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EX-23.1 - EX-23.1 - Archrock Partners, L.P. | h82551exv23w1.htm |
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 24, 2011
EXTERRAN PARTNERS, L.P.
(Exact name of registrant as specified in its charter)
Delaware | 001-33078 | 22-3935108 | ||
(State or other Jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
16666 Northchase Drive | ||
Houston, Texas (Address of principal executive offices) |
77060 (Zip Code) |
(281) 836-7000
Registrants telephone number, including area code
Registrants telephone number, including area code
N/A
(Former name or former address, if changed since last report.)
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
EXPLANATORY NOTE
On May 24, 2011, Exterran Partners, L.P. (the Partnership, we, us or our) filed a Current
Report on Form 8-K (the Original Report), reporting, among other things, our proposed acquisition
(the Proposed 2011 Contract Operations Acquisition) of certain contract operations customer
service agreements with 34 customers, a fleet of compressor units used to provide compression
services under those agreements comprising approximately 289,000 horsepower, a fleet of compressor
units comprising approximately 98,000 horsepower currently being leased by us from Exterran
Holdings and a natural gas processing plant with a capacity of 8 million cubic feet per day and a
related long-term processing services agreement with a customer pursuant to that certain
Contribution, Conveyance and Assumption Agreement, dated as of May 23, 2011, by and among us,
Exterran Holdings, Inc. and certain of our respective subsidiaries, as further described in the
Original Report. This Current Report on Form 8-K provides the financial statements and pro forma
financial information required by Item 9.01 in connection with the proposed acquisition.
Item 9.01. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
The Report of the Independent Registered Public Accounting Firm and the financial statements listed
below are set forth starting on page 3 of this Form 8-K.
| The audited combined statements of assets acquired and liabilities assumed as of December 31, 2010 and 2009 for the Proposed 2011 Contract Operations Acquisition and the related audited combined statements of revenues and direct operating expenses for the years ended December 31, 2010, 2009 and 2008. | ||
| The unaudited combined statement of assets acquired and liabilities assumed as of March 31, 2011 for the Proposed 2011 Contract Operations Acquisition and the related unaudited combined statements of revenues and direct operating expenses for the three months ended March 31, 2011 and 2010. |
(b) Pro Forma Financial Information.
The unaudited pro forma consolidated balance sheet of the Partnership as of March 31, 2011 and the
unaudited pro forma consolidated statements of operations for the year ended December 31, 2010 and
the three months ended March 31, 2011 are set forth starting on page 9 of this Form 8-K.
(d) Exhibits.
Exhibit No. | Description | |||
23.1 | Consent of Deloitte & Touche LLP |
2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Partners of Exterran Partners L.P.,
Houston, TX
To the Partners of Exterran Partners L.P.,
Houston, TX
We have audited the accompanying combined statements of assets acquired and liabilities assumed by
Exterran Partners, L.P. and subsidiaries (the Partnership), including certain contract operations
customer service agreements and contract operations equipment (the Contract Operations Net
Assets) proposed to be acquired by the Partnership pursuant to the Contribution, Conveyance and
Assumption Agreement between Exterran Holdings, Inc., the Partnership and certain of their
respective subsidiaries dated May 23, 2011 (the Contract Operation Acquisition Agreement), as of
December 31, 2010 and 2009, and the related combined statements of revenues and direct operating
expenses for the years ended December 31, 2010, 2009, and 2008 (the Proposed 2011 Contract
Operations Acquisition Financial Statements). These statements are the responsibility of the
Partnerships management. Our responsibility is to express an opinion on these statements based on
our audits.
We conducted our audits in accordance with standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. The
Contract Operations Net Assets are not required to have, nor were we engaged to perform, an audit
of internal control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Contract Operations Net Assets internal control over financial reporting. Accordingly, we express
no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.
The accompanying combined statements related to the Proposed 2011 Contract Operations Acquisition
Financial Statements were prepared to present the assets acquired and liabilities assumed and
revenues and direct operating expenses of assets acquired by the Partnership pursuant to the
Contract Operation Acquisition Agreement described in Note 1, and are not intended to be a
complete presentation of the results of operations associated with the Contract Operations Net
Assets.
In our opinion, such combined financial statements present fairly, in all material respects, the
assets acquired and liabilities assumed by the Partnership as of December 31, 2010 and 2009,
pursuant to the Contract Operation Acquisition Agreement described in Note 1, and the related
revenues and direct operating expenses for the years ended December 31, 2010, 2009, and 2008 in
conformity with accounting principles generally accepted in the United States of America.
/s/ Deloitte & Touche LLP | ||||
Houston, TX | ||||
May 24, 2011 |
3
PROPOSED 2011 CONTRACT OPERATIONS ACQUISITION
COMBINED STATEMENTS OF ASSETS ACQUIRED AND LIABILITIES ASSUMED
(In thousands)
COMBINED STATEMENTS OF ASSETS ACQUIRED AND LIABILITIES ASSUMED
(In thousands)
March 31, 2011 | December 31, 2010 | December 31, 2009 | ||||||||||
(unaudited) | ||||||||||||
ASSETS |
||||||||||||
Property, plant and equipment |
$ | 280,257 | $ | 236,841 | $ | 239,886 | ||||||
Accumulated depreciation |
(84,227 | ) | (73,853 | ) | (65,331 | ) | ||||||
Net property, plant and equipment |
196,030 | 162,988 | 174,555 | |||||||||
Construction-in-progress |
| 11,544 | | |||||||||
Intangibles and other assets, net |
6,559 | 6,760 | 7,578 | |||||||||
Total assets acquired |
$ | 202,589 | $ | 181,292 | $ | 182,133 | ||||||
LIABILITIES |
||||||||||||
Long-term debt |
$ | 159,434 | $ | 159,434 | $ | 159,434 | ||||||
Total liabilities assumed |
$ | 159,434 | $ | 159,434 | $ | 159,434 | ||||||
The accompanying notes are an integral part of these combined financial statements.
4
PROPOSED 2011 CONTRACT OPERATIONS ACQUISITION
COMBINED STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES
(In thousands)
COMBINED STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES
(In thousands)
Three Months Ended March 31, | Years Ended December 31, | |||||||||||||||||||
2011 | 2010 | 2010 | 2009 | 2008 | ||||||||||||||||
(unaudited) | ||||||||||||||||||||
Revenues |
$ | 14,428 | $ | 13,158 | $ | 53,139 | $ | 62,120 | $ | 60,381 | ||||||||||
Direct operating expenses: |
||||||||||||||||||||
Cost of sales (excluding depreciation and
amortization) |
6,997 | 5,415 | 22,637 | 25,828 | 26,467 | |||||||||||||||
Depreciation and amortization |
4,391 | 3,038 | 12,950 | 14,537 | 11,814 | |||||||||||||||
Selling, general and administrative |
1,056 | 931 | 3,845 | 3,504 | 2,990 | |||||||||||||||
Total direct operating expenses |
12,444 | 9,384 | 39,432 | 43,869 | 41,271 | |||||||||||||||
Excess of revenues over direct operating expenses |
$ | 1,984 | $ | 3,774 | $ | 13,707 | $ | 18,251 | $ | 19,110 | ||||||||||
The accompanying notes are an integral part of these combined financial statements.
5
PROPOSED 2011 CONTRACT OPERATIONS ACQUISITION
NOTES TO COMBINED STATEMENTS OF ASSETS ACQUIRED
AND LIABILITIES ASSUMED AND
COMBINED STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES
NOTES TO COMBINED STATEMENTS OF ASSETS ACQUIRED
AND LIABILITIES ASSUMED AND
COMBINED STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES
1. Overview and Basis of Presentation
Overview
On May 23, 2011, Exterran Partners, L.P. (we, us or our) agreed to acquire from certain
subsidiaries of Exterran Holdings, Inc. (individually and together with its subsidiaries, Exterran
Holdings) certain contract operations customer service agreements with 34 customers, a fleet of
compressor units used to provide compression services under those agreements comprising
approximately 289,000 horsepower, a fleet of compressor units comprising approximately 98,000
horsepower currently being leased by us from Exterran Holdings and a natural gas processing plant
with a capacity of 8 million cubic feet per day and a related
long-term processing services
agreement with a customer (the Proposed 2011 Contract Operations Acquisition) in accordance with
the Contribution, Conveyance and Assumption Agreement, dated May 23, 2011, between us, Exterran
Holdings and certain of our respective subsidiaries (the Agreement). The Proposed 2011 Contract
Operations Acquisition is subject to regulatory approval and other closing conditions and is
expected to close in June 2011.
The accompanying combined statements of assets acquired and liabilities assumed and statements of
revenues and direct operating expenses for the Proposed 2011 Contract Operations Acquisition
include revenue and direct operating expenses related to contract operations customer service
agreements and contract operations equipment that we intend to acquire from Exterran Holdings.
These financial statements represent the assets acquired and liabilities assumed as well as the
revenues and direct operating expenses related to the Proposed 2011 Contract Operations Acquisition
to be acquired by us in connection with the Agreement, except as discussed below in Basis of
Presentation.
Basis of Presentation
The accompanying combined statements of assets acquired and liabilities assumed and statements of
revenues and direct operating expenses related to the Proposed 2011 Contract Operations Acquisition
have been prepared for the purpose of complying with the rules and regulations of the U.S.
Securities and Exchange Commission. Statements of assets acquired and liabilities assumed and
statements of revenues and direct operating expenses have been included in this report in lieu of
full financial statements because the preparation of full financial statements was determined to be
impracticable as it would have required significant assumptions that cannot be substantiated. The
Proposed 2011 Contract Operations Acquisition was not operated as a separate business unit or legal
entity of Exterran Holdings, but was an integrated part of Exterran Holdings consolidated
operations.
The accompanying combined statements have been derived from the historical records of Exterran
Holdings to present combined statements of assets acquired and liabilities assumed and revenues and
direct operating expenses related to the Proposed 2011 Contract Operations Acquisition in
accordance with accounting principles generally accepted in the U.S. (GAAP). In the opinion of
management, the accompanying combined statements contain all adjustments considered necessary to
fairly present the assets acquired, liabilities assumed, revenues and direct operating expenses
related to the Proposed 2011 Contract Operations Acquisition. These combined statements are not
intended to be a complete presentation of the financial position or results of operations for the
Proposed 2011 Contract Operations Acquisition. The historical operating results of the Proposed
2011 Contract Operations Acquisition may not be indicative of its results in the future due to
changes in the business.
The combined statements of assets acquired and liabilities assumed include the contract operations
equipment in the Proposed 2011 Contract Operations Acquisition as defined in the Agreement, as well
as the intangible assets and amortization related to the intangible assets associated with the
Proposed 2011 Contract Operations Acquisition. Contract operations equipment includes the cost and
accumulated depreciation of equipment which was in service as of the end of the periods presented
attributable to Exterran Holdings contract operations customer service agreements that will be
transferred in connection with the Proposed 2011 Contract Operations Acquisition and certain other
equipment to be acquired in the Proposed 2011 Contract Operations Acquisition. The combined
statements of revenues and direct operating expenses related to the Proposed 2011 Contract
Operations Acquisition include the revenues and direct expenses of units that are being acquired
which were in service during the periods presented attributable to Exterran Holdings contract
operations customer service agreements that will be transferred in connection with the Proposed
2011 Contract Operations Acquisition. These statements include depreciation expense related to the
equipment used to provide service under these customer service agreements and certain other
equipment to be acquired in the Proposed 2011 Contract Operations Acquisition. Certain
expense items not directly associated with the customer service agreements, such as interest,
income taxes and corporate overhead (see Note 2) were excluded from
6
the statements of revenues and direct operating expenses. The allocation of such costs was not
historically made and therefore would be made at the discretion of management and would not
necessarily be indicative of what such costs actually would have been had the specific assets been
operated as a stand-alone entity.
All cash flow requirements of the Proposed 2011 Contract Operations Acquisition were funded by
Exterran Holdings, and cash management functions were not performed at the Proposed 2011 Contract
Operations Acquisition level. Therefore, a statement of cash flows, including cash flows from
operating, investing and financing activities, is not presented as the Proposed 2011 Contract
Operations Acquisition did not maintain a separate cash balance.
2. Summary of Significant Accounting Policies
Use of Estimates
In preparing the Proposed 2011 Contract Operations Acquisition combined statements of assets
acquired and liabilities assumed and combined statements of revenues and direct operating expenses,
management made estimates and assumptions that affect the amounts reported therein and related
disclosures. Actual results may differ from these estimates.
Property, Plant and Equipment
Property, plant and equipment is carried at cost. Depreciation for financial reporting purposes is
computed on the straight-line basis using an estimated useful life of 15 to 30 years. Depreciation
begins with the first service. Included in depreciation expense is $0.9 million and $0.2 million
for the three months ended March 31, 2011 and 2010, respectively, and $1.2 million, $0.7 million
and $0.4 million for the years ended December 31, 2010, 2009 and 2008, respectively, of
depreciation expense on contract operations equipment that we intercompany lease from Exterran
Holdings.
Maintenance and repairs are charged to expense as incurred. Overhauls and major improvements that
increase the value or extend the life of compressor units are capitalized and depreciated over the
estimated useful life of up to seven years.
Property, plant and equipment is reviewed for impairment whenever events or circumstances indicate
that the carrying amount of an asset may not be recoverable based upon undiscounted cash flows. Any
impairment losses are measured based upon the excess of the carrying value over the fair value.
Intangible Assets
The amounts of finite life intangible assets reflected in the combined statements of assets
acquired and liabilities assumed of the Proposed 2011 Contract Operations Acquisition represent an
allocation of the historical cost finite life intangible assets of Exterran Holdings North America
contract operations segment. The amounts allocated were based on the determination of fair value of
net assets transferred to us to the total fair value of Exterran Holdings North America contract
operations segment.
The amount of finite life intangible assets included in the Proposed 2011 Contract Operations
Acquisition is comprised of $8.8 million, excluding accumulated amortization at March 31, 2011 of $2.2 million, associated with customer relationships. This intangible
asset is being amortized through 2024, based on the present value of expected income to be realized
from this asset.
Revenue Recognition
Revenue from contract operations is recorded when earned, which generally occurs monthly at the
time the monthly service is provided to customers in accordance with the contracts.
Cost of Sales (Excluding Depreciation and Amortization)
Cost of sales (excluding depreciation and amortization) includes all variable and fixed costs
associated with providing contract operations services, including direct labor, benefits cost,
parts cost, unit freight cost, lubricant cost, field supply cost and ad valorem taxes. Included in
cost of sales is $0.2 million and $47,000 for the three months ended March 31, 2011 and 2010,
respectively, and $0.2 million, $0.1 million and $63,000 for the years ended December 31, 2010,
2009 and 2008, respectively, of ad valorem tax on contract operations equipment that we
intercompany lease from Exterran Holdings.
7
Selling, General and Administrative
Selling, general and administrative (SG&A) expenses include only those costs directly associated
with producing contract operations revenues, including fleet management, selling and marketing and
ad valorem taxes. The amount of SG&A expenses included in the combined statements of revenues and
direct operating expenses of the Proposed 2011 Contract Operations Acquisition reflects an
allocation of those costs incurred by Exterran Holdings based on a percentage of revenue and
horsepower.
3. Long-Term Debt
As part of the purchase price to be paid for the customer service agreements and contract
operations equipment we intend to acquire in the Proposed 2011 Contract Operations Acquisition, we
expect to assume $159.4 million of Exterran Holdings long-term debt that was outstanding under
Exterran Holdings senior secured debt facility. At March 31, 2011, all amounts outstanding under
this debt facility were LIBOR loans and the applicable margin was 0.65%. In connection with the
Proposed 2011 Contract Operations Acquisition, we intend to borrow $159.9 million under our
revolving credit facility, which we expect to use to repay the debt assumed from Exterran Holdings
in connection with the Proposed 2011 Contract Operations Acquisition. All amounts outstanding under
our revolving credit facility mature in November 2015.
8
EXTERRAN PARTNERS, L.P.
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
INTRODUCTION
The following are the unaudited pro forma consolidated financial statements of Exterran Partners,
L.P. (we, us or our) as of March 31, 2011, and for the year ended December 31, 2010 and the
three months ended March 31, 2011. The unaudited pro forma consolidated balance sheet assumes that
our proposed acquisition of certain contract operations customer service agreements and contract
operations equipment (together, the Proposed Assets) of the natural gas contract operations
business that is provided in the United States of America by Exterran Holdings, Inc. (individually
and together with its subsidiaries, Exterran Holdings), and the other related transactions, as
described below (the Proposed 2011 Contract Operations Acquisition), occurred as of March 31,
2011. The unaudited pro forma consolidated statement of operations for the year ended December 31,
2010 assumes that the Proposed 2011 Contract Operations Acquisition and our acquisition in August
2010 of certain contract operations customer service agreements and contract operations equipment
from Exterran Holdings (the August 2010 Contract Operations Acquisition) occurred on January 1,
2010. The unaudited pro forma consolidated statement of operations for the three months ended March
31, 2011 assumes that the Proposed 2011 Contract Operations Acquisition occurred on January 1,
2010. These transaction adjustments are presented in the notes to the unaudited pro forma financial
statements.
The pro forma financial statements reflect the following transactions:
As related to the Proposed 2011 Contract Operations Acquisition:
| our acquisition of the Proposed Assets from Exterran Holdings; | ||
| our assumption of $159.4 million of Exterran Holdings long-term debt; | ||
| our borrowing of $159.9 million under our revolving credit facility and use of those proceeds to retire the debt assumed from Exterran Holdings; and | ||
| our issuance of 2,497,659 common units to Exterran Holdings and 50,973 general partner units to Exterran General Partner, L.P., our general partner and Exterran Holdings wholly-owned subsidiary. |
As related to the August 2010 Contract Operations Acquisition for the period January 1, 2010
through August 10, 2010:
| our acquisition in August 2010 of certain contract operations customer service agreements and contract operations equipment from Exterran Holdings; and | ||
| our issuance of 8,206,863 common units to Exterran Holdings and 167,075 general partner units to Exterran General Partner, L.P., our general partner and Exterran Holdings wholly-owned subsidiary. |
The unaudited pro forma consolidated balance sheet and unaudited pro forma consolidated statements
of operations were derived by adjusting our historical financial statements. The adjustments are
based on currently available information and certain estimates and assumptions and, therefore, the
actual adjustments may differ from the pro forma adjustments. However, management believes that the
adjustments provide a reasonable basis for presenting the significant effects of the transactions.
The unaudited pro forma consolidated financial statements do not purport to present our financial
position or results of operations had the Proposed 2011 Contract Operations Acquisition actually
been completed as of the dates indicated. Moreover, the statements do not project our financial
position or results of operations for any future date or period.
9
EXTERRAN PARTNERS, L.P.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
March 31, 2011
(In thousands)
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
March 31, 2011
(In thousands)
Proposed 2011 | ||||||||||||||||
Exterran | Contract | Exterran | ||||||||||||||
Partners, L.P. | Operations | Partners, L.P. | ||||||||||||||
Historical | Acquisition | Adjustments | Pro Forma | |||||||||||||
ASSETS |
||||||||||||||||
Current assets: |
||||||||||||||||
Cash and cash equivalents |
$ | 15 | $ | | $ | 159,934 | (A) | $ | 515 | |||||||
| (159,434 | )(B) | ||||||||||||||
Accounts receivable, trade, net of allowance |
25,128 | | | 25,128 | ||||||||||||
Due from affiliates, net |
7,553 | | | 7,553 | ||||||||||||
Total current assets |
32,696 | | 500 | 33,196 | ||||||||||||
Property, plant and equipment |
925,319 | 280,257 | | 1,205,576 | ||||||||||||
Accumulated depreciation |
(296,065 | ) | (84,227 | ) | | (380,292 | ) | |||||||||
Net property, plant and equipment |
629,254 | 196,030 | | 825,284 | ||||||||||||
Goodwill |
124,019 | | | 124,019 | ||||||||||||
Interest rate swaps |
7,304 | | | 7,304 | ||||||||||||
Intangibles and other assets, net |
18,532 | 6,559 | | 25,091 | ||||||||||||
Total assets |
$ | 811,805 | $ | 202,589 | $ | 500 | $ | 1,014,894 | ||||||||
LIABILITIES AND PARTNERS CAPITAL |
||||||||||||||||
Current liabilities: |
||||||||||||||||
Accounts payable, trade |
$ | 175 | $ | | $ | | $ | 175 | ||||||||
Accrued liabilities |
8,812 | | | 8,812 | ||||||||||||
Accrued interest |
842 | | | 842 | ||||||||||||
Current portion of interest rate swaps |
3,284 | | | 3,284 | ||||||||||||
Total current liabilities |
13,113 | | | 13,113 | ||||||||||||
Long-term debt |
450,000 | 159,434 | 159,934 | (A) | 609,934 | |||||||||||
(159,434 | )(B) | |||||||||||||||
Total liabilities |
463,113 | 159,434 | 500 | 623,047 | ||||||||||||
Partners capital: |
||||||||||||||||
Common units |
373,561 | | 42,295 | (C) | 415,856 | |||||||||||
Subordinated units |
(30,261 | ) | | | (30,261 | ) | ||||||||||
General partner units |
10,683 | | 860 | (C) | 11,543 | |||||||||||
Accumulated other comprehensive loss |
(4,736 | ) | | | (4,736 | ) | ||||||||||
Treasury units |
(555 | ) | | | (555 | ) | ||||||||||
Total partners capital |
348,692 | | 43,155 | 391,847 | ||||||||||||
Total liabilities and partners capital |
$ | 811,805 | $ | 159,434 | $ | 43,655 | $ | 1,014,894 | ||||||||
The accompanying notes are an integral part of these unaudited pro forma consolidated financial statements.
10
EXTERRAN PARTNERS, L.P.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the year ended December 31, 2010
(In thousands, except per unit data)
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the year ended December 31, 2010
(In thousands, except per unit data)
Carve-off for | ||||||||||||||||||||||||
August 2010 | Proposed 2011 | Non-Acquired | ||||||||||||||||||||||
Exterran | Contract | Contract | Business of | Exterran | ||||||||||||||||||||
Partners, L.P. | Operations | Operations | Customers Partially | Partners, L.P. | ||||||||||||||||||||
Historical | Acquisition | Acquisition | Adjustments | Acquired | Pro Forma | |||||||||||||||||||
Revenue |
$ | 237,636 | $ | 34,458 | $ | 53,139 | $ | (91 | )(D) | $ | (2,809 | ) | $ | 322,333 | ||||||||||
Costs and expenses: |
||||||||||||||||||||||||
Cost of sales (excluding
depreciation and
amortization) |
124,242 | 14,145 | 22,637 | (91 | )(D) | (1,153 | ) | 157,207 | ||||||||||||||||
(2,573 | )(E) | |||||||||||||||||||||||
Depreciation and
amortization |
52,518 | 8,182 | 12,950 | | (667 | ) | 72,983 | |||||||||||||||||
Fleet impairment |
24,976 | | | | | 24,976 | ||||||||||||||||||
Selling, general and
administrative |
34,830 | 2,415 | 3,845 | 3,289 | (F) | (277 | ) | 44,102 | ||||||||||||||||
Interest expense |
24,037 | | | 3,428 | (G) | | 27,465 | |||||||||||||||||
Other (income)
expense, net |
(314 | ) | | | | | (314 | ) | ||||||||||||||||
Total costs and expense |
260,289 | 24,742 | 39,432 | 4,053 | (2,097 | ) | 326,419 | |||||||||||||||||
Income (loss) before
income taxes |
(22,653 | ) | 9,716 | 13,707 | (4,144 | ) | (712 | ) | (4,086 | ) | ||||||||||||||
Income tax expense |
680 | | | 250 | (H) | (10 | ) | 920 | ||||||||||||||||
Net income (loss) |
$ | (23,333 | ) | $ | 9,716 | $ | 13,707 | $ | (4,394 | ) | $ | (702 | ) | $ | (5,006 | ) | ||||||||
General partner interest
in net income (loss) |
$ | 1,091 | $ | 1,864 | ||||||||||||||||||||
Common units interest in
net income (loss) |
$ | (19,257 | ) | $ | (5,731 | ) | ||||||||||||||||||
Subordinated units
interest in net income
(loss) |
$ | (5,167 | ) | $ | (1,139 | ) | ||||||||||||||||||
Weighted average
common units
outstanding: |
||||||||||||||||||||||||
Basic |
21,360 | 7,490 | (I) | 28,850 | ||||||||||||||||||||
Diluted |
21,360 | 7,490 | (I) | 28,850 | ||||||||||||||||||||
Weighted average
subordinated units
outstanding: |
||||||||||||||||||||||||
Basic |
5,731 | 5,731 | ||||||||||||||||||||||
Diluted |
5,731 | 5,731 | ||||||||||||||||||||||
Earnings (loss) per
common unit: |
||||||||||||||||||||||||
Basic |
$ | (0.90 | ) | $ | (0.20 | ) | ||||||||||||||||||
Diluted |
$ | (0.90 | ) | $ | (0.20 | ) | ||||||||||||||||||
Earnings (loss) per
subordinated unit: |
||||||||||||||||||||||||
Basic |
$ | (0.90 | ) | $ | (0.20 | ) | ||||||||||||||||||
Diluted |
$ | (0.90 | ) | $ | (0.20 | ) | ||||||||||||||||||
The accompanying notes are an integral part of these unaudited pro forma consolidated financial statements.
11
EXTERRAN PARTNERS, L.P.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the three months ended March 31, 2011
(In thousands, except per unit data)
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the three months ended March 31, 2011
(In thousands, except per unit data)
Proposed 2011 | ||||||||||||||||
Exterran | Contract | Exterran | ||||||||||||||
Partners, L.P. | Operations | Partners, L.P. | ||||||||||||||
Historical | Acquisition | Adjustments | Pro Forma | |||||||||||||
Revenue |
$ | 68,729 | $ | 14,428 | $ | (17 | )(D) | $ | 83,140 | |||||||
Costs and expenses: |
||||||||||||||||
Cost of sales (excluding depreciation and amortization) |
37,052 | 6,997 | (17 | )(D) | 42,785 | |||||||||||
(1,247 | )(E) | |||||||||||||||
Depreciation and amortization |
14,149 | 4,391 | 18,540 | |||||||||||||
Selling, general and administrative |
10,216 | 1,056 | 729 | (F) | 12,001 | |||||||||||
Interest expense |
7,075 | | 1,188 | (G) | 8,263 | |||||||||||
Other (income) expense, net |
(221 | ) | | | (221 | ) | ||||||||||
Total costs and expense |
68,271 | 12,444 | 653 | 81,368 | ||||||||||||
Income before income taxes |
458 | 1,984 | (670 | ) | 1,772 | |||||||||||
Income tax expense |
235 | | 32 | (H) | 267 | |||||||||||
Net income |
$ | 223 | $ | 1,984 | $ | (702 | ) | $ | 1,505 | |||||||
General partner interest in net income |
$ | 522 | $ | 642 | ||||||||||||
Common units interest in net income |
$ | (255 | ) | $ | 745 | |||||||||||
Subordinated units interest in net income |
$ | (44 | ) | $ | 118 | |||||||||||
Weighted average common units outstanding: |
||||||||||||||||
Basic |
27,363 | 2,498 | (J) | 29,861 | ||||||||||||
Diluted |
27,363 | 2,502 | (J) | 29,865 | ||||||||||||
Weighted average subordinated units outstanding: |
||||||||||||||||
Basic |
4,744 | 4,744 | ||||||||||||||
Diluted |
4,744 | 4,744 | ||||||||||||||
Earnings
(loss) per common unit: |
||||||||||||||||
Basic |
$ | (0.01 | ) | $ | 0.02 | |||||||||||
Diluted |
$ | (0.01 | ) | $ | 0.02 | |||||||||||
Earnings
(loss) per subordinated unit: |
||||||||||||||||
Basic |
$ | (0.01 | ) | $ | 0.02 | |||||||||||
Diluted |
$ | (0.01 | ) | $ | 0.02 | |||||||||||
The accompanying notes are an integral part of these unaudited pro forma consolidated financial statements.
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EXTERRAN PARTNERS, L.P.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation, the Proposed 2011 Contract Operations Acquisition and Related
Transactions
The historical financial information is derived from the consolidated financial statements of the
Partnership and the combined financial statements of the Proposed 2011 Contract Operations
Acquisition and August 2010 Contract Operations Acquisition. The unaudited pro forma consolidated
balance sheet assumes that the Proposed 2011 Contract Operations Acquisition, as described below,
occurred as of March 31, 2011. The unaudited pro forma consolidated statement of operations for the
year ended December 31, 2010 assumes that the Proposed 2011 Contract Operations Acquisition and the
August 2010 Contract Operations Acquisition occurred on January 1, 2010. The unaudited pro forma
consolidated statement of operations for the three months ended March 31, 2011 assumes that the
Proposed 2011 Contract Operations Acquisition occurred on January 1, 2010.
The pro forma financial statements reflect the following transactions:
As related to the Proposed 2011 Contract Operations Acquisition:
| our acquisition of the Proposed Assets from Exterran Holdings; | ||
| our assumption of $159.4 million of Exterran Holdings long-term debt; | ||
| our borrowing of $159.9 million under our revolving credit facility and use of those proceeds to retire the debt assumed from Exterran Holdings; and | ||
| our issuance of 2,497,659 common units to Exterran Holdings and 50,973 general partner units to Exterran General Partner, L.P., our general partner and Exterran Holdings wholly-owned subsidiary. |
As related to the August 2010 Contract Operations Acquisition for the period January 1, 2010
through August 10, 2010:
| our acquisition in August 2010 of certain contract operations customer service agreements and contract operations equipment from Exterran Holdings; and |
| our issuance of 8,206,863 common units to Exterran Holdings and 167,075 general partner units to Exterran General Partner, L.P., our general partner and Exterran Holdings wholly-owned subsidiary. |
2. Pro Forma Adjustments and Assumptions
(A) Reflects borrowings of $159.9 million under our revolving credit facility.
(B) Reflects the repayment of $159.4 million of debt assumed from Exterran Holdings using
borrowings under our revolving credit facility.
(C) Reflects the issuance of 2,497,659 common units to Exterran Holdings and 50,973 general partner
units to our general partner in connection with the Proposed 2011 Contract Operations Acquisition.
If we elect to conduct a public offering of our common units and we expect this public offering to
be completed prior to the closing date of the Proposed 2011 Contract Operations Acquisition,
Exterran Holdings has the option to cause us to sell a number of additional common units, up to
2,497,659 common units, that otherwise would be issued to Exterran Holdings at the closing of the
Proposed 2011 Contract Operations Acquisition. We would expect to distribute the net proceeds from
the sale of these additional common units to Exterran Holdings at the closing of the Proposed 2011
Contract Operations Acquisition, in lieu of issuing the full 2,497,659 new common units to Exterran
Holdings.
(D) Reflects the reversal of intercompany lease revenue and intercompany lease expense recorded
related to units included in the Proposed 2011 Contract Operations Acquisition that Exterran
Holdings intercompany leases from us.
(E) Reflects the reversal of intercompany lease expense recorded related to units included in the
Proposed 2011 Contract Operations Acquisition that we intercompany lease from Exterran Holdings.
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(F) Reflects an allocation of selling, general and administrative (SG&A) expenses of Exterran
Holdings for the year ended December 31, 2010 of $2.3 million and $1.0 million related to the
Proposed 2011 Contract Operations Acquisition and August 2010 Contract Operations Acquisition,
respectively. Reflects an allocation of SG&A expenses of Exterran Holdings for the three months
ended March 31, 2011 of $0.7 million related to the Proposed 2011 Contract Operations Acquisition.
SG&A expenses in this adjustment include only the allocation of indirect expenses and have been
allocated to us based on the percentage of total horsepower of compressor units acquired or
expected to be acquired in the transactions to total horsepower of Exterran Holdings and our
compressor units in accordance with an omnibus agreement among us, Exterran Holdings and others.
(G) Reflects interest expense incurred on borrowings of $159.9 million under our revolving credit
facility in connection with the Proposed 2011 Contract Operations Acquisition. During the year
ended December 31, 2010, interest expense is $3.4 million and is based on an average rate of
one-month LIBOR of 0.27%, plus the applicable margin of 1.5% to 2.5%. During the three months ended
March 31, 2011, interest expense is $1.2 million and is based on an average rate of one-month LIBOR
of 0.26%, plus the applicable margin of 2.5%. A one percentage point increase or decrease in
interest rates would result in an increase or decrease in interest expense related to the Proposed
2011 Contract Operations Acquisition of $1.6 million and $0.4 million for the year ended December
31, 2010 and the three months ended March 31, 2011, respectively.
(H) Reflects additional taxes for the year ended December 31, 2010 of $0.1 million in connection
with the Proposed 2011 Contract Operations Acquisition, that we would have incurred under the Texas
margins tax related to the contract operations service agreements that we intend to acquire from
Exterran Holdings in the transaction. Reflects additional taxes for the year ended December 31,
2010 of $0.1 million in connection with the August 2010 Contract Operations Acquisition, that we
would have incurred under the Texas margins tax and Michigan Business Tax related to the contract
operations service agreements that we acquired from Exterran Holdings in the transaction. Reflects
additional taxes for the three months ended March 31, 2011 of approximately $32,000, in connection
with the Proposed 2011 Contract Operations Acquisition, that we would have incurred under the Texas
margins tax related to the contract operations service agreements that we intend to acquire from
Exterran Holdings in the transaction. Note that a 10% increase or decrease in the apportionment
factor used to calculate the margin tax expense for the unaudited pro forma consolidated statement
of operations presented herein would not have a material impact on the amount of such tax expense.
(I) Reflects the issuance of 2,497,659 common units and 8,206,863 common units, respectively, to
Exterran Holdings in connection with the Proposed 2011 Contract Operations Acquisition and August
2010 Contract Operations Acquisition.
(J) Reflects the issuance of 2,497,659 common units to Exterran Holdings in connection with the
Proposed 2011 Contract Operations Acquisition.
3. Carve-off for Non-Acquired Business of Customers Partially Acquired
The unaudited pro forma consolidated statement of operations for the year ended December 31, 2010
includes the results of the August 2010 Contract Operations Acquisition. Such results include all
contract operations business with the customers that have been partially acquired in the August
2010 Contract Operations Acquisition even though some of the business contracted with that customer
was not transferred in the August 2010 Contract Operations Acquisition. To better reflect the
amount of business acquired, the unaudited pro forma statement of operations includes an adjustment
to reflect the amount of business in the August 2010 Contract Operations Acquisition not actually
acquired. The percentage was based on the ratio of horsepower acquired in the August 2010 Contract
Operations Acquisition to the total horsepower in service for each of this type of customer on the
closing date of the August 2010 Contract Operations Acquisition.
4. Pro Forma Net Earnings (Loss) Per Limited Partner Unit
Pro forma net earnings (loss) per limited partner unit is determined by dividing the pro forma net
income that would have been allocated to the common and subordinated unitholders by the number of
common and subordinated units expected to be outstanding after the completion of the transactions
included in the pro forma consolidated financial statements. All units issued in connection with
the Proposed 2011 Contract Operations Acquisition and August 2010 Contract Operations Acquisition
were assumed to have been outstanding since January 1, 2010. Pursuant to the partnership agreement,
to the extent that the quarterly distributions exceed certain targets, the general partner is
entitled to receive certain incentive distributions that will result in more net income
proportionately being allocated to the general partner than to the holders of common and
subordinated units. The pro forma net earnings (loss) per unit calculations reflect the incentive
distributions made to the general partner and a reduction of net income allocable to the limited
partners of $0.4 million and approximately $45,000 for the year ended December 31, 2010 and the
three months ended March 31, 2011, respectively, which reflects the amount of additional incentive
distributions that would have occurred if the excess of net income over actual distributions for
the period been distributed.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned hereunto duly authorized.
EXTERRAN PARTNERS, L.P. (Registrant) By: Exterran General Partner, L.P., its general partner By: Exterran GP LLC, its general partner |
||||
Date: May 24, 2011 | /s/ MICHAEL J. AARONSON | |||
Name: | Michael J. Aaronson | |||
Title: | Chief Financial Officer |
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