News Column

CLEAN HARBORS INC - 10-Q - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

August 7, 2014

Forward-Looking Statements In addition to historical information, this Quarterly Report on Form 10-Q contains forward-looking statements, which are generally identifiable by use of the words "believes," "expects," "intends," "anticipates," "plans to," "estimates," "projects," or similar expressions. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in these forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed under Item 1A, "Risk Factors," in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 3, 2014, under Item 1A, "Risk Factors," included in Part II-Other Information in this report, and in other documents we file from time to time with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's opinions only as of the date hereof. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements. Highlights Total revenues in the three and six months ended June 30, 2014 was $858.5 million and $1.71 billion, respectively, compared with $860.5 million and $1.72 billion in the three and six months ended June 30, 2013, respectively. These decreases in total revenues were primarily attributable to the effects of foreign currency translation which reduced revenue by approximately 2% in the three and six months ended June 30, 2014 from the comparable periods in 2013 partially offset by incremental revenues generated from the operations acquired as part of the September 2013 acquisition of Evergreen Oil, Inc. ("Evergreen"). Changes in segment revenues are more fully described in our Segment Performance section below under the heading "Direct Revenues." Income from operations in the three and six months ended June 30, 2014 was $67.1 million and $97.0 million, respectively, compared with $53.2 million and $88.1 million in the three and six months ended June 30, 2013, respectively. Increases in income from operations were primarily due to cost savings generated from corporate initiatives implemented in 2014 across several expense categories. Adjusted EBITDA for the three months ended June 30, 2014 increased 9.9% to $135.8 million from $123.6 million in the three months ended June 30, 2013 and increased 1.3% to $237.8 million in the six months ended June 30, 2014 from $234.8 million in the six months ended June 30, 2013. Additional information, including a reconciliation of Adjusted EBITDA to Net Income, appears below under the heading "Adjusted EBITDA." Acquisitions On September 13, 2013, we acquired 100% of the outstanding common shares of Evergreen for a final purchase price of $56.3 million in cash, net of cash acquired. Evergreen, headquartered in Irvine, California, specializes in the recovery and re-refining of used oil. Evergreen owns and operates one of the only oil re-refining operations in the western United States and also offers other ancillary environmental services, including parts cleaning and containerized waste services, vacuum services and hazardous waste management services. The acquisition of Evergreen enables us to further penetrate the small quantity waste generator market and further expand its oil re-refining, oil recycling and waste treatment capabilities. Financial information and results of Evergreen have been recorded in our consolidated financial statements since acquisition and are primarily included in the Oil Re-refining and Recycling segment. On May 30, 2014, the Company acquired certain assets of a privately owned U.S. company which provides carbon treatment systems and rental remediation equipment. The purchase price for the acquisition was $6.1 million and is subject to customary post-closing purchase price adjustments based upon finalized working capital amounts. The acquired company has been integrated into the Technical Services segment. Environmental Liabilities (in thousands) June 30, 2014 December 31, 2013 $ Change % Change Closure and post-closure liabilities $ 49,882 $ 47,085 $ 2,797 5.9 % Remedial liabilities 167,827



172,498 (4,671 ) (2.7 )% Total environmental liabilities $ 217,709 $ 219,583 $ (1,874 ) (0.9 )%

Total environmental liabilities as of June 30, 2014 were $217.7 million, a decrease of 0.9%, or $1.9 million, compared to December 31, 2013 primarily due to expenditures and changes in estimates recorded to the statement of income partially offset by accretion. 26



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We anticipate our environmental liabilities, substantially all of which we assumed in connection with our acquisitions, will be payable over many years and that cash flow from operations will generally be sufficient to fund the payment of such liabilities when required. However, events not anticipated (such as future changes in environmental laws and regulations) could require that such payments be made earlier or in greater amounts than currently anticipated, which could adversely affect our results of operations, cash flow and financial condition. In the six months ended June 30, 2014, the net reduction in our environmental liabilities from changes in estimates recorded as a benefit within the statement of income was $1.4 million and primarily related to estimated cost adjustments for remediation across various sites. Segment data During the second quarter of 2014, we made changes to the manner in which we manage our business, make operating decisions and assess performance. These changes included the reassignment of certain departments among our operating segments in line with management reporting changes as well as the identification of Lodging Services as an additional segment. Under the new structure, our operations are managed in six reportable segments: Technical Services, Industrial and Field Services, Oil Re-refining and Recycling, SK Environmental Services, Lodging Services and Oil and Gas Field Services. The following discussion and related prior year segment information has been recast to conform to the current year presentation. Performance of our segments is evaluated on several factors of which the primary financial measure is Adjusted EBITDA. The following tables set forth certain operating data associated with our results of operations and summarize Adjusted EBITDA contribution by reportable segment for the three and six months ended June 30, 2014 and 2013 (in thousands). 27



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Table of Contents Summary of Operations (in thousands) For the Three Months Ended For the Six Months Ended $ % $ % 2014 2013 Change Change 2014 2013 Change Change Third Party Revenues(1): Technical Services $ 256,798$ 256,262$ 536



0.2% $ 493,579$ 490,201$ 3,378 0.7% Industrial and Field Services 185,154 199,225 (14,071 ) (7.1) 347,114 368,846 (21,732 ) (5.9) Oil Re-refining and Recycling 144,016 123,008 21,008 17.1 272,937 263,092 9,845 3.7 SK Environmental Services 171,324 166,523 4,801 2.9

332,712 326,325 6,387 2.0 Lodging Services 42,872 46,685 (3,813 ) (8.2) 99,566 100,015 (449 ) (0.4) Oil and Gas Field Services 58,177 68,444 (10,267 ) (15.0) 158,949 183,607 (24,658 ) (13.4) Corporate Items(2) 139 381 (242 ) (63.5) 290 (9,395 ) 9,685 103.1 Total $ 858,480$ 860,528$ (2,048 ) (0.2)% $ 1,705,147$ 1,722,691$ (17,544 ) (1.0)% Direct Revenues(1): Technical Services $ 297,658$ 283,390$ 14,268



5.0% $ 572,272$ 542,600$ 29,672 5.5% Industrial and Field Services 174,143 186,417 (12,274 ) (6.6) 324,500 342,300 (17,800 ) (5.2) Oil Re-refining and Recycling 89,150 74,747 14,403 19.3 169,955 164,805 5,150 3.1 SK Environmental Services 194,631 198,730 (4,099 ) (2.1) 375,918 393,486 (17,568 ) (4.5) Lodging Services

43,797 47,993 (4,196 ) (8.7) 100,886 102,041 (1,155 ) (1.1) Oil and Gas Field Services 59,774 70,133 (10,359 ) (14.8) 162,647 189,040 (26,393 ) (14.0) Corporate Items(2) (673 ) (882 ) 209 23.7 (1,031 ) (11,581 ) 10,550 91.1 Total 858,480 860,528 (2,048 ) (0.2) 1,705,147 1,722,691 (17,544 ) (1.0) Cost of Revenues(3): Technical Services 191,875 192,072 (197 )



(0.1) 381,650 370,765 10,885 2.9 Industrial and Field Services 129,603 137,416 (7,813 ) (5.7) 249,167 264,594 (15,427 ) (5.8) Oil Re-refining and Recycling 69,718 57,980 11,738 20.2 133,827 126,325 7,502 5.9 SK Environmental Services 137,199 137,801 (602 ) (0.4) 267,472 276,952 (9,480 ) (3.4) Lodging Services

26,630 27,471 (841 ) (3.1) 64,563 57,852 6,711 11.6 Oil and Gas Field Services 51,286 59,609 (8,323 ) (14.0) 130,435 142,789 (12,354 ) (8.7) Corporate Items(2) 639 1,977 (1,338 ) (67.7) 5,555 11,073 (5,518 ) (49.8) Total 606,950 614,326 (7,376 ) (1.2) 1,232,669 1,250,350 (17,681 ) (1.4) Selling, General & Administrative Expenses: Technical Services 21,486 21,928 (442 )



(2.0) 44,148 42,400 1,748 4.1 Industrial and Field Services 13,824 14,241 (417 ) (2.9) 28,245 29,134 (889 ) (3.1) Oil Re-refining and Recycling 4,236 4,015 221 5.5

8,349 10,382 (2,033 ) (19.6) SK Environmental Services 26,125 26,853 (728 ) (2.7) 54,314 55,452 (1,138 ) (2.1) Lodging Services 1,680 1,263 417 33.0 3,099 2,629 470 17.9 Oil and Gas Field Services 6,676 6,380 296 4.6

14,069 14,323 (254 ) (1.8) Corporate Items 41,704 47,932 (6,228 ) (13.0) 82,469 96,762 (14,293 ) (14.8) Total 115,731 122,612 (6,881 ) (5.6) 234,693 251,082 (16,389 ) (6.5) Adjusted EBITDA: Technical Services 84,297 69,390 14,907



21.5 146,474 129,435 17,039 13.2 Industrial and Field Services 30,716 34,760 (4,044 ) (11.6) 47,088 48,572 (1,484 ) (3.1) Oil Re-refining and Recycling 15,196 12,752 2,444 19.2 27,779 28,098 (319 ) (1.1) SK Environmental Services 31,307 34,076 (2,769 ) (8.1) 54,132 61,082 (6,950 ) (11.4) Lodging Services

15,487 19,259 (3,772 ) (19.6) 33,224 41,560 (8,336 ) (20.1) Oil and Gas Field Services 1,812 4,144 (2,332 ) (56.3) 18,143 31,928 (13,785 ) (43.2) Corporate Items (43,016 ) (50,791 ) 7,775 (15.3) (89,055 ) (105,857 ) 16,802 (15.9) Total $ 135,799$ 123,590$ 12,209 9.9% $ 237,785$ 234,818$ 2,967 1.3% ______________________



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

segment. Direct revenue is revenue allocated to the segment performing the

provided service. 2. Corporate Items revenues and costs of revenues for the six months ended June 30, 2013 includes purchase price measurement period adjustments. 3. Cost of revenue is shown exclusive of items shown separately on the statements of income which consist of (i) accretion of environmental liabilities and (ii) depreciation and amortization. 28



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Direct Revenues There are many factors which have impacted, and continue to impact, our revenues. These factors include, but are not limited to: foreign currency translation, acquisitions, the general conditions of the oil and gas industries, competitive industry pricing, the effects of fuel prices on our fuel recovery fees, and the level of emergency response projects. Technical Services revenues increased $14.3 million and $29.7 million in the three and six months ended June 30, 2014 from the comparable periods in 2013 primarily due to growth in our treatment, storage and disposal network as a result of greater drum volumes and overall utilization. The utilization rate at our incinerators was 95.0% and 91.0% for the three and six months ended June 30, 2014, respectively, compared with 92.3% and 88.9% in the comparable period of 2013, and our landfill volumes increased by approximately 5.1% in six months ended June 30, 2014 from the comparable period in 2013. Industrial and Field Services revenues decreased $12.3 million and $17.8 million in the three and six months ended June 30, 2014 from the comparable periods in 2013. The decrease was primarily due to decreased activity in the oil sands region, cyclicality of scheduled plant turnarounds and the effects of foreign currency translation. Oil Re-refining and Recycling revenues increased $14.4 million, in the three months ended June 30, 2014 from the comparable period in 2013. The increase was primarily due to increased volumes resulting from our acquisition of Evergreen on September 13, 2013. Oil Re-refining and Recycling revenues increased $5.2 million, in the six months ended June 30, 2014 from the comparable period in 2013 also primarily due to increased volumes resulting from of our acquisition of Evergreen partially offset by lower sales mix between base oils and higher priced blended oils. In addition, revenues were negatively impacted as compared to the three and six months ended June 30, 2013 by the effects of foreign currency translation. SK Environmental Services revenues decreased $4.1 million and $17.6 million in the three and six months ended June 30, 2014 from the comparable periods in 2013 primarily due to system integration changes which occurred in May of 2013 and changed the manner by which waste is tracked across the Company's disposal network and lower refined fuel oil sales period over period. Lodging Services revenues decreased $4.2 million and $1.2 million in the three and six months ended June 30, 2014 from the comparable periods in 2013 primarily due to lower occupancy at our lodging and camp facilities due to an overall slowdown in the levels of activity in the Oil Sands region of Canada and the effects of foreign currency translation. Oil and Gas Field Services revenues decreased $10.4 million and $26.4 million in the three and six months ended June 30, 2014 from the comparable periods in 2013 primarily due to project delays in exploration, pricing pressure in North America and the effects of foreign currency translation. Corporate Items revenues during the six months ended June 30, 2013 included the impact of purchase accounting adjustments to deferred revenue balances that did not reoccur in 2014. Cost of Revenues We believe that our ability to manage operating costs is important to our ability to remain price competitive. We continue to upgrade the quality and efficiency of our waste treatment services through the development of new technology and continued modifications at our facilities, and implementation of strategic sourcing initiatives. Technical Services cost of revenues was flat in the three months ended June 30, 2014 from the comparable period in 2013. Technical Services cost of revenues increased $10.9 million, in the six months ended June 30, 2014 from the comparable period in 2013 primarily due to increases in materials and supplies, outside transportation and utilities. Profit margins have improved due to overall mix of waste handled and greater operating efficiencies. Industrial and Field Services cost of revenues decreased $7.8 million and $15.4 million in the three and six months ended June 30, 2014 from the comparable periods in 2013 primarily due to decreased revenues in both periods. Oil Re-refining and Recycling cost of revenues increased $11.7 million and $7.5 million in the three and six months ended June 30, 2014 from the comparable periods in 2013 primarily due to the cost of the incremental revenue from our acquisition of Evergreen on September 13, 2013. SK Environmental Services cost of revenues decreased $0.6 million and $9.5 million in the three and six months ended June 30, 2014 from the comparable periods in 2013 primarily due to system changes which occurred in May of 2013 and impacted how intercompany disposal charges are recorded between the SK Environmental Services segment and the Technical Services segment and lower refined fuel oil sales period over period. 29



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Lodging Services cost of revenues decreased $0.8 million, in the three months ended June 30, 2014 from the comparable period in 2013 primarily due to lower revenue. Lodging cost of revenues increased $6.7 million, in the six months ended June 30, 2014 from the comparable period in 2013 primarily due to increases in materials and supplies, subcontractors, equipment repairs and utilities associated with increased capacity partially offset by a decrease in catering. Oil and Gas Field Services cost of revenues decreased $8.3 million and $12.4 million in the three and six months ended June 30, 2014 from the comparable periods in 2013 primarily due to salaries, internal maintenance expense and equipment repairs in connection with overall lower business activity and revenues. Selling, General and Administrative Expenses Technical Services selling, general and administrative expenses remained approximately flat and increased $1.7 million in the three and six months ended June 30, 2014 from the comparable periods in 2013 primarily due to an increase in variable compensation partially offset by cost saving initiatives. Industrial and Field Services selling, general and administrative expenses decreased $0.4 million and $0.9 million in the three and six months ended June 30, 2014 from the comparable periods in 2013 primarily due to cost saving initiatives Oil Re-refining and Recycling selling, general and administrative expenses remained flat in the three months ended June 30, 2014. Oil Re-refining and Recycling selling, general and administrative expenses decreased $2.0 million, in the six months ended June 30, 2014 from the comparable period in 2013 primarily due to cost saving initiatives. SK Environmental Services selling, general and administrative expenses decreased $0.7 million and $1.1 million in the three and six months ended June 30, 2014 from the comparable periods in 2013 primarily due to cost saving initiatives partially offset by increases in variable compensation. Lodging Services selling, general and administrative expenses increased $0.4 million and $0.5 million in the three and six months ended June 30, 2014 from the comparable periods in 2013 primarily due to increases in salaries and professional fees associated with increased capacity in both comparable periods. Oil and Gas Field Services selling, general and administrative expenses remained approximately flat in the three and six months ended June 30, 2014 from the comparable periods in 2013 primarily due to increases in compensation offset by cost saving initiatives. Corporate Items selling, general and administrative expenses decreased $6.2 million and $14.3 million for the three and six months ended June 30, 2014, as compared to the same periods in 2013 primarily due to cost saving initiatives and acquisition related costs that did not reoccur in the six months ended 2014. Earnings Before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") Management considers Adjusted EBITDA to be a measurement of performance which provides useful information to both management and investors. Adjusted EBITDA should not be considered an alternative to net income or other measurements under generally accepted accounting principles ("GAAP"). Adjusted EBITDA is not calculated identically by all companies, therefore our measurements of Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies. We use Adjusted EBITDA to enhance our understanding of our operating performance, which represents our views concerning our performance in the ordinary, ongoing and customary course of our operations. We historically have found it helpful, and believe that investors have found it helpful, to consider an operating measure that excludes certain expenses relating to transactions not reflective of our core operations. The information about our operating performance provided by this financial measure is used by our management for a variety of purposes. We regularly communicate Adjusted EBITDA results to our lenders and to our board of directors and discuss with the board our interpretation of such results. We also compare our Adjusted EBITDA performance against internal targets as a key factor in determining cash bonus compensation for executives and other employees, largely because we believe that this measure is indicative of the how the fundamental business is performing and is being managed. We also provide information relating to our Adjusted EBITDA so that analysts, investors and other interested persons have the same data that we use to assess our core operating performance. We believe that Adjusted EBITDA should be viewed only as a supplement to the GAAP financial information. We also believe, however, that providing this information in addition to, and together with, GAAP financial information permits the foregoing persons to obtain a better understanding of our core operating performance and to evaluate the efficacy of the methodology and information used by management to evaluate and measure such performance on a standalone and a comparative basis. 30



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The following is a reconciliation of net income to Adjusted EBITDA (in thousands): For the Three Months Ended For the Six Months Ended June 30, June 30, 2014 2013 2014 2013 Net income $ 28,672$ 22,902$ 37,632$ 33,404 Accretion of environmental liabilities 2,609 2,879 5,333 5,714 Depreciation and amortization 66,075 67,468 135,431 127,474 Other expense (income) 655 (1,655 ) (3,523 ) (2,180 ) Interest expense, net 19,382 19,585 38,936 39,458 Pre-tax, non-cash acquisition accounting inventory adjustment - - - 13,559 Provision for income taxes 18,406 12,411 23,976 17,389 Adjusted EBITDA $ 135,799$ 123,590$ 237,785$ 234,818



Depreciation and Amortization

For the Three Months Ended For the Six Months Ended June 30, 2014 over 2013 June 30, 2014 over 2013 2014 2013 $ Change % Change 2014 2013 $ Change % Change Depreciation of fixed assets $ 54,280$ 54,337$ (57 ) (0.1 )%



$ 110,938$ 102,905$ 8,033 7.8 % Landfill and other amortization

11,795 13,131 (1,336 ) (10.2 )% 24,493 24,569 (76 ) (0.3 )% Total depreciation and amortization $ 66,075$ 67,468$ (1,393 ) (2.1 )%



$ 135,431$ 127,474$ 7,957 6.2 %

Depreciation and amortization decreased 2.1%, or $1.4 million, in the three months ended June 30, 2014 from the comparable period in 2013 primarily due to decreased landfill amortization. Landfill and other amortization decreased primarily due to the decrease in volumes at our landfill facilities offset by additional amortization resulting from an increase in other intangibles balances from recent acquisitions. Depreciation and amortization increased 6.2%, or $8.0 million, in the six months ended June 30, 2014 from the comparable period in 2013. Depreciation of fixed assets increased primarily due to acquisitions and other increased capital expenditures in recent periods. Landfill and other amortization decreased primarily due to the decrease in volumes at our landfill facilities offset by additional amortization resulting from an increase in other intangibles balances from recent acquisitions. Other (Expense) Income For the Three Months Ended For the Six Months Ended June 30, 2014 over 2013 June 30, 2014 over 2013 2014 2013 $ Change % Change



2014 2013 $ Change % Change Other (expense) income $ (655 )$ 1,655$ (2,310 ) (139.6 )% $ 3,523$ 2,180$ 1,343 61.6 %

Other (expense) income decreased $2.3 million in the three months ended June 30, 2014 from the comparable period in 2013 primarily due to losses on fixed asset disposals recorded in the second quarter of 2014 versus gains recorded in 2013. Other (expense) income increased $1.3 million in the six months ended June 30, 2014 from the comparable period in 2013 primarily due to gains recognized on the sale available-for-sale securities which occurred in 2014. 31



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Provision for Income Taxes

For the Three Months Ended For the Six Months Ended June 30, 2014 over 2013 June 30, 2014 over 2013 2014 2013 $ Change % Change



2014 2013 $ Change % Change Provision for income taxes $ 18,406$ 12,411$ 5,995 48.3 % $ 23,976$ 17,389$ 6,587 37.9 % Effective income tax rate 39.1 % 35.1 %

38.9 % 34.2 %

Income tax expense for the three months ended June 30, 2014 increased $6.0 million as compared to the comparable period in 2013. The increase is a result of a combination of increased income, the recording of an audit settlement and an increase in the effective rate driven by a greater percentage of taxable earnings being generated in the U.S. versus Canada as compared to 2013. Income tax expense for the six months ended June 30, 2014 increased $6.6 million as compared to the comparable period in 2013. The increase is a result of a combination of increased income, the recording of an audit settlement and an increase in the effective rate driven by a greater percentage of taxable earnings being generated in the U.S. versus Canada as compared to 2013 as well as the release of an unrecognized tax benefit recorded in 2013. 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. At June 30, 2014 and December 31, 2013, we had a remaining valuation allowance of $28.6 million and $29.7 million, respectively. The allowance as of June 30, 2014 consisted of $13.4 million of foreign tax credits, $5.9 million of state net operating loss carryforwards, $7.5 million of foreign net operating loss carryforwards and $1.8 million for the deferred tax assets of a Canadian subsidiary. The allowance as of December 31, 2013 consisted of $13.4 million of foreign tax credits, $7.0 million of state net operating loss carryforwards, $7.5 million of foreign net operating loss carryforwards and $1.8 million for the deferred tax assets of a Canadian subsidiary. Liquidity and Capital Resources For the Six Months Ended (in thousands) 2014 2013



Net cash from operating activities $ 114,944$ 137,612 Net cash used in investing activities (131,294 ) (141,441 ) Net cash from financing activities (14,892 ) 40,019

Net cash from operating activities Net cash from operating activities for the six months ended June 30, 2014 was $114.9 million, a decrease of 16.5%, or $22.7 million, compared with net cash from operating activities for the comparable period in 2013. The change was primarily the result of a net increase in working capital driven by the payment of liabilities existing at the beginning of the period. Net cash used in investing activities Net cash used in investing activities for six months ended June 30, 2014 was $131.3 million, a decrease of 7.2% compared with $141.4 million of cash used in investing activities for the comparable period in 2013. The change was primarily the result of decreases in capital expenditures and proceeds received from the sale of marketable securities offset by cash paid for an acquisition. Net cash from financing activities Net cash from financing activities for the six months ended June 30, 2014 was an outflow of $14.9 million, compared to net inflows of cash from financing activities of $40.0 million for the comparable period in 2013. The change in net cash from financing activities during the six months ended June 30, 2014 was primarily due to a decrease in uncashed checks as of June 30, 2014 combined with repurchases of common stock made in the first six months of 2014 and repayment of long term obligations. Working Capital We intend to use our existing cash and cash equivalents and cash flows from operations primarily to provide for our working capital needs and to fund capital expenditures and potential future acquisitions. We anticipate that our operating cash flow will provide the necessary funds on both a short- and long-term basis to meet operating cash requirements. At June 30, 2014, cash and cash equivalents totaled $278.6 million, compared to $310.1 million at December 31, 2013. At June 30, 2014, cash and cash equivalents held by foreign subsidiaries totaled $83.8 million and were readily convertible into other 32



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foreign currencies including U.S. dollars. At June 30, 2014, the cash and cash equivalent balances for our U.S. operations were $194.8 million. Our U.S. operations had net operating cash from operations of $51.9 million for the six months ended June 30, 2014. Additionally, we have available a $400.0 million revolving credit facility of which $287.8 million was available to borrow at June 30, 2014. Based on the above and on our current plans, we believe that our U.S. operations have adequate financial resources to satisfy their liquidity needs without being required to repatriate earnings from foreign subsidiaries. Accordingly, although repatriation to the U.S. of foreign earnings would generally be subject to U.S. income taxation, net of any available foreign tax credits, we have not recorded any deferred tax liability related to such repatriation since we intend to permanently reinvest foreign earnings outside the U.S. We assess our liquidity in terms of our ability to generate cash to fund our operating, investing, and financing activities. Our primary ongoing cash requirements will be to fund operations, capital expenditures, interest payments and investments in line with our business strategy. We believe our future operating cash flows will be sufficient to meet our future operating and investing cash needs as well as any cash needs relating to the stock repurchase program. Furthermore, the existing cash balances and the availability of additional borrowings under our revolving credit facility provide potential sources of liquidity should they be required. Common Stock Repurchase Program On February 25, 2014, our Board of Directors authorized the repurchase of up to $150 million of our common stock. We intend to fund the repurchases through available cash resources. The repurchase program authorizes us to purchase our common stock on the open market from time to time. The share repurchases will be made in a manner that complies with applicable U.S. securities laws. The number of shares purchased and the timing of the purchases will depend on a number of factors, including share price, cash required for future business plans, trading volume and other conditions. We have no obligation to repurchase stock under this program and may suspend or terminate the repurchase program at any time. As of June 30, 2014, we had repurchased and retired a total of approximately 273,000 shares of our common stock for approximately $16.2 million under this program. As of June 30, 2014, an additional $133.8 million remains available for repurchase of shares under the current authorized program. Financing Arrangements The financing arrangements and principal terms of our $800.0 million principal amount of 5.25% senior unsecured notes due 2020 and $595.0 million principal amount of 5.125% senior unsecured notes due 2021 which were outstanding at June 30, 2014, and our $400.0 million revolving credit facility, are discussed further in Note 10, "Financing Arrangements," to our consolidated financial statements included in Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2013. As of June 30, 2014, we were in compliance with the covenants of all of our debt agreements, and we believe it is reasonably likely that we will continue to meet such covenants. Capital Expenditures We anticipate that 2014 capital spending will be approximately $250 million, which includes our incinerator project in El Dorado. However, changes in environmental regulations could require us to make significant capital expenditures for our facilities and adversely affect our results of operations and cash flow. Critical Accounting Policies and Estimates Other than described below there were no material changes in the first six months of 2014 to the information provided under the heading "Critical Accounting Policies and Estimates" included in our Annual Report on Form 10-K for the year ended December 31, 2013. Goodwill. Goodwill is not amortized but is reviewed for impairment annually as of December 31, or when events or changes in the business environment would more likely than not reduce the fair value of a reporting unit below its carrying value. If the fair value is less than the carrying amount, a more detailed analysis is performed to determine if goodwill is impaired. The loss, if any, is measured as the excess of the carrying value of the goodwill over the implied value of the goodwill. We determine our reporting units by identifying the components of each operating segment, and then aggregate components having similar economic characteristics based on quantitative and / or qualitative factors. At June 30, 2014 and December 31, 2013, we had seven reporting units. The Technical Services, Industrial Services, Field Services, Oil Re-refining and Recycling, SK Environmental Services, Lodging Services and Oil and Gas Field Services operating segments each constitute a reporting unit. We conducted our annual impairment test of goodwill for all of our reporting units as of December 31, 2013 and determined that no adjustment to the carrying value of goodwill for any reporting unit was necessary because the fair values of the reporting units exceeded their respective carrying values. 33



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The fair value of the Oil Re-refining and Recycling reporting unit exceeded the carrying value by less than 10% at December 31, 2013. During the first six months of fiscal 2014 the reporting unit has experienced lower than anticipated financial results primarily due to lower sales mix between base oils and higher priced blended oils as well as higher utilities and shutdown related costs. The lower sales prices reflected general economic conditions in the oil industry during the period. The financial performance of this reporting unit, which had a goodwill balance of approximately $174.7 million at June 30, 2014, is affected by fluctuations in oil prices, overall market supply of refined oil and sales mix. In the future, if market factors were to lead to significant declines in the reporting units overall pricing, impairments could arise. The fair value of the Oil and Gas Field Services reporting unit exceeded its carrying value by more than 10% at December 31, 2013. The financial performance of this reporting unit, which had a goodwill balance of approximately $36.4 million at June 30, 2014, was affected in the first six months ended June 30, 2014 by pricing pressure and lower levels of overall activity in the markets and regions that the business serves. The Oil and Gas Field Services reporting unit is seasonal with the second quarter of the fiscal year historically being the period with the lowest earnings levels. Significant judgments are inherent in the annual impairment tests performed and include assumptions about the amount and timing of expected future cash flows, growth rates, and the determination of appropriate discount rates. We believe that the assumptions used in our impairment analysis are reasonable, but variations in any of the assumptions may result in different calculations of fair values that could result in a material impairment charge. The annual impairment test performed during the year ended December 31, 2013 utilized future annual budgeted amounts and discount rate assumptions based on an assessment of our weighted average cost of capital as well as other significant assumptions believed to be reasonable at that time. During the interim periods of fiscal year 2014 and with respect to the Oil Re-Refining and Recycling and Oil and Gas Field Services reporting units, we considered whether (i) the lower than anticipated results (ii) general economic and industry conditions, and (iii) reporting unit specific factors would more likely than not reduce the estimated fair values of our reporting units below their carrying values. We have not performed an interim test for impairment of goodwill for any of our reporting units as it does not believe the factors impacting the performance of the reporting units through June 30, 2014 would more likely than not reduce the fair value below carrying value. The performance of the Oil Re-Refining and Recycling and Oil and Gas Field Services reporting units will continue to be monitored. If these reporting units do not achieve the financial performance that the Company expects, it is possible that a goodwill impairment charge may result. There can be no assurance that future events will not result in an impairment of goodwill ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET



RISK

There were no material changes in the first six months of 2014 to the information provided under Item 7A. "Quantitative and Qualitative Disclosures about Market Risk" in the Company's Annual Report on Form 10-K for the year ended December 31, 2013.


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