2. Discontinued Operations

In May 2009, the Venezuelan government enacted a law that reserves to the State of Venezuela certain assets and services related to hydrocarbon activities, which included substantially all of our assets and services in Venezuela. The law provides that the reserved activities are to be performed by the State, by the State-owned oil company, Petroleos de Venezuela S.A. (“PDVSA”), or its affiliates, or through mixed companies under the control of PDVSA or its affiliates. The law authorizes PDVSA or its affiliates to take possession of the assets and take over control of those operations related to the reserved activities as a step prior to the commencement of an expropriation process, and permits the national executive of Venezuela to decree the total or partial expropriation of shares or assets of companies performing those services.

In June 2009, PDVSA commenced taking possession of our assets and operations in a number of our locations in Venezuela and by the end of the second quarter of 2009, PDVSA had assumed control over substantially all of our assets and operations in Venezuela. The expropriation of our business in Venezuela meets the criteria established for recognition as discontinued operations under GAAP. Therefore, our Venezuela contract operations business is reflected as discontinued operations in our condensed consolidated financial statements.

In March 2010, our Spanish subsidiary filed a request for the institution of an arbitration proceeding against Venezuela with the International Centre for Settlement of Investment Disputes (“ICSID”) related to the seized assets and investments under the Agreement between Spain and Venezuela for the Reciprocal Promotion and Protection of Investments and under Venezuelan law. The arbitration hearing occurred in July 2012.

In August 2012, our Venezuelan subsidiary sold its previously nationalized assets to PDVSA Gas, S.A. (“PDVSA Gas”) for a purchase price of approximately $441.7 million. We received an initial payment of $176.7 million in cash at closing, of which we remitted $50.0 million to the insurance company from which we collected $50.0 million in January 2010 under the terms of an insurance policy we maintained for the risk of expropriation. We received an installment payment of $16.8 million in the year ended December 31, 2012. In March 2013, we received an installment payment of $34.3 million, which included a prepayment of $17.2 million for the second quarter 2013 installment payment. The remaining principal amount due to us of approximately $215 million is payable in quarterly cash installments through the third quarter of 2016. We have not recognized amounts payable to us by PDVSA Gas as a receivable and will therefore recognize quarterly payments received in the future as income from discontinued operations in the periods such payments are received. The proceeds from the sale of assets are not subject to Venezuelan national taxes due to an exemption allowed under the Venezuelan Reserve Law applicable to expropriation settlements. In addition, and in connection with the sale, we and the Venezuelan government agreed to waive rights to assert certain claims against each other.

In connection with the sale of these assets, we have agreed to suspend the arbitration proceeding previously filed by our Spanish subsidiary against Venezuela pending payment in full by PDVSA Gas of the purchase price for these nationalized assets.

In February 2013, the Venezuelan government announced a devaluation of the Venezuelan bolivar. This devaluation resulted in a translation gain of approximately $1.4 million on the remeasurement of our net liability position associated with our discontinued operations in Venezuela and is reflected in other (income) loss, net, in the table below during the six months ended June 30, 2013. The functional currency of our Venezuelan subsidiary is the U.S. dollar and we had more liabilities than assets denominated in bolivars in Venezuela at the time of the devaluation. The exchange rate used to remeasure our net liabilities changed from 4.3 bolivars per U.S. dollar at December 31, 2012 to 6.3 bolivars per U.S. dollar in February 2013.

In June 2012, we committed to a plan to sell our contract operations and aftermarket services businesses in Canada as part of our continued emphasis on simplification and focus on our core businesses. Our Canadian contract operations and aftermarket services businesses are reflected as discontinued operations in our condensed consolidated financial statements. These operations were previously included in our North American contract operations and aftermarket services business segments. In connection with the planned disposition, we recorded impairment charges totaling $3.9 million and $40.8 million during the three months ended June 30, 2013 and 2012, respectively, and $6.0 million and $40.8 million during the six months ended June 30, 2013 and 2012, respectively. The impairment charges are reflected in income (loss) from discontinued operations, net of tax. As discussed in Note 17, we completed the sale of our Canadian contract operations and aftermarket services businesses in July 2013.

The following tables summarize the operating results of discontinued operations (in thousands):

	Three months ended June 30, 2013									Three months ended June 30, 2012
	Venezuela			Canada			Total			Venezuela			Canada			Total
Revenue	$	—		$	13,630		$	13,630		$	—		$	13,966		$	13,966
Expenses and selling, general and administrative	81			10,771			10,852			271			13,826			14,097
Loss (recovery) attributable to expropriation and impairments	(228		)	3,924			3,696			1,568			40,813			42,381
Other (income) loss, net	—			478			478			—			860			860
Provision for (benefit from) income taxes	—			179			179			823			(1,304		)	(481		)
Income (loss) from discontinued operations, net of tax	$	147		$	(1,722	)	$	(1,575	)	$	(2,662	)	$	(40,229	)	$	(42,891	)

	Six months ended June 30, 2013									Six months ended June 30, 2012
	Venezuela			Canada			Total			Venezuela			Canada			Total
Revenue	$	—		$	24,458		$	24,458		$	—		$	25,240		$	25,240
Expenses and selling, general and administrative	308			21,810			22,118			443			27,677			28,120
Loss (recovery) attributable to expropriation and impairments	(33,427		)	6,000			(27,427		)	1,581			40,813			42,394
Other (income) loss, net	(2,592		)	512			(2,080		)	—			174			174
Provision for (benefit from) income taxes	—			172			172			1,263			(2,658		)	(1,395		)
Income (loss) from discontinued operations, net of tax	$	35,711		$	(4,036	)	$	31,675		$	(3,287	)	$	(40,766	)	$	(44,053	)

The following table summarizes the balance sheet data for discontinued operations (in thousands):

	June 30, 2013						December 31, 2012
	Venezuela		Canada		Total		Venezuela		Canada		Total
Cash	$	98	$	9	$	107	$	113	$	791	$	904
Accounts receivable	2		10,740		10,742		17		9,148		9,165
Inventory	—		10,556		10,556		—		9,826		9,826
Other current assets	12		1,873		1,885		41		1,810		1,851
Total current assets associated with discontinued operations	112		23,178		23,290		171		21,575		21,746
Total assets associated with discontinued operations	$	112	$	23,178	$	23,290	$	171	$	21,575	$	21,746

Accounts payable	$	367	$	4,035	$	4,402	$	499	$	3,345	$	3,844
Accrued liabilities	1,995		2,838		4,833		4,335		2,724		7,059
Deferred revenue	—		422		422		—		669		669
Total current liabilities associated with discontinued operations	2,362		7,295		9,657		4,834		6,738		11,572
Other long-term liabilities	368		570		938		455		589		1,044
Total liabilities associated with discontinued operations	$	2,730	$	7,865	$	10,595	$	5,289	$	7,327	$	12,616