Organization and Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2015

Estimated useful lives of property, plant and equipment

Property, Plant and Equipment

Property, plant and equipment are recorded at cost and depreciated using the straight-line method over their estimated useful lives as follows:



Compression equipment, facilities and other fleet assets	3 to 30 years
Buildings	20 to 35 years
Transportation, shop equipment and other	3 to 10 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 Archrock common stockholders used in the calculation of basic and diluted income (loss) per common share (in thousands):



	Years Ended December 31,
	2015			2014			2013
Loss from continuing operations attributable to Archrock stockholders	$	(166,226	)	$	(44,829	)	$	(35,626	)
Income from discontinued operations, net of tax	60,408			142,995			158,790
Net income (loss) attributable to Archrock shareholders	(105,818		)	98,166			123,164
Less: Net income attributable to participating securities	(514		)	(495		)	—
Net income (loss) attributable to Archrock common stockholders	$	(106,332	)	$	97,671		$	123,164

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 Archrock common stockholders per common share (in thousands):



	Years Ended December 31,
	2015		2014		2013
Weighted average common shares outstanding including participating securities	69,389		67,175		65,655
Less: Weighted average participating securities outstanding	(956	)	(941	)	(1,201	)
Weighted average common shares outstanding — used in basic income (loss) per common share	68,433		66,234		64,454
Net dilutive potential common shares issuable:
On exercise of options and vesting of restricted stock units	*		*		*
On settlement of employee stock purchase plan shares	*		*		*
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	68,433		66,234		64,454


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



	Years Ended December 31,
	2015	2014	2013
Net dilutive potential common shares issuable:
On exercise of options where exercise price is greater than average market value for the period	572	515	734
On exercise of options and vesting of restricted stock units	214	490	547
On settlement of employee stock purchase plan shares	—	1	2
On exercise of warrants	—	10,666	12,426
On conversion of 4.25% convertible senior notes due 2014	—	7,073	15,334
On conversion of 4.75% convertible senior notes due 2014	—	—	119
Net dilutive potential common shares issuable	786	18,745	29,162

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, 2013, 2014 and 2015:



	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	(476		)	⁽¹⁾	(2,960		)		(3,436		)
Loss reclassified from accumulated other comprehensive income (loss), net of tax	2,114			⁽²⁾	7,491			⁽³⁾	9,605
Other comprehensive income attributable to Archrock 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		)	⁽⁴⁾	(11,871		)		(13,166		)
(Gain) loss reclassified from accumulated other comprehensive income (loss), net of tax	1,730			⁽⁵⁾	(2,777		)	⁽⁶⁾	(1,047		)
Other comprehensive income (loss) attributable to Archrock stockholders	435				(14,648		)		(14,213		)
Accumulated other comprehensive income (loss), December 31, 2014	$	(911	)		$	16,776			$	15,865
Loss recognized in other comprehensive income (loss), net of tax	(2,713		)	⁽⁷⁾	(3,558		)		(6,271		)
(Gain) loss reclassified from accumulated other comprehensive income (loss), net of tax	2,054			⁽⁸⁾	(13,218		)	⁽⁹⁾	(11,164		)
Other comprehensive loss attributable to Archrock stockholders	(659		)		(16,776		)		(17,435		)
Accumulated other comprehensive income (loss), December 31, 2015	$	(1,570	)		$	—			$	(1,570	)


⁽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 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).

⁽³⁾

During the year ended December 31, 2013, we reclassified losses of $7.5 million related to foreign currency translation adjustments to income from discontinued operations, net of tax in our consolidated statements of operations. These amounts represent cumulative foreign currency translation adjustments associated with Exterran Corporation’s contract operations and aftermarket services businesses in Canada and United Kingdom entity that were sold during the year ended December 31, 2013.


⁽⁴⁾	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.


⁽⁵⁾	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).

⁽⁶⁾

During the year ended December 31, 2014, we reclassified a gain of $2.8 million related to foreign currency translation adjustments to discontinued operations, net of tax, in our consolidated statements of operations. This amount represents cumulative foreign currency translation adjustments associated with Exterran Corporation’s 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).


⁽⁷⁾	During the year ended December 31, 2015, we recognized a loss of $4.1 million and a tax benefit of $1.4 million, in other comprehensive income (loss), net of tax, related to changes in the fair value of derivative financial instruments.


⁽⁸⁾	During the year ended December 31, 2015, 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).

⁽⁹⁾

During the year ended December 31, 2015, we reclassified a loss of $13.2 million related to foreign currency translation adjustments to additional paid in capital, in our consolidated balance sheet. This amount represents cumulative foreign currency translation adjustments associated with the businesses of Exterran Corporation which were spun-off in November 2015, that previously had been recognized in accumulated other comprehensive income (loss). See Note 2 (‘Discontinued Operations”) for further discussion of the Spin-off.

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, 2015 and 2014 (in thousands):



	December 31, 2015				December 31, 2014
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Fixed rate debt	$	691,465	$	524,000	$	1,040,295	$	960,000
Floating rate debt	897,000		897,000		985,500		986,000
Total debt	$	1,588,465	$	1,421,000	$	2,025,795	$	1,946,000