Background and Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2013

Background and Significant Accounting Policies

Estimated useful lives of property, plant and equipment

Compression equipment, facilities and other fleet assets		3 to 30 years
Buildings		20 to 35 years
Transportation, shop equipment and other		3 to 12 years

Summary of net income (loss) attributable to Exterran stockholders

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

	Years Ended December 31,
	2013		2012			2011
Income (loss) from continuing operations attributable to Exterran stockholders	$	59,150	$	(75,462	)	$	(332,564	)
Income (loss) from discontinued operations, net of tax	64,014		35,976			(8,044		)
Net income (loss) attributable to Exterran stockholders	$	123,164	$	(39,486	)	$	(340,608	)

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):

	Years Ended December 31,
	2013	2012	2011
Weighted average common shares outstanding — used in basic income (loss) per common share	65,655	63,436	62,624
Net dilutive potential common shares issuable:
On exercise of options and vesting of restricted stock and restricted stock units	547	**	**
On settlement of employee stock purchase plan shares	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	66,204	63,436	62,624

** 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):

	Years Ended December 31,
	2013	2012	2011
Net dilutive potential common shares issuable:
On exercise of options where exercise price is greater than average market value for the period	734	1,858	2,533
On exercise of options and vesting of restricted stock and restricted stock units	—	1,466	675
On settlement of employee stock purchase plan shares	—	9	23
On exercise of warrants	12,426	12,426	12,426
On conversion of 4.25% convertible senior notes due 2014	15,334	15,334	15,334
On conversion of 4.75% convertible senior notes due 2014	119	3,114	3,114
Net dilutive potential common shares issuable	28,613	34,207	34,105

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	(476		)(1)	(2,960		)(3)	(3,436		)
Loss reclassified from accumulated other comprehensive income (loss), net of tax	2,114		(2)	7,491		(4)	9,605
Other comprehensive income attributable to Exterran stockholders	1,638			4,531			6,169
Accumulated other comprehensive income (loss), December 31, 2013	$	(1,346	)	$	31,424		$	30,078

(1) During the year ended December 31, 2013, we recognized a loss of $0.5 million and a tax benefit of $0.1 million, in other comprehensive income (loss), net of tax, related to changes in the fair value of derivative financial instruments.

(2) During the year ended December 31, 2013, we reclassified a $3.2 million loss and a tax benefit of $1.1 million, to interest expense and provision for (benefit from) income taxes, respectively, in our consolidated statements of operations from accumulated other comprehensive income (loss).

(3) During the year ended December 31, 2013, we recognized a loss of $3.0 million in other comprehensive income (loss), net of tax, related to changes in foreign currency translation adjustment.

(4) During the year ended December 31, 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 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 13, we sold the entity that owned our fabrication facility in the United Kingdom in July 2013 and, we recognized an impairment during the year ended December 31, 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	(879		)(1)	3,762		(3)	2,883
Loss reclassified from accumulated other comprehensive income (loss), net of tax	14,967		(2)	—			14,967
Other comprehensive income attributable to Exterran stockholders	14,088			3,762			17,850
Accumulated other comprehensive income (loss), December 31, 2012	$	(2,984	)	$	26,893		$	23,909

(1) During the year ended December 31, 2012, we recognized a loss of $1.5 million and a tax benefit 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 year ended December 31, 2012, we reclassified a $23.0 million loss and a tax benefit of $8.0 million, to interest expense and provision for (benefit from) income taxes, respectively, in our consolidated statements of operations from accumulated other comprehensive income (loss).

(3) During the year ended December 31, 2012, we recognized a gain of $3.8 million in other comprehensive income (loss), net of tax, related to changes in foreign currency translation adjustment.

	Derivatives -			Foreign Currency
	Cash Flow Hedges			Translation Adjustment			Total
Accumulated other comprehensive income (loss), December 31, 2010	$	(40,013	)	$	19,788		$	(20,225	)
Income (loss) recognized in other comprehensive income (loss), net of tax	(1,634		)(1)	3,343		(3)	1,709
Loss reclassified from accumulated other comprehensive income (loss), net of tax	24,575		(2)	—			24,575
Other comprehensive income attributable to Exterran stockholders	22,941			3,343			26,284
Accumulated other comprehensive income (loss), December 31, 2011	$	(17,072	)	$	23,131		$	6,059

(1) During the year ended December 31, 2011, we recognized a loss of $2.7 million and a tax benefit of $1.1 million, in other comprehensive income (loss), net of tax, related to changes in the fair value of derivative financial instruments.

(2) During the year ended December 31, 2011, we reclassified a $38.2 million loss and a tax benefit of $13.3 million, to interest expense and provision for (benefit from) income taxes, respectively, and a $0.4 million gain and a tax provision of $0.1 million, to fabrication revenue and provision for (benefit from) income taxes, respectively, in our consolidated statements of operations from accumulated other comprehensive income (loss).

(3) During the year ended December 31, 2011, we recognized a gain of $3.3 million 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 December 31, 2013 and 2012 (in thousands):

	December 31, 2013				December 31, 2012
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Fixed rate debt	$	1,040,155	$	1,070,000	$	814,423	$	857,000
Floating rate debt	462,000		462,000		750,500		761,000
Total debt	$	1,502,155	$	1,532,000	$	1,564,923	$	1,618,000