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Stericycle

srcl · NASDAQ Industrials
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Ticker srcl
Exchange NASDAQ
Sector Industrials
Industry Waste Management
Employees 10,000+
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FY2019 Annual Report · Stericycle
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2019

Annual Report

We protect what matters.

2019 ANNUAL REPORT

A Message from Cindy Miller

Dear Fellow Stockholders:
During 2019, Stericycle made important progress in our multi-year effort to transform our 
business. Our refreshed management team, under the guidance of our Board of Directors, 
executed and delivered on our five key priorities: portfolio rationalization, debt reduction and 
leverage improvements, quality of revenue, operational cost efficiencies and successful enterprise 
resource planning (ERP) implementation. Our progress is reflected in our stockholder return of 
over 73% in 2019, which meaningfully outpaced the Russell 3000 Index. I am pleased to share 
details of our transformation progress: 

Operational Efficiencies

To drive performance improvement and operational  
efficiencies, we are transitioning the organization towards  
centralized decision-making, standardized operating  
models, and measurable performance goals. During 2019,  
we created an engineering team, a new skillset for Stericycle,  
to partner with our operational teams and lead our efforts  
to drive efficiencies. Our environmental health and services  
team made great stride advancing our safety culture. While  
we are early in our efforts, we are proud to report several  
important improvements:

• 18% reduction in missed stops in our core businesses

• 22% reduction in lost time days

• 13% reduction in automobile accident claims 

2019 Highlights

Revenue: $3,308 million

Adjusted EBITDA: $578 million

Adjusted EPS: $2.65

These reductions not only reflect improvements in our operating efficiency but are clear signs 
that we are driving a culture of safety, discipline and accountability deeper into the business. 
Our efforts should be enhanced by the implementation of our ERP system, which is expected to 
provide real-time data on our key operational performance metrics. 

ERP Implementation

On January 6, 2020, we launched our new global human capital management system, marking 
the first step of our ERP system implementation. This system now serves as our master record for 
employee data for more than 19,500 team members around the globe, enabling disciplined fiscal 
responsibility in our workforce planning. We are on track to begin a staged implementation of the 
commercial, operational and financial systems in the U.S. and Canada later this year. We expect 
our ERP system to significantly streamline every major process in the business. 

2019 ANNUAL REPORT

In Summary

We made important progress during 2019 on our journey to transform Stericycle. 
Our progress in these areas can be attributed to the hard work and dedication of 
our team members around the globe, who also have helped establish Stericycle as 
a trusted provider of differentiated services that address complex, highly regulated 
business needs. We recognize that we are in the early stages of our journey, but we 
remain confident and excited about the prospects for our business going forward. We 
are committed to building on our momentum to drive profitable growth across all 
our business areas and enhance stockholder value. 

Thank you for your continued support of Stericycle. 

Sincerely,

Cindy Miller
President and Chief Executive Officer

2019 ANNUAL REPORT

Directors and Executive Management

B O A R D   O F   D I R E C T O R S

Robert S. Murley 
Chairman

J. Joel Hackney, Jr.
Member – Nominating and Governance Committee

Cindy J. Miller
President and Chief Executive Officer

Veronica M. Hagen 
Member – Audit Committee

Brian P. Anderson 
Chair – Audit Committee

Lynn Dorsey Bleil 
Chair – Nominating and Governance Committee
Member – Compensation Committee 

Stephen C. Hooley 
Member – Compensation Committee 
Member – Audit Committee

Kay G. Priestly 
Member – Audit Committee

Thomas F. Chen 
Member – Compensation Committee  
Member – Nominating and Governance Committee

Mike S. Zafirovski 
Chair – Compensation Committee 
Member – Nominating and Governance Committee

E X E C U T I V E   O F F I C E R S

Cindy J. Miller
President and Chief Executive Officer

Janet H. Zelenka
Executive Vice President and Chief Financial Officer

S. Cory White
Executive Vice President and Chief Commercial Officer

Joseph A. Reuter
Executive Vice President and Chief People Officer

Dominic Culotta
Executive Vice President and Chief Engineer

David W. Stahl
Executive Vice President and Chief Information Officer

Michael S. Weisman 
Executive Vice President and Chief Ethics and 
Compliance Officer

Richard M. Moore
Executive Vice President, North American Operations

Daniel V. Ginnetti
Executive Vice President, International

Kurt M. Rogers
Executive Vice President and General Counsel

 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION 
Washington, D.C. 20549 

FORM 10-K 
(cid:1800) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE 
ACT OF 1934 

For the fiscal year ended December 31, 2019 
or 
(cid:1798) 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 
(State or other jurisdiction of incorporation or 
organization) 

36-3640402 
(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 class 
Common Stock, par value $0.01 per share 

Trading Symbol(s) 
SRCL 

Name of each exchange on which registered 
Nasdaq Global Select Market 

Securities registered pursuant to Section 12(g) of the Act:     None 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES 
(cid:1800) NO (cid:1798) 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. 
YES (cid:1798) NO (cid:1800) 
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 (cid:1800) NO (cid:1798) 
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 (cid:1800) NO (cid:1798) 
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 definition of "large accelerated filer", "accelerated 
filer" "smaller reporting company," and “emerging growth company” in Rule 12b-2 of the Exchange Act. 

Large accelerated filer (cid:1800) 
Smaller reporting company (cid:1798) 

Accelerated filer (cid:1798) 
Emerging Growth Company (cid:1798) 

Non-accelerated filer (cid:1798) 

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. (cid:1798) 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES (cid:1798) NO (cid:1800) 
The aggregate market value of voting and non-voting common equity held by non-affiliates computed by reference to 
the price at which common equity was last sold as of the last business day of the registrant’s most recently completed 
second fiscal quarter (June 30, 2019): $4,350,940,797. 

On February 24, 2020 there were 91,271,184 shares of the Registrant’s Common Stock outstanding. 

DOCUMENTS INCORPORATED BY REFERENCE 
Information required by Items 10, 11, 12 and 13 of Part III of this Report is incorporated by reference from the Registrant’s 
definitive Proxy Statement for the 2020 Annual Meeting of Stockholders. 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table of Contents 

PART I. 

Item 1.  Business 

Item 1A.  Risk Factors 

Item 1B.  Unresolved Staff Comments 

Item 2.  Properties 

Item 3.  Legal Proceedings 

Item 4.  Mine Safety Disclosures 

PART II. 

Item 5.  Market Price for Registrant's Common Equity, Related Stockholder Matters and Issuer 

Purchase of Equity Securities 

Item 6.  Selected Financial Data 

Item 7.  Management's Discussion and Analysis of Financial Condition and Results of 
Operations 

Item 7A.  Quantitative and Qualitative Disclosures about Market Risk 

Item 8.  Financial Statements and Supplementary Data 

Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial 
Disclosure 

Item 9A.  Controls and Procedures 

Item 9B.  Other Information 

PART III. 

Item 10.  Directors, Executive Officers and Corporate Governance 

Item 11.  Executive Compensation 

Item 12.  Security Ownership of Certain Beneficial Owners and Management and Related 
Stockholder Matters 

Item 13.  Certain Relationships and Related Transactions, and Director Independence 

Item 14.  Principal Accountant Fees and Services 

PART IV. 

Item 15.  Exhibits and Financial Statement Schedules 

Item 16.  Form 10-K Summary 

SIGNATURES

Page No.

6

20

31

31

31

31

32

34

36

65

67

122

122

127

128

128

128

129

129

130

133

134

 
 
 
 
 
 
 
 
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 Annual Report on Form 
10-K, most of which are explained or defined below:

Abbreviation 
2000 Plan 
2005 Plan 
2008 Plan 
2011 Plan 
2014 Plan 
2017 Plan 
2019 Form 10-K 

Adjusted EBITDA 
APAC 
ASC 606 
ASC 718 
ASC 740 
ASC 842 
ASU 
Buyer 
Canada ESPP 
CDC 
CERCLA 
Consolidated Leverage 
Ratio 

COR 
COSO Framework 
Clean Air Act 
Credit Agreement 

Description 
2000 Non-Statutory Stock Option Plan, which expired in February 2010 
2005 Incentive Stock Plan, which was approved by stockholders in April 2005 
2008 Incentive Stock Plan, which was approved by stockholders in May 2008 
2011 Incentive Stock Plan, which was approved by stockholders in May 2011 
2014 Incentive Stock Plan, which was approved by stockholders in May 2014 
2017 Incentive Stock Plan, which was approved by stockholders in May 2017 
Annual report on Form 10-K for the year ended December 31, 2019 
EBITDA adjusted for certain items discussed in Item 7. Management's Discussion and Analysis of Financial Condition and 
Results of Operations 
Asia Pacific 
Accounting Standards Codification Topic 606 "Revenue from Contracts with Customers" 
Accounting Standards Codification Topic 718 "Income Taxes" 
Accounting Standards Codification Topic 740 "Compensation – Stock Compensation" 
Accounting Standards Codification Topic 842 "Leases" 
Accounting Standards Update 
CEI Holding LLC, a Delaware limited liability company 
Canadian Employee Stock Purchase Plan, which was approved by stockholders in May 2016 
U.S. Center for Disease Control 
Comprehensive Environmental Response, Compensation and Liability Act of 1980 
Consolidated 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 Fourth Amendment. 
Cost of revenues 
Internal Control Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission 
The Clean Air Act of 1970 
Credit 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 
Communication and Related Services 
Discounted cash flows 
U.S. Drug Enforcement Agency 
U.S. Department of Justice 
U.S. Department of Transportation 
Days sales outstanding 
Earnings before interest, tax, depreciation and amortization 

CRS 
DCF 
DEA 
DOJ 
DOT 
DSO 
EBITDA 
Environmental Solutions  Provider of Hazardous Waste Solutions and Manufacturing and Industrial Services 
EPA 
EPM 
EPS 

U.S. Environmental Protection Agency 
Enterprise Performance Management 
Earnings (Loss) per share 
U.S. Employee Retirement Income Security Act of 1974, as amended by the Multi-Employer Pension Amendments Act of 
1980 
Enterprise Resource Planning 
Domestic Environmental Solutions less the Retained Business 
Employee Stock Purchase Plan, which was approved by stockholders in May 2001 (as amended and restated in May 2017 
European Union 
U.S. Securities Exchange Act of 1934 
Recall and return services 
U.S. Fair and Accurate Credit Transaction Act 
Financial Accounting Standards Board 
U.S. Foreign Corrupt Practices Act 
U.S. Food and Drug Administration 
U.S. Federal Motor Carrier Safety Administration 
Fifth Amendment to the Credit Agreement, dated as of February 25, 2020 
Fourth Amendment to the Credit Agreement, dated as of June 14, 2019 
General Data Protection Rules 

ERISA 
ERP 
ESOL Disposal Group 
ESPP 
EU 
Exchange Act 
Expert Solutions 
FACTA 
FASB 
FCPA 
FDA 
FMCSA 
Fifth Amendment 
Fourth Amendment 
GDPR 

2019 10-K Annual Report 

Stericycle, Inc.  •  3

 
GILTI 
GPO 
HIPAA 
HMIW 
HSA 
IDN 
Indenture 

INT 
IRS 
ISO 
LATAM 
M&I 
MDL Action 
NA 
NAID 
NOL 
NSO 
OSHA 
Pension Protection Act 
PFA 
PHMSA 
Plans 
PSU 

Purchase Agreement 
RCRA 
Retained Business 
ROU 
RSU 
RWCS 
S&P 
SAB 118 
SEC 
Senior Credit Facility 
Senior Notes 
Series A 
SG&A 
SID 
SOP 
SOX 
SQ 
SQ Settlement 
TAS 
Tax Act 
Term Facility 
Term Loans 
Transaction 
TSA 
U.K. 
U.S. 
USDA 
U.S. GAAP 
UPS 

Global Intangible Low-Taxed Income 
Group Purchasing Organization 
U.S. Health Insurance Portability and Accountability Act 
Hospital, Medical, and Infectious Waste 
Healthcare Services Agreement 
Integrated Delivery Network 
Indenture, dated as of June 14, 2019 between the Company, the guarantors named therein and U.S. Bank National 
Association, as trustee 
International 
U.S. Internal Revenue Service 
Incentive Stock Options 
Latin America (including Mexico) 
Manufacturing and Industrial 
Small quantity medical waste customer contract class action 
North America 
National Association for Information Destruction 
Net operating losses 
Non-statutory Stock Options 
U.S. Occupational Safety and Health Act of 1970 
Pension Protection Act of 2006 
Pre-filing agreement 
U.S. Pipeline Hazardous Materials Safety Administration 
2017 Plan, 2014 Plan, 2011 Plan, 2008 Plan, and 2005 Plan 
Performance-based restricted stock unit 
Stock Purchase Agreement dated as of February 6, 2020 by and between Stericycle, Inc. Harsco Corporation and CEI Holding 
LLC 
U.S. Resource Conservation and Recovery Act of 1976 
The Company's healthcare hazardous waste services and unused consumer pharmaceuticals take-back services 
Right-of-use 
Restricted stock unit 
Regulated Waste and Compliance Services 
Standard & Poor's 
Staff Accounting Bulletin No. 118 
U.S. Securities and Exchanges Commission 
The Company's $1.2 billion senior credit facility due in 2022 granted under the terms of the Credit Agreement 
5.375% Senior Notes due July 2024 
Series A Mandatory Convertible Preferred Stock, par value $0.01 per share 
Selling, general and administrative expenses 
Secure Information Destruction 
Sorted office paper 
U.S. Sarbanes Oxley Act of 2002 
Small quantity 
Small quantity medical waste customers class action settlement of $295.0 million 
Telephone answering services 
U.S. Tax Cuts and Jobs Act of 2017 
Aggregate amount of commitments made by any lender under the terms of the Credit Agreement 
Advances made by any lender under the Term Facility 
Purchase of the ESOL Disposal Group by Buyer subject to the terms and conditions of the Purchase Agreement 
Transition Services Agreement 
United Kingdom 
United States of America 
United States Department of Agriculture 
U.S. Generally Accepted Accounting Principles 
United Parcel Service, Inc. 

2019 10-K Annual Report 

Stericycle, Inc.  •  4

 
PART I 
Disclosure Regarding Forward-Looking Statements 

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

PART I 

"anticipates," 

"estimates"  or  similar  expressions,  we  are  making 

This  document  may  contain  forward-looking  statements.    When  we  use  words  such  as  "believes," 
"expects," 
forward-looking 
statements.  Forward-looking statements are prospective in nature and are not based on historical facts, 
but  rather  on  current  expectations  and  projections  of  our  management  about  future  events  and  are 
therefore subject to risks and uncertainties which could cause actual results to differ materially from the 
future  results  expressed  or  implied  by  the  forward-looking  statements.    Factors  that  could  cause  such 
differences  include,  among  others,  SOP  pricing  volatility,  foreign  exchange  rate  volatility  in  the 
jurisdictions  in  which  we  operate,  the  volume  and  size  of  any  recall  events,  changes  in  governmental 
regulation  of  the  collection,  transportation,  treatment  and  disposal  of  regulated  waste  or  the  proper 
handling and protection of personal and confidential information, the level of government enforcement of 
regulations governing regulated waste collection and treatment or the proper handling and protection of 
personal  and  confidential  information,  decreases  in  the  volume  of  regulated  wastes  or  personal  and 
confidential  information  collected  from  customers,  the  ability  to  implement  our  ERP  system,  charges 
related  to  portfolio  rationalization  or  the  failure  of  divestitures  to  achieve  the  desired  results,  failure  to 
consummate  transactions  with  respect  to  non-core  businesses,  including  the  risk  that  the  Domestic 
Environmental  Solutions  transaction  may  not  be  completed  in  a  timely  manner  or  at  all,  the  failure  to 
satisfy  the  conditions  to  the  consummation  of  such  transaction,  including  the  receipt  of  certain 
governmental  and  regulatory  approvals,  the  effect  of  the  announcement  or  pendency  of  the  Domestic 
Environmental Solutions transaction on Stericycle’s business relationships, operating results and business 
generally  and  risks  related  to  diverting  management’s  attention  from  Stericycle’s  ongoing  business 
operations,  the  obligations  to  service  substantial  indebtedness  and  comply  with  the  covenants  and 
restrictions contained in our credit agreements and notes, a downgrade in our credit rating resulting in an 
increase  in  interest  expense,  political,  economic,  inflationary  and  other  risks  related  to  our  foreign 
operations, the outcome of pending or future litigation or investigations including with respect to the U.S. 
Foreign  Corrupt  Practices  Act,  changing  market  conditions  in  the  healthcare  industry,  competition  and 
demand  for  services  in  the  regulated  waste  and  secure  information  destruction  industries,  failure  to 
maintain an effective system of internal control over financial reporting, delays or failures in implementing 
remediation  efforts  with  respect  to  existing  or  future  material  weaknesses,  disruptions  in  or  attacks  on 
information  technology  systems,  as  well  as  other  factors  described  in  our  filings  with  the  U.S.  Securities 
and Exchange Commission, including our Annual Report on Form 10-K and subsequent Quarterly Reports 
on Forms 10-Q.  As a result, past  financial performance should not be considered a reliable indicator of 
future  performance,  and  investors  should  not  use  historical  trends  to  anticipate  future  results  or 
trends.   We  disclaim  any  obligation  to  update  or  revise  any  forward-looking  or  other  statements 
contained herein other than in accordance with legal and regulatory obligations. 

2019 10-K Annual Report 

Stericycle, Inc.  •  5

 
PART I 

Item 1. Business 

Overview 

Company Overview 

Incorporated in 1989, Stericycle protects people, safeguards communities and reduces risk through highly 
specialized  medical  and  hazardous  waste  management  and  secure  information  services.    Our  team  of 
more than 19,500 employees serves customers in the U.S. and 18 other countries with a concentration on 
the growing healthcare industry.  We are a world-leading services company with the scale, expertise, and 
experience  to  handle  complicated  and  behind-the-scenes  essential  services  for  waste  management, 
regulatory compliance and information security.  To our customers, team members and the communities 
we serve, Stericycle is a company that protects what matters. 

Segments 

Our  three  operating  segments  are  North  America  RWCS,  (formerly  Domestic  and  Canada),  (excluding 
Mexico prior to the divestiture of our operations there), International RWCS and Domestic CRS. 

Domestic CRS does not meet the quantitative criteria to be a separate reportable segment and therefore 
is included in the “All Other” reporting segment  along with costs related to our corporate enabling  and 
shared services functions. 

Financial  and  other  information  related  to  our  reporting  segments  is  included  in  Part  II,  Item  7. 
Management’s Discussion and Analysis of Financial Condition and Results of Operations and Part II, Item 8. 
Financial Statements and Supplementary Data; Note 18 - Segment Reporting. 

Services 

Within our operating segments, our revenues are further broken down into these service categories: 

Revenue Service Category 

Services Offered

(cid:120) Medical waste management services (including reusable sharps

Regulated Waste and 
Compliance Services 

Secure Information  
Destruction Services 

Manufacturing and Industrial 
Services 

Communication and 
Related Services 

(cid:120)

(cid:120)

(cid:120)

(cid:120)

disposal management services)

Pharmaceutical waste services

Compliance programs under the Steri-Safe®, Clinical Services, First 
Practice Management, SeguriMed, and EnviroAssure brand names

Retail and Healthcare – Hazardous waste and compliance solutions

Secure information destruction (including document and hard
drive destruction services)

(cid:120) Manufacturing and Industrial hazardous waste management

(cid:120)

(cid:120)

Appointment reminders, secure messaging, event registration, and
other communications specifically for hospitals and IDN’s.

Regulated recall and returns management communication,
logistics, and data management services for expired, withdrawn or
recalled products

2019 10-K Annual Report 

Stericycle, Inc.  •  6

 
Revenues by service category for each of the operating segments were as follows: 

PART I 

1,496.1  
778.3  
270.4  
29.3  
2,574.1  

436.5  
132.7  
58.8  
27.1  
655.1  

Year Ended December 31, 

2019 

2018 

1,491.0 
769.5 
261.6 
22.1 
2,544.2 

401.8 
132.4 
33.4 
11.7 
579.3 

 $ 

 $ 

 $ 

 $ 

185.4 

 $ 

256.7  

3,308.9 

 $ 

3,485.9  

In millions 

North America RWCS 
Regulated Waste and Compliance Services 
Secure Information Destruction Services 
Manufacturing and Industrial Services 
Communication and Related Services 

Total North America RWCS 

International RWCS
Regulated Waste and Compliance Services 
Secure Information Destruction Services 
Manufacturing and Industrial Services 
Communication and Related Services 

Total International RWCS 

Domestic CRS 
Communication and Related Services 

Total revenues

Divestitures 

$ 

$ 

$ 

$ 

$ 

$ 

During the year ended December 31, 2019, we entered into separate arrangements to dispose of several 
service lines and geographies.  The 2019 divestitures include: 

(cid:120)

(cid:120)

(cid:120)

(cid:120)

an automated communication business in the U.K. focused on text messaging,

the  North  American  telephone  answering  services  business,  which  provided  live  voice  and
automated communication services for small healthcare providers and other small businesses,

a retail pharmaceutical returns business in the U.S. and Puerto Rico, and

the regulated waste operations in Mexico and Chile.

The  2019  revenues  for  these  divested  businesses  were  $114.7  million  with  $75.7  million  from  the 
Communication and Related Services revenue category, primarily in All Other, and $39.0 million from the 
Regulated Waste and Compliance Services revenue category, primarily in International RWCS. 

On February 6, 2020, we entered into the Purchase Agreement, pursuant to which we have agreed to sell 
our Domestic Environmental Solutions business, exclusive of the Retained Business, for cash consideration 
of approximately $462.5 million, subject to regulatory approval and customary adjustments as set forth in 
the Purchase Agreement. 

The  Purchase  Agreement  includes  customary  termination  provisions,  including  if  the  closing  of  the 
Transaction has not occurred on or before November 6, 2020 (which may be extended until February 6, 
2021, if needed, to obtain applicable regulatory approvals).  Both we and Buyer have agreed to indemnify 
the other  party for losses  arising from certain breaches of  the Purchase Agreement  and other  liabilities, 
subject to certain limitations. 

2019 10-K Annual Report 

Stericycle, Inc.  •  7

 
PART I 

The  Domestic  Environmental  Solutions  business  generated  revenue  in  2019  of  $559.6  million,  including 
approximately $100.0 million related to the Retained Business, which is included in the Regulated Waste 
and Compliance Services revenue category within our North America RWCS segment. The ESOL Disposal 
Group includes approximately 2,000 employees and 60 North America locations. 

Customers 

Our offering of services appeals to a wide range of small and large business customers.  The majority of 
our  customers  are  healthcare  businesses  (hospitals,  physician,  and  dental  practices,  outpatient  clinics, 
long-term  care  facilities,  etc.).    We  also  provide  services  to  retailers,  manufacturers,  financial  services 
providers, professional services providers, governmental entities, and other businesses.  While we manage 
large volumes of waste and other materials, the average volume per customer site is small.  

No  single  customer  accounted  for  more  than  1.4%  of  our  total  revenues,  and  our  top  ten  customers 
collectively accounted for approximately  7.3% of total revenues.  We have developed a strong and loyal 
customer  base,  with,  we  believe,  a  revenue  retention  rate  of  approximately  90%  (based  on  our  internal 
customer  attrition  analysis)  and  have  been  able  to  leverage  these  customer  relationships  to  provide 
additional services.  We use several different contracts across our services lines and terms vary depending 
upon the customer’s service requirements, types of services, and geographies. 

As of December 31, 2019, regulated waste and compliance services are provided to customers in the U.S., 
Argentina,  Brazil,  Canada,  Ireland,  Japan,  the  Netherlands,  Portugal,  the  Republic  of  Korea,  Romania, 
Spain, and the U.K.   Secure information destruction services under the  Shred-it® brand are provided in 
the  U.S.,  Australia,  Austria,  Belgium,  Canada,  France,  Germany,  Ireland,  Luxembourg,  the  Netherlands, 
Portugal, Spain, Singapore, and the U.K.  Secure information destruction service  are  also provided in the 
United Arab Emirates through a joint venture.  Manufacturing and industrial hazardous waste services are 
predominately provided in the U.S., Canada, and Latin America.  The vast majority of services for CRS are 
provided within the U.S. and Canada. 

Facilities and Fleet 

Our worldwide network includes a fleet of more than 7,200 trucks and properties both leased and owned 
as described below: 

201 North America 
92 International 
Transfer 
Sites

133 North America 
80 International 
Processing 
Facilities 

4 North America 
Nil International 
Communication 
Centers 

27 North America 
32 International 
Office 
Locations 

2019 10-K Annual Report 

Stericycle, Inc.  •  8

 
PART I

In addition to the above we have one landfill, located in Argentina and we retained an inactive landfill in 
Mexico.    We  are  currently  headquartered  in  Bannockburn,  Illinois,  having  occupied  our  new  corporate 
headquarters during the year ended December 31, 2019. 

Our Key Business Priorities 

Following  its  founding  in  1989,  Stericycle  grew  rapidly  as  the  medical  waste  industry  developed  and 
largely through inorganic acquisitions.  Growth from medical waste acquisitions helped us achieve scale of 
infrastructure, route density, and a leadership position in the U.S.  We also leveraged acquisitions to enter 
new  geographies  or  add  additional  services  to  our  portfolio.    As  we  grew  and  evolved,  we  operated 
without centralization and the efficiencies that come from an integrated, modern corporate structure and 
associated information systems. 

At the end of 2017, we began advancement of a business transformation, including the development and 
implementation  of  an  ERP  system,  focused  on  driving  long-term  growth,  improving  profitability,  and 
enhancing shareholder value.  During 2019, we refocused our transformation efforts and aligned around 
five key business priorities. 

1. Portfolio  rationalization  –  As  we  look  to  the  future,  we  continue  to  pursue  the  divestiture  of
service  lines  or  geographies  that  are  not  profitable,  have  limited  growth  potential,  are  not
vertically integrated, are not essential to our regulated waste and compliance services and secure
information destruction service categories, and/or present the opportunity to reduce debt.

2. Quality of revenue –  The services we offer help our  customers meet complex regulations.  Our
expertise,  infrastructure  and  service  levels  provide  a  differentiated  and  premium  brand  value  to
the customers we serve.  As such, we are focused on improving the quality of revenue we deliver.
During  2019,  we  added  a  Chief  Commercial  Officer  and  began  implementing  changes  in  our
commercial  operations.    We  realigned  our  sales  organization  around  customer  channels;
implemented best practices for sales management and training; reorganized our marketing teams
to focus functional area of expertise across services; and improved our contracting processes with
customers.

3. Operational  cost  efficiencies  –  Our  day-to-day  operations  are  shifting  toward  a  standardized
operating  model  to  optimize  processes,  drive  efficiencies  and  improve  both  safety  and  service.
During  2019,  we  added  a  Chief  Engineer  and  have  begun  centralizing  operational  decision
making  under  a  corporate  engineering  group.    Additionally,  we  are  focused  on  driving  cost
efficiencies  through  work  measurement,  asset  optimization,  use  of  technology,  and  expanded
strategic sourcing.

4. Debt  reduction  and  leverage  improvement  –  As  a  result  of  the  debt  accumulated  from  our
historic acquisition strategy, debt  structure and debt  leverage improvement  were a key focus in
2019.    In  June  2019,  we  raised  $600  million  from  the  issuance  of  our  Senior  Notes  and  $365
million  from  an  incremental  Term  Loan.    Combined  with  an  additional  draw  from  our  Senior
Credit  Facility,  Stericycle  paid  off  its  more  restrictive  $1.075  billion  private  placement  notes.
Additionally,  in  2019,  we  applied  cash  flow  from  operations  and  proceeds  from  the  divestitures
discussed above, to enable a net debt reduction of approximately $100.0 million.

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5. ERP  implementation  –  Over  our  30-year  history,  Stericycle  had  acquired  more  than  500
companies without fully integrating certain acquisitions onto centralized information technology
platforms.    The  disparate  operating  and  information  systems  have  resulted  in  significant
operational  inefficiencies.    With  the  implementation  of  an  ERP,  we  expect  to  improve  daily
decision  making  via  real-time  information  insights,  simplify  and  enhance  forecast  accuracy,
provide transparency for greater accountability, aid in the development of strategic planning, and
make it easier for our customers to do business with us.  The “go-live” of the ERP system began in
January 2020 with the global roll-out of the human-resources performance management solution.
During 2020, the additional ERP capabilities, including commercial, operational and financial, will
be  implemented  in  a  staged  approach  across  our  North  America  RWCS  reportable  segment,
excluding the ESOL Disposal Group.

Refer  to  Item  7.  Management’s  Discussion  and  Analysis  of  Financial  Condition  and  Results  of  Operations 
and  Item  8.  Financial  Statements  and  Supplementary  Data;  Note  4  –  Restructuring  and  Divestitures  and 
Note 9 - Debt. 

Regulated Waste and Compliance Services 

Collection and Transportation 

The  collection  process  for  regulated  waste  streams  or  secure  information  destruction  begins  at  the 
customer  location  with  segregation.    To  assure  regulatory  compliance,  we  will  not  accept  material  from 
customers unless it complies with our waste acceptance protocols and is properly stored or packaged in 
containers that we have either supplied or approved. 

Our fleet of vehicles then collects containers at the customer location.  The majority of collected waste or 
information for destruction is then transported directly to one of our processing facilities or to one of our 
transfer stations until it’s transported to a processing  facility.  Our use of transfer  stations in a "hub and 
spoke"  configuration  improves  the  efficiency  of  our  collection  and  transportation  operations  by 
expanding  the  geographic  area  that  a  particular  processing  facility  can  serve,  thereby  increasing  the 
utilization of the facility and the volume of waste that it processes. 

Processing and Disposal of Regulated Medical Waste 

Upon  arrival  at  a  processing  facility,  containers  or  boxes  of  regulated  waste  undergo  a  quality  control 
process  to  verify  that  they  do  not  contain  any  unacceptable  substances.    Any  container  or  box  that  is 
discovered to  contain unacceptable waste goes through a corrective action process which could include 

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redirecting  the  waste,  returning  the  waste  to  the  customer,  and/or  notifying  the  appropriate  regulatory 
authorities.    From  there,  regulated  medical  waste  is  processed  using  one  of  several  treatments  or 
processing technologies, predominantly at one of our wholly owned facilities: 

• Autoclaving:  Autoclaving is the primary method of medical waste treatment.  This process relies on

steam at high temperature and pressure to kill pathogens and render materials non-infectious.

• Alternative  Technologies:    We  use  several  different  non-incineration  alternatives  to  autoclaves,
predominantly  outside  of  the  U.S.    The  processes  used  by  these  technologies  are  similar,  as  the
regulated waste is heated to a specified temperature for a required time to kill the pathogens.  This is
not always under pressure.  Depending on local requirements, the waste may be shredded before or
after treatment to render it unrecognizable.

• Incineration:    Incineration  burns  regulated  waste  at  elevated  temperatures  and  reduces  it  to  ash.
Incineration reduces the volume of waste, and it is the recommended treatment and disposal option
for some types of regulated waste such as anatomical waste, residues from chemotherapy procedures,
and  non-hazardous  pharmaceutical  waste.    Air  emissions  from  incinerators  can  contain  certain
byproducts  that  are  subject  to  federal,  state,  and  in  some  cases,  local  regulation.    In  some
circumstances, the ash byproduct of incineration may be regulated.

Upon completion of the particular treatment process, the resulting waste or incinerator ash is transported 
to  for  disposal  in  a  landfill  owned  by  unaffiliated  third  parties.    In  some  countries,  where  permitted  by 
regulation, the treated waste is recovered, including recovery as fuel in waste-to-energy processes. 

Processing and Disposal of Hazardous Wastes 

Our technicians receive hazardous wastes either as expired goods requiring deconstruction or as defined 
hazardous wastes that were generated by healthcare, retail or manufacturing and industrial organizations.  
Expired goods are deconstructed to recover metals and plastics for recycling, thereby minimizing the total 
volume  of  waste  disposed  of  as  hazardous  waste.    Materials  that  are  predefined  as  hazardous  upon 
collection  are  bulked  together  or  consolidated  at  treatment  storage  and  disposal  facilities  for  more 
efficient transport to the final disposal or processing destination.  Whenever possible, we seek sustainable 
solutions  for  managing  materials  including  alternative  uses,  recovery  processes,  recycling  options,  fuel 
blending,  or  energy  recovery.    When  sustainable  options  do  not  exist,  these  wastes  are  sent  to  third 
parties for incineration, landfill, or water treatment. 

Destruction and Recycling of Secure Information 

We leverage a combination of off-site and on-site shredding methods.  Approximately 63% of collected 
documents  for  secure  destruction  in  2019  were  sent  off-site  to  a  regional  shredding  facility  for  secure 
destruction.    The  remainder  of  collected  documents  are  shredded  on-site  in  a  Shred-it®  truck  with 
proprietary information destruction technology.  For both methods, documents are cross-cut shredded to 
enhance the security level of destruction. 

Shredded paper is then baled to be sold as SOP for recycling.  SOP consists of paper typically generated 
by  offices  that  contains  primarily  white  paper.    It’s  a  higher  value  recyclable  than  mixed  paper,  old 
newspapers  or  magazines.    Stericycle  collected  and  delivered  approximately  750,000  tons  of  SOP  for 
recycling into paper products to be used in the hospitality industry including napkins, paper towels, and 
bathroom tissue.  During 2019, prices for SOP declined consecutively each month of the year resulting in 
an average annual SOP price of $132 per ton in 2019 as reported by Fastmarkets RISI, a decline of 30.5% 
over 2018. 

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Communication and Related Services 

During  the  year  ended  December  31,  2019  we  divested  of  our  North  American  telephone  answering 
services business, which provided live voice and automated communication services for small healthcare 
providers and other small businesses. 

Our  remaining  Communication  Solutions  provides  live  voice  and  automated  services  to  assist  hospitals 
and  IDNs  in  communications  with  their  patients.    Our  team  serves  as  a  client  representative  providing 
appointment  scheduling,  appointment  reminders,  event  registration,  and  other  communications. 
Providing  this  service  requires  information  management  systems  to  redirect  calls,  store  and  quickly 
retrieve live voice protocols or client data, send automated communications, or provide easily accessible 
reporting  and  activity  details  to  our  customers.    Beyond  the  information  management  system 
infrastructure, call center staffing and proper education levels are critical to our success. 

Our  Expert  Solutions  specializes  in  partnering  with  automotive,  food/beverage,  medical  device, 
pharmaceutical,  consumer  goods  manufacturers,  and  others  to  support  them  through  critical  recalls, 
retrievals,  or  audit  processes  to  ensure  brand  protection.    Services  could  include  notification  services  to 
impacted customers, call center services to support a recall or retrieval, removing impacted product from 
distribution, processing recalled product and supporting remedy requirements, and compliance reporting. 
These solutions are highly customized based on the product being recalled or retrieved and the specific 
needs of the client. 

Our Business Model and Key Business Attributes 

Regulated Business-to-Business Operations 

We focus on providing business-to-business services in areas of operations that are highly regulated.  By 
helping  our  customers  maintain  compliance  with  complex  regulations,  we  protect  people  and  brands, 
promote  health,  and  safeguard  the  environment.    Governmental  legislation  and  regulation  increasingly 
require  the  proper  handling  and  disposal  of  items  such  as  medical  waste,  hazardous  waste, 
pharmaceutical  waste,  and  personal  confidential  information.    Regulated  waste  can  be  defined  as  any 
material with government-imposed guidelines for handling the material for transportation or disposal. 

(cid:120) Medical  waste,  such  as  needles,  syringes,  gloves,  cultures,  blood  and  blood  products,  and  material

potentially contaminated by infectious agents, can potentially cause an infectious disease.

(cid:120)

(cid:120) Hazardous  waste  is  designated  and  governed  by  federal  and  local  environmental  protection
agencies.    It  generally  includes  waste  that  is  considered  dangerous  or  potentially  harmful  to  our
health or the environment during transportation and disposal.
Pharmaceutical  waste  may  be  hazardous  or  nonhazardous  and  consists  of  expired,  recalled,  or
otherwise unused pharmaceuticals.
Personal confidential information includes documents and e-media containing protected healthcare
information, financial information, or other confidential information.

(cid:120)

Growing Markets 

The  services  we  offer,  especially  core  services  of  regulated  medical  waste  and  secure  information 
destruction, are growing.  This growth is driven by multiple factors:  

• Aging Population:  The average age of the population in the countries where we operate is rising,

•

driving increases in healthcare and the quantity of regulated medical wastes generated.
Enforcement  of  Waste  Regulations:    Enforcement  of  regulations  relating  to  the  management  of
regulated  waste  is  increasing.    Penalties  for  violations  can  be  costly  and  high  profile,  thereby

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•

impacting a business’ overall reputation.  We believe that many businesses are unaware either of the 
need for proper training of employees or of applicable regulatory requirements and we seek to help 
businesses fill this gap. 
Regulation  of  Privacy  and  Information  Security  and  Concerns  over  Data  Breaches:    The
continued development and growth of the secure information destruction industry has been driven,
in  part,  by  the  need  for  compliance  with  increasing  government  regulation  with  respect  to  privacy
and  information  security,  including  the  European  Global  Data  Protection  Regulation  and  the
California Consumer Privacy Act.

• Market Expansion Due to Increased Outsourcing:  With regard to secure information destruction
services and communication services, we believe significant market growth will come from increased
reliance  on  outsourcing  services  by  those  businesses  within  the  marketplace  that  currently  do  not
use an outside vendor.
Increased Business Focus  on Sustainability:  Businesses large and small are  continuing to realize
that  a  focus  on  sustainability  is  now  essential  to  operating  efficiently  and  meeting  the  increasing
demands of customers for environmental responsibility.  Such pressures are driving proper disposal
of pharmaceuticals, recycling efforts, creative disposal efforts for unused inventory, shred-all policies
for paper, and other initiatives supported by our services.

•

Stable and Recurring Customer Needs Supported by Long-term Contracts 

The  services  we  provide  most  often  require  service  on  a  routine  and  scheduled  basis.    Historically,  our 
revenues  have  not  been  significantly  affected  by  economic  downturns.    The  majority  of  our  customer 
relationships include long-term contracts ranging from two to five years in length.  We have developed a 
strong and loyal customer base, with, we believe, a revenue retention rate of approximately 90% (based 
on our internal customer attrition analysis). 

Strong Service Relationships with Customers 

We are a trusted provider  of  outsourced services that address complex, regulated, or compliance-based 
business  needs  and  do  so  with  high  customer  service  levels.    Our  U.S.  net  promoter  scores,  an  index 
ranging  from  -100  to  100  that  measures  the  willingness  of  customers  to  recommend  a  company's 
products  or  services,  were  over  69%  for  regulated  medical  waste  and  over  75%  for  secure  information 
destruction.  Based on the global Net Promoter Score standards, any score above 0 would be considered 
“good”, 50 and above being “excellent” while 70 and above is considered "world class". 

Established Network of Processing and Transportation Locations 

We  believe  that  our  infrastructure  network  results  in  an  expansive  operational  network  with  alternate 
treatment or destruction options for our customers.  The scale of our network also provides us the ability 
to be the single-source provider for customers with multiple locations across the country and gives us the 
flexibility  to  quickly  redirect  services  or  operations  to  another  location  if  the  need  arises  due  to  severe 
weather, power outages, or other disruptions. 

Routing Logistics 

While we manage large volumes of waste or secure information for destruction, the average volume per 
customer  site  is  small  and  the  resulting  revenue  per  stop  is  low.    As  such,  route  logistics  and  route 
efficiency are a core focus.  This vast transportation network provides us with an advantage compared to 
our competition.  Additionally, we have continued to make route density and technological investments to 
optimize  routing  at  both  the  individual  truck  and  geographic  market  level.    We  believe  that  our  ERP 

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implementation will further improve our routing efficiencies by providing the opportunity to leverage our 
infrastructure across services lines and driving standard work across the network. 

Industry Leadership and Expertise 

Based  on  our  infrastructure  and  revenues,  we  maintain  a  global  leadership  position  across  our  various 
services  lines,  including  regulated  medical  waste,  retail  and  healthcare  hazardous  waste,  secure 
information destruction, and product recalls and returns.  We attract and retain highly experienced team 
members  who  have  a  deep  understanding  of  the  industries  they  serve,  the  regulatory  climate,  and  the 
evolving  needs  of  the  customers  we  serve.    We  collaborate  regularly  with  a  wide  range  of  stakeholders 
and  interest  groups.    We  proactively  work  with  organizations  like  the  CDC,  DEA,  OSHA,  EPA,  and  many 
other government and regulatory bodies, including law enforcement.  Our experts are frequent speakers 
at hospital networks, industry trade associations, and actively engage in numerous community meetings 
each year.  

Over the  course of 2019, we significantly elevated  the importance of safety across the organization and 
executed  against  multiple  initiatives  to  improve  our  safety  performance.   We  established  safety  metrics 
and  tracking  that  are  shared  across  the  organization  and  kicked  off  a  behavior-based  safety  program 
designed  to  influence  our  team  members’  actions  toward  safer  outcomes.   To  reduce  vehicle  accidents, 
we began the roll-out of a new driver  camera safety program, installing cameras in our  North American 
RWCS  trucks.    We  also  initiated  a  Toolbox  Talk  program  for  transportation  teams  in  North  America  to 
promote  routine  conversations  targeting  driver  safety.   These  efforts  and  others  resulted  in  a  22% 
reduction in lost time days and a 13% reduction in vehicle related accident claims in 2019. 

Competition 

The industries  and markets in which we operate are  highly competitive on pricing, and barriers to entry 
are low.  Our competitors consist of many different types of service providers, including national, regional, 
and local companies.   Some of these  companies provide only  a portion of the services of Stericycle, for 
example just  collection and transportation but not treatment of medical waste  or medical waste  service 
but  not  a  sharps  management  program.    In  the  regulated  waste  and  secure  information  destruction 
industries, another source of competition is on-site management. 

For regulated medical waste, some large-quantity waste generators, particularly hospitals, may choose an 
onsite  autoclave  or  other  treatment  process.    For  secure  information  destruction,  many  businesses  may 
choose to use small, on-site shredders for their documents.  In both medical waste and secure information 
destruction,  there  is  no  other  competitor  in  North  America  with  Stericycle’s  overall  scale,  breadth  of 
services, national transportation network, and comprehensive treatment network. 

Governmental Regulation 

The  regulated  medical  waste,  hazardous  waste,  secure  information  destruction,  and  recall  industries  are 
subject  to  numerous  regulations.    In  many  countries  there  are  multiple  regulatory  agencies  at  the  local 
and  national  level  that  oversee  our  customers  or  our  services.    This  regulatory  framework  imposes  a 
variety of compliance requirements, including requirements to obtain and maintain government permits.  
We maintain numerous governmental permits, registrations, and licenses to conduct our business in the 
jurisdictions in which we operate.  Our permits vary  by jurisdiction based upon our activities within that 
jurisdiction  and  on  the  applicable  laws  and  regulations  of  that  jurisdiction.    These  permits  grant  us  the 
authority, among other things: 

 to construct and operate collection, transfer, and processing facilities; 

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Stericycle, Inc.  •  14

 
PART I 

 to transport regulated waste within and between relevant jurisdictions; and 

 to handle particular regulated substances. 

Our  permits,  registrations,  and  licenses  may  be  subject  to  modification  or  revocation  by  the  issuing 
authority and, in some jurisdictions, are subject to periodic renewal.  Periodic renewals may be subject to 
public  participation  and  can  lead  to  additional  regulatory  oversight.    We  are  also  subject  to  regulations 
that  govern  the  definition,  generation,  segregation,  handling,  packaging,  transportation,  treatment, 
storage  and  disposal  of  regulated  waste.    In  addition,  we  are  subject  to  extensive  regulations  to  ensure 
public and employee health and safety at the federal, state and local levels. 

We  are  subject  to  substantial  regulations  enacted  and  enforced  by  the  U.S.  government  and  by  the 
governments  of  the  foreign  jurisdictions  in  which  we  conduct  regulated  waste  and  secure  information 
destruction operations.  The regulatory requirements with which we must comply vary from jurisdiction to 
jurisdiction.  The laws governing our domestic and international operations generally consist of statutes, 
legislation,  and  regulations  concerning  environmental  protection,  employee  health  and  welfare, 
transportation, document management, ethical business conduct, and proper handling and management 
of regulated waste streams, and controlled substances. 

Environmental Protection 

Certain services within our business are subject to extensive and evolving environmental regulations in all 
of the geographies in which we operate.  Generally, the environmental laws we are subject to regulate the 
handling,  transporting,  and  disposing  of  hazardous  and  non-hazardous  waste,  the  release  or  potential 
release  of  hazardous  substances  into  the  environment,  the  discharge  of  pollutants  into  streams,  rivers, 
groundwater,  and  other  surface  waters,  and  the  emission  of  pollutants  into  the  air.    The  principal 
environmental laws that govern our operations in the U.S. are state environmental regulatory agencies as 
they  provide  the  specific  legislative  and/or  regulatory  frameworks  which  require  the  management  and 
treatment of regulated medical waste.  Additionally, the RCRA, the CERCLA, and the Clean Air Act of 1970 
are the federal regulations that affect management of certain aspects of regulated medical waste and all 
RCRA hazardous wastes.  CERCLA and state laws similar to it may impose strict, joint and several liabilities 
on the current and former owners and operators of facilities from which release of hazardous substances 
has  occurred  and  on  the  generators  and  transporters  of  the  hazardous  substances  that  come  to  be 
located at these facilities.  The 10 HMIW incinerators, located at 7 sites, we currently operate in the U.S. 
must  comply  with  the  emissions  standards  imposed  by  the  applicable  states  permitting  authorities 
pursuant  to  regulations  promulgated  under  the  Clean  Air  Act  as  well  as  state  and/or  municipal  waste 
permit requirements. 

Examples of environmental laws applicable to our international operations include the Waste Framework 
Directive,  Environmental  Liabilities  Directive,  Industrial  Emissions  Directive  and  the  Shipments  of  Waste 
Regulations in the EU, Ley 154 (Residuos Patogenicos) in Argentina, Lei 12.305/2010 (Lei Ordinária) Institui 
A  Política  Nacional  De  Resíduos  Sólidos  in  Brazil,  and  the  Canadian  Environmental  Protection  Act  and 
related regulations in  Canada.  Additional  environmental laws at the federal and/or local levels  apply to 
regulated waste management in other markets in which we conduct business. 

Employee Health and Welfare 

We are subject to numerous regulations promulgated to protect and promote worker health and welfare 
through the implementation and enforcement of standards designed to prevent illness, injury and death 
in the workplace.  The primary U.S. federal laws relating to employee health and welfare applicable to our 
business are in OSHA, which establishes specific employer responsibilities including engineering controls, 

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PART I 

administrative  controls,  training,  policies  and  programs  complying  with  the  regulations,  and 
recordkeeping and reporting, all in an effort to ensure a safe workplace.  Various OSHA standards apply to 
almost  all  aspects  of  our  operations  and  govern  such  matters  as  exposure  to  blood-borne  pathogens, 
hazard communication, personal and protective equipment. 

Examples  of  employee  health  and  welfare  laws  applicable  to  our  international  operations  include  the 
European  Framework  Directive  on  Safety  and  Health  at  Work  (Directive  89/391  EEC),  and  various 
provisions  of  the  Canada  Labour  Code  and  related  occupational  safety  and  health  regulations  in  the 
provinces and territories of Canada. 

Transportation 

Various laws regulating the transportation of waste and other potentially hazardous materials also apply 
to the services we provide.  In the U.S., the DOT has established regulations which deal with two different 
aspects of transportation:  hazardous  materials  transport and safety in  transportation.   These regulations 
are defined within the PHMSA and the FMCSA.  Due to our fleet size we are regularly subject to roadside 
inspections.    These  inspections  have  a  cumulative  effect  on  our  compliance  history  and  require  us  to 
remain in good standing so as not to jeopardize our permits. 

Examples  of  transportation  laws  applicable  to  our  international  operations  include  the  Directive  on  the 
Inland  Transportation  of  Dangerous  Goods  in  the  EU  and  the  Transport  of  Dangerous  Goods  Act  and 
related  regulations  in  Canada,  and  globally  the  International  Maritime  Dangerous  Goods  Code  and  the 
IATA Dangerous Goods Regulations. 

Document Management 

Numerous  laws  and  regulations  require  proper  protection  of  confidential  customer  information  by 
business parties that have access to such information.  In the U.S., the most cited regulations include the 
FACTA  Final  Disposal  Rule,  the  FACTA  Red  Flag  Rule,  HIPAA,  and  the  Gramm-Leach  Bliley  Act.  
Furthermore, the GDPR provides the framework for data privacy and data protection for companies that 
conduct business in Europe. 

For the transportation of secure information for destruction, we are regulated by the DOT as a commercial 
motor  carrier.    The  processes  for  the  destruction  of  secure  information  destruction  processes  are  not 
regulated  by  any  government  agency.    However,  the  NAID  maintains  a  certification  to  ensure  that 
destruction  processes  support  the  needs  of  organizations  to  meet  laws  and  regulations  relating  to  the 
protection of confidential information.  We currently hold the NAID AAA Certification for our operations in 
North  America.    Further,  the  Payment  Card  Industry  Security  Standards  Council  has  developed  Data 
Security  Standards  which  are  imposed  upon  merchants  utilizing  credit  cards  and  require  destruction  of 
documents and media in accordance with their standards. 

Ethical Business Conduct 

Various international regulations governing ethical business practices apply to our business, including but 
not  limited  to,  the  FCPA,  the  U.K.  Bribery  Act,  and  the  Brazilian  Clean  Companies  Act.    These  laws  may 
apply to our business on both a global and local basis, and ban unethical behavior such as the payment of 
bribes  to  government  officials  for  the  purpose  of  gaining  an  improper  business  advantage,  improper 
maintenance of our books and records, as well as other financial transparency requirements. 

Controlled Substances 

Our service offerings for the recall, return and/or destruction of controlled substance pharmaceuticals are 
subject to numerous laws and regulations under various international federal agencies, such as the DEA in 

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Stericycle, Inc.  •  16

 
PART I 

the  U.S.  and  the  Home  Office  Drugs  and  Firearm  Licensing  Unit  in  the  U.K.    These  regulations  apply  to 
both  the  closed  loop  management  of  controlled  substances  as  well  as  the  return  of  unused  controlled 
substances from consumers.  These regulations typically require facilities to obtain a controlled substance 
registration  in  addition  to  other  pharmaceutical  licenses  and  meet  certain  criteria  in  order  to  collect, 
process,  and  dispose  of  controlled  substances.    These  regulations  have  very  strict  requirements  for  the 
management  of  employees,  the  type  of  security  within  facilities,  recordkeeping,  and  the  reporting  of  all 
controlled substances  managed at the facility.  Much  like our other permitting, the registration must be 
updated regularly and subjects us to inspection and enforcement. 

U.S. and Foreign Local Regulation for Waste Management 

We  conduct  business  in  all  50  U.S.  States  and  Puerto  Rico.    Because  the  EPA  does  not  promulgate 
regulations for regulated  medical waste at a national level, each state has its own regulations related  to 
the  handling,  treatment,  and  storage  of  regulated  medical  waste.    Many  states  have  followed 
requirements similar to the Medical Waste Tracking Act of 1988 or have placed medical waste regulations 
under  solid  waste  regulations.    Hazardous  waste  in  the  U.S.  is  regulated  under  the  RCRA.    In  addition, 
certain  states may have  their own regulations for handling, treatment  and  storage of hazardous  wastes. 
Regulated  garbage  (sometimes  referred  to  as  “APHIS  waste”  taken  from  the  Animal  Plant  and  Health 
Inspection Service) is another area of regulatory requirements we are subject to pursuant to regulations 
promulgated  by  the  USDA  and  Customers  and  Border  Patrol.    The  USDA  typically  inspects  our  facilities 
receiving such APHIS waste on a quarterly basis. 

In each state where we operate a processing facility or a transfer station, we are required to comply with 
varying state and local laws and regulations which may also require a specific operating plan.  In addition, 
many local governments have ordinances and regulations, such as zoning or wastewater regulations that 
affect  our  operations.    Similarly,  our  international  operations  are  subject  to  regulations  enacted  and 
enforced  at  the  provincial,  municipal,  and  local  levels  of  government  in  addition  to  the  national 
regulations with which we must comply. 

Potential Liability and Insurance 

The  regulated  waste  industry  involves  potentially  significant  risks  of  statutory,  contractual,  tort,  and 
common law liability claims.  Potential liability claims could involve, for example: 

• cleanup costs;

• personal injury;

• damage to the environment;

• employee matters;

• property damage; or

• alleged negligence or professional errors or omissions in the planning or performance of work.

We could also be subject to fines or penalties in connection with violations of regulatory requirements. 

We  carry  several  insurance  coverages  including  property,  workers  compensation,  general  liability, 
employer’s  liability,  pollution  liability,  privacy  and  security  liability,  event  management,  cyber-liability, 
directors and officers,  and  miscellaneous professional  services errors  and omissions coverages.  We also 
carry  umbrella  policies  that  cover  general  liability,  auto  and  employers  liability.   We  regularly  evaluate 
other lines of coverage to respond to specific business needs but consider our current insurance coverage 

2019 10-K Annual Report 

Stericycle, Inc.  •  17

 
PART I 

to be sufficient to meet regulatory as well as customer requirements and to protect our employees, assets, 
and operations. 

Patents, Trademarks and Proprietary Rights 

Stericycle  holds  eight  patents  in  the  U.S.,  Canada,  and  Australia  for  the  recovery  of  reusable  medical 
devices in a sharps container and holds two patents (U.S. and Canada) for the processing and updating of 
event-related information using automated reminders.  With the acquisition of Shred-it, we hold patents 
in the U.S. and Canada for a three-staged shredder, with one related patent application pending in the EU, 
expected to be issued in 2020.  We also hold patents in the U.S., Canada, and U.K. for Securshield®, our 
proprietary locks for shredding containers. 

We own federal registrations for a number of trademarks/service marks including Stericycle®, SRCL, Steri-
Safe®, Stericycle ExpertRECALL®, Sustainable Solutions®, CSRX, Shred-it®, Securit®, Community Shred-
it®, Making Sure it’s Secure®, We Protect What Matters®, and our company logo service mark consisting 
of a nine-circle design.  We also hold international registrations for Stericycle, the nine-circle design used 
in our logo, and the Shred-it® name and design.  

Information about our Executive Officers 

The following table contains certain information regarding our nine current executive officers: 

Name 

Cindy J. Miller 

Janet H. Zelenka 

S. Cory White

Joseph A. Reuter

David W. Stahl

Dominic Culotta

Position 

President and Chief (cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72) Officer

Executive Vice President and Chief Financial Officer 

Executive Vice President and Chief Commercial Officer 

Executive Vice President and Chief People Officer 

Executive Vice President and Chief Information Officer 

Executive Vice President and Chief Engineer 

Michael S. Weisman

Executive Vice President and Chief Ethics and Compliance Officer 

Richard M. Moore

Daniel V. Ginnetti

Executive Vice President of North American Operations 

Executive Vice President International 

Age 

57 

61 

47 

58 

54 

56 

61 

58 

51 

Cindy Miller was named President and Chief Executive Officer in May 2019 after serving as President and 
Chief  Operating  Officer  since  October  2018.    Ms.  Miller  previously  served  as  President,  Global  Freight 
Forwarding  for  UPS.    Ms.  Miller  had  a  30-year  career  with  UPS  starting  as  a  driver  and  progressing  to 
district  manager  for  operating  regions  in  the  United  States  and  then  managing  director  for  regions  in 
Europe,  the  Middle  East,  and  Africa  before  becoming  President  of  the  European  region.    Ms.  Miller 
received her bachelor’s degree from Pennsylvania State University and an executive MBA from the London 
Business School. 

Janet  Zelenka  was  named  Executive  Vice  President  Chief  Financial  Officer  in  June  2019.    Ms.  Zelenka 
previously  served  15  years  with  Essendant  Inc.,  most  recently  serving  as  Chief  Financial  Officer  until  the 
company’s acquisition by Sycamore Partners.  She also served in the roles of Chief Information Officer and 
Senior Vice President of Business Integration during a transformational period for the company, and held 
leadership  positions  in  finance,  analytics,  audit,  and  pricing.    Prior  to  Essendant,  she  spent  16  years  at 

2019 10-K Annual Report 

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PART I

SBC/Ameritech (AT&T) in a range of information technology, financial, and operational roles.  Ms. Zelenka 
received  her  bachelor’s  degree  from  Rockford  University  and  a  masters  of  business  administration  from 
Northern Illinois University. 

S. Cory  White  was  named  Executive  Vice  President  and  Chief  Commercial  Officer  in  October  2019.    He
previously  served  as  our  Executive  Vice  President  of  CRS  from  April  2019  and  retains  his  current  CRS
responsibilities in his new role.   Mr. White had previously served as the Global Chief Commercial Officer
for Startek, Inc. for nearly three years and as Vice President, Healthcare and Government Vertical Leader,
with Convergys, Inc. for six years.  Prior to those roles, he spent eleven years with ACS Healthcare, a Xerox
Company,  in  a  variety  of  sales  and  operational  roles  including  Senior  Vice  President  of  ACS  Healthcare
Payment Integrity Solutions.  Mr. White received his bachelor’s degree from the University of Kentucky.

Joe  Reuter  was  named  Executive  Vice  President  and  Chief  People  Officer  in  January  2019.    Mr.  Reuter 
previously  served  as  President,  International  Human  Resources  at  UPS,  since  April  2016.    Mr.  Reuter 
previously  served  as  Vice  President  of  the  Europe  Region  human  resources  for  three  years  and  Vice 
President  of  Human  Resources  for  the  Global  Freight  Forwarding  business  for  one  year.    He  began  his 
career  as  a  parcel  service  provider  and  supervisor  before  moving  into  the  human  resources  field  and 
supporting  UPS  operating  districts  across  the  U.S.  with  increasingly  larger  areas  of  responsibility.   Mr. 
Reuter received his bachelor’s degree from the University of South Dakota. 

David Stahl was named Executive Vice President and Chief Information Officer in April 2018 after serving 
as Senior Vice President for approximately 18 months.   Mr. Stahl previously served as  Chief Information 
Officer  at  Hillshire  Brands  Company  for  two  years,  where  he  implemented  an  IT  transformation,  and  as 
Chief Information Officer at Duracell (a Berkshire Hathaway Company) for two years, where he established 
a new operating platform for Duracell following its separation from the Procter & Gamble Company.  He 
also spent eight years with Tellabs, Inc. in roles of increasing responsibility within quality and IT, as well as 
quality  roles  with  Underwriters  Laboratories,  3Com  Corporation,  and  Emerson  Electronics.    Mr.  Stahl 
received his bachelor’s degree from Ohio Northern University. 

Dominic Culotta was named Executive Vice President and Chief Engineer in April 2019.   Prior to joining 
Stericycle, Mr. Culotta spent 35 years with United Parcel Services (UPS) most recently serving six years as 
Vice  President  of  Engineering  for  Global  Freight  Forwarding  and  eight  years  as  Vice  President  of 
Engineering  and  Operations  for  UPS'  Europe,  Middle  East  and  Africa  region.    His  early  career  included 
various  operations  and  engineering  assignments,  working  his  way  to  multiple  engineering  division 
manager  roles  as  well  as  a  regional  Vice  President  of  operations  and  engineering.    Mr.  Culotta  has  a 
bachelor’s degree from Loyola College in Baltimore. 

Michael Weisman was named Executive Vice President and Chief Ethics and Compliance Officer in April, 
2018.    Mr.  Weisman  previously  served  as  Chief  Ethics  and  Compliance  Officer  for  The  Kraft  Heinz 
Company, a publicly-listed packaged foods company, which he joined through Kraft Foods in July of 2015. 
Prior to the  merger with Heinz Foods he served as Chief Counsel, Compliance for Kraft Foods from July 
2014 and as Vice President, Ethics and Compliance for U.S. Foods from February, 2013 and as Associated 
General Counsel at Career Education Corporation from 2010.  He was also with the law firm Katten Muchin 
Rosenman, LLP for more than 10 years, four as partner, and served as a member of the firm's White Collar 
Defense,  Internal  Investigations  and  Compliance  Practice  Group.    Mr.  Weisman  received  his  bachelor’s 
degree from the University of Illinois and his juris doctor degree from Chicago-Kent College of Law. 

Rich  Moore  was  named  Executive  Vice  President  of  North  American  Operations  in  January  2019.    Mr. 
Moore previously served 30 years with UPS, most recently serving as President of the UPS Illinois District 

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PART I 

from 2016.  Previously he served for three years as Vice President of European Operations, five years as 
President  of  the  Northeast  District,  and  three  years  as  District  Manager  for  Utah,  Idaho,  and  Southern 
Nevada, in addition to other operations and transportation staff roles.  Mr. Moore received his bachelor’s 
degree from Manhattan College and a master’s of business administration from National Louis University. 

Daniel Ginnetti was named Executive Vice President, International in June 2019 having previously served 
as  Chief  Financial  Officer  from  August,  2014.    He  joined  Stericycle  as  Area  Vice  President  of  Finance  in 
2003.    In  2004  he  was  promoted  to  Area  Vice  President  for  Stericycle’s  Western,  and  later,  Midwestern 
business units.  Following that, he was promoted to Senior Vice President of Operations for the U.S. and 
Canada.    He  returned  to  financial  management  in  2013,  becoming  Vice  President  of  Corporate  Finance 
and then CFO in August 2014.  Prior to joining Stericycle, Mr. Ginnetti previously served in various finance 
and accounting positions  with The Ralph M. Parsons Company, a worldwide engineering firm, and Ryan 
Herco Products Corp., a national industrial plastics distributor.  Mr. Ginnetti received his bachelor’s degree 
from the University of California, Santa Barbara. 

Employees 

At  December  31,  2019  we  had  approximately  19,500  full  time  employees  worldwide,  of  which 
approximately 1,500 are covered by collective bargaining agreements. 

Available Information 

We maintain an internet website,  www.stericycle.com, which provides a variety of information about  the 
Company  and  where  the  Company’s  Annual  Reports  on  Form  10-K,  Quarterly  Reports  on  Form  10-Q, 
Current Reports on Form 8-K, and all amendments to those reports are available free of charge, as soon 
as  reasonably  practicable,  following  the  time  they  are  filed  with  or  furnished  to  the  SEC.    Reports  and 
proxy  and  information  statements  that  are  filed  electronically  with  the  SEC  are  available  on  the  SEC’s 
website, www.sec.gov. 

Item 1A. Risk Factors 

Our  consolidated  results  of  operations,  financial  position,  cash  flows  and  reputation  can  be  adversely 
affected by various risks.  These risks include the principal factors listed  below and the other matters set 
forth  in  this  Form  10-K.    There  may  be  additional  risks  of  which  we  are  not  presently  aware  or  that  we 
currently believe are immaterial that could have an adverse impact on our business. 

We are subject to  extensive governmental regulation, which is frequently difficult, expensive, and 
time-consuming  with  which  to  comply;  noncompliance  could  adversely  affect  our  operations  and 
efforts to grow our business results. 

The regulated waste management and secure information destruction industries are subject to extensive 
federal, state and local laws and regulations relating to the collection, transportation, packaging, labeling, 
handling, documentation, reporting, treatment and disposal of regulated waste and the proper handling 
and  protection  of  personal  and  confidential  information.    Our  business  requires  us  to  obtain  many 
permits,  authorizations,  approvals,  certificates,  and  other  types  of  governmental  permissions  and  to 
comply  with  various  regulations  in  every  jurisdiction  in  which  we  operate.    Federal,  state  and  local 
regulations change often, and new regulations are frequently adopted.  Changes in the regulations could 
require us to obtain new permits or to change the way in which we operate our business.  We might be 
unable  to  obtain  the  new  permits  that  we  require,  and  the  cost  of  compliance  with  new  or  changed 
regulations could be significant. 

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Stericycle, Inc.  •  20

 
PART I 

Many of the permits that we require, especially those to build and operate processing plants and transfer 
facilities, are difficult and time-consuming to obtain.  They may also contain conditions or restrictions that 
limit our ability to operate efficiently, and they may not be issued as quickly as we need them (or at all).  If 
we cannot obtain the permits, or if they contain unfavorable conditions, it could substantially impair our 
operations and reduce our revenues and/or profitability. 

If  we  encounter  regulatory  compliance  issues  in  the  course  of  operating  our  businesses,  we  may 
experience  adverse  publicity,  which  may  intensify  if  such  non-compliance  results  in  civil  or  criminal 
liability.    This  adverse  publicity  may  harm  our  reputation,  and  result  in  difficulties  in  attracting  new 
customers, or retaining existing customers. 

The  level  of  governmental  enforcement  of  environmental  and  other  regulations  has  an  uncertain 
effect on our business and could reduce the demand for our services. 

We  believe  that  strict  enforcement  of  laws  and  regulations  relating  to  regulated  waste  collection  and 
treatment, the proper handling and protection of personal and confidential information, and recalls and 
retrieval of products by governmental authorities can have a positive effect on our business, as these laws 
and  regulations  may  increase  the  demand  for  our  services.    Relaxation  of  enforcement,  government 
shutdowns,  or  other  changes  in  governmental  regulation  of  regulated  waste,  personal  and  confidential 
information or products to be recalled or retrieved could increase the number of competitors we face or 
reduce or delay the need for our services. 

Complications with the implementation of our ERP system could adversely impact our business and 
operations. 

We  rely  on  information  systems  and  technology  to  manage  our  business  and  summarize  operating 
results.    We  are  in  the  process  of  an  implementation  of  an  ERP  system,  which  will  replace  most  of  our 
existing  operating  and  financial  systems.    The  ERP  system  is  designed  to  accurately  maintain  the 
Company’s  financial  records,  enhance  operational  functionality  and  provide  timely  information  to  the 
Company’s management team related to the operation of our business.  The ERP system implementation 
process  has  required,  and  will  continue  to  require,  the  investment  of  significant  personnel  and  financial 
resources.    We  may  not  be  able  to  successfully  implement  the  ERP  system  without  experiencing  delays, 
increased  costs  and  other  difficulties.    If  we  are  unable  to  successfully  implement  our  ERP  system  as 
planned,  our  business,  results  of  operations,  and  financial  condition  could  be  negatively  impacted. 
Additionally, if we do not  effectively implement the  ERP system as planned or the ERP  system does not 
operate as intended, the effectiveness of our internal control over financial reporting could be adversely 
affected or our ability to assess those controls adequately could be delayed. 

Fluctuations  in  the  commodity  market  related  to  the  demand  and  price  for  recycled  paper  may 
affect our business, financial condition and results of operations. 

We  sell  nearly  all  of  the  shredded  paper  from  our  secure  information  destruction  business  to  paper 
companies and recycled paper brokers.  Sorted office paper is marketed as a commodity and is subject to 
significant demand and price fluctuations beyond our control.  Historically,  economic and  market shifts, 
fluctuations in capacity and changes in foreign currency exchange rates have created cyclical changes in 
prices,  sales  volume,  and  margins  for  pulp  and  paper  products.    The  length  and  magnitude  of  industry 
cycles have varied over time and by product, but generally reflect changes in macroeconomic conditions 
and  levels  of  industry  capacity.    The  overall  levels  of  demand  for  the  pulp  and  paper  products,  and 
consequently their sales and profitability, reflect fluctuations in levels of end-user demand, which depend 
in part on general macroeconomic  conditions in North America  and worldwide.   As a result, the market 

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PART I 

demand  for  recycled  paper  can  be  volatile  due  to  factors  beyond  our  control.    Lack  of  demand  for  our 
shredded paper material could adversely affect our business, financial condition and results of operations. 

We may incur significant charges as a result of portfolio optimization; portfolio optimization may 
not achieve the desired results. 

We  continue  to  evaluate  the  performance  of  our  portfolio  of  assets  and  businesses.    Based  on  this 
evaluation,  we  may  sell  certain  assets  or  businesses  or  exit  particular  markets.    Any  impairments  and 
losses  on  divestiture  resulting  from  this  process  may  cause  us  to  record  significant  charges,  including 
those  related  to  goodwill,  other  intangible  assets,  and  accumulated  currency  translation  adjustment 
losses.    In  addition,  divestitures  may  not  yield  the  targeted  improvements  in  our  business.    Divestitures 
involve  risks,  including  difficulties  in  the  separation  of  operations,  services,  products  and  personnel, 
disruption  in  our  operations  or  businesses,  finding  a  suitable  purchaser,  the  diversion  of  management’s 
attention from our other businesses, the potential loss of key employees, the erosion of employee morale 
or customer confidence, and the retention of contingent liabilities related to the divested business.  Any 
charges that we are required to record or the failure to achieve the intended financial results associated 
with  divestitures  of  businesses  or  assets  could  have  a  material  adverse  effect  on  our  business,  financial 
condition or results of operations. 

Restrictions  in  our  Credit  Agreement  and  our  Senior  Notes  could  adversely  affect  our  business, 
financial  condition,  results  of  operations,  ability  to  make  distributions  and  the  value  of  our 
securities. 

Our  Credit  Agreement  contains  customary  affirmative  covenants,  including,  among  others,  covenants 
pertaining  to  the  delivery  of  financial  statements;  certain  financial  covenants;  notices  of  default  and 
certain  other  material  events;  payment  of  obligations;  preservation  of  corporate  existence,  rights, 
privileges, permits, licenses, franchises  and intellectual property; maintenance of  property  and insurance 
and compliance with laws, as well as customary negative covenants, including, among others, limitations 
on  the  incurrence  of  liens,  investments  and  indebtedness;  mergers  and  certain  other  fundamental 
changes;  dispositions  of  assets;  restricted  payments;  changes  in  our  line  of  business;  transactions  with 
affiliates and burdensome agreements.  These covenants could affect our ability to operate our business, 
increase  the  amount  of  interest  expense  we  ultimately  pay  pursuant  to  the  Credit  Agreement,  and  may 
limit our ability to take advantage of potential business opportunities as they arise.  Our Senior Notes also 
contain certain covenants that could have a similar effect on our ability to operate our business (see Part 
II,  Item  8.  Financial  Statements  and  Supplementary  Data;  Note  9  –  Debt in  the  Consolidated  Financial 
Statements). 

Our ability to comply with the covenants and restrictions contained in our Credit Agreement, along with 
certain of the covenants and restrictions contained in our Senior Notes, may be affected by events beyond 
our control, including prevailing economic, financial, and industry conditions.  If market or other economic 
conditions deteriorate, our ability to comply with these covenants may be impaired.  A failure to comply 
with  these  provisions  could  result  in  a  default  or  an  event  of  default.  Upon  an  event  of  default,  unless 
waived, the lenders could elect to terminate their commitments, cease making further loans, require cash 
collateralization of letters of credit, cause their loans to become due and payable in full, foreclose against 
any  assets  securing  the  debt  under  our  Credit  Agreement  and  force  us  and  our  subsidiaries  into 
bankruptcy  or  liquidation.  If  the  payment  of  our  debt  is  accelerated,  our  assets  may  be  insufficient  to 
repay  such  debt  in  full,  and  the  holders  of  our  stock  could  experience  a  partial  or  total  loss  of  their 
investment.  See Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of 
Operations, Liquidity and Capital Resources. 

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PART I

Servicing debt and funding other obligations requires a significant amount of cash, and our ability 
to generate sufficient cash depends on many factors, some of which are beyond our control. 

Our ability to make payments on and refinance our indebtedness and to fund our operations and capital 
expenditures depends on our ability to generate cash flow and secure financing in the future.  Our ability 
to  generate  future  cash  flow  depends,  among  other  things,  on  future  operating  performance,  general 
economic  conditions,  competition,  and  litigation,  legislative  and  regulatory  factors  affecting  our 
operations and business. 

Some of these factors are beyond our control.  There is no assurance that our business will generate cash 
flow from operations or  that future debt or equity financings will be available to us to  enable us to pay 
our indebtedness or to  fund other needs.  As a result, we may need to refinance all or a portion of our 
indebtedness on or before maturity.   There is no assurance that we  will be able to refinance any of our 
indebtedness on favorable terms, or at all.  Any inability to generate sufficient cash flow or refinance our 
indebtedness on favorable terms could have an adverse effect on our financial condition. 

The amount of our indebtedness could adversely affect our business. 

As of December 31, 2019, we had a total of $2.7 billion of outstanding indebtedness, including long-term 
debt  and  short-term  debt  and  excluding  unamortized  debt  issuance  costs.    We  also  have  the  ability  to 
incur additional indebtedness subject to our financial covenants. 

Our leverage could have adverse consequences on our business, including the following: 
(cid:120) we  may be required to dedicate a  substantial portion of our available  cash to  payments of principal

and interest on our indebtedness;

(cid:120) our ability to access credit markets on terms we deem acceptable may be impaired; and
(cid:120) we may be limited in our flexibility to adjust to changing market conditions.

Risks from our international operations could adversely affect our business, financial condition and 
results of operations. 

We have established operations in the U.S. and 18 other countries.  Foreign operations carry special risks 
including: 
(cid:120) exchange rate and interest rate fluctuations;
(cid:120) substantial inflation in certain markets;
(cid:120) dependence in certain markets on government entities as customers;
(cid:120) delays in the collection of accounts receivable related to certain government funding practices;
(cid:120) government controls;
(cid:120) import and export license requirements;
(cid:120) political or economic instability;
(cid:120) changes in or compliance with U.S., local or other applicable laws and regulations, including laws and
regulations concerning anti-corruption, anti-bribery (i.e. FCPA, U.K. Bribery Act and similar laws), global
trade, trade sanctions, competition, privacy and data protection;

(cid:120) trade restrictions;
(cid:120) changes in tariffs and taxes;
(cid:120) industry or macro-economic trends;
(cid:120) permitting and regulatory standards;
(cid:120) differences in local laws, regulations, practices, and business customs;
(cid:120) restrictions on repatriating foreign profits back to the U.S. or movement of funds to other countries;
(cid:120) difficulties in staffing and managing international operations;
(cid:120) increases and volatility in labor costs; and

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PART I 

(cid:120) property ownership restrictions in certain countries.

Any  of  the  foregoing  or  other  factors  associated  with  doing  business  abroad  could  adversely  affect  our 
business, financial condition and results of operations. 

We  have  operations  in  Latin  America,  and  changes  in  the  business,  regulatory,  political  or  social 
climate  could  adversely  affect  our  operations  there,  which  could  adversely  affect  our  results  of 
operations and growth plans. 

We  have  business  operations  in  Argentina  and  Brazil.    Doing  business  in  those  countries  exposes  us  to 
risks  related  to  political  instability,  corruption,  economic  volatility,  social  unrest,  tax  and  foreign 
investment  policies,  public  safety  and  security,  and  uncertain  application  of  laws  and  regulations. 
Consequently, actions or events in any of those countries that are beyond our control could restrict our 
ability  to  operate  there  or  otherwise  adversely  affect  the  financial  results  of  those  operations. 
Furthermore,  changes  in  the  business,  regulatory  or  political  climate  in  any  of  those  countries,  or 
significant  fluctuations  in  currency  exchange  rates,  could  affect  our  ability  to  continue  our  operations 
there, which could have a material adverse impact on our prospects, results of operations, and cash flows. 

We face continuing risks relating to compliance with the FCPA and other anti-corruption and anti-
bribery laws. 

On June 12, 2017, the SEC issued a subpoena to us, requesting documents and information relating to our 
compliance with the FCPA or other foreign or domestic anti-corruption laws with respect to certain of the 
our operations in Latin America.  In addition, the DOJ has notified us that it is investigating this matter in 
parallel  with  the  SEC.    We  are  cooperating  with  these  agencies  and  are  also  conducting  an  internal 
investigation  of  these  and  other  matters,  including  outside  of  Latin  America,  under  the  oversight  of  the 
Audit  Committee  of  the  Board  of  Directors  and  with  the  assistance  of  outside  counsel,  and  this 
investigation has found evidence of improper conduct.  These matters (and other matters which may arise 
or of which we become aware in the future) may be deemed to violate the FCPA and other anti-corruption 
and anti-bribery laws.  Such determinations could subject us to, among other things, enforcement actions 
by  the  SEC  or  the  DOJ  or  other  regulatory  bodies,  fines,  penalties,  or  litigation,  which  could  adversely 
affect our business, financial condition  and results of  operations.  In  addition, any significant  settlement 
amount  may  require  us  to  incur  additional  indebtedness,  adversely  affect  our  liquidity  and  ability  to 
service our indebtedness, or require us to restructure or amend the terms of our indebtedness.  See  Part 
II, Item 8. Financial Statements and Supplementary Data; Note 20 – Legal Proceedings in the Consolidated 
Financial Statements for more information regarding currently pending legal proceedings. 

We are subject to a number of pending lawsuits. 

We are a defendant in a number of pending lawsuits and may be named as a defendant in future lawsuits.  
These  current  and  future  matters  may  result  in  significant  liabilities  and  diversion  of  our  management’s 
time,  attention,  and  resources.    Given  the  uncertain  nature  of  litigation  generally,  we  are  not  able  in  all 
cases  to  estimate  the  amount  or  range  of  loss  that  could  result  from  an  unfavorable  outcome  in  these 
matters.  In view of these uncertainties, the outcome of these matters may result in charges in excess of 
any  established  reserves  and,  to  the  extent  available,  liability  insurance.    Protracted  litigation,  including 
any  adverse  outcomes,  may  have  an  adverse  impact  on  our  reputation,  business,  financial  condition  or 
results of operations.  In addition, any significant judgment or settlement amount may require us to incur 
additional indebtedness, adversely affect our liquidity and ability to service our indebtedness, or require 
us to restructure or amend the terms of our indebtedness.  See  Part II, Item 8. Financial Statements and 
Supplementary  Data;  Note  20  -  Legal  Proceedings  in  the  Consolidated  Financial  Statements  for  more 
information regarding currently pending legal proceedings. 

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PART I 

Changing  market  conditions  in  the  healthcare  industry,  healthcare  consolidation  and  healthcare 
reform, could adversely affect our results of operations. 

Within the U.S., the healthcare industry is evolving to meet competing demands for increased healthcare 
coverage  of  a  growing  and  aging  population  and  economic  pressures  to  reduce  healthcare  costs.    As  a 
result  of  these  dynamics,  hospital  networks  are  consolidating  physician  practices  into  their  networks, 
independent practices are consolidating together, and healthcare providers are focused on cutting costs 
within  their  businesses.    These  changes  exert  downward  pricing  pressure,  including  the  impact  of  GPO 
rebates  and  administrative  fees,  on  services  that  we  provide  to  healthcare  customers  which  could 
adversely affect our results of operations.  Commitments made in connection with the SQ Settlement may 
affect  our  ability  to  increase  prices  in  the  future  and  a  deterioration  in  our  customer  relationships  as  a 
result of the MDL Action may affect our ability to sell additional services to our customers, both of which 
could adversely affect our results of operations. 

Aggressive pricing by existing competitors and the entrance of new competitors could significantly 
and adversely affect our results of operations. 

The industries in which we participate are highly competitive.  This competition has required us in the past 
to reduce our prices to our customers, may require us to reduce our prices in the future or may affect our 
ability  to  increase  prices  in  the  future.    Price  reductions  or  our  inability  to  increase  prices  could 
significantly and adversely affect our results of operations. 

We face direct competition from a large number of small, local competitors.  Because it requires very little 
financial  investment  to  compete  in  the  collection  and  transportation  of  regulated  wastes  or  the  secure 
destruction  of  personal  and  confidential  information,  there  are  many  regional  and  local  companies  in 
these industries.  We face competition from these businesses, and competition from them is likely to exist 
in  new  locations  to  which  we  may  expand  in  the  future.    In  addition,  large  national  companies  with 
substantial resources operate in the markets we serve.  For example, in the U.S., Waste Management, Inc., 
Clean Harbors, Inc., and Iron Mountain Incorporated all offer competing services. 

Unfavorable  market  conditions,  including  those  driven  by  economic  or  social  trends,  may  impact 
the  volume  of  regulated  wastes  or  personal  and  confidential  information  we  collect  from 
customers. 

The  compliance-based  services  we  provide  rely  on  the  generation  of  regulated  wastes  or  personal  and 
confidential information by our customers.  The amount of material generated by our customers may be 
impacted  by  macro-economic  trends  associated  with  manufacturing  and  industrial  markets,  healthcare 
market dynamics, and trends associated with electronic and digital record keeping.  Many of our services 
are  provided  on  a  subscription  basis  with  a  monthly  fee  to  minimize  short-term  or  cyclical  variability 
associated with these factors.  However, some of our services are provided on a transactional basis, and 
long-term  trends  resulting  from  these  factors  could  reduce  the  demand  for  our  services,  whether  we 
provide them on a subscription or transactional basis. 

If  we  fail  to  maintain  an  effective  system  of  internal  controls  over  financial  reporting,  including 
remediating known material weaknesses in our internal controls as of December 31, 2019, we may 
not  be  able  to  report  our  financial  results  timely  and  accurately  or  prevent  fraud,  which  could 
adversely affect investor confidence in our company, our results of operations and our stock price. 

As disclosed in more detail in Part II, Item 9A. Controls and Procedures of this Report, we have identified 
material weaknesses, including a material weakness related to ineffective general information technology 
controls, as of December 31, 2019, in our internal controls over financial reporting.  Due to these material 

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PART I

weaknesses,  we  have  also  concluded  our  internal  control  over  financial  reporting  was  ineffective  as  of 
December 31, 2019. 

Internal  controls  related  to  the  operation  of  technology  systems  are  critical  to  maintaining  adequate 
internal  control over financial reporting.   We are implementing remedial  measures  and  there  can be no 
assurance  that  our  efforts  will  be  successful.    These  measures  will  result  in  additional  technology  and 
other expenses.  If we are unable to remediate the material weakness, or are otherwise unable to maintain 
effective  internal  control  over  financial  reporting  or  disclosure  controls  and  procedures,  our  ability  to 
record,  process  and  report  financial  information  accurately,  and  to  prepare  financial  statements  within 
required time periods, could be adversely affected, which could subject us to litigation or investigations 
requiring  management  resources  and  payment  of  legal  and  other  expenses,  negatively  affect  investor 
confidence in our financial statements and adversely impact our stock price. 

Notwithstanding  the  material  weaknesses  that  existed  as  of  December  31,  2019,  management  has 
concluded that the consolidated financial  statements  included in this Annual Report fairly present, in all 
material respects, our financial position, results of operations and cash flows as of the dates, and for the 
periods, presented, in conformity with U.S. GAAP. 

Attacks  on  our  information  technology  systems  could  damage  our  reputation,  negatively  impact 
our businesses and expose us to litigation risk. 

We  use  computers  in  substantially  all  aspects  of  our  business  operations.    We  also  use  mobile  devices, 
social networking and other online activities to connect with our employees and our customers.  We rely 
heavily  on  various  proprietary  and  third-party  information  systems.    Our  reputation  for  the  secure 
handling of customer and other sensitive information is critical to the success of our business.  Like other 
large  multi-national  corporations,  we  are  potentially  subject  to  cyber-attacks,  including  state-sponsored 
cyber-attacks, industrial espionage, insider threats, computer denial-of-service attacks, computer viruses, 
ransomware  and  other  malware,  wire  fraud  and  other  cyber  incidents.    Our  incident  response  efforts, 
business  continuity  procedures  and  disaster  recovery  planning  may  not  be  entirely  effective  as  our 
information  technology  and  network  infrastructure  may  still  be  vulnerable  to  attacks  by  hackers  or 
breaches due to employee error, malfeasance, computer viruses, power outages, natural disasters, acts of 
terrorism, breaches with respect to third-party systems or other disruptions.  A cybersecurity incident and 
breach  of  our  information  systems  could  lead  to  theft,  destruction,  misappropriation  or  release  of 
sensitive  and/or  confidential  information  or  intellectual  property,  which  could  result  in  business 
disruption, negative publicity, violation of privacy laws, loss of customers, brand damage, adverse financial 
and operational results, and potential litigation. 

Our management depends on relevant and reliable information for decision-making purposes, including 
key  performance  indicators  and  financial  reporting.    Any  significant  loss  of  data,  failure  to  maintain 
reliable data, disruptions affecting our information systems, or delays or difficulties in transitioning to new 
systems could adversely affect our business, financial condition and results of operations.  In addition, our 
ability to continue to operate our businesses without significant interruption in the event of a disaster or 
other disruption depends in part on the ability of our information systems to operate in accordance with 
our  disaster  recovery  and  business  continuity  plans.    If  our  information  systems  fail  and  our  redundant 
systems  or  disaster  recovery  plans  are  not  adequate  to  address  such  failures,  or  if  our  business 
interruption insurance does not sufficiently compensate us for any losses that we may incur, our revenues 
and  profits  could  be  reduced  and  the  reputation  of  our  brands  and  our  business  could  be  adversely 
affected.    In  addition,  remediation  of  such  problems  could  result  in  significant,  unplanned  capital 
investments. 

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PART I

A  change  or  deterioration  in  our  relations  with  our  employees  or  an  increase  in  labor  and 
employment  costs  could  have a materially  adverse  effect on our  business,  financial condition  and 
results of operations. 

Labor  and  employment  is  one  of  our  highest  costs  and  increases  in  employment  costs  could  materially 
affect  our  cost  structure  and  our  profitability.   We  compete  with  other  businesses  in  our  markets  for 
qualified  employees  and  the  labor  supply  is  sometimes  tight  in  our  markets.   A  shortage  of  qualified 
employees  or  further  unionization  would  require  us  to  incur  additional  costs  related  to  wages  and 
benefits; inefficiencies in operations; unanticipated costs in sourcing temporary or third party labor; legal 
fees and interference with customer relationships. 

We  are  a  party  to  13  collective  bargaining  agreements  in  the  U.S.  and  Canada,  covering  approximately 
650 employees, or approximately 4.4%, of our total U.S. and Canadian workforce and further agreements 
and works  councils  covering  approximately 1,000 employees in our other international  locations.   These 
agreements  expire  on  a  scheduled  basis  depending  upon  the  negotiated  length  of  the  contract’s  term. 
Collective bargaining agreement negotiations occur every year depending upon which agreements expire 
and whether one or both parties seek the modification of terms. 

There can be no assurance that we will be able to negotiate the terms of future agreements with unions in 
a manner  acceptable to us.  There is also no guarantee that current non-union employees will not  seek 
union  representation  resulting  in  additional  collective  bargaining  agreements  with  associated  increased 
costs  to  us.    Potential  work  disruptions  from  labor  disputes  may  disrupt  our  businesses  and  adversely 
affect our brand, customer relations, financial condition, and results of operations. 

Market  conditions  could  adversely  change  and  our  earnings  could  decline  resulting  in  charges  to 
impair intangible assets, such as goodwill. 

As  a  result  of  our  various  acquisitions,  the  Consolidated  Balance  Sheet  at  December 31,  2019  contains 
goodwill  of  $3.0  billion  and  other  intangible  assets,  net  of  accumulated  amortization  of  $1.4  billion.    In 
accordance  with  Accounting  Standards  Codification  Topic  350,  Intangibles  –  Goodwill  and  Other,  we 
evaluate  on  an  ongoing  basis  whether  facts  and  circumstances  indicate  any  impairment  to  the  value  of 
indefinite-lived intangible assets such as goodwill.  As circumstances after an acquisition can change, we 
may  not  realize  the  value  of  these  intangible  assets.    During  2019  and  2018,  we  recorded  non-cash 
impairment charges of $17.7 million and $16.0 million, respectively, of operating permits, tradenames, and 
customer  relationships.   Additionally  in  2019  we  recognized  $228.3  million  in  non-cash  goodwill 
impairment  charges  related  to  our  Canada,  Domestic  Environmental  Solutions,  and  Latin  America 
reporting  units  and  in  2018,  we  recognized  $358.7  million  of  non-cash  goodwill  impairment  charges 
related to our Domestic CRS and Latin America reporting units.  We recognized these impairments due to 
a reduction of forecasted future cash flows in each reporting unit, as discussed in the Impairment section 
of Part II, Item 7. Management’s Discussion and Analysis  of Financial Condition and Results of Operations 
and  Item  8.  Financial  Statements  and  Supplementary  Data;  Note  7  –  Goodwill  and  Other  Intangible 
Assets.  The recognition of any potential future impairments could have a material adverse impact on our 
results of operations. 

The handling of regulated waste exposes us to the risk of environmental liabilities. 

As  a  company  engaged  in  regulated  waste  management,  we  face  risks  of  liability  for  environmental 
contamination.    CERCLA  and  similar  state  laws  impose  strict  liability  on  current  or  former  owners  and 
operators of facilities that release hazardous substances into the environment as well as on the businesses 
that  generate  those  substances  and  the  businesses  that  transport  them  to  our  facilities.    Responsible 
parties  may  be  liable  for  substantial  investigation  and  clean-up  costs  even  if  they  operated  their 

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Stericycle, Inc.  •  27

 
PART I

businesses properly and complied with applicable federal and state laws and regulations.  Liability under 
CERCLA may be joint and several, which means that if we were found to be a business with responsibility 
for a particular CERCLA site, we could be required to pay the entire cost of the investigation and clean-up 
even if we were not the party responsible for the release of the hazardous substance and other companies 
might also be liable. 

Our pollution liability insurance excludes liabilities under CERCLA.  Thus, if we were to incur liability under 
CERCLA and if we could not identify other parties responsible under the law whom we are able to compel 
to contribute to our expenses, the cost to us could be substantial and could impair our profitability and 
reduce  our  liquidity.    Our  customer  service  agreements  make  clear  that  the  customer  is  responsible  for 
making  sure  that  only  appropriate  materials  are  disposed  of.    If  there  were  a  claim  against  us  that  a 
customer  might  be  legally  liable  for,  we  might  not  be  successful  in  recovering  our  damages  from  the 
customer, see Item 8. Financial Statements and Supplementary Data; Note 20 – Legal Proceedings.  

Tax interpretations and changes in tax regulations and legislation could adversely affect us. 

Tax interpretations, regulations and legislation in the various jurisdictions in which we operate are subject 
to  measurement  uncertainty  and  the  interpretations  can  impact  net  income,  income  tax  expense  or 
recovery, and deferred income tax assets or liabilities.  Tax rules and regulations, including those relating 
to foreign jurisdictions, are subject to interpretation and require judgment by us that may be challenged 
by the applicable taxation authorities upon audit.  Although we believe our assumptions, judgements and 
estimates are reasonable, changes in tax laws or our interpretation of tax laws and the resolution of any 
tax audits could significantly impact the amounts provided for income taxes in our consolidated financial 
statements. 

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to 
as  the  Tax  Cuts  and  Jobs  Act  (the  “Tax  Act”).    The  Tax  Act  reduced  the  U.S.  federal  statutory  tax  rate, 
broadened  the  corporate  tax  base  through  the  elimination  or  reduction  of  deductions,  exclusions,  and 
credits, limited the ability of U.S. corporations to deduct interest expense, and transitioned to a territorial 
tax system which allows for the repatriation of foreign earnings to the U.S. with a 100% federal dividends 
received deduction prospectively.  In addition, the Tax Act required a one-time transitional tax on foreign 
cash equivalents and previously unremitted earnings.  Several of the new provisions enacted as part of the 
Tax Act require clarification and guidance from the IRS and Treasury Department.  These or other changes 
in U.S. tax laws could impact our profits, effective tax rate, and cash flows. 

We  have  accumulated  NOLs  arising  from  our  operations  and  foreign  and  domestic  acquisitions  of 
approximately  $379.4  million  as  of  December  31,  2019.    We  have  recognized  valuation  allowances  to 
reduce  these  amounts  to  our  current  estimate  for  NOLs  that  will  be  recoverable  against  future  taxable 
income  prior  to  their  expiration  in  accordance  with  the  appropriate  tax  regulations.    If  our  estimates 
change  or  we  do  not  generate  sufficient  taxable  income  prior  to  the  expiration  of  these  NOLs  we  may 
have  to  record  additional  valuation  allowances  resulting  in  higher  income  tax  expense,  see  Item  8. 
Financial Statements and Supplementary Data; Note 10 – Income Taxes. 

In  addition,  we  may  periodically  restructure  our  legal  entities  and  if  taxing  authorities  were  to  disagree 
with our tax positions in connection with any such restructurings, our effective tax rate could be materially 
affected.    In  connection  with  such  restructurings  we  could  also  incur  additional  charges  associated  with 
consulting fees and other charges. 

We face risks associated with project work and services that are provided on a non-recurring basis. 

While the majority of our business is based on long-term contracts for regularly scheduled service, we do 
have a portion of revenue which is derived from short-term projects or services that we provide on a non-

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PART I 

recurring  basis.    Product  recall  and  retrieval  events,  one-time  purge  events  for  secure  information 
destruction, and certain hazardous waste services that we provide on a project or non-recurring basis are 
not predictable in terms of frequency, size or duration.  Our customers’ need for these services could be 
influenced  by  regulatory  changes,  fluctuations  in  commodity  market  performance,  natural  disasters  and 
acts  of  God,  or  other  factors  beyond  our  control.    Variability  in  the  demand  for  these  services  could 
adversely affect our business, financial condition and results of operations. 

The handling, transportation, and treatment of regulated waste carries with it the risk of personal 
injury to employees and others. 

Our business requires our employees to handle materials that may be infectious or hazardous to life and 
property in other ways.  While we try to handle such materials with care and in accordance with accepted 
and safe methods, the possibility of accidents, leaks, spills, and natural disasters always exists. 

Examples of incidents that may present possible exposure to hazardous materials include: 

(cid:120) truck accidents;
(cid:120) damaged or leaking containers;
(cid:120) improper storage of regulated waste by customers;
(cid:120) improper placement by customers of materials into the waste stream that we are not authorized or

able to process, such as certain body parts and tissues; or

(cid:120) malfunctioning treatment plant equipment, such as power outages, or ineffective backup systems.

Human  beings,  or  animals  could  be  injured  or  sickened  or  property  could  be  damaged  by  exposure  to 
regulated waste.  This in turn could result in  lawsuits in which we are found liable for such injuries,  and 
substantial damages could be awarded against us. 

While we carry liability insurance intended to cover these contingencies, instances may occur that are not 
insured  against  or  that  are  inadequately  insured  against.    An  uninsured  or  underinsured  loss  could  be 
substantial and could impair our profitability and reduce our liquidity. 

The handling of secure information for destruction exposes us to potential data security risks that 
could  result  in  monetary  damages  against  us  and  could  otherwise  damage  our  reputation,  and 
adversely affect our business, financial condition, and results of operations. 

The  protection  of  customer,  employee,  and  company  data  is  critical  to  our  business.    The  regulatory 
environment  in  the  U.S.  and  Canada  surrounding  information  security  and  privacy  is  increasingly 
demanding,  with  the  frequent  imposition  of  new  and  constantly  changing  requirements.    Certain 
legislation,  including  the  FACTA,  the  HIPAA,  the  Economic  Espionage  Act  in  the  U.S.,  the  Personal 
Information  Protection  and  Electronic  Documents  Act  in  Canada  and  the  GDPR  in  the  EU,  require 
documents to be securely destroyed to avoid identity theft and inadvertent disclosure of confidential and 
sensitive  information.    A  significant  breach  of  customer,  employee,  or  company  data  could  attract  a 
substantial amount of media attention, damage our customer relationships and reputation, and result in 
lost  sales,  fines,  or  lawsuits.    In  addition,  an  increasing  number  of  countries  have  introduced  and/or 
increased enforcement of comprehensive privacy laws or are expected to do so.  The continued emphasis 
on information security as well as increasing concerns about government surveillance may lead customers 
to  request  us  to  take  additional  measures  to  enhance  security  and/or  assume  higher  liability  under  our 
contracts.    As  a  result  of  legislative  initiatives  and  customer  demands,  we  may  have  to  modify  our 
operations to further improve data security.  Any such modifications may result in increased expenses and 
operational  complexity,  and  adversely  affect  our  reputation,  business,  financial  condition  and  results  of 
operations. 

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PART I 

Our  participation  in  multi-employer  pension  plans  may  subject  us  to  liabilities  that  could 
materially adversely affect our liquidity, cash flows and results of operations. 

We  participate  in  multi-employer  pension  plans  administered  by  employer  and  union  trustees.    To  the 
extent  that those plans are underfunded, ERISA may  subject  us  to substantial  liabilities in  the event we, 
whether  partially  or  totally,  cease  to  have  obligations  to  contribute  to  the  plans.    Under  current  law 
regarding  multi-employer  defined  benefit  plans,  circumstances  such  as  a  plan's  termination,  an 
employer's  partial  or  complete  withdrawal  from,  or  the  mass  withdrawal  of  all  contributing  employers 
from, an underfunded multi-employer defined benefit plan can trigger our obligation to make payments 
to  the  plan  for  our  proportionate  share  of  the  multi-employer  plan's  unfunded  vested  liabilities.  
Furthermore,  the  Pension  Protection  Act  of  2006  added  new  funding  rules  generally  applicable  to  plan 
years  beginning  after  2007  for  multi-employer  plans  that  are  classified  as  "endangered,"  "seriously 
endangered," or "critical" status.  If plans in which we participate are in critical status or underfunded, we 
could be required to make additional contributions. 

Based  upon  the  information  available  to  us  from  plan  administrators  as  of  March  29,  2019,  one  of  the 
multi-employer  pension  plans  in  which  we  participate  is  underfunded.    The  Pension  Protection  Act 
requires that underfunded pension plans improve their funding ratios within prescribed intervals based on 
the level of their underfunding.  We have been notified that one plan is in "critical" status and this plan 
may require additional contributions.  The amount of additional funds we may be obligated to contribute 
in the future cannot be estimated, as such amounts will be based on future levels of employee work that 
require the specific use of the union employees covered by these plans, investment returns and the level 
of  underfunding  of  such  plans.    Additional  funding  could  adversely  affect  our  liquidity,  cash  flows,  and 
results of operations.  For  more information,  see Part II, Item 8. Financial Statements and Supplementary 
Data;  Note  13  –  Retirement  and  Other  Employee  Benefit  Programs  in  the  Consolidated  Financial 
Statements. 

Increases in transportation costs may adversely affect our business and reduce our earnings. 

We  maintain  an  extensive  transportation  network  and  fleet  of  vehicles.    A  significant  increase  in  market 
prices  for  trucks  or  fuel  could  adversely  affect  our  business  through  higher  transportation  costs  and 
reduce our operating margins and reported earnings. 

Some  of  our  customers  have  suffered  financial  difficulties  affecting  their  credit  risk,  which  could 
negatively impact our operating results. 

We provide service to a number of customers, including governmental entities and municipalities, some of 
which  have  suffered  significant  financial  difficulties  in  recent  years.    Some  of  these  entities  could  be 
unable to pay amounts owed to us or renew contracts with us at previous or increased rates.  The inability 
of  our  customers  to  pay  us  in  a  timely  manner  or  to  pay  increased  prices,  particularly  large  national 
accounts, could negatively affect our operating results. 

An inability to  retain key personnel or  difficulties  in recruiting  qualified  personnel may adversely 
affect our business 

Our  businesses  operate  in  highly  competitive  markets.    The  labor  market  in  the  United  States  is  very 
competitive  and  the  unemployment  rate  is  at  historic  lows.    We  depend  on  the  skills,  working 
relationships, and continued services of key personnel, including our experience management team.  We 
must  hire,  train  and  develop  effective  employees.    We  compete  with  other  companies  both  within  and 
outside  of  our  industry  for  talented  personnel.    In  addition,  employee  turnover  increases  our  cost  of 
operations and makes it more difficult to operate our business.  Difficulty in replacing or adding personnel 
could have an adverse effect on our business, results of operations and financial condition. 

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Stericycle, Inc.  •  30

 
PART I 

Our success depends on our executive officers and other key personnel.  If we lose key personnel or 
are unable to hire additional qualified personnel, our business may be harmed. 

Our future success depends to a significant degree on the skills, experience and efforts of our executive 
officers  and  key  personnel.    We  have  experienced  unplanned  turnover  in  our  executive  team  in  recent 
periods.  The unexpected loss of the services of any of our executive officers could have an adverse effect 
on our operations.  There can be no assurance that our executive succession planning, retention, or hiring 
efforts will be successful.  Competition for skilled and experienced management personnel is intense, and 
our future success will also depend on our ability to attract and retain qualified personnel, and a failure to 
attract and retain new qualified personnel could have an adverse effect on our operations. 

Natural  disasters  or  other  catastrophic  events  could  negatively  affect  our  business,  financial 
condition, and results of operations. 

Natural disasters such as hurricanes, typhoons or earthquakes could negatively affect our operations and 
financial  performance.    Such  events  could  result  in  physical  damage  to  one  or  more  of  our  facilities  or 
equipment, the temporary  lack of an  adequate work force in  a  market, and  the  temporary disruption in 
transportation services which we rely on to deliver waste to our facilities.  These events could prevent or 
delay  shipments  and  reduce  both  volumes  and  revenue.    Weather  conditions  and  other  event  driven 
special projects may also cause variations in our results.  We may be required to suspend operations in 
some of our locations, which could have a material adverse effect on our business, financial condition, and 
results of operations. 

Item 1B. Unresolved Staff Comments 

None. 

Item 2. Properties 

Information  regarding  our  worldwide  properties  can  be  found  under  Part  I,  Item  1.  Business  and  is 
incorporated herein by reference.  We believe that these processing and other facilities are adequate for 
our present and currently anticipated future needs. 

Item 3. Legal Proceedings 

Information regarding certain legal proceedings in which we are involved can be found in Part II, Item 8. 
Financial Statements and Supplementary Data;  Note 20 - Legal Proceedings in the Consolidated Financial 
Statements and is incorporated herein by reference.  

Item 4. Mine Safety Disclosures 

Not Applicable. 

2019 10-K Annual Report 

Stericycle, Inc.  •  31

 
PART II 

PART II 

Item 5. Market Price for the Registrant’s Common Equity and Related Stockholder
Matters and Issuer Purchases of Equity Securities  

Our common stock is listed on the Nasdaq Global Select Market under the ticker symbol "SRCL."  There 
were 83 shareholders of record as of February 24, 2020. 

We  did  not  declare  or  pay  any  cash  dividends  on  our  common  stock  during  2019,  2018,  or  2017.    We 
currently  expect  that  we  will  retain  future  earnings  for  debt  repayment  and  use  in  the  operation  and 
expansion of our business and do not anticipate paying any cash dividends on our common stock in the 
foreseeable future. 

Under resolutions that our Board of Directors 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  December 31, 2019, we had 
purchased a cumulative total of 22,219,146 shares.  No common stock purchases were made during 2019.  

Performance Graph 

The following graph compares the cumulative total return (i.e., share price appreciation plus dividends) on 
our common stock over the five-year period  ended  December 31, 2019 with the cumulative total return 
for the same period on the Nasdaq Global Select Market Composite Index, the S&P Mid Cap 400 Index, 
and  the Dow Jones U.S. Waste & Disposal Services Index. 

The graph assumes that $100 was invested on December 31, 2014 in our common stock and in the shares 
represented by each of the four indices, and that all dividends were reinvested. 

The  stock  price  performance  of  our  common  stock  reflected  in  the  following  graph  is  not  necessarily 
indicative of future performance. 

Stericycle, Inc.

S&P Mid Cap 400 Index

Nasdaq Global Select Market Composite Index

Dow Jones U.S. Waste & Disposal Services Index

$250.00

$200.00

$150.00

$100.00

$50.00

$0.00

12/31/2014

12/31/2015

12/31/2016

12/31/2017

12/31/2018

12/31/2019

2019 10-K Annual Report 

Stericycle, Inc.  •  32

 
Company/Index 
Stericycle, Inc. 
$ 
Nasdaq Global Select Market Composite Index  $ 
S&P Mid Cap 400 Index 
$ 
Dow Jones U.S. Waste & Disposal Services Index $ 

2014 

2015 

2016 

2017 

2018 

2019 

100.00   $ 
100.00   $ 
100.00   $ 
100.00   $ 

92.00   $ 
106.11   $ 
100.00   $ 
102.08   $ 

58.77  $ 
114.16  $ 
96.29  $ 
121.08  $ 

51.87   $ 
146.62   $ 
130.85   $ 
139.05   $ 

27.99   $ 
141.23   $ 
114.50   $ 
136.60   $ 

48.68   
191.51   
142.04   
181.46   

PART II 

2019 10-K Annual Report  

Stericycle, Inc.  •  33 

 
 
  
    
    
   
   
    
  
 
 
 
Item 6. Selected Financial Data 

In millions, except per share data 

Statements of (Loss) Income Data 
Revenues 
Depreciation and amortization 
Goodwill impairment 
Divestiture losses, net of gains 
(Loss) income from operations 
Mandatory convertible preferred stock dividend 
Gain on repurchase of preferred stock 
Net (loss) income attributable to Stericycle, Inc. common 
shareholders 
(Loss) earnings per common share attributable to Stericycle, Inc. 
common shareholders - diluted (1) 
Statements of Cash Flow Data 
Net cash from: 

Operating activities 
Investing activities 
Financing activities 
Balance Sheet Data 
Cash and cash equivalents 
Total assets 
Long-term debt, net 
Stericycle, Inc. equity (1) 

PART II 

2015 

2019 

Year Ended December 31, 
2017 

2016 

2018 

$ 

3,308.9   $ 
272.8     
228.3     
103.0     
(211.9 )   
-     
-     
(346.8 )   

3,485.9  $ 
255.9    
358.7    
12.8    
(161.1 )   
(25.5 )   
16.9    
(253.3 )   

3,580.7  $ 
249.5    
65.0    
9.5    
(7.6 )   
(36.3 )   
17.3    
23.4    

3,562.3   $ 
252.5     
-     
27.1     
433.8     
(39.4 )   
11.3     
178.2     

2,985.9   
127.4   
-   
-   
487.6   
(10.1 ) 
-   
256.9   

$ 

(3.81 ) $ 

(2.91 ) $ 

0.27   $ 

2.08   $ 

2.98   

$ 

$ 

$ 

248.0   $ 
(104.0 )   
(141.6 )   

165.7  $ 
(147.5 )   
(25.7 )   

508.6  $ 
(193.0 )   
(321.2 )   

560.8   $ 
(195.6 )   
(376.8 )   

386.1   
(2,533.9 ) 
2,185.4   

34.7   $ 
6,437.0     
2,559.3     
2,330.9   $ 

34.3  $ 
6,455.5    
2,663.9    
2,587.4  $ 

42.2  $ 
6,988.3    
2,615.3    
2,896.6  $ 

44.2   $ 
6,980.1     
2,877.3     
2,805.8   $ 

55.6   
7,065.2   
3,040.4   
2,729.9   

(1)  See  Part  II,  Item  8.  Financial  Statements  and  Supplementary  Data;  Note  16  –  (Loss)  Earnings  per 
Common  Share  in  the  Consolidated  Financial  Statements  for  information  concerning  the 
computation of diluted EPS. 

For more details on the items below, see Part II, Item 7. Management’s Discussion and Analysis of Financial 
Condition and Results of Operations. 

2019 10-K Annual Report  

Stericycle, Inc.  •  34 

 
 
 
  
  
  
  
  
 
 
  
  
  
     
    
    
     
   
  
  
  
  
  
  
  
  
     
    
    
     
   
  
     
    
    
     
   
  
  
  
     
    
    
     
   
  
  
 
Net (loss) income attributable to Stericycle, Inc. common shareholders (including the total negative impact 
to (Loss) earnings per share attributable to Stericycle, Inc. common shareholders), included the following 
after-tax effects:  

PART II 

In millions, except per share data 

2019 

Year Ended December 31, 
2018 

2017 

     2016 

      2015   

After-tax charges (income) 
Business Transformation 
Intangible Amortization 
Acquisition and Integration 
Operational Optimization 
Divestitures (including Divestiture Losses, net of Gains) 
Litigation, Settlements and Regulatory Compliance 
Asset Impairments 
Goodwill Impairment 
Other 
Debt Extinguishment 
Preferred Stock Dividends 
U.S. Tax Reform 
Total after-tax impacts 

Negative impact to (Loss) earnings per share attributable to 
Stericycle, Inc. common shareholders - diluted (1) 

$ 

$ 

$ 

51.1        $ 
112.0          
3.1          
11.9          
90.0          
23.7          
21.5          
221.4          
33.4          
19.8          
-          
-          
587.9        $ 

61.2       $ 
97.7         
7.8         
22.9         
16.0         
74.2         
21.8         
292.7         
25.6         
-         
27.5         
8.8         
656.2       $ 

20.0    $ 
77.4     
26.2     
46.8     
7.1     
203.5     
-     
67.2     
15.3     
-     
36.3     
(129.8 )    
370.0    $ 

-     $ 

-  
83.5        29.8  
38.1        55.4  
40.4        24.0  
-  
23.2       
4.4        39.8  
-  
1.4       
-  
-       
-  
4.1       
-  
-       
39.4        10.1  
-  
-       
234.5     $ 159.1  

6.46        $ 

7.36       $ 

4.07    $ 

2.45     $  1.76   

(1) 

For the purpose of calculating the impact to (Loss) earnings per share attributable to Stericycle, Inc. 
common shareholders, of our mandatory convertible preferred stock in the years ended December 
31,  2018,  2017,  2016,  and  2015,  we  calculate  the  impact  by  excluding  the  mandatory  convertible 
preferred  stock  dividend  and  using  the  “if-converted”  method  of  share  dilution,  weighted  in  2018 
for the period prior to its conversion into common stock in September 2018 and weighted in 2015 
for the period after issuance in September 2015. 

2019 10-K Annual Report  

Stericycle, Inc.  •  35 

 
 
 
 
 
 
  
        
       
  
          
         
     
       
  
  
  
  
  
  
  
  
  
  
  
  
 
 
PART II 

Item 7. Management’s Discussion and Analysis of Financial  Condition and Results 
of Operations 

The following discussion of our financial condition and results of operations should be read in conjunction 
with our Consolidated Financial Statements and related notes in  Part II, Item 8. Financial Statements and 
Supplementary Data of this 2019 Form 10-K. 

Overview 

Incorporated in 1989, Stericycle protects people, safeguards communities, and reduces risk through highly 
specialized  medical  and  hazardous  waste  management  and  secure  information  services.    Our  team  of 
more than 19,500 employees serves customers in the U.S. and 18 other countries with a concentration on 
the growing healthcare industry.  We are a world-leading services company with the scale, expertise, and 
experience  to  handle  complicated  and  behind-the-scenes  essential  services  for  waste  management, 
regulatory compliance and destruction of secure information.  To our customers, team members and the 
communities we serve, Stericycle is a company that protects what matters. 

Our offering of services appeals to a wide range of small and large business  customers.  The majority of 
our  customers  are  healthcare  businesses  (hospitals,  physician,  and  dental  practices,  outpatient  clinics, 
long-term  care  facilities,  etc.).    We  also  provide  services  to  retailers,  manufacturers,  financial  services 
providers, professional services providers, governmental entities, and other businesses.  While we manage 
large volumes of waste and other materials, the volume per customer site on average is small. 

Highlights for the year ended December 31, 2019 compared to the prior year include: 

(cid:120)  Revenues for the year ended December 31, 2019 were $3.31 billion, compared to $3.49 billion in 
2018.    The  decline  of  $177.0  million  was  due  to  the  impact  of  divestitures  and  macroeconomic 
factors of foreign exchange rates and SOP pricing which reduced revenues by $64.1 million, $67.8 
million and $41.5 million, respectively. 

(cid:120)  Organic  revenue  in  RWCS  and  SID,  excluding  the  impact  of  SOP  pricing,  remained  strong  with 
increases  of  0.7%  and  3.6%  compared  to  2018,  respectively.    These  were  more  than  offset  by 
continued  lowered  sales  in  Domestic  CRS  primarily  due  to  smaller  sized  recall  events  and  fewer 
mandated recalls and lower M&I revenues. 

(cid:120) 

Loss from operations for the year was $211.9 million in 2019, compared to loss from operations of 
$161.1 million  in 2018.   We  incurred  significant  charges associated with  key priorities and other 
significant  matters  of  $663.9  million  and  $780.1  million  as  detailed  below  in  2019  and  2018, 
respectively.  Excluding these matters, loss from operations decreased by $167.0 million which is 
attributed to macroeconomic factors of $59.0 million including SOP Pricing and foreign exchange, 
the impact of divestitures, and operational matters of $108.0 million including higher RWCS and 
corporate operating costs and declines in CRS operations. 

(cid:120)  Net  loss  was  $346.8  million,  or  $3.81  diluted  loss  per  share,  compared  with  $253.3  million,  or 
$2.91  diluted  loss  per  share,  in  2018,  primarily  due  to  the  changes  in  significant  charges 
associated  with  key  priorities  and  other  significant  matters  and  operational  items  previously 
highlighted. 

(cid:120)  Cash  flow  from  operations  for  the  full  year  was  $248.0  million,  compared  to  $165.7  million  for 
2018.    In  2018,  cash  flow  from  operations  was  reduced  by  the  Small  Quantity  customer  class 
action settlement payment of $295.0 million.  Excluding the settlement payment, cash flow from 
operations  decreased  $212.7  million,  primarily  due  to  lower  operating  performance  in  2019,  as 

2019 10-K Annual Report  

Stericycle, Inc.  •  36 

 
 
PART II 

previously  highlighted,  and  payments  in  2019  for  certain  litigation  matters,  2018  incentive 
compensation and ERP-related prepaid software. 

(cid:120)  Capital  expenditures  for  the  year  were  $194.2  million,  including  $80.6  million  for  the  ERP 
implementation,  compared  to  $130.8  million  in  2018,  including  $18.0  million  for  the  ERP 
implementation. 

During 2019, we completed the following debt related transactions: 

a) 

Issued  $600.0  million  at  par  of  aggregate  principal  Senior  Notes,  due  July  2024,  which  are 
unsecured  and  bear  interest  at  5.375%  per  annum,  payable  on  January  15  and  July  15  of  each 
year. 

b)  Executed the Fourth Amendment which amended the Credit Agreement to, among other things, 
(i) provide an incremental Term Loan of $365.0 million, (ii) modify the definition of “Consolidated 
EBITDA”,  (iii) revise  the  financial  covenant  requirement  for  our  Consolidated  Leverage  Ratio  and 
(iv) make  certain  other  modifications  to  negative  covenants  related  to  restricted  payments  and 
investments that we may make. 

c)  Repaid  in  full  $1.075  billion  of  the  outstanding  private  placement  notes  using  the  net  proceeds 
from the Senior Notes and the incremental Term Loan together with additional borrowings under 
the Senior Credit Facility. 

On  February  25,  2020,  we  executed  the  Fifth  Amendment  which  amended  the  Credit  Agreement  to, 
among other things: 

(cid:120) 

increase the maximum allowable Consolidated Leverage Ratio to 5.00 to 1.00 until the end of the 
first quarter of 2022 and 4.50 to 1.00 thereafter. 

(cid:120)  upon  the  consummation  of  the  divesture  of  the  ESOL  Disposal  Group,  each  of  the  foregoing 
maximum permitted Consolidated Leverage Ratio levels will step down to 4.75 to 1.00 and 4.25 to 
1.00, respectively. 

(cid:120) 

(cid:120) 

allow  for  continuation  of  the  $200  million  of  cash  add  backs  to  EBITDA  through  December  31, 
2020, and addbacks of $100 million until December 31, 2021, with no further addbacks thereafter. 

increase the leverage ratio pricing tier of greater than 4.50 to 1.00 by 0.125%. 

(cid:120)  grant a first-priority security interest to the administrative agent for the benefit of the lenders in 
substantially  all  of  the  personal  property  of  the  Company  and  certain  of  its  material  domestic 
subsidiaries, including certain equity interests held by those entities. 

For  additional  information,  see Part  II,  Item  8,  Financial  Statements  and  Supplementary  Data;  Note  9  – 
Debt in the Consolidated Financial Statements. 

Over the course of 2019, we divested a texting business based in the UK, a telephone answering services 
business and pharmaceutical returns business in North America, and substantially all of our operations in 
Mexico and Chile.  The five transactions combined generated $83.7 million in gross proceeds during 2019.  

As  a  result  of  these  divestitures  we  recorded  total  non-cash  divestiture  losses,  net  of  gains,  of  $103.0 
million.    (For  additional  information,  see Part  II,  Item  8,  Financial  Statements  and  Supplementary  Data; 
Note 4 – Restructuring and Divestitures in the Consolidated Financial Statements). 

On  February  6,  2020,  we  entered  into  the  Purchase  Agreement  to  sell  our  Domestic  Environmental 
Solutions business to Harsco Corporation, exclusive of the Retained Business.  

2019 10-K Annual Report  

Stericycle, Inc.  •  37 

 
 
PART II 

Subject to the terms and conditions of the Purchase Agreement, the Buyer has agreed to purchase all of 
the outstanding equity interests of our Domestic Environmental Solutions subsidiary.  Both we and Buyer 
have  agreed  to  indemnify  the  other  party  for  losses  arising  from  certain  breaches  of  the  Purchase 
Agreement and other liabilities, subject to certain limitations.  

The purchase price for the Transaction is approximately $462.5 million, and subject to adjustment based 
on  the  ESOL  Disposal  Group’s  net  working  capital  at  closing  and  other  adjustments  as  defined  in  the 
Purchase Agreement.   The  Transaction is  anticipated to result in a  loss which  is  currently  not  estimable. 
The  expected  charge  is  based  on  our  current  estimate  of  the  proceeds  that  will  be  allocated  to  the 
disposal  transaction  as  we  evaluate  the  terms  of  the  HSA  agreement  negotiated  with  the  Buyer 
concurrently  with  the  Transaction,  the  net  assets  that  will  be  disposed  of  and  an  allocation  of  goodwill 
based  on  the  relative  fair  value  of  the  ESOL  Disposal  Group  to  the  Domestic  Environmental  Solutions 
reporting unit.  The remaining goodwill will be allocated to the Retained Business which we anticipate will 
become part of the Domestic Healthcare Compliance Services reporting unit once the transaction closes. 

The  Purchase  Agreement  contains  customary  representations,  warranties  and  covenants  related  to  the 
Business and the  Transaction.   Between the date of the Purchase Agreement and the completion of the 
Transaction,  we  have  agreed  to  conduct  the  ordinary  course  of  the  ESOL  Disposal  Group  business 
consistent  with  past  practices  in  all  material  respects  and  have  agreed  to  certain  other  operating 
covenants  with  respect  to  the  ESOL  Disposal  Group  business  as  set  forth  more  fully  in  the  Purchase 
Agreement.  The Purchase Agreement includes customary termination provisions, including if the closing 
of  the  Transaction  has  not  occurred  on  or  before  November  6,  2020  (which  may  be  extended  until 
February  6,  2021,  if  needed,  to  obtain  applicable  regulatory  approvals).    Both  we  and  the  Buyer  have 
agreed to indemnify the other party for losses  arising from certain breaches of the Purchase Agreement 
and other liabilities, subject to certain limitations. 

In connection with the closing of the Transaction, we and Buyer will enter into certain additional ancillary 
agreements,  including  a  transition  services  agreement.    We  and  Buyer  will  also  enter  into  a  long-term 
subcontracted  HSA  with  respect  to  our  Retained  Business.    We  currently  provide  integrated  waste 
compliance  services  to  healthcare  customers,  including  medical  and  hazardous  waste  disposal  services. 
We will continue to be the integrated waste services provider to these customers and have subcontracted 
with the Buyer to performed hazardous waste services, including collection, transportation and disposal as 
necessary. 

The  Domestic  Environmental  Solutions  business  generated  revenue  of  $559.6  million,  including 
approximately $100.0 million related to the  Retained Business, which is included in the Regulated Waste 
and Compliance Services revenue category and in the North America RWCS segment.  

Key Business Priorities 

Following  its  founding  in  1989,  Stericycle  grew  rapidly  as  the  medical  waste  industry  developed  and 
largely through inorganic acquisitions.  Growth from medical waste acquisitions helped us achieve scale of 
infrastructure, route density, and a leadership position in the U.S.  We also leveraged acquisitions to enter 
new  geographies  or  add  additional  services  to  our  portfolio.    As  we  grew  and  evolved,  we  operated 
without centralization and the efficiencies that come from an integrated, modern corporate structure and 
associated information systems. 

2019 10-K Annual Report  

Stericycle, Inc.  •  38 

 
 
The following table identifies key priorities and other significant matters impacting our business (amounts 
are stated pre-tax except when noted): 

PART II 

In millions 

Pre-tax items: 
Included in COR 
Business Transformation 
Operational Optimization 
Asset Impairments 

Total included in COR 

Included in SG&A 
Business Transformation 
Intangible Amortization 
Acquisition and Integration 
Operational Optimization 
Divestitures 
Litigation, Settlements and Regulatory Compliance 
Asset Impairments 
Other 

Total included in SG&A 

Year Ended December 31, 
2018 

2017 

2019 

$ 

0.4     $ 
9.8      
5.2      
15.4      

67.3      
145.2      
3.5      
4.7      
11.7      
28.2      
16.9      
39.7      
317.2      

8.1     $ 
-      
17.6      
25.7      

74.5      
130.3      
9.8      
29.4      
7.7      
93.2      
8.9      
29.1      
382.9      

0.7   
0.4   
-   
1.1   

30.6   
118.4   
40.7   
70.7   
-   
327.7   
-   
24.8   
612.9   

Divestiture losses, net of gains 

103.0      

12.8      

9.5   

Goodwill impairment 

228.3      

358.7      

65.0   

Total included in Loss from operations 

663.9      

780.1      

688.5   

Included in Interest expense, net 
Capital Allocation (debt related) 

Loss on early extinguishment of debt 

Included in Other expense, net 
Other (including highly inflationary exchange loss) 
Total pre-tax 

After tax items: 
Capital Allocation (preferred dividends) 
U.S. Tax Reform 
Total after-tax 

3.6      

2.7      

23.1      

-      

-   

-   

3.3      
693.9     $ 

3.8      
786.6     $ 

-   
688.5   

-     $ 
-      
-     $ 

25.5     $ 
8.8      
34.3     $ 

36.3   
(129.8 ) 
(93.5 ) 

$ 

$ 

$ 

2019 10-K Annual Report  

Stericycle, Inc.  •  39 

 
 
 
  
 
  
  
    
    
  
 
  
     
  
      
  
  
   
       
       
  
 
 
 
  
   
       
       
  
   
       
       
  
 
 
 
 
 
 
 
 
 
  
   
       
       
  
 
 
   
       
       
  
 
 
   
       
       
  
 
 
   
       
       
  
   
       
       
  
 
 
   
       
       
  
 
 
   
       
       
  
   
       
       
  
 
  
   
       
       
  
   
       
       
  
 
 
   
       
       
  
PART II 

The above priorities and other significant matters include the following types of activities: 

Cash Charges 

Closure and Exit 
Costs(1) 
(cid:166) 

Internal (2) 
(cid:166) 

Consulting and 
Professional Fees 
(cid:166) 

Other (3) 
(cid:166) 

Non-Cash Charges 
(4) 
(cid:166) 

(cid:166) 

(cid:166) 

(cid:166) 

(cid:166) 

(cid:166) 

(cid:166) 

(cid:166) 

(cid:166) 

(cid:166) 

(cid:166) 

(cid:166) 

(cid:166) 

(cid:166) 

(cid:166) 

(cid:166) 

(cid:166) 

Business Transformation 

Acquisition and 
Integration 
Operational 
Optimization 

Divestitures 

Litigation, Settlements 
and Regulatory 
Compliance 

Other 

(1) 

(2) 

(3) 

(4) 

Includes employee and contract termination, facility closure, and clean-up costs. 

Includes dedicated resources, including project related incentive compensation and stock-based 
compensation. 

Includes other costs related to each priority e.g. software maintenance fees, changes in 
contingent consideration and environmental provisions.  

Includes impairments, accelerated depreciation, and/or amortization, gain/loss on disposal, and 
changes in deferred consideration. 

At the end of 2017, we began implementation of a business transformation, including the development of 
an ERP system, focused on driving long-term growth, improving profitability, and enhancing shareholder 
value.    During  2019,  we  refocused  our  transformation  efforts  and  aligned  around  five  key  business 
priorities. 

1.  Portfolio  rationalization  –  As  we  look  to  the  future,  we  continue  to  pursue  the  divestiture  of 
service  lines  or  geographies  that  are  not  profitable,  have  limited  growth  potential,  are  not 
vertically integrated, are not essential to our regulated waste and compliance services and secure 
information destruction service categories, and/or present the opportunity to reduce debt. 

2.  Quality of revenue –  The services we offer help our  customers meet complex regulations.  Our 
expertise,  infrastructure  and  service  levels  provide  a  differentiated  and  premium  brand  value  to 
the customers we serve.  As such, we are focused on improving the quality of revenue we deliver.  
During  2019,  we  added  a  Chief  Commercial  Officer  and  began  implementing  changes  in  our 
commercial  operations.    We  realigned  our  sales  organization  around  customer  channels; 
implemented best practices for sales management and training; reorganized our marketing teams 
to focus functional area of expertise across services; and improved our contracting processes with 
customers.   

3.  Operational  cost  efficiencies  –  Our  day-to-day  operations  are  shifting  toward  a  standardized 
operating  model  to  optimize  processes,  drive  efficiencies  and  improve  both  safety  and  service.  
During  2019,  we  added  a  Chief  Engineer  and  have  begun  centralizing  operational  decision 
making  under  a  corporate  engineering  group.    Additionally,  we  are  focused  on  driving  cost 
efficiencies  through  work  measurement,  asset  optimization,  use  of  technology,  and  expanded 
strategic sourcing.  

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4.  Debt  reduction  and  leverage  improvement  –  As  a  result  of  the  debt  accumulated  from  our 
historic acquisition strategy, debt structure and debt improvement were a key focus in 2019.  In 
June 2019, we raised $600 million from the issuance of our Senior Notes and $365 million from an 
incremental  Term  Loan.    Combined  with  an  additional  draw  from  our  Senior  Credit  Facility, 
Stericycle paid off its more restrictive $1.075 billion-dollar private placement notes.  Additionally, 
in  2019,  we  applied  cash  flow  from  operations  and  proceeds  from  divestitures  to  enable  a  net 
debt reduction of approximately $100.0 million.  

5.  ERP  implementation  –  Over  our  30-year  history,  Stericycle  had  acquired  more  than  500 
companies without fully integrating certain acquisitions onto centralized information technology 
platforms.    The  disparate  operating  and  information  systems  have  resulted  in  significant 
operational  inefficiencies.    With  the  implementation  of  an  ERP,  we  expect  to  improve  daily 
decision  making  via  real-time  information  insights,  simplify  and  enhance  forecast  accuracy, 
provide transparency for greater accountability, aid in the development of strategic planning, and 
make it easier for our customers to do business with us.  The “go-live” of the ERP system began in 
January 2020 with the global roll-out of the human-resources performance management module.  
During 2020, the additional ERP capabilities, including commercial, operational and financial, will 
be  implemented  in  a  staged  approach  across  our  North  America  RWCS  reportable  segment, 
excluding the ESOL Disposal Group.  

2019 10-K Annual Report  

Stericycle, Inc.  •  41 

 
 
PART II 

Business Transformation 

Since the program’s inception, we have recognized the following charges and capital expenditures related 
to the Business Transformation: 

In millions 

Investment in Costs Savings and Business 
Capability 
Exit costs - employee termination 
Consulting and professional fees 
Internal costs 
Other related expenses 

Total 

ERP Development and Implementation 
Consulting and professional fees 
Internal costs 
Software usage/maintenance fees 
Other related expenses 

Capital expenditures 

Total 

Other Related Matters 
Exit costs - employee termination 
Consulting and professional fees 
Non-cash charges 

Total 

Total charges and capital expenditures 

Non-cash related charges 
Cash related charges (including stock based 
compensation) 
Total operating expenditures 

$ 

$ 

$ 

$ 

Year Ended December 31, 

2019 

2018 

2017 

Cumulative 
Since Inception    

-     $ 
0.4       
2.4       
3.3       
6.1       

27.2       
9.3       
15.3       
4.3       
56.1       
80.6       
136.7       

5.5       
-       
-       
5.5       

-    $ 
27.1      
4.4      
1.4      
32.9      

16.0      
8.7      
7.4      
0.6      
32.7      
18.0      
50.7      

3.7      
4.2      
9.1      
17.0      

6.7    $ 
15.8      
1.3      
-      
23.8      

-      
0.1      
-      
1.0      
1.1      
10.9      
12.0      

4.1      
-      
2.3      
6.4      

6.7   
43.3   
8.1   
4.7   
62.8   

43.2   
18.1   
22.7   
5.9   
89.9   
109.5   
199.4   

13.3   
4.2   
11.4   
28.9   

148.3     $ 

100.6    $ 

42.2    $ 

291.1   

1.8     $ 

9.4    $ 

2.4    $ 

13.6   

65.9       
67.7     $ 

73.2      
82.6    $ 

28.9      
31.3    $ 

168.0   
181.6   

Through  December  31,  2019,  we  have  completed  activities  originally  contemplated  as  part  of  Business 
Transformation  in  the  areas  of  investment  in  costs  savings  and  business  capability  and  other  related 
matters.    Prospectively,  Business  Transformation  activities  will  be  focused  on  ERP  development  and 
implementation  with  additional  operating  expenditures  and  capital  expenditures  anticipated  in  2020  to 
complete design, testing and deployment in North America.  Once the North America deployment occurs, 
additional costs will be added to ongoing operations to reflect the cost of the ERP post go-live.  For 2020, 
and  beyond,  we  will  continue  to  incur  costs  to  maintain  the  legacy  suite  of  applications  supporting  our 
global businesses until those applications are replaced by the new ERP. 

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Business Transformation operating expenditures by reportable segment were as follows:  

In millions 

North America RWCS 
International RWCS 
All Other 
Total 

Year Ended December 31, 

2019 

2018 

2017 

$ 

$ 

2.6      $ 
1.3        
63.8        
67.7      $ 

10.8     $ 
0.7      
71.1      
82.6     $ 

5.5   
4.0   
21.8   
31.3   

As  part  of  our  Business  Transformation,  we  are  undertaking  legal  entity  organizational  restructuring 
actions  to  assist  with  streamlining  and  simplifying  business  operations  and  to  help  lower  general  and 
administrative  costs.    Such  actions  could  result  in  additional  charges  associated  with  consulting  and 
professional  fees  and  increases  in  potential  exposure  to  U.S.  and  foreign  taxes  and  foreign  exchange 
charges. 

Intangible Amortization 

For  the  years  ended  December  31,  2019,  2018,  and  2017,  we  recognized  $145.2  million,  $130.3  million, 
and $118.4  million, respectively, of intangible amortization expense.  The increase is partially due to the 
adjustment  of  the  estimated  useful  lives  of  certain  of  our  customer  relationship  intangibles  (see  Part  II, 
Item 8. Financial Statements and Supplementary Data; Note 7 – Goodwill and Other Intangible Assets in the 
Consolidated  Financial  Statements)  at  the  end  of  2018  with  the  remaining  changes,  net  arising  from 
acquisitions and divestitures. 

Acquisition and Integration 

Details  of  the  acquisitions  completed  in  the  years  ended  December  31,  2019,  2018,  and  2017  can  be 
found  in  Part  II,  Item  8.  Financial  Statements  and  Supplementary  Data;  Note  3  –  Acquisitions  in  the 
Consolidated Financial Statements. 

Acquisition and integration expenses were as follows:  

In millions 

2019 

Year Ended December 31, 
2018 

2017 

Acquisition expenses 
Integration expenses 
Unfavorable (favorable) change in contingent consideration 

Total 

$ 

$ 

3.5    $ 
-      
-      
3.5    $ 

7.4    $ 
2.2      
0.2      
9.8    $ 

10.6   
30.5   
(0.4 ) 
40.7   

Acquisition expenses in all years principally comprise internal costs and changes in deferred consideration.  
Integration expenses incurred in the years ended December 31, 2018 and 2017 were primarily related to 
acquisitions completed in the U.S. and, in particular, the Shred-it® acquisition.  Prospectively, baring new 
acquisitions,  we  anticipate  acquisition  and  integration  expenses  to  be  limited  to  deferred  consideration 
changes, if any. 

Operational Optimization  

We aim to achieve a culture of continuous improvement that will enhance its efficiency, effectiveness and 
competitiveness to improve its cost base and cash flow and we have taken a number of actions to reduce 
operating costs and optimize operations.  For example, we believe plant throughput and route density are 
competitive strengths of Stericycle.  We maintain such strengths by making adjustments to our network of 

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transportation  and  treatment  facilities  to  optimize  overall  logistics  and  processing  capabilities  within  a 
service  category  while  reducing  operational  costs.    As  part  of  these  efforts,  we  seek  to  reduce  network 
redundancies  by  consolidating  facilities,  closing  the  redundant  facility,  and  restructuring  the  local 
organization and operation for efficiency. 

Operational  Optimization  expenses,  of  which  $9.8  million  was  recognized  in  COR  and  $4.7  million  was 
recognized in SG&A, for the year ended December 31, 2019, were as follows: 

In millions 

North America 
RWCS 

International 
RWCS 

All Other 

Total 

Exit costs - employee termination 
Closure and exit costs - other 

Impairment and accelerated depreciation of property, 
plant and equipment 
Impairment of intangibles 
Total non-cash charges 
Other expenses 

Total 

$ 

$ 

0.4     $ 
-       

2.0       
-       
2.0       
-       
2.4     $ 

0.9    $ 
2.4      

4.0      
0.9      
4.9      
2.5      
10.7    $ 

1.0    $ 
-      

-      
0.4      
0.4      
-      
1.4    $ 

2.3  
2.4  

6.0  
1.3  
7.3  
2.5  
14.5   

Of the more significant charges: 

(cid:120)  North America RWCS: Exit costs – employee termination related to employee severance payments and 
non-cash charges related to impairment of long-lived assets arising from a site relocation in the U.S.; 

(cid:120)  International  RWCS:  Exit  costs  –  employee  termination  and  non-cash  charges  relate  to  site  closures 
and facility  exits in  EMEA and Latin America.   Other expenses primarily related to additional charges 
incurred as a result of diverting waste processing during conversion at one of our plants in APAC; and 

(cid:120)  All  Other:  Exit  costs  –  employee  termination  relate  to  severance  payments  in  our  Domestic  CRS 
business  to  better  align  cost  structure  with  associated  revenues  and  non-cash  charges  relate  to  an 
impairment of customer list intangibles. 

Operational Optimization expenses, which were all recognized in SG&A, for the year ended December 31, 
2018, were as follows: 

In millions 

North America 
RWCS 

International 
RWCS 

All Other 

Total 

Exit costs - employee termination 
Closure and exit costs - other 

Impairment and accelerated depreciation of property, 
plant and equipment 
Impairment of intangibles 
Total non-cash charges 
Other expenses 

Total 

$ 

$ 

Of the more significant charges: 

-     $ 
4.2       

1.0       
-       
1.0       
-       
5.2     $ 

0.2    $ 
5.9      

4.7      
6.6      
11.3      
2.0      
19.4    $ 

1.1    $ 
3.7      

-      
-      
-      
-      
4.8    $ 

1.3  
13.8  

5.7  
6.6  
12.3  
2.0  
29.4   

(cid:120)  North America RWCS: Closure and exit costs - other related to optimizing overall logistics and sales 
functions,  primarily  related  to  our  secure  information  destruction  locations  and  lease  exit  costs  for 
the  consolidation  of  call  centers  in  our  Canadian  CRS  locations.    Non-cash  charges  related  to 
accelerated depreciation associated with software;  

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(cid:120) 

International RWCS: Closure and exit costs - other related to closure, contract exit and other clean-
up costs, primarily in Latin America and APAC.  Non-cash impairment charges related to long-lived 
assets,  customer  relationships,  and  operating  permits,  primarily  in  Latin  America  and  APAC,  and 
rationalization of a tradename in Europe, and other expenses primarily in APAC; and 

(cid:120)  All  Other:  Closure  and  exit  costs  -  other  related  to  lease  exit  costs  for  the  consolidation  of  call 

centers in Domestic CRS locations. 

Operational  Optimization  charges,  which,  except  for  $0.4  million  which  was  recognized  in  COR,  were 
recognized in SG&A, for the year ended December 31, 2017, were as follows: 

In millions 

North America 
RWCS 

International 
RWCS 

All Other 

Total 

Exit costs - employee termination 
Closure and exit costs - other 

Impairment and accelerated depreciation of property, 
plant and equipment 
Impairment of intangibles 
Total non-cash charges 
Consulting and professional fees 

Total 

$ 

$ 

Of the more significant charges: 

1.1     $ 
16.1       

-       
3.1       
3.1       
8.9       
29.2     $ 

3.7    $ 
8.8      

5.1      
11.9      
17.0      
-      
29.5    $ 

0.5    $ 
5.8      

-      
5.8      
5.8      
0.3      
12.4    $ 

5.3  
30.7  

5.1  
20.8  
25.9  
9.2  
71.1   

(cid:120)  North America RWCS:  Closure and  exit costs  - other related  to optimizing overall logistics and sales 
functions,  primarily  related  to  our  secure  information  destruction  locations.    Non-cash  impairment 
charges  related  to  long  lived  assets.    Consulting  and  professional  fees  related  to  costs  to  identify 
opportunities and reduce operational redundancies; 

(cid:120)  International RWCS: Closure and exit costs – employee termination and closure and exit costs - other 
included amounts incurred in Latin America for rationalizing our operations and in the U.K. for facility 
rationalization  and  contract  exit  costs.    Non-cash  impairment  charges  related  to  long-lived  assets, 
operating permits, and customer relationships in Latin America and APAC; and 

(cid:120)  All  Other:  Closure  and  exit  costs  -  other  related  to  consolidating  of  call  centers  in  Domestic  CRS 
locations.    Non-cash  charges  relate  to  the  impairment  of  a  tradename.    Consulting  and  professional 
fees represented expenses incurred to eliminate operational redundancies. 

As  we  continue  to  consider  each  Operational  Optimization  activity,  the  amount,  the  timing  and 
recognition  of  charges  will  be  affected  by  the  occurrence  of  commitments  and  triggering  events  as 
defined under U.S. GAAP, among other factors.  We may incur more charges and cash expenditures than 
estimated and may not realize the expected improvement or cost savings on its planned time frame or at 
all. 

Divestitures  

We evaluate our portfolio of services on an ongoing basis with a country-by-country and service line-by-
service  line  approach  to  assess  long-term  potential  and  identify  potential  business  candidates  for 
divestiture.  Any decision to divest of a business is based upon several criteria, including the following: 

(cid:120)  outlook for long-term market conditions;  

(cid:120)  potential impact to complementary services or customer relationships; 

(cid:120)  ability to leverage infrastructure and customer base for growth; 

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(cid:120)  potential for margin improvement, inclusive of vertical integration of collection and treatment; 

(cid:120)  current divestiture value versus future divestiture value; 

(cid:120)  return on invested capital;  

(cid:120)  impact on overall leverage, including impact on debt leverage ratio;  

(cid:120)  implications for ongoing internal control compliance efforts; and 

(cid:120)  implications for our ERP system implementation. 

We recognized the following divestiture losses, net of (gains) associated with divestitures of the following 
businesses (see Part II, Item 8. Financial Statements and  Supplementary Data; Note 4 – Restructuring and 
Divestitures in the Consolidated Financial Statements. 

In millions 

North America RWCS Segment 
CRS businesses 
U.S. clean room business 

Total North America RWCS charges 

International RWCS Segment 
Mexico operations 
Chile operations 
U.K. TextAnywhere business 
U.K. hazardous waste business 
U.K. patient transport business 
South Africa operations 

Total International RWCS charges, net 

All Other 
CRS businesses 
Total 

2019 

Year Ended December 31, 
2018 

2017 

$ 

$ 

6.5     $ 
-      
6.5      

43.2      
19.0      
(5.1 )     
0.7      
(0.3 )     
-      
57.5      

39.0      
103.0     $ 

 $ 

-  
6.9  
6.9  

-  
-  
-  
5.9  
-  
-  
5.9  

-  
12.8  

 $ 

-   
-   
-   

-   
-   
-   
6.8   
5.7   
(3.0 ) 
9.5   

-   
9.5   

Included in the losses on divestiture of the Mexico and Chile operations were charges of $18.9 million and 
$16.8 million, respectively, relating to the recognition of losses accumulated on the associated cumulative 
currency translation adjustments which were reclassified to earnings as of the date of disposal. 

In addition to these charges, in 2019 and 2018 we incurred $11.7 million and $7.7 million, respectively, of 
consulting  and  professional  fees  associated  with  our  Portfolio  Rationalization  efforts.    We  did  not  incur 
any such fees in the year ended December 31, 2017. 

As part of our long-term strategy for improving profitability and return on invested capital, we continue to 
evaluate the performance of our entire portfolio of assets and businesses.  Divestitures resulting from this 
ongoing evaluation may cause us to record significant charges, including those related to goodwill, other 
intangible  assets,  long-lived  assets,  and  cumulative  currency  translation  adjustments.  In  addition, 
divestitures we complete may not yield the targeted improvements in our business.  Any charges that we 
are  required  to  record  or  the  failure  to  achieve  the  intended  financial  results  associated  with  any 
divestiture we may complete as a result of our ongoing reviews could have a material adverse effect on 
our business, financial condition or results of operations. 

We will continue monitoring businesses for achievement of the criteria that may require classification as 
assets  held-for-sale  or  for  impairment  as  otherwise  required  by  applicable  accounting  standards.    Our 
impairment  evaluation  is  based  on  the  assumption  that  these  assets  or  businesses  will  continue  to  be 
operated by us as held-for-use until they are divested or classified as held-for-sale. 

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Litigation, Settlements and Regulatory Compliance 

We  operate  in  highly  regulated  industries  and  must  address  regulatory  inquiries  or  respond  to 
investigations  from  time  to  time.    We  are  also  involved  in  a  variety  of  civil  litigation  from  time  to  time 
including  the  items  detailed  in  Part  II,  Item  8.  Financial  Statements  and  Supplementary  Data;  Note  20  – 
Legal Proceedings, in the Consolidated Financial Statements. 

Our  financial  results  may  also  include  considerations  of  non-recurring  matters  including  settlements, 
environmental remediation, and legal related consulting and professional fees. 

For the year ended December 31, 2019, we recognized $28.2 million in regulatory compliance, consulting 
and professional fees, primarily related to certain litigation matters. 

For the year ended December 31, 2018, we  recognized  $93.2 million of legal, settlement and regulatory 
compliance  expenses,  consulting  and  professional  fees,  primarily  related  to  certain  litigation  matters, 
including the provision, net of insurance recoveries, for the Securities Class Action Settlement announced 
on December 19, 2018 and approved in July 2019. 

For the year ended December 31, 2017, we recognized $327.7 million of legal, settlement and regulatory 
compliance  expenses,  consulting  and  professional  fees,  primarily  related  to  certain  litigation  matters,  of 
which $295.0 million was for the SQ Settlement. 

See also Item 1A. Risk Factor “We are subject to a number of pending lawsuits.” 

Asset and Goodwill Impairments 

Asset impairment charges comprise the following: 

In millions 

Software 
Other property plant and equipment 
Impairments included in COR 

Other property plant and equipment 
Customer lists, permits and tradenames 
Impairments included in SG&A 

Asset impairments 

Goodwill impairments: 

Canada reporting unit 
Domestic Environmental Solutions reporting unit 
Domestic CRS reporting unit 
Latin America reporting unit 

Goodwill impairments 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

2019 

Year Ended December 31, 
2018 

2017 

1.6    $ 
3.6      
5.2    $ 

0.5    $ 
16.4      
16.9    $ 

17.6    $ 
-      
17.6    $ 

-    $ 
8.9      
8.9    $ 

22.1    $ 

26.5    $ 

126.6    $ 
80.8      
-      
20.9      
228.3    $ 

-    $ 
-      
286.3      
72.4      
358.7    $ 

-   
-   
-   

-   
-   
-   

-   

-   
-   
-   
65.0   
65.0   

For the year ended December 31, 2019, impairment charges primarily consisted of $1.6 million related to 
software as a result of rationalization of system applications primarily in All Other, $1.0 million related to 
permits in Mexico due to site closures prior to  the Mexico operations divestiture, $0.7 million related  to 
customer  list  intangibles  in  the  Netherlands,  and  $18.3  million  associated  with  property  and  equipment 
and customer relationship, permits and other intangibles in our Brazil operations, both, which are part of 
our International RWCS reportable segment and $0.5 million  associated with a  site closure in our North 

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America RWCS reportable segment.  For the year ended December 31, 2018, the impairment charges were 
primarily  associated  to  software  in  connection  with  our  evolving  future  information  systems  strategy 
including  rationalization  of  applications  used  within  each  reportable  segment.   The  impairment  charges 
included  in  SG&A  and  COR  for  the  year  ended  December  31,  2019  and  2018,  respectively  are  further 
described  in  Part  II,  Item  8.  Financial  Statements  and  Supplementary  Data;  Note  5  –  Property,  Plant  and 
Equipment and Note 7 – Goodwill and Other Intangible Assets in the Consolidated Financial Statements. 

As  a  result  of  our  annual  goodwill  impairment  assessments  on  October  1  and  interim  assessments,  as 
applicable,  we  recognized  goodwill  impairment  charges  which  are  discussed  below  in  the  Impairment 
section  of  Part  II,  Item  7.  Management’s  Discussion  and  Analysis  of  Financial  Condition  and  Results  of 
Operations  –  Goodwill  Impairment.  (For  additional  information,  see  Part  II,  Item  8.  Financial  Statements 
and  Supplementary  Data;  Note  7  –  Goodwill  and  Other  Intangible  Assets  in  the  Consolidated  Financial 
Statements). 

Impairment  charges  may  be  recognized  in  future  periods  to  the  extent  changes  in  factors  or 
circumstances occur, including deterioration in the macroeconomic environment or in the equity markets, 
including  the  market  value  of  our  common  shares,  deterioration  in  our  performance  or  our  future 
projections, or changes in our plans for one or more reporting units or specified long-lived assets, among 
other factors. 

Other 

During the years ended  December 31, 2019, 2018, and 2017, we recognized $39.7 million, $29.1 million, 
and $24.8 million, respectively, of consulting and professional fees related to internal control remediation 
activities as well as the implementation of new accounting standards. 

For the years ended December 31, 2019 and 2018, we recognized foreign exchange losses of $3.3 million 
and $3.8 million, respectively, related to the re-measurement of net monetary assets held in Argentina as 
a result of its designation as a highly inflationary economy. 

Capital Allocation 

Stericycle  aims  to  maintain  a  structured  capital  allocation  strategy  that  balances  investment  in  the 
business, debt reduction, and returns to shareholders. 

Our capital allocation items include the following types of activities: 

(cid:120) 

Stock issuance costs, 

(cid:120)  Dividends on Preferred Stock, 

(cid:120)  Debt modification costs in connection with related non-recurring matters, 

(cid:120) 

Losses on early extinguishment of debt, and 

(cid:120)  Other related expenses. 

For  the  year  ended  December 31,  2019,  we  incurred  a  pre-tax  loss  on  early  extinguishment  of  debt  of 
$23.1 million, comprising a “make-whole” premium of $20.4 million, due under the terms of certain of the 
private  placement  notes,  and  $2.7  million  related  to  unamortized  debt  issuance  costs,  associated  with 
repayments of our private placement notes. 

We  also  incurred  $0.2  million  of  debt  modification  charges  associated  with  the  execution  of  the  Fourth 
Amendment, which are recorded in Interest expense, net and charges of $3.4 million related to the write-

2019 10-K Annual Report  

Stericycle, Inc.  •  48 

 
 
PART II 

off  of  the  unamortized  portion  of  premiums  associated  with  interest  rate  locks  executed  in  connection 
with the issuance of certain of the private placement notes, which are recorded in Interest expense, net.  

During  the  year  ended  December 31,  2018,  we  recognized  $2.7  million  of  debt  modification  charges 
related to amending our credit agreements.  These charges have been recognized as Interest expense, net 
in the Consolidated Statements of (Loss) Income. 

We  declared  and  paid  dividends  of  $25.5  million  and  $36.3  million,  to  the  Series  A  Preferred  Stock 
shareholders during the years ended December 31, 2018 and 2017, respectively.  On September 14, 2018, 
in accordance with their terms of issuance, all of the Series A Preferred Stock was converted into common 
stock  and  all  then  outstanding  shares  of  preferred  stock  and  the  associated  depositary  shares  were 
cancelled. 

Tax Reform 

We analyzed the provisional impact of the Tax Act on our year end 2017 income tax benefit/provision and 
as a result recognized $129.8 million as an income tax benefit in 2017.  Consistent with the requirements 
of Staff Accounting Bulletin No. 118 (“SAB 118”), the analysis and determination of provisional impact was 
finalized  during  2018,  resulting  in  a  charge  of  $8.8  million.    For  further  discussion,  see  Part  II,  Item  8. 
Financial  Statements  and  Supplementary  Data;  Note  10  –  Income  Taxes  in  the  Consolidated  Financial 
Statements. 

Results of Operations 

Revenues (including Segment Revenue): 

In analyzing our Company’s performance, it is necessary to understand that our various regulated services 
share a common infrastructure and customer base.  We market our regulated and compliance services by 
offering various pricing options to meet our customers’ preferences, and customers move between these 
different billing paradigms.  For example, our customers may contract with us for Medical Waste Disposal 
services  that  are  billed  based  on  the  weight  of  waste  collected,  processed  and  disposed  during  a 
particular  period,  and  in  a  subsequent  period,  the  same  customer  could  move  to  our  standard  service, 
which  packages  the  same  regulated  medical  waste  services  with  training  and  education  services  for  a 
contracted subscription fee.  Another example is a customer that purchases our  Medical Waste Disposal 
and Sharps Disposal Management services which provides the customer with the same regulated services 
under a different pricing and billing arrangement. 

We  do  not  track  the  movement  of  customers  between  the  various  types  of  regulated  services  we  offer.  
Although we can identify directional trends in our services, because the regulated services are similar in 
nature  and  there  are  inherent  inaccuracies  in  disaggregation,  we  analyze  revenues  by  revenue  service 
category  and  operating  segment.    We  analyze  our  revenue  growth  by  identifying  changes  related  to 
organic  growth,  acquisitions,  divestitures  and  changes  due  to  currency  exchange  fluctuations.    Organic 
growth excludes the effect of foreign exchange and acquisitions and divestitures with less than a full year 
of revenues in the comparative period. 

Revenues  and  Gross  profit  associated  with  SID  Services  are  impacted  by  changes  in  SOP  pricing,  which 
has declined in recent quarters.  Continued declines in SOP pricing could have a material impact on our 
Revenues, Gross profit and results of operations. 

Regulated  Waste  and  Compliance  Services  consist  of  Medical  Waste  and  Compliance  Solutions  and 
Hazardous Waste Solutions.  Communication and Related Services Revenues consist of Communications 
Services and Expert Solutions. 

2019 10-K Annual Report  

Stericycle, Inc.  •  49 

 
 
PART II 

2019 compared to 2018 

Year over year movements in Revenues by Service Category and were as follows: 

In millions 

Year Ended 

December 31,      

Percentage Change % 

2019 

   2018 

  Change   Change    Organic  

  Acquisitions   Divestitures   

Foreign 
Exchange   

$ 1,892.8   $ 1,932.6   $ 

(39.8 )   

(2.1 %)   

0.7 % 

0.1 %  

(0.5 %)   

(2.4 %) 

(1) 

  901.9      911.0     

(9.1 )   

(1.0 %)   

(1.0 %) 

0.9 %  

–   

(0.9 %) 

  219.2      313.1     

(93.9 )   

(30.0 %)   

(16.6 %) 

–  

(13.0 %)   

(0.4 %) 

(34.2 )   
  295.0      329.2     
$ 3,308.9   $ 3,485.9   $  (177.0 )   

(10.4 %)   
(5.1 %)   

(2.2 %) 
(1.6 %)    

–  
0.3 %  

(4.1 %)   
(1.8 %)   

(4.1 %) 
(2.0 %) 

(29.9 )   
$ 2,544.2   $ 2,574.1   $ 
(75.8 )   
  579.3      655.1     
(71.3 )   
  185.4      256.7     
$ 3,308.9   $ 3,485.9   $  (177.0 )   

(1.2 %)   
(11.6 %)   
(27.8 %)   
(5.1 %)   

(1.2 %) (2)   
3.1 %  (3)   

(17.5 %)  
(1.6 %)    

0.4 %  
–  
–  
0.3 %  

(0.2 %)   
(4.9 %)   
(10.3 %)   
(1.8 %)   

(0.2 %) 
(9.8 %) 
–   
(2.0 %) 

Revenues by Service 
Regulated Waste and Compliance 
Services 
Secure Information Destruction 
Services 
Communication and Related 
Services 
Manufacturing and Industrial 
Services 

Total Revenues 

Revenues by Segment 
North America RWCS 
International RWCS 
All Other 

Total Revenues 

(1) 

(2) 

(3) 

Excluding SOP price impact, SID organic percentage change is 3.6% for the year ended December 31, 2019. 

Excluding SOP price impact,  North America RWCS organic percentage change is  0.2% for the year ended December 31, 
2019. 

Excluding  SOP  price  impact,  International  RWCS  organic  percentage  change  is  4.1%  for  the  year  ended  December  31, 
2019. 

On a consolidated basis revenues decreased $177.0 million, or 5.1%, in 2019 to $3.31 billion from $3.49 
billion  in  2018.    The  decrease  was  largely  driven  by  the  impact  of  divestiture  activity,  foreign  exchange, 
SOP pricing and reductions in CRS, partially offset by organic growth in RWCS and SID due, among other 
things, to the implementation of a recycling revenue surcharge. 

North America RWCS revenues decreased $29.9 million, or 1.2%, in 2019 to $2.54 billion from $2.57 billion 
in  2018.    Organic  revenue  declined  $30.0  million,  or  1.2%,  as  a  result  of  approximately  $35.0  million 
related  to  the  impact  of  SOP  pricing  partially  offset  by  growth  in  SID.    Acquisitions  contributed  $9.5 
million, or 0.4%, to revenues and divestitures reduced revenues by $5.7 million or 0.2%.  The decline of the 
Canadian dollar had an unfavorable impact on 2019 revenues of $3.7 million, or 0.2%.   

International  RWCS  revenue  decreased  $75.8  million,  or  11.6%,  in  2019  to  $579.3  million  from  $655.1 
million in 2018.  Organic revenue increased in the International RWCS segment in 2019 by $20.4 million, 
or 3.1%, primarily due to higher volumes in RWCS revenues as a result of the implementation of new sales 
strategies and higher SID revenues, due to higher volumes, and increases in recycling surcharge revenue, 
offset by the impact of decreases in SOP pricing.  Divestitures of businesses, primarily the U.K hazardous 
waste business in 2018, reduced revenues by $32.1 million, or 4.9%.  The effect of foreign exchange rates 
unfavorably  impacted  international  revenues  in  2019  by  $64.1  million,  or  9.8%,  as  foreign  currencies 
declined against the U.S. dollar. 

2019 10-K Annual Report  

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PART II 

All Other revenues, related to Domestic CRS, decreased $71.3 million, or 27.8%, in 2019 to $185.4 million 
from  $256.7  million  in  2018.    Organic  revenue  decreased  $45.0  million,  or  17.5%,  primarily  due  to 
reductions in CRS volumes due to smaller sized recall events and fewer mandated recalls as a result of the 
U.S. Federal government shutdown in early 2019.  Divestitures, primarily related to the North America TAS 
and  retail  pharmaceutical  returns  businesses  divested  in  2019  reduced  revenues  by  $26.3  million,  or 
10.3%. 

2018 compared to 2017 

In millions 

Year Ended 
December 31, 

Percentage Change % 

2018 

   2017 

  Change   Change    Organic   Acquisitions   Divestitures   

Foreign 
Exchange   

(91.0 )   

(4.5 %)  

(2.8 %)  

0.3 %  

(1.1 %)   

(0.9 %) 

Revenues by Service 
Regulated Waste and Compliance 
Services 
Secure Information Destruction 
Services 
  911.0      823.4     
Communication and Related Services    313.1      382.6     
Manufacturing and Industrial Services    329.2      351.1     
$ 3,485.9   $ 3,580.7   $ 

$ 1,932.6   $ 2,023.6   $ 

Total Revenues 

87.6     
(69.5 )   
(21.9 )   
(94.8 )   

10.6 %   
(18.2 %)  
(6.2 %)  
(2.7 %)  

7.8 %   
(18.2 %)  
2.8 %   
(1.5 %)  

Revenues by Segment 
North America RWCS 
International RWCS 
All Other 

Total Revenues 

$ 2,574.1   $ 2,551.9   $ 
  655.1      707.6     
  256.7      321.2     
$ 3,485.9   $ 3,580.7   $ 

22.2     
(52.5 )   
(64.5 )   
(94.8 )   

0.9 %   
(7.4 %)  
(20.1 %)  
(2.7 %)  

(0.1 %)  
1.9 %   
(20.1 %)  
(1.5 %)  

2.7 %  
0.1 %  
0.2 %  
0.8 %  

1.1 %  
0.4 %  
–  
0.8 %  

(0.4 %)   
–   
(5.4 %)   
(1.3 %)   

0.5 % 
(0.1 %) 
(3.8 %) 
(0.7 %) 

(0.1 %)   
(5.9 %)   
–   
(1.3 %)   

–   
(3.8 %) 
–   
(0.7 %) 

On  a  consolidated  basis  revenues  decreased  $94.8  million,  or  2.7%,  in  2018  to  $3.49  billion  from  $3.58 
billion  in  2017.    The  decrease  was  largely  driven  by  the  expected  declines  in  the  SQ  medical  waste 
business and CRS, foreign exchange, and divestitures, partially offset by strong organic growth in SID. 

North America RWCS revenues increased $22.2 million, or 0.9%, in 2018 to $2.57 billion from $2.55 billion 
in 2017.   Organic revenues  decreased $1.5  million, as we saw  declines due to  the impact of SQ pricing.  
This was partially offset by increases in SID revenues as a result of increased pricing and related demand 
for  and  SOP  pricing  increases  related  to  recycled  paper  as  well  as  organic  growth  from  new  customers 
and  growth  in  Regulated  Waste  and  Compliance  revenues  from  retail  and  our  larger  customers.  
Acquisitions  contributed  $27.0  million,  or  1.1%,  to  revenues.    Divestitures,  primarily  related  to  the  U.S. 
clean room business, reduced revenues by $3.3 million, or 0.1%. 

International  RWCS  revenue  decreased  $52.5  million,  or  7.4%,  in  2018  to  $655.1  million  from  $707.6 
million in 2017.  The increase in International RWCS segment organic revenues was $13.3 million, or 1.9%.  
SID revenues increased as a result of increased pricing and related demand and SOP pricing for recycled 
paper as well as organic growth from new customers, and the impact of the new General Data Protection 
Regulation laws in Europe.  We also saw increases in Medical Waste and Compliance Revenues as a result 
of growth in Europe.  These increases were offset by  declines due to the exit from our patient transport 
business in the U.K. and overall economic declines in several Latin America  markets.  Acquisitions in the 
International  RWCS  segment  contributed  $2.7  million,  or  0.4%,  to  revenues.    Divestitures  related  to  the 
hazardous waste business in the U.K. and SID business in South Africa reduced revenues by $41.7 million, 
or  5.9%.    The  effect  of  foreign  exchange  rates,  primarily  in  Latin  America,  unfavorably  impacted 

2019 10-K Annual Report  

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international  revenues  in  2018  by  $26.8  million,  or  3.8%,  as  foreign  currencies,  notably  those  in  Latin 
America, declined against the U.S. dollar. 

All Other revenues, related to Domestic CRS, decreased $64.5 million, or 20.1%, in 2018 to $256.7 million 
from $321.2 million in 2017.  Revenues were impacted by reductions in CRS volumes due to smaller-sized 
recall  events  as  compared  to  multiple  large-sized  recall  events  managed  during  2017  and  lower  call 
volumes. 

PART II 

Gross Profit 

In millions 

Year Ended December 31, 

2019 

2018 

2017 

% of 
Revenue   

$ 

% of 
Revenue   

$ 

% of 
Revenue  

$ 

Gross profit 

  1,174.5    

35.5 %      1,376.0     

39.5 %      1,462.5     

40.8 %    

Change 2019 
versus 2018 

Change 2018 
versus 2017 

  % 

$ 
(201.5 )   

(14.6 %)    

   % 

$ 
(86.5 )   

(5.9 %) 

Consolidated Gross profit decreased $201.5 million, or 14.6%, in 2019 to $1.17 billion from $1.38 billion in 
2018.  As a percentage of revenues, consolidated Gross profit decreased to  35.5% in 2019 compared  to 
39.5%  in  2018.    The  decline  in  gross  profit  was  primarily  due  to  the  impact  of  higher  operational  costs, 
including third-party disposal in hazardous waste operations, equipment maintenance and rental costs as 
well as the impact of SOP pricing declines. 

Consolidated Gross profit decreased $86.5 million, or 5.9%, in 2018 to $1.38 billion from $1.46 billion in 
2017.  As a percentage of revenues, consolidated Gross profit decreased to  39.5% in 2018 compared  to 
40.8%  in  2017.    The  decline  in  gross  profit  was  primarily  attributable  to  the  expected  impact  of  SQ  mix 
and pricing, approximately $25.7 million of impairment charges incurred in the North America RWCS and 
All  Other  reportable  segments  and  the  impact  of  lower  volumes  in  CRS.    Decreases  were  also  due  to  a 
prolonged declining market trend and cost pressures in Latin America. 

International  gross  profit  is  lower  than  domestic  gross  profit  because  our  international  operations  have 
fewer small account customers, which tend to generate higher gross profit.  Historically, our international 
operations  generate  most  of  their  revenues  from  large  account  customers,  such  as  hospitals,  publicly 
funded  healthcare  organizations  and  government  bodies.    As  our  international  revenues  increase, 
consolidated  gross  profit  percentages  experience  downward  pressure  due  to  this  "business  mix"  shift, 
which may be offset by additional international small account market penetration, integration savings, and 
domestic business expansions. 

SG&A 

In millions 

Year Ended December 31, 

2019 

% of 

2018 

% of 

2017 

% of 

Change 2019 
versus 2018 

Change 2018 
versus 2017 

SG&A 

  1,055.1    

31.9 %     1,165.6     

33.4 %     1,395.6     

$ 

Revenue     

$ 

Revenue     

$ 

Revenue    
39.0 %   

$ 
(110.5 )   

  % 

(9.5 %)   

   % 

$ 
(230.0 )   

(16.5 %) 

SG&A expenses decreased $110.5 million, or 9.5%, in 2019 to $1.06 billion from $1.17 billion in 2018.  As a 
percentage of revenues, SG&A decreased to 31.9% of revenues in 2019 compared to 33.4% in 2018.  The 
decrease  was  primarily  the  result  of  lower  charges  associated  with  key  priorities  and  other  significant 
matters,  discussed  above,  which  were  $317.4  million  in  2019  compared  to  $382.9  million  in  2018  and 

2019 10-K Annual Report  

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PART II 

lower incentive compensation. 

SG&A expenses decreased $230.0 million, or 16.5%, in 2018 to $1.17 billion from $1.40 billion in 2017.  As 
a percentage of revenues, SG&A decreased to 33.4% in 2018 compared to 39.0% in 2017.  The decrease 
was  primarily  attributable  to  lower  charges  associated  with  key  priorities  and  significant  matters,  which 
were  $382.9  million  in  2018  compared  to  $612.9  million  in  2017.    These  matters  are  discussed  above. 
Additionally, there were also decreases in consulting and professional fees and bad debt expense partially 
offset by an increase in incentive compensation as achievement was at higher overall levels during 2018. 

Goodwill Impairment 

In millions 

Year Ended December 31, 

2019 

% of 

2018 

% of 

2017 

% of 

$ 

Revenue     

$ 

Revenue     

$ 

Revenue      

Change 2019 
versus 2018 

Change 2018 
versus 2017 

Goodwill 
impairment 

228.3    

6.9 %    

358.7     

10.3 %    

65.0     

1.8 %   

(130.4 )   

(36.4 %)   

293.7     

451.8 % 

Goodwill impairment was $228.3 million in 2019, $358.7 million in 2018, and $65.0 million in 2017. 

We performed our annual goodwill assessment as of October 1, 2019, and as a result we determined that 
our Canada and Domestic Environmental Solutions reporting units’ carrying values were in excess of their 
estimated fair values.  

The following factors contributed to changes in our long-range plan approved in the fourth quarter, which 
negatively impacted the estimated fair value of these reporting units: 

(cid:120)  Domestic  Environmental  Solutions:    During  2019,  we  experienced  higher  operating  costs, 
particularly related to hazardous waste disposal costs.  In addition, we anticipate that the timelines 
for  achieving  the  betterment  plans  for  both  revenue  quality  and  cost  improvements  have  been 
extended.    We  also  gathered  insights  from  the  process  of  evaluating  Domestic  Environmental 
Solutions as part of our portfolio rationalization considerations. 

(cid:120)  Canada: During 2019, we experienced competitive pricing pressure  in SID and Regulated Medical 
Waste  Services,  lower  SOP  pricing,  and  higher  medical  and  hazardous  waste  costs  including 
Canada based operating costs due to a reliance on third-party disposal, and U.S. based  enabling 
support  costs.    We  expect  these  challenges  to  have  a  prolonged  impact  and  have  adjusted  for 
them in our current year long-range plan.  

These  challenges  were  factored  into  updates  to  our  long-range  plan  and  forecasted  cash-flow 
assumptions to reflect our current outlook.  We also made certain adjustments to the discount rates used 
to present value these forecasted cash-flows.  As a result, we recognized $126.6 million to fully impair the 
goodwill  associated  with  our  Canada  reporting  unit  and  $80.8  million  of  non-cash  impairment  charges 
related our Domestic Environmental Solutions reporting unit. 

During  the  first  quarter  of  2019,  there  were  business,  market,  and  strategic  developments  which 
negatively impacted the estimated cash flows of our Latin America reporting unit and triggered an interim 
assessment as of March 31, 2019.  We determined that the Latin America reporting unit’s carrying value 
was in excess of its estimated fair value and recognized $20.9 million of non-cash goodwill impairment 

During  2018,  as  a  result  of  our  annual  impairment  assessment  of  goodwill,  we  recognized  a  non-cash 
goodwill impairment charge for our Domestic CRS and Latin America reporting units of $286.3 million and 
$72.4 million, respectively. 

2019 10-K Annual Report  

Stericycle, Inc.  •  53 

 
 
 
  
 
   
  
 
 
  
  
  
    
    
   
 
 
  
  
 
  
  
  
   
  
 
   
  
    
  
  
 
PART II 

During  2017,  as  a  result  of  our  annual  impairment  assessment  of  goodwill  we  recognized  a  non-cash 
goodwill impairment charge for our Latin America reporting unit of $65.0 million. 

Segment Profitability  

We use Adjusted EBITDA as the  primary  measure of  profitability for each of our Reportable Segments  – 
see  Part  II,  Item  8.  Financial  Statements  and  Supplementary  Data;  Note  18  –  Segment  Reporting  in  the 
Consolidated  Financial  Statements  for  an  explanation  of  this  measure.    Segment  profitability  and  a 
reconciliation of the total for segment profitability to (loss) income from operations was as follows: 

In millions 

Year Ended December 31, 

2019 

2018 

2017 

% of 
Segment 
Revenues   

$ 

% of 
Segment 
Revenues   

$ 

% of 
Segment 
Revenues  

$ 

Change 2019 
versus 2018 

Change 2018 
versus 2017 

$ 

  % 

$ 

   % 

Adjusted EBITDA 
North America RWCS 
International RWCS 
All Other 
Total 

  643.2    
  99.0    
  (164.4 )  
  577.8    

25.3 %       782.4     
17.1 %       95.6     
(88.7 %)      (133.4 )   
17.5 %       744.6     

30.4 %       809.5    
14.6 %       93.7    
(52.0 %)     
(91.2 )  
21.4 %       812.0    

31.7 %     (139.2 )  
13.2 %    
3.4    
(28.4 %)   
22.7 %     (166.8 )  

(17.8 %)   
3.6 %    
(31.0 )   23.2 %    
(22.4 %)   

(27.1 )   
1.9     

(3.3 %) 
2.0 % 
(42.2 )    46.3 % 
(8.3 %) 
(67.4 )   

Reconciliation to Loss 
from operations: 
Total Adjusted EBITDA 
above 
Depreciation 
Intangible Amortization 
Business Transformation   
Acquisition and 
Integration 
Operational 
Optimization 
Divestitures (including 
Divestiture Losses, net of 
Gains) 
Litigation, Settlements 
and Regulatory 
Compliance 
Asset Impairments 
Goodwill Impairment 
Other 
Loss from operations 

  577.8    
  (125.8 )  
  (145.2 )  
(67.7 )  

(3.5 )  

(14.5 )  

  (114.7 )  

(28.2 )  
(22.1 )  
  (228.3 )  
(39.7 )  
  (211.9 )  

     744.6     
     (125.6 )   
     (130.3 )   
(82.6 )   

(9.8 )   

(29.4 )   

     812.0    
     (131.1 )  
     (118.4 )  
(31.3 )  

(40.7 )  

(71.1 )  

(20.5 )   

(9.5 )  

(93.2 )   
(26.5 )   
     (358.7 )   
(29.1 )   
     (161.1 )   

     (327.7 )  
-    
(65.0 )  
(24.8 )  
(7.6 )  

2019 compared to 2018 

Adjusted EBITDA for our North America RWCS reportable segment decreased $139.2 million, or 17.8%, in 
2019 to $643.2 million from $782.4 million in 2018.  As a percentage of  North America RWCS revenues, 
Adjusted  EBITDA  was  25.3%  and  30.4%  for  2019  and  2018,  respectively.    This  decrease  was  primarily a 
result of lower gross margins due to the impact of higher operational costs, including third-party disposal 
in  hazardous  waste  operations,  equipment  maintenance  and  rental  costs as  well  as  the  impact  of  SOP 
pricing declines. 

2019 10-K Annual Report  

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PART II 

Adjusted EBITDA for our International RWCS reportable segment increased $3.4 million, or 3.6%, in 2019 
to  $99.0  million  from  $95.6  million  in  2018.    As  a  percentage  of  International  RWCS  revenues,  Adjusted 
EBITDA was 17.1% and 14.6% for 2019 and 2018, respectively.  The increase as a percentage of revenues 
was  primarily  the  result  of  a  higher  gross  profit  percentage  in  Europe  as  a  result  of  the  divestitures  of 
lower  margin  businesses  in  2018  and  lower  SG&A  expenses,  offset  by  lower  operating  margins  in  Latin 
America due to the impact of lower volumes and decreases in SOP pricing in Europe. 

Adjusted EBITDA for All Other decreased $31.0 million, or 23.2%, in 2019 to $(164.4) million from $(133.4) 
million in 2018.  The decrease is a result of lower revenues in our Domestic CRS business due to smaller 
sized  recall  events  and  fewer  mandated  recalls  as  a  result  of  the  U.S.  Federal  government  shutdown  in 
early 2019, combined with disproportionally lower gross profits due to the higher fixed cost nature of this 
business and higher corporate enabling functional expenses.  

2018 compared to 2017 

Adjusted  EBITDA  for  our  North  America  RWCS  reportable  segment  decreased  $27.1  million,  or  3.3%,  in 
2018 to $782.4 million from $809.5 million in 2017.  As a percentage of  North America RWCS revenues, 
Adjusted  EBITDA  was  30.4%  and  31.7%,  for  2018  and  2017,  respectively.    This  decrease  was  primarily  a 
result of the impact of lower margins caused by the expected impact of pricing on our SQ medical waste 
customers  as  well  as  the  pricing  pressures  we  have  experienced  from  our  SQ  regulated  waste  and 
compliance  customers  resulting  from  hospital  consolidation  of  physician  practices  and  increased 
competitive  activities,  partially  offset  by  the  impact  of  Business  Transformation  cost  savings  and 
efficiencies.  Additionally, the overall decrease was partially offset by the benefits of increased volume and 
higher SOP pricing. 

Adjusted EBITDA for our International RWCS reportable segment increased $1.9 million, or 2.0%, in 2018 
to  $95.6  million  from  $93.7  million  in  2017.    As  a  percentage  of  International  RWCS  revenues,  Adjusted 
EBITDA was 14.6% and 13.2% for 2018 and 2017, respectively.  We experienced improvements in overall 
margins in Europe as a result of our exit from some lower margin businesses.  These improvements were 
partially  offset  by  lower  margins  in  Latin  America  due  to  a  prolonged  declining  market  trend  and  costs 
pressures. 

Adjusted EBITDA for All Other decreased $42.2 million in 2018 to $(133.4) million from $(91.2) million in 
2017.    The  decrease  is  a  result  of  the  lower  revenues  in  our  Domestic  CRS  business  combined  with 
disproportionally lower gross profits due to the higher fixed costs nature for this business. 

Interest Expense, Net 

In millions 

Year Ended December 31, 

2019 

% 

$ 

Revenue      

$ 

2018 

2017 

% 
Revenue   

% of 
Revenue  

$ 

Change 2019 
versus 2018 

Change 2018 
versus 2017 

$ 

  % 

$ 

   % 

Interest expense, 
net 

  118.3    

3.6 %      106.0     

3.0 %     

93.7     

2.6 %    

12.3    

11.6 %    

12.3     

13.1 % 

Interest  expense,  net  increased  in  2019  to  $118.3  million  from  $106.0  million  in  2018  due  to  an  overall 
increase in interest rates charged on our borrowings caused by an increase in the LIBOR rate and interest 
rate  adjustments.    The  interest  rate  adjustments  were  calculated  under  the  terms  of  the  relevant 
agreements,  related  to  both  our  private  placement  notes,  prior  to  their  early  extinguishment,  and  the 
Senior Credit Facility combined with an overall increase in our average outstanding debt balance.  Further, 

2019 10-K Annual Report  

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for  2019,  Interest  expense,  net  includes  a  non-cash  charge  of  $3.4  million,  together  with  a  further  $0.2 
million which are detailed in Capital Allocation, above. 

Interest expense, net increased in 2018 to $106.0 million from $93.7 million in 2017 due to an increase in 
the  overall  interest  rates  on  our  borrowings  caused  by  an  increase  in  the  LIBOR  rate  and  interest  rate 
adjustments.  The higher interest rates were a result of higher rates as calculated under the terms of the 
relevant  agreements,  related  to  both  our  private  placement  notes  and  Senior  Credit  Facility  combined 
with  an  overall  increase  in  our  average  outstanding  debt  balance  primarily  due  to  funding  the  SQ 
settlement payment of $295.0 million using amounts available on our Senior Credit Facility. 

We  capitalized  interest  of  $5.4  million,  $2.9  million  and  $1.6  million  for  the  years  ended  December  31, 
2019,  2018  and  2017,  respectively.    Interest  capitalization  is  based  upon  the  balance  of  construction  in 
progress within property plant and equipment and is primarily comprised of amounts associated with our 
ERP implementation.  As the ERP becomes operational amounts will be reclassified from construction in 
progress, thereby reducing the amount of interest which is capitalized, increasing the amount recognized 
as interest expense.   

In addition, based on the terms of the amendment to the Credit Agreement signed on February 25, 2020 
we expect that our annual interest expense will increase by approximately $2.0 million. 

Loss on Early Extinguishment of Debt  

During 2019, we incurred a pre-tax loss on early extinguishment of debt of $23.1 million, relating to the 
repayment of our private placement notes, discussed in Capital Allocation above. 

Other Expense, Net   

Other  expense,  net  increased  in  2019  to  $9.5  million  from  $8.3  million  in  2018.  Other  expense  includes 
$3.3 million and $3.8 million in 2019 and 2018, respectively, relating to the foreign exchange loss resulting 
from  the  re-measurement  of  our  Argentina  Peso  denominated  net  monetary  assets  as  a  result  of  the 
designation, as of July 1, 2018, of Argentina as a highly inflationary economy., 

Other  expense,  net  increased  in  2018  to  $8.3  million  from  $6.6  million  in  2017,  primarily  due  to  a  $3.8 
million  foreign  exchange  loss  resulting  from  the  re-measurement  of  our  Argentinian  Peso  denominated 
net monetary assets. 

Income Tax Benefit 

In millions 

Year Ended December 31, 

2019 

2018 

2017 

Change 2019 
versus 2018 

Change 2018 
versus 2017 

Income tax benefit 

4.6 %     

10.8 %     150.9     

139.9 %   

Effective 
rate 

$ 
16.8    

$ 
29.8     

Effective 
rate 

Effective 
rate 

$ 

  % 

$ 
(13.0 )   

(43.6 %)    

   % 

$ 
(121.1 )   

(80.3 %) 

Income  tax  benefit  was  $16.8  million  in  2019  compared  to  income  tax  benefit  of  $29.8  million  in  2018.  
The effective tax rates for the years 2019 and 2018 were 4.6% and 10.8%, respectively.  In 2019 and 2018, 
our  effective  rate  was  impacted  by  the  non-deductibility  of  a  portion  of  the  goodwill  impairments  in 
certain jurisdictions, and valuation allowances recognized against net operating losses in several countries.  

Income tax benefit was $29.8 million in 2018 compared to $150.9 million in 2017.  The effective tax rates 
for  the  years  2018  and  2017  were  10.8%  and  139.9%,  respectively.    During  2017,  as  a  result  of  the 
introduction  of  the  Tax  Act,  we  recognized  an  income  tax  benefit  of  $129.8  million  arising  from  the 

2019 10-K Annual Report  

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revaluation of our U.S. net  deferred  tax liabilities from 35% to the newly  enacted  U.S. corporate income 
tax rate of 21%, partially offset by a one-time transition tax on our unremitted foreign earnings and profits 
which we elected to pay over an eight-year period, and expected foreign withholding taxes.  During 2018, 
in  accordance  with  SAB  118,  we  recognized  a  charge  of  $8.8  million  as  we  completed  our  analysis 
associated  with  the  impact  of  the  Tax  Act.    In  addition,  in  2018  and  2017  our  effective  rate  was  also 
impacted  by  the  non-deductibility  of  the  goodwill  impairments  in  certain  jurisdictions,  and  valuation 
allowances recognized against net operating losses in several countries. 

We file income tax returns in the United States,  in various states and in certain foreign jurisdictions. We 
are no longer subject to U.S. federal, state, local, or non-US income tax examinations by tax authorities for 
years prior to 2015. 

The  Company  filed  a  PFA  with  the  IRS  related  to  a  claim  under  Internal  Revenue  Code  Section  1341 
concerning  the tax rate to  be applied  to the SQ Settlement on the Company’s 2018 tax return.   The IRS 
has reviewed and has subsequently agreed to hold discussions regarding the PFA in 2020.  

During the year ended December 31, 2018, the Company had established a long-term receivable and an 
amount within the uncertain tax positions to reflect its estimate of the potential refund should its claim be 
successful.  The long-term receivable is included in Other Assets, while the uncertain tax position liability 
is included in Other Liabilities in the Consolidated Balance Sheets as of December 31, 2019 and 2018.  Any 
positive income tax benefit resulting from the claim in a future period will be recognized as appropriate in 
accordance  with  the  guidance  in ASC  740 on  the  accounting  for  uncertain  tax  positions.  The  long-term 
receivable  is  in  addition  to  the  net  operating  loss  assets,  included  in  Other  assets  in  the  Consolidated 
Balance Sheets.  There can be no assurance that this amount or any amount will be recovered as a result 
of this claim. 

Liquidity and Capital Resources 

Details  of  our  outstanding  debt  obligations  can  be  found  in  Part  II,  Item  8.  Financial  Statements  and 
Supplementary Data; Note 9 – Debt in the Consolidated Financial Statements. 

We  believe  that  we  have  sufficient  liquidity  to  support  our  ongoing  operations,  including  the  ERP 
implementation, and to invest in future growth to create value for our shareholders.  Operating cash flows 
and the $1.2 billion Senior Credit Facility are our primary sources of liquidity and are expected to be used 
for, among other things, payment of interest and principal on our long-term debt obligations and capital 
expenditures  necessary  to  support  growth  and  productivity  improvements,  including  those  associated 
with  our  ERP  implementation.    To  the  extent  our  liquidity  needs  prove  to  be  greater  than  expected  or 
cash  generated  from  operations  is  less  than  anticipated,  and  cash  on  hand  or  credit  availability  is 
insufficient or we are in breach under the  existing  Credit Agreement, we would  need to seek additional 
financing  from  alternative  sources,  including  approaching  the  capital  markets,  in  order  to  provide 
additional liquidity. 

On  February  25,  2020,  we  executed  the  Fifth  Amendment  which  amended  the  Credit  Agreement  to, 
among other things: 

(cid:120) 

increase the maximum allowable Consolidated Leverage Ratio to 5.00 to 1.00 until the end of the 
first quarter of 2022 and 4.50 to 1.00 thereafter.  

(cid:120)  upon  the  consummation  of  the  divesture  of  the  ESOL  Disposal  Group,  each  of  the  foregoing 
maximum permitted Consolidated Leverage Ratio levels will step down to 4.75 to 1.00 and 4.25 to 
1.00, respectively.  

2019 10-K Annual Report  

Stericycle, Inc.  •  57 

 
 
PART II 

(cid:120) 

(cid:120) 

allow  for  continuation  of  the  $200  million  of  cash  add  backs  to  EBITDA  through  December  31, 
2020, and addbacks of $100 million until December 31, 2021, with no further addbacks thereafter. 

increase the leverage ratio pricing tier of greater than 4.50 to 1.00 by 0.125%,  

(cid:120)  grant a first-priority security interest to the  administrative agent for the benefit of the lenders in 
substantially  all  of  the  personal  property  of  the  Company  and  certain  of  its  material  domestic 
subsidiaries, including certain equity interests held by those entities. 

We expect to incur facility and other fees of approximately $2.0 million in connection with the execution 
of the Fifth Amendment. 

The  Credit  Agreement  and  Fifth  Amendment  contain  a  number  of  covenants,  including  financial 
covenants.    As  of  December  31,  2019  we  were  in  compliance  with  the  Consolidated  Leverage  Ratio 
covenant, with an actual ratio of 4.45 to 1.00, which was below the allowed maximum ratio of 5.00 to 1.00 
as contained in the Fifth Amendment.  

Working Capital 

At December 31, 2019, our working capital decreased $64.4 million to a deficit of $50.3 million compared 
to $14.1 million at  December 31, 2018.  This change is primarily related to the  recognition of Operating 
lease  liabilities  associated  with  the  adoption  of  ASC  842,  and  the  impact  of  divestitures  and  increased 
collections,  partially  offset  by  an  increase  in  Prepaid  expenses,  and  decreases  in  Accrued  liabilities  and 
Bank overdrafts. 

Current assets decreased $40.7 million in 2019 to $706.6 million from $747.3 million in 2018.  Increases in 
Prepaid  expenses  as  a  result  of  increases  in  prepaid  software-as-a-service  fees  were  partially  offset  by 
declines  in  accounts  receivable  as  a  result  of  divestitures  and  increased  collections.    Days  sales 
outstanding ("DSO") was 60 days and 63 days as of December 31, 2019 and 2018, respectively.   

Current liabilities increased $23.7 million in 2019 to $756.9 million from $733.2 million in 2018, primarily 
as a result of the adoption of ASC 842, which now requires recognition of Operating lease liabilities on the 
Consolidated Balance Sheet.  This increase was partially offset by decreases in Accrued liabilities, due to 
timing of payments related to 2018 annual incentive plans, and a decrease in Bank overdrafts, as we used 
a portion of the proceeds from the divestiture of a business to reduce overdraft balances in the U.K. 

In millions 

2019 

Year Ended December 31, 
2018 

2017 

Net cash from operating activities 
Net cash from investing activities 
Net cash from financing activities 
Effect of exchange rate changes on cash and cash equivalents 

Net change in cash and cash equivalents 

$ 

$ 

248.0    $ 
(104.0 )     
(141.6 )     
(2.0 )     
0.4    $ 

165.7    $ 
(147.5 )    
(25.7 )    
(0.4 )    
(7.9 )   $ 

508.6   
(193.0 ) 
(321.2 ) 
3.6   
(2.0 ) 

Operating  Cash  Flows:  Net  cash  from  operating  activities  increased  $82.3  million,  or  49.7%,  in  2019  to 
$248.0  million  from  $165.7  million  in  2018.    Cash  flow  from  operations  in  2018  is  lower,  primarily  as  a 
result of the payment of the $295.0 million SQ settlement.  Excluding the settlement payment, cash flow 
from  operations  decreased  $212.7  million,  primarily  due  to  lower  operating  performance  in  2019,  as 
previously highlighted, and payments in 2019 for certain litigation matters, 2018 incentive compensation 
and ERP-related prepaid software. 

Investing Cash Flows: Net cash used in investing activities decreased $43.5 million, or 29.5%, in 2019 to 
$104.0 million from $147.5 million in 2018.  Our capital expenditures increased by $63.4 million to $194.2 

2019 10-K Annual Report  

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million from $130.8 million in 2018, primarily as a result of capital expenditure payments associated with 
our ERP implementation.  We also received $86.6 million from the divestiture of businesses during 2019 
and the receipt of a note receivable issued in connection with the divestiture of our U.K. hazardous waste 
business  in  2018.    Payments  for  acquisitions,  net  of  cash  acquired,  decreased  by  $44.5  million  as  we 
completed only one acquisition in 2019 versus 21 in 2018. 

Financing Cash Flows: Net cash used in financing activities increased $115.9 million, or 451.0%, in 2019, 
to a net outflow of $141.6  million from  a net outflow  of $25.7 million in 2018.    In June 2019, we raised 
proceeds of $600.0 million from our issuance of the Senior Notes and used the proceeds, net of issuance 
costs,  together  with  additional  borrowings  on  our  Senior  Credit  Facility  and  Term  Loan,  to  repay  in  full 
approximately $1.075 billion of the then outstanding balance on private placement notes.  As a result of 
this repayment,  we  also  incurred  a “make-whole” premium of $20.4  million, payable  under the terms of 
certain of the private placement notes.  Our net borrowings on our Senior Credit Facility and Term Loan 
were  $446.3  million,  including  the  additional  Term  Loan  of  $365.0  million,  in  2019  compared  to  net 
borrowings  of  $68.7  million  in  2018,  primarily  as  a  result  of  additional  borrowings  to  finance  the 
repayment of the private placement notes.  We made repayments of $12.5 million in 2019, including using 
a portion of the proceeds from the divestiture of a business to reduce our bank overdraft in the U.K.  We 
made Series A repurchases of $17.2 million and paid dividends of $25.5 million to the holders of Series A 
during 2018.  The Series A was converted, in accordance with its terms of issuance, to common stock in 
September 2018 and as a result no dividends were due or payable during 2019. 

Contractual Obligations 

The following table summarizes our significant contractual obligations and cash commitments at 
December 31, 2019: 

Payments due by period (in millions) 

Total 

2020 

    2021-2022 

    2023-2024 

2025 and 
After 

Long term debt (1) 
Finance lease liabilities 
Operating lease liabilities 
Estimated unconditional purchase obligations 
Total contractual cash obligations 

$ 

$ 

2,646.2     $ 
34.5       
508.2       
229.3       
3,418.2     $ 

98.0    $ 
6.5     
112.6     
159.1     
376.2    $ 

1,936.6    $ 
10.5     
172.9     
52.6     
2,172.6    $ 

610.3    $ 
5.5      
113.7      
17.6      
747.1    $ 

1.3   
12.0   
109.0   
-   
122.3   

(1)  These  amounts  represent  the  scheduled  principal  payments  related  to  our  long-term  debt, 
excluding interest (see Part II, Item 8. Financial Statements and Supplementary Data; Note 9 – Debt 
in the Consolidated Financial Statements). 

Payments  for  unrecognized  tax  benefits  are  excluded  from  contractual  obligations.    Based  on  the 
uncertain nature of our liability for unrecognized tax benefits, we are unable to make an estimate of the 
period of potential settlement, if any, with the applicable taxing authorities. 

We had elected to pay our $23.5 million transition tax liability over eight years.  We are in a net receivable 
position with the IRS due to estimated payments and credits for tax periods through 2019.   The IRS has 
offset the transition tax payable with these payments and credits on deposit with the IRS. 

Environmental  liabilities  are  not  presented  above  but  are  accrued  on  an  undiscounted  basis  and  are 
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 (see Part II, 
Item 8. Financial  Statements and Supplementary Data;  Note 12 – Commitments and Contingencies  in the 
Consolidated Financial Statements).  

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As of December 31, 2019, we had $33.0 million of stand-by letters of credit outstanding against our senior 
credit facility and a further $52.3 million of stand-by letters of credit outstanding against another facility, 
$72.3  million  of  surety  bonds,  and  $19.3  million  of  bank  guarantees.    The  bank  guarantees  are  issued 
mostly by our international subsidiaries for various purposes, including leases, seller notes, contracts and 
permits.   The surety bonds are used for performance  guarantees.   Neither the bank  guarantees nor  the 
surety bonds affect our ability to use our various lines of credit. 

We  anticipate  that  our  operating  cash  flows,  together  with  additional  borrowings  available  under  our 
Senior Credit Facility, as amended on February 25, 2020, will be sufficient to meet our anticipated future 
operating expenses, key priorities such as our ERP implementation, capital expenditures and debt service 
obligations as they become due during the next 12 months and the foreseeable future. 

Critical Accounting Policies and Estimates 

Our  discussion  and  analysis  of  our  financial  condition  and  results  of  operations  are  based  upon  our 
consolidated  financial  statements,  which  have  been  prepared  in  accordance  with  U.S.  GAAP.    The 
preparation  of  these  financial  statements  requires  management  to  make  estimates,  assumptions  and 
judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and the related 
disclosure  of  contingent  assets  and  liabilities.    Although  management  believes  that  its  estimates  and 
assumptions  are  reasonable,  they  are  based  upon  information  available  when  they  are  made,  and 
therefore, actual results may differ from these estimates under different assumptions or conditions.   Our 
most  critical  accounting  policies  are  those  that  may  be  material  due  to  the  levels  of  subjectivity  and 
judgment  necessary  to  account  for  highly  uncertain  matters  or  the  susceptibility  of  such  matters  to 
change,  and  those  policies  that  have  a  material  impact  on  the  financial  condition  or  operating 
performance of the Company.  Part II, Item 8. Financial Statements and Supplementary Data; Note 1 – Basis 
of  Presentation  and  Summary  of  Significant  Accounting  Polices  in  the  Consolidated  Financial  Statements 
provides a detailed description of all of our material accounting policies however, we have identified the 
following as our most critical accounting policies and estimates. 

Revenue Recognition   

Revenue is recognized when a customer obtains control of promised goods or services.  The amount of 
revenue recognized reflects the consideration to which the Company expects to be entitled to receive in 
exchange  for  these  good  or  services.    Revenue  is  recognized  net  of  revenue-based  taxes  assessed  by 
governmental authorities. 

We  provide  regulated  waste  and  compliance  services,  which  include  the  collection  and  processing  of 
regulated  and  specialized  waste  for  disposal,  the  collection  of  personal  and  confidential  information  for 
secure destruction, and Expert Solutions, and communication services.  The associated activities for each 
of  these  are  a  series  of  distinct  services  that  are  substantially  the  same  and  have  the  same  pattern  of 
transfer over time; therefore, the respective services are treated as a single performance obligation. 

We recognize revenue by  applying the right to invoice practical  expedient as our right  to consideration 
corresponds  directly  to  the  value  provided  to  the  customer  for  performance  to  date.    Revenues  for  our 
Regulated  Medical  Waste  Solutions  and  Secure  Information  Destruction  Services  are  recognized  upon 
waste collection.  Our Compliance Solution revenues  are recognized over the contractual service period.  
Revenues from Hazardous  Waste  Solutions and Manufacturing and  Industrial  Services are recognized at 
the time the waste is received by a facility with an appropriate permit, either our processing facility or a 
third party.  Revenues from Communication Services and Expert Solutions are recorded as the services are 
performed. 

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Stericycle, Inc.  •  60 

 
 
PART II 

Allowance for Doubtful Accounts 

We report accounts receivable  at their net realizable  value, which  is  management’s best estimate of the 
cash  that  will  ultimately  be  received.    We  maintain  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.  If current 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  our  customers,  historical  collection  trends  and 
current economic trends.   

Accounts receivable written off in subsequent periods can differ from the allowance for doubtful accounts 
provided,  but  historically  our  provision  has  been  adequate.    Allowance  for  doubtful  accounts  was  $67.9 
million and $71.9 million as of December 31, 2019 and 2018, respectively.  

Impairment of Long-Lived and Other Assets 

Property,  Plant  and  Equipment  and  Intangible  Assets  (definite-lives),  Net:  Long-lived  assets,  such  as 
property, plant and equipment and amortizing intangible assets are reviewed whenever events or changes 
in circumstances indicate that the related carrying amounts may not be recoverable.  Impairment of assets 
with  definite-lives  is  generally  determined  by  comparing  projected  undiscounted  cash  flows  to  be 
generated by the asset, or appropriate grouping of assets, to its carrying value.  If impairment is identified, 
a loss is recognized equal to the excess of the asset's net book value over its fair value, and the cost basis 
is adjusted.   

Determining  the  extent  of  impairment,  if  any,  typically  requires  various  estimates  and  assumptions 
including using management's judgment, cash flows directly attributable to the asset, the useful life of the 
asset and residual value, if any.  When necessary, the Company uses internal cash flow estimates, quoted 
market prices and appraisals as appropriate to determine fair value.  Actual results could vary from these 
estimates. In addition, the remaining useful life of the impaired asset is revised, if necessary. 

(For  additional  information,  see  Part  II,  Item  8.  Financial  Statements  and  Supplementary  Data;  Note  5  – 
Property,  Plant  and  Equipment  and  Note  7  –  Goodwill  and  Other  Intangible  Assets  in  the  Consolidated 
Financial Statements). 

Intangible Assets (indefinite-lived): Indefinite-lived intangibles consist primarily of permits and tradenames. 
Indefinite-lived intangibles are assessed for impairment annually, as of October 1, or more frequently if an 
event  occurs  or  circumstances  change  and  are  not  subject  to  amortization  but  are  assessed  for 
impairment in the same manner as goodwill.  Indefinite lived intangibles may be assessed using either a 
qualitative  or  quantitative  approach.   The  qualitative  approach  first  determines  if  it  is  more-likely-than-
not that the fair value of the asset is less than the carrying value.  If no such determination is made, then 
the  impairment  test  is  complete.   If,  however,  it  is  determined  that  there  is  a  likely  impairment,  a 
quantitative  assessment  is  performed.   In  the  fourth  quarter  of  2019,  we  performed  our  annual 
impairment  test  on  indefinite-lived  intangibles,  other  than  goodwill,  using  the  qualitative  approach  for 
certain  assets  and  the  quantitative  approach  for  the  remaining  assets.    The  calculated  fair  value  of  our 
indefinite-lived intangibles is based upon, among other things, certain assumptions about expected future 
operating  performance,  internal  and  external  processing  costs,  and  an  appropriate  discount  rate 
determined by management. 

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Future  changes  in  our  assumptions  or  the  interrelationship  of  the  assumptions  described  above  may 
negatively impact future valuations that would require non-cash charges and may have a material effect 
on our financial condition and operating results. 

Goodwill: Goodwill is assessed for impairment annually as of October 1 of each year, or more frequently if 
an  event  occurs  or  circumstances  change  that  could  reduce  the  value  of  a  reporting  until  below  its 
carrying value. 

We used a quantitative approach to assess goodwill for impairment.  The fair value of each reporting unit 
is calculated using the income approach (including DCF) and validated using a market approach with the 
involvement  of  a  third-party  valuation  specialist.    Our  reporting  units  are:  Domestic  Healthcare 
Compliance  Services,  Domestic  Shred-it,  Domestic  CRS,  Domestic  Environmental  Solutions,  Canada, 
Europe,  Asia  Pacific  and  Latin  America.    The  income  approach  uses  expected  future  cash  flows  of  each 
reporting unit and discounts those cash flows to present value.  Expected future cash flows are calculated 
using management assumptions of growth rates, including long-term growth rates, capital expenditures, 
and  cost  efficiencies.   Future  acquisitions  are  not  included  in  the  expected  future  cash  flows.    We  use  a 
discount  rate  based  on  a  calculated  weighted  average  cost  of  capital  which  is  adjusted  for  each  of  our 
reporting  units  based  on  size,  country  and  company  specific  risk  premiums.   The  market  approach 
compares  the  valuation  multiples  of  similar  companies  to  that  of  the  associated  reporting  unit.   In 
addition,  we  analyze  differences  between  the  sum  of  the  fair  value  of  the  reporting  units  and  our  total 
market capitalization for reasonableness, taking into account certain factors including control premiums. 

The fair value is then compared to its carrying value including goodwill.  If the fair value is in excess of its 
carrying  value,  the  related  goodwill  is  not  impaired.    If  the  fair  value  is  less  than  its  carrying  value,  we 
recognize an impairment charge in the amount that the carrying value exceeds the fair value but not to 
exceed the carrying value of any goodwill. 

We performed an interim review of goodwill assessment for our Latin America reporting unit in the first 
quarter  of  2019  and  our  annual  goodwill  assessment  as  of  October  1,  2019.    As  a  result  of  these 
assessments we recorded non-cash goodwill impairment charges of $126.6 million relating to our Canada 
reporting  unit,  $80.8  million  relating  to  our  Domestic  Environmental  Solutions  reporting  unit  and  $20.9 
million relating to our Latin America reporting unit.  

The  factors  considered  in  these  goodwill  impairment  assessments  are  discussed  further  above  in  the 
Goodwill  Impairment  section  of  Part  II,  Item  7.  Management’s  Discussion  and  Analysis  of  Financial 
Condition and Results of Operations - Goodwill Impairment.  (For additional information, see Part II, Item 8. 
Financial  Statements  and  Supplementary  Data;  Note  7  –  Goodwill  and  Other  Intangible  Assets  in  the 
Consolidated Financial Statements). 

A measure of sensitivity of the amount of goodwill impairment charges to key assumptions is the amount 
by  which  each  reporting  unit's  fair  value  exceeds  their  respective  carrying  value.    Subsequent  to  the 
impairment charges incurred through December 31, 2019, the fair value exceeds the carrying value for all 
reporting units, except Domestic Environmental Solutions, by no less than forty percent.   

We performed sensitivity analysis on our estimated fair values, noting that a 50 basis point increase in the 
discount rate or a 50 basis point reduction in the long-term growth rate would not result in impairments 
for  any  of  the  reporting  units,  except  Domestic  Environmental  Solutions,  which,  would  result  in 
incremental impairment charges of $39.0 million or $26.0 million, respectively.  Following the impairment 
charges  recorded  through  December 31,  2019,  the  Domestic  CRS,  Canada,  and  Latin  America  reporting 
units have no goodwill remaining.  

Intangible Assets Lives  

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We  have  determined  that  certain  of  our  operating  permits  and  certain  tradenames  have  indefinite  lives 
due to our ability to renew them with minimal additional cost, and therefore they are not amortized.   

Our finite-lived intangible assets are amortized over their useful lives using the straight-line method.  Our 
customer relationships have useful lives from 10 to 25 years based upon the type of customer.  We have 
non-compete  covenant  intangibles  with  useful  lives  from  5  to  14  years.    We  also  have  tradename 
intangibles with useful lives from 15 to 40 years. 

We  evaluate  the  useful  life  of  our  intangible  assets  annually  to  determine  whether  events  and 
circumstances warrant a revision to their remaining useful life and changes are reflected prospectively as 
the intangible asset is amortized over the revised remaining useful life.  In the fourth quarter of 2019, we 
performed the annual assessment of the useful life of our finite-lived intangibles and made no changes to 
useful lives. 

Assets and Liabilities Held-for-Sale  

We  classify  Long-lived  assets  or  disposal  groups  as  held-for-sale  when  management  having  the 
appropriate authority, generally our Board of Directors or certain of our Executive Officers, commits to a 
plan of sale, the disposal group is ready for immediate sale, an active program to locate a buyer has been 
initiated and the sale is probable and expected to be completed within one year.  Once classified as held-
for-sale  disposal  groups  are  valued  at  the  lower  of  their  carrying  amount  or  fair  value  less  estimated 
selling  costs.    Where  the  disposal  group  constitutes  substantially  all,  generally  more  than  90%  of  the 
assets  and  liabilities,  of  our  operations  in  a  foreign  country  the  balance  in  the  cumulative  currency 
translation  adjustment,  associated  with  that  country  is  included  in  the  carrying  value  of  the  disposal 
group.    If  the  carrying  value,  including  any  amount  associated  with  the  cumulative  currency  translation 
adjustment  exceeds  the  fair  value  less  estimated  selling  costs  a  held-for-sale  impairment  charge  is 
recorded to reduce the carrying value. 

The  estimate  for  fair  value  is  reviewed  at  the  end  of  every  reporting  period  that  the  disposal  group  is 
classified as held-for-sale and the carrying value adjusted whenever the estimated fair value less costs to 
sell is less than the carrying value. 

Environmental Remediation Liabilities   

Our  environmental  remediation  liabilities  primarily  include  costs  associated  with  remediating  air, 
groundwater,  surface  water,  soil  contamination,  and  applicable  legal  costs.    To  estimate  our  ultimate 
liability  at  these  sites,  we  evaluate  several  factors,  including  the  nature  and  extent  of  contamination  at 
each identified site, the required remediation methods, timing of expenditures, and the apportionment of 
responsibility among the potentially responsible parties (“PRPs”) and the financial viability of those PRP’s.  
We routinely review and evaluate sites that require remediation, considering whether we were an owner, 
operator, transporter, or generator  at the site, the  amount and type of waste hauled to the site and the 
number  of  years  we  contracted  with  or  owned  the  site.    Next,  we  review  the  same  information  with 
respect  to  other  named  and  unnamed  PRPs.    Estimates  of  the  cost  for  the  likely  remediation  are  then 
either developed using our internal resources or by third party environmental engineers or other service 
providers.  (For additional information, see  Part II, Item 8. Financial Statements and Supplementary Data; 
Note 12 – Commitments and Contingencies in the Consolidated Financial Statements).  

Income Taxes   

We  record  a  provision  for  income  taxes  for  the  anticipated  tax  consequences  of  our  reported  results  of 
operations  using  the  asset  and  liability  method.    Deferred  income  taxes  are  recognized  by  applying 
enacted  statutory  tax  rates  applicable  to  future  years  to  differences  between  the  financial  statement 

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carrying amounts of existing  assets  and  liabilities  and their respective  tax basis  as well as net operating 
loss and tax credit carryforwards.  The effect on deferred tax assets and liabilities of a change in tax rates 
is recognized in income in the period that includes the enactment date.  The measurement of deferred tax 
assets is reduced, if necessary, by a valuation allowance for any tax benefits for which future realization is 
uncertain. 

Although  we  believe  our  assumptions,  judgments  and  estimates  are  reasonable,  changes  in  tax  laws  or 
our interpretation of tax laws and the resolution of any tax audits could significantly impact the amounts 
provided for income taxes in our Consolidated Financial Statements. 

In  evaluating  our  ability  to  recover  our  deferred  tax  assets,  in  full  or  in  part,  we  consider  all  available 
positive and negative evidence, including our past operating results, and our forecast of future earnings, 
future  taxable  income  and  prudent  and  feasible  tax  planning  strategies.    The  assumptions  utilized  in 
determining  future  taxable  income  require  significant  judgment  and  are  consistent  with  the  plans  and 
estimates  we  are  using  to  manage  the  underlying  businesses.    Actual  operating  results  in  future  years 
could differ from our current assumptions, judgments and estimates.  However, we believe that it is more 
likely than not that most of the deferred tax  assets  recognized on our  Consolidated Balance Sheets will 
ultimately  be  realized.    We  record  a  valuation  allowance  to  reduce  our  deferred  tax  assets  to  the  net 
amount that we believe is more likely than not to be realized.   

We  did  not  recognize  certain  tax  benefits  from  uncertain  tax  positions  within  the  provision  for  income 
taxes.  We may recognize a tax benefit only if it is more likely than not the tax position will be sustained 
on examination by the taxing authorities, based on the technical merits of the position.  The tax benefits 
recognized  in  the  financial  statements  from  such  positions  are  then  measured  based  on  the  largest 
benefit that has a greater than 50% likelihood of being realized upon settlement.  At December 31, 2019, 
our  estimated  gross  unrecognized  tax  benefits  were  $62.7  million,  of  which  $61.3  million,  if  recognized, 
would favorably impact our future earnings.  Due to uncertainties in any tax audit outcome, our estimates 
of the ultimate settlement of our unrecognized tax positions may change and the actual tax benefits may 
differ significantly from the estimates. 

The  Company  filed  a  PFA  with  the  IRS  related  to  a  claim  under  Internal  Revenue  Code  Section  1341 
concerning  the tax rate to  be applied  to the SQ Settlement on the Company’s 2018 tax return.   The IRS 
has reviewed and has subsequently agreed to hold discussions in 2020 regarding the PFA.  Any positive 
income  tax  benefit  resulting  from  the  claim  in  a  future  period  will  be  recognized  as  appropriate  in 
accordance with the guidance in ASC 740 on the accounting for uncertain tax positions. There can be no 
assurance that this amount or any amount will be recovered as a result of this claim. 

The  Tax  Act  established  global  intangible  low-taxed  income  ("GILTI")  provisions  that  impose  a  tax  on 
foreign income in excess of a deemed return on intangible assets of foreign corporations.  We recognize 
the taxes on GILTI as a period expense rather than to recognize deferred taxes for basis differences that 
are expected to affect the amount of GILTI inclusion upon reversal. 

For further information see Part II, Item 8. Financial Statements and Supplementary Data; Note 10 – Income 
Taxes in the Consolidated Financial Statements. 

Insured and Self-Insured Claims   

The Company’s insurance for workers’ compensation, auto/fleet, general liability, property and employee-
related health care benefits is obtained using high deductible insurance policies, if any, meaning that the 
Company  has  retained  a  significant  portion  of  the  risks  related  to  the  claims  associated  with  these 
programs.  The estimated exposure for unpaid claims and associated expenses, including incurred but not 
reported  losses,  is  based  on  a  calculation  performed  by  a  third  party  actuarial  specialist  using  the 

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Company’s  historical  claims  experience.    The  accruals  for  these  liabilities  could  be  revised  if  future 
occurrences  or  loss  developments  significantly  differ  from  the  assumptions  used.    Estimated  recoveries 
associated with insured claims are recognized as assets when the receipt of such amounts is probable. 

Stock-Based Compensation   

We measure the cost of employee services received in exchange for an award of equity instruments based 
on  the  grant-date  fair  value  of  the  award.    That  cost  is  recognized  over  the  period  during  which  an 
employee is required to provide service in exchange for the award—the requisite service period, usually 
the vesting period.  Performance based awards are  recognized consistent with performance metrics and 
Accounting  Standards  Codification  Section  718  Compensation  –  Stock  Compensation.    No  compensation 
cost is recognized for equity instruments for which employees do not render the requisite service. 

The  grant-date  fair  value  of  ISOs  and  similar  instruments  are  estimated  using  option-pricing  models, 
(Black  Scholes).    The  option  pricing  model  includes  assumptions  that  are  evaluated  by  a  third-party 
valuation specialist and evaluated and approved by the Vice President and Treasurer based on historical 
experience,  current  company  trends  and  comparative  analysis  to  industry  trends.    If  an  equity  award  is 
modified  after  the  grant  date,  we  assess  the  impact  of  the  modification  and  where  necessary  record  
compensation  cost  calculated as  any incremental  fair  value of the  modified award over the fair value of 
the original award immediately before the modification. 

RSU’s  awarded  to  an  employee  and  PSU’s  awarded  are  measured  at  fair  value,  once  the  related 
performance criteria have been established.  A non-vested  equity share unit awarded  to an employee is 
measured at its fair value as if it were vested and issued on the grant date.  

For further detail, see Part II, Item 8. Financial Statements and Supplementary Data; Note 14 – Stock Based 
Compensation in the Consolidated Financial Statements. 

Item 7A. Quantitative and Qualitative Disclosures about Market Risk 

In  the  normal  course  of  business,  we  are  exposed  to  market  risks,  including  changes  in  interest  rates, 
certain  commodity  prices,  including  SOP  and  diesel  fuel,  and  foreign  currency  rates.    We  do  not 
specifically hedge our exposure to these risks. 

We  are  subject  to  market  risks  arising  from  changes  in  interest  rates  which  relate  primarily  to  our 
financing  activities.    We  performed  a  sensitivity  analysis  to  determine  how  market  rate  changes  might 
affect  the  fair  value  of  our  market  risk-sensitive  debt  instruments.    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 $19.7 
million on a pre-tax basis. 

We have exposure to foreign currency fluctuations.  We have subsidiaries in  17 foreign countries whose 
revenues and expenses are denominated in local currency and who use local currency denominated lines 
of credit for their funding needs.  We translate results of operations of our international operations using 
an average exchange rate.  We have quantified and described the impact of foreign currency translation 
on our revenues.  We estimate, that based upon the amounts reported by individual countries during the 
year  ended  December  31,  2019  and  prevailing  exchange  rates  at  that  date  a  1%  devaluation  of  all  the 
functional currencies of each of our foreign businesses would result in a reduction of approximately $2.1 
million in the Net (loss) income attributable to Stericycle, Inc. reported in our Consolidated Statements of 
(Loss) Income. 

In  addition,  Argentina  is  classified  as  a  highly  inflationary  economy,  resulting  in  foreign  exchange  gains 
and losses arising from the translation of our Argentinian peso denominated net monetary assets being 

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recognized  in  net  income.    The  foreign  exchange  losses  recognized  for  the  years  ended  December  31, 
2019 and  2018  were $3.3  million and  $3.8  million, respectively.  On an ongoing basis, we estimate  that, 
based  on  our  Argentinian  Peso  denominated  net  monetary  asset  position  as  of  December  31,  2019,  we 
will  record  additional  exchange  losses  of  approximately  $0.1  million  for  each  1%  devaluation  from  the 
December 31, 2019 Argentinian Peso rate of exchange versus the U.S. dollar.  As of December 31, 2019, 
we had net monetary assets of approximately $8.2 million relating to our operations in Argentina. 

We  have  cumulative  currency  translation  adjustment  losses  as  of  December  31,  2019  of  approximately 
$318.1  million  which  are  subject  to  continued  fluctuations  due  to  changes  in  foreign  currency  rates.    In 
addition,  to  the  extent  that  we  sell  substantially  all  of  the  operations  within  one  country,  similar  to  the 
transactions  undertaken  in  Mexico  and  Chile  during  2019,  we  would  be  required  to  recognize,  in  the 
Statements  of  (Loss)  Income,  the  accumulated  currency  translation  losses  or  gains  associated  with  that 
country. 

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Item 8. Financial Statements and Supplementary Data 

Report of Independent Registered Public Accounting Firm 

To the Shareholders and the Board of Directors of Stericycle, Inc. 

Opinion on the Financial Statements 

We  have  audited  the  accompanying  consolidated  balance  sheets  of  Stericycle,  Inc.  (the  Company)  as  of 
December 31, 2019 and 2018, the related consolidated statements of (loss) income, comprehensive (loss) 
income, changes in equity and cash flows for each of the three years in the period ended December 31, 
2019,  and  the  related  notes  and financial statement schedule listed in the Index at Item 15(a)  (collectively 
referred  to  as  the  “consolidated  financial  statements”).    In  our  opinion,  the  consolidated  financial 
statements present fairly, in all material respects, the financial position of the Company at December 31, 
2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period 
ended December 31, 2019, in conformity with U.S. generally accepted accounting principles. 

We  also  have  audited,  in  accordance  with  the  standards  of  the  Public  Company  Accounting  Oversight 
Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 
2019, based on criteria established in Internal Control - Integrated Framework issued by the Committee of 
Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 
28, 2020 expressed an adverse opinion thereon. 

Basis for Opinion 

These financial statements are the responsibility of the Company’s management.  Our responsibility is to 
express  an  opinion  on  the  Company’s  financial  statements  based  on  our  audits.    We  are  a  public 
accounting  firm  registered  with  the  PCAOB  and  are  required  to  be  independent  with  respect  to  the 
Company in accordance with the U.S. federal  securities laws and  the  applicable rules  and regulations of 
the Securities and Exchange Commission and the PCAOB. 

We conducted our audits in accordance with the standards of the PCAOB.  Those standards require that 
we plan and perform the audit to obtain reasonable assurance about whether the financial statements are 
free of material misstatement, whether due to error or fraud.  Our audits included performing procedures 
to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and 
performing procedures that respond to those risks.  Such procedures include examining, on a test basis, 
evidence  regarding  the  amounts  and  disclosures  in  the  financial  statements.    Our  audits  also  included 
evaluating  the  accounting  principles  used  and  significant  estimates  made  by  management,  as  well  as 
evaluating  the  overall  presentation  of  the  financial  statements.    We  believe  that  our  audits  provide  a 
reasonable basis for our opinion. 

Critical Audit Matters  

The  critical  audit  matters  communicated  below  are  matters  arising  from  the  current  period  audit  of  the 
consolidated financial statements that were communicated or required to be communicated to the audit 
committee  and  that:  (1)  relate  to  accounts  or  disclosures  that  are  material  to  the  consolidated  financial 
statements  and  (2)  involved  our  especially  challenging,  subjective  or  complex  judgments.  The 
communication  of  critical  audit  matters  does  not  alter  in  any  way  our  opinion  on  the  consolidated 
financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, 
providing separate opinions on the critical audit matters or on the accounts or disclosures to which they 
relate. 

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PART II 

Description of 
the Matter 

How We 
Addressed the 
Matter in Our 
Audit 

Valuation of Goodwill 

At December 31, 2019, the Company’s goodwill was $2,982.2 million. As disclosed 
in  Note  7  to  the  consolidated  financial  statements,  goodwill  is  tested  for 
impairment  at  the  reporting  unit  level  annually  as  of  October  1,  or  more 
frequently,  if  a  triggering  event  occurs.  The  Company  recognized  $20.9  million, 
$126.6  million  and  $80.8  million  of  goodwill  impairment  related  to  its  Latin 
America,  Canada  and  Domestic  Environmental  Solutions  reporting  units  during 
2019.  Latin  America  is  included  in  the  International  Regulated  Waste  and 
Compliance Services segment and Canada and Domestic Environmental Solutions 
reporting  units  are  both  included  in  the  North  America  Regulated  Waste  and 
Compliance Services segment. 

impairment  assessments  and 

Auditing  management’s  goodwill 
resulting 
impairment were complex and highly judgmental due to the significant estimation 
required  in  determining  the  fair  value  of  the  Company’s  reporting  units.  In 
particular, the fair value estimate was sensitive to significant assumptions, such as 
discount  rates,  projections  of  revenue,  cost  of  revenue  and  operating  expense 
growth  rates,  and  long-term  growth  rates  which  are  affected  by  expectations 
about  future  market  or  economic  conditions,  particularly  those  in  markets  with 
challenging economic conditions. 

To test the estimated fair value of the  Company’s reporting units, we performed 
audit  procedures  that  included,  among  others,  assessing  methodologies  and 
testing the significant assumptions discussed above and the underlying data used 
by the Company in its analysis. We involved our valuation specialists to review the 
Company’s model, methods, and the more sensitive assumptions utilized such as 
the  discount  rate  and  long-term  growth  assumptions.  We  compared  the 
significant  assumptions  used  by  management  to  current  industry  and  economic 
trends,  changes  to  the  Company’s  business  model,  customer  base  and  other 
relevant  factors  with  a  particular  focus  on  the  reporting  units  where  an 
impairment  charge  was  recorded  in  the  current  year.  We  assessed  the  historical 
accuracy  of  management’s  estimates  and  performed  sensitivity  analyses  of 
significant assumptions to evaluate the changes in the fair value of the reporting 
units  that  would  result  from  changes  in  the  assumptions.  We  reconciled  the  fair 
value  of  the  reporting  units  to  their  carrying  values,  testing  the  Company’s 
determination of the assets and liabilities used within the reporting units that are 
the  basis  for  the  carrying  values. 
In  addition,  we  tested  management’s 
reconciliation  of  the  fair  value  of  all  the  reporting  units  to  the  market 
capitalization  of  the  Company  and  assessed  the  adequacy  of  the  Company’s 
goodwill valuation disclosures.  

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PART II 

Measurement of Environmental Remediation Liability 

Description of 
the Matter 

At December 31, 2019, the Company’s environmental remediation liability totaled 
$31.9 million. As disclosed in Note 12 of the consolidated financial statements, the 
Company’s liability for environmental remediation is based on undiscounted costs 
associated  with  identified  sites  where  an  assessment  has  indicated  that  cleanup 
costs are probable and can be reasonably estimated. Such liabilities are based on 
currently  available  information,  estimated  timing  of  remedial  actions,  existing 
technology, and enacted laws and regulations. 

How We 
Addressed the 
Matter in Our 
Audit 

Auditing  environmental  remediation  liabilities  is  complex  due  to  the  highly 
judgmental  nature  of  the  assumptions  used  in  the  estimate.  The  Company 
considers  several  assumptions  to  estimate  the  ultimate  liability  at  these  sites, 
including  the  nature  and  extent  of  contamination,  the  required  remediation 
methods, timing of expenditures, and apportionment of responsibility among the 
potentially responsible parties and the financial viability of those parties. 

To test the liability for environmental remediation, we performed audit procedures 
that included, among others, assessing methodologies used by the Company and 
testing  of  the  significant  assumptions  discussed  above.  We  also  compared  the 
significant  assumptions  used  by  management  to  historical  trends  and,  when 
available,  to  notifications  or  decisions  from  regulatory  agencies  specifying 
remedial plans of action required. In addition, we evaluated management’s third-
party  environmental  engineers  and  other  service  providers  charged  with 
developing  these  assumptions.  We  involved  our  environmental  engineering 
specialists  to  assist  us  with  evaluating  the  work  performed  by  the  Company’s 
internal  resources  and  the  third-party  external  environmental  engineering 
specialists the Company engaged to help develop their estimates. Specifically, we 
utilized our environmental engineering specialists to evaluate the reasonableness 
of  the  costs  estimated  for  the  environmental  remediation  activities,  assess 
remediation progress in relation to regulatory requirements, and corroborate the 
analysis  with 
third-party  environmental 
engineers  and  other  service  providers.  We  also  tested  the  completeness  and 
accuracy of the data utilized in the development of the environmental liability and 
assessed the adequacy of the environmental remediation liabilities disclosures.  

relevant  management  personnel, 

/s/ Ernst & Young LLP 

We have served as the Company’s auditor since 1991. 

Chicago, Illinois 
February 28, 2020  

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PART II 

STERICYCLE, INC. 
CONSOLIDATED STATEMENTS OF (LOSS) INCOME 

In millions, except per share data 

Revenues 
Cost of revenues 
Gross profit 
Selling, general and administrative expenses 
Goodwill impairment 
Divestiture losses, net of gains 
Loss from operations 
Interest expense, net 
Loss on early extinguishment of debt 
Other expense, net 
Loss before income taxes 
Income tax benefit 
Net (loss) income 
Net (income) loss attributable to noncontrolling interests 
Net (loss) income attributable to Stericycle, Inc. 
Mandatory convertible preferred stock dividend 
Gain on repurchase of preferred stock 
Net (loss) income attributable to Stericycle, Inc. common 
shareholders 

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

Basic 

Diluted 

Weighted average number of common shares 
  Outstanding: 
Basic 
Diluted 

$ 

$ 

$ 

$ 

Year Ended December 31, 
2018 

2017 

2019 

3,308.9    $ 
2,134.4     
1,174.5     
1,055.1     
228.3     
103.0     
(211.9 )    
(118.3 )    
(23.1 )    
(9.5 )    
(362.8 )    
16.8     
(346.0 )    
(0.8 )    
(346.8 )    
-     
-     

3,485.9    $ 
2,109.9     
1,376.0     
1,165.6     
358.7     
12.8     
(161.1 )    
(106.0 )    
-     
(8.3 )    
(275.4 )    
29.8     
(245.6 )    
0.9     
(244.7 )    
(25.5 )    
16.9     

3,580.7   
2,118.2   
1,462.5   
1,395.6   
65.0   
9.5   
(7.6 ) 
(93.7 ) 
-   
(6.6 ) 
(107.9 ) 
150.9   
43.0   
(0.6 ) 
42.4   
(36.3 ) 
17.3   

(346.8 )   $ 

(253.3 )   $ 

23.4   

(3.81 )   $ 

(3.81 )   $ 

(2.91 )   $ 

(2.91 )   $ 

91.0     
91.0     

87.1     
87.1     

0.27   

0.27   

85.3   
85.6   

See accompanying Notes to Consolidated Financial Statements. 

2019 10-K Annual Report  

Stericycle, Inc.  •  70 

 
 
 
  
  
  
  
    
    
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
     
     
   
  
     
     
   
  
  
 
PART II 

STERICYCLE, INC.  
CONSOLIDATED STATEMENTS OF COMPREHENSIVE  
(LOSS) INCOME 

In millions 

Net (loss) income 

$ 

(346.0 )   $ 

(245.6 )   $ 

43.0   

Year Ended December 31, 
2018 

2017 

2019 

Other comprehensive income (loss): 
Currency translation adjustments 
Cumulative currency translation loss realized through disposition of 
Mexico operations 
Cumulative currency translation loss realized through disposition of 
Chile operations 
Amortization of cash flow hedge into income, net of tax expense ($0.2, 
$0.4, and $0.7 for the years ended December 31, 2019, 2018, and 2017, 
respectively) 
Change in fair value of cash flow hedge, net of tax expense ($0.1, $0.0, 
and $0.0) for the years ended December 31, 2019, 2018, and 2017, 
respectively) 
Accelerated amortization of interest rate lock premiums, net of tax 
expense ($1.1) for the year ended December 31, 2019 
Total other comprehensive income (loss) 

Comprehensive (loss) income 
Less: comprehensive income (loss) attributable to noncontrolling 
interests 
Comprehensive (loss) income attributable to Stericycle, Inc. 
common shareholders 

8.8      

(80.3 )     

80.5   

18.9      

16.8      

-      

-   

0.4      

1.0      

1.0   

0.3      

2.3      
47.5      

-      

-      
(79.3 )     

0.3   

-   
81.8   

(298.5 )     

(324.9 )     

124.8   

1.1      

(1.9 )     

1.8   

$ 

(299.6 )   $ 

(323.0 )   $ 

123.0   

See accompanying Notes to Consolidated Financial Statements. 

2019 10-K Annual Report  

Stericycle, Inc.  •  71 

 
 
 
  
 
  
 
   
   
  
 
  
      
      
   
  
      
      
   
  
  
      
   
  
  
  
  
  
 
  
      
      
   
  
  
 
STERICYCLE, INC. 
CONSOLIDATED BALANCE SHEETS 

In millions, except per share data 

PART II 

December 31, 

2019 

2018 

$ 

34.7    $ 

ASSETS 
Current Assets: 
Cash and cash equivalents 
Accounts receivable, less allowance for doubtful accounts of $67.9 in 2019 and $71.9 
in 2018 
Prepaid expenses 
Other current assets 

Total Current Assets 

Property, plant and equipment, less accumulated depreciation of $667.8 in 2019 and 
$678.1 in 2018 
Operating lease right-of-use assets 
Goodwill 
Intangible assets, less accumulated amortization of $584.9 in 2019 and $499.9 in 2018   
Other assets 
Total Assets 

$ 

LIABILITIES AND EQUITY 
Current Liabilities: 
Current portion of long-term debt 
Bank overdraft 
Accounts payable 
Accrued liabilities 
Operating lease liabilities 
Other current liabilities 

Total Current Liabilities 

Long-term debt, net 
Long-term operating lease liabilities 
Deferred income taxes 
Long-term tax payable 
Other liabilities 
Total Liabilities 

Commitments and contingencies 

Equity: 
Preferred stock (par value $0.01 per share, 1.0 shares authorized), mandatory 
convertible preferred stock, Series A, 0.0 issued and outstanding in 2019 and 2018, 
respectively 
Common stock (par value $.01 per share, 120.0 shares authorized, 91.2 and 90.7 
issued and outstanding in 2019 and 2018, respectively) 
Additional paid-in capital 
Retained earnings 
Accumulated other comprehensive loss 

Total Stericycle, Inc.’s Equity 

Noncontrolling interests 

Total Equity 

Total Liabilities and Equity 

$ 

$ 

544.3      
60.7      
66.9      
706.6      

798.5      
435.0      
2,982.2      
1,422.4      
92.3      
6,437.0    $ 

103.1    $ 
1.9      
220.1      
296.6      
94.8      
40.4      
756.9      
2,559.3      
356.1      
295.1      
70.7      
64.2      
4,102.3      

34.3   

599.6   
50.0   
63.4   
747.3   

743.5   
-   
3,222.2   
1,637.7   
104.8   
6,455.5   

104.3   
14.8   
225.8   
340.8   
-   
47.5   
733.2   
2,663.9   
-   
307.3   
83.3   
70.7   
3,858.4   

-      

-   

0.9      
1,205.7      
1,442.4      
(318.1 )     
2,330.9      
3.8      
2,334.7      
6,437.0    $ 

0.9   
1,162.6   
1,789.2   
(365.3 ) 
2,587.4   
9.7   
2,597.1   
6,455.5   

See accompanying Notes to Consolidated Financial Statements. 

2019 10-K Annual Report  

Stericycle, Inc.  •  72 

 
 
  
  
  
  
   
  
 
      
   
 
      
   
 
 
 
 
 
 
 
 
 
      
   
 
      
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      
   
 
      
   
 
 
      
   
 
      
   
 
 
 
 
 
 
 
 
 
STERICYCLE, INC.  
CONSOLIDATED STATEMENTS OF CASH FLOWS 

In millions 

PART II 

2019 

Year Ended December 31, 
2018 

2017 

$ 

(346.0 )   $ 

(245.6 )   $ 

43.0   

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

Depreciation 
Intangible amortization 
Loss on early extinguishment of debt and related charges 
Stock-based compensation expense 
Deferred income taxes 
Goodwill impairment 
Divestiture losses, net of gains 
Asset impairments, gain/loss on disposal of property plant and equipment and 
other charges 
Other, net 

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

Accounts receivable 
Prepaid expenses 
Accounts payable 
Accrued liabilities 
Other assets and liabilities 

Net cash from operating activities 
INVESTING ACTIVITIES: 
Capital expenditures 
Payments for acquisitions, net of cash acquired 
Proceeds from divestitures of businesses 
Other, net 
Net cash from investing activities 
FINANCING ACTIVITIES: 
Repayments of long-term debt and other obligations 
Proceeds from foreign bank debt 
Repayment of foreign bank debt 
Proceeds from term loan 
Repayment of term loan 
Repayment of private placement of long-term note 
Proceeds from senior debt 
Proceeds from senior credit facility 
Repayment of senior credit facility 
(Repayment of) proceeds from bank overdrafts, net 
Payments of capital lease obligations 
Payments of deferred financing costs 
Proceeds from issuance of common stock, net of shares withheld for tax 
Payments on early debt extinguishment 
Payments for repurchase of mandatory convertible preferred stock 
Dividends paid on mandatory convertible preferred stock 
Payments to noncontrolling interests 
Net cash from financing activities 
Effect of exchange rate changes on cash and cash equivalents 
Net change in cash and cash equivalents 
Cash and cash equivalents at beginning of year 
Cash and cash equivalents at end of year 

SUPPLEMENTAL CASH FLOW INFORMATION: 
Net issuances of obligations for acquisitions 
Capital expenditures in accounts payable 
Interest paid during the year, net of capitalized interest 
Income taxes paid during the year, net of refunds 

$ 

$ 
$ 
$ 
$ 

127.6       
145.2       
26.5       
17.1       
(33.9 )     
228.3       
103.0       

28.1       
2.5       

24.5       
(18.4 )     
(4.6 )     
(33.4 )     
(18.5 )     
248.0       

(194.2 )     
(0.2 )     
86.6       
3.8       
(104.0 )     

(50.4 )     
12.1       
(47.8 )     
365.0       
(95.3 )     
(1,075.0 )     
600.0       
1,752.2       
(1,575.6 )     
(12.5 )     
(4.3 )     
(8.8 )     
19.9       
(20.4 )     
-       
-       
(0.7 )     
(141.6 )     
(2.0 )     
0.4       
34.3       
34.7     $ 

0.3     $ 
33.8     $ 
101.5     $ 
6.9     $ 

125.6       
130.3       

24.1       
(34.1 )     
358.7       
12.8       

47.4       
3.8       

3.6       
(15.6 )     
9.3       
(238.5 )     
(16.1 )     
165.7       

(130.8 )     
(44.7 )     
25.2       
2.8       
(147.5 )     

(64.5 )     
12.1       
(17.8 )     
-       
(47.5 )     
-       
-       
1,657.2       
(1,541.0 )     
8.7       
(8.2 )     
(1.7 )     
20.1       
-       
(17.2 )     
(25.5 )     
(0.4 )     
(25.7 )     
(0.4 )     
(7.9 )     
42.2       
34.3     $ 

30.1     $ 
30.8     $ 
93.7     $ 
26.4     $ 

131.1   
118.4   

21.3   
(290.2 ) 
65.0   
9.5   

37.7   
(6.7 ) 

17.1   
(33.9 ) 
22.9   
363.0   
10.4   
508.6   

(143.0 ) 
(52.5 ) 
1.2   
1.3   
(193.0 ) 

(62.1 ) 
13.3   
(31.9 ) 
50.0   
(100.0 ) 
(175.0 ) 
-   
1,739.1   
(1,689.7 ) 
2.4   
(3.6 ) 
(2.7 ) 
10.2   
-   
(34.2 ) 
(36.3 ) 
(0.7 ) 
(321.2 ) 
3.6   
(2.0 ) 
44.2   
42.2   

16.5   
5.0   
84.2   
128.9   

See accompanying Notes to Consolidated Financial Statements. 

2019 10-K Annual Report  

Stericycle, Inc.  •  73 

 
 
  
 
  
 
   
   
  
  
       
       
   
  
       
       
   
  
  
  
       
   
  
  
  
  
  
  
     
       
   
  
  
  
  
  
  
  
       
       
   
  
  
  
  
  
  
       
       
   
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
  
   
 
 
   
 
 
   
  
       
       
   
 
PART II 

STERICYCLE, INC.  
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY 

In millions 

Stericycle, Inc. Equity 

Preferred Stock   Common Stock   
Shares   Amount   Shares   Amount   

Additional 
Paid-In 
Capital 

Accumulated 
Other 
Comprehensive 
Loss 

Retained 
Earnings   

Noncontrolling 
Interests 

   Total Equity   

Balance as of January 1, 2017 
Net income 
Currency translation adjustment 
Change in qualifying cash flow hedge, 
net of tax 
Issuance of common stock for exercise of 
options, RSU vesting and employee stock 
purchases, net 
Repurchase and cancellation of 
convertible preferred stock 
Preferred stock dividend 
Stock compensation expense 
Reduction to noncontrolling interests 
due to additional ownership 
Balance as of December 31, 2017 
Cumulative effect of new accounting 
standard 
Net loss 
Currency translation adjustment 
Change in qualifying cash flow hedge, 
net of tax 
Issuance of common stock for exercise of 
options, PSU and RSU vesting and 
employee stock purchases, net 
Repurchase and cancellation of 
convertible preferred stock 
Conversion of convertible preferred stock 
to common stock 
Preferred stock dividend 
Stock compensation expense 
Payments to noncontrolling interest 
Balance as of December 31, 2018 
Net (loss) income 
Currency translation adjustment 
Change in qualifying cash flow hedge, 
net of tax 
Accelerated amortization of interest rate 
lock premiums, net of tax 
Issuance of common stock for exercise of 
options, PSU and RSU vesting and 
employee stock purchases, net 
Cumulative currency translation loss 
realized through disposition of Mexico 
operations 
Cumulative currency translation loss 
realized through disposition of Chile 
operations 
Stock compensation expense 
Changes to noncontrolling interest 
Balance as of December 31, 2019 

0.7   $ 

-      85.2   $ 

0.8   $  1,166.5    $  2,006.1    $ 
42.4     

(367.6 )  $ 

79.3      

1.3      

-     

-     

0.3     

0.1     

17.2     

17.3     
(36.3 )   

(51.5 )   

21.3     

(0.3 )   

0.7     

-      85.5     

0.9     

1,153.2       2,029.5     

(287.0 )    

10.6    $ 
0.6      
1.2      

2,816.4   
43.0   
80.5   

1.3   

17.3   

(34.2 ) 
(36.3 ) 
21.3   

(0.4 )    
12.0      

(0.7 ) 
2,908.6   

13.0     
(244.7 )   

(0.9 )    
(1.0 )    

(79.3 )    

1.0      

0.5     

-     

19.4     

(0.1 )   

-     

(34.1 )   

16.9     

(0.6 )   

4.7     

(25.5 )   

24.1     

-     

-      90.7     

0.9     

1,162.6       1,789.2     
(346.8 )   

(365.3 )    

0.5     

19.7     

8.5      

0.7      

2.3      

18.9      

16.8      

(0.4 )    
9.7      
0.8      
0.3      

-   $ 

-      91.2   $ 

17.1     
6.3     
0.9   $  1,205.7    $  1,442.4    $ 

(318.1 )  $ 

(7.0 )    
3.8    $ 

13.0   
(245.6 ) 
(80.3 ) 

1.0   

19.4   

(17.2 ) 

-   
(25.5 ) 
24.1   
(0.4 ) 
2,597.1   
(346.0 ) 
8.8   

0.7   

2.3   

19.7   

18.9   

16.8   
17.1   
(0.7 ) 
2,334.7   

See accompanying Notes to Consolidated Financial Statements. 

2019 10-K Annual Report  

Stericycle, Inc.  •  74 

 
 
  
 
   
  
     
  
  
 
 
 
 
  
 
  
 
  
 
  
   
  
  
 
 
     
     
     
     
     
      
 
     
     
     
     
     
     
 
     
     
     
     
     
     
      
 
     
     
     
      
      
 
     
     
      
      
 
     
     
     
     
      
      
      
 
     
     
     
     
     
      
      
 
     
     
     
     
     
      
 
 
     
     
     
     
      
      
      
 
     
     
     
     
     
      
 
     
     
     
     
     
     
 
     
     
     
     
     
     
      
 
     
     
     
      
      
 
     
     
      
      
 
     
     
     
     
      
      
 
     
     
     
     
      
      
      
 
     
     
     
     
     
      
      
 
     
     
     
     
     
     
      
 
 
     
     
     
     
     
      
 
     
     
     
     
     
     
 
     
     
     
     
     
     
      
 
     
     
     
     
     
     
      
 
     
     
     
     
      
      
 
     
     
     
     
     
     
      
 
     
     
     
     
     
     
      
 
     
     
     
     
     
      
      
 
     
     
     
     
     
      
 
 
PART II 

STERICYCLE, INC.  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(In millions, except per share data and unless otherwise indicated) 

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

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

Description of Business 

Incorporated in 1989, Stericycle protects people, safeguards communities and reduces risk through highly 
specialized  medical  and hazardous waste  management and secure information destruction  services. The 
Company  serves  customers  in  the  U.S  and  18  other  countries  with  a  concentration  on  the  growing 
healthcare industry.  

The  Company’s  core  business  focus  is  on  regulated  medical  waste  and  secure  information  destruction, 
and it is the leading provider of these services in terms of both revenue and operational infrastructure.   

For further information on the Company’s business, segments and services, see Part I, Item 1. Business and 
Note 18 – Segment Reporting. 

On February 6, 2020, we entered into the Agreement, pursuant to which we have agreed to sell the ESOL 
Disposal Group for cash consideration of $462.5 million, subject to regulatory approval, and satisfaction of 
customary closing conditions. For further discussion see Note 4 – Restructuring and Divestitures. 

Summary of Significant Accounting Policies 

Basis  of  Presentation:    The  accompanying  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 consolidated  financial  statements  were prepared  in accordance with  U.S. 
GAAP  and  include  the  assets,  liabilities,  revenue  and  expenses  of  all  wholly-owned  subsidiaries  and 
majority-owned subsidiaries over which the Company exercises control.  Outside stockholders' interests in 
subsidiaries are shown on the consolidated financial statements as “Noncontrolling interests." 

Use  of  Estimates:    The  preparation  of  financial  statements  in  conformity  with  generally  accepted 
accounting principles 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  allowance  for  doubtful  accounts,  credit  memo  reserve,  accrued  employee  health  and 
welfare  benefits,  environmental  liabilities,  asset  retirement  obligations,  stock  compensation  expense, 
income  tax  assets  and  liabilities,  accrued  auto  and  workers’  compensation  insurance  claims,  leases, 
intangible asset valuations, and long-lived asset and goodwill impairment.  Such estimates are based on 
historical  trends  and  on  various  other  assumptions  that  are  believed  to  be  reasonable  under  the 
circumstances.  Actual results could differ from these estimates. 

Revenue  from  Contracts  with  Customers:  In  accordance  with  ASC  606,  revenue  is  recognized  when  a 
customer obtains control of promised goods or services.  The amount of revenue recognized reflects the 
consideration  to  which  the  Company  expects  to  be  entitled  to  receive  in  exchange  for  these  good  or 
services.  Revenue is recognized net of revenue-based taxes assessed by governmental authorities. 

2019 10-K Annual Report  

Stericycle, Inc.  •  75 

 
 
PART II 

The  Company  provides  Regulated  Waste  and  Compliance  Services,  which  provide  collection  and 
processing  of  regulated  and  specialized  waste,  including  medical,  pharmaceutical  and  hazardous  waste, 
for  disposal  and  compliance  programs,  Secure  Information  Destruction  Services,  which  provide  for  the 
collection  of  personal  and  confidential  information  for  secure  destruction  and  recycling  of  shredded 
paper,  Manufacturing  and  Industrial  Services,  which  provides  collection,  processing  and  disposal  of 
hazardous waste for  Manufacturing and  Industrial  companies,  and  Communication and Related  Services 
which  includes  Expert  Solutions,  and  communication  services  such  as  appointment  reminders,  secure 
messaging, event registration and other communications for hospitals and IDN’s.   

The associated activities for each of these are a series of distinct services that are substantially the same 
and have the same pattern of transfer over time; therefore, the respective services are treated as a single 
performance obligation. 

The Company recognizes revenue by applying the right to invoice practical expedient as  the Company’s 
right  to  consideration  corresponds  directly  to  the  value  provided  to  the  customer  for  performance  to 
date.  Revenues  for  the  Company’s  Medical  Waste  Management  Services  and  Secure  Information 
Destruction  Services  are  recognized  upon  waste  collection.    The  Company’s  Compliance  Program 
revenues  are  recognized  over  the  contractual  service  period.    Revenues  from  Retail  and  Healthcare 
Hazardous  Waste  Solutions,  are  recognized  at  the  time  the  waste  is  received  by  a  facility  with  an 
appropriate  permit,  either  the  Company’s  processing  facility  or  a  third  party.    Revenues  from 
communication services and Expert Solutions are recognized as the services are performed.  

Accounts  Receivable  and  Allowance  for  Doubtful  Accounts:    Accounts  receivable  is  recorded  when 
billed  or  when  goods  or  services  are  provided.    The  carrying  value  of  the  Company’s  receivables  is 
presented net of an allowance for doubtful accounts.  The Company estimates its allowance for doubtful 
accounts  based  on  past  collection  history  and  specific  risks  identified  among  uncollected  amounts.    If 
current  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.  Past-due receivable balances are written off when the Company’s internal collection 
efforts have been exhausted. 

No single customer accounts for more than approximately 1.2% of the Company’s accounts receivable or 
approximately  1.4% of total revenues.   During the  year ended  December 31, 2019, 2018, and 2017, bad 
debt expense was $25.7 million, $24.9 million, and $32.3 million, respectively. 

Contract Liability:  The Company records a contract liability when cash payments are received in advance 
of the Company’s services being performed which is classified as current in Other current liabilities on the 
Consolidated Balance Sheets since the amounts are earned within a year.   

Contract  Acquisition  Costs:  Incremental  direct  costs  of  obtaining  a  contract,  which  primarily  represent 
sales incentives, are deferred and amortized to SG&A over the estimated period of benefit to be derived 
from the cost. 

Cash and Cash Equivalents:  The Company considers all highly liquid investments with a maturity of less 
than three months when purchased to be cash equivalents.  Cash equivalents are carried at cost. 

Financial  Instruments:    The  Company’s  financial  instruments  consist  of  cash  and  cash  equivalents, 
accounts receivable and payable, derivatives, and long-term debt.  Financial instruments, which potentially 
subject the Company to concentrations of credit risk, consist principally of accounts receivable.  Credit risk 
on  trade  receivables  is  minimized  as  a  result  of  the  large  size  of  the  Company’s  customer  base,  low 

2019 10-K Annual Report  

Stericycle, Inc.  •  76 

 
 
PART II 

concentration  and  the  performance  of  ongoing  credit  evaluations  of  its  customers.    The  Company  also 
maintains allowances for potential credit losses. 

Property,  Plant  and  Equipment:    Property,  plant  and  equipment  is  stated  at  cost.  Expenditures  for 
software purchases and software developed for internal use are capitalized and included in Software. For 
software  developed  for  internal  use,  external  direct  costs  for  materials  and  services  and  certain  internal 
payroll  and  related  fringe  benefit  costs  are  capitalized  as  the  costs  of  computer  software  developed  or 
obtained for internal use. 

Depreciation and amortization is computed using the straight-line method over the estimated useful lives 
of the assets as follows: 

Building and improvements 
Machinery and equipment 
Containers 
Vehicles 
Office equipment and furniture 
Software 

2 to 40 years 
2 to 30 years 
2 to 20 years 
2 to 10 years 
2 to 20 years 
2 to 10 years 

Upon deployment, capitalized costs associated with the ERP system will be amortized over an estimated 
useful life of 10 years. 

Capitalized  Interest:    The  Company  capitalizes  interest  incurred  associated  with  projects  under 
construction  for  the  duration  of  the  asset  construction  period.    During  the  years  ended  December  31, 
2019,  2018,  and  2017,  the  Company  capitalized  interest  of  $5.4  million,  $2.9  million,  and  $1.6 million, 
respectively. 

Goodwill  and  Other  Identifiable  Intangible  Assets:    Goodwill  represents  the  excess  of  the  purchase 
price  over  the  fair  value  assigned  the  net  tangible  and  identifiable  tangibles  of  business  acquired.  
Intangible assets with definite lives are amortized on a straight-line basis over their estimated useful lives. 

Impairment of Long and Indefinite- Lived Assets: 

Property  and  Equipment  and  Intangible  Assets  (definite-lives),  Net:    Long-lived  assets,  such  as 
property, plant and equipment and amortizing intangible assets are reviewed whenever events or changes 
in circumstances indicate that the related carrying amounts may not be recoverable.  Impairment of assets 
with definite-lives is generally determined by comparing projected undiscounted cash flows  expected to 
be generated by the  asset, or asset groups, to its  carrying value.    If the  carrying value of the long-lived 
asset  or  asset  group  is  not  recoverable  on  an  undiscounted  basis,  an  impairment  is  recognized  to  the 
extent  fair  value  exceeds  carrying  value.  Determining  the  extent  of  impairment,  if  any,  typically  requires 
various estimates and assumptions including cash flows directly attributable to the asset, the useful life of 
the  asset  and  residual  value,  if  any.    When  necessary,  the  Company  uses  internal  cash  flow  estimates, 
quoted market prices and appraisals as appropriate to determine fair value.  Actual results could vary from 
these estimates. In addition, the remaining useful life of the impaired asset is revised, if necessary. 

Intangible  Assets  (indefinite-lived):    Indefinite-lived  intangibles  consist  primarily  of  permits  and 
tradenames.  Indefinite-lived  intangibles  are  assessed  for  impairment  annually  as  of  October  1,  or  more 
frequently  if  an  event  occurs  or  circumstances  change,  using  either  a  qualitative  or  quantitative 
approach.  The qualitative approach first determines if it is more-likely-than-not that the fair value of the 
asset  is  less  than  the  carrying  value.   If  no  such  determination  is  made,  then  the  impairment  test  is 
complete.   If,  however,  it  is  determined  that  there  is  a  likely  impairment,  a  quantitative  assessment  is 

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performed. The  Company  performs  its  annual  impairment  test  on  indefinite-lived  intangibles,  using  the 
qualitative approach for certain assets and the quantitative approach for the remaining assets. 

Goodwill:  Goodwill  is  assessed  for  impairment  at  least  annually  as  of  October  1  of  each  year,  or  more 
frequently if an event occurs or circumstances change that would reduce the fair value of a reporting unit 
below its carrying value. 

The  Company  used  a  quantitative  approach  to  assess  goodwill  for  impairment.    The  fair  value  of  each 
reporting  unit  is  calculated  using  the  income  approach  (including  DCF)  and  validated  using  a  market 
approach with the involvement of a third-party valuation specialist.   The Company's reporting units are:  
Domestic  Healthcare  Compliance  Services,  Domestic  Secure  Information  Destruction,  Domestic  CRS, 
Domestic Environmental Solutions, Canada, Europe, Asia Pacific and Latin America.  The income approach 
uses  expected  future  cash  flows  of  each  reporting  unit  and  discounts  those  cash  flows  to  present 
value.   Expected  future  cash  flows  are  estimated  using  management  assumptions  of  growth  rates, 
including long-term growth rates, capital expenditures, and cost efficiencies.  Future acquisitions are not 
included  in  the  expected  future  cash  flows.    The  Company  uses  a  discount  rate  based  on  a  calculated 
weighted  average cost of capital which is adjusted for each of its reporting units based on size, country 
and  company  specific  risk  premiums.   The  market  approach  compares  the  valuation  multiples  of  similar 
companies  to  that  of  the  associated  reporting  unit.   The  Company  then  reconciles  the  calculated  fair 
values to its market capitalization.  The fair value is then compared to its carrying value including goodwill.  
If the fair value is in excess of its carrying value, the related goodwill is not impaired.  If the fair value is 
less than carrying value, an impairment charge is recognized, equivalent to the amount that the carrying 
value exceeds the fair value but not to exceed the carrying value of the goodwill. 

The use of different assumptions, estimates or judgments in the goodwill impairment testing process may 
significantly increase or decrease the estimated fair value of a reporting unit.  Generally, changes in DCF 
estimates  would  have  a  similar  effect  on  the  estimated  fair  value  of  the  reporting  unit.    The  Company 
believes  that  the  estimated  fair  value  used  in  measuring  the  impairment  was  based  on  reasonable 
assumptions but future changes in the underlying assumptions could differ due to the inherent judgment 
in making such estimates. 

Goodwill  impairment  charges  may  be  recognized  in  future  periods  to  the  extent  changes  in  factors  or 
circumstances  occur,  including  deterioration  in  the  macro-economic  environment  or  in  the  equity 
markets, including the market value of the Company’s common shares, deterioration in its performance or 
its future projections, or changes in its plans for one or more reporting units. 

For further discussion see Note 7 – Goodwill and Other Intangible Assets. 

Assets and Liabilities Held-for-Sale: Long-lived assets or disposal groups are classified as held-for-sale 
when  management  having  the  appropriate  authority,  generally  the  Company’s  Board  of  Directors  or 
certain of its Executive Officers, commits to a plan of sale, the disposal group is ready for immediate sale, 
an  active  program  to  locate  a  buyer  has  been  initiated  and  the  sale  is  probable  and  expected  to  be 
completed  within  one  year.    Once  classified  as  held-for-sale  disposal  groups  are  valued  at  the  lower  of 
their  carrying  amount  or  fair  value  less  estimated  selling  costs.  Where  the  disposal  group  constitutes 
substantially  all  of  our  operations  of  a  country  the  balance  in  the  cumulative  translation  adjustment 
associated with that country is included in the carrying value of the disposal group. If the carrying value, 
including  any  amount  associated  with  the  cumulative  translation  adjustment  exceeds  the  fair  value  less 
estimated selling costs a held-for-sale impairment charge is recorded to reduce the carrying value. 

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PART II 

The  estimate  for  fair  value  is  reviewed  at  the  end  of  every  reporting  period  that  the  disposal  group  is 
classified as held-for-sale and the carrying value adjusted whenever the estimated fair value less costs to 
sell is less than the carrying value. 

Insurance and Self-Insurance:  The Company’s insurance for workers’ compensation, auto/fleet, general 
liability, property and employee-related health care benefits is obtained using high deductible insurance 
policies,  if  any,  meaning  that  the  Company  has  retained  a  significant  portion  of  the  risks  related  to  the 
claims  associated  with  these  programs.    The  estimated  exposure  for  unpaid  claims  and  associated 
expenses, including incurred but not reported losses, is based on a calculation performed by a third party 
actuarial  specialist  using  the  Company’s  historical  claims  experience.    The  accruals  for  these  liabilities 
could be revised if future occurrences or loss developments significantly differ from the assumptions used.  
Estimated  recoveries  associated  with  insured  claims  are  recognized  as  assets  when  the  receipt  of  such 
amounts is probable.  

Restructuring  Charges:    Involuntary  termination  benefits  are  accrued  upon  the  commitment  to  a 
termination  plan  and  when  the  benefit  arrangement  is  communicated  to  affected  employees,  or  when 
liabilities are determined to be probable and estimable, depending on the existence of a substantive plan 
for severance or termination.  Costs for one-time termination benefits in which the employee is required 
to  render  service  beyond  a  minimum  retention  period  in  order  to  receive  the  benefits  are  recognized 
ratably  over  the  future  service  period.    Contract  termination  costs  are  recognized  when  contracts  are 
terminated or when the Company ceases to use the leased facility and no longer derive economic benefit 
from  the  contract.    All  other  exit  costs  are  expensed  as  incurred.    For  further  discussion,  see  Note  4  – 
Restructuring and Divestitures. 

Stock-Based Compensation:  The Company recognizes stock-based compensation expense based on the 
estimated  grant-date  fair  value.  The  grant-date  fair  value  of  stock  options  is  estimated  using  the  Black- 
Scholes  option  valuation  model.  The  fair  value  for  restricted  stock  units  and  performance  stock  units  is 
based on the closing price of the Company’s common stock on the date of grant.  Expense is generally 
recognized on a straight-line basis over the service period during which awards are expected to vest.  The 
Company  presents  stock-based  compensation  expense  within  the  Consolidated  Statements  of  (Loss) 
Income  based  on  the  classification  of  the  respective  employees'  cash  compensation.    For  further 
discussion, see Note 14 – Stock Based Compensation. 

Income  Taxes:    The  Company  is  subject  to  income  taxes  in  both  the  U.S.  and  numerous  foreign 
jurisdictions.  The Company computes its provision for income taxes using the asset and liability method, 
under which deferred tax assets and liabilities are recognized for the expected future tax consequences of 
temporary  differences  between  the  financial  reporting  and  tax  basis  of  assets  and  liabilities  and  for 
operating  loss  and  tax  credit  carry-forwards.    Deferred  tax  assets  and  liabilities  are  measured  using  the 
currently enacted tax rates that are expected to apply to taxable income for the years in which those tax 
assets and liabilities are expected to reverse.  Significant judgments are required in order to determine the 
realizability of  these deferred tax assets.   In assessing the need for  a valuation allowance,  the  Company 
evaluates  all  significant  available  positive  and  negative  evidence,  including  historical  operating  results, 
estimates  of  future  taxable  income  and  the  existence  of  prudent  and  feasible  tax  planning  strategies.  
Changes  in  the  expectations  regarding  the  realization  of  deferred  tax  assets  could  materially  impact 
income tax expense in future periods.  Tax liabilities are recognized when, in management’s judgment, an 
uncertain tax position does not meet the more likely than not (i.e. a likelihood of more than fifty percent) 
threshold  for  recognition.    For  tax  positions  that  meet  the  more  likely  than  not  threshold,  a  tax  liability 
may still be  recognized depending on management’s assessment of how the tax position will ultimately 

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PART II 

be settled.  The Company records interest and penalties on unrecognized tax benefits in the provision for 
income taxes.  For further discussion, see Note 10 – Income Taxes. 

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

Operating  lease  ROU  assets,  Operating  lease  liabilities  and  Long-term  operating  lease  liabilities  are 
recognized  based  on  the  present  value  of  the  future  minimum  lease  payments  over  the  lease  term  at 
commencement date.  Nearly all of the Company’s lease contracts do not provide a readily determinable 
implicit  rate.    For  these  contracts,  the  Company  uses  an  estimated  incremental  borrowing  rate,  which  is 
based on information available at lease commencement.  Upon adoption of ASC 842, the Company used 
estimated incremental borrowing rates as of January 1, 2019 for operating leases that commenced prior 
to that date.  

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

The  Company  has  lease  agreements  with  lease  and  non-lease  components,  including  payments  for 
common area maintenance and vehicle maintenance costs, which are accounted for separately, based on 
their underlying nature, for each class of underlying assets. 

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

Asset  Retirement  Obligations:  The  Company  establishes  assets  and  liabilities  for  the  present  value  of 
estimated future costs to retire long-lived assets at the termination or expiration of a lease.  Such assets 
are  amortized  over  the  lease  term,  and  the  recognized  liabilities  are  accreted  to  the  future  value  of  the 
estimated retirement costs.  The related amortization and accretion expenses are presented within COR if 
the  leased  asset  is  used  in  the  delivery  of  the  Company’s  services  and  the  remaining  expenses  are 
presented within SG&A on the Consolidated Statements of (Loss) Income. 

Foreign Currency:  Assets and liabilities of foreign affiliates that use the local currency as their functional 
currency  are  translated  at  the  exchange  rate  on  the  last  day  of  the  accounting  period,  and  income 
statement accounts are translated at the average rates during the period.  Related translation adjustments 
are  reported  as  a  component  of  accumulated  other  comprehensive  loss  on  the  Consolidated  Balance 
Sheets.  Foreign currency gains and losses resulting from transactions that are denominated in currencies 
other than the entity’s functional currency, including foreign currency gains and losses on intercompany 
balances  that  are  not  of  a  long-term  investment  nature,  are  included  within  Other  expense,  net  on  the 
Consolidated Statements of (Loss) Income. 

Highly  Inflationary  Economy:    Effective  July  1,  2018,  as  a  result  of  the  three-year  cumulative  inflation 
exceeding  100%,  Argentina  was  classified  as  a  highly  inflationary  economy.    Accordingly,  the  Company 

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recognized,  in  Other  expense,  net,  a  foreign  exchange  loss  of  $3.3  million  and  $3.8  million,  during  the 
years  ended  December  31,  2019  and  2018,  respectively,  arising  from  the  re-measurement  of  its 
Argentinian peso denominated net monetary assets. 

Nonmonetary assets, liabilities and related expenses are measured using historical exchange rates and do 
not fluctuate with changes in the local exchange rate. 

Adoption of New Accounting Standards 

Leases 

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

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

The  standard  had  a  material  impact  on  the  Company’s  Consolidated  Balance  Sheets,  with  the  most 
significant impact being the recognition of ROU assets and lease liabilities for operating leases, while the 
Company’s accounting for finance leases remained substantially unchanged (see Note 6 – Leases). 

Derivatives and Hedging 

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

Stranded Tax Effects 

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

Stock Compensation 

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

2019 10-K Annual Report  

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PART II 

Accounting Standards Issued But Not Yet Adopted 

Financial Instrument Credit Losses 

In June 2016, the FASB issued ASU 2016-13 associated with the measurement of credit losses on financial 
instruments.    ASU  2016-13  replaces  the  current  incurred  loss  impairment  methodology  of  recognizing 
credit losses when a loss is probable, with a methodology that reflects expected credit losses and requires 
consideration  of  a  broader  range  of  reasonable  and  supportable  information  to  assess  credit  loss 
estimates.    The  amended  guidance  is  effective  for  the  Company  on  January  1,  2020.    The  Company 
expects to record, upon adoption of ASU 2016-13, an adjustment to its allowance for doubtful accounts, 
with such adjustment currently estimated to be less than $5.0 million. 

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  250-40):  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 is effective on January 1, 2020 with early adoption permitted, 
including  adoption  in  any  interim  period.    The  adoption  of  ASU  2018-15  is  not  expected  to  have  a 
material impact on the Company’s Consolidated Financial Statements. 

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  is  currently  assessing  the  effect  this  guidance  may  have  on  its  
Consolidated Financial Statements. 

NOTE 2 – REVENUES FROM CONTRACTS WITH CUSTOMERS 

The  Company  provides  Regulated  Waste  and  Compliance  Services,  which  provide  collection  and 
processing  of  regulated  and  specialized  waste,  including  medical,  pharmaceutical  and  hazardous  waste, 
for  disposal  and  compliance  programs,  Secure  Information  Destruction  Services,  which  provide  for  the 
collection  of  personal  and  confidential  information  for  secure  destruction  and  recycling  of  shredded 
paper,  and  Communication  and  Related  Services  which  includes  Expert  Solutions,  and  communication 
services such as appointment reminders, secure messaging, event registration and other communications 
for hospitals and IDN’s.   

The  Company’s  customers  typically  enter  into  a  contract  for  the  provision  of  services  on  a  regular  and 
scheduled  basis,  e.g.  weekly,  monthly  or  on  an  as  needed  basis  over  the  contract  term.    Under  the 
contract terms, the Company receives fees based on a monthly, quarterly or annual rate or fees based on 
contractual rates depending upon measures including the volume, weight and type of waste, number and 
size  of  bins  collected,  weight  and  type  of  shredded  paper,  type  of  recall  service  and  number  of  call 
minutes. 

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PART II 

Amounts  are  invoiced  based  on  the  terms  of  the  underlying  contract  either  on  a  regular  basis,  e.g. 
monthly  or  quarterly,  or  as  services  are  performed  and  are  generally  due  within  a  short  period  of  time 
after invoicing based upon normal terms and conditions for our business type and the geography of the 
services performed. 

Disaggregation of Revenues 

In millions 

Reportable Segment 

Revenues by Service: 

North America RWCS 
United 
States 

   Canada 

Year Ended December 31, 2019 

International RWCS 

    All Other 

EMEA 

  Others 

U.S. 

Total 

Medical Waste and Compliance Services  $ 
Hazardous Waste Services 

Total RWCS 

Secure Information Destruction Services 
Manufacturing and Industrial Services 
Communication Services 
Expert Solutions 

Total CRS 
Total Revenues 

$ 

1,127.9   $ 
321.3     
1,449.2     
705.1     
238.3     
-     
-     
-     
2,392.6   $ 

41.8      $ 
-   
41.8   
64.4   
23.3   
12.1   
10.0   
22.1   
151.6   

 $ 

300.7  $ 
-    
300.7    
132.4    
3.7    
4.4    
7.3    
11.7    
448.5  $ 

101.1     $ 
-  
101.1  
-  
29.7  
-  
-  
-  
130.8  

 $ 

-    $ 
-      
-      
-      
-      
117.3      
68.1      
185.4      
185.4    $ 

1,571.5   
321.3   
1,892.8   
901.9   
295.0   
133.8   
85.4   
219.2   
3,308.9   

Reportable Segment Total 

   $ 

2,544.2   

  $ 

579.3  

 $ 

185.4    $ 

3,308.9   

In millions 

Reportable Segment 

Revenues by Service: 

North America RWCS 
United 
States 

   Canada 

Year Ended December 31, 2018 

International RWCS 

    All Other 

EMEA 

  Others 

U.S. 

Total 

Medical Waste and Compliance Services  $ 
Hazardous Waste Services 

Total RWCS 

Secure Information Destruction Services 
Manufacturing and Industrial Services 
Communication Services 
Expert Solutions 

Total CRS 
Total Revenues 

$ 

1,142.4   $ 
314.1     
1,456.5     
712.6     
247.8     
-     
-     
-     
2,416.9   $ 

39.6      $ 
-   
39.6   
65.7   
22.6   
17.3   
12.0   
29.3   
157.2   

 $ 

305.1  $ 
-    
305.1    
132.7    
16.9    
18.4    
8.7    
27.1    
481.8  $ 

131.4     $ 
-  
131.4  
-  
41.9  
-  
-  
-  
173.3  

 $ 

-        $ 
-          
-          
-          
-          
148.4          
108.3          
256.7          
256.7        $ 

1,618.5  
314.1  
1,932.6  
911.0  
329.2  
184.1  
129.0  
313.1  
3,485.9  

Reportable Segment Total 

   $ 

2,574.1   

  $ 

655.1  

 $ 

256.7        $ 

3,485.9   

Contract Liabilities  

The  contract  liability  at  December  31,  2019  and  2018  was  $12.2  million  and  $15.0  million,  respectively.  
Substantially all of the contract liability as of December 31, 2019 is expected to be recognized as revenue 
during the year ended  December 31, 2020 and substantially all of the balance as of  December 31, 2018 
was recognized as revenue during the year ended December 31, 2019. 

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 6.3 years. 

During  the  year  ended  December  31,  2019  and  2018,  the  Company  amortized  $9.1  million  and  $6.9 
million, respectively, of deferred sales incentives to SG&A. 

2019 10-K Annual Report  

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Total contract acquisition costs, net of accumulated amortization, were classified as follows: 

PART II 

In millions 

Other current assets 
Other assets 

Total contract acquisition costs 

NOTE 3 – ACQUISITIONS 

Acquisitions 

2019 

2018 

$ 

$ 

9.5     $ 

28.9    
38.4  

 $ 

8.5   
23.3   
31.8   

During  the  years  ended  December 31,  2019,  2018,  and  2017,  the  Company  completed  1,  21,  and  30 
acquisitions, respectively.   All of the acquisitions detailed below are  considered  to be complementary to 
existing  operations  and  fit  with  the  Company’s  growth  strategy.    All  were  accounted  for  as  business 
combinations under the applicable guidance. 

The following table summarizes the locations and services of acquisitions by year: 

2019 Acquisitions 

Acquisition Locations 
United States 

Total 

2018 Acquisitions 

Acquisition Locations 
United States 

Total 

2017 Acquisitions 

Acquisition Locations 
United States and Canada 
International 

Total 

Total Number of 
Acquisitions 

      Regulated Waste 

1   
1   

Service 
Secure Information 
Destruction 

Communication and 
Related Services 

-    
-    

1    
1    

-   
-   

Total Number of 
Acquisitions 

      Regulated Waste 

21   
21   

Service 
Secure Information 
Destruction 

Communication and 
Related Services 

2    
2    

19    
19    

-   
-   

Total Number of 
Acquisitions 

      Regulated Waste 

22   
8   
30   

Service 
Secure Information 
Destruction 

Communication and 
Related Services 

2    
5    
7    

19    
3    
22    

1   
-   
1   

The results of operations of these acquired businesses have been included in the Consolidated Statements 
of (Loss) Income from the date of the acquisition.  Pro forma results of  operations for these acquisitions 
are not presented because the pro forma effects, individually or in the aggregate, were not material to the 
Company’s consolidated results of operations. 

2019 10-K Annual Report  

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PART II 

The following table summarizes the acquisition date fair value of consideration transferred for acquisitions 
completed during the years ended December 31: 

In millions 

Cash 
Promissory notes 
Deferred consideration 
Contingent consideration 
Total purchase price 

$ 

$ 

2019 

2018 

2017 

0.2     $ 
0.3       

0.5     $ 

44.8    $ 
30.0      
0.6      
-      
75.4    $ 

52.9   
25.3   
1.1   
0.1   
79.4   

The fair value of consideration transferred in a business combination is allocated to the  net tangible and 
identifiable intangible assets  at the acquisition date,  with the remaining unallocated  amount  recognized 
as goodwill.   

The  following  table  summarizes  the  purchase  price  allocations  for  current  year  acquisitions  and 
adjustments to purchase price allocations for prior year acquisitions.  As of December 31, 2019, purchase 
accounting had been completed for all of our acquisitions. 

In millions 

Current Year 
Acquisitions 

Adjustments to Prior 
Year Acquisitions 

Total 

Fixed assets 
Intangibles 
Goodwill 
Other assets and liabilities, net 
Total purchase price allocation 

$ 

$ 

-      $ 

0.5     
-     
-     
0.5      $ 

0.2  
4.2  
(4.3 ) 
(0.1 ) 
0.0  

 $ 

 $ 

0.2   
4.7   
(4.3 ) 
(0.1 ) 
0.5   

During  the  year  ended  December 31,  2019,  the  Company  recognized  an  increase  in  the  estimated  fair 
value of acquired customer relationships from current year and prior year acquisitions of $0.5 million, and 
$4.2 million, respectively, excluding the effect of foreign currency translation, with amortizable lives of 10 
years. 

NOTE 4 – RESTRUCTURING AND DIVESTITURES 

Restructuring - Business Transformation 

Stericycle is focused on driving long-term growth, profitability and delivering enhanced shareholder value.   

As part of overall business strategy, in the third quarter of 2017, the Company initiated a comprehensive 
multi-year  Business  Transformation.  Through  December  31,  2019,  the  Company  has  incurred  all  the 
originally anticipated  employee termination charges, including incremental charges related principally to 
executive management, in connection with its initial restructuring estimate.   

During  the  year  ended  December  31,  2019,  the  Company  recognized  $5.5  million  in  charges  related  to 
executive and employee termination costs, of which $4.8 million was recognized within All Other and $0.7 
million was recognized within the International RWCS reportable segment.  These amounts are included in 
SG&A and will be paid out over approximately two years.  As of December 31, 2019, approximately $3.0 
million in future payments remained accrued. 

During  the  year  ended  December  31,  2018,  the  Company  recognized  $3.7  million,  of  employee 
termination  charges  related  to  Business  Transformation.  The  North  America  RWCS  and  International 

2019 10-K Annual Report  

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PART II 

RWCS  reportable  segments  incurred  $3.0  million  and  $0.3  million,  respectively,  with  the  remaining  $0.4 
million impacting All Other. These amounts were fully paid as of December 31, 2018. 

In  addition,  during  the  year  ended  December  31,  2018,  the  Company  recognized  non-cash  impairment 
charges of $9.1 million, of which $7.4 million related to software and $0.3 million related  to other long-
term assets in the North America RWCS reportable segment,  that was included in COR and $1.4 million 
related to All Other, was included in SG&A, see Note 5 – Property, Plant and Equipment. 

During  the  year  ended  December  31,  2017,  the  Company  recognized  employee  termination  charges  of 
$11.5  million  and  non-cash  impairment  charges  of  $2.4  million  related  to  software.  The  North  America 
RWCS  and  International  RWCS  reportable  segments  incurred  $5.5  million  and  $3.3  million,  respectively, 
with the remaining $5.1 million impacting All Other.   The remaining liability of $2.2 million at December 
31, 2017, was paid in the first quarter of 2018. 

Restructuring – Operational Optimization 

We aim to achieve a culture of continuous improvement that will enhance its efficiency, effectiveness and 
competitiveness to improve its cost base and cash flow, and we have taken a number of actions to reduce 
operating  costs  and  optimize  operations.  As  part  of  these  efforts,  we  seek  to  reduce  network 
redundancies by consolidating facilities and restructuring the operations for efficiency. 

2019 Actions 

Operational Optimization restructuring charges by segment were as follows: 

In millions 

Included in COR 

Exit costs - employee termination 
Closure and exit costs - other 

Impairment of property, plant and equipment 

Total non-cash charges 
Total included in COR 

Included in SG&A 

Exit costs - employee termination 
Closure and exit costs - other 

Impairment of property, plant and equipment 
Impairment of intangibles 
Total non-cash charges 
Total included in SG&A 

Total charges 

North America 
RWCS 

Year Ended December 31, 2019 
International 
RWCS 

All Other 

Total 

$ 

$ 

-     $ 
-       
2.0       
2.0       
2.0       

0.4       
-       
-       
-       
-       
0.4       
2.4     $ 

0.2    $ 
1.1      
3.6      
3.6      
4.9      

0.7      
1.3      
0.4      
0.9      
1.3      
3.3      
8.2    $ 

0.4    $ 
-      
-      
-      
0.4      

0.6      
-      
-      
0.4      
0.4      
1.0      
1.4    $ 

0.6   
1.1   
5.6   
5.6   
7.3   

1.7   
1.3   
0.4   
1.3   
1.7   
4.7   
12.0   

The charges in the North America RWCS reportable segment related primarily to a site relocation. 

The  charges  in  the  International  RWCS  reportable  segment  relate  to  site  closures  and  facility  exits 
undertaken in EMEA and LATAM.  

The employee termination charges within All Other represent employee severance arising from reductions 
in  headcount  undertaken  in  the  Company’s  Domestic  CRS  business.    The  non-cash  impairment  of 
intangibles was recognized a result of the exit from a business line.  

The employee termination payments were paid in 2019. 

2019 10-K Annual Report  

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PART II 

2018 Actions 

Operational Optimization restructuring charges by segment were as follows: 

In millions 

North America 
RWCS 

Year Ended December 31, 2018 
International 
RWCS 

     All Other 

Total 

Included in SG&A 

Exit costs - employee termination 
Closure and exit costs - other 

Impairment and accelerated depreciation of property, 
plant and equipment 
Impairment of intangibles 
Total non-cash charges 
Total included in SG&A 

Total charges 

$ 

$ 

-     $ 
4.2       

1.0       
-       
1.0       
5.2       
5.2     $ 

0.2    $ 
5.9      

4.7      
6.6      
11.3      
17.4      
17.4    $ 

1.1    $ 
3.7      

-      
-      
-      
4.8      
4.8    $ 

1.3  
13.8  

5.7  
6.6  
12.3  
27.4  
27.4   

The  charges  in  the  North  America  RWCS  reportable  segment  related  primarily  to  optimizing  overall 
logistics and sales functions and lease exit costs for the consolidation of call centers in our Canadian CRS 
locations. Non-cash charges relate to accelerated depreciation associated with software.  

The charges in the International RWCS reportable segment primarily related to closure, contract exit and 
other  clean-up  costs,  associated  with  various  sites  in  EMEA,  Latin  America  and  APAC.  Non  cash 
impairment  charges  related  to  long-lived  assets,  customer  relationships,  operating  permits,  and  other 
intangibles, primarily in Latin America and APAC, and rationalization of a tradename in Europe. 

The charges in All Other related to headcount reduction undertaken during the year and lease exit costs 
for the consolidation of call centers in Domestic CRS locations.  

The employee termination payments were paid by the end of the fourth quarter of 2018. 

Divestitures losses, net of (gains) 

The  Company  incurred  the  following  divestiture  losses,  net  of  (gains),  which  are  included  in  the 
Consolidated Statements of (Loss) Income: 

In millions 

North America RWCS Segment 
CRS businesses 
U.S. clean room business 

Total North America RWCS charges 

International RWCS Segment 
Mexico operations 
Chile operations 
U.K. TextAnywhere business 
U.K. hazardous waste business 
U.K. patient transport business 
South Africa operations 

Total International RWCS charges, net 

All Other 
CRS businesses 
Total 

2019 

Year Ended December 31, 
2018 

2017 

$ 

$ 

6.5  

 $ 
-       

6.5  

43.2       
19.0       
(5.1 )     
0.7       
(0.3 ) 

-       

57.5  

39.0  
103.0  

 $ 

-     $ 
6.9       
6.9       

-       
-       
-       
5.9       
-       
-       
5.9       

-       
12.8     $ 

-   
-   
-   

-   
-   
-   
6.8   
5.7   
(3.0 ) 
9.5   

-   
9.5   

2019 10-K Annual Report  

Stericycle, Inc.  •  87 

 
 
 
 
  
 
  
     
    
 
    
        
       
       
 
  
  
  
  
  
 
 
  
 
  
 
    
    
  
    
       
       
  
 
  
   
 
       
       
   
 
 
 
 
  
   
 
  
   
 
       
       
   
  
   
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The details associated with each of these amounts are as follows: 

CRS Businesses: 

During the year ended December 31, 2019 the Company completed the sales of its TAS business in North 
America  and  its  retail  pharmaceutical  returns  business  in  the  U.S.  and  Puerto  Rico  for  total  cash 
consideration  of  $36.4  million,  resulting  in  total  losses  of  $45.5  million,  of  which  $6.5  million  related  to 
North America RWCS and $39.0 million related to All Other.  

In  connection  with  the  sale  agreement  for  the  TAS  business,  the  Company  entered  into  a  TSA  with  the 
buyer for a period of up to 15 months. The Company allocated and deferred $5.1 million of the proceeds, 
which will be recognized over the duration of the TSA period offsetting the expenses incurred to deliver 
the TSA services that are not reimbursed by the buyer.  

North America RWCS Segment: 

During the year ended December 31, 2018, the Company completed the sale of the non-core clean room 
business  realizing  proceeds  of  $17.0  million,  resulting  in  impairment  charges  and  subsequent  loss  on 
disposal totaling $6.9 million.   

International RWCS Segment: 

During the year ended December 31, 2019, the Company had the following divestiture activity: 

(cid:120)  U.K.  based  texting  business,  for  proceeds  of  $14.8  million,  resulting  in  a  gain  of  approximately 

$5.1 million. 

(cid:120) 

(cid:120) 

Substantially  all  of  the  Company’s  operations  in  Mexico  for  nominal  consideration  resulting  in 
impairment  charges  and  subsequent  loss  on  disposal  totaling  $43.2  million,  including  the 
realization of a loss of approximately $18.9 million related to the balance of cumulative currency 
translation adjustment. 

The Company’s operations in Chile for  net proceeds of $30.7 million, resulting in a loss of $19.0 
million, including the realization of a loss of approximately $16.8 million related to the balance of 
cumulative currency translation adjustment.  

(cid:120)  A reduction in the provision against a loan receivable  originally arising from the sale of our  U.K. 

patient transport business resulting in a $0.3 million gain. 

During  the  year  ended  December  31,  2018,  the  Company  completed  the  sale  of  its  hazardous  waste 
business  in  the  U.K.  for  proceeds  of  $11.5  million  of  which  $8.2  million  was  received  in  cash  and  $3.0 
million  was  held  in  escrow,  until  it  was  received  in  August  2019.    The  Company  recognized  impairment 
charges  and  subsequent  loss  on  disposal  totaling  $16.5  million,  including  impairment  charges  of  $3.8 
million in 2016.  

During  the  year  ended  December  31,  2017,  the  Company  completed  the  divestiture  of  its  operations  in 
South Africa for proceeds of $7.3 million, resulting in a gain of $3.0 million. 

In addition during the year ended December 31, 2017, the Company completed the divestiture of  certain 
assets associated with its patient transport business in the U.K. for proceeds of $1.2 million, resulting in a 
net loss of $5.7 million.   

Environmental Solutions Business 

On  February  6,  2020,  the  Company  entered  into  the  Purchase  Agreement  to  sell  its  Domestic 
Environmental Solutions business to Harsco Corporation, exclusive of the Retained Business.  

2019 10-K Annual Report  

Stericycle, Inc.  •  88 

 
 
 
PART II 

Subject to the terms and conditions of the Purchase Agreement, the Buyer has agreed to purchase all of 
the outstanding equity interests of the Company’s Domestic Environmental Solutions subsidiary. Both the 
Company and Buyer have agreed to indemnify the other party for losses arising from certain breaches of 
the Purchase Agreement and other liabilities, subject to certain limitations.  

The purchase price for the Transaction is approximately $462.5 million,  and subject to adjustment based 
on  the  ESOL  Disposal  Group’s  net  working  capital  at  closing  and  other  adjustments  as  defined  in  the 
Purchase Agreement. The Transaction is anticipated to result in a loss which is currently not estimable. The 
expected charge is based on the Company’s current estimate of the proceeds that will be allocated to the 
disposal  transaction  as  it  evaluates  the  terms  of  the  HSA  agreement  negotiated  with  the  Buyer 
concurrently  with  the  Transaction,  the  net  assets  that  will  be  disposed  of  and  an  allocation  of  goodwill 
based  on  the  relative  fair  value  of  the  ESOL  Disposal  Group  to  the  Domestic  Environmental  Solutions 
reporting  unit.    The  remaining  goodwill  will  be  allocated  to  the  Retained  Business  which  the  Company 
anticipates  will  become  part  of  the  Domestic  Healthcare  Compliance  Services  reporting  unit  once  the 
transaction closes. 

The  Purchase  Agreement  contains  customary  representations,  warranties  and  covenants  related  to  the 
Business  and  the  Transaction.  Between  the  date  of  the  Purchase  Agreement  and  the  completion  of  the 
Transaction,  the  Company  has  agreed  to  conduct  the  ordinary  course  of  the  ESOL  Disposal  Group 
business consistent with past practices in all material respects and has agreed to certain other operating 
covenants  with  respect  to  the  ESOL  Disposal  Group  business  as  set  forth  more  fully  in  the  Purchase 
Agreement. The Purchase Agreement includes customary termination provisions, including if the closing 
of  the  Transaction  has  not  occurred  on  or  before  November  6,  2020  (which  may  be  extended  until 
February 6, 2021, if needed, to obtain applicable regulatory approvals). Both  the Company and the Buyer 
have  agreed  to  indemnify  the  other  party  for  losses  arising  from  certain  breaches  of  the  Purchase 
Agreement and other liabilities, subject to certain limitations. 

In  connection  with  the  closing  of  the  Transaction,  the  Company  and  Buyer  will  enter  into  certain 
additional  ancillary  agreements,  including  a  transition  services  agreement.  The  Company  and  Buyer  will 
also  enter  into  a  long-term  subcontracted  HSA  with  respect  to  the  Company's  Retained  Business.  The 
Company  currently  provides  integrated  waste  compliance  services  to  healthcare  customers,  including 
medical  and  hazardous  waste  disposal  services.  The  Company  will  continue  to  be  the  integrated  waste 
services provider to these customers and has subcontracted with the Buyer to performed hazardous waste 
services, including collection, transportation and disposal for the Company, as necessary.  

2019 10-K Annual Report  

Stericycle, Inc.  •  89 

 
 
 
PART II 

NOTE 5 – PROPERTY, PLANT AND EQUIPMENT 

Property, plant and equipment consisted of the following at December 31: 

In millions 

$ 

Land and improvements 
Building and improvements 
Machinery and equipment 
Vehicles 
Containers 
Office equipment and furniture 
Software and Enterprise Resource Planning system 
Construction in progress 

Total property, plant and equipment 

Less: accumulated depreciation 

Property, plant and equipment, net 

$ 

2019 

2018 

66.0    $ 
263.3      
342.4      
177.9      
246.6      
111.5      
84.3      
174.3      
1,466.3      
(667.8 )     
798.5    $ 

63.8  
243.5  
345.4  
178.9  
296.6  
126.8  
65.1  
101.5  
1,421.6  
(678.1 ) 
743.5  

Depreciation expense was $127.6 million, $125.6 million, and $131.1 million for the years ended December 
31, 2019, 2018, and 2017, respectively. 

2019 Impairments 

Non-cash impairment charges related to software and other property plant and equipment by reportable 
segment were as follows:  

In millions 

Included in COR 
Software 
Other property, plant and equipment 

Total included in COR 

Included in SG&A 
Software 
Other property, plant and equipment 

Total included in SGA 
Total impairments 

North America 
RWCS 

Year Ended December 31, 2019 
International 
RWCS 

     All Other 

Total 

$ 

$ 

-     $ 
2.0       
2.0       

-       
0.5       
0.5       
2.5     $ 

0.3    $ 
7.2      
7.5      

-      
0.4      
0.4      
7.9    $ 

1.3    $ 
-      
1.3      

-      
-      
-      
1.3    $ 

1.6   
9.2   
10.8   

-   
0.9   
0.9   
11.7   

2019 10-K Annual Report  

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The 2019 non-cash impairment charges related to software were in connection with the rationalization of 
applications within the CRS business. The non-cash impairment charges in COR related to property, plant 
and  equipment,  other  arose  as  a  result  of  a  site  move  in  North  America  and  the  rationalization  of  the 
Company’s operations in EMEA and LATAM. 

In  addition,  the  Company  recognized  non-cash  impairment  charges  of  $3.6  million  in  COR,  related  to 
property, plant and equipment associated with an impairment review of its operations in Brazil (see Note 7 
– Goodwill and Other Intangible Assets). 

2018 Impairments 

Non-cash impairment charges related to software and other property plant and equipment by reportable 
segment were as follows: 

In millions 

Included in COR 
Software 
Other property, plant and equipment 

Total included in COR 

Included in SG&A 
Software 
Other property, plant and equipment 

Total included in SG&A 
Total impairments 

$ 

$ 

Year Ended December 31, 2018 

North America 
RWCS 

International 
RWCS 

All Other 

Total 

7.4     $ 
0.3       
7.7       

1.0       
0.3       
1.3       
9.0     $ 

-    $ 
-      
-      

-      
5.1        
5.1      
5.1    $ 

17.6    $ 
-      
17.6      

1.4      

1.4      
19.0    $ 

25.0   
0.3   
25.3   

2.4   
5.4   
7.8   
33.1   

The  2018  non-cash  impairment  charges  related  to  software  were  in  connection  with  the  Company’s 
evolving  future  information  systems  strategy,  including  the  implementation  of  a  global  ERP  system  and 
the  impact  on  currently  deployed  software  as  well  as  rationalization  of  applications  used  within  each 
reportable segment.   The  non-cash impairment charges related to  other property, plant  and  equipment 
were as a result of the rationalization of the Company’s operations. 

2017 Impairments 

The 2017 non-cash impairment charges in SG&A of $7.3 million, related to property, plant and equipment, 
due to rationalizing certain of our operations, primarily in the International RWCS segment. 

2019 10-K Annual Report  

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PART II 

NOTE 6 – LEASES 

The Company has operating leases for vehicles, transfer sites, processing facilities, communication centers, 
corporate and regional offices, and certain equipment. 

The components of net lease cost were as follows: 

In millions 

Operating lease cost 
Finance lease cost: 

Amortization of leased assets 
Interest on lease liabilities 

Net lease cost 

Year Ended 
December 31, 2019 

$ 

$ 

117.2  

3.5  
1.0  
121.7  

Short-term lease cost, variable lease cost and sublease income were not significant during the period. 

Supplemental cash flow information related to leases was as follows: 

In millions 

Cash paid for amounts included in the measurement of lease liabilities: 

Operating cash flows from operating leases 
Operating cash flows from finance leases 
Financing cash flows from finance leases 

$ 

Right-of-use assets obtained in exchange for lease obligations: 

Operating leases 
Finance leases 

Year Ended  
December 31, 2019 

122.4  
0.9  
4.3  

203.8  
17.0  

Finance  lease  assets,  net  of  accumulated  amortization,  were  $30.1  million  as  of  December 31,  2019  and 
are included in Property, Plant and Equipment, net on the Consolidated Balance Sheet. 

Information regarding lease terms and discount rates is as follows: 

In millions 

Weighted average remaining lease term (years): 

Operating leases 
Finance leases 

Weighted average discount rate: 

Operating leases 
Finance leases 

December 31, 
2019 

6.4  
15.3  

4.11 % 
5.34 % 

2019 10-K Annual Report  

Stericycle, Inc.  •  92 

 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
 
  
 
  
 
 
 
 
 
 
 
  
 
 
 
  
 
 
Maturities of lease liabilities as of December 31, 2019, were as follows: 

In millions 

2020 
2021 
2022 
2023 
2024 
Thereafter 
Total lease payments 
Less: Interest 
Present value of lease liabilities 

Operating leases 

Finance leases 

$ 

$ 

112.6     $ 
95.6      
77.3      
62.4      
51.3      
109.0      
508.2      
57.3      
450.9     $ 

PART II 

6.5   
7.4   
3.1   
2.9   
2.6   
12.0   
34.5   
4.1   
30.4   

As of December 31, 2019, the Company had additional operating leases of $14.0 million which have not 
yet commenced.  These operating leases are expected to commence in fiscal year 2020 with lease terms 
of 3 to 15 years. 

As of December 31, 2018, prior to the adoption of ASC 842, future minimum payments under operating 
leases having initial or non-cancelable lease terms in excess of one year, including leases with an inception 
date but not yet commenced, and payments due under capital leases were as follows: 

In millions 

2019 
2020 
2021 
2022 
2023 
Thereafter 
Total lease payments 

Less amounts representing interest 
Total lease payments 

Operating leases 

Capital Leases 

$ 

$ 

107.0     $ 
88.7      
72.7      
54.8      
40.0      
128.7      
491.9      

     $ 

5.4   
5.6   
2.6   
2.3   
2.1   
5.9   
23.9   

(3.6 ) 
20.3   

2019 10-K Annual Report  

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NOTE 7 – GOODWILL AND OTHER INTANGIBLE ASSETS 

Goodwill: 

The changes in the carrying amount of goodwill were as follows: 

In millions 

North America 
RWCS 

International 
RWCS 

All Other 

Total 

Balance as of January 1, 2018 
Goodwill acquired during year 
Purchase accounting adjustments 
Impairments during the year 
Impairments related to divestitures (Note 4) 
Changes due to foreign currency fluctuations 
Balance as of December 31, 2018 
Purchase accounting adjustments (Note 3) 
Impairments during the year 
Impairments related to divestitures (Note 4) 
Changes due to foreign currency fluctuations and other 
Balance as of December 31, 2019 

$ 

$ 

2,850.2     $ 
32.2       
(16.9 )     

(5.8 )     
(11.3 )     
2,848.4       
(4.3 )     
(207.4 )     
(2.4 )     
(2.7 )     
2,631.6     $ 

466.8    $ 
-     
-     
(72.4 )    
-     
(20.6 )    
373.8     
-     
(20.9 )    
(6.2 )    
3.9     
350.6    $ 

287.0    $ 
-     
(0.7 )    
(286.3 )    
-     
-     
-     
-     
-     
-     
-     
-    $ 

3,604.0   
32.2   
(17.6 ) 
(358.7 ) 
(5.8 ) 
(31.9 ) 
3,222.2   
(4.3 ) 
(228.3 ) 
(8.6 ) 
1.2   
2,982.2   

Accumulated  non-cash  impairment  charges  by  segment  as  of  December  31,  2019  and  2018  were  as 
follows: 

In millions 

North America RWCS 
International RWCS 
All Other 
Total 

2019 Impairments 

2019 

2018 

$ 

$ 

215.6  
171.6  
286.3  
673.5  

 $ 

 $ 

5.8   
144.5   
286.3   
436.6   

The Company performed its annual goodwill assessment as of October 1, 2019, and determined that the 
Domestic  Environmental  Solutions  and  Canada  reporting  units’  carrying  values  were  in  excess  of  their 
estimated fair value. 

Factors  that  contributed  to  the  estimated  fair  value  of  the  reporting  units  being  below  their  carrying 
values included: 

(cid:120)  Domestic  Environmental  Solutions:    During  2019,  we  experienced  higher  operating  costs, 
particularly related  to hazardous waste disposal costs. In addition, we anticipate that the timeline 
for  achieving  the  betterment  plans  for  both  revenue  quality  and  cost  improvements  has  been 
extended.  The  Company  also  gathered  insights  from  the  process  of  evaluating  Domestic 
Environmental Solutions as part of the Company’s portfolio rationalization criteria. 

(cid:120)  Canada:  During  2019,  we  experienced  competitive  pricing  pressure  in  both  SID  Services  and 
Regulated Medical Waste Solutions, lower SOP pricing, higher medical and hazardous waste costs 
including  Canada based operating  costs due to a reliance on third-party disposal and U.S.-based 
enabling support costs. We expect these challenges to have a prolonged impact and have adjusted 
for them in our current year long-range plan. 

2019 10-K Annual Report  

Stericycle, Inc.  •  94 

 
 
 
 
  
  
    
   
   
  
  
  
  
       
  
  
  
  
  
  
  
 
  
  
   
  
  
  
  
  
PART II 

These challenges were factored into updates to the Company’s long-range plan and forecasted cash-flow 
assumptions. The Company also made certain adjustments to the risk premiums within the discount rates 
used to present value these forecasted cash-flows.  As a result, the Company recognized $80.8 million of 
non-cash  impairment  charges  related  its  Domestic  Environmental  Solutions  reporting  unit  and  $126.6 
million to fully impair the goodwill associated with its Canada reporting unit. 

During  the  first  quarter  of  2019,  there  were  business,  and  market  developments  and  insights  gathered 
from  the  Company’s  portfolio  rationalization  considerations,  which  negatively  impacted  the  estimated 
cash  flows  of  the  Company’s  Latin  America  reporting  unit  and  triggered  an  interim  assessment  as  of 
March 31, 2019.  The Company determined that the Latin America reporting unit’s carrying value was in 
excess of its estimated fair value and recognized $20.9 million of non-cash goodwill impairment charges 
related  to  the  Latin  America  reporting  unit.   Following  the  impairment,  the  Latin  America  reporting  unit 
has no remaining goodwill. 

2018 Impairments 

The  Company  performed  its  annual  goodwill  assessment  as  of  October  1,  2018,  and  an  interim 
assessment as of December 31, 2018. The Company determined that the Domestic CRS and Latin America 
reporting units’ carrying values were in excess of their estimated fair values.  

Factors that contributed to the estimated fair value of the reporting units being below their carrying value 
included: 

(cid:120)  Domestic  CRS:  The  Company  experienced  a  progressive  decrease  in  revenues  and  operating 
margins  in  2018  due  to  (i)  continued  declines  in  large  recall  events  leading  to  a  higher  level  of 
uncertainty of these occurring in future periods. (ii) recall events that had a smaller number of units 
and  significantly  lower  revenue  per  event  than  experienced  in  recent  years,  and  (iii)  continued 
decline in the volume of inbound/outbound call volumes for  the live voice services. The Company 
also gathered insights from its portfolio rationalization considerations which were initiated in 2018. 

(cid:120)  Latin America: The Company continued to experience prolonged challenges and volatility in certain 
markets due to declining market trends and cost pressures. Revenue increases in the M&I business 
due to inflationary price increases in Argentina  were offset by the impact of currency devaluation 
and the continuing declines in several local economies. 

These challenges were factored into updates to the Company’s forecasted cash-flow assumptions during 
the  fourth  quarter  of  2018  to  reflect  its  current  outlook  and  the  Company  made  certain  adjustments  to 
the  discount  rates  used  to  present  value  these  forecasted  cash-flows.    As  a  result  of  these  impairment 
assessments,  the  Company  recognized  $286.3  million  of  non-cash  goodwill  impairment  charges  to  fully 
impair the Domestic CRS reporting unit. In addition,  the Company recognized $72.4 million of non-cash 
goodwill impairment charges related to the Latin America reporting unit. 

2017 Impairments 

The Company performed its annual goodwill assessment, as of October 1, 2017 and evaluated the impact 
of  prolonged  declining  market  trends  in  Latin  America  and  continued  softness  in  the  Company’s  M&I 
regional  hazardous  waste  business.  Estimated  cash  flows  were  updated  to  reflect  these  challenging 
conditions  in  Latin  America  and,  as  a  result  of  the  impairment  assessment,  the  Company  recognized  a 
$65.0 million non-cash goodwill impairment charge.  The impairment charge recognized was the amount 
by which the carrying value of the Latin America reporting unit exceeded its fair value. 

The  fair  value  of  reporting  units,  used  in  both  the  annual  and  any  interim  goodwill  impairment 
assessments in 2019, 2018 and 2017, are classified as Level 3 measurements within the fair value hierarchy 
due to significant unobservable inputs such as discount rates, projections of revenue, cost of revenue and 

2019 10-K Annual Report  

Stericycle, Inc.  •  95 

 
 
PART II 

operating  expense  growth  rates,  long-term  growth  rates  and  income  tax  rates.    The  fair  value 
methodology is described further in Note 1 – Basis of Presentation and Summary of Significant Accounting 
Policies. 

Current  year  adjustments  to  goodwill  for  certain  prior  year  acquisitions  are  primarily  due  to  the 
finalization of intangible asset valuations among other opening balance sheet adjustments. 

Other Intangible Assets: 

At December 31, the values of other intangible assets were as follows: 

In millions 

Gross Carrying 
Amount 

2019 
Accumulated 
Amortization       Net Value 

Gross Carrying 
Amount 

2018 
Accumulated 
Amortization      Net Value 

Amortizable 
intangibles: 
Customer relationships  $ 
Covenants not-to-
compete 
Operating permits 
Tradenames 
Other 
Indefinite-lived 
intangibles: 
Operating permits 
Tradenames 

Total 

$ 

1,460.8     $ 

575.8     $ 

885.0     $ 

1,591.5    $ 

492.0    $ 

1,099.5   

4.9       
4.1       
3.6       
8.6       

3.8       
1.6       
1.1       
2.6       

1.1       
2.5      
2.5       
6.0       

5.1      
-     
3.9      
12.3      

3.2      
-     
1.2      
3.5      

1.9   
-   
2.7   
8.8   

211.1       
314.2       
2,007.3     $ 

-       
-       
584.9     $ 

211.1       
314.2       
1,422.4     $ 

212.5      
312.3      
2,137.6    $ 

-      
-      
499.9    $ 

212.5   
312.3   
1,637.7   

The changes in the carrying amount of intangible assets since January 1, 2018 were as follows: 

In millions 

$ 

Balance as of January 1, 2018 
Intangible assets acquired during the year 
Purchase accounting adjustments for prior year acquisitions    
Divestitures (Note 4) 
Impairments during the year 
Amortization during the year 
Changes due to foreign currency fluctuations 
Balance as of December 31, 2018 
Intangible assets acquired during the year 
Reclassification of capitalized permit costs 
Purchase accounting adjustments for prior year acquisitions 
(Note 3) 
Divestitures (Note 4) 
Impairments during the year 
Amortization during the year 
Changes due to foreign currency fluctuations 
Balance as of December 31, 2019 

$ 

Total 

1,791.5  
34.0  
10.2  
(14.4 ) 
(16.0 ) 
(130.3 ) 
(37.3 ) 
1,637.7  
0.5  
7.7  

4.2  
(67.5 ) 
(17.7 ) 
(145.2 ) 
2.7  
1,422.4  

The Company’s indefinite-lived intangible assets include operating permits and certain tradenames.   The 
Company  has  determined  that  certain  of  our  operating  permits  and  certain  tradenames  have  indefinite 
lives due to our ability to renew them with minimal additional cost, and therefore they are not amortized.  

2019 10-K Annual Report  

Stericycle, Inc.  •  96 

 
 
 
  
 
    
  
 
    
    
   
  
 
       
       
       
      
      
   
 
 
 
 
 
       
       
       
      
      
   
 
 
 
 
  
 
  
  
  
  
  
  
  
  
  
  
  
  
  
PART II 

The  Company  recognized  non-cash  impairment  charges  relating  to  customer  lists,  permits  and 
tradenames in the following reportable segments: 

In millions 

North America RWCS 
International RWCS 
All Other 

2019 

2018 

2017 

-    $ 
17.3     
0.4     
17.7    $ 

0.5    $ 
15.5     
-     
16.0    $ 

3.1   
12.1   
5.8   
21.0   

$ 

$ 

In  2019,  the  Company  recognized  non-cash  impairment  charges  of  $14.7  million,  to  write-off  customer 
relationship, permits, tradenames and other intangibles presented in the table above, and $3.6 million in 
respect to certain property plant and equipment (See Note 5 – Property, Plant and Equipment) related to 
the  Company’s Brazilian operations. Brazil has  continued to  experience  challenges including  commercial 
pricing pressure and higher customer attrition which contributed to actual and forecasted declines in cash 
flows reflected in our long-range plan finalized in the fourth quarter of 2019.  

The  remaining  $3.0  million  in  2019,  relates  to  the  write-off  of  various  customer  relationship  and  permit 
intangibles in EMEA, LATAM and North America as a result of rationalizing certain operations. 

The non-cash impairment charges recognized during the year ended December  31, 2018 included $10.3 
million related to customer relationship and permit intangibles, which were impaired as a result of actual 
and forecasted business declines, primarily in LATAM. 

The  remaining  non-cash  impairment  charges  incurred  during  the  year  ended  December  31,  2018  and 
2017 were recognized due to rationalizing certain operations across all segments. 

Finite-lived intangible assets are amortized over their estimated useful lives using the straight-line method 
with each category having weighted average remaining useful lives as follows: 

In years 

Customer relationships 
Covenants not-to-compete 
Tradenames 
Landfill air rights 

Estimated useful lives 

Weighted average 
remaining useful lives 
8.5 
2.4 
17.6 

14.4  

10-25       
5-14       
15-40       
5-26      

The  useful  life  of  intangible  assets  is  assessed  annually  to  determine  whether  events  and  circumstances 
warrant a revision to their remaining useful life and changes are reflected prospectively as the intangible 
asset is amortized over the revised remaining useful life.  In the fourth quarter of 2019, we performed the 
annual assessment of the useful life of our finite-lived intangibles and no changes were required. 

During the years ended December 31, 2019, 2018, and 2017, our aggregate intangible asset amortization 
expense was $145.2 million, $130.3 million, and $118.4 million, respectively. 

Our estimated intangible asset amortization expense for each of the next five years (based upon foreign 
exchange rates as of December 31, 2019) is as follows for the years ended December 31: 

In millions 
2020 
2021 
2022 
2023 
2024 

$ 

131.6  
125.0  
123.4  
120.9  
118.3   

2019 10-K Annual Report  

Stericycle, Inc.  •  97 

 
 
 
  
  
   
   
  
  
  
  
 
  
     
 
 
  
  
  
  
PART II 

NOTE 8 – ACCRUED LIABILITIES AND OTHER LONG TERM LIABILITIES 

Accrued liabilities consisted of the following at December 31: 

In millions 

Compensation 
Self-insurance 
Taxes 
Interest 
Professional fees 
Disposal and landfill liabilities 
Other 

Total accrued liabilities 

2019 

2018 

$ 

$ 

68.6    $ 
74.7      
50.7      
21.3      
22.1      
18.8      
40.4      
296.6    $ 

Other long-term liabilities consisted of the following at December 31: 

In millions 

Contingent consideration 
Environmental liabilities 
Asset retirement obligations 
Other long-term liabilities 

Total other long-term liabilities 

NOTE 9 – DEBT 

2019 

2018 

$ 

$ 

7.4    $ 
27.2      
19.4      
10.2      
64.2    $ 

80.0  
72.8  
42.3  
14.7  
40.1  
15.9  
75.0  
340.8  

7.5  
28.2  
19.1  
15.9  
70.7  

Long-term debt consisted of the following at December 31: 

In millions 

$1.2 billion senior credit facility, due in 2022 
$1.3 billion term loan, due in 2022 
$600 million Senior Notes, due in 2024 
$125 million private placement notes, due in 2019 (repaid in June 2019, see below) 
$225 million private placement notes, due in 2020 (repaid in June 2019, see below) 
$150 million private placement notes, due in 2021 (repaid in June 2019, see below) 
$125 million private placement notes, due in 2022 (repaid in June 2019, see below) 
$200 million private placement notes, due in 2022 (repaid in June 2019, see below) 
$100 million private placement notes, due in 2023 (repaid in June 2019, see below) 
$150 million private placement notes, due in 2023 (repaid in June 2019, see below) 
Promissory notes and deferred consideration, weighted average maturity of 2.49 and 2.74 
years for 2019 and 2018 
Foreign bank debt, weighted average maturity of 1.6 years for 2019 and 1.9 years for 2018 
Obligations under finance leases (Note 6) 

Total debt 

Less: current portion of total debt 
Less: unamortized debt issuance costs 

Long-term portion of total debt 

2019 

2018 

$ 

$ 

758.7    $ 
1,172.2      
600.0      
-      
-      
-      
-      
-      
-      
-      

73.1      
42.2      
30.4      
2,676.6      
103.1      
14.2      
2,559.3    $ 

583.3   
902.5   
-   
125.0   
225.0   
150.0   
125.0   
200.0   
100.0   
150.0   

120.9   
76.7   
20.3   
2,778.7   
104.3   
10.5   
2,663.9   

The weighted average interest rates on long-term debt, excluding finance leases, as of December 31, 2019 
and 2018 were as follows: 

2019 10-K Annual Report  

Stericycle, Inc.  •  98 

 
 
 
 
 
  
   
 
  
  
  
  
  
  
 
 
  
   
 
  
  
  
 
 
  
  
    
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$1.2 billion senior credit facility, due in 2022 (variable rate based on LIBOR) 
$1.3 billion term loan, due in 2022 (variable rate based on LIBOR) 
$600 million Senior Notes, due in 2024 (fixed rate) 
$125 million private placement notes, due in 2019 
$225 million private placement notes, due in 2020 
$150 million private placement notes, due in 2021 
$125 million private placement notes, due in 2022 
$200 million private placement notes, due in 2022 
$100 million private placement notes, due in 2023 
$150 million private placement notes, due in 2023 
Promissory notes and deferred consideration (fixed rate) 
Foreign bank debt (variable rate) 

Credit Agreement  

PART II 

3.77 % 
4.07 % 
–   
3.43 % 
5.22 % 
3.64 % 
4.01 % 
3.47 % 
3.54 % 
3.93 % 
1.79 % 
5.81 % 

2019 

2018 

3.57 %    
3.44 %    
5.38 %    
–  
–  
–  
–  
–  
–  
–  
1.81 %    
4.43 %    

The Company entered into the Credit Agreement, as amended which provided for a term loan facility of 
$950.0 million and a revolving credit facility of $1.2 billion.  The obligations under the Credit Agreement 
are  secured  and  the  Company  is  required  to  meet  certain  covenants  including  the  requirement  to 
maintain the Consolidated Leverage Ratio below a maximum threshold.  

On February 25, 2020, the Company executed a Fifth Amendment which amended the Credit Agreement 
to, among other things:  

(cid:120) 

increase the maximum allowable Consolidated Leverage Ratio to 5.00 to 1.00 until the end of the 
first quarter of 2022 and 4.50 to 1.00 thereafter.  

(cid:120)  upon  the  consummation  of  the  divesture  of  the  ESOL  Disposal  Group,  each  of  the  foregoing 
maximum permitted Consolidated Leverage Ratio levels will step down to 4.75 to 1.00 and 4.25 to 
1.00, respectively.  

(cid:120) 

(cid:120) 

allow  for  continuation  of  the  $200  million  of  cash  add  backs  to  EBITDA  through  December  31, 
2020, and addbacks of $100 million until December 31, 2021, with no further addbacks thereafter. 

increase the leverage ratio pricing tier of greater than 4.50 to 1.00 by 0.125%,  

(cid:120)  grant a first-priority security interest to the administrative agent for the benefit of the lenders in 
substantially  all  of  the  personal  property  of  the  Company  and  certain  of  its  material  domestic 
subsidiaries, including certain equity interests held by those entities. 

We expect to incur facility and other fees of approximately $2.0 million in connection with the execution 
of the Fifth Amendment. 

As of December 31, 2019, the Company was in compliance with its Consolidated Leverage Ratio covenant, 
with  an  actual  ratio  of  4.45  to  1.00,  which  was  below  the  allowed  maximum  ratio  of  5.00  to  1.00  as  set 
forth in the Fifth Amendment. 

Senior Notes 

During  2019,  the  Company  issued  $600.0  million  at  par  of  aggregate  principal  Senior  Notes,  due  July 
2024, which are unsecured and bear interest at 5.375% per annum, payable on January 15 and July 15 of 
each year.  The Senior Notes are fully and unconditionally guaranteed by each of the Company’s current 
domestic subsidiaries that guarantee the Company’s Senior Credit Facility.  The Indenture limits the ability 
of  the  Company  and  its  subsidiaries  to  incur  certain  liens,  enter  into  certain  sale  and  leaseback 
transactions, and consolidate, merge or sell all or substantially all of their assets. 

The Senior Notes will be redeemable, at the option of the Company, in whole or in part, at any time on or 

2019 10-K Annual Report  

Stericycle, Inc.  •  99 

 
 
  
    
  
 
 
 
 
   
 
   
 
   
 
   
 
   
 
   
 
   
 
 
PART II 

after July 15, 2021, at the redemption prices specified in the Indenture along with accrued interest.  At any 
time prior to July 15, 2021, the Senior Notes may be redeemed, at the option of the Company, in whole or 
in part, at a redemption price of 100% of the principal amount thereof, plus a “make-whole” premium and 
accrued and unpaid interest.  In addition, the Company may redeem up to 40% of the Senior Notes at any 
time before July 15, 2021, with the net cash proceeds from certain equity offerings at a redemption price 
equal to 105.375%, plus accrued and unpaid interest. 

In the event of both a change of control of the Company and a rating downgrade by the rating agencies, 
the  Company  will  be  required  to  offer  to  repurchase  all  outstanding  Senior  Notes  at  101%  of  their 
principal amount, plus accrued and unpaid interest. 

The Indenture contains customary events of default, which include (subject in certain cases to customary 
grace  and  cure  periods),  nonpayment  of  principal  or  interest;  breach  of  other  agreements  in  the 
Indenture; failure to pay certain other indebtedness; certain events of bankruptcy or insolvency; failure to 
pay certain final judgments; and failure of certain guarantees to be enforceable. 

In connection with the issuance of the Senior Notes, the Company incurred $ 7.1 million of direct issuance 
costs, which have been capitalized in unamortized debt issuance costs and are being amortized to Interest 
expense, net over the term of the Senior Notes.  

Private Placement Notes 

In addition, during 2019 the Company  repaid in full $1.075 billion of the outstanding private placement 
notes  using  the  net  proceeds  from  the  Senior  Notes  and  the  incremental  Term  Loan  together  with 
additional borrowings under the Senior Credit Facility. 

In connection with the repayment of the private placement notes, the Company incurred a loss on early 
extinguishment  of  debt  of  $23.1  million  comprising  make  whole  premiums,  payable  under  the  terms  of 
certain of the private placement notes, of $20.4 million and the write-off of $2.7 million of unamortized 
debt issuance costs associated with the private placement notes. 

In addition, $3.4 million, representing the unamortized portion of premiums associated with interest rate 
locks executed in connection with the issuance of certain of the private placement notes, was recorded in 
Interest expense, net.  These amounts were previously included in Accumulated other comprehensive loss 
on the Consolidated Balance Sheet. 

Other Matters 

Amounts committed to outstanding letters of credit and the unused portion of our Senior Credit Facility 
at December 31 were as follows: 

In millions 

Outstanding letters of credit under Senior Credit Facility 
Unused portion of the Revolving Credit Facility 

$ 

33.0     $ 
408.3      

63.1   
553.6   

2019 

2018 

2019 10-K Annual Report  

Stericycle, Inc.  •  100 

 
 
 
  
  
    
  
  
Payments  due  on  long-term  debt,  excluding  finance  lease  obligations,  during  each  of  the  five  years 
subsequent to December 31, 2019 are as follows: 

PART II 

In millions 
2020 
2021 
2022 
2023 
2024 
Thereafter 
Total 

$ 

$ 

98.0  
126.7  
1,809.9  
5.1  
605.2  
1.3  
2,646.2   

NOTE 10 – INCOME TAXES 

The  U.S.  and  International  components  of  loss  before  income  taxes  consisted  of  the  following  for  the 
years ended, December 31: 

In millions 

United States 
Foreign 

Total loss before income taxes 

2019 

2018 

2017 

$ 

$ 

(150.5 )   $ 
(212.3 )     
(362.8 )   $ 

(189.1 )   $ 
(86.3 )     
(275.4 )   $ 

(9.6 ) 
(98.3 ) 
(107.9 ) 

Significant components of the Company’s income tax benefit (expense) for the years ended December 31, 
are as follows: 

In millions 

Current 

United States - federal 
United States - state and local 
Foreign 

Deferred 

United States - federal 
United States - state and local 
Foreign 

Total benefit 

2019 

2018 

2017 

$ 

$ 

-     $ 
(10.7 )     
(6.4 )     
(17.1 )     

23.9       
8.0       
2.0       
33.9       
16.8     $ 

-    $ 
(0.4 )     
(8.5 )     
(8.9 )     

24.4      
11.2      
3.1      
38.7      
29.8    $ 

(107.0 ) 
(10.0 ) 
(7.1 ) 
(124.1 ) 

256.1   
9.8   
9.1   
275.0   
150.9   

2019 10-K Annual Report  

Stericycle, Inc.  •  101 

 
 
 
 
  
  
  
  
  
 
 
  
  
     
    
  
  
 
  
  
    
   
  
  
       
      
   
  
  
 
  
  
       
      
   
  
  
  
 
  
A reconciliation of the income tax provision computed at the federal statutory rate to the effective tax rate 
for the years ended December 31, are as follows: 

2019 

2018 

2017 

PART II 

35.0 % 

3.9 % 
(2.7 %) 
(2.1 %) 
(12.0 %) 
120.3 % 
(4.6 %) 
-   
(0.6 %) 
2.7 % 
139.9 % 

Federal statutory income tax rate 
Effect of: 

State and local taxes, net of federal tax effect 
Foreign tax rates 
Permanent - other items 
Permanent - goodwill impairment 
Tax Act 
Valuation allowance 
Divestitures 
Stock-based compensation 
Other 

Effective tax rate 

21.0 %     

1.2 %     
5.1 %     
(4.2 %)    
(14.1 %)    
-   
(1.2 %)    
1.2 %     
(1.0 %)    
(3.4 %)    
4.6 %     

Deferred tax liabilities and assets at December 31, were as follows: 

In millions 

Deferred tax liabilities: 

Property, plant and equipment 
Goodwill and intangibles 
Leases - right of use asset 
Other 

Total deferred tax liabilities 
Deferred tax assets: 
Accrued liabilities 
Leases - right of use liability 
Net operating tax loss carry-forwards 
Interest expense carry-forward 
Other 

Less: valuation allowance 
Total deferred tax assets 
Net deferred tax liabilities 

2019 

2018 

$ 

$ 

(68.1 )   $ 
(417.9 )     
(84.5 )     
(10.9 )     
(581.4 )     

87.8      
88.7      
116.2      
31.2      
11.4      
(39.4 )     
295.9      
(285.5 )   $ 

21.0 %     

4.2 %     
4.2 %     
0.5 %     
(9.1 %)    
(3.2 %)    
(7.5 %)    
-  
1.2 %     
(0.5 %)    
10.8 %     

(68.9 ) 
(395.1 ) 
-  
(22.7 ) 
(486.7 ) 

84.4  
-  
88.9  
13.4  
39.9  
(35.3 ) 
191.3  
(295.4 ) 

The valuation allowance increased $4.1 million during the year ended December 31, 2019, primarily due to 
non-benefited foreign losses. 

On  December  22,  2017,  the  Tax  Act  was  signed  into  law  making  significant  changes  to  the  Internal 
Revenue  Code.    Changes  included,  but  were  not  limited  to,  a  corporate  income  tax  rate  decrease  from 
35% to 21% effective for tax years beginning after December 31, 2017, the transition of U.S. international 
taxation  from  a  worldwide  tax  system  to  a  territorial  system,  and  a  one-time  transition  tax  on  the 
mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017.   

2019 10-K Annual Report  

Stericycle, Inc.  •  102 

 
 
 
 
  
 
 
 
  
  
  
   
   
  
   
   
  
  
  
  
  
   
  
  
   
  
  
  
 
 
  
   
 
  
      
  
  
  
  
  
  
      
  
  
  
  
  
  
  
  
PART II 

In accordance with SAB 118 and the Company’s understanding of the Tax Act and guidance available, the 
Company calculated the provisional estimate of the tax impact of the Tax Act on its year end 2017 income 
tax benefit/provision and as a result  recognized an income tax (benefit) of ($129.8) million in the fourth 
quarter of 2017, the period in which the legislation was enacted.  The provisional amount related to the 
re-measurement  of  certain  deferred  tax  assets  and  liabilities  based  on  the  rates  at  which  they  are 
expected to reverse in the  future, the  one-time transition tax on the mandatory  deemed repatriation of 
foreign earnings and the related expected foreign withholding taxes on such earnings are reflected in the 
table below. 

The net tax benefit recognized during the year ended December 31, 2017,  related to the Tax Act was as 
follows: 

In millions 
Remeasurement of net deferred tax liabilities due to enacted rate reduction 
Section 965 transition tax on foreign earnings 
Foreign withholding taxes on such earnings 
Net tax benefit from the Tax Act 

$ 

$ 

167.7  
(24.3 ) 
(13.6 ) 
129.8  

During the year ended December 31, 2018, the Company adjusted the provisional amounts recognized as 
of December 31, 2017 for the one-time transition tax, deferred taxes and foreign withholding taxes.  These 
adjustments  resulted  in  a  net  charge  to  the  tax  provision  of  $8.8  million.  As  of  December  31,  2018,  the 
accounting for the various elements of the Tax Act was complete. Adjustments may be necessary in future 
periods  due  to  potential  technical  corrections  to  the  Tax  Act  and/or  regulatory  guidance  that  may  be 
issued by the U.S. Internal Revenue Service. 

Prior  to  the  enactment  of  the  Tax  Act,  the  Company  treated  the  undistributed  earnings  from  foreign 
subsidiaries  as  indefinitely  reinvested.   The  Company  continues  to  assert  permanent  reinvestment  in  its 
first tier subsidiaries, but lifts the assertion on deferred foreign earnings that were taxed under the Tax Act 
on lower tier subsidiaries.  A withholding tax accrual has been recorded where appropriate.  The Company 
has not provided for deferred taxes on outside basis differences for investments in its foreign subsidiaries 
that  are  unrelated  to  unremitted  earnings  as  these  basis  differences  will  be  indefinitely  reinvested.   A 
determination of the unrecognized deferred taxes related to these other components of outstanding basis 
difference is not practicable to calculate. 

At December 31, 2019, the net operating loss carry-forwards from both foreign and domestic operations 
are approximately $379.4 million and certain of these net operating loss carry-forwards begin to expire in 
2021.  The tax benefit of these net operating losses is approximately $116.2 million at December 31, 2019, 
on which a valuation allowance of $30.8 million was recognized offsetting such tax benefit. 

We file income tax returns in the United States, in various states and in certain foreign jurisdictions. With a 
few exceptions, we are no longer subject to U.S. federal, state, local, or non-US income tax examinations 
by tax authorities for years prior to 2015.   

The  Company  has  recognized  liabilities  to  cover  certain  uncertain  tax  positions.    Such  uncertain  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  uncertain  tax 
positions  as  deemed  necessary.    The  estimated  amount  of  the  liability  associated  with  the  Company’s 
uncertain tax positions that may significantly increase or decrease within the next twelve months cannot 
be reasonably estimated. 

The  total  amount  of  unrecognized  tax  benefit  at  December 31,  2019  is  $62.7  million.    The  amount  of 
uncertain  tax  positions  that,  if  recognized,  would  affect  the  effective  tax  rate  is  approximately  $61.3 

2019 10-K Annual Report  

Stericycle, Inc.  •  103 

 
 
 
 
 
 
million.    We  recognized  interest  and  penalties  related  to  income  tax  reserves  in  the  amount  of  $(0.7) 
million, $0.8 million, and $0.3 million for the years ended December 31, 2019, 2018 and 2017, respectively, 
as a component of income tax expense. 

The  following  table  summarizes  the  aggregate  changes  in  unrecognized  tax  benefits  during  the  years 
ended December 31, 2019 and 2018: 

PART II 

$ 

In millions 
Unrecognized tax positions as of January 1, 2018 
Gross increases - tax positions in prior periods 
Gross increases - current period tax positions 
Settlement 
Lapse of statute of limitations 

Unrecognized tax positions as of December 31, 2018 

Gross increases (decreases) - tax positions in prior periods 
Gross increases - current period tax positions 
Settlement 
Lapse of statute of limitations 

Unrecognized tax positions as of December 31, 2019 

$ 

27.4  
1.1  
43.5  
(2.0 ) 
(5.3 ) 
64.7  
1.2  
4.6  
(0.2 ) 
(7.6 ) 
62.7  

The  table  above  includes  amounts  that  relate  to  uncertain  tax  positions  from  acquired  companies.  
Purchase agreements to acquire the stock of a target generally provide that the seller is liable for and has 
indemnified  the  Company  against  all  income  tax  liabilities  for  periods  prior  to  the  acquisition.    The 
Company will be responsible for unrecognized tax benefits and related interest and penalties for periods 
after the acquisition. 

The  Company  filed  a  PFA  with  the  IRS  related  to  a  claim  under  Internal  Revenue  Code  Section  1341 
concerning the tax rate to be applied to the SQ Settlement on the Company’s 2018 tax return. The IRS has 
agreed to review the position and discussions are ongoing.  

As of December 31, 2019 and 2018, the Company has established a long-term receivable and an amount 
within  the  uncertain  tax  positions  to  reflect  its  estimate  of  the  potential  refund  should  its  claim  be 
successful. Any positive income tax benefit resulting from the claim in a future period will be recognized 
as appropriate in accordance with the guidance in ASC 740 on the accounting for uncertain tax positions. 
There can be no assurance that this amount or any amount will be recovered as a result of this claim. 

NOTE 11 – 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 as described below: 

Level 1 – Quoted prices in active markets for identical assets or liabilities (highest priority). 

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  estimate  of 
assumptions that market participants would use in pricing the asset or liability (lowest priority). 

2019 10-K Annual Report  

Stericycle, Inc.  •  104 

 
 
 
 
  
  
  
  
  
  
  
  
  
PART II 

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 and non-performance 
risk  has  been  considered  in  the  fair  value  measurements  noted  below.    There  were  no  movements  of 
items between fair value hierarchies in the periods presented. 

At  December  31,  2018,  the  Company  had  recognized  a  $0.3  million  asset  related  to  the  fair  value, 
established  using  Level  2  inputs,  of  a  U.S.  dollar-Canadian  dollar  foreign  currency  swap  which  was 
classified as Other assets.  The objective of the swap  was to offset the foreign exchange risk to the  U.S. 
dollar equivalent cash outflows for our Canadian subsidiary. The swap was fully amortized as of December 
31, 2019. 

Our  contingent  consideration  liabilities  are  reassessed  at  the  end  of  every  reporting  period  and  are 
recorded  using  Level  3  inputs.  The  amounts  are  classified  as  either  Other  current  liabilities  or  Other 
liabilities and are presented as follows as of December 31: 

In millions 

Other current liabilities 
Other liabilities (see Note 8) 

Total contingent consideration 

2019 

2018 

$ 

$ 

0.6    $ 
7.4   
8.0  

 $ 

2.8  
7.5  
10.3  

Contingent  consideration  represents  amounts  expected  to  be  paid  as  part  of  acquisition  consideration 
only if certain future events occur.  The Company arrives at the fair value of contingent consideration by 
applying  a  weighted  probability  of  potential  payment  outcomes.    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, the maximum aggregate liability would be $10.7 
million at December 31, 2019. 

Changes to contingent consideration are reflected in the table below: 

In millions 
Contingent consideration as of January 1, 2018 
Purchase accounting adjustments 
Decrease due to payments 
Change in fair value reflected in SG&A 
Other 
Contingent consideration as of December 31, 2018 
Decrease due to payments 
Contingent consideration as of December 31, 2019 

$ 

$ 

12.4  
(0.4 ) 
(1.3 ) 
0.2  
(0.6 ) 
10.3  
(2.3 ) 
8.0  

In  addition  to  assets  and  liabilities  that  are  recorded  at  fair  value  on  a  recurring  basis,  the  Company  is 
required to record certain assets and liabilities at fair value on a nonrecurring basis, generally as result of 
acquisitions,  the  classification  of  disposal  groups  as  held-for-sale,  or  the  re-measurement  of  assets 
resulting in impairment charges.  See Note 3 – Acquisitions, Note 4 – Restructuring and Divestitures, Note 5 
Property, Plant and Equipment, and Note 7 Goodwill And Other Intangible Assets for further discussion of 
the fair value of assets and liabilities associated with Acquisitions and Assets Held for Sale.  These values 
are generated using Level 3 inputs. 

Fair  Value  of  Debt:  The  estimated  fair  value  of  the  Company’s  debt  obligations,  using  Level  2  inputs, 
compared to the carrying amount at December 31 was as follows: 

2019 10-K Annual Report  

Stericycle, Inc.  •  105 

 
 
 
 
  
    
 
  
 
 
 
  
  
  
  
  
  
PART II 

In billions 

Fair value of debt obligations 
Carrying value of debt obligations 

2019 

2018 

$ 

2.73    $ 
2.68      

2.75  
2.78  

The  fair  values  were  estimated  using  an  income  approach  by  applying  market  interest  rates  for 
comparable instruments. 

Accounts  receivable,  accounts  payable  and  accrued  liabilities  are  financial  assets  and  liabilities, 
respectively, with carrying values that approximate fair value, using Level 3 inputs. 

NOTE 12 – COMMITMENTS AND CONTINGENCIES 

Environmental Remediation Liabilities  

The Company records a liability for environmental remediation when such liability becomes probable and 
the  costs  or  damages  can  be  reasonably  estimated.    The  Company  accrues  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  liabilities  are  based  on  currently  available  information,  estimated  timing  of 
remedial actions, existing technology, and enacted laws and regulations. 

Environmental remediation liabilities in total at December 31 were presented as follows:  

In millions 

Accrued liabilities - other (Note 8) 
Other long term liabilities (Note 8) 
Total environmental liabilities 

$ 

$ 

2019 

2018 

4.7     $ 
27.2      
31.9     $ 

5.3   
28.2   
33.5   

We project estimated payments over approximately 30 years.  

Asset Retirement Obligations 

The Company has asset retirement obligations that it is required to perform under law or contract once an 
asset  is  permanently  taken  out  of  service.    Most  of  these  obligations  are  not  expected  to  be  paid  until 
many years in the future and are expected to be funded from general company resources at the time of 
removal. 

At  December  31,  2019  and  2018,  the  total  asset  retirement  obligation  liabilities  recognized  were  $19.4 
million  and  $19.1  million,  respectively,  and  were  included  in  Other  long  term  liabilities  on  the 
Consolidated Balance Sheets (see Note 8 – Accrued Liabilities and Other Long Term Liabilities). 

2019 10-K Annual Report  

Stericycle, Inc.  •  106 

 
 
 
 
  
   
 
  
 
  
  
    
  
  
Unconditional Purchase Commitments 

The  Company  has  entered  into  non-cancelable  arrangements  with  third-parties,  primarily  related  to 
information  technology  products  and  services.  As  of  December 31,  2019,  future  payments  under  these 
contractual obligations, which are not recognized on the Consolidated Balance Sheets, were as follows: 

PART II 

In millions 
2020 
2021 
2022 
2023 
2024 
Thereafter 

$ 

$ 

159.1  
29.7  
22.9  
9.3  
8.3  
-  
229.3   

Letters of Credit, Surety Bonds and Bank Guarantees 

As  of  December 31,  2019  and  2018,  the  Company  had  $33.0  million  and  $63.1  million,  respectively,  of 
stand-by letters of credit outstanding against our senior credit facility (see Note 9 – Debt).  At December 
31, 2019 and 2018 we also had $52.3 million and $52.2 million, respectively, of stand-by letters of credit 
outstanding  against  another  facility  which  was  entered  into  during  2018.    In  addition,  at  December  31, 
2019  and  2018  we  had,  $72.3  million  and  $63.7  million,  respectively,  of  surety  bonds,  and  $19.3  million 
and  $19.5  million,  respectively,  of  bank  guarantees.    The  bank  guarantees  are  issued  mostly  by  the 
Company’s  international  subsidiaries  for  various  purposes,  including  leases,  seller  notes,  contracts  and 
permits.    The  surety  bonds  are  used  for  performance  and  financial  guarantees.    Neither  the  bank 
guarantees nor the surety bonds affect the Company’s ability to use its various lines of credit. 

NOTE 13 – RETIREMENT AND OTHER EMPLOYEE BENEFIT PROGRAMS 

Defined Contribution Plans: 

The Company has a 401(k) defined contribution retirement savings plan (the “Plan”) covering substantially 
all domestic employees.  Each participant may elect to defer a portion of his or her compensation subject 
to certain limitations.  The Company may contribute up to 50% of compensation contributed to the Plan 
by each employee up to a maximum of $3,000 per annum.  During the years  ended December 31, 2019, 
2018 and 2017, our contributions were $11.0 million, $10.6 million, and $8.9 million, respectively.   

The  Company  also  has  several  foreign  defined  contribution  plans,  which  require  the  Company  to 
contribute a percentage of the participating employee’s salary according to local regulations.  During the 
years  ended  December 31,  2019,  2018  and  2017,  total  contributions  made  by  the  Company  for  these 
plans were approximately $5.0 million, $3.1 million, and $3.4 million, respectively. 

Multiemployer Defined Benefit Pension Plans: 

The  Company  participates  in  two  trustee-managed  multiemployer  defined  benefit  pension  plans 
(“Multiemployer Pension Plans”) for employees who are covered by collective bargaining agreements. The 
risks  of  participating  in  these  Multiemployer  Pension  Plans  are  different  from  single-employer  plans  in 
that  (i)  assets contributed  to the Multiemployer  Pension Plan by one employer  may be used  to provide 
benefits  to  employees  or  former  employees  of  other  participating  employers;  (ii)  if  a  participating 
employer  stops  contributing  to  the  Multiemployer  Pension  Plans,  the  unfunded  obligations  of  the 
Multiemployer  Pension  Plan  may  be  required  to  be  assumed  by  the  remaining  participating  employers 
and (iii) if the Company chooses to stop participating in any of its Multiemployer Pension Plans or if any 
event should significantly reduce or eliminate the need to participate (such as employee layoffs or closure 

2019 10-K Annual Report  

Stericycle, Inc.  •  107 

 
 
 
 
  
  
  
  
  
 
 
PART II 

of  a  location),  the  Company  may  be  required  to  pay  those  plans  a  withdrawal  amount  based  on  the 
underfunded status of the plan.  Based upon the most recent information available, one of the plans the 
Company participates in is in “critical” status due to an accumulated funding deficiency and has adopted a 
rehabilitation plan to address the funding deficiency position. 

The following table outlines the Company’s participation in Multiemployer Pension Plans: 

Pension Protection 
Act Zone Status (1), (3)    

Company 
Contributions (4) 
(in millions) 

Plan 
Employer ID 
Number 

  Plan #     2019 

2018 

FIP/RP Status 
(2) 

   2019 

    2018 

13-1975659   

1   

Red/ 
Critical   

Red/ 

Critical    Implemented 

 $ 

0.6    $ 

0.6    

Expiration Date 
of Collective 
Bargaining 
Agreements 

3/31/2020 and 
6/30/2022 

13-3628926   

1   

Green   

Green   

N/A   $ 

-    $ 

-    

various dates 

Pension Plan Private 
Sanitation Union, Local 
813 IBT 
Nurses And Local 813 
IBT Retirement Plan 

(1)  Zone status is defined by the Department of Labor and  the Pension  Protection  Act of 2006 and 
represents the level at which the plan is funded.  Plans in the red zone are less than 65% funded, 
while  plans  in  the  green  zone  are  at  least  80%  funded.  Status  is  based  on  information  received 
from the Multiemployer Pension Plans and is certified by the pension plans actuary. 

(2)  The  "FIP/RP  Status"  column  indicates  Multiemployer  Pension  Plans  for  which  a  Funding 
Improvement  Plan  ("FIP”)  or  a  Rehabilitation  Plan  ("RP")  has  been  implemented  or  is  pending.  
The  most recent  Pension Protection Act zone status available in 2019 and 2018 is for the plans’ 
year-end December 31, 2018 and 2017, respectively. 

(3)  A  Multiemployer  Pension  Plan  that  has  been  certified  as  endangered,  seriously  endangered  or 
critical  may  begin  to  levy  a  statutory  surcharge  on  contribution  rates.    Once  authorized,  the 
surcharge  is  at  the  rate  of  5%  for  the  first  12  months  and  10%  for  any  periods  thereafter,  until 
certain  conditions  are  met.    Contributing  employers,  however,  may  eliminate  the  surcharge  by 
entering into a collective bargaining agreement that meets the requirements of the applicable FIP 
or RP. 

(4)  The Company was listed in the Form 5500 for the Pension Plan Private Sanitation Union Local 813 
IBT  as  individually  significant  for  contributing  more  than  5%  of  total  contributions  to  such  plan 
during the plan years ended December 31, 2018 and 2017.  At the date these financial statements 
were  issued,  Forms  5500  were  not  available  for  the  Multiemployer  Pension  Plans  for  the  year 
ended December 31, 2019. 

NOTE 14 – STOCK BASED COMPENSATION 

At December 31, 2019, the Company had the following incentive stock plans: 

(cid:120) 
(cid:120) 
(cid:120) 
(cid:120) 
(cid:120) 
(cid:120) 

the 2017 Plan; 
the 2014 Plan; 
the 2011 Plan; 
the 2008 Plan; 
the 2005 Plan; and 
the 2000 Plan. 

2019 10-K Annual Report  

Stericycle, Inc.  •  108 

 
 
 
  
 
 
  
  
  
  
   
 
  
 
  
    
PART II 

At  December 31,  2019,  the  Company  had  reserved  a  total  of  3,043,981  shares  for  issuance  under  its 
incentive stock plans. 

The Plans provide for the grant of NSOs, ISOs, RSUs, and PSUs intended to qualify under Section 422 of 
the Internal Revenue Code; and the 2000 Plan provides for the grant of NSOs.  The Plans authorize awards 
to the Company’s officers, employees and consultants, and to the Company’s directors. 

The exercise price per share of an option granted under any of the Plans may not be less than the closing 
price of a share of the Company’s common stock on the date of grant.  The maximum term of an option 
granted under any of the Plans may not exceed 8 or 10 years.  An option may be exercised only when it is 
vested and, in the case of an option granted to an employee (including an officer), only while he or she 
remains an employee and for a limited period following the termination of his or her employment.  New 
shares are issued upon exercise of stock options. 

Employee Stock Purchase Plan: 

In October 2000, our Board of Directors adopted the ESPP, which our stockholders approved in May 2001, 
and was made effective as of July 1, 2001.  The ESPP authorizes 1,299,999 shares of our common stock, 
which substantially all employees may purchase through payroll deductions at a price equal to 85% of the 
fair  market  values  of  the  stock  as  of  the  end  of  the  six-month  offering  period.    An  employee's  payroll 
deductions,  and  stock purchase,  may not  exceed  $5,000 during any offering period.  During  2019, 2018 
and 2017, 97,669 shares, 131,959 shares, and 109,762 shares, respectively, were issued through the ESPP.  
In May 2017, our shareholders approved an amendment to the ESPP which authorizes the issuance of an 
additional 300,000 shares.  At December 31, 2019, we had 63,703 shares available for issuance under the 
ESPP plan. 

In  March  2016,  our  Board  of  Directors  approved  the  Canada  ESPP,  which  our  stockholders  approved  in 
May  2016.    The  Canada  ESPP  authorizes  100,000  shares  of  our  common  stock  which  substantially  all 
Canadian employees may purchase through payroll deductions, at a price equal to 95% of the fair market 
values of the stock at the end of the six-month offering period.  An employee's payroll deductions, and 
stock purchase, may not exceed $5,000 during any offering period.  During  2019, 2018, and 2017, 1,073 
shares,  2,283  shares,  and  1,766  shares,  respectively,  were  issued  through  the  Canada  ESPP.    At 
December 31, 2019, we had 94,122 shares available for issuance under the Canada ESPP plan. 

Stock-Based Compensation Expense: 

During  2019,  there  were  no  changes  to  our  stock  compensation  plans  or  modifications  to  outstanding 
stock-based awards which would change the value of any awards outstanding. 

The  following  table  presents  the  total  stock-based  compensation  expense  resulting  from  stock  option 
awards,  RSUs,  PSUs,  and  the  ESPP  and  Canada  ESPP  included  in  the  Consolidated  Statements  of  (Loss) 
Income: 

In millions 

Selling, general and administrative - stock option plans 
Selling, general and administrative - RSUs 
Selling, general and administrative - PSUs 
Selling, general and administrative - ESPP and Canada ESPP 

Total pre-tax expense 

$ 

$ 

8.0    $ 
7.8      
0.5      
0.8      
17.1    $ 

10.8    $ 
7.2      
5.1      
1.0      
24.1    $ 

14.7   
5.2   
0.2   
1.2   
21.3   

2019 

Year Ended December 31, 
2018 

2017 

2019 10-K Annual Report  

Stericycle, Inc.  •  109 

 
 
 
  
  
  
  
   
   
  
  
  
  
PART II 

During  the  years  ended  December  31,  2019,  2018  and  2017,  the  impact  of  forfeitures  of  stock  option 
plans and RSUs was a reduction to expense of $6.7 million, $3.5 million, and $1.8 million, respectively.  

Stock Options: 

Options  granted  to  non-employee  directors  vest  in  one  year  and  options  granted  to  officers  and 
employees  generally vest over five years.  Expense related to options with graded vesting is recognized 
using the straight-line method over the vesting period.  

Stock option activity for the year ended December 31, 2019 is summarized as follows: 

Number of Options          

Weighted Average 
Exercise Price per 
Share 

Weighted 
Average 
Remaining 

Contractual Life      

(in years) 

Total 
Aggregate 
Intrinsic Value   
(in millions) 

Outstanding as of January 1, 2019 
Granted 
Exercised 
Forfeited 
Cancelled or expired 
Outstanding as of December 31, 2019 

Exercisable as of December 31, 2019 

4,896,386         $ 
340,652         $ 
(337,069 )       $ 
(453,662 )       $ 
(478,882 )       $ 
3,967,425         $ 

3,192,394         $ 

95.85     
49.01     
51.94     
86.51     
98.99        
96.32      

101.61      

3.00    $ 

2.32    $ 

5.9  

0.8   

At December 31, 2019, there was $8.9 million of total unrecognized compensation expense related to 
stock options, which is expected to be recognized over a weighted average period of 2.2 years. 

The following table sets forth the intrinsic value of options exercised for the years ended December 31: 

In millions 

Total exercise intrinsic value of options exercised 

$ 

2.1    $ 

4.7    $ 

4.8   

2019 

2018 

2017 

The  exercise  intrinsic  value  represents  the  total  pre-tax  intrinsic  value  (the  difference  between  the  fair 
value on the 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 grant using the Black-Scholes option pricing model was as follows: 

Stock options granted (shares) 
Weighted average fair value at grant date 
Assumptions: 

Expected term (in years) 
Expected volatility 
Expected dividend yield 
Risk free interest rate 

Restricted Stock Units: 

2019 

Year Ended December 31, 
2018 

2017 

$ 

340,652   
14.41   

 $ 

430,337  
16.79  

 $ 

456,424   
19.46   

4.40   
30.99 %    
0.00 %    
2.35 %    

4.89  
25.52 %    
0.00 %    
2.64 %    

4.82   
22.68 % 
0.00 % 
1.90 % 

The fair value of RSUs is based on the closing price of the Company's common stock on the date of grant 
and is amortized to expense over the service period.  RSUs vest at the end of three or five years.  The 2017 
Plan includes a share reserve for RSUs granted at a 1-1 ratio while our 2008, 2011, and 2014 Plans reserve 
at a 2-1 ratio.  No RSUs were granted under the 2005 Plan. 

2019 10-K Annual Report  

Stericycle, Inc.  •  110 

 
 
 
  
    
  
  
  
          
  
    
    
 
  
     
  
  
     
  
  
     
  
  
     
  
  
       
 
  
  
 
  
  
   
   
  
  
  
  
  
 
 
 
  
  
   
   
  
   
   
  
   
   
  
   
   
  
  
  
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RSUs activity during the year ended December 31, 2019, is as follows: 

Number of Units          

Weighted Average 
Grant Date 
Fair Value 

Weighted 
Average 
Remaining 
Contractual Life 
(in years) 

Total Aggregate 
Intrinsic Value   
(in millions) 

Non-vested as of January 1, 2019 
Granted 
Vested and Released 
Forfeited 
Non-vested as of December 31, 2019 

429,810         $ 
266,033         $ 
(109,142 )       $ 
(147,621 )       $ 
439,080         $ 

72.02         
48.68         
72.83         
67.27            
59.09         

1.35    $ 

28.0   

At  December 31,  2019,  there  was  $18.2  million  of  total  unrecognized  compensation  expense  related  to 
RSUs, which is expected to be recognized over a weighted average period of 2.5 years.  The fair value of 
units  that  vested  during  the  years  ended  December  31,  2019,  2018,  and  2017  was  $5.3  million,  $4.2 
million, and $2.9 million, respectively. 

Performance-Based Restricted Stock Units: 

Our  executive  officers  PSU  program  was  introduced  in  2017.    PSUs  vest,  or  not,  in  three  equal  annual 
installments based on the achievement of pre-determined annual earnings per share performance goals 
as approved by the Compensation Committee.  Each of the  PSU’s granted represent the right to receive 
one share of the Company’s common stock at a specified future date. 

In  addition,  certain  employees  have  been  granted  PSUs  which  vest,  or  not,  in  four  equal  annual 
installments based on the achievement of performance goals related to the Business Transformation, as 
approved by the Compensation Committee. 

Compensation  cost  for  the executive  and Business  Transformation PSU’s  has been recognized  based  on 
the  estimated achievement of the underlying goals.   The number of PSU’s that  recipients will ultimately 
receive  will  be  based  upon  the  Compensation  Committee’s  review  of  the  actual  achievement  of  these 
goals.    Each  of  the  PSU’s  granted  represent  the  right  to  receive  one  share  of  the  Company’s  common 
stock at a specified future date. 

PSUs activity during the year ended December 31, 2019, is as follows: 

Non-vested as of January 1, 2019 
Granted 
Vested and Released 
Forfeited (including performance goal not achieved) 
Non-vested as of December 31, 2019 

Number of Units 

Weighted Average 
Grant Date 
Fair Value 

115,508       $ 
157,451       $ 
(65,095 )      $ 
(91,815 )       $ 
116,049       $ 

63.77 
48.59 
63.38 
57.37 
48.46  

The  table  above  reflects  the  maximum  number  of  shares  which  could  be  granted  upon  vesting  of  the 
executive  and  Business  Transformation  PSU’s  for  which  performance  goals  related  to  2019  have  been 
established.    At  December  31,  2019,  approximately  213,000  of  additional  PSUs  exist  which  will  vest  in 
tranches based upon achievement of performance goals to be established for fiscal years 2020 and 2021. 

NOTE 15 – PREFERRED STOCK 

At December 31, 2019, the Company had 1,000,000 authorized shares of preferred stock and zero shares 
issued and outstanding. 

2019 10-K Annual Report  

Stericycle, Inc.  •  111 

 
 
 
  
       
    
  
  
  
          
  
       
    
 
  
     
  
  
     
  
  
     
  
  
       
 
  
 
  
       
  
  
  
  
  
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Series  A  Mandatory  Convertible  Preferred  Stock  Offering:    On  September  15,  2015,  the  Company 
completed a registered public offering of 7,700,000 depositary shares, each representing a 1/10th interest 
in a share of 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. 

On September 14, 2018, in accordance with their terms of issue, 638,190 shares of the Company’s Series A 
Preferred Stock, representing all of the preferred stock outstanding as of that date, were converted into a 
total of 4.7 million shares of the Company’s common stock at a ratio of 7.3394 shares of common stock 
for each share of Series A Preferred Stock. 

Prior  to  the  conversion  referenced  above,  dividends  on  shares  of  the  Series  A  Preferred  Stock  were 
payable  on  a  cumulative  basis  when,  as  and  if  declared  by  the  Company’s  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 were 
payable in cash, or subject to certain limitations, in shares of common stock, or any combination of cash 
and  shares  of  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. 

The  Company  declared  and  paid  dividends  of  $25.5  million  and  $36.3  million  to  the  Series  A  Preferred 
Stock shareholders during the years ended December 31, 2018, and 2017, respectively. 

The following table provides information about the Company’s repurchases of depository shares of Series 
A Preferred stock, prior to the conversion referenced above, during the year ended December 31, 2018: 

In millions, except share and per share data 

January 1 - January 31, 2018 
February 1 - February 28 , 2018 
March 1 - March 31 , 2018 
April 1 - April 30 , 2018 
May 1 - May 31 , 2018 
June 1 - June 30 , 2018 
July 1 - July 31 , 2018 
August 1 - August 31 , 2018 
September 1 - September 30 , 2018 
October 1 - October 31 , 2018 
November 1 - November 30 , 2018 
December 1 - December 31, 2018 
Total 

Number of 
Depository Shares 
Repurchased 

Amount Paid for 
Repurchases 

Average Price Paid 
per Share 

-    $ 
151,900     
-     
-     
150,000     
-     
-     
50,000      
-     
-     
-     
-     
351,900    $ 

-    $ 
7.4     
-     
-     
7.4     
-     
-     
2.4     
-     
-     
-     
-     
17.2    $ 

-   
49.05   
-   
-   
49.24   
-   
-   
47.05   
-   
-   
-   
-   
48.85   

For  the  year  ended  December  31,  2018,  repurchases  of  the  Company’s  depository  shares  resulted  in 
increases in retained earnings of $16.9 million, because the Company redeemed the depository shares at 
a discount.  The 351,900 depository shares repurchased during 2018 were equivalent to 35,190 shares of 
Series A Preferred Stock. 

NOTE 16 – (LOSS) EARNINGS PER COMMON SHARE 

Basic  (loss) earnings per  share is computed by dividing  (loss) 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-

2019 10-K Annual Report  

Stericycle, Inc.  •  112 

 
 
 
  
  
   
    
  
  
  
  
  
  
  
  
  
  
  
  
  
  
PART II 

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  ESPP  and  Canada  ESPP,  RSUs,  PSUs,  and  the  impact  of  the  Series  A 
Preferred Stock prior to conversion on September 14, 2018.  The effect of potentially dilutive securities is 
reflected  in  diluted  earnings  per  share  by  application  of  the  "treasury  stock  method"  for  outstanding 
stock-based compensation awards.  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  Series  A  Preferred  Stock,  we  used  the  "if-converted  method",  weighted  for  the  period 
prior  to  conversion.    Under  the  if-converted  method,  the  preferred  dividend  applicable  to  Series  A 
Preferred Stock was added back as an adjustment to the numerator.  The Series A Preferred Stock shares 
were assumed to be converted to common shares at the beginning of the period or, if later, at the time of 
issuance,  and  through  their  conversion  on  September  14,  2018,  for  the  year  ended  December  31,  2018, 
these common shares are weighted for the period the Series A Preferred Stock was outstanding with the 
resulting  weighted  average  common  shares  included  in  the  denominator.    In  applying  the  if-converted 
method,  conversion  is  not  assumed  for  purposes  of  computing  diluted  earnings  per  share  if  the  effect 
would  be  anti-dilutive.    The  numerator  was  also  adjusted  for  any  premium  or  discount  arising  from 
redemption of the Series A Preferred Stock. 

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

In millions, except per share data 

Numerator: 

Net (loss) income attributable to Stericycle, Inc. 
Mandatory convertible preferred stock dividend 
Gain on repurchase of preferred stock 

Year Ended December 31, 
2018 

2019 

2017 

$ 

(346.8 )   $ 
-      
-      

(244.7 )   $ 
(25.5 )     
16.9      

42.4   
(36.3 ) 
17.3   

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

$ 

(346.8 )   $ 

(253.3 )   $ 

23.4   

Denominator: 

Denominator for basic (loss) earnings per share - weighted average 
shares (1) 

Effect of dilutive securities: 

Stock-based compensation awards (2) 
Mandatory convertible preferred stock (3) 

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

(Loss) earnings per share – Basic 

(Loss) earnings per share – Diluted 

$ 

$ 

91.0      

87.1      

85.3   

-      
-      

91.0      

(3.81 )   $ 

(3.81 )   $ 

-      
-      

87.1      

(2.91 )   $ 

(2.91 )   $ 

0.3   
-   

85.6   

0.27   

0.27   

(1)  For  the  year  ended  December  31,  2018,  the  denominator  for  basic  (loss)  earnings  per  share 
includes  1.4  million  shares  representing  the  weighted-average  impact  of  the  common  shares 
outstanding as a result of the Series A Preferred Stock conversion on September 14, 2018. 

(2)  For  the  years  ended  December  31,  2019  and  2018  options  to  purchase  shares  and  awards  (in 
thousands)  of  74  and  124,  respectively,  were  excluded  from  the  computation  of  diluted  (loss) 
earnings per share due to the net loss incurred for the year. 

(3)  For  the  years  ended  December  31,  2018  and  2017,  the  weighted  average  common  shares  (in 
thousands) issuable upon the assumed conversion of the Series A Preferred Stock totaling, 3,367 
and 5,104, respectively, were excluded from the computation of diluted (loss) earnings per share 
as such conversion would have been anti-dilutive. 

2019 10-K Annual Report  

Stericycle, Inc.  •  113 

 
 
 
  
  
  
  
   
   
  
  
      
      
   
  
  
  
      
      
   
  
  
      
      
   
  
  
  
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For  the  years  ended  December  31,  2019,  2018,  and  2017,  options  to  purchase  shares  (in  thousands)  of 
4,507,  4,664,  and  4,724,  respectively,  at  exercise  prices  of  $44.01-$141.56,  $47.52-$141.56,  and  $62.50-
$141.56, respectively, were not included in the computation of diluted  (loss)  earnings per share because 
the effect would have been anti-dilutive. 

For  the  years  ended  December  31,  2019,  2018,  and  2017,  RSUs  (in  thousands)  of  98,  169,  and  218, 
respectively, were not included in the computation of diluted (loss) earnings per share because the effect 
would have been anti-dilutive. 

During  the  years  ended  December  31,  2019,  2018,  and  2017,  the  Company  had  outstanding  PSUs  (in 
thousands)  that  were  eligible  to  vest  into  a  maximum  of  116,  116,  and  11  shares  of  common  stock, 
respectively,  subject  to  the  achievement  of  specified  performance  conditions.    Contingently  issuable 
shares  are  excluded  from  the  computation  of  diluted  earnings  per  share  if,  based  on  current  period 
results,  the  shares  would  not  be  issuable  if  the  end  of  the  reporting  period  were  the  end  of  the 
contingency period or if the Company incurred a net loss attributable to its common shareholders.  These 
outstanding PSUs have been excluded from the (loss) earnings per share calculation for the years ended 
December 31, 2019, 2018 and 2017 as the performance conditions were not satisfied as of the end of the 
respective periods. 

NOTE 17 – ACCUMULATED OTHER COMPREHENSIVE LOSS 

The following table sets forth the changes in the components of accumulated other comprehensive loss: 

In millions 

Currency 
Translation (Loss) 
Income 
Adjustments 

Unrealized Gains 
(Losses) on Cash 
Flow Hedges 

Accumulated 
Other 
Comprehensive 
(Loss) Income 

Balance as of January 1, 2017 
Period change 
Balance as of December 31, 2017 
Period change 
Balance as of December 31, 2018 
Accelerated amortization of interest rate lock premiums 
Cumulative currency translation loss realized through disposition 
of Mexico operations 
Cumulative currency translation loss realized through disposition 
of Chile operations 
Period change 
Balance as of December 31, 2019 

$ 

$ 

(362.3 )   $ 
79.3      
(283.0 )     
(79.3 )     
(362.3 )     
-      

(5.3 )   $ 
1.3      
(4.0 )     
1.0      
(3.0 )     
2.3      

(367.6 ) 
80.6   
(287.0 ) 
(78.3 ) 
(365.3 ) 
2.3   

18.9      

-      

18.9   

16.8      
8.5      
(318.1 )   $ 

-      
0.7      
-    $ 

16.8   
9.2   
(318.1 ) 

NOTE 18 – SEGMENT REPORTING 

The Company evaluates, oversees and manages the financial performance of three operating segments – 
North  America  RWCS  (formerly  Domestic  and  Canada  RWCS),  International  RWCS,  and  Domestic 
Communication and Related Services. 

The North America, and International Regulated Waste and Compliance Services segments offer the 
following services: Medical waste management services (including reusable sharps disposal management 
services),  Pharmaceutical  waste  services,  Compliance  programs  under  the  Steri-Safe®,  Clinical  Services, 
First Practice Management, SeguriMed, and EnviroAssure brand names, Retail and Healthcare – Hazardous 

2019 10-K Annual Report  

Stericycle, Inc.  •  114 

 
 
 
  
  
   
   
  
  
  
  
  
  
  
  
  
 
PART II 

waste and compliance solutions, Industrial and manufacturing hazardous waste management and Secure 
Information Destruction 

The  Domestic  Communication  and  Related  Services  segment  offers  Appointment  reminders,  secure 
messaging,  event  registration,  and  other  communications  specifically  for  hospitals  and  IDN’s  as  well  as 
Regulated  recall  and  returns  management  communication,  logistics,  and  data  management  services  for 
expired, withdrawn or recalled products. 

Domestic Communication and Related Services does not consistently meet the quantitative criteria to be a 
separate  reportable  segment  and  therefore  is  included  in  the  “All  Other”  reporting  segment  along  with 
costs related to corporate support, shared services functions, and stock-based compensation. 

The  Company’s  measure  of  segment  profitability  is  Adjusted  Earnings  Before  Interest,  Tax,  Depreciation 
and  Amortization  (“Adjusted  EBITDA”).  Adjusted  EBITDA  is  Income  from  operations  excluding  certain 
specified items, Depreciation and Intangible Amortization.   

The following tables show financial information for the Company's reportable segments: 

In millions 

Revenues 
North America RWCS 
International RWCS 
All Other 
Total 

Depreciation 
North America RWCS 
International RWCS 
All Other 
Total(1) 

Intangible Amortization 
North America RWCS 
International RWCS 
All Other 
Total 

Adjusted EBITDA 
North America RWCS 
International RWCS 
All Other 
Total 

Total Assets 
North America RWCS 
International RWCS 
All Other 
Total 

2019 

Year Ended December 31, 
2018 

2017 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

2,544.2    $ 
579.3      
185.4      
3,308.9    $ 

77.2    $ 
27.8      
20.8      
125.8    $ 

103.1    $ 
34.1      
8.0      
145.2    $ 

643.2    $ 
99.0      
(164.4 )     
577.8    $ 

5,085.2    $ 
988.8      
363.0      
6,437.0    $ 

2,574.1    $ 
655.1      
256.7      
3,485.9    $ 

72.5    $ 
29.7      
23.4      
125.6    $ 

96.7    $ 
25.3      
8.3      
130.3    $ 

782.4    $ 
95.6      
(133.4 )     
744.6    $ 

5,062.5    $ 
1,110.4      
282.6      
6,455.5    $ 

2,551.9   
707.6   
321.2   
3,580.7   

80.3   
30.9   
19.9   
131.1   

87.6   
22.7   
8.1   
118.4   

809.5   
93.7   
(91.2 ) 
812.0   

4,995.0   
1,333.1   
660.2   
6,988.3   

2019 10-K Annual Report  

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The following table reconciles the Company's primary measure of segment profitability (Adjusted EBITDA) 
to Loss from operations: 

In millions 

Total Reportable Segment Adjusted EBITDA 
Depreciation(1) 
Intangible Amortization 
Business Transformation 
Acquisition and Integration 
Operational Optimization 
Divestitures (including Divestiture Losses, net of Gains) 
Litigation, Settlements and Regulatory Compliance 
Asset Impairments 
Goodwill Impairment 
Other 

Loss from operations 

$ 

$ 

2019 

Year Ended December 31, 
2018 

2017 

577.8    $ 
(125.8 )     
(145.2 )     
(67.7 )     
(3.5 )     
(14.5 )     
(114.7 )     
(28.2 )     
(22.1 )     
(228.3 )     
(39.7 )     
(211.9 )   $ 

744.6    $ 
(125.6 )     
(130.3 )     
(82.6 )     
(9.8 )     
(29.4 )     
(20.5 )     
(93.2 )     
(26.5 )     
(358.7 )     
(29.1 )     
(161.1 )   $ 

812.0   
(131.1 ) 
(118.4 ) 
(31.3 ) 
(40.7 ) 
(71.1 ) 
(9.5 ) 
(327.7 ) 
-   
(65.0 ) 
(24.8 ) 
(7.6 ) 

(1)  Excludes depreciation of $1.8 million for the year ended December 31, 2019, which is 

included as part of Business Transformation. 

NOTE 19 – GEOGRAPHIC AREA AND SERVICES INFORMATION 

The following table presents consolidated revenues and long-lived assets by geographic region: 

In millions 

Revenues 

U.S. 
International: 
Europe 
Other international countries 

Total international 

Total 

Long-Lived and Indefinite-Lived Assets 

U.S. 
International: 
Europe 
Other international countries 

Total international 

Total 

2019 

Year Ended December 31, 
2018 

2017 

$ 

$ 

$ 

$ 

2,578.0    $ 

2,673.6    $ 

2,716.9   

379.3      
351.5      
730.9      
3,308.9    $ 

415.5      
396.8      
812.3      
3,485.9    $ 

436.2   
427.6   
863.8   
3,580.7   

4,696.4    $ 

4,501.1    $ 

4,821.6   

636.5      
305.2      
941.7      
5,638.1    $ 

612.7      
489.6      
1,102.3      
5,603.4    $ 

711.8   
603.1   
1,314.9   
6,136.5   

The following table presents an analysis of consolidated revenues by service: 

2019 10-K Annual Report  

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In millions 

2019 

Year Ended December 31, 
2018 

2017 

Regulated Waste and Compliance Services 
Secure Information Destruction Services 
Communication and Related Services 
Manufacturing and Industrial Services 

Revenues 

$ 

$ 

1,892.8    $ 
901.9      
219.2      
295.0      
3,308.9    $ 

1,932.6    $ 
911.0      
313.1      
329.2      
3,485.9    $ 

PART II 

2,023.6   
823.4   
382.6   
351.1   
3,580.7   

NOTE 20 – LEGAL PROCEEDINGS 

The  Company  operates  in  highly  regulated  industries  and  responds  to  regulatory  inquiries  or 
investigations  from  time  to  time  that  may  be  initiated  for  a  variety  of  reasons.    At  any  given  time,  the 
Company  has  matters  at  various  stages  of  resolution  with  the  applicable  government  authorities.    The 
Company is also routinely involved in actual or threatened legal actions, including those involving alleged 
personal  injuries  and  commercial,  employment,  environmental,  tax,  and  other  issues.    The  outcomes  of 
these  matters  are  not  within  the  Company’s  complete  control  and  may  not  be  known  for  prolonged 
periods  of  time.    In  some  actions,  claimants  seek  damages,  as  well  as  other  relief,  including  injunctive 
relief, that could require significant expenditures or result in lost revenue. 

In accordance with applicable accounting standards, the Company establishes an accrued liability for loss 
contingencies  related  to  legal  and  regulatory  matters  when  the  loss  is  both  probable  and  reasonably 
estimable.  If the reasonable estimate of a probable loss is a range, and no amount within the range is a 
better estimate than any other, the minimum amount of the range is accrued.  If a loss is not probable or 
a probable loss is not reasonably estimable, no liability is recorded.  When determining the estimated loss 
or  range  of  loss,  significant  judgment  is  required  to  estimate  the  amount  and  timing  of  a  loss  to  be 
recorded.    These  accruals  represent  management’s  best  estimate  of  probable  losses  and,  in  such  cases, 
there  may  be  an  exposure  to  loss  in  excess  of  the  amounts  accrued.    Estimates  of  probable  losses 
resulting from litigation and regulatory proceedings are difficult to predict.  Legal and regulatory matters 
inherently  involve  significant  uncertainties  based  on,  among  other  factors,  the  jurisdiction  and  stage  of 
the  proceedings,  developments  in  the  applicable  facts  or  law,  and  the  unpredictability  of  the  ultimate 
determination of the merits of any claim, any defenses the Company may assert against that claim and the 
amount of any damages that may be awarded.  The Company’s accrued liabilities for loss contingencies 
related  to  legal  and  regulatory  matters  may  change  in  the  future  as  a  result  of  new  developments, 
including,  but  not  limited  to,  the  occurrence  of  new  legal  matters,  changes  in  the  law  or  regulatory 
environment, adverse or favorable rulings, newly discovered facts relevant to the matter, or changes in the 
strategy  for  the  matter.    Regardless  of  the  outcome,  litigation  can  have  an  adverse  impact  on  the 
Company because of defense and settlement costs, diversion of management resources and other factors. 

Contract Class Action and Opt Out Lawsuits.  Beginning on March 12, 2013, the Company was served 
with  several  class  action  complaints  filed  in  federal  and  state  courts  in  several  jurisdictions.    These 
complaints asserted, among other things, that the Company had imposed unauthorized or excessive price 
increases  and  other  charges  on  its  customers  in  breach  of  its  contracts  and  in  violation  of  the  Illinois 
Consumer Fraud and Deceptive Business Practices Act.  The complaints sought certification of the lawsuit 
as  a  class  action  and  the  award  to  class  members  of  appropriate  damages  and  injunctive  relief.    These 
related actions were ultimately transferred to the United States District Court for the Northern District of 
Illinois for centralized pretrial proceedings (the “MDL Action”). 

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The parties engaged in discussions through and overseen by a mediator regarding a potential resolution 
of the matter and reached a settlement agreement, as previously disclosed, which settlement agreement 
obtained  court  approval  on  March  8,  2018  (the  “Settlement”).    Under  the  terms  of  the  Settlement,  the 
Company admitted no fault or wrongdoing whatsoever, and it entered into the  Settlement to avoid the 
cost and uncertainty of litigation. 

Certain  class  members  who  have  opted  out  of  the  Final  Settlement  have  filed  lawsuits  against  the 
Company, and the Company will defend and resolve those actions.  The Company has accrued its estimate 
of the probable loss for these collective matters, which is not material. 

Securities  Class  Action  and  Opt  Out  Lawsuits.  On  July  11,  2016,  two  purported  stockholders  filed  a 
putative  class  action  complaint  in  the  U.S.  District  Court  for  the  Northern  District  of  Illinois,  which  was 
subsequently  amended.    As  amended,  the  complaint  purported  to  assert  claims  on  behalf  of  all 
purchasers of the Company’s publicly traded securities between February 7, 2013 and February 21, 2018, 
inclusive, and all those who purchased securities in the Company’s public offering of depositary shares on 
or  around  September  15,  2015.    The  complaint  named  as  defendants  the  Company,  its  directors  and 
certain  of  its  current  and  former  officers,  and  certain  of  the  underwriters  in  the  public  offering.    The 
complaint purported to assert claims under Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 and 
Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as well as SEC Rule 10b-5, promulgated 
thereunder.    The  complaint  alleged,  among  other  things,  that  the  Company  imposed  unauthorized  or 
excessive  price  increases  and  other  charges  on  its  customers  in  breach  of  its  contracts,  and  that 
defendants failed to disclose those alleged practices in public filings  and other statements issued during 
the proposed class period. 

Defendants filed a motion to dismiss.  Before the court had ruled on the pending motion to dismiss, the 
parties  engaged  in  discussions  through  and  overseen  by  a  mediator  regarding  a  potential  resolution  of 
the  matter  and  reached  a  settlement  agreement  as  previously  disclosed  (the  “Securities  Class  Action 
Settlement”).  The court held a final fairness hearing on July 22, 2019, at which it granted final approval of 
the  Settlement  and  took  under  advisement  the  amount  of  attorneys’  fees  to  be  awarded  to  plaintiffs’ 
counsel from the settlement fund.  Under the terms of the Settlement, the Company admitted no fault or 
wrongdoing whatsoever, and it entered into the Settlement to avoid the cost and uncertainty of litigation. 

Certain  class  members  who  have  opted  out  of  the  Final  Settlement  have  filed  lawsuits  against  the 
Company,  and  the  Company  will  defend  and  resolve  those  actions. The  Company  has  not  accrued  any 
amounts in respect of these lawsuits, as it cannot estimate any reasonably possible loss or  any range of 
reasonably possible losses that the Company may incur. 

Government Investigations.  On June 12, 2017, the SEC issued a subpoena to the Company, requesting 
documents  and  information  relating  to  the  Company’s  compliance  with  the  FCPA  or  other  foreign  or 
domestic  anti-corruption  laws  with  respect  to  certain  of  the  Company’s  operations  in  Latin  America.    In 
addition, the DOJ has notified the Company that it is investigating this matter in parallel with the SEC.  The 
Company  is  cooperating  with  these  agencies  and  certain  foreign  authorities.  The  Company  is  also 
conducting an internal investigation of these and other matters, including outside of Latin America, under 
the oversight of the Audit Committee of the Board of Directors and with the assistance of outside counsel, 
and this investigation has found evidence of improper conduct. 

As part of the FCPA investigation discussed above, the SEC has requested certain additional information 
from the Company.  On July 29, 2019, the SEC issued a subpoena to the Company requesting documents 
relating  to  the  Company’s  pricing  practices  concerning  small  quantity  customers,  as  alleged  in  the 
Contract  Class  Actions  and  in  the  Securities  Class  Action.    The  Company  is  cooperating  with  the  SEC’s 
request. 

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Stericycle, Inc.  •  118 

 
 
PART II 

The Company has not accrued any amounts in respect of this matter, as it cannot estimate any reasonably 
possible loss or  any range  of reasonably possible losses  that the  Company  may  incur.   The Company  is 
unable  to  make  such  an  estimate  because,  based  on  what  the  Company  knows  now,  in  the  Company’s 
judgment, the factual and legal issues presented in this matter are sufficiently unique that the Company is 
unable to identify other circumstances sufficiently comparable to provide guidance in making estimates. 

Environmental and Regulatory Matters.  The Company’s Environmental Solutions business is regulated 
by federal, state and local laws enacted to regulate the discharge of materials into the environment, the 
generation, transportation and disposal of waste, and the cleanup of contaminated soil and groundwater 
and protection of the environment.  Because of the highly regulated nature of this business, the Company 
frequently  becomes  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  the  Company  or  by  other 
parties to which either the Company or the prior owners of certain of its facilities shipped wastes.  From 
time  to  time,  the  Company  may  be  subject  to  fines  or  penalties  in  regulatory  proceedings  relating 
primarily to waste treatment, storage or disposal facilities. 

North Salt Lake, Utah.  The Company has continued to toll the statute of limitations with the United States 
Attorney’s  Office  for  the  District  of  Utah  (the  “USAO”)  relating  to  an  investigation  by  the  U.S. 
Environmental Protection Agency (the “EPA”) into past Clean Air Act emissions and permit requirements, 
as  previously  alleged  in  the  notice  of  violation  (the  “NOV”)  issued  by  the  State  of  Utah  Division  of  Air 
Quality  (the  “DAQ”).   The  NOV  resulted  in  the  Company’s  December  2014  settlement  with  the  DAQ,  as 
previously disclosed. 

The parties have reached agreement in principle, to be documented in the form of a civil consent decree, 
under  which  the  Company  will  undertake  a  Supplemental  Environmental  Project  and  pay  a  civil  penalty 
under the Clean Air Act. 

The Company has accrued the total amount of the agreement in principle. 

Tabasco,  Mexico.  In  late  2016,  the  National  Agency  for  Industrial  Security  and  the  Protection  of  the 
Environment for the Hydrocarbon Sector in Mexico (“ASEA”) conducted a permit compliance inspection at 
a  hazardous  waste  treatment  facility  acquired  by  one  of  the  Company’s  subsidiaries  in  Dos  Bocas, 
Tabasco,  Mexico.    ASEA  subsequently  claimed  that  the  soil  treatment  process  described  in  the  facility’s 
treatment permit had not been followed properly and issued an order imposing a fine and directing that 
the  facility  be  closed  and  that  alleged  contamination  on  a  certain  portion  of  the  facility  be  remediated.  
The Company’s subsidiary has engaged a firm of environmental technicians to assess the contamination 
described  in  the  ASEA  order  and  to  conduct  a  broader  environmental  assessment  of  the  facility.    The 
Company’s review and assessment of the overall facility is ongoing.  In November 2017, ASEA rescinded 
the prior order imposing the fine.  After reassessing the evidence and arguments presented, ASEA issued 
a new resolution on March 9, 2018, containing a lower, revised fine and including remedial obligations.  In 
March 2018, the Company submitted a proposal for remedial measures.  On April 26, 2018, the Company 
appealed the fines in the most recent order. 

In  December  2018,  ASEA  approved  the  Company’s  remedial  plan  for  the  facility,  which  will  involve  an 
amendment  to  the  facility’s  permit  to  allow  for  on-site,  in-situ  remediation  of  the  one  treatment  cell 
subject to ASEA’s original order. 

In  June  2018,  the  Company  instituted  both  civil  and  criminal  legal  proceedings  in  Mexico  against  the 
company from which it acquired the relevant facility, seeking to hold the seller liable for any remediation 

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Stericycle, Inc.  •  119 

 
 
PART II 

as well  as lost profits and  damages.   The defendants  named in the civil  complaint filed their  answers in 
September 2018 and evidence is being heard in this matter. 

The Company has accrued its estimate of the probable loss and costs necessary to comply with the ASEA 
order and remediate the treatment cell, which are not material. 

Tacoma, Washington.  On October 7, 2019, the State of Washington Department of Ecology (“Washington 
Ecology”)  issued  an  Administrative  Order  alleging  violations  of  Washington  regulations  and  the  facility 
operating  permit  for  our  hazardous  waste  facility  in  Tacoma,  Washington  during  2018  and  ordering 
compliance  with  Chapter  70.105  Revised  Code  of  Washington,  Hazardous  Waste  Management  Act, 
Chapter 173-303 Washington Administrative code, Dangerous Waste Regulations, and Dangerous Waste 
Management  Facility  Permit  WAD020257945  effective  March  22,  2012.    The  Administrative  Order 
identified certain alleged violations and associated corrective actions for the Tacoma Facility to take upon 
receipt of the Order.  Washington Ecology also issued an associated Notice of Penalty, assessing a fine of 
$1.9 million.   

On November 5, 2019, the Company appealed the fine to the state Pollution Control hearings Board.  A 
hearing is scheduled to take place in November, 2020.  The Company intends to vigorously defend itself 
against these allegations. 

The  Company  has  accrued  its  estimate  of  the  probable  loss  for  these  collective  matters,  which  is  not 
material. 

Rancho  Cordova,  California.    On  June  25  and  26,  2018,  the  California  Department  of  Toxic  Substances 
Control  (“DTSC”)  conducted  a  Compliance  Enforcement  Inspection  of  the  Company’s  facility  in  Rancho 
Cordova, California.  On October 7, 2019, the Company learned that DTSC has referred alleged violations 
of  California’s  Hazardous  Waste  Control  Law  and  the  facility’s  hazardous  waste  permit  arising  from  the 
inspection to the Environmental Section of the California Attorney General’s Office for enforcement.   

Separately,  on  August  15,  2019,  the  Company  received  from  DTSC  a  written  Intent  to  Deny  Hazardous 
Waste  Facility  Permit  application  for  the  Rancho  Cordova  Facility.    A  public  hearing  was  held  on 
September 22, 2019, and the public comment period closed on October 25, 2019.  The Company entered 
a written submission as part of that process.  Next, DTSC will issue a final permit decision.  If DTSC were to 
deny the permit renewal, the Company has the right to file an administrative appeal.  

The Company has not accrued any amounts in respect of these alleged violations and cannot estimate the 
reasonably  possible  loss  or  the  range  of  reasonably  possible  losses  that  it  may  incur.   The  Company  is 
unable to make such an estimate because (i) litigation is by its nature uncertain and unpredictable and (ii) 
in the Company’s judgment, the factual and legal allegations asserted by plaintiffs are sufficiently unique 
that  it  is  unable  to  identify  other  proceedings  with  circumstances  sufficiently  comparable  to  provide 
guidance in making estimates. 

DEA  Investigation  –  Rancho  Cordova,  California  and  Indianapolis,  Indiana.    On  February  11,  2020,  the 
Company  received  an  administrative  subpoena  from  the  DEA,  which  executed  a  search  warrant  at  the 
Rancho Cordova facility and an administrative inspection warrant at the Company’s facility in Indianapolis, 
Indiana for materials related to Stericycle’s business of shipping and destroying controlled substances.  On 
that  same  day,  agents  from  the  DTSC  executed  a  separate  search  warrant  at  the  Rancho  Cordova 
facility.  The  Company is  cooperating fully  with the  DEA and DTSC in response to their investigations of 
Stericycle,  including  with  the  government’s  activity  at  the  Company’s  Rancho  Cordova  and  Indianapolis 
facilities. 

The  Company  has  not  accrued  any  amounts  in  respect  of  these  investigations  and  cannot  estimate  the 
reasonably  possible  loss  or  the  range  of  reasonably  possible  losses  that  it  may  incur.    The  Company  is 

2019 10-K Annual Report  

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PART II 

unable to make such an estimate because (i) litigation is by its nature uncertain and unpredictable and (ii) 
in the Company’s judgment, the factual and legal allegations asserted by plaintiffs are sufficiently unique 
that  it  is  unable  to  identify  other  proceedings  with  circumstances  sufficiently  comparable  to  provide 
guidance in making estimates. 

The Company intends to vigorously defend itself against these allegations and actions. 

NOTE 21 – QUARTERLY FINANCIAL INFORMATION (UNAUDITED) 

The following table summarizes our unaudited consolidated quarterly results of operations as reported for 
2019 and 2018: 

In millions, except per share data 

Revenues 
Gross profit 
Goodwill impairment 
Divestiture losses, net of (gains) 
Loss on early extinguishment of debt 
Net loss attributable to Stericycle, Inc. common 
shareholders 
* Basic loss per common share 
* Diluted loss per common share 

In millions, except per share data 

Revenues 
Gross profit 
Goodwill impairment 
Divestiture losses, net of (gains) 
Net (loss) income attributable to Stericycle, Inc. 
Preferred stock dividend 
Net (loss) income attributable to Stericycle, Inc. 
common shareholders 
* Basic earnings (loss) per common share 
* Diluted earnings (loss) per common share 

$ 

$ 
$ 

$ 

$ 
$ 

First 
Quarter 
2019 

Second 
Quarter 
2019 

Third 
Quarter 
2019 

Fourth 
Quarter 
2019 

830.1     $ 
297.1       
20.9       
(5.4 )     
-       

(37.8 )     
(0.42 )   $ 
(0.42 )   $ 

845.8    $ 
302.6     
-     
0.3     
23.1     

(30.5 )    
(0.33 )   $ 
(0.33 )   $ 

833.1    $ 
295.3     
-     
83.2     
-     

(59.2 )    
(0.65 )   $ 
(0.65 )   $ 

    Year 2019    
3,308.9   
1,174.5   
228.3   
103.0   
23.1   

799.9    $ 
279.5      
207.4      
24.9      
-      

(219.3 )     
(2.41 )   $ 
(2.41 )   $ 

(346.8 ) 
(3.81 ) 
(3.81 ) 

First 
Quarter 
2018 

Second 
Quarter 
2018 

Third 
Quarter 
2018 

Fourth 
Quarter 
2018 

895.0     $ 
358.5       
-       
4.1       
22.5       
(8.8 )     

21.0       
0.25     $ 
0.25     $ 

883.3    $ 
353.3      
-      
7.3      
27.7      
(8.3 )     

26.6      
0.31    $ 
0.31    $ 

854.9    $ 
335.5      
-      
1.6      
23.5      
(8.4 )     

      Year 2018    
3,485.9   
1,376.0   
358.7   
12.8   
(244.7 ) 
(25.5 ) 

852.7     $ 
328.7       
358.7       
(0.2 )     
(318.4 )     
-       

17.5      
0.20     $ 
0.20     $ 

(318.4 )     
(3.51 )   $ 
(3.51 )   $ 

(253.3 ) 
(2.91 ) 
(2.91 ) 

* 

EPS calculated on a quarterly basis, and, as such, the amounts may not total the calculated full-year EPS. 

2019 10-K Annual Report  

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PART II 

STERICYCLE, INC.  
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS 

In millions 

Allowance for doubtful 
accounts 
2017 
2018 
2019 

$ 
$ 
$ 

Balance 
Beginning 
of Period 

Charges to 
Expenses 

Other Charges/ 
(Reversals) (1) 

Write-offs/ 
Payments 

Balance End 
of Period 

49.6     $ 
65.2     $ 
71.9     $ 

32.3     $ 
24.9     $ 
25.7     $ 

2.7    $ 
(2.1 )   $ 
(5.8 )   $ 

(19.4 )   $ 
(16.1 )   $ 
(23.9 )   $ 

65.2   
71.9   
67.9   

(1)  Amounts  consist  primarily  of  currency  translation  adjustments  and  $4.1  million  relating  to 

divestitures undertaken during 2019. 

In millions 

Valuation Allowance on Deferred 
Tax Assets 
2017 
2018 
2019 

$ 
$ 
$ 

Balance 
Beginning of 
Period 

Additions/ 
(Deductions) 
Charged to/ 
(from) Income 
Tax Expense(1) 

Other Changes 
to Reserves (2) 

Balance End of 
Period 

15.4     $ 
16.1     $ 
35.3     $ 

4.5    $ 
20.6    $ 
13.3    $ 

(3.8 )   $ 
(1.4 )   $ 
(9.2 )   $ 

16.1   
35.3   
39.4   

(1)  2019 amount includes a valuation allowance on Capital losses related to divestitures. 
(2)  2019 amount  consists  primarily  of  release  of  valuation  allowance  on  the  Divestitures  in 
Mexico  and  Chile.  2018  and  2017  amounts  consist  primarily  of  valuation  allowances  on 
acquired deferred tax assets from business combinations.  

Item 9. Changes in and Disagreements with Accountants on Accounting and 
Financial Disclosure  

None. 

Item 9A. Controls and Procedures 

Evaluation of 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 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  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 year covered by this Report. Based upon that evaluation, our Chief Executive Officer  and Chief 
Financial Officer have concluded that our disclosure controls and procedures were not effective as of the 

2019 10-K Annual Report  

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end of the period covered  by this  annual report, because of the  material weaknesses in internal  control 
over financial reporting described below. 

Management’s Report on Internal Control Over Financial Reporting 

Management of Stericycle is responsible for establishing and maintaining adequate internal control over 
financial reporting (as defined in Rules 13a-15(f) and 15d(f) under the Exchange Act). Internal control over 
financial  reporting  is  a  process  designed  to  provide  reasonable  assurance  regarding  the  reliability  of 
financial  reporting  and  the  preparation  of  financial  statements  for  external  reporting  purposes  in 
accordance  with  United  States  generally  accepted  accounting  principles  (US  GAAP).  Because  of  its 
inherent  limitations,  internal  control  over  financial  reporting  may  not  prevent  or  detect  misstatements. 
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls 
may  become  inadequate  because  of  changes  in  conditions,  or  that  the  degree  of  compliance  with  the 
policies  or  procedures  may  deteriorate.  A  material  weakness  is  a  deficiency,  or  a  combination  of 
deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a 
material  misstatement of the  company’s annual or interim financial statements  will not be prevented or 
detected on a timely basis. 

Stericycle conducted an assessment of the effectiveness of its internal control over financial reporting as 
of December 31, 2019 based on the criteria established  in Internal Control-Integrated Framework  issued 
by  the  Committee  of  Sponsoring  Organizations  of  the  Treadway  Commission  (2013  framework).  As  of 
December 31, 2019, we have identified material weaknesses in internal controls related to:  

(a)  not  fully  implementing  and  monitoring  general  information  technology  controls  (GITCs)  in  the 
areas  of  user  access  and  program  change  management  for  systems  supporting  all  of  the 
Company’s internal control processes. Our business process controls (automated and manual) are 
dependent on the affected GITCs and therefore are also deemed ineffective because they could 
have been adversely impacted by the ineffective GITCs; and  

(b)  our  Domestic  Environmental  Solutions  component  of  the  North  America  Regulated  Waste  and 
Compliance  Services  segment  (further  referred  to  within  this  Item  as  “Environmental  Solutions”) 
related  to  not  fully  designing,  implementing  and  monitoring  controls  relevant  to  our  revenue 
(including  the  GITCs  for  systems  supporting  this  process)  and  cost  of  disposal  processes.  
Environmental Solutions comprises approximately 17% of our consolidated revenues. 

As  a  result  of  the  material  weaknesses  described  above,  management  has  concluded  that,  as  of 
December 31, 2019, our internal control over financial reporting was ineffective.   Ernst & Young LLP, our 
independent  registered  public  accounting  firm  has  also  issued  an  attestation  report  relating  to  our 
internal control over financial reporting as of December 31, 2019 (included elsewhere herein). 

Changes in internal controls 

Despite  the  material  weaknesses  described  above,  certain  remediation  activities  occurred  (as  described 
below) that have materially affected, or are reasonably likely to  materially affect, the Company's internal 
controls over financial reporting during the fourth quarter.  Other than as described herein, there were no 
other  changes  that  materially  affected  our  internal  controls  over  financial  reporting  during  the  fourth 
quarter of 2019.   

2019 10-K Annual Report  

Stericycle, Inc.  •  123 

 
 
PART II 

Remediation Activities 

Consistent  with  Stericycle’s  Business  Transformation,  the  Company  advanced  an  Internal  Control 
Transformation  Program  (“ICT  Program”)  to  address  its  historical  material  weaknesses.  This  includes 
development  and  execution  against  a  2019  Internal  Control  Over  Financial  Reporting  roadmap  with 
defined  milestones  that  allowed  the  Company  to  measure  progress,  engage  key  stakeholders  timely 
throughout  the  year  and  foster  accountability.    Further,  in  connection  with  our  ICT  Program,  Stericycle 
focused  on  improving  its  overall  control  environment,  re-designing  and  implementing  control  activities 
across  business  segments  and  establishing  a  strong,  sustainable  foundation  for  transition  into  our  new 
ERP  system  (SAP)  in  2020.  Notwithstanding  the  material  weaknesses  described  above  the  Company  has 
highlighted below the significant remediation activities undertaken in 2019.  

Financial Reporting Controls: 

Our remediation actions related to improving the controls over our financial  statement preparation and 
reporting process included the following: 

(cid:120)  Delivered  additional  and  more  frequent  communications  to  the  Audit  Committee  regarding  our 
financial  reporting  and  internal  control  environment  and  internal  controls  training  to  control 
owners. 

(cid:120)  Performed  walkthroughs  of  our  significant  processes  to 

identify  the  risks  of  material 
misstatement. Implemented certain new controls and re-designed and enhanced existing controls 
to sufficiently mitigate those risks as part of our SOX program efforts to drive accountability and 
efficiency. 
Expanded  our  Corporate  and  Business  Unit  Finance,  Accounting  and  Reporting,  Information 
Technology  and  technical  accounting  teams  through  the  hiring  of  additional  experienced  and 
qualified resources. 

(cid:120) 

(cid:120)  Continued  the  expanded  use  of  specialist  involvement  in  highly  complex  and  technical  areas  of 

accounting, valuation and new accounting standards adoption. 

General Information Technology Controls (GITCs): 

Our remediation actions related to improving our GITCs included the following:  

(cid:120) 

(cid:120) 

Improved  consistency  in  change  management  supported  by  standard  operating  procedures  to 
govern  the  authorization,  testing  and  approval  of  changes  to  systems  supporting  all  of  the 
Company’s internal control processes. 
Formalized IT Global Risk and Compliance office responsibilities within the IT function to provide 
governance, drive accountability and perform GITC compliance monitoring. 

(cid:120)  Delivered additional internal controls training. 

Planned Remediation of Remaining Material Weaknesses  

The most significant planned activities to improve user access will be the implementation of SAP in 2020, 
which will transition the Company from a manual disparate user access process to a real-time automated 
user access process for the Company’s core North America operations by the end of the year. In 2019, we 
also  designed  and  implemented  a  technology  enabled  user  entitlement  review  process  which  we  will 
continue to mature for our international systems to support internal controls in 2020.  

Because of the announced divestiture of our Environmental Solutions subsidiary as disclosed in Form 8-K 
dated February 2, 2020 and herein, the material weaknesses impacting the Company as of December 31, 
2019 associated with Environmental Solutions will no longer impact the Company subsequent to the date 
the transaction closes, which is expected to be during the first quarter of 2020.  

2019 10-K Annual Report  

Stericycle, Inc.  •  124 

 
 
Notwithstanding  the  existence  of  the  material  weaknesses  as  described  above,  we  believe  that  the 
consolidated financial statements in this Annual Report present fairly, in all material respects, our financial 
position, results of operations and cash flows as of the dates, and for the periods presented, in conformity 
with U.S. GAAP. 

PART II 

2019 10-K Annual Report  

Stericycle, Inc.  •  125 

 
 
PART II 

Report of Independent Registered Public Accounting Firm 

To the Shareholders and the Board of Directors of Stericycle, Inc. 

Opinion on Internal Control over Financial Reporting  

We have audited Stericycle, Inc.’s (the Company) internal control over financial reporting as of December 
31,  2019,  based  on  criteria  established  in  Internal  Control  -  Integrated  Framework  issued  by  the 
Committee  of  Sponsoring  Organizations  of  the  Treadway  Commission  (2013  framework)  (the  COSO 
criteria).    In  our  opinion,  because  of  the  effect  of  the  material  weaknesses  described  below  on  the 
achievement of the objectives of the control criteria,  the Company has not  maintained effective internal 
control over financial reporting as of December 31, 2019, based on the COSO criteria. 

A  material  weakness  is  a  deficiency,  or  combination  of  deficiencies,  in  internal  control  over  financial 
reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual 
or interim financial statements will not be prevented or detected on a timely basis.  The following material 
weaknesses have been identified and included in management’s assessment.  Management has identified 
material  weaknesses  in  internal  controls  related  to  (a)  not  fully  implementing  and  monitoring  general 
information technology controls (GITCs) in the areas of user access and program change management for 
systems  supporting  all  of  the  Company’s  internal  control  processes.  The  business  process  controls 
(automated and manual) are dependent on the affected GITCs and therefore are also deemed ineffective; 
and  (b)  the  Domestic  Environmental  Solutions  component  of  the  North  America  Regulated  Waste  and 
Compliance  Services  segment  related  to  not  fully  designing,  implementing  and  monitoring  controls 
relevant  to  revenue  (including  the  GITCs  for  systems  supporting  this  process)  and  cost  of  disposal 
processes. 

We  also  have  audited,  in  accordance  with  the  standards  of  the  Public  Company  Accounting  Oversight 
Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2019 
and 2018, the related consolidated statements of (loss) income, comprehensive (loss) income, changes in 
equity and cash flows for each of the three years in the period ended December 31, 2019, and the related 
notes and financial statement schedule listed in the Index at Item 15(a).  These material weaknesses were 
considered  in  determining  the  nature,  timing  and  extent  of  audit  tests  applied  in  our  audit  of  the  2019 
consolidated  financial  statements,  and  this  report  does  not  affect  our  report  dated  February  28,  2020, 
which expressed an unqualified opinion thereon. 

Basis for Opinion 

The  Company’s  management  is  responsible  for  maintaining  effective  internal  control  over  financial 
reporting  and  for  its  assessment  of  the  effectiveness  of  the  internal  control  over  financial  reporting 
including in the accompanying Management’s Report on Internal Control Over Financial Reporting.  Our 
responsibility is to express an opinion on the Company’s internal control over financial reporting based on 
our  audit.    We  are  a  public  accounting  firm  registered  with  the  PCAOB  and  are  required  to  be 
independent  with  respect  to  the  Company  in  accordance  with  the  U.S.  federal  securities  laws  and  the 
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. 

We conducted our audit in accordance with the standards of the PCAOB.  Those standards require that we 
plan and perform the audit to obtain reasonable assurance about whether effective internal control over 
financial reporting was maintained in all material respects. 

2019 10-K Annual Report  

Stericycle, Inc.  •  126 

 
 
PART II 

Our audit included obtaining an understanding of internal control over financial reporting, assessing the 
risk  that  a  material  weakness  exists,  testing  and  evaluating  the  design  and  operating  effectiveness  of 
internal  control  based  on  the  assessed  risk,  and  performing  such  other  procedures  as  we  considered 
necessary in the circumstances.  We believe that our audit provides a reasonable basis for our opinion. 

Definition and Limitations of Internal Control Over Financial Reporting 

A  company’s  internal  control  over  financial  reporting  is  a  process  designed  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.    A  company’s  internal 
control over financial reporting includes those policies and procedures that (1) pertain to the maintenance 
of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the 
assets  of  the  company;  (2)  provide  reasonable  assurance  that  transactions  are  recorded  as  necessary  to 
permit  preparation  of  financial  statements  in  accordance  with  generally  accepted  accounting  principles, 
and  that  receipts  and  expenditures  of  the  company  are  being  made  only  in  accordance  with 
authorizations  of  management  and  directors  of  the  company;  and  (3)  provide  reasonable  assurance 
regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s 
assets that could have a material effect on the financial statements. 

Because  of  its  inherent  limitations,  internal  control  over  financial  reporting  may  not  prevent  or  detect 
misstatements.    Also,  projections  of  any  evaluation  of  effectiveness  to  future  periods  are  subject  to  the 
risk  that  controls  may  become  inadequate  because  of  changes  in  conditions,  or  that  the  degree  of 
compliance with the policies or procedures may deteriorate. 

/s/ Ernst & Young LLP 

Chicago, Illinois 
February 28, 2020  

Item 9B. Other Information 

None. 

2019 10-K Annual Report  

Stericycle, Inc.  •  127 

 
 
 
 
 
 
 
PART III

PART III 

Item 10. Directors, Executive Officers and Corporate Governance 

The  information  required  by  this  Item  regarding  our  directors  is  incorporated  by  reference  to  the 
information contained under the caption "Election of Directors" in our definitive proxy statement for our 
2020 Annual Meeting of Stockholders to be filed pursuant to Regulation 14A. 

The  information  required  by  this  Item  regarding  our  executive  officers  is  contained  under  the  caption 
"Executive Officers of the Registrant" in Item 1 of Part I of this Report. 

The information required by this Item regarding compliance with Section 16(a) of the Securities Exchange 
Act  of  1934  is  incorporated  by  reference  to  the  information  contained  under  the  caption  "Section  16(a) 
Beneficial  Ownership  Reporting  Compliance"  in  our  definitive  proxy  statement  for  our  2020  Annual 
Meeting of Stockholders, to be filed pursuant to Regulation 14A. 

We have adopted a code of business conduct that applies to all of our employees.  The Code of Business 
Conduct and Ethics is  available on our website,  www.stericycle.com, under "About Us/Our Culture."  We 
intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding any amendments to, 
or waiver from, a provision of our Code of Business Conduct and Ethics by posting such information on 
our website. 

The information required by this Item regarding certain corporate governance matters is incorporated by 
reference  to  the  information  contained  under  the  caption  "Election  of  Directors"  in  our  definitive  proxy 
statement for our 2020 Annual Meeting of Stockholders, to be filed pursuant to Regulation 14A. 

Item 11. Executive Compensation 

The information required by this Item is incorporated by reference to the information contained under the 
caption  "Compensation  Discussion  and  Analysis"  and  following  sections  (up  to  Item 2)  in  our  definitive 
proxy statement for our 2020 Annual Meeting of Stockholders, to be filed pursuant to Regulation 14A. 

Item 12. Security Ownership of Certain Beneficial Owners and Management and 
Related Stockholder Matters 

The information required by this Item is incorporated by reference to the information contained under the 
captions  "Stock  Ownership"  and  "Compensation  Discussion  and  Analysis"  and  following  sections  (up  to 
Item 2)  in  our  definitive  proxy  statement  for  our  2020  Annual  Meeting  of  Stockholders,  to  be  filed 
pursuant to Regulation 14A. 

Equity Compensation Plans 

The following table summarizes information as of December 31, 2019 relating to our equity compensation 
plans  pursuant  to  which  stock  option  grants,  restricted  stock  units,  performance  based  restricted  stock 
units or other rights to acquire shares of our common stock may be made or issued: 

2019 10-K Annual Report  

Stericycle, Inc.  •  128 

 
 
 
Equity Compensation Plan Information 

In millions, except per share data 

PART III

Number 
of Securities 
Remaining 
Available for 
Future Issuance 
Under Equity 
Compensation 
Plans (Excluding 
Securities 
Reflected in 
Column (a)) 
(c) 

Number of 
Securities to be 
Issued Upon 
Exercise of 
Outstanding 
Options and 
Vesting of RSUs 
(a) 

Weighted-Average 
Exercise Price 
of Outstanding 
Options 
(b) 

Plan Category 
Equity compensation plans approved by our security holders (1) 

4.7    $ 

89.81      

3.2   

(1)  These plans consist of our 2017 Incentive Compensation Plan, 2014 Incentive Compensation Plan, 
2011  Incentive  Compensation  Plan,  2008  Incentive  Stock  Plan,  2005  Incentive  Stock  Plan,  the 
Employee Stock Purchase Plan and the Canadian Employee Stock Purchase Plan. 

Item 13. Certain Relationships and Related Transactions, and Director 
Independence 

The information required by this Item regarding our policies and procedures for  the review, approval or 
ratification of transactions with related persons is incorporated by reference to the information contained 
under  the  caption  "Policy  on  Related  Party  Transactions"  in  Item 1  of  our  definitive  proxy  statement  for 
our 2020 Annual Meeting of Stockholders, to be filed pursuant to Regulation 14A. 

The  information  required  by  this  Item  regarding  director  independence  is  incorporated  by  reference  to 
the  information  contained  in  Item 1  of  our  definitive  proxy  statement  for  our  2020  Annual  Meeting  of 
Stockholders, to be filed pursuant to Regulation 14A. 

Item 14. Principal Accounting Fees and Services 

Incorporated  by  reference  from  the  information  under  the  caption  "Ratification  of  the  Independent 
Registered  Public  Accounting  Firm"  in  our  definitive  proxy  statement  for  our  2020  Annual  Meeting  of 
Stockholders, to be filed pursuant to Regulation 14A. 

2019 10-K Annual Report  

Stericycle, Inc.  •  129 

 
 
 
 
  
   
   
  
  
 
PART IV 

PART IV 

Item 15. Exhibits and Financial Statement Schedules 

(a) List of Financial Statements, Financial Statement Schedule and Exhibits 

We have filed the following financial statements and financial statement schedule as part of this report: 

Report of Independent Registered Public Accounting Firm 

Consolidated Financial Statements of Stericycle, Inc. and Subsidiaries 

Consolidated Statements of (Loss) Income for Each of the Years in the Three-Year Period 
Ended December 31, 2019 

Consolidated  Statements  of  Comprehensive  (Loss)  Income  for  Each  of  the  Years  in  the 
Three-Year Period Ended December 31, 2019 

Consolidated Balance Sheets as of December 31, 2019 and 2018 

Consolidated  Statements  of  Cash  Flows  for  Each  of  the  Years  in  the  Three-Year  Period 
Ended December 31, 2019 

Consolidated  Statements  of  Changes  in  Equity  for  Each  of  the  Years  in  the  Three-Year 
Period Ended December 31, 2019 

Notes to Consolidated Financial Statements 

Schedule II - Valuation and Qualifying Accounts 

Report  of  Independent  Registered  Public  Accounting  Firm  on  Internal  Control  Over 
Financial Reporting 

Page 

67 

70 

71 

72 

73 

74 

75 

122 

126 

2019 10-K Annual Report  

Stericycle, Inc.  •  130 

 
 
 
 
 
 
PART IV 

All other financial  statement schedules have been omitted because  they are not applicable to us or the 
required information is shown on the Consolidated Financial Statements or notes thereto. 

We have filed the following exhibits with this report: 

Exhibit 
Index 

  Description 

Filed with 
Electronic 
Submission 

3(i).1* 

3(i).2* 

3(i).3* 

3(i).4* 

3(i).5* 

3(i).6* 

3(i).7*and 
4.2* 

3(i).8* and 
4.3* 

3(i).8* and 
4.4* 

3(ii).1* 

4.1* 

4.5 

4.6* 

4.7* 

10.1* 

10.2* 

10.3* 

Amended  and  restated  certificate  of  incorporation  (incorporated  by  reference  to  Exhibit 3.1  to  our 
registration statement on Form S-1 declared effective on August 22, 1996) 
First certificate of amendment to amended and restated certificate of incorporation (incorporated by 
reference to Exhibit 3.1 to our current report on Form 8-K filed November 29, 1999) 
Second certificate of amendment to amended and restated certificate of incorporation  (incorporated 
by reference to Exhibit 3.4 to our annual report on Form 10-K for 2002) 
Third certificate of amendment to amended and restated certificate of incorporation (incorporated by 
reference to Exhibit 3.4 to our registration statement on Form S-4 declared effective on October 10, 
2007) 
Fourth  certificate  of  amendment  to  amended  and  restated  certificate  of  incorporation  (incorporated 
by reference to Exhibit 3(i).1 to our quarterly report on Form 10-Q filed August 7, 2014) 
Certificate  of  Designation  setting  forth  the  specific  rights,  preferences,  limitations,  restrictions  and 
other  terms  and  conditions  of  the  Series  A  Convertible  Preferred  Stock,  par  value  $0.01  per  share 
(incorporated by reference to Exhibit 3.2 to our Current Report on Form 8-K filed November 29, 1999) 
Certificate of Elimination of the Certificate of Designations relating to Series A Convertible Preferred 
Stock, par value 0.01 per share (incorporated by reference to Exhibit 3.1 and 4.1 to our current report 
on Form 8-K filed September 15, 2015) 
Certificate  of  Designations  setting  forth  the  specific  rights,  preferences,  limitations,  restrictions  and 
other terms and conditions of the Mandatory Convertible Preferred Stock (incorporated by reference 
to Exhibit 4.1 to our Registration Statement on Form 8-A filed September 15, 2015) 
Certificate  of  Elimination  of  the  Certificate  of  Designations  relating  to  5.25%  Series  A  Mandatory 
Convertible Preferred Stock (incorporated by reference to Exhibit 3.9 to our Quarterly Report on Form 
10-Q filed November 11, 2018) 
Amended  and  restated  bylaws  (incorporated  by  reference  to  Exhibit  3(ii).1  to  our  current  report  on 
Form 8-K filed June 1, 2016) 
Specimen  certificate  for  shares  of  our  common  stock,  par  value  $.01  per  share  (incorporated  by 
reference  to  Exhibit  4.1  to  our  registration  statement  on  Form  S-1  declared  effective  on  August 22, 
1996 (Registration No. 333-05665)) 
  Description of the Company's Common Stock 
Indenture dated as of June 14, 2019 between Stericylce, the named guarantors and U.S. Bank National 
Association, as trustee (incorporated by reference to Exhibit 4.1 to our current report on Form 8-K filed 
June 14, 2019 
Form of 5.375% Senior Notes due July 2024 (incorporated by reference to Exhibit 4.1 to our current 
report on Form 8-K filed June 14, 2019) 
Credit Agreement, dated as of November 17, 2017, among Stericycle, Inc. and certain subsidiaries as 
borrowers, Bank of America, N.A., as administrative agent, swing line lender, a lender and a letter of 
credit  issuer,  other  lenders  party  to  the  credit  agreement,  JP  Morgan  Chase  Bank,  N.A.,  and  HSBC 
Securities (USA) Inc., as syndication agents, The Bank of Tokyo-Mitsubishi UFJ, Ltd., Sumitomo Mitsui 
Banking  Corporation,  and  Wells  Fargo  Bank,  National  Association  as  co-documentation  agents,  and 
Merrill Lynch, Pierce, Fenner & Smith Inc., HSBC Securities (USA) Inc., and JP Morgan Chase Bank, N.A., 
as joint lead arrangers and joint bookrunners (incorporated by reference to Exhibit 10.1 to our current 
report on Form 8-K filed November 20, 2017) 
First  Amendment,  dated  as  of  March  23,  2018,  to  the  Credit  Agreement,  dated  as  of  November  17, 
2017,  entered  into  by  Stericycle  Inc.  and  certain  subsidiaries  as  borrowers,  Bank  of  America,  N.A.,  as 
administrative agent, swing line lender, a lender and a letter of credit issuer and other lenders party 
thereto (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8 K filed March 26, 
2018) 
Second Amendment, dated as of November 15, 2018, to the Credit Agreement, dated as of November 
17, 2017, entered into by Stericycle, Inc. and certain subsidiaries as borrowers, Bank of America, N.A., 
as administrative agent, swing-line lender, a lender and a letter of credit issuer and other lenders party 
thereto 

x 

2019 10-K Annual Report  

Stericycle, Inc.  •  131 

 
 
 
  
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
  
 
     
 
     
 
     
 
     
 
  
  
PART IV 

10.4* 

10.5* 

10.6*(cid:130) 

10.7*(cid:130) 

10.8*(cid:130) 

10.9*(cid:130) 

10.10*(cid:130) 

10.11*(cid:130) 

10.12*(cid:130) 

10.13*(cid:130) 

10.14*(cid:130) 

10.15*(cid:130) 

10.16*(cid:130) 

10.17*(cid:130) 

10.18*(cid:130) 

10.19(cid:130) 
10.20(cid:130) 
10.21(cid:130) 

10.22*(cid:130) 

10.23(cid:130) 

10.24*(cid:130) 

10.25*(cid:130) 

10.26(cid:130) 

10.27*(cid:130) 

10.28*(cid:130) 

10.29(cid:130) 

10.30*(cid:130) 

10.31*(cid:130) 

Third Amendment, dated as of December 19, 2018, to the Credit Agreement, dated as of November 
17,  2017,  as  amended,  entered  into  by  Stericycle  Inc.  and  certain  subsidiaries  as  borrowers,  Bank  of 
America,  N.A.,  as  administrative  agent,  swing  line  lender,  a  lender  and  a  letter  of  credit  issuer  and 
other lenders party thereto (incorporated by reference to Exhibit 10.1 to our Current Report on Form 
8-K filed December 20, 2018) 
Fourth  Amendment,  dated  as  of  June  14,  2019, to the  Credit  Agreement,  dated  as  of  November  17, 
2017, entered into by Stericycle, Inc. and certain of its subsidiaries as borrowers, Bank of America, N.A., 
as administrative agent and the financial institutions from time to time party thereto (incorporated by 
reference to Exhibit 10.1 to our current report on Form 8-K filed June 14, 2019)  
2000 Non-statutory Stock Option Plan ("2000 Plan") (incorporated by reference to Exhibit 10.13 to our 
annual report on Form 10-K for 2001) 
2005  Incentive  Stock  Plan  ("2005  Plan")  (incorporated  by  reference  to  Exhibit  4.1  to  our  registration 
statement on Form S-8 filed August 9, 2005 (Registration No. 333-127353)) 
First  amendment  to  2005  Plan  (incorporated  by  reference  to  Exhibit  10.15  to  our  annual  report  on 
Form 10-K for 2008) 
2008  Incentive  Stock  Plan  ("2008  Plan")  (incorporated  by  reference  to  Exhibit  4.1  to  our  registration 
statement on Form S-8 filed August 8, 2008 (Registration No. 333-152877)) 
First  amendment  to  2008  Plan  (incorporated  by  reference  to  Exhibit  10.19  to  our  annual  report  on 
Form 10-K for 2009) 
Amendment to 2000 Plan, 2005 Plan and 2008 Plan (incorporated by reference to Exhibit 10.21 to our 
annual report on Form 10-K for 2012) 
2011  Incentive  Stock  Plan  ("2011  Plan")  (incorporated  by  reference  to  Exhibit  4.1  to  our  registration 
statement on Form S-8 filed August 9, 2011 (Registration No. 333-176165)) 
2014  Incentive  Stock  Plan  ("2014  Plan")  (incorporated  by  reference  to  Exhibit  4.1  to  our  registration 
statement on Form S-8 filed December 23, 2014 (Registration No. 333-201236)) 
Stericycle, Inc. 2017 Long-Term Incentive Plan ("2017 Plan") (incorporated by reference to Exhibit B to 
our Definitive Proxy Statement on Schedule 14A filed April 14, 2017) 
Form  of  agreement  for  stock  option  grant  under  2005,  2008,  2011 and  2014  Plans  (incorporated  by 
reference to Exhibit 10.20 to our annual report on Form 10-K for 2011) 
Form of agreement for restricted stock unit award under 2008, 2011 and 2014 Plans (incorporated by 
reference to Exhibit 10.21 to our annual report on Form 10-K for 2011) 
Form  of  agreement  for  performance-based  restricted  stock  unit  award  under  2011  and  2014  Plans 
(incorporated by reference to Exhibit 10.24 to our annual report on Form 10-K for 2016) 
Form of Agreement for Stock Option Grant under 2008 Plan (incorporated by reference to Exhibit 10.1 
to our Current Report on Form 8-K filed March 15, 2018) 
  Form of Agreement for Stock Option Grant under 2011 Plan  
  Form of Agreement for Stock Option Grant under 2014 Plan  
  Form of Agreement for Stock Option Grant under 2017 Plan  
Form  of  Agreement  for  Restricted  Stock  Unit  Award  under  2017  Plan  (incorporated  by  reference  to 
Exhibit 10.5 to our Current Report on Form 8-K filed March 15, 2018) 
  Form of Agreement for Performance-Based Restricted Stock Unit Award under 2017 Plan  
Form  of  Agreement  for  Performance-Based  Restricted  Stock  Unit  Award  (Business  Transformation) 
under  2017 Plan  (incorporated  by  reference to  Exhibit  10.7 to  our Current  Report  on  Form  8-K  filed 
March 15, 2018) 
Form  on  Agreement  of  Stock  Option  Grant  under  2017  Plan  (incorporated  by  reference  to  Exhibit 
10.46 to our annual report on Form 10-K for 2018) 
  Form on Agreement of Stock Option Grant under 2017 Plan 
Bonus conversion program (2018 plan year) (incorporated by reference to Exhibit 10.28 to our annual 
report on Form 10-K for 2017) 
Amended  and  Restated  Employee  Stock  Purchase  Plan  effective  May  24,  2017  (incorporated  by 
reference to Exhibit A to our Definitive Proxy Statement on Schedule 14A filed April 14, 2017) 
Canadian Employee Stock Purchase Plan (incorporated by reference to Exhibit A to our Definitive Proxy 
Statement on Schedule 14A filed April 15, 2016) 
Plan of Compensation for Outside Directors (incorporated by reference to Exhibit 10.1 to our quarterly 
report on Form 10-Q filed August 9, 2016) 
Form  of Director  Restricted Stock  Unit  Award  under  2017 Plan  (incorporated  by  reference  to  Exhibit 
10.32 to our annual report on Form 10-K for 2017) 

x 
x 
x 

x 

x 

2019 10-K Annual Report  

Stericycle, Inc.  •  132 

 
 
 
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
  
  
 
  
  
  
  
  
 
  
  
  
 
  
  
 
  
  
  
 
  
  
 
     
 
     
 
     
 
  
  
PART IV 

10.32*(cid:130) 

10.33(cid:130) 

10.34*(cid:130) 

10.35(cid:130) 
10.36(cid:130) 
10.37(cid:130) 
10.38(cid:130) 
10.39(cid:130) 
10.40(cid:130) 
10.41(cid:130) 
10.42(cid:130) 

10.43(cid:130) 

10.44(cid:130) 

10.45*(cid:130) 

10.46* 

10.47 

14* 
21 
23 
31.1 
31.2 
32 

99.1 

101 

104 

Form  of  Indemnification  Agreement  for  Directors  and  Officers  (incorporated  by  reference  to  Exhibit 
10.29 to our annual report on Form 10-K for 2016) 
  Executive Severance and Change in Control Plan (as amended) 
Supplemental  Retirement  Plan  (incorporated  by  reference  to  Exhibit  10.1  to  our  current  report  on 
Form 8-K filed December 30, 2016) 
  Form of Agreement for Stock Option Grant under 2011 Plan  
  Form of Agreement for Stock Option Grant under 2014 Plan  
  Form of Agreement for Stock Option Grant under 2017 Plan (related to Spain) 
  Form of Agreement for Stock Option Grant under 2017 Plan (related to U.K. Executive) 
  Form of Agreement for Stock Option Grant under 2017 Plan (related to U.K. Non-Executive) 
  Form of Agreement for Stock Option Grant under 2017 Plan (related to Ireland Non-Executive) 
  Form of Agreement for Stock Option Grant under 2017 Plan (related to Canada Non-Executive) 
  Form of Agreement for Stock Option Grant under 2017 Plan (related to Singapore Non-Executive) 
Form  of  Agreement  for  Performance-Based  Restricted  Stock  Unit  Award  (Business  Transformation) 
under 2017 Plan  
  Form of Agreement for Stock Option Grant under 2017 Plan (related to Chile Non-Executive) 

Confidential  Transition  Agreement  and  General  Release  dated  February  28,  2019,  between  the 
Company  and  Charles  A.  Alutto  (incorporated  by  reference  to  Exhibit  10.1  to  our  current  report  on 
Form 8-K filed February 28, 2019) 
Fifth Amendment, dated as of February 25, 2020, to the Credit Agreement, dated as of November 17, 
2017, entered into by Stericycle, Inc. and certain of its subsidiaries as borrowers, Bank of America, N.A., 
as administrative agent and the financial institutions from time to time party thereto (incorporated by 
reference to Exhibit 10.1 to our Current Report on Form 8-K filed February 27, 2020) 
Stock  Option  Award  Agreement  under  Stericycle,  Inc.  2017  Long  Term  Incentive  Plan  (Particippants 
Not Elligible for Executive Severance and CIC Plan) (incorporated by reference to Exhibit 10.47 to our 
annual report on Form 10-K for 2018) 
  Code of ethics (incorporated by reference to Exhibit 10.14 to our annual report on Form 10-K for 2003)      
  Subsidiaries 
  Consent of Independent Registered Public Accounting Firm 
  Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer 
  Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer 
  Section 1350 Certification of Chief Executive Officer and Chief Financial Officer 
Settlement  Agreement  dated  October  17,  2017  (incorporated  by  reference  to  Exhibit  99.1  to  our 
Current Report on Form 8-K filed October 18, 2017) 
The  following  financial  information  from  our  Annual  Report  on  Form  10-K  for  the  year  ended 
December  31,  2019,  formatted  in  iXBRL  (Inline  Extensible  Business  Reporting  Language)  includes:  (i) 
the Cover Page (ii) the Consolidated Balance Sheets, (iii) the Consolidated Statements of Earnings, (iv) 
the Consolidated Statements of Comprehensive Income, (v) the Consolidated Statements of Changes 
in  Shareholders(cid:182)  Equity,  (vi)  the  Consolidated  Statements  of  Cash  Flows,  and  (vii)  the  Notes  to 
Consolidated Financial Statements and Schedule I, tagged in summary and detail. 
  Cover Page Interactive Data File (formatted as iXBRL and contained in Exhibit 101) 

x 

x 
x 
x 
x 
x 
x 
x 
x 

x 

x 

x 
x 
x 
x 
x 

x 

x 

Filed herewith 
Previously filed 

x 
* 
†  Management contract or compensatory plan required to be filed pursuant to Item 601 of Regulation S-K 

Item 16. Form 10-K Summary 

None. 

2019 10-K Annual Report  

Stericycle, Inc.  •  133 

 
 
 
 
  
  
  
 
  
  
  
  
  
  
  
  
  
  
 
  
  
 
  
  
 
  
  
 
  
  
  
  
  
  
  
 
  
  
 
  
  
 
 
 
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. 

SIGNATURES 

SIGNATURES 

Dated: February 28, 2020 

STERICYCLE, INC. 
(Registrant) 
By:    /s/ Janet H. Zelenka 
Janet H. Zelenka 
Executive Vice President and Chief Financial Officer  

STERICYCLE, INC. 
(Registrant) 
By:    /s/ Richard J. Hoffman  
Richard J. Hoffman 
Senior Vice President and Chief Accounting 
Officer  

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below 
by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. 

Dated: February 28, 2020 

Name 

Title 

Date 

/s/    CINDY J. MILLER 
Cindy J. Miller 

/s/   JANET H. ZELENKA 
Janet H. Zelenka 

/s/    RICHARD J. HOFFMAN 
Richard J. Hoffman 

/s/   ROBERT S. MURLEY 
Robert S. Murley 

/s/    BRIAN P. ANDERSON 
Brian P. Anderson 

/s/    LYNN D. BLEIL 
Lynn D. Bleil 

/s/    THOMAS F. CHEN 
Thomas F. Chen 

/s/    J. Joel Hackney Jr. 
J. Joel Hackney Jr. 

Chief Executive Officer and Director (Principal Executive 
Officer) 

February 28, 2020 

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

February 28, 2020 

Senior Vice President and Chief Accounting Officer (Principal 
Accounting Officer) 

February 28, 2020 

   Chairman of the Board of Directors 

  February 28, 2020 

   Director 

   Director 

   Director 

   Director 

  February 28, 2020 

  February 28, 2020 

  February 28, 2020 

  February 28, 2020 

2019 10-K Annual Report  

Stericycle, Inc.  •  134 

 
 
 
 
 
 
 
  
 
  
     
 
  
  
 
     
 
  
  
     
 
  
  
 
     
 
  
  
     
 
  
  
 
     
 
  
 
   
 
     
 
  
  
     
 
  
     
 
  
  
     
 
  
     
 
  
  
     
 
  
     
 
  
  
     
 
  
     
 
  
/s/    VERONICA M. HAGEN 
Veronica M. Hagen 

/s/  STEPHEN C. HOOLEY 
Stephen C. Hooley 

/s/    KAY G. PRIESTLY 
Kay G. Priestly 

/s/    MIKE S. ZAFIROVSKI 
Mike S. Zafirovski 

   Director 

   Director 

   Director 

   Director 

SIGNATURES 

  February 28, 2020 

  February 28, 2020 

  February 28, 2020 

  February 28, 2020 

2019 10-K Annual Report  

Stericycle, Inc.  •  135 

 
 
 
 
   
 
 
   
 
     
 
  
  
     
 
  
     
 
  
 
 
 
 
     
 
  
  
     
 
  
     
 
  
 
2019 ANNUAL REPORT

Our Company  
At A Glance

Stericycle is a global business-to-business services company. We 
provide an array of highly specialized solutions serving healthcare 
organizations and commercial businesses of every size. Since our 
founding in 1989, we have grown from a small start-up in medical 
waste management into a leader across a range of increasingly 
complex and highly regulated arenas, such as:

•  Regulated waste management and compliance solutions

•  Secure information destruction

•  Environmental and sustainable solutions

•  Product recall and withdrawal service

•  Patient communication services for hospitals

Every organization today must comply with increasingly strict 
regulatory requirements and quality controls in the delivery of their 
core products or services. Large or small, businesses can’t always 
do it on their own. They seek out Stericycle to help them. We have 
the expertise and passion to take on many complicated and often 
behind-the-scenes services our clients don’t always know how to 
do well but that ultimately make their businesses better.

O U R   P U R P O S E :

To help our customers fulfill their  
promises by providing solutions  
that protect people and brands,  
promote health and safeguard  
the environment.

1989

FOUNDED IN 1989 

HEADQUARTERS 
BANNOCKBURN, IL

2019 REVENUE OF  
$3.3 BILLION

560+ LOCATIONS 
IN 19 COUNTRIES

MORE THAN 
ONE MILLION CUSTOMERS 
WORLDWIDE

19,500+ 
TEAM MEMBERS

2019 ANNUAL REPORT

Stericycle’s Global  
Sustainability Highlights

Stericycle provides essential sustainability services that help protect communities from harmful wastes, enable 
recycling and alternative use opportunities, and lead to greater consumer safety and satisfaction. Here is a sample 
of the annual global impact of our services as reported in our 2019 Corporate Social Responsibility Report:

Medical Waste Management

1.8 BILLION POUNDS 
of Medical Waste Safely Treated

Secure Information Destruction

1.5 BILLION POUNDS  
 of Paper Recycled

Pharmaceutical Waste Disposal

85 MILLION POUNDS 
 of Drugs Safely Disposed

Hazardous Waste Management

1.2 BILLION POUNDS 
of RCRA Wastes Properly Managed

Sharps Management

56 MILLION POUNDS 
 of Plastic Diverted from Landfills

Sustainable Solutions

84 MILLION POUNDS 
of Wastes Diverted from Landfills

Maritime Solutions

83 MILLION POUNDS 
of Maritime Wastes Diverted from Landfills

Learn more about our sustainability efforts at  
stericycle.com/about-us/sustainability.

2019 ANNUAL REPORT

Corporate Information

C O M P A N Y   H E A D Q U A R T E R S

I N V E S T O R   R E L A T I O N S

Stericycle, Inc.
2355 Waukegan Road
Bannockburn, IL 60015 
800-643-0240 
stericycle.com

For information on the company, additional copies 
of this Annual Report or other information, please 
contact Stericycle at StericycleIR@stericycle.com  
or 800-643-0240 ext. 2012. You may also visit the 
Investor section on the Company website at  
Investors.stericycle.com.

I N D E P E N D E N T   A U D I T O R S

A N N U A L   M E E T I N G

Ernst & Young LLP 
155 N. Wacker Drive
Chicago, Illinois 60606

The annual meeting of stockholders will be held  
at 8:30am CT on Friday, May 22, 2020 virtually at  
virtualshareholdermeeting.com/SRCL2020

T R A N S F E R   A G E N T

N A S D A Q®   S Y M B O L

EQ Shareowner Services 
1110 Centre Pointe Curve, Suite 101
Mendota Heights, MN 55120

SRCL

S A F E   H A R B O R   S T A T E M E N T

This document may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. When we use words such as “believes,” 
“expects,” “anticipates,” “estimates” “may,” “plan,” “will,” “goal” or similar expressions, we are making forward-looking statements.  Forward-looking statements are 
prospective in nature and are not based on historical facts, but rather on current expectations and projections of our management about future events and are 
therefore subject to risks and uncertainties, which could cause actual results to differ materially from the future results expressed or implied by the forward-looking 
statements. Factors that could cause such differences include, among others, developments in the COVID-19 pandemic and the resulting impact on the DOJ and FTC 
review of the Transaction and on our business and results of operations, SOP pricing volatility, foreign exchange rate volatility in the jurisdictions in which we operate, 
the volume and size of any recall events, changes in governmental regulation of the collection, transportation, treatment and disposal of regulated waste or the proper 
handling and protection of personal and confidential information, the level of government enforcement of regulations governing regulated waste collection and 
treatment or the proper handling and protection of personal and confidential information, decreases in the volume of regulated wastes or personal and confidential 
information collected from customers, the ability to implement our ERP system, charges related to portfolio rationalization or the failure of divestitures to achieve the 
desired results, failure to consummate transactions with respect to non-core businesses, including the risk that the Domestic Environmental Solutions transaction 
described in our Current Report on Form 8-K dated February 7, 2020, may not be completed in a timely manner or at all, the failure to satisfy the conditions to the 
consummation of the transaction, including the receipt of certain governmental and regulatory approvals, the effect of the announcement or pendency of the Domestic 
Environmental Solutions transaction on Stericycle’s business relationships, operating results and business generally and risks relating to diverting management’s 
attention from Stericycle’s ongoing business operations, the obligations to service substantial indebtedness and comply with the covenants and restrictions contained 
in our credit agreements and notes, a downgrade in our credit rating resulting in an increase in interest expense, political, economic, inflationary and other risks related 
to our foreign operations, the outcome of pending or future litigation or investigations including with respect to the U.S. Foreign Corrupt Practices Act, changing 
market conditions in the healthcare industry, competition and demand for services in the regulated waste and secure information destruction industries, failure 
to maintain an effective system of internal control over financial reporting, delays or failures in implementing remediation efforts with respect to existing or future 
material weaknesses, disruptions in or attacks on information technology systems, as well as other factors described in our filings with the U.S. Securities and Exchange 
Commission, including our Annual Report on Form 10-K and subsequent Quarterly Reports on Forms 10-Q. As a result, past financial performance should not be 
considered a reliable indicator of future performance, and investors should not use historical trends to anticipate future results or trends. We disclaim any obligation to 
update or revise any forward-looking or other statements contained herein other than in accordance with legal and regulatory obligations.

2355 Waukegan Road
Bannockburn, IL 60015

800-643-0240 | stericycle.com

© 2020 Stericycle, Inc. All rights reserved.