What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2022-02-23 compared with 2021-02-24 · 462 added, 371 removed, 1121 unchanged (43% of the section changed)

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Independent Registered Public Accounting Firm (PCA OB ID No.

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Comprehensive Income

Consolidated Statements of Cash Flows

Consolidated Statements of Stockholders' Equity

Notes to Consolidated Financial Statements

(1) Operations

(2) Significant Accounting Policies

(4) Business Combinations

(5) Inventories and Supplies

(6) Property, Plant and Equipment

(7) Goodwill and Other Intangible Assets

(8) Accrued Expenses

(9) Closure and Post-Closure Liabilities

(10) Remedial Liabilities

(11) Financing Arrangements

(12) Income Taxes

(13) Earnings Per Share

(14) Stockholders' Equity

(15) Accumulated Other Comprehensive Income

(16) Stock Based Compensation

(17) Commitments and Contingencies

(19) Segment Reporting

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

2 unchanged sentences

We have audited the accompanying consolidated balance sheets of Clean Harbors, Inc.

and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income, cash flows and stockholders’ equity, for each of the three years in the period ended December 31, 2020, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements").

and subsidiaries (the "Company") as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income, cash flows and stockholders’ equity, for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

11 unchanged sentences

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Business Combination – HydroChemPSC - Identifiable Intangible Assets— Refer to Note 4, "Business Combinations", to the financial statements

Critical Audit Matter Description

The Company completed the acquisition of LJ Energy Services Intermediate Holding Corp.

and its subsidiaries (collectively, “HydroChemPSC”) on October 8, 2021 and accounted for the transaction under the acquisition method of accounting for business combinations.

Under this approach, the Company allocated the purchase consideration paid to the assets acquired and liabilities assumed based on estimates of fair value on the date of acquisition.

The assets acquired included intangible assets of $289.0 million which primarily consisted of customer relationships and developed technology.

Management estimated the fair value of these intangible assets using customary valuation procedures and techniques, including certain income methods.

The fair value determination of the intangible assets acquired required management to make significant estimates and assumptions related to future cash flows driven by estimated revenue growth, operational performance, customer attrition and royalty rates.

We identified the valuation of the intangible assets as a critical audit matter because of the significant estimates and assumptions management made to measure the fair values of these assets for purposes of the purchase price allocation.

These fair value measurements required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists, when performing audit procedures to evaluate the reasonableness of management’s forecasts of future cash flows for the identified intangible assets.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the valuation assumptions for the intangible assets included the following, among others:

• We tested the design and operating effectiveness of the controls over the determination of the fair value of intangible assets acquired, including management’s controls over forecasts of future cash flows.

• We assessed the reasonableness of management’s forecasts of future cash flows by performing the following:

– We compared the cash flow forecasts to historical results.

– We compared the cash flow forecasts to internal communications to management and the Board of Directors and other information obtained from performing the audit.

– We compared the growth rates observed to similar businesses acquired by the Company, to the Company’s legacy operations who operate in a similar business and to peer companies.

• With the assistance of our fair value specialists, we also performed the following:

– We evaluated the reasonableness of the valuation methodologies selected.

– We evaluated the attrition and royalty rates, including testing of the source information underlying these rates, testing the mathematical accuracy of the calculations of the attrition rate, and developing range of independent estimates and compared those to the amounts selected by management.

Remedial Liabilities - Refer to Note 2, "Significant Accounting Policies," and Note 10, "Remedial Liabilities," to the financial statements

9 unchanged sentences

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the remedial liabilities included the following, among others:

Our audit procedures related to remedial liabilities included the following, among others:

• We tested the effectiveness of controls related to the recognition and measurement of remedial liabilities, including those controls over changes in estimates.

38 unchanged sentences

83,749 74,066

Accrued expenses

295,823 276,540

Accrued expenses and other current liabilities 391,414 295,823

Current portion of closure, post-closure and remedial liabilities

71 unchanged sentences

Net income $ 203,247 $ 134,837 $ 97,740

Other comprehensive (loss) income, net of tax:

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

Reclassification adjustment for losses on available-for-sale securities included in net income — 332 —

Unrealized loss on interest rate hedge ( 20,970 ) ( 14,401 ) ( 9,579 )

Reclassification adjustment for losses on interest rate hedge included in net income 8,180 2,335 806

Other comprehensive income (loss), net of tax:

Unrealized loss on available-for-sale securities ( 285 ) ( 8 ) ( 120 )

Reclassification adjustment for loss on available-for-sale securities included in net income — — 332

Unrealized gain (loss) on interest rate hedge 6,235 ( 20,970 ) ( 14,401 )

Reclassification adjustment for loss on interest rate hedge included in net income 10,011 8,180 2,335

Unrealized gain (loss) on net pension liability 1,094 ( 189 ) 44

Foreign currency translation adjustments ( 1,590 ) 11,561 25,130

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

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

Other comprehensive income (loss), net of tax 15,465 ( 1,426 ) 13,320

Comprehensive income $ 218,712 $ 133,411 $ 111,060

36 unchanged sentences

Net cash used in investing activities ( 1,507,602 ) ( 199,460 ) ( 217,856 )

Cash flows used in financing activities:

Cash flows from (used in) financing activities:

Change in uncashed checks ( 1,806 ) 5,404 ( 3,705 )

9 unchanged sentences

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

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

Net cash from (used in) financing activities 898,249 ( 88,946 ) ( 53,425 )

Effect of exchange rate change on cash ( 3,170 ) 4,919 3,573

Increase (decrease) in cash and cash equivalents 147,110 145,484 ( 92,892 )

(Decrease) increase in cash and cash equivalents ( 66,526 ) 147,110 145,484

Cash and cash equivalents, beginning of year 519,101 371,991 226,507

6 unchanged sentences

Property, plant and equipment accrued 19,264 3,536 30,964

Payable for estimated purchase price adjustment — — 4,032

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

8 unchanged sentences

Net income — — — — 97,740 97,740

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

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

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

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

3 unchanged sentences

Net income — — — — 134,837 134,837

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

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

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

3 unchanged sentences

Net income — — — — 203,247 203,247

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

Other comprehensive income — — — 15,465 — 15,465

Stock-based compensation — — 18,839 — — 18,839

8 unchanged sentences

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.

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

(2) SIGNIFICANT ACCOUNTING POLICIES

8 unchanged sentences

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.

Changes in Operating Segments

During the first quarter of 2021, the Company reorganized its Safety-Kleen business.

The collection services for waste oil, used oil filters, antifreeze and related items and bulk blended oil sales operations were combined with the Safety-Kleen Oil business to form the Safety-Kleen Sustainability Solutions business.

Under this structure, Safety-Kleen Sustainability Solutions will encompass both sides of the spread that the Company manages in its re-refinery business.

Concurrently with this change, the Company consolidated the Safety-Kleen branches' core offerings, including containerized waste, parts washer and vacuum services, into the legacy Clean Harbors Environmental Services sales and service operations.

In restructuring the operations of the Company in this manner, the information that the chief operating decision maker regularly reviews for purposes of allocating resources and assessing performance changed to conform to this new operating structure of the business and the Company reevaluated the identification of its operating segments.

In accordance with ASC 280, Segment Reporting, Environmental Services and Safety-Kleen Sustainability Solutions are the Company's operating segments and reportable segments starting in the first quarter of 2021, with the operations not managed through the Company's operating segments described above continuing to be recorded as Corporate Items.

Segment financial information has been retrospectively adjusted to reflect these changes.

The impact of the segment change has been reflected throughout our financial statements and related disclosures, including here in Note 2, "Significant Accounting Policies," as well as in Note 3, "Revenues," Note 4, "Business Combinations," Note 7, "Goodwill and Other Intangible Assets" and Note 19, "Segment Reporting."

Cash, Cash Equivalents and Uncashed Checks

5 unchanged sentences

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.

Marketable Securities

The Company, through its wholly-owned captive insurance subsidiary, invests in marketable securities consisting of U.S.

Treasury securities, corporate notes and bonds and commercial paper.

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

CLEAN HARBORS, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Marketable Securities

The Company, through its wholly-owned captive insurance subsidiary, invests in marketable securities consisting of U.S.

Treasury securities, corporate notes and bonds as well as commercial paper.

As of December 31, 2021 and 2020, the Company had total marketable securities as follows (in thousands):

December 31, 2021 December 31, 2020

Commercial paper $ — $ 2,395

Total cash equivalents — 2,395

Treasury securities $ 901 $ 28,901

Municipal bonds 1,978 —

Corporate notes and bonds 57,685 22,956

1 unchanged sentence

Total marketable securities $ 81,724 $ 51,857

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, 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.

Allowance for Doubtful Accounts and Revenue Allowance

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 uncertainty 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 collection efforts have been deemed unsuccessful in collecting the outstanding balance due.

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.

In addition, for some of the services provided, the Company's invoices are based on quotes that, in limited instances can result in adjustments to revenue subsequent to billing.

Based on industry knowledge and historical trends, the Company records a revenue allowance in anticipation of these expected adjustments.

This practice causes the volume of activity flowing through the revenue allowance during the year to be higher than the balance at the end of the year.

The revenue allowance is intended to cover the net amount of revenue adjustments that may need to be credited to customers' accounts in future periods.

Management determines the appropriate total revenue allowance by evaluating the following factors on an invoice-by-invoice basis as well as on a consolidated level:

trends in adjustments to previously billed amounts, existing economic conditions, communications with customers and other information as deemed applicable.

Revenue allowance estimates can differ 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.

The following table reflects the activity in the allowance for doubtful accounts and revenue allowance (in thousands):

Allowance for Doubtful Accounts Revenue Allowance

2021 2020 2019 2021 2020 2019

Balance at January 1, $ 24,634 $ 22,493 $ 26,368 $ 20,115 $ 16,218 $ 17,947

Additions charged to earnings 8,018 10,133 2,408 34,319 45,784 35,549

Deductions from reserves, net of recoveries ( 8,516 ) ( 7,992 ) ( 6,283 ) ( 38,430 ) ( 41,887 ) ( 37,278 )

Balance at December 31, $ 24,136 $ 24,634 $ 22,493 $ 16,004 $ 20,115 $ 16,218

Credit Concentration

5 unchanged sentences

Inventories are stated at the lower of cost or market.

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 basis.

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

The cost of oil and oil products as well as the cost of supplies and drums, solvent and solution and other inventories is principally determined on a first-in, first-out ("FIFO") basis.

CLEAN HARBORS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 and finance lease right-of-use assets)

5 unchanged sentences

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.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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

Asset Classification Estimated Useful Life

11 unchanged sentences

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

Business Combinations

In accordance with the acquisition method of accounting, the purchase price paid for an acquisition is allocated to the assets and liabilities acquired based upon their estimated fair values as of the acquisition date, with the excess of the purchase price over the net assets acquired recorded as goodwill.

As required, a preliminary fair value is determined once a business is acquired, with the final determination of the fair value being completed no later than one year from the date of acquisition.

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.

Goodwill is reviewed for impairment annually as of December 31 or when events or changes in the business environment indicate the carrying value of a reporting unit may exceed its fair value.

This review is performed by comparing the fair value of each reporting unit to its carrying value, including goodwill.

If the fair value is less than the carrying amount, a loss is recorded for the excess of the carrying value over the fair value up to the carrying amount of goodwill.

We determine our reporting units by identifying the components of each operating segment.

As of December 31, 2021, using our segment conclusions then in place, we had three reporting units consisting of, Environmental Sales and Service, Environmental Facilities and Safety-Kleen Sustainability Solutions.

See Note 7, "Goodwill and Other Intangible Assets," for additional information related to the Company's goodwill impairment tests.

1 unchanged sentence

Costs related to acquiring licenses, permits and intangible assets, such as legal fees, site surveys, engineering costs and other expenditures are capitalized.

Other intangible assets consist primarily of customer and supplier relationships, trademarks and trade names and non-compete agreements.

Other intangible assets consist primarily of customer and supplier relationships, trademarks and trade names and developed technology.

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

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 other permits are amortized over periods

CLEAN HARBORS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

ranging from five to 30 years on a straight-line basis.

Finite-lived other intangible assets are amortized on a straight-line basis over their respective useful lives, which range from two to 25 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.

9 unchanged sentences

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

CLEAN HARBORS, INC.

AND SUBSIDIARIES

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

9 unchanged sentences

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.

CLEAN HARBORS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of December 31, 2021, 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:

18 unchanged sentences

Remaining capacity, end of year 23,784 24,716 28,494

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.

The Company is in the process of closing two commercial landfill sites, Altair and Westmorland.

These landfills are classified as inactive with no airspace at either landfill being consumed in 2021.

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 and 2019 was 25 and 132 thousand cubic yards, respectively.

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

CLEAN HARBORS, INC.

AND SUBSIDIARIES

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.

During 2020, the Company also decided to close the Westmorland landfill, a hazardous landfill, due to the costs of obtaining and maintaining permits and operating the landfill.

No airspace had been consumed at the Westmorland landfill in any period presented.

The change in the highly probable airspace, net in 2020 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).

9 unchanged sentences

Landfill final closure and post-closure liabilities —The balance of landfill final closure and post-closure liabilities at December 31, 2021 and 2020 was $ 53.4 million and $ 48.4 million, respectively.

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.

The Company has material financial commitments for the costs associated with requirements of the Environmental Protection Agency ("EPA") and the comparable

CLEAN HARBORS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

regulatory agency in Canada for landfill final closure and post-closure activities.

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.

17 unchanged sentences

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

CLEAN HARBORS, INC.

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.

8 unchanged sentences

Remedial liabilities, including Superfund liabilities, include the costs of removal or containment of contaminated material, 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 in the last 18 years and Superfund sites owned by third parties for which the Company, or the prior owners of certain of the Company's facilities for which the Company may have certain indemnification obligations, have been identified as potentially responsible parties ("PRPs") or potential PRPs.

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 for which the Company may have certain indemnification obligations, have been identified as potentially responsible parties ("PRPs") or potential PRPs.

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

1 unchanged sentence

(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;

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

CLEAN HARBORS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 pay their share.

12 unchanged sentences

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

CLEAN HARBORS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Self-Insurance Liabilities

4 unchanged sentences

The Company generates service and product revenues through the following operating segments:

Environmental Services and Safety-Kleen.

Environmental Services and Safety-Kleen Sustainability Solutions.

The Company's Environmental Services operating segment generally has four sources of revenue and the Safety-Kleen Sustainability Solutions operating segment has two sources of revenue.

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.

1 unchanged sentence

Product revenues are recognized when the products are delivered and control transfers to the customer.

The Company’s payment terms vary by the type and location of its customers and the products or services offered.

The Company’s payment terms vary by the type of customers and the products or services offered.

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

2 unchanged sentences

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 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.

Revenue is primarily generated by short-term projects, most of which are governed by master service agreements that are long-term in nature.

These master service agreements are typically entered into with the Company's larger customers and outline the pricing and legal frameworks for such arrangements.

Services are provided based on purchase orders or agreements with the customer and include prices based upon units of volume of waste, and transportation and other fees.

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, 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.

The Company periodically enters into bundled arrangements for the collection and transportation and disposal of waste.

For such arrangements, transportation and disposal are considered distinct performance obligations and the Company allocates revenue to each based on the relative standalone selling price (i.e.

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

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 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.

Additional services include filtration and water treatment services.

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

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.

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

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

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.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 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.

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

Safety-Kleen Environmental Services —Safety-Kleen Environmental Services revenues are generated from providing parts washer services, containerized waste handling and disposal services, oil collection services, vacuum services, direct sales of blended oil products and other complementary services and product sales.

Containerized waste services consist of profiling, collecting, transporting and recycling or disposing of a wide variety of waste.

Other products and services include sale of complementary supply products including automotive fluids and shop supplies and other environmental services.

Parts washer services include customer use of our parts washer equipment, cleaning and maintenance of the parts washer equipment and removal and replacement of used cleaning fluids.

Parts washer services are considered a single performance obligation due to the highly integrated and interdependent nature of the arrangement.

Revenue from parts washer services is recognized over the service interval as the customer receives the benefit of the services.

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

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 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.

The used oil is also processed into vacuum gas oil which can be further re-refined into lubricant base oils or sold directly into the marine diesel oil fuel market.

Revenue for oil products is recognized at a point in time, upon the transfer of control.

Control transfers when the products are delivered to the customer.

Foreign Currency

6 unchanged sentences

Recorded balances that are denominated in a currency other than the functional currency are remeasured to the functional currency using the exchange rate at the balance sheet date and gains or losses are recorded in the consolidated statements of operations.

Defined Contribution Plan

The Company has defined contribution plans under which eligible employees may contribute up to the maximum amount as provided by law.

The Company matches a portion of these employee contributions and contributed $ 20.5 million, $ 18.6 million and $ 14.6 million in 2021, 2020 and 2019 respectively.

Advertising Expense

4 unchanged sentences

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

CLEAN HARBORS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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

These programs (collectively referred to as "Government Programs") were extended in 2021.

The Company recorded the benefits from the Government Programs as an offset to the related operating expenses in either cost of revenues or selling, general and administrative expenses.

During the year ended December 31, 2021, the Company recognized $ 9.2 million and $ 2.9 million of Government Program benefits in cost of revenues and selling, general and administrative expenses, respectively.

During the year ended December 31, 2020, the Company recognized $ 29.1 million and $ 13.2 million of Government Program benefits in cost of revenues and selling, general and administrative expenses, respectively.

The benefits received under the Government Programs do not require repayment.

Stock-Based Compensation

Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period, which generally represents the vesting period.

In addition, the Company issues awards with performance targets established at the grant date.

In addition, the Company issues awards with performance targets established prior to or at the grant date.

The expense for these awards is recognized over the requisite service period when management believes it is probable those performance targets will be achieved.

7 unchanged sentences

The Company evaluates the recoverability of future tax deductions and credits and a valuation allowance is established by tax jurisdiction when, based on an evaluation of both positive and negative objective verifiable evidence, it is more likely than not that some portion or all of deferred tax assets will not be realized.

CLEAN HARBORS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company recognizes and measures a tax benefit from uncertain tax positions when it is more likely than not that the tax position will be sustained upon examination by the taxing authorities, based on the technical merits of the position.

5 unchanged sentences

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.

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

Earnings per Share ("EPS")

12 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.

CLEAN HARBORS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Escalating lease payments that are based upon explicit amounts contained in the lease or an index (e.g., consumer price index) are included in its determination of future lease payments to determine the ROU asset and lease liability recognized at the commencement date.

Escalating lease payments that are based upon explicit amounts contained in the lease or an index (e.g., consumer price index) are included in the Company's determination of future lease payments to determine the ROU asset and lease liability recognized at the commencement date.

Any differences in the future lease payments from initial recognition are not anticipated to be material and will be recorded as variable lease cost in the period incurred.

8 unchanged sentences

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.

Disaggregation of Revenue

We disaggregate the Company’s third-party revenues by geographic location and source of revenue as we believe these categories depict how revenue and cash flows are affected by economic factors (in thousands):

CLEAN HARBORS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

We disaggregate the Company’s third-party revenues by geographic location and source of revenue as we believe these categories depict how revenue and cash flows are affected by economic factors.

The Company's significant sources of revenue include:

Technical Services —Technical Services contribute to the revenues of the Environmental Services operating segment.

Revenues for these services 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.

Revenue is primarily generated by short-term projects, most of which are governed by master service agreements that are long-term in nature.

These master service agreements are typically entered into with the Company's larger customers and outline the pricing and legal frameworks for such arrangements.

Services are provided based on purchase orders or agreements with the customer and include prices based upon units of volume of waste, and transportation and other fees.

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

The Company periodically enters into bundled arrangements for the collection and transportation and disposal of waste.

For such arrangements, transportation and disposal are considered distinct performance obligations and the Company allocates revenue to each based on the relative standalone selling price (i.e., the estimated price that a customer would pay for the services on a standalone basis).

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 services are completed.

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

Field and Emergency Response Services —Field and Emergency Response Services contribute to the revenues of the Environmental Services operating segment.

Field Services revenues are generated from cleanup services at customer sites, including those managed by municipalities and utility providers, or other locations on a scheduled or emergency response basis.

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

Additional services include filtration and water treatment services.

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

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

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

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

Industrial Services and Other —Industrial Services contribute to the revenues of the Environmental Services operating segment.

These revenues are primarily 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, specialty cleaning services including chemical cleaning, pigging and high and ultra-high pressure water cleaning, leak detection and repair, daylighting, production services and upstream energy services.

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.

Safety-Kleen Environmental Services —Safety-Kleen Environmental Services revenues contribute both to the Environmental Services operating segment and the Safety-Kleen Sustainability Solutions operating segment depending upon the nature of such revenues and operating responsibilities relative to driving these revenues.

Revenues from providing containerized waste handling and disposal services, parts washer services and vacuum services, referred to collectively as the Safety-Kleen branches' core service offerings, contribute to the revenues of the Environmental Services operating segment.

CLEAN HARBORS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

addition, sales of packaged blended oil products and other complementary product sales contribute to the revenues of the Environmental Services operating segment.

Revenues generated from waste oil, anti-freeze and oil filter collection services, sales of bulk blended oil products and sales of bulk automotive fluids contribute to the Safety-Kleen Sustainability Solutions operating segment.

Generally, the revenue from services is 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 duration of such services can be over a number of hours or several days.

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

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

Containerized waste services consist of profiling, collecting, transporting and recycling or disposing of a wide variety of waste.

Related 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.

Parts washer services include customer use of our parts washer equipment, cleaning and maintenance of the parts washer equipment and removal and replacement of used cleaning fluids.

Parts washer services are considered a single performance obligation due to the highly integrated and interdependent nature of the arrangement.

Revenue from parts washer services is recognized over the service interval as the customer receives the benefit of the services.

Safety-Kleen Oil —Safety-Kleen Oil related sales contribute to the revenues of the Safety-Kleen Sustainability Solutions segment.

These revenues 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.

The used oil is also processed into vacuum gas oil which can be further re-refined into lubricant base oils or sold directly into the marine diesel oil fuel market.

Revenue for oil products is recognized at a point in time, upon the transfer of control.

Control transfers when the products are delivered to the customer.

The following tables present the Company's third-party revenue disaggregated by source of revenue and geography (in thousands):

For the year ended December 31, 2021

Environmental Services Safety-Kleen Corporate Total

Environmental Services Safety-Kleen Sustainability Solutions Corporate Total

Primary Geographical Markets

5 unchanged sentences

Field and Emergency Response Services (1)

466,380 — — 466,380

Industrial Services and Other (2)

705,999 — 299 706,298

Safety-Kleen Environmental Services 643,904 161,587 — 805,491

1 unchanged sentence

Total third-party revenues $ 3,025,907 $ 779,360 $ 299 $ 3,805,566

_____________

(1) Includes $ 28.4 million of third-party revenues generated from the operations of the HydroChemPSC business

(2) Includes $ 137.7 million of third-party revenues generated from the operations of the HydroChemPSC business

CLEAN HARBORS, INC.

2 unchanged sentences

For the year ended December 31, 2020

Environmental Services Safety-Kleen Corporate Total

Environmental Services Safety-Kleen Sustainability Solutions Corporate Total

Primary Geographical Markets

6 unchanged sentences

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

631,414 — 1,136 632,550

Safety-Kleen Environmental Services 633,560 175,676 — 809,236

2 unchanged sentences

For the year ended December 31, 2019

Environmental Services Safety-Kleen Corporate Total

Environmental Services Safety-Kleen Sustainability Solutions Corporate Total

Primary Geographical Markets

6 unchanged sentences

Industrial Services and Other 631,414 — 1,136 632,550

661,728 — 1,105 662,833

Safety-Kleen Environmental Services 710,319 141,201 — 851,520

1 unchanged sentence

Total third-party revenues $ 2,802,682 $ 608,372 $ 1,136 $ 3,412,190

_____________________

(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.

(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

4 unchanged sentences

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,

CLEAN HARBORS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

resulting in contract assets.

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

The Company estimates the amount of variable consideration

CLEAN HARBORS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

There have been no material changes in estimates of variable consideration in the periods presented.

Contract Costs

8 unchanged sentences

(4) BUSINESS COMBINATIONS

On October 8, 2021, the Company completed its previously announced acquisition of LJ Energy Services Intermediate Holding Corp.

and its subsidiaries (collectively, “HydroChemPSC”), a privately owned company.

HydroChemPSC is a leading U.S.

provider of industrial cleaning, specialty maintenance and utilities services with annual revenues of $ 715.3 million in 2020.

The acquired operations, including more than 4,500 employees, over 240 service locations and a fleet of specialized vehicles and equipment, will enhance the Company's Environmental Services Segment.

The Company paid an all-cash purchase price for HydroChemPSC of approximately $ 1.23 billion.

The Company incurred acquisition, severance and integration related costs of approximately $ 6.0 million in connection with the transaction which are included in selling, general and administrative expenses in the consolidated statements of operations for the year ended December 31, 2021.

The Company financed the purchase with net proceeds from the Company’s issuance of $ 1.0 billion of senior secured term loans on October 8, 2021.

The remainder of the purchase price was funded through existing cash.

See Note 11, "Financing Arrangements" for additional information regarding the issuance of the term loans.

The acquisition of HydroChemPSC has been accounted for as a business combination and is included in the Company's consolidated financial statements commencing October 8, 2021.

The fair value of all the acquired assets and liabilities summarized below is provisional pending finalization of the Company's acquisition accounting.

The Company retained the services of third-party valuation specialists in determining the fair value of certain tangible and intangible assets, under the supervision of management.

The Company believes that such preliminary allocations provide a reasonable basis for estimating the fair values of assets acquired and liabilities assumed but the Company is waiting for additional information necessary to finalize fair value.

The Company expects to finalize the valuation and complete the purchase price allocation as soon as practicable but no later than one year from the acquisition date.

Final determination of the fair value may result in further adjustments to the amounts presented below.

Measurement period adjustment will reflect new information obtained about facts

CLEAN HARBORS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

and circumstances that existed as of the acquisition date.

The following table summarizes the preliminary determination and recognition of assets acquired and liabilities assumed (in thousands):

At October 8, 2021

Accounts receivable, including unbilled receivables 131,924

Inventories and supplies 3,162

Prepaid expenses and other current assets 16,016

Property, plant and equipment 313,540

Other intangibles 289,000

Operating lease right-of-use assets 34,347

Other non-current assets 1,045

Current liabilities ( 115,704 )

Current portion of operating lease liabilities ( 11,659 )

Operating lease liabilities, less current portion ( 26,128 )

Deferred tax liabilities ( 85,908 )

Other long-term liabilities ( 2,685 )

Total identifiable net assets 546,950

Total purchase price $ 1,230,413

_____________

(i) Goodwill represents the excess of the fair value of the net assets acquired over the purchase price.

Goodwill of $ 683.5 million was assigned to the Environmental Sales & Service reporting unit and is attributable to the future economic benefits arising from the acquired operations, synergies and the acquired workforce of HydroChemPSC.

None of the goodwill related to this acquisition will be deductible for tax purposes .

Of the $ 289.0 million of acquired intangibles, the Company recorded a customer relationship intangible for $ 215.0 million with an estimated useful life of 25 years, an intangible asset for developed technology for $ 65.0 million with a useful life of 10 years and a trademark/tradename intangible asset for $ 9.0 million with an estimated useful life of 2 years.

The fair values of the acquired intangibles were determined by using discounted cash flow valuation methods with significant estimates and assumptions related to future cash flows driven by estimated revenue growth, operational performance, customer attrition and royalty rates.

The Company's consolidated statement of operations for the year ended December 31, 2021 includes $ 166.1 million of direct revenues and $ 166.4 million of expense, including $ 12.3 million of incremental depreciation and amortization related to the operations of the operations of the acquired business and the $ 6.0 million of severance and integration costs subsequent to its acquisition on October 8, 2021.

Unaudited Pro Forma Financial Information

The following table presents unaudited pro forma combined summary financial information for the years ended December 31, 2021 and December 31, 2020, respectively, and assumes the acquisition of HydroChemPSC occurred on January 1, 2020 (in thousands):

Pro forma combined revenues $ 4,380,724 $ 3,859,430

Pro forma combined net income 229,807 149,219

The pro forma results do not include any costs incurred directly attributable to the acquisition of HydroChemPSC.

The pro forma results do reflect impacts resulting from the issuance of $ 1.0 billion senior secured term loans issued in connection with the acquisition assuming interest rates in effect at the time of the acquisition.

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

CLEAN HARBORS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

indicative of the Company's consolidated results for any future period.

Interest expense used in calculating the pro forma net income in both periods did not contemplate the interest rate swap that the Company put in place in early 2022.

See Note 11, "Financing Arrangements."

Other 2021 Acquisition Activity

On March 27, 2021, the Company acquired a privately-owned business for $ 22.8 million cash consideration.

The acquired company increases the Safety-Kleen Sustainability Solutions segment's network within the south central United States.

In connection with this acquisition, a preliminary goodwill amount of $ 16.3 million was recognized.

The results of operations for this acquired business were not material in 2021.

On June 29, 2021, the Company signed a definitive agreement with Vertex Energy, Inc.

("Vertex") to acquire certain assets related to Vertex's used motor oil collection and re-refinery business in an all-cash transaction for $ 140.0 million, subject to working capital and other adjustments.

On January 25, 2022, Vertex and the Company mutually agreed to terminate the planned acquisition.

In connection with the termination, in early 2022, Vertex paid Clean Harbors a breakup fee of $ 3.0 million pursuant to the agreement.

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

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

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

1 unchanged sentence

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.

The acquired company expands the environmental services and hazardous materials management services of the Company and the operations of this acquisition are included in the Environmental Services segment.

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.

The acquired business has components included in both the Environmental Services and Safety-Kleen Sustainability Solutions segments.

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.

Pro forma revenue and earnings amounts on a combined basis as if these acquisitions had been completed on January 1, 2018 are immaterial to the consolidated financial statements of the Company since that date.

2018 Acquisitions

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

CLEAN HARBORS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Industrial Cleaning Business of Veolia Environmental Services North America LLC (the "Veolia Business").

The acquisition provides significant scale and industrial services capabilities while increasing the size of the Company's existing U.S.

Industrial Services business.

The Company acquired the Veolia Business for a purchase price of $ 124.5 million.

The Veolia Business has been integrated into the Environmental Services segment.

The amount of revenue from the Veolia Business included in the Company's results of operations for the year ended December 31, 2018 was $ 154.0 million.

The amount of pre-tax loss from the Veolia Business included in the Company's results of operations for the year ended December 31, 2018 was $ 0.9 million, which included $ 14.6 million in depreciation expense as well as $ 0.6 million of amortization expense related to intangible assets.

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.

(5) INVENTORIES AND SUPPLIES

2 unchanged sentences

Oil and oil related products $ 101,965 $ 76,209

Supplies and drums 120,007 115,128

Supplies 126,602 120,007

Solvent and solutions 8,099 8,812

1 unchanged sentence

Total inventories and supplies $ 250,692 $ 220,498

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.

Supplies inventories consist primarily of critical spare parts to support the Company's incinerator and re-refinery operations, personal protective equipment and other general supplies used in our normal day-to-day operations.

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

CLEAN HARBORS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(6) PROPERTY, PLANT AND EQUIPMENT

16 unchanged sentences

___________________________________

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

(1) Balances inclusive of gross ROU assets classified as finance leases of $ 8.9 million in both periods.

(2) Balances inclusive of gross ROU assets classified as finance leases of $ 77.7 million and $ 47.2 million, respectively.

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

(3) Balances inclusive of gross ROU assets classified as finance leases of $ 9.3 million both periods.

Depreciation expense, inclusive of landfill and finance lease amortization was $ 263.4 million, $ 257.1 million and $ 265.5 million for the years ended December 31, 2021, 2020 and 2019, respectively.

(7) GOODWILL AND OTHER INTANGIBLE ASSETS

In connection with the Changes in Operating Segments discussed in Note 2 "Significant Accounting Policies," the Company changed its operating segments in accordance with ASC 280, Segment Reporting .

In addition, the Company concluded that it now has three reporting units.

The Environmental Services operating segment has two reporting units consisting of (i) Environmental Sales and Service which now includes the legacy Environmental Sales and Service reporting unit and certain operations previously included within Safety-Kleen Environmental Services including the core service offerings of containerized waste, parts washers and vacuum services and (ii) Environmental Facilities, unchanged from prior year.

The Safety-Kleen Sustainability Solutions operating segment is a single reporting unit which includes the legacy Safety-Kleen Oil reporting unit and the remaining operations of the legacy Safety-Kleen Environmental Services reporting unit primarily consisting of collection services for waste oil, anti-freeze and used oil filters as well as the sale of bulk blended re-refined oil and other automotive related fluid finished products.

The Company allocated goodwill to the newly identified reporting units using a relative fair value approach.

The table below has been recast to align with this new presentation.

CLEAN HARBORS, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(7) GOODWILL AND OTHER INTANGIBLE ASSETS

The changes in goodwill for the years ended December 31, 2021 and 2020 were as follows (in thousands):

Environmental Services Safety-Kleen Totals

Environmental Services Safety-Kleen Sustainability Solutions Totals

Balance at January 1, 2020 $ 401,680 $ 123,333 $ 525,013

Increase from current period acquisitions 7,378 5,225 12,603

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

Measurement period adjustments from prior period acquisitions 23 — 23

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

Foreign currency translation 889 333 1,222

Balance at December 31, 2020 $ 401,918 $ 125,105 $ 527,023

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 )

Increase from current period acquisitions 683,463 16,349 699,812

Foreign currency translation 153 54 207

1 unchanged sentence

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.

The Company did not identify any triggering events in the years presented.

Goodwill impairment is also tested annually.

7 unchanged sentences

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.

If the Company's reporting units do not achieve the financial performance that the Company expects, or if there is a significant prolonged change 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.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of December 31, 2021 and 2020, the Company's finite-lived and indefinite-lived intangible assets consisted of the following (in thousands):

12 unchanged sentences

$ 981,455 $ 336,543 $ 644,912 $ 728,292 $ 341,672 $ 386,620

CLEAN HARBORS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 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.

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.

Amortization expense of permits and other intangible assets for the years ended December 31, 2021, 2020 and 2019 were $ 34.7 million, $ 35.8 million and $ 35.2 million, respectively.

During the year, the Company wrote off fully amortized intangible assets with a cost of $ 39.9 million during the year ended December 31, 2021.

The expected amortization of the net carrying amount of finite-lived intangible assets at December 31, 2021 is as follows (in thousands):

13 unchanged sentences

As of December 31, 2021 and 2020, accrued insurance included employee medical insurance costs of $ 18.6 million and $ 9.4 million, respectively, and accruals for losses under our workers' compensation, comprehensive general liability and vehicle liability self-insurance programs of $ 82.8 million and $ 65.6 million, respectively.

The increase in accrued insurance was predominately due to incremental balances from the acquisition of HydroChemPSC.

Accrued compensation and benefits increased from the comparable period in 2020 primarily due to an increase in accrued bonus and incremental balances from the acquisition of HydroChemPSC.

The majority of the increase in Accrued other is also due to the incremental balances from the acquisition of HydroChemPSC.

The decrease in the fair value of the interest rate swap liability from December 31, 2020 is mainly due to the passage of time and changes in future interest rate expectation.

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

CLEAN HARBORS, INC.

1 unchanged sentence

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."

(9) CLOSURE AND POST-CLOSURE LIABILITIES

20 unchanged sentences

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.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Altair landfill reached its permitted capacity and the Westmorland landfill was closed due to the costs of obtaining and maintaining permits and operating the landfill.

The changes in estimate recorded to the consolidated statement of operations includes $ 2.3 million and $ 6.8 million in 2021 and 2020, respectively, related to the closure of these two commercial landfills.

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,

Years ending December 31,

2022 $ 12,612

4 unchanged sentences

Present value of closure and post-closure liabilities $ 99,103

CLEAN HARBORS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(10) REMEDIAL LIABILITIES

12 unchanged sentences

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

Liabilities assumed in acquisitions — — 1,216 1,216

Accretion 90 2,614 1,684 4,388

3 unchanged sentences

Balance at December 31, 2021 $ 1,780 $ 59,787 $ 50,306 $ 111,873

In 2021, there were no significant charges or benefits resulting from changes in estimates for remedial liabilities.

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.

CLEAN HARBORS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Anticipated payments at December 31, 2021 (based on current estimated costs and anticipated timing of necessary regulatory approvals to commence work on remedial activities) for each of the next five years and thereafter were as follows (in thousands):

Year ending December 31,

Years ending December 31,

2022 $ 14,416

1 unchanged sentence

Undiscounted remedial liabilities 131,000

Discount ( 20,114 )

Discount at risk free rates ( 19,127 )

Total remedial liabilities $ 111,873

The following tables show, respectively, (i) the amounts of such estimated liabilities associated with the types of facilities and sites involved and (ii) the amounts of such estimated liabilities associated with each facility or site which represents at least 5 % of the total and with all other facilities and sites as a group and as of December 31, 2020.

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

CLEAN HARBORS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table presents the Company's estimated remedial liabilities and reasonably possible additional liabilities as of December 31, 2021 disaggregated by facility/site type (in thousands, except percentages):

Type of Facility or Site Remedial

Liability % of Total Reasonably Possible

Liabilities % of Total Reasonably Possible

Additional Liabilities (1)

8 unchanged sentences

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

CLEAN HARBORS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

The following table presents the Company's estimated remedial liabilities and reasonably possible additional liabilities as of December 31, 2021 disaggregated by facilities/sites which represent at least 5 % of the total and with all other facilities/ sites combined (in thousands, except percentages):

Location Type of Facility or Site Remedial

Liability (1)

Liabilities (1)

% of Total Reasonably

16 unchanged sentences

Since the Company's satisfaction of the liabilities will occur over many years, the Company cannot reasonably predict the nature or extent of possible future events or the impact that those events, if any, might have on the current estimates of remedial liabilities.

CLEAN HARBORS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(11) FINANCING ARRANGEMENTS

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

Current Debt:

Long-term Debt

The following table is a summary of the Company's long-term debt (in thousands):

Current Portion of Long-Term Debt:

December 31, 2021 December 31, 2020

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

Secured senior term loans $ 17,535 $ 7,535

Long-Term Debt:

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

Secured senior term loans due June 30, 2024 ("2024 Term Loans") $ 712,091 $ 719,626

Secured senior term loans due October 8, 2028 ("2028 Term Loans") 990,000 —

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

3 unchanged sentences

Long-term debt, at par 2,547,091 1,564,626

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

Unamortized debt issuance costs and discount, net ( 30,067 ) ( 14,985 )

Long-term debt, at carrying value $ 2,517,024 $ 1,549,641

Financing Activities

Secured Senior Term Loans.

On October 8, 2021, the Company, and substantially all of the Company’s domestic subsidiaries as guarantors, entered into Incremental Facility Amendment No.

2 to the Company’s existing Credit Agreement dated as of June 30, 2017 (the “Term Loan Agreement”).

Incremental Facility Amendment No.

2 provides for the 2028 Term Loans in the aggregate principal amount of $ 1.0 billion which will mature on October 8, 2028.

Proceeds from the issuance of the 2028 Term Loans were $ 981.3 million after debt discount and debt issuance costs and were used to fund the acquisition of HydroChemPSC.

The 2028 Term Loans are in addition to the aggregate of $ 719.6 million of 2024 Term Loans which are also outstanding under the Term Loan Agreement and which will mature on June 30, 2024 (collectively referred to as the "Term Loans.") The 2028 Term Loans may be prepaid at any time without premium or penalty other than customary breakage costs with respect to Eurodollar based loans or if the Company engages in certain repricing transactions before April 9, 2022, in which event a 1.0 % prepayment premium would be due.

The 2024 Term Loans may be prepaid at any point without premium or penalty other than customary breakage costs.

The Company’s obligations under the Term Loan Agreement with respect to both the 2024 Term Loans and the 2028 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 2028 Term Loans under the Term Loan Agreement bear interest, at the Company’s election, at either of the following rates:

(a) the sum of the Eurodollar Rate (as defined in the Term Loan Agreement) plus 2.00 %, or (b) the sum of the Base Rate (as defined in the Term Loan Agreement) plus 1.00 %, with the Eurodollar Rate being subject to a floor of 0.00 % and the Base Rate being subject to a floor of 1.00 %.

The applicable interest rate margins for the 2024 Term Loans are 1.75 % for Eurocurrency borrowings and 0.75 % for base rate borrowings.

Interest is paid monthly.

The effective annual interest rate on December 31, 2021 was 2.04 %.

The Term Loan Agreement was also amended to adopt a LIBOR successor rate.

Unsecured Senior Notes.

3 unchanged sentences

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

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 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:

CLEAN HARBORS, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

Year Percentage

12 unchanged sentences

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 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 Loans.

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 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, 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.

As of December 31, 2021 and 2020, the estimated fair value of the Company’s outstanding long-term debt, including the current portion, was $ 2.6 billion and $ 1.6 billion, respectively.

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.

1 unchanged sentence

Revolving Credit Facility.

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").

12 unchanged sentences

subsidiaries’ accounts receivable.

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 Canadian Borrower’s obligations under the facility

CLEAN HARBORS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

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

3 unchanged sentences

The Company’s strategy to hedge against fluctuations in variable interest rates involves entering into interest rate derivative agreements.

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.

Although the interest rates on the Term Loans are variable, the Company has effectively fixed the interest rate on $ 350.0 million principal of the outstanding 2024 Term Loans by entering into interest rate swap agreements in 2018 with a notional amount of $ 350.0 million ("2018 Swaps").

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 %.

2 unchanged sentences

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 transactions affect 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.

As of December 31, 2021 and 2020, the Company recorded a derivative liability with a fair value of $ 17.4 million and $ 33.6 million, respectively, within accrued expenses in connection with the 2018 Swap 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.

CLEAN HARBORS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In January 2022, the Company entered into interest rate swap agreements ("2022 Swaps") with a notional amount of $ 600.0 million to effectively fix the interest rate on $ 600.0 million principal of the outstanding 2028 Term Loans.

Under the terms of the 2022 Swaps' agreements, the Company will receive interest based upon the variable rates on the 2028 Term Loans and pay a fixed amount of interest.

The fixed rate on these instruments is 0.931 % through June 30, 2023 and then increases to 1.9645 % from July 1, 2023 through September 30, 2027.

The variable rate on these instruments is designed to both mirror the current 2028 Term Loan interest payments and the successor rate upon the eventual sunsetting of the LIBOR rate.

The Company will apply cash flow hedge accounting to these instruments which will begin being presented in the financial statements in the first quarter of 2022.

(12) INCOME TAXES

5 unchanged sentences

Total $ 269,715 $ 174,550 $ 148,239

CLEAN HARBORS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

19 unchanged sentences

Uncertain tax position interest and penalties 263 ( 712 ) 474

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

Tax credits expired (used) 2,530 2,039 ( 50 )

Non-deductible compensation 2,326 1,406 1,922

Other ( 175 ) 571 1,691

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

Provision for income taxes $ 66,468 $ 39,713 $ 50,499

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).

The Company collected the refund during 2020.

The valuation allowance benefits recognized in 2021 and 2020 are predominately related to taxable earnings in certain Canadian entities that benefited from the wage subsidy received under CEWS.

In addition, foreign tax credits that expired in 2021 and 2020 had full valuation allowances which were also written off, contributing to the valuation allowance benefits in the table above.

The foreign tax credit expirations and associated valuation allowance write offs had no net impact to the provision for income taxes in either year.

During the year ended December 31, 2020, the Company recorded $ 1.3 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 for income taxes.

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

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, 2021 and 2020 were as follows (in thousands):

23 unchanged sentences

___________________________________

(1) As of December 31, 2020, the net operating loss carryforwards included (i) state net operating loss carryovers of $ 193.2 million which will begin to expire in 2021, (ii) federal net operating loss carryforwards of $ 16.8 million which will begin to expire in 2025 and (iii) foreign net operating loss carryforwards of $ 151.5 million which will begin to expire in 2021.

(1) As of December 31, 2021, the net operating loss carryforwards included (i) state net operating loss carryforwards of $ 280.6 million which will begin to expire in 2022, (ii) federal net operating loss carryforwards of $ 124.1 million which will begin to expire in 2024 and (iii) foreign net operating loss carryforwards of $ 116.0 million which will begin to expire in 2022.

The increases in the state net operating loss carryforwards and federal net operating loss carryforwards are due to balances acquired in the HydroChemPSC acquisition.

(2) As of December 31, 2021, the foreign tax credit carryforwards of $ 11.0 million will expire between 2022 and 2024.

The Company has not accrued for any remaining undistributed foreign earnings.

These amounts continue to be indefinitely reinvested in foreign operations.

CLEAN HARBORS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

These amounts continue to be indefinitely reinvested in foreign operations and the amount of tax associated with the earnings is not expected to be material.

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.

2 unchanged sentences

Foreign tax credits 11,047 14,127

Acquired federal net operating losses 779 779

Federal net operating losses 3,788 779

State net operating loss carryforwards 12,053 10,429

3 unchanged sentences

Total valuation allowance $ 69,806 $ 77,044

CLEAN HARBORS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The changes to unrecognized tax benefits (excluding related penalties and interest) from January 1, 2019 through December 31, 2021, were as follows (in thousands):

9 unchanged sentences

Therefore, an offsetting benefit of $ 3.2 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.

Due to expiring statute of limitation periods, the Company believes that total unrecognized tax benefits will decrease by approximately $ 0.3 million within the next 12 months.

At December 31, 2021, 2020 and 2019, the Company had accrued interest of $ 2.3 million, $ 2.1 million and $ 1.7 million, respectively, relative to unrecognized tax benefits.

2 unchanged sentences

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

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

The Company may be subject to examination by the Internal Revenue Service for calendar years 2016 through 2020.

The Company may be subject to examination by Canadian federal and provincial authorities for calendar years 2014 through 2020 and by state and local revenue authorities for calendar years 2015 through 2020.

1 unchanged sentence

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.

CLEAN HARBORS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(13) EARNINGS PER SHARE

14 unchanged sentences

securities laws.

The number of shares purchased and the timing of the purchases have depended and will depend on a number of factors including share price, cash required for future business plans, trading volume and other conditions.

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, 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.

The number of shares

CLEAN HARBORS, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

purchased and the timing of the purchases have depended and will depend on a number of factors including share price, cash required for future business plans, trading volume and other conditions.

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, 2021, 2020 and 2019, the Company repurchased and retired a total of 0.6 million, 1.2 million and 0.3 million shares, respectively, of the Company's common stock for total costs of $ 54.4 million, $ 74.8 million and $ 21.4 million, respectively.

As of December 31, 2021, an additional $ 155.4 million remained available to repurchase shares under this program.

(15) ACCUMULATED OTHER COMPREHENSIVE LOSS

The changes in accumulated other comprehensive loss by component and related tax impacts for the years ended December 31, 2021, 2020 and 2019 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

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

Balance at January 1, 2019 $ ( 212,925 ) $ ( 69 ) $ ( 8,773 ) $ ( 1,604 ) $ ( 223,371 )

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

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

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

8 unchanged sentences

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

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.

Other comprehensive (loss) income before reclassifications ( 1,590 ) ( 361 ) 6,235 1,411 5,695

Amounts reclassified out of accumulated other comprehensive loss — — 10,011 — 10,011

Tax benefit (expense) — 76 — ( 317 ) ( 241 )

Other comprehensive (loss) income ( 1,590 ) ( 285 ) 16,246 1,094 15,465

Balance at December 31, 2021 $ ( 177,824 ) $ ( 150 ) $ ( 17,383 ) $ ( 655 ) $ ( 196,012 )

During the year ended December 31, 2020, the Company converted an intercompany loan with a foreign subsidiary to equity, which resulted in a deductible tax loss.

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 tax benefit of $ 1.3 million, which was triggered by the conversions was 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, 2021, 2020 and 2019 were as follows (in thousands):

5 unchanged sentences

Stock-Based Compensation

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

In 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.

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

CLEAN HARBORS, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 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 conditions typically based on revenue, Adjusted EBITDA margin, free cash flow and a measure of workplace safety.

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

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

22 unchanged sentences

Balance at December 31, 2021 169,757 $ 85.56

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.

As of December 31, 2021, there was $ 7.3 million of total unrecognized compensation cost arising from performance stock awards whereby the performance conditions either had been or were probable of being met.

The total fair value of performance awards vested during 2021, 2020 and 2019 was $ 15.0 million, $ 3.5 million and $ 8.1 million, respectively.

6 unchanged sentences

In addition, the Company’s waste management services operations are regulated by federal, state, provincial and local laws enacted to regulate discharge of materials into the environment, remediation of contaminated soil and groundwater or otherwise protect the environment.

This ongoing regulation results in the Company frequently becoming a party to legal or administrative proceedings involving all levels of government authorities and other interested parties.

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.

This ongoing regulation results in the Company frequently becoming a party to legal or administrative

CLEAN HARBORS, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

proceedings involving all levels of government authorities and other interested parties.

At December 31, 2021 and 2020, the Company had recorded reserves of $ 36.1 million and $ 29.8 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.

25 unchanged sentences

Consequently, the Company is unable to ascertain the ultimate aggregate amount of monetary liability or financial impact with respect to these matters as of December 31, 2021.

From January 1, 2020 to December 31, 2020, 12 product liability claims were settled or dismissed.

Due to the nature of these claims and the related insurance, the Company did not incur any expense as insurance provided coverage in full for all such claims.

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

From January 1, 2021 to December 31, 2021, 21 product liability claims were settled or

CLEAN HARBORS, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Due to the nature of these claims and the related insurance, the Company did not incur any expense as insurance provided coverage in full for all such claims.

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

Superfund Proceedings

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 131 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 131 Superfund related sites, six (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, 30 are now settled, 15 are currently requiring expenditures on remediation and 80 are not currently requiring expenditures on remediation.

17 unchanged sentences

However, there can be no guarantee that the Company's ultimate liabilities for those sites will not exceed the amount recorded or that indemnities applicable to any of these sites will be available to pay all or a portion of related costs.

Except for the indemnification agreements which the Company holds from ChemWaste, McKesson and two other entities, the Company does not have an indemnity agreement with respect to any of the 125 third-party sites discussed above.

Federal, State and Provincial Enforcement Actions

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, 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

Except for the indemnification agreements which the Company holds from ChemWaste, McKesson and one other entity, the Company does not have an indemnity agreement with respect to any of the 125 third-party sites discussed above.

CLEAN HARBORS, INC.

1 unchanged sentence

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.

Federal, State and Provincial Enforcement Actions

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, 2021, there were two proceedings for which the Company believes it is possible that the sanctions could equal or exceed $ 1.0 million.

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.

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.

The Company maintains umbrella insurance to limit our exposure to certain catastrophic claim costs, including general liability and vehicle claim costs, which includes a $ 5.0 million annual aggregate self-insured corridor retention.

At December 31, 2021 and 2020, the Company had accrued $ 82.8 million and $ 65.6 million, respectively, for its self-insurance liabilities (exclusive of employee medical insurance) using a risk-free discount rate of 0.97 % and 0.29 %, respectively.

6 unchanged sentences

Total self-insurance liabilities (included in accrued expenses) $ 82,770

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 lease portfolio is predominately operating leases for real estate, vehicles and industrial equipment utilized in operations and rail cars.

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

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

8 unchanged sentences

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

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

For the years ended December 31,

2021 2020 2019

Operating lease cost $ 50,264 $ 53,194 $ 55,402

6 unchanged sentences

Total lease cost $ 168,771 $ 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:

2 unchanged sentences

Finance leases 8.1 9.3

Weighted Average Discount Rate

Weighted Average Discount Rate December 31, 2021 December 31, 2020

Operating leases 4.35 % 4.89 %

Finance leases 3.65 % 3.57 %

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

For the years ended December 31,

Supplemental Cash Flow Related Disclosures (in thousands) 2021 2020 2019

Cash paid for amounts related to lease liabilities:

Operating cash flows from operating leases $ 50,963 $ 53,498 $ 56,240

2 unchanged sentences

ROU assets obtained in exchange for operating lease liabilities (1)

55,556 34,358 17,699

ROU assets obtained in exchange for finance lease liabilities 30,476 32,526 33,449

_____________

(1) Includes $ 34.3 million of operating leases acquired with the HydroChemPSC business

At December 31, 2021, the Company's future lease payments under non-cancelable leases that have lease terms in excess of one year were as follows (in thousands):

13 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

At December 31, 2021, none of the Company's executed leases that had not yet commenced will create significant rights or obligations in the future and 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.

1 unchanged sentence

Segment reporting is prepared on the same basis that the Company's chief executive officer, who is the Company's chief operating decision maker, manages the business, makes operating decisions and assesses performance.

The Company is managed and reports as two operating segments ;

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

As described in Note 2, during the first quarter of 2021, certain of the Company's businesses undertook a reorganization which included changes to the underlying business and management structures.

The Company's chief operating decision maker also requested changes in the information that he regularly reviews for purposes of allocating resources and assessing performance so that information would align with the new operating structure of the business.

Due to these changes, the Company reassessed its determination of operating segments in the first quarter of 2021 which resulted in a change in the operating segments.

The Company consolidated the core services of Safety-Kleen Environmental Services into its Environmental Services segment, eliminated its Safety-Kleen segment and created the Safety-Kleen Sustainability Solutions segment.

In addition, certain intercompany transactions previously recorded as Corporate Items have been allocated to the segments.

All the historical balances presented below have been recast to reflect the impact of these changes.

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

6 unchanged sentences

Environmental

Services Safety-Kleen Corporate

Services Safety-Kleen Sustainability Solutions Corporate

Third-party revenues $ 3,025,907 $ 779,360 $ 299 $ 3,805,566

Intersegment revenues, net 6,547 ( 6,547 ) — —

Corporate Items, net 3,559 142 ( 3,701 ) —

Direct revenues $ 3,032,454 $ 772,813 $ 299 $ 3,805,566

1 unchanged sentence

Environmental

Services Safety-Kleen Corporate

Services Safety-Kleen Sustainability Solutions

Third-party revenues $ 2,637,641 $ 506,166 $ 290 $ 3,144,097

Intersegment revenues, net ( 1,740 ) 1,740 — —

Corporate Items, net 4,128 15 ( 4,143 ) —

Direct revenues $ 2,635,901 $ 507,906 $ 290 $ 3,144,097

1 unchanged sentence

Environmental

Services Safety-Kleen Corporate

Services Safety-Kleen Sustainability Solutions

Third-party revenues $ 2,802,682 $ 608,372 $ 1,136 $ 3,412,190

Intersegment revenues, net ( 6,688 ) 6,688 — —

Corporate Items, net 3,247 31 ( 3,278 ) —

Direct revenues $ 2,795,994 $ 615,060 $ 1,136 $ 3,412,190

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.

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, stock-based compensation, 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.

7 unchanged sentences

Environmental Services $ 659,718 $ 665,918 $ 600,413

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

Safety-Kleen Sustainability Solutions 227,354 83,214 128,249

Corporate Items ( 210,466 ) ( 175,328 ) ( 170,529 )

2 unchanged sentences

Accretion of environmental liabilities 11,745 11,051 10,136

Stock-based compensation 18,839 18,502 17,816

Depreciation and amortization 298,135 292,915 300,725

9 unchanged sentences

Environmental Services $ 1,374,913 $ 1,068,910

Safety-Kleen 555,894 555,310

Safety-Kleen Sustainability Solutions 373,721 366,160

Corporate Items 114,541 90,228

5 unchanged sentences

Total Environmental Services 1,584,273 630,155

Safety-Kleen Sustainability Solutions

Goodwill $ 141,508 $ 125,105

Permits and other intangibles, net 146,173 158,383

Total Safety-Kleen 622,329 641,826

Total Safety-Kleen Sustainability Solutions 287,681 283,488

Total $ 1,871,954 $ 913,643

19 unchanged sentences

Total $ 5,653,699 $ 4,131,520

CLEAN HARBORS, INC.

AND SUBSIDIARIES

VALUATION AND QUALIFYING ACCOUNTS

For the Three Years Ended December 31, 2020

(in thousands)

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)

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.

In addition, for some of the services provided, the Company's invoices are based on quotes that can either generate credits or debits when the actual revenue amount is known.

Based on industry knowledge and historical trends, the Company records a revenue allowance accordingly.

This practice causes the volume of activity flowing through the revenue allowance during the year to be higher than the balance at the end of the year.

Increases in overall sales volumes and the expansion of the customer base in recent years have also increased the volume of additions and deductions to the allowance during the year.

The revenue allowance is intended to cover the net amount of revenue adjustments that may need to be credited to customers' accounts in future periods.

Management determines the appropriate total revenue allowance by evaluating the following factors on a customer-by-customer basis as well as on a consolidated level:

trends in adjustments to previously billed amounts, existing economic conditions and other information as deemed applicable.

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 Balance

Period Additions

Charged to Income

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