<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 333-48279
UNIVERSAL COMPRESSION, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
TEXAS 74-1282680
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4430 BRITTMOORE ROAD
HOUSTON, TX 77041
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code 713-466-4103
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS.
UNIVERSAL COMPRESSION, INC.
UNAUDITED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE DATA)
ASSETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1998
--------- ------------
<S> <C> <C>
Current assets:
Cash and equivalents...................................... $ 2,382 $ 610
Accounts receivable....................................... 11,662 14,977
Inventories............................................... 8,678 18,044
Deferred tax assets....................................... 67 67
Other..................................................... 3,121 1,118
-------- --------
Total current assets.............................. 25,910 34,816
Property, plant and equipment
Rental equipment.......................................... 237,795 268,428
Other..................................................... 14,611 16,602
Less: accumulated depreciation............................ (1,366) (13,497)
-------- --------
Net property, plant and equipment................. 251,040 271,533
Goodwill, net of amortization............................... 93,300 93,206
Other assets, net........................................... 8,858 7,935
-------- --------
Total assets...................................... $379,108 $407,490
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities.................. $ 11,280 $ 10,839
Current portion of long-term debt......................... 750 750
-------- --------
Total current liabilities......................... 12,030 11,589
Deferred income taxes....................................... 525 525
Long-term debt.............................................. 260,758 288,796
-------- --------
Total liabilities................................. 273,313 300,910
Stockholders' equity:
Common stock, $10 par value, 5,000 shares authorized and
4,910 shares issued and outstanding.................... 49 49
Additional paid-in capital................................ 105,130 105,130
Retained earnings......................................... 616 1,401
-------- --------
Total common stockholders' equity................. 105,795 106,580
-------- --------
Total liabilities and equity...................... $379,108 $407,490
======== ========
</TABLE>
See accompanying notes to unaudited financial statements.
1
<PAGE> 3
UNIVERSAL COMPRESSION, INC.
UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
PREDECESSOR
------------ PREDECESSOR
THREE THREE ------------
MONTHS MONTHS NINE MONTHS NINE MONTHS
ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1998 1997 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues
Rental................................... $21,310 $21,762 $62,204 $65,204
Sales.................................... 5,639 11,797 19,267 30,776
------- ------- ------- -------
Total revenues................... 26,949 33,559 81,471 95,980
Costs and expenses
Rentals, exclusive of depreciation and
amortization.......................... 8,176 7,633 25,993 23,602
Cost of sales, exclusive of depreciation
and amortization...................... 4,161 9,993 13,418 25,517
Depreciation and amortization............ 6,574 4,929 19,657 14,251
General and administrative............... 2,329 4,162 7,281 12,186
Interest expense......................... -- 6,500 3 19,158
------- ------- ------- -------
Total costs and expenses......... 21,240 33,217 66,352 94,714
------- ------- ------- -------
Income before income taxes................. 5,709 342 15,119 1,266
Income taxes............................... 2,282 128 5,745 481
------- ------- ------- -------
Net income................................. $ 3,427 $ 214 $ 9,374 $ 785
======= ======= ======= =======
</TABLE>
See accompanying notes to unaudited financial statements.
2
<PAGE> 4
UNIVERSAL COMPRESSION, INC.
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED DECEMBER 31, 1997 AND 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
PREDECESSOR
1997 1998
----------- --------
<S> <C> <C>
Cash flow from operating activities:
Net income................................................ $ 9,374 $ 785
Adjustments to reconcile net income to cash provided from
operating activities:
Depreciation and amortization.......................... 19,657 14,251
Amortization of debt financing activities.............. -- 807
Accretion of discount notes............................ -- 11,350
Change in assets and liabilities....................... (1,803) (9,888)
-------- --------
Net cash provided by operating activities......... 27,228 17,305
Cash flows from investing activities
Additions to property, plant, and equipment, net.......... (9,604) (35,764)
-------- --------
Net cash used in investing activities............. (9,604) (35,764)
Cash flows from financing activities:
Principal repayments on long-term debt.................... -- (563)
Net borrowing on line of credit........................... -- 17,250
Intercompany payable...................................... (18,190) --
-------- --------
Net cash used in and provided by financing
activities...................................... (18,190) 16,687
Decrease in cash............................................ (566) (1,772)
Cash at beginning of period................................. -- 2,382
-------- --------
Cash at end of period....................................... $ (566) $ 610
======== ========
</TABLE>
See accompanying notes to unaudited financial statements.
3
<PAGE> 5
UNIVERSAL COMPRESSION, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
DECEMBER 31, 1998
1. BASIS OF PRESENTATION
TW Acquisition Corporation, ("Acquisition Corp.") was formed on December
12, 1997 for the purpose of acquiring Tidewater Compression Service, Inc.
("TCS"). On February 20, 1998, Acquisition Corp. acquired 100% of the voting
securities of TCS. Immediately following the acquisition, Acquisition Corp. was
merged with and into TCS, which changed its name to Universal Compression, Inc.
(the "Company"). The Company is a wholly owned subsidiary of Universal
Compression Holdings, Inc. These financial statements should be read in
conjunction with the financial statements presented in the Company's most recent
annual report as of March 31, 1998. That report contains a more comprehensive
summary of the Company's major accounting policies. In the opinion of
management, the accompanying unaudited financial statements contain all
appropriate adjustments, all of which are normally recurring adjustments unless
otherwise noted, considered necessary to present fairly its financial position,
results of operation and cash flows for the respective periods. Operating
results for the three-and nine-month periods ended December 31, 1998 are not
necessarily indicative of the results that may be expected for the year ending
March 31, 1999.
The Company is a leading provider of natural gas compressor rental,
maintenance and operations services to the domestic oil and gas industry, owning
the second largest domestic gas compressor fleet, and has a growing presence in
key international markets, including Argentina, Venezuela, Colombia and the
Pacific Rim. The Company has a broad base of over 500 customers and its 525,000
horsepower ("HP") gas compression rental fleet is comprised of over 2,700 units.
Founded in 1954, the Company is the only compression rental company with an
operating presence in all active domestic gas compression markets. As a
complement to its rental operations, the Company designs and fabricates
compression units for its own fleet as well as for its global customer base.
2. RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 130, Report Comprehensive Income ("SFAS 130").
Comprehensive income is a more inclusive financial reporting methodology that
includes disclosures of certain financial information that historically has not
been recognized in the presentation of net income. SFAS 130 requires the
reporting of comprehensive income in addition to net income from operations.
SFAS 130 is effective for periods beginning after December 15, 1997. At December
31, 1998, the Company had no items of comprehensive income, and as a result
believes that the adoption of SFAS 130 will have no impact upon implementation.
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 131, Segments of an Enterprise and Related
Information ("SFAS 131"). SFAS 131 requires that companies report in their
financial statements financial and descriptive information about reportable
operating segments defined by reference to the way in which management reviews
its operations in order to assess performance and allocate resources. Management
is evaluating what, if any, additional disclosures may be required upon
implementation of SFAS 131.
3. INVENTORIES
Inventories consisted of (in thousands):
<TABLE>
<CAPTION>
MARCH, DECEMBER,
1998 1998
------ ---------
<S> <C> <C>
Work-in-progress............................................ $3,199 $12,174
Finished goods.............................................. 5,479 5,870
------ -------
$8,678 $18,044
====== =======
</TABLE>
4
<PAGE> 6
ITEM 2:MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
RESULTS OF OPERATIONS
Set forth below is a discussion of the results of operations for the three-
and nine-month periods ended December 31, 1998 as compared to the corresponding
periods of the previous year. The results for the three-and nine-month periods
ended December, 1997 are the results of the predecessor, TCS.
Three Months ended December 31, 1998
Revenue. Revenue for the quarter ended December, 1998 increased $6.6
million, or 24%, to $33.6 million compared to $27.0 million for the quarter
ended December, 1997 due to increases in both rental revenue and revenue from
fabrication and equipment sales. Rental revenue increased 2% to $21.8 million.
The increase in rental revenue was due to a 4% increase in utilized horsepower
while average rental pricing declined 1%. Additionally the Company increased the
amount of HP rented in international markets by 16% through additional service
in Argentina. Revenue from fabrication and sales increased to $11.8 million from
$5.6 million, an increase of 110%, due to a relatively higher level of
fabrication activity.
Gross Margin. Gross margin (defined as total revenue less (i) rental
expense, (ii) cost of sales (exclusive of depreciation and amortization), (iii)
gain on asset sales and (iv) interest income) for the quarter ended December 31,
1998 increased $1.3 million, or 9%, to $15.9 million from gross margin of $14.6
million for the quarter ended December 31, 1997. The increase was primarily due
to higher utilization and the resulting operating efficiencies related to the
rental fleet and the increased capitalization of overhaul expenses of $0.7
million. The rental gross margin for the quarter ended December 31, 1998
increased $1.0 million, or 8%, to $14.1 million compared to gross margin of
$13.1 million for the quarter ended December 31, 1997 due to the aforementioned
factors regarding utilization of the rental fleet and the capitalization of
overhaul expenses.
General and Administrative Expenses. General and administrative expenses
for the quarter ended December 31, 1998 increased $1.8 million compared to the
quarter ended December 31, 1997. The increase was primarily due to the
management fee payable to Castle Harlan and increased sales and engineering
expense in the quarter ended December 31, 1998 as the Company added the
additional sales and engineering personnel necessary to manage and rent a larger
rental fleet.
Net income. Primarily as a result of increased interest expense of $6.5
million related to the indebtedness incurred in the Acquisition and expansion of
the rental fleet, reduced income taxes, and the factors discussed above, the
Company had net income of $0.2 million for the quarter ended December 31, 1998
compared net income of $3.4 million for the quarter ended December 31, 1997.
Nine Months ended December 31, 1998
Revenue. Revenue for the nine months ended December 31, 1998 increased
$14.5 million, or 18%, to $96.0 million compared to $81.5 million for the nine
months ended December 31, 1997 due to increases in both rental revenue and
revenue from fabrication and equipment sales. Rental revenue increased 5% to
$65.2 million. The increase in rental revenue was principally due to a 6%
increase in utilized horsepower while average rental pricing remained unchanged.
Additionally the Company increased the amount of HP rented in international
markets by 26% through additional service in Argentina. Revenue from fabrication
and sales increased to $30.8 million from $19.3 million, an increase of 60%, due
to a much higher level of fabrication activity in the most recent quarter.
Gross Margin. Gross margin (defined as total revenue less (i) rental
expense, (ii) cost of sales (exclusive of depreciation and amortization), (iii)
gain on asset sales and (iv) interest income) for the nine months ended December
31, 1998 increased $4.8 million, or 11%, to $46.9 million from gross margin of
$42.1 million for the nine months ended December 31, 1997. The increase was due
to higher utilization and the resulting operating efficiencies related to the
rental fleet, the increased capitalization of overhaul expenses of $3.3 million,
and increased fabrication activity. The rental gross margin for the nine months
ended December 31, 1998 increased $5.4 million, or 15%, to $41.6 million
compared to gross margin of $36.2 million
5
<PAGE> 7
for the nine months ended December 31, 1997 due to the aforementioned factors
regarding utilization of the rental fleet and the capitalization of overhaul
expenses.
General and Administrative Expenses. General and administrative expenses
for the nine months ended December 31, 1998 increased $4.9 million compared to
the nine months ended December 31, 1997. The increase was due primarily to the
management fee payable to Castle Harlan and increased sales and engineering
expense in the nine months ended December 31, 1998 as the Company incurred
additional sales and engineering costs necessary to manage and rent a larger
rental fleet and increased fabrication activities.
Net income. Primarily as a result of increased interest expense of $19.2
million related to the indebtedness incurred in the Acquisition and expansion of
the rental fleet, reduced income taxes, and the factors discussed above, the
Company had net income of $.8 million for the nine months ended December 31,
1998 compared net income of $9.4 million for the nine months ended December 31,
1997.
LIQUIDITY AND CAPITAL RESOURCES
For the nine months ended December 31, 1998 the Company generated cash flow
from operations of $17.3 million. The Company used this cash flow together with
net borrowings of $16.7 million under established lines of credit and cash on
hand of $1.8 million to expend $35.8 million on equipment for its rental
operations. During the nine months ended December 31, 1998 the Company had a
sharp increase in its fabrication activities and as a result has increased its
use of working capital for work-in-progress by $9.0 million.
The Company expects to expend approximately $66 million on capital projects
during fiscal 1999. Approximately $21 million is included for expansion of its
domestic rental fleet, $30 million is for additional expansion into
international markets, $10 million is for maintaining and updating the existing
fleet, with the balance of $5 million being for the expansion of the fabrication
shop in Houston and for new vehicles for service technicians and other capital
projects.
The Company anticipates that internally generated cash flow coupled with
availability under its established credit facilities will be sufficient to fund
domestic and international operations, capital investments, and its obligations
to its creditors. The Company's ability to borrow additional funds is limited by
its debt obligations.
IMPACT OF THE YEAR 2000
The Company has assessed its internal information and operating systems in
order to develop a comprehensive strategy to address the computer software and
hardware changes and facility upgrades that are required to remedy Year 2000
related deficiencies inherent in those systems. Generally, the Company is in the
process of installing various modifications to existing computer systems to
accommodate the problems associated with the Year 2000, and anticipates
completing Year 2000 modifications, and replacements and testing by mid-1999.
The aggregate cost of such modifications is estimated to be approximately
$100,000. The Company has evaluated its embedded technology systems in respect
of the Year 2000 problem, and believes that a failure, if any, of such systems
would not significantly impact operations.
The Company has not conducted an assessment of Year 2000-related problems
originating with third parties outside the Company's control, including the
third parties with which the Company has a material relationship. However, the
Company has no significant supplier or customer that directly interfaces with
the Company's information technology systems. There is no assurance that the
computer systems of the suppliers and customers on which the Company relies will
be converted timely and will not have a material adverse effect on the Company.
The Company believes that its most reasonably likely worst case Year 2000
scenario would include these elements: (a) one or more of the Company's third
party providers will be unable to provide the supplies expected and (b) one or
more parts of the Company's internal systems will operate incorrectly. The
Company believes that the testing and replacement of its critical systems are
minimizing the uncertainties associated with a failure of its systems, which
will reveal any significant Year 2000 problems. Such problems will be capable of
remediation so that the Company's systems will perform substantially as planned
when Year 2000
6
<PAGE> 8
processing begins. In the event of a systems failure, the Company believes it is
equipped to switch to manual processes until such failure is remedied, without
significantly impacting operations.
FORWARD LOOKING STATEMENTS
Certain statements in this report which are not historical facts, including
statements regarding the sufficiency of available cash flows to fund its
continuing operations, capital improvements and research and development, and
the expected amount of capital expenditures for the fiscal year may be regarded
as "forward looking statements" within the meaning of the Securities Litigation
Reform Act. Such forward looking statements are subject to the impact of risks
and uncertainties that could cause actual results to differ materially from
results expressed or implied in such forward looking statements. The risks and
uncertainties include, but are not limited to (1) conditions in the oil and gas
industry including the price of oil and natural gas and the demand for natural
gas, (2) competition among the various providers of contract compression
services, (3) changes in safety and environmental regulations pertaining to the
production and transportation of natural gas, and (4) changes in economic or
political conditions in the international markets in which the Company competes.
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
None.
7
<PAGE> 9
PART II. OTHER INFORMATION
ITEM 6: EXHIBITS AND REPORT ON FORM 8-K.
(a) Exhibits.
The following documents have been included as Exhibits to this form:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
-------
<C> <S>
4.1 -- First Amendment to Credit Agreement dated November 13,
1998 among Universal Compression Holdings, Inc.,
Universal Compression, Inc., Bankers Trust Company, as
agent and the lenders party thereto
27 -- Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K.
The Company did not file any reports on Form 8-K during the three month
period ended December 31, 1998.
8
<PAGE> 10
SIGNATURES
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, thereunto duly authorized.
UNIVERSAL COMPRESSION, INC.
By: /s/ ERNIE L. DANNER
----------------------------------
Ernie L. Danner,
Executive Vice President and
Chief Financial Officer
Date: February 16, 1999
9
<PAGE> 11
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
-------
<C> <S>
4.1 -- First Amendment to Credit Agreement dated November 13,
1998 among Universal Compression Holdings, Inc.,
Universal Compression, Inc., Bankers Trust Company, as
agent and the lenders party thereto
27 -- Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 4.1
FIRST AMENDMENT
FIRST AMENDMENT TO THE CREDIT AGREEMENT (this "Amendment"), dated as of November
13, 1998, among UNIVERSAL COMPRESSION HOLDINGS, INC. ("Holdings"), UNIVERSAL
COMPRESSION, INC. (the "Borrower"), various lenders party to the Credit
Agreement referred to below (the "Banks") and BANKERS TRUST COMPANY, as Agent
(the "Agent"). All capitalized terms used herein and not otherwise defined
herein shall have the respective meanings provided such terms in the Credit
Agreement referred to below.
WITNESSETH:
WHEREAS, Holdings, the Borrower, the Banks and the Agent are parties to a Credit
Agreement, dated as of February 20, 1998 (as amended, modified or supplemented
to, but not including, the date hereof, the "Credit Agreement");
WHEREAS, Holdings and the Borrower have requested that the Banks waive certain
provisions of the Credit Agreement as herein provided and the Banks have agreed
to such waivers to the extent provided herein; and
WHEREAS, the parties hereto wish to amend the Credit Agreement as herein
provided;
NOW, THEREFORE, it is agreed:
1. Section 9.05(viii) of the Credit Agreement is hereby amended by inserting the
following provisos immediately following the reference to "Joint Venture or
Foreign Subsidiary" appearing in clause (i) thereof:
, provided that, notwithstanding the foregoing provisions of this clause (i),
the Borrower shall be permitted to guaranty (the "Uniwhale Guaranty") the
obligations of Uniwhale EU under the Uniwhale EU/ECOGAS Lease Agreement so long
as (1) each of Whale Manufacturing & Procurement, Inc. and Universal Compression
International, Inc. shall own, directly or indirectly, 50% of the economic and
voting interest of Uniwhale EU, (2) Whale Manufacturing & Procurement, Inc.
shall have executed and delivered an identical guaranty of such obligations and
such guaranty shall continue in full force and effect and (3) the liabilities
and obligations of the Borrower (including, without limitation, the performance
obligations guaranteed by the Borrower) pursuant to the Uniwhale Guaranty are
not materially altered or increased from those in effect on the First Amendment
Effective Date without the prior written consent of the Required Banks
2. Section 9.04(xii) of the Credit Agreement is hereby amended by inserting the
following new language immediately following the reference therein to
"Subsidiary Guarantors": "and the obligations of the Borrower with respect to
the Uniwhale Guaranty, in each case".
<PAGE> 2
3. Section 11 of the Credit Agreement is hereby amended by inserting the
following new defined terms in appropriate alphabetical order:
"First Amendment Effective Date" shall mean November [13], 1998.
"Uniwhale EU" shall mean Uniwhale De Colombia E.U., a Joint Venture between
Universal Compression International, Inc. and Whale Manufacturing & Procurement,
Ltd., of which each joint venture partner owns, on the First Amendment Effective
Date, a 50% voting and economic interest.
"Uniwhale EU/ECOGAS Lease Agreement" shall mean the Agreement between Uniwhale
EU and Empresa Colombiana De Gas, concerning the lease of gas compression
equipment and services, as the same may be amended from time to time in
accordance with the provisions thereof.
"Uniwhale Guaranty" shall have the meaning provided in Section 9.05.
4. Pursuant to Section 9.14 of the Credit Agreement, and subject to the
provisions of Section 9.05(viii) of the Credit Agreement and the requirements of
paragraph 9(ii) below, the Banks party hereto authorize the formation by
Holdings and its Subsidiaries of the following new Subsidiaries:
Universal Compression International, Inc., a domestic Wholly Owned subsidiary of
the Borrower;
Universal Compression International, Ltd., a Wholly Owned Subsidiary of
Universal Compression International, Inc. organized under the laws of the Cayman
Islands;
Cayman Finance, Ltd., a Wholly Owned Subsidiary of Universal Compression
International, Ltd. organized under the laws of the Cayman Islands; and
Universal Compression of Colombia, Ltd., a Wholly Owned Subsidiary of Universal
Compression International, Ltd. organized under the laws of the Cayman Islands.
In addition, the Banks hereby waive the provision of Section 9.14 requiring
prior written consent of the Required Banks solely inasmuch as such provision
relates to the formation of the new Subsidiaries described above in this
paragraph 4.
5. In order to induce the Banks to enter into this Amendment, Holdings and the
Borrower hereby represent and warrant that (i) no Default or Event of Default
exists on the First Amendment Effective Date (as defined below), after giving
effect to this Amendment, and (y) on the First Amendment Effective Date, and
after giving effect to
<PAGE> 3
this Amendment, all representations and warranties contained in the Credit
Agreement and in the other Credit Documents are true and correct in all material
respects as though such representations and warranties were made on the First
Amendment Effective Date (it being understood and agreed that any representation
or warranty which by its terms is made as of a specified date shall be required
to be true and correct in all material respects only as of such date).
6. This Amendment is limited as specified and shall not constitute a
modification, acceptance or waiver of any other provision (or of any provision
beyond the specific waivers granted herein with respect to such provision) of
the Credit Agreement or any other Credit Document.
7. This Amendment may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, each of which counterparts
when executed and delivered shall be an original, but all of which shall
together constitute one and the same instrument. A complete set of counterparts
shall be delivered to the Borrower and the Agent.
8. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL
BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW
YORK.
9. This Amendment shall become effective on the date (the "First Amendment
Effective Date") when (i) Holdings, the Borrower and the Required Banks shall
have signed a counterpart hereof (whether the same or different counterparts)
and shall have delivered (including by way of facsimile transmission) the same
to the Agent at the Notice Office and (ii) Universal Compression International,
Inc. shall have executed and delivered (x) a Subsidiaries Guaranty in the form
of Exhibit I to the Credit Agreement, (y) counterparts of the Pledge Agreement
and Security Agreement and (z) an officer's certificate, together with Exhibits
A, B and C thereto, in the form of Exhibit F to the Credit Agreement.
10. From and after the First Amendment Effective Date, all references in the
Credit Agreement and each of the other Credit Documents to the Credit Agreement
shall be deemed to be references to the Credit Agreement as amended hereby.
* * *
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this
Amendment to be duly executed and delivered as of the date first above written.
UNIVERSAL COMPRESSION HOLDINGS, INC.
By: /s/ ERNIE L. DANNER
------------------------------------
Title: Exec. V.P. & C.F.O.
<PAGE> 4
UNIVERSAL COMPRESSION, INC.
By: /s/ ERNIE L. DANNER
------------------------------------
Title: Exec. V. P. & C.F.O.
BANKERS TRUST COMPANY,
Individually and as the Agent
By: /s/ MARCUS M. TARKINGTON
------------------------------------
Title: Principal
BANK OF SCOTLAND
By: /s/ ANNIE CHIN TAT
------------------------------------
Title: Senior Vice President
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ PHILLIPPE SOUSTRA
------------------------------------
Title: Senior Vice President
FIRST NATIONAL BANK OF COMMERCE
By: /s/ J. CHARLES FREEL, JR.
------------------------------------
Title: Senior Vice President
FIRST UNION NATIONAL BANK
By: /s/ ROBERT R. WETTEROFF
------------------------------------
Title: Senior Vice President
ABN AMRO BANK N.V.
By: /s/ MICHAEL A. TRIBOLET
------------------------------------
Title: Senior Vice President
By: /s/ BELINDA ROWELL
------------------------------------
Title: Assistant Vice President
<PAGE> 5
BANQUE PARIBAS
By: /s/ MARIAN LIVINGSTON
------------------------------------
Title: Vice President
By: /s/ ILLEGIBLE
------------------------------------
Title: Vice President
WELLS FARGO BANK (TEXAS)
NATIONAL ASSOCIATION
By: /s/ FRANK W. SCHAGEMAN
------------------------------------
Title: Vice President
UNION BANK OF CALIFORNIA, N.A.
By: /s/ RICHARD P. DEGREY
------------------------------------
Title: Vice President
SOCIETE GENERALE,
SOUTHWEST AGENCY
By: /s/ ILLEGIBLE
------------------------------------
Title: Managing Director
THE BANK OF NOVA SCOTIA
By: /s/ F.C.H. ASHBY
------------------------------------
Title: Senior Manager Loan Operations
BANKBOSTON, N.A.
By: /s/ ILLEGIBLE
------------------------------------
Title: Vice President
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 610
<SECURITIES> 0
<RECEIVABLES> 15,221
<ALLOWANCES> (244)
<INVENTORY> 18,044
<CURRENT-ASSETS> 34,816
<PP&E> 285,030
<DEPRECIATION> (13,497)
<TOTAL-ASSETS> 407,490
<CURRENT-LIABILITIES> 11,589
<BONDS> 288,796
0
0
<COMMON> 49
<OTHER-SE> 106,531
<TOTAL-LIABILITY-AND-EQUITY> 407,490
<SALES> 31,897
<TOTAL-REVENUES> 95,980
<CGS> 26,265
<TOTAL-COSTS> 49,119
<OTHER-EXPENSES> 45,595
<LOSS-PROVISION> 165
<INTEREST-EXPENSE> 19,158
<INCOME-PRETAX> 1,266
<INCOME-TAX> 481
<INCOME-CONTINUING> 785
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 785
<EPS-PRIMARY> 159.88
<EPS-DILUTED> 159.88
</TABLE>
