BUSINESS COMBINATIONS

12 Months Ended

Dec. 31, 2016

Business Combinations [Abstract]

BUSINESS COMBINATIONS

BUSINESS COMBINATIONS

2016 Acquisitions

During 2016, the Company acquired seven businesses that complement the strategy to create a closed loop model as it relates to the sale of the Company's oil products. These acquisitions provided the Company with two additional oil re-refineries while also expanding its used motor oil collection network and providing greater blending and packaging capabilities. These acquisitions also provide the Company with greater access to customers in the West Coast region of the United States and additional locations with Part B permits. Operations of these acquisitions are primarily being integrated into the Safety-Kleen operating segment with certain operations also being integrated into the Technical Services and Industrial Services operating segments.

The combined purchase price for the seven acquisitions was approximately $205.0 million paid in cash and subject to customary post-closing adjustments. The combined amount of direct revenue from the acquisitions included in the Company's results of operations for the year ended December 31, 2016 was approximately $69.8 million. Upon acquisition, the acquired entities are immediately integrated into the Company's operating segments. Therefore it is impracticable to measure earnings attributable to the acquired businesses. During the year ended December 31, 2016, the Company incurred acquisition-related costs of approximately $1.7 million in connection with the transactions which are included in selling, general and administrative expenses in the consolidated statements of operations.

The purchase price allocation for acquisitions may reflect various fair value estimates and analysis, including preliminary work performed by third-party valuation specialists. In addition, purchase prices for acquisitions may reflect preliminary working capital based adjustments. These estimates are subject to change within the measurement period as valuations and working capital adjustments are finalized. The primary areas of the preliminary purchase price allocation that are subject to change relate to the fair values of certain tangible assets and liabilities acquired, the valuation of intangible assets acquired, certain legal matters, income and income based taxes, and residual goodwill. Measurement period adjustments are recorded in the reporting period in which the estimates are finalized and adjustment amounts are determined.

(3) BUSINESS COMBINATIONS (Continued)

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

	At Acquisition Dates			Measurement Period Adjustments			At Acquisition Dates As Reported December 31, 2016
Accounts receivable	$	17,384		$	(1,617	)	$	15,767
Inventories and supplies	13,859			(1,344		)	12,515
Prepaid expenses and other current assets	920			(143		)	777
Property, plant and equipment	132,705			10,320			143,025
Permits and other intangibles	23,405			5,451			28,856
Current liabilities	(19,482		)	(776		)	(20,258		)
Closure and post-closure liabilities, less current portion	(1,709		)	(699		)	(2,408		)
Remedial liabilities, less current portion	(4		)	(2,037		)	(2,041		)
Deferred taxes, unrecognized tax benefits and other long-term liabilities	(8,663		)	(8,356		)	(17,019		)
Total identifiable net assets	158,415			799			159,214
Goodwill	48,500			(2,709		)	45,791
Total purchase price, net of cash acquired	$	206,915		$	(1,910	)	$	205,005

The excess of the total purchase price, which includes the aggregate cash consideration paid in excess of the fair value of the tangible net assets and intangible asset acquired, was recorded as goodwill. The goodwill recognized is attributable to the expected operating synergies and growth potential that the Company expects to realize from these acquisitions. Goodwill generated from the acquisitions was not deductible for tax purposes.

Pro forma revenue and earnings amounts on a combined basis as if these acquisitions had been completed on January 1, 2014 are immaterial to the consolidated financial statements of the Company since that date.

2015 Acquisitions

Thermo Fluids Inc.

On April 11, 2015, the Company completed the acquisition of Heckmann Environmental Services, Inc. (“HES”) and Thermo Fluids Inc. (“TFI”), a wholly-owned subsidiary of HES. The acquisition was accomplished through a purchase by Safety-Kleen, Inc., a wholly-owned subsidiary of the Company, of all of the issued and outstanding shares of HES from Nuverra Environmental Solutions, Inc. HES is a holding company that does not conduct any operations. TFI provides environmental services, including used oil recycling, used oil filter recycling, antifreeze products, parts washers and solvent recycling, and industrial waste management services, including vacuum services, remediation, lab pack and hazardous waste management. The Company acquired TFI for a purchase price of $79.3 million. The acquisition was financed with cash on hand and expands the Company’s environmental services customer base while also complimenting the Safety-Kleen network and presence in the western United States. The amount of revenue from TFI included in the Company's results of operations for the years ended December 31, 2016 and 2015 was $38.0 million and $33.8 million, respectively. Upon acquisition, TFI was immediately integrated into the Company's Safety-Kleen operating segment. Therefore it is impracticable to measure earnings attributable to TFI.

The allocation of the purchase price was based on estimates of the fair value of assets acquired and liabilities assumed as of April 11, 2015. The Company believes that such information provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed. The Company finalized the purchase accounting for the acquisition of TFI in the second quarter of 2016.

(3) BUSINESS COMBINATIONS (Continued)

	Preliminary Allocations as reported at December 31, 2015			Measurement Period Adjustments			Final Allocations
Accounts Receivable	$	7,585		$	(284	)	$	7,301
Inventories and supplies	1,791			—			1,791
Prepaid expenses and other current assets	665			—			665
Property, plant and equipment	28,862			(1,221		)	27,641
Permits and other intangibles	18,100			—			18,100
Current liabilities	(5,845		)	(39		)	(5,884		)
Closure and post-closure liabilities	(1,676		)	(657		)	(2,333		)
Deferred taxes, unrecognized tax benefits and other long-term liabilities	(10,030		)	856			(9,174		)
Total identifiable net assets	39,452			(1,345		)	38,107
Goodwill	39,134			2,095			41,229
Total	$	78,586		$	750		$	79,336

Pro forma revenue and earnings amounts on a combined basis as if TFI had been acquired on January 1, 2014 are immaterial to the consolidated financial statements of the Company since that date.

Other 2015 Acquisitions

In December 2015, the Company acquired certain assets and assumed certain defined liabilities of a privately owned company for approximately $14.7 million in cash. That company specializes in the collection and recycling of used oil filters and was a service provider to the Safety-Kleen operating segment prior to the acquisition. The acquired company has been integrated into the Safety-Kleen operating segment. In connection with this acquisition a preliminary goodwill amount of $7.4 million was recognized.

2014 Acquisitions

In 2014, the Company acquired the assets of two privately owned companies for approximately $16.1 million in cash, net of cash acquired. The acquired companies have been integrated into the Technical Services and Lodging Services operating segments.