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Discontinued Operations | 12 Months Ended
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Dec. 31, 2013
Discontinued Operations |
Discontinued Operations | 2. Discontinued Operations In May 2009, the Venezuelan government enacted a law that reserves to the State of Venezuela certain assets and services related to hydrocarbon activities, which included substantially all of our assets and services in Venezuela. The law provides that the reserved activities are to be performed by the State, by the State-owned oil company, Petroleos de Venezuela S.A. (“PDVSA”), or its affiliates, or through mixed companies under the control of PDVSA or its affiliates. The law authorizes PDVSA or its affiliates to take possession of the assets and take over control of those operations related to the reserved activities as a step prior to the commencement of an expropriation process, and permits the national executive of Venezuela to decree the total or partial expropriation of shares or assets of companies performing those services. In June 2009, PDVSA commenced taking possession of our assets and operations in a number of our locations in Venezuela and by the end of the second quarter of 2009, PDVSA had assumed control over substantially all of our assets and operations in Venezuela. The expropriation of our business in Venezuela meets the criteria established for recognition as discontinued operations under GAAP. Therefore, our Venezuela contract operations business is reflected as discontinued operations in our consolidated financial statements. In March 2010, our Spanish subsidiary filed a request for the institution of an arbitration proceeding against Venezuela with the International Centre for Settlement of Investment Disputes (“ICSID”) related to the seized assets and investments under the agreement between Spain and Venezuela for the Reciprocal Promotion and Protection of Investments and under Venezuelan law. The arbitration hearing occurred in July 2012. 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 an initial payment of $176.7 million in cash at closing, of which we remitted $50.0 million to repay the amount we collected in January 2010 under the terms of an insurance policy we maintained for the risk of expropriation. We received installment payments, including an annual charge, totaling $69.3 million and $16.8 million during the years ended December 31, 2013 and 2012, respectively. The remaining principal amount due to us of approximately $182 million as of December 31, 2013, 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. 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. We therefore recorded a reduction in previously unrecognized tax benefits, resulting in a $15.5 million benefit reflected in income (loss) from discontinued operations, net of tax, in our consolidated statements of operations during the year ended December 31, 2012. 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 February 2013, the Venezuelan government announced a devaluation of the Venezuelan bolivar. This devaluation resulted in a translation gain of approximately $1.4 million on the remeasurement of our net liability position associated with our discontinued operations in Venezuela and is reflected in other (income) loss, net, in the table below during the year ended December 31, 2013. The functional currency of our Venezuelan subsidiary is the U.S. dollar, and we had more liabilities than assets denominated in bolivars in Venezuela at the time of the devaluation. The exchange rate used to remeasure our net liabilities changed from 4.3 bolivars per U.S. dollar at December 31, 2012 to 6.3 bolivars per U.S. dollar in February 2013. In June 2012, we committed to a plan to sell our Canadian Operations as part of our continued emphasis on simplification and focus on our core businesses. Our Canadian Operations are reflected as discontinued operations in our consolidated financial statements. These operations were previously included in our North American contract operations and aftermarket services business segments. In connection with the planned disposition, we recorded impairment charges totaling $6.4 million and $80.2 million during the years ended December 31, 2013 and 2012, respectively. The impairment charges are reflected in income (loss) from discontinued operations, net of tax, in our consolidated statements of operations. In July 2013, we completed the sale of our Canadian Operations to Ironline Compression Holdings LLC, an affiliate of Staple Street Capital L.L.C. We received the following consideration for the sale of the Canadian Operations (specified in either U.S. dollars (“$”) or Canadian dollars (“CDN$”)): (i) cash proceeds of $12.3 million, net of transaction expenses, (ii) a note receivable of CDN$8.1 million, (iii) contingent consideration of CDN$5.0 million based upon the Canadian Operations reaching a specified performance threshold prior to December 31, 2016 and (iv) a potential tax refund related to the Canadian Operations of CDN$1.6 million if such amounts are received by the Canadian Operations. In December 2013, we abandoned our contract water treatment business as part of our continued emphasis on simplification and focus on our core businesses. The abandonment of this business meets the criteria established for recognition as discontinued operations under GAAP. Therefore, our contract water treatment business is reflected as discontinued operations in our consolidated financial statements. This business was previously included in our North American contract operations business segment. During the years ended December 31, 2013 and 2012, we evaluated our contract water treatment business and recorded impairment charges of $2.4 million and $46.8 million, respectively. The impairment charges are reflected in income (loss) from discontinued operations, net of tax, in our consolidated statements of operations. The following table summarizes the operating results of discontinued operations (in thousands):
|  | Years Ended December 31, |
|  | 2013 |  | 2012 |  | 2011 |
|  | Venezuela |  | Canada |  | Contract Water Treatment Business |  | Total |  | Venezuela |  | Canada |  | Contract Water Treatment Business |  | Total |  | Venezuela |  | Canada |  | Contract Water Treatment Business |  | Total |
Revenue |  | $ | — |  | $ | 24,458 |  | $ | 3,425 |  | $ | 27,883 |  | $ | — |  | $ | 50,557 |  | $ | 9,356 |  | $ | 59,913 |  | $ | — |  | $ | 53,591 |  | $ | 17,254 |  | $ | 70,845 |
Expenses and selling, general and administrative |  | 883 |  | 21,810 |  | 3,352 |  | 26,045 |  | 1,275 |  | 50,521 |  | 10,088 |  | 61,884 |  | 1,302 |  | 59,421 |  | 14,104 |  | 74,827 |
Loss (recovery) attributable to expropriation and impairments |  | (66,344 | ) | 6,376 |  | 2,355 |  | (57,613 | ) | (136,947 | ) | 80,159 |  | 46,831 |  | (9,957 | ) | 3,092 |  | 944 |  | — |  | 4,036 |
Other (income) loss, net |  | (4,552 | ) | (30 | ) | 1,002 |  | (3,580 | ) | (219 | ) | (130 | ) | (76 | ) | (425 | ) | (150 | ) | 228 |  | (23 | ) | 55 |
Provision for (benefit from) income taxes |  | — |  | 166 |  | (1,149 | ) | (983 | ) | (13,509 | ) | 2,564 |  | (16,620 | ) | (27,565 | ) | 1,719 |  | (2,860 | ) | 1,112 |  | (29 | )
Income (loss) from discontinued operations, net of tax |  | $ | 70,013 |  | $ | (3,864 | ) | $ | (2,135 | ) | $ | 64,014 |  | $ | 149,400 |  | $ | (82,557 | ) | $ | (30,867 | ) | $ | 35,976 |  | $ | (5,963 | ) | $ | (4,142 | ) | $ | 2,061 |  | $ | (8,044 | )
The following table summarizes the balance sheet data for discontinued operations (in thousands):
|  | December 31, 2013 |  | December 31, 2012 |
|  | Venezuela |  | Contract Water Treatment Business |  | Total |  | Venezuela |  | Canada |  | Contract Water Treatment Business |  | Total |
Cash |  | $ | 74 |  | $ | — |  | $ | 74 |  | $ | 113 |  | $ | 791 |  | $ | — |  | $ | 904 |
Accounts receivable |  | 1 |  | 287 |  | 288 |  | 17 |  | 9,148 |  | 981 |  | 10,146 |
Inventory |  | — |  | 50 |  | 50 |  | — |  | 9,826 |  | 1,380 |  | 11,206 |
Other current assets |  | 16 |  | 14 |  | 30 |  | 41 |  | 1,810 |  | — |  | 1,851 |
Total current assets associated with discontinued operations |  | 91 |  | 351 |  | 442 |  | 171 |  | 21,575 |  | 2,361 |  | 24,107 |
Property, plant and equipment |  | — |  | 560 |  | 560 |  | — |  | — |  | 3,312 |  | 3,312 |
Deferred tax assets |  | — |  | 20,358 |  | 20,358 |  | — |  | — |  | 22,928 |  | 22,928 |
Total assets associated with discontinued operations |  | $ | 91 |  | $ | 21,269 |  | $ | 21,360 |  | $ | 171 |  | $ | 21,575 |  | $ | 28,601 |  | $ | 50,347 |
Accounts payable |  | $ | 366 |  | $ | 2 |  | $ | 368 |  | $ | 499 |  | $ | 3,345 |  | $ | 236 |  | $ | 4,080 |
Accrued liabilities |  | 1,998 |  | 867 |  | 2,865 |  | 4,335 |  | 2,724 |  | 335 |  | 7,394 |
Deferred revenue |  | — |  | — |  | — |  | — |  | 669 |  | 517 |  | 1,186 |
Total current liabilities associated with discontinued operations |  | 2,364 |  | 869 |  | 3,233 |  | 4,834 |  | 6,738 |  | 1,088 |  | 12,660 |
Other long-term liabilities |  | 447 |  | — |  | 447 |  | 455 |  | 589 |  | — |  | 1,044 |
Total liabilities associated with discontinued operations |  | $ | 2,811 |  | $ | 869 |  | $ | 3,680 |  | $ | 5,289 |  | $ | 7,327 |  | $ | 1,088 |  | $ | 13,704 |

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- Definition The entire disclosure for the facts and circumstances leading to the completed or expected disposal, manner and timing of disposal, the gain (loss) recognized in the income statement and the income statement caption that includes that gain (loss), amounts of revenues and pretax profit or loss reported in discontinued operations, the segment in which the disposal group was reported, and the classification (whether sold or classified as held for sale) and carrying value of the assets and liabilities comprising the disposal group. Includes all disposal groups, including those classified as components of the entity (discontinued operations). + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6391110&loc=d3e2941-110230 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1361-107760 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 45 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6892542&loc=d3e957-107759 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 45 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6892542&loc=d3e1012-107759 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1510-107760 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 45 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6892542&loc=d3e1020-107759 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -SubTopic 10 -Section 45 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=8077374&loc=d3e2443-110228 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1474-107760 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1436-107760 + Details
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