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SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION

9 Months Ended

Sep. 30, 2012

SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION

SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION

18. SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION

Exterran Energy Corp., our 100% owned subsidiary, was the original issuer of the 4.75% Notes, which Exterran Holdings, Inc. (“Parent”) had agreed to fully and unconditionally guarantee. In the second quarter of 2012, in connection with an organizational restructuring of certain of our subsidiaries, Exterran Energy Corp. distributed and assigned substantially all its assets and liabilities, including its obligations under the 4.75% Notes, to Parent. As a result, Parent became the direct obligor under the 4.75% Notes; therefore, subsidiary issuer financial information is no longer provided in this footnote.

Parent is the issuer of the 7.25% Notes. Exterran Energy Solutions, L.P., EES Leasing LLC, EXH GP LP LLC and EXH MLP LP LLC (each a 100% owned subsidiary; together, the “Guarantor Subsidiaries”), have agreed to fully and unconditionally guarantee Parent’s obligations relating to the 7.25% Notes. As a result of these guarantees, we are presenting the following condensed consolidating financial information pursuant to Rule 3-10 of Regulation S-X. These schedules are presented using the equity method of accounting for all periods presented. Under this method, investments in subsidiaries are recorded at cost and adjusted for our share in the subsidiaries’ cumulative results of operations, capital contributions and distributions and other changes in equity. Elimination entries relate primarily to the elimination of investments in subsidiaries and associated intercompany balances and transactions. The Other Subsidiaries column includes financial information for those subsidiaries that do not guarantee the 7.25% Notes.

Condensed Consolidating Balance Sheet

September 30, 2012

(In thousands)

	Parent		Guarantor Subsidiaries		Other Subsidiaries		Eliminations			Consolidation
ASSETS

Current assets	$	120	$	738,684	$	491,541	$	1,161		$	1,231,506
Current assets associated with discontinued operations	—		—		31,243		—			31,243
Total current assets	120		738,684		522,784		1,161			1,262,749
Property, plant and equipment, net	—		1,314,284		1,536,831		—			2,851,115
Investments in affiliates	1,625,498		1,368,509		—		(2,994,007		)	—
Intangible and other assets, net	35,022		40,358		152,117		(24,017		)	203,480
Intercompany receivables	871,086		86,892		542,761		(1,500,739		)	—
Long-term assets associated with discontinued operations	—		—		9,938		—			9,938
Total long-term assets	2,531,606		2,810,043		2,241,647		(4,518,763		)	3,064,533
Total assets	$	2,531,726	$	3,548,727	$	2,764,431	$	(4,517,602	)	$	4,327,282

LIABILITIES AND EQUITY

Current liabilities	$	14,293	$	436,203	$	251,369	$	(9	)	$	701,856
Current liabilities associated with discontinued operations	—		—		14,216		—			14,216
Total current liabilities	14,293		436,203		265,585		(9		)	716,072
Long-term debt	1,041,119		—		664,519		—			1,705,638
Intercompany payables	—		1,413,847		86,892		(1,500,739		)	—
Other long-term liabilities	—		73,179		149,043		(22,847		)	199,375
Long-term liabilities associated with discontinued operations	—		—		658		—			658
Total liabilities	1,055,412		1,923,229		1,166,697		(1,523,595		)	2,621,743
Total equity	1,476,314		1,625,498		1,597,734		(2,994,007		)	1,705,539
Total liabilities and equity	$	2,531,726	$	3,548,727	$	2,764,431	$	(4,517,602	)	$	4,327,282

Condensed Consolidating Balance Sheet

December 31, 2011

(In thousands)

	Parent		Guarantor Subsidiaries		Other Subsidiaries		Eliminations			Consolidation
ASSETS

Current assets	$	94	$	562,964	$	522,193	$	12		$	1,085,263
Current assets associated with discontinued operations	—		—		38,664		—			38,664
Total current assets	94		562,964		560,857		12			1,123,927
Property, plant and equipment, net	—		1,504,399		1,430,265		—			2,934,664
Investments in affiliates	1,531,223		1,456,782		—		(2,988,005		)	—
Intangible and other assets, net	57,556		78,835		125,248		(38,788		)	222,851
Intercompany receivables	1,092,298		96,378		637,165		(1,825,841		)	—
Long-term assets associated with discontinued operations	—		—		79,220		—			79,220
Total long-term assets	2,681,077		3,136,394		2,271,898		(4,852,634		)	3,236,735
Total assets	$	2,681,171	$	3,699,358	$	2,832,755	$	(4,852,622	)	$	4,360,662

LIABILITIES AND EQUITY

Current liabilities	$	14,268	$	352,981	$	299,408	$	(12,918	)	$	653,739
Current liabilities associated with discontinued operations	—		—		16,142		—			16,142
Total current liabilities	14,268		352,981		315,550		(12,918		)	669,881
Long-term debt	1,227,399		—		545,640		—			1,773,039
Intercompany payables	—		1,705,911		119,930		(1,825,841		)	—
Other long-term liabilities	2,268		109,243		137,359		(25,858		)	223,012
Long-term liabilities associated with discontinued operations	—		—		14,688		—			14,688
Total liabilities	1,243,935		2,168,135		1,133,167		(1,864,617		)	2,680,620
Total equity	1,437,236		1,531,223		1,699,588		(2,988,005		)	1,680,042
Total liabilities and equity	$	2,681,171	$	3,699,358	$	2,832,755	$	(4,852,622	)	$	4,360,662

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)

Three Months Ended September 30, 2012

(In thousands)

	Parent			Guarantor Subsidiaries			Other Subsidiaries			Eliminations			Consolidation
Revenues	$	—		$	463,900		$	290,123		$	(35,319	)	$	718,704
Costs of sales (excluding depreciation and amortization expense)	—			366,858			176,485			(35,319		)	508,024
Selling, general and administrative	299			40,899			44,338			—			85,536
Depreciation and amortization	—			32,306			52,942			—			85,248
Long-lived asset impairment	—			—			3,204			—			3,204
Restructuring charges	—			527			988			—			1,515
Interest expense	23,269			2,089			6,365			—			31,723
Other (income) expense:
Intercompany charges, net	(13,136		)	9,290			3,846			—			—
Equity in income of affiliates	(119,600		)	(111,038		)	(4,793		)	230,638			(4,793		)
Other, net	10			(2,431		)	971			—			(1,450		)
Income before income taxes	109,158			125,400			5,777			(230,638		)	9,697
Provision for (benefit from) income taxes	(4,208		)	5,800			(325		)	—			1,267
Income from continuing operations	113,366			119,600			6,102			(230,638		)	8,430
Income from discontinued operations, net of tax	—			—			110,916			—			110,916
Net Income	113,366			119,600			117,018			(230,638		)	119,346
Less: Net income attributable to the noncontrolling interest	—			—			(5,980		)	—			(5,980		)
Net income attributable to Exterran stockholders	113,366			119,600			111,038			(230,638		)	113,366
Other comprehensive income attributable to Exterran stockholders	8,257			6,396			3,942			(10,338		)	8,257
Comprehensive income attributable to Exterran stockholders	$	121,623		$	125,996		$	114,980		$	(240,976	)	$	121,623

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)

Three Months Ended September 30, 2011

(In thousands)

	Parent			Guarantor Subsidiaries			Other Subsidiaries			Eliminations			Consolidation
Revenues	$	—		$	374,199		$	342,066		$	(26,445	)	$	689,820
Costs of sales (excluding depreciation and amortization expense)	—			299,855			229,757			(26,445		)	503,167
Selling, general and administrative	185			40,964			48,108			—			89,257
Depreciation and amortization	—			35,234			53,528			—			88,762
Long-lived assets impairment	—			1,522			301			—			1,823
Restructuring charges	—			—			2,941			—			2,941
Goodwill impairment	—			146,876			49,266			—			196,142
Interest expense	28,602			678			9,392			—			38,672
Other (income) expense:
Intercompany charges, net	(17,238		)	17,238			—			—			—
Equity in loss of affiliates	208,369			59,127			262			(267,496		)	262
Other, net	10			480			12,255			—			12,745
Loss before income taxes	(219,928		)	(227,775		)	(63,744		)	267,496			(243,951		)
Benefit from income taxes	(3,954		)	(19,406		)	(9,280		)	—			(32,640		)
Loss from continuing operations	(215,974		)	(208,369		)	(54,464		)	267,496			(211,311		)
Loss from discontinued operations, net of tax	—			—			(3,236		)	—			(3,236		)
Net loss	(215,974		)	(208,369		)	(57,700		)	267,496			(214,547		)
Less: Net income attributable to the noncontrolling interest	—			—			(1,427		)	—			(1,427		)
Net loss attributable to Exterran stockholders	(215,974		)	(208,369		)	(59,127		)	267,496			(215,974		)
Other comprehensive loss attributable to Exterran stockholders	(12,101		)	(17,868		)	(20,560		)	38,428			(12,101		)
Comprehensive loss attributable to Exterran stockholders	$	(228,075	)	$	(226,237	)	$	(79,687	)	$	305,924		$	(228,075	)

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)

Nine Months Ended September 30, 2012

(In thousands)

	Parent			Guarantor Subsidiaries			Other Subsidiaries			Eliminations			Consolidation
Revenues	$	—		$	1,205,153		$	894,737		$	(135,210	)	$	1,964,680
Costs of sales (excluding depreciation and amortization expense)	—			939,077			566,016			(135,210		)	1,369,883
Selling, general and administrative	640			135,434			138,435			—			274,509
Depreciation and amortization	—			102,847			156,421			—			259,268
Long-lived asset impairment	—			100,542			35,327			—			135,869
Restructuring charges	—			3,475			2,353			—			5,828
Interest expense	78,506			8,885			19,291			—			106,682
Other (income) expense:
Intercompany charges, net	(47,006		)	40,241			6,765			—			—
Equity in (income) loss of affiliates	13,303			(63,382		)	(46,860		)	50,079			(46,860		)
Other, net	30			(6,427		)	7,604			—			1,207
Income (loss) before income taxes	(45,473		)	(55,539		)	9,385			(50,079		)	(141,706		)
Provision for (benefit from) income taxes	(11,726		)	(42,236		)	19,384			—			(34,578		)
Loss from continuing operations	(33,747		)	(13,303		)	(9,999		)	(50,079		)	(107,128		)
Income from discontinued operations, net of tax	—			—			66,863			—			66,863
Net income (loss)	(33,747		)	(13,303		)	56,864			(50,079		)	(40,265		)
Less: Net loss attributable to the noncontrolling interest	—			—			6,518			—			6,518
Net income (loss) attributable to Exterran stockholders	(33,747		)	(13,303		)	63,382			(50,079		)	(33,747		)
Other comprehensive income attributable to Exterran stockholders	14,526			10,449			782			(11,231		)	14,526
Comprehensive income (loss) attributable to Exterran stockholders	$	(19,221	)	$	(2,854	)	$	64,164		$	(61,310	)	$	(19,221	)

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)

Nine Months Ended September 30, 2011

(In thousands)

	Parent			Guarantor Subsidiaries			Other Subsidiaries			Eliminations			Consolidation
Revenues	$	—		$	1,014,566		$	1,152,973		$	(226,723	)	$	1,940,816
Costs of sales (excluding depreciation and amortization expense)	—			806,760			817,008			(226,723		)	1,397,045
Selling, general and administrative	582			129,084			139,466			—			269,132
Depreciation and amortization	—			112,929			154,444			—			267,373
Long-lived asset impairment	—			3,265			621			—			3,886
Restructuring charges	—			—			2,941			—			2,941
Goodwill impairment	—			146,876			49,266			—			196,142
Interest expense	78,504			136			31,788			—			110,428
Other (income) expense:
Intercompany charges, net	(49,744		)	49,744			—			—			—
Equity in loss of affiliates	254,928			62,788			262			(317,716		)	262
Other, net	30			(4,946		)	14,731			—			9,815
Loss before income taxes	(284,300		)	(292,070		)	(57,554		)	317,716			(316,208		)
Benefit from income taxes	(10,270		)	(37,142		)	(2,808		)	—			(50,220		)
Loss from continuing operations	(274,030		)	(254,928		)	(54,746		)	317,716			(265,988		)
Loss from discontinued operations, net of tax	—			—			(9,247		)	—			(9,247		)
Net loss	(274,030		)	(254,928		)	(63,993		)	317,716			(275,235		)
Less: Net loss attributable to the noncontrolling interest	—			—			1,205			—			1,205
Net loss attributable to Exterran stockholders	(274,030		)	(254,928		)	(62,788		)	317,716			(274,030		)
Other comprehensive income attributable to Exterran stockholders	16,570			10,449			1,983			(12,432		)	16,570
Comprehensive loss attributable to Exterran stockholders	$	(257,460	)	$	(244,479	)	$	(60,805	)	$	305,284		$	(257,460	)

Condensed Consolidating Statement of Cash Flows

Nine Months Ended September 30, 2012

(In thousands)

	Parent			Guarantor Subsidiaries			Other Subsidiaries			Eliminations			Consolidation
Cash flows from operating activities:
Net cash provided by continuing operations	$	2,740		$	21,848		$	117,403		$	—		$	141,991
Net cash provided by discontinued operations	—			—			2,392			—			2,392
Net cash provided by operating activities	2,740			21,848			119,795			—			144,383
Cash flows from investing activities:
Capital expenditures	—			(187,882		)	(140,843		)	—			(328,725		)
Contract operations acquisition	—			77,415			(77,415		)	—			—
Proceeds from sale of property, plant and equipment	—			8,986			19,010			—			27,996
Capital distributions received from consolidated subsidiaries	—			22,847			—			(22,847		)	—
Increase in restricted cash	—			—			(163		)	—			(163		)
Return of investments in non-consolidated affiliates	—			—			47,084			—			47,084
Cash invested in non-consolidated affiliates	—			—			(224		)	—			(224		)
Investment in consolidated subsidiaries	—			(23,483		)	—			23,483			—
Net cash used in continuing operations	—			(102,117		)	(152,551		)	636			(254,032		)
Net cash provided by discontinued operations	—			—			121,041			—			121,041
Net cash used in investing activities	—			(102,117		)	(31,510		)	636			(132,991		)
Cash flows from financing activities:
Proceeds from borrowings of long-term debt	886,000			—			662,000			—			1,548,000
Repayments of long-term debt	(982,150		)	—			(648,471		)	—			(1,630,621		)
Payments for debt issuance costs	—			—			(549		)	—			(549		)
Net proceeds from the sale of Partnership units	—			—			114,530			—			114,530
Proceeds from stock options exercised	119			—			—			—			119
Proceeds from stock issued pursuant to our employee stock purchase plan	1,280			—			—			—			1,280
Purchases of treasury stock	(1,892		)	—			—			—			(1,892		)
Stock-based compensation excess tax benefit	210			—			—			—			210
Distributions to noncontrolling partners in the Partnership	—			—			(64,822		)	22,847			(41,975		)
Net proceeds from sale of general partner units	—			—			2,426			(2,426		)	—
Capital contributions received from parent	—			—			21,057			(21,057		)	—
Borrowings (repayments) between consolidated subsidiaries, net	93,705			78,120			(171,825		)	—			—
Net cash provided by (using in) financing activities	(2,728		)	78,120			(85,654		)	(636		)	(10,898		)
Effect of exchange rate changes on cash and cash equivalents	—			—			(326		)	—			(326		)
Net increase (decrease) in cash and cash equivalents	12			(2,149		)	2,305			—			168
Cash and cash equivalents at beginning of year	93			2,810			19,000			—			21,903
Cash and cash equivalents at end of year	$	105		$	661		$	21,305		$	—		$	22,071

Condensed Consolidating Statement of Cash Flows

Nine Months Ended September 30, 2011

(In thousands)

	Parent			Guarantor Subsidiaries			Other Subsidiaries			Eliminations			Consolidation
Cash flows from operating activities:
Net cash provided by continuing operations	$	733		$	34,416		$	32,378		$	—		$	67,527
Net cash provided by discontinued operations	—			—			6,772			—			6,772
Net cash provided by operating activities	733			34,416			39,150			—			74,299
Cash flows from investing activities:
Capital expenditures	—			(103,329		)	(67,962		)	—			(171,291		)
Contract operations acquisition	—			62,217			(62,217		)	—			—
Proceeds from sale of property, plant and equipment	—			10,736			26,350			—			37,086
Capital distributions received from consolidated subsidiaries	—			23,516			—			(23,516		)	—
Decrease in restricted cash	—			—			819			—			819
Investment in consolidated subsidiaries	—			(28,640		)	—			28,640			—
Cash invested in non-consolidated affiliates	—			—			(262		)	—			(262		)
Return on investment in consolidated subsidiaries	87,419			—			87,419			(174,838		)	—
Net cash provided by (used in) continuing operations	87,419			(35,500		)	(15,853		)	(169,714		)	(133,648		)
Net cash used in discontinued operations	—			—			(5,437		)	—			(5,437		)
Net cash provided by (used in) investing activities	87,419			(35,500		)	(21,290		)	(169,714		)	(139,085		)
Cash flows from financing activities:
Proceeds from borrowings of long-term debt	1,096,240			—			506,627			—			1,602,867
Repayments of long-term debt	(1,227,644		)	—			(576,934		)	—			(1,804,578		)
Payments for debt issuance costs	(7,666		)	—			(980		)	—			(8,646		)
Net proceeds from the sale of Partnership units	—			162,236			127,672			—			289,908
Proceeds from stock options exercised	526			—			—			—			526
Proceeds from stock issued pursuant to our employee stock purchase plan	1,435			—			—			—			1,435
Purchases of treasury stock	(2,456		)	—			—			—			(2,456		)
Stock-based compensation excess tax benefit	836			—			—			—			836
Distributions to noncontrolling partners in the Partnership	—			—			(51,306		)	23,516			(27,790		)
Net proceeds from sale of general partner units	—			—			1,316			(1,316		)	—
Capital distributions to affiliates	—			(87,419		)	(87,419		)	174,838			—
Capital contributions received from parent	—			—			27,324			(27,324		)	—
Borrowings (repayments) between consolidated subsidiaries, net	50,428			(73,519		)	23,091			—			—
Net cash provided by (used in) financing activities	(88,301		)	1,298			(30,609		)	169,714			52,102
Effect of exchange rate changes on cash and cash equivalents	—			—			(2,458		)	—			(2,458		)
Net increase (decrease) in cash and cash equivalents	(149		)	214			(15,207		)	—			(15,142		)
Cash and cash equivalents at beginning of year	160			1,536			42,665			—			44,361
Cash and cash equivalents at end of year	$	11		$	1,750		$	27,458		$	—		$	29,219