field Services revenues are generated from cleanup services at customer sites, including municipalities and utilities, or other locations on a scheduled or emergency response basis.

Field and Emergency Response Services —Field Services revenues are generated from cleanup services at customer sites or other locations.

Services include confined space entry for tank cleaning, site decontamination, large remediation projects, demolition, spill cleanup on land and water, railcar cleaning, product recovery and transfer and vacuum services.

1 unchanged sentence

Response services for environmental emergencies include any scale from man-made disasters such as oil spills, to natural disasters such as hurricanes.

These services are provided based on purchase orders or agreements with customers and include prices generally based upon daily, hourly or job rates for equipment, materials and personnel.

More recently, demand has increased for projects involving contagion disinfection, decontamination and disposal services in response to the COVID-19 pandemic.

Field and emergency response services are provided based on purchase orders or agreements with customers and include prices generally based upon daily, hourly or job rates for equipment, materials and personnel.

The Company recognizes revenue for these services over time, as the customer receives and consumes the benefits of the service as they are being performed and the Company has a right to payment for performance completed to date.

1 unchanged sentence

The duration of such services can be over a number of hours, several days or even months for larger scale projects.

Industrial Services —Industrial Services revenues are generated from industrial and specialty services provided to refineries, mines, upgraders, chemical plants, pulp and paper mills, manufacturing facilities, power generation facilities and other industrial customers throughout North America.

Services include in-plant cleaning and maintenance services, plant outage and turnaround services, decoking and pigging, chemical cleaning, high and ultra-high pressure water cleaning, pipeline inspection and coating services, large tank and surface impoundment cleaning, oilfield transport, daylighting, production services and directional boring services supporting drilling, completion and production programs.

Services are provided based on purchase orders or agreements with the customer and include prices based upon daily, hourly or job rates for equipment, materials and personnel.

The Company recognizes revenue for these services over time, as the customer receives and consumes the benefits of the services as they are being performed and the Company has a right to payment for performance completed to date.

The Company uses the input method to recognize revenue over time, based on time and materials incurred.

Oil, Gas and Lodging Services and Other —Oil, Gas and Lodging Services and Other is primarily comprised of revenues generated from providing Oil and Gas Field Services that support upstream activities such as exploration and drilling for oil and gas companies and Lodging Services to customers in Western Canada and Texas.

The Company recognizes Oil and Gas Field Services revenue over time, as the customer receives and consumes the benefits of the services as they are being performed and the Company has a right to payment for performance completed to date.

The Company uses the input method to recognize

Industrial Services and Other —Industrial Services revenues are generated from industrial and specialty services provided to refineries, mines, upgraders, chemical plants, pulp and paper mills, manufacturing facilities, power generation facilities and

CLEAN HARBORS, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

revenue over time, based on time and materials incurred.

Revenue for lodging accommodation services is recognized over time based on passage of time.

other industrial customers throughout North America.

Services include in-plant cleaning and maintenance services, plant outage and turnaround services, decoking and pigging, chemical cleaning, high and ultra-high pressure water cleaning, pipeline inspection and coating services, large tank and surface impoundment cleaning, oilfield transport, daylighting, production services and upstream energy services, such as exploration and drilling for industrial oil and gas customers.

Services are provided based on purchase orders or agreements with the customer and include prices based upon daily, hourly or job rates for equipment, materials and personnel.

The Company uses the input method to recognize revenue over time, based on time and materials incurred.

The Company's Safety-Kleen operating segment generally has the following two sources of revenue:

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Product revenue is recognized upon the transfer of control whereby control transfers when the products are delivered to the customer.

Safety-Kleen Oil —Revenues from Safety-Kleen Oil, previously referred to as Kleen Performance Products, are generated from sales of high-quality base and blended lubricating oils to third-party distributors, government agencies, fleets, railroads and industrial customers.

Safety-Kleen Oil —Revenues from Safety-Kleen Oil are generated from sales of high-quality base and blended lubricating oils to third-party distributors, government agencies, fleets, railroads and industrial customers.

The business also sells recycled fuel oil to asphalt plants, industrial plants and pulp and paper companies.

2 unchanged sentences

Control transfers when the products are delivered to the customer.

The Company adopted Accounting Standards Codification 606, Revenue from contracts with customers, on January 1, 2018 without adjusting prior period amounts.

The only significant impact from the adoption of this standard related to incremental disclosures now required.

Upon adoption, a cumulative effect adjustment was not recorded.

Foreign Currency

The Company has international operations, substantially all of which are located in Canada.

The functional currencies of those operations are the local currency and therefore assets and liabilities of those foreign operations are translated to U.S.

The Company has international operations, substantially all of which are located in Canada from an operational perspective with more limited administrative support services located in India.

The functional currencies of foreign operations are the local currency and therefore assets and liabilities of those foreign operations are translated to U.S.

Dollars at the exchange rate in effect at the balance sheet date and revenue and expenses at the average exchange rate for the period.

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Advertising expense was $ 9.0 million in 2020, $ 9.8 million in 2019 and $ 10.5 million in 2018.

Government Grants

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act ("CARES Act") was signed into law in response to the widespread economic impact of the COVID-19 pandemic, providing companies, among other things, tax credits for a portion of wages paid to qualifying employees.

Additionally, the Canadian government enacted the Canada Emergency Wage Subsidy ("CEWS") to help employers offset a portion of their employee wages.

During the year ended December 31, 2020, the Company recorded a benefit of $ 42.3 million as an offset to the related operating expenses in either cost of revenues or selling, general and administrative expenses for the eligible employee retention

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credit under the CARES Act and the subsidy under CEWS, as amended.

The benefits received under these government sponsored programs do not require repayment.

Stock-Based Compensation

4 unchanged sentences

Forfeitures are recognized as they occur.

Stock-based compensation is recognized in selling, general and administrative expense.

Current income tax expense approximates cash to be paid or refunded for taxes for the applicable period.

Deferred tax expense or benefit is the result of changes between deferred tax assets and liabilities.

Deferred tax assets and liabilities are

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

determined based upon the temporary differences between the financial statement basis and tax basis of assets and liabilities as well as from net operating loss and tax credit carryforwards as measured by the enacted tax rates which will be in effect when these differences reverse.

Deferred tax assets and liabilities are determined based upon the temporary differences between the financial statement basis and tax basis of assets and liabilities as well as from net operating loss and tax credit carryforwards as measured by the enacted tax rates which will be in effect when these differences reverse.

The effect of a change in tax rates on deferred tax assets and liabilities is generally recognized in income in the period that includes the enactment date.

5 unchanged sentences

These differences will be reflected as increases or decreases to income tax expense in the period in which they are determined.

The Company recognizes interest and penalties related to unrecognized tax benefits within the provision (benefit) for income taxes line in the consolidated statements of operations.

Accrued interest and penalties are included within the deferred taxes, unrecognized tax benefits and other long-term liabilities line in the consolidated balance sheet.

Liabilities for unrecognized tax benefits are included within other long-term liabilities in the consolidated balance sheets.

The Company recognizes interest and penalties related to unrecognized tax benefits within the provision for income taxes line in the consolidated statements of operations.

Accrued interest and penalties are included within the other long-term liabilities line in the consolidated balance sheet.

Earnings per Share ("EPS")

1 unchanged sentence

Diluted EPS gives effect to all potentially dilutive common shares that were outstanding during the period.

The Company’s leases predominately relate to real estate and equipment such as vehicles and industrial equipment utilized in operations as well as rail cars utilized in connection with the Company’s transportation needs.

The Company’s leases predominately relate to real estate, equipment, such as vehicles and industrial equipment utilized in operations, and rail cars utilized in connection with the Company’s transportation needs.

Contracts are reviewed at inception to determine if the arrangement is a lease and, if so, whether it is an operating or finance lease.

For all of its leases, the Company has elected not to separate lease and nonlease components, such as common area maintenance.

The Company generally enters into real estate leases with five to ten-year terms and non-real estate leases with two to seven-year terms.

The Company generally enters into long-term real estate leases with three to ten-year terms and long-term non-real estate leases with two to eight-year terms.

In the normal course of business, the Company also enters into short-term leases having terms of less than one-year.

5 unchanged sentences

When applicable, the ROU asset includes any lease payments made at or before the commencement date and initial direct costs incurred and is reduced by lease incentives received under the lease agreement.

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Certain of the Company's real estate leases contain escalating future lease payments.

4 unchanged sentences

The Company includes these renewal periods in the lease term only when renewal is reasonably certain based upon facts and circumstances specific to the lease and known by the Company.

Certain of the equipment and rail car leases transfer ownership upon the conclusion of the lease term and as such, are classified as finance leases.

Leases containing purchase options are classified as finance leases only when it is reasonably certain that the Company will execute such options.

The Company uses its incremental borrowing rate on collateralized debt based on the information available at the lease commencement date in determining the present value of future lease payments as the implicit rate is typically not readily determinable.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Recent Accounting Pronouncements

Standards implemented

In February 2016, the Financial Accounting Standards Board issued Accounting Standards Update 2016-02, Leases (Topic 842) .

The amendment increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements.

The Company adopted Topic 842 on January 1, 2019 using the modified retrospective method of adoption.

Prior period amounts have not been adjusted and continue to be reported in accordance with the Company's historical accounting methodology pursuant to ASC 840, Leases .

As permitted under the transition guidance, the Company elected to apply the package of three practical expedients for all existing leases which, among other things, allowed the Company to maintain the lease classification for all existing leases at the adoption date.

The adoption of Topic 842 resulted in the recognition of ROU assets of $ 185.5 million and total current and noncurrent lease liabilities of $ 188.5 million at adoption.

Additionally, Topic 842 required new and expanded disclosures to enable users of financial statements to assess the amount, timing and uncertainty of cash flows arising from leases.

For operating leases, lease cost is recognized on a straight-line basis over the lease term and is included in cost of revenues or selling, general and administrative expenses depending on the use of the asset.

For finance leases, ROU assets are amortized on a straight-line basis over the shorter of the lease term or the estimated useful life of the leased asset and interest expense is recognized based on the incremental borrowing rate.

Amortization and interest expense for finance leases are included in depreciation and amortization and interest expense, net of interest income, respectively.

The Company adopted Accounting Standards Codification 842, Leases ("ASC 842") , on January 1, 2019 using the modified retrospective method of adoption.

Prior period amounts have not been adjusted and continue to be reported in accordance with the Company's historical accounting methodology pursuant to Accounting Standards Codification 840, Leases .

The standard did not have a material impact on the consolidated statements of operations or cash flows.

2 unchanged sentences

For the year ended December 31, 2020

Environmental Services

Environmental Services Safety-Kleen Corporate Total

Primary Geographical Markets

United States $ 1,690,256 $ 1,049,975 $ ( 674 ) $ 2,739,557

Canada 313,825 89,751 964 404,540

Total third-party revenues $ 2,004,081 $ 1,139,726 $ 290 $ 3,144,097

2 unchanged sentences

Field and Emergency Response Services 461,036 — — 461,036

Industrial Services

Oil, Gas and Lodging Services and Other

Industrial Services and Other 480,331 — 290 480,621

Safety-Kleen Environmental Services — 809,236 — 809,236

5 unchanged sentences

For the year ended December 31, 2019

Environmental Services

Environmental Services Safety-Kleen Corporate Total

Primary Geographical Markets

United States $ 1,721,322 $ 1,220,096 $ ( 586 ) $ 2,940,832

Canada 371,041 98,595 1,722 471,358

Total third-party revenues $ 2,092,363 $ 1,318,691 $ 1,136 $ 3,412,190

2 unchanged sentences

Field and Emergency Response Services 340,906 — — 340,906

Industrial Services

Oil, Gas and Lodging Services and Other

Industrial Services and Other (2)

631,414 — 1,136 632,550

Safety-Kleen Environmental Services — 851,520 — 851,520

1 unchanged sentence

Total third-party revenues $ 2,092,363 $ 1,318,691 $ 1,136 $ 3,412,190

For the year ended December 31, 2018

Environmental Services Safety-Kleen Corporate Total

Primary Geographical Markets

United States $ 1,598,402 $ 1,196,661 $ 1,082 $ 2,796,145

Canada 405,441 98,694 23 504,158

Total third-party revenues $ 2,003,843 $ 1,295,355 $ 1,105 $ 3,300,303

Sources of Revenue (1)

Technical Services $ 1,037,388 $ — $ — $ 1,037,388

Field and Emergency Response Services 304,727 — — 304,727

Industrial Services and Other (3)

661,728 — 1,105 662,833

Safety-Kleen Environmental Services — 795,077 — 795,077

Safety-Kleen Oil — 500,278 — 500,278

Total third-party revenues $ 2,003,843 $ 1,295,355 $ 1,105 $ 3,300,303

_____________________

(1) All revenue except oil and oil product sales within Safety-Kleen Oil and product sales within Safety-Kleen Environmental Services, which include various automotive related fluids, shop supplies and direct blended oil sales, are recognized over time.

Safety-Kleen Oil and Safety-Kleen Environmental Services product sales are recognized at a point in time.

Safety-Kleen Oil was formerly known as Kleen Performance Products .

(2) Environmental Services third-party revenues of $ 117.0 million and Corporate third party revenues of $ 1.1 million previously reported as Oil, Gas and Lodging Services and Other for the year ended December 31, 2019 are now reported within Industrial Services and Other based on relative materiality to the business.

(3) Environmental Services third-party revenues of $ 119.8 million and Corporate third party revenues of $ 1.1 million previously reported as Oil, Gas and Lodging Services and Other for the year ended December 31, 2018 are now reported within Industrial Services and Other based on relative materiality to the business.

Contract Balances

(in thousands)

December 31, 2019

December 31, 2018

(in thousands) December 31, 2020 December 31, 2019

Receivables $ 611,534 $ 644,738

Contract assets (unbilled receivables) 55,681 56,326

1 unchanged sentence

The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets) and customer advances and deposits or deferred revenue (contract liabilities) on the consolidated balance sheet.

Generally, billing occurs subsequent to revenue recognition, as a right to payment is not just subject to passage of time, resulting in contract assets.

Generally, billing occurs subsequent to revenue recognition, as a right to payment is not just subject to passage of time,

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resulting in contract assets.

Contract assets are generally classified as current.

5 unchanged sentences

Accordingly, management establishes a revenue allowance to cover the estimated amounts of revenue that may need to be credited to customers' accounts in future periods.

The Company estimates the amount of variable consideration to include in the estimated transaction price based on historical experience, anticipated performance and its best judgment at the time and to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved.

The Company estimates the amount of variable consideration to include in the estimated transaction price based on historical experience, anticipated performance and management's best judgment at the time and to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved.

Contract Costs

Contract costs include direct and incremental costs to obtain or fulfill a contract.

The Company’s contract costs that are subject to capitalization are comprised of costs associated with parts washer services and costs associated with the treatment and disposal of waste.

Parts washer costs include costs of solvent, commissions paid relating to revenue generated from parts washer services, and transportation costs associated with transferring the product picked up from the services as it is returned to the Company’s facilities or a third-party site.

Costs related to the treatment of waste include costs for waste receiving, drum movement and storage, waste consolidation and transportation between facilities.

Deferred costs associated with parts washer

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services are amortized ratably over the average service interval, which ranges between four and 16 weeks.

Deferred costs related to treatment and disposal of waste are recognized when the corresponding waste is disposed of and are included in deferred costs within total current assets in the Company’s consolidated balance sheets.

The Company’s contract costs that are subject to capitalization are comprised of costs associated with parts washer services and costs associated with the treatment and disposal of waste.

As of December 31, 2020 and 2019, the Company's deferred contract costs totaled $ 22.8 million and $ 21.7 million, respectively.

Deferred parts washer costs are recognized over the service interval as the customer receives the benefit of the services, and deferred costs related to treatment and disposal of waste are recognized when the corresponding waste is disposed.

Deferred costs are included within total current assets in the Company’s consolidated balance sheets.

The deferred contract cost balances at the beginning of each period presented were fully recognized in cost of revenue in the subsequent three-month period.

(4) BUSINESS COMBINATIONS

2020 Acquisition

On April 17, 2020, the Company acquired a privately-owned business for $ 8.8 million cash consideration.

The acquired company expands the Safety-Kleen segment's oil re-refining operations to the northeast United States.

In connection with this acquisition, a preliminary goodwill amount of $ 1.4 million was recognized.

The results of operations of this acquired business were not material in 2020.

2019 Acquisitions

On May 31, 2019 , the Company acquired a privately-owned business for $ 14.8 million in cash consideration.

On May 31, 2019, the Company acquired a privately-owned business for $ 14.8 million cash consideration.

The acquired company expands the environmental services and hazardous materials management services of the Company and is included in the Environmental Services segment.

In connection with this acquisition, a preliminary goodwill amount of $ 7.4 million was recognized.

On March 1, 2019 , the Company acquired certain assets of a privately-owned business for $ 10.4 million .

In connection with this acquisition, a goodwill amount of $ 7.4 million was recognized.

On March 1, 2019, the Company acquired certain assets of a privately-owned business for $ 10.4 million cash consideration.

The acquired business complements the Safety-Kleen segment's core service offerings, such as used motor oil collection, parts washers, oil filter recycling and vacuum services.

In connection with this acquisition, a preliminary goodwill amount of $ 5.2 million was recognized.

In connection with this acquisition, a goodwill amount of $ 5.2 million was recognized.

The results of operations of these acquired businesses were not material in 2019.

2 unchanged sentences

On August 31, 2018, the Company acquired a privately-owned company which expands the environmental services and waste oil capabilities of the Company for a $ 26.7 million purchase price, net of cash.

The acquired company is included in the Safety-Kleen and Environmental Services segments.

In connection with this acquisition, a goodwill amount of $ 12.3 million was recognized.

The results of operations of this acquired business were not material in 2018.

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On February 23, 2018, the Company completed the acquisition of the U.S.

7 unchanged sentences

During the year ended December 31, 2018, the Company incurred acquisition-related costs of approximately $ 1.4 million in connection with the transaction which are included in selling, general and administrative expenses in the consolidated statements of operations.

The Company finalized purchase accounting for the Veolia Business in the first quarter of 2019.

The components and allocation of the purchase price for the Veolia Business consist of the following amounts (in thousands):

Final Allocation

Accounts receivable, including unbilled receivable

(5) INVENTORIES AND SUPPLIES

Prepaid expenses and other current assets

Property, plant and equipment

Permits and other intangibles

Current liabilities

Closure and post-closure liabilities

Total identifiable net assets

Total purchase price

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The weighted average amortization period for the intangibles acquired is 8.2 years.

The excess of the total purchase price, which includes the aggregate cash consideration paid in excess of the fair value of the tangible net assets and intangible assets acquired, was recorded as goodwill.

The goodwill recognized is attributable to the expected operating synergies and growth potential that the Company expects to realize from this acquisition.

Goodwill generated from the acquisition is deductible for tax purposes.

Pro forma revenue and earnings amounts on a combined basis as if this acquisition had been completed on January 1, 2017 are immaterial to the consolidated financial statements of the Company since that date.

2017 Acquisitions

On July 14, 2017, the Company acquired Lonestar West Inc.

("Lonestar"), a public company headquartered in Alberta, Canada, for CAD $ 41.8 million , ( $ 33.1 million USD at acquisition date), net of cash acquired, which included an equity payout of CAD $ 0.72 per share to Lonestar shareholders and the assumption of approximately CAD $ 21.3 million ( $ 16.8 million USD at acquisition date) in outstanding debt, which Clean Harbors subsequently repaid.

The acquisition supports the Company's growth in the daylighting and hydro excavation services markets.

In addition to increasing the size of the Company's hydro vacuum fleet, Lonestar's network of locations provides the Company with direct access to key geographic markets in both the United States and Canada.

The acquired company is included in the Environmental Services segment.

In connection with this acquisition a goodwill amount of $ 2.8 million was recognized.

On January 31, 2017, the Company acquired a privately held company for a purchase price of approximately $ 11.9 million in cash, net of cash acquired.

The acquired business produces and distributes oil products and therefore complements the Company's closed loop model as it relates to the sale of its oil products.

The acquired company is included in the Safety-Kleen segment.

In connection with this acquisition a goodwill amount of $ 5.0 million was recognized.

The combined amount of direct revenues from the acquisitions included in the Company's results of operations for the year ended December 31, 2017 was approximately $ 14.5 million .

(5) DISPOSITION OF BUSINESS

On June 30, 2017, the Company completed the sale of its Transformer Services business, a non-core business within the Environmental Services operating segment.

The Transformer Services business was sold for $ 45.5 million ( $ 43.4 million net of $ 2.1 million in transactional related costs).

As a result of the sale, the Company recognized a pre-tax gain of $ 30.7 million in gain on sale of businesses in the Company’s consolidated statement of operations for the year ended December 31, 2017.

(6) INVENTORIES AND SUPPLIES

Inventories and supplies consisted of the following (in thousands):

December 31, 2019

December 31, 2018

December 31, 2020 December 31, 2019

Oil and oil related products $ 76,209 $ 75,408

1 unchanged sentence

Solvent and solutions 8,812 9,973

Other 15,470 14,235

Total inventories and supplies $ 220,498 $ 214,744

Supplies and drums consist primarily of drums and containers used in providing the Company's products and services as well as critical spare parts to support the Company's incinerator and re-refinery operations.

Other inventories consisted primarily of parts washer components, cleaning fluids, absorbents and automotive fluids, such as windshield washer fluid and antifreeze.

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Supplies and drums inventories consist primarily of drums and containers used in providing the Company's products and services, critical spare parts to support the Company's incinerator and re-refinery operations, and personal protective equipment.

Other inventories consist primarily of parts washer components, cleaning fluids, absorbents and automotive fluids, such as windshield washer fluid and antifreeze.

(6) PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consisted of the following (in thousands):

December 31, 2019

December 31, 2018

December 31, 2020 December 31, 2019

Land $ 139,776 $ 131,023

Asset retirement costs (non-landfill) 16,407 15,924

1 unchanged sentence

Buildings and improvements (1)

Camp and lodging equipment

509,804 499,159

Camp equipment 159,021 158,277

844,026 785,056

Equipment (3)

1,807,235 1,779,366

Furniture and fixtures 7,082 6,054

Construction in progress 24,378 36,679

3,699,416 3,593,814

Less - accumulated depreciation and amortization 2,174,118 2,005,663

1 unchanged sentence

___________________________________

December 31, 2019 balances inclusive of ROU assets classified as finance leases.

(1) Balances inclusive of gross ROU assets classified as finance leases of $ 8.9 million and $ 31.0 million, respectively.

(2) Balances inclusive of gross ROU assets classified as finance leases of $ 47.2 million and $ 2.4 million, respectively.

(3) December 31, 2020 balance inclusive of gross ROU assets classified as finance leases of $ 9.3 million.

Depreciation expense, inclusive of landfill and finance lease amortization was $ 257.1 million, $ 265.5 million and $ 264.3 million for the years ended December 31, 2020, 2019 and 2018, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(7) GOODWILL AND OTHER INTANGIBLE ASSETS

The changes in goodwill for the years ended December 31, 2020 and 2019 were as follows (in thousands):

Environmental Services

Environmental Services Safety-Kleen Totals

Balance at January 1, 2019 $ 207,019 $ 307,170 $ 514,189

1 unchanged sentence

Measurement period adjustments from prior period acquisitions ( 2,675 ) ( 1,355 ) ( 4,030 )

Decrease from disposition of business

Foreign currency translation 809 1,442 2,251

Balance at December 31, 2019 $ 212,531 $ 312,482 $ 525,013

Increase from current period acquisitions

Increase from current period acquisition — 1,439 1,439

Measurement period adjustments from prior period acquisitions 23 — 23

Decrease from disposition of businesses ( 674 ) — ( 674 )

Foreign currency translation 506 716 1,222

Balance at December 31, 2020 $ 212,386 $ 314,637 $ 527,023

The Company regularly assesses goodwill for impairment when it is more likely than not that events or changes in the business environment ("triggering events") would reduce the fair value of a reporting unit below its carrying value.

The Company considered the effects of COVID-19 and evolving changes in demand and pricing for oil during 2020 but concluded that there were no triggering events requiring an impairment assessment.

Goodwill impairment is also tested annually.

The Company conducted its annual impairment test of goodwill as of December 31, 2020 and determined that no adjustment to the carrying value of goodwill for any reporting unit was then necessary because the fair values of the reporting units exceeded their respective carrying values.

4 unchanged sentences

Level 3 inputs are unobservable inputs for the asset or liability in which there is little, if any, market activity for the asset or liability at the measurement date.

The Company believes that the

The Company believes that the assumptions used in its impairment tests are reasonable, but variations in any of the assumptions may result in different measurements of fair values.

The impacts of any adverse business and market conditions which may impact the overall performance of the Company's reporting units will continue to be monitored.

If the Company's reporting units do not achieve the financial performance that the Company expects, or if the impact of the COVID-19 pandemic and macroeconomic factors on the Company and its customers result in significant prolonged changes in demand for our products and services, it is possible that goodwill impairment charges may result.

There can therefore be no assurance that future events will not result in an impairment of goodwill.

CLEAN HARBORS, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

assumptions used in its impairment tests are reasonable, but variations in any of the assumptions may result in different measurements of fair values.

The impacts of any adverse business and market conditions which impact the overall performance of the Company's reporting units will continue to be monitored.

If the Company's reporting units do not achieve the financial performance that the Company expects, it is possible that goodwill impairment charges may result.

There can therefore be no assurance that future events will not result in an impairment of goodwill.

As of December 31, 2020 and 2019, the Company's finite-lived and indefinite-lived intangible assets consisted of the following (in thousands):

December 31, 2019

December 31, 2018

December 31, 2020 December 31, 2019

Cost Accumulated

Amortization Net Cost Accumulated

Amortization Net

Permits $ 183,766 $ 95,033 $ 88,733 $ 184,235 $ 87,228 $ 97,007

Customer and supplier relationships

382,083 211,895 170,188 401,696 207,884 193,812

Other intangible assets 39,287 34,744 4,543 38,331 33,018 5,313

Total amortizable permits and other intangible assets

605,136 341,672 263,464 624,262 328,130 296,132

Trademarks and trade names 123,156 — 123,156 122,934 — 122,934

Total permits and other intangible assets

$ 728,292 $ 341,672 $ 386,620 $ 747,196 $ 328,130 $ 419,066

The Company regularly monitors and assesses whether events or changes in circumstances relative to the Company's business might indicate that future cash flows attributable to the Company's asset groups may not be sufficient to recover the current value of those assets.

During the year ended and as of December 31, 2019 , there were no events or changes in circumstances which would indicate that the carrying values of the Company's asset groups would not be recoverable and thus no impairment charge was recorded related to the Company's long-lived assets .

If expectations of future cash flows were to decrease in the future as a result of worse than expected or prolonged periods of depressed activity, future impairments may become evident.

During the periods presented, there were no events or changes in circumstances which would indicate that the carrying values of the Company's asset groups would not be recoverable and thus no impairment charge was recorded related to the Company's long-lived assets .

If expectations of future cash flows were to decrease in the future as a result of worse than expected or prolonged periods of depressed activity, including prolonged macroeconomic impacts from the COVID-19 pandemic as noted above, future impairments may become evident.

Amortization expense of permits and other intangible assets for the years ended December 31, 2020, 2019 and 2018 were $ 35.8 million, $ 35.2 million and $ 34.4 million, respectively.

The expected amortization of the net carrying amount of finite-lived intangible assets at December 31, 2020 is as follows (in thousands):

Years ending December 31,

CLEAN HARBORS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years ending December 31, Expected

2021 $ 30,163

Thereafter 130,590

(8) ACCRUED EXPENSES

Accrued expenses consisted of the following (in thousands):

December 31, 2019

December 31, 2018

December 31, 2020 December 31, 2019

Accrued insurance $ 77,514 $ 74,376

2 unchanged sentences

Accrued income, real estate, sales and other taxes 25,843 35,749

Interest rate swap liability 33,630 20,840

Accrued other 57,702 51,880

$ 295,823 $ 276,540

As of December 31, 2020 and 2019, accrued insurance included employee medical insurance costs of $ 9.4 million and $ 14.3 million, respectively, and accruals for losses under our workers' compensation, comprehensive general liability and vehicle liability self-insurance programs of $ 65.6 million and $ 59.4 million, respectively.

The increase in accrued interest from the comparable period in 2018 is due to the timing of required interest payments which changed due to the redemption of the 2021 unsecured senior notes and the issuance of the 2027 and 2029 unsecured senior notes.

For additional information relating to accrued interest, see Note 12, "Financing Arrangements."

The increase in accrued income, real estate, sales and other taxes from the comparable period in 2018 is due to an increase in accrued federal tax of $ 10.5 million driven by higher taxable income and the timing of tax payments.

As of December 31, 2019 and 2018 , accrued other includes a derivative liability of $ 20.8 million and $ 8.8 million , respectively, related to the Company's cash flow hedges.

The increase in the fair value of the derivative liability is mainly due to changes in variable interest rates.

CLEAN HARBORS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Accrued compensation and benefits increased from the comparable period in 2019 primarily due to an increase in payroll tax payable of $ 17.0 million due to the deferral of employer payroll tax payments under the CARES Act which are due to be repaid in the fourth quarter of 2021.

This increase was partially offset by decreases in accrued payroll of $ 4.8 million and accrued bonuses of $ 3.5 million.

The increase in the fair value of the interest rate swap liability from December 31, 2019 is mainly due to changes in variable interest rates.

For additional information relating to the derivative liability, see Note 11, "Financing Arrangements."

1 unchanged sentence

The changes to closure and post-closure liabilities (also referred to as "asset retirement obligations") from January 1, 2019 through December 31, 2020 were as follows (in thousands):

Liability Non-Landfill

Liability Total

Balance at January 1, 2019 $ 37,809 $ 32,122 $ 69,931

1 unchanged sentence

New asset retirement obligations 2,705 — 2,705

Accretion 2,772 2,829 5,601

Changes in estimates recorded to consolidated statement of operations 248 2,437 2,685

Changes in estimates recorded to consolidated balance sheet 3,303 562 3,865

Expenditures ( 7,718 ) ( 2,121 ) ( 9,839 )

Currency translation and other 282 201 483

2 unchanged sentences

New asset retirement obligations 2,101 — 2,101

Accretion 3,254 3,399 6,653

Changes in estimates recorded to consolidated statement of operations 6,465 103 6,568

Changes in estimates recorded to consolidated balance sheet 481 201 682

Expenditures ( 3,445 ) ( 753 ) ( 4,198 )

Currency translation and other 155 49 204

Balance at December 31, 2020 $ 48,412 $ 39,514 $ 87,926

During 2020, the Company took actions to begin the closure of two of its commercial landfill sites.

The Altair landfill was closed because it had reached permitted capacity.

The Westmorland landfill was closed due to the costs of obtaining and maintaining permits and operating the landfill.

The 2020 environmental changes in estimates recorded to the consolidated statement of operations included $ 6.8 million related to the closure of these two commercial landfills.

The 2019 environmental changes in estimates recorded to the consolidated statements of operations included $ 2.3 million related to increased facility closure costs at one of our locations.

CLEAN HARBORS, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All of the landfill facilities reflected in the above table were active as of December 31, 2019 and 2018 .

The 2019 and 2018 environmental changes in estimates recorded to the consolidated statements of operations include $ 2.3 million and $ 1.2 million , respectively, related to increased facility closure costs at one of our locations.

Anticipated payments (based on current estimated costs and anticipated timing of necessary regulatory approvals to commence work on closure and post-closure activities) for each of the next five years and thereafter are as follows (in thousands):

Year ending December 31,

2021 $ 14,941

Thereafter 269,477

Undiscounted closure and post-closure liabilities 320,911

5 unchanged sentences

Liabilities for

Landfill Sites

Landfill Sites Remedial

Liabilities for

Inactive Sites

Inactive Sites Remedial

Superfund) for

Operations Total

Balance at January 1, 2019 $ 1,838 $ 65,315 $ 53,864 $ 121,017

Accretion 88 2,639 1,808 4,535

Changes in estimates recorded to consolidated statement of operations ( 17 ) ( 913 ) ( 2,087 ) ( 3,017 )

Expenditures ( 59 ) ( 5,079 ) ( 3,724 ) ( 8,862 )

Currency translation and other 1 29 470 500

Balance at December 31, 2019 1,851 61,991 50,331 114,173

Accretion 90 2,607 1,701 4,398

Changes in estimates recorded to consolidated statement of operations ( 15 ) 2,873 1,272 4,130

Expenditures ( 61 ) ( 4,332 ) ( 3,810 ) ( 8,203 )

Currency translation and other — ( 79 ) 394 315

Balance at December 31, 2020 $ 1,865 $ 63,060 $ 49,888 $ 114,813

During 2020, the Company increased its remedial liabilities for an inactive site and a Superfund site by $ 3.3 million and $ 1.8 million, respectively, due to updated regulatory remediation requirements received during the year.

In 2019, the net reduction in the Company's remedial liabilities from changes in estimates recorded to the consolidated statement of operations was $ 3.0 million and primarily related to reductions in estimates for remedial activities at five locations.

There were no significant (benefits) charges in 2018 resulting from changes in estimates for remedial liabilities.

CLEAN HARBORS, INC.

3 unchanged sentences

Year ending December 31,

2021 $ 12,718

Thereafter 75,915

Undiscounted remedial liabilities 134,927

Discount ( 20,114 )

Total remedial liabilities $ 114,813

1 unchanged sentence

Estimates based on type of facility or site (in thousands, except percentages):

Type of Facility or Site

Reasonably Possible

Type of Facility or Site Remedial

Liability % of Total Reasonably Possible

Additional Liabilities (1)

Facilities now used in active conduct of the Company's business ( 37 facilities)

$ 42,151 36.7 % $ 10,565

Inactive facilities not now used in active conduct of the Company's business but most of which were acquired because the assumption of remedial liabilities for such facilities was part of the purchase price for the CSD assets ( 27 facilities)

Superfund sites owned by third parties (17 sites)

63,060 54.9 10,716

Superfund sites ( 16 sites)

9,602 8.4 960

Total $ 114,813 100.0 % $ 22,241

___________________________________

(1) Amounts represent the high end of the range of management's best estimate of the reasonably possible additional liabilities.

3 unchanged sentences

Estimates based on amount of potential liability (in thousands, except percentages):

Type of Facility or Site

Location Type of Facility or Site Remedial

Liability (1)

% of Total Reasonably

Liabilities (2)

Baton Rouge, LA

Closed incinerator and landfill

Bridgeport, NJ

Closed incinerator

Mercier, Quebec

Idled incinerator and legal proceedings

Operating solvent recycling center

All other incinerators, landfills, wastewater treatment facilities and service centers (72 facilities)

Superfund sites (each representing less than 5% of total liabilities) owned by third parties (17 sites)

Baton Rouge, LA Closed incinerator and landfill $ 25,650 22.3 % $ 4,208

Bridgeport, NJ Closed incinerator 17,832 15.5 2,510

Mercier, Quebec Idled incinerator and legal proceedings 11,158 9.7 1,157

Linden, NJ Operating solvent recycling center 7,220 6.3 758

Various All other incinerators, landfills, wastewater treatment facilities and service centers ( 60 facilities)

43,351 37.8 12,648

Various Superfund sites (each representing less than 5 % of total liabilities) ( 16 sites)

9,602 8.4 960

Total $ 114,813 100.0 % $ 22,241

_________________________________

(1) $ 24.0 million of the $ 114.8 million remedial liabilities include estimates related to the legal and administrative proceedings discussed in Note 17, "Commitments and Contingencies," as well as other such estimated remedial liabilities.

6 unchanged sentences

The following table is a summary of the Company's financing arrangements (in thousands):

Current Obligations:

December 31, 2019

December 31, 2018

Senior secured Term Loan Agreement ("Term Loan Agreement")

Long-Term Obligations:

Senior secured Term Loan Agreement due June 30, 2024

Current Debt:

December 31, 2020 December 31, 2019

Secured senior term loans ("Term Loans") $ 7,535 $ 7,535

Long-Term Debt:

Secured senior Term Loans due June 30, 2024 $ 719,626 $ 727,162

Unsecured senior notes, at 4.875 %, due July 15, 2027 ("2027 Notes")

545,000 545,000

Unsecured senior notes, at 5.125 %, due July 15, 2029 ("2029 Notes")

Unsecured senior notes, at 5.125%, due June 1, 2021 ("2021 Notes")

Long-term obligations, at par

300,000 300,000

Long-term debt, at par 1,564,626 1,572,162

Unamortized debt issuance costs and premium, net ( 14,985 ) ( 18,046 )

Long-term obligations, at carrying value

Long-term debt, at carrying value $ 1,549,641 $ 1,554,116

Financing Activities

Unsecured Senior Notes.

On July 2, 2019, the Company completed a private placement of $ 545.0 million aggregate principal amount of 2027 Notes and $ 300.0 million aggregate principal amount of 2029 Notes (collectively, the "New Notes").

The 2027 Notes will mature on July 15, 2027, and the 2029 Notes will mature on July 15, 2029.

Interest payments on each series of the New Notes will be paid semiannually on January 15 and July 15, commencing on January 15, 2020.

Interest payments on each series of the Notes are paid semiannually on January 15 and July 15.

The Company may redeem all or any portion of the 2027 Notes prior to July 15, 2022 or the 2029 Notes prior to July 15, 2024 at a redemption price equal to 100 % of the principal amount redeemed plus a make whole premium as of the date of redemption including accrued and unpaid interest, if any, up to the date of redemption.

Additionally, prior to July 15, 2022 for

CLEAN HARBORS, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Additionally, prior to July 15, 2022 for the 2027 Notes and July 15, 2024 for the 2029 Notes, the Company may use cash proceeds of one or more equity offerings to redeem up to 35 % in aggregate principal of the 2027 Notes or the 2029 Notes at a redemption price equal to 104.875 % or 105.125 % , respectively, plus accrued and unpaid interest thereon, if any, up to the date of redemption.

After the dates in the preceding paragraph, the Company may redeem all or any portion of the New Notes which remain outstanding at any time upon proper notice at the following redemption prices if redeemed during the twelve-month period commencing on July 15 of the years set forth below plus accrued and unpaid interest, if any, up to the date of redemption:

the 2027 Notes and July 15, 2024 for the 2029 Notes, the Company may use cash proceeds of one or more equity offerings to redeem up to 35 % in aggregate principal of the 2027 Notes or the 2029 Notes at a redemption price equal to 104.875 % or 105.125 %, respectively, plus accrued and unpaid interest thereon, if any, up to the date of redemption.

After the dates in the preceding paragraph, the Company may redeem all or any portion of the Notes which remain outstanding at any time upon proper notice at the following redemption prices if redeemed during the twelve-month period commencing on July 15 of the years set forth below plus accrued and unpaid interest, if any, up to the date of redemption:

Year Percentage

2022 102.438 %

2023 101.219 %

2024 and thereafter 100.000 %

Year Percentage

2024 102.563 %

2025 101.281 %

2026 and thereafter 100.000 %

Concurrently with the closing of the New Notes on July 2, 2019, the Company repurchased, using a portion of the net proceeds from the sale of the New Notes, an aggregate principal amount of $ 701.0 million of the 2021 Notes.

Concurrently with the closing of the Notes in July 2019, the Company repurchased an aggregate principal amount of $ 845.0 million of previously outstanding notes due in 2021 ("2021 Notes") using a combination of the net proceeds from the sale of the Notes and available cash.

The total amount paid in repurchasing the 2021 Notes was $ 850.2 million, including $ 4.0 million of accrued interest.

On July 17, 2019, the Company redeemed the remaining $ 144.0 million outstanding 2021 Notes, including $ 0.9 million of accrued interest, using the remaining net proceeds from the sale of the New Notes and available cash.

In connection with this early repurchase and redemption of the 2021 Notes, the Company recorded a loss on early extinguishment of debt of $ 6.1 million during the year ended December 31, 2019.

With the repurchase and redemption of the 2021 Notes, none of the Company’s outstanding debt is registered under the Securities Act of 1933, as amended.

The New Notes and the related indenture contain various customary non-financial covenants and are guaranteed by substantially all of the Company’s current and future domestic subsidiaries.

The New Notes are effectively subordinated to the Company's Term Loan Agreement, revolving credit facility and finance lease obligations to the extent of the value of the assets securing such secured indebtedness.

The New Notes are effectively subordinated to all indebtedness and other liabilities of the Company's subsidiaries that are not guarantors of the New Notes.

In connection with this repurchase of the 2021 Notes, the Company recorded a loss on early extinguishment of debt of $ 6.1 million during the year ended December 31, 2019.

The Notes and the related indenture contain various customary non-financial covenants and are guaranteed by substantially all of the Company’s current and future domestic subsidiaries.

The Notes are effectively subordinated to the loan agreement under which the Company's Term Loans are outstanding, revolving credit facility and finance lease obligations to the extent of the value of the assets securing such secured indebtedness.

The Notes are also effectively subordinated to all indebtedness and other liabilities of the Company's subsidiaries that are not guarantors of the Notes.

Senior Secured Term Loans.

On April 17, 2018, the Company, and substantially all of the Company's domestic subsidiaries as guarantors, entered into the first amendment (the “First Amendment”) of the Term Loan Agreement.

The First Amendment reduced the applicable interest rate margin for the Company’s term loans (the "Term Loans") outstanding under the Term Loan Agreement by 25 basis points for both Eurocurrency borrowings and base rate borrowings.

After giving effect to the repricing, the applicable interest rate margins for the Term Loans are 1.75 % for Eurocurrency borrowings and 0.75 % for base rate borrowings.

On July 19, 2018, the Company, and substantially all of the Company’s domestic subsidiaries as guarantors, entered into an Incremental Facility Amendment (the “Incremental Facility Amendment”) to the Company’s Term Loan Agreement.

The Incremental Facility Amendment increased the principal amount of the Term Loans outstanding under the Term Loan Agreement by $ 350.0 million .

The Term Loans under the Term Loan Agreement will mature on June 30, 2024 and may be prepaid at any time without premium or penalty other than customary breakage costs with respect to Eurodollar based loans.

The Company’s obligations under the Term Loan Agreement are guaranteed by all of the Company’s domestic restricted subsidiaries and secured by liens on substantially all of the assets of the Company and the guarantors.

The Incremental Facility Amendment increased the principal amount of the Term Loans outstanding by $ 350.0 million.

The total Term Loans outstanding will mature on June 30, 2024 and may be prepaid at any time without premium or penalty other than customary breakage costs with respect to Eurodollar based loans.

The Company’s obligations under the Term Loans are guaranteed by all of the Company’s domestic restricted subsidiaries and secured by liens on substantially all of the assets of the Company and the guarantors.

The applicable interest rate margins for the Term Loans are 1.75 % for Eurocurrency borrowings and 0.75 % for base rate borrowings.

The effective annual interest rate of the Term Loans on December 31, 2020 was 1.90 %.

Concurrently with the closing on July 19, 2018 of the Incremental Facility Amendment, the Company repurchased $ 322.0 million aggregate principal of previously outstanding unsecured senior notes.

The total amount paid to repurchases these notes

CLEAN HARBORS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

was $ 330.9 million inclusive of $ 7.9 million of accrued interest and $ 1.0 million of debt redemption fees.

On August 1, 2018, the Company redeemed the remaining $ 78.0 million of principal of the previously outstanding notes.

The total amount paid to repurchase those notes was $ 330.9 million inclusive of $ 7.9 million of accrued interest and $ 1.0 million of debt redemption fees.

On August 1, 2018, the Company redeemed the remaining $ 78.0 million of principal of those previously outstanding notes.

In connection with this redemption, the Company recorded a loss on early extinguishment of debt of $ 2.5 million during the year ended December 31, 2018.

As of December 31, 2019 and December 31, 2018 , the estimated fair value of the Company’s outstanding long-term obligations, including the current portion, was $ 1.6 billion .

The Company’s estimates of the fair value of its long-term obligations, including the current portion, are based on quoted market prices or other available market data which are considered Level 2 measures according to the fair value hierarchy.

As of December 31, 2020 and December 31, 2019, the estimated fair value of the Company’s outstanding long-term debt, including the current portion, was $ 1.6 billion.

The Company’s estimates of the fair value of its long-term debt, including the current portion, are based on quoted market prices or other available market data which are considered Level 2 measures according to the fair value hierarchy.

Level 2 utilizes quoted market prices in markets that are not active, broker or dealer quotation, or alternative pricing sources with reasonable levels of price transparency for similar assets and liabilities.

Revolving Credit Facility.

On November 1, 2016, the Company and one of the Company's subsidiaries (the "Canadian Borrower") entered into an amended and restated credit agreement for the Company's revolving credit facility with Bank of America, N.A.

On October 28, 2020, the Company and one of the Company's subsidiaries (the "Canadian Borrower") entered into an amended and restated credit agreement for the Company's revolving credit facility with Bank of

CLEAN HARBORS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

America, N.A.

(“BofA”), as agent for the lenders under the facility (the "Agent").

Under the amended and restated facility, the Company has the right to obtain revolving loans and letters of credit for a combined maximum of up to $ 300.0 million (with a sub-limit of $ 250.0 million for letters of credit) and the Canadian Borrower has the right to obtain revolving loans and letters of credit for a combined maximum of up to $ 100.0 million (with a $ 75.0 million sub-limit for letters of credit).

Under the amended and restated facility, the Company has the right to obtain revolving loans and letters of credit for a combined maximum of up to $ 350.0 million (with a sub-limit of $ 250.0 million for letters of credit) and the Canadian Borrower has the right to obtain revolving loans and letters of credit for a combined maximum of up to $ 50.0 million.

Availability under the U.S.

line is subject to a borrowing base basically comprised of 85 % of the eligible accounts receivable of the Company and its U.S.

subsidiaries plus 100 % of cash deposited in a controlled account with the Agent, and availability under the Canadian line is subject to a borrowing base basically comprised of 85 % of the eligible accounts receivable of the Company’s Canadian subsidiaries plus 100 % of cash deposited in a controlled account with the Agent’s Canadian affiliate.

Subject to certain conditions, the facility will expire on November 1, 2021.

line is subject to a borrowing base primarily comprised of 85 % of the eligible accounts receivable of the Company and its U.S.

subsidiaries plus 100 % of cash deposited in a controlled account with the Agent, and availability under the Canadian line is subject to a borrowing base primarily comprised of 85 % of the eligible accounts receivable of the Company’s Canadian subsidiaries plus 100 % of cash deposited in a controlled account with the Agent’s Canadian affiliate.

Subject to certain conditions, the revolving credit facility will expire on October 28, 2025.

Borrowings under the revolving credit facility bear interest at a rate of, at the Company’s option, either (i) LIBOR plus an applicable margin ranging from 1.50 % to 1.75 % per annum based primarily on the level of the Company’s average liquidity for the most recent 30 day period or (ii) BofA’s base rate plus an applicable margin ranging from 0.50 % to 0.75 % per annum based primarily on such average liquidity.

There is also an unused line fee, calculated on the then unused portion of the lenders’ $ 400.0 million maximum commitments, ranging from 0.25 % to 0.375 % per annum of the unused commitment.

For outstanding letters of credit, the Company will pay to the lenders a fee equal to the then applicable LIBOR margin described above, and to the issuing banks a standard fronting fee and customary fees and charges in connection with all amendments, extensions, draws and other actions with respect to letters of credit.

For outstanding letters of credit, the Company pays to the lenders a fee equal to the then applicable LIBOR margin described above, and to the issuing banks a standard fronting fee and customary fees and charges in connection with all amendments, extensions, draws and other actions with respect to letters of credit.

In the event that LIBOR ceases to be available during the term of the revolving credit facility, the amended and restated credit agreement provides procedures to determine a LIBOR successor rate.

The Company utilizes letters of credit issued under the revolving credit facility primarily as security for our insurance program that includes casualty and financial assurance.

The Company’s obligations under the revolving credit facility (including revolving loans and reimbursement obligations for outstanding letters of credit) are guaranteed by substantially all of the Company’s U.S.

2 unchanged sentences

The Canadian Borrower’s obligations under the facility are guaranteed by substantially all of the Company’s Canadian subsidiaries and secured by a first lien on the accounts receivable of the Canadian subsidiaries.

The Company utilizes letters of credit primarily as security for financial assurance which it has been required to provide to regulatory bodies for its hazardous waste facilities and which would be called only in the event that the Company fails to satisfy closure, post-closure and other obligations under the permits issued by those regulatory bodies for such licensed facilities.

On August 1, 2018, the Company borrowed $ 50.0 million under the revolving credit facility in connection with the redemption of $ 78.0 million of previously outstanding unsecured senior notes.

The Company repaid the $ 50.0 million borrowing during the fourth quarter of 2018.

At December 31, 2019 and 2018 , the revolving credit facility had no outstanding loan balances, availability of $ 229.2 million and $ 235.4 million , respectively, and outstanding letters of credit of $ 146.9 million and $ 130.1 million , respectively.

On March 31, 2020, the Company borrowed $ 150.0 million under the revolving credit facility.

The Company repaid the full amount of the borrowing during 2020.

The revolving credit facility had no outstanding loan balances at December 31, 2020 and 2019 and had availability of $ 264.0 million and outstanding letters of credit of $ 120.6 million at December 31, 2020.

Cash Flow Hedges

1 unchanged sentence

Although the interest rate on the Term Loans is variable, the Company has effectively fixed the interest rate on $ 350.0 million principal outstanding by entering into interest rate swap agreements in 2018 with a notional amount of $ 350.0 million.

Under the terms of the interest rate swap agreements, the Company receives interest based on the 1-month LIBOR index and pays interest at a weighted average rate of approximately 2.92 % , resulting in an effective annual interest rate of approximately 4.67 % .

CLEAN HARBORS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Under the terms of the interest rate swap agreements, the Company receives interest based on the one-month LIBOR index and pays interest at a weighted average rate of approximately 2.92 %, resulting in an effective annual interest rate of approximately 4.67 %.

The Company recognizes derivative instruments as either assets or liabilities on the consolidated balance sheet at fair value.

No ineffectiveness has been identified on these swaps and, therefore the change in fair value is recorded in stockholders’ equity as a component of accumulated other comprehensive loss.

Amounts are reclassified from accumulated other comprehensive loss into interest expense on the consolidated statement of operations in the same period or periods during which the hedged transaction affects earnings.

As of December 31, 2020 and December 31, 2019, the Company recorded a derivative liability with a fair value of $ 33.6 million and $ 20.8 million, respectively, within accrued expenses in connection with these cash flow hedges.

The fair value of the interest rate swaps is calculated using discounted cash flow valuation methodologies based upon the one-month LIBOR yield curves that are observable at commonly quoted intervals for the full term of the interest rate swaps and as such is considered a Level 2 measure according to the fair value hierarchy.

(13) INCOME TAXES

The domestic and foreign components of income before provision (benefit) for income taxes were as follows (in thousands):

For the years ended December 31,

The provision (benefit) for income taxes consisted of the following (in thousands):

For the years ended December 31,

Provision (benefit) for income taxes

CLEAN HARBORS, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company's effective tax rate for fiscal years 2019 , 2018 and 2017 was 34.1 % , 30.5 % and ( 71.6 )% , respectively.

The effective income tax rate varied from the amount computed using the statutory federal income tax rate as follows (in thousands):

(12) INCOME TAXES

The domestic and foreign components of income before provision for income taxes were as follows (in thousands):

For the years ended December 31,

2020 2019 2018

Domestic $ 168,117 $ 156,571 $ 115,070

Foreign 6,433 ( 8,332 ) ( 20,588 )

Total $ 174,550 $ 148,239 $ 94,482

The provision for income taxes consisted of the following (in thousands, except percentages):

For the years ended December 31,

2020 2019 2018

Federal $ 33,327 $ 20,482 $ ( 7,677 )

State 14,575 14,564 12,653

Foreign 1,559 7,448 4,781

49,461 42,494 9,757

Federal ( 965 ) 7,933 19,899

State ( 2,506 ) 550 ( 1,205 )

Foreign ( 6,277 ) ( 478 ) 395

( 9,748 ) 8,005 19,089

Provision for income taxes $ 39,713 $ 50,499 $ 28,846

Effective tax rate 22.8 %

The Company's effective income tax rate varied from the amount computed using the statutory federal income tax rate of 21% as follows (in thousands):

For the years ended December 31,

2020 2019 2018

Tax expense at US statutory rate $ 36,655 $ 31,130 $ 19,841

3 unchanged sentences

Uncertain tax position interest and penalties ( 712 ) 474 ( 1,806 )

Tax credits 2,039 ( 50 ) ( 9,799 )

Non-deductible compensation 1,406 1,922 1,813

Other 571 1,691 1,032

Adjustment for Tax Cuts and Jobs Act — — ( 288 )

Provision (benefit) for income taxes

Due to the Tax Cuts and Jobs Act (the “Tax Act”) signed into law on December 22, 2017, the statutory rate in effect was 21% in 2019 and 2018, compared to 35% in 2017.

For the year ended December 31, 2017, the Company calculated its best estimate of the impact of the Tax Act in its year-end income tax provision in accordance with its understanding of the Tax Act and guidance available as of the date of the 2017 Form 10-K filing and as a result recorded a net benefit of $ 93.0 million as a component of the 2017 income tax expense.

This provisional net income tax benefit was comprised of a $ 100.5 million tax benefit for the remeasurement of deferred tax assets and liabilities to the 21% rate at which they are expected to reverse, offset by a one-time tax expense on deemed repatriation of $ 7.5 million .

This one-time charge was after the utilization of $ 7.5 million of foreign tax credits which had full valuation allowances applied to them previously.

During 2018, the Company completed its analysis of impacts of the Tax Act and specific to the one-time deemed repatriation, adjusted the previous amount recorded of $ 7.5 million to $ 6.6 million resulting in a $ 0.9 million benefit to tax expense recorded in 2018.

The Company also recorded the final remeasurement of its deferred tax assets and liabilities and adjusted the deferred tax benefit from $ 100.5 million to $ 99.9 million or approximately $ 0.6 million of deferred expense recorded in 2018.

The total net impact of changes in tax law resulted in a net benefit of approximately $ 0.3 million in 2018.

During 2018, the Company also completed an analysis of certain federal manufacturing and research and development credit benefits for tax years 2014 through 2017.

Provision for income taxes $ 39,713 $ 50,499 $ 28,846

The valuation allowance benefit of $ 11.3 million recognized in 2020 is predominately related to taxable earnings in certain Canadian entities that benefited from the wage subsidy received under the CEWS.

In addition, the foreign tax credit that expired in 2020 had a full valuation allowance which was also written off, contributing to the valuation allowance benefit in the table above.

The foreign tax credit expiration and valuation allowance write off had no net impact to the provision for income taxes.

During 2018, the Company completed an analysis of certain federal manufacturing and research and development credit benefits for tax years 2014 through 2017.

Upon the filing of its 2017 tax return in October 2018, the Company recognized $ 3.3 million of tax benefits and recognized an additional $ 7.1 million upon the amendments of its 2014 through 2016 tax returns for a net benefit recorded as a component of the 2018 tax provision of $ 9.8 million (shown as Tax credits in the table above).

During the year ended December 31, 2018, the Company recorded $ 5.0 million of tax benefits related to tax deductible foreign currency losses to accumulated other comprehensive loss and as such these benefits are not included within the provision (benefit) for income taxes.

The Company collected the refund during 2020.

CLEAN HARBORS, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

During the years ended December 31, 2020 and December 31, 2018, the Company recorded $ 1.3 million and $ 5.0 million, respective, of tax benefits related to tax deductible foreign currency losses to accumulated other comprehensive loss and as such these benefits are not included within the provision for income taxes.

See Note 15, "Accumulated Other Comprehensive Loss," for additional information related to these transactions.

The components of the total net deferred tax assets and liabilities as of December 31, 2020 and 2019 were as follows (in thousands):

4 unchanged sentences

Accrued expenses 16,797 17,602

Accrued compensation

Accrued compensation and benefits 11,372 7,155

Net operating loss carryforwards (1)

50,433 50,824

Tax credit carryforwards (2)

Uncertain tax positions accrued interest and federal benefit

14,471 16,909

Interest rate swap liability 10,089 6,252

Stock-based compensation 3,040 2,435

Other 5,553 8,342

Total deferred tax assets 188,876 186,307

13 unchanged sentences

These amounts continue to be indefinitely reinvested in foreign operations.

A valuation allowance is required to be established when, based on an evaluation of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Accordingly, as of December 31, 2019 and 2018 , the Company had a valuation allowance of $ 83.6 million and $ 79.3 million , respectively.

The total allowance as of December 31, 2019 consisted of $ 16.5 million of foreign tax credits, $ 0.8 million of acquired federal net operating losses, $ 10.7 million of state net operating loss carryforwards, $ 34.1 million of foreign net operating loss carryforwards, $ 14.9 million of deferred tax assets of a Canadian subsidiary and $ 6.6 million of realized and unrealized capital losses.

The allowance as of December 31, 2018 consisted of $ 16.5 million of foreign tax credits, $ 0.8 million of acquired federal net operating losses, $ 9.6 million of state net operating loss carryforwards and $ 22.7 million of foreign net operating loss carryforwards, $ 26.6 million of deferred tax assets of a Canadian subsidiary and $ 3.1 million of unrealized capital losses.

CLEAN HARBORS, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The components of the total valuation allowance as of December 31, 2020 and 2019 were as follows (in thousands):

Allowance related to:

Foreign tax credits 14,127 16,565

Acquired federal net operating losses 779 779

State net operating loss carryforwards 10,429 10,663

Foreign net operating loss carryforwards 29,839 34,149

Deferred tax assets of a Canadian subsidiary 11,468 14,922

Realized and unrealized capital losses 10,402 6,565

Total valuation allowance $ 77,044 $ 83,643

The changes to unrecognized tax benefits (excluding related penalties and interest) from January 1, 2018 through December 31, 2020, were as follows (in thousands):

Unrecognized tax benefits as of January 1

Additions to current year tax positions

2020 2019 2018

Unrecognized tax benefits, beginning of year $ 6,414 $ 3,159 $ 5,121

(Reductions) additions to prior year tax positions ( 833 ) 3,354 ( 625 )

Expirations ( 203 ) ( 209 ) ( 1,115 )

Foreign currency translation 112 110 ( 222 )

Unrecognized tax benefits as of December 31

At December 31, 2019 , 2018 and 2017 , the Company had recorded $ 6.4 million , $ 3.2 million and $ 5.1 million , respectively, of unrecognized tax benefits that if recognized would affect the annual effective tax rate.

The Company recorded $ 3.1 million of unrecognized tax benefits for Canadian Revenue Agency transfer pricing adjustments for which relief from double taxation has been requested.

Therefore, an offsetting benefit of $ 3.1 million was also recorded resulting in no effect on the annual effective tax rate.

At December 31, 2019 , 2018 and 2017 the Company has accrued interest of $ 1.7 million , $ 0.8 million and $ 0.9 million , respectively, relative to unrecognized tax benefits.

Interest expense that is recorded as a tax expense against the liability for unrecognized tax benefits for the years ended December 31, 2019 , 2018 and 2017 included interest and penalties of $ 0.9 million , $( 0.1 ) million and $ 0.5 million , respectively.

Unrecognized tax benefits, end of year $ 5,490 $ 6,414 $ 3,159

The unrecognized tax benefits at December 31, 2020 if and when recognized will affect the annual effective tax rate.

However, the balance at December 31, 2020 included $ 3.1 million of unrecognized tax benefits for Canadian Revenue Agency transfer pricing adjustments.

Should these be recognized, the Company would request relief from double taxation.

Therefore, an offsetting benefit of $ 3.1 million would also recognized resulting in no net effect on the annual effective tax rate.

The Company does not currently believe that the total unrecognized tax benefits will change within the next 12 months.

At December 31, 2020, 2019 and 2018, the Company had accrued interest of $ 2.1 million, $ 1.7 million and $ 0.8 million, respectively, relative to unrecognized tax benefits.

Interest expense and penalties relative to unrecognized tax benefits for the years ended December 31, 2020, 2019 and 2018 were immaterial.

The Company files U.S.

federal income tax returns as well as income tax returns in various states and foreign jurisdictions.

The Company’s tax years 2014-2016 are currently under review by the Internal Revenue Service (the “IRS”).

The Company does not believe the examination will result in material adjustments to previously filed returns.

Additionally, any net operating losses that were generated in prior years and utilized in these years may also be subject to examination by the IRS.

The Company may also be subject to examinations by state and local revenue authorities for calendar years 2014 through 2018.

The Company may be subject to examination by the IRS for calendar years 2015 through 2019.

The Company may be subject to examination by Canadian federal and provincial authorities for calendar years 2013 through 2019 and by state and local revenue authorities for calendar years 2014 through 2019.

The Company has ongoing U.S.

state and local jurisdictional audits, as well as Canadian federal and provincial audits, all of which the Company believes will not result in material liabilities.

Due to expiring statute of limitation periods and the resolution of tax audits, the Company believes that total unrecognized tax benefits will decrease by approximately $ 0.2 million within the next 12 months.

CLEAN HARBORS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(13) EARNINGS PER SHARE

1 unchanged sentence

For the years ended December 31,

2020 2019 2018

Numerator for basic and diluted earnings per share:

Net income $ 134,837 $ 97,740 $ 65,636

Weighted basic shares outstanding 55,479 55,845 56,148

3 unchanged sentences

Diluted earnings per share $ 2.42 $ 1.74 $ 1.16

For the years ended December 31, 2019 , 2018 and 2017 , all then outstanding performance awards and restricted stock awards were included in the calculation of diluted earnings per share except for 122,785 , 79,390 and 152,831 respectively, of performance stock awards for which the performance criteria were not attained at the time and 16,304 , 121,803 and 49,373 respectively, of restricted stock awards and performance stock awards which were excluded as their inclusion would have an antidilutive effect.

CLEAN HARBORS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the years ended December 31, 2020, 2019 and 2018, all then outstanding performance awards and restricted stock awards were included in the calculation of diluted earnings per share except for 53,667 , 122,785 and 79,390 respectively, of performance stock awards for which the performance criteria were not attained at the reporting dates and 8,878 , 16,304 and 121,803 respectively, of restricted stock awards and performance stock awards which were excluded as their inclusion would have had an antidilutive effect.

(14) STOCKHOLDERS' EQUITY

The Company's board of directors has authorized the repurchase of up to $ 600.0 million of the Company's common stock.

The Company has funded and intends to continue to fund the repurchases through available cash resources.

The repurchase program authorizes the Company to purchase the Company's common stock on the open market or in privately negotiated transactions periodically in a manner that complies with applicable U.S.

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The Company has no obligation to repurchase stock under this program and may suspend or terminate the repurchase program at any time.

During the years ended December 31, 2019 , 2018 and 2017 , the Company repurchased and retired a total of approximately 0.3 million , 0.8 million and 0.9 million shares, respectively, of the Company's common stock for total costs of approximately $ 21.4 million , $ 45.1 million and $ 49.0 million , respectively.

Through December 31, 2019 , the Company has repurchased and retired a total of approximately 5.9 million shares of its common stock for approximately $ 315.3 million under this program.

During the years ended December 31, 2020, 2019 and 2018, the Company repurchased and retired a total of 1.2 million, 0.3 million and 0.8 million shares, respectively, of the Company's common stock for total costs of $ 74.8 million, $ 21.4 million and $ 45.1 million, respectively.

As of December 31, 2020, an additional $ 209.9 million remained available for repurchase of shares under this program.

CLEAN HARBORS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(15) ACCUMULATED OTHER COMPREHENSIVE LOSS

The changes in accumulated other comprehensive loss by component and related tax (loss) benefit for the years ended December 31, 2019 , 2018 and 2017 were as follows (in thousands):

Foreign Currency Translation Adjustments

Unrealized (Losses) Gains on Available-for-Sale Securities

Unrealized Loss on Interest Rate Hedge

Unfunded Pension Liability

The changes in accumulated other comprehensive loss by component and related tax impacts for the years ended December 31, 2020, 2019 and 2018 were as follows (in thousands):

Foreign Currency Translation Adjustments Unrealized (Losses) Gains on Available-for-Sale Securities Unrealized Loss on Interest Rate Hedge Unrealized (loss) gain on unfunded pension liability Total

Balance at January 1, 2018 $ ( 170,575 ) $ ( 146 ) $ — $ ( 1,686 ) $ ( 172,407 )

Other comprehensive income before reclassifications

Other comprehensive (loss) income before reclassifications ( 47,374 ) 182 ( 9,579 ) 124 ( 56,647 )

Amounts reclassified out of accumulated other comprehensive loss — — 806 — 806

Other comprehensive income

Tax benefit (expense) 5,024 ( 105 ) — ( 42 ) 4,877

Other comprehensive (loss) income, net of tax ( 42,350 ) 77 ( 8,773 ) 82 ( 50,964 )

Balance at December 31, 2018 ( 212,925 ) ( 69 ) ( 8,773 ) ( 1,604 ) ( 223,371 )

Other comprehensive (loss) income before reclassifications

Other comprehensive income (loss) before reclassifications 25,130 ( 70 ) ( 14,401 ) 60 10,719

Amounts reclassified out of accumulated other comprehensive loss — 332 2,335 — 2,667

Tax benefit (loss)

Other comprehensive (loss) income

Tax expense — ( 50 ) — ( 16 ) ( 66 )

Other comprehensive income (loss) 25,130 212 ( 12,066 ) 44 13,320

Balance at December 31, 2019 ( 187,795 ) 143 ( 20,839 ) ( 1,560 ) ( 210,051 )

1 unchanged sentence

Amounts reclassified out of accumulated other comprehensive loss — — 8,180 — 8,180

Tax benefit 1,349 2 — 66 1,417

Other comprehensive income (loss) 11,561 ( 8 ) ( 12,790 ) ( 189 ) ( 1,426 )

Balance at December 31, 2020 $ ( 176,234 ) $ 135 $ ( 33,629 ) $ ( 1,749 ) $ ( 211,477 )

During the year ended December 31, 2018, the Company converted an intercompany loan with a foreign subsidiary to equity, which resulted in losses for tax purposes.

The loan had been historically treated as a component of the Company’s investment in that subsidiary, and as a result, foreign currency gains and losses on the loan had been accumulated as a component of other comprehensive (loss) income.

The subsidiary continues to operate as part of the Company.

The tax benefit of $ 5.0 million , which was triggered by the conversion, was therefore allocated to other comprehensive (loss) income rather than net income.

CLEAN HARBORS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

During the years ended December 31, 2020 and December 31, 2018, the Company converted intercompany loans with a foreign subsidiary to equity, which resulted in deductible tax losses.

The loans had been historically treated as a component of the Company’s investment in that subsidiary, and as a result, foreign currency gains and losses on the loans had been accumulated as a component of other comprehensive (loss) income.

The tax benefits of $ 1.3 million and $ 5.0 million, respectively, which were triggered by the conversions were therefore allocated to other comprehensive loss rather than net income.

The amounts reclassified out of accumulated other comprehensive loss into the consolidated statement of operations, with presentation location, during the years ended December 31, 2020, 2019 and 2018 were as follows (in thousands):

For the years ended December 31,

Other Comprehensive Income Components

Unrealized (losses) gains on available-for-sale securities

Other income (expense), net

Unrealized loss on interest rate hedge

Interest expense, net of interest income

Other Comprehensive Income Components 2020 2019 2018 Location

Unrealized loss on available-for-sale securities $ — $ ( 332 ) $ — Other (expense) income, net

Unrealized loss on interest rate hedge ( 8,180 ) ( 2,335 ) ( 806 ) Interest expense, net of interest income

(16) STOCK-BASED COMPENSATION

Stock-Based Compensation

In 2010, the Company adopted an equity incentive plan (the "2010 Plan"), which provides for awards of up to 6,000,000 shares of common stock (subject to certain anti-dilution adjustments) in the form of (i) stock options, (ii) stock appreciation rights, (iii) restricted stock, (iv) restricted stock units, and (v) certain other stock-based awards.

The Company ceased issuing stock options in 2008, and all awards issued to date under the 2010 Plan have been in the form of restricted stock awards and performance stock awards as described below.

As of December 31, 2019 and 2018 , the Company had restricted stock awards and performance stock awards outstanding under the 2010 Plan.

On June 3, 2020, our shareholders approved the Clean Harbors, Inc.

2020 Stock Incentive Plan (the "2020 Plan").

The 2020 Plan provides for future awards of up to 2.5 million shares of the Company’s common stock (subject to certain anti-dilution adjustments) in the form of stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards.

The 2020 Plan is administered by the Compensation Committee of the Company’s Board of Directors.

The Company's previous stock incentive plan (the "2010 Plan") expired on May 10, 2020.

In connection with the adoption of the 2020 Plan, no further awards will be made under the 2010 Plan.

CLEAN HARBORS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company grants restricted stock awards and performance stock awards.

The restricted stock awards generally vest over three to five years subject to continued employment.

The performance stock awards vest depending on the satisfaction of certain performance criteria and continued service conditions as described below.

Total stock-based compensation cost charged to selling, general and administrative expenses for the years ended December 31, 2019 , 2018 and 2017 was $ 17.8 million , $ 16.8 million and $ 13.1 million , respectively.

The total income tax benefit recognized in the consolidated statements of operations from stock-based compensation was $ 3.1 million , $ 3.2 million and $ 3.7 million for the years ended December 31, 2019 , 2018 and 2017 , respectively.

The performance stock awards vest depending on the satisfaction of certain performance conditions typically based on revenue, Adjusted EBITDA margin, free cash flow and a measure of workplace safety.

In addition, performance stock awards include continued service conditions subsequent to the attainment of any performance conditions.

Total stock-based compensation expense for the years ended December 31, 2020, 2019 and 2018 was $ 18.5 million, $ 17.8 million and $ 16.8 million, respectively.

The total income tax benefit recognized in the consolidated statements of operations from stock-based compensation expense was $ 4.2 million, $ 3.1 million and $ 3.2 million for the years ended December 31, 2020, 2019 and 2018, respectively.

Restricted Stock Awards

The following table summarizes information about restricted stock awards for the year ended December 31, 2020:

Restricted Stock

Weighted Average

Unvested at January 1, 2019

Unvested at December 31, 2019

Restricted Stock Number of

Shares Weighted Average

Balance at January 1, 2020 522,597 $ 59.57

Granted 225,548 58.23

Vested ( 208,652 ) 57.89

Forfeited ( 45,614 ) 58.81

Balance at December 31, 2020 493,879 $ 59.74

As of December 31, 2020, there was $ 19.8 million of total unrecognized compensation cost arising from restricted stock awards.

3 unchanged sentences

The following table summarizes information about performance stock awards for the year ended December 31, 2020:

Performance Stock

Weighted Average

Unvested at January 1, 2019

Unvested at December 31, 2019

CLEAN HARBORS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of December 31, 2019 , there was $ 2.8 million of total unrecognized compensation cost arising from performance stock awards whereby the performance conditions had been met or were deemed probable of vesting.

Performance Stock Number of

Shares Weighted Average

Balance at January 1, 2020 204,553 $ 64.78

Granted 161,610 58.30

Vested ( 54,377 ) 55.75

Forfeited ( 57,337 ) 78.02

Balance at December 31, 2020 254,449 $ 53.79

As of December 31, 2020, there was $ 5.1 million of total unrecognized compensation cost arising from performance stock awards whereby the performance conditions had either been met or were probable of vesting.

The total fair value of performance awards vested during 2020, 2019 and 2018 was $ 3.5 million, $ 8.1 million and $ 1.2 million, respectively.

8 unchanged sentences

The issues involved in such 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 the Company or by other parties (“third-party sites”) to which either the Company or the prior owners of certain of the Company’s facilities shipped waste.

CLEAN HARBORS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

At December 31, 2020 and 2019, the Company had recorded reserves of $ 29.8 million and $ 26.0 million, respectively, for actual or probable liabilities related to the legal and administrative proceedings in which the Company was then involved, the principal of which are described below.

18 unchanged sentences

Product Liability Cases.

CLEAN HARBORS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

have been settled but not formally dismissed) as of December 31, 2019 , wherein persons claim personal injury resulting from the use of Safety-Kleen's parts cleaning equipment or cleaning products.

Safety-Kleen has been named as a defendant in various lawsuits that are currently pending in various courts and jurisdictions throughout the United States, including approximately 68 proceedings (excluding cases which have been settled but not formally dismissed) as of December 31, 2020, wherein persons claim personal injury resulting from the use of Safety-Kleen's parts cleaning equipment or cleaning products.

These proceedings typically involve allegations that the solvent used in Safety-Kleen's parts cleaning equipment contains contaminants and/or that Safety-Kleen's recycling process does not effectively remove the contaminants that become entrained in the solvent during their use.

7 unchanged sentences

Safety-Kleen may be named in similar, additional lawsuits in the future, including claims for which insurance coverage may not be available.

CLEAN HARBORS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Superfund Proceedings

The Company has been notified that either the Company (which, since December 28, 2012, includes Safety-Kleen) or the prior owners of certain of the Company's facilities for which the Company may have certain indemnification obligations have been identified as PRPs or potential PRPs in connection with 130 sites which are subject to or are proposed to become subject to proceedings under federal or state Superfund laws.

Of the 130 sites, five (including the BR Facility described below) involve facilities that are now owned or leased by the Company and 125 involve third-party sites to which either the Company or the prior owners of certain of the Company’s facilities shipped waste.

The Company has been notified that either the Company (which, since December 28, 2012, has included Safety-Kleen) or the prior owners of certain of the Company's facilities for which the Company may have certain indemnification obligations have been identified as PRPs or potential PRPs in connection with 130 sites which are subject to or are proposed to become subject to proceedings under federal or state Superfund laws.

Of the 130 Superfund related sites, five (including the BR Facility described below) involve facilities that are now owned or leased by the Company and 125 involve third-party sites to which either the Company or the prior owners of certain of the Company’s facilities shipped waste.

Of the 125 third-party sites, 31 are now settled, 15 are currently requiring expenditures on remediation and 79 are not currently requiring expenditures on remediation.

1 unchanged sentence

The amount of such actual and potential liability is inherently difficult to estimate because of, among other relevant factors, uncertainties as to the legal liability (if any) of the Company or the prior owners of certain of the Company's facilities to contribute a portion of the cleanup costs, the assumptions that must be made in calculating the estimated cost and timing of remediation, the identification of other PRPs and their respective capability and obligation to contribute to remediation efforts, and the existence and legal standing of indemnification agreements (if any) with prior owners, which may either benefit the Company or subject the Company to potential indemnification obligations.

The Company believes its potential liability could exceed $ 100,000 at 10 of the 125 third-party sites.

The Company believes its potential monetary liability could exceed $ 1.0 million at each of three of the 130 Superfund related sites.

The Company acquired in 2002 a former hazardous waste incinerator and landfill in Baton Rouge (the "BR Facility"), for which operations had been previously discontinued by the prior owner.

3 unchanged sentences

The EPA originally requested COC generators to submit a good faith offer to conduct a remedial investigation feasibility study directed towards the eventual remediation of the site.

In 2018 the Company completed performing corrective actions at the BR Facility under an order issued by the Louisiana Department of Environmental Quality, and has also completed conducting the remedial investigation and feasibility study for Devil's Swamp under an order issued by the EPA.

The Company cannot presently estimate the potential additional liability for the Devil's Swamp cleanup until a final remedy is selected by the EPA with issuance of a Record of Decision.

In 2018, the Company completed performing corrective actions at the BR Facility under an order issued by the Louisiana Department of Environmental Quality, and completed conducting the remedial investigation and feasibility study for Devil's Swamp, at which point the feasibility study, with several remedial alternatives, was submitted to the EPA for review.

During the year ended December 31, 2020, the EPA signed a Record of Decision which defines the remediation alternative selected and approved by the EPA.

Based upon this Record of Decision, the Company increased the estimated remedial liability for this inactive site by $ 3.3 million.

As of December 31, 2020, the Company has recorded its best estimate of the costs to execute upon this remediation alternative.

Changes in the natural landscape and/or new information identified during the remediation could impact this estimate, but are not expected to have a future material effect on the Company's financial position, liquidity or results of operation.

Third-Party Sites.

1 unchanged sentence

These agreements indemnify the Company (which now includes Safety-Kleen) with respect to any liability at the 17 sites for waste disposed prior to the Company's (or Safety-Kleen's) acquisition of the former subsidiaries of Waste Management and McKesson which had shipped waste to those sites.

CLEAN HARBORS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Accordingly, Waste Management or McKesson are paying all costs of defending those subsidiaries in those 17 cases, including legal fees and settlement costs.

3 unchanged sentences

From time to time, the Company pays fines or penalties in regulatory proceedings relating primarily to waste treatment, storage or disposal facilities.

As of December 31, 2019 and 2018 , there were 12 and 10 proceedings, respectively, for which the Company reasonably believes that the sanctions could equal or exceed $ 100,000 .

The Company believes that the fines or other penalties in these or any of the other regulatory proceedings will, individually or in the aggregate, not have a material effect on its financial condition, results of operations or cash flows.

As of December 31, 2020 there were no proceedings for which the Company reasonably believes that the sanctions could equal or exceed $ 1.0 million.

The Company believes that the fines or other penalties in these or any of

CLEAN HARBORS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

the other regulatory proceedings will, individually or in the aggregate, not have a material effect on its financial condition, results of operations or cash flows.

Self-Insurance Liabilities

6 unchanged sentences

The retention per claim for the environmental impairment policy is $ 1.0 million.

We maintain umbrella insurance to limit our exposure to certain catastrophic claim costs, including general liability and vehicle claim costs.

For the policy year starting in the fourth quarter of 2020, the Company changed the umbrella policy terms to include a $ 5.0 million annual aggregate self-insured corridor retention.

At December 31, 2020 and 2019, the Company had accrued $ 65.6 million and $ 59.4 million, respectively, for its self-insurance liabilities (exclusive of employee medical insurance) using a risk-free discount rate of 0.29 % and 1.52 %, respectively.

1 unchanged sentence

Years ending December 31,

2021 $ 22,896

Thereafter 8,188

Undiscounted self-insurance liabilities 65,928

Discount ( 320 )

Total self-insurance liabilities (included in accrued expenses) $ 65,608

As of December 31, 2019 , the Company’s lease portfolio was predominately operating leases for real estate, vehicles and rail cars.

As of December 31, 2020, the Company’s lease portfolio was predominately operating leases for real estate, equipment, such as vehicles and industrial equipment utilized in operations, and rail cars.

The Company presents operating lease balances separately on the consolidated balance sheet.

The Company's finance leases relate to certain buildings and equipment.

The following table presents our finance lease balances and their classification on the consolidated balance sheet as of December 31, 2019 (in thousands):

Finance Lease Balances (Classification)

December 31, 2019

The Company's finance leases relate to equipment, rail cars and certain real estate.

The following table presents our finance lease balances and their classification on the consolidated balance sheets (in thousands):

Finance Lease Balances (Classification) December 31, 2020 December 31, 2019

ROU assets (Property, plant and equipment, net) $ 60,271 $ 32,307

Current portion of lease liabilities (Accrued expenses) 5,840 801

Long-term portion of lease liabilities (Deferred taxes, unrecognized tax benefits and other long-term liabilities)

Long-term portion of lease liabilities (Other long-term liabilities) 55,038 34,517

CLEAN HARBORS, INC.

2 unchanged sentences

The Company’s lease expense was as follows (in thousands):

For the year ended December 31, 2019

For the year ended December 31, 2020 For the year ended December 31, 2019

Operating lease cost $ 53,194 $ 55,402

6 unchanged sentences

Total lease cost $ 134,066 $ 149,410

Rent expense, including short-term rentals for the year ended December 31, 2018, prior to the Company's adoption of ASC 842, was $ 141.1 million.

Other information related to leases was as follows:

Weighted Average Remaining Lease Term (years)

December 31, 2019

Weighted Average Remaining Lease Term (years) December 31, 2020 December 31, 2019

Operating leases 5.1 5.1

3 unchanged sentences

Finance leases 3.57 % 4.97 %

Supplemental Cash Flow Related Disclosures (in thousands)

For the year ended December 31, 2019

The weighted average remaining lease term of the finance leases decreased significantly due to the 2020 acquisition of the Company's corporate headquarters which had previously been recognized as a finance lease.

Supplemental Cash Flow Related Disclosures (in thousands) For the year ended December 31, 2020 For the year ended December 31, 2019

Cash paid for amounts included in the measurement of lease liabilities

5 unchanged sentences

At December 31, 2020, the Company's future lease payments under non-cancelable leases that have lease terms in excess of one year were as follows (in thousands):

Years ending December 31,

Years ending December 31, December 31, 2020

Operating Leases Finance Leases

2021 $ 45,341 $ 8,407

2022 37,629 8,972

2023 29,014 8,281

2024 21,048 8,248

2025 14,672 7,573

Thereafter 25,064 31,632

Total future lease payments 172,768 73,113

1 unchanged sentence

Total lease liabilities $ 151,008 $ 60,878

At December 31, 2019 , none of the Company's executed leases that had not yet commenced will create significant rights or obligations in the future and its sublease transactions are not material.

Additionally, the Company does not have any related party leases, and there were no restrictions or covenants imposed by its leases.

CLEAN HARBORS, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Disclosures related to relevant periods prior to adoption of Topic 842

The following is a summary of future minimum payments under operating leases that have initial or remaining non-cancelable lease terms in excess of one year at December 31, 2018 (in thousands):

Total minimum lease payments

During the years ended December 31, 2018 and 2017 , rent expense, including short-term rentals, was approximately $ 141.1 million and $ 125.4 million , respectively.

At December 31, 2020, none of the Company's executed leases that had not yet commenced will create significant rights or obligations in the future and its sublease transactions are not material.

Additionally, the Company does not have any related party leases, and there were no restrictions or covenants imposed by its leases.

(19) SEGMENT REPORTING

1 unchanged sentence

The Company is managed and reports as two operating segments ;

(i) the Environmental Services segment which consists of the Company’s historical Technical Services, Industrial Services, Field Services and Oil, Gas and Lodging businesses, and (ii) the Safety-Kleen segment.

(i) the Environmental Services segment and (ii) the Safety-Kleen segment.

Third-party revenue is revenue billed to outside customers by a particular segment.

6 unchanged sentences

Environmental

Services Safety-Kleen Corporate

Third-party revenues $ 2,004,081 $ 1,139,726 $ 290 $ 3,144,097

4 unchanged sentences

Environmental

Services Safety-Kleen Corporate

Third-party revenues $ 2,092,363 $ 1,318,691 $ 1,136 $ 3,412,190

2 unchanged sentences

Direct revenues $ 2,237,068 $ 1,178,129 $ ( 3,007 ) $ 3,412,190

CLEAN HARBORS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the year ended December 31, 2018

Environmental

Services Safety-Kleen Corporate

Third-party revenues $ 2,003,843 $ 1,295,355 $ 1,105 $ 3,300,303

2 unchanged sentences

Direct revenues $ 2,141,194 $ 1,161,282 $ ( 2,173 ) $ 3,300,303

The primary financial measure by which the Company evaluates the performance of its segments is Adjusted EBITDA, which consists of net income plus accretion of environmental liabilities, depreciation and amortization, net interest expense, loss on early extinguishment of debt and provision (benefit) for income taxes and excludes other gains, losses and non-cash charges not deemed representative of fundamental segment results and other (income) expense, net.

The primary financial measure by which the Company evaluates the performance of its segments is Adjusted EBITDA, which consists of net income plus accretion of environmental liabilities, depreciation and amortization, net interest expense, loss on early extinguishment of debt and provision for income taxes and excludes other gains, losses and non-cash charges not deemed representative of fundamental segment results and other expense (income), net.

Transactions between the segments are accounted for at the Company’s best estimate based on similar transactions with outside customers.

CLEAN HARBORS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table presents Adjusted EBITDA information used by management by reported segment (in thousands):

For the years ended December 31,

2020 2019 2018

Adjusted EBITDA:

Environmental Services $ 519,960 $ 446,284 $ 380,856

Safety-Kleen 229,172 282,378 282,029

Corporate Items ( 193,830 ) ( 188,345 ) ( 171,880 )

Total 555,302 540,317 491,005

Reconciliation to Consolidated Statements of Operations:

2 unchanged sentences

Income from operations 251,336 229,456 182,574

Other (income) expense, net

Other expense (income), net 290 ( 2,897 ) 4,510

Loss on early extinguishment of debt — 6,131 2,488

Gain on sale of businesses

Loss (gain) on sale of businesses 3,376 ( 687 ) —

Interest expense, net of interest income 73,120 78,670 81,094

Income from operations before provision (benefit) for income taxes

Income from operations before provision for income taxes $ 174,550 $ 148,239 $ 94,482

The following table presents assets by reported segment and in the aggregate (in thousands):

December 31, 2019

December 31, 2018

December 31, 2020 December 31, 2019

Property, plant and equipment, net

Environmental Services $ 879,176 $ 939,352

Safety-Kleen 555,894 555,310

Corporate Items 90,228 93,489

2 unchanged sentences

Environmental Services

Goodwill $ 212,386 $ 212,531

Permits and other intangibles, net 78,928 89,722

Total Environmental Services 291,314 302,253

Goodwill $ 314,637 $ 312,482

Permits and other intangibles, net 307,692 329,344

Total Safety-Kleen 622,329 641,826

Total $ 913,643 $ 944,079

CLEAN HARBORS, INC.

3 unchanged sentences

As of December 31, 2020 and 2019, the Company had property, plant and equipment, net of depreciation and amortization and permits and other intangible assets, net of amortization in the following geographic locations (in thousands):

December 31, 2019

December 31, 2018

December 31, 2020 December 31, 2019

Total % of Total Total % of Total

Property, plant and equipment, net

7 unchanged sentences

The following table presents the total assets by geographical area (in thousands):

December 31, 2019

December 31, 2018

December 31, 2020 December 31, 2019

United States $ 3,447,811 $ 3,413,254

Canada and other foreign 683,709 695,650

(21) QUARTERLY DATA (UNAUDITED)

(in thousands, except per share amounts)

Total revenues

Cost of revenues (1)

Income from operations

Other income (expense), net

Net income (2)

Basic earnings per share (3)

Diluted earnings per share (3)

(in thousands, except per share amounts)

Total revenues

Cost of revenues (1)

Income from operations

Other (expense) income, net

Net (loss) income (2)

Basic (loss) earnings per share (3)

Diluted (loss) earnings per share (3)

____________________________________

Accretion of environmental liabilities and depreciation and amortization are shown separately on the consolidated statements of operations.

Net income in the third quarters of 2019 and 2018 included a $ 6.1 million and $ 2.5 million loss on early extinguishment of debt, respectively.

Earnings (loss) per share are computed independently for each of the quarters presented.

Accordingly, the quarterly basic and diluted earnings (loss) per share may not equal the total computed for the year.

Total $ 4,131,520 $ 4,108,904

CLEAN HARBORS, INC.

3 unchanged sentences

(in thousands)

Allowance for Doubtful Accounts

Additions Charged to

Operating Expense

Deductions from

Allowance for Doubtful Accounts Balance

Period Additions Charged to

Operating Expense Deductions from

End of Period

2018 $ 16,173 $ 15,817 $ 5,622 $ 26,368

2019 26,368 2,408 6,283 22,493

2020 22,493 10,133 7,992 24,634

___________________________________

(1) Amounts deemed uncollectible, net of recoveries.

Revenue Allowance (2)

Additions Charged to

Deductions from

Period Additions Charged to

Revenue Deductions from

Reserves Balance

End of Period

2018 $ 11,626 $ 41,338 $ 35,017 $ 17,947

2019 17,947 35,549 37,278 16,218

2020 16,218 45,784 41,887 20,115

___________________________________

(2) Due to the nature of the Company's businesses and the invoices that result from the services provided, customers may withhold payments and attempt to renegotiate amounts invoiced.

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Revenue allowance estimates can differ materially from the actual adjustments, but historically the revenue allowance has been sufficient to cover the net amount of the reserve adjustments issued in subsequent reporting periods.

Valuation Allowance on Deferred Tax Assets

Valuation Allowance on Deferred Tax Assets Balance

Period Additions

Charged to Income

Other Changes

Tax Expense Other Changes

to Reserves Balance

End of Period

2018 $ 68,355 $ 10,466 $ 474 $ 79,295

2019 79,295 4,459 ( 111 ) 83,643

2020 83,643 ( 11,339 ) 4,740 77,044

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data