Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Nov. 25, 2015 | |
Document and Entity Information | ||
Entity Registrant Name | Exterran Corporation | |
Entity Central Index Key | 1,635,881 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 35,153,358 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 |
CONDENSED COMBINED BALANCE SHEE
CONDENSED COMBINED BALANCE SHEETS (unaudited) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 31,946 | $ 39,361 |
Restricted cash | 1,491 | 1,490 |
Accounts receivable, net of allowance of $3,263 and $2,133, respectively | 353,382 | 398,070 |
Inventory, net | 261,354 | 291,240 |
Costs and estimated earnings in excess of billings on uncompleted contracts | 119,981 | 120,938 |
Current deferred income taxes | 40,774 | 48,890 |
Other current assets | 59,863 | 53,977 |
Current assets associated with discontinued operations | 263 | 468 |
Total current assets | 869,054 | 954,434 |
Property, plant and equipment, net | 920,918 | 954,811 |
Intangible and other assets, net | 129,077 | 123,578 |
Total assets | 1,919,049 | 2,032,823 |
Current liabilities: | ||
Accounts payable, trade | 104,006 | 161,826 |
Accrued liabilities | 127,227 | 168,577 |
Deferred revenue | 37,901 | 64,820 |
Billings on uncompleted contracts in excess of costs and estimated earnings | 41,355 | 76,277 |
Payable to Archrock, Inc. | 0 | 0 |
Current liabilities associated with discontinued operations | 672 | 1,338 |
Total current liabilities | 311,161 | 472,838 |
Long-term debt | 738 | 1,107 |
Deferred income taxes | 40,711 | 38,180 |
Long-term deferred revenue | 57,965 | 41,591 |
Other long-term liabilities | 27,336 | 26,968 |
Long-term liabilities associated with discontinued operations | 162 | 317 |
Total liabilities | $ 438,073 | $ 581,001 |
Commitments and contingencies | ||
Equity: | ||
Parent equity | $ 1,465,954 | $ 1,435,046 |
Accumulated other comprehensive income | 15,022 | 16,776 |
Total equity | 1,480,976 | 1,451,822 |
Total liabilities and equity | 1,919,049 | $ 2,032,823 |
Pro Forma | ||
Current assets: | ||
Cash and cash equivalents | 31,946 | |
Restricted cash | 1,491 | |
Accounts receivable, net of allowance of $3,263 and $2,133, respectively | 353,382 | |
Inventory, net | 261,354 | |
Costs and estimated earnings in excess of billings on uncompleted contracts | 119,981 | |
Current deferred income taxes | 40,774 | |
Other current assets | 59,863 | |
Current assets associated with discontinued operations | 263 | |
Total current assets | 869,054 | |
Property, plant and equipment, net | 920,918 | |
Intangible and other assets, net | 129,077 | |
Total assets | 1,919,049 | |
Current liabilities: | ||
Accounts payable, trade | 104,006 | |
Accrued liabilities | 127,227 | |
Deferred revenue | 37,901 | |
Billings on uncompleted contracts in excess of costs and estimated earnings | 41,355 | |
Payable to Archrock, Inc. | 532,578 | |
Current liabilities associated with discontinued operations | 672 | |
Total current liabilities | 843,739 | |
Long-term debt | 738 | |
Deferred income taxes | 40,711 | |
Long-term deferred revenue | 57,965 | |
Other long-term liabilities | 27,336 | |
Long-term liabilities associated with discontinued operations | 162 | |
Total liabilities | $ 970,651 | |
Commitments and contingencies | ||
Equity: | ||
Parent equity | $ 933,376 | |
Accumulated other comprehensive income | 15,022 | |
Total equity | 948,398 | |
Total liabilities and equity | $ 1,919,049 |
CONDENSED COMBINED BALANCE SHE3
CONDENSED COMBINED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance (in dollars) | $ 3,263 | $ 2,133 |
CONDENSED COMBINED STATEMENTS O
CONDENSED COMBINED STATEMENTS OF OPERATIONS (unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Revenues: | ||||
Revenues | $ 437,189 | $ 537,759 | $ 1,451,880 | $ 1,561,585 |
Cost of sales (excluding depreciation and amortization expense): | ||||
Selling, general and administrative | 55,018 | 65,925 | 169,348 | 200,616 |
Depreciation and amortization | 36,837 | 44,155 | 112,418 | 139,312 |
Long-lived asset impairment | 3,775 | 1,044 | 14,264 | 1,044 |
Restructuring and other charges | 7,150 | 0 | 17,697 | 0 |
Interest expense | 581 | 182 | 1,407 | 1,030 |
Equity in income of non-consolidated affiliates | (5,084) | (4,951) | (15,152) | (14,553) |
Other (income) expense, net | 27,974 | 6,414 | 39,852 | 1,448 |
Total costs and expenses | 446,249 | 498,472 | 1,407,304 | 1,450,725 |
Income (loss) before income taxes | (9,060) | 39,287 | 44,576 | 110,860 |
Provision for (benefit from) income taxes | (2,587) | 20,731 | 24,215 | 60,372 |
Income (loss) from continuing operations | (6,473) | 18,556 | 20,361 | 50,488 |
Income from discontinued operations, net of tax | 18,756 | 18,335 | 37,878 | 54,932 |
Net income | 12,283 | 36,891 | 58,239 | 105,420 |
Contract operations | ||||
Revenues: | ||||
Revenues | 114,104 | 124,355 | 350,045 | 369,787 |
Cost of sales (excluding depreciation and amortization expense): | ||||
Costs of sales (excluding depreciation and amortization expense) | 41,114 | 47,983 | 130,198 | 135,517 |
Aftermarket services | ||||
Revenues: | ||||
Revenues | 25,272 | 39,552 | 95,547 | 117,531 |
Cost of sales (excluding depreciation and amortization expense): | ||||
Costs of sales (excluding depreciation and amortization expense) | 18,336 | 30,161 | 67,820 | 87,358 |
Product sales | ||||
Cost of sales (excluding depreciation and amortization expense): | ||||
Costs of sales (excluding depreciation and amortization expense) | 260,548 | 307,559 | 869,452 | 898,953 |
Product sales | Affiliated entity | ||||
Revenues: | ||||
Revenues | 36,551 | 61,380 | 146,263 | 152,619 |
Product sales | Third parties | ||||
Revenues: | ||||
Revenues | $ 261,262 | $ 312,472 | $ 860,025 | $ 921,648 |
CONDENSED COMBINED STATEMENTS 5
CONDENSED COMBINED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 12,283 | $ 36,891 | $ 58,239 | $ 105,420 |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustment | 4,949 | (6,250) | (1,754) | (6,519) |
Comprehensive income | $ 17,232 | $ 30,641 | $ 56,485 | $ 98,901 |
CONDENSED COMBINED STATEMENTS 6
CONDENSED COMBINED STATEMENTS OF CHANGES IN EQUITY (unaudited) - USD ($) $ in Thousands | Total | Parent Equity | Accumulated Other Comprehensive Income (Loss) |
Beginning balance at Dec. 31, 2013 | $ 1,373,904 | $ 1,342,480 | $ 31,424 |
Increase (Decrease) in Stockholders' Equity | |||
Net income | 105,420 | 105,420 | |
Net distributions to parent | (74,326) | (74,326) | |
Foreign currency translation adjustment | (6,519) | (6,519) | |
Ending balance at Sep. 30, 2014 | 1,398,479 | 1,373,574 | 24,905 |
Beginning balance at Dec. 31, 2014 | 1,451,822 | 1,435,046 | 16,776 |
Increase (Decrease) in Stockholders' Equity | |||
Net income | 58,239 | 58,239 | |
Net distributions to parent | (27,331) | (27,331) | |
Foreign currency translation adjustment | (1,754) | (1,754) | |
Ending balance at Sep. 30, 2015 | $ 1,480,976 | $ 1,465,954 | $ 15,022 |
CONDENSED COMBINED STATEMENTS 7
CONDENSED COMBINED STATEMENTS OF CASH FLOWS (unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Cash flows from operating activities: | ||
Net income | $ 58,239 | $ 105,420 |
Adjustments to reconcile net income to cash provided by operating activities: | ||
Depreciation and amortization | 112,418 | 139,312 |
Long-lived asset impairment | 14,264 | 1,044 |
Income from discontinued operations, net of tax | (37,878) | (54,932) |
Provision for doubtful accounts | 1,774 | 821 |
Gain on sale of property, plant and equipment | (1,184) | (792) |
Equity in income of non-consolidated affiliates | (15,152) | (14,553) |
(Gain) loss on remeasurement of intercompany balances | 35,550 | (116) |
Capital contribution by parent—stock-based compensation expense | 5,358 | 4,068 |
Deferred income tax provision | (19,000) | 9,191 |
Changes in assets and liabilities: | ||
Accounts receivable and notes | 39,714 | (13,713) |
Inventory | 29,054 | (3,966) |
Costs and estimated earnings versus billings on uncompleted contracts | (34,393) | (12,106) |
Other current assets | (9,505) | (6,191) |
Accounts payable and other liabilities | (75,772) | (927) |
Deferred revenue | (8,533) | (22,793) |
Other | 684 | (7,199) |
Net cash provided by continuing operations | 95,638 | 122,568 |
Net cash provided by discontinued operations | 4,273 | 4,122 |
Net cash provided by operating activities | 99,911 | 126,690 |
Cash flows from investing activities: | ||
Capital expenditures | (123,943) | (110,477) |
Proceeds from sale of property, plant and equipment | 5,275 | 9,300 |
Return of investments in non-consolidated affiliates | 15,185 | 14,750 |
Proceeds received from settlement of note receivable | 5,357 | 0 |
Increase in restricted cash | (1) | (245) |
Cash invested in non-consolidated affiliates | (33) | (197) |
Net cash used in continuing operations | (98,160) | (86,869) |
Net cash provided by discontinued operations | 33,119 | 49,667 |
Net cash used in investing activities | (65,041) | (37,202) |
Cash flows from financing activities: | ||
Net distributions to parent | (40,811) | (87,412) |
Payments for debt issuance costs | (498) | 0 |
Net cash used in financing activities | (41,309) | (87,412) |
Effect of exchange rate changes on cash and cash equivalents | (976) | (3,797) |
Net decrease in cash and cash equivalents | (7,415) | (1,721) |
Cash and cash equivalents at beginning of period | 39,361 | 35,194 |
Cash and cash equivalents at end of period | $ 31,946 | $ 33,473 |
Spin-Off, Basis of Presentation
Spin-Off, Basis of Presentation and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2015 | |
Accounting Policies [Abstract] | |
Spin-Off, Basis of Presentation and Summary of Significant Accounting Policies | 1. Spin-Off, Basis of Presentation and Summary of Significant Accounting Policies Spin-off On November 3, 2015, Archrock, Inc. (named Exterran Holdings, Inc. prior to November 3, 2015) (“Archrock”) completed the Spin-off (the ‘‘Spin-off”) of its international contract operations, international aftermarket services (the international contract operations and international aftermarket services businesses combined are referred to as the ‘‘international services businesses’’ and include such activities conducted outside of the United States of America (‘‘U.S.’’)) and global fabrication businesses into an independent, publicly traded company (“Exterran Corporation,” “our,” “we” or “us”). We refer to the global fabrication business previously operated by Archrock as our product sales business. To effect the Spin-off, on November 3, 2015, Archrock distributed, on a pro rata basis, all of our shares of common stock to its stockholders as of October 27, 2015 (the “Record Date”). Archrock shareholders received one share of Exterran Corporation common stock for every two shares of its common stock held at the close of business on the Record Date. Pursuant to the separation and distribution agreement with Archrock and certain of our and Archrock’s respective affiliates, on November 3, 2015, we transferred cash of $532.6 million to Archrock. Following the completion of the Spin-off, we and Archrock are independent, publicly traded companies with separate boards of directors and management. Unless otherwise indicated, the financial statements and related footnote disclosures within this report exclude the impact of the Spin-off. Basis of Presentation These condensed combined financial statements are derived from the accounting records of Archrock. These statements reflect the condensed combined historical results of operations, financial position and cash flows of Archrock’s international services and product sales businesses in conformity with accounting principles generally accepted in the U.S. (‘‘GAAP’’). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP are not required in these interim financial statements and have been condensed or omitted. Management believes that the information furnished includes all adjustments, consisting only of normal recurring adjustments, that are necessary to present fairly our combined financial position, results of operations and cash flows for the periods indicated. The accompanying unaudited condensed combined financial statements should be read in conjunction with the annual combined financial statements presented in our Registration Statement on Form 10, as amended, initially filed with the Securities and Exchange Commission on March 3, 2015 and declared effective on October 21, 2015. The interim results reported herein are not necessarily indicative of results for a full year. These condensed combined financial statements are presented as if such businesses had been combined for all periods presented. All intercompany transactions and accounts within these condensed combined financial statements have been eliminated. Affiliate transactions between the international services and product sales businesses of Archrock and the other businesses of Archrock have been included in these condensed combined financial statements, with the exception of products sales to our wholly owned subsidiary, Exterran Energy Solutions, L.P. (‘‘EESLP’’). Prior to the closing of the Spin-off, EESLP also had a fleet of compression units used to provide compression services in the U.S. services business of Archrock. Revenue has not been recognized in the condensed combined statements of operations for the sale of compressor units by us that were used by EESLP to provide compression services to customers of the U.S. services business of Archrock. See Note 10 for further discussion on transactions with affiliates. The condensed combined financial statements include certain assets and liabilities that have historically been held at the Archrock level but are specifically identifiable or otherwise attributable to us. The assets and liabilities in the condensed combined financial statements have been reflected on a historical cost basis, as immediately prior to the Spin-off all of the assets and liabilities of Exterran Corporation were wholly owned by Archrock. Third party debt, other than debt attributable to capital leases, of Archrock were not allocated to us for any of the periods presented as we are not the legal obligor of the debt and Archrock’s borrowings were not directly attributable to our business. The condensed combined statement of operations also includes expense allocations for certain functions historically performed by Archrock and not allocated to its operating segments, including allocations of expenses related to executive oversight, accounting, treasury, tax, legal, human resources, procurement and information technology. See Note 10 for further discussion regarding the allocation of corporate expenses. Investments in affiliated entities in which we own more than a 20% interest and do not have a controlling interest are accounted for using the equity method. Unaudited Pro Forma Balance Sheet As discussed in Note 6, on November 3, 2015 and in connection with the Spin-off, EESLP incurred approximately $300.0 million of indebtedness under its revolving credit facility and $245.0 million of indebtedness under its term loan facility. Pursuant to the separation and distribution agreement with Archrock and certain of our and Archrock’s respective affiliates, on November 3, 2015, EESLP transferred approximately $532.6 million of net proceeds from borrowings under its revolving credit and term loan facilities to Archrock. The accompanying unaudited pro forma balance sheet as of September 30, 2015 gives effect to the planned cash transfer to Archrock of $532.6 million . Comprehensive Income (Loss) Components of comprehensive income (loss) are net income (loss) and all changes in equity during a period except those resulting from transactions with owners. Our accumulated other comprehensive income consists of foreign currency translation adjustments. The following table presents the changes in accumulated other comprehensive income, net of tax, during the nine months ended September 30, 2014 and 2015 (in thousands): Foreign Currency Translation Adjustment Accumulated other comprehensive income, January 1, 2014 $ 31,424 Loss recognized in other comprehensive income (loss) (6,519 ) Accumulated other comprehensive income, September 30, 2014 $ 24,905 Accumulated other comprehensive income, January 1, 2015 $ 16,776 Loss recognized in other comprehensive income (loss) (1,754 ) Accumulated other comprehensive income, September 30, 2015 $ 15,022 Financial Instruments Our financial instruments consist of cash, restricted cash, receivables and payables. At September 30, 2015 and December 31, 2014 , the estimated fair values of these financial instruments approximated their carrying amounts as reflected in our condensed combined balance sheets. See Note 7 for additional information regarding the fair value hierarchy. |
Discontinued Operations
Discontinued Operations | 9 Months Ended |
Sep. 30, 2015 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | 2. Discontinued Operations In August 2012, our Venezuelan subsidiary sold its previously nationalized assets to PDVSA Gas, S.A. (“PDVSA Gas”) for a purchase price of approximately $441.7 million . We received installment payments, including an annual charge, totaling $ 18.9 million and $18.2 million during the three months ended September 30, 2015 and 2014 , respectively, and $37.6 million and $54.1 million during the nine months ended September 30, 2015 and 2014 , respectively. The remaining principal amount due to us of approximately $83 million as of September 30, 2015 , is payable in quarterly cash installments through the third quarter of 2016. We have not recognized amounts payable to us by PDVSA Gas as a receivable and will therefore recognize quarterly payments received in the future as income from discontinued operations in the periods such payments are received. In October 2015, we received an additional installment payment, including an annual charge, of $19.1 million . The proceeds from the sale of the assets are not subject to Venezuelan national taxes due to an exemption allowed under the Venezuelan Reserve Law applicable to expropriation settlements. In addition, and in connection with the sale, we and the Venezuelan government agreed to waive rights to assert certain claims against each other. In connection with the sale of these assets, we have agreed to suspend the arbitration proceeding previously filed by our Spanish subsidiary against Venezuela pending payment in full by PDVSA Gas of the purchase price for these nationalized assets. In accordance with the separation and distribution agreement, a subsidiary of Archrock has the right to receive payments from EESLP based on a notional amount corresponding to payments received by our subsidiaries from PDVSA Gas in respect of the sale of our previously nationalized assets promptly after such amounts are collected by our subsidiaries. See Note 12 for additional discussion related to our contingent liability to Archrock. The following table summarizes the operating results of discontinued operations (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Revenue $ — $ — $ — $ — Expenses and selling, general and administrative 132 84 366 329 Recovery attributable to expropriation (16,541 ) (16,539 ) (33,523 ) (49,523 ) Other income, net (2,347 ) (1,880 ) (4,721 ) (5,738 ) Income from discontinued operations, net of tax $ 18,756 $ 18,335 $ 37,878 $ 54,932 The following table summarizes the balance sheet data for discontinued operations (in thousands): September 30, 2015 December 31, 2014 Cash $ 220 $ 431 Accounts receivable 4 2 Other current assets 39 35 Total current assets associated with discontinued operations 263 468 Total assets associated with discontinued operations $ 263 $ 468 Accounts payable $ — $ 214 Accrued liabilities 672 1,124 Total current liabilities associated with discontinued operations 672 1,338 Other long-term liabilities 162 317 Total liabilities associated with discontinued operations $ 834 $ 1,655 |
Inventory, net
Inventory, net | 9 Months Ended |
Sep. 30, 2015 | |
Inventory Disclosure [Abstract] | |
Inventory, net | 3. Inventory, net Inventory, net of reserves, consisted of the following amounts (in thousands): September 30, 2015 December 31, 2014 Parts and supplies $ 137,930 $ 148,724 Work in progress 76,767 108,814 Finished goods 46,657 33,702 Inventory, net $ 261,354 $ 291,240 As of September 30, 2015 and December 31, 2014 , we had inventory reserves of $18.8 million and $8.7 million , respectively. As discussed further in Note 9 , $8.7 million of the increase in inventory reserves during the nine months ended September 30, 2015 related to restructuring and other charges. |
Property, Plant and Equipment,
Property, Plant and Equipment, net | 9 Months Ended |
Sep. 30, 2015 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment, net | 4. Property, Plant and Equipment, net Property, plant and equipment, net, consisted of the following (in thousands): September 30, 2015 December 31, 2014 Compression equipment, facilities and other fleet assets $ 1,521,634 $ 1,514,982 Land and buildings 154,234 154,866 Transportation and shop equipment 184,966 194,032 Other 115,141 112,732 1,975,975 1,976,612 Accumulated depreciation (1,055,057 ) (1,021,801 ) Property, plant and equipment, net $ 920,918 $ 954,811 |
Investments in Non-Consolidated
Investments in Non-Consolidated Affiliates | 9 Months Ended |
Sep. 30, 2015 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Investments in Non-Consolidated Affiliates | 5. Investments in Non-Consolidated Affiliates Investments in affiliates that are not controlled by us where we have the ability to exercise significant influence over the operations are accounted for using the equity method. We own a 30.0% interest in WilPro Energy Services (PIGAP II) Limited and 33.3% interest in WilPro Energy Services (El Furrial) Limited, which are joint ventures that provided natural gas compression and injection services in Venezuela. In May 2009, Petroleos de Venezuela S.A. (“PDVSA”) assumed control over the assets of our Venezuelan joint ventures and transitioned the operations, including the hiring of their employees, to PDVSA. In March 2011, our Venezuelan joint ventures, together with the Netherlands’ parent company of our joint venture partners, filed a request for the institution of an arbitration proceeding against Venezuela with the International Centre for Settlement of Investment Disputes related to the seized assets and investments. In March 2012, our Venezuelan joint ventures sold their assets to PDVSA Gas. We received installment payments, including an annual charge, totaling $5.1 million and $5.0 million during the three months ended September 30, 2015 and 2014 , respectively, and $15.2 million and $14.7 million during the nine months ended September 30, 2015 and 2014 , respectively. The remaining principal amount due to us of approximately $13 million as of September 30, 2015 , is payable in quarterly cash installments through the first quarter of 2016. We have not recognized amounts payable to us by PDVSA Gas as a receivable and will therefore recognize quarterly payments received in the future as equity in (income) loss of non-consolidated affiliates in our combined statements of operations in the periods such payments are received. In connection with the sale of our Venezuelan joint ventures’ assets, the joint ventures and our joint venture partners have agreed to suspend their previously filed arbitration proceeding against Venezuela pending payment in full by PDVSA Gas of the purchase price for the assets. In accordance with the separation and distribution agreement, a subsidiary of Archrock has the right to receive payments from EESLP based on a notional amount corresponding to payments received by our subsidiaries from PDVSA Gas in respect of the sale of our joint ventures' previously nationalized assets promptly after such amounts are collected by our subsidiaries. See Note 12 for additional discussion related to our contingent liability to Archrock. |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Sep. 30, 2015 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | 6. Long-Term Debt On July 10, 2015, we and our wholly owned subsidiary, EESLP, entered into a $750.0 million credit agreement (the “Credit Agreement”) with Wells Fargo, as the administrative agent, and various financial institutions as lenders. On October 5, 2015, the parties amended and restated the Credit Agreement to provide for a new $925.0 million credit facility, consisting of a $680.0 million revolving credit facility and a $245.0 million term loan facility (collectively, the “Credit Facility”). Availability under the Credit Facility was subject to the satisfaction of certain conditions precedent, including the consummation of the Spin-off on or before January 4, 2016 (the date on which those conditions were satisfied, November 3, 2015, is referred to as the “Initial Availability Date”). No borrowings were outstanding under the Credit Facility as of September 30, 2015 because the Initial Availability Date had not yet occurred. The revolving credit facility will mature in November 2020 and the term loan facility will mature in November 2017. On November 3, 2015, EESLP incurred approximately $300.0 million of indebtedness under its revolving credit facility and $245.0 million of indebtedness under its term loan facility. Pursuant to the separation and distribution agreement with Archrock and certain of our and Archrock’s respective affiliates, on November 3, 2015, EESLP transferred approximately $532.6 million of net proceeds from borrowings under the Credit Facility to Archrock to allow it to repay a portion of its indebtedness in connection with the Spin-off. Revolving borrowings under the Credit Facility bear interest at a rate equal to, at our option, either the Base Rate or LIBOR (or EURIBOR, in the case of Euro-denominated borrowings) plus the applicable margin. The applicable margin for revolving borrowings varies (i) in the case of LIBOR loans, from 1.50% to 2.75% and (ii) in the case of Base Rate loans, from 0.50% to 1.75% . ‘‘Base Rate’’ means the highest of the prime rate, the federal funds effective rate plus 0.50% and one-month LIBOR plus 1.00% . Until the term loan facility is refinanced in full with the proceeds of certain qualifying unsecured debt or equity issuances, the applicable margin for borrowings under the revolving credit facility will be increased by 1.00% until the first anniversary of the Initial Availability Date and by 1.50% following the first anniversary of the Initial Availability Date. Term loan borrowings under the Credit Facility will bear interest at a rate equal to, at our option, either (1) the Base Rate, plus 4.75% , or (2) the greater of LIBOR or 1.00% , plus 5.75% . We and all of our Significant Domestic Subsidiaries (as defined in the Credit Agreement) guarantee EESLP’s obligations under the Credit Facility. In addition, EESLP’s obligations under the Credit Facility are secured by (1) substantially all of our assets and the assets of EESLP and our Significant Domestic Subsidiaries located in the U.S., including certain real property, and (2) all of the equity interests of our U.S. restricted subsidiaries (other than certain excluded subsidiaries) and 65% of the voting equity interests in certain of our first-tier foreign subsidiaries. The Credit Agreement contains various covenants with which we, EESLP and our respective restricted subsidiaries must comply, including, but not limited to, limitations on the incurrence of indebtedness, investments, liens on assets, repurchasing equity, making distributions, transactions with affiliates, mergers, consolidations, dispositions of assets and other provisions customary in similar types of agreements. We are required to maintain, on a consolidated basis, a minimum interest coverage ratio of 2.25 to 1.00; a maximum total leverage ratio of 3.75 to 1.00 prior to the completion of a qualified capital raise and 4.50 to 1.00 thereafter; and, following the completion of a qualified capital raise, a maximum senior secured leverage ratio of 2.75 to 1.00. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 7. Fair Value Measurements The accounting standard for fair value measurements and disclosures establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into the following three broad categories: • Level 1 — Quoted unadjusted prices for identical instruments in active markets to which we have access at the date of measurement. • Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 2 inputs are those in markets for which there are few transactions, the prices are not current, little public information exists or prices vary substantially over time or among brokered market makers. • Level 3 — Model derived valuations in which one or more significant inputs or significant value drivers are unobservable. Unobservable inputs are those inputs that reflect our own assumptions regarding how market participants would price the asset or liability based on the best available information. The following table presents our assets and liabilities measured at fair value on a nonrecurring basis during the nine months ended September 30, 2015 and 2014 , with pricing levels as of the date of valuation (in thousands): Nine Months Ended September 30, 2015 Nine Months Ended September 30, 2014 (Level 1) (Level 2) (Level 3) (Level 1) (Level 2) (Level 3) Impaired long-lived assets $ — $ — $ 499 $ — $ — $ — Long-term receivable from the sale of our Canadian Operations — — 5,100 — — — Our estimate of the impaired long-lived assets’ fair value was primarily based on either the expected net sale proceeds compared to other fleet units we recently sold and/or a review of other units recently offered for sale by third parties, or the estimated component value of the equipment on each compressor unit that we plan to use. We discounted the expected proceeds, net of selling and other carrying costs, using a weighted average disposal period of four years and a weighted average discount rate of 10% for the nine months ended September 30, 2015 . In April 2015, we accepted an offer to early settle the outstanding note receivable due to us relating to the previous sale of our Canadian contract operations and aftermarket services businesses (“Canadian Operations”) for $5.1 million . |
Long-Lived Asset Impairment
Long-Lived Asset Impairment | 9 Months Ended |
Sep. 30, 2015 | |
Property, Plant and Equipment [Abstract] | |
Long-Lived Asset Impairment | 8. Long-Lived Asset Impairment We review long-lived assets, including property, plant and equipment and identifiable intangibles that are being amortized, for impairment whenever events or changes in circumstances, including the removal of compressor units from our active fleet, indicate that the carrying amount of an asset may not be recoverable. During the three and nine months ended September 30, 2015 , we reviewed the future deployment of our idle compression assets used in our contract operations segment for units that were not of the type, configuration, condition, make or model that are cost efficient to maintain and operate. Based on this review, we determined that 19 and 48 idle compressor units totaling approximately 20,000 and 44,000 horsepower would be retired from the active fleet during the three and nine months ended September 30, 2015 , respectively. The retirement of these units from the active fleet triggered a review of these assets for impairment. As a result, we recorded a $3.8 million and a $12.9 million asset impairment to reduce the book value of each unit to its estimated fair value during the three and nine months ended September 30, 2015 , respectively. The fair value of each unit was estimated based on either the expected net sale proceeds compared to other fleet units we recently sold and/or a review of other units recently offered for sale by third parties, or the estimated component value of the equipment on each compressor unit that we plan to use. During the first quarter of 2015, we evaluated a long-term note receivable from the purchaser of our Canadian Operations for impairment. This review was triggered by an offer from the purchaser of our Canadian Operations to prepay the note receivable at a discount to its current book value. The fair value of the note receivable as of March 31, 2015 was based on the amount offered by the purchaser of our Canadian Operations to prepay the note receivable. The difference between the book value of the note receivable at March 31, 2015 and its fair value resulted in the recording of an impairment of long-lived assets of $1.4 million during the nine months ended September 30, 2015 . In April 2015, we accepted the offer to early settle this note receivable. In connection with our fleet review during the three and nine months ended September 30, 2014 , we evaluated for impairment idle units that had been culled from our fleet in prior years and were available for sale. Based upon that review, we reduced the expected proceeds from disposition for certain of the remaining units. This resulted in an additional impairment of $1.0 million during both the three and nine months ended September 30, 2014 to reduce the book value of each unit to its estimated fair value. |
Restructuring and Other Charges
Restructuring and Other Charges | 9 Months Ended |
Sep. 30, 2015 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Other Charges | 9. Restructuring and Other Charges During the three and nine months ended September 30, 2015 , we incurred $2.0 million and $6.7 million , respectively, of costs associated with the Spin-off which were primarily related to a one-time cash signing bonus paid to our new Chief Executive Officer and non-cash inventory write-downs. Non-cash inventory write-downs, which primarily related to the decentralization of shared inventory components between Archrock’s North America contract operations business and our international contract operations business, totaled $4.7 million during the nine months ended September 30, 2015 , of which approximately $4.2 million related to our contract operations segment and $0.5 million related to our product sales segment. The charges incurred in conjunction with the Spin-off are included in restructuring and other charges in our condensed combined statements of operations. Excluding transaction costs related to the Credit Facility, we expect to incur additional one-time expenditures ranging from approximately $14 million to $18 million primarily related to costs to start up certain stand-alone functions, retention payments to certain employees and other one-time transaction related costs. As a result of the current market conditions in North America, combined with the impact of lower international activity due to customer budget cuts driven by lower oil prices, in the second quarter of 2015, we announced a cost reduction plan primarily focused on workforce reductions and the reorganization of certain product sales facilities. During the three and nine months ended September 30, 2015 , we incurred $ 5.2 million and $11.0 million , respectively, of restructuring and other charges as a result of this plan. Included in these amounts are $ 5.2 million and $7.0 million recorded during the three and nine months ended September 30, 2015 , respectively, related to termination benefits and consulting fees and $4.0 million recorded during the nine months ended September 30, 2015 related to non-cash write-downs of inventory. The non-cash inventory write-downs were the result of our decision to exit the manufacturing of cold weather packages, which had historically been performed at a product sales facility in North America we recently decided to close. These charges are reflected as restructuring and other charges in our condensed combined statements of operations. We currently estimate that we will incur additional charges with respect to this cost reduction plan of approximately $2.5 million . We expect the majority of the estimated additional charges will result in cash expenditures. As of September 30, 2015 , we had an accrued liability balance of $ 0.5 million for charges incurred relating to the cost reduction plan. The following table summarizes the changes to our accrued liability balance related to restructuring and other charges for the nine months ended September 30, 2015 (in thousands): Spin-off Cost Reduction Plan Total Beginning balance at January 1, 2015 $ — $ — $ — Additions for costs expensed 6,700 10,997 17,697 Less non-cash expense (4,700 ) (4,007 ) (8,707 ) Reductions for payments (2,000 ) (6,470 ) (8,470 ) Ending balance at September 30, 2015 $ — $ 520 $ 520 The following table summarizes the components of charges included in restructuring and other charges in our condensed combined statements of operations for the three and nine months ended September 30, 2015 (in thousands): Three Months Ended September 30, 2015 Nine Months Ended September 30, 2015 Consulting, audit and professional fees $ 1,329 $ 1,329 Chief Executive Officer signing bonus 2,000 2,000 Non-cash inventory write-downs — 8,707 Employee termination benefits 3,821 5,661 Total restructuring and other charges $ 7,150 $ 17,697 |
Related Party Transactions and
Related Party Transactions and Parent Equity | 9 Months Ended |
Sep. 30, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Transactions and Parent Equity | 10. Related Party Transactions and Parent Equity Spin Agreements In connection with the completion of the Spin-off, on November 3, 2015, we entered into several agreements with Archrock and certain subsidiaries of Archrock and, with respect to certain agreements, a subsidiary of Archrock Partners, L.P. (named Exterran Partners, L.P. prior to November 3, 2015) (“Archrock Partners”), that govern the Spin-off and the relationship among the parties following the Spin-off, including the following (collectively, the “Spin Agreements”): • The separation and distribution agreement contains the key provisions relating to the separation of our business from Archrock’s business and the distribution of our common stock to its stockholders. The separation and distribution agreement identifies the assets and rights that were transferred, liabilities that were assumed or retained and contracts and related matters that were assigned to us by Archrock or by us to Archrock in the Spin-off and describes how these transfers, assumptions and assignments occurred. Pursuant to the separation and distribution agreement, on November 3, 2015, we transferred net proceeds of $532.6 million from borrowings under the Credit Facility to Archrock to allow for its repayment of a portion of its indebtedness. In addition, the separation and distribution agreement contains certain noncompetition provisions addressing restrictions for three years after the Spin-off on our ability to provide contract operations and aftermarket services in the United States and on Archrock’s ability to provide contract operations and aftermarket services outside of the United States and to provide products for sale worldwide that compete with our current product sales business, subject to certain exceptions. The separation and distribution agreement also governs the treatment of aspects relating to indemnification, insurance, confidentiality and cooperation. Additionally, the separation and distribution agreement specifies the right of a subsidiary of Archrock to receive payments from EESLP based on a notional amount corresponding to payments received by our subsidiaries from PDVSA Gas in respect of the sale of our and our joint ventures' previously nationalized assets promptly after such amounts are collected by our subsidiaries and a $25.0 million cash payment from EESLP promptly following the occurrence of a qualified capital raise (as defined in the Credit Agreement). See Note 12 for additional discussion on such contingent liabilities. • The tax matters agreement governs the respective rights, responsibilities and obligations of Archrock and us with respect to tax liabilities and benefits, tax attributes, the preparation and filing of tax returns, the control of audits and other tax proceedings and certain other matters regarding taxes. • The employee matters agreement governs the allocation of liabilities and responsibilities between Archrock and Exterran Corporation relating to employee compensation and benefit plans and programs, including the treatment of retirement, health and welfare plans and equity and other incentive plans and awards. The agreement contains provisions regarding stock-based compensation. See Note 11 for additional information relating to the Exterran Corporation Stock Incentive Plan. • The transition services agreement sets forth the terms on which Archrock will provide to us, and we will provide to Archrock, on a temporary basis, certain services or functions that the companies historically have shared. Transition services provided to us by Archrock and to Archrock by us may include accounting, administrative, payroll, human resources, environmental health and safety, real estate, fleet, financial audit support, legal, tax, treasury and other support and corporate services, and each service will be provided at a predetermined rate set forth in the transition services agreement. Each service provided under the agreement will have its own duration generally less than one year but not to exceed two years , extension terms and monthly cost, and the transition services agreement will terminate upon cessation of all services provided thereunder. • The supply agreement sets forth the terms under which we will provide manufactured equipment, including the design, engineering, manufacturing and sale of natural gas compression equipment, on an exclusive basis to Archrock and Archrock Partners. This supply agreement will have an initial term of two years , subject to certain cancellation clauses, and is extendable for additional one -year terms by mutual agreement of the parties. Pursuant to the supply agreement, each of Archrock and Archrock Partners will be required to purchase its requirements of newly-manufactured compression equipment from us, subject to certain exceptions. • The storage agreements set forth the terms under which we will provide each of Archrock and Archrock Partners with storage space for equipment purchased under the supply agreement, as well as the terms under which Archrock will provide storage space to us for certain of our equipment. • The services agreements set forth the terms under which we will provide Archrock (or Archrock’s customers on its behalf) with engineering, preservation and installation and commissioning services and Archrock will provide us (or our customers on our behalf) with make-ready, parts sales, preservation and installation and commissioning services. These services agreements will continue in effect until terminated by either party on 30 days ’ written notice. Transactions with Affiliates All intercompany transactions and accounts within these condensed combined financial statements have been eliminated. All affiliate transactions between the international services and product sales businesses of Archrock and the other businesses of Archrock have been included in these condensed combined financial statements. Sales of newly-manufactured compression equipment from the product sales business of EESLP to Archrock Partners are used in the U.S. services business of Archrock and were made pursuant to an omnibus agreement between the parties and other affiliates of both entities. Through November 3, 2015, per the omnibus agreement, revenue was determined by the cost to manufacture such equipment plus a fixed margin. During the three months ended September 30, 2015 and 2014 , we recorded revenue of $36.6 million and $61.4 million , respectively, and cost of sales of $33.6 million and $56.2 million , respectively, from the sale of newly-manufactured compression equipment to Archrock Partners. During the nine months ended September 30, 2015 and 2014 , we recorded revenue of $146.3 million and $152.6 million , respectively, and cost of sales of $134.6 million and $138.3 million , respectively, from the sale of newly-manufactured compression equipment to Archrock Partners. Prior to the closing of the Spin-off, EESLP also had a fleet of compression units used to provide compression services in the U.S. services business of Archrock . Revenue has not been recognized in the condensed combined statements of operations for the sale of compressor units by us that were used by EESLP to provide compression services to customers of the U.S. services business of Archrock . The cost of these units were treated as a reduction of parent equity in the condensed combined balance sheets and a distribution to parent in the condensed combined statements of cash flows and totaled $32.3 million and $37.2 million during the nine months ended September 30, 2015 and 2014 , respectively. Allocation of Expenses The condensed combined statement of operations also includes expense allocations for certain functions performed by Archrock which have not been historically allocated to its operating segments, including allocations of expenses related to executive oversight, accounting, treasury, tax, legal, human resources, procurement and information technology. Included in our selling, general and administrative expense during the three months ended September 30, 2015 and 2014 were $14.3 million and $16.9 million , respectively, and during the nine months ended September 30, 2015 and 2014 were $42.4 million and $48.9 million , respectively, of corporate expenses incurred by Archrock . These costs were allocated to us systematically based on specific department function and revenue. Management believes the assumptions underlying the condensed combined financial statements, including the assumptions regarding allocating expenses from Archrock , are reasonable. Nevertheless, the condensed combined financial statements may not include all of the actual expenses that would have been incurred had we been a stand-alone public company during the periods presented and may not reflect our combined results of operations, financial position and cash flows had we been a stand-alone public company during the periods presented. Actual costs that would have been incurred if we had been a stand-alone public company would depend on multiple factors, including organizational structure and strategic decisions made in various areas, including information technology and infrastructure. Cash Management Prior to the closing of the Spin-off, EESLP provided centralized treasury functions for Archrock ’s U.S. operations, whereby EESLP regularly transferred cash both to and from U.S. subsidiaries of Archrock , as necessary. In conjunction therewith, the intercompany transactions between our U.S. subsidiaries and the other U.S. subsidiaries of Archrock ’s have been considered to be effectively settled in cash in these condensed combined financial statements. Intercompany receivables/payables from/to related parties arising from transactions with affiliates and expenses allocated from Archrock described above have been included in net distributions to parent in the condensed combined financial statements. Net Distributions to Parent Parent equity, which includes retained earnings, represents Archrock ’s interest in our recorded net assets. All transactions between us and Archrock have been identified in the accompanying condensed combined statements of changes in equity as net distributions to parent. A reconciliation of net distributions to parent in the condensed combined statements of changes in equity to the corresponding amount presented on the condensed combined statements of cash flows for all periods presented is as follows (in thousands): Nine Months Ended September 30, 2015 2014 Net distributions to parent per condensed combined statements of changes in equity $ (27,331 ) $ (74,326 ) Capital contribution by parent-stock-based compensation expenses (5,358 ) (4,068 ) Capital contribution by parent-stock-based compensation excess tax benefit 1,140 2,962 Net transfers of property, plant and equipment from parent (9,262 ) (11,980 ) Net distributions to parent per condensed combined statements of cash flows $ (40,811 ) $ (87,412 ) |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | 11. Stock-Based Compensation Archrock maintains stock-based compensation plans described below. The below disclosures only relate to stock-based compensation provided to employees that are directly involved in our operations. The below disclosure excludes stock-based compensation awards made to employees that are indirectly involved in our operations but whose cost have been allocated to us. Archrock Stock Incentive Plan In April 2013, Archrock adopted the Archrock, Inc. 2013 Stock Incentive Plan (the “Archrock 2013 Plan”) to provide for the granting of stock options, restricted stock, restricted stock units, stock appreciation rights, performance units, other stock-based awards and dividend equivalent rights to employees, directors and consultants of Archrock. Upon effectiveness of the Archrock 2013 Plan, no additional grants may be made under the Archrock, Inc. 2007 Amended and Restated Stock Incentive Plan (the “Archrock 2007 Plan”) or the Archrock, Inc. 2011 Employment Inducement Long-Term Equity Plan. 2015 Stock Incentive Plan On October 30, 2015, the compensation committee of our board of directors approved the Exterran Corporation 2015 Stock Incentive Plan (the “2015 Plan”) to provide for the granting of stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, other stock-based awards and dividend equivalents rights to employees, directors and consultants of Exterran Corporation. The 2015 Plan became effective on November 1, 2015. The 2015 Plan will also govern awards granted under the Archrock 2007 Plan and the Archrock 2013 Plan which were adjusted into awards denominated in our common stock in accordance with the terms of the employee matters agreement and/or actions taken by our board of directors or the Archrock board of directors. Stock Options Stock options are granted at fair market value at the grant date, are exercisable according to the vesting schedule established by the compensation committee of Archrock’s board of directors in its sole discretion and expire no later than seven years after the grant date. Stock options generally vest one-third per year on each of the first three anniversaries of the grant date. The following table presents stock option activity with employees directly involved in our operations during the nine months ended September 30, 2015 : Stock Options (in thousands) Weighted Average Exercise Price Per Share Weighted Average Remaining Life (in years) Aggregate Intrinsic Value (in thousands) Options outstanding, January 1, 2015 328 $ 29.96 Granted — — Exercised — — Cancelled (51 ) 62.26 Options outstanding, September 30, 2015 277 24.01 3.0 $ 283 Options exercisable, September 30, 2015 240 22.80 2.8 283 Intrinsic value is the difference between the market value of Archrock stock and the exercise price of each stock option multiplied by the number of stock options outstanding for those stock options where the market value exceeds their exercise price. As of September 30, 2015 , we expect $0.3 million of unrecognized compensation cost related to unvested stock options issued to employees directly involved in our operations to be recognized over the weighted-average period of 1.2 years . Restricted Stock, Restricted Stock Units, Performance Units, Cash Settled Restricted Stock Units and Cash Settled Performance Units For grants of restricted stock, restricted stock units and performance units, we recognize compensation expense over the vesting period equal to the fair value of our common stock at the grant date. We remeasure the fair value of cash settled restricted stock units and cash settled performance units and record a cumulative adjustment of the expense previously recognized. Our obligation related to the cash settled restricted stock units and cash settled performance units is reflected as a liability in our condensed combined balance sheets. Grants of restricted stock, restricted stock units, performance units, cash settled restricted stock units and cash settled performance units generally vest one-third per year on each of the first three anniversaries of the grant date. The following table presents restricted stock, restricted stock unit, performance unit, cash settled restricted stock unit and cash settled performance unit activity with employees directly involved in our operations during the nine months ended September 30, 2015 : Shares (in thousands) Weighted Average Grant-Date Fair Value Per Share Non-vested awards, January 1, 2015 389 $ 27.25 Granted 242 31.96 Vested (235 ) 23.51 Cancelled (24 ) 33.21 Non-vested awards, September 30, 2015 (1) 372 32.29 ________________________________ (1) Non-vested awards as of September 30, 2015 are comprised of 13,000 cash settled restricted stock units and cash settled performance units and 359,000 restricted shares, restricted stock units and performance units. As of September 30, 2015 , we expect $8.4 million of unrecognized compensation cost related to unvested restricted stock, restricted stock units, performance units, cash settled restricted stock units and cash settled performance units issued to employees directly involved in our operations to be recognized over the weighted-average period of 2.0 years . |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 12. Commitments and Contingencies Guarantees Borrowings under Archrock’s $900.0 million senior secured revolving credit facility (the ‘‘Archrock Credit Facility’’) were guaranteed by certain of our and Archrock’s domestic subsidiaries. Our guarantees of borrowings under the Archrock Credit Facility were secured by substantially all of the personal property assets and certain real property assets of our Significant Domestic Subsidiaries (as defined in the Archrock Credit Facility agreement) and 65% of the equity interests in certain of our first-tier foreign subsidiaries. As of September 30, 2015 , Archrock had $330.0 million in outstanding borrowings under the Archrock Credit Facility. All of our existing subsidiaries that guaranteed indebtedness under the Archrock Credit Facility also guaranteed Archrock’s $350.0 million aggregate principal amount of 7.25% senior notes due December 2018 (the ‘‘Archrock 7.25% Notes’’). Our guarantees of the Archrock 7.25% Notes were on a senior unsecured basis, ranked equally in right of payment with all of Archrock’s other senior obligations and were effectively subordinated to all of Archrock’s existing and future secured debt to the extent of the value of the collateral securing such indebtedness. As of September 30, 2015, Archrock had $350.0 million in outstanding borrowings under the Archrock 7.25% Notes. We were liable in the event Archrock defaulted in its payment obligations or failed to comply with the covenants under the Archrock Credit Facility agreement or upon the occurrence of specified events contained in the Archrock Credit Facility agreement, including the event of bankruptcy or insolvency of Archrock. As of September 30, 2015 and December 31, 2014 , no liabilities relating to such guarantees have been reflected in our condensed combined balance sheets. Effective on November 3, 2015, we were released from our obligations under the guarantees of the Archrock Credit Facility and the Archrock 7.25% Notes. In addition to our guarantees of indebtedness held by Archrock, we have issued the following guarantees that are not recorded on our accompanying combined balance sheet (dollars in thousands): Term Maximum Potential Undiscounted Payments as of September 30, 2015 Performance guarantees through letters of credit(1) 2015-2021 $ 173,502 Standby letters of credit 2015-2016 8,381 Commercial letters of credit 2016 3,607 Bid bonds and performance bonds(1) 2015-2023 40,707 Maximum potential undiscounted payments(2) $ 226,197 ________________________________ (1) We have issued guarantees to third parties to ensure performance of our obligations, some of which may be fulfilled by third parties. (2) $106.0 million of the maximum potential undiscounted payments relate to letters of credit outstanding that were issued by us under the Archrock Credit Facility. Contingencies As part of an acquisition in 2001, we may be required to make contingent payments of up to $15 million to the seller, depending on our realization of certain U.S. federal tax benefits through the year 2015. To date, we have not realized any such benefits that would require a payment and we do not anticipate realizing any such benefits that would require a payment before the year 2016. See Note 2 and Note 5 for a discussion of our gain contingencies related to assets that were expropriated in Venezuela. Pursuant to the separation and distribution agreement, EESLP contributed to a subsidiary of Archrock the right to receive payments based on a notional amount corresponding to payments received by our subsidiaries from PDVSA Gas in respect of the sale of our and our joint ventures' previously nationalized assets promptly after such amounts are collected by our subsidiaries until Archrock’s subsidiary has received an aggregate amount of such payments up to the lesser of (x) $125.8 million , plus the aggregate amount of all reimbursable expenses incurred by Archrock and its subsidiaries in connection with recovering any PDVSA Gas default installment payments following the completion of the Spin-off or (y) $150.0 million . Our condensed combined balance sheets do not reflect this contingent liability to Archrock or the amount payable to us by PDVSA Gas as a receivable. In subsequent periods, the recognition of a liability, if applicable, resulting from this contingency to Archrock is expected to impact equity, and as such, is not expected to have an impact on our statements of operations. Pursuant to the separation and distribution agreement, EESLP (in the case of debt offerings) or Exterran Corporation (in the case of equity issuances) will use its commercially reasonable efforts to complete one or more unsecured debt offerings or equity issuances resulting in aggregate gross cash proceeds of at least $250.0 million on the terms described in the Credit Agreement (such transaction, a “qualified capital raise”) on or before the maturity date of our $245.0 million term loan facility. In connection with the Spin-off, EESLP contributed to a subsidiary of Archrock the right to receive, promptly following the occurrence of a qualified capital raise, a $25.0 million cash payment. Our condensed combined balance sheets do not reflect this contingent liability to Archrock. In subsequent periods, the recognition of a liability, if applicable, resulting from this contingency to Archrock is expected to impact equity, and as such, is not expected to have an impact on our statements of operations. In addition to U.S. federal, state, local and foreign income taxes, we are subject to a number of taxes that are not income-based. As many of these taxes are subject to audit by the taxing authorities, it is possible that an audit could result in additional taxes due. We accrue for such additional taxes when we determine that it is probable that we have incurred a liability and we can reasonably estimate the amount of the liability. As of September 30, 2015 and December 31, 2014 , we had accrued $1.0 million and $1.4 million , respectively, for the outcomes of non-income based tax audits. We do not expect that the ultimate resolutions of these audits will result in a material variance from the amounts accrued. We do not accrue for unasserted claims for tax audits unless we believe the assertion of a claim is probable, it is probable that it will be determined that the claim is owed and we can reasonably estimate the claim or range of the claim. We do not have any unasserted claims from non-income based tax audits that we have determined are probable of assertion. We also believe the likelihood is remote that the impact of potential unasserted claims from non-income based tax audits could be material to our combined financial position, but it is possible that the resolution of future audits could be material to our results of operations or cash flows for the period in which the resolution occurs. Our business can be hazardous, involving unforeseen circumstances such as uncontrollable flows of natural gas or well fluids and fires or explosions. As is customary in our industry, we review our safety equipment and procedures and carry insurance against some, but not all, risks of our business. Our insurance coverage includes property damage, general liability and commercial automobile liability and other coverage we believe is appropriate. In addition, we have a minimal amount of insurance on our offshore assets. We believe that our insurance coverage is customary for the industry and adequate for our business; however, losses and liabilities not covered by insurance would increase our costs. Additionally, we are substantially self-insured for workers’ compensation and employee group health claims in view of the relatively high per-incident deductibles we absorb under our insurance arrangements for these risks. Losses up to the deductible amounts are estimated and accrued based upon known facts, historical trends and industry averages. Litigation and Claims In the ordinary course of business, we are involved in various pending or threatened legal actions. While management is unable to predict the ultimate outcome of these actions, it believes that any ultimate liability arising from any of these actions will not have a material adverse effect on our combined financial position, results of operations or cash flows. However, because of the inherent uncertainty of litigation and arbitration proceedings, we cannot provide assurance that the resolution of any particular claim or proceeding to which we are a party will not have a material adverse effect on our combined financial position, results of operations or cash flows. Indemnifications In conjunction with, and effective as of the completion of, the Spin-Off, we entered into the separation and distribution agreement with Archrock, which governs, among other things, the treatment between Archrock and us of aspects relating to indemnification, insurance, confidentiality and cooperation. Generally, the separation and distribution agreement provides for cross-indemnities principally designed to place financial responsibility for the obligations and liabilities of our business with us and financial responsibility for the obligations and liabilities of Archrock’s business with Archrock. Pursuant to the agreement, we and Archrock will generally release the other party from all claims arising prior to the Spin-off that relate to the other party’s business. |
Recent Accounting Developments
Recent Accounting Developments | 9 Months Ended |
Sep. 30, 2015 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recent Accounting Developments | 13. Recent Accounting Developments In July 2015, the Financial Accounting Standards Board (“FASB”) issued an update which will require an entity to measure inventory at the lower of cost and net realizable value. Net realizable value is defined as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. For public business entities, this update is effective on a prospective basis for interim and annual periods beginning after December 15, 2016, with early adoption permitted. We are currently evaluating the impact of this update on our financial statements. In April 2015, the FASB issued an update that addresses the presentation of debt issuance costs. The update requires an entity to present such costs in the balance sheet as a direct deduction from the carrying amount of the related debt liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. In August 2015, the FASB issued a subsequent update which clarifies that the guidance in the previous update does not apply to line-of-credit arrangements. Per the subsequent update, line-of-credit arrangements will continue to defer and present debt issuance costs as an asset and subsequently amortize the deferred debt costs ratably over the term of the arrangement. Upon transition, an entity is required to comply with the applicable disclosures for a change in an accounting principle. The update will be effective for reporting periods beginning after December 15, 2015 on a retrospective basis. Early adoption is permitted. We will evaluate the impact of this update in subsequent periods as it becomes applicable to our financial statements. In May 2014, the FASB issued an update related to revenue recognition. The update outlines a single comprehensive model for companies to use in accounting for revenue arising from contracts with customers and supersedes the most current revenue recognition guidance, including industry-specific guidance. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The update also requires disclosures enabling users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The update will be effective for reporting periods beginning after December 15, 2017, including interim periods within the reporting period. Early adoption is permitted for reporting periods beginning after December 15, 2016. Companies may use either a full retrospective or a modified retrospective approach to adopt this update. We are currently evaluating the potential impact of the update on our financial statements. |
Reportable Segments
Reportable Segments | 9 Months Ended |
Sep. 30, 2015 | |
Segment Reporting [Abstract] | |
Reportable Segments | 14. Reportable Segments We manage our business segments primarily based upon the type of product or service provided. We have three reportable segments: contract operations, aftermarket services and product sales. The contract operations segment primarily provides natural gas compression services, production and processing equipment services and maintenance services to meet specific customer requirements on assets owned by us. The aftermarket services segment provides a full range of services to support the surface production, compression and processing needs of customers, from parts sales and normal maintenance services to full operation of a customer’s owned assets. The product sales segment provides (i) design, engineering, manufacturing, installation and sale of natural gas compression units and accessories and equipment used in the production, treating and processing of crude oil and natural gas and (ii) engineering, procurement and manufacturing services related to the manufacture of critical process equipment for refinery and petrochemical facilities, the manufacture of tank farms and the manufacture of evaporators and brine heaters for desalination plants. We evaluate the performance of our segments based on gross margin for each segment. Revenue includes sales to external customers and affiliates. We do not include intersegment sales when we evaluate our segments’ performance. During the nine months ended September 30, 2015 , Archrock accounted for approximately 10% of our total revenue. See Note 10 for further discussion on transactions with affiliates. No other customer accounted for more than 10% of our combined revenues during the nine months ended September 30, 2015 and 2014 . The following tables present revenues and other financial information by reportable segment during the three and nine months ended September 30, 2015 and 2014 (in thousands): Three Months Ended Contract Operations Aftermarket Services Product Sales Reportable Segments Total September 30, 2015: Revenue $ 114,104 $ 25,272 $ 297,813 $ 437,189 Gross margin(1) 72,990 6,936 37,265 117,191 September 30, 2014: Revenue $ 124,355 $ 39,552 $ 373,852 $ 537,759 Gross margin(1) 76,372 9,391 66,293 152,056 Nine Months Ended Contract Operations Aftermarket Services Product Sales Reportable Segments Total September 30, 2015: Revenue $ 350,045 $ 95,547 $ 1,006,288 $ 1,451,880 Gross margin(1) 219,847 27,727 136,836 384,410 September 30, 2014: Revenue $ 369,787 $ 117,531 $ 1,074,267 $ 1,561,585 Gross margin(1) 234,270 30,173 175,314 439,757 ________________________________ (1) Gross margin, a non-GAAP financial measure, is reconciled, in total, to net income (loss), its most directly comparable measure calculated and presented in accordance with GAAP, below. We define gross margin as total revenue less cost of sales (excluding depreciation and amortization expense). Gross margin is included as a supplemental disclosure because it is a primary measure used by our management to evaluate the results of revenue and cost of sales (excluding depreciation and amortization expense), which are key components of our operations. As an indicator of our operating performance, gross margin should not be considered an alternative to, or more meaningful than, net income (loss) as determined in accordance with GAAP. Our gross margin may not be comparable to a similarly titled measure of another company because other entities may not calculate gross margin in the same manner. The following table reconciles net income to gross margin (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Net income $ 12,283 $ 36,891 $ 58,239 $ 105,420 Selling, general and administrative 55,018 65,925 169,348 200,616 Depreciation and amortization 36,837 44,155 112,418 139,312 Long-lived asset impairment 3,775 1,044 14,264 1,044 Restructuring and other charges 7,150 — 17,697 — Interest expense 581 182 1,407 1,030 Equity in income of non-consolidated affiliates (5,084 ) (4,951 ) (15,152 ) (14,553 ) Other (income) expense, net 27,974 6,414 39,852 1,448 Provision for (benefit from) income taxes (2,587 ) 20,731 24,215 60,372 Income from discontinued operations, net of tax (18,756 ) (18,335 ) (37,878 ) (54,932 ) Gross margin $ 117,191 $ 152,056 $ 384,410 $ 439,757 |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | 15. Subsequent Events In October 2015, we received an additional installment payment, including an annual charge, of $19.1 million from PDVSA Gas relating to the 2012 sale of our Venezuelan subsidiary’s previously nationalized assets. As we have not recognized amounts payable to us by PDVSA Gas relating to the 2012 sale of our Venezuelan subsidiary’s previously nationalized assets as a receivable but rather as income from discontinued operations in the periods such payments are received, the installment payment received in October 2015 will be recognized as income from discontinued operations in the fourth quarter of 2015. On October 5, 2015, we and EESLP amended and restated the Credit Agreement to provide for a new $925.0 million credit facility, consisting of a $680.0 million revolving credit facility and a $245.0 million term loan facility. Availability under the Credit Facility was subject to the satisfaction of certain conditions precedent, including the consummation of the Spin-off on or before January 4, 2016. As a result of the completion of the Spin-off, our Credit Facility became available on November 3, 2015. The revolving credit facility will mature in November 2020 and the term loan facility will mature in November 2017. See Note 6 for additional information regarding the Credit Facility. On November 3, 2015, Archrock completed the Spin-off of its international contract operations, international aftermarket services and global fabrication businesses into Exterran Corporation as an independent, publicly traded company. To effect the Spin-off, on November 3, 2015, Archrock distributed, on a pro rata basis, all of our shares of common stock to its stockholders as of the Record Date. Archrock shareholders received one share of Exterran Corporation common stock for every two shares of its common stock held at the close of business on the Record Date. On November 3, 2015, EESLP incurred approximately $300.0 million of indebtedness under its revolving credit facility and $245.0 million of indebtedness under its term loan facility. Pursuant to the separation and distribution agreement with Archrock and certain of our and Archrock’s respective affiliates, on November 3, 2015, EESLP transferred approximately $532.6 million of net proceeds from borrowings under the Credit Facility to Archrock to allow it to repay a portion of its indebtedness in connection with the Spin-off. Following the completion of the Spin-off, we and Archrock are independent, publicly traded companies with separate boards of directors and management. In connection with the completion of the Spin-off, on November 3, 2015, we entered into several agreements with Archrock and certain subsidiaries of Archrock and, with respect to certain agreements, a subsidiary of Archrock Partners, that govern the Spin-off and the relationship among the parties following the Spin-off, including the following: separation and distribution agreement, tax matters agreement, employee matters agreement, transition services agreement, supply agreement, storage agreements and services agreements. See Note 10 for additional information relating to the Spin Agreements. |
Spin-Off, Basis of Presentati23
Spin-Off, Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Accounting Policies [Abstract] | |
Comprehensive Income (Loss) | Comprehensive Income (Loss) Components of comprehensive income (loss) are net income (loss) and all changes in equity during a period except those resulting from transactions with owners. Our accumulated other comprehensive income consists of foreign currency translation adjustments. |
Financial Instruments | Financial Instruments Our financial instruments consist of cash, restricted cash, receivables and payables. At September 30, 2015 and December 31, 2014 , the estimated fair values of these financial instruments approximated their carrying amounts as reflected in our condensed combined balance sheets. See Note 7 for additional information regarding the fair value hierarchy. |
Recent Accounting Developments | In July 2015, the Financial Accounting Standards Board (“FASB”) issued an update which will require an entity to measure inventory at the lower of cost and net realizable value. Net realizable value is defined as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. For public business entities, this update is effective on a prospective basis for interim and annual periods beginning after December 15, 2016, with early adoption permitted. We are currently evaluating the impact of this update on our financial statements. In April 2015, the FASB issued an update that addresses the presentation of debt issuance costs. The update requires an entity to present such costs in the balance sheet as a direct deduction from the carrying amount of the related debt liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. In August 2015, the FASB issued a subsequent update which clarifies that the guidance in the previous update does not apply to line-of-credit arrangements. Per the subsequent update, line-of-credit arrangements will continue to defer and present debt issuance costs as an asset and subsequently amortize the deferred debt costs ratably over the term of the arrangement. Upon transition, an entity is required to comply with the applicable disclosures for a change in an accounting principle. The update will be effective for reporting periods beginning after December 15, 2015 on a retrospective basis. Early adoption is permitted. We will evaluate the impact of this update in subsequent periods as it becomes applicable to our financial statements. In May 2014, the FASB issued an update related to revenue recognition. The update outlines a single comprehensive model for companies to use in accounting for revenue arising from contracts with customers and supersedes the most current revenue recognition guidance, including industry-specific guidance. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The update also requires disclosures enabling users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The update will be effective for reporting periods beginning after December 15, 2017, including interim periods within the reporting period. Early adoption is permitted for reporting periods beginning after December 15, 2016. Companies may use either a full retrospective or a modified retrospective approach to adopt this update. We are currently evaluating the potential impact of the update on our financial statements. |
Spin-Off, Basis of Presentati24
Spin-Off, Basis of Presentation and Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Accounting Policies [Abstract] | |
Schedule of changes in accumulated other comprehensive income (loss) by component, net of tax | The following table presents the changes in accumulated other comprehensive income, net of tax, during the nine months ended September 30, 2014 and 2015 (in thousands): Foreign Currency Translation Adjustment Accumulated other comprehensive income, January 1, 2014 $ 31,424 Loss recognized in other comprehensive income (loss) (6,519 ) Accumulated other comprehensive income, September 30, 2014 $ 24,905 Accumulated other comprehensive income, January 1, 2015 $ 16,776 Loss recognized in other comprehensive income (loss) (1,754 ) Accumulated other comprehensive income, September 30, 2015 $ 15,022 |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Summary of operating results and balance sheet data for discontinued operations | The following table summarizes the operating results of discontinued operations (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Revenue $ — $ — $ — $ — Expenses and selling, general and administrative 132 84 366 329 Recovery attributable to expropriation (16,541 ) (16,539 ) (33,523 ) (49,523 ) Other income, net (2,347 ) (1,880 ) (4,721 ) (5,738 ) Income from discontinued operations, net of tax $ 18,756 $ 18,335 $ 37,878 $ 54,932 The following table summarizes the balance sheet data for discontinued operations (in thousands): September 30, 2015 December 31, 2014 Cash $ 220 $ 431 Accounts receivable 4 2 Other current assets 39 35 Total current assets associated with discontinued operations 263 468 Total assets associated with discontinued operations $ 263 $ 468 Accounts payable $ — $ 214 Accrued liabilities 672 1,124 Total current liabilities associated with discontinued operations 672 1,338 Other long-term liabilities 162 317 Total liabilities associated with discontinued operations $ 834 $ 1,655 |
Inventory, net (Tables)
Inventory, net (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Inventory Disclosure [Abstract] | |
Schedule of inventory, net of reserves | Inventory, net of reserves, consisted of the following amounts (in thousands): September 30, 2015 December 31, 2014 Parts and supplies $ 137,930 $ 148,724 Work in progress 76,767 108,814 Finished goods 46,657 33,702 Inventory, net $ 261,354 $ 291,240 |
Property, Plant and Equipment27
Property, Plant and Equipment, net (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property, plant and equipment, net | Property, plant and equipment, net, consisted of the following (in thousands): September 30, 2015 December 31, 2014 Compression equipment, facilities and other fleet assets $ 1,521,634 $ 1,514,982 Land and buildings 154,234 154,866 Transportation and shop equipment 184,966 194,032 Other 115,141 112,732 1,975,975 1,976,612 Accumulated depreciation (1,055,057 ) (1,021,801 ) Property, plant and equipment, net $ 920,918 $ 954,811 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Summary of assets and liabilities measured at fair value on nonrecurring basis | The following table presents our assets and liabilities measured at fair value on a nonrecurring basis during the nine months ended September 30, 2015 and 2014 , with pricing levels as of the date of valuation (in thousands): Nine Months Ended September 30, 2015 Nine Months Ended September 30, 2014 (Level 1) (Level 2) (Level 3) (Level 1) (Level 2) (Level 3) Impaired long-lived assets $ — $ — $ 499 $ — $ — $ — Long-term receivable from the sale of our Canadian Operations — — 5,100 — — — |
Restructuring and Other Charg29
Restructuring and Other Charges (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Restructuring and Related Activities [Abstract] | |
Summary of changes to accrued liability balance related to restructuring and other charges | The following table summarizes the changes to our accrued liability balance related to restructuring and other charges for the nine months ended September 30, 2015 (in thousands): Spin-off Cost Reduction Plan Total Beginning balance at January 1, 2015 $ — $ — $ — Additions for costs expensed 6,700 10,997 17,697 Less non-cash expense (4,700 ) (4,007 ) (8,707 ) Reductions for payments (2,000 ) (6,470 ) (8,470 ) Ending balance at September 30, 2015 $ — $ 520 $ 520 |
Schedule of components of charges included in restructuring and other charges | The following table summarizes the components of charges included in restructuring and other charges in our condensed combined statements of operations for the three and nine months ended September 30, 2015 (in thousands): Three Months Ended September 30, 2015 Nine Months Ended September 30, 2015 Consulting, audit and professional fees $ 1,329 $ 1,329 Chief Executive Officer signing bonus 2,000 2,000 Non-cash inventory write-downs — 8,707 Employee termination benefits 3,821 5,661 Total restructuring and other charges $ 7,150 $ 17,697 |
Related Party Transactions an30
Related Party Transactions and Parent Equity (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Related Party Transactions [Abstract] | |
Reconciliation of Net Distributions to Parent [Table Text Block] | A reconciliation of net distributions to parent in the condensed combined statements of changes in equity to the corresponding amount presented on the condensed combined statements of cash flows for all periods presented is as follows (in thousands): Nine Months Ended September 30, 2015 2014 Net distributions to parent per condensed combined statements of changes in equity $ (27,331 ) $ (74,326 ) Capital contribution by parent-stock-based compensation expenses (5,358 ) (4,068 ) Capital contribution by parent-stock-based compensation excess tax benefit 1,140 2,962 Net transfers of property, plant and equipment from parent (9,262 ) (11,980 ) Net distributions to parent per condensed combined statements of cash flows $ (40,811 ) $ (87,412 ) |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of stock option activity | The following table presents stock option activity with employees directly involved in our operations during the nine months ended September 30, 2015 : Stock Options (in thousands) Weighted Average Exercise Price Per Share Weighted Average Remaining Life (in years) Aggregate Intrinsic Value (in thousands) Options outstanding, January 1, 2015 328 $ 29.96 Granted — — Exercised — — Cancelled (51 ) 62.26 Options outstanding, September 30, 2015 277 24.01 3.0 $ 283 Options exercisable, September 30, 2015 240 22.80 2.8 283 |
Schedule of restricted stock, restricted stock unit, performance unit, cash settled restricted stock unit and cash settled performance unit activity | The following table presents restricted stock, restricted stock unit, performance unit, cash settled restricted stock unit and cash settled performance unit activity with employees directly involved in our operations during the nine months ended September 30, 2015 : Shares (in thousands) Weighted Average Grant-Date Fair Value Per Share Non-vested awards, January 1, 2015 389 $ 27.25 Granted 242 31.96 Vested (235 ) 23.51 Cancelled (24 ) 33.21 Non-vested awards, September 30, 2015 (1) 372 32.29 ________________________________ (1) Non-vested awards as of September 30, 2015 are comprised of 13,000 cash settled restricted stock units and cash settled performance units and 359,000 restricted shares, restricted stock units and performance units. |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of guarantees | In addition to our guarantees of indebtedness held by Archrock, we have issued the following guarantees that are not recorded on our accompanying combined balance sheet (dollars in thousands): Term Maximum Potential Undiscounted Payments as of September 30, 2015 Performance guarantees through letters of credit(1) 2015-2021 $ 173,502 Standby letters of credit 2015-2016 8,381 Commercial letters of credit 2016 3,607 Bid bonds and performance bonds(1) 2015-2023 40,707 Maximum potential undiscounted payments(2) $ 226,197 ________________________________ (1) We have issued guarantees to third parties to ensure performance of our obligations, some of which may be fulfilled by third parties. (2) $106.0 million of the maximum potential undiscounted payments relate to letters of credit outstanding that were issued by us under the Archrock Credit Facility. |
Reportable Segments (Tables)
Reportable Segments (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Segment Reporting [Abstract] | |
Revenue and other financial information by reportable segment | The following tables present revenues and other financial information by reportable segment during the three and nine months ended September 30, 2015 and 2014 (in thousands): Three Months Ended Contract Operations Aftermarket Services Product Sales Reportable Segments Total September 30, 2015: Revenue $ 114,104 $ 25,272 $ 297,813 $ 437,189 Gross margin(1) 72,990 6,936 37,265 117,191 September 30, 2014: Revenue $ 124,355 $ 39,552 $ 373,852 $ 537,759 Gross margin(1) 76,372 9,391 66,293 152,056 Nine Months Ended Contract Operations Aftermarket Services Product Sales Reportable Segments Total September 30, 2015: Revenue $ 350,045 $ 95,547 $ 1,006,288 $ 1,451,880 Gross margin(1) 219,847 27,727 136,836 384,410 September 30, 2014: Revenue $ 369,787 $ 117,531 $ 1,074,267 $ 1,561,585 Gross margin(1) 234,270 30,173 175,314 439,757 ________________________________ (1) Gross margin, a non-GAAP financial measure, is reconciled, in total, to net income (loss), its most directly comparable measure calculated and presented in accordance with GAAP, below. |
Reconciliation of net income (loss) to gross margin | The following table reconciles net income to gross margin (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Net income $ 12,283 $ 36,891 $ 58,239 $ 105,420 Selling, general and administrative 55,018 65,925 169,348 200,616 Depreciation and amortization 36,837 44,155 112,418 139,312 Long-lived asset impairment 3,775 1,044 14,264 1,044 Restructuring and other charges 7,150 — 17,697 — Interest expense 581 182 1,407 1,030 Equity in income of non-consolidated affiliates (5,084 ) (4,951 ) (15,152 ) (14,553 ) Other (income) expense, net 27,974 6,414 39,852 1,448 Provision for (benefit from) income taxes (2,587 ) 20,731 24,215 60,372 Income from discontinued operations, net of tax (18,756 ) (18,335 ) (37,878 ) (54,932 ) Gross margin $ 117,191 $ 152,056 $ 384,410 $ 439,757 |
Spin-Off, Basis of Presentati34
Spin-Off, Basis of Presentation and Summary of Significant Accounting Policies - Narrative (Details) $ in Thousands | Nov. 03, 2015USD ($) | Oct. 27, 2015 | Sep. 30, 2015USD ($) | Dec. 31, 2014USD ($) |
Related Party Transaction [Line Items] | ||||
Payable to Archrock, Inc. | $ 0 | $ 0 | ||
Pro Forma | ||||
Related Party Transaction [Line Items] | ||||
Payable to Archrock, Inc. | $ 532,578 | |||
Archrock | Subsequent Events | ||||
Related Party Transaction [Line Items] | ||||
Funds transferred for spin-off | $ 532,600 | |||
Archrock | Subsequent Events | ||||
Related Party Transaction [Line Items] | ||||
Number of shares of Exterran Corporation common stock received per share of Archrock common stock held | 0.5 | |||
EESLP | Subsequent Events | Revolving Credit Facility | Credit Agreement | ||||
Related Party Transaction [Line Items] | ||||
Outstanding borrowings | 300,000 | |||
EESLP | Subsequent Events | Term Loan Facility | Credit Agreement | ||||
Related Party Transaction [Line Items] | ||||
Term loan outstanding | 245,000 | |||
EESLP | Archrock | Subsequent Events | ||||
Related Party Transaction [Line Items] | ||||
Funds transferred for spin-off | $ 532,600 |
Spin-Off, Basis of Presentati35
Spin-Off, Basis of Presentation and Summary of Significant Accounting Policies - Comprehensive Income (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Changes in accumulated other comprehensive income (loss) by component | ||
Accumulated other comprehensive income (loss), balance at beginning of period | $ 16,776 | |
Accumulated other comprehensive income (loss), balance at end of period | 15,022 | |
Foreign Currency Translation Adjustment | ||
Changes in accumulated other comprehensive income (loss) by component | ||
Accumulated other comprehensive income (loss), balance at beginning of period | 16,776 | $ 31,424 |
Loss recognized in other comprehensive income (loss) | (1,754) | (6,519) |
Accumulated other comprehensive income (loss), balance at end of period | $ 15,022 | $ 24,905 |
Discontinued Operations (Detail
Discontinued Operations (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
Oct. 31, 2015 | Aug. 31, 2012 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Summary of operating results of the discontinued operations | |||||||
Income from discontinued operations, net of tax | $ 18,756 | $ 18,335 | $ 37,878 | $ 54,932 | |||
Summary of balance sheet data for discontinued operations | |||||||
Total current assets associated with discontinued operations | 263 | 263 | $ 468 | ||||
Total current liabilities associated with discontinued operations | 672 | 672 | 1,338 | ||||
Venezuela | |||||||
Discontinued Operations | |||||||
Sale price of expropriated assets | $ 441,700 | ||||||
Installment payments, including an annual charge, received from sale of expropriated assets | 18,900 | 18,200 | 37,600 | 54,100 | |||
Remaining expected proceeds from sale of expropriated assets | 83,000 | 83,000 | |||||
Summary of operating results of the discontinued operations | |||||||
Revenue | 0 | 0 | 0 | 0 | |||
Expenses and selling, general and administrative | 132 | 84 | 366 | 329 | |||
Recovery attributable to expropriation | (16,541) | (16,539) | (33,523) | (49,523) | |||
Other income, net | (2,347) | (1,880) | (4,721) | (5,738) | |||
Income from discontinued operations, net of tax | 18,756 | $ 18,335 | 37,878 | $ 54,932 | |||
Summary of balance sheet data for discontinued operations | |||||||
Cash | 220 | 220 | 431 | ||||
Accounts receivable | 4 | 4 | 2 | ||||
Other current assets | 39 | 39 | 35 | ||||
Total current assets associated with discontinued operations | 263 | 263 | 468 | ||||
Total assets associated with discontinued operations | 263 | 263 | 468 | ||||
Accounts payable | 0 | 0 | 214 | ||||
Accrued liabilities | 672 | 672 | 1,124 | ||||
Total current liabilities associated with discontinued operations | 672 | 672 | 1,338 | ||||
Other long-term liabilities | 162 | 162 | 317 | ||||
Total liabilities associated with discontinued operations | $ 834 | $ 834 | $ 1,655 | ||||
Venezuela | Subsequent Events | |||||||
Discontinued Operations | |||||||
Installment payments, including an annual charge, received from sale of expropriated assets | $ 19,100 |
Inventory, net (Details)
Inventory, net (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Dec. 31, 2014 | |
Composition of Inventory net of reserves | ||
Parts and supplies | $ 137,930 | $ 148,724 |
Work in progress | 76,767 | 108,814 |
Finished goods | 46,657 | 33,702 |
Inventory, net | 261,354 | 291,240 |
Inventory reserves | 18,800 | $ 8,700 |
Increase in inventory reserves related to restructuring charges | $ 8,707 |
Property, Plant and Equipment38
Property, Plant and Equipment, net (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Property, Plant and Equipment | ||
Property, plant and equipment, gross | $ 1,975,975 | $ 1,976,612 |
Accumulated depreciation | (1,055,057) | (1,021,801) |
Property, plant and equipment, net | 920,918 | 954,811 |
Compression equipment, facilities and other fleet assets | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | 1,521,634 | 1,514,982 |
Land and buildings | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | 154,234 | 154,866 |
Transportation and shop equipment | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | 184,966 | 194,032 |
Other | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | $ 115,141 | $ 112,732 |
Investments in Non-Consolidat39
Investments in Non-Consolidated Affiliates (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Investments in non-consolidated affiliates | ||||
Installment payments, including annual charges, received from the sale of the joint venture | $ 5.1 | $ 5 | $ 15.2 | $ 14.7 |
Remaining principal amount due from sale of joint venture | $ 13 | $ 13 | ||
PIGAP II | ||||
Investments in non-consolidated affiliates | ||||
Ownership interest (as a percent) | 30.00% | 30.00% | ||
El Furrial | ||||
Investments in non-consolidated affiliates | ||||
Ownership interest (as a percent) | 33.30% | 33.30% |
Long-Term Debt (Details)
Long-Term Debt (Details) | Nov. 03, 2015USD ($) | Oct. 05, 2015USD ($) | Sep. 30, 2015 | Jul. 10, 2015USD ($) |
Credit Agreement | Subsequent Events | ||||
Line of Credit Facility [Line Items] | ||||
Revolving credit facility borrowing capacity | $ 925,000,000 | |||
Credit Agreement | Subsequent Events | Minimum | ||||
Line of Credit Facility [Line Items] | ||||
Consolidated interest coverage ratio | 2.25 | |||
Credit Agreement | Subsequent Events | Maximum | ||||
Line of Credit Facility [Line Items] | ||||
Total leverage ratio, prior to qualified capital raise | 3.75 | |||
Total leverage ratio, after qualified capital raise | 4.50 | |||
Senior secured leverage ratio, after qualified capital raise | 2.75 | |||
Revolving Credit Facility | Credit Agreement | ||||
Line of Credit Facility [Line Items] | ||||
Revolving credit facility borrowing capacity | $ 750,000,000 | |||
Percent of equity interests in first-tier foreign subsidiaries pledged | 65.00% | |||
Revolving Credit Facility | Credit Agreement | Subsequent Events | ||||
Line of Credit Facility [Line Items] | ||||
Revolving credit facility borrowing capacity | $ 680,000,000 | |||
Interest rate increase until refinanced, through the first anniversary | 1.00% | |||
Interest rate increase until refinanced, after the first anniversary | 1.50% | |||
Revolving Credit Facility | Credit Agreement | Subsequent Events | LIBOR | Minimum | ||||
Line of Credit Facility [Line Items] | ||||
Applicable margin on variable rate | 1.50% | |||
Revolving Credit Facility | Credit Agreement | Subsequent Events | LIBOR | Maximum | ||||
Line of Credit Facility [Line Items] | ||||
Applicable margin on variable rate | 2.75% | |||
Revolving Credit Facility | Credit Agreement | Subsequent Events | Base Rate [Member] | Minimum | ||||
Line of Credit Facility [Line Items] | ||||
Applicable margin on variable rate | 0.50% | |||
Revolving Credit Facility | Credit Agreement | Subsequent Events | Base Rate [Member] | Maximum | ||||
Line of Credit Facility [Line Items] | ||||
Applicable margin on variable rate | 1.75% | |||
Revolving Credit Facility | Credit Agreement | Subsequent Events | Federal funds effective rate | ||||
Line of Credit Facility [Line Items] | ||||
Applicable margin on variable rate | 0.50% | |||
Revolving Credit Facility | Credit Agreement | Subsequent Events | One-month LIBOR | ||||
Line of Credit Facility [Line Items] | ||||
Applicable margin on variable rate | 1.00% | |||
Term Loan Facility | Credit Agreement | Subsequent Events | ||||
Line of Credit Facility [Line Items] | ||||
Revolving credit facility borrowing capacity | $ 245,000,000 | |||
Term Loan Facility | Credit Agreement | Subsequent Events | LIBOR | Minimum | ||||
Line of Credit Facility [Line Items] | ||||
Applicable margin on variable rate | 1.00% | |||
Term Loan Facility | Credit Agreement | Subsequent Events | LIBOR | Maximum | ||||
Line of Credit Facility [Line Items] | ||||
Applicable margin on variable rate | 5.75% | |||
Term Loan Facility | Credit Agreement | Subsequent Events | Base Rate [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Applicable margin on variable rate | 4.75% | |||
EESLP | Subsequent Events | Archrock | ||||
Line of Credit Facility [Line Items] | ||||
Funds transferred for spin-off | $ 532,600,000 | |||
EESLP | Revolving Credit Facility | Credit Agreement | Subsequent Events | ||||
Line of Credit Facility [Line Items] | ||||
Outstanding borrowings | 300,000,000 | |||
EESLP | Term Loan Facility | Credit Agreement | Subsequent Events | ||||
Line of Credit Facility [Line Items] | ||||
Term loan outstanding | $ 245,000,000 |
Fair Value Measurements - Asset
Fair Value Measurements - Assets and Liabilities Measured at Fair Value (Details) - Nonrecurring basis - USD ($) $ in Thousands | Sep. 30, 2015 | Sep. 30, 2014 |
(Level 1) | ||
Fair value measurement of assets and liabilities | ||
Impaired long-lived assets | $ 0 | $ 0 |
Long-term receivable from the sale of our Canadian Operations | 0 | 0 |
(Level 2) | ||
Fair value measurement of assets and liabilities | ||
Impaired long-lived assets | 0 | 0 |
Long-term receivable from the sale of our Canadian Operations | 0 | 0 |
(Level 3) | ||
Fair value measurement of assets and liabilities | ||
Impaired long-lived assets | 499 | 0 |
Long-term receivable from the sale of our Canadian Operations | $ 5,100 | $ 0 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value Assumption Inputs (Details) - USD ($) $ in Thousands | 1 Months Ended | 9 Months Ended | |
Apr. 30, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | |
Fair value measurement of assets and liabilities | |||
Proceeds received from settlement of note receivable | $ 5,357 | $ 0 | |
Canadian Operations | |||
Fair value measurement of assets and liabilities | |||
Proceeds received from settlement of note receivable | $ 5,100 | ||
Impaired long-lived assets | |||
Fair value measurement of assets and liabilities | |||
Weighted average disposal period of impaired assets | 4 years | ||
Discount rate (as a percent) | 10.00% |
Long-Lived Asset Impairment (De
Long-Lived Asset Impairment (Details) hp in Thousands, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015USD ($)compressor_unithp | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($)compressor_unithp | Sep. 30, 2014USD ($) | |
Idle compressor units | ||||
Long-Lived Asset Impairment | ||||
Number of long-lived assets that the entity determined to retire and either sell or re-utilize key components | compressor_unit | 19 | 48 | ||
Horsepower retired from the contract operations business (in horsepower) | hp | 20 | 44 | ||
Long-lived asset impairment | $ 3.8 | $ 12.9 | ||
Long-term receivable from the sale of Canadian Operations | ||||
Long-Lived Asset Impairment | ||||
Long-lived asset impairment | $ 1.4 | |||
Other long lived assets | ||||
Long-Lived Asset Impairment | ||||
Long-lived asset impairment | $ 1 | $ 1 |
Restructuring and Other Charg44
Restructuring and Other Charges - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Restructuring and Other Charges | |||||
Restructuring and other charges | $ 7,150 | $ 0 | $ 17,697 | $ 0 | |
Non-cash inventory write-downs | 8,707 | ||||
Restructuring reserve | 520 | 520 | $ 0 | ||
Spin-off | |||||
Restructuring and Other Charges | |||||
Restructuring and other charges | 2,000 | 6,700 | |||
Non-cash inventory write-downs | 4,700 | ||||
Restructuring reserve | 0 | 0 | 0 | ||
Spin-off | Minimum | |||||
Restructuring and Other Charges | |||||
Additional restructuring costs expected to be incurred | 14,000 | 14,000 | |||
Spin-off | Maximum | |||||
Restructuring and Other Charges | |||||
Additional restructuring costs expected to be incurred | 18,000 | 18,000 | |||
Spin-off | Contract operations | |||||
Restructuring and Other Charges | |||||
Non-cash inventory write-downs | 4,200 | ||||
Spin-off | Product Sales | |||||
Restructuring and Other Charges | |||||
Non-cash inventory write-downs | 500 | ||||
Cost Reduction Plan | |||||
Restructuring and Other Charges | |||||
Restructuring and other charges | 5,200 | 10,997 | |||
Non-cash inventory write-downs | 4,007 | ||||
Additional restructuring costs expected to be incurred | 2,500 | 2,500 | |||
Employee termination benefits | 5,200 | 7,000 | |||
Restructuring reserve | $ 520 | $ 520 | $ 0 |
Restructuring and Other Charg45
Restructuring and Other Charges - Rollforward of Accrued Liability Balance Related to Restructuring (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Restructuring Charges Accrual | ||||
Beginning balance | $ 0 | |||
Additions for costs expensed | $ 7,150 | $ 0 | 17,697 | $ 0 |
Less non-cash expense | (8,707) | |||
Reductions for payments | (8,470) | |||
Ending balance | 520 | 520 | ||
Spin-off | ||||
Restructuring Charges Accrual | ||||
Beginning balance | 0 | |||
Additions for costs expensed | 2,000 | 6,700 | ||
Less non-cash expense | (4,700) | |||
Reductions for payments | (2,000) | |||
Ending balance | 0 | 0 | ||
Cost Reduction Plan | ||||
Restructuring Charges Accrual | ||||
Beginning balance | 0 | |||
Additions for costs expensed | 5,200 | 10,997 | ||
Less non-cash expense | (4,007) | |||
Reductions for payments | (6,470) | |||
Ending balance | $ 520 | $ 520 |
Restructuring and Other Charg46
Restructuring and Other Charges- Components of Charges Included in Restructuring Charges (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Components of charges included in restructuring charges | ||||
Non-cash inventory write-downs | $ 8,707 | |||
Total restructuring and other charges | $ 7,150 | $ 0 | 17,697 | $ 0 |
Restructuring and other charges | ||||
Components of charges included in restructuring charges | ||||
Consulting, audit and professional fees | 1,329 | 1,329 | ||
Chief Executive Officer signing bonus | 2,000 | 2,000 | ||
Non-cash inventory write-downs | 0 | 8,707 | ||
Employee termination benefits | 3,821 | 5,661 | ||
Total restructuring and other charges | $ 7,150 | $ 17,697 |
Related Party Transactions an47
Related Party Transactions and Parent Equity Related Party Transactions and Parent Equity - Narrative (Details) - USD ($) | Nov. 03, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 |
Archrock | |||||
Related Party Transaction [Line Items] | |||||
Selling, general and administrative expenses from related party | $ 14,300,000 | $ 16,900,000 | $ 42,400,000 | $ 48,900,000 | |
Archrock | Sale of compressor units | |||||
Related Party Transaction [Line Items] | |||||
Related party transaction, amounts of transaction | 32,300,000 | 37,200,000 | |||
Archrock Partners | |||||
Related Party Transaction [Line Items] | |||||
Revenue from related parties | 36,600,000 | 61,400,000 | 146,300,000 | 152,600,000 | |
Related parties amount in cost of sales | $ 33,600,000 | $ 56,200,000 | $ 134,600,000 | $ 138,300,000 | |
Subsequent Events | Archrock | |||||
Related Party Transaction [Line Items] | |||||
Funds transferred for spin-off | $ 532,600,000 | ||||
Noncompete provision term | 3 years | ||||
Contingent liability, payment upon qualified capital raise | $ 25,000,000 | ||||
Transition service agreement term | 2 years | ||||
Supply agreement term | 2 years | ||||
Supply agreement, extension term | 1 year | ||||
Service agreement, termination written notice period | 30 days | ||||
EESLP | Subsequent Events | |||||
Related Party Transaction [Line Items] | |||||
Contingent liability, payment upon qualified capital raise | $ 25,000,000 | ||||
EESLP | Subsequent Events | Archrock | |||||
Related Party Transaction [Line Items] | |||||
Funds transferred for spin-off | $ 532,600,000 |
Related Party Transactions an48
Related Party Transactions and Parent Equity - Net Distributions to Parent (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Related Party Transactions [Abstract] | ||
Net distributions to parent per condensed combined statements of changes in equity | $ (27,331) | $ (74,326) |
Capital contribution by parent-stock-based compensation expenses | (5,358) | (4,068) |
Capital contribution by parent-stock-based compensation excess tax benefit | 1,140 | 2,962 |
Net transfers of property, plant and equipment from parent | (9,262) | (11,980) |
Net distributions to parent per condensed combined statements of cash flows | $ (40,811) | $ (87,412) |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Options Activity (Details) - Stock Options $ / shares in Units, shares in Thousands, $ in Thousands | 9 Months Ended |
Sep. 30, 2015USD ($)$ / sharesshares | |
Stock-based compensation | |
Vesting period | 3 years |
Stock Options | |
Options outstanding at the beginning of the period (in shares) | shares | 328 |
Granted (in shares) | shares | 0 |
Exercised (in shares) | shares | 0 |
Cancelled (in shares) | shares | (51) |
Options outstanding at the end of the period (in shares) | shares | 277 |
Options exercisable at the end of the period (in shares) | shares | 240 |
Weighted Average Exercise Price Per Share | |
Options outstanding at the beginning of the period (in dollars per share) | $ 29.96 |
Granted (in dollars per share) | 0 |
Exercised (in dollars per share) | 0 |
Cancelled (in dollars per share) | 62.26 |
Options outstanding at end of the period (in dollars per share) | 24.01 |
Options exercisable at the end of period (in dollars per share) | $ 22.80 |
Weighted Average Remaining Life | |
Outstanding at the end of the period | 3 years |
Exercisable at the end of the period | 2 years 9 months 18 days |
Aggregate Intrinsic Value | |
Outstanding at the end of the period | $ | $ 283 |
Exercisable at the end of the period | $ | 283 |
Expected unrecognized compensation cost related to unvested stock options | $ | $ 300 |
Weighted-average period over which the expected unrecognized compensation cost related to unvested stock options will be recognized | 1 year 2 months 12 days |
First anniversary vesting | |
Stock-based compensation | |
Vesting percentage | 33.33% |
Second anniversary vesting | |
Stock-based compensation | |
Vesting percentage | 33.33% |
Third anniversary vesting | |
Stock-based compensation | |
Vesting percentage | 33.33% |
Maximum | |
Stock-based compensation | |
Expiration period | 7 years |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock, Restricted Stock Units, and Performance Units Activity (Details) $ / shares in Units, shares in Thousands, $ in Millions | 9 Months Ended |
Sep. 30, 2015USD ($)$ / sharesshares | |
Restricted stock, restricted stock units, performance units, cash settled restricted stock units and cash settled performance units | |
Stock-based compensation | |
Vesting period | 3 years |
Shares | |
Non-vested awards at the beginning of the period (in shares) | 389 |
Granted (in shares) | 242 |
Vested (in shares) | (235) |
Cancelled (in shares) | (24) |
Non-vested awards at the end of the period (in shares) | 372 |
Weighted Average Grant-Date Fair Value Per Share | |
Non-vested awards at the beginning of the period (in dollars per share) | $ / shares | $ 27.25 |
Granted (in dollars per share) | $ / shares | 31.96 |
Vested (in dollars per share) | $ / shares | 23.51 |
Cancelled (in dollars per share) | $ / shares | 33.21 |
Non-vested awards at the end of the period (in dollars per share) | $ / shares | $ 32.29 |
Unrecognized compensation | |
Expected unrecognized compensation cost related to unvested awards (in dollars) | $ | $ 8.4 |
Weighted-average period over which the expected unrecognized compensation cost related to unvested stock options will be recognized | 2 years 4 days |
Restricted stock, restricted stock units, performance units, cash settled restricted stock units and cash settled performance units | First anniversary vesting | |
Stock-based compensation | |
Vesting percentage | 33.33% |
Restricted stock, restricted stock units, performance units, cash settled restricted stock units and cash settled performance units | Second anniversary vesting | |
Stock-based compensation | |
Vesting percentage | 33.33% |
Restricted stock, restricted stock units, performance units, cash settled restricted stock units and cash settled performance units | Third anniversary vesting | |
Stock-based compensation | |
Vesting percentage | 33.33% |
Cash settled restricted stock units and cash settled performance units | |
Shares | |
Non-vested awards at the end of the period (in shares) | 13 |
Restricted stock shares, restricted stock units and performance units | |
Shares | |
Non-vested awards at the end of the period (in shares) | 359 |
Commitments and Contingencies -
Commitments and Contingencies - Guarantees Not Recorded on Balance Sheet (Details) $ in Thousands | Sep. 30, 2015USD ($) |
Schedule Of Guarantees | |
Maximum potential undiscounted payments | $ 226,197 |
Performance guarantees through letters of credit | |
Schedule Of Guarantees | |
Maximum potential undiscounted payments | 173,502 |
Standby letters of credit | |
Schedule Of Guarantees | |
Maximum potential undiscounted payments | 8,381 |
Commercial letters of credit | |
Schedule Of Guarantees | |
Maximum potential undiscounted payments | 3,607 |
Bid bonds and performance bonds | |
Schedule Of Guarantees | |
Maximum potential undiscounted payments | 40,707 |
Archrock Credit Facility | Revolving Credit Facility | |
Schedule Of Guarantees | |
Maximum potential undiscounted payments | $ 106,000 |
Commitments and Contingencies52
Commitments and Contingencies - Narrative (Details) - USD ($) | 9 Months Ended | ||||
Sep. 30, 2015 | Nov. 03, 2015 | Oct. 05, 2015 | Jul. 10, 2015 | Dec. 31, 2014 | |
Loss contingency | |||||
Accrued liability for the outcomes of non-income based tax audits | $ 1,000,000 | $ 1,400,000 | |||
Maximum | |||||
Business acquisition, contingent consideration | |||||
Contingent payments (up to) | 15,000,000 | ||||
Archrock Credit Facility | Archrock | Revolving Credit Facility | |||||
Business acquisition, contingent consideration | |||||
Revolving credit facility borrowing capacity | 900,000,000 | ||||
Outstanding borrowings | 330,000,000 | ||||
7.25% Senior Notes Due December 2018 | Archrock | Senior Notes | |||||
Business acquisition, contingent consideration | |||||
Principle amount of senior notes | $ 350,000,000 | ||||
Interest rate (as a percent) | 7.25% | ||||
Long-term debt | $ 350,000,000 | ||||
Credit Agreement | Revolving Credit Facility | |||||
Business acquisition, contingent consideration | |||||
Revolving credit facility borrowing capacity | $ 750,000,000 | ||||
Percent of equity interests in first-tier foreign subsidiaries pledged | 65.00% | ||||
Subsequent Events | EESLP | |||||
Business acquisition, contingent consideration | |||||
Contingent liability, base maximum threshold | $ 125,800,000 | ||||
Contingent liability, maximum threshold | 150,000,000 | ||||
Contingent liability, payment upon qualified capital raise | 25,000,000 | ||||
Subsequent Events | Credit Agreement | |||||
Business acquisition, contingent consideration | |||||
Revolving credit facility borrowing capacity | $ 925,000,000 | ||||
Subsequent Events | Credit Agreement | Revolving Credit Facility | |||||
Business acquisition, contingent consideration | |||||
Revolving credit facility borrowing capacity | 680,000,000 | ||||
Subsequent Events | Credit Agreement | Term Loan Facility | |||||
Business acquisition, contingent consideration | |||||
Revolving credit facility borrowing capacity | $ 245,000,000 | ||||
Subsequent Events | Credit Agreement | EESLP | Revolving Credit Facility | |||||
Business acquisition, contingent consideration | |||||
Outstanding borrowings | 300,000,000 | ||||
Subsequent Events | Forecast | EESLP and Exterran Coporation | |||||
Business acquisition, contingent consideration | |||||
Proceeds from issuance of debt or equity | $ 250,000,000 |
Reportable Segments - Revenue a
Reportable Segments - Revenue and Gross Margin by Reportable Segment (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($)segment | Sep. 30, 2014USD ($) | |
Reportable segments | ||||
Number of reportable segments | segment | 3 | |||
Revenue and other financial information by reportable segment | ||||
Revenue | $ 437,189 | $ 537,759 | $ 1,451,880 | $ 1,561,585 |
Gross margin | 117,191 | 152,056 | 384,410 | 439,757 |
Contract operations | ||||
Revenue and other financial information by reportable segment | ||||
Revenue | 114,104 | 124,355 | 350,045 | 369,787 |
Aftermarket Services | ||||
Revenue and other financial information by reportable segment | ||||
Revenue | 25,272 | 39,552 | 95,547 | 117,531 |
Archrock | Product sales | ||||
Revenue and other financial information by reportable segment | ||||
Revenue | 36,551 | 61,380 | $ 146,263 | 152,619 |
Archrock | Revenue | Customer Concentration Risk | ||||
Reportable segments | ||||
Concentration risk, percentage | 10.00% | |||
Operating Segments [Member] | Contract operations | ||||
Revenue and other financial information by reportable segment | ||||
Revenue | 114,104 | 124,355 | $ 350,045 | 369,787 |
Gross margin | 72,990 | 76,372 | 219,847 | 234,270 |
Operating Segments [Member] | Aftermarket Services | ||||
Revenue and other financial information by reportable segment | ||||
Revenue | 25,272 | 39,552 | 95,547 | 117,531 |
Gross margin | 6,936 | 9,391 | 27,727 | 30,173 |
Operating Segments [Member] | Product sales | ||||
Revenue and other financial information by reportable segment | ||||
Revenue | 297,813 | 373,852 | 1,006,288 | 1,074,267 |
Gross margin | $ 37,265 | $ 66,293 | $ 136,836 | $ 175,314 |
Reportable Segments - Reconcili
Reportable Segments - Reconciliation of Net Income to Gross Margin (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Segment Reporting [Abstract] | ||||
Net income | $ 12,283 | $ 36,891 | $ 58,239 | $ 105,420 |
Selling, general and administrative | 55,018 | 65,925 | 169,348 | 200,616 |
Depreciation and amortization | 36,837 | 44,155 | 112,418 | 139,312 |
Long-lived asset impairment | 3,775 | 1,044 | 14,264 | 1,044 |
Restructuring and other charges | 7,150 | 0 | 17,697 | 0 |
Interest expense | 581 | 182 | 1,407 | 1,030 |
Equity in income of non-consolidated affiliates | (5,084) | (4,951) | (15,152) | (14,553) |
Other (income) expense, net | 27,974 | 6,414 | 39,852 | 1,448 |
Provision for (benefit from) income taxes | (2,587) | 20,731 | 24,215 | 60,372 |
Income from discontinued operations, net of tax | (18,756) | (18,335) | (37,878) | (54,932) |
Gross margin | $ 117,191 | $ 152,056 | $ 384,410 | $ 439,757 |
Subsequent Events (Details)
Subsequent Events (Details) | Nov. 03, 2015USD ($) | Oct. 31, 2015USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Oct. 27, 2015 | Oct. 05, 2015USD ($) | Jul. 10, 2015USD ($) |
Credit Agreement | Revolving Credit Facility | |||||||||
Subsequent Event | |||||||||
Revolving credit facility borrowing capacity | $ 750,000,000 | ||||||||
Venezuela | |||||||||
Subsequent Event | |||||||||
Installment payments, including an annual charge, received from sale of expropriated assets | $ 18,900,000 | $ 18,200,000 | $ 37,600,000 | $ 54,100,000 | |||||
Subsequent Events | Credit Agreement | |||||||||
Subsequent Event | |||||||||
Revolving credit facility borrowing capacity | $ 925,000,000 | ||||||||
Subsequent Events | Credit Agreement | Revolving Credit Facility | |||||||||
Subsequent Event | |||||||||
Revolving credit facility borrowing capacity | 680,000,000 | ||||||||
Subsequent Events | Credit Agreement | Term Loan Facility | |||||||||
Subsequent Event | |||||||||
Revolving credit facility borrowing capacity | $ 245,000,000 | ||||||||
Subsequent Events | Archrock | |||||||||
Subsequent Event | |||||||||
Number of shares of Exterran Corporation common stock received per share of Archrock common stock held | 0.5 | ||||||||
Subsequent Events | EESLP | Archrock | |||||||||
Subsequent Event | |||||||||
Funds transferred for spin-off | $ 532,600,000 | ||||||||
Subsequent Events | EESLP | Credit Agreement | Revolving Credit Facility | |||||||||
Subsequent Event | |||||||||
Outstanding borrowings | 300,000,000 | ||||||||
Subsequent Events | EESLP | Credit Agreement | Term Loan Facility | |||||||||
Subsequent Event | |||||||||
Term loan outstanding | $ 245,000,000 | ||||||||
Subsequent Events | Venezuela | |||||||||
Subsequent Event | |||||||||
Installment payments, including an annual charge, received from sale of expropriated assets | $ 19,100,000 |