XML 55 R18.htm IDEA: XBRL DOCUMENT

LONG-LIVED ASSET IMPAIRMENT

9 Months Ended

Sep. 30, 2012

11. LONG-LIVED ASSET IMPAIRMENT

During the nine months ended September 30, 2012, we evaluated the future deployment of our idle fleet and, as a result, determined to retire and either sell or re-utilize key components on approximately 920 idle compressor units, or approximately 316,000 horsepower, that we previously used to provide services in our North America contract operations segment. As a result of our decision to sell or re-utilize key components on these compressor units, we performed an impairment review and, based on that review, recorded a $96.5 million asset impairment to reduce the book value of each unit to its estimated fair value. The fair value of each unit was estimated based on the expected net sale proceeds compared to other fleet units we recently sold, as well as our review of other units recently offered for sale by third parties, or the estimated component value of the equipment we plan to use.

In the fourth quarter of 2010, we recorded an impairment of compressor units used in our contract operations segments that we retired from our active fleet and made available for sale. In connection with our review of our fleet in June 2012, we re-evaluated the key assumptions used in the fleet impairment recorded in the fourth quarter of 2010. Based upon that review, we reduced the expected proceeds from disposition for most of the remaining units and increased the weighted average disposal period for the units from the impairment in the fourth quarter of 2010. This resulted in an additional impairment of $34.8 million to reduce the book value of each unit to its estimated fair value.

During the three and nine months ended September 30, 2012, we evaluated other long-lived assets for impairment and recorded long-lived asset impairments of $3.2 million and $4.7 million, respectively, on these assets.

During the nine months ended September 30, 2011, we reviewed the idle compression assets used in our contract operations segments for units that were not of the type, configuration, make or model that are cost effective to maintain and operate. Our estimate of the fair value of the impaired long-lived assets was based on the expected net sale proceeds compared to other fleet units we recently sold, as well as our review of other units recently offered for sale by third parties, or the estimated component value of the equipment we plan to use. The net book value of these assets exceeded the fair value by $3.9 million for the nine months ended September 30, 2011 and was recorded as a long-lived asset impairment.