Toggle SGML Header (+)


Section 1: 10-Q (10-Q)

srcl-10q_20190331.htm
STERICYCLE INC 0000861878 --12-31 Large Accelerated Filer false false 2019-03-31 2019 Q1 SRCL false us-gaap:PropertyPlantAndEquipmentNet P1Y P6Y P6Y6M P3Y10M24D P3Y2M12D P4Y4M20D P4Y10M20D P2Y 0000861878 2019-01-01 2019-03-31 xbrli:shares 0000861878 2019-04-30 iso4217:USD 0000861878 2018-01-01 2018-03-31 iso4217:USD xbrli:shares 0000861878 2019-03-31 0000861878 2018-12-31 0000861878 2017-12-31 0000861878 2018-03-31 0000861878 us-gaap:PreferredStockMember 2018-12-31 0000861878 us-gaap:CommonStockMember 2018-12-31 0000861878 us-gaap:AdditionalPaidInCapitalMember 2018-12-31 0000861878 us-gaap:RetainedEarningsMember 2018-12-31 0000861878 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-31 0000861878 us-gaap:NoncontrollingInterestMember 2018-12-31 0000861878 us-gaap:RetainedEarningsMember 2019-01-01 2019-03-31 0000861878 us-gaap:NoncontrollingInterestMember 2019-01-01 2019-03-31 0000861878 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-01-01 2019-03-31 0000861878 us-gaap:CommonStockMember 2019-01-01 2019-03-31 0000861878 us-gaap:AdditionalPaidInCapitalMember 2019-01-01 2019-03-31 0000861878 us-gaap:PreferredStockMember 2019-03-31 0000861878 us-gaap:CommonStockMember 2019-03-31 0000861878 us-gaap:AdditionalPaidInCapitalMember 2019-03-31 0000861878 us-gaap:RetainedEarningsMember 2019-03-31 0000861878 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-03-31 0000861878 us-gaap:NoncontrollingInterestMember 2019-03-31 0000861878 us-gaap:PreferredStockMember 2017-12-31 0000861878 us-gaap:CommonStockMember 2017-12-31 0000861878 us-gaap:AdditionalPaidInCapitalMember 2017-12-31 0000861878 us-gaap:RetainedEarningsMember 2017-12-31 0000861878 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2017-12-31 0000861878 us-gaap:NoncontrollingInterestMember 2017-12-31 0000861878 us-gaap:RetainedEarningsMember 2018-01-01 2018-03-31 0000861878 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-01-01 2018-03-31 0000861878 us-gaap:NoncontrollingInterestMember 2018-01-01 2018-03-31 0000861878 us-gaap:CommonStockMember 2018-01-01 2018-03-31 0000861878 us-gaap:AdditionalPaidInCapitalMember 2018-01-01 2018-03-31 0000861878 us-gaap:PreferredStockMember 2018-03-31 0000861878 us-gaap:CommonStockMember 2018-03-31 0000861878 us-gaap:AdditionalPaidInCapitalMember 2018-03-31 0000861878 us-gaap:RetainedEarningsMember 2018-03-31 0000861878 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-03-31 0000861878 us-gaap:NoncontrollingInterestMember 2018-03-31 0000861878 srcl:ContingentConsiderationLiabilityMember 2019-01-01 2019-03-31 0000861878 srcl:MedicalWasteAndComplianceSolutionsMember srcl:DomesticAndCanadaRCSMember country:US 2019-01-01 2019-03-31 0000861878 srcl:MedicalWasteAndComplianceSolutionsMember srcl:DomesticAndCanadaRCSMember country:CA 2019-01-01 2019-03-31 0000861878 srcl:MedicalWasteAndComplianceSolutionsMember srcl:InternationalRegulatedAndComplianceServicesMember srt:EuropeMember 2019-01-01 2019-03-31 0000861878 srcl:MedicalWasteAndComplianceSolutionsMember srcl:InternationalRegulatedAndComplianceServicesMember srcl:OtherGeographicalAreaMember 2019-01-01 2019-03-31 0000861878 srcl:MedicalWasteAndComplianceSolutionsMember 2019-01-01 2019-03-31 0000861878 srcl:SecureInformationDestructionServicesMember srcl:DomesticAndCanadaRCSMember country:US 2019-01-01 2019-03-31 0000861878 srcl:SecureInformationDestructionServicesMember srcl:DomesticAndCanadaRCSMember country:CA 2019-01-01 2019-03-31 0000861878 srcl:SecureInformationDestructionServicesMember srcl:InternationalRegulatedAndComplianceServicesMember srt:EuropeMember 2019-01-01 2019-03-31 0000861878 srcl:SecureInformationDestructionServicesMember srcl:InternationalRegulatedAndComplianceServicesMember srcl:OtherGeographicalAreaMember 2019-01-01 2019-03-31 0000861878 srcl:SecureInformationDestructionServicesMember 2019-01-01 2019-03-31 0000861878 srcl:ManufacturingAndIndustrialServicesMember srcl:DomesticAndCanadaRCSMember country:US 2019-01-01 2019-03-31 0000861878 srcl:ManufacturingAndIndustrialServicesMember srcl:DomesticAndCanadaRCSMember country:CA 2019-01-01 2019-03-31 0000861878 srcl:ManufacturingAndIndustrialServicesMember srcl:InternationalRegulatedAndComplianceServicesMember srt:EuropeMember 2019-01-01 2019-03-31 0000861878 srcl:ManufacturingAndIndustrialServicesMember srcl:InternationalRegulatedAndComplianceServicesMember srcl:OtherGeographicalAreaMember 2019-01-01 2019-03-31 0000861878 srcl:ManufacturingAndIndustrialServicesMember 2019-01-01 2019-03-31 0000861878 srcl:HazardousWasteSolutionsMember srcl:DomesticAndCanadaRCSMember country:US 2019-01-01 2019-03-31 0000861878 srcl:HazardousWasteSolutionsMember 2019-01-01 2019-03-31 0000861878 srcl:CommunicationServicesMember srcl:DomesticAndCanadaRCSMember country:CA 2019-01-01 2019-03-31 0000861878 srcl:CommunicationServicesMember srcl:InternationalRegulatedAndComplianceServicesMember srt:EuropeMember 2019-01-01 2019-03-31 0000861878 srcl:CommunicationServicesMember us-gaap:AllOtherSegmentsMember country:US 2019-01-01 2019-03-31 0000861878 srcl:CommunicationServicesMember 2019-01-01 2019-03-31 0000861878 srcl:ExpertSolutionsMember srcl:DomesticAndCanadaRCSMember country:CA 2019-01-01 2019-03-31 0000861878 srcl:ExpertSolutionsMember srcl:InternationalRegulatedAndComplianceServicesMember srt:EuropeMember 2019-01-01 2019-03-31 0000861878 srcl:ExpertSolutionsMember us-gaap:AllOtherSegmentsMember country:US 2019-01-01 2019-03-31 0000861878 srcl:ExpertSolutionsMember 2019-01-01 2019-03-31 0000861878 srcl:DomesticAndCanadaRCSMember country:US 2019-01-01 2019-03-31 0000861878 srcl:DomesticAndCanadaRCSMember country:CA 2019-01-01 2019-03-31 0000861878 srcl:InternationalRegulatedAndComplianceServicesMember srt:EuropeMember 2019-01-01 2019-03-31 0000861878 srcl:InternationalRegulatedAndComplianceServicesMember srcl:OtherGeographicalAreaMember 2019-01-01 2019-03-31 0000861878 us-gaap:AllOtherSegmentsMember country:US 2019-01-01 2019-03-31 0000861878 country:US srcl:MedicalWasteAndComplianceSolutionsMember srcl:DomesticAndCanadaRCSMember 2018-01-01 2018-03-31 0000861878 country:CA srcl:MedicalWasteAndComplianceSolutionsMember srcl:DomesticAndCanadaRCSMember 2018-01-01 2018-03-31 0000861878 srt:EuropeMember srcl:MedicalWasteAndComplianceSolutionsMember srcl:InternationalRegulatedAndComplianceServicesMember 2018-01-01 2018-03-31 0000861878 srcl:OtherGeographicalAreaMember srcl:MedicalWasteAndComplianceSolutionsMember srcl:InternationalRegulatedAndComplianceServicesMember 2018-01-01 2018-03-31 0000861878 srcl:MedicalWasteAndComplianceSolutionsMember 2018-01-01 2018-03-31 0000861878 country:US srcl:SecureInformationDestructionServicesMember srcl:DomesticAndCanadaRCSMember 2018-01-01 2018-03-31 0000861878 country:CA srcl:SecureInformationDestructionServicesMember srcl:DomesticAndCanadaRCSMember 2018-01-01 2018-03-31 0000861878 srt:EuropeMember srcl:SecureInformationDestructionServicesMember srcl:InternationalRegulatedAndComplianceServicesMember 2018-01-01 2018-03-31 0000861878 srcl:OtherGeographicalAreaMember srcl:SecureInformationDestructionServicesMember srcl:InternationalRegulatedAndComplianceServicesMember 2018-01-01 2018-03-31 0000861878 srcl:SecureInformationDestructionServicesMember 2018-01-01 2018-03-31 0000861878 country:US srcl:ManufacturingAndIndustrialServicesMember srcl:DomesticAndCanadaRCSMember 2018-01-01 2018-03-31 0000861878 country:CA srcl:ManufacturingAndIndustrialServicesMember srcl:DomesticAndCanadaRCSMember 2018-01-01 2018-03-31 0000861878 srt:EuropeMember srcl:ManufacturingAndIndustrialServicesMember srcl:InternationalRegulatedAndComplianceServicesMember 2018-01-01 2018-03-31 0000861878 srcl:OtherGeographicalAreaMember srcl:ManufacturingAndIndustrialServicesMember srcl:InternationalRegulatedAndComplianceServicesMember 2018-01-01 2018-03-31 0000861878 srcl:ManufacturingAndIndustrialServicesMember 2018-01-01 2018-03-31 0000861878 country:US srcl:HazardousWasteSolutionsMember srcl:DomesticAndCanadaRCSMember 2018-01-01 2018-03-31 0000861878 srcl:HazardousWasteSolutionsMember 2018-01-01 2018-03-31 0000861878 country:CA srcl:CommunicationServicesMember srcl:DomesticAndCanadaRCSMember 2018-01-01 2018-03-31 0000861878 srt:EuropeMember srcl:CommunicationServicesMember srcl:InternationalRegulatedAndComplianceServicesMember 2018-01-01 2018-03-31 0000861878 country:US srcl:CommunicationServicesMember us-gaap:AllOtherSegmentsMember 2018-01-01 2018-03-31 0000861878 srcl:CommunicationServicesMember 2018-01-01 2018-03-31 0000861878 country:CA srcl:ExpertSolutionsMember srcl:DomesticAndCanadaRCSMember 2018-01-01 2018-03-31 0000861878 srt:EuropeMember srcl:ExpertSolutionsMember srcl:InternationalRegulatedAndComplianceServicesMember 2018-01-01 2018-03-31 0000861878 country:US srcl:ExpertSolutionsMember us-gaap:AllOtherSegmentsMember 2018-01-01 2018-03-31 0000861878 srcl:ExpertSolutionsMember 2018-01-01 2018-03-31 0000861878 country:US srcl:DomesticAndCanadaRCSMember 2018-01-01 2018-03-31 0000861878 country:CA srcl:DomesticAndCanadaRCSMember 2018-01-01 2018-03-31 0000861878 srt:EuropeMember srcl:InternationalRegulatedAndComplianceServicesMember 2018-01-01 2018-03-31 0000861878 srcl:OtherGeographicalAreaMember srcl:InternationalRegulatedAndComplianceServicesMember 2018-01-01 2018-03-31 0000861878 country:US us-gaap:AllOtherSegmentsMember 2018-01-01 2018-03-31 0000861878 us-gaap:OtherCurrentAssetsMember 2019-03-31 0000861878 us-gaap:OtherCurrentAssetsMember 2018-12-31 0000861878 us-gaap:OtherNoncurrentAssetsMember 2019-03-31 0000861878 us-gaap:OtherNoncurrentAssetsMember 2018-12-31 0000861878 us-gaap:SellingGeneralAndAdministrativeExpensesMember 2019-01-01 2019-03-31 0000861878 us-gaap:AllOtherSegmentsMember us-gaap:SellingGeneralAndAdministrativeExpensesMember 2019-01-01 2019-03-31 0000861878 srcl:InternationalRegulatedWasteAndComplianceServicesMember us-gaap:SellingGeneralAndAdministrativeExpensesMember 2019-01-01 2019-03-31 0000861878 srcl:DomesticAndCanadaRegulatedWasteAndComplianceServicesMember us-gaap:SellingGeneralAndAdministrativeExpensesMember 2019-01-01 2019-03-31 0000861878 us-gaap:SellingGeneralAndAdministrativeExpensesMember 2019-03-31 0000861878 country:GB us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMember srcl:InternationalRegulatedWasteAndComplianceServicesMember 2019-01-01 2019-03-31 0000861878 country:GB us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMember srcl:InternationalRegulatedWasteAndComplianceServicesMember us-gaap:NotesReceivableMember 2019-01-01 2019-03-31 0000861878 country:GB us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMember srcl:InternationalRegulatedWasteAndComplianceServicesMember us-gaap:SellingGeneralAndAdministrativeExpensesMember 2019-01-01 2019-03-31 0000861878 country:GB us-gaap:DisposalGroupHeldforsaleNotDiscontinuedOperationsMember us-gaap:SellingGeneralAndAdministrativeExpensesMember 2018-01-01 2018-03-31 0000861878 srcl:DomesticAndCanadaRegulatedWasteAndComplianceServicesMember 2018-12-31 0000861878 srcl:InternationalRegulatedWasteAndComplianceServicesMember 2018-12-31 0000861878 srcl:DomesticAndCanadaRegulatedWasteAndComplianceServicesMember 2019-01-01 2019-03-31 0000861878 srcl:InternationalRegulatedWasteAndComplianceServicesMember 2019-01-01 2019-03-31 0000861878 srcl:DomesticAndCanadaRegulatedWasteAndComplianceServicesMember 2019-03-31 0000861878 srcl:InternationalRegulatedWasteAndComplianceServicesMember 2019-03-31 0000861878 srcl:LatinAmericaReportingUnitMember 2019-01-01 2019-03-31 0000861878 srcl:LatinAmericaReportingUnitMember 2019-03-31 0000861878 us-gaap:AllOtherSegmentsMember 2019-03-31 0000861878 us-gaap:CustomerRelationshipsMember 2019-03-31 0000861878 us-gaap:NoncompeteAgreementsMember 2019-03-31 0000861878 us-gaap:TradeNamesMember 2019-03-31 0000861878 us-gaap:OtherIntangibleAssetsMember 2019-03-31 0000861878 us-gaap:CustomerRelationshipsMember 2018-12-31 0000861878 us-gaap:NoncompeteAgreementsMember 2018-12-31 0000861878 us-gaap:TradeNamesMember 2018-12-31 0000861878 us-gaap:OtherIntangibleAssetsMember 2018-12-31 0000861878 srcl:OperatingPermitsMember 2019-03-31 0000861878 us-gaap:TradeNamesMember 2019-03-31 0000861878 srcl:OperatingPermitsMember 2018-12-31 0000861878 us-gaap:TradeNamesMember 2018-12-31 xbrli:pure 0000861878 srt:MinimumMember 2019-03-31 0000861878 srt:MaximumMember 2019-03-31 0000861878 srcl:SeniorCreditFacilityDueJuneTwentyTwentyTwoMember us-gaap:LineOfCreditMember 2019-03-31 0000861878 srcl:SeniorCreditFacilityDueJuneTwentyTwentyTwoMember us-gaap:LineOfCreditMember 2018-12-31 0000861878 srcl:TermLoanFacilityDueAugustTwentyTwentyTwoMember srcl:TermLoanMember 2019-03-31 0000861878 srcl:TermLoanFacilityDueAugustTwentyTwentyTwoMember srcl:TermLoanMember 2018-12-31 0000861878 srcl:NotesDueInTwentyNineteenMember srcl:PrivatePlacementNotesMember 2019-03-31 0000861878 srcl:NotesDueInTwentyNineteenMember srcl:PrivatePlacementNotesMember 2018-12-31 0000861878 srcl:NotesDueInTwentyTwentyMember srcl:PrivatePlacementNotesMember 2019-03-31 0000861878 srcl:NotesDueInTwentyTwentyMember srcl:PrivatePlacementNotesMember 2018-12-31 0000861878 srcl:NotesDueInTwentyTwentyOneMember srcl:PrivatePlacementNotesMember 2019-03-31 0000861878 srcl:NotesDueInTwentyTwentyOneMember srcl:PrivatePlacementNotesMember 2018-12-31 0000861878 srcl:NotesDueInTwentyTwentyTwoMember srcl:PrivatePlacementNotesMember 2019-03-31 0000861878 srcl:NotesDueInTwentyTwentyTwoMember srcl:PrivatePlacementNotesMember 2018-12-31 0000861878 srcl:NotesDueOneInTwentyTwentyTwoMember srcl:PrivatePlacementNotesMember 2019-03-31 0000861878 srcl:NotesDueOneInTwentyTwentyTwoMember srcl:PrivatePlacementNotesMember 2018-12-31 0000861878 srcl:NotesDueInTwentyTwentyThreeMember srcl:PrivatePlacementNotesMember 2019-03-31 0000861878 srcl:NotesDueInTwentyTwentyThreeMember srcl:PrivatePlacementNotesMember 2018-12-31 0000861878 srcl:NotesDueOneInTwentyTwentyThreeMember srcl:PrivatePlacementNotesMember 2019-03-31 0000861878 srcl:NotesDueOneInTwentyTwentyThreeMember srcl:PrivatePlacementNotesMember 2018-12-31 0000861878 srcl:NotesWeightedAverageMaturityTwoPointSixAndTwoPointSevenYearsMember srcl:PromissoryNotesAndDeferredConsiderationMember 2019-03-31 0000861878 srcl:NotesWeightedAverageMaturityTwoPointSixAndTwoPointSevenYearsMember srcl:PromissoryNotesAndDeferredConsiderationMember 2018-12-31 0000861878 srcl:DebtWeightedAverageMaturityOnePointSixAndOnePointNineYearsMember srcl:ForeignLongTermDebtMember 2019-03-31 0000861878 srcl:DebtWeightedAverageMaturityOnePointSixAndOnePointNineYearsMember srcl:ForeignLongTermDebtMember 2018-12-31 0000861878 us-gaap:CapitalLeaseObligationsMember 2019-03-31 0000861878 us-gaap:CapitalLeaseObligationsMember 2018-12-31 0000861878 srcl:PromissoryNotesAndDeferredConsiderationMember srcl:NotesWeightedAverageMaturityTwoPointSixAndTwoPointSevenYearsMember 2019-01-01 2019-03-31 0000861878 srcl:PromissoryNotesAndDeferredConsiderationMember srcl:NotesWeightedAverageMaturityTwoPointSixAndTwoPointSevenYearsMember 2018-01-01 2018-12-31 0000861878 srcl:ForeignLongTermDebtMember srcl:DebtWeightedAverageMaturityOnePointSixAndOnePointNineYearsMember 2019-01-01 2019-03-31 0000861878 srcl:ForeignLongTermDebtMember srcl:DebtWeightedAverageMaturityOnePointSixAndOnePointNineYearsMember 2018-01-01 2018-12-31 0000861878 us-gaap:FairValueInputsLevel2Member 2019-03-31 0000861878 us-gaap:FairValueInputsLevel2Member 2018-12-31 0000861878 us-gaap:FairValueInputsLevel3Member 2019-03-31 0000861878 us-gaap:FairValueInputsLevel3Member 2018-12-31 0000861878 srcl:ContingentConsiderationLiabilityMember 2018-12-31 0000861878 srcl:ContingentConsiderationLiabilityMember 2019-03-31 0000861878 us-gaap:EmployeeStockOptionMember us-gaap:SellingGeneralAndAdministrativeExpensesMember 2019-01-01 2019-03-31 0000861878 us-gaap:EmployeeStockOptionMember us-gaap:SellingGeneralAndAdministrativeExpensesMember 2018-01-01 2018-03-31 0000861878 us-gaap:RestrictedStockUnitsRSUMember us-gaap:SellingGeneralAndAdministrativeExpensesMember 2019-01-01 2019-03-31 0000861878 us-gaap:RestrictedStockUnitsRSUMember us-gaap:SellingGeneralAndAdministrativeExpensesMember 2018-01-01 2018-03-31 0000861878 us-gaap:PerformanceSharesMember us-gaap:SellingGeneralAndAdministrativeExpensesMember 2019-01-01 2019-03-31 0000861878 us-gaap:PerformanceSharesMember us-gaap:SellingGeneralAndAdministrativeExpensesMember 2018-01-01 2018-03-31 0000861878 us-gaap:SellingGeneralAndAdministrativeExpensesMember srcl:EmployeeStockPurchasePlanMember 2019-01-01 2019-03-31 0000861878 us-gaap:SellingGeneralAndAdministrativeExpensesMember srcl:EmployeeStockPurchasePlanMember 2018-01-01 2018-03-31 0000861878 us-gaap:EmployeeStockOptionMember 2019-03-31 0000861878 us-gaap:EmployeeStockOptionMember 2019-01-01 2019-03-31 0000861878 us-gaap:RestrictedStockUnitsRSUMember 2018-12-31 0000861878 us-gaap:RestrictedStockUnitsRSUMember 2019-01-01 2019-03-31 0000861878 us-gaap:RestrictedStockUnitsRSUMember 2019-03-31 0000861878 us-gaap:PerformanceSharesMember 2018-12-31 0000861878 us-gaap:PerformanceSharesMember 2019-01-01 2019-03-31 0000861878 us-gaap:PerformanceSharesMember 2019-03-31 0000861878 us-gaap:RestrictedStockUnitsRSUMember 2019-01-01 2019-03-31 0000861878 srcl:SeriesAMandatoryConvertiblePreferredStockMember 2018-01-01 2018-03-31 0000861878 us-gaap:EmployeeStockOptionMember 2019-01-01 2019-03-31 0000861878 us-gaap:EmployeeStockOptionMember 2018-01-01 2018-03-31 0000861878 us-gaap:RestrictedStockUnitsRSUMember 2018-01-01 2018-03-31 0000861878 srcl:DomesticAndCanadaRegulatedWasteAndComplianceServicesMember 2018-01-01 2018-03-31 0000861878 srcl:InternationalRegulatedWasteAndComplianceServicesMember 2018-01-01 2018-03-31 0000861878 us-gaap:AllOtherSegmentsMember 2019-01-01 2019-03-31 0000861878 us-gaap:AllOtherSegmentsMember 2018-01-01 2018-03-31 0000861878 us-gaap:AccruedLiabilitiesMember 2019-03-31 0000861878 us-gaap:AccruedLiabilitiesMember 2018-12-31 0000861878 us-gaap:OtherNoncurrentLiabilitiesMember 2019-03-31 0000861878 us-gaap:OtherNoncurrentLiabilitiesMember 2018-12-31 0000861878 srcl:DefinitiveSettlementAgreementMember 2017-10-16 2017-10-17 0000861878 srcl:ProposedSecuritiesClassActionSettlementMember 2019-01-01 2019-03-31 0000861878 srcl:ProposedSecuritiesClassActionSettlementMember 2019-03-24 2019-03-25 0000861878 srcl:SiuSettlementMember 2019-02-25 0000861878 srcl:HazardousWasteFacilityInMexicoMember us-gaap:EnvironmentalRemediationMember 2017-07-01 2017-07-31

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2019

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from             to

Commission File Number 1-37556

 

Stericycle, Inc.

(Exact name of registrant as specified in its charter)

 

 

Delaware

36-3640402

(State or other jurisdiction of incorporation or organization)

(IRS Employer Identification Number)

 

28161 North Keith Drive

Lake Forest, Illinois 60045

(Address of principal executive offices, including zip code)

(847) 367-5910

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.01 per share

SRCL

Nasdaq Global Select Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file reports), and (2) has been subject to such filing requirements for the past 90 days. YES NO

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YES NO

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "accelerated filer", "large accelerated filer", "smaller reporting company", and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

Smaller reporting company

 

Emerging Growth Company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES NO

 

On April 30, 2019, there were 91,040,915 shares of the Registrant’s Common Stock outstanding.

 

 


 

 

 

Table of Contents

 

 

Page No.

 

PART I. FINANCIAL INFORMATION

 

 

 

 

 

 

Item 1.  Financial Statements (Unaudited)

 

 

 

 

 

Condensed Consolidated Statements of (Loss) Income for the three months ended March 31, 2019 and 2018

4

 

 

 

 

Condensed Consolidated Statements of Comprehensive (Loss) Income for the three months ended March 31, 2019 and 2018

5

 

 

 

 

Condensed Consolidated Balance Sheets as of March 31, 2019 and December 31, 2018

6

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2019 and 2018

7

 

 

 

 

Condensed Consolidated Statements of Changes in Equity for the three months ended March 31, 2019 and 2018

8

 

 

 

 

Notes to Condensed Consolidated Financial Statements

9

 

 

 

 

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

29

 

 

 

 

Item 3.  Quantitative and Qualitative Disclosure about Market Risk

42

 

 

 

 

Item 4.  Controls and Procedures

42

 

 

 

 

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

 

Item 1.  Legal Proceedings

45

 

 

 

 

Item 1A.  Risk Factors

45

 

 

 

 

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

45

 

 

 

 

Item 6.  Exhibits

46

 

 

 

 

 

 

 

SIGNATURES

47

 

 

 

 

2019 Q1 10-Q Report

Stericycle, Inc.  •  2

 


 

Glossary of Defined Terms

Unless the context requires otherwise, “Company”, “Stericycle”, "we," "us" or "our" refers to Stericycle, Inc. on a consolidated basis. We also have used several other terms in this Quarterly Report on Form 10-Q, most of which are explained or defined below:

 

Abbreviation

Description

2018 Form 10-K

Annual report on Form 10-K for the year ended December 31, 2018

Adjusted EBITDA

EBITDA adjusted for certain items discussed in Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

APAC

Asia Pacific

ASC 606

Accounting Standards Codification Topic 606 "Revenues from Contracts with Customers"

ASC 740

Accounting Standards Codification Topic 740 "Income Taxes"

ASC 842

Accounting Standards Codification Topic 842 "Leases"

ASU

Accounting Standards Update

Canada ESPP

Canadian Employee Stock Purchase Plan

COR

Cost of revenues

COSO Framework

Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission

CRS

Communication and Related Services

DOJ

United States' Department of Justice

EMEAA

Europe, Middle East, Africa and Asia

E.U.

European Union

EBITDA

Earnings before interest, tax, depreciation and amortization

EPA

United States' Environmental Protection Agency

EPM

Enterprise Performance Management

ERP

Enterprise Resource Planning

ESPP

Employee Stock Purchase Plan

Exchange Act

Securities and Exchange Act of 1934

Expert Solutions

Recall and return services

FASB

Financial Accounting Standards Board

FCPA

United States' Foreign Corrupt Practices Act

IRS

United States' Internal Revenue Service

PFA

Pre-filing agreement

PMO

Project Management Office

PSU

Performance-based restricted stock unit

RCS

Regulated Waste and Compliance Services

ROU

Right-of-use

RSU

Restricted stock unit

S&P

Standard & Poor's

SEC

United States Securities and Exchange Commission

Series A

Series A Mandatory Convertible Preferred Stock, par value $0.01 per share

SG&A

Selling, general and administrative expenses

SOX

United States Sarbanes-Oxley Act of 2002

SQ

Small quantity

SQ Settlement

Small quantity medical waste customers class action settlement

Tax Act

United States Tax Cuts and Jobs Act of 2017

U.K.

United Kingdom

U.S.

United States of America

U.S. GAAP

United States Generally Accepted Accounting Principles

 

 

 

2019 Q1 10-Q Report

Stericycle, Inc.  •  3

 


 

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

STERICYCLE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) INCOME

(Unaudited)

 

In millions, except per share data

 

 

Three Months Ended March 31,

 

 

2019

 

 

2018

 

Revenues

$

830.1

 

 

$

895.0

 

Cost of revenues

 

533.0

 

 

 

536.5

 

Gross profit

 

297.1

 

 

 

358.5

 

Selling, general and administrative expenses

 

280.4

 

 

 

304.4

 

Goodwill impairment

 

20.9

 

 

 

-

 

(Loss) income from operations

 

(4.2

)

 

 

54.1

 

Interest expense, net

 

(27.6

)

 

 

(25.0

)

Other expense, net

 

(2.2

)

 

 

-

 

(Loss) income before income taxes

 

(34.0

)

 

 

29.1

 

Income tax expense

 

(3.6

)

 

 

(6.6

)

Net (loss) income

 

(37.6

)

 

 

22.5

 

Net income attributable to noncontrolling interests

 

(0.2

)

 

 

-

 

Net (loss) income attributable to Stericycle, Inc.

 

(37.8

)

 

 

22.5

 

Mandatory convertible preferred stock dividend

 

-

 

 

 

(8.8

)

Gain on repurchases of preferred stock

 

-

 

 

 

7.3

 

Net (loss) income attributable to Stericycle, Inc. common shareholders

$

(37.8

)

 

$

21.0

 

(Loss) earnings per common share attributable to Stericycle, Inc. common shareholders:

 

 

 

 

 

 

 

Basic

$

(0.42

)

 

$

0.25

 

Diluted

$

(0.42

)

 

$

0.25

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

Basic

 

90.7

 

 

 

85.5

 

Diluted

 

90.7

 

 

 

85.8

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

 

2019 Q1 10-Q Report

Stericycle, Inc.  •  4

 


 

STERICYCLE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF

COMPREHENSIVE (LOSS) INCOME

(Unaudited)

 

In millions

 

 

Three Months Ended March 31,

 

 

2019

 

 

2018

 

Net (loss) income

$

(37.6

)

 

$

22.5

 

 

 

 

 

 

 

 

 

Other comprehensive income:

 

 

 

 

 

 

 

Currency translation adjustments

 

8.5

 

 

 

16.3

 

Amortization of cash flow hedge into income, net of tax expense ($0.1 and $0.1) for the three months ended March 31, 2019 and 2018, respectively

 

0.2

 

 

 

0.1

 

Total other comprehensive income

 

8.7

 

 

 

16.4

 

 

 

 

 

 

 

 

 

Comprehensive (loss) income

 

(28.9

)

 

 

38.9

 

Less: comprehensive income attributable to noncontrolling interests

 

0.5

 

 

 

0.1

 

Comprehensive (loss) income attributable to Stericycle, Inc. common shareholders

$

(29.4

)

 

$

38.8

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

 

2019 Q1 10-Q Report

Stericycle, Inc.  •  5

 


 

STERICYCLE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

In millions, except per share data

 

 

March 31, 2019

 

 

December 31, 2018

 

ASSETS

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

Cash and cash equivalents

$

48.2

 

 

$

34.3

 

Accounts receivable, less allowance for doubtful accounts of $72.7 in 2019 and $71.9 in 2018

 

600.9

 

 

 

599.6

 

Prepaid expenses

 

87.0

 

 

 

50.0

 

Other current assets

 

65.5

 

 

 

63.4

 

Total Current Assets

 

801.6

 

 

 

747.3

 

Property, plant and equipment, less accumulated depreciation of $709.5 in 2019 and $678.1 in 2018

 

760.0

 

 

 

743.5

 

Operating lease right-of-use assets

 

385.6

 

 

 

-

 

Goodwill

 

3,197.5

 

 

 

3,222.2

 

Intangible assets, less accumulated amortization of $535.9 in 2019 and $499.9 in 2018

 

1,599.7

 

 

 

1,637.7

 

Other assets

 

106.3

 

 

 

104.8

 

Total Assets

$

6,850.7

 

 

$

6,455.5

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

Current portion of long-term debt

$

101.9

 

 

$

104.3

 

Bank overdrafts

 

7.4

 

 

 

14.8

 

Accounts payable

 

210.7

 

 

 

225.8

 

Accrued liabilities

 

331.5

 

 

 

340.8

 

Operating lease liabilities

 

92.8

 

 

 

-

 

Other liabilities

 

41.7

 

 

 

47.5

 

Total Current Liabilities

 

786.0

 

 

 

733.2

 

Long-term debt, net

 

2,702.4

 

 

 

2,663.9

 

Long-term operating lease liabilities

 

297.5

 

 

 

-

 

Deferred income taxes

 

347.7

 

 

 

307.3

 

Long-term taxes payable

 

74.4

 

 

 

83.3

 

Other long-term liabilities

 

72.2

 

 

 

70.7

 

Total Liabilities

 

4,280.2

 

 

 

3,858.4

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

 

Preferred stock (par value $0.01 per share, 1.0 shares authorized), 0.0 issued and outstanding in 2019 and 2018, respectively

 

-

 

 

-

 

Common stock (par value $0.01 per share, 120.0 shares authorized, 90.8 and 90.7 issued and outstanding in 2019 and 2018, respectively)

 

0.9

 

 

 

0.9

 

Additional paid-in capital

 

1,171.2

 

 

 

1,162.6

 

Retained earnings

 

1,751.4

 

 

 

1,789.2

 

Accumulated other comprehensive loss

 

(356.9

)

 

 

(365.3

)

Total Stericycle, Inc.’s Equity

 

2,566.6

 

 

 

2,587.4

 

Noncontrolling interests

 

3.9

 

 

 

9.7

 

Total Equity

 

2,570.5

 

 

 

2,597.1

 

Total Liabilities and Equity

$

6,850.7

 

 

$

6,455.5

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

 

2019 Q1 10-Q Report

Stericycle, Inc.  •  6

 


 

STERICYCLE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

In millions

 

 

Three Months Ended March 31,

 

 

2019

 

 

2018

 

OPERATING ACTIVITIES:

 

 

 

 

 

 

 

Net (loss) income

$

(37.6

)

 

$

22.5

 

Adjustments to reconcile net (loss) income to net cash from operating activities:

 

 

 

 

 

 

 

Depreciation

 

31.8

 

 

 

30.8

 

Intangible amortization

 

37.8

 

 

 

31.9

 

Stock-based compensation expense

 

4.3

 

 

 

7.1

 

Deferred income taxes

 

7.3

 

 

 

(18.3

)

Asset impairment charges and gain on divestiture of business, net

 

18.9

 

 

 

9.8

 

Other, net

 

(0.4

)

 

 

(0.3

)

Changes in operating assets and liabilities, net of the effects of acquisitions and divestitures:

 

 

 

 

 

 

 

Accounts receivable

 

(2.2

)

 

 

(6.8

)

Prepaid expenses

 

(11.7

)

 

 

13.6

 

Accounts payable

 

(1.2

)

 

 

(19.4

)

Accrued liabilities

 

(18.4

)

 

 

31.9

 

Other assets and liabilities

 

7.6

 

 

 

7.6

 

Net cash from operating activities

 

36.2

 

 

 

110.4

 

INVESTING ACTIVITIES:

 

 

 

 

 

 

 

Capital expenditures

 

(66.1

)

 

 

(28.5

)

Payments for acquisitions, net of cash acquired

 

(0.3

)

 

 

(15.9

)

Proceeds from divestiture of business

 

13.6

 

 

 

-

 

Other, net

 

0.5

 

 

 

0.3

 

Net cash from investing activities

 

(52.3

)

 

 

(44.1

)

FINANCING ACTIVITIES:

 

 

 

 

 

 

 

Repayments of long-term debt and other obligations

 

(6.8

)

 

 

(12.2

)

Proceeds from foreign bank debt

 

7.4

 

 

 

1.9

 

Repayment of foreign bank debt

 

(1.9

)

 

 

(2.8

)

Repayment of term loan

 

(11.9

)

 

 

(11.9

)

Proceeds from senior credit facility

 

411.5

 

 

 

303.1

 

Repayment of senior credit facility

 

(359.6

)

 

 

(332.1

)

(Repayments of) proceeds from bank overdrafts, net

 

(6.9

)

 

 

5.5

 

Payments of capital lease obligations

 

(0.8

)

 

 

(1.6

)

Proceeds from issuance of common stock, net of shares withheld for tax

 

0.3

 

 

 

3.7

 

Payments for repurchase of mandatory convertible preferred stock

 

-

 

 

 

(7.4

)

Dividends paid on mandatory convertible preferred stock

 

-

 

 

 

(8.8

)

Net cash from financing activities

 

31.3

 

 

 

(62.6

)

Effect of exchange rate changes on cash and cash equivalents

 

(1.3

)

 

 

3.5

 

Net change in cash and cash equivalents

 

13.9

 

 

 

7.2

 

Cash and cash equivalents at beginning of period

 

34.3

 

 

 

42.2

 

Cash and cash equivalents at end of period

$

48.2

 

 

$

49.4

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL CASH FLOW INFORMATION:

 

 

 

 

 

 

 

Net issuances of obligations for acquisitions

$

0.3

 

 

$

11.2

 

Accrued capital expenditures

$

16.9

 

 

$

5.0

 

Interest paid during the period, net of capitalized interest

$

21.7

 

 

$

16.6

 

Income taxes paid during the period, net of refunds

$

0.5

 

 

$

2.6

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

 

 

2019 Q1 10-Q Report

Stericycle, Inc.  •  7

 


 

STERICYCLE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF

CHANGES IN EQUITY

(Unaudited)

 

In millions

 

 

Stericycle, Inc. Equity

 

 

 

 

 

 

 

 

 

 

Preferred Stock

 

 

Common Stock

 

 

Additional Paid-In Capital

 

 

Retained Earnings

 

 

Accumulated Other Comprehensive Loss

 

 

Noncontrolling Interests

 

 

Total Equity

 

 

Shares

 

Amount

 

 

Shares

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of January 1, 2019

 

0.0

 

$

-

 

 

 

90.7

 

$

0.9

 

 

$

1,162.6

 

 

$

1,789.2

 

 

$

(365.3

)

 

$

9.7

 

 

$

2,597.1

 

Net (loss) income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(37.8

)

 

 

 

 

 

 

0.2

 

 

 

(37.6

)

Currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8.2

 

 

 

0.3

 

 

 

8.5

 

Change in qualifying cash flow hedge, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.2

 

 

 

 

 

 

 

0.2

 

Issuance of common stock for exercise of options, RSU vesting and employee stock purchases, net

 

 

 

 

 

 

 

 

0.1

 

 

-

 

 

 

(2.0

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2.0

)

Stock compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4.3

 

Change in noncontrolling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6.3

 

 

 

 

 

 

 

 

 

 

 

(6.3

)

 

 

-

 

Balance as of March 31, 2019

 

0.0

 

$

-

 

 

 

90.8

 

$

0.9

 

 

$

1,171.2

 

 

$

1,751.4

 

 

$

(356.9

)

 

$

3.9

 

 

$

2,570.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stericycle, Inc. Equity

 

 

 

 

 

 

 

 

 

 

Preferred Stock

 

 

Common Stock

 

 

Additional Paid-In Capital

 

 

Retained Earnings

 

 

Accumulated Other Comprehensive Loss

 

 

Noncontrolling Interests

 

 

Total Equity

 

 

Shares

 

Amount

 

 

Shares

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of January 1, 2018

 

0.7

 

$

-

 

 

 

85.5

 

$

0.9

 

 

$

1,153.2

 

 

$

2,029.5

 

 

$

(287.0

)

 

$

12.0

 

 

$

2,908.6

 

Cumulative effect of new accounting standard, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13.0

 

 

 

 

 

 

 

 

 

 

 

13.0

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

22.5

 

 

 

 

 

 

 

-

 

 

 

22.5

 

Currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

16.2

 

 

 

0.1

 

 

 

16.3

 

Change in qualifying cash flow hedge, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.1

 

 

 

 

 

 

 

0.1

 

Issuance of common stock for exercise of options, RSU vesting and employee stock purchases, net

 

 

 

 

 

 

 

 

0.1

 

 

-

 

 

 

0.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.7

 

Repurchase and cancellation of convertible preferred stock

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

(14.7

)

 

 

7.3

 

 

 

 

 

 

 

 

 

 

 

(7.4

)

Preferred stock dividend

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8.8

)

 

 

 

 

 

 

 

 

 

 

(8.8

)

Stock compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7.1

 

Balance as of March 31, 2018

 

0.7

 

$

-

 

 

 

85.6

 

$

0.9

 

 

$

1,146.3

 

 

$

2,063.5

 

 

$

(270.7

)

 

$

12.1

 

 

$

2,952.1

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.


 

2019 Q1 10-Q Report

Stericycle, Inc.  •  8

 


 

STERICYCLE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(In millions, except per share data and unless otherwise indicated)

 

NOTE 1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Summary of Significant Accounting Policies

Basis of Presentation:  The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of Stericycle, Inc. and its subsidiaries.  All intercompany accounts and transactions have been eliminated in consolidation.  The Company's Condensed Consolidated Financial Statements were prepared in accordance with U.S. GAAP and include the assets, liabilities, revenues and expenses of all wholly-owned subsidiaries and majority-owned subsidiaries over which the Company exercises control.  Outside shareholders' interests in subsidiaries are shown on the Condensed Consolidated Financial Statements as “Noncontrolling interests."

The accompanying unaudited Condensed Consolidated Financial Statements as of March 31, 2019 and for the three months ended March 31, 2019 and 2018 have been prepared pursuant to the rules and regulations of the SEC for interim reporting and, therefore, do not include all information and footnote disclosures normally included in audited financial statements prepared in conformity with U.S. GAAP.  However, in the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary to present fairly the results of operations, financial position and cash flows have been made.  These Condensed Consolidated Financial Statements should be read in conjunction with the consolidated financial statements and notes thereto included in the 2018 Form 10-K.  The results of operations for any interim period are not necessarily indicative of the results of operations to be expected for the full year or any other period.

Use of Estimates: The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.  Some areas where we make estimates include our allowance for doubtful accounts, credit memo reserve, accrued employee health and welfare benefits, environmental liabilities, stock-based compensation expense, income tax liabilities, accrued auto and workers’ compensation insurance claims, intangible asset valuations and long-lived asset and goodwill impairment assessments.  Such estimates are based on historical trends and on various other assumptions that are believed to be reasonable under the circumstances.  Actual results could differ from our estimates.

Leases (Accounted for as of January 1, 2019 and thereafter under ASC 842): Operating leases are included in Operating lease ROU assets, Operating lease liabilities and Long-term operating lease liabilities on our Condensed Consolidated Balance Sheets. Finance leases are included in Property, plant and equipment, Current portion of long-term debt, and Long-term debt on our Condensed Consolidated Balance Sheets.

Operating lease ROU assets, operating lease liabilities and Long-term operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at

 

2019 Q1 10-Q Report

Stericycle, Inc.  •  9

 


 

commencement date. Nearly all of our lease contracts do not provide a readily determinable implicit rate. For these contracts, the Company uses an estimated incremental borrowing rate, which is based on information available at the lease commencement. The Company used incremental borrowing rates as of January 1, 2019 for operating leases that commenced prior to that date.

Our leases generally do not require material variable lease payments and generally do not contain options to purchase the leased property, any material residual value guarantees, or material restrictive covenants. At commencement, the operating lease ROU asset is equal to the lease liability and is adjusted for lease incentives and initial direct costs incurred. We review all options for the Company to extend, terminate, or purchase its right of use assets at the commencement of the lease and on an ongoing basis and account for these options when they are reasonably certain of being exercised. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

We have lease agreements with lease and non-lease components, including payments for common area maintenance and vehicle maintenance costs, which are accounted for separately for each class of underlying assets.

In addition, the Company applies the short-term lease recognition exemption for leases with terms at commencement of not greater than 12 months.

Adoption of New Accounting Standards:

Leases

In February 2016, the FASB issued ASC 842. The amended guidance, which was effective for the Company on January 1, 2019, requires the recognition of lease assets and lease liabilities on the balance sheet for those leases with terms in excess of 12 months and previously classified as operating leases.  The Company elected the optional transition method which allows entities to continue to apply historical accounting guidance in the comparative periods presented.

The Company elected to apply a package of practical expedients which allowed us to not reassess at transition: (i) whether any expired or existing contracts are or contain leases; (ii) lease classification for any expired or existing leases and (iii) whether initial direct costs for any expired or existing leases qualify for capitalization under the amended guidance.

The standard had a material impact on our Consolidated Balance Sheets, but did not have an impact on our Consolidated Statements of (Loss) Income. The most significant impact was the recognition of ROU assets and lease liabilities for operating leases, while our accounting for finance leases remained substantially unchanged (see Note 5 – Leases).

Derivatives and Hedging

In August 2017, the FASB issued ASU No. 2017-12, “Derivatives and Hedging” (Topic 815): Targeted Improvements to Accounting for Hedging Activities (“ASU 2017-12”).  ASU 2017-12 amends the hedge accounting recognition and presentation requirements with the objective of improving the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements and enhance the transparency and understandability of hedge transactions.  In addition, ASU 2017-12 makes improvements to simplify the application of the hedge accounting guidance.  ASU 2017-12 was effective for us on January 1, 2019, and the adoption did not have a material impact on our Consolidated Financial Statements.

 

2019 Q1 10-Q Report

Stericycle, Inc.  •  10

 


 

Stranded Tax Effects

In February 2018, the FASB issued ASU 2018-02, “Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” (“ASU 2018-02”), which allows for stranded tax effects in accumulated other comprehensive income resulting from the Tax Act to be reclassified to retained earnings.  ASU 2018-02 was effective for us on January 1, 2019.  The adoption of ASU 2018-02 did not have a material impact on our Consolidated Financial Statements.

Stock Compensation

In June 2018, the FASB issued ASU 2018-07 “Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting” (“ASU 2018-07”). ASU 2018-07 extends the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. ASU 2018-07 was effective for us on January 1, 2019. The adoption of ASU 2018-07 did not have a material impact on our Consolidated Financial Statements.

Changes in Stockholders Equity and Noncontrolling Interest

In August 2018, the SEC issued the final rule on Regulation S-X, Rule 3-04 (“Rule 3-04”) requiring entities to disclose changes in stockholders’ equity in the form of a reconciliation for the current and comparative year-to-date interim periods, with subtotals for each interim period. The Company adopted Rule 3-04 in the first quarter of fiscal 2019.

Accounting Standards Issued But Not Yet Adopted

Financial Instrument Credit Losses

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses” (“ASU 2016-13”) associated with the measurement of credit losses on financial instruments.  ASU 2016-13 replaces the current incurred loss impairment methodology of recognizing credit losses when a loss is probable, with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to assess credit loss estimates.  The amended guidance is effective for us on January 1, 2020.  We are evaluating the impact of adopting ASU 2016-13 on our Consolidated Financial Statements.

Implementation Costs Incurred in a Cloud Computing Arrangement

In August 2018, the FASB issued ASU 2018-15, “Goodwill and Other Intangibles- Internal Use Software – Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract” (“ASU 2018-15”).  ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs for internal-use software.  The accounting for any hosting contract is unchanged. ASU 2018-15 is effective on January 1, 2020 with early adoption permitted, including adoption in any interim period.  We are evaluating the impact of adopting ASU 2018-15 on our Consolidated Financial Statements.

 

 

2019 Q1 10-Q Report

Stericycle, Inc.  •  11

 


 

NOTE 2 – REVENUES FROM CONTRACTS WITH CUSTOMERS

Disaggregation of Revenues

The following table presents our revenues disaggregated by service and primary geographical regions, and includes a reconciliation of disaggregated revenue to revenue reported by our reportable segments, Domestic and Canada RCS and International RCS:

 

In millions

 

 

Three Months Ended March 31, 2019

 

Reportable Segment

Domestic and Canada RCS

 

 

International RCS

 

 

All Other

 

 

 

 

 

Revenues by Service:

United States

 

Canada

 

 

Europe

 

Others

 

 

United States

 

 

Total

 

Medical Waste and Compliance Solutions

$

283.1

 

$

10.1

 

 

$

62.1

 

$

42.2

 

 

$

-

 

 

$

397.5

 

Secure Information Destruction Services

 

182.1