Basis of Presentation and Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2013 |
Notes to Financial Statements [Abstract] | ' |
Basis of Presentation and Significant Accounting Policies | ' |
NOTE A – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES |
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We are a provider of compression-based production enhancement services, which are used in both conventional wellhead compression applications and unconventional compression applications and, in certain circumstances, well monitoring and sand separation services. We provide our services to a broad base of natural gas and oil exploration and production companies operating throughout many of the onshore producing regions of the United States. Internationally, we have significant operations in Mexico and Canada and a growing presence in certain countries in South America, Eastern Europe, and the Asia-Pacific region. |
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Presentation |
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Our unaudited consolidated financial statements include the accounts of our wholly owned subsidiaries. All material intercompany balances and transactions have been eliminated. In the opinion of our management, our unaudited consolidated financial statements as of September 30, 2013, and for the three and nine month periods ended September 30, 2013 and 2012, include all normal recurring adjustments that are, in the opinion of management, necessary to provide a fair statement of our results for the interim periods. Operating results for the period ended September 30, 2013 are not necessarily indicative of results that may be expected for the twelve months ended December 31, 2013. |
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The accompanying unaudited consolidated financial statements have been prepared in accordance with Rule 10-01 of Regulation S-X for interim financial statements required to be filed with the SEC and do not include all information and footnotes required by generally accepted accounting principles for complete financial statements. These financial statements should be read in connection with the financial statements for the year ended December 31, 2012, and notes thereto included in our Annual Report on Form 10-K, which we filed with the SEC on March 11, 2013. |
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Beginning with the three month period ended September 30, 2013, certain ad valorem tax expenses for operating equipment have been classified as cost of compression and other services instead of being included in general and administrative expense as reported in prior periods. Prior period amounts have been reclassified to conform to the current year period presentation. The amount of such reclassification is $0.7 million for the six month period ended June 30, 2013, and $0.4 million and $1.2 million for the three and nine month periods ended September 30, 2012, respectively. This reclassification had no effect on net income for any of the periods presented. This revised presentation results in a presentation that is consistent with other reporting entities in our industry. |
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Use of Estimates |
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The preparation of financial statements in conformity with generally accepted accounting principles requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclose contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates, and such differences could be material. |
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Cash Equivalents |
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We consider all highly liquid cash investments with maturities of three months or less when purchased to be cash equivalents. |
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Financial Instruments |
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The fair values of our financial instruments, which may include cash, accounts receivable, accounts payable, and long-term debt pursuant to our bank credit agreement, approximate their carrying amounts. |
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Inventories |
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Inventories consist primarily of compressor unit components and parts and are stated at the lower of cost or market value. Cost is determined using the weighted average cost method. |
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Net Income Per Common and Subordinated Unit |
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The computations of net income per common and subordinated unit are based on the weighted average number of common and subordinated units, respectively, outstanding during the applicable period. Our subordinated units meet the definition of a participating security, and, therefore, we are required to use the two-class method in the computation of net income per unit. Basic net income per common and subordinated unit is determined by dividing net income allocated to the common units and subordinated units, respectively, after deducting the amount allocated to our General Partner (including any distributions to our General Partner on its |
incentive distribution rights) by the weighted average number of outstanding common and subordinated units, respectively, during the period. |
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We determine cash distributions based on available cash and determine the actual incentive distributions allocable to our General Partner, if any, based on actual distributions. When computing net income per common and subordinated unit under the two-class method, the amount of the actual incentive distribution rights, if any, is deducted from net income and allocated to our General Partner for the period to which the calculation relates. The remaining amount of net income, after deducting the incentive distribution rights, is allocated among our General Partner, common, and subordinated units based on how our partnership agreement allocates net income. |
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The following is a reconciliation of the weighted average number of common and subordinated units outstanding to the number of common and subordinated units used in the computations of net income per common and subordinated unit. |
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| Three Months Ended September 30, 2013 | | Nine Months Ended September 30, 2013 | | |
| Common | | Subordinated | | Common | | Subordinated | | |
Units | Units | Units | Units | | |
Number of weighted average units outstanding | 9,235,680 | | | 6,273,970 | | | 9,227,116 | | | 6,273,970 | | | |
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Restricted units outstanding | 83,462 | | | — | | | 83,945 | | | — | | | |
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Average diluted units outstanding | 9,319,142 | | | 6,273,970 | | | 9,311,061 | | | 6,273,970 | | | |
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| Three Months Ended September 30, 2012 | | Nine Months Ended September 30, 2012 | | |
| Common | | Subordinated | | Common | | Subordinated | | |
Units | Units | Units | Units | | |
Number of weighted average units outstanding | 9,163,738 | | | 6,273,970 | | | 9,155,744 | | | 6,273,970 | | | |
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Restricted units outstanding | — | | | — | | | — | | | — | | | |
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Average diluted units outstanding | 9,163,738 | | | 6,273,970 | | | 9,155,744 | | | 6,273,970 | | | |
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Environmental Liabilities |
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Costs to remediate and monitor environmental matters are accrued when such liabilities are considered probable and a reasonable estimate of such costs is determinable. |
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Accumulated Other Comprehensive Income |
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Certain of our international operations maintain their accounting records in the local currencies that are their functional currencies. For these operations, the functional currency financial statements are converted to United States dollar equivalents, with the effect of the foreign currency translation adjustment reflected as a component of accumulated other comprehensive income. Accumulated other comprehensive income is included in partners’ capital in the accompanying consolidated balance sheets and consists of the cumulative currency translation adjustments associated with such international operations. Activity within accumulated other comprehensive income during the three and nine month periods ended September 30, 2013 and 2012, is as follows: |
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| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2013 | | 2012 | | 2013 | | 2012 |
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Balance, beginning of period | $ | 910 | | | $ | 879 | | | 1,004 | | | 902 | |
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Foreign currency translation adjustment | 58 | | | 135 | | | (36 | ) | | 112 | |
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Balance, end of period | $ | 968 | | | $ | 1,014 | | | 968 | | | 1,014 | |
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Activity within accumulated other comprehensive income includes no reclassifications to net income. |
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Allocation of Net Income |
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Our net income is allocated to partners’ capital accounts in accordance with the provisions of our partnership agreement. |
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Distributions |
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On January 18, 2013, the board of directors of our General Partner declared a cash distribution attributable to the quarter ended December 31, 2012, of $0.42 per unit. This distribution equates to a distribution of $1.68 per outstanding unit, or approximately $26.6 million, on an annualized basis. This cash distribution was paid on February 15, 2013, to all unitholders of record as of the close of business on February 1, 2013. |
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On April 19, 2013, the board of directors of our General Partner declared a cash distribution attributable to the quarter ended March 31, 2013 of $0.425 per unit. This distribution equates to a distribution of $1.70 per outstanding unit, or approximately $27.0 million, on an annualized basis. This cash distribution was paid on May 15, 2013, to all unitholders of record as of the close of business on May 1, 2013. |
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On, July 19, 2013, the board of directors of our General Partner declared a cash distribution attributable to the quarter ended June 30, 2013 of $0.425 per unit. This distribution equates to a distribution of $1.70 per outstanding unit, or approximately $27.0 million, on an annualized basis. This cash distribution was paid on August 15, 2013, to all unitholders of record as of the close of business on August 1, 2013. |
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Subsequent to September 30, 2013, on October 18, 2013, the board of directors of our General Partner declared a cash distribution attributable to the quarter ended September 30, 2013 of $0.43 per unit. This distribution equates to a distribution of $1.72 per outstanding unit, or approximately $27.0 million, on an annualized basis. This cash distribution is to be paid on November 15, 2013 to all unitholders of record as of the close of business on November 1, 2013. |
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New Accounting Pronouncements |
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In June 2011, the Financial Accounting Standards Board (FASB) published Accounting Standards Update (ASU) 2011-05, “Comprehensive Income (Topic 220), Presentation of Comprehensive Income” (ASU 2011-05), with the stated objective of improving the comparability, consistency, and transparency of financial reporting and increasing the prominence of items reported in other comprehensive income. As part of ASU 2011-05, the FASB eliminated the option to present components of other comprehensive income as part of the statement of changes in stockholders’ equity. The ASU 2011-05 amendments require that all non-owner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The ASU 2011-05 amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011, and the amendments are applied retrospectively. In December 2011, with the issuance of ASU 2011-12, “Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05,” the FASB announced that it has deferred certain aspects of ASU 2011-05. In February 2013, the FASB issued ASU 2013-2, “Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income,” with the stated objective of improving the reporting of reclassifications out of accumulated other comprehensive income. The amendments in ASU 2013-2 are effective during interim and annual periods beginning after December 31, 2012. The adoption of ASU 2011-05, 2011-12 and 2013-2 regarding comprehensive income have not had a significant impact on the accounting or disclosures in our financial statements. |
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In December 2011, the FASB published ASU 2011-11, “Balance Sheet (Topic 210), Disclosures about Offsetting Assets and Liabilities” (ASU 2011-11), which requires an entity to disclose the nature of its rights of setoff and related arrangements associated with its financial instruments and derivative instruments. The objective of ASU 2011-11 is to make financial statements that are prepared under U.S. generally accepted accounting principles more comparable to those prepared under International Financial Reporting Standards. The new disclosures will give financial statement users information about both gross and net exposures. In January 2013, the FASB published ASU 2013-01, “Balance Sheet (Topic 210), Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities” (ASU 2013-01), with the stated objective of clarifying the scope of offsetting disclosures and address any unintended consequences of ASU 2011-11. ASU 2011-11 and ASU 2013-01 are effective for interim and annual reporting periods beginning after January 1, 2013, and will be applied on a retrospective basis. The adoption of ASU 2011-11 and ASU 2013-01 did not have a material impact on our financial condition, results of operations, or liquidity. |
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In July 2013, the FASB published ASU No. 2013-11, "Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists" (ASU 2013-11). The amendments in this ASU provide guidance on presentation of unrecognized tax benefits and are expected to reduce diversity in practice and better reflect the manner in which an entity would settle at the reporting date any additional income taxes that would result from the disallowance of a tax position when net operating loss carryforwards, similar tax losses, or tax credit carryforwards exist. The amendments in this ASU are effective prospectively for interim and annual periods beginning after December 15, 2013, with early adoption and retrospective application permitted. We do not expect the adoption of this standard to have a material impact on our consolidated financial statements. |