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

6 Months Ended

Jun. 30, 2014

Basis of Presentation and Summary of Significant Accounting Policies

Summary of net income attributable to Exterran common stockholders used in the calculation of basic and diluted income per common share

The following table summarizes net income attributable to Exterran common stockholders used in the calculation of basic and diluted income per common share (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Income (loss) from continuing operations attributable to Exterran stockholders	$	(5,392	)	$	10,441		$	8,477		$	27,130
Income (loss) from discontinued operations, net of tax	17,769			(1,106		)	36,496			32,410
Less: Net income attributable to participating securities	(122		)	(175		)	(803		)	(1,106		)
Net income attributable to Exterran common stockholders	$	12,255		$	9,160		$	44,170		$	58,434

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Weighted average common shares outstanding including participating securities	66,826		65,716		66,579		65,498
Less: Weighted average participating securities outstanding	(936	)	(1,232	)	(1,004	)	(1,217	)
Weighted average common shares outstanding — used in basic income (loss) per common share	65,890		64,484		65,575		64,281
Net dilutive potential common shares issuable:
On exercise of options and vesting of restricted stock units	**		530		556		523
On settlement of employee stock purchase plan shares	**		2		1		2
On exercise of warrants	**		**		2,640		**
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	65,890		65,016		68,772		64,806

** 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 common 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 common stockholders per common share as their inclusion would have been anti-dilutive (in thousands):

	Three Months Ended June 30,		Six Months Ended June 30,
	2014	2013	2014	2013
Net dilutive potential common shares issuable:
On exercise of options where exercise price is greater than average market value for the period	497	741	541	834
On exercise of options and vesting of restricted stock units	497	—	—	—
On settlement of employee stock purchase plan shares	—	—	—	—
On exercise of warrants	12,426	12,426	—	12,426
On conversion of 4.25% convertible senior notes due 2014	12,900	15,334	14,146	15,334
On conversion of 4.75% convertible senior notes due 2014	—	—	—	241
Net dilutive potential common shares issuable	26,320	28,501	14,687	28,835

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

The following table presents the changes in accumulated other comprehensive income (loss) by component, net of tax, and excluding noncontrolling interest, during the six months ended June 30, 2013 and 2014 (in thousands):

	Derivatives Cash Flow Hedges			Foreign Currency Translation Adjustment			Total
Accumulated other comprehensive income (loss), January 1, 2013	$	(2,984	)	$	26,893		$	23,909
Loss recognized in other comprehensive income (loss), net of tax	(26		)(1)	(6,145		)(3)	(6,171		)
Loss reclassified from accumulated other comprehensive income (loss), net of tax	1,146		(2)	2,375		(4)	3,521
Other comprehensive income (loss) attributable to Exterran stockholders	1,120			(3,770		)	(2,650		)
Accumulated other comprehensive income (loss), June 30, 2013	$	(1,864	)	$	23,123		$	21,259

Accumulated other comprehensive income (loss), January 1, 2014	$	(1,346	)	$	31,424		$	30,078
Loss recognized in other comprehensive income (loss), net of tax	(639		)(5)	(269		)(7)	(908		)
Loss reclassified from accumulated other comprehensive income (loss), net of tax	823		(6)	—			823
Other comprehensive income (loss) attributable to Exterran stockholders	184			(269		)	(85		)
Accumulated other comprehensive income (loss), June 30, 2014	$	(1,162	)	$	31,155		$	29,993

(1) During the three months ended June 30, 2013, we recognized a gain of $0.9 million and a tax provision of $0.3 million, in other comprehensive income (loss), net of tax, related to changes in the fair value of derivative financial instruments. During the six months ended June 30, 2013, we recognized a gain of $0.2 million and a tax provision of $0.2 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 June 30, 2013, we reclassified a $1.0 million loss to interest expense and a tax benefit of $0.4 million to provision for income taxes in our condensed consolidated statements of operations from accumulated other comprehensive income (loss). During the six months ended June 30, 2013, we reclassified a $1.7 million loss to interest expense and a tax benefit of $0.6 million to provision for income taxes in our condensed consolidated statements of operations from accumulated other comprehensive income (loss).

(3) During the three and six months ended June 30, 2013, we recognized a loss of $0.9 million and $6.1 million, respectively, in other comprehensive income (loss), net of tax, related to changes in foreign currency translation adjustment.

(4) During the three and six months ended June 30, 2013, we reclassified a loss of $2.4 million related to foreign currency translation adjustment to long-lived asset impairment in our condensed consolidated statements of operations. This amount represents cumulative foreign currency translation adjustment associated with our United Kingdom entity that previously had been recognized in accumulated other comprehensive income (loss). As discussed in Note 10, we sold the entity that owned our fabrication facility in the United Kingdom in July 2013 and, we recognized an impairment during the three months ended June 30, 2013 based on the net transaction value set forth in our agreement to sell this entity.

(5) During the three months ended June 30, 2014, we recognized a loss of $0.6 million and a tax benefit of $0.3 million, in other comprehensive income (loss), net of tax, related to changes in the fair value of derivative financial instruments. During the six months ended June 30, 2014, we recognized a loss of $1.0 million and a tax benefit of $0.4 million, in other comprehensive income (loss), net of tax, related to changes in the fair value of derivative financial instruments.

(6) During the three months ended June 30, 2014, we reclassified a $0.6 million loss to interest expense and a tax benefit of $0.2 million to provision for income taxes in our condensed consolidated statements of operations from accumulated other comprehensive income (loss). During the six months ended June 30, 2014, we reclassified a $1.2 million loss to interest expense and a tax benefit of $0.4 million to provision for income taxes in our condensed consolidated statements of operations from accumulated other comprehensive income (loss).

(7) During the three and six months ended June 30, 2014, we recognized a loss of $1.4 million and $0.3 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 June 30, 2014 and December 31, 2013 (in thousands):

	June 30, 2014				December 31, 2013
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Fixed rate debt	$	1,041,068	$	1,080,000	$	1,040,155	$	1,070,000
Floating rate debt	811,500		810,000		462,000		462,000
Total debt	$	1,852,568	$	1,890,000	$	1,502,155	$	1,532,000