Supplemental Guarantor Financial Information | 20. Supplemental Guarantor Financial Information Exterran Holdings, Inc. (“Parent”) is the issuer of our 7.25% senior notes with an aggregate principal amount of $350.0 million due December 2018 (the “7.25% Notes”). EESLP, EES Leasing LLC, EXH GP LP LLC and EXH MLP LP LLC (each a 100% owned subsidiary; together, the “Guarantor Subsidiaries”), have agreed to fully and unconditionally (subject to customary release provisions) on a joint and several senior unsecured basis guarantee Parent’s obligations relating to the 7.25% Notes. As a result of these guarantees, we are presenting the following condensed consolidating financial information pursuant to Rule 3-10 of Regulation S-X. These schedules are presented using the equity method of accounting for all periods presented. Under this method, investments in subsidiaries are recorded at cost and adjusted for our share in the subsidiaries’ cumulative results of operations, capital contributions and distributions and other changes in equity. Elimination entries relate primarily to the elimination of investments in subsidiaries and associated intercompany balances and transactions. The Other Subsidiaries column includes financial information for those subsidiaries that do not guarantee the 7.25% Notes. Condensed Consolidating Balance Sheet September 30, 2015 (In thousands) Parent Guarantor Subsidiaries Other Subsidiaries Eliminations Consolidation ASSETS Current assets $ 792 $ 612,488 $ 557,043 $ — $ 1,170,323 Current assets associated with discontinued operations — — 263 — 263 Total current assets 792 612,488 557,306 — 1,170,586 Property, plant and equipment, net — 922,974 2,370,392 — 3,293,366 Investments in affiliates 1,810,278 1,725,780 — (3,536,058 ) — Goodwill — — 3,738 — 3,738 Intangible and other assets, net 5,784 31,020 178,543 (115 ) 215,232 Intercompany receivables 688,672 18,957 432,400 (1,140,029 ) — Long-term assets associated with discontinued operations — — 15,996 — 15,996 Total long-term assets 2,504,734 2,698,731 3,001,069 (4,676,202 ) 3,528,332 Total assets $ 2,505,526 $ 3,311,219 $ 3,558,375 $ (4,676,202 ) $ 4,698,918 LIABILITIES AND EQUITY Current liabilities $ 8,789 $ 235,346 $ 220,368 $ — $ 464,503 Current liabilities associated with discontinued operations — — 677 — 677 Total current liabilities 8,789 235,346 221,045 — 465,180 Long-term debt 680,000 738 1,395,166 — 2,075,904 Intercompany payables — 1,121,072 18,957 (1,140,029 ) — Other long-term liabilities — 143,785 112,955 (115 ) 256,625 Long-term liabilities associated with discontinued operations — — 162 — 162 Total liabilities 688,789 1,500,941 1,748,285 (1,140,144 ) 2,797,871 Total equity 1,816,737 1,810,278 1,810,090 (3,536,058 ) 1,901,047 Total liabilities and equity $ 2,505,526 $ 3,311,219 $ 3,558,375 $ (4,676,202 ) $ 4,698,918 Condensed Consolidating Balance Sheet December 31, 2014 (In thousands) Parent Guarantor Subsidiaries Other Subsidiaries Eliminations Consolidation ASSETS Current assets $ 4,846 $ 649,719 $ 610,574 $ — $ 1,265,139 Current assets associated with discontinued operations — — 537 — 537 Total current assets 4,846 649,719 611,111 — 1,265,676 Property, plant and equipment, net — 1,124,786 2,202,106 — 3,326,892 Investments in affiliates 1,786,572 1,744,614 — (3,531,186 ) — Goodwill — — 3,738 — 3,738 Intangible and other assets, net 5,966 33,292 204,114 — 243,372 Intercompany receivables 727,896 12,023 529,274 (1,269,193 ) — Long-term assets associated with discontinued operations — — 17,469 — 17,469 Total long-term assets 2,520,434 2,914,715 2,956,701 (4,800,379 ) 3,591,471 Total assets $ 2,525,280 $ 3,564,434 $ 3,567,812 $ (4,800,379 ) $ 4,857,147 LIABILITIES AND EQUITY Current liabilities $ 2,520 $ 353,851 $ 252,281 $ — $ 608,652 Current liabilities associated with discontinued operations — — 2,066 — 2,066 Total current liabilities 2,520 353,851 254,347 — 610,718 Long-term debt 725,500 1,107 1,300,295 — 2,026,902 Intercompany payables — 1,257,170 12,023 (1,269,193 ) — Other long-term liabilities — 165,734 100,431 — 266,165 Long-term liabilities associated with discontinued operations — — 317 — 317 Total liabilities 728,020 1,777,862 1,667,413 (1,269,193 ) 2,904,102 Total equity 1,797,260 1,786,572 1,900,399 (3,531,186 ) 1,953,045 Total liabilities and equity $ 2,525,280 $ 3,564,434 $ 3,567,812 $ (4,800,379 ) $ 4,857,147 Condensed Consolidating Statement of Operations and Comprehensive Income (Loss) Three Months Ended September 30, 2015 (In thousands) Parent Guarantor Subsidiaries Other Subsidiaries Eliminations Consolidation Revenues $ — $ 314,478 $ 404,343 $ (69,320 ) $ 649,501 Costs of sales (excluding depreciation and amortization expense) — 238,327 240,732 (69,320 ) 409,739 Selling, general and administrative 159 38,569 43,396 — 82,124 Depreciation and amortization — 29,900 65,024 — 94,924 Long-lived asset impairment — 15,080 8,628 — 23,708 Restructuring and other charges — 10,220 1,778 — 11,998 Interest expense 9,219 234 19,124 — 28,577 Intercompany charges, net (8,653 ) 8,013 640 — — Equity in (income) loss of affiliates 5,823 (208 ) (5,084 ) (5,615 ) (5,084 ) Other (income) expense, net 10 2,735 27,384 — 30,129 Income (loss) before income taxes (6,558 ) (28,392 ) 2,721 5,615 (26,614 ) Provision for (benefit from) income taxes (254 ) (22,569 ) 19,218 — (3,605 ) Loss from continuing operations (6,304 ) (5,823 ) (16,497 ) 5,615 (23,009 ) Income from discontinued operations, net of tax — — 18,776 — 18,776 Net income (loss) (6,304 ) (5,823 ) 2,279 5,615 (4,233 ) Less: Net income attributable to the noncontrolling interest — — (2,071 ) — (2,071 ) Net income (loss) attributable to Exterran stockholders (6,304 ) (5,823 ) 208 5,615 (6,304 ) Other comprehensive income attributable to Exterran stockholders 3,911 3,058 3,239 (6,297 ) 3,911 Comprehensive income (loss) attributable to Exterran stockholders $ (2,393 ) $ (2,765 ) $ 3,447 $ (682 ) $ (2,393 ) Condensed Consolidating Statement of Operations and Comprehensive Income (Loss) Three Months Ended September 30, 2014 (In thousands) Parent Guarantor Subsidiaries Other Subsidiaries Eliminations Consolidation Revenues $ — $ 367,326 $ 408,847 $ (52,341 ) $ 723,832 Costs of sales (excluding depreciation and amortization expense) — 260,530 249,158 (52,341 ) 457,347 Selling, general and administrative 61 43,437 51,308 — 94,806 Depreciation and amortization — 32,040 66,216 — 98,256 Long-lived asset impairment — 7,783 4,602 — 12,385 Restructuring and other charges — 94 125 — 219 Interest expense 9,593 396 15,748 — 25,737 Intercompany charges, net (9,006 ) 8,026 980 — — Equity in income of affiliates (34,481 ) (28,290 ) (4,951 ) 62,771 (4,951 ) Other (income) expense, net 10 1,301 3,352 — 4,663 Income before income taxes 33,823 42,009 22,309 (62,771 ) 35,370 Provision for (benefit from) income taxes (227 ) 7,528 3,914 — 11,215 Income from continuing operations 34,050 34,481 18,395 (62,771 ) 24,155 Income from discontinued operations, net of tax — — 18,003 — 18,003 Net income 34,050 34,481 36,398 (62,771 ) 42,158 Less: Net income attributable to the noncontrolling interest — — (8,108 ) — (8,108 ) Net income attributable to Exterran stockholders 34,050 34,481 28,290 (62,771 ) 34,050 Other comprehensive loss attributable to Exterran stockholders (5,630 ) (5,687 ) (5,498 ) 11,185 (5,630 ) Comprehensive income attributable to Exterran stockholders $ 28,420 $ 28,794 $ 22,792 $ (51,586 ) $ 28,420 Condensed Consolidating Statement of Operations and Comprehensive Income (Loss) Nine Months Ended September 30, 2015 (In thousands) Parent Guarantor Subsidiaries Other Subsidiaries Eliminations Consolidation Revenues $ — $ 1,039,414 $ 1,231,878 $ (208,877 ) $ 2,062,415 Costs of sales (excluding depreciation and amortization expense) — 789,565 726,112 (208,877 ) 1,306,800 Selling, general and administrative 268 116,262 136,154 — 252,684 Depreciation and amortization — 91,912 193,145 — 285,057 Long-lived asset impairment — 36,521 15,339 — 51,860 Restructuring and other charges — 29,206 7,186 — 36,392 Interest expense 27,839 459 55,975 — 84,273 Intercompany charges, net (26,098 ) 23,845 2,253 — — Equity in income of affiliates (25,783 ) (56,298 ) (15,152 ) 82,081 (15,152 ) Other (income) expense, net 30 2,308 36,637 — 38,975 Income before income taxes 23,744 5,634 74,229 (82,081 ) 21,526 Provision for (benefit from) income taxes (705 ) (20,149 ) 35,482 — 14,628 Income from continuing operations 24,449 25,783 38,747 (82,081 ) 6,898 Income from discontinued operations, net of tax — — 37,743 — 37,743 Net income 24,449 25,783 76,490 (82,081 ) 44,641 Less: Net income attributable to the noncontrolling interest — — (20,192 ) — (20,192 ) Net income attributable to Exterran stockholders 24,449 25,783 56,298 (82,081 ) 24,449 Other comprehensive loss attributable to Exterran stockholders (3,705 ) (5,522 ) (4,732 ) 10,254 (3,705 ) Comprehensive income attributable to Exterran stockholders $ 20,744 $ 20,261 $ 51,566 $ (71,827 ) $ 20,744 Condensed Consolidating Statement of Operations and Comprehensive Income (Loss) Nine Months Ended September 30, 2014 (In thousands) Parent Guarantor Subsidiaries Other Subsidiaries Eliminations Consolidation Revenues $ — $ 1,085,562 $ 1,183,139 $ (162,591 ) $ 2,106,110 Costs of sales (excluding depreciation and amortization expense) — 798,368 714,388 (162,591 ) 1,350,165 Selling, general and administrative 211 131,668 151,217 — 283,096 Depreciation and amortization — 102,651 193,083 — 295,734 Long-lived asset impairment — 16,960 9,079 — 26,039 Restructuring and other charges — 4,692 702 — 5,394 Interest expense 45,208 1,634 39,925 — 86,767 Intercompany charges, net (27,177 ) 24,568 2,609 — — Equity in income of affiliates (90,910 ) (102,779 ) (14,553 ) 193,689 (14,553 ) Other (income) expense, net 30 3,082 (4,554 ) — (1,442 ) Income before income taxes 72,638 104,718 91,243 (193,689 ) 74,910 Provision for (benefit from) income taxes (6,385 ) 13,808 24,071 — 31,494 Income from continuing operations 79,023 90,910 67,172 (193,689 ) 43,416 Income from discontinued operations, net of tax — — 54,499 — 54,499 Net income 79,023 90,910 121,671 (193,689 ) 97,915 Less: Net income attributable to the noncontrolling interest — — (18,892 ) — (18,892 ) Net income attributable to Exterran stockholders 79,023 90,910 102,779 (193,689 ) 79,023 Other comprehensive loss attributable to Exterran stockholders (5,715 ) (6,531 ) (6,071 ) 12,602 (5,715 ) Comprehensive income attributable to Exterran stockholders $ 73,308 $ 84,379 $ 96,708 $ (181,087 ) $ 73,308 Condensed Consolidating Statement of Cash Flows Nine Months Ended September 30, 2015 (In thousands) Parent Guarantor Subsidiaries Other Subsidiaries Eliminations Consolidation Cash flows from operating activities: Net cash provided by continuing operations $ 3,629 $ 2,269 $ 306,462 $ — $ 312,360 Net cash provided by discontinued operations — — 3,441 — 3,441 Net cash provided by operating activities 3,629 2,269 309,903 — 315,801 Cash flows from investing activities: Capital expenditures — (77,179 ) (273,074 ) — (350,253 ) Proceeds from sale of property, plant and equipment — 4,630 17,226 — 21,856 Capital distributions received from consolidated subsidiaries — 49,265 — (49,265 ) — Return of investments in non-consolidated affiliates — — 15,185 — 15,185 Proceeds received from settlement of note receivable — — 5,357 — 5,357 Increase in restricted cash — — (1 ) — (1 ) Cash invested in non-consolidated affiliates — — (33 ) — (33 ) Return of investments in consolidated subsidiaries 31,167 — — (31,167 ) — Net cash provided by (used in) continuing operations 31,167 (23,284 ) (235,340 ) (80,432 ) (307,889 ) Net cash provided by discontinued operations — — 33,119 — 33,119 Net cash provided by (used in) investing activities 31,167 (23,284 ) (202,221 ) (80,432 ) (274,770 ) Cash flows from financing activities: Proceeds from borrowings of long-term debt 722,500 — 332,500 — 1,055,000 Repayments of long-term debt (768,000 ) — (238,500 ) — (1,006,500 ) Payments for debt issuance costs (874 ) (1,023 ) (1,311 ) — (3,208 ) Payments for settlement of interest rate swaps that include financing elements — — (2,815 ) — (2,815 ) Net proceeds from the sale of Partnership units — — 1,164 — 1,164 Proceeds from stock options exercised 1,106 — — — 1,106 Proceeds from stock issued pursuant to our employee stock purchase plan 910 — — — 910 Purchases of treasury stock (3,771 ) — — — (3,771 ) Dividends to Exterran stockholders (31,167 ) — — — (31,167 ) Stock-based compensation excess tax benefit 3,048 — — — 3,048 Distributions to noncontrolling partners in the Partnership — — (110,310 ) 49,265 (61,045 ) Capital distributions to affiliates — (31,167 ) — 31,167 — Borrowings (repayments) between consolidated subsidiaries, net 41,550 53,531 (95,081 ) — — Net cash provided by (used in) financing activities (34,698 ) 21,341 (114,353 ) 80,432 (47,278 ) Effect of exchange rate changes on cash and cash equivalents — — (976 ) — (976 ) Net increase (decrease) in cash and cash equivalents 98 326 (7,647 ) — (7,223 ) Cash and cash equivalents at beginning of period 42 655 39,042 — 39,739 Cash and cash equivalents at end of period $ 140 $ 981 $ 31,395 $ — $ 32,516 Condensed Consolidating Statement of Cash Flows Nine Months Ended September 30, 2014 (In thousands) Parent Guarantor Subsidiaries Other Subsidiaries Eliminations Consolidation Cash flows from operating activities: Net cash provided by (used in) continuing operations $ (1,743 ) $ 79,455 $ 198,456 $ — $ 276,168 Net cash provided by discontinued operations — — 3,954 — 3,954 Net cash provided by (used in) operating activities (1,743 ) 79,455 202,410 — 280,122 Cash flows from investing activities: Capital expenditures — (116,458 ) (269,281 ) — (385,739 ) Proceeds from sale of property, plant and equipment — 8,274 11,462 — 19,736 Payment for business acquisitions — (11,743 ) (483,012 ) — (494,755 ) Capital distributions received from consolidated subsidiaries — 40,688 — (40,688 ) — Increase in restricted cash — — (245 ) — (245 ) Return of investments in non-consolidated affiliates — — 14,750 — 14,750 Investment in consolidated subsidiaries — (13,813 ) — 13,813 — Cash invested in non-consolidated affiliates — — (197 ) — (197 ) Return of investments in consolidated subsidiaries 252,482 — — (252,482 ) — Net cash provided by (used in) continuing operations 252,482 (93,052 ) (726,523 ) (279,357 ) (846,450 ) Net cash provided by discontinued operations — — 49,835 — 49,835 Net cash provided by (used in) investing activities 252,482 (93,052 ) (676,688 ) (279,357 ) (796,615 ) Cash flows from financing activities: Proceeds from borrowings of long-term debt 1,056,001 — 793,798 — 1,849,799 Repayments of long-term debt (1,073,500 ) — (332,500 ) — (1,406,000 ) Payments for debt issuance costs — — (6,923 ) — (6,923 ) Payments above face value for redemption of convertible debt (15,007 ) — — — (15,007 ) Payments for settlement of interest rate swaps that include financing elements — — (2,844 ) — (2,844 ) Net proceeds from the sale of Partnership units — — 169,471 — 169,471 Proceeds from stock options exercised 11,637 — — — 11,637 Proceeds from stock issued pursuant to our employee stock purchase plan 1,324 — — — 1,324 Purchases of treasury stock (6,372 ) — — — (6,372 ) Dividends to Exterran stockholders (30,047 ) — — — (30,047 ) Stock-based compensation excess tax benefit 8,269 — — — 8,269 Distributions to noncontrolling partners in the Partnership — — (95,581 ) 40,688 (54,893 ) Net proceeds from sale of general partner units — — 3,573 (3,573 ) — Capital distributions to affiliates — (252,482 ) — 252,482 — Capital contributions received from parent — — 10,240 (10,240 ) — Borrowings (repayments) between consolidated subsidiaries, net (203,025 ) 264,974 (61,949 ) — — Net cash provided by (used in) financing activities (250,720 ) 12,492 477,285 279,357 518,414 Effect of exchange rate changes on cash and cash equivalents — — (3,797 ) — (3,797 ) Net increase (decrease) in cash and cash equivalents 19 (1,105 ) (790 ) — (1,876 ) Cash and cash equivalents at beginning of period 11 1,554 34,100 — 35,665 Cash and cash equivalents at end of period $ 30 $ 449 $ 33,310 $ — $ 33,789 |