Basis of Presentation and Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2013

Basis of Presentation and Summary of Significant Accounting Policies

Summary of net income (loss) attributable to Exterran stockholders

The following table summarizes net income (loss) attributable to Exterran stockholders (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Income (loss) from continuing operations attributable to Exterran stockholders	$	23,466	$	2,450	$	51,331	$	(100,610	)
Income from discontinued operations, net of tax	17,511		110,916		49,186		66,863
Net income (loss) attributable to Exterran stockholders	$	40,977	$	113,366	$	100,517	$	(33,747	)

Schedule of potential shares of common stock that were included in computing diluted income (loss) attributable to Exterran stockholders per common share

The following table shows the potential shares of common stock that were included in computing diluted income (loss) attributable to Exterran stockholders per common share (in thousands):

	Three Months Ended September 30,		Nine Months Ended September 30,
	2013	2012	2013	2012
Weighted average common shares outstanding — used in basic income (loss) per common share	65,780	64,847	66,218	63,384
Net dilutive potential common shares issuable:
On exercise of options and vesting of restricted stock and restricted stock units	565	239	537	**
On settlement of employee stock purchase plan shares	2	8	2	**
On exercise of warrants	**	**	**	**
On conversion of 4.25% convertible senior notes due 2014	**	**	**	**
On conversion of 4.75% convertible senior notes due 2014	**	**	**	**
Weighted average common shares outstanding — used in diluted income (loss) per common share	66,347	65,094	66,757	63,384

** Excluded from diluted income (loss) per common share as their inclusion would have been anti-dilutive.

Schedule of potential shares of common stock issuable, excluded from computation of diluted income (loss), attributable to Exterran stockholders per common share

The following table shows the potential shares of common stock issuable that were excluded from computing diluted income (loss) attributable to Exterran stockholders per common share as their inclusion would have been anti-dilutive (in thousands):

	Three Months Ended September 30,		Nine Months Ended September 30,
	2013	2012	2013	2012
Net dilutive potential common shares issuable:
On exercise of options where exercise price is greater than average market value for the period	681	1,345	783	2,042
On exercise of options and vesting of restricted stock and restricted stock units	—	—	—	1,426
On settlement of employee stock purchase plan shares	—	—	—	11
On exercise of warrants	12,426	12,426	12,426	12,426
On conversion of 4.25% convertible senior notes due 2014	15,334	15,334	15,334	15,334
On conversion of 4.75% convertible senior notes due 2014	—	3,114	160	3,114
Net dilutive potential common shares issuable	28,441	32,219	28,703	34,353

Schedule of changes in accumulated other comprehensive income (loss) by component, net of tax, excluding noncontrolling interest

	Derivatives -			Foreign Currency
	Cash Flow Hedges			Translation Adjustment			Total
Accumulated other comprehensive income (loss), December 31, 2012	$	(2,984	)	$	26,893		$	23,909
Loss recognized in other comprehensive income (loss), net of tax	(633		)(1)	(3,640		)(3)	(4,273		)
Loss reclassified from accumulated other comprehensive income (loss), net of tax	1,643		(2)	7,491		(4)	9,134
Other comprehensive income attributable to Exterran stockholders	1,010			3,851			4,861
Accumulated other comprehensive income (loss), September 30, 2013	$	(1,974	)	$	30,744		$	28,770

(1) During each of the three and nine month periods ended September 30, 2013, we recognized a loss of $0.6 million in other comprehensive income (loss), net of tax, related to changes in the fair value of derivative financial instruments.

(2) During the three months ended September 30, 2013, we reclassified a $0.8 million loss, net of a tax benefit of $0.3 million, to interest expense and provision for (benefit from) income taxes, respectively, in our condensed consolidated statements of operations from accumulated other comprehensive income (loss). During the nine months ended September 30, 2013, we reclassified a $2.5 million loss, net of a tax benefit of $0.9 million, to interest expense and provision for (benefit from) income taxes, respectively, in our condensed consolidated statements of operations from accumulated other comprehensive income (loss).

(3) During the three and nine months ended September 30, 2013, we recognized a gain of $2.5 million and a loss of $3.6 million, respectively, in other comprehensive income (loss), net of tax, related to changes in foreign currency translation adjustment.

(4) During the three months ended September 30, 2013, we reclassified a loss of $5.1 million related to foreign currency translation adjustment to income from discontinued operations, net of tax, in our condensed consolidated statement of operations. During the nine months ended September 30, 2013, we reclassified losses of $5.1 million and $2.4 million related to foreign currency translation adjustments to income from discontinued operations, net of tax, and long-lived asset impairment, respectively, in our condensed consolidated statements of operations. These amounts represent cumulative foreign currency translation adjustments associated with our contract operations and aftermarket services businesses in Canada (“Canadian Operations”) and a United Kingdom entity that previously had been recognized in accumulated other comprehensive income (loss). See Note 2 for further discussion of the sale of our Canadian Operations. Additionally, as discussed in Note 9, we sold the entity that owned our fabrication facility in the United Kingdom in July 2013 and, we recognized an impairment during the nine months ended September 30, 2013 based on the net transaction value set forth in our agreement to sell this entity.

	Derivatives -			Foreign Currency
	Cash Flow Hedges			Translation Adjustment			Total
Accumulated other comprehensive income (loss), December 31, 2011	$	(17,072	)	$	23,131		$	6,059
Income (loss) recognized in other comprehensive income (loss), net of tax	(833		)(1)	921		(3)	88
Loss reclassified from accumulated other comprehensive income (loss), net of tax	14,438		(2)	—			14,438
Other comprehensive income attributable to Exterran stockholders	13,605			921			14,526
Accumulated other comprehensive income (loss), September 30, 2012	$	(3,467	)	$	24,052		$	20,585

(1) During the three and nine months ended September 30, 2012, we recognized a loss of $0.2 million and $0.8 million, respectively, in other comprehensive income (loss), net of tax, related to changes in the fair value of derivative financial instruments.

(2) During the three months ended September 30, 2012, we reclassified a $4.3 million loss, net of a tax benefit of $1.5 million, to interest expense and provision for (benefit from) income taxes, respectively, in our condensed consolidated statements of operations from accumulated other comprehensive income (loss). During the nine months ended September 30, 2012, we reclassified a $22.2 million loss, net of a tax benefit of $7.8 million, to interest expense and provision for (benefit from) income taxes, respectively, in our condensed consolidated statements of operations from accumulated other comprehensive income (loss).

(3) During the three and nine months ended September 30, 2012, we recognized a gain of $5.7 million and $0.9 million, respectively, in other comprehensive income (loss), net of tax, related to changes in foreign currency translation adjustment.

Summary of carrying amount and fair value of debt

The following table summarizes the carrying amount and fair value of our debt as of September 30, 2013 and December 31, 2012 (in thousands):

	September 30, 2013				December 31, 2012
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Fixed rate debt	$	1,032,808	$	1,064,000	$	814,423	$	857,000
Floating rate debt	531,500		531,000		750,500		761,000
Total debt	$	1,564,308	$	1,595,000	$	1,564,923	$	1,618,000