Notes to Consolidated Financial
Statements
(Unaudited)
NOTE
A
–
BASIS OF PRESENTATION
AND
SIGNIFICANT ACCOUNTING POLICIES
We are a provider of compression services and equipment for natural gas and oil production, gathering, transportation, processing, and storage. We sell standard and custom-designed compressor packages and oilfield fluid pump systems, and provide aftermarket services and compressor package parts and components manufactured by third-party suppliers. We provide these compression services and equipment to a broad base of natural gas and oil exploration and production, midstream, and transmission companies operating throughout many of the onshore producing regions of the United States as well as in a number of foreign countries, including Mexico, Canada, and Argentina. We design and fabricate a majority of the compressor packages that we use to provide compression services and that we sell to customers.
Presentation
Our unaudited consolidated financial statements include the accounts of our wholly owned subsidiaries. All intercompany balances and transactions have been eliminated. In the opinion of our management, our unaudited consolidated financial statements as of
March 31, 2016
, and for the three month periods ended
March 31, 2016
and
2015
, include all normal recurring adjustments that are necessary to provide a fair statement of our results for the interim periods. Operating results for the period ended
March 31, 2016
are not necessarily indicative of results that may be expected for the twelve months ended
December 31, 2016
.
The accompanying unaudited consolidated financial statements have been prepared in accordance with Rule 10-01 of Regulation S-X for interim financial statements required to be filed with the U.S. Securities and Exchange Commission ("SEC") and do not include all information and footnotes required by generally accepted accounting principles for complete financial statements. These financial statements should be read in connection with the financial statements for the year ended
December 31, 2015
, and notes thereto included in our Annual Report on Form 10-K, which
we filed with the SEC on
March 7, 2016
.
Throughout 2015 and continuing into early 2016, significant decreases in oil and natural gas commodity prices lowered the capital expenditure and operating plans of many of our customers, creating uncertainty regarding the expected demand for many of our products and services and the resulting cash flows from operating activities for the foreseeable future. In addition, the availability of new borrowings in current capital markets is more limited and costly. Accordingly, we have implemented and continue to implement cost reduction measures designed to lower our cost structure and improve our operating cash flows. These measures include headcount reductions and salary adjustments. We also continue to negotiate with our suppliers and service providers to reduce costs. We continue to critically review all capital expenditure activities and are deferring a significant portion of our growth capital expenditure plans until they may be justified by expected activity levels. We believe the steps taken have enhanced our operating cash flows and preserved our cash, and additional steps may be taken to continue to enhance our operating cash flows and preserve cash in the future. However, considering financial forecasts based on current market conditions as of
May 10, 2016
, it is reasonably possible that we will not be in compliance with one of our financial covenants of our revolving bank credit agreement (the "Credit Agreement") as of September 30, 2016. See Note B - Long-Term Debt and Other Borrowings for further discussion. We are currently in discussions with our lender to amend the Credit Agreement to, among other provisions, favorably adjust our financial covenants. However, there is no assurance that we will be successful in obtaining any favorable amendment to our Credit Agreement.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclose contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues, expenses, and impairments during the reporting period. Actual results could differ from those estimates, and such differences could be
material.
Reclassifications
Certain previously reported financial information has been reclassified to conform to the current year period’s presentation. The impact of such reclassifications was not significant to the prior year period’s overall presentation. These reclassifications include the presentation of deferred financing costs in accordance with the adoption of the Financial Accounting Standards Board ("FASB") Accounting Standards Update ("ASU") No. 2015-03 and ASU No. 2015-15 as further discussed below and the reclassification of the amortization of deferred financing costs from other expense, net to interest expense, net. Additionally, see Note B - Long-Term Debt and Other Borrowings for further discussion and presentation.
Beginning with the three month period ended
March 31, 2016
, Parts Sales revenues and Cost of Parts Sales revenues have been reclassified as part of Aftermarket Services revenues and Cost of Aftermarket Services revenues, respectively, instead of being included with Equipment Sales revenues and Cost of Equipment Sales revenues as reported in prior periods. Prior period amounts have been reclassified to conform to the current year period's presentation. The amount of such reclassification for revenue is $4.5 million for the period ended
March 31, 2016
and $4.8 million for the period ended
March 31, 2015
. The amount of such reclassification for cost of revenue is $3.4 million for the period ended
March 31, 2016
and $3.7 million for the period ended
March 31, 2015
.
Cash Equivalents
We consider all highly
liquid cash investments with
maturities
of three months or less when purchased
to be cash equivalents.
Foreign Currencies
We have designated the Canadian dollar and Argentine peso as the functional currencies for our operations in Canada and Argentina, respectively. We are exposed to fluctuations between the U.S. dollar and certain foreign currencies, including the Canadian dollar, the Mexican peso, and the Argentine peso, as a result of our international operations. Foreign currency exchange gains and (losses) are included in other expense and totaled
$(0.2) million
and
$(0.5) million
during the
three
month periods ended
March 31, 2016
and
March 31, 2015
, respectively.
Inventories
Inventories
consist primarily of compressor package parts and supplies and work in progress and are stated at the lower of cost or
market value. For parts and supplies, cost is determined using the weighted average
cost
method. The cost of work in progress is determined using the specific identification method. Work in progress inventories consist primarily of new compressor packages located at our fabrication facility in Midland, Texas. Components of inventories as of
March 31, 2016
, and
December 31, 2015
, are as follows:
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|
|
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|
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|
|
March 31, 2016
|
|
December 31, 2015
|
|
(In Thousands)
|
Parts and supplies
|
27,000
|
|
|
27,447
|
|
Work in progress
|
16,274
|
|
|
22,324
|
|
Total inventories
|
$
|
43,274
|
|
|
$
|
49,771
|
|
Compression and Related Services Revenues and Costs
Our compression and related services revenues include revenues from our U.S. corporate subsidiaries' operating lease agreements with customers. For the
three
month periods ended
March 31, 2016
and
2015
, the following operating lease revenues and associated costs were included in compression and related service revenues and cost of compression and related services, respectively, in the accompanying consolidated statements of operations. As a result of our customers entering into compression service contracts, our revenues from rental contracts have
decreased
during the three months ended
March 31, 2016
compared to the prior year period.
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|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
2016
|
|
2015
|
|
(In Thousands)
|
Rental revenue
|
$
|
11,526
|
|
|
$
|
45,536
|
|
Cost of rental revenue
|
$
|
12,884
|
|
|
$
|
24,440
|
|
Earnings
Per Common Unit
The computations of
earnings
per common unit are based on the weighted average number of common units outstanding during the applicable period. Basic
earnings
per common unit
are
determined by dividing net income (loss) allocated to the common units after deducting the amount allocated to our
General Partner
(including any distributions to our
General Partner
on its incentive distribution rights), by the weighted average number of
outstanding common units during the period.
When computing
earnings
per common unit when distributions are greater than earnings, the amount of the distribution is deducted from net income and the excess of distributions over earnings is allocated between the
General Partner and common units based on how our partnership agreement allocates net losses.
When earnings are greater than distributions, we determine cash distributions based on available cash and determine the actual incentive distributions allocable to our General Partner based on actual distributions. When computing earnings per common unit, the amount of the assumed incentive distribution rights, if any, is deducted from net income and allocated to our General Partner for the period to which the calculation relates. The remaining amount of net income, after deducting the assumed incentive distribution rights, is allocated between the General Partner and common units based on how our Partnership Agreement allocates net earnings.
Diluted earnings per unit are computed using the treasury stock method, which considers the potential issuance of limited partner units. Unvested phantom units are not included in basic earnings per unit, as they are not considered to be participating securities, but are included in the calculation of diluted earnings per unit. For the three months ended
March 31, 2016
and
March 31, 2015
, all incremental unvested phantom units were excluded from the calculation of diluted units because the impact was anti-dilutive.
Goodwill
Goodwill represents the excess of cost over the fair value of the net assets of businesses acquired in purchase transactions. We perform a goodwill impairment test on an annual basis or whenever indicators of impairment are present. We perform the annual test of goodwill impairment following the fourth quarter of each year. The assessment for goodwill impairment begins with a qualitative assessment of whether it is “more likely than not” that the fair value of our business is less than its carrying value. This qualitative assessment requires the evaluation, based on the weight of evidence, of the significance of all identified events and circumstances. Based on this qualitative assessment, we determined that, due to the decline in the price of our common units that resulted in our market capitalization being less than the book value of our consolidated partners' capital balance as of
March 31, 2016
, it was “more likely than not” that the fair value of our business was less than its carrying value as of
March 31, 2016
.
When the qualitative analysis indicates that it is “more likely than not” that our business’ fair value is less than its carrying value, the resulting goodwill impairment test consists of a two-step accounting test being performed. The first step of the impairment test is to compare the estimated fair value with the recorded net book value (including goodwill) of our business. If the estimated fair value is higher than the recorded net book value, no
impairment is deemed to exist and no further testing is required. If, however, the estimated fair value is below the recorded net book value, then a second step must be performed to determine the goodwill impairment required, if any. In this second step, the estimated fair value from the first step is used as the purchase price in a hypothetical acquisition. Business combination accounting rules are followed to determine a hypothetical purchase price allocation to assets and liabilities. The residual amount of goodwill that results from this hypothetical purchase price allocation is compared to the recorded amount of goodwill and the recorded amount is written down to the hypothetical amount, if lower.
Our management must apply judgment in determining the estimated fair value for purposes of performing the goodwill impairment test. Management uses all available information to make these fair value determinations, including the present value of expected future cash flows using discount rates commensurate with the risks involved in the assets. The resultant fair values calculated are then compared to observable metrics for other companies in our industry or on mergers and acquisitions in our industry, to determine whether those valuations, in our judgment, appear reasonable.
During
2015
, and continuing into
2016
, global oil and natural gas commodity prices, particularly crude oil, decreased significantly. This decrease in commodity prices has had, and is expected to continue to have, a negative impact on industry drilling and capital expenditure activity, which affects the demand for a portion of our products and services. The accompanying decrease in the price of our common units during the last half of 2015 and early
2016
has also resulted in an overall reduction in our market capitalization. The accounting principles regarding goodwill acknowledge that the observed market prices of individual trades of a company’s stock (and thus its computed market capitalization) may not be representative of the fair value of the company as a whole. Substantial value may arise from the ability to take advantage of synergies and other benefits that flow from control over another entity. Consequently, measuring the fair value of a collection of assets and liabilities that operate together in a controlled entity is different from measuring the fair value of a single share of that entity’s common stock. Therefore, once the fair value of the reporting units was determined, we also added a control premium to the calculations. This control premium is judgmental and is based on observed mergers and acquisitions in our industry.
As part of our annual internal business outlook that we performed during the fourth quarter of 2015, we considered changes in the global economic environment which affected our common unit price and market capitalization. As part of the first step of goodwill impairment testing, we updated our assessment of our future cash flows, applying expected long-term growth rates, discount rates, and terminal values that we consider reasonable. We have calculated a present value of the cash flows to arrive at an estimate of fair value under the income approach, and then used the market approach to corroborate this value. Based on this qualitative assessment, we determined that due to the decrease in the market price of our common units that resulted in our market capitalization being less than the book value of our consolidated partners' capital as of
December 31, 2015
, it was “more likely than not” that the fair value of our business was less than its carrying value as of
December 31, 2015
. As a result of the goodwill assessment analysis described above, as of
December 31, 2015
, we recorded a partial impairment of
$139.4 million
of recorded goodwill.
Throughout 2015 and continuing into
2016
, lower oil and natural gas commodity prices have resulted in a decreased demand for certain of our products and services. Specifically, demand for low-horsepower wellhead compression services and for sales of compressor equipment has decreased significantly and is expected to continue to be decreased for the foreseeable future. In addition, the price per common unit as of
March 31, 2016
has decreased compared to
December 31, 2015
. Accordingly, the fair value, as reflected by our market capitalization and other indicators, was less than our carrying value as of
March 31, 2016
. After making the hypothetical purchase price adjustments as part of the second step of the goodwill impairment test, there was
$0.0 million
residual purchase price to be allocated to our goodwill. Based on this analysis, we concluded that an impairment all of our recorded goodwill was required. Accordingly, during the three month period ended
March 31, 2016
, $92.4 million was charged to Goodwill Impairment expense in the accompanying consolidated statement of operations. As of
March 31, 2016
, the carrying amount of goodwill is net of $233.5 million of accumulated impairment losses.
The changes in the carrying amount of goodwill are as follows:
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March 31, 2016
|
|
December 31, 2015
|
|
|
(In Thousands)
|
Balance, beginning of period
|
|
$
|
92,402
|
|
|
$
|
233,548
|
|
Goodwill adjustments
|
|
(92,402
|
)
|
|
(141,146
|
)
|
Balance, end of period
|
|
$
|
—
|
|
|
$
|
92,402
|
|
Impairments of Long-Lived Assets
Impairments of long-lived assets, including identified intangible assets, are determined periodically, when indicators of impairment are present. If such indicators are present, the determination of the amount of impairment is based on our judgments as to the future undiscounted operating cash flows to be generated from these assets throughout their remaining estimated useful lives. If these undiscounted cash flows are less than the carrying amount of the related asset, an impairment is recognized for the excess of the carrying value over its fair value. Fair value of intangible assets is generally determined using the discounted present value of future cash flows. Assets held for disposal are recorded at the lower of carrying value or estimated fair value less estimated selling costs.
During the first quarter of 2016, as a result of continuing decreased demand as a result of current market conditions, we recorded impairments of approximately
$7.9 million
associated with certain identified intangible assets. This amount was charged to Long-Lived Asset Impairment expense in the accompanying consolidated statement of operations.
Accumulated Other Comprehensive Income (Loss)
Certain of
our international operations maintain their accounting records in the local currencies that are their functional currencies. For these operations, the functional currency financial statements are converted to United States dollar equivalents, with the effect of the foreign currency translation adjustment reflected as a component of accumulated other comprehensive income (loss). Accumulated other comprehensive income (loss) is included in partners’ capital in the accompanying consolidated balance sheets and consists of the cumulative currency translation adjustments associated with such international operations. Activity within accumulated other comprehensive income (loss) during the three month periods ended
March 31, 2016
and
2015
,
is as follows:
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|
|
Three Months Ended March 31,
|
|
2016
|
|
2015
|
|
(In Thousands)
|
Balance, beginning of period
|
$
|
(8,393
|
)
|
|
$
|
(3,336
|
)
|
Foreign currency translation adjustment
|
(804
|
)
|
|
176
|
|
Balance, end of period
|
$
|
(9,197
|
)
|
|
$
|
(3,160
|
)
|
Activity within accumulated other comprehensive income includes no
reclassifications to net income.
Allocation of Net Income (Loss)
Our net income (loss) is allocated to partners’ capital accounts in accordance with the provisions of our partnership agreement.
Distributions
On
January 22, 2016
, we declared a cash distribution attributable to the quarter ended
December 31, 2015
of
$0.3775
per common unit. This distribution equates to a distribution of
$1.51
per outstanding common unit on an annualized basis. This cash distribution was paid on
February 15, 2016
, to all common unitholders of record as of the close of business on
February 1, 2016
.
On
April 19, 2016
, we declared a cash distribution attributable to the quarter ended
March 31, 2016
of
$0.3775
per common unit. This distribution equates to a distribution of
$1.51
per outstanding common unit on an
annualized basis. This cash distribution will be paid on
May 13, 2016
to all common unitholders of record as of the close of business on
April 29, 2016
.
Fair Value Measurements
Fair value is defined as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date” within an entity’s principal market, if any. The principal market is the market in which the reporting entity would sell the asset or transfer the liability with the greatest volume and level of activity, regardless of whether it is the market in which the entity will ultimately transact for a particular asset or liability or if a different market is potentially more advantageous. Accordingly, this exit price concept may result in a fair value that may differ from the transaction price or market price of the asset or liability.
Under generally accepted accounting principles, the fair value hierarchy prioritizes inputs to valuation techniques used to measure fair value. Fair value measurements should maximize the use of observable inputs and minimize the use of unobservable inputs, where possible. Observable inputs are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs may be needed to measure fair value in situations where there is little or no market activity for the asset or liability at the measurement date and are developed based on the best information available in the circumstances, which could include the reporting entity’s own judgments about the assumptions market participants would utilize in pricing the asset or liability.
We utilize fair value measurements to account for certain items and account balances within our consolidated financial statements. Fair value measurements are utilized in the allocation of purchase consideration for acquisition transactions to the assets and liabilities acquired, including intangible assets and goodwill (a Level 3 fair value measurement). Fair value measurements may also be utilized on a nonrecurring basis, such as for the impairment of long-lived assets, including goodwill (a level 3 fair value measurement). The fair value of certain of our financial instruments, which may include cash, accounts receivable, short-term borrowings, and variable-rate long-term debt pursuant to our bank credit agreement, approximate their carrying amounts. The fair values of our publicly tradable long-term
7.25%
Senior Notes at
March 31, 2016
were approximately
$244.1 million
(level 2 fair value measurement). As of
December 31, 2015
, the fair value of our 7.25% Senior Notes was approximately
$259.9 million
(a level 2 fair value measurement). These fair values compared to an aggregate principal amount of
$350.0 million
, as current rates on
those dates were different from the stated interest rates on the 7.25% Senior Notes.
We also utilize fair value measurements on a recurring basis in the accounting for our foreign currency forward purchase and sale derivative contracts. For these fair value measurements, we utilize the quoted value as determined by our counterparty financial institution (a level 2 fair value measurement). A summary of these fair value measurements as of
March 31, 2016
and
December 31, 2015
is as follows:
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Fair Value Measurements Using
|
Description
|
|
Total as of
March 31, 2016
|
|
Quoted Prices
in Active
Markets for
Identical
Assets
or Liabilities
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
|
(In Thousands)
|
Asset for foreign currency derivative contracts
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Liability for foreign currency derivative contracts
|
|
(69
|
)
|
|
—
|
|
|
(69
|
)
|
|
—
|
|
|
|
$
|
(69
|
)
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
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|
|
|
|
Fair Value Measurements Using
|
|
|
|
|
Quoted Prices
in Active
Markets for
Identical
Assets
or Liabilities
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
Description
|
|
Total as of
December 31, 2015
|
|
|
|
|
|
(In Thousands)
|
|
|
|
|
|
|
Asset for foreign currency derivative contracts
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Liability for foreign currency derivative contracts
|
|
(14
|
)
|
|
—
|
|
|
(14
|
)
|
|
—
|
|
|
|
$
|
(14
|
)
|
|
|
|
|
|
|
During the first quarter of
2016
, we recorded total impairment charges of approximately
$100.2 million
, reflecting the decreased fair value for certain assets. Assets that were partially impaired included certain of our intangible assets. The fair values used in these impairment calculations were estimated based on discounted estimated future cash flows, based on significant unobservable inputs (Level 3) in accordance with the fair value hierarchy.
A summary of these nonrecurring fair value measurements as of
March 31, 2016
, using the fair value hierarchy is as follows:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements Using
|
|
|
|
|
|
|
Quoted Prices
in Active
Markets for
Identical
Assets
or Liabilities (Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Year-to-Date
Impairment Losses
|
Description
|
|
Total as of March 31, 2016
|
|
|
|
|
|
|
(In Thousands)
|
|
|
|
|
|
|
|
|
Identified intangible assets
|
|
$
|
20,600
|
|
|
—
|
|
|
—
|
|
|
$
|
20,600
|
|
|
7,866
|
|
Goodwill
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
92,334
|
|
Total
|
|
$
|
20,600
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
20,600
|
|
|
$
|
100,200
|
|
New Accounting Pronouncements
In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers." ASU 2014-09 supersedes the revenue recognition requirements in Accounting Standards Codification ("ASC") 605, Revenue Recognition, and most industry-specific guidance. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU is effective for annual periods beginning after December 15, 2017, and interim periods within those years, under either full or modified retrospective adoption. We are currently assessing the potential effects of these changes to our consolidated financial statements.
Additionally in March 2016, the FASB issued ASU 2016-08,"Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)" to clarify the guidance on principal versus agent considerations. This ASU does not change the effective date or adoption method under ASU 2014-09 which is noted above.
In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements - Going Concern”. The ASU provides guidance on management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and in certain circumstances to provide related footnote disclosures. The ASU is effective for annual periods ending after December 15, 2016, and for annual and interim periods thereafter. Early adoption is permitted. We do not expect the adoption of this standard to have a material impact on our consolidated financial statements.
In April 2015, the FASB issued ASU No. 2015-03, “Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs”. The ASU requires entities that have historically presented debt issuance costs as an asset to present those costs as a direct deduction from the carrying amount of the related debt liability. This presentation will result in the debt issuance costs being presented the same way debt discounts have historically been handled. The ASU does not change the recognition, measurement, or subsequent measurement guidance for debt issuance costs. The ASU is effective for annual periods beginning after December 15, 2015, and interim periods within those annual periods, and is to be applied retrospectively. Early adoption is permitted. As a result of the retrospective adoption of this guidance during the quarter, deferred financing costs of $8.1 million and $8.4 million at
March 31, 2016
and
December 31, 2015
, respectively, are netted against the carrying values of the 7.25% Senior Notes.
Additionally, in accordance with ASU No. 2015-15, "Interest-Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements", issued in August 2015, we elected to present the deferred financing costs associated with its Credit Agreement of $5.1 million and $5.4 million at
March 31, 2016
and
December 31, 2015
, respectively, as netted against the outstanding amount of the Credit Agreement.
In July 2015, the FASB issued ASU No. 2015-11, “Simplifying the Measurement of Inventory”, which simplifies the subsequent measurement of inventory by requiring entities to measure inventory at the lower of cost or net realizable value, except for inventory measured using the last-in, first-out (LIFO) or the retail inventory methods. The ASU requires entities to compare the cost of inventory to one measure - net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The ASU is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods, and is to be applied prospectively with early adoption permitted. We do not expect the adoption of this standard to have a material impact on our consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)" which was issued to increase comparability and transparency among different organizations. Organizations are required to recognize lease assets and lease liabilities in the balance sheet and disclose key information about the leasing arrangements and cash flows. The ASU is effective for annual periods beginning after December 15, 2018, and interim periods within those annual periods, with early adoption permitted, under a modified retrospective adoption. We are currently assessing the potential effects of these changes to our consolidated financial statements.
In March 2016, the FASB issued ASU 2016-09, "Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting" as part of the Simplification Initiative. The update addresses and simplifies several aspects of accounting for share-based payment transactions. The ASU is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods, with early adoption permitted, and is to be applied using either modified retrospective, retrospective, or prospective transition method based on which amendment is being applied. We are currently assessing the potential effects of these changes to our consolidated financial statements.
NOTE B
–
LONG-TERM DEBT AND OTHER BORROWINGS
Long-term debt consists of the following:
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|
|
|
|
|
|
|
|
|
March 31, 2016
|
|
December 31, 2015
|
|
|
Scheduled Maturity
|
|
(In Thousands)
|
Credit Agreement (presented net of the unamortized deferred financing costs of $5.1 million as of March 31, 2016 and $5.4 million as of December 31, 2015)
|
|
August 4, 2019
|
|
$
|
228,933
|
|
|
$
|
229,555
|
|
7.25% Senior Notes (presented net of the unamortized discount of $4.4 million as of March 31, 2016 and $4.5 million as of December 31, 2015 and unamortized deferred financing costs of $8.1 million as of March 31, 2016 and $8.4 million as of December 31, 2015)
|
|
August 15, 2022
|
|
337,552
|
|
|
337,103
|
|
|
|
|
|
566,485
|
|
|
566,658
|
|
Less current portion
|
|
|
|
—
|
|
|
—
|
|
Total long-term debt
|
|
|
|
$
|
566,485
|
|
|
$
|
566,658
|
|
As a result of the retrospective adoption of ASU 2015-03 during the three months ended
March 31, 2016
, deferred financing costs of $13.2 million and $13.8 million at
March 31, 2016
and
December 31, 2015
, respectively, were reclassified out of long-term other assets and are netted against the carrying values of our bank Credit Agreement and 7.25% Senior Notes. In addition, $0.7 million and $0.8 million of expense for the amortization of deferred financing costs for the three month periods ended
March 31, 2016
and
2015
, respectively, were reclassified from Other Expense, net to Interest Expense, net in the accompanying consolidated statements of operations.
As of
March 31, 2016
, we had a balance outstanding under our Credit Agreement of
$234.0 million
, had
$2.1 million
letters of credit and performance bonds outstanding, leaving a net availability under the Credit Agreement of
$163.9 million
. Availability under the Credit Agreement is subject to compliance with the financial covenants and other provisions in the Credit Agreement that may limit our borrowings under the Credit Agreement. We are in compliance with all covenants and conditions of our debt agreements as of
March 31, 2016
. However, considering financial forecasts based on current market conditions as of
May 10, 2016
, it is reasonably possible that we will not be in compliance with one of our debt financial covenants of our Credit Agreement as of September 30, 2016. If any such non-compliance event occurs and is not remedied in a timely manner, a default will occur under the Credit Agreement. Any event of default, if not timely remedied, could result in a termination of all commitments of the lenders thereunder and an acceleration of all outstanding loans thereunder. Any such default could also result in a cross-default under our 7.25% Senior Notes. We are currently in discussions with our lender to amend the Credit Agreement to, among other provisions, favorably adjust our debt financial covenants. However, there is no assurance that we will be successful in obtaining any favorable amendment to our Credit Agreement.
NOTE C – MARKET RISKS AND DERIVATIVE CONTRACTS
We are exposed to financial and market risks that affect our businesses. We have currency exchange rate risk exposure related to transactions denominated in a foreign currency as well as to investments in certain of our international operations. As a result of our variable rate bank credit facility, we face market risk exposure related to changes in applicable interest rates. We have concentrations of credit risk as a result of trade receivables owed to us by companies in the energy industry. Our financial risk management activities may at times involve, among other measures, the use of derivative financial instruments, such as swap and collar
agreements, to hedge the impact of market price risk exposures.
Foreign Currency Derivative Contracts
As of
March 31, 2016
, we had the following foreign currency derivative contracts outstanding relating to a portion of our foreign operations:
|
|
|
|
|
|
|
|
|
|
Derivative Contracts
|
|
US Dollar Notional Amount
|
|
Traded Exchange Rate
|
|
Settlement Date
|
|
|
(In Thousands)
|
|
|
|
|
Forward purchase Mexican peso
|
|
$
|
2,011
|
|
|
17.90
|
|
4/18/2016
|
Under a program designed to mitigate the currency exchange rate risk exposure on selected transactions of certain foreign subsidiaries, we may enter into similar derivative contracts from time to time. Although contracts pursuant to this program will serve as economic hedges of the cash flow of our currency exchange risk exposure, they will not be formally designated as hedge contracts or qualify for hedge accounting treatment. Accordingly, any change in the fair value of these derivative instruments during a period will be included in the determination of earnings for that period.
The fair values of our foreign currency derivative instruments are based on quoted market values as reported to us by our counterparty (a Level 2 fair value measurement). The fair values of our foreign currency derivative instruments as of
March 31, 2016
and
December 31, 2015
, are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency derivative instruments
|
|
Balance Sheet
|
|
Fair Value at
|
|
Location
|
|
March 31, 2016
|
|
December 31, 2015
|
|
|
|
|
(In Thousands)
|
Forward purchase contracts
|
|
Current assets
|
|
$
|
—
|
|
|
$
|
—
|
|
Forward purchase contracts
|
|
Current liabilities
|
|
(69
|
)
|
|
$
|
(14
|
)
|
Net asset
|
|
|
|
$
|
(69
|
)
|
|
$
|
(14
|
)
|
None of the foreign currency derivative contracts contains credit risk related contingent features that would require us to post assets or collateral for contracts that are classified as liabilities. During the three month periods ended
March 31, 2016
and
March 31, 2015
, we recognized approximately
$0.1 million
and $0.2 million, respectively, of net gains associated with our foreign currency derivative program, and such amounts are included in other expense, net, in the accompanying consolidated statement of operations.
NOTE D – RELATED
PARTY TRANSACTIONS
Omnibus Agreement
Under the terms of the Omnibus Agreement entered into on June 20, 2011, and later amended June 20, 2014 (the "Omnibus Agreement"),
our
General
Partner
provides
all personnel and services reasonably necessary to manage
our
operations and conduct
our
business
(other than in Mexico, Canada, and Argentina),
and
certain of
TETRA’s
Latin American-based subsidiaries provide personnel and services necessary
for the
conduct
of certain of
our
Latin American-based businesses. In addition, under the Omnibus Agreement,
TETRA
provides
certain corporate and general and administrative services
as requested by our
General
Partner,
including, without limitation, legal, accounting and financial reporting, treasury, insurance administration, claims processing and risk management, health, safety and environmental,
information technology, human resources, credit, payroll, internal audit,
and tax services. Pursuant to the Omnibus Agreement,
we
reimburse
our
General
Partner
and
TETRA
for services they provide to
us. The Omnibus Agreement will terminate on the earlier of (i) a change of control of the General Partner or TETRA, or (ii) upon any party providing at least 180 days prior written notice of termination.
Under
the terms of the Omnibus Agreement,
we
or
TETRA
may, but neither of us
are under any
obligation to, perform for the other such production enhancement or other oilfield services on a subcontract basis as are needed or desired by the
other, for such periods of time and in such amounts as may be mutually agreed upon by
TETRA
and
our
General Partner. Any such services are required to be performed on terms that are (i) approved by the conflicts committee of
our
General Partner’s board of directors, (ii) no less favorable to
us
than those generally being provided to or available from non-affiliated third parties, as determined by
our
General Partner, or (iii) fair and reasonable to
us, taking into account the totality of the relationships between
TETRA
and
us
(including other transactions that may be particularly favorable or advantageous to
us), as determined by
our
General Partner.
Under the terms of the Omnibus Agreement,
we
or
TETRA
may, but neither of us
are under any obligation
to, sell, lease or exchange on a like-kind basis to
the other such production enhancement or other oilfield services equipment as is needed or desired
to meet either of our
production enhancement or other oilfield services
obligations, in such amounts, upon
such conditions and for such periods of time, if
applicable, as may be mutually agreed upon by
TETRA
and
our
General Partner. Any such sales, leases,
or like-kind exchanges are required to be on terms that are (i) approved by the conflicts committee of
our
General Partner’s board of directors, (ii) no less favorable to
us
than those generally being provided to or available from non-affiliated third parties, as determined by
our
General Partner, or (iii) fair and reasonable to
us, taking into account the totality of the relationships between
TETRA
and
us
(including other transactions that may be particularly favorable or advantageous to
us), as determined by
our
General Partner. In addition, unless otherwise approved by the conflicts committee of
our
General Partner’s
board of directors,
TETRA
may purchase
newly fabricated equipment from
us at a negotiated price, provided that such price may not be
less than the sum of the total costs (other than any allocations of general and administrative expenses) incurred by
us
in fabricating such equipment plus a fixed
margin percentage thereof, and
TETRA
may purchase from
us
previously fabricated equipment for a price that is not less than the sum of the net book value of such equipment plus a fixed margin percentage thereof.
This description is not a complete discussion of this agreement and is qualified in its entirety by reference to the full text of the complete agreement, which is filed, along with other agreements, as exhibits to our filings with the SEC.
TETRA and General Partner Ownership
As of
March 31, 2016
, TETRA's ownership interest in us was approximately
44%
, with the common units held by the public representing an approximate
56%
interest in us. TETRA's ownership is through various wholly owned subsidiaries and consists of approximately
42%
of the limited partner interests plus the approximately
2%
general partner interest, through which it holds incentive distribution rights.
NOTE E – INCOME TAXES
As a partnership, we are generally not subject to income taxes at the entity level because our income is included in the tax returns of our partners. Our operations are treated as a partnership for federal tax purposes with each partner being separately taxed on its share of taxable income. However, a portion of our business is conducted through taxable U.S. corporate subsidiaries. Accordingly, a U.S. federal and state income tax provision has been reflected in the accompanying statements of operations. Certain of our operations are located outside of the U.S., and the Partnership, through its foreign subsidiaries, is responsible for income taxes in these countries.
Despite the significant pre-tax loss for the three months period ended
March 31, 2016
, we recorded a provision for income tax. Our effective tax rate for the three months period ended
March 31, 2016
was negative 0.7% primarily due to losses generated in entities for which no related tax benefit has been recorded. The losses generated by these entities do not result in tax benefits due to offsetting valuation allowances being recorded against their net deferred tax assets. We establish a valuation allowance to reduce the deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Included in our deferred tax assets are net operating loss carryforwards and tax credits that are available to offset future income tax liabilities in the U.S. as well as in certain foreign jurisdictions. Further, the effective tax rate is negatively impacted by the nondeductible portion of our goodwill impairments during the three months period ended
March 31, 2016
. Our consolidated provision for income taxes during the first quarter of 2015 and 2016 is primarily attributable to taxes in certain foreign jurisdictions and Texas gross margins taxes.
NOTE F – COMMITMENTS
AND CONTINGENCIES
From time to time, we are involved in litigation relating to claims arising out of our operations in the normal course of business. While the outcome of any lawsuits
or other proceedings
against us cannot be predicted with certainty, management does not
consider it reasonably possible that a loss resulting from such lawsuits or proceedings in excess of any amounts accrued has been incurred that is
expected
to
have a material adverse effect on our financial
condition, results of operations,
or cash flows.
NOTE G – SEGMENTS
ASC 280-10-50, “Operating Segments”, defines the characteristics of an operating segment as (i) being engaged in business activity from which it may earn revenues and incur expenses, (ii) being reviewed by the company's chief operating decision maker ("CODM") to make decisions about resources to be allocated and to assess its performance, and (iii) having discrete financial information. Although management of our General Partner reviews our products and services to analyze the nature of our revenue, other financial information, such as certain costs and expenses, and net income are not captured or analyzed by these items. Therefore discrete financial information is not available by product line and our CODM does not make resource allocation decisions or assess the performance of the business based on these items, but rather in the aggregate. Based on this, our General Partner believes that we operate in one business segment.
NOTE H — SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION
The
$350 million
in aggregate principal amount of
7.25%
Senior Notes are fully and unconditionally guaranteed, subject to certain customary release provisions, on a joint and several senior unsecured basis, by the following domestic restricted subsidiaries (each a "Guarantor Subsidiary" and collectively the "Guarantor Subsidiaries"):
Compressor Systems, Inc.
CSI Compressco Field Services International LLC
CSI Compressco Holdings LLC
CSI Compressco International LLC
CSI Compressco Leasing LLC
CSI Compressco Operating LLC
CSI Compressco Sub, Inc.
CSI Compression Holdings, LLC
Pump Systems International, Inc.
Rotary Compressor Systems, Inc.
As a result of these guarantees, we are presenting the following condensed consolidating financial information pursuant to Rule 3-10 of Regulation S-X. These schedules are presented using the equity method of accounting for all periods presented. Under this method, investments in subsidiaries are recorded at cost and adjusted for our share in the subsidiaries’ cumulative results of operations, capital contributions and distributions and other changes in equity. Elimination entries relate primarily to the elimination of investments in subsidiaries and associated intercompany balances and transactions. The Other Subsidiaries column includes financial information for those subsidiaries that do not guarantee the 7.25% Senior Notes. In addition to the financial information of the Partnership, financial information of the Issuers includes CSI Compressco Finance Inc., which had no assets or operations for any of the periods presented.
Condensed Consolidating Balance Sheet
March 31, 2016
(In Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuers
|
|
Guarantor
Subsidiaries
|
|
Other
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
$
|
176
|
|
|
$
|
75,308
|
|
|
$
|
29,850
|
|
|
$
|
—
|
|
|
$
|
105,334
|
|
Property, plant, and equipment, net
|
|
—
|
|
|
662,674
|
|
|
26,081
|
|
|
—
|
|
|
688,755
|
|
Investments in subsidiaries
|
|
259,881
|
|
|
13,777
|
|
|
—
|
|
|
(273,658
|
)
|
|
—
|
|
Intangible and other assets, net
|
|
—
|
|
|
39,610
|
|
|
401
|
|
|
—
|
|
|
40,011
|
|
Intercompany receivables
|
|
296,139
|
|
|
—
|
|
|
—
|
|
|
(296,139
|
)
|
|
—
|
|
Total non-current assets
|
|
556,020
|
|
|
716,061
|
|
|
26,482
|
|
|
(569,797
|
)
|
|
728,766
|
|
Total assets
|
|
$
|
556,196
|
|
|
$
|
791,369
|
|
|
$
|
56,332
|
|
|
$
|
(569,797
|
)
|
|
$
|
834,100
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND PARTNERS' CAPITAL
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
$
|
4,310
|
|
|
$
|
37,154
|
|
|
$
|
5,632
|
|
|
$
|
—
|
|
|
$
|
47,096
|
|
Amounts payable to affiliates
|
|
301
|
|
|
2,567
|
|
|
2,693
|
|
|
—
|
|
|
5,561
|
|
Long-term debt
|
|
337,552
|
|
|
228,933
|
|
|
—
|
|
|
—
|
|
|
566,485
|
|
Intercompany payables
|
|
|
|
262,753
|
|
|
33,386
|
|
|
(296,139
|
)
|
|
—
|
|
Other long-term liabilities
|
|
194
|
|
|
81
|
|
|
844
|
|
|
—
|
|
|
1,119
|
|
Total liabilities
|
|
342,357
|
|
|
531,488
|
|
|
42,555
|
|
|
(296,139
|
)
|
|
620,261
|
|
Total partners' capital
|
|
213,839
|
|
|
259,881
|
|
|
13,777
|
|
|
(273,658
|
)
|
|
213,839
|
|
Total liabilities and partners' capital
|
|
$
|
556,196
|
|
|
$
|
791,369
|
|
|
$
|
56,332
|
|
|
$
|
(569,797
|
)
|
|
$
|
834,100
|
|
Condensed Consolidating Balance Sheet
December 31, 2015
(In Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuers
|
|
Guarantor
Subsidiaries
|
|
Other
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
$
|
6
|
|
|
$
|
95,246
|
|
|
$
|
30,948
|
|
|
$
|
—
|
|
|
$
|
126,200
|
|
Property, plant, and equipment, net
|
|
—
|
|
|
674,743
|
|
|
24,537
|
|
|
—
|
|
|
699,280
|
|
Investments in subsidiaries
|
|
371,702
|
|
|
13,332
|
|
|
—
|
|
|
(385,034
|
)
|
|
—
|
|
Intangible and other assets, net
|
|
1
|
|
|
139,818
|
|
|
1,328
|
|
|
—
|
|
|
141,147
|
|
Intercompany receivables
|
|
308,064
|
|
|
—
|
|
|
—
|
|
|
(308,064
|
)
|
|
—
|
|
Total non-current assets
|
|
679,767
|
|
|
827,893
|
|
|
25,865
|
|
|
(693,098
|
)
|
|
840,427
|
|
Total assets
|
|
$
|
679,773
|
|
|
$
|
923,139
|
|
|
$
|
56,813
|
|
|
$
|
(693,098
|
)
|
|
$
|
966,627
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND PARTNERS' CAPITAL
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
$
|
10,468
|
|
|
$
|
45,238
|
|
|
$
|
3,041
|
|
|
$
|
—
|
|
|
$
|
58,747
|
|
Amounts payable to affiliates
|
|
44
|
|
|
5,357
|
|
|
2,752
|
|
|
—
|
|
|
8,153
|
|
Long-term debt
|
|
337,103
|
|
|
229,555
|
|
|
—
|
|
|
—
|
|
|
566,658
|
|
Intercompany payables
|
|
—
|
|
|
271,231
|
|
|
36,833
|
|
|
(308,064
|
)
|
|
—
|
|
Other long-term liabilities
|
|
—
|
|
|
56
|
|
|
855
|
|
|
—
|
|
|
911
|
|
Total liabilities
|
|
347,615
|
|
|
551,437
|
|
|
43,481
|
|
|
(308,064
|
)
|
|
634,469
|
|
Total partners' capital
|
|
332,158
|
|
|
371,702
|
|
|
13,332
|
|
|
(385,034
|
)
|
|
332,158
|
|
Total liabilities and partners' capital
|
|
$
|
679,773
|
|
|
$
|
923,139
|
|
|
$
|
56,813
|
|
|
$
|
(693,098
|
)
|
|
$
|
966,627
|
|
Condensed Consolidating Statement of Operations
and Comprehensive Income
Three Months Ended March 31, 2016
(In Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuers
|
|
Guarantor
Subsidiaries
|
|
Other
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
Revenues
|
|
$
|
—
|
|
|
$
|
75,095
|
|
|
$
|
11,210
|
|
|
$
|
(4,613
|
)
|
|
$
|
81,692
|
|
Cost of revenues (excluding depreciation and amortization expense)
|
|
—
|
|
|
45,313
|
|
|
7,676
|
|
|
(4,613
|
)
|
|
48,376
|
|
Selling, general and administrative expense
|
|
636
|
|
|
9,172
|
|
|
422
|
|
|
—
|
|
|
10,230
|
|
Depreciation and amortization
|
|
—
|
|
|
17,743
|
|
|
709
|
|
|
—
|
|
|
18,452
|
|
Long-live asset impairment
|
|
—
|
|
|
7,797
|
|
|
69
|
|
|
—
|
|
|
7,866
|
|
Goodwill impairment
|
|
—
|
|
|
91,575
|
|
|
759
|
|
|
—
|
|
|
92,334
|
|
Interest expense, net
|
|
6,480
|
|
|
2,322
|
|
|
—
|
|
|
—
|
|
|
8,802
|
|
Other expense, net
|
|
—
|
|
|
66
|
|
|
222
|
|
|
—
|
|
|
288
|
|
Equity in net income of subsidiaries
|
|
98,233
|
|
|
(1,249
|
)
|
|
—
|
|
|
(96,984
|
)
|
|
—
|
|
Income before income tax provision
|
|
(105,349
|
)
|
|
(97,644
|
)
|
|
1,353
|
|
|
96,984
|
|
|
(104,656
|
)
|
Provision (benefit) for income taxes
|
|
—
|
|
|
589
|
|
|
104
|
|
|
—
|
|
|
693
|
|
Net income (loss)
|
|
(105,349
|
)
|
|
(98,233
|
)
|
|
1,249
|
|
|
96,984
|
|
|
(105,349
|
)
|
Other comprehensive income (loss)
|
|
(804
|
)
|
|
(804
|
)
|
|
(804
|
)
|
|
1,608
|
|
|
(804
|
)
|
Comprehensive income (loss)
|
|
$
|
(106,153
|
)
|
|
$
|
(99,037
|
)
|
|
$
|
445
|
|
|
$
|
98,592
|
|
|
$
|
(106,153
|
)
|
Condensed Consolidating Statement of Operations
and Comprehensive Income
Three Months Ended March 31, 2015
(In Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuers
|
|
Guarantor
Subsidiaries
|
|
Other
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
Revenues
|
|
$
|
—
|
|
|
$
|
136,701
|
|
|
$
|
10,668
|
|
|
$
|
(44,480
|
)
|
|
$
|
102,889
|
|
Cost of revenues (excluding depreciation and amortization expense)
|
|
—
|
|
|
96,594
|
|
|
7,993
|
|
|
(44,480
|
)
|
|
60,107
|
|
Selling, general and administrative expense
|
|
477
|
|
|
10,242
|
|
|
530
|
|
|
—
|
|
|
11,249
|
|
Depreciation and amortization
|
|
—
|
|
|
18,619
|
|
|
1,369
|
|
|
—
|
|
|
19,988
|
|
Interest expense, net
|
|
6,769
|
|
|
1,833
|
|
|
—
|
|
|
—
|
|
|
8,602
|
|
Other expense, net
|
|
—
|
|
|
24
|
|
|
519
|
|
|
—
|
|
|
543
|
|
Equity in net income of subsidiaries
|
|
(9,054
|
)
|
|
(63
|
)
|
|
—
|
|
|
9,117
|
|
|
—
|
|
Income (loss) before income tax provision
|
|
1,808
|
|
|
9,452
|
|
|
257
|
|
|
(9,117
|
)
|
|
2,400
|
|
Provision (benefit) for income taxes
|
|
—
|
|
|
398
|
|
|
194
|
|
|
—
|
|
|
592
|
|
Net income (loss)
|
|
1,808
|
|
|
9,054
|
|
|
63
|
|
|
(9,117
|
)
|
|
1,808
|
|
Other comprehensive income (loss)
|
|
176
|
|
|
176
|
|
|
176
|
|
|
(352
|
)
|
|
176
|
|
Comprehensive income (loss)
|
|
$
|
1,984
|
|
|
$
|
9,230
|
|
|
$
|
239
|
|
|
$
|
(9,469
|
)
|
|
$
|
1,984
|
|
Condensed Consolidating Statement of Cash Flows
Three Months Ended March 31, 2016
(In Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuers
|
|
Guarantor
Subsidiaries
|
|
Other
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
Net cash provided by (used in) operating activities
|
|
$
|
—
|
|
|
$
|
14,201
|
|
|
$
|
894
|
|
|
$
|
—
|
|
|
$
|
15,095
|
|
Investing activities:
|
|
|
|
|
|
|
|
|
|
|
Purchases of property, plant, and equipment, net
|
|
—
|
|
|
1,048
|
|
|
(2,401
|
)
|
|
—
|
|
|
(1,353
|
)
|
Intercompany investment activity
|
|
12,784
|
|
|
—
|
|
|
—
|
|
|
(12,784
|
)
|
|
—
|
|
Advances and other investing activities
|
|
—
|
|
|
20
|
|
|
—
|
|
|
—
|
|
|
20
|
|
Net cash provided by (used in) investing activities
|
|
12,784
|
|
|
1,068
|
|
|
(2,401
|
)
|
|
(12,784
|
)
|
|
(1,333
|
)
|
Financing activities:
|
|
|
|
|
|
|
|
|
|
|
Proceeds from long-term debt
|
|
—
|
|
|
29,000
|
|
|
—
|
|
|
—
|
|
|
29,000
|
|
Payments of long-term debt
|
|
—
|
|
|
(30,000
|
)
|
|
—
|
|
|
—
|
|
|
(30,000
|
)
|
Distributions
|
|
(12,784
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12,784
|
)
|
Intercompany contribution (distribution)
|
|
—
|
|
|
(12,784
|
)
|
|
—
|
|
|
12,784
|
|
|
—
|
|
Net cash provided by (used in) financing activities
|
|
(12,784
|
)
|
|
(13,784
|
)
|
|
—
|
|
|
12,784
|
|
|
(13,784
|
)
|
Effect of exchange rate changes on cash
|
|
—
|
|
|
—
|
|
|
(308
|
)
|
|
—
|
|
|
(308
|
)
|
Increase (decrease) in cash and cash equivalents
|
|
—
|
|
|
1,485
|
|
|
(1,815
|
)
|
|
—
|
|
|
(330
|
)
|
Cash and cash equivalents at beginning of period
|
|
—
|
|
|
2,711
|
|
|
7,909
|
|
|
—
|
|
|
10,620
|
|
Cash and cash equivalents at end of period
|
|
$
|
—
|
|
|
$
|
4,196
|
|
|
$
|
6,094
|
|
|
$
|
—
|
|
|
$
|
10,290
|
|
Condensed Consolidating Statement of Cash Flows
Three Months Ended March 31, 2015
(In Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuers
|
|
Guarantor
Subsidiaries
|
|
Other
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
Net cash provided by (used in) operating activities
|
|
$
|
—
|
|
|
$
|
30,181
|
|
|
$
|
2,300
|
|
|
$
|
—
|
|
|
$
|
32,481
|
|
Investing activities:
|
|
|
|
|
|
|
|
|
|
|
Purchases of property, plant, and equipment, net
|
|
—
|
|
|
(34,879
|
)
|
|
(2,279
|
)
|
|
—
|
|
|
(37,158
|
)
|
Intercompany investment activity
|
|
16,615
|
|
|
—
|
|
|
—
|
|
|
(16,615
|
)
|
|
—
|
|
Advances and other investing activities
|
|
—
|
|
|
(66
|
)
|
|
—
|
|
|
—
|
|
|
(66
|
)
|
Net cash provided by (used in) investing activities
|
|
16,615
|
|
|
(34,945
|
)
|
|
(2,279
|
)
|
|
(16,615
|
)
|
|
(37,224
|
)
|
Financing activities:
|
|
|
|
|
|
|
|
|
|
|
Proceeds from long-term debt
|
|
—
|
|
|
13,000
|
|
|
—
|
|
|
—
|
|
|
13,000
|
|
Distributions
|
|
(16,615
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16,615
|
)
|
Intercompany contribution (distribution)
|
|
—
|
|
|
(16,615
|
)
|
|
—
|
|
|
16,615
|
|
|
—
|
|
Net cash provided by (used in) financing activities
|
|
(16,615
|
)
|
|
(3,615
|
)
|
|
—
|
|
|
16,615
|
|
|
(3,615
|
)
|
Effect of exchange rate changes on cash
|
|
—
|
|
|
—
|
|
|
(237
|
)
|
|
—
|
|
|
(237
|
)
|
Increase (decrease) in cash and cash equivalents
|
|
—
|
|
|
(8,379
|
)
|
|
(216
|
)
|
|
—
|
|
|
(8,595
|
)
|
Cash and cash equivalents at beginning of period
|
|
—
|
|
|
23,343
|
|
|
10,723
|
|
|
—
|
|
|
34,066
|
|
Cash and cash equivalents at end of period
|
|
$
|
—
|
|
|
$
|
14,964
|
|
|
$
|
10,507
|
|
|
$
|
—
|
|
|
$
|
25,471
|
|
NOTE I – SUBSEQUENT EVENTS
On
April 19, 2016
, we declared a cash distribution attributable to the quarter ended
March 31, 2016
of
$0.3775
per common unit. This distribution equates to a distribution of
$1.51
per outstanding common unit, on an annualized basis. This cash distribution is to be paid on
May 13, 2016
to all common unitholders of record as of the close of business on
April 29, 2016
.