Supplemental Guarantor Financial Information | SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION The $295.9 million in aggregate principal amount of the 7.25% Senior Notes as of June 30, 2017 is fully and unconditionally guaranteed, subject to certain customary release provisions, on a joint and several senior unsecured basis, by the following domestic restricted subsidiaries (each a "Guarantor Subsidiary" and collectively the "Guarantor Subsidiaries"): Compressor Systems, Inc. CSI Compressco Field Services International LLC CSI Compressco Holdings LLC CSI Compressco International LLC CSI Compressco Leasing LLC CSI Compressco Operating LLC CSI Compressco Sub, Inc. CSI Compression Holdings, LLC Pump Systems International, Inc. Rotary Compressor Systems, Inc. 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% Senior Notes. In addition to the financial information of the Partnership, financial information of the Issuers includes CSI Compressco Finance Inc., which had no assets or operations for any of the periods presented. Condensed Consolidating Balance Sheet June 30, 2017 (In Thousands) Issuers Guarantor Other Eliminations Consolidated ASSETS Current assets $ — $ 74,247 $ 20,971 $ — $ 95,218 Property, plant, and equipment, net — 601,020 25,733 — 626,753 Investments in subsidiaries 187,199 15,822 — (203,021 ) — Intangible and other assets, net — 35,124 323 — 35,447 Intercompany receivables 303,887 — — (303,887 ) — Total non-current assets 491,086 651,966 26,056 (506,908 ) 662,200 Total assets $ 491,086 $ 726,213 $ 47,027 $ (506,908 ) $ 757,418 LIABILITIES AND PARTNERS' CAPITAL Current liabilities $ 8,334 $ 32,775 $ 2,740 $ — $ 43,849 Amounts payable to affiliates — 5,234 2,190 — 7,424 Long-term debt, net 287,402 222,348 — — 509,750 Series A Preferred Units 77,350 — — — 77,350 Intercompany payables — 278,586 25,301 (303,887 ) — Other long-term liabilities — 71 974 — 1,045 Total liabilities 373,086 539,014 31,205 (303,887 ) 639,418 Total partners' capital 118,000 187,199 15,822 (203,021 ) 118,000 Total liabilities and partners' capital $ 491,086 $ 726,213 $ 47,027 $ (506,908 ) $ 757,418 Condensed Consolidating Balance Sheet December 31, 2016 (In Thousands) Issuers Guarantor Other Eliminations Consolidated ASSETS Current assets $ 35 $ 74,574 $ 27,395 $ — $ 102,004 Property, plant, and equipment, net — 624,051 22,955 — 647,006 Investments in subsidiaries 214,703 15,112 — (229,815 ) — Intangible and other assets, net — 36,794 336 — 37,130 Intercompany receivables 312,227 — — (312,227 ) — Total non-current assets 526,930 675,957 23,291 (542,042 ) 684,136 Total assets $ 526,965 $ 750,531 $ 50,686 $ (542,042 ) $ 786,140 LIABILITIES AND PARTNERS' CAPITAL Current liabilities $ 8,089 $ 31,789 $ 3,856 $ — $ 43,734 Amounts payable to affiliates 874 3,780 1,526 — 6,180 Long-term debt, net 286,623 217,467 — — 504,090 Series A Preferred Units 88,130 — — — 88,130 Intercompany payables — 282,753 29,474 (312,227 ) — Other long-term liabilities — 39 718 — 757 Total liabilities 383,716 535,828 35,574 (312,227 ) 642,891 Total partners' capital 143,249 214,703 15,112 (229,815 ) 143,249 Total liabilities and partners' capital $ 526,965 $ 750,531 $ 50,686 $ (542,042 ) $ 786,140 Condensed Consolidating Statement of Operations and Comprehensive Income Three Months Ended June 30, 2017 (In Thousands) Issuers Guarantor Other Eliminations Consolidated Revenues $ — $ 70,515 $ 6,321 $ (1,521 ) $ 75,315 Cost of revenues (excluding depreciation and amortization expense) — 47,668 4,438 (1,521 ) 50,585 Selling, general and administrative expense 941 6,902 387 — 8,230 Depreciation and amortization — 16,393 811 — 17,204 Interest expense, net 7,862 2,587 — — 10,449 Series A Preferred FV Adjustment (5,528 ) — — — (5,528 ) Other expense, net — 239 (98 ) — 141 Equity in net income of subsidiaries 3,097 (391 ) — (2,706 ) — Income before income tax provision (6,372 ) (2,883 ) 783 2,706 (5,766 ) Provision (benefit) for income taxes — 214 392 — 606 Net income (loss) (6,372 ) (3,097 ) 391 2,706 (6,372 ) Other comprehensive income (loss) (568 ) (568 ) (568 ) 1,136 (568 ) Comprehensive income (loss) $ (6,940 ) $ (3,665 ) $ (177 ) $ 3,842 $ (6,940 ) Condensed Consolidating Statement of Operations and Comprehensive Income Three Months Ended June 30, 2016 (In Thousands) Issuers Guarantor Other Eliminations Consolidated Revenues $ — $ 66,396 $ 12,087 $ (2,394 ) $ 76,089 Cost of revenues (excluding depreciation and amortization expense) — 37,579 8,478 (2,394 ) 43,663 Selling, general and administrative expense 676 7,001 506 — 8,183 Depreciation and amortization — 18,011 731 — 18,742 Long-lived asset impairment — — — — — Goodwill impairment — — — — — Interest expense, net 6,482 2,388 — — 8,870 Other expense, net — 38 669 — 707 Equity in net income of subsidiaries (2,478 ) (1,513 ) — 3,991 — Income (loss) before income tax provision (4,680 ) 2,892 1,703 (3,991 ) (4,076 ) Provision (benefit) for income taxes — 414 190 — 604 Net income (loss) (4,680 ) 2,478 1,513 (3,991 ) (4,680 ) Other comprehensive income (loss) (115 ) (115 ) (115 ) 230 (115 ) Comprehensive income (loss) $ (4,795 ) $ 2,363 $ 1,398 $ (3,761 ) $ (4,795 ) Condensed Consolidating Statement of Operations and Comprehensive Income Six Months Ended June 30, 2017 (In Thousands) Issuers Guarantor Other Eliminations Consolidated Revenues $ — $ 131,098 $ 12,702 $ (2,933 ) $ 140,867 Cost of revenues (excluding depreciation and amortization expense) — 86,905 8,674 (2,933 ) 92,646 Selling, general and administrative expense 1,984 14,303 709 — 16,996 Depreciation and amortization — 32,917 1,582 — 34,499 Long-live asset impairment — — — — — Goodwill impairment — — — — — Interest expense, net 15,849 4,983 — — 20,832 Series A Preferred FV Adjustment (3,663 ) — — — (3,663 ) Other expense, net — 602 (499 ) — 103 Equity in net income of subsidiaries 7,795 (1,028 ) — (6,767 ) — Income before income tax provision (21,965 ) (7,584 ) 2,236 6,767 (20,546 ) Provision for income taxes — 211 1,208 — 1,419 Net income (21,965 ) (7,795 ) 1,028 6,767 (21,965 ) Other comprehensive income (loss) (318 ) (318 ) (318 ) 636 (318 ) Comprehensive income (loss) $ (22,283 ) $ (8,113 ) $ 710 $ 7,403 $ (22,283 ) Condensed Consolidating Statement of Operations and Comprehensive Income Six Months Ended June 30, 2016 (In Thousands) Issuers Guarantor Other Eliminations Consolidated Revenues $ — $ 141,492 $ 23,296 $ (7,007 ) $ 157,781 Cost of revenues (excluding depreciation and amortization expense) — 82,891 16,155 (7,007 ) 92,039 Selling, general and administrative expense 1,311 16,174 928 — 18,413 Depreciation and amortization — 35,754 1,440 — 37,194 Long-live asset impairment — 7,797 69 — 7,866 Goodwill impairment — 91,575 759 — 92,334 Interest expense, net 12,962 4,710 — — 17,672 Other expense, net — 104 891 — 995 Equity in net income of subsidiaries 95,756 (2,761 ) — (92,995 ) — Income before income tax provision (110,029 ) (94,752 ) 3,054 92,995 (108,732 ) Provision (benefit) for income taxes — 1,004 293 — 1,297 Net income (110,029 ) (95,756 ) 2,761 92,995 (110,029 ) Other comprehensive income (loss) (919 ) (919 ) (919 ) 1,838 (919 ) Comprehensive income (loss) $ (110,948 ) $ (96,675 ) $ 1,842 $ 94,833 $ (110,948 ) Condensed Consolidating Statement of Cash Flows Six Months Ended June 30, 2017 (In Thousands) Issuers Guarantor Other Eliminations Consolidated Net cash provided by (used in) operating activities $ — $ 15,735 $ (4,381 ) $ — $ 11,354 Investing activities: Purchases of property, plant, and equipment, net — (11,850 ) 373 — (11,477 ) Intercompany investment activity 19,510 — — (19,510 ) — Advances and other investing activities — 32 — — 32 Net cash provided by (used in) investing activities 19,510 (11,818 ) 373 (19,510 ) (11,445 ) Financing activities: Proceeds from long-term debt — 42,500 — — 42,500 Payments of long-term debt — (37,300 ) — — (37,300 ) Proceeds from Series A Preferred Units, net of offering costs (37 ) — — — (37 ) Distributions (19,391 ) — — — (19,391 ) Other Financing Activities (82 ) (1,266 ) — — (1,348 ) Intercompany contribution (distribution) — (19,510 ) — 19,510 — Net cash provided by (used in) financing activities (19,510 ) (15,576 ) — 19,510 (15,576 ) Effect of exchange rate changes on cash — — (110 ) — (110 ) Increase (decrease) in cash and cash equivalents — (11,659 ) (4,118 ) — (15,777 ) Cash and cash equivalents at beginning of period — 12,201 8,596 — 20,797 Cash and cash equivalents at end of period $ — $ 542 $ 4,478 $ — $ 5,020 Condensed Consolidating Statement of Cash Flows Six Months Ended June 30, 2016 (In Thousands) Issuers Guarantor Other Eliminations Consolidated Net cash provided by (used in) operating activities $ — $ 33,128 $ 2,436 $ — $ 35,564 Investing activities: Purchases of property, plant, and equipment, net — (2,404 ) (1,402 ) — (3,806 ) Intercompany investment activity 25,568 — — (25,568 ) — Advances and other investing activities — 21 — 21 Net cash provided by (used in) investing activities 25,568 (2,383 ) (1,402 ) (25,568 ) (3,785 ) Financing activities: Proceeds from long-term debt — 36,000 — — 36,000 Payments of long-term debt — (35,000 ) — — (35,000 ) Distributions (25,568 ) — — — (25,568 ) Payment of financing costs — (725 ) — — (725 ) Intercompany contribution (distribution) — (25,568 ) — 25,568 — Net cash provided by (used in) financing activities (25,568 ) (25,293 ) — 25,568 (25,293 ) Effect of exchange rate changes on cash — — (415 ) — (415 ) Increase (decrease) in cash and cash equivalents — 5,452 619 — 6,071 Cash and cash equivalents at beginning of period — 2,711 7,909 — 10,620 Cash and cash equivalents at end of period $ — $ 8,163 $ 8,528 $ — $ 16,691 |