3. 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 Venezuelan 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 $72.6 million, $69.3 million and $16.8 million during the years ended December 31, 2014, 2013 and 2012, respectively. The remaining principal amount due to us of approximately $116 million as of December 31, 2014, 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 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 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 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 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,
	2014									2013												2012
	Venezuela			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
Expenses and selling, general and administrative	479			509			988			883			21,810			3,352			26,045			1,275			50,521			10,088			61,884
Loss (recovery) attributable to expropriation and impairments	(66,040		)	319			(65,721		)	(66,344		)	6,376			2,355			(57,613		)	(136,947		)	80,159			46,831			(9,957		)
Other (income) loss, net	(7,637		)	(27		)	(7,664		)	(4,552		)	(30		)	1,002			(3,580		)	(219		)	(130		)	(76		)	(425		)
Provision for (benefit from) income taxes	—			(277		)	(277		)	—			166			(1,149		)	(983		)	(13,509		)	2,564			(16,620		)	(27,565		)
Income (loss) from discontinued operations, net of tax	$	73,198		$	(524	)	$	72,674		$	70,013		$	(3,864	)	$	(2,135	)	$	64,014		$	149,400		$	(82,557	)	$	(30,867	)	$	35,976

The following table summarizes the balance sheet data for discontinued operations (in thousands):

	December 31, 2014						December 31, 2013
	Venezuela		Contract Water Treatment Business		Total		Venezuela		Contract Water Treatment Business		Total
Cash	$	431	$	—	$	431	$	74	$	—	$	74
Accounts receivable	2		69		71		1		287		288
Inventory	—		—		—		—		50		50
Other current assets	35		—		35		16		14		30
Total current assets associated with discontinued operations	468		69		537		91		351		442
Property, plant and equipment	—		—		—		—		560		560
Deferred tax assets	—		17,469		17,469		—		20,358		20,358
Total assets associated with discontinued operations	$	468	$	17,538	$	18,006	$	91	$	21,269	$	21,360

Accounts payable	$	214	$	1	$	215	$	366	$	2	$	368
Accrued liabilities	1,124		727		1,851		1,998		867		2,865
Total current liabilities associated with discontinued operations	1,338		728		2,066		2,364		869		3,233
Other long-term liabilities	317		—		317		447		—		447
Total liabilities associated with discontinued operations	$	1,655	728		2,383		$	2,811	$	869	$	3,680