UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

x

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

For the quarterly period ended March 31, 2016 or

o

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)

 

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  x    NO  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES  x    NO  o

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

 

Large accelerated filer

x

 

Accelerated filer

o

Non-accelerated filer

o

 

Smaller reporting company

o

 

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

On April 29, 2016 there were 84,912,603 shares of the Registrant’s Common Stock outstanding.

 

 

 

 


Stericycle, Inc.

Table of Contents

 

 

Page No.

PART I.  Financial Information

 

 

 

Item 1.  Financial Statements (Unaudited)

 

Condensed Consolidated Balance Sheets as of March 31, 2016 and December 31, 2015

1

 

 

Condensed Consolidated Statements of Income for the three months ended March 31, 2016 and 2015

2

 

 

Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2016 and 2015

3

 

 

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2016 and 2015

4

 

 

Condensed Consolidated Statements of Changes in Equity for the three months ended March 31, 2016 and year ended December 31, 2015

5

 

 

Notes to Condensed Consolidated Financial Statements

6

 

 

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

18

 

 

Item 3.  Quantitative and Qualitative Disclosures about Market Risk

23

 

 

Item 4.  Controls and Procedures

23

 

 

PART II.  Other Information

 

 

 

Item 1.  Legal Proceedings

25

 

 

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

25

 

 

Item 6.  Exhibits

26

 

 

Signatures

27

 

 

 


 

PART I. – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

STERICYCLE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

In thousands, except share and per share data

 

 

 

March 31, 2016

 

 

December 31, 2015

 

ASSETS

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

45,655

 

 

$

55,634

 

Short-term investments

 

 

64

 

 

 

69

 

Accounts receivable, less allowance for doubtful accounts of $22,964 in 2016 and $22,329 in 2015

 

 

622,709

 

 

 

614,494

 

Prepaid expenses

 

 

46,198

 

 

 

46,740

 

Other current assets

 

 

42,732

 

 

 

44,891

 

Total Current Assets

 

 

757,358

 

 

 

761,828

 

Property, plant and equipment, less accumulated depreciation of $453,753 in 2016 and $426,019 in 2015

 

 

677,525

 

 

 

665,602

 

Goodwill

 

 

3,790,016

 

 

 

3,758,177

 

Intangible assets, less accumulated amortization of $170,507 in 2016 and $151,025 in 2015

 

 

1,840,844

 

 

 

1,842,561

 

Other assets

 

 

46,801

 

 

 

49,282

 

Total Assets

 

$

7,112,544

 

 

$

7,077,450

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Current portion of long-term debt

 

$

114,066

 

 

$

161,409

 

Accounts payable

 

 

133,779

 

 

 

149,202

 

Accrued liabilities

 

 

218,933

 

 

 

197,329

 

Deferred revenues

 

 

17,543

 

 

 

16,989

 

Other current liabilities

 

 

68,192

 

 

 

62,420

 

Total Current Liabilities

 

 

552,513

 

 

 

587,349

 

Long-term debt, net of current portion

 

 

3,038,083

 

 

 

3,052,639

 

Deferred income taxes

 

 

617,011

 

 

 

608,272

 

Other liabilities

 

 

86,448

 

 

 

81,352

 

Equity:

 

 

 

 

 

 

 

 

Preferred stock (par value $0.01 per share, 1,000,000 shares authorized), Mandatory Convertible Preferred Stock, Series A, 770,000 issued and outstanding in 2016 and 2015

 

 

8

 

 

 

8

 

Common stock (par value $0.01 per share, 120,000,000 shares authorized, 84,829,822 issued and outstanding in 2016 and 84,852,584 issued and outstanding in 2015)

 

 

848

 

 

 

849

 

Additional paid-in capital

 

 

1,172,962

 

 

 

1,143,020

 

Accumulated other comprehensive loss

 

 

(265,018

)

 

 

(282,631

)

Retained earnings

 

 

1,897,636

 

 

 

1,868,645

 

Total Stericycle, Inc.’s Equity

 

 

2,806,436

 

 

 

2,729,891

 

Noncontrolling interest

 

 

12,053

 

 

 

17,947

 

Total Equity

 

 

2,818,489

 

 

 

2,747,838

 

Total Liabilities and Equity

 

$

7,112,544

 

 

$

7,077,450

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

1


 

STERICYCLE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 

In thousands, except share and per share data

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

 

2016

 

 

2015

 

Revenues

 

$

874,181

 

 

$

663,319

 

Costs and Expenses:

 

 

 

 

 

 

 

 

Cost of revenues (exclusive of depreciation shown below)

 

 

482,356

 

 

 

367,340

 

Depreciation - cost of revenues

 

 

22,641

 

 

 

14,648

 

Selling, general and administrative expenses (exclusive of depreciation and amortization shown below)

 

 

202,488

 

 

 

141,363

 

Depreciation – selling, general and administrative expenses

 

 

7,499

 

 

 

4,118

 

Amortization

 

 

18,274

 

 

 

8,797

 

Total Costs and Expenses

 

 

733,258

 

 

 

536,266

 

Income from Operations

 

 

140,923

 

 

 

127,053

 

Other Income (Expense):

 

 

 

 

 

 

 

 

Interest income

 

 

21

 

 

 

35

 

Interest expense

 

 

(24,062

)

 

 

(18,633

)

Other expense, net

 

 

(1,251

)

 

 

(598

)

Total Other Expense

 

 

(25,292

)

 

 

(19,196

)

Income Before Income Taxes

 

 

115,631

 

 

 

107,857

 

Income tax expense

 

 

38,036

 

 

 

32,047

 

Net Income

 

 

77,595

 

 

 

75,810

 

Less: net income attributable to noncontrolling interests

 

 

809

 

 

 

352

 

Net Income Attributable to Stericycle, Inc.

 

 

76,786

 

 

 

75,458

 

Less: mandatory convertible preferred stock dividend

 

 

10,106

 

 

 

 

Net Income Attributable to Stericycle, Inc. Common Shareholders

 

$

66,680

 

 

$

75,458

 

Earnings Per Common Share Attributable to Stericycle, Inc. Common Shareholders:

 

 

 

 

 

 

 

 

Basic

 

$

0.79

 

 

$

0.89

 

Diluted

 

$

0.78

 

 

$

0.87

 

Weighted Average Number of Common Shares Outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

84,705,000

 

 

 

85,037,823

 

Diluted

 

 

85,845,501

 

 

 

86,357,006

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

2


 

STERICYCLE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

 

In thousands

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

 

2016

 

 

2015

 

Net Income

 

$

77,595

 

 

$

75,810

 

 

 

 

 

 

 

 

 

 

Other Comprehensive Income/ (Loss):

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

17,164

 

 

 

(64,501

)

Amortization of cash flow hedge into income, net of tax (($172) and ($54), for the three months ended March 31, 2016 and 2015, respectively)

 

 

269

 

 

 

90

 

Change in fair value of cash flow hedge, net of tax (($89) and $2,381 for the three months ended March 31, 2016 and 2015, respectively)

 

 

242

 

 

 

(4,424

)

Total Other Comprehensive Loss

 

 

17,675

 

 

 

(68,835

)

 

 

 

 

 

 

 

 

 

Comprehensive Income

 

 

95,270

 

 

 

6,975

 

Less: comprehensive income/ (loss) attributable to noncontrolling interests

 

 

871

 

 

 

(468

)

Comprehensive Income Attributable to Stericycle, Inc. Common Shareholders

 

$

94,399

 

 

$

7,443

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

3


 

STERICYCLE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

In thousands

 

 

 

Three Months Ended March 31,

 

 

 

2016

 

 

2015

 

OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net income

 

$

77,595

 

 

$

75,810

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Stock compensation expense

 

 

6,105

 

 

 

5,487

 

Excess tax benefit of stock options exercised

 

 

 

 

 

(8,222

)

Depreciation

 

 

30,140

 

 

 

18,766

 

Amortization

 

 

18,274

 

 

 

8,797

 

Deferred income taxes

 

 

6,932

 

 

 

(2,957

)

Other, net

 

 

(2,644

)

 

 

5,313

 

Changes in operating assets and liabilities, net of effect of acquisitions:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(3,918

)

 

 

(14,491

)

Accounts payable

 

 

(15,203

)

 

 

5,443

 

Accrued liabilities

 

 

21,151

 

 

 

35,924

 

Deferred revenues

 

 

487

 

 

 

(628

)

Other assets and liabilities

 

 

18,030

 

 

 

3,312

 

Net cash provided by operating activities

 

 

156,949

 

 

 

132,554

 

INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Payments for acquisitions, net of cash acquired

 

 

(24,884

)

 

 

(34,210

)

Proceeds from investments

 

 

7

 

 

 

257

 

Proceeds from sale of property and equipment

 

 

766

 

 

 

 

Capital expenditures

 

 

(34,185

)

 

 

(21,356

)

Net cash used in investing activities

 

 

(58,296

)

 

 

(55,309

)

FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Repayments of long-term debt and other obligations

 

 

(6,879

)

 

 

(9,780

)

Proceeds from foreign bank debt

 

 

15,607

 

 

 

4,851

 

Repayments of foreign bank debt

 

 

(18,721

)

 

 

(38,252

)

Proceeds from term loan

 

 

 

 

 

250,000

 

Repayment of term loan

 

 

(171,000

)

 

 

 

Proceeds from senior credit facility

 

 

457,959

 

 

 

394,097

 

Repayments of senior credit facility

 

 

(353,520

)

 

 

(670,254

)

Payments of capital lease obligations

 

 

(1,381

)

 

 

(988

)

Payment of cash flow hedge

 

 

 

 

 

(8,833

)

Purchases and cancellations of treasury stock

 

 

(37,693

)

 

 

(11,516

)

Proceeds from issuance of common stock

 

 

22,310

 

 

 

27,452

 

Dividends paid on mandatory convertible preferred stock

 

 

(10,106

)

 

 

 

Excess tax benefit of stock options exercised

 

 

 

 

 

8,222

 

Payments to noncontrolling interests

 

 

(4,997

)

 

 

(2,603

)

Net cash used in financing activities

 

 

(108,421

)

 

 

(57,604

)

Effect of exchange rate changes on cash and cash equivalents

 

 

(211

)

 

 

(3,594

)

Net (decrease)/ increase in cash and cash equivalents

 

 

(9,979

)

 

 

16,047

 

Cash and cash equivalents at beginning of period

 

 

55,634

 

 

 

22,236

 

Cash and cash equivalents at end of period

 

$

45,655

 

 

$

38,283

 

 

 

 

 

 

 

 

 

 

NON-CASH INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Issuances of obligations for acquisitions

 

$

13,013

 

 

$

21,543

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

4


 

STERICYCLE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Three Months Ended March 31, 2016 and Year Ended December 31, 2015

(Unaudited)

 

In thousands

 

 

 

Stericycle, Inc. Equity

 

 

 

 

 

 

 

 

 

 

 

Preferred Stock

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Additional

Paid-In Capital

 

 

Retained Earnings

 

 

Accumulated Other Comprehensive Income (Loss)

 

 

Noncontrolling Interest

 

 

Total Equity

 

Balance at January 1, 2015

 

 

 

 

$

 

 

 

84,884

 

 

$

849

 

 

$

289,211

 

 

$

1,743,371

 

 

$

(138,419

)

 

$

22,173

 

 

$

1,917,185

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

267,046

 

 

 

 

 

 

 

967

 

 

 

268,013

 

Currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(140,809

)

 

 

161

 

 

 

(140,648

)

Change in qualifying cash flow hedge, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,403

)

 

 

 

 

 

 

(3,403

)

Issuance of common stock for exercise of options, restricted stock units and employee stock purchases

 

 

 

 

 

 

 

 

 

 

973

 

 

 

10

 

 

 

68,630

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

68,640

 

Issuance of mandatory convertible preferred stock

 

770

 

 

8

 

 

 

 

 

 

 

 

 

 

 

746,892

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

746,900

 

Purchase and cancellation of treasury stock

 

 

 

 

 

 

 

 

 

 

(1,004

)

 

 

(10

)

 

 

 

 

 

 

(131,666

)

 

 

 

 

 

 

 

 

 

 

(131,676

)

Preferred stock dividend

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10,106

)

 

 

 

 

 

 

 

 

 

 

(10,106

)

Stock compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

21,750

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

21,750

 

Excess tax benefit of stock options exercised

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

16,897

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

16,897

 

Reduction to noncontrolling interests due to additional ownership

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(360

)

 

 

 

 

 

 

 

 

 

 

(5,354

)

 

 

(5,714

)

Balance at December 31, 2015

 

 

770

 

 

 

8

 

 

 

84,853

 

 

 

849

 

 

 

1,143,020

 

 

 

1,868,645

 

 

 

(282,631

)

 

 

17,947

 

 

 

2,747,838

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

76,786

 

 

 

 

 

 

 

809

 

 

 

77,595

 

Currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

17,102

 

 

 

62

 

 

 

17,164

 

Change in qualifying cash flow hedge, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

511

 

 

 

 

 

 

 

511

 

Issuance of common stock for exercise of options, restricted stock units and employee stock purchases

 

 

 

 

 

 

 

 

 

 

305

 

 

 

3

 

 

 

22,870

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

22,873

 

Purchase and cancellation of treasury stock

 

 

 

 

 

 

 

 

 

 

(328

)

 

 

(4

)

 

 

 

 

 

 

(37,689

)

 

 

 

 

 

 

 

 

 

 

(37,693

)

Preferred stock dividend

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10,106

)

 

 

 

 

 

 

 

 

 

 

(10,106

)

Stock compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,105

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,105

 

Reduction to noncontrolling interests due to additional ownership

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

967

 

 

 

 

 

 

 

 

 

 

 

(6,765

)

 

 

(5,798

)

Balance at March 31, 2016

 

 

770

 

 

$

8

 

 

 

84,830

 

 

$

848

 

 

$

1,172,962

 

 

$

1,897,636

 

 

$

(265,018

)

 

$

12,053

 

 

$

2,818,489

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

5


 

STERICYCLE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Unless the context requires otherwise, "we", "us" or "our" refers to Stericycle, Inc. and its subsidiaries on a consolidated basis.

 

NOTE 1 – BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. However, the Company believes the disclosures included in the accompanying condensed consolidated financial statements are adequate to make the information presented not misleading. In our opinion, all adjustments necessary for a fair presentation for the periods presented have been reflected and are of a normal recurring nature. These condensed consolidated financial statements should be read in conjunction with the Stericycle, Inc. and Subsidiaries Consolidated Financial Statements and notes thereto for the year ended December 31, 2015, as filed with our Annual Report on Form 10-K for the year ended December 31, 2015. The results of operations for the three months ended March 31, 2016 are not necessarily indicative of the results that may be achieved for the entire year ending December 31, 2016.

There were no material changes in the Company’s significant accounting policies since the filing of its 2015 Form 10-K. As discussed in the 2015 Form 10-K, the preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make certain estimates and assumptions that affect the amount of reported assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and revenues and expenses during the periods reported. Actual results may differ from those estimates.

We have evaluated subsequent events through the date of filing this quarterly report on Form 10-Q. No events have occurred that would require adjustment to or disclosure in the condensed consolidated financial statements.

 

 

NOTE 2 – ACQUISITIONS

The following table summarizes the locations of our acquisitions for the three months ended March 31, 2016

 

Acquisition Locations

 

2016

 

United States

 

 

5

 

Romania

 

 

1

 

Spain

 

 

1

 

Total

 

 

7

 

 

During the quarter ended March 31, 2016, we completed seven acquisitions. Domestically, we acquired 100% of the stock of one regulated waste business and selected assets of four secure information destruction businesses. Internationally, we acquired selected assets of one regulated waste business in Romania and one in Spain.

The following table summarizes the aggregate purchase price paid for acquisitions and other adjustments of consideration to be paid for acquisitions during the three months ended March 31:

 

In thousands

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

 

2016

 

 

2015

 

Cash

 

$

24,884

 

 

$

34,210

 

Promissory notes

 

 

11,595

 

 

 

7,618

 

Deferred consideration

 

 

1,361

 

 

 

624

 

Contingent consideration

 

 

57

 

 

 

13,301

 

Total purchase price

 

$

37,897

 

 

$

55,753

 

6


 

 

For financial reporting purposes, our acquisitions were accounted for using the acquisition method of accounting. These acquisitions resulted in the recognition of goodwill in our financial statements reflecting the premium paid to acquire businesses that we believe are complementary to our existing operations and fit our growth strategy. During the three months ended March 31, 2016, we recognized a net increase in goodwill of $25.5 million, excluding the effect of foreign currency translation (see Note 9 – Goodwill and Other Intangible Assets). A net increase of $23.7 million was assigned to our United States reportable segment, and a net increase of $1.8 million was assigned to our International reportable segment. Approximately $20.7 million of the goodwill recognized during the three months ended March 31, 2016 will be deductible for income taxes.

During the three months ended March 31, 2016, we recognized a net increase in intangible assets from acquisitions of $8.4 million, excluding the effect of foreign currency translation. The changes include $7.7 million in the estimated fair value of acquired customer relationships with amortizable lives of 10 to 40 years and $0.7 million in covenant not-to-compete with an amortizable life of 5 years.

The purchase prices for these acquisitions in excess of acquired tangible and identifiable intangible assets have been primarily allocated to goodwill, and are preliminary, pending completion of certain intangible asset valuations and finalization of the opening balance sheet. The following table summarizes the preliminary purchase price allocation for current period acquisitions and other adjustments to purchase price allocations during the three months ended March 31:

 

In thousands

 

 

 

Three Months Ended March 31,

 

 

 

2016

 

 

2015

 

Fixed assets

 

$

3,345

 

 

$

(1,477

)

Intangibles

 

 

8,436

 

 

 

19,791

 

Goodwill

 

 

25,519

 

 

 

41,190

 

Accounts receivable

 

 

1,715

 

 

 

4,217

 

Net other assets/ (liabilities)

 

 

133

 

 

 

59

 

Current liabilities

 

 

(201

)

 

 

(4,650

)

Net deferred tax liabilities

 

 

(1,050

)

 

 

(3,377

)

Total purchase price allocation

 

$

37,897

 

 

$

55,753

 

 

During the three months ended March 31, 2016 and 2015, the Company incurred $3.0 million and $3.3 million, respectively, of acquisition related expenses. These expenses are included with “Selling, general and administrative expenses” (“SG&A”) on our Condensed Consolidated Statements of Income. The results of operations of these acquired businesses have been included in the Condensed Consolidated Statements of Income from the date of the acquisition.

 

 

NOTE 3 – NEW ACCOUNTING STANDARDS

Accounting Standards Recently Adopted

Compensation - Stock Compensation

On January 1, 2016, the Company adopted the guidance in Accounting Standards Update ("ASU") No. 2016-09, “Compensation - Stock Compensation (Topic 718) - Improvements to Employee Share-Based Payment Accounting.” Under this ASU, entities are permitted to make an accounting policy election to either estimate forfeitures on share-based payment awards, as previously required, or to recognize forfeitures as they occur. The Company has elected to recognize forfeitures as they occur and the impact of that change in accounting policy has been evaluated and determined to be insignificant and resulted in no cumulative-effect change to the Company’s retained earnings. Additionally, ASU 2016-09 requires that all income tax effects related to settlements of share-based payment awards be reported in earnings as an increase or decrease to income tax expense (benefit), net. Previously, income tax benefits at settlement of an award were reported as an increase (or decrease) to additional paid-in capital to the extent that those benefits were greater than (or less than) the income tax benefits reported in earnings during the award's vesting period. The requirement to report those income tax effects in earnings has been applied on a prospective basis to settlements occurring on or after January 1, 2016 and the impact of applying that guidance was $2.9 million to the condensed consolidated financial statements for the period ended March 31, 2016. ASU 2016-09 also requires that all income tax-related cash flows resulting from share-based payments be reported as operating activities in the statement of cash flows. Previously, income tax benefits at

7


 

settlement of an award were reported as a reduction to operating cash flows and an increase to financing cash flows to the extent that those benefits exceeded the income tax benefits reported in earnings during the award's vesting period. The Company has elected to apply that change in cash flow classification on a prospective basis, leaving previously reported net cash provided by operating activities and net cash used in financing activities in the accompanying Condensed Consolidated Statement of Cash Flows for the period ended March 31, 2015 unchanged. The remaining provisions of ASU 2016-09 did not have a material impact on the accompanying condensed consolidated financial statements.

Accounting Standards Issued But Not Yet Adopted

Revenue From Contracts With Customers

In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers" (Topic 606), guidance to provide a single and comprehensive revenue recognition model for all contracts with customers. The revenue guidance contains principles that an entity will apply to determine the measurement of revenue and timing of when it is recognized. The underlying principle is that an entity will recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services. The amended authoritative guidance associated with revenue recognition is effective for the Company on January 1, 2018. The amended guidance may be applied retrospectively for all periods presented or retrospectively with the cumulative effect of initially applying the amended guidance recognized at the date of initial application. We are in the process of assessing the provisions of the new revenue recognition standard and have not determined whether the adoption will have a material impact on our consolidated financial statements.

 

Leases

In February 2016, the FASB issued ASU No. 2016-02, “Leases” (Topic 842). This ASU will require lessees to record a right-of-use asset and lease liability on the balance sheet for all leases with terms of more than 12 months. Recognition, measurement and presentation of expenses will depend on classification as a finance or operating lease. This ASU also requires certain quantitative and qualitative disclosures. Accounting guidance for lessors is largely unchanged. The amendments should be applied on a modified retrospective basis. ASU 2016-02 is effective for us beginning January 1, 2019. We are beginning to evaluate the impact that the adoption of ASU 2016-02 will have on our consolidated financial statements and related disclosures.

 

 

NOTE 4 – FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity's own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Inputs that are generally unobservable and typically reflect management’s judgment about the assumptions that market participants would use in pricing the asset or liability.

8


 

Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of assets and liabilities and their placement within the fair value hierarchy levels. The impact of our creditworthiness has been considered in the fair value measurements noted below. In addition, the fair value measurement of a liability must reflect the nonperformance risk of an entity. There were no movements of items between fair value hierarchies.

 

In thousands

 

 

 

 

 

 

 

Fair Value Measurements Using

 

 

 

Total as of

March 31, 2016

 

 

Level 1

Inputs

 

 

Level 2

Inputs

 

 

Level 3

Inputs

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

45,655

 

 

$

45,655

 

 

$

 

 

$

 

Short-term investments

 

 

64

 

 

$

64

 

 

 

 

 

 

 

Derivative financial instruments

 

 

954

 

 

 

 

 

 

954

 

 

 

 

Total assets

 

$

46,673

 

 

$

45,719

 

 

$

954

 

 

$

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contingent consideration

 

$

22,967

 

 

$

 

 

$

 

 

$

22,967

 

Total liabilities

 

$

22,967

 

 

$

 

 

$

 

 

$

22,967

 

 

In thousands

 

 

 

 

 

 

 

Fair Value Measurements Using

 

 

 

Total as of

December 31, 2015

 

 

Level 1

Inputs

 

 

Level 2

Inputs

 

 

Level 3

Inputs

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

55,634

 

 

$

55,634

 

 

$

 

 

$

 

Short-term investments

 

 

69

 

 

 

69

 

 

 

 

 

 

 

Derivative financial instruments

 

 

1,207

 

 

 

 

 

 

1,207

 

 

 

 

Total assets

 

$

56,910

 

 

$

55,703

 

 

$

1,207

 

 

$

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contingent consideration

 

$

25,390

 

 

$

 

 

$

 

 

$

25,390

 

Total liabilities

 

$

25,390

 

 

$

 

 

$

 

 

$

25,390

 

For our derivative financial instruments we use a market approach valuation technique based on observable market transactions of spot and forward rates.

We recorded a $1.0 million asset related to the fair value of the U.S. dollar-Canadian dollar foreign currency swap which was classified as other assets at March 31, 2016. The objective of the swap is to offset the foreign exchange risk to the U.S. dollar equivalent cash outflows for our Canadian subsidiary.

9


 

We had contingent consideration liabilities recorded using Level 3 inputs in the amount of $23.0 million, of which $6.9 million was classified as current liabilities at March 31, 2016. Contingent consideration liabilities were $25.4 million at December 31, 2015. Contingent consideration represents amounts expected to be paid as part of acquisition consideration only if certain future events occur. These events are usually targets for revenues or earnings related to the business acquired. We arrive at the fair value of contingent consideration by applying a weighted probability of potential outcomes to the maximum possible payout. The calculation of these potential outcomes is dependent on both past financial performance and management assumptions about future performance. If the financial performance measures were all fully met, our maximum liability would be $40.2 million at March 31, 2016. Contingent consideration liabilities are reassessed each quarter and are reflected in the Condensed Consolidated Balance Sheets as part of “Other current liabilities” and “Other liabilities”. Changes to contingent consideration are reflected in the table below:

 

In thousands

 

Contingent consideration at January 1, 2016

 

$

25,390

 

Increases due to acquisitions

 

 

57

 

Decrease due to payments

 

 

(1,000

)

Changes due to foreign currency fluctuations

 

 

1,164

 

Changes in fair value reflected in Selling, general, and administrative expenses

 

 

(2,644

)

Contingent consideration at March 31, 2016

 

$

22,967

 

 

Fair Value of Debt: At March 31, 2016, the fair value of the Company’s debt obligations was estimated, using Level 2 inputs, at $3.13 billion compare to a carrying amount of $3.15 billion. At December 31, 2015, the fair value of the Company’s debt obligations was estimated, using Level 2 inputs, at $3.22 billion compared to a carrying amount of $3.21 billion. The fair values were estimated using an income approach by applying market interest rates for comparable instruments. The Company has no current plans to retire a significant amount of its debt prior to maturity.

 

 

NOTE 5 – INCOME TAXES

We file income tax returns in the U.S, in various states and in certain foreign jurisdictions.

The Company has recorded accruals to cover certain unrecognized tax positions. Such unrecognized tax positions relate to additional taxes that the Company may be required to pay in various tax jurisdictions. During the course of examinations by various taxing authorities, proposed adjustments may be asserted. The Company evaluates such items on a case-by-case basis and adjusts the accrual for unrecognized tax positions as deemed necessary. During the quarter ended March 31, 2016, we had no material changes to our accruals related to previous or current uncertain tax positions. The effective tax rates for the quarters ended March 31, 2016 and 2015 were approximately 32.9% and 29.7%, respectively. The increase in the current quarter tax rate is primarily related to the recognition of tax benefits in 2015.

 

 

NOTE 6 – STOCK BASED COMPENSATION

At March 31, 2016, we had the following active stock option and stock purchase plans:

·

the 2014 Incentive Stock Plan, which our stockholders approved in May 2014;

·

the 2011 Incentive Stock Plan, which our stockholders approved in May 2011;

·

the 2008 Incentive Stock Plan, which our stockholders approved in May 2008;

·

the 2005 Incentive Stock Plan, which our stockholders approved in April 2005;

·

the 2000 Non-statutory Stock Option Plan, which expired in February 2010;

·

the Employee Stock Purchase Plan (“ESPP”), which our stockholders approved in May 2001.

10


 

Stock-Based Compensation Expense:

The following table presents the total stock-based compensation expense resulting from stock option awards, restricted stock units (“RSUs”), and the ESPP included in the Condensed Consolidated Statements of Income:

 

In thousands

 

 

 

Three Months Ended March 31,

 

 

 

2016

 

 

2015

 

Cost of revenues – stock option plan

 

$

15

 

 

$

23

 

Selling, general and administrative – stock option plan

 

 

4,752

 

 

 

4,729

 

Selling, general and administrative – RSUs

 

 

559

 

 

 

346

 

Selling, general and administrative – ESPP

 

 

779

 

 

 

389

 

Total pre-tax expense

 

$

6,105

 

 

$

5,487

 

 

Stock Options:

Stock option activity for the three months ended March 31, 2016, is summarized as follows:

 

 

 

Number of

Options

 

 

Weighted

Average

Exercise

Price per

Share

 

 

Weighted

Average

Remaining

Contractual Life

 

 

Total Aggregate Intrinsic Value

 

 

 

 

 

 

 

 

 

 

 

(in years)

 

 

(in thousands)

 

Outstanding at beginning of year

 

 

5,334,803

 

 

$

92.02

 

 

 

 

 

 

 

 

 

Granted

 

 

1,008,569

 

 

 

111.29

 

 

 

 

 

 

 

 

 

Exercised

 

 

(306,088

)

 

 

73.22

 

 

 

 

 

 

 

 

 

Forfeited

 

 

(28,412

)

 

 

118.19

 

 

 

 

 

 

 

 

 

Canceled or expired

 

 

(1,939

)

 

 

86.92

 

 

 

 

 

 

 

 

 

Outstanding at March 31, 2016

 

 

6,006,933

 

 

 

96.10

 

 

 

5.92

 

 

$

185,247

 

Exercisable at March 31, 2016

 

 

3,225,121

 

 

 

80.59

 

 

 

4.93

 

 

$

147,947

 

 

As of March 31, 2016, there was $38.7 million of total unrecognized compensation expense related to non-vested option awards, which is expected to be recognized over a weighted average period of 3.58 years.

The following table sets forth the total intrinsic value of options exercised:

 

 

 

Three Months Ended March 31,

 

 

 

2016

 

 

2015

 

Total intrinsic value of options exercised

 

$

13,229

 

 

$

29,525

 

 

The total intrinsic value of options exercised represents the total pre-tax value (the difference between the sales price on that trading day the option was exercised and the exercise price associated with the respective option).

The Company uses historical data to estimate expected life and volatility. The estimated fair value of stock options at the time of the grant using the Black-Scholes option pricing model was as follows:

 

 

 

Three Months Ended March 31,

 

 

 

2016

 

 

2015

 

Stock options granted (shares)

 

 

1,008,569

 

 

 

860,534

 

Weighted average fair value at grant date (per share)

 

$

20.19

 

 

$

22.84

 

Assumptions:

 

 

 

 

 

 

 

 

Expected term (in years)

 

 

4.76

 

 

 

4.79

 

Expected volatility

 

 

18.02

%

 

 

16.62

%

Expected dividend yield

 

 

%

 

 

%

Risk free interest rate

 

 

1.26

%

 

 

1.48

%

 

11


 

Restricted Stock Units:

Restricted stock units (“RSUs”) vest annually, or at the end of three and five years. Our 2008, 2011 and 2014 Plans include a share reserve related to RSUs granted at a 2 -1 ratio. A summary of the status of our non-vested RSUs and changes during the three months ended March 31, 2016, are as follows:

 

 

 

Number of

Options

 

 

Weighted

Average

Grant Date

Fair Value

 

 

Weighted

Average Remaining Contractual Life

 

 

Total Aggregate Intrinsic Value

 

 

 

 

 

 

 

 

 

 

 

(in years)

 

 

(in thousands)

 

Non-vested at beginning of year

 

 

71,451

 

 

$

101.29

 

 

 

 

 

 

 

 

 

Granted

 

 

53,267

 

 

 

111.12

 

 

 

 

 

 

 

 

 

Non-vested at March 31, 2016

 

 

124,718

 

 

 

105.57

 

 

 

2.34

 

 

$

15,738

 

 

As of March 31, 2016, there was $8.9 million of total unrecognized compensation expense related to RSUs, which is expected to be recognized over a weighted average period of 3.15 years.

 

 

NOTE 7 – PREFERRED STOCK

 

At March 31, 2016, we had 1,000,000 authorized shares of preferred stock and 770,000 shares issued and outstanding of Mandatory Convertible Preferred Stock.

Series A Mandatory Convertible Preferred Stock Offering: On September 15, 2015, we completed a registered public offering of 7,700,000 depositary shares, each representing a 1/10th interest in a share of our 5.25% Series A Mandatory Convertible Preferred Stock, par value $0.01 per share (the “Series A Preferred Stock”), at a public offering price of $100.00 per depository share for total gross proceeds of $770.0 million.

Unless earlier converted or redeemed, each share of the Series A Preferred Stock will automatically convert into between 5.8716 and 7.3394 shares of our common stock, subject to anti-dilution and other adjustments, on the mandatory conversion date, which is expected to be September 15, 2018. The number of shares of our common stock issuable on conversion will be determined based on the volume-weighted average price of our common stock over the 20 trading day period commencing on and including the 23rd scheduled trading day prior to September 15, 2018. Subject to certain restrictions, at any time prior to September 15, 2018, holders of the Series A Preferred Stock may elect to convert all or a portion of their shares into common stock at the minimum conversion rate of 5.8716 shares of common stock per share of Series A Preferred Stock, subject to adjustment.

Dividends on shares of the Series A Preferred Stock are payable on a cumulative basis when, as and if declared by our board of directors, or an authorized committee thereof, at an annual rate of 5.25% on the liquidation preference of $1,000 per share (and, correspondingly, $100.00 per share with respect to the depositary shares). The dividends may be payable in cash, or subject to certain limitations, in shares of our common stock or any combination of cash and shares of our common stock on March 15, June 15, September 15 and December 15 of each year, commencing on December 15, 2015, and to, and including, September 15, 2018.

 

 

NOTE 8 – EARNINGS PER COMMON SHARE

 

Basic earnings per share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include outstanding stock options, shares to be purchased under the Company’s employee stock purchase plan, RSUs, and the assumed conversion of mandatory convertible preferred stock. The effect of potentially dilutive securities is reflected in diluted earnings per share by application of the “treasury stock method” for outstanding restricted stock awards and stock options. Under the treasury stock method, an increase in the fair market value of the Company’s common stock can result in a greater dilutive effect from potentially dilutive securities. For the issue of the mandatory convertible preferred stock,

12


 

we use the “if-converted method”. Under the if-converted method, the preferred dividend applicable to convertible preferred stock is added back to net income attributable to Stericycle, the numerator. The Mandatory Convertible Preferred shares are assumed to be converted to common shares at the beginning of the period or, if later, at the time of issuance, and the resulting common shares are included in the denominator. In applying the if-converted method, conversion shall not be assumed for purposes of computing diluted EPS if the effect would be anti-dilutive.

The following table sets forth the computation of basic and diluted earnings per share:

 

In thousands, except share and per share data

 

 

 

Three Months Ended March 31,

 

 

 

2016

 

 

2015

 

Numerator:

 

 

 

 

 

 

 

 

Net income attributable to Stericycle, Inc.

 

$

76,786

 

 

$

75,458

 

Less: mandatory convertible preferred stock dividend

 

 

10,106

 

 

 

 

Numerator for basic earnings per share attributable to Stericycle, Inc. common shareholders

 

$

66,680

 

 

$

75,458

 

Denominator:

 

 

 

 

 

 

 

 

Denominator for basic earnings per share-weighted average shares

 

 

84,705,000

 

 

 

85,037,823

 

Effect of diluted securities:

 

 

 

 

 

 

 

 

Employee stock based awards

 

 

1,140,501

 

 

 

1,319,183

 

Mandatory convertible preferred stock (1)

 

 

 

 

 

 

Denominator for diluted earnings per share-adjusted weighted average shares and after assumed exercises

 

 

85,845,501

 

 

 

86,357,006

 

Earnings per share – Basic

 

$

0.79

 

 

$

0.89

 

Earnings per share – Diluted

 

$

0.78

 

 

$

0.87

 

 

(1)

In 2016, the weighted average common shares issuable upon the assumed conversion of the mandatory convertible preferred stock totaling 5,651,376 shares were excluded from the computation of diluted earnings per share as such conversion would have been antidilutive.

For additional information regarding outstanding employee stock options, see Note 6 - Stock Based Compensation.

 

 

NOTE 9 – GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill and other identifiable indefinite lived intangibles are not amortized, but are subject to an annual impairment test, or more frequent testing if circumstances indicate that they may be impaired.

Goodwill:

We have two geographical reportable segments, “United States” and “International”, both of which have goodwill. The changes in the carrying amount of goodwill since January 1, 2015, by reportable segment, were as follows:

 

In thousands

 

 

 

United States

 

 

International

 

 

Total

 

Balance as of January 1, 2015

 

$

1,838,739

 

 

$

580,093

 

 

$

2,418,832

 

Goodwill acquired during the year, net

 

 

1,177,431

 

 

 

273,519

 

 

 

1,450,950

 

Purchase accounting allocation adjustments

 

 

(43,895

)

 

 

15,618

 

 

 

(28,277

)

Goodwill other changes

 

 

 

 

 

(440

)

 

 

(440

)

Changes due to foreign currency fluctuations

 

 

 

 

 

(82,888

)

 

 

(82,888

)

Balance as of December 31, 2015

 

 

2,972,275

 

 

 

785,902

 

 

 

3,758,177

 

Goodwill acquired during the year, net

 

 

17,390

 

 

 

450

 

 

 

17,840

 

Purchase accounting allocation adjustments

 

 

6,305

 

 

 

1,374

 

 

 

7,679

 

Changes due to foreign currency fluctuations

 

 

 

 

 

6,320

 

 

 

6,320

 

Balance at March 31, 2016

 

$

2,995,970

 

 

$

794,046

 

 

$

3,790,016

 

13


 

 

Current year adjustments to goodwill for certain 2015 acquisitions are primarily due to the finalization of intangible asset valuations.

We complete our annual impairment analysis of our goodwill during the quarter ended June 30 of each year, or more frequently, if circumstances indicate that it may be impaired.

Other Intangible Assets:

At March 31, 2016 and December 31, 2015, the values of other intangible assets were as follows:

 

In thousands

 

 

 

March 31, 2016

 

 

December 31, 2015

 

 

 

Gross

Carrying

Amount

 

 

Accumulated

Amortization

 

 

Net

Value

 

 

Gross

Carrying

Amount

 

 

Accumulated

Amortization

 

 

Net

Value

 

Amortizable intangibles:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer relationships

 

$

1,319,782

 

 

$

162,831

 

 

$

1,156,951

 

 

$

1,304,388

 

 

$

144,020

 

 

$

1,160,368

 

Covenants not-to-compete

 

 

7,630

 

 

 

5,340

 

 

 

2,290

 

 

 

6,878

 

 

 

5,141

 

 

 

1,737

 

Tradenames

 

 

3,935

 

 

 

1,022

 

 

 

2,913

 

 

 

3,819

 

 

 

948

 

 

 

2,871

 

Other

 

 

16,834

 

 

 

1,314

 

 

 

15,520

 

 

 

18,902

 

 

 

916

 

 

 

17,986

 

Indefinite lived intangibles:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating permits

 

 

234,888

 

 

 

 

 

 

234,888

 

 

 

233,101

 

 

 

 

 

 

233,101

 

Tradenames

 

 

428,282

 

 

 

 

 

 

428,282

 

 

 

426,498

 

 

 

 

 

 

426,498

 

Total

 

$

2,011,351

 

 

$

170,507

 

 

$

1,840,844

 

 

$

1,993,586

 

 

$

151,025

 

 

$

1,842,561

 

 

The changes in the carrying amount of intangible assets since January 1, 2015 were as follows:

 

In thousands

 

 

 

Total

 

Balance as of January 1, 2015

 

$

909,645

 

Intangible assets acquired during the year, net

 

 

1,052,016

 

Impairments during the year

 

 

(4,177

)

Amortization during the year

 

 

(45,498

)

Changes due to foreign currency fluctuations

 

 

(69,425

)

Balance as of December 31, 2015

 

 

1,842,561

 

Intangible assets acquired during the year, net

 

 

8,436

 

Amortization during the year

 

 

(18,274

)

Changes due to foreign currency fluctuations

 

 

8,121

 

Balance at March 31, 2016

 

$

1,840,844

 

 

Under generally accepted accounting principles, a fair value must be assigned to all acquired assets based on a theoretical “market participant” regardless of the acquirer's intended use for those assets. This accounting treatment can lead to the recognition of losses when a company disposes of acquired assets. We complete our annual impairment analysis of our indefinite lived intangibles during the quarter ended December 31 of each year, or more frequently, if circumstances indicate that they may be impaired.

Our finite-lived intangible assets are amortized over their useful lives. We have determined that our customer relationships have useful lives from 10 to 40 years based upon the type of customer, with a weighted average remaining useful life of 19.1 years. We have covenants not-to-compete intangibles with useful lives from 5 to 14 years, with a weighted average remaining useful life of 4.4 years. We have tradename intangibles with useful lives from 15 to 40 years, with a weighted average remaining useful life of 16.9 years. Other intangibles mainly consist of landfill air rights with a weighted average remaining useful life of 18.5 years. We have determined that our permits have indefinite lives due to our ability to renew these permits with minimal additional cost, and therefore these are not amortized. We also have a trade name that we have determined has an indefinite life.

14


 

During the quarters ended March 31, 2016 and 2015, the aggregate amortization expense was $18.3 million and $8.8 million, respectively.

The estimated amortization expense for each of the next five years, assuming no additional amortizable intangible assets, is as follows for the years ended December 31:

 

In thousands

 

2016

 

$

72,287

 

2017

 

 

72,300

 

2018

 

 

72,252

 

2019

 

 

72,095

 

2020

 

 

71,805

 

 

Future amortization expense may fluctuate depending on changes in foreign currency rates, future acquisitions, or changes to the estimated amortizable life of the intangibles. The estimates for amortization expense noted above are based upon foreign exchange rates as of March 31, 2016.

 

 

NOTE 10 – ENVIRONMENTAL REMEDIATION LIABILITIES

We record a liability for environmental remediation when such liability becomes probable and the costs or damages can be reasonably estimated. We accrue environmental remediation costs, on an undiscounted basis, associated with identified sites where an assessment has indicated that cleanup costs are probable and can be reasonably estimated, but the timing of such payments is not fixed and determinable. Such accruals are based on currently available information, estimated timing of remedial actions, existing technology, and enacted laws and regulations. The liability for environmental remediation is included in the Condensed Consolidated Balance Sheets in current liabilities within “Accrued liabilities” and in non-current liabilities within “Other liabilities.”

At March 31, 2016, the total environmental remediation liabilities recorded were $30.4 million, of which $1.5 million was classified as accrued liabilities and $28.9 million was classified as other liabilities.

 

 

NOTE 11 – DEBT

Long-term debt consisted of the following:

 

In thousands

 

 

 

March 31, 2016

 

 

December 31, 2015

 

Obligations under capital leases

 

$

14,308

 

 

$

15,024

 

$1.20 billion senior credit facility weighted average rate 1.87%, due in 2019

 

 

455,911

 

 

 

353,763

 

$1.08 billion term loan weighted average rate 1.81%, due in 2020

 

 

1,079,000

 

 

 

1,250,000

 

$175 million private placement notes 3.89%, due in 2017

 

 

175,000

 

 

 

175,000

 

$125 million private placement notes 2.68%, due in 2019

 

 

125,000

 

 

 

125,000

 

$225 million private placement notes 4.47%, due in 2020

 

 

225,000

 

 

 

225,000

 

$150 million private placement notes 2.89%, due in 2021

 

 

150,000

 

 

 

150,000

 

$125 million private placement notes 3.26%, due in 2022

 

 

125,000

 

 

 

125,000

 

$200 million private placement notes 2.72%, due in 2022

 

 

200,000

 

 

 

200,000

 

$100 million private placement notes 2.79%, due in 2023

 

 

100,000

 

 

 

100,000

 

$150 million private placement notes 3.18%, due in 2023

 

 

150,000

 

 

 

150,000

 

Promissory notes and deferred consideration weighted average rate of 2.35% and weighted average maturity of 3.1 years

 

 

246,442

 

 

 

239,731

 

Foreign bank debt weighted average rate 7.40% and weighted average maturity of 2.0 years

 

 

106,488

 

 

 

105,530

 

Total debt

 

 

3,152,149

 

 

 

3,214,048

 

Less: current portion of total debt

 

 

114,066

 

 

 

161,409

 

Long-term portion of total debt

 

$

3,038,083

 

 

$

3,052,639

 

 

15


 

Our $1.20 billion senior credit facility maturing in June 2019, our $1.08 billion term loan maturing in August 2020, our $175.0 million private placement notes maturing in October 2017, our $125.0 million private placement notes maturing in December 2019, our $225.0 million private placement notes maturing in October 2020, our $150.0 million private placement notes maturing in October 2021,  our $125.0 million private placement notes maturing in December 2022, our $200.0 million private placement notes maturing in July 2022, our $100.0 million private placement notes maturing in July 2023, and our $150.0 million private placement notes maturing in October 2023 all require us to comply with various financial, reporting and other covenants and restrictions, including a restriction on dividend payments. The financial debt covenants are the same for the senior credit facility, term loan, and the private placement notes. At March 31, 2016, we were in compliance with all of our financial debt covenants. Our senior credit facility, term loan, and the private placement notes rank pari passu to each other and all other unsecured debt obligations,

As of March 31, 2016 and December 31, 2015, we had $159.8 million and $160.4 million, respectively, committed to outstanding letters of credit under our senior credit facility. The unused portion of the revolving credit facility as of March 31, 2016 and December 31, 2015 was $584.3 million and $685.8 million, respectively. 

 

 

NOTE 12 – GEOGRAPHIC INFORMATION

 

The FASB Accounting Standards Codification Topic 280, Segment Reporting, requires segment information to be reported based on information utilized by executive management to internally assess performance and make operating decisions. We have determined that we have two operating and reportable segments based on the organizational structure of our Company and information reviewed by our Chief Operating Decision Maker. These operating and reportable segments are Domestic Regulated and Compliance Services ("Domestic") and International Regulated and Compliance Services ("International"). We are in the process of determining the integration of the Shred-it organization within Stericycle. Currently the operations of Shred-it are part of our Domestic Regulated and Compliance Services and International operating segments, based on the location of the revenue producing customer.

 

Detailed information for our United States reportable segment is as follows:

 

In thousands

 

 

 

Three Months Ended March 31,

 

 

 

2016

 

 

2015

 

Regulated and compliance solutions revenues

 

$

624,878

 

 

$

452,269

 

Recall and returns solutions revenues

 

 

24,790

 

 

 

19,979

 

Total revenues

 

$

649,668

 

 

$

472,248

 

Net interest expense

 

 

19,883

 

 

 

10,845

 

Income before income taxes

 

 

108,313

 

 

 

102,890

 

Income taxes

 

 

38,814

 

 

 

37,880

 

Net income attributable to Stericycle, Inc.

 

$

69,499

 

 

$

65,010

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

$

31,570

 

 

$

16,140

 

 

Detailed information for our International reportable segment is as follows:

 

In thousands

 

 

 

Three Months Ended March 31,

 

 

 

2016

 

 

2015

 

Regulated and compliance solutions revenues

 

$

224,513

 

 

$

191,071

 

Net interest expense

 

 

4,158

 

 

 

7,753

 

Income before income taxes

 

 

7,318

 

 

 

4,967

 

Income taxes

 

 

(778

)

 

 

(5,833

)

Net income

 

 

8,096

 

 

 

10,800

 

Less: net income attributable to noncontrolling interests

 

 

809

 

 

 

352

 

Net income attributable to Stericycle, Inc.

 

$

7,287

 

 

$

10,448

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

$

16,844

 

 

$

11,423

 

16


 

 

 

NOTE 13 – LEGAL PROCEEDINGS

We operate in a highly regulated industry and must deal with regulatory inquiries or investigations from time to time that may be instituted for a variety of reasons. We are also involved in a variety of civil litigation from time to time.

We review all of our outstanding legal proceedings with counsel quarterly, and we will disclose an estimate of any reasonably possible loss or range of reasonably possible losses if and when we are able to make such an estimate and the reasonably possible loss or range of reasonably possible losses is material to our financial statements.

Class Action Lawsuits. As we have previously disclosed, we were served on March 12, 2013 with a class action complaint filed in the U.S. District Court for the Western District of Pennsylvania by an individual plaintiff for itself and on behalf of all other “similarly situated” customers of ours. The complaint alleges, among other things, that we imposed unauthorized or excessive price increases and other charges on our customers in breach of our contracts and in violation of the Illinois Consumer Fraud and Deceptive Business Practices Act. The complaint sought certification of the lawsuit as a class action and the award to class members of appropriate damages and injunctive relief.

The Pennsylvania class action complaint was filed in the wake of a settlement with the State of New York of an investigation under the New York False Claims Act which arose out of the qui tam (or “whistle blower”) action captioned United States of America ex rel. Jennifer D. Perez v. Stericycle, Inc., Case No. 1:08-cv-2390 which was settled in the fourth quarter of 2015 as previously disclosed.

Following the filing of the Pennsylvania class action complaint, we were served with class action complaints filed in federal and state courts in several jurisdictions. These complaints asserted claims and allegations substantially similar to those made in the Pennsylvania class action complaint. All of these cases appear to be follow-on litigation to our settlement with the State of New York. On August 9, 2013, the Judicial Panel on Multidistrict Litigation granted our Motion to Transfer these related actions to the United States District Court for the Northern District of Illinois for centralized pretrial proceedings (the “MDL Action”). On December 10, 2013, we filed our answer to the Amended Consolidated Class Action Complaint in the MDL Action, generally denying the allegations therein.

On January 29, 2016, the plaintiffs’ attorneys filed a Second Amended Consolidated Complaint and a Motion for Class Certification in the MDL Action. The Motion requests that the court certify a class of plaintiffs consisting of certain of our small quantity customers who received rate increases. We intend to strongly contest the Motion.

We believe that we have operated in accordance with the terms of our customer contracts and that these complaints are without merit. We will continue to vigorously defend ourselves against each of these lawsuits.

We have not accrued any amounts in respect of these class action lawsuits, and we cannot estimate the reasonably possible loss or the range of reasonably possible losses that we may incur. We are unable to make such an estimate because (i) litigation is by its nature uncertain and unpredictable, (ii) we do not know whether the court will certify any class of plaintiffs or, if any class is certified, how the class would be defined, and (iii) in our judgment, there are no comparable proceedings against other defendants that might provide guidance in making estimates.

Environmental Matters. Our Environmental Solutions business is regulated by federal, state and local laws enacted to regulate the discharge of materials into the environment, remediate contaminated soil and groundwater or otherwise protect the environment. As a result of this continuing regulation, we frequently become a party to legal or administrative proceedings involving various governmental authorities and other interested parties. The issues involved in these proceedings generally relate to alleged violations of existing permits and licenses or alleged responsibility under federal or state Superfund laws to remediate contamination at properties owned either by us or by other parties to which either we or the prior owners of certain of its facilities shipped wastes. From time to time, we may be subject to fines or penalties in regulatory proceedings relating primarily to waste treatment, storage or disposal facilities. We believe that the fines or other penalties that we may pay in connection with any pending regulatory proceedings of this nature will not, individually or in the aggregate, be material to our financial statements.

On February 29, 2016, we entered into a statute of limitations tolling agreement with the United States Attorney’s Office for the District of Utah relating to that Office’s investigation of the same facts underlying the notice of violation (the “NOV”) issued by the State of Utah Division of Air Quality (the “DAQ”) that resulted in our December 2014 settlement with the DAQ that we have previously disclosed. The U.S. Attorney’s Office is investigating whether the matters forming the

17


 

basis of the NOV constitute violations of the Clean Air Act and other federal statutes. Under the tolling agreement, the period from March 1, 2016 through July 31, 2016 will be excluded from any calculation of time for the purpose of determining the statute of limitations concerning any charges that we violated federal statutes. The agreement does not constitute an admission of guilt or wrongdoing on our part and cannot be construed as a waiver of any other rights or defenses that we may have in any resulting action or proceeding. We will continue to cooperate with the investigation.

 

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

We are a business-to-business services provider with a focus on regulated and compliance solutions for healthcare, retail, and commercial businesses. This includes the collection and processing of regulated and specialized waste for disposal and the collection of personal and confidential information for secure destruction, plus a variety of training, consulting, recall/return, communication, and compliance services. We were incorporated in 1989 and presently serve a diverse customer base of more than 1,000,000 customers throughout the United States, Argentina, Austria, Australia, Belgium, Brazil, Canada, Chile, France, Germany, Ireland, Japan, Luxembourg, Mexico, the Netherlands, Portugal, Romania, Republic of Korea, Singapore, South Africa, Spain, and the United Kingdom.

Our solutions for regulated or specialty waste streams include: medical waste disposal, pharmaceutical waste disposal, hazardous waste management, sustainability solutions for expired or unused inventory, and secure information destruction of documents or e-media. Our compliance solutions include: training and consulting through our Steri-Safe® and Clinical Services programs as well as inbound/outbound communications, data reporting, and other regulatory compliance services. Our regulated recall and returns management solutions consist of communication, logistics, and data management services to support the recall, withdrawal, or return of expired or recalled products.

There were no material changes in the Company’s critical accounting policies since the filing of its 2015 Form 10-K. As discussed in the 2015 Form 10-K, the preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make certain estimates and assumptions that affect the amount of reported assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and revenues and expenses during the periods reported. Actual results may differ from those estimates.

Highlights of the three months ended March 31, 2016:

·

revenues grew to $874.2 million, a 31.8% increase over $663.3 million in the first quarter last year;

·

gross margins decreased to 42.2% from 42.4% in the first quarter last year;

·

operating income increased 10.9% to $140.9 million from $127.1 million in the first quarter last year;

·

we incurred $21.2 million in pre-tax expenses related to acquisitions, integration expense related to acquisitions, litigation expenses, plant conversion expenses, and a favorable change in the fair value of contingent consideration;

·

amortization expense increased to $18.3 million from $8.8 million in the first quarter last year;

·

cash flow from operations was $156.9 million;

·

dividends of $10.1 million were paid on March 15, 2016 to holders of our Series A Preferred Stock.

 

18


 

THREE MONTHS ENDED MARCH 31, 2016 COMPARED TO

THREE MONTHS ENDED MARCH 31, 2015

The following summarizes the Company’s operations:

 

In thousands, except per share data

 

 

 

Three Months Ended March 31,

 

 

 

2016

 

 

2015

 

 

 

$

 

 

%

 

 

$

 

 

%

 

Revenues

 

$

874,181

 

 

 

100.0

%

 

$

663,319

 

 

 

100.0

%

Cost of revenues

 

 

482,120

 

 

 

55.2

%

 

 

367,340

 

 

 

55.4

%

Depreciation - cost of revenues

 

 

22,641

 

 

 

2.6

%

 

 

14,648

 

 

 

2.2

%

Plant conversion expenses

 

 

236

 

 

 

0.0

%

 

 

 

 

 

0.0

%

Total cost of revenues

 

 

504,997

 

 

 

57.8

%

 

 

381,988

 

 

 

57.6

%

Gross profit

 

 

369,184

 

 

 

42.2

%

 

 

281,331

 

 

 

42.4

%

Selling, general and administrative expenses (exclusive of adjusting items, depreciation and amortization shown below)

 

 

181,569

 

 

 

20.8

%

 

 

115,431

 

 

 

17.4

%

Acquisition expenses

 

 

2,990

 

 

 

0.3

%

 

 

3,296

 

 

 

0.5

%

Integration expenses

 

 

19,268

 

 

 

2.2

%

 

 

8,886

 

 

 

1.3

%

Change in fair value of contingent consideration

 

 

(2,644

)

 

 

-0.3

%

 

 

(675

)

 

 

-0.1

%

Restructuring and plant conversion expenses

 

 

5

 

 

 

0.0

%

 

 

12,302

 

 

 

1.9

%

Litigation expenses

 

 

1,300

 

 

 

0.1

%

 

 

2,123

 

 

 

0.3

%

Total SG&A expenses (exclusive of depreciation and amortization shown below)

 

 

202,488

 

 

 

23.2

%

 

 

141,363

 

 

 

21.3

%

Depreciation

 

 

7,499

 

 

 

0.9

%

 

 

4,118

 

 

 

0.6

%

Amortization

 

 

18,274

 

 

 

2.1

%

 

 

8,797

 

 

 

1.3

%

Income from operations

 

 

140,923

 

 

 

16.1

%

 

 

127,053

 

 

 

19.2

%

Net interest expense

 

 

24,041

 

 

 

2.8

%

 

 

18,598

 

 

 

2.8

%

Other expense, net

 

 

1,251

 

 

 

0.1

%

 

 

598

 

 

 

0.1

%

Income tax expense

 

 

38,036

 

 

 

4.4

%

 

 

32,047

 

 

 

4.8

%

Net income

 

 

77,595

 

 

 

8.9

%

 

 

75,810

 

 

 

11.4

%

Less: net income attributable to noncontrolling interests

 

 

809

 

 

 

0.1

%

 

 

352

 

 

 

0.1

%

Net income attributable to Stericycle, Inc.

 

 

76,786

 

 

 

8.8

%

 

 

75,458

 

 

 

11.4

%

Less: mandatory convertible preferred stock dividend

 

 

10,106

 

 

 

1.2

%

 

 

 

 

 

0.0

%

Net income attributable to Stericycle, Inc. common shareholders

 

$

66,680

 

 

 

7.6

%

 

$

75,458

 

 

 

11.4

%

Earnings per share- diluted

 

$

0.78

 

 

 

 

 

 

$

0.87

 

 

 

 

 

 

Revenues: Our revenues increased $210.9 million, or 31.8%, in the first quarter of 2016 to $874.2 million from $663.3 million in the same period in 2015.

Domestic revenues increased $177.5 million, or 37.6%, to $649.7 million from $472.2 million in the same period in 2015. Organic revenue growth for domestic small account customers increased by $17.0 million, or approximately 6%, driven by an increase in Steri-Safe® revenues and regulated waste services for retailers. Organic revenue from domestic large account customers increased by $6.3 million, or approximately 4%, as we increased the total number of accounts and expanded our reusable sharps services and pharmaceutical waste disposal programs. Organic revenues for both small account customers and large account customers were negatively impacted by lower fuel surcharges as well as lower hazardous waste volume from our industrial customers. Organic revenues for recall and returns management services increased by $4.8 million in 2016. Organic revenues exclude revenue growth attributed to businesses acquired within the preceding twelve months. Revenues from domestic acquisitions closed within the preceding twelve months contributed $149.4 million to the increase in revenues in the first quarter of 2016.

International revenues increased $33.4 million, or 17.5%, in the first quarter of 2016, to $224.5 million from $191.1 million in the same period in 2015. Organic growth, currency rate fluctuations and acquisitions impact the comparison of 2016 and 2015. Organic growth in the international segment contributed $12.1 million in revenues, or approximately 7%. Organic growth excludes the effect of foreign exchange and acquisitions and divestitures less than one year old. The effect of foreign exchange rates unfavorably impacted international revenues in 2016 by $23.8 million as foreign

19


 

currencies declined against the U.S. dollar. Revenue from international acquisitions closed within the preceding twelve months contributed $45.1 million to the increase in revenues in the first quarter of 2016.

Cost of Revenues: Our cost of revenues increased $123.0 million, or 32.2%, in the first quarter of 2016 to $505.0 million from $382.0 million in the same period in 2015. As a percent of revenues, our costs of revenues increased 0.2% which resulted in consolidated gross profit of 42.2% during the first quarter of 2016 as compared to 42.4% during the same period in 2015. We incurred $0.2 million in plant conversion expenses during the first quarter of 2016.

In general, international gross profit is lower than domestic gross profit because international operations have fewer small account customers, which tend to provide higher gross profits. Historically, the international operations have had most of their revenues from large account customers, such as hospitals. As the international revenues increase, consolidated gross profit receive downward pressure due to this "business mix" shift, which may be offset by additional international small account market penetration, integration savings, and domestic business expansion.

Our domestic cost of revenues increased $101.3 million, or 40.2%, in the first quarter of 2016 to $353.6 million from $252.3 million in the same period in 2015. Domestic gross profit as a percent of revenues decreased to 45.6% during the first quarter of 2016 from 46.6% in the same period in 2015 primarily due to less than anticipated revenues from our industrial customers, which have a higher fixed cost structure. Additionally, higher disposal costs for some of our industrial waste project work in the quarter further unfavorably impacted domestic gross profit.

Our international cost of revenues increased $21.7 million, or 16.7%, in the first quarter of 2016 to $151.4 million from $129.7 million in the same period in 2015. International gross profit as a percent of revenues increased to 32.6% during the first quarter of 2016 from 32.1% during the same period in 2015 primarily due to the inclusion of the 2015 Shred-it acquisition, offset by a negative impact from higher costs related to the servicing of certain government contracts in our patient transportation business in the United Kingdom.

Selling, General and Administrative Expenses Exclusive of Adjusting Items, Depreciation and Amortization (“SG&A”): Our SG&A expenses increased $66.1 million, or 57.3%, in the first quarter of 2016 to $181.6 million from $115.4 million in the same period in 2015 to support our increase in revenues and the inclusion of the 2015 Shred-it acquisition. As a percent of revenues, these costs increased to 20.8% in the first quarter of 2016 from 17.4% in the same period in 2015.

Domestically, first quarter SG&A expenses increased $48.2 million, or 61.5%, to $126.8 million from $78.5 million in the same period in 2015 primarily related to increased healthcare benefit costs, compensation and marketing expenses, increased investment for growth, and the inclusion of the 2015 Shred-it acquisition. As a percent of revenues, SG&A increased to 19.5% in the first quarter of 2016 from 16.6% in the same period in 2015. As a percent of revenues, amortization expense of acquired intangible assets increased to 1.9% in the first quarter of 2016 as compared to 1.1% in the same period in 2015.

Internationally, first quarter SG&A expenses increased $17.9 million, or 48.5%, to $54.8 million from $36.9 million in the same period in 2015. As a percent of revenues, SG&A increased to 24.4% in the first quarter of 2016 from 19.3% in the same period in 2015. The following factors negatively impacted our first quarter international SG&A: higher costs related to the management of certain government contracts in our patient transportation business in the United Kingdom, compensation expenses in support of new business growth opportunities, and the inclusion of the 2015 Shred-it acquisition. As a percent of revenues, amortization expense of acquired intangible assets increased to 2.6% in the first quarter of 2016 as compared to 2.0% in the same period in 2015.

Income from Operations: Income from operations increased $13.9 million, or 10.9%, in the first quarter of 2016 to $140.9 million from $127.1 million in same period in 2015. Comparison of income from operations between the first quarter of 2016 and the same period of 2015 was affected by Adjusting Items as described below.

During the quarter ended March 31, 2016, we recognized $3.0 million in acquisition expenses, $19.3 million of expenses related to the integration of our acquisitions, mainly Shred-it, $1.3 million in litigation expenses, $0.2 million in plant conversion expenses, and a $2.6 million favorable change in the fair value of contingent consideration.

During the quarter ended March 31, 2015, we recognized $3.3 million in acquisition expenses, $8.9 million of expenses related to the integration of our acquisitions, $12.3 million in restructuring expenses, $2.1 million in litigation expenses, and a $0.7 million favorable change in the fair value of contingent consideration.

20


 

Domestically, our income from operations increased $17.9 million, or 15.6%, to $133.0 million in the first quarter of 2016 from $115.1 million in the same period in 2015.

Internationally, our income from operations decreased $4.1 million, or 34.2%, to $7.9 million in the first quarter of 2016 from $12.0 million in the same period in 2015.

Net Interest Expense: Net interest expense was at $24.0 million during the first quarter of 2016 and $18.6 million during the same period in 2015 due to increased borrowings to fund the acquisition of Shred-it in the fourth quarter of 2015.

Income Tax Expense: Income tax expense increased to $38.0 million in the first quarter of 2016 from $32.0 million in the same period in 2015. The reported tax rates for the quarters ended March 31, 2016 and 2015 were 32.9% and 29.7%, respectively. The increase in the current quarter tax rate is primarily related to the recognition of tax benefits in 2015.

Liquidity and Capital Resource:

The following senior credit facility, term loan, and the private placement notes require us to comply with various financial, reporting and other covenants and restrictions, including a restriction on dividend payments:

 

$1.20 billion senior credit facility weighted average rate 1.87%, due in 2019

$1.08 billion term loan weighted average rate 1.81%, due in 2020

$175 million private placement notes 3.89%, due in 2017

$125 million private placement notes 2.68%, due in 2019

$225 million private placement notes 4.47%, due in 2020

$150 million private placement notes 2.89%, due in 2021

$125 million private placement notes 3.26%, due in 2022

$200 million private placement notes 2.72%, due in 2022

$100 million private placement notes 2.79%, due in 2023

$150 million private placement notes 3.18%, due in 2023

 

The financial debt covenants are the same for the senior credit facility, term loan, and the private placement notes. At March 31, 2016, we were in compliance with all of our financial debt covenants. Our senior credit facility, term loan, and the private placement notes rank pari passu to each other and all other unsecured debt obligations.

As of March 31, 2016, we had $455.9 million of borrowings outstanding under our $1.20 billion senior unsecured credit facility, which includes foreign currency borrowings of $146.9 million. We also had $159.8 million committed to outstanding letters of credit under this facility. The unused portion of the revolving credit facility as of March 31, 2016 was $584.3 million. At March 31, 2016, our interest rates on borrowings under our revolving credit facility were as follows:

·

A fee of 0.2% on our revolving credit facility

·

For borrowings less than one month, the higher of the following

 

o

Federal funds rate plus 0.5%

 

o

Euro currency rate plus 0.9% or the prime rate plus 0.3%

·

For borrowings greater than one month: LIBOR plus 1.3%

The weighted average rate of interest on the unsecured revolving credit facility was 1.87% per annum, which includes the 0.2% facility fee at March 31, 2016.

As of March 31, 2016, we had $1.08 billion outstanding under our $1.50 billion term loan credit facility, weighted average rate of interest on the unsecured term loan facility was 1.81% per annum.

21


 

As of March 31, 2016, we had outstanding $175.0 million of seven-year 3.89% unsecured senior notes and $225.0 million of 10-year 4.47% unsecured senior notes issued to 39 institutional purchasers in a private placement completed in October 2010. Interest is payable in arrears semiannually on April 15 and October 15 beginning on April 15, 2011, and principal is payable at the maturity of the notes, October 15, 2017 in the case of the seven-year notes and October 15, 2020 in the case of the 10-year notes.

As of March 31, 2016, we had outstanding $125.0 million of seven-year 2.68% unsecured senior notes and $125.0 million of 10-year 3.26% unsecured senior notes issued to 46 institutional purchasers in a private placement completed in December 2012. Interest is payable in arrears semi-annually on June 12 and December 12 beginning on June 12, 2013, and principal is payable at the maturity of the notes, December 12, 2019 in the case of the seven-year notes and December 12, 2022 in the case of the 10-year notes.

As March 31, 2016, we had outstanding $200.0 million of seven-year 2.72% unsecured senior notes and $100.0 million of eight-year 2.79% unsecured senior notes issued to several institutional purchasers in a private placement completed in July 2015. Interest is payable in arrears semi-annually on January 1 and July 1 beginning on January 1, 2016, and principal is payable at the maturity of the notes, July 1, 2022 in the case of the seven-year notes and July 1, 2023 in the case of the eight-year notes.

As March 31, 2016, we had outstanding $150.0 million of six-year 2.89% unsecured senior notes and $150.0 million of eight-year 3.18% unsecured senior notes issued to several institutional purchasers in a private placement completed in October 2015. Interest is payable in arrears semiannually on April 1 and October 1 beginning on April 1, 2016, and principal is payable at the maturity of the notes, October 1, 2021 in the case of the six-year notes and October 1, 2023 in the case of the eight-year notes.

As of March 31, 2016, we had $246.4 million in promissory notes issued in connection with acquisitions during 2008 through 2016, $106.5 million in foreign subsidiary bank debt outstanding, and $14.3 million in capital lease obligations.

Working Capital: At March 31, 2016, our working capital increased $30.4 million to $204.8 million, as compared to $174.5 million at December 31, 2015.

Current assets decreased by $4.5 million, mainly driven by $10.0 million decrease in cash and cash equivalents balance at the end of the quarter, offset by $8.2 million increase in accounts receivable balance. Days sales outstanding (“DSO”) was calculated at 63 days at March 31, 2016 and 64 days at December 31, 2015.

Current liabilities decreased by $34.8 million, primarily related to a $50 million repayment of current portion of the term loan facility, decrease in accounts payable, partially offset by an increase in accrued income tax liabilities.

Net Cash Provided or Used: Net cash provided by operating activities increased $24.4 million, or 18.4%, to $156.9 million during three months ended March 31, 2016 from $132.6 million for the same period in 2015. Cash provided by operations as a ratio to net income was 202% and 175% for three months ended March 31, 2016 and 2015, respectively. On January 1, 2016, the Company adopted the guidance in Accounting Standards Update ("ASU") No. 2016-09, “Compensation - Stock Compensation (Topic 718) - Improvements to Employee Share-Based Payment Accounting.” ASU 2016-09 requires that all income tax-related cash flows resulting from share-based payments be reported as operating activities in the statement of cash flows. Previously, income tax benefits at settlement of an award were reported as a reduction to operating cash flows and an increase to financing cash flows to the extent that those benefits exceeded the income tax benefits reported in earnings during the award's vesting period. The Company has elected to apply that change in cash flow classification on a prospective basis, leaving previously reported net cash provided by operating activities and net cash used in financing activities in the accompanying Condensed Consolidated statement of Cash Flows for the period ended March 31, 2015 unchanged.

Net cash used in investing activities for three months ended March 31, 2016 was $58.3 million compared to $55.3 million in the same period in 2015. We used $9.3 million less in funds to acquire new businesses in 2016, offset by $12.8 million increase in capital expenditures. Our capital expenditures, as a percent of revenues, were at 3.9% in 2016 compare to 3.2% in 2015.

22


 

Net cash used in financing activities for three months ended March 31, 2016 was $108.4 million compared to $57.6 million for the same period in 2015. In 2016, we had $66.6 million net repayments on our senior credit facility and term loan facility, as compared to $26.6 million in 2015. We had share repurchases of $37.7 million in 2016 compared to $11.5 million in 2015, a decrease of $26.2 million. Dividends of $10.1 million were paid on March 15, 2016 to holders of our Series A Preferred Stock.

 

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are subject to market risks arising from changes in interest rates. Our potential additional interest expense over one year that would result from a hypothetical, instantaneous and unfavorable change of 100 basis points in the interest rate on all of our variable rate obligations would be approximately $16.6 million on a pre-tax basis.

We have exposure to commodity pricing for gas and diesel fuel for our trucks and for the purchase of containers and boxes. We do not hedge these items to manage the exposure.

We have exposure to foreign currency fluctuations. We have subsidiaries in twelve foreign countries whose functional currency is the local currency. Our international subsidiaries use local currency denominated lines of credit for their funding needs which is has no exposure to currency fluctuations. We translate results of operations of our international operations using an average exchange rate. Changes in foreign currency exchange rates could unfavorably impact our consolidated results of operations.

 

 

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

The term "disclosure controls and procedures" is defined in Rule 13a-15(e) of the Securities Exchange Act of 1934 as "controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Act is recorded, processed, summarized and reported, within the time periods specified in the [Securities and Exchange] Commission’s rules and forms." Our disclosure controls and procedures are designed to ensure that material information relating to us and our consolidated subsidiaries is accumulated and communicated to our management, including our President and Chief Executive Officer and our Chief Financial Officer as appropriate, to allow timely decisions regarding our required disclosures.

Our management, with the participation of our President and Chief Executive Officer and our Chief Financial Officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter covered by this Report. Based upon that evaluation, our President and Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this quarterly report, because of material weaknesses in internal control over financial reporting described below and also identified in Management’s Report on Internal Control Over Financial Reporting included in our Annual Report on Form 10-K for the year ended December 31, 2015. References to “COSO” or “COSO Framework” below refer to the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) in Internal Control-Integrated Framework.

Internal Control Over Financial Reporting

The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2015. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) in Internal Control-Integrated Framework (the “COSO Framework”). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that there were material weaknesses in internal controls over financial reporting described below. During the quarter ended March 31, 2016, there were no changes in our internal controls over financial reporting.

COSO Component - Risk Assessment

The Company’s risk assessment process did not operate effectively, resulting in a material weakness pertaining to this component of the COSO Framework. Specifically, the Company did not sufficiently identify risks associated with certain routine processes and related information systems, including revenue, and certain non-routine transactions. In addition, the Company did not properly design and implement appropriate process-level internal controls at the Environmental Solutions component of the Domestic Regulated and Compliance Services segment. The Environmental Solutions component primarily consists of the PSC Environmental Services, LLC component acquired on April 22, 2014,

23


 

which was excluded from management assessment of internal controls over financial reporting as of December 31, 2014. The material weakness relating to the risk assessment component of the internal control framework contributed to the other material weaknesses described below.

COSO Component - Control Activities

Revenue - The design and operating effectiveness of revenue control activities were inadequate to ensure that revenue transactions were properly measured and recorded in the appropriate period.

Environmental Solutions - The design and operating effectiveness of control activities at the Environmental Solutions component of the Domestic Regulated and Compliance Services segment of the business were inadequate to ensure the component’s financial statements were appropriately stated.

 

Planned Remediation of Material Weaknesses

We are committed to remediating the control deficiencies that gave rise to the material weaknesses described above by implementing changes to strengthen our risk assessment process and accountability for our internal control over financial reporting. Management is responsible for implementing changes and improvements in our internal control over financial reporting and for remediating the control deficiencies that gave rise to these material weaknesses.

To remediate the material weaknesses in our internal control over financial reporting described above, we will review, analyze, and properly document our processes related to internal controls over financial reporting, starting with our revenue processes. We will create standard policies and procedures related to internal control over financial reporting to be implemented throughout the organization. These measures will also include the implementation of financial reporting risk assessment and review processes to ensure the related significant accounting policies are implemented and applied properly under U.S. generally accepted accounting principles on a consistent basis throughout the Company.

The Company has engaged an external service provider to assist management with performing a comprehensive risk assessment, further documenting and updating the Company’s internal control over financial reporting at both the entity and transaction levels, and correcting the identified deficiencies including the material weaknesses. The material weaknesses will not be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

 

Changes in Internal Controls

 

Although we have taken steps toward our planned remediation of material weaknesses as described above, there were no changes implemented in our internal control over financial reporting during the quarter ended March 31, 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

FROM TIME TO TIME WE ISSUE FORWARD-LOOKING STATEMENTS RELATING TO SUCH THINGS AS ANTICIPATED FINANCIAL PERFORMANCE, BUSINESS PROSPECTS, ACQUISITION ACTIVITIES AND SIMILAR MATTERS.

THESE FORWARD-LOOKING STATEMENTS MAY INVOLVE RISKS AND UNCERTAINTIES, SOME OF WHICH ARE BEYOND OUR CONTROL (FOR EXAMPLE, GENERAL ECONOMIC CONDITIONS). OUR ACTUAL RESULTS COULD DIFFER SIGNIFICANTLY FROM THE RESULTS DESCRIBED IN THE FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE SUCH DIFFERENCES INCLUDE DIFFICULTIES IN COMPLETING THE INTEGRATION OF ACQUIRED BUSINESSES, CHANGES IN GOVERNMENTAL REGULATION OF MEDICAL WASTE COLLECTION AND TREATMENT, AND INCREASES IN TRANSPORTATION AND OTHER OPERATING COSTS, AS WELL AS VARIOUS OTHER FACTORS.

 

 

24


 

PART II. – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See Note 13 - Legal Proceedings in the Notes to the Condensed Consolidated Financial Statements (Item 1 of Part I).

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Under resolutions that our Board of Directors has adopted, we have been authorized to purchase a cumulative total of 24,621,640 shares of our common stock on the open market. As of March 31, 2016, we had purchased a cumulative total of 21,218,771 shares.

The following table provides information about our purchases of shares of our common stock during the three months ended March 31, 2016:      

Issuer Purchase of Equity Securities

 

Period

 

Total Number of Shares (or Units)

Purchased *

 

 

Average Price

Paid per Share

(or Unit)

 

 

Total Number of Shares (or Units) Purchased as Part

of Publicly

Announced Plans

or Programs

 

 

Maximum

Number of Shares

(or Units) that

May Yet Be

Purchased Under

the Plans or

Programs

 

January 1 – January 31, 2016

 

 

277,952

 

 

$

116.24

 

 

 

277,952

 

 

 

3,452,869

 

February 1 – February 29, 2016

 

 

50,000

 

 

 

107.69

 

 

 

50,000

 

 

 

3,402,869

 

March 1 – March 31, 2016

 

 

 

 

 

 

 

 

 

 

 

3,402,869

 

Total

 

 

327,952

 

 

$

114.93

 

 

 

327,952

 

 

 

3,402,869

 

 

25


 

ITEM 6. EXHIBITS

 

31.1

 

Rules 13a-14(a)/15d-14(a) Certification of Charles A. Alutto, President and Chief Executive Officer

 

 

 

31.2

 

Rule 13a-14(a)/15d-14(a) Certification of Daniel V. Ginnetti, Executive Vice President and Chief Financial Officer

 

 

 

32

 

Section 1350 Certification of Charles A. Alutto, President and Chief Executive Officer, and Daniel V. Ginnetti, Executive Vice President and Chief Financial Officer

 

 

 

101.INS XBRL

 

Instance Document

 

 

 

101.SCH XBRL

 

Taxonomy Extension Schema Document

 

 

 

101.CAL XBRL

 

Taxonomy Extension Calculation Linkbase Document

 

 

 

101.DEF XBRL

 

Taxonomy Definition Linkbase Document

 

 

 

101.LAB XBRL

 

Taxonomy Extension Label Linkbase Document

 

 

 

101.PRE XBRL

 

Taxonomy Extension Presentation Linkbase Document

 

 

 

26


 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: May 9, 2016

 

STERICYCLE, INC.

(Registrant)

By: /s/ Daniel V. Ginnetti

Daniel V. Ginnetti

Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

 

 

27


srcl-ex311_14.htm

Exhibit 31.1

Rule 13a-14(a)/15d-14(a) Certification

Charles A. Alutto

President and Chief Executive Officer

I, Charles A. Alutto, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Stericycle, Inc.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 9, 2016

 

/s/ Charles A. Alutto

 

Charles A. Alutto

 

President and Chief

 

Executive Officer

 

Stericycle, Inc.

 


srcl-ex312_15.htm

Exhibit 31.2

Rule 13a-14(a)/15d-14(a) Certification

Daniel V. Ginnetti

Executive Vice President and Chief Financial Officer

I, Daniel V. Ginnetti, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Stericycle, Inc.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 9, 2016

 

/s/ Daniel V. Ginnetti

 

Daniel V. Ginnetti

 

Executive Vice President and

 

Chief Financial Officer

 

Stericycle, Inc.

 


srcl-ex32_13.htm

 

Exhibit 32

SECTION 1350 CERTIFICATION

In reference to this quarterly report on Form 10-Q of Stericycle, Inc. we, Charles A. Alutto, President and Chief Executive Officer of the registrant, and Daniel V. Ginnetti, an Executive Vice President and the Chief Financial Officer of the registrant, certify as follows, pursuant to 18 U.S.C. §1350 (as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002):

(a)

the report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

(b)

the information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the registrant.

Date: May 9, 2016

 

/s/ Charles  A. Alutto

 

Charles A. Alutto

 

President and Chief

 

Executive Officer

 

Stericycle, Inc.

 

/s/ Daniel  V. Ginnetti

 

Daniel V. Ginnetti

 

Executive Vice President and

 

Chief Financial Officer

 

Stericycle, Inc.

 

 


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srcl-20160331.xsd
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srcl-20160331_cal.xml
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srcl-20160331_def.xml
Attachment: XBRL TAXONOMY EXTENSION DEFINITION LINKBASE


srcl-20160331_lab.xml
Attachment: XBRL TAXONOMY EXTENSION LABEL LINKBASE


srcl-20160331_pre.xml
Attachment: XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE


v3.4.0.3
Document and Entity Information - shares
3 Months Ended
Mar. 31, 2016
Apr. 29, 2016
Document Document And Entity Information [Abstract]    
Entity Registrant Name STERICYCLE INC  
Entity Central Index Key 0000861878  
Current Fiscal Year End Date --12-31  
Entity Filer Category Large Accelerated Filer  
Document Type 10-Q  
Document Period End Date Mar. 31, 2016  
Document Fiscal Year Focus 2016  
Document Fiscal Period Focus Q1  
Trading Symbol SRCL  
Amendment Flag false  
Entity Common Stock, Shares Outstanding   84,912,603

v3.4.0.3
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands
Mar. 31, 2016
Dec. 31, 2015
Current Assets:    
Cash and cash equivalents $ 45,655 $ 55,634
Short-term investments 64 69
Accounts receivable, less allowance for doubtful accounts of $22,964 in 2016 and $22,329 in 2015 622,709 614,494
Prepaid expenses 46,198 46,740
Other current assets 42,732 44,891
Total Current Assets 757,358 761,828
Property, plant and equipment, less accumulated depreciation of $453,753 in 2016 and $426,019 in 2015 677,525 665,602
Goodwill 3,790,016 3,758,177
Intangible assets, less accumulated amortization of $170,507 in 2016 and $151,025 in 2015 1,840,844 1,842,561
Other assets 46,801 49,282
Total Assets 7,112,544 7,077,450
Current Liabilities:    
Current portion of long-term debt 114,066 161,409
Accounts payable 133,779 149,202
Accrued liabilities 218,933 197,329
Deferred revenues 17,543 16,989
Other current liabilities 68,192 62,420
Total Current Liabilities 552,513 587,349
Long-term debt, net of current portion 3,038,083 3,052,639
Deferred income taxes 617,011 608,272
Other liabilities 86,448 81,352
Equity:    
Common stock (par value $0.01 per share, 120,000,000 shares authorized, 84,829,822 issued and outstanding in 2016 and 84,852,584 issued and outstanding in 2015) 848 849
Additional paid-in capital 1,172,962 1,143,020
Accumulated other comprehensive loss (265,018) (282,631)
Retained earnings 1,897,636 1,868,645
Total Stericycle, Inc.’s Equity 2,806,436 2,729,891
Noncontrolling interest 12,053 17,947
Total Equity 2,818,489 2,747,838
Total Liabilities and Equity 7,112,544 7,077,450
Series A preferred stock    
Equity:    
Preferred stock (par value $0.01 per share, 1,000,000 shares authorized), Mandatory Convertible Preferred Stock, Series A, 770,000 issued and outstanding in 2016 and 2015 $ 8 $ 8

v3.4.0.3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)
$ in Thousands
Mar. 31, 2016
Dec. 31, 2015
Accounts receivable, allowance for doubtful accounts $ 22,964 $ 22,329
Property, plant and equipment, accumulated depreciation 453,753 426,019
Intangible assets, accumulated amortization $ 170,507 $ 151,025
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Common stock, authorized (in shares) 120,000,000 120,000,000
Common stock, issued (in shares) 84,829,822 84,852,584
Common stock, outstanding (in shares) 84,829,822 84,852,584
Series A preferred stock    
Preferred stock, par value (in dollars per share) $ 0.01 $ 0.01
Preferred stock, authorized (in shares) 1,000,000 1,000,000
Preferred stock, issued (in shares) 770,000 770,000
Preferred stock, outstanding (in shares) 770,000 770,000

v3.4.0.3
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Income Statement [Abstract]    
Revenues $ 874,181 $ 663,319
Costs and Expenses:    
Cost of revenues (exclusive of depreciation shown below) 482,356 367,340
Depreciation - cost of revenues 22,641 14,648
Selling, general and administrative expenses (exclusive of depreciation and amortization shown below) 202,488 141,363
Depreciation – selling, general and administrative expenses 7,499 4,118
Amortization 18,274 8,797
Total Costs and Expenses 733,258 536,266
Income from Operations 140,923 127,053
Other Income (Expense):    
Interest income 21 35
Interest expense (24,062) (18,633)
Other expense, net (1,251) (598)
Total Other Expense (25,292) (19,196)
Income Before Income Taxes 115,631 107,857
Income tax expense 38,036 32,047
Net Income 77,595 75,810
Less: net income attributable to noncontrolling interests 809 352
Net Income Attributable to Stericycle, Inc. 76,786 75,458
Less: mandatory convertible preferred stock dividend 10,106 0
Net Income Attributable to Stericycle, Inc. Common Shareholders $ 66,680 $ 75,458
Earnings Per Common Share Attributable to Stericycle, Inc. Common Shareholders:    
Basic (in dollars per share) $ 0.79 $ 0.89
Diluted (in dollars per share) $ 0.78 $ 0.87
Weighted Average Number of Common Shares Outstanding:    
Basic (in shares) 84,705,000 85,037,823
Diluted (in shares) 85,845,501 86,357,006

v3.4.0.3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Statement Of Income And Comprehensive Income [Abstract]    
Net Income $ 77,595 $ 75,810
Other Comprehensive Income/ (Loss):    
Foreign currency translation adjustments 17,164 (64,501)
Amortization of cash flow hedge into income, net of tax (($172) and ($54), for the three months ended March 31, 2016 and 2015, respectively) 269 90
Change in fair value of cash flow hedge, net of tax (($89) and $2,381 for the three months ended March 31, 2016 and 2015, respectively) 242 (4,424)
Total Other Comprehensive Loss 17,675 (68,835)
Comprehensive Income 95,270 6,975
Less: comprehensive income/ (loss) attributable to noncontrolling interests 871 (468)
Comprehensive Income Attributable to Stericycle, Inc. Common Shareholders $ 94,399 $ 7,443

v3.4.0.3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Statement Of Income And Comprehensive Income [Abstract]    
Amortization of cash flow hedge into income, tax $ (172) $ (54)
Change in fair value of cash flow hedge, tax $ (89) $ 2,381

v3.4.0.3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
OPERATING ACTIVITIES:    
Net Income $ 77,595 $ 75,810
Adjustments to reconcile net income to net cash provided by operating activities:    
Stock compensation expense 6,105 5,487
Excess tax benefit of stock options exercised 0 (8,222)
Depreciation 30,140 18,766
Amortization 18,274 8,797
Deferred income taxes 6,932 (2,957)
Other, net (2,644) 5,313
Changes in operating assets and liabilities, net of effect of acquisitions:    
Accounts receivable (3,918) (14,491)
Accounts payable (15,203) 5,443
Accrued liabilities 21,151 35,924
Deferred revenues 487 (628)
Other assets and liabilities 18,030 3,312
Net cash provided by operating activities 156,949 132,554
INVESTING ACTIVITIES:    
Payments for acquisitions, net of cash acquired (24,884) (34,210)
Proceeds from investments 7 257
Proceeds from sale of property and equipment 766 0
Capital expenditures (34,185) (21,356)
Net cash used in investing activities (58,296) (55,309)
FINANCING ACTIVITIES:    
Repayments of long-term debt and other obligations (6,879) (9,780)
Proceeds from foreign bank debt 15,607 4,851
Repayments of foreign bank debt (18,721) (38,252)
Proceeds from term loan 0 250,000
Repayment of term loan (171,000) 0
Proceeds from senior credit facility 457,959 394,097
Repayments of senior credit facility (353,520) (670,254)
Payments of capital lease obligations (1,381) (988)
Payment of cash flow hedge 0 (8,833)
Purchases and cancellations of treasury stock (37,693) (11,516)
Proceeds from issuance of common stock 22,310 27,452
Dividends paid on mandatory convertible preferred stock (10,106) 0
Excess tax benefit of stock options exercised 0 8,222
Payments to noncontrolling interests (4,997) (2,603)
Net cash used in financing activities (108,421) (57,604)
Effect of exchange rate changes on cash and cash equivalents (211) (3,594)
Net (decrease)/ increase in cash and cash equivalents (9,979) 16,047
Cash and cash equivalents at beginning of period 55,634 22,236
Cash and cash equivalents at end of period 45,655 38,283
NON-CASH INVESTING ACTIVITIES:    
Issuances of obligations for acquisitions $ 13,013 $ 21,543

v3.4.0.3
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - USD ($)
shares in Thousands, $ in Thousands
Total
Preferred Stock
Series A preferred stock
Common Stock
Additional Paid-In Capital
Retained Earnings
Accumulated Other Comprehensive Income (Loss)
Noncontrolling Interest
Beginning Balance (in shares) at Dec. 31, 2014     84,884        
Beginning Balance at Dec. 31, 2014 $ 1,917,185   $ 849 $ 289,211 $ 1,743,371 $ (138,419) $ 22,173
Net Income 268,013       267,046   967
Currency translation adjustment (140,648)         (140,809) 161
Change in qualifying cash flow hedge, net of tax (3,403)         (3,403)  
Issuance of common stock for exercise of options, restricted stock units and employee stock purchases (in shares)     973        
Issuance of common stock for exercise of options, restricted stock units and employee stock purchases 68,640   $ 10 68,630      
Issuance of mandatory convertible preferred stock (in shares)   770          
Issuance of mandatory convertible preferred stock 746,900 $ 8   746,892      
Purchase and cancellation of treasury stock (in shares)     (1,004)        
Purchase and cancellation of treasury stock (131,676)   $ (10)   (131,666)    
Preferred stock dividend (10,106)       (10,106)    
Stock compensation expense 21,750     21,750      
Excess tax benefit of stock options exercised 16,897     16,897      
Reduction to noncontrolling interests due to additional ownership (5,714)     (360)     (5,354)
Ending Balance (in shares) at Dec. 31, 2015   770 84,853        
Ending Balance at Dec. 31, 2015 2,747,838 $ 8 $ 849 1,143,020 1,868,645 (282,631) 17,947
Net Income 77,595       76,786   809
Currency translation adjustment 17,164         17,102 62
Change in qualifying cash flow hedge, net of tax 511         511  
Issuance of common stock for exercise of options, restricted stock units and employee stock purchases (in shares)     305        
Issuance of common stock for exercise of options, restricted stock units and employee stock purchases 22,873   $ 3 22,870      
Purchase and cancellation of treasury stock (in shares)     (328)        
Purchase and cancellation of treasury stock (37,693)   $ (4)   (37,689)    
Preferred stock dividend (10,106)       (10,106)    
Stock compensation expense 6,105     6,105      
Reduction to noncontrolling interests due to additional ownership (5,798)     967     (6,765)
Ending Balance (in shares) at Mar. 31, 2016   770 84,830        
Ending Balance at Mar. 31, 2016 $ 2,818,489 $ 8 $ 848 $ 1,172,962 $ 1,897,636 $ (265,018) $ 12,053

v3.4.0.3
BASIS OF PRESENTATION
3 Months Ended
Mar. 31, 2016
Organization Consolidation And Presentation Of Financial Statements [Abstract]  
BASIS OF PRESENTATION

NOTE 1 – BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. However, the Company believes the disclosures included in the accompanying condensed consolidated financial statements are adequate to make the information presented not misleading. In our opinion, all adjustments necessary for a fair presentation for the periods presented have been reflected and are of a normal recurring nature. These condensed consolidated financial statements should be read in conjunction with the Stericycle, Inc. and Subsidiaries Consolidated Financial Statements and notes thereto for the year ended December 31, 2015, as filed with our Annual Report on Form 10-K for the year ended December 31, 2015. The results of operations for the three months ended March 31, 2016 are not necessarily indicative of the results that may be achieved for the entire year ending December 31, 2016.

There were no material changes in the Company’s significant accounting policies since the filing of its 2015 Form 10-K. As discussed in the 2015 Form 10-K, the preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make certain estimates and assumptions that affect the amount of reported assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and revenues and expenses during the periods reported. Actual results may differ from those estimates.

We have evaluated subsequent events through the date of filing this quarterly report on Form 10-Q. No events have occurred that would require adjustment to or disclosure in the condensed consolidated financial statements.


v3.4.0.3
ACQUISITIONS
3 Months Ended
Mar. 31, 2016
Business Combinations [Abstract]  
ACQUISITIONS

NOTE 2 – ACQUISITIONS

The following table summarizes the locations of our acquisitions for the three months ended March 31, 2016

 

Acquisition Locations

 

2016

 

United States

 

 

5

 

Romania

 

 

1

 

Spain

 

 

1

 

Total

 

 

7

 

 

During the quarter ended March 31, 2016, we completed seven acquisitions. Domestically, we acquired 100% of the stock of one regulated waste business and selected assets of four secure information destruction businesses. Internationally, we acquired selected assets of one regulated waste business in Romania and one in Spain.

The following table summarizes the aggregate purchase price paid for acquisitions and other adjustments of consideration to be paid for acquisitions during the three months ended March 31:

 

In thousands

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

 

2016

 

 

2015

 

Cash

 

$

24,884

 

 

$

34,210

 

Promissory notes

 

 

11,595

 

 

 

7,618

 

Deferred consideration

 

 

1,361

 

 

 

624

 

Contingent consideration

 

 

57

 

 

 

13,301

 

Total purchase price

 

$

37,897

 

 

$

55,753

 

 

For financial reporting purposes, our acquisitions were accounted for using the acquisition method of accounting. These acquisitions resulted in the recognition of goodwill in our financial statements reflecting the premium paid to acquire businesses that we believe are complementary to our existing operations and fit our growth strategy. During the three months ended March 31, 2016, we recognized a net increase in goodwill of $25.5 million, excluding the effect of foreign currency translation (see Note 9 – Goodwill and Other Intangible Assets). A net increase of $23.7 million was assigned to our United States reportable segment, and a net increase of $1.8 million was assigned to our International reportable segment. Approximately $20.7 million of the goodwill recognized during the three months ended March 31, 2016 will be deductible for income taxes.

During the three months ended March 31, 2016, we recognized a net increase in intangible assets from acquisitions of $8.4 million, excluding the effect of foreign currency translation. The changes include $7.7 million in the estimated fair value of acquired customer relationships with amortizable lives of 10 to 40 years and $0.7 million in covenant not-to-compete with an amortizable life of 5 years.

The purchase prices for these acquisitions in excess of acquired tangible and identifiable intangible assets have been primarily allocated to goodwill, and are preliminary, pending completion of certain intangible asset valuations and finalization of the opening balance sheet. The following table summarizes the preliminary purchase price allocation for current period acquisitions and other adjustments to purchase price allocations during the three months ended March 31:

 

In thousands

 

 

 

Three Months Ended March 31,

 

 

 

2016

 

 

2015

 

Fixed assets

 

$

3,345

 

 

$

(1,477

)

Intangibles

 

 

8,436

 

 

 

19,791

 

Goodwill

 

 

25,519

 

 

 

41,190

 

Accounts receivable

 

 

1,715

 

 

 

4,217

 

Net other assets/ (liabilities)

 

 

133

 

 

 

59

 

Current liabilities

 

 

(201

)

 

 

(4,650

)

Net deferred tax liabilities

 

 

(1,050

)

 

 

(3,377

)

Total purchase price allocation

 

$

37,897

 

 

$

55,753

 

 

During the three months ended March 31, 2016 and 2015, the Company incurred $3.0 million and $3.3 million, respectively, of acquisition related expenses. These expenses are included with “Selling, general and administrative expenses” (“SG&A”) on our Condensed Consolidated Statements of Income. The results of operations of these acquired businesses have been included in the Condensed Consolidated Statements of Income from the date of the acquisition.


v3.4.0.3
NEW ACCOUNTING STANDARDS
3 Months Ended
Mar. 31, 2016
Accounting Changes And Error Corrections [Abstract]  
NEW ACCOUNTING STANDARDS

NOTE 3 – NEW ACCOUNTING STANDARDS

Accounting Standards Recently Adopted

Compensation - Stock Compensation

On January 1, 2016, the Company adopted the guidance in Accounting Standards Update ("ASU") No. 2016-09, “Compensation - Stock Compensation (Topic 718) - Improvements to Employee Share-Based Payment Accounting.” Under this ASU, entities are permitted to make an accounting policy election to either estimate forfeitures on share-based payment awards, as previously required, or to recognize forfeitures as they occur. The Company has elected to recognize forfeitures as they occur and the impact of that change in accounting policy has been evaluated and determined to be insignificant and resulted in no cumulative-effect change to the Company’s retained earnings. Additionally, ASU 2016-09 requires that all income tax effects related to settlements of share-based payment awards be reported in earnings as an increase or decrease to income tax expense (benefit), net. Previously, income tax benefits at settlement of an award were reported as an increase (or decrease) to additional paid-in capital to the extent that those benefits were greater than (or less than) the income tax benefits reported in earnings during the award's vesting period. The requirement to report those income tax effects in earnings has been applied on a prospective basis to settlements occurring on or after January 1, 2016 and the impact of applying that guidance was $2.9 million to the condensed consolidated financial statements for the period ended March 31, 2016. ASU 2016-09 also requires that all income tax-related cash flows resulting from share-based payments be reported as operating activities in the statement of cash flows. Previously, income tax benefits at settlement of an award were reported as a reduction to operating cash flows and an increase to financing cash flows to the extent that those benefits exceeded the income tax benefits reported in earnings during the award's vesting period. The Company has elected to apply that change in cash flow classification on a prospective basis, leaving previously reported net cash provided by operating activities and net cash used in financing activities in the accompanying Condensed Consolidated Statement of Cash Flows for the period ended March 31, 2015 unchanged. The remaining provisions of ASU 2016-09 did not have a material impact on the accompanying condensed consolidated financial statements.

Accounting Standards Issued But Not Yet Adopted

Revenue From Contracts With Customers

In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers" (Topic 606), guidance to provide a single and comprehensive revenue recognition model for all contracts with customers. The revenue guidance contains principles that an entity will apply to determine the measurement of revenue and timing of when it is recognized. The underlying principle is that an entity will recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services. The amended authoritative guidance associated with revenue recognition is effective for the Company on January 1, 2018. The amended guidance may be applied retrospectively for all periods presented or retrospectively with the cumulative effect of initially applying the amended guidance recognized at the date of initial application. We are in the process of assessing the provisions of the new revenue recognition standard and have not determined whether the adoption will have a material impact on our consolidated financial statements.

 

Leases

In February 2016, the FASB issued ASU No. 2016-02, “Leases” (Topic 842). This ASU will require lessees to record a right-of-use asset and lease liability on the balance sheet for all leases with terms of more than 12 months. Recognition, measurement and presentation of expenses will depend on classification as a finance or operating lease. This ASU also requires certain quantitative and qualitative disclosures. Accounting guidance for lessors is largely unchanged. The amendments should be applied on a modified retrospective basis. ASU 2016-02 is effective for us beginning January 1, 2019. We are beginning to evaluate the impact that the adoption of ASU 2016-02 will have on our consolidated financial statements and related disclosures.


v3.4.0.3
FAIR VALUE MEASUREMENTS
3 Months Ended
Mar. 31, 2016
Fair Value Disclosures [Abstract]  
FAIR VALUE MEASUREMENTS

NOTE 4 – FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity's own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Inputs that are generally unobservable and typically reflect management’s judgment about the assumptions that market participants would use in pricing the asset or liability.

Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of assets and liabilities and their placement within the fair value hierarchy levels. The impact of our creditworthiness has been considered in the fair value measurements noted below. In addition, the fair value measurement of a liability must reflect the nonperformance risk of an entity. There were no movements of items between fair value hierarchies.

 

In thousands

 

 

 

 

 

 

 

Fair Value Measurements Using

 

 

 

Total as of

March 31, 2016

 

 

Level 1

Inputs

 

 

Level 2

Inputs

 

 

Level 3

Inputs

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

45,655

 

 

$

45,655

 

 

$

 

 

$

 

Short-term investments

 

 

64

 

 

$

64

 

 

 

 

 

 

 

Derivative financial instruments

 

 

954

 

 

 

 

 

 

954

 

 

 

 

Total assets

 

$

46,673

 

 

$

45,719

 

 

$

954

 

 

$

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contingent consideration

 

$

22,967

 

 

$

 

 

$

 

 

$

22,967

 

Total liabilities

 

$

22,967

 

 

$

 

 

$

 

 

$

22,967

 

 

In thousands

 

 

 

 

 

 

 

Fair Value Measurements Using

 

 

 

Total as of

December 31, 2015

 

 

Level 1

Inputs

 

 

Level 2

Inputs

 

 

Level 3

Inputs

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

55,634

 

 

$

55,634

 

 

$

 

 

$

 

Short-term investments

 

 

69

 

 

 

69

 

 

 

 

 

 

 

Derivative financial instruments

 

 

1,207

 

 

 

 

 

 

1,207

 

 

 

 

Total assets

 

$

56,910

 

 

$

55,703

 

 

$

1,207

 

 

$

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contingent consideration

 

$

25,390

 

 

$

 

 

$

 

 

$

25,390

 

Total liabilities

 

$

25,390

 

 

$

 

 

$

 

 

$

25,390

 

For our derivative financial instruments we use a market approach valuation technique based on observable market transactions of spot and forward rates.

We recorded a $1.0 million asset related to the fair value of the U.S. dollar-Canadian dollar foreign currency swap which was classified as other assets at March 31, 2016. The objective of the swap is to offset the foreign exchange risk to the U.S. dollar equivalent cash outflows for our Canadian subsidiary.

We had contingent consideration liabilities recorded using Level 3 inputs in the amount of $23.0 million, of which $6.9 million was classified as current liabilities at March 31, 2016. Contingent consideration liabilities were $25.4 million at December 31, 2015. Contingent consideration represents amounts expected to be paid as part of acquisition consideration only if certain future events occur. These events are usually targets for revenues or earnings related to the business acquired. We arrive at the fair value of contingent consideration by applying a weighted probability of potential outcomes to the maximum possible payout. The calculation of these potential outcomes is dependent on both past financial performance and management assumptions about future performance. If the financial performance measures were all fully met, our maximum liability would be $40.2 million at March 31, 2016. Contingent consideration liabilities are reassessed each quarter and are reflected in the Condensed Consolidated Balance Sheets as part of “Other current liabilities” and “Other liabilities”. Changes to contingent consideration are reflected in the table below:

 

In thousands

 

Contingent consideration at January 1, 2016

 

$

25,390

 

Increases due to acquisitions

 

 

57

 

Decrease due to payments

 

 

(1,000

)

Changes due to foreign currency fluctuations

 

 

1,164

 

Changes in fair value reflected in Selling, general, and administrative expenses

 

 

(2,644

)

Contingent consideration at March 31, 2016

 

$

22,967

 

 

Fair Value of Debt: At March 31, 2016, the fair value of the Company’s debt obligations was estimated, using Level 2 inputs, at $3.13 billion compare to a carrying amount of $3.15 billion. At December 31, 2015, the fair value of the Company’s debt obligations was estimated, using Level 2 inputs, at $3.22 billion compared to a carrying amount of $3.21 billion. The fair values were estimated using an income approach by applying market interest rates for comparable instruments. The Company has no current plans to retire a significant amount of its debt prior to maturity.


v3.4.0.3
INCOME TAXES
3 Months Ended
Mar. 31, 2016
Income Tax Disclosure [Abstract]  
INCOME TAXES

NOTE 5 – INCOME TAXES

We file income tax returns in the U.S, in various states and in certain foreign jurisdictions.

The Company has recorded accruals to cover certain unrecognized tax positions. Such unrecognized tax positions relate to additional taxes that the Company may be required to pay in various tax jurisdictions. During the course of examinations by various taxing authorities, proposed adjustments may be asserted. The Company evaluates such items on a case-by-case basis and adjusts the accrual for unrecognized tax positions as deemed necessary. During the quarter ended March 31, 2016, we had no material changes to our accruals related to previous or current uncertain tax positions. The effective tax rates for the quarters ended March 31, 2016 and 2015 were approximately 32.9% and 29.7%, respectively. The increase in the current quarter tax rate is primarily related to the recognition of tax benefits in 2015.


v3.4.0.3
STOCK BASED COMPENSATION
3 Months Ended
Mar. 31, 2016
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]  
STOCK BASED COMPENSATION

NOTE 6 – STOCK BASED COMPENSATION

At March 31, 2016, we had the following active stock option and stock purchase plans:

·

the 2014 Incentive Stock Plan, which our stockholders approved in May 2014;

·

the 2011 Incentive Stock Plan, which our stockholders approved in May 2011;

·

the 2008 Incentive Stock Plan, which our stockholders approved in May 2008;

·

the 2005 Incentive Stock Plan, which our stockholders approved in April 2005;

·

the 2000 Non-statutory Stock Option Plan, which expired in February 2010;

·

the Employee Stock Purchase Plan (“ESPP”), which our stockholders approved in May 2001.

Stock-Based Compensation Expense:

The following table presents the total stock-based compensation expense resulting from stock option awards, restricted stock units (“RSUs”), and the ESPP included in the Condensed Consolidated Statements of Income:

 

In thousands

 

 

 

Three Months Ended March 31,

 

 

 

2016

 

 

2015

 

Cost of revenues – stock option plan

 

$

15

 

 

$

23

 

Selling, general and administrative – stock option plan

 

 

4,752

 

 

 

4,729

 

Selling, general and administrative – RSUs

 

 

559

 

 

 

346

 

Selling, general and administrative – ESPP

 

 

779

 

 

 

389

 

Total pre-tax expense

 

$

6,105

 

 

$

5,487

 

 

Stock Options:

Stock option activity for the three months ended March 31, 2016, is summarized as follows:

 

 

 

Number of

Options

 

 

Weighted

Average

Exercise

Price per

Share

 

 

Weighted

Average

Remaining

Contractual Life

 

 

Total Aggregate Intrinsic Value

 

 

 

 

 

 

 

 

 

 

 

(in years)

 

 

(in thousands)

 

Outstanding at beginning of year

 

 

5,334,803

 

 

$

92.02

 

 

 

 

 

 

 

 

 

Granted

 

 

1,008,569

 

 

 

111.29

 

 

 

 

 

 

 

 

 

Exercised

 

 

(306,088

)

 

 

73.22

 

 

 

 

 

 

 

 

 

Forfeited

 

 

(28,412

)

 

 

118.19

 

 

 

 

 

 

 

 

 

Canceled or expired

 

 

(1,939

)

 

 

86.92

 

 

 

 

 

 

 

 

 

Outstanding at March 31, 2016

 

 

6,006,933

 

 

 

96.10

 

 

 

5.92

 

 

$

185,247

 

Exercisable at March 31, 2016

 

 

3,225,121

 

 

 

80.59

 

 

 

4.93

 

 

$

147,947

 

 

As of March 31, 2016, there was $38.7 million of total unrecognized compensation expense related to non-vested option awards, which is expected to be recognized over a weighted average period of 3.58 years.

The following table sets forth the total intrinsic value of options exercised:

 

 

 

Three Months Ended March 31,

 

 

 

2016

 

 

2015

 

Total intrinsic value of options exercised

 

$

13,229

 

 

$

29,525

 

 

The total intrinsic value of options exercised represents the total pre-tax value (the difference between the sales price on that trading day the option was exercised and the exercise price associated with the respective option).

The Company uses historical data to estimate expected life and volatility. The estimated fair value of stock options at the time of the grant using the Black-Scholes option pricing model was as follows:

 

 

 

Three Months Ended March 31,

 

 

 

2016

 

 

2015

 

Stock options granted (shares)

 

 

1,008,569

 

 

 

860,534

 

Weighted average fair value at grant date (per share)

 

$

20.19

 

 

$

22.84

 

Assumptions:

 

 

 

 

 

 

 

 

Expected term (in years)

 

 

4.76

 

 

 

4.79

 

Expected volatility

 

 

18.02

%

 

 

16.62

%

Expected dividend yield

 

 

%

 

 

%

Risk free interest rate

 

 

1.26

%

 

 

1.48

%

 

Restricted Stock Units:

Restricted stock units (“RSUs”) vest annually, or at the end of three and five years. Our 2008, 2011 and 2014 Plans include a share reserve related to RSUs granted at a 2 -1 ratio. A summary of the status of our non-vested RSUs and changes during the three months ended March 31, 2016, are as follows:

 

 

 

Number of

Options

 

 

Weighted

Average

Grant Date

Fair Value

 

 

Weighted

Average Remaining Contractual Life

 

 

Total Aggregate Intrinsic Value

 

 

 

 

 

 

 

 

 

 

 

(in years)

 

 

(in thousands)

 

Non-vested at beginning of year

 

 

71,451

 

 

$

101.29

 

 

 

 

 

 

 

 

 

Granted

 

 

53,267

 

 

 

111.12

 

 

 

 

 

 

 

 

 

Non-vested at March 31, 2016

 

 

124,718

 

 

 

105.57

 

 

 

2.34

 

 

$

15,738

 

 

As of March 31, 2016, there was $8.9 million of total unrecognized compensation expense related to RSUs, which is expected to be recognized over a weighted average period of 3.15 years.


v3.4.0.3
PREFERRED STOCK
3 Months Ended
Mar. 31, 2016
Equity [Abstract]  
PREFERRED STOCK

NOTE 7 – PREFERRED STOCK

 

At March 31, 2016, we had 1,000,000 authorized shares of preferred stock and 770,000 shares issued and outstanding of Mandatory Convertible Preferred Stock.

Series A Mandatory Convertible Preferred Stock Offering: On September 15, 2015, we completed a registered public offering of 7,700,000 depositary shares, each representing a 1/10th interest in a share of our 5.25% Series A Mandatory Convertible Preferred Stock, par value $0.01 per share (the “Series A Preferred Stock”), at a public offering price of $100.00 per depository share for total gross proceeds of $770.0 million.

Unless earlier converted or redeemed, each share of the Series A Preferred Stock will automatically convert into between 5.8716 and 7.3394 shares of our common stock, subject to anti-dilution and other adjustments, on the mandatory conversion date, which is expected to be September 15, 2018. The number of shares of our common stock issuable on conversion will be determined based on the volume-weighted average price of our common stock over the 20 trading day period commencing on and including the 23rd scheduled trading day prior to September 15, 2018. Subject to certain restrictions, at any time prior to September 15, 2018, holders of the Series A Preferred Stock may elect to convert all or a portion of their shares into common stock at the minimum conversion rate of 5.8716 shares of common stock per share of Series A Preferred Stock, subject to adjustment.

Dividends on shares of the Series A Preferred Stock are payable on a cumulative basis when, as and if declared by our board of directors, or an authorized committee thereof, at an annual rate of 5.25% on the liquidation preference of $1,000 per share (and, correspondingly, $100.00 per share with respect to the depositary shares). The dividends may be payable in cash, or subject to certain limitations, in shares of our common stock or any combination of cash and shares of our common stock on March 15, June 15, September 15 and December 15 of each year, commencing on December 15, 2015, and to, and including, September 15, 2018.


v3.4.0.3
EARNINGS PER COMMON SHARE
3 Months Ended
Mar. 31, 2016
Earnings Per Share [Abstract]  
EARNINGS PER COMMON SHARE

NOTE 8 – EARNINGS PER COMMON SHARE

 

Basic earnings per share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include outstanding stock options, shares to be purchased under the Company’s employee stock purchase plan, RSUs, and the assumed conversion of mandatory convertible preferred stock. The effect of potentially dilutive securities is reflected in diluted earnings per share by application of the “treasury stock method” for outstanding restricted stock awards and stock options. Under the treasury stock method, an increase in the fair market value of the Company’s common stock can result in a greater dilutive effect from potentially dilutive securities. For the issue of the mandatory convertible preferred stock, we use the “if-converted method”. Under the if-converted method, the preferred dividend applicable to convertible preferred stock is added back to net income attributable to Stericycle, the numerator. The Mandatory Convertible Preferred shares are assumed to be converted to common shares at the beginning of the period or, if later, at the time of issuance, and the resulting common shares are included in the denominator. In applying the if-converted method, conversion shall not be assumed for purposes of computing diluted EPS if the effect would be anti-dilutive.

The following table sets forth the computation of basic and diluted earnings per share:

 

In thousands, except share and per share data

 

 

 

Three Months Ended March 31,

 

 

 

2016

 

 

2015

 

Numerator:

 

 

 

 

 

 

 

 

Net income attributable to Stericycle, Inc.

 

$

76,786

 

 

$

75,458

 

Less: mandatory convertible preferred stock dividend

 

 

10,106

 

 

 

 

Numerator for basic earnings per share attributable to Stericycle, Inc. common shareholders

 

$

66,680

 

 

$

75,458

 

Denominator:

 

 

 

 

 

 

 

 

Denominator for basic earnings per share-weighted average shares

 

 

84,705,000

 

 

 

85,037,823

 

Effect of diluted securities:

 

 

 

 

 

 

 

 

Employee stock based awards

 

 

1,140,501

 

 

 

1,319,183

 

Mandatory convertible preferred stock (1)

 

 

 

 

 

 

Denominator for diluted earnings per share-adjusted weighted average shares and after assumed exercises

 

 

85,845,501

 

 

 

86,357,006

 

Earnings per share – Basic

 

$

0.79

 

 

$

0.89

 

Earnings per share – Diluted

 

$

0.78

 

 

$

0.87

 

 

(1)

In 2016, the weighted average common shares issuable upon the assumed conversion of the mandatory convertible preferred stock totaling 5,651,376 shares were excluded from the computation of diluted earnings per share as such conversion would have been antidilutive.

For additional information regarding outstanding employee stock options, see Note 6 - Stock Based Compensation.


v3.4.0.3
GOODWILL AND OTHER INTANGIBLE ASSETS
3 Months Ended
Mar. 31, 2016
Goodwill And Intangible Assets Disclosure [Abstract]  
GOODWILL AND OTHER INTANGIBLE ASSETS

NOTE 9 – GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill and other identifiable indefinite lived intangibles are not amortized, but are subject to an annual impairment test, or more frequent testing if circumstances indicate that they may be impaired.

Goodwill:

We have two geographical reportable segments, “United States” and “International”, both of which have goodwill. The changes in the carrying amount of goodwill since January 1, 2015, by reportable segment, were as follows:

 

In thousands

 

 

 

United States

 

 

International

 

 

Total

 

Balance as of January 1, 2015

 

$

1,838,739

 

 

$

580,093

 

 

$

2,418,832

 

Goodwill acquired during the year, net

 

 

1,177,431

 

 

 

273,519

 

 

 

1,450,950

 

Purchase accounting allocation adjustments

 

 

(43,895

)

 

 

15,618

 

 

 

(28,277

)

Goodwill other changes

 

 

 

 

 

(440

)

 

 

(440

)

Changes due to foreign currency fluctuations

 

 

 

 

 

(82,888

)

 

 

(82,888

)

Balance as of December 31, 2015

 

 

2,972,275

 

 

 

785,902

 

 

 

3,758,177

 

Goodwill acquired during the year, net

 

 

17,390

 

 

 

450

 

 

 

17,840

 

Purchase accounting allocation adjustments

 

 

6,305

 

 

 

1,374

 

 

 

7,679

 

Changes due to foreign currency fluctuations

 

 

 

 

 

6,320

 

 

 

6,320

 

Balance at March 31, 2016

 

$

2,995,970

 

 

$

794,046

 

 

$

3,790,016

 

 

Current year adjustments to goodwill for certain 2015 acquisitions are primarily due to the finalization of intangible asset valuations.

We complete our annual impairment analysis of our goodwill during the quarter ended June 30 of each year, or more frequently, if circumstances indicate that it may be impaired.

Other Intangible Assets:

At March 31, 2016 and December 31, 2015, the values of other intangible assets were as follows:

 

In thousands

 

 

 

March 31, 2016

 

 

December 31, 2015

 

 

 

Gross

Carrying

Amount

 

 

Accumulated

Amortization

 

 

Net

Value

 

 

Gross

Carrying

Amount

 

 

Accumulated

Amortization

 

 

Net

Value

 

Amortizable intangibles:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer relationships

 

$

1,319,782

 

 

$

162,831

 

 

$

1,156,951

 

 

$

1,304,388

 

 

$

144,020

 

 

$

1,160,368

 

Covenants not-to-compete

 

 

7,630

 

 

 

5,340

 

 

 

2,290

 

 

 

6,878

 

 

 

5,141

 

 

 

1,737

 

Tradenames

 

 

3,935

 

 

 

1,022

 

 

 

2,913

 

 

 

3,819

 

 

 

948

 

 

 

2,871

 

Other

 

 

16,834

 

 

 

1,314

 

 

 

15,520

 

 

 

18,902

 

 

 

916

 

 

 

17,986

 

Indefinite lived intangibles:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating permits

 

 

234,888

 

 

 

 

 

 

234,888

 

 

 

233,101

 

 

 

 

 

 

233,101

 

Tradenames

 

 

428,282

 

 

 

 

 

 

428,282

 

 

 

426,498

 

 

 

 

 

 

426,498

 

Total

 

$

2,011,351

 

 

$

170,507

 

 

$

1,840,844

 

 

$

1,993,586

 

 

$

151,025

 

 

$

1,842,561

 

 

The changes in the carrying amount of intangible assets since January 1, 2015 were as follows:

 

In thousands

 

 

 

Total

 

Balance as of January 1, 2015

 

$

909,645

 

Intangible assets acquired during the year, net

 

 

1,052,016

 

Impairments during the year

 

 

(4,177

)

Amortization during the year

 

 

(45,498

)

Changes due to foreign currency fluctuations

 

 

(69,425

)

Balance as of December 31, 2015

 

 

1,842,561

 

Intangible assets acquired during the year, net

 

 

8,436

 

Amortization during the year

 

 

(18,274

)

Changes due to foreign currency fluctuations

 

 

8,121

 

Balance at March 31, 2016

 

$

1,840,844

 

 

Under generally accepted accounting principles, a fair value must be assigned to all acquired assets based on a theoretical “market participant” regardless of the acquirer's intended use for those assets. This accounting treatment can lead to the recognition of losses when a company disposes of acquired assets. We complete our annual impairment analysis of our indefinite lived intangibles during the quarter ended December 31 of each year, or more frequently, if circumstances indicate that they may be impaired.

Our finite-lived intangible assets are amortized over their useful lives. We have determined that our customer relationships have useful lives from 10 to 40 years based upon the type of customer, with a weighted average remaining useful life of 19.1 years. We have covenants not-to-compete intangibles with useful lives from 5 to 14 years, with a weighted average remaining useful life of 4.4 years. We have tradename intangibles with useful lives from 15 to 40 years, with a weighted average remaining useful life of 16.9 years. Other intangibles mainly consist of landfill air rights with a weighted average remaining useful life of 18.5 years. We have determined that our permits have indefinite lives due to our ability to renew these permits with minimal additional cost, and therefore these are not amortized. We also have a trade name that we have determined has an indefinite life.

During the quarters ended March 31, 2016 and 2015, the aggregate amortization expense was $18.3 million and $8.8 million, respectively.

The estimated amortization expense for each of the next five years, assuming no additional amortizable intangible assets, is as follows for the years ended December 31:

 

In thousands

 

2016

 

$

72,287

 

2017

 

 

72,300

 

2018

 

 

72,252

 

2019

 

 

72,095

 

2020

 

 

71,805

 

 

Future amortization expense may fluctuate depending on changes in foreign currency rates, future acquisitions, or changes to the estimated amortizable life of the intangibles. The estimates for amortization expense noted above are based upon foreign exchange rates as of March 31, 2016.


v3.4.0.3
ENVIRONMENTAL REMEDIATION LIABILITIES
3 Months Ended
Mar. 31, 2016
Environmental Remediation Obligations [Abstract]  
ENVIRONMENTAL REMEDIATION LIABILITIES

NOTE 10 – ENVIRONMENTAL REMEDIATION LIABILITIES

We record a liability for environmental remediation when such liability becomes probable and the costs or damages can be reasonably estimated. We accrue environmental remediation costs, on an undiscounted basis, associated with identified sites where an assessment has indicated that cleanup costs are probable and can be reasonably estimated, but the timing of such payments is not fixed and determinable. Such accruals are based on currently available information, estimated timing of remedial actions, existing technology, and enacted laws and regulations. The liability for environmental remediation is included in the Condensed Consolidated Balance Sheets in current liabilities within “Accrued liabilities” and in non-current liabilities within “Other liabilities.”

At March 31, 2016, the total environmental remediation liabilities recorded were $30.4 million, of which $1.5 million was classified as accrued liabilities and $28.9 million was classified as other liabilities.


v3.4.0.3
DEBT
3 Months Ended
Mar. 31, 2016
Debt Disclosure [Abstract]  
DEBT

NOTE 11 – DEBT

Long-term debt consisted of the following:

 

In thousands

 

 

 

March 31, 2016

 

 

December 31, 2015

 

Obligations under capital leases

 

$

14,308

 

 

$

15,024

 

$1.20 billion senior credit facility weighted average rate 1.87%, due in 2019

 

 

455,911

 

 

 

353,763

 

$1.08 billion term loan weighted average rate 1.81%, due in 2020

 

 

1,079,000

 

 

 

1,250,000

 

$175 million private placement notes 3.89%, due in 2017

 

 

175,000

 

 

 

175,000

 

$125 million private placement notes 2.68%, due in 2019

 

 

125,000

 

 

 

125,000

 

$225 million private placement notes 4.47%, due in 2020

 

 

225,000

 

 

 

225,000

 

$150 million private placement notes 2.89%, due in 2021

 

 

150,000

 

 

 

150,000

 

$125 million private placement notes 3.26%, due in 2022

 

 

125,000

 

 

 

125,000

 

$200 million private placement notes 2.72%, due in 2022

 

 

200,000

 

 

 

200,000

 

$100 million private placement notes 2.79%, due in 2023

 

 

100,000

 

 

 

100,000

 

$150 million private placement notes 3.18%, due in 2023

 

 

150,000

 

 

 

150,000

 

Promissory notes and deferred consideration weighted average rate of 2.35% and weighted average maturity of 3.1 years

 

 

246,442

 

 

 

239,731

 

Foreign bank debt weighted average rate 7.40% and weighted average maturity of 2.0 years

 

 

106,488

 

 

 

105,530

 

Total debt

 

 

3,152,149

 

 

 

3,214,048

 

Less: current portion of total debt

 

 

114,066

 

 

 

161,409

 

Long-term portion of total debt

 

$

3,038,083

 

 

$

3,052,639

 

 

Our $1.20 billion senior credit facility maturing in June 2019, our $1.08 billion term loan maturing in August 2020, our $175.0 million private placement notes maturing in October 2017, our $125.0 million private placement notes maturing in December 2019, our $225.0 million private placement notes maturing in October 2020, our $150.0 million private placement notes maturing in October 2021,  our $125.0 million private placement notes maturing in December 2022, our $200.0 million private placement notes maturing in July 2022, our $100.0 million private placement notes maturing in July 2023, and our $150.0 million private placement notes maturing in October 2023 all require us to comply with various financial, reporting and other covenants and restrictions, including a restriction on dividend payments. The financial debt covenants are the same for the senior credit facility, term loan, and the private placement notes. At March 31, 2016, we were in compliance with all of our financial debt covenants. Our senior credit facility, term loan, and the private placement notes rank pari passu to each other and all other unsecured debt obligations,

As of March 31, 2016 and December 31, 2015, we had $159.8 million and $160.4 million, respectively, committed to outstanding letters of credit under our senior credit facility. The unused portion of the revolving credit facility as of March 31, 2016 and December 31, 2015 was $584.3 million and $685.8 million, respectively. 


v3.4.0.3
GEOGRAPHIC INFORMATION
3 Months Ended
Mar. 31, 2016
Segment Reporting [Abstract]  
GEOGRAPHIC INFORMATION

NOTE 12 – GEOGRAPHIC INFORMATION

 

The FASB Accounting Standards Codification Topic 280, Segment Reporting, requires segment information to be reported based on information utilized by executive management to internally assess performance and make operating decisions. We have determined that we have two operating and reportable segments based on the organizational structure of our Company and information reviewed by our Chief Operating Decision Maker. These operating and reportable segments are Domestic Regulated and Compliance Services ("Domestic") and International Regulated and Compliance Services ("International"). We are in the process of determining the integration of the Shred-it organization within Stericycle. Currently the operations of Shred-it are part of our Domestic Regulated and Compliance Services and International operating segments, based on the location of the revenue producing customer.

 

Detailed information for our United States reportable segment is as follows:

 

In thousands

 

 

 

Three Months Ended March 31,

 

 

 

2016

 

 

2015

 

Regulated and compliance solutions revenues

 

$

624,878

 

 

$

452,269

 

Recall and returns solutions revenues

 

 

24,790

 

 

 

19,979

 

Total revenues

 

$

649,668

 

 

$

472,248

 

Net interest expense

 

 

19,883

 

 

 

10,845

 

Income before income taxes

 

 

108,313

 

 

 

102,890

 

Income taxes

 

 

38,814

 

 

 

37,880

 

Net income attributable to Stericycle, Inc.

 

$

69,499

 

 

$

65,010

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

$

31,570

 

 

$

16,140

 

 

Detailed information for our International reportable segment is as follows:

 

In thousands

 

 

 

Three Months Ended March 31,

 

 

 

2016

 

 

2015

 

Regulated and compliance solutions revenues

 

$

224,513

 

 

$

191,071

 

Net interest expense

 

 

4,158

 

 

 

7,753

 

Income before income taxes

 

 

7,318

 

 

 

4,967

 

Income taxes

 

 

(778

)

 

 

(5,833

)

Net income

 

 

8,096

 

 

 

10,800

 

Less: net income attributable to noncontrolling interests

 

 

809

 

 

 

352

 

Net income attributable to Stericycle, Inc.

 

$

7,287

 

 

$

10,448

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

$

16,844

 

 

$

11,423

 

 


v3.4.0.3
LEGAL PROCEEDINGS
3 Months Ended
Mar. 31, 2016
Commitments And Contingencies Disclosure [Abstract]  
LEGAL PROCEEDINGS

NOTE 13 – LEGAL PROCEEDINGS

We operate in a highly regulated industry and must deal with regulatory inquiries or investigations from time to time that may be instituted for a variety of reasons. We are also involved in a variety of civil litigation from time to time.

We review all of our outstanding legal proceedings with counsel quarterly, and we will disclose an estimate of any reasonably possible loss or range of reasonably possible losses if and when we are able to make such an estimate and the reasonably possible loss or range of reasonably possible losses is material to our financial statements.

Class Action Lawsuits. As we have previously disclosed, we were served on March 12, 2013 with a class action complaint filed in the U.S. District Court for the Western District of Pennsylvania by an individual plaintiff for itself and on behalf of all other “similarly situated” customers of ours. The complaint alleges, among other things, that we imposed unauthorized or excessive price increases and other charges on our customers in breach of our contracts and in violation of the Illinois Consumer Fraud and Deceptive Business Practices Act. The complaint sought certification of the lawsuit as a class action and the award to class members of appropriate damages and injunctive relief.

The Pennsylvania class action complaint was filed in the wake of a settlement with the State of New York of an investigation under the New York False Claims Act which arose out of the qui tam (or “whistle blower”) action captioned United States of America ex rel. Jennifer D. Perez v. Stericycle, Inc., Case No. 1:08-cv-2390 which was settled in the fourth quarter of 2015 as previously disclosed.

Following the filing of the Pennsylvania class action complaint, we were served with class action complaints filed in federal and state courts in several jurisdictions. These complaints asserted claims and allegations substantially similar to those made in the Pennsylvania class action complaint. All of these cases appear to be follow-on litigation to our settlement with the State of New York. On August 9, 2013, the Judicial Panel on Multidistrict Litigation granted our Motion to Transfer these related actions to the United States District Court for the Northern District of Illinois for centralized pretrial proceedings (the “MDL Action”). On December 10, 2013, we filed our answer to the Amended Consolidated Class Action Complaint in the MDL Action, generally denying the allegations therein.

On January 29, 2016, the plaintiffs’ attorneys filed a Second Amended Consolidated Complaint and a Motion for Class Certification in the MDL Action. The Motion requests that the court certify a class of plaintiffs consisting of certain of our small quantity customers who received rate increases. We intend to strongly contest the Motion.

We believe that we have operated in accordance with the terms of our customer contracts and that these complaints are without merit. We will continue to vigorously defend ourselves against each of these lawsuits.

We have not accrued any amounts in respect of these class action lawsuits, and we cannot estimate the reasonably possible loss or the range of reasonably possible losses that we may incur. We are unable to make such an estimate because (i) litigation is by its nature uncertain and unpredictable, (ii) we do not know whether the court will certify any class of plaintiffs or, if any class is certified, how the class would be defined, and (iii) in our judgment, there are no comparable proceedings against other defendants that might provide guidance in making estimates.

Environmental Matters. Our Environmental Solutions business is regulated by federal, state and local laws enacted to regulate the discharge of materials into the environment, remediate contaminated soil and groundwater or otherwise protect the environment. As a result of this continuing regulation, we frequently become a party to legal or administrative proceedings involving various governmental authorities and other interested parties. The issues involved in these proceedings generally relate to alleged violations of existing permits and licenses or alleged responsibility under federal or state Superfund laws to remediate contamination at properties owned either by us or by other parties to which either we or the prior owners of certain of its facilities shipped wastes. From time to time, we may be subject to fines or penalties in regulatory proceedings relating primarily to waste treatment, storage or disposal facilities. We believe that the fines or other penalties that we may pay in connection with any pending regulatory proceedings of this nature will not, individually or in the aggregate, be material to our financial statements.

On February 29, 2016, we entered into a statute of limitations tolling agreement with the United States Attorney’s Office for the District of Utah relating to that Office’s investigation of the same facts underlying the notice of violation (the “NOV”) issued by the State of Utah Division of Air Quality (the “DAQ”) that resulted in our December 2014 settlement with the DAQ that we have previously disclosed. The U.S. Attorney’s Office is investigating whether the matters forming the basis of the NOV constitute violations of the Clean Air Act and other federal statutes. Under the tolling agreement, the period from March 1, 2016 through July 31, 2016 will be excluded from any calculation of time for the purpose of determining the statute of limitations concerning any charges that we violated federal statutes. The agreement does not constitute an admission of guilt or wrongdoing on our part and cannot be construed as a waiver of any other rights or defenses that we may have in any resulting action or proceeding. We will continue to cooperate with the investigation.


v3.4.0.3
NEW ACCOUNTING STANDARDS (Policies)
3 Months Ended
Mar. 31, 2016
Accounting Changes And Error Corrections [Abstract]  
New Accounting Standards

Accounting Standards Recently Adopted

Compensation - Stock Compensation

On January 1, 2016, the Company adopted the guidance in Accounting Standards Update ("ASU") No. 2016-09, “Compensation - Stock Compensation (Topic 718) - Improvements to Employee Share-Based Payment Accounting.” Under this ASU, entities are permitted to make an accounting policy election to either estimate forfeitures on share-based payment awards, as previously required, or to recognize forfeitures as they occur. The Company has elected to recognize forfeitures as they occur and the impact of that change in accounting policy has been evaluated and determined to be insignificant and resulted in no cumulative-effect change to the Company’s retained earnings. Additionally, ASU 2016-09 requires that all income tax effects related to settlements of share-based payment awards be reported in earnings as an increase or decrease to income tax expense (benefit), net. Previously, income tax benefits at settlement of an award were reported as an increase (or decrease) to additional paid-in capital to the extent that those benefits were greater than (or less than) the income tax benefits reported in earnings during the award's vesting period. The requirement to report those income tax effects in earnings has been applied on a prospective basis to settlements occurring on or after January 1, 2016 and the impact of applying that guidance was $2.9 million to the condensed consolidated financial statements for the period ended March 31, 2016. ASU 2016-09 also requires that all income tax-related cash flows resulting from share-based payments be reported as operating activities in the statement of cash flows. Previously, income tax benefits at settlement of an award were reported as a reduction to operating cash flows and an increase to financing cash flows to the extent that those benefits exceeded the income tax benefits reported in earnings during the award's vesting period. The Company has elected to apply that change in cash flow classification on a prospective basis, leaving previously reported net cash provided by operating activities and net cash used in financing activities in the accompanying Condensed Consolidated Statement of Cash Flows for the period ended March 31, 2015 unchanged. The remaining provisions of ASU 2016-09 did not have a material impact on the accompanying condensed consolidated financial statements.

Accounting Standards Issued But Not Yet Adopted

Revenue From Contracts With Customers

In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers" (Topic 606), guidance to provide a single and comprehensive revenue recognition model for all contracts with customers. The revenue guidance contains principles that an entity will apply to determine the measurement of revenue and timing of when it is recognized. The underlying principle is that an entity will recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services. The amended authoritative guidance associated with revenue recognition is effective for the Company on January 1, 2018. The amended guidance may be applied retrospectively for all periods presented or retrospectively with the cumulative effect of initially applying the amended guidance recognized at the date of initial application. We are in the process of assessing the provisions of the new revenue recognition standard and have not determined whether the adoption will have a material impact on our consolidated financial statements.

 

Leases

In February 2016, the FASB issued ASU No. 2016-02, “Leases” (Topic 842). This ASU will require lessees to record a right-of-use asset and lease liability on the balance sheet for all leases with terms of more than 12 months. Recognition, measurement and presentation of expenses will depend on classification as a finance or operating lease. This ASU also requires certain quantitative and qualitative disclosures. Accounting guidance for lessors is largely unchanged. The amendments should be applied on a modified retrospective basis. ASU 2016-02 is effective for us beginning January 1, 2019. We are beginning to evaluate the impact that the adoption of ASU 2016-02 will have on our consolidated financial statements and related disclosures.


v3.4.0.3
ACQUISITIONS (Tables)
3 Months Ended
Mar. 31, 2016
Business Combinations [Abstract]  
Summary of Location of Acquisitions

The following table summarizes the locations of our acquisitions for the three months ended March 31, 2016

 

Acquisition Locations

 

2016

 

United States

 

 

5

 

Romania

 

 

1

 

Spain

 

 

1

 

Total

 

 

7

 

 

Aggregate Purchase Price Paid for Acquisitions and Other Adjustments to Consideration

The following table summarizes the aggregate purchase price paid for acquisitions and other adjustments of consideration to be paid for acquisitions during the three months ended March 31:

 

In thousands

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

 

2016

 

 

2015

 

Cash

 

$

24,884

 

 

$

34,210

 

Promissory notes

 

 

11,595

 

 

 

7,618

 

Deferred consideration

 

 

1,361

 

 

 

624

 

Contingent consideration

 

 

57

 

 

 

13,301

 

Total purchase price

 

$

37,897

 

 

$

55,753

 

 

Preliminary Purchase Price Allocation for Current Period Acquisitions and Other Adjustments to Purchase Price Allocations

The following table summarizes the preliminary purchase price allocation for current period acquisitions and other adjustments to purchase price allocations during the three months ended March 31:

 

In thousands

 

 

 

Three Months Ended March 31,

 

 

 

2016

 

 

2015

 

Fixed assets

 

$

3,345

 

 

$

(1,477

)

Intangibles

 

 

8,436

 

 

 

19,791

 

Goodwill

 

 

25,519

 

 

 

41,190

 

Accounts receivable

 

 

1,715

 

 

 

4,217

 

Net other assets/ (liabilities)

 

 

133

 

 

 

59

 

Current liabilities

 

 

(201

)

 

 

(4,650

)

Net deferred tax liabilities

 

 

(1,050

)

 

 

(3,377

)

Total purchase price allocation

 

$

37,897

 

 

$

55,753

 

 


v3.4.0.3
FAIR VALUE MEASUREMENTS (Tables)
3 Months Ended
Mar. 31, 2016
Fair Value Disclosures [Abstract]  
Fair Value Measurements

 

In thousands

 

 

 

 

 

 

 

Fair Value Measurements Using

 

 

 

Total as of

March 31, 2016

 

 

Level 1

Inputs

 

 

Level 2

Inputs

 

 

Level 3

Inputs

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

45,655

 

 

$

45,655

 

 

$

 

 

$

 

Short-term investments

 

 

64

 

 

$

64

 

 

 

 

 

 

 

Derivative financial instruments

 

 

954

 

 

 

 

 

 

954

 

 

 

 

Total assets

 

$

46,673

 

 

$

45,719

 

 

$

954

 

 

$

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contingent consideration

 

$

22,967

 

 

$

 

 

$

 

 

$

22,967

 

Total liabilities

 

$

22,967

 

 

$

 

 

$

 

 

$

22,967

 

 

In thousands

 

 

 

 

 

 

 

Fair Value Measurements Using

 

 

 

Total as of

December 31, 2015

 

 

Level 1

Inputs

 

 

Level 2

Inputs

 

 

Level 3

Inputs

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

55,634

 

 

$

55,634

 

 

$

 

 

$

 

Short-term investments

 

 

69

 

 

 

69

 

 

 

 

 

 

 

Derivative financial instruments

 

 

1,207

 

 

 

 

 

 

1,207

 

 

 

 

Total assets

 

$

56,910

 

 

$

55,703

 

 

$

1,207

 

 

$

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contingent consideration

 

$

25,390

 

 

$

 

 

$

 

 

$

25,390

 

Total liabilities

 

$

25,390

 

 

$

 

 

$

 

 

$

25,390

 

 

Changes to Contingent Consideration

Changes to contingent consideration are reflected in the table below:

 

In thousands

 

Contingent consideration at January 1, 2016

 

$

25,390

 

Increases due to acquisitions

 

 

57

 

Decrease due to payments

 

 

(1,000

)

Changes due to foreign currency fluctuations

 

 

1,164

 

Changes in fair value reflected in Selling, general, and administrative expenses

 

 

(2,644

)

Contingent consideration at March 31, 2016

 

$

22,967

 

 


v3.4.0.3
STOCK BASED COMPENSATION (Tables)
3 Months Ended
Mar. 31, 2016
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]  
Stock-Based Compensation Expense Resulting from Stock Option Awards, Restricted stock units ("RSU") and ESPP

The following table presents the total stock-based compensation expense resulting from stock option awards, restricted stock units (“RSUs”), and the ESPP included in the Condensed Consolidated Statements of Income:

 

In thousands

 

 

 

Three Months Ended March 31,

 

 

 

2016

 

 

2015

 

Cost of revenues – stock option plan

 

$

15

 

 

$

23

 

Selling, general and administrative – stock option plan

 

 

4,752

 

 

 

4,729

 

Selling, general and administrative – RSUs

 

 

559

 

 

 

346

 

Selling, general and administrative – ESPP

 

 

779

 

 

 

389

 

Total pre-tax expense

 

$

6,105

 

 

$

5,487

 

 

Stock Option Activity

Stock option activity for the three months ended March 31, 2016, is summarized as follows:

 

 

 

Number of

Options

 

 

Weighted

Average

Exercise

Price per

Share

 

 

Weighted

Average

Remaining

Contractual Life

 

 

Total Aggregate Intrinsic Value

 

 

 

 

 

 

 

 

 

 

 

(in years)

 

 

(in thousands)

 

Outstanding at beginning of year

 

 

5,334,803

 

 

$

92.02

 

 

 

 

 

 

 

 

 

Granted

 

 

1,008,569

 

 

 

111.29

 

 

 

 

 

 

 

 

 

Exercised

 

 

(306,088

)

 

 

73.22

 

 

 

 

 

 

 

 

 

Forfeited

 

 

(28,412

)

 

 

118.19

 

 

 

 

 

 

 

 

 

Canceled or expired

 

 

(1,939

)

 

 

86.92

 

 

 

 

 

 

 

 

 

Outstanding at March 31, 2016

 

 

6,006,933

 

 

 

96.10

 

 

 

5.92

 

 

$

185,247

 

Exercisable at March 31, 2016

 

 

3,225,121

 

 

 

80.59

 

 

 

4.93

 

 

$

147,947

 

 

Intrinsic Value of Options Exercised

The following table sets forth the total intrinsic value of options exercised:

 

 

 

Three Months Ended March 31,

 

 

 

2016

 

 

2015

 

Total intrinsic value of options exercised

 

$

13,229

 

 

$

29,525

 

 

Assumptions used in Black-Scholes Model

The estimated fair value of stock options at the time of the grant using the Black-Scholes option pricing model was as follows:

 

 

Three Months Ended March 31,

 

 

 

2016

 

 

2015

 

Stock options granted (shares)

 

 

1,008,569

 

 

 

860,534

 

Weighted average fair value at grant date (per share)

 

$

20.19

 

 

$

22.84

 

Assumptions:

 

 

 

 

 

 

 

 

Expected term (in years)

 

 

4.76

 

 

 

4.79

 

Expected volatility

 

 

18.02

%

 

 

16.62

%

Expected dividend yield

 

 

%

 

 

%

Risk free interest rate

 

 

1.26

%

 

 

1.48

%

 

Restricted Stock Units Activity

A summary of the status of our non-vested RSUs and changes during the three months ended March 31, 2016, are as follows:

 

 

Number of

Options

 

 

Weighted

Average

Grant Date

Fair Value

 

 

Weighted

Average Remaining Contractual Life

 

 

Total Aggregate Intrinsic Value

 

 

 

 

 

 

 

 

 

 

 

(in years)

 

 

(in thousands)

 

Non-vested at beginning of year

 

 

71,451

 

 

$

101.29

 

 

 

 

 

 

 

 

 

Granted

 

 

53,267

 

 

 

111.12

 

 

 

 

 

 

 

 

 

Non-vested at March 31, 2016

 

 

124,718

 

 

 

105.57

 

 

 

2.34

 

 

$

15,738

 

 


v3.4.0.3
EARNINGS PER COMMON SHARE (Tables)
3 Months Ended
Mar. 31, 2016
Earnings Per Share [Abstract]  
Earnings Per Common Share

The following table sets forth the computation of basic and diluted earnings per share:

 

In thousands, except share and per share data

 

 

 

Three Months Ended March 31,

 

 

 

2016

 

 

2015

 

Numerator:

 

 

 

 

 

 

 

 

Net income attributable to Stericycle, Inc.

 

$

76,786

 

 

$

75,458

 

Less: mandatory convertible preferred stock dividend

 

 

10,106

 

 

 

 

Numerator for basic earnings per share attributable to Stericycle, Inc. common shareholders

 

$

66,680

 

 

$

75,458

 

Denominator:

 

 

 

 

 

 

 

 

Denominator for basic earnings per share-weighted average shares

 

 

84,705,000

 

 

 

85,037,823

 

Effect of diluted securities:

 

 

 

 

 

 

 

 

Employee stock based awards

 

 

1,140,501

 

 

 

1,319,183

 

Mandatory convertible preferred stock (1)

 

 

 

 

 

 

Denominator for diluted earnings per share-adjusted weighted average shares and after assumed exercises

 

 

85,845,501

 

 

 

86,357,006

 

Earnings per share – Basic

 

$

0.79

 

 

$

0.89

 

Earnings per share – Diluted

 

$

0.78

 

 

$

0.87

 

 

(1)

In 2016, the weighted average common shares issuable upon the assumed conversion of the mandatory convertible preferred stock totaling 5,651,376 shares were excluded from the computation of diluted earnings per share as such conversion would have been antidilutive.


v3.4.0.3
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables)
3 Months Ended
Mar. 31, 2016
Goodwill And Intangible Assets Disclosure [Abstract]  
Changes in Carrying Amount of Goodwill

The changes in the carrying amount of goodwill since January 1, 2015, by reportable segment, were as follows:

 

In thousands

 

 

 

United States

 

 

International

 

 

Total

 

Balance as of January 1, 2015

 

$

1,838,739

 

 

$

580,093

 

 

$

2,418,832

 

Goodwill acquired during the year, net

 

 

1,177,431

 

 

 

273,519

 

 

 

1,450,950

 

Purchase accounting allocation adjustments

 

 

(43,895

)

 

 

15,618

 

 

 

(28,277

)

Goodwill other changes

 

 

 

 

 

(440

)

 

 

(440

)

Changes due to foreign currency fluctuations

 

 

 

 

 

(82,888

)

 

 

(82,888

)

Balance as of December 31, 2015

 

 

2,972,275

 

 

 

785,902

 

 

 

3,758,177

 

Goodwill acquired during the year, net

 

 

17,390

 

 

 

450

 

 

 

17,840

 

Purchase accounting allocation adjustments

 

 

6,305

 

 

 

1,374

 

 

 

7,679

 

Changes due to foreign currency fluctuations

 

 

 

 

 

6,320

 

 

 

6,320

 

Balance at March 31, 2016

 

$

2,995,970

 

 

$

794,046

 

 

$

3,790,016

 

 

Amortizable Intangibles

At March 31, 2016 and December 31, 2015, the values of other intangible assets were as follows:

 

In thousands

 

 

 

March 31, 2016

 

 

December 31, 2015

 

 

 

Gross

Carrying

Amount

 

 

Accumulated

Amortization

 

 

Net

Value

 

 

Gross

Carrying

Amount

 

 

Accumulated

Amortization

 

 

Net

Value

 

Amortizable intangibles:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer relationships

 

$

1,319,782

 

 

$

162,831

 

 

$

1,156,951

 

 

$

1,304,388

 

 

$

144,020

 

 

$

1,160,368

 

Covenants not-to-compete

 

 

7,630

 

 

 

5,340

 

 

 

2,290

 

 

 

6,878

 

 

 

5,141

 

 

 

1,737

 

Tradenames

 

 

3,935

 

 

 

1,022

 

 

 

2,913

 

 

 

3,819

 

 

 

948

 

 

 

2,871

 

Other

 

 

16,834

 

 

 

1,314

 

 

 

15,520

 

 

 

18,902

 

 

 

916

 

 

 

17,986

 

Indefinite lived intangibles:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating permits

 

 

234,888

 

 

 

 

 

 

234,888

 

 

 

233,101

 

 

 

 

 

 

233,101

 

Tradenames

 

 

428,282

 

 

 

 

 

 

428,282

 

 

 

426,498

 

 

 

 

 

 

426,498

 

Total

 

$

2,011,351

 

 

$

170,507

 

 

$

1,840,844

 

 

$

1,993,586

 

 

$

151,025

 

 

$

1,842,561

 

 

Indefinite Lived Intangibles

The changes in the carrying amount of intangible assets since January 1, 2015 were as follows:

 

In thousands

 

 

 

Total

 

Balance as of January 1, 2015

 

$

909,645

 

Intangible assets acquired during the year, net

 

 

1,052,016

 

Impairments during the year

 

 

(4,177

)

Amortization during the year

 

 

(45,498

)

Changes due to foreign currency fluctuations

 

 

(69,425

)

Balance as of December 31, 2015

 

 

1,842,561

 

Intangible assets acquired during the year, net

 

 

8,436

 

Amortization during the year

 

 

(18,274

)

Changes due to foreign currency fluctuations

 

 

8,121

 

Balance at March 31, 2016

 

$

1,840,844

 

 

Estimated Amortization Expense

The estimated amortization expense for each of the next five years, assuming no additional amortizable intangible assets, is as follows for the years ended December 31:

 

In thousands

 

2016

 

$

72,287

 

2017

 

 

72,300

 

2018

 

 

72,252

 

2019

 

 

72,095

 

2020

 

 

71,805

 

 


v3.4.0.3
DEBT (Tables)
3 Months Ended
Mar. 31, 2016
Debt Disclosure [Abstract]  
Long-Term Debt

Long-term debt consisted of the following:

 

In thousands

 

 

 

March 31, 2016

 

 

December 31, 2015

 

Obligations under capital leases

 

$

14,308

 

 

$

15,024

 

$1.20 billion senior credit facility weighted average rate 1.87%, due in 2019

 

 

455,911

 

 

 

353,763

 

$1.08 billion term loan weighted average rate 1.81%, due in 2020

 

 

1,079,000

 

 

 

1,250,000

 

$175 million private placement notes 3.89%, due in 2017

 

 

175,000

 

 

 

175,000

 

$125 million private placement notes 2.68%, due in 2019

 

 

125,000

 

 

 

125,000

 

$225 million private placement notes 4.47%, due in 2020

 

 

225,000

 

 

 

225,000

 

$150 million private placement notes 2.89%, due in 2021

 

 

150,000

 

 

 

150,000

 

$125 million private placement notes 3.26%, due in 2022

 

 

125,000

 

 

 

125,000

 

$200 million private placement notes 2.72%, due in 2022

 

 

200,000

 

 

 

200,000

 

$100 million private placement notes 2.79%, due in 2023

 

 

100,000

 

 

 

100,000

 

$150 million private placement notes 3.18%, due in 2023

 

 

150,000

 

 

 

150,000

 

Promissory notes and deferred consideration weighted average rate of 2.35% and weighted average maturity of 3.1 years

 

 

246,442

 

 

 

239,731

 

Foreign bank debt weighted average rate 7.40% and weighted average maturity of 2.0 years

 

 

106,488

 

 

 

105,530

 

Total debt

 

 

3,152,149

 

 

 

3,214,048

 

Less: current portion of total debt

 

 

114,066

 

 

 

161,409

 

Long-term portion of total debt

 

$

3,038,083

 

 

$

3,052,639

 

 


v3.4.0.3
GEOGRAPHIC INFORMATION (Tables)
3 Months Ended
Mar. 31, 2016
Segment Reporting [Abstract]  
Detailed Information for Reportable Segment

 

Detailed information for our United States reportable segment is as follows:

 

In thousands

 

 

 

Three Months Ended March 31,

 

 

 

2016

 

 

2015

 

Regulated and compliance solutions revenues

 

$

624,878

 

 

$

452,269

 

Recall and returns solutions revenues

 

 

24,790

 

 

 

19,979

 

Total revenues

 

$

649,668

 

 

$

472,248

 

Net interest expense

 

 

19,883

 

 

 

10,845

 

Income before income taxes

 

 

108,313

 

 

 

102,890

 

Income taxes

 

 

38,814

 

 

 

37,880

 

Net income attributable to Stericycle, Inc.

 

$

69,499

 

 

$

65,010

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

$

31,570

 

 

$

16,140

 

 

Detailed information for our International reportable segment is as follows:

 

In thousands

 

 

 

Three Months Ended March 31,

 

 

 

2016

 

 

2015

 

Regulated and compliance solutions revenues

 

$

224,513

 

 

$

191,071

 

Net interest expense

 

 

4,158

 

 

 

7,753

 

Income before income taxes

 

 

7,318

 

 

 

4,967

 

Income taxes

 

 

(778

)

 

 

(5,833

)

Net income

 

 

8,096

 

 

 

10,800

 

Less: net income attributable to noncontrolling interests

 

 

809

 

 

 

352

 

Net income attributable to Stericycle, Inc.

 

$

7,287

 

 

$

10,448

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

$

16,844

 

 

$

11,423

 

 


v3.4.0.3
ACQUISITIONS - Summary of Acquisition Location (Detail)
3 Months Ended
Mar. 31, 2016
Entity
Business Acquisition [Line Items]  
Number of acquisitions 7
United States  
Business Acquisition [Line Items]  
Number of acquisitions 5
Romania  
Business Acquisition [Line Items]  
Number of acquisitions 1
Spain  
Business Acquisition [Line Items]  
Number of acquisitions 1

v3.4.0.3
ACQUISITIONS - Additional Information (Detail)
$ in Millions
3 Months Ended
Mar. 31, 2016
USD ($)
Entity
Mar. 31, 2015
USD ($)
Business Acquisition [Line Items]    
Number of acquisitions | Entity 7  
Net increase in goodwill $ 25.5  
Tax deductible goodwill amount 20.7  
Net increase in Intangible Assets 8.4  
Selling, general and administrative expenses    
Business Acquisition [Line Items]    
Acquisition related expenses 3.0 $ 3.3
Customer relationships    
Business Acquisition [Line Items]    
Acquired finite-lived intangible assets $ 7.7  
Customer relationships | Minimum    
Business Acquisition [Line Items]    
Acquired finite-lived intangible assets, useful life 10 years  
Customer relationships | Maximum    
Business Acquisition [Line Items]    
Acquired finite-lived intangible assets, useful life 40 years  
Covenants not-to-compete    
Business Acquisition [Line Items]    
Acquired finite-lived intangible assets $ 0.7  
Acquired finite-lived intangible assets, useful life 5 years  
Romania    
Business Acquisition [Line Items]    
Number of acquisitions | Entity 1  
Spain    
Business Acquisition [Line Items]    
Number of acquisitions | Entity 1  
United States    
Business Acquisition [Line Items]    
Net increase in goodwill $ 23.7  
United States | Secure information destruction business    
Business Acquisition [Line Items]    
Number of acquisitions | Entity 4  
United States | Acquisition One | Regulated and Compliance Solutions    
Business Acquisition [Line Items]    
Number of acquisitions | Entity 1  
Business acquisition, ownership percentage acquired 100.00%  
International    
Business Acquisition [Line Items]    
Net increase in goodwill $ 1.8  
International | Romania | Regulated and Compliance Solutions    
Business Acquisition [Line Items]    
Number of acquisitions | Entity 1  
International | Spain | Regulated and Compliance Solutions    
Business Acquisition [Line Items]    
Number of acquisitions | Entity 1  

v3.4.0.3
ACQUISITIONS - Aggregate Purchase Price Paid for Acquisitions and Other Adjustments to Consideration (Detail) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Business Combinations [Abstract]    
Cash $ 24,884 $ 34,210
Promissory notes 11,595 7,618
Deferred consideration 1,361 624
Contingent consideration 57 13,301
Total purchase price $ 37,897 $ 55,753

v3.4.0.3
ACQUISITIONS - Preliminary Purchase Price Allocation and Other Adjustments to Purchase Price Allocations (Detail) - USD ($)
$ in Thousands
Mar. 31, 2016
Dec. 31, 2015
Mar. 31, 2015
Dec. 31, 2014
Business Acquisition [Line Items]        
Goodwill $ 3,790,016 $ 3,758,177   $ 2,418,832
Series of Individually Immaterial Business Acquisitions [Member]        
Business Acquisition [Line Items]        
Fixed assets 3,345   $ (1,477)  
Intangibles 8,436   19,791  
Goodwill 25,519   41,190  
Accounts receivable 1,715   4,217  
Net other assets/ (liabilities) 133   59  
Current liabilities (201)   (4,650)  
Net deferred tax liabilities (1,050)   (3,377)  
Total purchase price allocation $ 37,897   $ 55,753  

v3.4.0.3
NEW ACCOUNTING STANDARDS - Additional Information (Detail)
$ in Millions
3 Months Ended
Mar. 31, 2016
USD ($)
Accounting Changes And Error Corrections [Abstract]  
Income tax effects in earnings $ 2.9

v3.4.0.3
FAIR VALUE MEASUREMENTS - Fair Value Measurements (Detail) - USD ($)
$ in Thousands
Mar. 31, 2016
Dec. 31, 2015
Assets:    
Cash and cash equivalents $ 45,655 $ 55,634
Short-term investments 64 69
Derivative financial instruments 954 1,207
Total assets 46,673 56,910
Liabilities:    
Contingent consideration 22,967 25,390
Total liabilities 22,967 25,390
Level 1 Inputs [Member]    
Assets:    
Cash and cash equivalents 45,655 55,634
Short-term investments 64 69
Derivative financial instruments 0 0
Total assets 45,719 55,703
Liabilities:    
Contingent consideration 0 0
Total liabilities 0 0
Level 2 Inputs [Member]    
Assets:    
Cash and cash equivalents 0 0
Short-term investments 0 0
Derivative financial instruments 954 1,207
Total assets 954 1,207
Liabilities:    
Contingent consideration 0 0
Total liabilities 0 0
Level 3 Inputs [Member]    
Assets:    
Cash and cash equivalents 0 0
Short-term investments 0 0
Derivative financial instruments 0 0
Total assets 0 0
Liabilities:    
Contingent consideration 22,967 25,390
Total liabilities $ 22,967 $ 25,390

v3.4.0.3
FAIR VALUE MEASUREMENTS - Additional Information (Detail) - USD ($)
$ in Thousands
Mar. 31, 2016
Dec. 31, 2015
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]    
Derivative asset $ 954 $ 1,207
Contingent consideration liabilities 22,967 25,390
Debt obligations, carrying amount 3,152,149 3,214,048
Maximum    
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]    
Maximum contingent liability if financial performance measures were fully met 40,200  
Level 3 Inputs [Member]    
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]    
Derivative asset 0 0
Contingent consideration liabilities 22,967 25,390
Level 3 Inputs [Member] | Current Liabilities [Member]    
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]    
Contingent consideration liabilities 6,900  
Level 2 Inputs [Member]    
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]    
Derivative asset 954 1,207
Contingent consideration liabilities 0 0
Debt obligations, fair value $ 3,130,000 $ 3,220,000

v3.4.0.3
FAIR VALUE MEASUREMENTS - Changes to Contingent Consideration (Detail) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Business Combination, Contingent Consideration, Liability [Roll Forward]    
Contingent consideration at January 1, 2016 $ 25,390  
Increases due to acquisitions 57 $ 13,301
Decrease due to payments (1,000)  
Changes due to foreign currency fluctuations 1,164  
Changes in fair value reflected in Selling, general, and administrative expenses (2,644)  
Contingent consideration at March 31, 2016 $ 22,967  

v3.4.0.3
INCOME TAXES (Details)
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Income Tax Disclosure [Abstract]    
Effective tax rate 32.90% 29.70%

v3.4.0.3
STOCK BASED COMPENSATION - Expense Resulting from Stock Option Awards and ESPP (Detail) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Stock-based compensation expense $ 6,105 $ 5,487
Stock Options [Member] | Cost of revenues    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Stock-based compensation expense 15 23
Stock Options [Member] | Selling, general and administrative expenses    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Stock-based compensation expense 4,752 4,729
Restricted Stock Units (RSUs) [Member] | Selling, general and administrative expenses    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Stock-based compensation expense 559 346
ESPP [Member] | Selling, general and administrative expenses    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Stock-based compensation expense $ 779 $ 389

v3.4.0.3
STOCK BASED COMPENSATION - Stock Option Activity (Detail) - USD ($)
$ / shares in Units, $ in Thousands
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Number of Options    
Outstanding at beginning of year 5,334,803  
Granted 1,008,569 860,534
Exercised (306,088)  
Forfeited (28,412)  
Canceled or expired (1,939)  
Outstanding at March 31, 2016 6,006,933  
Exercisable at March 31, 2016 3,225,121  
Weighted Average Exercise Price per Share    
Outstanding at beginning of year $ 92.02  
Granted 111.29  
Exercised 73.22  
Forfeited 118.19  
Canceled or expired 86.92  
Outstanding at March 31, 2016 96.10  
Exercisable at March 31, 2016 $ 80.59  
Weighted Average Remaining Contractual Life    
Outstanding at March 31, 2016 5 years 11 months 1 day  
Exercisable at March 31, 2016 4 years 11 months 5 days  
Total Aggregate Intrinsic Value    
Outstanding at March 31, 2016 $ 185,247  
Exercisable at March 31, 2016 $ 147,947  

v3.4.0.3
STOCK BASED COMPENSATION - Additional Information (Detail)
$ in Millions
3 Months Ended
Mar. 31, 2016
USD ($)
shares
Stock Options [Member]  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Unrecognized compensation expenses related to non-vested option awards $ 38.7
Weighted average period of recognition for unrecognized compensation expenses 3 years 6 months 29 days
Restricted Stock Units (RSUs) [Member]  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Weighted average period of recognition for unrecognized compensation expenses 3 years 1 month 24 days
Award vesting period annually
Ratio of share reserve related to RSUs granted | shares 2
Unrecognized compensation expenses related to RSUs $ 8.9
Restricted Stock Units (RSUs) [Member] | Minimum  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Award vesting period 3 years
Restricted Stock Units (RSUs) [Member] | Maximum  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Award vesting period 5 years

v3.4.0.3
STOCK BASED COMPENSATION - Intrinsic Value of Options Exercised (Detail) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]    
Total intrinsic value of options exercised $ 13,229 $ 29,525

v3.4.0.3
STOCK BASED COMPENSATION - Assumptions used in Black-Scholes Model (Detail) - $ / shares
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]    
Stock options granted (shares) 1,008,569 860,534
Weighted average fair value at grant date $ 20.19 $ 22.84
Expected term (in years) 4 years 9 months 4 days 4 years 9 months 15 days
Expected volatility 18.02% 16.62%
Expected dividend yield 0.00% 0.00%
Risk free interest rate 1.26% 1.48%

v3.4.0.3
STOCK BASED COMPENSATION - Restricted Stock Units Activity (Detail)
$ / shares in Units, $ in Thousands
3 Months Ended
Mar. 31, 2016
USD ($)
$ / shares
shares
Number of Restricted Stock Units  
Non-vested at beginning of year | shares 71,451
Granted | shares 53,267
Non-vested at March 31, 2016 | shares 124,718
Weighted Average Grant Date Fair Value Per Share  
Non-vested at beginning of year | $ / shares $ 101.29
Granted | $ / shares 111.12
Non-vested at March 31, 2016 | $ / shares $ 105.57
Weighted Average Remaining Contractual Life  
Non-vested at March 31, 2016 2 years 4 months 2 days
Total Aggregate Intrinsic Value  
Non-vested at March 31, 2016 | $ $ 15,738

v3.4.0.3
PREFERRED STOCK - Additional Information (Details) - USD ($)
$ / shares in Units, $ in Millions
Sep. 15, 2015
Mar. 31, 2016
Dec. 31, 2015
Class of Stock [Line Items]      
Depositary Shares, Liquidation Preference Per Share $ 100.00    
Series A preferred stock      
Class of Stock [Line Items]      
Preferred stock, authorized (in shares)   1,000,000 1,000,000
Preferred stock, issued (in shares)   770,000 770,000
Depositary shares (in shares) 7,700,000    
Preferred stock, dividend rate 5.25%    
Preferred stock, par value (in dollars per share) $ 0.01 $ 0.01 $ 0.01
Issuance of preferred stock (in dollars per share) $ 100.00    
Gross proceeds from issuance of preferred stock $ 770.0    
Preferred stock, liquidation preference (in dollars per share) $ 1,000    
Series A preferred stock | Minimum      
Class of Stock [Line Items]      
Common stock issuable upon conversion (in shares) 5.8716    
Series A preferred stock | Maximum      
Class of Stock [Line Items]      
Common stock issuable upon conversion (in shares) 7.3394    

v3.4.0.3
EARNINGS PER COMMON SHARE - Computation of Basic and Diluted Net Income Per Share (Detail) - USD ($)
$ / shares in Units, $ in Thousands
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Numerator:    
Net income attributable to Stericycle, Inc. $ 76,786 $ 75,458
Less: mandatory convertible preferred stock dividend 10,106 0
Net Income Attributable to Stericycle, Inc. Common Shareholders $ 66,680 $ 75,458
Denominator:    
Denominator for basic earnings per share-weighted average shares (in shares) 84,705,000 85,037,823
Effect of diluted securities:    
Employee stock based awards (in shares) 1,140,501 1,319,183
Mandatory convertible preferred stock (in shares) 0 0
Denominator for diluted earnings per share-adjusted weighted average shares and after assumed exercises (in shares) 85,845,501 86,357,006
Earnings per share – Basic (in dollars per share) $ 0.79 $ 0.89
Earnings per share – Diluted (in dollars per share) $ 0.78 $ 0.87
Series A preferred stock    
Effect of diluted securities:    
Antidilutive shares excluded from computation of diluted earnings per share (in shares) 5,651,376  

v3.4.0.3
GOODWILL AND OTHER INTANGIBLE ASSETS - Additional Information (Detail)
$ in Thousands
3 Months Ended 12 Months Ended
Mar. 31, 2016
USD ($)
Segment
Mar. 31, 2015
USD ($)
Dec. 31, 2015
USD ($)
Intangible Assets By Major Class [Line Items]      
Number of geographical reportable segments | Segment 2    
Aggregate amortization expense | $ $ 18,274 $ 8,797 $ 45,498
Customer relationships      
Intangible Assets By Major Class [Line Items]      
Finite lived intangible assets, weighted average remaining useful life 19 years 1 month 6 days    
Customer relationships | Maximum      
Intangible Assets By Major Class [Line Items]      
Finite-lived intangible assets, useful life 40 years    
Customer relationships | Minimum      
Intangible Assets By Major Class [Line Items]      
Finite-lived intangible assets, useful life 10 years    
Covenants not-to-compete      
Intangible Assets By Major Class [Line Items]      
Finite lived intangible assets, weighted average remaining useful life 4 years 4 months 24 days    
Covenants not-to-compete | Maximum      
Intangible Assets By Major Class [Line Items]      
Finite-lived intangible assets, useful life 14 years    
Covenants not-to-compete | Minimum      
Intangible Assets By Major Class [Line Items]      
Finite-lived intangible assets, useful life 5 years    
Tradenames      
Intangible Assets By Major Class [Line Items]      
Finite lived intangible assets, weighted average remaining useful life 16 years 10 months 24 days    
Tradenames | Maximum      
Intangible Assets By Major Class [Line Items]      
Finite-lived intangible assets, useful life 40 years    
Tradenames | Minimum      
Intangible Assets By Major Class [Line Items]      
Finite-lived intangible assets, useful life 15 years    
Other      
Intangible Assets By Major Class [Line Items]      
Finite lived intangible assets, weighted average remaining useful life 18 years 6 months    

v3.4.0.3
GOODWILL AND OTHER INTANGIBLE ASSETS - Changes in Carrying Amount of Goodwill (Detail) - USD ($)
$ in Thousands
3 Months Ended 12 Months Ended
Mar. 31, 2016
Dec. 31, 2015
Goodwill [Roll Forward]    
Beginning Balance $ 3,758,177 $ 2,418,832
Goodwill acquired during the year, net 17,840 1,450,950
Purchase accounting allocation adjustments 7,679 (28,277)
Goodwill other changes   (440)
Changes due to foreign currency fluctuations 6,320 (82,888)
Ending Balance 3,790,016 3,758,177
United States    
Goodwill [Roll Forward]    
Beginning Balance 2,972,275 1,838,739
Goodwill acquired during the year, net 17,390 1,177,431
Purchase accounting allocation adjustments 6,305 (43,895)
Ending Balance 2,995,970 2,972,275
International    
Goodwill [Roll Forward]    
Beginning Balance 785,902 580,093
Goodwill acquired during the year, net 450 273,519
Purchase accounting allocation adjustments 1,374 15,618
Goodwill other changes   (440)
Changes due to foreign currency fluctuations 6,320 (82,888)
Ending Balance $ 794,046 $ 785,902

v3.4.0.3
GOODWILL AND OTHER INTANGIBLE ASSETS - Values of Intangible Assets (Detail) - USD ($)
$ in Thousands
Mar. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Intangible Assets By Major Class [Line Items]      
Gross Carrying Amount $ 2,011,351 $ 1,993,586  
Accumulated Amortization 170,507 151,025  
Net Value 1,840,844 1,842,561 $ 909,645
Operating permits      
Intangible Assets By Major Class [Line Items]      
Gross Carrying Amount 234,888 233,101  
Net Value 234,888 233,101  
Tradenames      
Intangible Assets By Major Class [Line Items]      
Gross Carrying Amount 428,282 426,498  
Net Value 428,282 426,498  
Customer relationships      
Intangible Assets By Major Class [Line Items]      
Gross Carrying Amount 1,319,782 1,304,388  
Accumulated Amortization 162,831 144,020  
Net Value 1,156,951 1,160,368  
Covenants not-to-compete      
Intangible Assets By Major Class [Line Items]      
Gross Carrying Amount 7,630 6,878  
Accumulated Amortization 5,340 5,141  
Net Value 2,290 1,737  
Tradenames      
Intangible Assets By Major Class [Line Items]      
Gross Carrying Amount 3,935 3,819  
Accumulated Amortization 1,022 948  
Net Value 2,913 2,871  
Other      
Intangible Assets By Major Class [Line Items]      
Gross Carrying Amount 16,834 18,902  
Accumulated Amortization 1,314 916  
Net Value $ 15,520 $ 17,986  

v3.4.0.3
GOODWILL AND OTHER INTANGIBLE ASSETS - Rollforward of Intangible Assets (Details) - USD ($)
$ in Thousands
3 Months Ended 12 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Dec. 31, 2015
Finite-lived and Indefinite-lived Intangible Assets [Roll Forward]      
Beginning of period $ 1,842,561 $ 909,645 $ 909,645
Intangible assets acquired during the year, net 8,436   1,052,016
Impairments during the year     (4,177)
Amortization during the year (18,274) $ (8,797) (45,498)
Changes due to foreign currency fluctuations 8,121   (69,425)
End of period $ 1,840,844   $ 1,842,561

v3.4.0.3
GOODWILL AND OTHER INTANGIBLE ASSETS - Estimated Amortization Expense (Detail)
$ in Thousands
Mar. 31, 2016
USD ($)
Goodwill And Intangible Assets Disclosure [Abstract]  
2016 $ 72,287
2017 72,300
2018 72,252
2019 72,095
2020 $ 71,805

v3.4.0.3
ENVIRONMENTAL REMEDIATION LIABILITIES - Additional Information (Details)
$ in Millions
Mar. 31, 2016
USD ($)
Site Contingency [Line Items]  
Environmental remediation liabilities $ 30.4
Accrued Liabilities [Member]  
Site Contingency [Line Items]  
Environmental remediation liabilities 1.5
Other Liabilities [Member]  
Site Contingency [Line Items]  
Environmental remediation liabilities $ 28.9

v3.4.0.3
DEBT - Schedule of Long-Term Debt (Detail) - USD ($)
3 Months Ended
Mar. 31, 2016
Dec. 31, 2015
Debt Instrument [Line Items]    
Total debt $ 3,152,149,000 $ 3,214,048,000
Less: current portion of total debt 114,066,000 161,409,000
Long-term portion of total debt 3,038,083,000 3,052,639,000
Obligations under capital leases    
Debt Instrument [Line Items]    
Total debt 14,308,000 15,024,000
$1.20 billion senior credit facility weighted average rate 1.87%, due in 2019    
Debt Instrument [Line Items]    
Total debt 455,911,000 353,763,000
Maximum borrowing capacity of line of credit facility $ 1,200,000,000  
Long-term Debt, Weighted Average Interest Rate 1.87%  
$1.08 billion term loan weighted average rate 1.81%, due in 2020    
Debt Instrument [Line Items]    
Total debt $ 1,079,000,000 1,250,000,000
Maximum borrowing capacity of line of credit facility $ 1,080,000,000  
Stated interest rate 1.81%  
$175 million private placement notes 3.89%, due in 2017    
Debt Instrument [Line Items]    
Total debt $ 175,000,000 175,000,000
Stated interest rate 3.89%  
Long-term debt, face amount $ 175,000,000  
$125 million private placement notes 2.68%, due in 2019    
Debt Instrument [Line Items]    
Total debt $ 125,000,000 125,000,000
Stated interest rate 2.68%  
Long-term debt, face amount $ 125,000,000  
$225 million private placement notes 4.47%, due in 2020    
Debt Instrument [Line Items]    
Total debt $ 225,000,000 225,000,000
Stated interest rate 4.47%  
Long-term debt, face amount $ 225,000,000  
$150 million private placement notes 2.89%, due in 2021    
Debt Instrument [Line Items]    
Total debt $ 150,000,000 150,000,000
Stated interest rate 2.89%  
Long-term debt, face amount $ 150,000,000  
$125 million private placement notes 3.26%, due in 2022    
Debt Instrument [Line Items]    
Total debt $ 125,000,000 125,000,000
Stated interest rate 3.26%  
Long-term debt, face amount $ 125,000,000  
$200 million private placement notes 2.72%, due in 2022    
Debt Instrument [Line Items]    
Total debt $ 200,000,000 200,000,000
Stated interest rate 2.72%  
Long-term debt, face amount $ 200,000,000  
$100 million private placement notes 2.79%, due in 2023    
Debt Instrument [Line Items]    
Total debt $ 100,000,000 100,000,000
Stated interest rate 2.79%  
Long-term debt, face amount $ 100,000,000  
$150 million private placement notes 3.18%, due in 2023    
Debt Instrument [Line Items]    
Total debt $ 150,000,000 150,000,000
Stated interest rate 3.18%  
Long-term debt, face amount $ 150,000,000  
Promissory notes and deferred consideration weighted average rate of 2.35% and weighted average maturity of 3.1 years    
Debt Instrument [Line Items]    
Total debt $ 246,442,000 239,731,000
Long-term Debt, Weighted Average Interest Rate 2.35%  
Long Term Debt Maturity 3 years 1 month 6 days  
Foreign bank debt weighted average rate 7.40% and weighted average maturity of 2.0 years    
Debt Instrument [Line Items]    
Total debt $ 106,488,000 $ 105,530,000
Long-term Debt, Weighted Average Interest Rate 7.40%  
Long Term Debt Maturity 2 years  

v3.4.0.3
DEBT - Additional Information (Detail) - USD ($)
Mar. 31, 2016
Dec. 31, 2015
$1.20 billion senior credit facility weighted average rate 1.87%, due in 2019    
Debt Instrument [Line Items]    
Maximum borrowing capacity of line of credit facility $ 1,200,000,000  
Revolving credit facility, amount committed to outstanding letters of credit 159,800,000 $ 160,400,000
Revolving credit facility, unused portion 584,300,000 $ 685,800,000
Term loan maturing in August 2020    
Debt Instrument [Line Items]    
Maximum borrowing capacity of line of credit facility 1,080,000,000  
$175 million private placement notes 3.89%, due in 2017    
Debt Instrument [Line Items]    
Long-term debt, face amount 175,000,000  
$125 million private placement notes 2.68%, due in 2019    
Debt Instrument [Line Items]    
Long-term debt, face amount 125,000,000  
$225 million private placement notes 4.47%, due in 2020    
Debt Instrument [Line Items]    
Long-term debt, face amount 225,000,000  
$150 million private placement notes 2.89%, due in 2021    
Debt Instrument [Line Items]    
Long-term debt, face amount 150,000,000  
$125 million private placement notes 3.26%, due in 2022    
Debt Instrument [Line Items]    
Long-term debt, face amount 125,000,000  
$200 million private placement notes 2.72%, due in 2022    
Debt Instrument [Line Items]    
Long-term debt, face amount 200,000,000  
$100 million private placement notes 2.79%, due in 2023    
Debt Instrument [Line Items]    
Long-term debt, face amount 100,000,000  
$150 million private placement notes 3.18%, due in 2023    
Debt Instrument [Line Items]    
Long-term debt, face amount $ 150,000,000  

v3.4.0.3
GEOGRAPHIC INFORMATION - Additional Information (Detail)
3 Months Ended
Mar. 31, 2016
Segment
Segment Reporting [Abstract]  
Number of operating segments 2
Number of reportable segments 2

v3.4.0.3
GEOGRAPHIC INFORMATION - Detailed Information for Reporting Segment (Detail) - USD ($)
$ in Thousands
3 Months Ended 12 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Dec. 31, 2015
Segment Reporting Information [Line Items]      
Revenues $ 874,181 $ 663,319  
Income before income taxes 115,631 107,857  
Income taxes 38,036 32,047  
Net Income 77,595 75,810 $ 268,013
Less: net income attributable to noncontrolling interests 809 352  
Net Income Attributable to Stericycle, Inc. 76,786 75,458  
United States      
Segment Reporting Information [Line Items]      
Revenues 649,668 472,248  
Net interest expense 19,883 10,845  
Income before income taxes 108,313 102,890  
Income taxes 38,814 37,880  
Net Income Attributable to Stericycle, Inc. 69,499 65,010  
Depreciation and amortization 31,570 16,140  
United States | Regulated and Compliance Solutions      
Segment Reporting Information [Line Items]      
Revenues 624,878 452,269  
United States | Recall and Returns Solutions      
Segment Reporting Information [Line Items]      
Revenues 24,790 19,979  
International      
Segment Reporting Information [Line Items]      
Net interest expense 4,158 7,753  
Income before income taxes 7,318 4,967  
Income taxes (778) (5,833)  
Net Income 8,096 10,800  
Less: net income attributable to noncontrolling interests 809 352  
Net Income Attributable to Stericycle, Inc. 7,287 10,448  
Depreciation and amortization 16,844 11,423  
International | Regulated and Compliance Solutions      
Segment Reporting Information [Line Items]      
Revenues $ 224,513 $ 191,071  

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