Company Quick10K Filing
Stericycle
Price49.12 EPS-2
Shares91 P/E-27
MCap4,475 P/FCF22
Net Debt2,713 EBIT-164
TEV7,188 TEV/EBIT-44
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-09-30 Filed 2020-11-05
10-Q 2020-06-30 Filed 2020-08-06
10-Q 2020-03-31 Filed 2020-05-07
10-K 2019-12-31 Filed 2020-02-28
10-Q 2019-09-30 Filed 2019-10-31
10-Q 2019-06-30 Filed 2019-08-01
10-Q 2019-03-31 Filed 2019-05-02
10-K 2018-12-31 Filed 2019-02-28
10-Q 2018-09-30 Filed 2018-11-01
10-Q 2018-06-30 Filed 2018-08-02
10-Q 2018-03-31 Filed 2018-05-03
10-K 2017-12-31 Filed 2018-02-26
10-Q 2017-09-30 Filed 2017-11-08
10-Q 2017-06-30 Filed 2017-08-09
10-Q 2017-03-31 Filed 2017-05-10
10-K 2016-12-31 Filed 2017-03-15
10-Q 2016-09-30 Filed 2016-11-09
10-Q 2016-03-31 Filed 2016-05-09
10-K 2015-12-31 Filed 2016-03-15
10-Q 2015-09-30 Filed 2015-11-09
10-Q 2015-06-30 Filed 2015-08-05
10-Q 2015-03-31 Filed 2015-05-07
10-K 2014-12-31 Filed 2015-03-02
10-Q 2014-09-30 Filed 2014-11-07
10-Q 2014-06-30 Filed 2014-08-07
10-Q 2014-03-31 Filed 2014-05-08
10-K 2013-12-31 Filed 2014-02-28
10-Q 2013-09-30 Filed 2013-11-07
10-Q 2013-06-30 Filed 2013-08-08
10-Q 2013-03-31 Filed 2013-05-09
10-K 2012-12-31 Filed 2013-02-28
10-Q 2012-09-30 Filed 2012-11-08
10-Q 2012-06-30 Filed 2012-08-08
10-Q 2012-03-31 Filed 2012-05-09
10-K 2011-12-31 Filed 2012-02-28
10-Q 2011-09-30 Filed 2011-11-09
10-Q 2011-06-30 Filed 2011-08-09
10-Q 2011-03-31 Filed 2011-05-10
10-K 2010-12-31 Filed 2011-02-28
10-Q 2010-09-30 Filed 2010-11-05
10-Q 2010-06-30 Filed 2010-08-09
10-Q 2010-03-31 Filed 2010-05-07
10-K 2009-12-31 Filed 2010-02-26
8-K 2020-11-24
8-K 2020-11-09
8-K 2020-11-09
8-K 2020-11-05
8-K 2020-08-06
8-K 2020-06-19
8-K 2020-06-05
8-K 2020-05-22
8-K 2020-05-07
8-K 2020-04-06
8-K 2020-03-26
8-K 2020-02-27
8-K 2020-02-25
8-K 2020-02-06
8-K 2020-01-06
8-K 2019-10-31
8-K 2019-09-26
8-K 2019-08-01
8-K 2019-06-14
8-K 2019-06-07
8-K 2019-06-04
8-K 2019-05-22
8-K 2019-05-02
8-K 2019-05-02
8-K 2019-03-25
8-K 2019-02-28
8-K 2019-02-28
8-K 2019-01-08
8-K 2018-12-19
8-K 2018-12-19
8-K 2018-11-01
8-K 2018-10-24
8-K 2018-09-28
8-K 2018-08-02
8-K 2018-06-19
8-K 2018-05-23
8-K 2018-05-03
8-K 2018-03-23
8-K 2018-03-14
8-K 2018-02-21

SRCL 10Q Quarterly Report

Part I - Financial Information
Item 1. Financial Statements (Unaudited)
Note 1 - Basis of Presentation and Summary of Significant Accounting Policies
Note 2 - Revenues From Contracts with Customers
Note 3 - Restructuring, Divestitures, and Impairments
Note 4 - Goodwill and Other Intangible Assets
Note 5 - Long - Term Debt
Note 6 - Income Taxes
Note 7 - (Loss) Earnings per Common Share
Note 8 - Segment Reporting
Note 9 - Commitments and Contingencies
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 6. Exhibits
EX-31.1 scl-20200930x10qex311.htm
EX-31.2 scl-20200930x10qex312.htm
EX-32 scl-20200930x10qex32.htm

Stericycle Earnings 2020-09-30

Balance SheetIncome StatementCash Flow
10.08.06.04.02.00.02012201420172020
Assets, Equity
1.00.70.40.2-0.1-0.42012201420172020
Rev, G Profit, Net Income
1.71.00.3-0.4-1.1-1.82012201420172020
Ops, Inv, Fin

scl-20200930
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Table of Contents
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________________________________
FORM 10-Q
________________________________________________________
[Mark One]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2020
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from             to
Commission File Number 1-37556
________________________________________________________
Stericycle, Inc.
(Exact name of registrant as specified in its charter)
________________________________________________________
Delaware36-3640402
(State or other jurisdiction of incorporation or organization)(IRS Employer Identification Number)
2355 Waukegan Road
Bannockburn, Illinois 60015
(Address of principal executive offices, including zip code)
(847) 367-5910
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01 per shareSRCLNasdaq Global Select Market
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer,” "smaller reporting company," and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Smaller reporting company
Accelerated filer ☐
Emerging growth company
Non-accelerated filer ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No x
On November 2, 2020, there were 91,552,471 shares of the Registrant’s Common Stock outstanding.


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Glossary of Defined Terms
Unless the context requires otherwise, the “Company,” “Stericycle,” "we," "us" or "our" refers to Stericycle, Inc. on a consolidated basis. The Company also uses several other terms in this Quarterly Report on Form 10-Q, most of which are explained or defined below:
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AbbreviationDescription
2019 Form 10-KAnnual report on Form 10-K for the year ended December 31, 2019
Adjusted Income from OperationsIncome from Operations adjusted for certain items discussed in Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
ASC 740
Accounting Standards Codification Topic 740 "Income Taxes"
ASEASecurity, Energy and Environmental Agency
ASUAccounting Standards Update
BuyerHarsco Corporation and CEI Holding LLC, a Delaware limited liability company and subsidiary of Harsco Corporation
CARES ActU.S. Coronavirus Aid, Relief, and Economic Security Act enacted into law on March 27, 2020
Clean Air ActThe Clean Air Act of 1970
Consolidated Leverage RatioConsolidated Leverage Ratio means, as of any date of determination, the ratio of (a) (i) Consolidated Funded Indebtedness as of such date minus (ii) Unrestricted Cash as of such date to (b) Consolidated EBITDA for the period of four fiscal quarters most recently ended on or prior to such date, as defined in the Fifth Amendment.
CORCost of revenues
COSO FrameworkInternal Control Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission
COVID-19The global novel coronavirus disease 2019 outbreak, which the World Health Organization declared as to be a pandemic
Credit AgreementCredit Agreement dated November 17, 2017 by and among the Company and certain of its subsidiaries named therein, Bank of America, N.A., as administrative agent, and the other financial institutions party thereto
CRSCommunication and Related Services
DAQDivision of Air Quality
DEAU.S. Drug Enforcement Agency
Disposal GroupThe divestiture of Domestic Environmental Solutions
DOJU.S. Department of Justice
Domestic Environmental SolutionsHazardous Waste Solutions and Manufacturing and Industrial Services
DSODays Sales Outstanding, defined as the average number of days that it takes a company to collect payment after a sale has been made computed as the last twelve months of Revenues for the quarter and period ended DSO, respectively, divided by the Accounts Receivable balance.
DTSCDepartment of Toxic Substances Control
EBITDAEarnings before interest, tax, depreciation and amortization
EPAU.S. Environmental Protection Agency
ERPEnterprise Resource Planning
Exchange ActU.S. Securities Exchange Act of 1934
Expert SolutionsRecall and Return Services
FASBFinancial Accounting Standards Board
FCPAU.S. Foreign Corrupt Practices Act
Fourth AmendmentFourth Amendment to the Credit Agreement, dated as of June 14, 2019
Fifth AmendmentFifth Amendment to the Credit Agreement, dated as of February 25, 2020
HSAHealthcare Service Agreement with Buyer
InternationalOperating segment including Europe, Middle East, Asia Pacific and Latin America Business operations outside of North America
IRSU.S. Internal Revenue Service
North AmericaOperating segment in North America, including Puerto Rico
NOVNotice of Violation
OtherRepresents corporate enabling and shared services functions
PFAPre-filing agreement
Purchase AgreementStock Purchase Agreement, dated as of February 6, 2020, by and between Stericycle, Inc., and the Buyer
PSUPerformance-based restricted stock unit
ROURight-of-use
RSURestricted stock unit
RWCSRegulated Waste and Compliance Services
SECU.S. Securities and Exchanges Commission
Senior Credit FacilityThe Company's $1.2 billion senior credit facility due in 2022 granted under the terms of the Credit Agreement
Senior Notes5.375% Senior Notes due July 2024
SG&ASelling, general and administrative expenses
SIDSecure Information Destruction Services
SOPSorted office paper
SQ SettlementSmall quantity medical waste customers class action settlement of $295.0 million
Term FacilityAggregate amount of commitments made by any lender under the terms of the Credit Agreement
Term LoansAdvances made by any lender under the Term Facility
TASTelephone answering services
TSATransition Services Agreement with Buyer
U.K.United Kingdom
U.S.United States of America
U.S. GAAPU.S. Generally Accepted Accounting Principles

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PART I – FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)

STERICYCLE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF LOSS
(Unaudited)
In millions, except per share data
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Revenues$636.4 $833.1 $2,019.6 $2,509.0 
Cost of revenues369.1 537.8 1,236.0 1,614.0 
Gross profit267.3 295.3 783.6 895.0 
Selling, general and administrative expenses219.0 246.6 678.7 809.4 
Divestiture losses (gains), net104.1 83.2 166.2 78.1 
Goodwill impairment  20.9 
Loss from operations(55.8)(34.5)(61.3)(13.4)
Interest expense, net(17.7)(29.9)(62.0)(91.1)
Loss on early extinguishment of debt   (23.1)
Other expense, net(0.9)(3.2)(4.8)(7.2)
Loss before income taxes(74.4)(67.6)(128.1)(134.8)
Income tax (expense) benefit(6.5)8.6 23.2 8.0 
Net loss(80.9)(59.0)(104.9)(126.8)
Net income attributable to noncontrolling interests(0.3)(0.2)(0.9)(0.7)
Net loss attributable to Stericycle, Inc. common shareholders$(81.2)$(59.2)$(105.8)$(127.5)
Loss per common share attributable to Stericycle, Inc. common shareholders:
Basic$(0.89)$(0.65)$(1.16)$(1.40)
Diluted$(0.89)$(0.65)$(1.16)$(1.40)
Weighted average number of common shares outstanding:
Basic91.5 91.1 91.4 91.0 
Diluted91.5 91.1 91.4 91.0 
See accompanying Notes to Condensed Consolidated Financial Statements.
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STERICYCLE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME (LOSS)
(Unaudited)
In millions
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Net loss$(80.9)$(59.0)$(104.9)$(126.8)
Other comprehensive income (loss):
Currency translation adjustments30.3 (28.9)1.5 (22.8)
Cumulative currency translation loss realized through disposition of Argentina operations87.2  87.2  
Amortization of cash flow hedge into income, net of tax expense ($0.0 and $0.2 for the three and nine months ended September 30, 2019)
   0.4 
Change in fair value of cash flow hedge, net of tax expense ($0.1 for the nine months ended September 30, 2019)
   0.2 
Reclassification of cash flow hedge, net of tax expense ($1.1 for the nine months ended September 30, 2019)
   2.3 
Total other comprehensive income (loss)117.5 (28.9)88.7 (19.9)
 
Comprehensive income (loss)36.6 (87.9)(16.2)(146.7)
Less: comprehensive income attributable to noncontrolling interests0.4 0.1 1.1 0.9 
Comprehensive income (loss) attributable to Stericycle, Inc. common shareholders$36.2 $(88.0)$(17.3)$(147.6)
See accompanying Notes to Condensed Consolidated Financial Statements.

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STERICYCLE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
In millions, except per share data
September 30, 2020December 31, 2019
ASSETS
Current Assets:
Cash and cash equivalents$59.4 $34.7 
Accounts receivable, less allowance for doubtful accounts of $55.4 in 2020 and $67.9 in 2019
384.9 544.3 
Prepaid expenses68.7 60.7 
Other current assets52.7 66.9 
Total Current Assets565.7 706.6 
Property, plant and equipment, less accumulated depreciation of $661.8 in 2020 and $667.8 in 2019
696.4 798.5 
Operating lease right-of-use assets378.2 435.0 
Goodwill2,801.8 2,982.2 
Intangible assets, less accumulated amortization of $615.7 in 2020 and $584.9 in 2019
1,122.4 1,422.4 
Other assets68.7 92.3 
Total Assets$5,633.2 $6,437.0 
LIABILITIES AND EQUITY
Current Liabilities:
Current portion of long-term debt$117.5 $103.1 
Bank overdrafts2.9 1.9 
Accounts payable156.1 220.1 
Accrued liabilities271.4 296.6 
Operating lease liabilities86.0 94.8 
Other current liabilities53.0 40.4 
Total Current Liabilities686.9 756.9 
Long-term debt, net1,878.7 2,559.3 
Long-term operating lease liabilities312.7 356.1 
Deferred income taxes311.2 295.1 
Long-term taxes payable45.7 70.7 
Other liabilities59.5 64.2 
Total Liabilities3,294.7 4,102.3 
Equity:
Common stock (par value $0.01 per share, 120.0 shares authorized, 91.5 and 91.1 issued and outstanding in 2020 and 2019, respectively)
0.9 0.9 
Additional paid-in capital1,228.2 1,205.7 
Retained earnings1,334.1 1,442.4 
Accumulated other comprehensive loss(229.6)(318.1)
Total Stericycle, Inc.’s Equity2,333.6 2,330.9 
Noncontrolling interests4.9 3.8 
Total Equity2,338.5 2,334.7 
Total Liabilities and Equity$5,633.2 $6,437.0 
See accompanying Notes to Condensed Consolidated Financial Statements.
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STERICYCLE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
In millions
Nine Months Ended September 30,
20202019
OPERATING ACTIVITIES:
Net loss$(104.9)$(126.8)
Adjustments to reconcile net loss to net cash from operating activities:
Depreciation83.3 96.6 
Intangible amortization94.5 110.5 
Loss on early extinguishment of debt and related charges 26.5 
Stock-based compensation expense20.3 13.7 
Deferred income taxes(3.7)18.7 
Goodwill impairment 20.9 
Divestiture losses (gains), net166.2 78.1 
Asset impairments, loss on disposal of property plant and equipment and other charges15.7 9.1 
Other, net(0.1)0.6 
Changes in operating assets and liabilities, net of the effects of acquisitions and divestitures:
Accounts receivable32.9 6.3 
Prepaid expenses26.4 (28.3)
Accounts payable(13.0)4.4 
Accrued liabilities9.9 (30.5)
Other assets and liabilities37.7 1.4 
Net cash from operating activities365.2 201.2 
INVESTING ACTIVITIES:
Capital expenditures(94.7)(161.2)
Payments for acquisitions, net of cash acquired (0.2)
Proceeds from divestiture of businesses421.2 17.8 
Other, net1.7 2.3 
Net cash from investing activities328.2 (141.3)
FINANCING ACTIVITIES:
Repayments of long-term debt and other obligations(23.5)(38.2)
Proceeds from foreign bank debt1.8 10.9 
Repayments of foreign bank debt(5.2)(7.4)
Proceeds from term loan 365.0 
Repayment of term loan(404.5)(40.2)
Repayment of private placement of long-term note (1,075.0)
Proceeds from senior notes 600.0 
Proceeds from senior credit facility943.1 1,292.1 
Repayment of senior credit facility(1,175.9)(1,141.3)
Proceeds from (repayments of) bank overdrafts, net1.4 (9.8)
Payments of capital lease obligations(3.2)(2.4)
Payments of debt issuance costs(1.4)(8.8)
Proceeds from issuance of common stock, net of (payments of) taxes from withheld shares(0.9)16.2 
Payments on early extinguishment of debt (20.4)
Payments to noncontrolling interest (0.7)
Net cash from financing activities(668.3)(60.0)
Effect of exchange rate changes on cash and cash equivalents(0.4)(3.4)
Net change in cash and cash equivalents24.7 (3.5)
Cash and cash equivalents at beginning of period34.7 34.3 
Cash and cash equivalents at end of period$59.4 $30.8 
SUPPLEMENTAL CASH FLOW INFORMATION:
Net issuances of obligations for acquisitions$ $0.3 
Capital expenditures in accounts payable$8.5 $22.3 
Interest paid during the period, net of capitalized interest$69.5 $69.7 
Income taxes (refunded) paid, net during the period
$(42.9)$7.3 
See accompanying Notes to Condensed Consolidated Financial Statements.
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STERICYCLE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited)
In millions
Stericycle, Inc. Equity
Common StockAdditional Paid-In
Capital
Retained EarningsAccumulated Other
Comprehensive Loss
Noncontrolling
Interests
Total Equity
SharesAmount
Balance as of June 30, 202091.5 $0.9 $1,222.4 $1,415.3 $(347.0)$4.5 $2,296.1 
Net loss— — (81.2)— 0.3 (80.9)
Currency translation adjustment— — — — 30.2 0.1 30.3 
Cumulative currency translation loss realized through disposition of Argentina operations— — — — 87.2 — 87.2 
Issuance of common stock for exercise of options, RSU vesting, and employee stock purchases, net— — (1.6)— — — (1.6)
Stock compensation expense— — 7.4 — — — 7.4 
Balance as of September 30, 202091.5 $0.9 $1,228.2 $1,334.1 $(229.6)$4.9 $2,338.5 
In millions
Stericycle, Inc. Equity 
Common StockAdditional Paid-In
Capital
Retained EarningsAccumulated Other
Comprehensive Loss
Noncontrolling InterestsTotal Equity
SharesAmount
Balance as of June 30, 201991.1 $0.9 $1,192.8 $1,720.9 $(356.6)$4.2 $2,562.2 
Net loss— — — (59.2)— 0.2 (59.0)
Currency translation adjustment— — — — (28.8)(0.1)(28.9)
Change in qualifying cash flow hedge, net of tax— — — — — —  
Accelerated amortization of cash flow hedge, net of tax— — — — — —  
Issuance of common stock for exercise of options, RSU vesting, and employee stock purchases, net— — — — — —  
Stock compensation expense— — 3.7 — — — 3.7 
Payment to noncontrolling interest— — — — — (0.7)(0.7)
Balance as of September 30, 201991.1 $0.9 $1,196.5 $1,661.7 $(385.4)$3.6 $2,477.3 
See accompanying Notes to Condensed Consolidated Financial Statements.
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STERICYCLE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited)
In millions
Stericycle, Inc. Equity
Common StockAdditional Paid-In
Capital
Retained EarningsAccumulated Other
Comprehensive Loss
Noncontrolling InterestsTotal Equity
SharesAmount
Balance as of December 31, 201991.2 $0.9 $1,205.7 $1,442.4 $(318.1)$3.8 $2,334.7 
Net loss— — — (105.8)— 0.9 (104.9)
Currency translation adjustment— — — — 1.3 0.2 1.5 
Cumulative currency translation loss realized through disposition of Argentina operations— — — — 87.2 — 87.2 
Issuance of common stock for exercise of options, RSU vesting, and employee stock purchases, net0.3 — 2.2 — — — 2.2 
Stock compensation expense— — 20.3 — — — 20.3 
Cumulative effect of adopting ASU 2016-13— — — (2.5)— — (2.5)
Balance as of September 30, 202091.5 $0.9 $1,228.2 $1,334.1 $(229.6)$4.9 $2,338.5 
In millions
Stericycle, Inc. Equity
Common StockAdditional Paid-In
Capital
Retained EarningsAccumulated Other
Comprehensive Loss
Noncontrolling InterestsTotal Equity
SharesAmount
Balance as of Balance as of December 31, 201890.7 $0.9 $1,162.6 $1,789.2 $(365.3)$9.7 $2,597.1 
Net loss— — — (127.5)— 0.7 (126.8)
Currency translation adjustment— — — — (23.0)0.2 (22.8)
Change in qualifying cash flow hedge, net of tax— — — — 0.6 — 0.6 
Accelerated amortization of cash flow hedge, net of tax— — — — 2.3 — 2.3 
Issuance of common stock for exercise of options, RSU vesting, and employee stock purchases, net0.4 — 13.9 — — — 13.9 
Stock compensation expense— — 13.7 — — — 13.7 
Payment to noncontrolling interest— — 6.3 — — (7.0)(0.7)
Balance as of September 30, 201991.1 $0.9 $1,196.5 $1,661.7 $(385.4)$3.6 $2,477.3 
See accompanying Notes to Condensed Consolidated Financial Statements.
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STERICYCLE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(In millions, except per share data and unless otherwise indicated)

NOTE 1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Summary of Significant Accounting Policies
Basis of Presentation:  The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of Stericycle, Inc. and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The Company's Condensed Consolidated Financial Statements were prepared in accordance with U.S. GAAP and include the assets, liabilities, revenues and expenses of all wholly owned subsidiaries and majority-owned subsidiaries over which the Company exercises control. Outside shareholders' interests in subsidiaries are shown on the Condensed Consolidated Financial Statements as “Noncontrolling interests."
The accompanying unaudited Condensed Consolidated Financial Statements as of September 30, 2020 and for the three and nine months ended September 30, 2020 and 2019 have been prepared pursuant to the rules and regulations of the SEC for interim reporting and, therefore, do not include all information and footnote disclosures normally included in audited financial statements prepared in conformity with U.S. GAAP. In the opinion of management, however, all adjustments, consisting of normal recurring adjustments necessary to present fairly the results of operations, financial position and cash flows have been made. These Condensed Consolidated Financial Statements should be read in conjunction with the consolidated financial statements and notes thereto included in the 2019 Form 10-K. The results of operations for any interim period are not necessarily indicative of the results of operations to be expected for the full year or any other period.
Use of Estimates: The preparation of financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Some areas where the Company makes estimates include its allowance for doubtful accounts, credit memo reserve, accrued employee health and welfare benefits, environmental liabilities, stock-based compensation expense, income tax liabilities, accrued auto and workers’ compensation insurance claims, operating lease ROU assets and lease liabilities, intangible asset valuations, and long-lived asset and goodwill impairment assessments. Actual results could differ from the Company's estimates.  
Allowance for Doubtful Accounts: The Company reports accounts receivable at their net realizable value, which is management’s best estimate of the cash that will ultimately be received. The Company maintains an allowance for doubtful accounts to reflect the expected uncollectability of accounts receivable based on historical collection data and specific risks identified among uncollected accounts, as well as management’s expectation of future economic conditions. If current or expected future economic trends, events, or changes in circumstances indicate that specific receivable balances may be impaired, further consideration is given to the collectability of those balances and the allowance is adjusted accordingly. The adequacy of allowances for uncollectible accounts is reviewed at least quarterly and adjusted as necessary based on such reviews. Management’s judgment is required to assess the collectability of an account, based on detailed analysis of the aging of the receivables, the creditworthiness of the Company’s customers, historical collection trends, and current and future expected economic trends.
Accounts receivable written off in subsequent periods can differ from the allowance for doubtful accounts provided, but historically the Company’s provision has been adequate.
The allowance for doubtful accounts has decreased to $55.4 million as of September 30, 2020 from $67.9 million as of December 31, 2019. This decline is principally due to write offs of uncollectible receivables in Brazil and due to the divestiture of the Domestic Environmental Solutions business on April 6, 2020. See Part I, Item I. Financial Statements Note 3 Restructuring, Divestitures and Impairments for further information.
Adoption of New Accounting Standards
Financial Instrument Credit Losses
In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”) associated with the measurement of
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credit losses on financial instruments. ASU 2016-13 replaces the prior incurred loss impairment methodology of recognizing credit losses when a loss was probable, with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to assess credit loss estimates. The amended guidance was effective for the Company on January 1, 2020. The Company recognized a net decrease to Retained earnings in the Condensed Consolidated Financial Statements of $2.5 million as of January 1, 2020 for the cumulative effect of adopting ASU 2016-13.
Implementation Costs Incurred in a Cloud Computing Arrangement
In August 2018, the FASB issued ASU 2018-15, “Intangibles - Goodwill and Other - Internal Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract” (“ASU 2018-15”). ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs for internal-use software. The accounting for any hosting contract is unchanged. ASU 2018-15 was effective on January 1, 2020 and was adopted prospectively for implementation costs incurred after the date of adoption. The adoption of ASU 2018-15 did not have a material impact on the Condensed Consolidated Financial Statements.
Accounting Standards Issued But Not Yet Adopted
Simplifying the Accounting for Income Taxes
In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” (“ASU 2019-12”). ASU 2019-12 attempts to simplify aspects of accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. ASU 2019-12 is effective for public business entities for fiscal years beginning after December 15, 2020, including interim periods within that fiscal year. Early adoption is permitted for all entities. The Company plans to adopt ASU 2019-12 effective January 1, 2021. The ASU is currently not expected to have a material impact on our Condensed Consolidated Financial Statements.
NOTE 2 – REVENUES FROM CONTRACTS WITH CUSTOMERS
Disaggregation of Revenues
During the three month period ended June 30, 2020, we updated our service lines to include Hazardous Waste Solutions Services and Manufacturing and Industrial Services in RWCS. This reclassification was driven by the divestiture of the Domestic Environmental Solutions business. See Part I, Item I. Financial Statements Note 3 Restructuring, Divestitures and Impairments. In addition, during the three month period ended June 30, 2020, we updated segment reporting to reflect U.S. CRS as part of the North America segment. See Part I, Item I. Financial Statements; Note 8 Segment Reporting in the Condensed Consolidated Financial Statements for further information. For 2019 periods, amounts have been recast to reflect these changes.
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The following table presents revenues disaggregated by service and reportable segments:
In millions
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Revenue by Service
Regulated Waste and Compliance Services$415.5 $551.6 $1,366.9 $1,641.7 
Secure Information Destruction Services187.3 222.6 557.9 684.0 
Communication and Related Services33.6 58.9 94.8 183.3 
Total Revenues$636.4 $833.1 $2,019.6 $2,509.0 
North America
Regulated Waste and Compliance Services$322.5 $445.6 $1,089.6 $1,317.8 
Secure Information Destruction Services163.4 189.7 486.8 584.4 
Communication and Related Services31.2 56.6 86.6 174.0 
Total North America Segment$517.1 $691.9 $1,663.0 $2,076.2 
International
Regulated Waste and Compliance Services$93.0 $106.0 $277.3 $323.9 
Secure Information Destruction Services23.9 32.9 71.1 99.6 
Communication and Related Services2.4 2.3 8.2 9.3 
Total International Segment$119.3 $141.2 $356.6 $432.8 
Contract Liabilities
Contract liabilities at September 30, 2020 and December 31, 2019 were $9.5 million and $12.2 million, respectively. Contract liabilities as of September 30, 2020 are expected to be recognized in Revenues, as the amounts are earned, which will be over the next 12 months.
Contract Acquisition Costs
The Company’s incremental direct costs of obtaining a contract, which consist primarily of sales incentives, are deferred and amortized to SG&A over a weighted average estimated period of benefit of 6.4 years.
During the three months ended September 30, 2020 and 2019, the Company amortized $2.7 million and $2.2 million, respectively, of deferred sales incentives to SG&A.
During the nine months ended September 30, 2020 and 2019, the Company amortized $7.8 million and $6.5 million, respectively, of deferred sales incentives to SG&A.
Total contract acquisition costs, net of accumulated amortization, were classified as follows:
In millions
 September 30, 2020December 31, 2019
Other current assets$10.6 $9.5 
Other assets30.0 28.9 
Total contract acquisition costs$40.6 $38.4 

NOTE 3 – RESTRUCTURING, DIVESTITURES, AND IMPAIRMENTS
Restructuring - Business Transformation

Stericycle is focused on driving long-term growth, profitability and delivering enhanced shareholder value.
During the nine months ended September 30, 2019, the Company recognized $5.3 million in charges related to executive and employee termination costs, primarily within Other as part of SG&A in the Condensed Consolidated
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Statements of Loss. As of September 30, 2020, approximately $1.2 million in future payments remained accrued as part of Accrued Liabilities on the Condensed Consolidated Balance Sheets.
Divestitures
On August 3, 2020, Stericycle entered into an agreement and completed the sale of its operations in Argentina for proceeds of approximately $3.9 million. Revenue of Argentina operations were approximately 1% of our consolidated annual revenues for 2019. The transaction resulted in a third quarter divestiture pre-tax loss of $112.4 million, of which $87.2 million related to the balance of cumulative currency translation adjustment.
On April 6, 2020, the Company completed the sale of all of the outstanding equity interests of its Domestic Environmental Solutions business (the “Transaction”) to Buyer for approximately $462.5 million (subject to customary adjustments for working capital and other adjustments), pursuant to the Purchase Agreement, dated February 6, 2020. As previously announced, the Purchase Agreement provided for the divestiture of the Company’s Domestic Environmental Solutions business, reported in the North America segment, exclusive of the Company’s healthcare hazardous waste services and unused consumer pharmaceutical take-back services, to Buyer. In connection with the Purchase Agreement, the Company entered into an HSA and TSA with the Buyer for a period of 7 years and 6 months, respectively. The Company allocated and deferred a portion of the Transaction proceeds, $17.7 million related to the HSA and $1.5 million related to the TSA, which will be recognized over the applicable duration of the HSA and TSA periods, subject to specific agreement provisions, thereby offsetting the expenses incurred to deliver the respective services. The allocated proceeds are reflected as an operating cash flow on the Condensed Consolidated Statement of Cash Flows, as they are advances received for services to be provided prospectively.

In the first quarter of 2020, the Company recognized an impairment charge of $58.3 million, inclusive of $10.8 million of related deal costs for the Transaction. In the second and third quarters of 2020, the Company recognized an incremental pre-tax loss (gain) of $3.8 million and $(8.3) million, respectively, primarily driven by working capital adjustments based upon the terms of the Purchase Agreement that have now concluded with an associated payment of $9.7 million to the Buyer in September 2020. These charges, net are reported as Divestiture losses (gains), net in the Company’s Condensed Consolidated Statements of Loss. Further, the Company released a $1.7 million benefit associated with contingent consideration related to a prior acquisition agreement connected with the divested business (Fair value - Level 3) that is reported in SG&A in the Company’s Condensed Consolidated Statements of Loss.
During the nine months ended September 30, 2019, the Company completed the sale of the its U.K. based texting business, a component of the International segment for proceeds of $14.9 million, including a $1.3 million note receivable that was due in six months from the closing of the transaction, resulting in a pre-tax gain of approximately $5.1 million, which is recognized in Divestiture losses (gains), net in the Condensed Consolidated Statements of Loss.

During September 2019, the Company approved plans to sell its TAS business in North America and its retail pharmaceutical returns business in the U.S. and Puerto Rico. Accordingly, the assets and liabilities for these businesses were classified as held for sale resulting in a $42.3 million impairment charge in the three and nine months ended September 30, 2019. These businesses are part of CRS, which is presented in the North America reportable segment. In October 2019, the Company entered into definitive agreements and completed the sales of these businesses for cash consideration of $36.4 million.
During September 2019, the Company also approved a plan to sell substantially all of its operations in Mexico. Accordingly, the assets and liabilities for these operations were classified as held for sale resulting in a $40.2 million impairment charge in the three and nine months ended September 30, 2019. In October 2019, the Company entered into a definitive agreement and completed the sale of the Mexico operations for nominal consideration. These operations are presented in the International RWCS reportable segment. The cumulative currency translation adjustment of $18.0 million was included as part of the carrying value of the disposal group when measuring the impairment charge.
2020 Q3 10-Q ReportStericycle, Inc. ●
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Impairments: