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 and nine months ended September 30, 2018 and 2017 (in thousands):



	For the Three Months Ended September 30, 2018											For the Three Months Ended September 30, 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	$	508,813	$	33,022		$	1,145		$	542,980		$	440,163	$	31,757		$	761		$	472,681
Safety-Kleen	333,901		(33,022		)	6			300,885			315,028		(31,757		)	3			283,274
Corporate Items	467		—			(1,151		)	(684		)	655		—			(764		)	(109		)
Total	$	843,181	$	—		$	—		$	843,181		$	755,846	$	—		$	—		$	755,846



	For the Nine Months Ended September 30, 2018											For the Nine Months Ended September 30, 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	$	1,468,417	$	99,278		$	2,546		$	1,570,241		$	1,285,701	$	95,465		$	2,001		$	1,383,167
Safety-Kleen	972,534		(99,278		)	28			873,284			910,885		(95,465		)	4			815,424
Corporate Items	1,148		—			(2,574		)	(1,426		)	989		—			(2,005		)	(1,016		)
Total	$	2,442,099	$	—		$	—		$	2,442,099		$	2,197,575	$	—		$	—		$	2,197,575

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, interest expense, net, loss on early extinguishment of debt, provision for income taxes and excludes loss (gain) on sale of business and 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						For the Nine Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Adjusted EBITDA:
Environmental Services	$	102,419		$	86,505		$	273,035		$	241,527
Safety-Kleen	79,502			70,305			214,455			182,954
Corporate Items	(40,644		)	(33,811		)	(118,387		)	(100,656		)
Total	$	141,277		$	122,999		$	369,103		$	323,825
Reconciliation to Consolidated Statements of Operations:
Accretion of environmental liabilities	2,450			2,347			7,328			7,053
Depreciation and amortization	73,082			72,989			220,686			216,932
Income from operations	65,745			47,663			141,089			99,840
Other expense, net	996			432			449			2,814
Loss on early extinguishment of debt	2,469			1,846			2,469			7,891
Loss (gain) on sale of business	—			77			—			(31,645		)
Interest expense, net of interest income	19,916			20,675			60,955			65,743
Income before provision for income taxes	$	42,364		$	24,633		$	77,216		$	55,037

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



	September 30, 2018
	Environmental Services		Safety-Kleen		Corporate Items		Totals
Property, plant and equipment, net	$	997,708	$	558,550	$	58,171	$	1,614,429
Goodwill	204,760		309,342		—		514,102
Permits and other intangibles, net	96,175		355,180		—		451,355
Total assets	$	1,714,209	$	1,445,995	$	614,125	$	3,774,329



	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):



	September 30, 2018		December 31, 2017
United States	$	3,090,011	$	2,985,394
Canada	684,144		721,176
Other foreign	174		—
Total	$	3,774,329	$	3,706,570