Supplemental Guarantor Financial Information | SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION The $295.9 million in aggregate principal amount of the 7.25% Senior Notes as of September 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"): 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 September 30, 2017 (In Thousands) Issuers Guarantor Other Eliminations Consolidated ASSETS Current assets $ — $ 77,524 $ 22,047 $ — $ 99,571 Property, plant, and equipment, net — 586,236 25,430 — 611,666 Investments in subsidiaries 179,080 16,472 — (195,552 ) — Intangible and other assets, net — 34,389 316 — 34,705 Intercompany receivables 293,156 — — (293,156 ) — Total non-current assets 472,236 637,097 25,746 (488,708 ) 646,371 Total assets $ 472,236 $ 714,621 $ 47,793 $ (488,708 ) $ 745,942 LIABILITIES AND PARTNERS' CAPITAL Current liabilities $ 3,327 $ 38,554 $ 2,907 $ — $ 44,788 Amounts payable to affiliates — 10,219 1,789 — 12,008 Long-term debt, net 287,795 218,976 — — 506,771 Series A Preferred Units 78,120 — — — 78,120 Intercompany payables — 267,792 25,364 (293,156 ) — Other long-term liabilities — — 1,261 — 1,261 Total liabilities 369,242 535,541 31,321 (293,156 ) 642,948 Total partners' capital 102,994 179,080 16,472 (195,552 ) 102,994 Total liabilities and partners' capital $ 472,236 $ 714,621 $ 47,793 $ (488,708 ) $ 745,942 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 September 30, 2017 (In Thousands) Issuers Guarantor Other Eliminations Consolidated Revenues $ — $ 65,278 $ 7,574 $ (1,254 ) $ 71,598 Cost of revenues (excluding depreciation and amortization expense) — 42,031 4,727 (1,254 ) 45,504 Selling, general and administrative expense 263 7,961 458 — 8,682 Depreciation and amortization — 16,522 839 — 17,361 Insurance recoveries — (2,352 ) — — (2,352 ) Interest expense, net 7,826 3,245 — — 11,071 Series A Preferred FV Adjustment (1,300 ) — — — (1,300 ) Other expense, net — (446 ) 127 — (319 ) Equity in net (income) loss of subsidiaries 1,032 (976 ) — (56 ) — Income before income tax provision (7,821 ) (707 ) 1,423 56 (7,049 ) Provision (benefit) for income taxes — 325 447 — 772 Net income (loss) (7,821 ) (1,032 ) 976 56 (7,821 ) Other comprehensive income (loss) (326 ) (326 ) (326 ) 652 (326 ) Comprehensive income (loss) $ (8,147 ) $ (1,358 ) $ 650 $ 708 $ (8,147 ) Condensed Consolidating Statement of Operations and Comprehensive Income Three Months Ended September 30, 2016 (In Thousands) Issuers Guarantor Other Eliminations Consolidated Revenues $ — $ 64,496 $ 8,404 $ (2,186 ) $ 70,714 Cost of revenues (excluding depreciation and amortization expense) — 36,814 5,898 (2,186 ) 40,526 Selling, general and administrative expense 1,736 7,206 337 — 9,279 Depreciation and amortization — 17,123 699 — 17,822 Interest expense, net 6,485 3,277 — — 9,762 Series A Preferred FV Adjustment 7,198 — — — 7,198 Other expense, net 1,583 62 253 — 1,898 Equity in net income of subsidiaries (1,031 ) (1,108 ) — 2,139 — Income (loss) before income tax provision (15,971 ) 1,122 1,217 (2,139 ) (15,771 ) Provision (benefit) for income taxes — 91 109 — 200 Net income (loss) (15,971 ) 1,031 1,108 (2,139 ) (15,971 ) Other comprehensive income (loss) (577 ) (577 ) (577 ) 1,154 (577 ) Comprehensive income (loss) $ (16,548 ) $ 454 $ 531 $ (985 ) $ (16,548 ) Condensed Consolidating Statement of Operations and Comprehensive Income Nine Months Ended September 30, 2017 (In Thousands) Issuers Guarantor Other Eliminations Consolidated Revenues $ — $ 196,376 $ 20,276 $ (4,187 ) $ 212,465 Cost of revenues (excluding depreciation and amortization expense) — 128,936 13,401 (4,187 ) 138,150 Selling, general and administrative expense 2,247 22,264 1,167 — 25,678 Depreciation and amortization — 49,439 2,421 — 51,860 Insurance recoveries — (2,352 ) — — (2,352 ) Interest expense, net 23,675 8,228 — — 31,903 Series A Preferred FV Adjustment (4,963 ) — — — (4,963 ) Other expense, net — 156 (372 ) — (216 ) Equity in net income of subsidiaries 8,827 (2,004 ) — (6,823 ) — Income before income tax provision (29,786 ) (8,291 ) 3,659 6,823 (27,595 ) Provision for income taxes — 536 1,655 — 2,191 Net income (29,786 ) (8,827 ) 2,004 6,823 (29,786 ) Other comprehensive income (loss) (644 ) (644 ) (644 ) 1,288 (644 ) Comprehensive income (loss) $ (30,430 ) $ (9,471 ) $ 1,360 $ 8,111 $ (30,430 ) Condensed Consolidating Statement of Operations and Comprehensive Income Nine Months Ended September 30, 2016 (In Thousands) Issuers Guarantor Other Eliminations Consolidated Revenues $ — $ 205,989 $ 31,698 $ (9,192 ) $ 228,495 Cost of revenues (excluding depreciation and amortization expense) — 119,705 22,052 (9,192 ) 132,565 Selling, general and administrative expense 3,047 23,380 1,265 — 27,692 Depreciation and amortization — 52,878 2,138 — 55,016 Long-live asset impairment — 7,797 69 — 7,866 Goodwill impairment — 91,574 760 — 92,334 Interest expense, net 19,447 7,987 — — 27,434 Series A Preferred FV Adjustment 7,198 — — — 7,198 Other expense, net 1,583 167 1,143 — 2,893 Equity in net income of subsidiaries 94,725 (3,869 ) — (90,856 ) — Income before income tax provision (126,000 ) (93,630 ) 4,271 90,856 (124,503 ) Provision (benefit) for income taxes — 1,095 402 — 1,497 Net income (126,000 ) (94,725 ) 3,869 90,856 (126,000 ) Other comprehensive income (loss) (1,496 ) (1,496 ) (1,496 ) 2,992 (1,496 ) Comprehensive income (loss) $ (127,496 ) $ (96,221 ) $ 2,373 $ 93,848 $ (127,496 ) Condensed Consolidating Statement of Cash Flows Nine Months Ended September 30, 2017 (In Thousands) Issuers Guarantor Other Eliminations Consolidated Net cash provided by (used in) operating activities $ — $ 29,445 $ (4,873 ) $ — $ 24,572 Investing activities: Purchases of property, plant, and equipment, net — (14,086 ) 373 — (13,713 ) Insurance recoveries — 2,352 — — 2,352 Intercompany investment activity 26,271 — — (26,271 ) — Advances and other investing activities — 25 — — 25 Net cash provided by (used in) investing activities 26,271 (11,709 ) 373 (26,271 ) (11,336 ) Financing activities: Proceeds from long-term debt — 66,300 — — 66,300 Payments of long-term debt — (64,900 ) — — (64,900 ) Proceeds from Series A Preferred Units, net of offering costs (37 ) — — — (37 ) Distributions (26,152 ) — — — (26,152 ) Other Financing Activities (82 ) (1,608 ) — — (1,690 ) Intercompany contribution (distribution) — (26,271 ) — 26,271 — Net cash provided by (used in) financing activities (26,271 ) (26,479 ) — 26,271 (26,479 ) Effect of exchange rate changes on cash — — (176 ) — (176 ) Increase (decrease) in cash and cash equivalents — (8,743 ) (4,676 ) — (13,419 ) Cash and cash equivalents at beginning of period — 12,201 8,596 — 20,797 Cash and cash equivalents at end of period $ — $ 3,458 $ 3,920 $ — $ 7,378 Condensed Consolidating Statement of Cash Flows Nine Months Ended September 30, 2016 (In Thousands) Issuers Guarantor Other Eliminations Consolidated Net cash provided by (used in) operating activities $ (58,521 ) $ 101,259 $ 2,784 $ — $ 45,522 Investing activities: Purchases of property, plant, and equipment, net — (6,158 ) (1,444 ) — (7,602 ) Intercompany investment activity 38,366 — — (38,366 ) — Advances and other investing activities — 20 — 20 Net cash provided by (used in) investing activities 38,366 (6,138 ) (1,444 ) (38,366 ) (7,582 ) Financing activities: Proceeds from long-term debt — 53,000 — — 53,000 Payments of long-term debt (18,800 ) (107,000 ) — — (125,800 ) Proceeds from issuance of Series A Preferred 77,321 — — — 77,321 Distributions (38,366 ) — — — (38,366 ) Other Financing Activities — (840 ) — — (840 ) Intercompany contribution (distribution) — (38,366 ) — 38,366 — Net cash provided by (used in) financing activities 20,155 (93,206 ) — 38,366 (34,685 ) Effect of exchange rate changes on cash — — (522 ) — (522 ) Increase (decrease) in cash and cash equivalents — 1,915 818 — 2,733 Cash and cash equivalents at beginning of period — 2,711 7,909 — 10,620 Cash and cash equivalents at end of period $ — $ 4,626 $ 8,727 $ — $ 13,353 |