SEGMENT REPORTING

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. During the first quarter of fiscal year 2018, certain of the Company's businesses undertook a reorganization which included changes to the underlying business and management structures. The reorganization resulted in combining the Environmental Services businesses from an operational and management perspective and is expected to deepen customer relationships and allow for efficiencies across the Company's operations through the sharing of resources, namely labor and equipment which will reduce third party spend and promote the cross selling of such business offerings. In connection with this reorganization, 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. These changes required a reconsideration of the Company’s operating segments in the first quarter of 2018 and resulted in a change in the Company’s assessment of its operating segments. Upon reconsideration of the identification of the Company’s operating segments, the Company concluded that there are now two operating segments for disclosure in accordance with ASC 280 Segment reporting; (i) the Environmental Services segment which consists of the Company’s historical Technical Services, Industrial Services, Field Services and Oil, Gas and Lodging businesses and (ii) the Safety-Kleen segment.

Third-party revenue is revenue billed to outside customers by a particular segment. Direct revenue is revenue allocated to the segment providing the product or service. Intersegment revenues represent the sharing of third-party revenues among the segments based on products and services provided by each segment as if the products and services were sold directly to the third-party. The intersegment revenues are shown net. The negative intersegment revenues are due to more transfers out of customer revenues to other segments than transfers in of customer revenues from other segments. The operations not managed through the Company’s operating segments described above are recorded as “Corporate Items.” Corporate Items revenues consist of two different operations for which the revenues are insignificant. Corporate Items cost of revenues represents certain central services that are not allocated to the Company's operating segments for internal reporting purposes. Corporate Items selling, general and administrative expenses include typical corporate items such as legal, accounting and other items of a general corporate nature that are not allocated to the Company’s operating segments.

The following table reconciles third party revenues to direct revenues for the three months ended March 31, 2018 and 2017 (in thousands):



	For the Three Months Ended March 31, 2018											For the Three Months Ended March 31, 2017
	Third party revenues		Intersegment revenues, net			Corporate Items, net			Direct revenues			Third party revenues		Intersegment revenues, net			Corporate Items, net			Direct revenues
Environmental Services	$	439,688	$	31,965		$	794		$	472,447		$	395,907	$	32,069		$	920		$	428,896
Safety-Kleen	309,918		(31,965		)	11			277,964			292,901		(32,069		)	3			260,835
Corporate Items	172		—			(805		)	(633		)	133		—			(923		)	(790		)
Total	$	749,778	$	—		$	—		$	749,778		$	688,941	$	—		$	—		$	688,941

The primary financial measure by which the Company evaluates the performance of its segments is "Adjusted EBITDA" which consists of net loss plus accretion of environmental liabilities, depreciation and amortization, interest expense, net, provision for income taxes and excludes other expense, net. Transactions between the segments are accounted for at the Company’s best estimate based on similar transactions with outside customers.

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



	For the Three Months Ended
	March 31,
	2018			2017
Adjusted EBITDA:
Environmental Services	$	61,417		$	60,190
Safety-Kleen	61,884			52,368
Corporate Items	(35,036		)	(32,423		)
Total	$	88,265		$	80,135
Reconciliation to Consolidated Statements of Operations:
Accretion of environmental liabilities	2,430			2,290
Depreciation and amortization	74,844			72,412
Income from operations	10,991			5,433
Other expense, net	299			1,549
Interest expense, net of interest income	20,270			22,576
Loss before provision for income taxes	$	(9,578	)	$	(18,692	)

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



	March 31, 2018
	Environmental Services		Safety-Kleen		Corporate Items		Totals
Property, plant and equipment, net	$	998,340	$	553,308	$	80,000	$	1,631,648
Goodwill	187,490		305,215		—		492,705
Permits and other intangibles, net	99,401		365,234		—		464,635
Total assets	$	1,685,168	$	1,437,026	$	562,622	$	3,684,816



	December 31, 2017
	Environmental Services		Safety-Kleen		Corporate Items		Totals
Property, plant and equipment, net	$	927,139	$	582,162	$	78,064	$	1,587,365
Goodwill	172,386		306,137		—		478,523
Permits and other intangibles, net	97,519		371,609		—		469,128
Total assets	$	1,541,241	$	1,471,291	$	694,038	$	3,706,570

The following table presents total assets by geographical area (in thousands):



	March 31, 2018		December 31, 2017
United States	$	3,002,779	$	2,985,394
Canada	681,901		721,176
Other foreign	136		—
Total	$	3,684,816	$	3,706,570