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Delaware
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47-3282259
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock, $0.01 par value
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New York Stock Exchange
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Large accelerated filer
o
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Accelerated filer
x
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Non-accelerated filer
o
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Smaller reporting company
o
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(Do not check if a smaller reporting company)
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m
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Page
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•
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conditions in the oil and natural gas industry, including a sustained imbalance in the level of supply or demand for oil or natural gas or a sustained low price of oil or natural gas, which could depress or reduce the demand or pricing for our natural gas compression and oil and natural gas production and processing equipment and services;
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reduced profit margins or the loss of market share resulting from competition or the introduction of competing technologies by other companies;
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•
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our reliance on Archrock, Inc. (named Exterran Holdings, Inc. prior to November 3, 2015) (“Archrock”) and its affiliates for recurring oil and gas product sales revenues and our ability to secure new oil and gas product sales customers;
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economic or political conditions in the countries in which we do business, including civil developments such as uprisings, riots, terrorism, kidnappings, violence associated with drug cartels, legislative changes and the expropriation, confiscation or nationalization of property without fair compensation;
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changes in currency exchange rates, including the risk of currency devaluations by foreign governments, and restrictions on currency repatriation;
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risks associated with our operations, such as equipment defects, malfunctions and natural disasters;
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the risk that counterparties will not perform their obligations under our financial instruments;
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the financial condition of our customers;
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the impact of exiting our Belleli EPC product sales business;
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our ability to timely and cost-effectively obtain components necessary to conduct our business;
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employment and workforce factors, including our ability to hire, train and retain key employees;
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our ability to implement our business and financial objectives, including:
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winning profitable new business;
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timely and cost-effective execution of projects;
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enhancing our asset utilization, particularly with respect to our fleet of compressors;
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integrating acquired businesses;
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generating sufficient cash; and
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accessing the financial markets at an acceptable cost;
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liability related to the use of our products and services;
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changes in governmental safety, health, environmental or other regulations, which could require us to make significant expenditures;
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our ability to successfully remediate each of the material weaknesses in our internal control environment as disclosed in this report within the time periods and in the manner currently anticipated;
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the effectiveness of our internal control environment, including the identification of additional control deficiencies;
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the results of governmental actions relating to current investigations;
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the results of shareholder actions, if any, relating to the restatement of our financial statements;
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the agreements related to the Spin-off (see “Spin-off” below under Part I, Item 1 “Business”) and the anticipated effects of restructuring our business; and
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our level of indebtedness and ability to fund our business.
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Global platform and expansive service and product offerings poised to capitalize on the global energy infrastructure build-out.
Despite the decline in oil and natural gas prices in recent years and its impact on demand for our products and services, we expect that global oil and natural gas infrastructure will continue to be built out and provide us with opportunities for growth, as we believe our global customer base will continue to invest in infrastructure projects based on longer-term fundamentals that are less tied to near-term commodity prices. We believe our size, geographic scope and broad customer base provide us with a unique advantage in meeting our customers’ needs, particularly with regard to large-scale project construction and development, and will allow us to capture future opportunities. We provide our customers with a broad variety of products and services in approximately
30
countries worldwide, including outsourced compression, production and processing services, as well as natural gas compression and oil and natural gas production and processing equipment and installation services. By offering a broad range of products and services that leverage our core strengths, we believe we provide unique integrated solutions that meet our customers’ needs. We believe the breadth and quality of our products and services, the depth of our customer relationships and our presence in many major oil and natural gas-producing regions place us in a position to capture additional business on a global basis.
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High-quality products and services.
We have built a network of high-quality energy infrastructure assets that are strategically deployed across our global platform. Through our history of operating a wide variety of products in many energy-producing markets around the world, we have developed the technical expertise and experience that we believe is required to understand the needs of our customers and to meet those needs through a range of products and services. These products and services include highly customized compression, production and processing solutions as well as standard products based on our expertise, in support of a range of projects, from those requiring quick completion to those that may take several years to fully develop. Additionally, our experience has enabled us to develop efficient systems and processes and a skilled workforce that allow us to provide high-quality services throughout international markets. We seek to continually improve our products and services to enable us to provide our customers with high-quality, comprehensive oil and natural gas infrastructure support worldwide.
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Complementary businesses enable us to offer customers integrated infrastructure solutions.
We aim to provide our customers with a single source to meet their energy infrastructure needs, and we believe we have the ability to serve our customers’ changing needs in a variety of ways. For customers that seek to limit capital spending on energy infrastructure projects, we offer our full operations services through our contract operations business. For customers that prefer to develop and acquire their own infrastructure assets, we are able to sell equipment and facilities for their operations and, following the sale of our equipment to them, we can also provide through our aftermarket services business operations, maintenance, overhaul and reconfiguration services. Furthermore, we combine our products into an integrated solution that we design, engineer, procure and, in some cases, construct on-site for sale to our customers. Because of the breadth of our products and our ability to deliver those products through our different delivery models, we believe we are able to provide the solution that is most suitable to our customers in the markets in which they operate. We believe this ability to provide our customers with a variety of products and services provides us with more business opportunities, as we are able to adjust the products and services we provide to reflect our customers’ changing needs.
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Cash flows from contract operations business supported by long-term contracts with diverse customer base.
We provide contract operations services to customers located in approximately
15
countries. Within our contract operations business, we seek to enter into long-term contracts with a diverse collection of customers, including large integrated oil and natural gas companies and national energy companies. These contracts generally involve initial terms ranging from three to five years, and in some cases, in excess of 10 years, and typically require our customers to pay our monthly service fee even during periods of limited or disrupted oil or natural gas flows. In addition, our large, international customer base provides a diversified revenue stream, which we believe reduces customer and geographic concentration risk. Furthermore, our customer base includes several companies that are among the largest and most well-known companies within their respective regions throughout our global platform.
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Experienced management team.
We have an experienced and skilled management team with a long track record of driving growth through organic expansion and selective acquisitions. The members of our management team have strong relationships in the oil and gas industry and have operated through numerous commodity price cycles throughout our areas of operations. Members of our management team have spent a significant portion of their respective careers at highly regarded energy and manufacturing companies.
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Well-balanced capital structure with sufficient liquidity.
We intend to maintain a capital structure with an appropriate amount of leverage and the financial flexibility to invest in our operations and pursue attractive growth opportunities that we believe will increase the overall earnings and cash flow generated by our business. At
December 31, 2016
, taking into account guarantees through letters of credit, we had undrawn capacity of
$504.9 million
under our revolving credit facility, of which
$226.9 million
was available for additional borrowings as a result of the covenant restriction on our Total Debt (as defined in the credit agreement) to EBITDA (as defined in the credit agreement) ratio. In addition, as of
December 31, 2016
, we had
$35.7 million
of cash and cash equivalents on hand.
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Strategically grow our business.
Our primary strategic focus involves the growth of our business through expanding our product and services offerings, growing our customer base and expanding relationships with existing customers by leveraging our portfolio of products and services. Additionally, our strategic focus includes targeting redevelopment opportunities in the U.S. energy market and expansions into new international markets benefiting from the global energy infrastructure build-out. We believe our diverse product and service portfolio allows us to readily respond to changes in industry and economic conditions. We believe our global footprint allows us to provide the prompt product availability our customers require, and we can construct projects in new locations as needed to meet customer demand. We have the ability to readily deploy our capital to construct new or supplemental projects that we build, own and operate on behalf of our customers through our contract operations business. In addition, we seek to provide our customers with integrated infrastructure solutions by combining product and service offerings across our businesses. We plan to supplement our organic growth with select acquisitions, partnerships and other commercial arrangements in key markets to further enhance our geographic reach, product offerings and other capabilities. We believe these arrangements will allow us to generate incremental revenues from existing and new customers and obtain greater market share.
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Expand customer base and deepen relationships with existing customers.
We believe the uniquely broad range of services we offer, the quality of our products and services and our diverse geographic footprint position us to attract new customers and cross-sell our products and services to existing customers. In addition, we have a long history and significant experience providing our products and services to our customers which, coupled with the technical expertise of our experienced engineering personnel, enables us to understand and meet our customers’ needs, particularly as those needs develop and change over time. We intend to continue to devote significant business development resources to market our products and services, leverage existing relationships and expedite our growth potential. We also seek to provide supplemental projects and services to our customers as their needs evolve over time.
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Enhance our safety performance.
We believe our safety performance and reputation help us to attract and retain customers and employees. We have adopted rigorous processes and procedures to facilitate our compliance with safety regulations and policies. We work diligently to meet or exceed applicable safety regulations, and intend to continue to focus on our safety monitoring function as our business grows and operating conditions change.
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Continue to optimize our global platform, products and services and enhance our profitability.
We regularly review and evaluate the quality of our operations, products and services. This process includes customer review programs to assess the quality of our performance. In addition, we intend to use our global platform to reach a wide variety of customers, which we believe can enable us to achieve cost savings in our operations. We believe our ongoing focus on improving the quality of our operations, products and services results in greater satisfaction among our customers, which we believe results in greater profitability and value for our shareholders.
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access to our specialized personnel and technical skills, including engineers and field service and maintenance employees, which we believe generally leads to improved production rates and increased throughput and higher revenues;
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the ability to increase their profitability by transporting or producing a higher volume of natural gas through decreased equipment downtime and reduced operating, maintenance and equipment costs by allowing us, as the service provider, to efficiently manage their operations; and
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the flexibility to deploy their capital on projects more directly related to their primary business by reducing their investment in compression, production and processing equipment and related maintenance capital requirements.
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our Code of Business Conduct;
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our Corporate Governance Principles; and
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the charters of our audit, compensation and nominating and corporate governance committees.
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difficulties in managing international operations, including our ability to timely and cost effectively execute projects;
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unexpected changes in regulatory requirements, laws or policies by foreign agencies or governments;
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work stoppages;
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training and retaining qualified personnel in international markets;
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the burden of complying with multiple and potentially conflicting laws and regulations;
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tariffs and other trade barriers;
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actions by governments or national oil companies that result in the nullification or renegotiation on less than favorable terms of existing contracts, or otherwise result in the deprivation of contractual rights, and other difficulties in enforcing contractual obligations;
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governmental actions that: result in restricting the movement of property or that impede our ability to import or export parts or equipment; require a certain percentage of equipment to contain local or domestic content; or require certain local or domestic ownership, control or employee ratios in order to do business in or obtain special incentives or treatment in certain jurisdictions;
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potentially longer receipt of payment cycles;
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changes in political and economic conditions in the countries in which we operate, including general political unrest, the nationalization of energy related assets, civil uprisings, riots, kidnappings, violence associated with drug cartels and terrorist acts;
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potentially adverse tax consequences or tax law changes;
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currency controls or restrictions on repatriation of earnings;
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expropriation, confiscation or nationalization of property without fair compensation;
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the risk that our international customers may have reduced access to credit because of higher interest rates, reduced bank lending or a deterioration in our customers’ or their lenders’ financial condition;
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complications associated with installing, operating and repairing equipment in remote locations;
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limitations on insurance coverage;
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inflation;
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the geographic, time zone, language and cultural differences among personnel in different areas of the world; and
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difficulties in establishing new international offices and the risks inherent in establishing new relationships in foreign countries.
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make it more difficult for us to satisfy our contractual obligations;
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increase our vulnerability to general adverse economic and industry conditions;
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limit our ability to fund future working capital, capital expenditures, acquisitions or other corporate requirements;
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increase our vulnerability to interest rate fluctuations because the interest payments on our debt are based upon variable interest rates and can adjust based upon our credit statistics;
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limit our flexibility in planning for, or reacting to, changes in our business and our industry;
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place us at a disadvantage compared to our competitors that have less debt or less restrictive covenants in such debt; and
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limit our ability to refinance our debt in the future or borrow additional funds.
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focusing on profitable growth in strategic markets and positioning us and our shareholders to benefit from the continued build-out of the global energy infrastructure and the redevelopment currently underway in North America;
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in our international services businesses, relatively stable cash flows due to our limited exposure to the production phase of oil and gas development, particularly when compared to drilling and completion related energy service and product providers;
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limited capital expenditures in our product sales business;
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financial flexibility to enable investment in value-creating contract operations projects; and
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expanding our potential product sales customer base to include companies in the U.S. contract compression business that have historically been Archrock’s competitors.
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the inability to meet the financial estimates of analysts who follow our common stock;
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strategic actions by us or our competitors;
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announcements by us or our competitors of significant contracts, acquisitions, joint marketing relationships, joint ventures or capital commitments;
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variations in our quarterly operating results and those of our competitors;
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general economic and stock market conditions;
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risks relating to our business and our industry, including those discussed above;
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changes in conditions or trends in our industry, markets or customers;
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cyber-attacks or terrorist acts;
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future sales of our common stock or other securities;
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material weaknesses in our internal control over financial reporting; and
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investor perceptions of the investment opportunity associated with our common stock relative to other investment alternatives.
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Location
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Status
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Square Feet
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Uses
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Houston, Texas
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Owned
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261,600
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Corporate office, oil and gas product sales
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Camacari, Brazil
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Owned
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86,112
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Contract operations and aftermarket services
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Neuquen, Argentina
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Owned
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43,233
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Contract operations and aftermarket services
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Reynosa, Mexico
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Owned
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28,912
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Contract operations and aftermarket services
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Santa Cruz, Bolivia
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Leased
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22,017
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Contract operations and aftermarket services
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Bangkok, Thailand
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Leased
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36,611
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Aftermarket services
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Port Harcourt, Nigeria
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Leased
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19,031
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Aftermarket services
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Houston, Texas
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Owned
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343,750
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Oil and gas product sales
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Columbus, Texas
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Owned
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219,552
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Oil and gas product sales
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Broken Arrow, Oklahoma
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Owned
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141,549
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Oil and gas product sales
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Singapore, Singapore
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Leased
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111,693
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Oil and gas product sales
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Hamriyah Free Zone, UAE
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Leased
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212,742
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Oil and gas product sales and Belleli EPC product sales
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Price Range
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||||||
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High
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Low
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||||
Year Ended December 31, 2015
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|
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||||
Fourth Quarter (beginning on November 4, 2015)
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$
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18.90
|
|
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$
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13.29
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Year Ended December 31, 2016
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|
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||||
First Quarter
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$
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16.99
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$
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12.07
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Second Quarter
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$
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17.13
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$
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10.83
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Third Quarter
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$
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15.90
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$
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11.87
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Fourth Quarter
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$
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24.84
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$
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14.51
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Period
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Total Number of
Shares Repurchased
(1)
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Average
Price Paid
Per Unit
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Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs
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Maximum Number of Shares
yet to be Purchased Under the
Publicly Announced Plans or
Programs
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|||
October 1, 2016 - October 31, 2016
|
|
—
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$
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—
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N/A
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N/A
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November 1, 2016 - November 30, 2016
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43,511
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14.78
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N/A
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N/A
|
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December 1, 2016 - December 31, 2016
|
|
160
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|
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23.90
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|
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N/A
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N/A
|
|
Total
|
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43,671
|
|
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$
|
14.81
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|
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N/A
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N/A
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(1)
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Represents shares withheld to satisfy employees’ tax withholding obligations in connection with vesting of restricted stock awards during the period.
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Years Ended December 31,
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||||||||||||||||||
(in thousands, except per share data)
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2016
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2015
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2014
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2013
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2012
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||||||||||
Statement of Operations Data:
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||||||||||
Revenues
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$
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1,029,253
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$
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1,790,485
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$
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2,101,663
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$
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2,324,537
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$
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1,987,392
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Cost of sales (excluding depreciation and amortization expense)
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722,728
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1,324,207
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1,543,877
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1,772,633
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1,502,310
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|||||
Selling, general and administrative
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165,985
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|
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220,396
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263,170
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259,801
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|
|
264,970
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|
|||||
Depreciation and amortization
|
137,974
|
|
|
154,801
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|
|
170,088
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|
|
136,607
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|
|
163,829
|
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|||||
Long-lived asset impairment
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15,146
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|
|
20,788
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|
|
3,851
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|
|
11,941
|
|
|
5,197
|
|
|||||
Restatement charges
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18,879
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|
|
—
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|
|
—
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|
|
—
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|
|
—
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|
|||||
Restructuring and other charges
|
27,457
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|
|
31,315
|
|
|
—
|
|
|
—
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|
|
3,892
|
|
|||||
Interest expense
|
34,181
|
|
|
7,272
|
|
|
1,878
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|
|
3,523
|
|
|
5,310
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|
|||||
Equity in income of non-consolidated affiliates
|
(10,403
|
)
|
|
(15,152
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)
|
|
(14,553
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)
|
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(19,000
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)
|
|
(51,483
|
)
|
|||||
Other (income) expense, net
|
(13,088
|
)
|
|
35,438
|
|
|
6,201
|
|
|
(3,385
|
)
|
|
7,541
|
|
|||||
Provision for income taxes
|
124,760
|
|
|
39,546
|
|
|
79,042
|
|
|
97,195
|
|
|
26,917
|
|
|||||
Income (loss) from continuing operations
|
(194,366
|
)
|
|
(28,126
|
)
|
|
48,109
|
|
|
65,222
|
|
|
58,909
|
|
|||||
Income (loss) from discontinued operations, net of tax
|
(33,571
|
)
|
|
54,774
|
|
|
67,183
|
|
|
58,495
|
|
|
59,914
|
|
|||||
Net income (loss)
|
(227,937
|
)
|
|
26,648
|
|
|
115,292
|
|
|
123,717
|
|
|
118,823
|
|
|||||
Income (loss) from continuing operations per common share (1):
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
$
|
(5.62
|
)
|
|
$
|
(0.82
|
)
|
|
$
|
1.40
|
|
|
$
|
1.90
|
|
|
$
|
1.72
|
|
Diluted
|
(5.62
|
)
|
|
(0.82
|
)
|
|
1.40
|
|
|
1.90
|
|
|
1.72
|
|
|||||
Weighted average common shares outstanding used in income (loss) from continuing operations per common share (1):
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
34,568
|
|
|
34,288
|
|
|
34,286
|
|
|
34,286
|
|
|
34,286
|
|
|||||
Diluted
|
34,568
|
|
|
34,288
|
|
|
34,286
|
|
|
34,286
|
|
|
34,286
|
|
|||||
Other Financial Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total gross margin (2)
|
$
|
306,525
|
|
|
$
|
466,278
|
|
|
$
|
557,786
|
|
|
$
|
551,904
|
|
|
$
|
485,082
|
|
EBITDA, as adjusted (2)
|
145,069
|
|
|
240,571
|
|
|
292,990
|
|
|
299,801
|
|
|
219,977
|
|
|||||
Capital expenditures:
|
|
|
|
|
|
|
|
|
|
||||||||||
Contract Operations Equipment:
|
|
|
|
|
|
|
|
|
|
||||||||||
Growth (3)
|
$
|
53,005
|
|
|
$
|
105,169
|
|
|
$
|
97,931
|
|
|
$
|
36,468
|
|
|
$
|
107,658
|
|
Maintenance (4)
|
14,440
|
|
|
27,282
|
|
|
24,377
|
|
|
21,591
|
|
|
22,530
|
|
|||||
Other
|
6,880
|
|
|
24,294
|
|
|
34,294
|
|
|
34,109
|
|
|
29,716
|
|
|||||
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
35,678
|
|
|
$
|
29,032
|
|
|
$
|
39,361
|
|
|
$
|
35,194
|
|
|
$
|
34,167
|
|
Working capital (5)
|
177,824
|
|
|
408,488
|
|
|
366,135
|
|
|
305,848
|
|
|
303,267
|
|
|||||
Property, plant and equipment, net
|
797,809
|
|
|
858,188
|
|
|
908,590
|
|
|
911,257
|
|
|
984,069
|
|
|||||
Total assets
|
1,374,778
|
|
|
1,788,396
|
|
|
1,999,303
|
|
|
1,973,622
|
|
|
2,105,744
|
|
|||||
Long-term debt (6)
|
348,970
|
|
|
525,593
|
|
|
1,107
|
|
|
1,539
|
|
|
—
|
|
|||||
Total stockholders’ equity (6)
|
556,771
|
|
|
805,936
|
|
|
1,364,335
|
|
|
1,321,160
|
|
|
1,380,975
|
|
|
(1)
|
For the periods prior to November 3, 2015, the average number of common shares outstanding used to calculate basic and diluted net income (loss) from continuing operations per common share was based on 34,286,267 shares of our common stock that were distributed by Archrock in the Spin-off on November 3, 2015.
|
(2)
|
Total gross margin and EBITDA, as adjusted, are non-GAAP financial measures. Total gross margin and EBITDA, as adjusted, are defined, reconciled to income (loss) before income taxes and net income (loss), respectively, and discussed further below under “Non-GAAP Financial Measures.”
|
(3)
|
Growth capital expenditures are made to expand or to replace partially or fully depreciated assets or to expand the operating capacity or revenue generating capabilities of existing or new assets, whether through construction, acquisition or modification. The majority of our growth capital expenditures are related to the acquisition cost of new compressor units and processing and treating equipment that we add to our contract operations fleet and installation costs on integrated projects. In addition, growth capital expenditures can include the upgrading of major components on an existing compressor unit where the current configuration of the compressor unit is no longer in demand and the compressor unit is not likely to return to an operating status without the capital expenditures. These latter expenditures substantially modify the operating parameters of the compressor unit such that it can be used in applications for which it previously was not suited.
|
(4)
|
Maintenance capital expenditures are made to maintain the existing operating capacity of our assets and related cash flows further extending the useful lives of the assets. Maintenance capital expenditures are related to major overhauls of significant components of a compressor unit, such as the engine, compressor and cooler, that return the components to a “like new” condition, but do not modify the applications for which the compressor unit was designed.
|
(5)
|
Working capital is defined as current assets minus current liabilities.
|
(6)
|
Pursuant to the separation and distribution agreement with Archrock and certain of our and Archrock’s respective affiliates, on November 3, 2015, we transferred $532.6 million of net proceeds from borrowings under our credit facility to Archrock to allow it to repay a portion of its indebtedness in connection with the Spin-off.
|
|
Years Ended December 31,
|
||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
Income (loss) before income taxes
|
$
|
(69,606
|
)
|
|
$
|
11,420
|
|
|
$
|
127,151
|
|
|
$
|
162,417
|
|
|
$
|
85,826
|
|
Selling, general and administrative
|
165,985
|
|
|
220,396
|
|
|
263,170
|
|
|
259,801
|
|
|
264,970
|
|
|||||
Depreciation and amortization
|
137,974
|
|
|
154,801
|
|
|
170,088
|
|
|
136,607
|
|
|
163,829
|
|
|||||
Long-lived asset impairment
|
15,146
|
|
|
20,788
|
|
|
3,851
|
|
|
11,941
|
|
|
5,197
|
|
|||||
Restatement charges
|
18,879
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Restructuring and other charges
|
27,457
|
|
|
31,315
|
|
|
—
|
|
|
—
|
|
|
3,892
|
|
|||||
Interest expense
|
34,181
|
|
|
7,272
|
|
|
1,878
|
|
|
3,523
|
|
|
5,310
|
|
|||||
Equity in income of non-consolidated affiliates
|
(10,403
|
)
|
|
(15,152
|
)
|
|
(14,553
|
)
|
|
(19,000
|
)
|
|
(51,483
|
)
|
|||||
Other (income) expense, net
|
(13,088
|
)
|
|
35,438
|
|
|
6,201
|
|
|
(3,385
|
)
|
|
7,541
|
|
|||||
Total gross margin
|
$
|
306,525
|
|
|
$
|
466,278
|
|
|
$
|
557,786
|
|
|
$
|
551,904
|
|
|
$
|
485,082
|
|
|
Years Ended December 31,
|
||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
Net income (loss)
|
$
|
(227,937
|
)
|
|
$
|
26,648
|
|
|
$
|
115,292
|
|
|
$
|
123,717
|
|
|
$
|
118,823
|
|
(Income) loss from discontinued operations, net of tax
|
33,571
|
|
|
(54,774
|
)
|
|
(67,183
|
)
|
|
(58,495
|
)
|
|
(59,914
|
)
|
|||||
Depreciation and amortization
|
137,974
|
|
|
154,801
|
|
|
170,088
|
|
|
136,607
|
|
|
163,829
|
|
|||||
Long-lived asset impairment
|
15,146
|
|
|
20,788
|
|
|
3,851
|
|
|
11,941
|
|
|
5,197
|
|
|||||
Restatement charges
|
18,879
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Restructuring and other charges
|
27,457
|
|
|
31,315
|
|
|
—
|
|
|
—
|
|
|
3,892
|
|
|||||
Investment in non-consolidated affiliates impairment
|
—
|
|
|
33
|
|
|
197
|
|
|
—
|
|
|
224
|
|
|||||
Proceeds from sale of joint venture assets
|
(10,403
|
)
|
|
(15,185
|
)
|
|
(14,750
|
)
|
|
(19,000
|
)
|
|
(51,707
|
)
|
|||||
Interest expense
|
34,181
|
|
|
7,272
|
|
|
1,878
|
|
|
3,523
|
|
|
5,310
|
|
|||||
(Gain) loss on currency exchange rate remeasurement of intercompany balances
|
(8,559
|
)
|
|
30,127
|
|
|
3,614
|
|
|
4,313
|
|
|
7,406
|
|
|||||
Loss on sale of businesses
|
—
|
|
|
—
|
|
|
961
|
|
|
—
|
|
|
—
|
|
|||||
Provision for income taxes
|
124,760
|
|
|
39,546
|
|
|
79,042
|
|
|
97,195
|
|
|
26,917
|
|
|||||
EBITDA, as adjusted
|
$
|
145,069
|
|
|
$
|
240,571
|
|
|
$
|
292,990
|
|
|
$
|
299,801
|
|
|
$
|
219,977
|
|
•
|
Our consolidated and combined statements of operations, comprehensive income, cash flows and stockholders’ equity for the year ended December 31, 2015 consist of (i) the combined results of Archrock’s international services and product sales businesses for the period between January 1, 2015 and November 3, 2015 and (ii) the consolidated results of Exterran Corporation for periods subsequent to November 3, 2015. Our combined statements of operations, comprehensive income, cash flows and stockholders’ equity for the year ended December 31, 2014 consist entirely of the combined results of Archrock’s international services and product sales businesses.
|
•
|
Our consolidated balance sheets at December 31, 2016 and 2015 consist entirely of our consolidated balances.
|
|
Exterran Corporation Excluding Belleli
|
|
Belleli
|
|
Exterran Corporation Consolidated and Combined
|
||||||||||
|
|
CPE
|
|
EPC
|
|
||||||||||
Year Ended December 31, 2016
|
|
|
|
|
|
|
|
||||||||
Revenue
|
$
|
905,397
|
|
|
$
|
—
|
|
|
$
|
123,856
|
|
|
$
|
1,029,253
|
|
Cost of sales (excluding depreciation and amortization expense)
|
596,406
|
|
|
—
|
|
|
126,322
|
|
|
722,728
|
|
||||
Depreciation and amortization
|
130,731
|
|
|
—
|
|
|
7,243
|
|
|
137,974
|
|
||||
Loss from continuing operations
|
(173,354
|
)
|
|
—
|
|
|
(21,012
|
)
|
|
(194,366
|
)
|
||||
Income (loss) from discontinued operations, net of tax (1)
|
39,036
|
|
|
(72,607
|
)
|
|
—
|
|
|
(33,571
|
)
|
||||
Net loss
|
(134,318
|
)
|
|
(72,607
|
)
|
|
(21,012
|
)
|
|
(227,937
|
)
|
||||
Product sales backlog (at period end)
|
306,222
|
|
|
—
|
|
|
63,578
|
|
(2)
|
369,800
|
|
||||
Third party bookings
|
431,188
|
|
|
—
|
|
|
25,010
|
|
(2)
|
456,198
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Year Ended December 31, 2015
|
|
|
|
|
|
|
|
||||||||
Revenue
|
$
|
1,687,264
|
|
|
$
|
—
|
|
|
$
|
103,221
|
|
|
$
|
1,790,485
|
|
Cost of sales (excluding depreciation and amortization expense)
|
1,189,361
|
|
|
—
|
|
|
134,846
|
|
|
1,324,207
|
|
||||
Depreciation and amortization
|
144,123
|
|
|
—
|
|
|
10,678
|
|
|
154,801
|
|
||||
Income (loss) from continuing operations
|
26,049
|
|
|
—
|
|
|
(54,175
|
)
|
|
(28,126
|
)
|
||||
Income (loss) from discontinued operations, net of tax (1)
|
56,132
|
|
|
(1,358
|
)
|
|
—
|
|
|
54,774
|
|
||||
Net income (loss)
|
82,181
|
|
|
(1,358
|
)
|
|
(54,175
|
)
|
|
26,648
|
|
||||
Product sales backlog (at period end)
|
267,418
|
|
|
—
|
|
|
162,424
|
|
|
429,842
|
|
||||
Third party bookings
|
437,250
|
|
|
—
|
|
|
80,907
|
|
|
518,157
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Year Ended December 31, 2014
|
|
|
|
|
|
|
|
||||||||
Revenue
|
$
|
1,986,184
|
|
|
$
|
—
|
|
|
$
|
115,479
|
|
|
$
|
2,101,663
|
|
Cost of sales (excluding depreciation and amortization expense)
|
1,395,007
|
|
|
—
|
|
|
148,870
|
|
|
1,543,877
|
|
||||
Depreciation and amortization
|
161,071
|
|
|
—
|
|
|
9,017
|
|
|
170,088
|
|
||||
Income (loss) from continuing operations
|
103,104
|
|
|
—
|
|
|
(54,995
|
)
|
|
48,109
|
|
||||
Income (loss) from discontinued operations, net of tax (1)
|
73,198
|
|
|
(6,015
|
)
|
|
—
|
|
|
67,183
|
|
||||
Net income (loss)
|
176,302
|
|
|
(6,015
|
)
|
|
(54,995
|
)
|
|
115,292
|
|
||||
Product sales backlog (at period end)
|
765,463
|
|
|
—
|
|
|
184,738
|
|
|
950,201
|
|
||||
Third party bookings
|
1,420,799
|
|
|
—
|
|
|
99,473
|
|
|
1,520,272
|
|
(1)
|
See
Note 3
to the Financial Statements for further discussion regarding discontinued operations. As Belleli CPE is no longer a part of our continuing operations, Belleli CPE’s product sales backlog and third party bookings have been excluded from all periods presented. We completed the sale of Belleli CPE in August 2016.
|
(2)
|
During the first quarter of 2016, we ceased the booking of new orders for our Belleli EPC business. Changes in our Belleli EPC backlog since March 31, 2016 reflect revenue recognized and change orders booked on existing contracts.
|
|
(1)
|
Gross margin is defined as revenue less cost of sales, excluding depreciation and amortization expense. We evaluate the performance of each of our segments based on gross margin. Total gross margin, a non-GAAP financial measure, is reconciled, in total, to income (loss) before income taxes, its most directly comparable financial measure calculated and presented in accordance with GAAP in Part II, Item 6 (“Selected Financial Data — Non-GAAP Financial Measures”) of this report.
|
(2)
|
Gross margin percentage is defined as gross margin divided by revenue.
|
|
Years Ended December 31,
|
|||||||
Contract Operations Horsepower
|
2016
|
|
2015
|
|
2014
|
|||
Total Available Horsepower (at period end)
|
1,138
|
|
|
1,181
|
|
|
1,236
|
|
Total Operating Horsepower (at period end)
|
936
|
|
|
964
|
|
|
976
|
|
Average Operating Horsepower
|
953
|
|
|
959
|
|
|
969
|
|
Horsepower Utilization (at period end)
|
82
|
%
|
|
82
|
%
|
|
79
|
%
|
|
December 31,
|
||||||||||
Product Sales Backlog (1)
|
2016
|
|
2015
|
|
2014
|
||||||
Oil and Gas Product Sales Backlog (2):
|
|
|
|
|
|
||||||
Compressor and Accessory Backlog
|
$
|
160,006
|
|
|
$
|
141,059
|
|
|
$
|
270,297
|
|
Production and Processing Equipment Backlog
|
144,252
|
|
|
118,914
|
|
|
373,415
|
|
|||
Installation Backlog
|
1,964
|
|
|
7,445
|
|
|
121,751
|
|
|||
Belleli EPC Backlog (3)
|
63,578
|
|
|
162,424
|
|
|
184,738
|
|
|||
Total Product Sales Backlog
|
$
|
369,800
|
|
|
$
|
429,842
|
|
|
$
|
950,201
|
|
|
(1)
|
Our product sales backlog consists of unfilled orders based on signed contracts and does not include potential product sales pursuant to letters of intent received from customers. As Belleli CPE is no longer a part of our continuing operations, Belleli CPE’s product sales backlog has been excluded from all periods presented.
|
(2)
|
We expect that approximately
$14.0 million
of our oil and gas product sales backlog as of December 31, 2016 will be recognized after December 31, 2017.
|
(3)
|
Prior to change in our reporting segments, our Belleli EPC product sales backlog was previously included in our production and processing equipment product sales backlog. During the first quarter of 2016, we ceased the booking of new orders for our Belleli EPC business. Changes in our Belleli EPC backlog since March 31, 2016 reflect revenue recognized and change orders booked on existing contracts. We expect that approximately
$4.3 million
of our Belleli EPC product sales backlog as of December 31, 2016 will be recognized after December 31, 2017.
|
|
Years Ended December 31,
|
|
Increase
(Decrease)
|
|||||||
|
2016
|
|
2015
|
|||||||
Revenue
|
$
|
392,463
|
|
|
$
|
469,900
|
|
|
(16
|
)%
|
Cost of sales (excluding depreciation and amortization expense)
|
143,670
|
|
|
172,391
|
|
|
(17
|
)%
|
||
Gross margin
|
$
|
248,793
|
|
|
$
|
297,509
|
|
|
(16
|
)%
|
Gross margin percentage
|
63
|
%
|
|
63
|
%
|
|
—
|
%
|
|
Years Ended December 31,
|
|
Increase
(Decrease)
|
|||||||
|
2016
|
|
2015
|
|||||||
Revenue
|
$
|
120,550
|
|
|
$
|
127,802
|
|
|
(6
|
)%
|
Cost of sales (excluding depreciation and amortization expense)
|
87,342
|
|
|
91,233
|
|
|
(4
|
)%
|
||
Gross margin
|
$
|
33,208
|
|
|
$
|
36,569
|
|
|
(9
|
)%
|
Gross margin percentage
|
28
|
%
|
|
29
|
%
|
|
(1
|
)%
|
|
Years Ended December 31,
|
|
Increase
(Decrease)
|
|||||||
|
2016
|
|
2015
|
|||||||
Revenue
|
$
|
392,384
|
|
|
$
|
1,089,562
|
|
|
(64
|
)%
|
Cost of sales (excluding depreciation and amortization expense)
|
365,394
|
|
|
925,737
|
|
|
(61
|
)%
|
||
Gross margin
|
$
|
26,990
|
|
|
$
|
163,825
|
|
|
(84
|
)%
|
Gross margin percentage
|
7
|
%
|
|
15
|
%
|
|
(8
|
)%
|
|
Years Ended December 31,
|
|
Increase
(Decrease)
|
|||||||
|
2016
|
|
2015
|
|||||||
Revenue
|
$
|
123,856
|
|
|
$
|
103,221
|
|
|
20
|
%
|
Cost of sales (excluding depreciation and amortization expense)
|
126,322
|
|
|
134,846
|
|
|
(6
|
)%
|
||
Gross margin
|
$
|
(2,466
|
)
|
|
$
|
(31,625
|
)
|
|
(92
|
)%
|
Gross margin percentage
|
(2
|
)%
|
|
(31
|
)%
|
|
29
|
%
|
|
Years Ended December 31,
|
|
Increase
(Decrease)
|
|||||||
|
2016
|
|
2015
|
|
||||||
Selling, general and administrative
|
$
|
165,985
|
|
|
$
|
220,396
|
|
|
(25
|
)%
|
Depreciation and amortization
|
137,974
|
|
|
154,801
|
|
|
(11
|
)%
|
||
Long-lived asset impairment
|
15,146
|
|
|
20,788
|
|
|
(27
|
)%
|
||
Restatement charges
|
18,879
|
|
|
—
|
|
|
N/A
|
|
||
Restructuring and other charges
|
27,457
|
|
|
31,315
|
|
|
(12
|
)%
|
||
Interest expense
|
34,181
|
|
|
7,272
|
|
|
370
|
%
|
||
Equity in income of non-consolidated affiliates
|
(10,403
|
)
|
|
(15,152
|
)
|
|
(31
|
)%
|
||
Other (income) expense, net
|
(13,088
|
)
|
|
35,438
|
|
|
(137
|
)%
|
|
Years Ended December 31,
|
|
Increase
(Decrease)
|
|||||||
|
2016
|
|
2015
|
|
||||||
Provision for income taxes
|
$
|
124,760
|
|
|
$
|
39,546
|
|
|
215
|
%
|
Effective tax rate
|
(179.2
|
)%
|
|
346.3
|
%
|
|
(525.5
|
)%
|
•
|
A
$123.9 million
increase (
178.0%
reduction) resulting from valuation allowances primarily recorded against U.S. deferred tax assets and certain deferred tax assets of our subsidiaries in Nigeria and Italy.
|
•
|
A
$38.2 million
increase (
54.9%
reduction) resulting primarily from foreign withholding taxes, negative impacts of foreign currency devaluations in Argentina and Mexico, settlement of a Nigeria tax audit and deemed distributions to the U.S. from certain of our non-U.S. subsidiaries. The increase includes a reduction resulting from rate differences between U.S. and foreign jurisdictions primarily related to income we earned in Oman and Mexico where the rates are 12.0% and 30.0%, respectively.
|
•
|
A
$9.5 million
reduction (
13.6%
increase) resulting from claiming foreign taxes as credits primarily for foreign withholding taxes. The foreign tax credits are available to offset future payments of U.S. federal income taxes.
|
•
|
A
$4.1 million
increase (
5.8%
reduction) resulting from unrecognized tax benefits primarily from additions based on tax positions related to the current year.
|
•
|
A
$3.6 million
reduction (
5.2%
increase) due to
$10.4 million
of nontaxable proceeds from sale of joint venture assets in Venezuela.
|
•
|
A
$2.9 million
reduction (
4.1%
increase) primarily due to
$11.2 million
of cash recovered from Archrock with respect to our restatement charges. Payments between Archrock and us are treated as nontaxable capital contributions or distributions pursuant to the tax matters agreement.
|
•
|
A
$38.1 million
(
333.2%
) increase resulting primarily from foreign withholding taxes, negative impacts of foreign currency devaluations in Argentina and Mexico and deemed distributions to the U.S. from certain of our non-U.S. subsidiaries. The increase includes a reduction resulting from rate differences between U.S. and foreign jurisdictions primarily related to income we earned in Oman, Mexico and Thailand where the rates are 12.0%, 30.0% and 20.0%, respectively.
|
•
|
A
$38.3 million
(
335.2%
) increase resulting from valuation allowances primarily recorded against deferred tax assets of our subsidiaries in Brazil, Italy and the Netherlands.
|
•
|
A
$24.9 million
(
218.4%
) reduction resulting from claiming the R&D Credit for years 2009 through 2013. The R&D Credits are available to offset future payments of U.S. federal income taxes.
|
•
|
A
$17.4 million
(
152.3%
) reduction resulting from claiming foreign taxes as credits primarily for foreign withholding taxes. The foreign tax credits are available to offset future payments of U.S. federal income taxes.
|
•
|
A
$6.2 million
(
54.2%
) increase resulting from unrecognized tax benefits primarily related to additions based on tax positions related to 2015.
|
•
|
A
$5.3 million
(
46.5%
) reduction due to
$15.2 million
of nontaxable proceeds from sale of joint venture assets in Venezuela.
|
|
Years Ended December 31,
|
|
Increase
(Decrease)
|
|||||||
|
2016
|
|
2015
|
|
||||||
Income (loss) from discontinued operations, net of tax
|
$
|
(33,571
|
)
|
|
$
|
54,774
|
|
|
(161
|
)%
|
|
Years Ended December 31,
|
|
Increase
(Decrease)
|
|||||||
|
2015
|
|
2014
|
|
||||||
Revenue
|
$
|
469,900
|
|
|
$
|
493,853
|
|
|
(5
|
)%
|
Cost of sales (excluding depreciation and amortization expense)
|
172,391
|
|
|
185,408
|
|
|
(7
|
)%
|
||
Gross margin
|
$
|
297,509
|
|
|
$
|
308,445
|
|
|
(4
|
)%
|
Gross margin percentage
|
63
|
%
|
|
62
|
%
|
|
1
|
%
|
|
Years Ended December 31,
|
|
Increase
(Decrease)
|
|||||||
|
2015
|
|
2014
|
|
||||||
Revenue
|
$
|
127,802
|
|
|
$
|
162,724
|
|
|
(21
|
)%
|
Cost of sales (excluding depreciation and amortization expense)
|
91,233
|
|
|
120,181
|
|
|
(24
|
)%
|
||
Gross margin
|
$
|
36,569
|
|
|
$
|
42,543
|
|
|
(14
|
)%
|
Gross margin percentage
|
29
|
%
|
|
26
|
%
|
|
3
|
%
|
|
Years Ended December 31,
|
|
Increase
(Decrease)
|
|||||||
|
2015
|
|
2014
|
|
||||||
Revenue
|
$
|
1,089,562
|
|
|
$
|
1,329,607
|
|
|
(18
|
)%
|
Cost of sales (excluding depreciation and amortization expense)
|
925,737
|
|
|
1,089,418
|
|
|
(15
|
)%
|
||
Gross margin
|
$
|
163,825
|
|
|
$
|
240,189
|
|
|
(32
|
)%
|
Gross margin percentage
|
15
|
%
|
|
18
|
%
|
|
(3
|
)%
|
|
Years Ended December 31,
|
|
Increase
(Decrease)
|
|||||||
|
2015
|
|
2014
|
|
||||||
Revenue
|
$
|
103,221
|
|
|
$
|
115,479
|
|
|
(11
|
)%
|
Cost of sales (excluding depreciation and amortization expense)
|
134,846
|
|
|
148,870
|
|
|
(9
|
)%
|
||
Gross margin
|
$
|
(31,625
|
)
|
|
$
|
(33,391
|
)
|
|
(5
|
)%
|
Gross margin percentage
|
(31
|
)%
|
|
(29
|
)%
|
|
(2
|
)%
|
|
Years Ended December 31,
|
|
Increase
(Decrease)
|
|||||||
|
2015
|
|
2014
|
|
||||||
Selling, general and administrative
|
$
|
220,396
|
|
|
$
|
263,170
|
|
|
(16
|
)%
|
Depreciation and amortization
|
154,801
|
|
|
170,088
|
|
|
(9
|
)%
|
||
Long-lived asset impairment
|
20,788
|
|
|
3,851
|
|
|
440
|
%
|
||
Restructuring and other charges
|
31,315
|
|
|
—
|
|
|
N/A
|
|
||
Interest expense
|
7,272
|
|
|
1,878
|
|
|
287
|
%
|
||
Equity in income of non-consolidated affiliates
|
(15,152
|
)
|
|
(14,553
|
)
|
|
4
|
%
|
||
Other (income) expense, net
|
35,438
|
|
|
6,201
|
|
|
471
|
%
|
|
Years Ended December 31,
|
|
Increase
(Decrease)
|
|||||||
|
2015
|
|
2014
|
|
||||||
Provision for income taxes
|
$
|
39,546
|
|
|
$
|
79,042
|
|
|
(50
|
)%
|
Effective tax rate
|
346.3
|
%
|
|
62.2
|
%
|
|
284.1
|
%
|
•
|
A
$38.1 million
(
333.2%
) increase resulting primarily from foreign withholding taxes, negative impacts of foreign currency devaluations in Argentina and Mexico and deemed distributions to the U.S. from certain of our non-U.S. subsidiaries. The increase includes a reduction resulting from rate differences between U.S. and foreign jurisdictions primarily related to income we earned in Oman, Mexico and Thailand where the rates are 12.0%, 30.0% and 20.0%, respectively.
|
•
|
A
$38.3 million
(
335.2%
) increase resulting from valuation allowances primarily recorded against deferred tax assets of our subsidiaries in Brazil, Italy and the Netherlands.
|
•
|
A
$24.9 million
(
218.4%
) reduction resulting from claiming the R&D Credit for years 2009 through 2013. The R&D Credits are available to offset future payments of U.S. federal income taxes.
|
•
|
A
$17.4 million
(
152.3%
) reduction resulting from claiming foreign taxes as credits primarily for foreign withholding taxes. The foreign tax credits are available to offset future payments of U.S. federal income taxes.
|
•
|
A
$6.2 million
(
54.2%
) increase resulting from unrecognized tax benefits primarily related to additions based on tax positions related to 2015.
|
•
|
A
$5.3 million
(
46.5%
) reduction due to
$15.2 million
of nontaxable proceeds from sale of joint venture assets in Venezuela.
|
•
|
A
$33.0 million
(
25.9%
) increase resulting primarily from foreign withholding taxes, decreases in available net operating losses mostly related to our subsidiaries in the Netherlands and negative impacts of foreign currency devaluations in Argentina and Mexico. The increase includes a reduction resulting from rate differences between U.S. and foreign jurisdictions primarily related to income we earned in Oman, Mexico and Thailand where the rates are 12.0%, 30.0% and 20.0%, respectively.
|
•
|
A
$17.8 million
(
14.0%
) increase resulting from valuation allowances primarily recorded against deferred tax assets of our subsidiaries in Brazil, Italy and the Netherlands. The increase includes a reduction in valuation allowances related to decreases in available net operating losses mostly related to our subsidiaries in the Netherlands.
|
•
|
A
$10.9 million
(
8.6%
) reduction resulting from claiming foreign taxes as credits primarily for foreign withholding taxes. The foreign tax credits are available to offset future payments of U.S. federal income taxes.
|
•
|
A
$5.2 million
(
4.1%
) reduction due to
$14.7 million
of nontaxable proceeds from sale of joint venture assets in Venezuela.
|
|
Years Ended December 31,
|
|
Increase
(Decrease)
|
|||||||
|
2015
|
|
2014
|
|
||||||
Income from discontinued operations, net of tax
|
$
|
54,774
|
|
|
$
|
67,183
|
|
|
(18
|
)%
|
|
Years Ended December 31,
|
||||||
|
2016
|
|
2015
|
||||
Net cash provided by (used in) continuing operations:
|
|
|
|
||||
Operating activities
|
$
|
265,702
|
|
|
$
|
130,915
|
|
Investing activities
|
(60,998
|
)
|
|
(129,611
|
)
|
||
Financing activities
|
(230,747
|
)
|
|
(55,002
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(1,832
|
)
|
|
(3,716
|
)
|
||
Discontinued operations
|
34,521
|
|
|
47,085
|
|
||
Net change in cash and cash equivalents
|
$
|
6,646
|
|
|
$
|
(10,329
|
)
|
•
|
growth capital expenditures, which are made to expand or to replace partially or fully depreciated assets or to expand the operating capacity or revenue generating capabilities of existing or new assets, whether through construction, acquisition or modification; and
|
•
|
maintenance capital expenditures, which are made to maintain the existing operating capacity of our assets and related cash flows further extending the useful lives of the assets.
|
|
Total
|
|
2017
|
|
2018-2019
|
|
2020-2021
|
|
Thereafter
|
||||||||||
Long-term debt (1):
|
|
|
|
|
|
|
|
|
|
||||||||||
Revolving credit facility due November 2020
|
$
|
118,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
118,000
|
|
|
$
|
—
|
|
Term loan facility due November 2017 (2)
|
232,750
|
|
|
232,750
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other
|
583
|
|
|
—
|
|
|
506
|
|
|
77
|
|
|
—
|
|
|||||
Total long-term debt
|
351,333
|
|
|
232,750
|
|
|
506
|
|
|
118,077
|
|
|
—
|
|
|||||
Interest on long-term debt (3)
|
54,227
|
|
|
25,636
|
|
|
20,127
|
|
|
8,464
|
|
|
—
|
|
|||||
Purchase commitments
|
119,734
|
|
|
118,990
|
|
|
744
|
|
|
—
|
|
|
—
|
|
|||||
Facilities and other operating leases
|
27,541
|
|
|
6,176
|
|
|
5,956
|
|
|
3,465
|
|
|
11,944
|
|
|||||
Total contractual obligations
|
$
|
552,835
|
|
|
$
|
383,552
|
|
|
$
|
27,333
|
|
|
$
|
130,006
|
|
|
$
|
11,944
|
|
|
(1)
|
For more information on our long-term debt, see
Note 10
to the Financial Statements.
|
(2)
|
The principal amount of
$232.8 million
due in November 2017 under the term loan facility is classified as long-term in our balance sheet at December 31, 2016 because we have the intent and ability to refinance the current principal amount due with borrowings under our existing revolving credit facility. Amounts represent the full face value of the term loan facility and are not reduced by the aggregate unamortized debt financing costs of
$2.4 million
as of
December 31, 2016
.
|
(3)
|
Interest amounts were calculated using interest rates in effect as of
December 31, 2016
.
|
•
|
There was not adequate integration, emphasis of local senior management accountability and management oversight of accounting and financial reporting activities in implementing and maintaining certain accounting practices at Belleli EPC to conform to the Company’s policies and GAAP.
|
•
|
The Company did not modify its controls and testing procedures to sufficiently address its assessment of risks related to Belleli EPC that could significantly impact internal control over financial reporting by modifying its approach to how those risks should be addressed.
|
•
|
The Company did not implement and maintain the same accounting controls at Belleli EPC, including information and communication controls, as those maintained in the Company’s other operating locations, resulting in internal controls that were not adequate to prevent or detect instances of intentional override of controls, intentional misconduct, or manipulation of cost-to-complete estimates by, or at the direction of, certain former members of Belleli EPC local senior management.
|
•
|
The Company did not maintain a sufficient complement of personnel with appropriate levels of accounting knowledge, experience and training commensurate with the nature and complexity of Belleli EPC’s business.
|
•
|
Corporate monitoring controls over certain foreign operations were not adequate to detect inappropriate accounting practices and were not designed to operate at a sufficient level of precision to detect material misstatements.
|
•
|
Controls over the determination of estimated cost-to-complete, including the assessment of contingencies and impact of project uncertainties; and
|
•
|
Controls to address the accuracy and completeness of information used to estimate revenue and related costs in the application of percentage-of-completion accounting principles.
|
•
|
Restructured the Company’s Executive Leadership Team (ELT), including designating responsibility of overseeing Belleli EPC projects to an ELT member who then reports directly to the Exterran Corporation principal executive officer;
|
•
|
Appointed experienced professionals to key finance and operational leadership positions within Belleli EPC, including the hiring of a new Finance Manager and assigning a Managing Director to lead the operations organization;
|
•
|
Integrated oversight of Belleli EPC operating, finance and manufacturing personnel by certain members of the Exterran Corporation ELT and the Exterran Corporation chief financial officer’s leadership team, including implementing regular meetings, to ensure sufficient oversight of project performance;
|
•
|
Established a direct functional reporting structure between Belleli EPC and Exterran Corporation with more clearly defined responsibilities;
|
•
|
Provided enhanced training on our policies and ethical requirements in English, and in Italian where necessary, including the emphasis of our hotline, the importance of reporting unethical actions and the Company’s zero tolerance for retaliation of any kind;
|
•
|
Engaged a third-party consultant to accelerate redesigning the Belleli EPC project and contract management processes and controls; and
|
•
|
Enhanced the accuracy and visibility of Belleli EPC financial results by improving the integrity of the monthly data interface.
|
•
|
Instituting enhanced review of estimated costs at completion as part of the quarterly close process;
|
•
|
Reviewing and redesigning internal controls, including spreadsheet controls, to ensure that the control objectives mitigate the identified risks;
|
•
|
Assessing and redesigning, as necessary, systems and related processes at Belleli EPC to ensure information technology oversight matches the operations of the business;
|
•
|
Integrating accounting, manufacturing and operations functions and revising organizational structures to enhance accurate reporting and ensure appropriate review and accountability;
|
•
|
Assessing current staffing levels and competencies to ensure the optimal complement of personnel with appropriate backgrounds and skill sets;
|
•
|
Enhancing our Sarbanes-Oxley (SOX) compliance procedures, including designing controls to respond to our risk assessment processes, implementing walkthroughs and performing risk responsive testing on our internal controls; and
|
•
|
Implementing a corporate review of non-income-based tax receivables globally.
|
/s/
DELOITTE & TOUCHE LLP
|
|
Houston, Texas
|
March 9, 2017
|
|
|
(a)
Number of Securities
to be Issued Upon
Exercise of
Outstanding Options,
Warrants and Rights
|
|
(b)
Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights
|
|
(c)
Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation Plans
(Excluding Securities
Reflected in Column (a))
|
||||
Plan Category
|
|
(#)
|
|
($)
|
|
(#)
|
||||
Equity compensation plans approved by security holders (1)
|
|
295,661
|
|
|
$
|
17.44
|
|
|
2,233,492
|
|
Equity compensation plans not approved by security holders
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
295,661
|
|
|
0
|
|
|
2,233,492
|
|
|
(1)
|
Comprised of (i) the Exterran Corporation 2015 Stock Incentive Plan, the (“2015 Plan”) and (ii) the Exterran Corporation 2015 Directors’ Stock and Deferral Plan. The 2015 Plan also governs awards originally granted by Archrock under the Archrock, Inc. 2013 Stock Incentive Plan, the Archrock, Inc. 2007 Amended and Restated Stock Incentive Plan and the Universal Compression Holdings, Inc. Incentive Stock Option Plan. In addition to the outstanding options, as of
December 31, 2016
, there were 389,085 restricted stock units outstanding, payable in common stock upon vesting, outstanding under the 2015 Plan.
|
(a)
|
Documents filed as a part of this report.
|
1.
|
Financial Statements.
The following financial statements are filed as a part of this report.
|
2.
|
Financial Statement Schedule
|
Exhibit No.
|
|
Description
|
2.1
|
|
Separation and Distribution Agreement, dated as of November 3, 2015, by and among Exterran Holdings, Inc., Exterran General Holdings LLC, Exterran Energy Solutions, L.P., Exterran Corporation, AROC Corp., EESLP LP LLC, AROC Services GP LLC, AROC Services LP LLC and Archrock Services, L.P., incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed on November 5, 2015
|
2.2
|
|
First Amendment to Separation and Distribution Agreement, dated as of December 15, 2015, by and among Archrock, Inc., Exterran General Holdings LLC, Exterran Energy Solutions, L.P., Exterran Corporation, AROC Corp., EESLP LP LLC, AROC Services GP LLC, AROC Services LP LLC and Archrock Services, L.P., incorporated by reference to Exhibit 2.2 to the Registrant’s Original Annual Report on Form 10-K for the year ended December 31, 2015 filed on February 26, 2016
|
3.1
|
|
Amended and Restated Certificate of Incorporation of Exterran Corporation, incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on November 5, 2015
|
3.2
|
|
Amended and Restated Bylaws of Exterran Corporation, incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed on November 5, 2015
|
10.1
|
|
Employee Matters Agreement, dated as of November 3, 2015, by and between Exterran Holdings, Inc. and Exterran Corporation, incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on November 5, 2015
|
10.2
|
|
Tax Matters Agreement, dated as of November 3, 2015, by and between Exterran Holdings, Inc. and Exterran Corporation, incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on November 5, 2015
|
10.3
|
|
Transition Services Agreement, dated as of November 3, 2015, by and between Exterran Holdings, Inc. and Exterran Corporation, incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed on November 5, 2015
|
10.4
|
|
Supply Agreement, dated as of November 3, 2015, by and among Archrock Services, L.P., EXLP Operating LLC and Exterran Energy Solutions, L.P., incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K filed on November 5, 2015
|
10.5
|
|
Form of Indemnification Agreement, incorporated by reference to Exhibit 10.5 to the Registrant’s Current Report on Form 8-K filed on November 5, 2015
|
10.6
|
|
Amended and Restated Credit Agreement, dated as of October 5, 2015, by and among Exterran Holdings, Inc., Exterran Energy Solutions, L.P., the lenders signatory thereto and Wells Fargo Bank, National Association, as administrative agent, incorporated by reference to Exhibit 4.2 to Amendment No. 5 to the Company’s Registration Statement on Form 10-12B, as filed on October 6, 2015
|
10.7†
|
|
Exterran Corporation 2015 Stock Incentive Plan, incorporated by reference to Exhibit 99.1 to the Company’s Registration Statement on Form S-8, as filed on November 2, 2015
|
10.8†
|
|
Form of Award Notice and Agreement for Incentive Stock Options pursuant to the 2015 Stock Incentive Plan, incorporated by reference to Exhibit 10.8 to the Registrant’s Current Report on Form 8-K filed on November 5, 2015
|
10.9†
|
|
Form of Award Notice and Agreement for Nonqualified Stock Options pursuant to the 2015 Stock Incentive Plan, incorporated by reference to Exhibit 10.9 to the Registrant’s Current Report on Form 8-K filed on November 5, 2015
|
10.10†
|
|
Form of Award Notice and Agreement for Performance Units pursuant to the 2015 Stock Incentive Plan, incorporated by reference to Exhibit 10.10 to the Registrant’s Current Report on Form 8-K filed on November 5, 2015
|
10.11†
|
|
Form of Award Notice and Agreement for Restricted Stock pursuant to the 2015 Stock Incentive Plan, incorporated by reference to Exhibit 10.11 to the Registrant’s Current Report on Form 8-K filed on November 5, 2015
|
10.12†
|
|
Form of Award Notice and Agreement for Cash-Settled Restricted Stock Units pursuant to the 2015 Stock Incentive Plan, incorporated by reference to Exhibit 10.12 to the Registrant’s Current Report on Form 8-K filed on November 5, 2015
|
10.13†
|
|
Form of Award Notice and Agreement for Stock-Settled Restricted Stock Units pursuant to the 2015 Stock Incentive Plan, incorporated by reference to Exhibit 10.13 to the Registrant’s Current Report on Form 8-K filed on November 5, 2015
|
10.14†
|
|
Form of Award Notice and Agreement for Common Stock Award for Non-Employee Directors pursuant to the 2015 Stock Incentive Plan, incorporated by reference to Exhibit 10.14 to the Registrant’s Current Report on Form 8-K filed on November 5, 2015
|
10.15†
|
|
Exterran Corporation Directors’ Stock and Deferral Plan, incorporated by reference to Exhibit 99.2 to the Company’s Registration Statement on Form S-8, as filed on November 2, 2015
|
Exhibit No.
|
|
Description
|
10.16†
|
|
Form of Employment Letter, incorporated by reference to Exhibit 10.16 to the Registrant’s Current Report on Form 8-K filed on November 5, 2015
|
10.17†
|
|
Form of Severance Benefit Agreement, incorporated by reference to Exhibit 10.11 to Amendment No. 4 to the Company’s Registration Statement on Form 10-12B, as filed on August 5, 2015
|
10.18†
|
|
Form of Change of Control Agreement, incorporated by reference to Exhibit 10.11 to Amendment No. 4 to the Company’s Registration Statement on Form 10-12B, as filed on August 5, 2015
|
10.19†
|
|
Exterran Corporation Deferred Compensation Plan, incorporated by reference to Exhibit 10.19 to the Registrant’s Current Report on Form 8-K filed on November 5, 2015
|
10.20†
|
|
Exterran Corporation Amended and Restated Directors’ Stock and Deferral Plan, incorporated by reference to Exhibit 10.20 to the Registrant’s Original Annual Report on Form 10-K for the year ended December 31, 2015 filed on February 26, 2016
|
10.21†
|
|
Separation Letter between the Company and Daniel K. Schlanger, dated as of March 7, 2016, incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on March 8, 2016
|
10.22
|
|
First Amendment, Consent and Waiver, dated April 22, 2016, to Amended and Restated Credit Agreement by and among Exterran Energy Solutions, L.P., Exterran Corporation, Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto, incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on April 26, 2016
|
10.23
|
|
Second Amendment, Consent and Waiver, dated June 17, 2016, to Amended and Restated Credit Agreement and First Amendment to Guaranty and Collateral Agreement by and among Exterran Energy Solutions, L.P., Exterran Corporation, Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto, incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on June 23, 2016
|
10.24
|
|
Third Amendment, Consent and Waiver, dated August 24, 2016, to Amended and Restated Credit Agreement by and among Exterran Energy Solutions, L.P., Exterran Corporation, Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto, incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on August 29, 2016
|
10.25
|
|
Fourth Amendment, Consent and Waiver, dated November 22, 2016, to Amended and Restated Credit Agreement by and among Exterran Energy Solutions, L.P., Exterran Corporation, Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto, incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on November 22, 2016
|
10.26†
|
|
First Amendment, Exterran Corporation Deferred Compensation Plan, incorporated by reference to Exhibit 10.3 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 filed on January 4, 2017
|
10.27†
|
|
2016 Form of Severance Benefit Agreement, incorporated by reference to Exhibit 10.3 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 filed on January 4, 2017
|
10.28†
|
|
2016 Form of Change of Control Agreement, incorporated by reference to Exhibit 10.3 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 filed on January 4, 2017
|
10.29†*
|
|
Form of Award Notice and Agreement for Performance Units pursuant to the 2015 Stock Incentive Plan
|
10.30†*
|
|
Form of Award Notice and Agreement for Restricted Stock pursuant to the 2015 Stock Incentive Plan
|
10.31†*
|
|
Form of Award Notice and Agreement for Cash-Settled Restricted Stock Units pursuant to the 2015 Stock Incentive Plan
|
10.32†*
|
|
Form of Award Notice and Agreement for Stock-Settled Restricted Stock Units pursuant to the 2015 Stock Incentive Plan
|
10.33†*
|
|
Form of Award Notice and Agreement for Common Stock Award for Non-Employee Directors pursuant to the 2015 Stock Incentive Plan
|
21.1*
|
|
List of Subsidiaries
|
23.1*
|
|
Consent of Deloitte & Touche LLP
|
24.1*
|
|
Powers of Attorney (included on the signature page to this Report)
|
31.1*
|
|
Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
31.2*
|
|
Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
32.1**
|
|
Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
32.2**
|
|
Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
101.1*
|
|
Interactive data files pursuant to Rule 405 of Regulation S-T
|
|
†
|
Management contract or compensatory plan or arrangement.
|
*
|
Filed herewith.
|
**
|
Furnished, not filed, herewith.
|
|
Exterran Corporation
|
|
|
|
/s/ ANDREW J. WAY
|
|
Name: Andrew J. Way
|
|
Title: President and Chief Executive Officer
|
|
|
|
Date: March 9, 2017
|
Signature
|
|
Title
|
|
|
|
/s/ ANDREW J. WAY
|
|
President and Chief Executive Officer and Director
|
Andrew J. Way
|
|
(Principal Executive Officer)
|
|
|
|
/s/ DAVID A. BARTA
|
|
Senior Vice President and Chief Financial Officer
|
David A. Barta
|
|
(Principal Financial Officer)
|
|
|
|
/s/ RAYMOND L. CARNEY JR.
|
|
Vice President and Chief Accounting Officer
|
Raymond L. Carney Jr.
|
|
(Principal Accounting Officer)
|
|
|
|
/s/ WILLIAM M. GOODYEAR
|
|
Director
|
William M. Goodyear
|
|
|
|
|
|
/s/ JOHN P. RYAN
|
|
Director
|
John P. Ryan
|
|
|
|
|
|
/s/ CHRISTOPHER T. SEAVER
|
|
Director
|
Christopher T. Seaver
|
|
|
|
|
|
/s/ RICHARD R. STEWART
|
|
Director
|
Richard R. Stewart
|
|
|
|
|
|
/s/ IEDA GOMES YELL
|
|
Director
|
Ieda Gomes Yell
|
|
|
|
|
|
/s/ JAMES C. GOUIN
|
|
Director
|
James C. Gouin
|
|
|
|
|
|
/s/ MARK R. SOTIR
|
|
Director
|
Mark R. Sotir
|
|
|
/s/
DELOITTE & TOUCHE LLP
|
|
Houston, Texas
|
March 9, 2017
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
ASSETS
|
|
|
|
||||
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
35,678
|
|
|
$
|
29,032
|
|
Restricted cash
|
671
|
|
|
1,490
|
|
||
Accounts receivable, net of allowance of $5,383 and $2,868, respectively
|
230,607
|
|
|
363,581
|
|
||
Inventory, net (Note 4)
|
157,516
|
|
|
208,081
|
|
||
Costs and estimated earnings in excess of billings on uncompleted contracts (Note 5)
|
31,956
|
|
|
65,311
|
|
||
Other current assets
|
55,516
|
|
|
53,866
|
|
||
Current assets associated with discontinued operations (Note 3)
|
14
|
|
|
32,923
|
|
||
Total current assets
|
511,958
|
|
|
754,284
|
|
||
Property, plant and equipment, net (Note 6)
|
797,809
|
|
|
858,188
|
|
||
Deferred income taxes (Note 15)
|
6,015
|
|
|
86,110
|
|
||
Intangible and other assets, net (Note 7)
|
58,996
|
|
|
51,533
|
|
||
Long-term assets associated with discontinued operations (Note 3)
|
—
|
|
|
38,281
|
|
||
Total assets
|
$
|
1,374,778
|
|
|
$
|
1,788,396
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS
’
EQUITY
|
|
|
|
||||
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable, trade
|
$
|
95,959
|
|
|
$
|
86,727
|
|
Accrued liabilities (Note 9)
|
162,792
|
|
|
175,841
|
|
||
Deferred revenue
|
32,154
|
|
|
31,675
|
|
||
Billings on uncompleted contracts in excess of costs and estimated earnings (Note 5)
|
42,116
|
|
|
37,908
|
|
||
Current liabilities associated with discontinued operations (Note 3)
|
1,113
|
|
|
13,645
|
|
||
Total current liabilities
|
334,134
|
|
|
345,796
|
|
||
Long-term debt (Note 10)
|
348,970
|
|
|
525,593
|
|
||
Deferred income taxes (Note 15)
|
11,700
|
|
|
22,519
|
|
||
Long-term deferred revenue
|
98,964
|
|
|
59,769
|
|
||
Other long-term liabilities
|
24,237
|
|
|
22,708
|
|
||
Long-term liabilities associated with discontinued operations (Note 3)
|
2
|
|
|
6,075
|
|
||
Total liabilities
|
818,007
|
|
|
982,460
|
|
||
Commitments and contingencies (Note 21)
|
|
|
|
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, $0.01 par value per share; 50,000,000 shares authorized; zero issued
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value per share; 250,000,000 shares authorized; 35,641,113 and 35,153,358 shares issued, respectively
|
356
|
|
|
352
|
|
||
Additional paid-in capital
|
768,304
|
|
|
805,755
|
|
||
Accumulated deficit
|
(257,252
|
)
|
|
(29,315
|
)
|
||
Treasury stock — 202,430 and 5,776 common shares, at cost, respectively
|
(2,145
|
)
|
|
(54
|
)
|
||
Accumulated other comprehensive income
|
47,508
|
|
|
29,198
|
|
||
Total stockholders’ equity (Note 17)
|
556,771
|
|
|
805,936
|
|
||
Total liabilities and stockholders’ equity
|
$
|
1,374,778
|
|
|
$
|
1,788,396
|
|
|
Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Revenues:
|
|
|
|
|
|
||||||
Contract operations
|
$
|
392,463
|
|
|
$
|
469,900
|
|
|
$
|
493,853
|
|
Aftermarket services
|
120,550
|
|
|
127,802
|
|
|
162,724
|
|
|||
Oil and gas product sales—third parties
|
392,384
|
|
|
935,295
|
|
|
1,096,638
|
|
|||
Oil and gas product sales—affiliates (Note 16)
|
—
|
|
|
154,267
|
|
|
232,969
|
|
|||
Belleli EPC product sales
|
123,856
|
|
|
103,221
|
|
|
115,479
|
|
|||
|
1,029,253
|
|
|
1,790,485
|
|
|
2,101,663
|
|
|||
Costs and expenses:
|
|
|
|
|
|
||||||
Cost of sales (excluding depreciation and amortization expense):
|
|
|
|
|
|
||||||
Contract operations
|
143,670
|
|
|
172,391
|
|
|
185,408
|
|
|||
Aftermarket services
|
87,342
|
|
|
91,233
|
|
|
120,181
|
|
|||
Oil and gas product sales
|
365,394
|
|
|
925,737
|
|
|
1,089,418
|
|
|||
Belleli EPC product sales
|
126,322
|
|
|
134,846
|
|
|
148,870
|
|
|||
Selling, general and administrative
|
165,985
|
|
|
220,396
|
|
|
263,170
|
|
|||
Depreciation and amortization
|
137,974
|
|
|
154,801
|
|
|
170,088
|
|
|||
Long-lived asset impairment (Note 12)
|
15,146
|
|
|
20,788
|
|
|
3,851
|
|
|||
Restatement charges (Note 13)
|
18,879
|
|
|
—
|
|
|
—
|
|
|||
Restructuring and other charges (Note 14)
|
27,457
|
|
|
31,315
|
|
|
—
|
|
|||
Interest expense
|
34,181
|
|
|
7,272
|
|
|
1,878
|
|
|||
Equity in income of non-consolidated affiliates (Note 8)
|
(10,403
|
)
|
|
(15,152
|
)
|
|
(14,553
|
)
|
|||
Other (income) expense, net
|
(13,088
|
)
|
|
35,438
|
|
|
6,201
|
|
|||
|
1,098,859
|
|
|
1,779,065
|
|
|
1,974,512
|
|
|||
Income (loss) before income taxes
|
(69,606
|
)
|
|
11,420
|
|
|
127,151
|
|
|||
Provision for income taxes (Note 15)
|
124,760
|
|
|
39,546
|
|
|
79,042
|
|
|||
Income (loss) from continuing operations
|
(194,366
|
)
|
|
(28,126
|
)
|
|
48,109
|
|
|||
Income (loss) from discontinued operations, net of tax (Note 3)
|
(33,571
|
)
|
|
54,774
|
|
|
67,183
|
|
|||
Net income (loss)
|
$
|
(227,937
|
)
|
|
$
|
26,648
|
|
|
$
|
115,292
|
|
|
|
|
|
|
|
||||||
Basic net income (loss) per common share (Note 19):
|
|
|
|
|
|
||||||
Income (loss) from continuing operations per common share
|
$
|
(5.62
|
)
|
|
$
|
(0.82
|
)
|
|
$
|
1.40
|
|
Income (loss) from discontinued operations per common share
|
(0.97
|
)
|
|
1.60
|
|
|
1.96
|
|
|||
Net income (loss) per common share
|
$
|
(6.59
|
)
|
|
$
|
0.78
|
|
|
$
|
3.36
|
|
|
|
|
|
|
|
||||||
Diluted net income (loss) per common share (Note 19):
|
|
|
|
|
|
||||||
Income (loss) from continuing operations per common share
|
$
|
(5.62
|
)
|
|
$
|
(0.82
|
)
|
|
$
|
1.40
|
|
Income (loss) from discontinued operations per common share
|
(0.97
|
)
|
|
1.60
|
|
|
1.96
|
|
|||
Net income (loss) per common share
|
$
|
(6.59
|
)
|
|
$
|
0.78
|
|
|
$
|
3.36
|
|
|
|
|
|
|
|
||||||
Weighted average common shares outstanding used in net income (loss) per common share (Note 19):
|
|
|
|
|
|
||||||
Basic
|
34,568
|
|
|
34,288
|
|
|
34,286
|
|
|||
Diluted
|
34,568
|
|
|
34,288
|
|
|
34,286
|
|
|
Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Net income (loss)
|
$
|
(227,937
|
)
|
|
$
|
26,648
|
|
|
$
|
115,292
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||
Foreign currency translation adjustment
|
18,310
|
|
|
2,453
|
|
|
(12,147
|
)
|
|||
Comprehensive income (loss)
|
$
|
(209,627
|
)
|
|
$
|
29,101
|
|
|
$
|
103,145
|
|
|
Common Stock
|
|
Additional Paid-in Capital
|
|
Accumulated Deficit
|
|
Treasury Stock
|
|
Parent Equity
|
|
Accumulated
Other
Comprehensive
Income
|
|
Total
|
||||||||||||||||||||
|
Shares
|
|
Amount
|
|
|
|
Shares
|
|
Amount
|
|
|
|
|||||||||||||||||||||
Balance at January 1, 2014
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
1,282,268
|
|
|
$
|
38,892
|
|
|
$
|
1,321,160
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
115,292
|
|
|
|
|
115,292
|
|
||||||||||||||
Net distributions to parent
|
|
|
|
|
|
|
|
|
|
|
|
|
(59,970
|
)
|
|
|
|
|
(59,970
|
)
|
|||||||||||||
Foreign currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
(12,147
|
)
|
|
(12,147
|
)
|
|||||||||||||
Balance at December 31, 2014
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
1,337,590
|
|
|
$
|
26,745
|
|
|
$
|
1,364,335
|
|
Net income (loss)
|
|
|
|
|
|
|
|
|
|
(29,315
|
)
|
|
|
|
|
|
|
|
55,963
|
|
|
|
|
|
26,648
|
|
|||||||
Foreign currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,453
|
|
|
2,453
|
|
|||||||
Net distributions to parent
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(57,635
|
)
|
|
|
|
|
(57,635
|
)
|
|||||||
Cash transfer to Archrock, Inc. at Spin-off (Note 17)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(532,578
|
)
|
|
|
|
|
(532,578
|
)
|
|||||||
Conversion of parent equity to additional paid-in capital
|
34,286,267
|
|
|
343
|
|
|
802,997
|
|
|
|
|
|
|
|
|
|
|
|
(803,340
|
)
|
|
|
|
|
—
|
|
|||||||
Conversion of stock-based compensation awards at Spin-off
|
505,512
|
|
|
5
|
|
|
(5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|||||||
Treasury stock purchased
|
|
|
|
|
|
|
|
|
(3,389
|
)
|
|
(54
|
)
|
|
|
|
|
|
(54
|
)
|
|||||||||||||
Stock-based compensation, net of forfeitures
|
361,579
|
|
|
4
|
|
|
2,115
|
|
|
|
|
|
(2,387
|
)
|
|
|
|
|
|
|
|
|
|
|
2,119
|
|
|||||||
Income tax benefit from stock-based compensation expenses
|
|
|
|
|
648
|
|
|
|
|
|
|
|
|
|
|
|
|
648
|
|
||||||||||||||
Balance at December 31, 2015
|
35,153,358
|
|
|
$
|
352
|
|
|
$
|
805,755
|
|
|
$
|
(29,315
|
)
|
|
(5,776
|
)
|
|
$
|
(54
|
)
|
|
$
|
—
|
|
|
$
|
29,198
|
|
|
$
|
805,936
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
(227,937
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(227,937
|
)
|
|||||||
Options exercised
|
61,177
|
|
|
|
|
|
786
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
786
|
|
|||||||
Foreign currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,310
|
|
|
18,310
|
|
|||||||
Cash transfer to Archrock, Inc. (Note 21)
|
|
|
|
|
|
|
(49,176
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(49,176
|
)
|
|||||||
Treasury stock purchased
|
|
|
|
|
|
|
|
|
|
|
|
|
(196,654
|
)
|
|
(2,091
|
)
|
|
|
|
|
|
|
|
(2,091
|
)
|
|||||||
Stock-based compensation, net of forfeitures
|
426,578
|
|
|
4
|
|
|
10,962
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,966
|
|
|||||||
Other
|
|
|
|
|
|
|
(23
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(23
|
)
|
|||||||
Balance at December 31, 2016
|
35,641,113
|
|
|
$
|
356
|
|
|
$
|
768,304
|
|
|
$
|
(257,252
|
)
|
|
(202,430
|
)
|
|
$
|
(2,145
|
)
|
|
$
|
—
|
|
|
$
|
47,508
|
|
|
$
|
556,771
|
|
|
Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
(227,937
|
)
|
|
$
|
26,648
|
|
|
$
|
115,292
|
|
Adjustments to reconcile net income (loss) to cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
137,974
|
|
|
154,801
|
|
|
170,088
|
|
|||
Long-lived asset impairment
|
15,146
|
|
|
20,788
|
|
|
3,851
|
|
|||
Amortization of deferred financing costs
|
4,584
|
|
|
702
|
|
|
—
|
|
|||
(Income) loss from discontinued operations, net of tax
|
33,571
|
|
|
(54,774
|
)
|
|
(67,183
|
)
|
|||
Provision for doubtful accounts
|
2,972
|
|
|
3,326
|
|
|
679
|
|
|||
Gain on sale of property, plant and equipment
|
(2,986
|
)
|
|
(1,805
|
)
|
|
(1,752
|
)
|
|||
Equity in income of non-consolidated affiliates
|
(10,403
|
)
|
|
(15,152
|
)
|
|
(14,553
|
)
|
|||
(Gain) loss on remeasurement of intercompany balances
|
(9,268
|
)
|
|
30,127
|
|
|
3,614
|
|
|||
Loss on foreign currency derivatives
|
709
|
|
|
—
|
|
|
—
|
|
|||
Loss on sale of businesses
|
—
|
|
|
—
|
|
|
961
|
|
|||
Stock-based compensation expense
|
10,966
|
|
|
8,184
|
|
|
5,288
|
|
|||
Deferred income tax provision (benefit)
|
71,591
|
|
|
(26,923
|
)
|
|
11,338
|
|
|||
Changes in assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable and notes
|
135,934
|
|
|
14,211
|
|
|
(51,234
|
)
|
|||
Inventory
|
49,705
|
|
|
80,416
|
|
|
(11,855
|
)
|
|||
Costs and estimated earnings versus billings on uncompleted contracts
|
37,551
|
|
|
(14,461
|
)
|
|
(21,376
|
)
|
|||
Other current assets
|
1,593
|
|
|
(5,474
|
)
|
|
(3,888
|
)
|
|||
Accounts payable and other liabilities
|
(9,684
|
)
|
|
(82,705
|
)
|
|
24,855
|
|
|||
Deferred revenue
|
24,414
|
|
|
(2,428
|
)
|
|
(9,913
|
)
|
|||
Other
|
(730
|
)
|
|
(4,566
|
)
|
|
(19,709
|
)
|
|||
Net cash provided by continuing operations
|
265,702
|
|
|
130,915
|
|
|
134,503
|
|
|||
Net cash provided by (used in) discontinued operations
|
(2,213
|
)
|
|
(412
|
)
|
|
16,462
|
|
|||
Net cash provided by operating activities
|
263,489
|
|
|
130,503
|
|
|
150,965
|
|
|||
|
|
|
|
|
|
||||||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Capital expenditures
|
(74,325
|
)
|
|
(156,745
|
)
|
|
(156,602
|
)
|
|||
Proceeds from sale of property, plant and equipment
|
2,814
|
|
|
6,625
|
|
|
12,219
|
|
|||
Proceeds from sale of businesses
|
—
|
|
|
—
|
|
|
1,516
|
|
|||
Return of investments in non-consolidated affiliates
|
10,403
|
|
|
15,185
|
|
|
14,750
|
|
|||
Proceeds received from settlement of note receivable
|
—
|
|
|
5,357
|
|
|
—
|
|
|||
Settlement of foreign currency derivatives
|
(709
|
)
|
|
—
|
|
|
—
|
|
|||
(Increase) decrease in restricted cash
|
819
|
|
|
—
|
|
|
(221
|
)
|
|||
Cash invested in non-consolidated affiliates
|
—
|
|
|
(33
|
)
|
|
(197
|
)
|
|||
Net cash used in continuing operations
|
(60,998
|
)
|
|
(129,611
|
)
|
|
(128,535
|
)
|
|||
Net cash provided by discontinued operations
|
36,734
|
|
|
47,497
|
|
|
64,958
|
|
|||
Net cash used in investing activities
|
(24,264
|
)
|
|
(82,114
|
)
|
|
(63,577
|
)
|
|||
|
|
|
|
|
|
||||||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Proceeds from borrowings of long-term debt
|
430,758
|
|
|
673,500
|
|
|
—
|
|
|||
Repayments of long-term debt
|
(610,261
|
)
|
|
(143,500
|
)
|
|
—
|
|
|||
Cash transfer to Archrock, Inc.
|
(49,176
|
)
|
|
(532,578
|
)
|
|
—
|
|
|||
Net distributions to parent
|
—
|
|
|
(39,025
|
)
|
|
(79,296
|
)
|
|||
Payments for debt issuance costs
|
(779
|
)
|
|
(13,345
|
)
|
|
—
|
|
|||
Proceeds from stock options exercised
|
786
|
|
|
—
|
|
|
—
|
|
|||
Purchases of treasury stock
|
(2,091
|
)
|
|
(54
|
)
|
|
—
|
|
|||
Other
|
16
|
|
|
—
|
|
|
—
|
|
|||
Net cash used in financing activities
|
(230,747
|
)
|
|
(55,002
|
)
|
|
(79,296
|
)
|
|||
|
|
|
|
|
|
||||||
Effect of exchange rate changes on cash and cash equivalents
|
(1,832
|
)
|
|
(3,716
|
)
|
|
(3,925
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
6,646
|
|
|
(10,329
|
)
|
|
4,167
|
|
|||
Cash and cash equivalents at beginning of period
|
29,032
|
|
|
39,361
|
|
|
35,194
|
|
|||
Cash and cash equivalents at end of period
|
$
|
35,678
|
|
|
$
|
29,032
|
|
|
$
|
39,361
|
|
|
|
|
|
|
|
||||||
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
||||||
Income taxes paid, net
|
$
|
57,580
|
|
|
$
|
64,683
|
|
|
$
|
63,349
|
|
Interest paid, net of capitalized amounts
|
$
|
29,046
|
|
|
$
|
4,141
|
|
|
$
|
1,905
|
|
|
|
|
|
|
|
||||||
Supplemental disclosure of non-cash transactions:
|
|
|
|
|
|
||||||
Net transfers of property, plant, and equipment from parent prior to the Spin-off
|
$
|
—
|
|
|
$
|
(7,627
|
)
|
|
$
|
(17,472
|
)
|
Transfer of net deferred tax liabilities from parent at Spin-off
|
$
|
—
|
|
|
$
|
29,203
|
|
|
$
|
—
|
|
Accrued capital expenditures
|
$
|
5,985
|
|
|
$
|
2,743
|
|
|
$
|
15,426
|
|
Non-cash proceeds from the sale of a plant
|
$
|
7,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
•
|
Our consolidated and combined statements of operations, comprehensive income, cash flows and stockholders’ equity for the year ended December 31, 2015 consist of (i) the combined results of Archrock’s international services and product sales businesses for the period between January 1, 2015 and November 3, 2015 and (ii) the consolidated results of Exterran Corporation for periods subsequent to November 3, 2015. Our combined statements of operations, comprehensive income, cash flows and stockholders’ equity for the year ended December 31, 2014 consist entirely of the combined results of Archrock’s international services and product sales businesses.
|
•
|
Our consolidated balance sheets at December 31, 2016 and 2015 consist entirely of our consolidated balances.
|
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
|
|
Years Ended December 31,
|
||||||||||||||||||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||||||||||||||||||||||||||
|
Venezuela
|
|
Belleli CPE
|
|
Total
|
|
Venezuela
|
|
Belleli CPE
|
|
Total
|
|
Venezuela
|
|
Belleli CPE
|
|
Total
|
||||||||||||||||||
Revenue
|
$
|
—
|
|
|
$
|
28,469
|
|
|
$
|
28,469
|
|
|
$
|
—
|
|
|
$
|
60,138
|
|
|
$
|
60,138
|
|
|
$
|
—
|
|
|
$
|
42,947
|
|
|
$
|
42,947
|
|
Cost of sales (excluding depreciation and amortization expense)
|
—
|
|
|
27,323
|
|
|
27,323
|
|
|
—
|
|
|
55,169
|
|
|
55,169
|
|
|
—
|
|
|
41,494
|
|
|
41,494
|
|
|||||||||
Selling, general and administrative
|
54
|
|
|
4,229
|
|
|
4,283
|
|
|
185
|
|
|
3,396
|
|
|
3,581
|
|
|
479
|
|
|
4,323
|
|
|
4,802
|
|
|||||||||
Depreciation and amortization
|
—
|
|
|
861
|
|
|
861
|
|
|
—
|
|
|
3,388
|
|
|
3,388
|
|
|
—
|
|
|
4,103
|
|
|
4,103
|
|
|||||||||
Long-lived asset impairment
|
—
|
|
|
68,780
|
|
|
68,780
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Recovery attributable to expropriation
|
(33,124
|
)
|
|
—
|
|
|
(33,124
|
)
|
|
(50,074
|
)
|
|
—
|
|
|
(50,074
|
)
|
|
(66,040
|
)
|
|
—
|
|
|
(66,040
|
)
|
|||||||||
Interest expense
|
—
|
|
|
17
|
|
|
17
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|
—
|
|
|
27
|
|
|
27
|
|
|||||||||
Other (income) expense, net
|
(5,966
|
)
|
|
(134
|
)
|
|
(6,100
|
)
|
|
(6,243
|
)
|
|
(456
|
)
|
|
(6,699
|
)
|
|
(7,637
|
)
|
|
(985
|
)
|
|
(8,622
|
)
|
|||||||||
Income (loss) from discontinued operations, net of tax
|
$
|
39,036
|
|
|
$
|
(72,607
|
)
|
|
$
|
(33,571
|
)
|
|
$
|
56,132
|
|
|
$
|
(1,358
|
)
|
|
$
|
54,774
|
|
|
$
|
73,198
|
|
|
$
|
(6,015
|
)
|
|
$
|
67,183
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||||||||||||
|
Venezuela
|
|
Belleli CPE
|
|
Total
|
|
Venezuela
|
|
Belleli CPE
|
|
Total
|
||||||||||||
Cash
|
$
|
11
|
|
|
$
|
—
|
|
|
$
|
11
|
|
|
$
|
177
|
|
|
$
|
—
|
|
|
$
|
177
|
|
Accounts receivable
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,810
|
|
|
7,810
|
|
||||||
Inventory
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
431
|
|
|
431
|
|
||||||
Costs and estimated earnings in excess of billings on uncompleted contracts
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17,666
|
|
|
17,666
|
|
||||||
Other current assets
|
3
|
|
|
—
|
|
|
3
|
|
|
14
|
|
|
6,825
|
|
|
6,839
|
|
||||||
Total current assets associated with discontinued operations
|
14
|
|
|
—
|
|
|
14
|
|
|
191
|
|
|
32,732
|
|
|
32,923
|
|
||||||
Property, plant and equipment, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
38,274
|
|
|
38,274
|
|
||||||
Intangible and other assets, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
7
|
|
||||||
Total assets associated with discontinued operations
|
$
|
14
|
|
|
$
|
—
|
|
|
$
|
14
|
|
|
$
|
191
|
|
|
$
|
71,013
|
|
|
$
|
71,204
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Accounts payable
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,839
|
|
|
$
|
7,839
|
|
Accrued liabilities
|
906
|
|
|
207
|
|
|
1,113
|
|
|
1,249
|
|
|
2,556
|
|
|
3,805
|
|
||||||
Billings on uncompleted contracts in excess of costs and estimated earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,001
|
|
|
2,001
|
|
||||||
Total current liabilities associated with discontinued operations
|
906
|
|
|
207
|
|
|
1,113
|
|
|
1,249
|
|
|
12,396
|
|
|
13,645
|
|
||||||
Other long-term liabilities
|
2
|
|
|
—
|
|
|
2
|
|
|
158
|
|
|
5,917
|
|
|
6,075
|
|
||||||
Total liabilities associated with discontinued operations
|
$
|
908
|
|
|
$
|
207
|
|
|
$
|
1,115
|
|
|
$
|
1,407
|
|
|
$
|
18,313
|
|
|
$
|
19,720
|
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Costs incurred on uncompleted contracts
|
$
|
558,274
|
|
|
$
|
664,229
|
|
Estimated earnings (losses) on uncompleted contracts (1)
|
(10,370
|
)
|
|
44,915
|
|
||
|
547,904
|
|
|
709,144
|
|
||
Less — billings to date on uncompleted contracts
|
(558,064
|
)
|
|
(681,741
|
)
|
||
|
$
|
(10,160
|
)
|
|
$
|
27,403
|
|
|
(1)
|
Estimated earnings (losses) on uncompleted contracts includes
$56.4 million
and
$40.9 million
of cumulative losses realized on uncompleted Belleli EPC product sales contracts as of
December 31, 2016
and
2015
, respectively. Estimated earnings (losses) on uncompleted contracts as of
December 31, 2016
and
2015
excludes estimated accrued loss contract provisions on uncompleted Belleli EPC product sales contracts recognized but not realized of
$28.6 million
and
$43.7 million
, respectively. Accrued loss contract provisions are included in accrued liabilities in our balance sheets.
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Costs and estimated earnings in excess of billings on uncompleted contracts
|
$
|
31,956
|
|
|
$
|
65,311
|
|
Billings on uncompleted contracts in excess of costs and estimated earnings
|
(42,116
|
)
|
|
(37,908
|
)
|
||
|
$
|
(10,160
|
)
|
|
$
|
27,403
|
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Compression equipment, facilities and other fleet assets
|
$
|
1,480,568
|
|
|
$
|
1,527,328
|
|
Land and buildings
|
110,378
|
|
|
117,247
|
|
||
Transportation and shop equipment
|
140,128
|
|
|
144,413
|
|
||
Other
|
95,817
|
|
|
99,035
|
|
||
|
1,826,891
|
|
|
1,888,023
|
|
||
Accumulated depreciation
|
(1,029,082
|
)
|
|
(1,029,835
|
)
|
||
Property, plant and equipment, net
|
$
|
797,809
|
|
|
$
|
858,188
|
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Intangible assets, net
|
$
|
12,945
|
|
|
$
|
17,809
|
|
Recoverable foreign social security tax
|
8,174
|
|
|
5,086
|
|
||
Deferred financing costs
|
6,475
|
|
|
7,399
|
|
||
Notes receivable
|
4,849
|
|
|
1,279
|
|
||
Other
|
26,553
|
|
|
19,960
|
|
||
Intangibles and other assets, net
|
$
|
58,996
|
|
|
$
|
51,533
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||||
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
||||||||
Deferred financing costs (1)
|
$
|
8,368
|
|
|
$
|
(1,893
|
)
|
|
$
|
7,673
|
|
|
$
|
(274
|
)
|
Marketing related (20 year life)
|
582
|
|
|
(541
|
)
|
|
2,537
|
|
|
(1,759
|
)
|
||||
Customer related (17-20 year life)
|
76,674
|
|
|
(64,151
|
)
|
|
78,271
|
|
|
(61,888
|
)
|
||||
Technology based (20 year life)
|
3,381
|
|
|
(3,155
|
)
|
|
3,252
|
|
|
(3,014
|
)
|
||||
Contract based (2-11 year life)
|
43,921
|
|
|
(43,766
|
)
|
|
43,930
|
|
|
(43,520
|
)
|
||||
Intangible assets and deferred financing costs
|
$
|
132,926
|
|
|
$
|
(113,506
|
)
|
|
$
|
135,663
|
|
|
$
|
(110,455
|
)
|
|
(1)
|
Represents debt issuance costs relating to our revolving credit facility. See
Note 10
for further discussion regarding our revolving credit facility.
|
2017
|
$
|
3,058
|
|
2018
|
2,331
|
|
|
2019
|
1,881
|
|
|
2020
|
1,559
|
|
|
2021
|
1,269
|
|
|
Thereafter
|
2,847
|
|
|
Total
|
$
|
12,945
|
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Accrued salaries and other benefits
|
$
|
52,247
|
|
|
$
|
48,440
|
|
Accrued income and other taxes
|
43,336
|
|
|
37,046
|
|
||
Accrued loss contract provisions
|
31,452
|
|
|
45,422
|
|
||
Accrued warranty expense
|
4,412
|
|
|
7,873
|
|
||
Accrued interest
|
2,889
|
|
|
2,454
|
|
||
Accrued start-up and commissioning expenses
|
1,055
|
|
|
2,695
|
|
||
Accrued other liabilities
|
27,401
|
|
|
31,911
|
|
||
Accrued liabilities
|
$
|
162,792
|
|
|
$
|
175,841
|
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Revolving credit facility due November 2020
|
$
|
118,000
|
|
|
$
|
285,000
|
|
Term loan facility due November 2017
|
232,750
|
|
|
245,000
|
|
||
Other, interest at various rates, collateralized by equipment and other assets
|
583
|
|
|
836
|
|
||
Unamortized deferred financing costs
|
(2,363
|
)
|
|
(5,243
|
)
|
||
Long-term debt
|
$
|
348,970
|
|
|
$
|
525,593
|
|
•
|
waived any potential event of default arising under the Credit Agreement as a result of the potential inaccuracy of certain representations and warranties regarding our prior period financial information and previously delivered compliance certificate for the 2015 fiscal year;
|
•
|
provides that LIBOR loans will bear interest at LIBOR plus
2.75%
and base rate loans will bear interest at the Base Rate plus
1.75%
until January 4, 2017;
|
•
|
adds a condition precedent to the borrowing of loans that, after giving effect to the application of the proceeds of each borrowing, our consolidated cash balance of group members (as defined in the amended Credit Agreement) will not exceed
$30,000,000
plus certain other amounts; and
|
•
|
amends the definition of EBITDA to allow adjustments for certain Restructuring Costs and Restatement Costs (in each case as defined in the amended Credit Agreement) to the extent such costs were incurred during the years ending December 31, 2016 and 2017.
|
|
December 31,
2016 |
|
|
||
2017
|
$
|
232,750
|
|
|
(1)
|
2018
|
253
|
|
|
|
|
2019
|
253
|
|
|
|
|
2020
|
118,077
|
|
|
|
|
2021
|
—
|
|
|
|
|
Thereafter
|
—
|
|
|
|
|
Total debt
|
$
|
351,333
|
|
|
(1)
|
|
(1)
|
The principal amount of
$232.8 million
due in November 2017 under the term loan facility is classified as long-term in our balance sheet at December 31, 2016 because we have the intent and ability to refinance the current principal amount due with borrowings under our existing revolving credit facility. These amounts include the full face value of the term loan facility and have not been reduced by the aggregate unamortized debt financing costs of
$2.4 million
as of
December 31, 2016
.
|
•
|
Level 1
— Quoted unadjusted prices for identical instruments in active markets to which we have access at the date of measurement.
|
•
|
Level 2
— Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 2 inputs are those in markets for which there are few transactions, the prices are not current, little public information exists or prices vary substantially over time or among brokered market makers.
|
•
|
Level 3
— Model derived valuations in which one or more significant inputs or significant value drivers are unobservable. Unobservable inputs are those inputs that reflect our own assumptions regarding how market participants would price the asset or liability based on the best available information.
|
|
Year Ended December 31, 2016
|
|
Year Ended December 31, 2015
|
||||||||||||||||||||
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
||||||||||||
Impaired long-lived assets (1)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,109
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
995
|
|
Impaired assets—Discontinued operations (2)
|
—
|
|
|
—
|
|
|
13,859
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Note receivable from the sale of a plant (3)
|
—
|
|
|
—
|
|
|
7,037
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Liability to exit the use of a corporate operating lease—restructuring and other charges (4)
|
—
|
|
|
—
|
|
|
3,580
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Long-term receivable from the sale of our Canadian Operations (5)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,100
|
|
|
(1)
|
Our estimate of the impaired long-lived assets’ fair value during the years ended
December 31, 2016
and
2015
was primarily based on either the expected net sale proceeds compared to other fleet units we recently sold and/or a review of other units recently offered for sale by third parties, or the estimated component value of the equipment we plan to use.
|
(2)
|
Our estimate of the fair value of the impaired assets of Belleli CPE, which were classified as discontinued operations, during the year ended
December 31, 2016
was based on the proceeds received from the sale of Belleli CPE, net of selling costs.
|
(3)
|
Our estimate of the fair value of the note receivable from the sale of our plant in Argentina during the year ended
December 31, 2016
was discounted based on a settlement period, with annual payments, of
2.6 years
and a discount rate of
5%
.
|
(4)
|
The fair value of our liability to exit the use of a corporate operating lease relating to restructuring activities during the second quarter of 2016 was estimated based on an incremental borrowing rate of
3%
and remaining lease payments, net of estimated sublease rentals, through
February 2018
.
|
(5)
|
In April 2015, we accepted an offer to early settle the outstanding note receivable due to us relating to the previous sale of our Canadian contract operations and aftermarket services businesses (“Canadian Operations”) for
$5.1 million
.
|
|
Restatement Charges
|
||
Beginning balance at January 1, 2016
|
$
|
—
|
|
Additions for costs expensed, net
|
18,879
|
|
|
Reductions for payments, net
|
(16,667
|
)
|
|
Ending balance at December 31, 2016
|
$
|
2,212
|
|
|
Year Ended
December 31, 2016 |
||
External accounting costs
|
$
|
21,073
|
|
External legal costs
|
7,565
|
|
|
Other
|
1,448
|
|
|
Recoveries from Archrock
|
(11,207
|
)
|
|
Total restatement charges
|
$
|
18,879
|
|
|
Spin-off
|
|
Cost Reduction Plan
|
|
Total
|
||||||
Beginning balance at January 1, 2015
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Additions for costs expensed
|
15,749
|
|
|
15,566
|
|
|
31,315
|
|
|||
Less non-cash expense
|
(4,843
|
)
|
|
(4,007
|
)
|
|
(8,850
|
)
|
|||
Reductions for payments
|
(9,823
|
)
|
|
(11,334
|
)
|
|
(21,157
|
)
|
|||
Ending balance at December 31, 2015
|
1,083
|
|
|
225
|
|
|
1,308
|
|
|||
Additions for costs expensed
|
3,943
|
|
|
24,386
|
|
|
28,329
|
|
|||
Deductions for gains realized
|
—
|
|
|
(872
|
)
|
|
(872
|
)
|
|||
Less non-cash expense
|
(896
|
)
|
|
(437
|
)
|
|
(1,333
|
)
|
|||
Less non-cash income
|
—
|
|
|
872
|
|
|
872
|
|
|||
Reductions for payments
|
(3,196
|
)
|
|
(16,289
|
)
|
|
(19,485
|
)
|
|||
Ending balance at December 31, 2016
|
$
|
934
|
|
|
$
|
7,885
|
|
|
$
|
8,819
|
|
|
Years Ended December 31,
|
||||||
|
2016
|
|
2015
|
||||
Financial advisor fees related to the Spin-off
|
$
|
—
|
|
|
$
|
4,598
|
|
Consulting fees
|
22
|
|
|
1,932
|
|
||
Start-up of stand-alone functions
|
887
|
|
|
1,332
|
|
||
Retention awards to certain employees
|
3,056
|
|
|
3,121
|
|
||
Chief Executive Officer signing bonus
|
—
|
|
|
2,000
|
|
||
Non-cash inventory write-downs
|
—
|
|
|
8,707
|
|
||
Employee termination benefits
|
19,892
|
|
|
9,625
|
|
||
Net charges to exit the use of a corporate operating lease
|
2,904
|
|
|
—
|
|
||
Other
|
696
|
|
|
—
|
|
||
Total restructuring and other charges
|
$
|
27,457
|
|
|
$
|
31,315
|
|
|
Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
United States
|
$
|
(129,864
|
)
|
|
$
|
(7,702
|
)
|
|
$
|
84,161
|
|
Foreign
|
60,258
|
|
|
19,122
|
|
|
42,990
|
|
|||
Income (loss) before income taxes
|
$
|
(69,606
|
)
|
|
$
|
11,420
|
|
|
$
|
127,151
|
|
|
Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Current tax provision (benefit):
|
|
|
|
|
|
||||||
U.S. federal
|
$
|
(131
|
)
|
|
$
|
383
|
|
|
$
|
6,105
|
|
State
|
(792
|
)
|
|
1,201
|
|
|
2,136
|
|
|||
Foreign
|
54,076
|
|
|
63,692
|
|
|
56,029
|
|
|||
Total current
|
53,153
|
|
|
65,276
|
|
|
64,270
|
|
|||
Deferred tax provision (benefit):
|
|
|
|
|
|
||||||
U.S. federal
|
62,672
|
|
|
(29,962
|
)
|
|
12,434
|
|
|||
State
|
2,306
|
|
|
(484
|
)
|
|
(753
|
)
|
|||
Foreign
|
6,629
|
|
|
4,716
|
|
|
3,091
|
|
|||
Total deferred
|
71,607
|
|
|
(25,730
|
)
|
|
14,772
|
|
|||
Provision for income taxes
|
$
|
124,760
|
|
|
$
|
39,546
|
|
|
$
|
79,042
|
|
|
Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Income taxes at U.S. federal statutory rate of 35%
|
$
|
(24,362
|
)
|
|
$
|
3,998
|
|
|
$
|
44,503
|
|
Net state income taxes
|
(1,841
|
)
|
|
466
|
|
|
976
|
|
|||
Foreign taxes
|
38,211
|
|
|
38,052
|
|
|
32,991
|
|
|||
Foreign tax credits
|
(9,492
|
)
|
|
(17,398
|
)
|
|
(10,942
|
)
|
|||
Research and development credits
|
(1,024
|
)
|
|
(24,938
|
)
|
|
—
|
|
|||
Unrecognized tax benefits
|
4,051
|
|
|
6,187
|
|
|
403
|
|
|||
Valuation allowances
|
123,892
|
|
|
38,284
|
|
|
17,846
|
|
|||
Proceeds from sale of joint venture assets
|
(3,641
|
)
|
|
(5,315
|
)
|
|
(5,162
|
)
|
|||
Capital contributions or distributions related to Spin-off
|
(2,887
|
)
|
|
(77
|
)
|
|
—
|
|
|||
Other
|
1,853
|
|
|
287
|
|
|
(1,573
|
)
|
|||
Provision for income taxes
|
$
|
124,760
|
|
|
$
|
39,546
|
|
|
$
|
79,042
|
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Deferred tax assets:
|
|
|
|
||||
Net operating loss carryforwards
|
$
|
172,851
|
|
|
$
|
134,448
|
|
Foreign tax credit carryforwards
|
81,510
|
|
|
72,019
|
|
||
Research and development credit carryforwards
|
31,251
|
|
|
31,251
|
|
||
Alternative minimum tax credit carryforwards
|
5,055
|
|
|
5,145
|
|
||
Deferred revenue
|
52,229
|
|
|
44,821
|
|
||
Other
|
50,797
|
|
|
46,045
|
|
||
Subtotal
|
393,693
|
|
|
333,729
|
|
||
Valuation allowances
|
(318,887
|
)
|
|
(186,993
|
)
|
||
Total deferred tax assets
|
74,806
|
|
|
146,736
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Property, plant and equipment
|
(64,876
|
)
|
|
(73,491
|
)
|
||
Other
|
(15,615
|
)
|
|
(9,654
|
)
|
||
Total deferred tax liabilities
|
(80,491
|
)
|
|
(83,145
|
)
|
||
Net deferred tax assets (liabilities)
|
$
|
(5,685
|
)
|
|
$
|
63,591
|
|
|
Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Beginning balance
|
$
|
14,943
|
|
|
$
|
8,356
|
|
|
$
|
9,033
|
|
Additions based on tax positions related to prior years
|
3,140
|
|
|
6,448
|
|
|
—
|
|
|||
Additions based on tax positions related to current year
|
256
|
|
|
261
|
|
|
—
|
|
|||
Reductions based on lapse of statute of limitations
|
(102
|
)
|
|
(122
|
)
|
|
(215
|
)
|
|||
Reductions based on tax positions related to prior years
|
—
|
|
|
—
|
|
|
(462
|
)
|
|||
Ending balance
|
$
|
18,237
|
|
|
$
|
14,943
|
|
|
$
|
8,356
|
|
•
|
The separation and distribution agreement contains the key provisions relating to the separation of our business from Archrock’s business and the distribution of our common stock to its stockholders. The separation and distribution agreement identifies the assets and rights that were transferred, liabilities that were assumed or retained and contracts and related matters that were assigned to us by Archrock or by us to Archrock in the Spin-off and describes how these transfers, assumptions and assignments occurred. Pursuant to the separation and distribution agreement, on November 3, 2015, we transferred net proceeds of
$532.6 million
from borrowings under the Credit Facility to Archrock to allow for its repayment of a portion of its indebtedness. In addition, the separation and distribution agreement contains certain noncompetition provisions addressing restrictions for
three years
after the Spin-off on our ability to provide contract operations and aftermarket services in the U.S. and on Archrock’s ability to provide contract operations and aftermarket services outside of the U.S. and to provide products for sale worldwide that compete with our current product sales business, subject to certain exceptions. The separation and distribution agreement also governs the treatment of aspects relating to indemnification, insurance, confidentiality and cooperation. Additionally, the separation and distribution agreement specifies the right of a subsidiary of Archrock to receive payments from EESLP based on a notional amount corresponding to payments received by our subsidiaries from PDVSA Gas in respect of the sale of our and our joint ventures’ previously nationalized assets promptly after such amounts are collected by our subsidiaries and a
$25.0 million
cash payment from EESLP promptly following the occurrence of a qualified capital raise (as defined in the Credit Agreement). See
Note 21
for additional discussion on such contingent liabilities.
|
•
|
The tax matters agreement governs the respective rights, responsibilities and obligations of Archrock and us with respect to tax liabilities and benefits, tax attributes, the preparation and filing of tax returns, the control of audits and other tax proceedings and certain other matters regarding taxes.
|
•
|
The employee matters agreement governs the allocation of liabilities and responsibilities between Archrock and Exterran Corporation relating to employee compensation and benefit plans and programs, including the treatment of retirement, health and welfare plans and equity and other incentive plans and awards. The agreement contains provisions regarding stock-based compensation. See
Note 18
for additional information relating to the Exterran Corporation Stock Incentive Plan.
|
•
|
The transition services agreement sets forth the terms on which Archrock provides to us, and we provide to Archrock, on a temporary basis, certain services or functions that the companies historically have shared. During the year ended
December 31, 2016
, we recorded selling, general and administrative expense of
$0.7 million
and other income of
$1.3 million
associated with services under the transition services agreement. For the period from November 4, 2015 through December 31, 2015, we recorded selling, general and administrative expense of
$0.2 million
and other income of
$0.2 million
associated with services under the transition services agreement.
|
•
|
The supply agreement sets forth the terms under which we provide manufactured equipment, including the design, engineering, manufacturing and sale of natural gas compression equipment, on an exclusive basis to Archrock and Archrock Partners. This supply agreement has an initial term of
two years
, subject to certain cancellation clauses, and is extendable for additional
one year
terms by mutual agreement of the parties. Pursuant to the supply agreement, each of Archrock and Archrock Partners is required to purchase their requirements of newly-manufactured compression equipment from us, subject to certain exceptions. Subsequent to November 3, 2015, sales to Archrock and Archrock Partners are considered sales to third parties.
|
•
|
The storage agreements set forth the terms under which we provide each of Archrock and Archrock Partners with storage space for equipment purchased under the supply agreement, as well as the terms under which Archrock provides storage space to us for certain of our equipment.
|
•
|
The services agreements set forth the terms under which we provide Archrock (or Archrock’s customers on its behalf) with engineering, preservation and installation and commissioning services and Archrock provides us (or our customers on our behalf) with make-ready, parts sales, preservation and installation and commissioning services. These services agreements will continue in effect until terminated by either party on
30 days
’ written notice.
|
|
Years Ended December 31,
|
||||||
|
2015
|
|
2014
|
||||
Net distributions to parent per the statements of stockholders’ equity
|
$
|
(57,635
|
)
|
|
$
|
(59,970
|
)
|
Stock-based compensation expenses prior to the Spin-off
|
(6,066
|
)
|
|
(5,288
|
)
|
||
Stock-based compensation excess tax benefit prior to the Spin-off
|
1,193
|
|
|
3,434
|
|
||
Net transfers of property, plant and equipment from parent prior to the Spin-off
|
(7,627
|
)
|
|
(17,472
|
)
|
||
Transfer of net deferred tax liabilities from parent at Spin-off
|
29,203
|
|
|
—
|
|
||
Transfer of other net assets to parent at Spin-off
|
1,907
|
|
|
—
|
|
||
Net distributions to parent per the statements of cash flows
|
$
|
(39,025
|
)
|
|
$
|
(79,296
|
)
|
|
Foreign Currency
Translation
Adjustment
|
||
Accumulated other comprehensive income, January 1, 2014
|
$
|
38,892
|
|
Loss recognized in other comprehensive income (loss)
|
(9,370
|
)
|
|
Income reclassified from accumulated other comprehensive income (1)
|
(2,777
|
)
|
|
Accumulated other comprehensive income, December 31, 2014
|
26,745
|
|
|
Income recognized in other comprehensive income (loss)
|
2,453
|
|
|
Accumulated other comprehensive income, December 31, 2015
|
29,198
|
|
|
Income recognized in other comprehensive income (loss)
|
3,151
|
|
|
Loss reclassified from accumulated other comprehensive income (2)
|
15,159
|
|
|
Accumulated other comprehensive income, December 31, 2016
|
$
|
47,508
|
|
|
(1)
|
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 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.
|
(2)
|
During the year ended
December 31, 2016
, we reclassified a loss of
$15.2 million
related to foreign currency translation adjustments to income (loss) from discontinued operations in our statement of operations. This amount represents cumulative foreign currency translation adjustments associated with our Belleli CPE business that previously had been recognized in accumulated other comprehensive income. See Note 3 for further discussion of the sale of our Belleli CPE business.
|
•
|
Pre-2015 Awards.
Immediately prior to the Spin-off, each outstanding Archrock stock option, restricted stock award, restricted stock unit award and performance unit award granted prior to January 1, 2015, whether vested or unvested, were split into
two
awards, consisting of an Archrock award and an Exterran Corporation award. For Archrock “incentive stock options” (within the meaning of Section 422 of the Code), the holder of the award had the option to elect, prior to the Spin-off, to convert such options into options denominated in shares of common stock of the applicable holder’s post-spin employer.
|
•
|
2015 Awards.
Each Archrock stock option, restricted stock award, restricted stock unit award and performance unit award that was (i) granted in calendar year 2015 and (ii) held by an individual who became our employee or is engaged by us following the Spin-off were converted solely into an Exterran Corporation award. Archrock did not grant any stock options in the calendar year 2015 prior to the Spin-off.
|
|
Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Stock options
|
$
|
115
|
|
|
$
|
348
|
|
|
$
|
496
|
|
Restricted stock, restricted stock units, performance units, cash settled restricted stock units and cash settled performance units
|
13,188
|
|
|
7,871
|
|
|
7,922
|
|
|||
Restructuring and other charges—stock-based compensation expense
|
1,333
|
|
|
143
|
|
|
—
|
|
|||
Total stock-based compensation expense
|
$
|
14,636
|
|
|
$
|
8,362
|
|
|
$
|
8,418
|
|
|
Years Ended December 31,
|
|||||
|
2016
|
|
2015
|
|
2014
|
|
Expected life in years
|
N/A
|
|
N/A
|
|
4.5
|
|
Risk-free interest rate
|
N/A
|
|
N/A
|
|
1.33
|
%
|
Volatility
|
N/A
|
|
N/A
|
|
46.51
|
%
|
Dividend yield
|
N/A
|
|
N/A
|
|
1.5
|
%
|
|
Stock
Options
(in thousands)
|
|
Weighted
Average
Exercise Price
Per Share
|
|
Weighted
Average
Remaining
Life
(in years)
|
|
Aggregate
Intrinsic
Value
(in thousands)
|
|||||
Options outstanding, January 1, 2016
|
434
|
|
|
$
|
18.53
|
|
|
|
|
|
||
Granted
|
—
|
|
|
—
|
|
|
|
|
|
|||
Exercised
|
(61
|
)
|
|
12.88
|
|
|
|
|
|
|||
Cancelled
|
(77
|
)
|
|
27.20
|
|
|
|
|
|
|||
Options outstanding, December 31, 2016
|
296
|
|
|
17.44
|
|
|
2.2
|
|
$
|
2,572
|
|
|
Options exercisable, December 31, 2016
|
284
|
|
|
16.80
|
|
|
2.1
|
|
2,572
|
|
|
Shares
(in thousands)
|
|
Weighted
Average
Grant-Date
Fair Value
Per Share
|
|||
Non-vested awards, January 1, 2016
|
1,004
|
|
|
$
|
22.17
|
|
Granted
|
773
|
|
|
15.46
|
|
|
Vested
|
(526
|
)
|
|
21.60
|
|
|
Change in expected vesting of performance units
|
138
|
|
|
15.46
|
|
|
Cancelled
|
(97
|
)
|
|
22.03
|
|
|
Non-vested awards, December 31, 2016 (1)
|
1,292
|
|
|
17.68
|
|
|
(1)
|
Non-vested awards as of
December 31, 2016
are comprised of
182,000
cash settled restricted stock units and cash settled performance units and
1,110,000
restricted shares, restricted stock units and performance units.
|
|
Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Numerator for basic and diluted net income (loss) per common share:
|
|
|
|
|
|
||||||
Income (loss) from continuing operations
|
$
|
(194,366
|
)
|
|
$
|
(28,126
|
)
|
|
$
|
48,109
|
|
Income (loss) from discontinued operations, net of tax
|
(33,571
|
)
|
|
54,774
|
|
|
67,183
|
|
|||
Less: Net income attributable to participating securities
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net income (loss) — used in basic and diluted net income (loss) per common share
|
$
|
(227,937
|
)
|
|
$
|
26,648
|
|
|
$
|
115,292
|
|
|
|
|
|
|
|
||||||
Weighted average common shares outstanding including participating securities
|
35,489
|
|
|
34,437
|
|
|
34,286
|
|
|||
Less: Weighted average participating securities outstanding
|
(921
|
)
|
|
(149
|
)
|
|
—
|
|
|||
Weighted average common shares outstanding — used in basic net income (loss) per common share
|
34,568
|
|
|
34,288
|
|
|
34,286
|
|
|||
Net dilutive potential common shares issuable:
|
|
|
|
|
|
|
|||||
On exercise of options and vesting of restricted stock units
|
*
|
|
|
*
|
|
|
—
|
|
|||
Weighted average common shares outstanding — used in diluted net income (loss) per common share
|
34,568
|
|
|
34,288
|
|
|
34,286
|
|
|||
|
|
|
|
|
|
||||||
Net income (loss) per common share:
|
|
|
|
|
|
||||||
Basic
|
$
|
(6.59
|
)
|
|
$
|
0.78
|
|
|
$
|
3.36
|
|
Diluted
|
$
|
(6.59
|
)
|
|
$
|
0.78
|
|
|
$
|
3.36
|
|
|
*
|
Excluded from diluted net income (loss) per common share as their inclusion would have been anti-dilutive.
|
|
Years Ended December 31,
|
|||||||
|
2016
|
|
2015
|
|
2014
|
|||
Net dilutive potential common shares issuable:
|
|
|
|
|
|
|||
On exercise of options where exercise price is greater than average market value for the period
|
225
|
|
|
62
|
|
|
*
|
|
On exercise of options and vesting of restricted stock units
|
50
|
|
|
16
|
|
|
*
|
|
Net dilutive potential common shares issuable
|
275
|
|
|
78
|
|
|
—
|
|
|
*
|
Not applicable for the period.
|
|
December 31,
2016 |
||
2017
|
$
|
6,176
|
|
2018
|
3,825
|
|
|
2019
|
2,131
|
|
|
2020
|
1,736
|
|
|
2021
|
1,729
|
|
|
Thereafter
|
11,944
|
|
|
Total
|
$
|
27,541
|
|
|
Term
|
|
Maximum Potential
Undiscounted
Payments as of
December 31, 2016
|
||
Performance guarantees through letters of credit (1)
|
2017-2020
|
|
$
|
121,645
|
|
Standby letters of credit
|
2017
|
|
545
|
|
|
Commercial letters of credit
|
2017
|
|
671
|
|
|
Bid bonds and performance bonds (1)
|
2017-2023
|
|
42,483
|
|
|
Maximum potential undiscounted payments
|
|
|
$
|
165,344
|
|
|
(1)
|
We have issued guarantees to third parties to ensure performance of our obligations, some of which may be fulfilled by third parties.
|
|
Contract
Operations
|
|
Aftermarket
Services
|
|
Oil and Gas Product Sales
|
|
Belleli EPC Product Sales
|
|
Reportable
Segments
Total
|
|
Other (1)
|
|
Total (2)(3)
|
||||||||||||||
2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Revenue
|
$
|
392,463
|
|
|
$
|
120,550
|
|
|
$
|
392,384
|
|
|
$
|
123,856
|
|
|
$
|
1,029,253
|
|
|
$
|
—
|
|
|
$
|
1,029,253
|
|
Gross margin (4)
|
248,793
|
|
|
33,208
|
|
|
26,990
|
|
|
(2,466
|
)
|
|
306,525
|
|
|
—
|
|
|
306,525
|
|
|||||||
Total assets
|
745,752
|
|
|
28,421
|
|
|
159,172
|
|
|
27,928
|
|
|
961,273
|
|
|
413,491
|
|
|
1,374,764
|
|
|||||||
Capital expenditures
|
69,946
|
|
|
332
|
|
|
790
|
|
|
1,236
|
|
|
72,304
|
|
|
2,021
|
|
|
74,325
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Revenue
|
$
|
469,900
|
|
|
$
|
127,802
|
|
|
$
|
1,089,562
|
|
|
$
|
103,221
|
|
|
$
|
1,790,485
|
|
|
$
|
—
|
|
|
$
|
1,790,485
|
|
Gross margin (4)
|
297,509
|
|
|
36,569
|
|
|
163,825
|
|
|
(31,625
|
)
|
|
466,278
|
|
|
—
|
|
|
466,278
|
|
|||||||
Total assets
|
790,957
|
|
|
31,614
|
|
|
230,947
|
|
|
46,592
|
|
|
1,100,110
|
|
|
617,082
|
|
|
1,717,192
|
|
|||||||
Capital expenditures
|
138,171
|
|
|
709
|
|
|
5,001
|
|
|
1,713
|
|
|
145,594
|
|
|
11,151
|
|
|
156,745
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Revenue
|
$
|
493,853
|
|
|
$
|
162,724
|
|
|
$
|
1,329,607
|
|
|
$
|
115,479
|
|
|
$
|
2,101,663
|
|
|
$
|
—
|
|
|
$
|
2,101,663
|
|
Gross margin (4)
|
308,445
|
|
|
42,543
|
|
|
240,189
|
|
|
(33,391
|
)
|
|
557,786
|
|
|
—
|
|
|
557,786
|
|
|||||||
Total assets
|
809,122
|
|
|
37,200
|
|
|
334,401
|
|
|
63,304
|
|
|
1,244,027
|
|
|
686,083
|
|
|
1,930,110
|
|
|||||||
Capital expenditures
|
130,248
|
|
|
1,095
|
|
|
10,954
|
|
|
10,462
|
|
|
152,759
|
|
|
3,843
|
|
|
156,602
|
|
|
(1)
|
Includes corporate related items.
|
(2)
|
Totals exclude assets, capital expenditures and the operating results of discontinued operations.
|
(3)
|
Total gross margin, a non-GAAP financial measure, is reconciled, in total, to income (loss) before income taxes, its most directly comparable measure calculated and presented in accordance with GAAP, below.
|
(4)
|
Gross margin is defined as total revenue less cost of sales (excluding depreciation and amortization expense).
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Assets from reportable segments
|
$
|
961,273
|
|
|
$
|
1,100,110
|
|
Other assets (1)
|
413,491
|
|
|
617,082
|
|
||
Assets associated with discontinued operations
|
14
|
|
|
71,204
|
|
||
Total assets
|
$
|
1,374,778
|
|
|
$
|
1,788,396
|
|
|
(1)
|
Includes corporate related items.
|
|
Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Revenue:
|
|
|
|
|
|
||||||
U.S.
|
$
|
335,268
|
|
|
$
|
858,409
|
|
|
$
|
1,051,824
|
|
United Arab Emirates
|
137,247
|
|
|
135,623
|
|
|
131,392
|
|
|||
Argentina
|
151,374
|
|
|
172,004
|
|
|
172,492
|
|
|||
Brazil
|
85,831
|
|
|
68,578
|
|
|
91,433
|
|
|||
Mexico
|
90,876
|
|
|
125,972
|
|
|
119,953
|
|
|||
Other international
|
228,657
|
|
|
429,899
|
|
|
534,569
|
|
|||
Total
|
$
|
1,029,253
|
|
|
$
|
1,790,485
|
|
|
$
|
2,101,663
|
|
|
December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Property, plant and equipment, net:
|
|
|
|
|
|
||||||
U.S.
|
$
|
84,669
|
|
|
$
|
90,976
|
|
|
$
|
87,093
|
|
Argentina
|
222,548
|
|
|
239,226
|
|
|
246,410
|
|
|||
Brazil
|
157,139
|
|
|
128,032
|
|
|
119,795
|
|
|||
Mexico
|
167,279
|
|
|
198,641
|
|
|
238,661
|
|
|||
Other international
|
166,174
|
|
|
201,313
|
|
|
216,631
|
|
|||
Total
|
$
|
797,809
|
|
|
$
|
858,188
|
|
|
$
|
908,590
|
|
|
Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Income (loss) before income taxes
|
$
|
(69,606
|
)
|
|
$
|
11,420
|
|
|
$
|
127,151
|
|
Selling, general and administrative
|
165,985
|
|
|
220,396
|
|
|
263,170
|
|
|||
Depreciation and amortization
|
137,974
|
|
|
154,801
|
|
|
170,088
|
|
|||
Long-lived asset impairment
|
15,146
|
|
|
20,788
|
|
|
3,851
|
|
|||
Restatement charges
|
18,879
|
|
|
—
|
|
|
—
|
|
|||
Restructuring and other charges
|
27,457
|
|
|
31,315
|
|
|
—
|
|
|||
Interest expense
|
34,181
|
|
|
7,272
|
|
|
1,878
|
|
|||
Equity in income of non-consolidated affiliates
|
(10,403
|
)
|
|
(15,152
|
)
|
|
(14,553
|
)
|
|||
Other (income) expense, net
|
(13,088
|
)
|
|
35,438
|
|
|
6,201
|
|
|||
Total gross margin
|
$
|
306,525
|
|
|
$
|
466,278
|
|
|
$
|
557,786
|
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
Year Ended December 31, 2016:
|
|
|
|
|
|
|
|
||||||||
Revenue
|
$
|
306,630
|
|
|
$
|
262,147
|
|
|
$
|
229,158
|
|
|
$
|
231,318
|
|
Gross profit (1)
|
35,634
|
|
|
54,647
|
|
|
44,886
|
|
|
32,059
|
|
||||
Loss from continuing operations
|
(28,830
|
)
|
|
(106,582
|
)
|
|
(32,312
|
)
|
|
(26,642
|
)
|
||||
Income (loss) from discontinued operations, net of tax
|
(64,127
|
)
|
|
11,036
|
|
|
19,652
|
|
|
(132
|
)
|
||||
Net loss
|
(92,957
|
)
|
|
(95,546
|
)
|
|
(12,660
|
)
|
|
(26,774
|
)
|
||||
Net loss per common share:
|
|
|
|
|
|
|
|
||||||||
Basic (2)
|
$
|
(2.70
|
)
|
|
$
|
(2.76
|
)
|
|
$
|
(0.37
|
)
|
|
$
|
(0.77
|
)
|
Diluted (2)
|
(2.70
|
)
|
|
(2.76
|
)
|
|
(0.37
|
)
|
|
(0.77
|
)
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
Year Ended December 31, 2015:
|
|
|
|
|
|
|
|
||||||||
Revenue
|
$
|
519,820
|
|
|
$
|
460,781
|
|
|
$
|
411,173
|
|
|
$
|
398,711
|
|
Gross profit (1)
|
97,839
|
|
|
45,960
|
|
|
58,578
|
|
|
47,006
|
|
||||
Income (loss) from continuing operations
|
18,545
|
|
|
(14,630
|
)
|
|
(9,598
|
)
|
|
(22,443
|
)
|
||||
Income from discontinued operations, net of tax
|
17,932
|
|
|
207
|
|
|
18,275
|
|
|
18,360
|
|
||||
Net income (loss)
|
36,477
|
|
|
(14,423
|
)
|
|
8,677
|
|
|
(4,083
|
)
|
||||
Net income (loss) per common share:
|
|
|
|
|
|
|
|
||||||||
Basic (2)
|
$
|
1.06
|
|
|
$
|
(0.42
|
)
|
|
$
|
0.25
|
|
|
$
|
(0.12
|
)
|
Diluted (2)
|
1.06
|
|
|
(0.42
|
)
|
|
0.25
|
|
|
(0.12
|
)
|
|
(1)
|
Gross profit is defined as revenue less cost of sales, direct depreciation and amortization expense and direct long-lived asset impairment charges.
|
(2)
|
For the periods prior to November 3, 2015, the average number of common shares outstanding used to calculate basic and diluted net income (loss) per common share was based on
34,286,267
shares of our common stock that were distributed by Archrock in the Spin-off on November 3, 2015.
|
•
|
In conjunction with the planned disposition of Belleli CPE, we recorded impairments of long-lived assets and current assets that totaled
$61.6 million
and
$7.1 million
during the first quarter of
2016
and second quarter of
2016
, respectively. We completed the sale of Belleli CPE in August 2016 for cash proceeds of
$5.5 million
. Belleli CPE is reflected as discontinued operations in our financial statements for all periods presented (see
Note 3
).
|
•
|
Due to significant negative evidence of cumulative losses in the U.S., we are no longer able to support that it is more-likely-than-not that we will have sufficient taxable income of the appropriate character in the future that will allow us to realize our U.S. deferred tax assets. As a result, we recorded a full valuation allowance against our U.S. deferred tax assets resulting in additional charges of
$88.0 million
,
$13.6 million
and
$18.2 million
during the second quarter of
2016
, third quarter of
2016
and fourth quarter of
2016
, respectively (see
Note 15
).
|
•
|
During the second quarter of 2016, third quarter of 2016 and fourth quarter of
2016
, we incurred costs of
$7.9 million
,
$12.3 million
and
$9.9 million
, respectively, associated with the restatement of our financial statements and current SEC investigation, of which
$11.2 million
of cash was recovered from Archrock in the fourth quarter of
2016
pursuant to the separation and distribution agreement (see
Note 13
).
|
•
|
Our Spin-off from Archrock was completed on November 3, 2015. In conjunction with the Spin-off, we incurred approximately
$300.0 million
of indebtedness under the revolving credit facility and
$245.0 million
of indebtedness under the term loan facility. Pursuant to the separation and distribution agreement with Archrock and certain of our and Archrock’s respective affiliates, on November 3, 2015, we transferred cash of
$532.6 million
to Archrock. Prior to the Spin-off, third party debt of Archrock, other than debt attributable to capital leases, was not allocated to us as we were not the legal obligor of the debt and Archrock’s borrowings were not directly attributable to our business (see
Note 10
).
|
Description
|
|
Balance at
Beginning
of Period
|
|
Charged to
Costs and
Expenses
|
|
Deductions
|
|
Balance at
End of
Period
|
|||||||||
Allowance for doubtful accounts deducted from accounts receivable in the balance sheets
|
|
|
|
|
|
|
|
|
|||||||||
December 31, 2016
|
|
$
|
2,868
|
|
|
$
|
2,972
|
|
|
$
|
457
|
|
(1)
|
$
|
5,383
|
|
|
December 31, 2015
|
|
2,133
|
|
|
3,292
|
|
|
2,557
|
|
(1)
|
2,868
|
|
|||||
December 31, 2014
|
|
7,381
|
|
|
641
|
|
|
5,889
|
|
(1)
|
2,133
|
|
|||||
Allowance for obsolete and slow moving inventory deducted from inventories in the balance sheets
|
|
|
|
|
|
|
|
|
|||||||||
December 31, 2016
|
|
$
|
14,486
|
|
|
$
|
756
|
|
|
$
|
2,365
|
|
(2)
|
$
|
12,877
|
|
|
December 31, 2015
|
|
8,660
|
|
|
15,590
|
|
|
9,764
|
|
(2)
|
14,486
|
|
|||||
December 31, 2014
|
|
8,231
|
|
|
3,186
|
|
|
2,757
|
|
(2)
|
8,660
|
|
|||||
Allowance for deferred tax assets not expected to be realized
|
|
|
|
|
|
|
|
|
|||||||||
December 31, 2016
|
|
$
|
186,993
|
|
|
$
|
147,558
|
|
|
$
|
15,664
|
|
(4)
|
$
|
318,887
|
|
|
December 31, 2015
|
|
132,021
|
|
|
94,026
|
|
(3
|
)
|
39,054
|
|
(4)
|
186,993
|
|
||||
December 31, 2014
|
|
120,958
|
|
|
41,820
|
|
|
30,757
|
|
(4)
|
132,021
|
|
|
(1)
|
Uncollectible accounts written off.
|
(2)
|
Obsolete inventory written off at cost, net of value received.
|
(3)
|
Includes
$45.0 million
in allowance against foreign tax credits transferred from Archrock pursuant to the Spin-off.
|
(4)
|
Reflects expected realization of deferred tax assets and amounts credited to other accounts for stock-based compensation excess tax benefits, expiring net operating losses, changes in tax rates and changes in currency exchange rates.
|
(i)
|
A reduction of 10% or more of your base salary;
|
(ii)
|
Your being required to be based at any other office or location of employment more than 50 miles from your primary office or location of employment immediately prior to the Corporate Change; or
|
(iii)
|
The willful failure by the Company or an Affiliate to pay you your compensation when due;
|
(i)
|
A reduction of 10% or more of your base salary;
|
(ii)
|
Your being required to be based at any other office or location of employment more than 50 miles from your primary office or location of employment immediately prior to the Corporate Change; or
|
(iii)
|
The willful failure by the Company or an Affiliate to pay you your compensation when due;
|
(ii)
|
Your being required to be based at any other office or location of employment more than 50 miles from your primary office or location of employment immediately prior to the Corporate Change; or
|
(iii)
|
The willful failure by the Company or an Affiliate to pay you your compensation when due;
|
(ii)
|
Your being required to be based at any other office or location of employment more than 50 miles from your primary office or location of employment immediately prior to the Corporate Change; or
|
(iii)
|
The willful failure by the Company or an Affiliate to pay you your compensation when due;
|
Company
|
|
Ownership
|
|
Incorporation
|
Belleli Energy F.Z.E.
|
|
Wholly owned
|
|
UAE Sharjah
|
EES Finance Corp.
|
|
Wholly owned
|
|
Delaware
|
EESLP LP LLC
|
|
Wholly owned
|
|
Delaware
|
Enterra B.V.
|
|
Wholly owned
|
|
Netherlands
|
Enterra Compression Investment LLC
|
|
Wholly owned
|
|
Delaware
|
Enterra Global Holdings LLC
|
|
Wholly owned
|
|
Delaware
|
Excel Energy Services Limited
|
|
Wholly owned
|
|
Nigeria
|
EXH Cayman Ltd.
|
|
Wholly owned
|
|
Cayman Islands
|
Exterran (Beijing) Energy Equipment Company Ltd.
|
|
Wholly owned
|
|
China
|
Exterran (Colombia) Ltd.
|
|
Wholly owned
|
|
Colombia
|
Exterran (Singapore) Pte. Ltd.
|
|
Wholly owned
|
|
Singapore
|
Exterran (Thailand) Ltd.
|
|
Wholly owned
|
|
Thailand
|
Exterran Argentina S.r.l.
|
|
Wholly owned
|
|
Argentina
|
Exterran Bahrain S.P.C.
|
|
Wholly owned
|
|
Bahrain
|
Exterran Bolivia S.r.l.
|
|
Wholly owned
|
|
Bolivia
|
Exterran Cayman GP Holdings LLC
|
|
Wholly owned
|
|
Delaware
|
Exterran Cayman, L.P.
|
|
Wholly owned
|
|
Cayman Islands
|
Exterran Colombia Leasing LLC
|
|
Wholly owned
|
|
Delaware
|
Exterran Corporation
|
|
Parent
|
|
Delaware
|
Exterran Eastern Hemisphere F.Z.E.
|
|
Wholly owned
|
|
UAE Dubai
|
Exterran Eastern Hemisphere Holdings LLC
|
|
Wholly owned
|
|
Delaware
|
Exterran Egypt LLC
|
|
Wholly owned
|
|
Egypt
|
Exterran Egypt Oil & Gas Services LLC
|
|
Wholly owned
|
|
Egypt
|
Exterran Energy de Mexico, S. de R.L. de C.V.
|
|
Wholly owned
|
|
Mexico
|
Exterran Energy Middle-East LLC
|
|
Wholly owned
|
|
Oman
|
Exterran Energy Solutions Compania Limitada
|
|
Wholly owned
|
|
Chile
|
Exterran Energy Solutions India Private Limited
|
|
Wholly owned
|
|
India
|
Exterran Energy Solutions, L.P.
|
|
Wholly owned
|
|
Delaware
|
Exterran General Holdings LLC
|
|
Wholly owned
|
|
Delaware
|
Exterran Gulf FZE
|
|
Wholly owned
|
|
UAE Sharjah
|
Exterran Holding Company NL B.V.
|
|
Wholly owned
|
|
Netherlands
|
Exterran International Holdings C.V.
|
|
Wholly owned
|
|
Netherlands
|
Exterran International Holdings GP LLC
|
|
Wholly owned
|
|
Delaware
|
Exterran International Holdings LLC
|
|
Wholly owned
|
|
Delaware
|
Exterran International SA
|
|
Wholly owned
|
|
Switzerland
|
Exterran Italy Holdings B.V.
|
|
Wholly owned
|
|
Netherlands
|
Exterran Italy S.r.l.
|
|
Wholly owned
|
|
Italy
|
Exterran Kazakhstan LLP
|
|
Wholly owned
|
|
Kazakhstan
|
Exterran Middle East LLC
|
|
70% owned
|
|
Oman
|
Exterran Nigeria Limited
|
|
Wholly owned
|
|
Nigeria
|
Exterran Offshore Pte. Ltd.
|
|
Wholly owned
|
|
Singapore
|
Exterran Oman Holdings LLC
|
|
Wholly owned
|
|
Delaware
|
Exterran Pakistan (Private) Limited
|
|
Wholly owned
|
|
Pakistan
|
Exterran Peru S.R.L.
|
|
Wholly owned
|
|
Peru
|
Exterran Services (UK) Ltd.
|
|
Wholly owned
|
|
United Kingdom
|
Exterran Services B.V.
|
|
Wholly owned
|
|
Netherlands
|
Exterran Servicos de Oleo e Gas Ltda.
|
|
Wholly owned
|
|
Brazil
|
Exterran Trinidad LLC
|
|
Wholly owned
|
|
Delaware
|
Exterran Venezuela, S.R.L.
|
|
Wholly owned
|
|
Venezuela
|
Exterran Water Solutions ULC
|
|
Wholly owned
|
|
Alberta, Canada
|
ExterranEnergy Solutions Ecuador Cia. Ltda.
|
|
Wholly owned
|
|
Ecuador
|
Gas Conditioning of Mexico, S. de R.L. de C.V.
|
|
Wholly owned
|
|
Mexico
|
H.C.C. Compressor de Venezuela, C.A.
|
|
Wholly owned
|
|
Venezuela
|
Hanover Asia LLC
|
|
Wholly owned
|
|
Delaware
|
Hanover Cayman Limited
|
|
Wholly owned
|
|
Cayman Islands
|
LLC Exterran Vostok
|
|
Wholly owned
|
|
Russia
|
Production Operators Cayman Inc.
|
|
Wholly owned
|
|
Cayman Islands
|
PT. Exterran Indonesia
|
|
Wholly owned
|
|
Indonesia
|
Quimex Sarl
|
|
Wholly owned
|
|
Switzerland
|
Quimex Tunisia Sarl
|
|
Wholly owned
|
|
Tunisia
|
UCI GP LLC
|
|
Wholly owned
|
|
Delaware
|
UCO Compression Holding, L.L.C.
|
|
Wholly owned
|
|
Delaware
|
Universal Compression International Holdings, S.L.U.
|
|
Wholly owned
|
|
Spain
|
Universal Compression International Ltd.
|
|
Wholly owned
|
|
Cayman Islands
|
Universal Compression International, L.P.
|
|
Wholly owned
|
|
Delaware
|
Universal Compression of Colombia Ltd.
|
|
Wholly owned
|
|
Cayman Islands
|
Universal Compression Services, LLC
|
|
Wholly owned
|
|
Delaware
|
Uniwhale Ltd.
|
|
75% owned
|
|
Cayman Islands
|
/s/
DELOITTE & TOUCHE LLP
|
|
|
|
Houston, Texas
|
|
March 9, 2017
|
|
(a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
(a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
By:
|
/s/ ANDREW J. WAY
|
|
|
|
Name:
|
Andrew J. Way
|
|
|
Title:
|
President and Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
|
(a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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(a)
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all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
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any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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By:
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/s/ DAVID A. BARTA
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Name:
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David A. Barta
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Title:
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Senior Vice President and Chief Financial Officer
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(Principal Financial Officer)
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(1)
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the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
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(2)
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the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ ANDREW J. WAY
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Name:
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Andrew J. Way
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Title:
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President and Chief Executive Officer
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Date: March 9, 2017
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(1)
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the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
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(2)
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the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ DAVID A. BARTA
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|
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Name:
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David A. Barta
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Title:
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Senior Vice President and Chief Financial Officer
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Date: March 9, 2017
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