Background and Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2014

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 common stockholders used in the calculation of basic and diluted income per common share

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

	Years Ended December 31,
	2014			2013			2012
Income (loss) from continuing operations attributable to Exterran stockholders	$	25,492		$	59,150		$	(75,462	)
Income from discontinued operations, net of tax	72,674			64,014			35,976
Less: Net income attributable to participating securities	(1,513		)	(2,253		)	—
Net income (loss) attributable to Exterran common stockholders	$	96,653		$	120,911		$	(39,486	)

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 common stockholders per common share (in thousands):

	Years Ended December 31,
	2014		2013		2012
Weighted average common shares outstanding including participating securities	67,175		65,655		64,737
Less: Weighted average participating securities outstanding	(941	)	(1,201	)	(1,301	)
Weighted average common shares outstanding — used in basic income (loss) per common share	66,234		64,454		63,436
Net dilutive potential common shares issuable:
On exercise of options and vesting of restricted stock units	490		547		*
On settlement of employee stock purchase plan shares	1		2		*
On exercise of warrants	2,365		*		*
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	69,090		65,003		63,436

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

**Not applicable as the debt instrument was not outstanding during the period.

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

	Years Ended December 31,
	2014	2013	2012
Net dilutive potential common shares issuable:
On exercise of options where exercise price is greater than average market value for the period	515	734	1,858
On exercise of options and vesting of restricted stock units	—	—	181
On settlement of employee stock purchase plan shares	—	—	9
On exercise of warrants	—	12,426	12,426
On conversion of 4.25% convertible senior notes due 2014	7,073	15,334	15,334
On conversion of 4.75% convertible senior notes due 2014	—	119	3,114
Net dilutive potential common shares issuable	7,588	28,613	32,922

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

The following tables present the changes in accumulated other comprehensive income (loss) by component, net of tax and excluding noncontrolling interest, during the years ended December 31, 2012, 2013 and 2014:

	Derivatives				Foreign Currency
	Cash Flow Hedges				Translation Adjustment				Total
Accumulated other comprehensive income (loss), January 1, 2012	$	(17,072	)		$	23,131			$	6,059
Income (loss) recognized in other comprehensive income (loss), net of tax	(879		)	(1)	3,762				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
Loss recognized in other comprehensive income (loss), net of tax	(476		)	(3)	(2,960		)		(3,436		)
Loss reclassified from accumulated other comprehensive income (loss), net of tax	2,114			(4)	7,491			(5)	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
Loss recognized in other comprehensive income (loss), net of tax	(1,295		)	(6)	(11,871		)		(13,166		)
(Gain) loss reclassified from accumulated other comprehensive income (loss), net of tax	1,730			(7)	(2,777		)	(8)	(1,047		)
Other comprehensive income (loss) attributable to Exterran stockholders	435				(14,648		)		(14,213		)
Accumulated other comprehensive income (loss), December 31, 2014	$	(911	)		$	16,776			$	15,865

(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 to interest expense and a tax benefit of $8.0 million to provision for (benefit from) income taxes 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 $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.

(4)

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

(5)

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 3 for further discussion of the sale of our Canadian Operations. Additionally, as discussed in Note 14, we sold the entity that owned our fabrication facility in the United Kingdom in July 2013 and, we recognized impairment during the year ended December 31, 2013 based on the net transaction value set forth in our agreement to sell this entity.

(6)

During the year ended December 31, 2014, we recognized a loss of $2.0 million and a tax benefit of $0.7 million, in other comprehensive income (loss), net of tax, related to changes in the fair value of derivative financial instruments.

(7)

During the year ended December 31, 2014, we reclassified a $2.6 million loss to interest expense and a tax benefit of $0.9 million to provision for (benefit from) income taxes in our consolidated statements of operations from accumulated other comprehensive income (loss).

(8)

During the year ended December 31, 2014, we reclassified a gain of $2.8 million related to foreign currency translation adjustments to other (income) expense, net, in our consolidated statements of operations. This amount represents cumulative foreign currency translation adjustments associated with our contract operations and aftermarket services businesses in Australia, which were sold in December 2014, that previously had been recognized in accumulated other comprehensive income (loss).

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, 2014 and 2013 (in thousands):

	December 31, 2014				December 31, 2013
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Fixed rate debt	$	1,041,402	$	960,000	$	1,040,155	$	1,070,000
Floating rate debt	985,500		986,000		462,000		462,000
Total debt	$	2,026,902	$	1,946,000	$	1,502,155	$	1,532,000