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SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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Form 10-K

FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

|(Mark One)                                                        |                                                                                         
|----------------------------------------------------------------- | ----------------------------------------------------------------------------------------
|o                                                                 | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934    
|For the fiscal year ended                                        
|or                                                               
|ý                                                                 | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|For the transition period from April 1, 2005 to December 31, 2005

|Commission file nos.: |  | 001-15843
333-48279
|--------------------- |  | -------------------

Universal Compression Holdings, Inc.
Universal Compression, Inc.(Exact name of Registrants as Specified in Their Charters)

|Delaware
Texas                                                                                      |  | 13-3989167
74-1282680                    
|--------------------------------------------------------------------------------------------------- |  | -----------------------------------------
|(States or Other Jurisdictions of Incorporation or Organization)                                    |  | (I.R.S. Employer Identification Nos.)    
|4444 Brittmoore Road, Houston, Texas                                                                |  | 77041-8004                               
|(Address of Principal Executive Offices)                                                            |  | (Zip Code)                               
|(713) 335-7000                                                                                     
|(Registrants' telephone number, including area code)                                               
|                                                                                                   
|Securities of Universal Compression Holdings, Inc. Registered Pursuant to Section 12(b) of the Act:
|Title of Each Class                                                                                 |  | Name of Each Exchange on Which Registered
|Common Stock, $.01 par value                                                                        |  | New York Stock Exchange, Inc             
|Securities of Universal Compression Holdings, Inc. Registered Pursuant to Section 12(g) of the Act:
|Title of Each Class                                                                                 |  |                                          
|None                                                                                                |  |                                          
|Securities of Universal Compression, Inc. Registered Pursuant to Section 12(b) of the Act:         
|Title of Each Class                                                                                 |  | Name of Each Exchange on Which Registered
|None                                                                                                |  | N/A                                      
|Securities of Universal Compression, Inc. Registered Pursuant to Section 12(g) of the Act:         
|Title of Each Class                                                                                 |  |                                          
|None                                                                                                |  |                                          

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UNIVERSAL COMPRESSION, INC. MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION I(1)(a) AND (b) OF FORM 10-K AND IS THEREFORE
FILING THIS FORM 10-K WITH THE REDUCED DISCLOSURE FORMAT.

Indicate
by check mark if the registrant is a well-known seasoned issuer (as defined in Rule 405 of the Securities Act).

Yes ý No o
(Universal Compression Holdings, Inc.)

Yes o No ý (Universal Compression, Inc.)

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15 (d) of the Securities Exchange Act.

Yes o No ý
(Universal Compression Holdings, Inc.)

Yes o No ý (Universal Compression, Inc.)

Indicate by check mark whether each of the registrants (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 registrants were required to file such reports), and (2) has been subject to such filing requirements for the past
90 days.    Yes ý No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the
best of each of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. o

Indicate by check mark whether the registrants are large accelerated filers, accelerated filers, or non-accelerated filers (as defined in
Rule 12b-2 of the Exchange Act).

Large
accelerated filer ý Accelerated filer o Non-accelerated
filer o (Universal Compression Holdings, Inc.)

Large accelerated filer o Accelerated filer o Non-accelerated
filer ý (Universal Compression, Inc.)

Indicate by check mark whether the registrants are a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes
o No ý

The aggregate market value of the Common Stock of Universal Compression Holdings, Inc. held by non-affiliates as of the last business day of the
registrant's most recently completed second fiscal quarter (September 30, 2005) was approximately $1.0 billion. For purposes of the above statements only, all directors, executive
officers and 10% stockholders are assumed to be affiliates. This calculation does not reflect a determination that such persons are affiliates for any other purpose.

The
number of shares of the Common Stock of Universal Compression Holdings, Inc. outstanding as of February 22, 2006: 29,878,363 shares. All 4,910 outstanding shares of
common stock of Universal Compression, Inc., par value $10.00 per share, are owned by Universal Compression Holdings, Inc.

Documents Incorporated by Reference

Portions of Universal Compression Holdings, Inc.'s Proxy Statement for the Annual Meeting of Stockholders to be held on April 19, 2006 are
incorporated by reference into Part III, as indicated herein.

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The
Index to Exhibits is on page 40.



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Table of Contents



|         |  |                                                                                                                  |  | Page
|-------- |  | ---------------------------------------------------------------------------------------------------------------- |  | ----
|Part I   |  |                                                                                                                  |  | 2   
|Item 1.  |  | Business                                                                                                         |  | 3   
|Item 1A. |  | Risk Factors                                                                                                     |  | 14  
|Item 1B. |  | Unresolved Staff Comments                                                                                        |  | 18  
|Item 2.  |  | Properties                                                                                                       |  | 19  
|Item 3.  |  | Legal Proceedings                                                                                                |  | 19  
|Item 4.  |  | Submission of Matters to a Vote of Security Holders                                                              |  | 19  
|Part II  |  |                                                                                                                  |  | 20  
|Item 5.  |  | Market for the Registrants' Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |  | 20  
|Item 6.  |  | Selected Financial Data                                                                                          |  | 21  
|Item 7.  |  | Management's Discussion and Analysis of Financial Condition and Results of Operations                            |  | 28  
|Item 7A. |  | Quantitative and Qualitative Disclosures About Market Risk                                                       |  | 44  
|Item 8.  |  | Financial Statements and Supplementary Data                                                                      |  | 45  
|Item 9.  |  | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure                             |  | 45  
|Item 9A. |  | Controls and Procedures                                                                                          |  | 45  
|Item 9B. |  | Other Information                                                                                                |  | 45  
|Part III |  |                                                                                                                  |  | 47  
|Item 10. |  | Directors and Executive Officers of the Registrant                                                               |  | 47  
|Item 11. |  | Executive Compensation                                                                                           |  | 47  
|Item 12. |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters                   |  | 47  
|Item 13. |  | Certain Relationships and Related Transactions                                                                   |  | 47  
|Item 14. |  | Principal Accountant Fees and Services                                                                           |  | 47  
|Part IV  |  |                                                                                                                  |  | 48  
|Item 15. |  | Exhibits and Financial Statement Schedules                                                                       |  | 48  
|         |  | Signatures                                                                                                       |  | II-1

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PART I

The terms "our," "Company," "we" and "us" when used in this report refer to Universal Compression Holdings, Inc. ("Holdings") and Universal
Compression, Inc. ("Universal") and their subsidiaries.

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

This report contains "forward-looking statements" intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform
Act of 1995 and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact contained in this report are forward-looking statements,
including, without limitation, statements regarding future financial position, business strategy, proposed acquisitions, budgets, litigation, projected costs and plans and objectives of management for
future operations. You can identify many of these statements by looking for words such as "believes," "expects," "will," "intends," "projects," "anticipates," "estimates," "continues" or similar words
or the negative thereof.

Such
forward-looking statements in this report include, without limitation:



Such
forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from those anticipated as of the date of this report.
The risks related to our business described under "Risk Factors" and elsewhere in this report could cause our actual results to differ from those described in, or otherwise projected or implied by,
the forward-looking statements. Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, no assurance can be given that these
expectations will prove to be correct. Important factors that could cause our actual results to differ materially from the expectations reflected in these forward-looking statements include, among
other things:



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All
forward-looking statements included in this report are based on information available to us on the date of this report. We undertake no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable to us or persons acting on our
behalf are expressly qualified in their entirety by the cautionary statements contained throughout this report.

ITEM 1.Business

General

We are the second largest natural gas compression services company in the world in terms of compressor fleet horsepower, with a fleet as of December 31,
2005 of approximately 7,100 compressor units comprising approximately 2.5 million horsepower. We provide a full range of natural gas compression services and products, including sales,
operations, maintenance and fabrication to the natural gas industry, both domestically and internationally. These services and products are essential to the natural gas industry, as gas must be
compressed to be delivered from the wellhead to end-users.

We
operate in four primary business segments: domestic contract compression, international contract compression, fabrication and aftermarket services. Our core business, contract
compression, involves providing natural gas compression services to customers utilizing our compression equipment. By outsourcing their compression needs, we believe our contract compression customers
generally are able to increase their revenue by producing a higher volume of natural gas through decreased compression downtime. Outsourcing allows our customers to reduce their operating costs,
maintenance costs, capital investments and more efficiently meet their changing compression needs.

In
addition to contract compression, we provide a broad range of compression services and products to customers who own their compression equipment or use equipment provided by other
companies. Our fabrication business involves the design, engineering and assembly of natural gas compressors for sale to third parties or for use in our contract compression fleet. Our ability to
fabricate compressors ranging in size from under 100 horsepower to over 5,000 horsepower enables us to provide compressors that are used in all facets of natural gas production, transmission, storage
and distribution. Our aftermarket services business sells parts and components, and provides maintenance and operations services to customers who own their compression equipment or use equipment
provided by other companies. Our ability to provide a full range of compression services and products broadens our customer relationships and helps us identify potential new customers and
cross-selling opportunities with existing customers. As the compression needs of our customers increase due to the growing demand for natural gas throughout the world, we believe our geographic scope
and broad range of compression services and products will enable us to participate in that growth.

We
maintain 19 field service locations throughout the United States at which we service and overhaul compression equipment. These locations provide a base from which we deploy operating
personnel to service and overhaul our compression equipment and the equipment of customers who either own their own compression equipment or use equipment provided by other companies. We operate
internationally in Argentina, Australia, Bolivia, Brazil, Canada, China, Colombia, Indonesia, Mexico, Peru, Russia, Thailand, Tunisia and Venezuela. Financial information about our business segments
and the geographic locations in which we operate is provided in Note 14 to the financial

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statements
included in Part II, Item 8 ("Financial Statements and Supplementary Data") of this report. Our principal corporate office is located at 4444 Brittmoore Road, Houston, Texas
77041.

Holdings
is a Delaware corporation and a holding company that conducts operations through our wholly-owned subsidiary, Universal, a Texas corporation incorporated in 1954. Holdings was
formed on December 12, 1997 for the purpose of acquiring Universal's predecessor, Tidewater Compression Service, Inc. ("TCS") from Tidewater, Inc. Upon completion of the
acquisition on February 20, 1998, TCS became our wholly-owned subsidiary and changed its name to Universal Compression, Inc. Through this subsidiary, our gas compression service
operations date back to 1954. Holdings completed an initial public offering of shares of common stock in June 2000. Primarily during the two year period following Holdings' initial public
offering, we completed several acquisitions that contributed significantly to our growth. Our most significant acquisition, through merger, was that of Weatherford Global Compression Services, L.P.
and certain related entities ("Weatherford Global"), former subsidiaries of Weatherford International Ltd. ("Weatherford"), in February 2001. This acquisition added approximately 950,000
horsepower to our fleet, more than doubling our size at that time.

In
December 2005, our board of directors approved a change to our fiscal year end from March 31 to December 31, effective in 2005. As a result, this
Form 10-K is a transition report, and includes financial information for the nine-month transition period ended December 31, 2005 and for the twelve month periods
ended March 31, 2005 and 2004.

We
maintain a website atwww.universalcompression.com. Our annual report on Form 10-K, quarterly reports on
Form 10-Q, current reports on Form 8-K and amendments to those reports are available, without charge, on our website, www.universalcompression.com/invest/SECfrX.html, as soon as reasonably
practicable after they are filed electronically with the Securities and Exchange
Commission. Information contained on our website is not incorporated by reference in this report or any of our other securities filings. Paper copies are also available, without charge, from Universal
Compression Holdings, Inc., 4444 Brittmoore Road, Houston, Texas 77041, Attention: Investor Relations. Also, such information is readily available at the website of the Securities and
Exchange Commission, which can be found atwww.sec.gov.

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Key Operating and Financial Statistics

The following table illustrates our key operating and financial statistics during the periods as indicated:

|                                         |                                    |   |         | Twelve Months Ended March 31, |  
|---------------------------------------- | ---------------------------------- | - | ------- | ----------------------------- | -
|
|
|
|Domestic horsepower (end of period)      |                                    |   | 1,965   |                               |  
|International horsepower (end of period) |                                    |   | 584     |                               |  
|                                         | Total horsepower (end of period)   |   |         | 2,549                         |  
|Average horsepower utilization rate      |                                    |   | 91.1    | %                             |  
|Revenue                                  |                                    | $ | 613,647 |                               | $
|Percentage of revenue from:              |                                    |   |         |                               |  
|                                         | Domestic contract compression      |   |         | 40.5                          | %
|                                         | International contract compression |   |         | 15.5                          | %
|                                         | Fabrication                        |   |         | 23.4                          | %
|                                         | Aftermarket services               |   |         | 20.6                          | %
|Net incomeHoldings                      |                                    | $ | 55,369  |                               | $
|EBITDA, as adjusted(1)                   |                                    | $ | 205,850 |                               | $

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Natural Gas Compression Industry Overview

Natural gas compression is a mechanical process whereby a volume of gas at an existing pressure is compressed to a desired higher pressure. We offer both slow and
high speed reciprocating compressors driven either by internal combustion engines or electric motors. We also offer rotary screw compressors for specialized applications. Most natural gas compression
applications involve compressing gas for its delivery from one point to another. Low pressure or aging natural gas wells require compression for delivery of produced gas into higher pressured gas
gathering or pipeline systems. Compression at the wellhead is often required because, over the life of an oil or gas well, natural reservoir pressure typically declines as reserves are produced. As
the natural reservoir pressure of the well declines below the line pressure of the gas gathering or pipeline system used to transport the gas to market, gas no longer naturally flows into the
pipeline. Compression equipment is applied in both field and gathering systems to boost pressure levels allowing gas to be brought to market. Compression is also used to reinject natural gas down
producing oil wells to help lift liquids to the surface, known as gas lift operations. In secondary oil recovery operations, compression is used to inject natural gas into wells to maintain reservoir
pressure. Compression is also used in gas storage projects to inject gas into underground reservoirs during off-peak seasons for withdrawal later during periods of high demand. Compressors
may also be used in combination with oil and gas production equipment to process and refine oil and gas into more marketable energy sources. In addition, compression services
are used for compressing feedstocks in refineries and petrochemical plants, and for refrigeration applications in natural gas processing plants.

Typically,
compression is required several times during the natural gas production cycle: at the wellhead, at the gathering lines, into and out of gas processing facilities, into and out
of storage facilities and through the pipeline. Natural gas compression that is used to transport gas from the wellhead through the gathering system is considered "field compression." Natural gas
compression that is used during the transportation of gas from the gathering systems to storage or the end-user is considered "pipeline compression." During the production phase,
compression is used to boost the

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pressure
of natural gas from the wellhead so that natural gas can flow into the gathering system or pipeline for transmission to end-users. Typically, these applications require portable,
low to mid-range horsepower compression equipment located at or near the wellhead. The continually dropping pressure levels in natural gas fields require periodic modification and
variation of on-site compression equipment.

Compression
equipment is also used to increase the efficiency of a low capacity gas field by providing a central compression point from which the gas can be produced and injected into a
pipeline for transmission to facilities for further processing. In an effort to reduce costs for wellhead operators, operators of gathering systems tend to keep the pressure of the gathering systems
low. As a result, more pressure is often needed to force the gas from the low pressure gathering systems into the higher pressure pipelines. Similarly, as gas is transported through a pipeline,
compressor units are applied all along the pipeline to allow the natural gas to continue to flow through the pipeline to its destination. These applications generally require larger horsepower
compression equipment (1,000 horsepower and higher).

Gas
producers, transporters and processors historically owned and maintained most of the compression equipment used in their operations. Many producers, transporters and processors have
increasingly outsourced their compression services. Changing well and pipeline pressures and conditions over the life of a well often require producers to reconfigure or replace their compressor units
to optimize the well production or pipeline efficiency.

We
believe outsourcing contract compression equipment offers customers:



In
contrast to the domestic compression market, the international compression market is comprised primarily of large horsepower compressors. A significant portion of this market involves
comprehensive installation projects, which include the design, fabrication, delivery, installation, operation and maintenance of compressors and related gas treatment equipment by the contract
compression service provider. In these projects, the customer's only responsibility is to provide fuel gas within specifications. As a result of the full service nature of these projects and because
these compressors generally remain on-site for three to seven years, we are typically able to achieve higher revenue and margins on these projects as compared to average domestic
compression service margins.

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Operations

Contract Compression Fleet

As of December 31, 2005, our fleet consisted of 7,068 compressors, as reflected in the following table:

|               |       | Total Horsepower As of |           | % of Horsepower As of |           | Number of Units As of
|-------------- | ----- | ---------------------- | --------- | --------------------- | --------- | ---------------------
|
|0-99           |       | 167,982                |           | 175,093               |           | 6.6                  
|100-299        |       | 436,510                |           | 442,919               |           | 17.1                 
|300-599        |       | 364,132                |           | 368,893               |           | 14.3                 
|600-999        |       | 431,329                |           | 428,070               |           | 16.9                 
|1,000 and over |       | 1,149,324              |           | 1,053,970             |           | 45.1                 
|               |       |                        |           |                       |           |                      
|               | Total |                        | 2,549,277 |                       | 2,468,945 |                      

For
the nine months ended December 31, 2005, the average horsepower utilization rate for our fleet was approximately 91.1%.

Over
the last several years, we have undertaken to standardize our compressor fleet around major components and key suppliers. Our standardized fleet:



Contract Compression

We provide comprehensive contract compression services, which include our provision at the customer's location of our personnel, equipment, tools, materials and
supplies necessary to provide the amount of gas compression for which the customer has contracted. These services include equipment selection based on the operating conditions at the customer's
location and the customer's unique compression
needs, mobilization and demobilization of our personnel, equipment, tools, materials and supplies, installation or installation supervision, operations and maintenance. When providing contract
compression services, we work closely with a customer's field service personnel so that the compression services can be adjusted to efficiently match changing characteristics of the gas produced. We
routinely repackage or reconfigure a portion of our existing fleet to adapt to our customers' compression services needs.

Our
field compression equipment is maintained in accordance with daily, weekly, monthly and annual maintenance schedules. These maintenance procedures are updated as technology changes
and as our operations group develops new techniques and procedures. In addition, because our field technicians provide maintenance on substantially all of our contract compression equipment, they are
familiar with the condition of our equipment and can readily identify potential problems. In our experience, these procedures maximize equipment life and unit availability and minimize avoidable
downtime. Generally, each of our units undergoes a major overhaul once every six to eight years. A major overhaul involves the rebuilding of the unit to materially extend its economic useful life or
to enhance the unit's ability to fulfill broader or different contract compression applications.

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We
believe that our fabrication and aftermarket services businesses provide us with opportunities to cross-sell our contract compression services.

We
have standard contracts for rates and terms on the contract compression services we provide. Through negotiations, these rates and contracts may be modified. At the end of the initial
term, which is frequently one-year, contract compression services can continue on a month-to-month basis at the option of the customer.

Domestic Operations.As of December 31, 2005, we operated a domestic fleet of compressors with 6,357 units comprising
approximately 2.0 million horsepower. For the nine months ended December 31, 2005, 40.5% of our total revenue was generated from domestic contract compression operations.

We
maintain 19 field service locations throughout the United States at which we service and overhaul compression equipment. We operate sales and service locations in the primary onshore
and offshore natural gas producing regions of the United States.

International Operations.As of December 31, 2005, we operated 711 units comprising approximately 584,000 horsepower
in international markets. We intend to continue to expand our presence in these markets and pursue opportunities in other strategic international areas. For the nine months ended
December 31, 2005, 15.5% of our total revenue was generated from international contract compression operations.

International
compression service projects usually generate higher gross profit margins than domestic projects. Our international operations are focused on large horsepower compressor
markets and frequently involve longer-term and more comprehensive service projects than our domestic projects. International projects often require us to provide complete engineering,
design and installation services. International service agreements can and frequently do differ significantly from domestic service agreements, as individual contracts are negotiated for each project.

Financial
information about geographic areas for the nine months ended December 31, 2005 and the twelve months ended March 31, 2005 and 2004 is provided in Note 14
to the financial statements, included in Part II, Item 8 ("Financial Statements and Supplementary Data").

Fabrication

As a complement to our contract compression service operations, we design, engineer, fabricate and sell natural gas compressors to engineering and construction
firms, exploration and production companies, as well as pipeline and gas transmission companies, both domestically and internationally. We also fabricate compressor units for our own fleet. Our
primary fabrication facilities are located in Houston, Texas and Calgary, Alberta, Canada.

Generally,
compressors sold to third parties are assembled according to each customer's specifications. We purchase components for these compressors from third party suppliers, and we
are original equipment manufacturer representatives for several major engine, compressor, and electric motor manufacturers in the industry. We also sell prepackaged compressor units. For the nine
months ended December 31, 2005, 23.4% of our total revenue was generated from fabrication operations.

We
do not incur material research and development expenditures, as these activities are not a significant aspect of our business. All research and development costs are expensed as
incurred.

Aftermarket Services

Our aftermarket services business sells parts and components, and provides operation and maintenance services to customers who own their compression equipment or
use equipment provided by other companies.

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Our
inventory of parts is available either on an over-the-counter basis through our 19 service locations in the United States and 5 in Canada, on a bid basis for
larger orders, or as part of our compressor maintenance service. Our maintenance services are available on an individual call basis, on a contract basis (which may cover a particular unit, an entire
compression project or all of the customer's compression projects) or as part of our comprehensive operation and maintenance service. We also provide offshore maintenance and service. In addition, we
provide overhaul and reconfiguration services for customer-owned compression equipment, either on-site or in our overhaul shops. For the nine months ended December 31, 2005, 20.6%
of our total revenue was generated from aftermarket services operations.

Business Strategy

Our business strategy is to meet the evolving needs of our customers by providing consistent and dependable services and products, and to take advantage of our
size and broad geographic scope to expand our customer base. The key elements of our business strategy are described below:



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Competitive Strengths

We believe that we have the following key competitive strengths:



Oil and Gas Industry Cyclicality and Volatility

Our financial performance is generally less affected by the short-term market cycles and oil and gas price volatility than the financial performance
of companies operating in other sectors of the oilfield services industry because:



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Adding
to this stability is the fact that, while compressors often must be specifically engineered or reconfigured to meet the unique demands of our customers, the fundamental technology
of compression equipment has not experienced significant technological change.

Seasonal Fluctuations

Our results of operations have not historically reflected any material seasonal tendencies, nor do we currently believe that seasonal fluctuations will have a
material impact in the foreseeable future.

Customers

Our current customer base consists of over 1,000 domestic and international companies engaged in all aspects of the oil and gas industry, including domestic and
international oil and gas companies, international state-owned oil and gas companies and natural gas producers, processors, gatherers and pipelines. We have entered into strategic alliances with some
of our customers. These alliances are essentially preferred vendor arrangements and give us preferential consideration for the compression needs of these customers. In exchange, we provide these
customers with enhanced product availability, product support and favorable pricing.

In
the nine months ended December 31, 2005, no single customer accounted for as much as 10% of our total revenue. Our top 20 customers accounted for approximately 41% of our total
revenue in the nine months ended December 31, 2005.

Suppliers

Our principal suppliers include Caterpillar and Waukesha for engines, Air Xchangers for coolers, and Ariel for compressors. We also purchase Cooper parts and
compressors in Canada for sale to customers. Although we rely primarily on these suppliers, we believe alternative sources are generally available. We have not experienced any material supply problems
to date, and we believe our relations with our suppliers are good.

Backlog

As of December 31, 2005, we had a compressor unit fabrication backlog for sale to third parties of approximately $144.5 million, compared to
$68.7 million as of March 31, 2005. As of February 22, 2006, our backlog was $254.7 million. A majority of the backlog is expected to be completed within a
270-day period.

Insurance

We believe that our insurance coverage is customary for the industry and adequate for our business. As is customary in the natural gas service operations
industry, we review our safety equipment and procedures and carry insurance against some, but not all, risks of our business.

Losses
and liabilities not covered by insurance would increase our costs. The natural gas service operations business can be hazardous, involving unforeseen circumstances such as
uncontrollable flows of gas or well fluids, fires and explosions or environmental damage. To address the hazards inherent in our business, we maintain insurance coverage that includes physical damage
coverage, third party general liability insurance, employer's liability, environmental and pollution and other coverage, although coverage for environmental and pollution-related losses is subject to
significant limitations.

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Competition

The natural gas contract compression, fabrication and aftermarket services businesses are highly competitive. We face competition from large national and
multinational companies with greater financial resources and, on a regional basis, from numerous smaller companies.

Our
main competitors in the contract compression business, based on horsepower, are Hanover Compressor Company, Compressor Systems, Inc. and J-W Operating Company. In
our fabrication activities, we currently compete primarily with Hanover Compressor Company, Compressor Systems, Inc., Enerflex Systems, Ltd., Toromont Industries Ltd. and Collicut
Energy Services Ltd. Our aftermarket services business faces competition from manufacturers (including Cooper Energy Services and Dresser-Rand), from distributors of Caterpillar and
Waukesha engines, from a number of smaller companies and from Hanover Compressor Company, Enerflex Systems, Ltd., Toromont Industries Ltd. and Collicut Energy Services Ltd.

We
believe that we compete effectively on the basis of customer service, including the availability of our personnel in remote locations, price, technical expertise, parts service
system, flexibility in meeting customer needs and quality and reliability of our compressors and related services.

Environmental and Other Regulations

We are subject to stringent and complex foreign, federal, state and local laws and regulations governing the discharge of materials into the environment or
otherwise relating to protection of human health and the environment. Compliance with these laws and regulations may affect the costs of our operations. Moreover, failure to comply with these
environmental laws and regulations may result in the assessment of administrative, civil, and criminal penalties, imposition of remedial obligations, and
the issuance of injunctions delaying or prohibiting operations. We believe that our operations are in substantial compliance with applicable environmental requirements. As part of the regular
evaluation of our operations, we update the environmental condition of our existing and acquired properties as necessary. We further believe that the phasing in of more stringent emission controls and
other known regulatory requirements at the rate currently contemplated by environmental laws and regulations will not have a material adverse effect on our business, financial condition or results of
operations.

Primary
federal environmental laws that our operations are subject to include the Clean Air Act and regulations thereunder, which regulate air emissions; the Clean Water Act, and
regulations thereunder, which regulate the discharge of pollutants in industrial wastewater and storm water runoff; and the Resource Conservation and Recovery Act, ("RCRA") and regulations,
thereunder, which regulate the management and disposal of solid and hazardous waste. In addition, we are also subject to regulation under the federal Comprehensive Environmental Response,
Compensation, and Liability Act, ("CERCLA") and regulations thereunder, known more commonly as "Superfund," which regulates the release of hazardous substances in the environment. Analogous state laws
and regulations may also apply.

The
Clean Air Act and related regulations establish limits on the levels of various substances which may be emitted into the atmosphere during the operation of our fleet of natural gas
compressors. These substances are regulated in permits, which are applied for and obtained through the various regulatory agencies, either state or federal depending on the level of emissions. While
our standard contract typically provides that the customer will assume the permitting responsibilities and environmental risks related to site operations, we have in some cases obtained air permits as
the owner and operator of the compressors. Under most of our contract compression service agreements, our customers must indemnify us for certain losses or liabilities we may suffer as a result of the
failure to comply with applicable environmental laws, including permit conditions. Increased obligations of operators to reduce air emissions of nitrogen oxides and other pollutants from internal
combustion engines in transmission service are anticipated. Any new regulations requiring the installation of more

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sophisticated
emission control compression equipment potentially could have a material adverse impact. However, we believe that in most cases, these obligations would be allocated to our clients under
the above-referenced contracts. In any event, we expect that such requirements would not have any more significant effect on our operations or financial condition than on any similarly situated
company providing contract compression services.

The
Clean Water Act and related regulations prohibit the discharge of industrial wastewater without a permit and establish limits on the levels of pollutants contained in these
discharges. In addition, the Clean Water Act regulates storm water discharges associated with industrial activities depending on a facility's primary standard industrial classification. Many of our
facilities have applied for and obtained industrial wastewater discharge permits as well as sought coverage under local wastewater ordinances. In addition, many of our facilities have filed notices of
intent for coverage under statewide storm water general permits and developed and implemented storm water pollution prevention plans, as required.

The
RCRA and related regulations, regulate the management and disposal of solid and hazardous waste. These laws and regulations govern the generation, storage, treatment, transfer and
disposal of wastes that we generate. These wastes include, but are not limited to, used oil, antifreeze, filters, sludge, paint, solvents, and sandblast materials. The Environmental Protection Agency
and various state agencies have limited the approved methods of disposal for these types of wastes.

Under
CERCLA and comparable state laws and regulations, strict and joint and several liability can be imposed without regard to fault or the legality of the original conduct on certain
classes of persons that contributed to the release of a hazardous substance into the environment. These persons include the owner and operator of a contaminated site where a hazardous substance
release occurred and any company that transported, disposed of, or arranged for the transport or disposal of hazardous substances released at the site. Under CERCLA, such persons may be liable for the
costs of remediating the hazardous substances that have been released into the environment and for damages to natural resources. In addition, where contamination may be present it is not uncommon for
the neighboring landowners and other third parties to file claims for personal injury, property damage and recovery of response costs.

We
currently own or lease, and have in the past owned or leased, a number of properties that have been used, some for many years and some by third parties over whom we have no control,
in support of natural gas compression services or other industrial operations. We may be subject to remediation costs and liability under CERCLA, RCRA or other environmental laws for hazardous waste,
asbestos or any other toxic or hazardous substance that may exist on or under any of our owned or leased properties, including waste disposed or groundwater contaminated by prior owners or operators.
We have performed in the past, are currently performing, and may perform in the future, certain remediation activities governed by environmental laws. The cost of this remediation has not been
material to date and we currently do not expect it to be material in the future. Former owners and operators are currently undertaking groundwater monitoring activities at certain of our facilities.
Certain of our acquired properties may also warrant groundwater monitoring and other remedial activities in the future. We believe that former owners and operators of many of these properties may be
wholly or partly responsible under environmental laws and contractual agreements to pay for or perform remediation, or to indemnify us for our remedial costs. These other entities may fail to fulfill
their legal or contractual obligations, which could result in imposing response obligations and material costs on us.

Stricter
standards in environmental legislation or regulations that may affect us may be imposed in the future, such as proposals to make hazardous wastes subject to more stringent and
costly handling, disposal and remediation requirements. Accordingly, new environmental laws or regulations or amendments to existing environmental laws or regulations (including, but not limited to,
regulations concerning ambient air quality standards, wastewater and storm water discharges, and global climate changes) could require us to undertake significant capital expenditures and could
otherwise have a material adverse effect on our business, results of operations and financial condition.

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Our international operations are potentially subject to similar governmental controls and restrictions relating to the environment. We believe that we are in substantial compliance with
any such foreign requirements pertaining to the environment.

Since
1992, there have been various proposals to impose taxes with respect to the energy industry, none of which have been enacted and all of which have received significant scrutiny
from various industry lobbyists. At the present time, given the uncertainties regarding the proposed taxes, including the uncertainties regarding the terms which the proposed taxes might ultimately
contain and the industries and persons who may ultimately be the subject of such taxes, it is not possible to determine whether any such tax will have a material adverse effect on us.

Employees and Labor Relations

As of December 31, 2005, we had approximately 2,740 employees worldwide. We believe our relationship with our employees is good. Approximately 174 of our
employees in Argentina, 113 of our employees in Canada and 148 of our employees in Brazil are covered by collective bargaining agreements.

ITEM 1A.Risk Factors

As described in "Part I. Disclosure Regarding Forward-Looking Statements," this report contains forward-looking statements
regarding us, our business and our industry. The risk factors described below, among others, could cause our actual results to differ materially from the expectations reflected in the forward-looking
statements. If any of the following risks actually occur, our business, financial condition and operating results could be negatively impacted.

We depend on strong demand for natural gas and a prolonged, substantial reduction in this demand would adversely affect the demand for our services and
products.

Gas contract compression operations are significantly dependent upon the demand for natural gas. Demand may be affected by, among other factors, natural gas
prices, weather, demand for energy and availability of alternative energy sources. Any prolonged, substantial reduction in the demand for natural gas would, in all likelihood, depress the level of
production, exploration and development activity and result in a decline in the demand for our contract compression services and products. Similarly, a decrease in capital spending by our customers
could result in reduced demand for our fabrication and aftermarket services businesses.

Our international operations subject us to risks that are difficult to predict.

For the nine months ended December 31, 2005, we derived approximately 30% of our revenues from international operations. We intend to continue to expand
our business in Latin America, Asia Pacific and, ultimately, other international markets. This may make it more difficult for us to manage our business. Reasons for this include, but are not limited
to, the following:



14

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Any
of these factors may cause us to experience economic loss or negatively impact our earnings or net assets.

We face significant competition that may cause us to lose market share and harm our financial performance.

The contract compression, fabrication, and aftermarket services businesses are highly competitive and there are low barriers to entry for individual projects. In
addition, some of our competitors are large national and multinational companies that provide contract compression and fabrication services to third parties, some of these competitors have greater
financial and other resources than we do. If our competitors substantially increase the resources they devote to the development and marketing of competitive products and services, we may not be able
to compete effectively.

We are dependent on particular suppliers and are vulnerable to product shortages and price increases.

As a consequence of having a highly standardized contract compression fleet, some of the components used in our products are obtained from a single source or a
limited group of suppliers. Our reliance on these suppliers involves several risks, including price increases, inferior component quality and a potential inability to obtain an adequate supply of
required components in a timely manner. The partial or complete loss of certain of these sources could have a negative impact on our results of operations and could damage our customer relationships.
Further, a significant increase in the price of one or more of these components could have a negative impact on our results of operations.

We do not insure against all potential losses and could be seriously harmed by unexpected liabilities.

Natural gas service operations are subject to inherent risks such as equipment defects, malfunction and failures, and natural disasters that can result in
uncontrollable flows of gas or well fluids, fires and explosions. These risks could expose us to substantial liability for personal injury, death, property damage, pollution and other environmental
damages. Although we have obtained insurance against many of these risks, our insurance may be inadequate to cover our liabilities. Further, insurance covering the risks we face or in the amounts we
desire may not be available in the future or, if available, the premiums may not be commercially justifiable. If we were to incur substantial liability and such damages were not covered by insurance
or were in excess of policy limits, or if we were to incur liability at a time when we are not able to obtain liability insurance, our business, results of operations and financial condition could be
negatively impacted.

A substantial portion of our cash flow must be used to service our debt obligations, and we are vulnerable to interest rate increases.

As of December 31, 2005, we had approximately $922.9 million in outstanding debt obligations consisting primarily of $471.8 million
outstanding under our seven-year term loan, $171.1 million outstanding under our 71/4% senior notes, $200.0 million outstanding under our asset-backed
securitization facility (the "ABS facility") and $80.0 million outstanding under our revolving credit

15

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facility.
These debt amounts exclude approximately $26.0 million of standby letters of credit issued on our behalf, as of December 31, 2005.

As
of December 31, 2005, approximately $371.8 million of our outstanding debt bore interest at floating rates. Changes in economic conditions could result in higher
interest rates, thereby increasing our interest expense and reducing our funds available to make payments of interest and principal on the notes and for capital investment, operations or other
purposes.

Our credit facilities impose restrictions on us that may affect our ability to successfully operate our business.

Our credit facilities include certain covenants that, among other things, restrict our ability to:



As
of December 31, 2005, we were also required by our credit facilities to maintain various financial ratios, including a collateral coverage ratio (market value of compression
collateral to amount of indebtedness outstanding under our senior secured credit facility) of greater than or equal to 1.15 to 1, a total leverage ratio (total debt to earnings before interest, taxes,
depreciation and amortization expense) of less than or equal to 5 to 1, and an interest coverage ratio (earnings before interest, taxes, depreciation and amortization expense to interest expense) of
greater than or equal to 2.5 to 1. As of February 27, 2006, we were in compliance with all of these financial covenants. These covenants may restrict our ability to expand or to pursue our
business strategies. Our ability to comply with these and other provisions of the credit facilities may be affected by changes in our operating and financial performance, changes in business
conditions or results of operations, adverse regulatory developments or other events beyond our control. The breach of any of these covenants could result in a default under our debt, which could
cause those obligations to become due and payable. If any of our indebtedness were to be accelerated, we may not be able to repay or refinance it.

Our new enterprise resource planning ("ERP") system implementation may encounter problems that would negatively impact our business.

We contracted with a third party vendor to assist us with the design and implementation of a new ERP system, which will support substantially all of our operating
and financial functions, including our business segment operations, fleet management, billing, estimating, customer management, vendor management, accounting and financial reporting systems. We plan
to complete the implementation of this new ERP system in 2007. A significant implementation problem, if encountered, could negatively impact our business by disrupting our operations. Although we
currently have no reason to believe that any such significant implementation problems will occur, there are inherent limitations in our ability to predict and plan for these risks and estimate the
magnitude of their impact. Consequently, it is possible that the occurrence of a significant implementation problem could be material.

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We are exposed to exchange rate fluctuations in the foreign markets in which we operate. A decrease in the value of any of these currencies relative to
the U.S. dollar could reduce our profits from foreign operations and the value of our foreign net assets.

Our reporting currency is the U.S. dollar. The majority of the Company's foreign operations have designated the local currency as their functional currency and,
as such, gains and losses resulting from financial statement translation of foreign operations are included as a separate component of accumulated other comprehensive loss within stockholders' equity.
Gains and losses from balances that are receivable or payable in currency other than functional currency are included in the consolidated statements of operations. As a result, the U.S. dollar value
of our foreign operations has varied, and will continue to vary, with exchange rate fluctuations. In this respect, historically we have been primarily exposed to fluctuations in the exchange rate of
the Brazilian real, Mexican peso, Australian dollar and Canadian dollar against the U.S. dollar.

A
fluctuation in the value of any of these currencies relative to the U.S. dollar could reduce our profits from foreign operations and the value of the net assets of our foreign
operations when reported in U.S. dollars in our financial statements. This could have a negative impact on our business, financial condition or results of operations as reported in U.S. dollars.

In
addition, fluctuations in currencies relative to currencies in which the earnings are generated may make it more difficult to perform period-to-period
comparisons of our reported results of operations. For purposes of accounting, the assets and liabilities of our foreign operations, where the local currency is the functional currency, are translated
using period-end exchange rates, and the revenues and expenses of our foreign operations are translated using average exchange rates during each period.

Although
we attempt to match costs and revenues in local currencies, we anticipate that there may be instances in which costs and revenues will not be matched with respect to currency
denomination. As a result, to the extent we continue our expansion on a global basis, we expect that increasing portions of our revenues, costs, assets and liabilities will be subject to fluctuations
in foreign currency valuations. We may experience economic loss and a negative impact on earnings or net assets solely as a result of foreign currency exchange rate fluctuations. Further, the markets
in which we operate could restrict the removal or conversion of the local or foreign currency, resulting in our inability to hedge against these risks.

Our ability to manage our business effectively will be weakened if we lose key personnel or are unable to hire, train and retain a qualified labor
force.

We depend on the continuing efforts of our executive officers and senior management. The departure of any of our key personnel could have a significant negative
effect on our business, operating results, financial condition and on our ability to compete effectively in the marketplace. We do not maintain key man life insurance coverage with respect to our
executive officers or key management personnel. We are not aware of the upcoming retirement of any of our executive officers or senior management personnel.

Additionally,
we believe our ability to hire, train and retain qualified personnel will continue to be more challenging and important as we continue to grow and if energy industry market
conditions continue to be positive. When general industry conditions are good, the supply of experienced operational, fabrication and field personnel, in particular, decreases as other energy, oil
field services and manufacturing companies' needs for the same personnel increases. Our ability to continue our growth and perhaps even to continue our current level of service to our current
customers will be adversely impacted if we are unable to successfully hire, train and retain these important personnel.

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We are subject to substantial environmental regulation, and changes in these regulations could increase our costs or liabilities.

We are subject to stringent and complex foreign, federal, state and local laws and regulatory standards, including laws and regulations regarding the discharge of
materials into the environment, emission controls and other environmental protection and occupational health and safety concerns. Environmental laws and regulations may, in certain circumstances,
impose strict liability for environmental contamination, rendering us liable for remediation costs, natural resource damages and other damages as a result of our conduct that was lawful at the time it
occurred or the conduct of, or conditions caused by, prior owners or operators or other third parties. In addition, where contamination may be present, it is not uncommon for neighboring land owners
and other third parties to file claims for personal injury, property damage and recovery of response costs. Remediation costs and other damages arising as a result of environmental laws and
regulations, and costs associated with new information, changes in existing environmental laws and regulations or the adoption of new environmental laws and regulations could be substantial and could
negatively impact our financial condition or results of operations. Moreover, failure to comply with these environmental laws and regulations may result in the imposition of administrative, civil and
criminal penalties.

We
routinely deal with natural gas, oil and other petroleum products. As a result of our fabrication and aftermarket services operations, we generate, manage and dispose of or recycle
hazardous wastes and substances such as solvents, thinner, waste paint, waste oil, washdown wastes and sandblast material. Although it is our policy to use generally accepted operating and disposal
practices in accordance with applicable environmental laws and regulations, hydrocarbons or other hazardous substances or wastes may have been disposed or released on, under or from properties owned,
leased or operated by us or on or under other locations where such substances or wastes have been taken for disposal. These properties may be subject to investigatory, remediation and monitoring
requirements under foreign, federal, state and local environmental laws and regulations.

We
believe that our operations are in substantial compliance with applicable environmental laws and regulations. Nevertheless, the modification or interpretation of existing
environmental laws or regulations, the more vigorous enforcement of existing environmental laws or regulations, or the adoption of new environmental laws or regulations may also negatively impact oil
and natural gas exploration and production companies, which in turn could have a negative impact on us and other similarly situated service companies.

Our charter and bylaws contain provisions that may make it more difficult for a third party to acquire control of us, even if a change in control would
result in the purchase of your shares at a premium to the market price or would otherwise be beneficial to you.

There are provisions in our restated certificate of incorporation and bylaws that may make it more difficult for a third party to acquire control of us, even if a
change in control would result in the purchase of your shares at a premium to the market price or would otherwise be beneficial to you. For example, our restated certificate of incorporation
authorizes our board of directors to issue preferred stock without stockholder approval. If our board of directors elects to issue preferred stock, it could be more difficult for a third party to
acquire us. In addition, provisions of our restated certificate of incorporation, such as a staggered board of directors and limitations on the removal of directors, no stockholder action by written
consent, and on stockholder proposals at meetings of stockholders, could make it more difficult for a third party to acquire control of us. Delaware corporation law may also discourage takeover
attempts that have not been approved by our board of directors.

ITEM 1B.Unresolved Staff Comments

None.

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ITEM 2.Properties

The following table describes our material facilities owned or leased as of December 31, 2005:

|Location                 |  | Square
Feet |  | Acreage |  | Status |  | Uses                                                                              
|------------------------ |  | ----------- |  | ------- |  | ------ |  | ----------------------------------------------------------------------------------
|Houston, Texas           |  | 244,000     |  | 35.4    |  | Owned  |  | Corporate headquarters, fabrication, contract compression and aftermarket services
|Calgary, Alberta, Canada |  | 105,760     |  | 9.2     |  | Owned  |  | Fabrication, contract compression and aftermarket services                        
|Yukon, Oklahoma          |  | 72,000      |  | 14.7    |  | Owned  |  | Contract compression and aftermarket services                                     
|Houma, Louisiana         |  | 60,000      |  | 91.0    |  | Owned  |  | Aftermarket services                                                              
|Belle Chase, Louisiana   |  | 35,000      |  | 4.0     |  | Owned  |  | Contract compression and aftermarket services                                     
|Schulenberg, Texas       |  | 23,000      |  | 13.3    |  | Owned  |  | Fabrication, contract compression and aftermarket services                        
|Broussard, Louisiana     |  | 24,700      |  | 10.0    |  | Leased |  | Contract compression and aftermarket services                                     

None
of the referenced facilities are pledged as collateral, except for our Houston, Texas corporate headquarters, which has been pledged as collateral to secure our $650 million
senior secured credit facility.

We
believe our facilities are suitable for their intended purposes and are adequate for our current and anticipated level of operations.

ITEM 3.Legal Proceedings

From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. We do not believe we are
party to any legal proceedings which, if determined adversely to us, individually or in the aggregate, would have a material adverse effect on our financial position, results of operations or cash
flows.

ITEM 4.Submission of Matters to a Vote of Security Holders

There were no matters submitted to a vote of security holders during the quarter ended December 31, 2005.

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PART II

ITEM 5.Market for Registrants' Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Holdings' common stock is traded on the New York Stock Exchange under the symbol "UCO." The following table sets forth the range of high and low sale prices for
Holdings' common stock for the periods indicated.

Price RangeHigh

LowQuarter Ended:June 30, 2004

$
33.16

$
28.80September 30, 2004


34.85


30.68December 31, 2004


37.46


32.24March 31, 2005


39.70


32.90June 30, 2005


39.40


33.12September 30, 2005


41.97


35.54December 31, 2005


43.84


34.18Through February 22, 2006


48.75


41.30


On
February 22, 2006, the closing price of Holdings' common stock was $46.21 per share. As of February 22, 2006, there were approximately 454 holders of record of its
common stock.

Holdings
has never declared or paid any cash dividends to its stockholders and does not plan to pay any cash dividends in the foreseeable future.

The
following table contains information about our purchases of our equity securities during the quarter ended December 31, 2005.

|Period              |  | Total Number
of Shares Purchased |  | Average Price
Paid per Share |       | Total Number
of Shares
Purchased as
Part of Publicly
Announced Plans
or Programs |   | Maximum Number (or
Approximate Dollar
Value) of Shares that
May Yet Be Purchased
Under the Plans or
Programs
|------------------- |  | -------------------------------- |  | ---------------------------- | ----- | -------------------------------------------------------------------------------- | - | ------------------------------------------------------------------------------------------------------------
|October 1-31, 2005  |  |                                 |  | $                            |      |                                                                                  |  |                                                                                                             
|November 1-30, 2005 |  |                                 |  |                              |      |                                                                                  |  |                                                                                                             
|December 1-31, 2005 |  | 2,439,024                        |  |                              | 41.00 |                                                                                  |  |                                                                                                             
|                    |  |                                  |  |                              |       |                                                                                  |   |                                                                                                             
|Total               |  | 2,439,024                        |  | $                            | 41.00 |                                                                                  |  |                                                                                                             
|                    |  |                                  |  |                              |       |                                                                                  |   |                                                                                                             

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ITEM 6.Selected Financial Data

SELECTED HISTORICAL FINANCIAL DATA  UNIVERSAL COMPRESSION HOLDINGS, INC.

The following selected historical consolidated financial data should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and the audited consolidated financial statements and related notes included elsewhere in this report. The selected historical financial and operating data for the nine months
ended December 31, 2005 and each of the four years in the period ended March 31, 2005 have been derived from the respective audited financial statements. The consolidated audited
financial statements and report thereon, as of December 31, 2005 and March 31, 2005 and for the nine months ended December 31, 2005 and the twelve months ended March 31,
2005 and 2004 are included elsewhere in this report.

|                                             |                      |   |         | Twelve Months Ended March 31, |  
|-------------------------------------------- | -------------------- | - | ------- | ----------------------------- | -
|
|
|
|Statement of Operations Data:                |                      |   |         |                               |  
|Revenue                                      |                      | $ | 613,647 |                               | $
|Gross profit(1)                              |                      |   | 271,335 |                               |  
|Selling, general and administrative expenses |                      |   | 65,269  |                               |  
|Depreciation and amortization                |                      |   | 79,899  |                               |  
|Interest expense, net(2)                     |                      |   | 40,221  |                               |  
|Operating lease expense(2)                   |                      |   |        |                               |  
|Debt extinguishment costs                    |                      |   |        |                               |  
|Facility consolidation costs                 |                      |   |        |                               |  
|Asset impairment expense                     |                      |   |        |                               |  
|Income tax expense                           |                      |   | 31,053  |                               |  
|Net income                                   |                      |   | 55,369  |                               |  
|Earnings per share                           |                      |   |         |                               |  
|                                             | Basic                |   |         | 1.74                          |  
|                                             | Diluted              |   |         | 1.69                          |  
|Weighted average common stock outstanding    |                      |   |         |                               |  
|                                             | Basic                |   |         | 31,773                        |  
|                                             | Diluted              |   |         | 32,758                        |  
|Other Financial Data:                        |                      |   |         |                               |  
|EBITDA, as adjusted(3)                       |                      | $ | 205,850 |                               | $
|Capital expenditures:                        |                      |   |         |                               |  
|                                             | Expansion            |   | $       | 60,435                        |  
|                                             | Overhauls            |   |         | 33,458                        |  
|                                             | Other                |   |         | 24,192                        |  
|Cash flows provided by (used in):            |                      |   |         |                               |  
|                                             | Operating activities |   | $       | 144,873                       |  
|                                             | Investing activities |   |         | (110,464                      | )
|                                             | Financing activities |   |         | (34,734                       | )

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|                     |  |   |           | As of March 31,
|-------------------- |  | - | --------- | ---------------
|
|
|
|Balance Sheet Data:  |  |   |           |                
|Cash                 |  | $ | 39,262    |                
|Working capital(4)   |  |   | 144,714   |                
|Total assets         |  |   | 2,095,295 |                
|Total debt(5)(6)     |  |   | 923,341   |                
|Stockholders' equity |  |   | 831,312   |                

---

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THE COMPANY'S DEFINITION, RECONCILIATION  AND USE OF EBITDA, AS ADJUSTED

EBITDA, as adjusted, is defined as net income plus income taxes, interest expense (including debt extinguishment costs and gain on the termination of interest
rate swap agreements), operating lease expense, depreciation and amortization, foreign currency gains or losses, excluding non-recurring items (including facility consolidation costs).

EBITDA,
as adjusted, represents a measure upon which management assesses performance and, as such, we believe that the generally accepted accounting principle ("GAAP") measure most
directly comparable to it is net income or net loss. The manner in which management uses EBITDA, as adjusted, to evaluate our business follows.

EBITDA, as adjusted, as a supplemental measure to review current period operating performance.Management uses EBITDA, as
adjusted, as a supplemental measure to evaluate the current period operating performance of our business. We believe that EBITDA, as adjusted, when viewed with our GAAP results and the accompanying
reconciliations and other financial and non-financial measures, provides a useful additional perspective on, and a more complete understanding of, our performance than our GAAP results
alone.



EBITDA, as adjusted, as a comparability measure.Management uses EBITDA, as adjusted, to compare the Company's performance
with that of other companies. Although other companies may calculate EBITDA differently, the measure will usually present operating performance on a basis that is meaningful for comparative purposes.
We urge the readers of our reports and financial statements,

23

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including
our disclosure of EBITDA, as adjusted, to review carefully the reconciliation of the non-GAAP measure to net income or loss set forth in the table below.



EBITDA, as adjusted, as a performance measure for period to period comparisons.Management uses EBITDA, as adjusted, as a
measure of the performance of our business over time and as a tool in identifying key trends.



EBITDA, as adjusted, as a valuation measure.Just as investors monitor and review a variety of financial and performance
indicators, such as the market stock price to earnings ratio and the enterprise value to EBITDA ratio, management monitors these ratios to better understand the value of our Company and how to
increase that value for our investors. For example, management has routinely utilized an EBITDA measure as a method to value companies when considering potential acquisition targets. This measure is
utilized for the reasons discussed above; it allows for an evaluation of the target independent of its historical capital structure, depreciation estimates, tax position, and incurrence

24

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of
infrequent or more uncommon items. Moreover, management believes investors that desire to evaluate us as a potential target will also utilize our EBITDA, as adjusted, as part of their evaluation.

The
following table reconciles our EBITDA, as adjusted, to net income (in thousands):

|                    |                                                      |   |         | Twelve Months Ended March 31, |  
|------------------- | ---------------------------------------------------- | - | ------- | ----------------------------- | -
|
|
|EBITDA, as adjusted |                                                      | $ | 205,850 |                               | $
|                    | Interest expense, net                                |   |         | (40,221                       | )
|                    | Income tax expense                                   |   |         | (31,053                       | )
|                    | Depreciation and amortization                        |   |         | (79,899                       | )
|                    | Operating lease expense                              |   |         |                              |  
|                    | Gain on termination of interest rate swap agreements |   |         |                              |  
|                    | Foreign currency gain (loss)                         |   |         | 692                           |  
|                    | Facility consolidation costs                         |   |         |                              |  
|                    | Debt extinguishment costs                            |   |         |                              |  
|                    |                                                      |   |         |                               |  
|Net income          |                                                      | $ | 55,369  |                               | $
|                    |                                                      |   |         |                               |  

Below
are the items excluded from net income in the calculation of EBITDA, as adjusted, and the reasons for the exclusion:



25

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We
believe disclosure of this non-GAAP measure provides useful information to investors because, when viewed with our GAAP results and accompanying reconciliations, it
provides a more complete understanding of our performance than GAAP results alone. This is the case because this non-GAAP financial measure excludes from earnings financial and other items
that have less bearing on operating performance. When using this measure to compare to other companies, which we believe can be a useful tool to evaluate us, please note that an EBITDA measure may be
calculated differently between companies, as it is a non-GAAP measure. We cannot ensure that EBITDA, as adjusted, is directly comparable to other companies' similarly titled measures. We
urge the readers of financial statements to review the reconciliation of the non-GAAP measure to the most comparable GAAP measure to understand any differences that may exist between
companies. Nonetheless, we have shown EBITDA, as adjusted, its
definition and its calculation in order to disclose how management uses it, to present the exclusions made and the limitations of it as a measure.

EBITDA,
as adjusted, has certain material limitations associated with its use as compared to net income. These limitations are primarily due to the exclusion of certain amounts that are
material to our consolidated results of operations, as follows:



26

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Use
of EBITDA, as adjusted, by itself and without consideration of other measures, is not an adequate measure of our performance because this measure excludes certain material items, as
noted above. Further, the measure has a limitation in that many users of financial statements believe that EBITDA is a measure of liquidity or of cash flows. We do not use EBITDA, as adjusted, in this
way because it excludes interest payments and changes in working capital accounts and therefore, we urge the readers of our financial statements to not use the measure in this way either. Management
compensates for these limitations by using EBITDA, as adjusted, as a supplemental measure to other GAAP results to provide a more complete understanding of our performance without considering
financial and other items that have less bearing on operating performance. The measure has a limitation, as it does not consider the amount of required reinvestment to maintain similar going forward
results. Management mitigates this limitation by reviewing and disclosing our capital and maintenance capital expenditures on a regular basis as yet another supplemental tool to evaluate us.

EBITDA,
as adjusted, is not a measure of financial performance under GAAP and should not be considered an alternative to operating income or net income as an indicator of our operating
performance or to net cash provided by operating activities as a measure of our liquidity.

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ITEM 7.Management's Discussion and Analysis of Financial Condition and Results of Operations

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION  AND RESULTS OF OPERATIONS

The following discussion and analysis of financial condition and results of operations should be read in conjunction with our financial
statements, and the notes thereto, and the other financial information appearing elsewhere in this report. The following discussion includes forward-looking statements that involve certain risks and
uncertainties. See "Part I. Disclosure Regarding Forward-Looking Statements" and "Part 1. Item 1A. Risk Factors."

The
terms "our," "Company," "we" and "us" when used in this report refer to Universal Compression Holdings, Inc. ("Holdings") and Universal Compression, Inc. ("Universal")
and their subsidiaries, except where indicated.

Overview

General

We provide a full range of natural gas compression services and products, including sales, operations, maintenance and fabrication to the natural gas industry,
both domestically and internationally. Through our core business, contract compression, and our fleet as of December 31, 2005 of approximately 7,100 compressor units comprising approximately
2.5 million horsepower, we provide natural gas compression
to domestic and international customers. Through our equipment fabrication business we design, engineer and assemble natural gas compressors for sale to third parties and for use in our contract
compression fleet. Through our aftermarket services business, we sell parts and components and provide maintenance and operations services to customers who own their compression equipment or use
equipment provided by other companies. These services and products are essential to the natural gas industry as gas must be compressed to be delivered from the wellhead to end-users and,
sometimes in the case of declining reservoir pressure, in order to get to the wellhead itself. Our customers consist primarily of domestic and international oil and gas companies, international
state-owned oil and gas companies and natural gas producers, processors, gatherers and pipelines.

Generally,
our overall business activity and revenue increase as the demand for natural gas increases. In the United States, increases in the demand for compression services and products
are driven by growth in the production of natural gas, by declining reservoir pressure in maturing natural gas producing fields and, more recently, by increased demand for compression equipment for
growing non-conventional natural gas production, from places such as coal bed methane, tight sands and shale gas. In international markets, increases in the demand for compression services
and products are driven by growth in natural gas industry infrastructure, environmental initiatives encouraging the production and consumption of natural gas and the growth in the worldwide
transportation and use of natural gas. The demand for compression services is also driven by general increases in the demand for energy fuel stocks, including natural gas, which is generally driven by
economic growth, and by increases in the outsourcing of compression needs.

Stockholders' Equity

In December 2005, we entered into an underwriting agreement with Weatherford International Ltd. and J. P. Morgan Securities Inc., as sole
underwriter, in connection with the offering of 6,750,000 shares of our common stock by Weatherford. We did not sell any shares of common stock in connection with the offering and did not receive any
of the proceeds from the sale of the shares by Weatherford. In connection with the underwriting agreement, we entered into a purchase agreement with J. P. Morgan Securities, pursuant to
which we agreed to purchase 2,439,024 of the 6,750,000 shares

28

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of
common stock acquired by them in the offering, at a price of $41.00 per share. The purchase price of approximately $100.0 million was funded from borrowings of approximately
$80.0 million under our revolving credit facility with the balance of the funding provided from available cash.

Change in Fiscal Year End

In December 2005, our board of directors approved a change to our fiscal year end from March 31 to December 31, effective in 2005. As a
result, Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") compares financial information as of and for the nine months ended December 31, 2005 with
financial information as of and for the nine months ended December 31, 2004. Note that although consolidated financial statements are not presented as of and for the nine months ended
December 31, 2004, we have included summary information in MD&A for these periods for comparability purposes.

In
MD&A, financial information for all periods except as of and for the nine months ended December 31, 2004 are derived from our consolidated financial statements, included
elsewhere in this report. All data as of and for the nine months ended December 31, 2004 are derived from our unaudited consolidated financial statements which are not presented herein.

Industry Conditions and Trends

Natural Gas Industry.Worldwide consumption of natural gas increased from approximately 53 trillion cubic feet in 1980
to approximately 92 trillion cubic feet in 2002, although consumption levels in the United States declined in the early 2000s primarily due to an economic slowdown and continue to be relatively
flat today. Industry sources expect the long-term growth trend of worldwide gas consumption to continue. We believe the growing demand in electrical power generation is a contributing
factor in the worldwide growth of natural gas consumption as natural gas tends to be the fuel of choice for new power plants.

The
United States accounted for an estimated annual production of approximately 19 trillion cubic feet of natural gas in calendar year 2002, or 21% of the worldwide total,
compared to an estimated annual production of approximately 73 trillion cubic feet in the rest of the world. Industry sources estimate that the United States' relative natural gas production
level will decrease to approximately 14% of worldwide production by calendar year 2025. As of January 1, 2005, the United States natural gas reserves were estimated at 189 trillion cubic feet,
or 3.1% of the worldwide total.

Natural Gas Compression Services Industry.The natural gas compression services industry experienced a significant increase
in the demand for its products and services from the early 1990s to the early 2000s. The amount of compression horsepower currently operated by contract compression providers, such as us, is estimated
to be approximately 6.0 million horsepower in the United States and approximately 1.5 million horsepower internationally.

A
high level of compression industry capital expenditures and reduced demand due to lackluster economic activity resulted in reduced contract compression fleet utilization beginning in
late calendar 2001 and continued into calendar 2002. Industry utilization stabilized in the second half of calendar 2002 and began to increase during calendar 2003 as a result of reduced capital
expenditures and increasing demand due to improving economic activity. During calendar 2003 the industry did not materially increase the supply of contract compression units in the United States due
to an emphasis on the redeployment of idle units while growth in international markets continued. During calendar years 2004 and 2005, the industry began to increase capital expenditure levels in the
United States as increasing utilization levels caused a shortage in the supply of available, large horsepower units, while international growth continued.

29

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We
believe the outlook for contract compression services, particularly in the United States, will continue to benefit from aging producing natural gas fields which will require more
compression to continue producing the same volume of natural gas, and from increasing production from unconventional sources, which include tight sands, shale and coal bed methane, which generally
require more compression than production from conventional sources to produce the same volume of natural gas.

While
the international gas contract compression services market is currently smaller than the domestic market, we believe there are growth opportunities in international demand for
compression services and products due to the following factors:



Company Performance Trends and Outlook

For the twelve months ending December 31, 2006, we continue to expect strong demand in the contract compression segment to support an average utilization
rate in the low 90% range. We continue to experience increasing direct costs in this segment and have continued to implement price increases to our customers when feasible. Domestic contract
compression gross margin is expected to stay within its historical mid-60% range and we expect our international contract compression gross margin to remain in the low to
mid-70% range. Additionally, we continue to selectively add new large-horsepower units to our contract compression fleet to meet customer requirements in both domestic and international
markets. Aftermarket service customer demand is expected to support continued revenue growth in this segment. We expect aftermarket services gross margin to remain at approximately 20%. We continue to
expect fabrication revenue growth due to solid customer demand. Fabrication gross margin is expected to be higher in calendar year 2006 than in calendar year 2005 as we continue to implement our
process improvements, maintain greater pricing discipline and focus on more standard compression packages.

We
are investing in key initiatives to help support the future growth of our company. These initiatives include an increased marketing and business development commitment targeted at
aftermarket services and international expansion, and the implementation of our new company-wide ERP system.

Certain Key Challenges and Uncertainties

Market conditions in the natural gas industry, competition in the natural gas compression industry and the risks inherent in our on-going
international expansion continue to represent key challenges and uncertainties. In addition to those, we believe the following represent some of the key challenges and uncertainties we will face in
the near future.

Supply of Components.As we continue to grow and in light of the currently favorable energy industry market conditions, our
ability to timely and cost-effectively obtain components necessary to

30

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provide
comprehensive compression services through each of our business segments has become more challenging and important. This issue is compounded by the fact that some of the components used in our
products are obtained from a single source or a limited group of suppliers. Our reliance on these suppliers involves several risks, including price increases that could have a negative impact on our
results of operations, inferior component quality that could increase our warranty costs and a potential inability to obtain an adequate supply to timely satisfy customer demand. We attempt to
minimize our exposure to these risks through, among other things, strategic alliances with key vendors, maintaining adequate inventories of long-lead time components and continually
seeking out competitive, quality alternatives to our existing component sources.

Labor.As we continue to grow both domestically and internationally and in light of the currently favorable energy industry
market conditions, we believe our ability to hire, train and retain qualified personnel has become more challenging and important. In particular, the supply of experienced operational, fabrication and
field personnel continues to be tight and our demand for such personnel continues to grow. Although we have been able to satisfy our personnel needs in these positions thus far, retaining these
employees has been a challenge. To increase retention of and improve skill sets, we have instituted programs that enhance skills and provide on-going training.    Our ability
to continue our growth will depend in part on our success in hiring, training and retaining these employees.

ERP.The on-going implementation of our enterprise resource planning ("ERP") system is anticipated to have a
continuing impact on our selling, general and administrative expenses until implementation is completed, which we anticipate will be in 2007. We expect to see these higher ERP-related
expense levels through the remainder of 2006, but believe they will moderate as we move into 2007. Moreover, implementation problems, if encountered, could negatively impact our business by disrupting
our operations. Although we currently have no reason to believe that any such significant implementation problems will occur, there are inherent limitations in our ability to predict and plan for
these risks and estimate the magnitude of their impact. Consequently, it is possible that the occurrence of a significant implementation problem could be material to our business operations.

Financial Highlights

Some of the more significant financial items for the nine months ended December 31, 2005 compared to the same period in the prior year, which are discussed
below in "Financial Results of Operations," were as follows:



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Operating Highlights

The following table summarizes total available horsepower, average contracted horsepower, horsepower utilization percentages and fabrication backlog.

|                                            |                                    | Nine Months Ended
December 31, |       | Twelve Months Ended
March 31, |      
|------------------------------------------- | ---------------------------------- | ------------------------------ | ----- | ----------------------------- | -----
|
|
|Total available horsepower (at period end): |                                    |                                |       |                               |      
|                                            | Domestic contract compression      |                                | 1,965 |                               | 1,908
|                                            | International contract compression |                                | 584   |                               | 518  
|                                            |                                    |                                |       |                               |      
|                                            |                                    | Total                          |       | 2,549                         |      
|Average contracted horsepower:              |                                    |                                |       |                               |      
|                                            | Domestic contract compression      |                                | 1,760 |                               | 1,662
|                                            | International contract compression |                                | 525   |                               | 412  
|                                            |                                    |                                |       |                               |      
|                                            |                                    | Total                          |       | 2,285                         |      
|Horsepower utilization:                     |                                    |                                |       |                               |      
|                                            | Spot (at period end)               |                                | 92.3  | %                             | 89.9 
|                                            | Average                            |                                | 91.1  | %                             | 88.4 

|                    |  | As of December 31, |       | As of March 31,
|------------------- |  | ------------------ | ----- | ---------------
|
|
|Fabrication backlog |  | $                  | 144.5 |                

The
increase in domestic available horsepower as of December 31, 2005 compared to December 31, 2004 was primarily attributable to large horsepower units added to our fleet
to meet the incremental demand by our customers. The increase in international horsepower during the same period was primarily attributable to horsepower that was added in Latin America in response to
new projects.

Domestic
average contracted horsepower increased by 5.9% for the nine months ended December 31, 2005 compared to the nine months ended December 31, 2004. This increase was
primarily attributable to higher customer demand as well as larger horsepower units added to the fleet. International average contracted horsepower increased by 27.4% for the nine months ended
December 31, 2005 compared to the nine months ended December 31, 2004. This increase was primarily attributable to new projects started in Latin America.

Fabrication
backlog increased $52.9 million or 57.8% as of December 31, 2005 compared to December 31, 2004. Fabrication backlog fluctuates period to period due to,
among other things, the timing of receipt of orders placed by customers and the timing of revenue recognition. The backlog of fabrication projects at February 22, 2006 was approximately
$254.7 million. A majority of the backlog is expected to be completed within a 270-day period.

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Financial Results of Operations

Nine Months Ended December 31, 2005 Compared to Nine Months Ended December 31, 2004

The following table summarizes our revenue, gross profit, gross margin, expenses and net income:

|                                                     |              | Nine Months Ended
December 31, |        
|---------------------------------------------------- | ------------ | ------------------------------ | -------
|
|
|Revenue:                                             |              |                                |        
|Domestic contract compression                        |              | $                              | 248,414
|                                                     | % of revenue |                                |        
|International contract compression                   |              | $                              | 94,831 
|                                                     | % of revenue |                                |        
|Fabrication                                          |              | $                              | 143,710
|                                                     | % of revenue |                                |        
|Aftermarket services                                 |              | $                              | 126,692
|                                                     | % of revenue |                                |        
|                                                     |              |                                |        
|Total revenue                                        |              | $                              | 613,647
|Gross profit:                                        |              |                                |        
|Domestic contract compression                        |              | $                              | 160,256
|International contract compression                   |              |                                | 71,075 
|Fabrication                                          |              |                                | 14,191 
|Aftermarket services                                 |              |                                | 25,813 
|                                                     |              |                                |        
|Total gross profit                                   |              | $                              | 271,335
|Gross margin:                                        |              |                                |        
|Domestic contract compression                        |              |                                | 64.5   
|International contract compression                   |              |                                | 74.9   
|Fabrication                                          |              |                                | 9.9    
|Aftermarket services                                 |              |                                | 20.4   
|                                                     |              |                                |        
|Total gross margin                                   |              |                                | 44.2   
|Expenses:                                            |              |                                |        
|Depreciation and amortization                        |              | $                              | 79,899 
|Selling, general and administrative                  |              |                                | 65,269 
|Interest expense, net                                |              |                                | 40,221 
|Debt extinguishment costs                            |              |                                |       
|Foreign currency (gain) loss                         |              |                                | (692   
|Other (income) loss, net                             |              |                                | 216    
|Gain on termination of interest rate swap agreements |              |                                |       
|Income taxes                                         |              |                                | 31,053 
|                                                     |              |                                |        
|Net income                                           |              | $                              | 55,369 
|                                                     |              |                                |        

---

Revenue.Higher revenue for the nine months ended December 31, 2005 is attributable to increased industry activity and
customer demand, which resulted in higher utilization in both the domestic and international contract compression fleets and increased sales in the aftermarket services

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businesses.
Specifically, domestic contract compression revenue increased due primarily to higher average contract prices and increased contracted horsepower in the nine months ended
December 31, 2005. International contract compression revenue increased primarily as a result of the acquisition of the contract compression fleet in Canada in November 2004 and
additional compression business in Argentina and Mexico, which contributed to increases of $7.5 million, $7.6 million and $2.8 million, respectively. Fabrication revenue decreased
$19.5 million in the Asia Pacific region, $10.8 million in Canada and $3.6 million in the United States as we maintained greater pricing discipline and focused on more standard
compression packages in the nine months ended December 31, 2005. This decrease was partially offset by an increase of $11.6 million in Latin America related to installation projects.
Aftermarket services revenue was higher primarily due to increases within the United States and Latin America of $11.1 million and $4.9 million, respectively.

Gross Profit.The changes in contract compression gross profit (defined as total revenue less direct costs) for the nine
months ended December 31, 2005 compared to the same period in the prior year were primarily attributable to the revenue increases discussed above for domestic contract compression and
international contract compression, which offset the somewhat higher maintenance expenses experienced toward the end of the nine months ended December 31, 2005. These cost increases include
lubricant costs, vehicle fuel costs and field wages. The higher gross profit experienced in fabrication, despite the decreased revenues, primarily reflects the higher warranty costs and cost overruns
experienced on certain relatively complex projects in the prior year period. Aftermarket services gross profit was higher due to revenue increases discussed above.

Gross Margin.As a percentage of segment revenue, direct costs for domestic contraction compression and aftermarket services
for the nine months ended December 31, 2005 remained relatively stable compared to the same period in the prior year. Gross margins for fabrication were higher due to the above-mentioned higher
direct costs in the prior year period. Gross margins for international contract compression were lower due to the above-mentioned increases in costs, primarily in Argentina, during the nine months
ended December 31, 2005.

Depreciation and Amortization.The increase in depreciation and amortization expense for the nine months ended
December 31, 2005 compared to the prior year period primarily resulted from on-going capital expenditures, consisting primarily of additions to our contract compression fleet and
compressor overhauls, and the acquisition of the contract compression fleet in Canada in November 2004.

Selling, General and Administrative Expenses.The increase in SG&A expenses for the nine months ended December 31,
2005 relates to the increased expenses within the United States of $7.7 million due
primarily to the on-going implementation of our new ERP system and increased marketing and business development activities. SG&A expenses in Latin America increased $1.9 million due
to our on-going investment in our international infrastructure and growing international revenue taxes, which are classified as SG&A. SG&A expenses represented 10.6% and 9.8% of revenues
for the nine months ended December 31, 2005 and 2004, respectively.

EBITDA, as adjusted.EBITDA, as adjusted, for the nine months ended December 31, 2005 was $205.9 million
compared to $175.6 million for the prior year period. The increase in EBITDA, as adjusted of 17.3% from the same period in the prior year is primarily attributable to the gross profit increases
discussed above for all business segments, partially offset by increased SG&A expenses. EBITDA, as adjusted, is defined, discussed and reconciled to net income beginning on page 19 of this
report, within Item 6 ("Selected Financial Data").

Interest Expense, net.The decrease in interest expense for the nine months ended December 31, 2005 is primarily
related to our debt refinancing and restructuring activities. This decrease was partially offset by an increase in interest expense due to higher total debt levels outstanding during the nine

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months
ended December 31, 2005, largely due to the acquisition of the contract compression fleet in Canada in November 2004.

Gain on Termination of Interest Rate Swap Agreements.A $3.2 million gain on the termination of interest rate swap
agreements was recognized for the nine months ended December 31, 2004. This gain was the result of reducing the notional amount of interest rate swap agreements by $84.8 million on our
ABS facility in connection with a principal reduction of $80.0 million in June 2004.

Income Tax Expense.The increase in income tax expense for the nine months ended December 31, 2005 primarily relates
to increased income before taxes as compared to the nine months ended December 31, 2004 due to the items mentioned above.

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Twelve Months Ended March 31, 2005 Compared to Twelve Months Ended March 31, 2004

The following table summarizes revenue, gross profit, gross margin, expenses and net income:

|                                                     |              | Twelve Months Ended March 31, |        
|---------------------------------------------------- | ------------ | ----------------------------- | -------
|
|
|Revenue:                                             |              |                               |        
|Domestic contract compression                        |              | $                             | 296,239
|                                                     | % of revenue |                               |        
|International contract compression                   |              | $                             | 102,167
|                                                     | % of revenue |                               |        
|Fabrication                                          |              | $                             | 213,994
|                                                     | % of revenue |                               |        
|Aftermarket services                                 |              | $                             | 150,670
|                                                     | % of revenue |                               |        
|                                                     |              |                               |        
|Total revenue                                        |              | $                             | 763,070
|Gross profit:                                        |              |                               |        
|Domestic contract compression                        |              | $                             | 186,865
|International contract compression                   |              |                               | 78,448 
|Fabrication                                          |              |                               | 15,285 
|Aftermarket services                                 |              |                               | 29,656 
|                                                     |              |                               |        
|Total gross profit                                   |              | $                             | 310,254
|Gross margin:                                        |              |                               |        
|Domestic contract compression                        |              |                               | 63.1   
|International contract compression                   |              |                               | 76.8   
|Fabrication                                          |              |                               | 7.1    
|Aftermarket services                                 |              |                               | 19.7   
|                                                     |              |                               |        
|Total gross margin                                   |              |                               | 40.7   
|Expenses:                                            |              |                               |        
|Depreciation and amortization                        |              |                               | 93,797 
|Selling, general and administrative                  |              |                               | 75,756 
|Interest expense, net                                |              |                               | 64,188 
|Debt extinguishment costs                            |              |                               | 26,543 
|Foreign currency (gain) loss                         |              |                               | 389    
|Other income, net                                    |              |                               | (1,125 
|Gain on termination of interest rate swap agreements |              |                               | (3,197 
|Asset impairment expense                             |              |                               | 3,080  
|Facility consolidation costs                         |              |                               |       
|Income taxes                                         |              |                               | 17,213 
|                                                     |              |                               |        
|Net income                                           |              | $                             | 33,610 
|                                                     |              |                               |        

Revenue.Higher revenue for the twelve months ended March 31, 2005, is attributable to increased industry activity and
customer demand, which resulted in higher utilization in both the domestic and international contract compression fleets and increased sales in the fabrication and aftermarket services businesses.
Specifically, domestic contract compression revenue increased due primarily to higher average contract prices and increased contracted horsepower in the twelve months ended March 31, 2005.
International contract compression revenue increased primarily as a result of additional revenue from the Canadian acquisition, additional compression business in Argentina and

36

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additional
revenue from a project in Brazil, which contributed to increases of $7.2 million, $5.2 million and $4.2 million, respectively. Fabrication revenue increased due to
increased customer demand in the United States, Asia Pacific and Latin America regions, which contributed increases of $23.6 million, $15.5 million and $7.4 million, respectively.
This increased revenue contribution was partially offset by a decline in fabrication revenue in Canada of $16.2 million. Aftermarket services revenue was higher primarily due to increases
within Latin America ($4.3 million) and the Asia Pacific region ($1.6 million) due, in part, to small acquisitions made in these regions. Additionally, aftermarket service revenue in the
United States increased $3.1 million due to higher customer demand.

Gross Profit.The changes in contract compression gross profit (defined as total revenue less direct costs) for the twelve
months ended March 31, 2005 compared to the prior year were primarily attributable to revenue increases discussed above for domestic contract compression and international contract compression,
which offset the somewhat higher maintenance expenses experienced domestically toward the end of the twelve months, including lubricant costs, fuel costs and field wages. The decreased gross profit
experienced in fabrication despite the increased revenues was primarily due to warranty costs and cost overruns experienced on certain relatively complex projects. Aftermarket services gross profit
was lower despite increased revenues due to, among other things, some year end pricing adjustments for an alliance customer.

Gross Margin.As a percentage of segment revenue, direct costs for all business segments combined for twelve months ended
March 31, 2005 remained relatively stable compared to the prior year, although gross margins for our fabrication and aftermarket service segments were lower due to the above-mentioned increases
in direct costs.

Depreciation and Amortization.The increase in depreciation and amortization expense for the twelve months ended
March 31, 2005 compared to the prior year primarily resulted from the start of operations of a project in Brazil (an increase of $2.6 million) and other capital additions, primarily
overhauls, which resulted in an increase in depreciation of approximately $4.7 million.

Selling, General and Administrative Expenses.The increase in SG&A expenses for the twelve months ended March 31, 2005
resulted from increased operating activity within Latin America and the Asia Pacific region, of $4.3 million and $1.9 million, respectively. Additionally, expenses within the United
States increased $3.6 million due primarily to compliance with Sarbanes-Oxley and on-going implementation of our new ERP system. Selling, general and administrative expenses
represented 10% of total revenues for both periods.

EBITDA, as adjusted.EBITDA, as adjusted, for the twelve months ended March 31, 2005 was $232.5 million
compared to $223.8 million for the prior year period. The increase in EBITDA, as adjusted, of 3.9% from the prior year period is primarily attributable to the gross profit increases discussed
above for all business segments, partially offset by increased SG&A expenses. EBITDA, as adjusted, is defined, discussed and reconciled to net income beginning on page 19 of this report, within
Item 6 ("Selected Financial Data").

Interest Expense, net.The decrease in interest expense for the twelve months ended March 31, 2005 is primarily
related to our debt refinancing activities during the two fiscal years ended March 31, 2005. Our $80.0 million reduction in the amount outstanding under the ABS facility from
June 2004 to February 2005 lowered interest expense by $3.2 million. The lower interest rates resulting from the refinancing of $400.0 million of long term debt in
February 2005 reduced interest expense by $2.9 million. Finally, the refinancing of $175.0 million of long-term debt in May 2003 lowered interest expense by
$2.3 million.

Debt Extinguishment Costs.For the twelve months ended March 31, 2005, debt extinguishment costs were primarily due to
the early extinguishment of our term loan due 2008 and 87/8% senior notes

37

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due
2008. As a result of the early extinguishment of debt, a charge of $26.1 million was recognized in the quarter ended March 31, 2005 resulting from the call premium of
$19.5 million and write-off of unamortized debt issuance costs of $6.5 million. The debt extinguishment costs of $14.9 million included in the prior year results
consisted of premium costs of $12.0 million, the write-off of unamortized debt issuance costs of $1.9 million and $0.5 million in transaction expenses.

Gain on Termination of Interest Rate Swap Agreements.A $3.2 million gain on the termination of interest rate swap agreements was
recognized for the twelve months ended March 31, 2005. This gain was the
result of reducing the notional amount of interest rate swap agreements by $84.8 million on our ABS facility in connection with a principal reduction of $80.0 million in
June 2004.

Asset Impairment.Included within net income for the twelve months ended March 31, 2005 is a $3.1 million loss
on the impairment of our 136,000 square foot Tulsa, Oklahoma fabrication facility. With the fabrication difficulties experienced during the twelve months ended March 31, 2005, including cost
overruns on certain complex fabrication jobs, we undertook a significant analysis of our fabrication assets and business, and made a decision to permanently discontinue operations and dispose of our
Tulsa fabrication facility. The carrying value of this facility was written down to its estimated market value, which was determined by the Company based upon recent appraisals.

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Facility Consolidation Costs.Facility consolidation costs incurred during the twelve months ended
March 31, 2004 were
$1.8 million. These costs related to the transfer of the Tulsa, Oklahoma fabrication operations to the Houston, Texas fabrication facility and were primarily for severance, personnel costs and
relocation costs.

Effects of Inflation

In recent years, inflation has been modest and has not had a material impact upon the results of our operations, nor do we currently have reason to believe it
will have a material impact in the foreseeable future.

Liquidity and Capital Resources

Universal meets the conditions set forth in General Instruction I(1) of Form 10-K and as a result is not required to include a
discussion of its liquidity and capital resources in this Form 10-K. The below discussion of liquidity and capital resources is related to Holdings only and all references to "our,"
"we" and "us" when used in this discussion refer to Universal Compression Holdings, Inc. and its subsidiaries.

Our
primary sources of cash are operating activities and financing activities. Our primary uses of cash are operating expenditures, capital expenditures, long-term debt
repayments and purchase of our common stock. The following table summarizes our sources and uses of cash for the nine months ended December 31, 2005 and December 31, 2004, and our cash
and working capital as of the end of such periods (in thousands):

Nine Months Ended
December 31,2005

2004Net cash provided by (used in):Operating activities

$
144,873

$
112,223Investing activities


(110,464
)

(147,274
)Financing activities


(34,734
)

(33,073
)As of December 31,2005

2004Cash

$
39,262

$
53,958Working capital, net of cash and restricted cash


101,265


65,041


Operations.Net cash provided by operating activities increased $32.7 million, or 29.1%, for the nine months ended
December 31, 2005 compared to the same period in the prior year primarily as a result of increased earnings and changes in working capital.

Capital Expenditures.Capital expenditures for the nine months ended December 31, 2005 were $118.1 million,
consisting of $60.4 million for fleet additions, $33.5 million for compressor overhauls, $9.4 million for service trucks and $14.8 million for machinery, equipment,
information technology equipment and other items. Based on current market conditions, we expect to continue to invest in fleet additions, compressor overhauls and maintenance and other capital
requirements. We expect net capital expenditures (defined as capital expenditures less proceeds from asset sales) of approximately $210 million to $240 million for the twelve months
ending December 31, 2006, including approximately $45 million for compression fleet maintenance capital.

Long-term Debt.As of December 31, 2005, we had approximately $922.9 million in outstanding debt
obligations consisting primarily of $471.8 million outstanding under our seven-year term loan,

39

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$171.1 million
outstanding under our 71/4% senior notes, $200.0 million outstanding under our ABS facility and $80.0 million outstanding under our revolving credit
facility.

The
maturities of this debt are shown below (in thousands). We expect to pay these principal payments through cash generated by operations and debt refinancing activity.

2006

$
18,0832007


19,2952008


19,2952009


19,2952010


270,373Thereafter


576,549Total debt

$
922,890


Historically,
we have financed capital expenditures with net cash provided by operating and financing activities. Based on current market conditions, we expect that net cash provided by
operating activities will be sufficient to finance our operating expenditures, capital expenditures and scheduled interest and debt repayments through the 2006 calendar year. To the extent that net
cash provided by operating activities is not sufficient to finance our operating expenditures, capital expenditures and scheduled interest and debt repayments through the 2006 calendar year, we may
borrow additional funds under our revolving credit facility or we may obtain additional debt or equity financing.

Debt Covenants and Availability.Covenants in our credit facilities require that we maintain various financial ratios,
including a collateral coverage ratio (market value of domestic compression collateral to amount of indebtedness outstanding under our credit facility) of greater than or equal to 1.15 to 1, a total
leverage ratio (total debt to earnings before interest, taxes, depreciation and amortization expense) of less than or equal to 5 to 1, and an interest coverage ratio (earnings before interest, taxes,
depreciation and amortization expense to interest expense) of greater than or equal to 2.5 to 1. As of December 31, 2005, we were in compliance with all financial covenants.

As
of December 31, 2005, due to restrictive covenants and after giving effect to $26.0 million of outstanding letters of credit under our financing agreements, we had an
aggregate unused credit availability of approximately $69.8 million under our revolving credit facility and $25.0 million under our ABS facility.

Debt Amendment.In September 2005, we entered into an amendment to our senior secured credit agreement (the
"Amendment"). Prior to entering into the Amendment, the senior secured credit agreement consisted of a seven-year term loan and a five-year $250.0 million revolving
credit facility. The Amendment, among other things, reduced the interest rate applicable to our seven-year term loan by 0.25% resulting in a rate of LIBOR plus 1.50% and reduced the
borrowing capacity under the revolving credit facility by $75.0 million to $175.0 million. In addition, under the terms of the Amendment, in October 2005, $75.0 million of
our outstanding revolving credit facility balance was funded to our seven-year term loan. The additional $75.0 million of seven-year term loan will amortize over the
remaining term of the original seven-year term loan. Additionally, the Amendment increases our ability to enter into future unsecured indebtedness from $125.0 million to
$200.0 million.

Debt Restructuring.In October 2005, we completed the planned restructuring of the ABS facility and added a
$25.0 million revolving warehouse facility, increasing the total borrowing capacity to $225.0 million. The notes will amortize based on the revenues of the secured assets, which is
expected to result in a fourteen year amortization. Under the restructured ABS facility, the outstanding balance is subject to a variable interest rate based on one-month LIBOR plus 0.74%.

40

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Contractual Obligations.The following table summarizes our cash contractual obligations as of December 31, 2005 (in
thousands):

|                                   |  | Payments Due by Period
|---------------------------------- |  | ----------------------
|
|Total debt(1)                      |  | $                     
|Estimated interest payments(2)     |  |                       
|Capital leases(3)                  |  |                       
|Purchase obligations(4)            |  |                       
|                                   |  |                       
|Total contractual cash obligations |  | $                     
|                                   |  |                       

---

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operation is based upon our consolidated financial statements. We prepare these financial
statements in conformity with United States generally accepted accounting principles. As such, we are required to make certain estimates, judgments and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the periods presented. We base our estimates on historical experience, available
information and various other assumptions we believe to be reasonable under the circumstances. On an on-going basis, we evaluate our estimates; however, actual results may differ from
these estimates under different assumptions or conditions. The accounting policies we believe require management's most difficult, subjective or complex judgments and are the most critical to our
reporting of results of operations and financial position are as follows:

Allowances and Reserves

Our customers are evaluated for credit worthiness prior to the extension of credit. We maintain an allowance for bad debts based on specific customer collection
issues and historical experience. On an on-going basis, we conduct an evaluation of the financial strength of our customers based on payment history and make adjustments to the allowance
as necessary.

We
record a reserve against our inventory balance for estimated obsolescence. This reserve is based on specific identification and historical experience.

We
accrue amounts for estimated warranty claims based upon current and historical product warranty costs and any other related information known to us.

41

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Depreciation

Property, plant and equipment are carried at cost. Depreciation for financial reporting purposes is computed on the straight-line basis using
estimated useful lives and salvage values.

Business Combinations and Goodwill

Goodwill and intangible assets acquired in connection with business combinations represent the excess of consideration over the fair value of tangible net assets
acquired. Certain assumptions and estimates are employed in determining the fair value of assets acquired and liabilities assumed, as well as in determining the allocation of goodwill to the
appropriate reporting unit.

We
perform an impairment test for goodwill assets annually or earlier if indicators of potential impairment exist. Our goodwill impairment test involves a comparison of the fair value of
each of our reporting units with their carrying value. The fair value is determined using discounted cash flows and other market-related valuation models. Certain estimates and judgments are required
in the application of the fair value models. During February 2005, we performed an impairment analysis in accordance with SFAS No. 142 and determined that no impairment had occurred.
During the nine months ended December 31, 2005, no event occurred or circumstances changed that would more likely than not reduce the fair value of a reporting unit below its carrying value. As
a result, an interim test for goodwill impairment between our annual test dates was not performed. If for any reason the fair value of our goodwill or that of any of our reporting units declines below
the carrying value in the future, we may incur charges for the impairment.

Long-Lived Assets

Long-lived assets, which include property, plant and equipment, finite-lived intangibles and other assets comprise a significant amount of our total
assets. In accordance with SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets," long-lived assets to be held and used by us are reviewed to determine whether any events or changes in
circumstances indicate the carrying amount of the asset may not be recoverable. For long-lived assets to be held and used, we base our evaluation on impairment indicators such as the
nature of the assets, the future economic benefit of the assets, any historical or future profitability measurements and other external market conditions or factors that may be present. If such
impairment indicators are present or other factors exist that indicate the carrying amount of the asset may not be recoverable, we determine whether an impairment has occurred through the use of an
undiscounted cash flows analysis. If an impairment has occurred, we recognize a loss for the difference between the carrying amount and the estimated fair value of the asset. The fair value of the
asset is measured using quoted market prices or, in the absence of quoted market prices, is based on an estimate of discounted cash flows.

Self-Insurance

We are self-insured up to certain levels for general liability, vehicle liability, group medical and for workers' compensation claims for certain of
our employees. We record self-insurance accruals based on claims filed and an estimate for significant claims incurred but not reported. We regularly review estimates of reported and
unreported claims and provide for losses through insurance reserves. Although we believe adequate reserves have been provided for expected liabilities arising from our self-insured
obligations, it is reasonably possible our estimates of these liabilities will change over the near term as circumstances develop.

Income Taxes

We provide a wide range of services to a global market and as such, are subject to taxation not only in the United States but also in numerous foreign
jurisdictions. The determination of our tax

42

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liabilities
involves the interpretation of local tax laws, tax treaties, and tax authority practices and procedures in each jurisdiction. Changes in the operating environment including changes in tax
law could impact our estimate of tax liabilities in a given year.

The
realizablity of our deferred tax assets or the need for associated valuation allowances is reliant upon our estimates of future taxable income and the reversal of tax advantaged
temporary differences, such as accelerated depreciation. Numerous judgments and assumptions are inherent in the determination of future taxable income, including assumptions on future operating
conditions and asset utilization. The judgments and assumptions used to determine future taxable income are consistent with those used for other financial statement purposes.

Another
item that affects income taxes is the permanent reinvestment of the earnings of our foreign subsidiaries. The assumptions related to this permanent reinvestment are analyzed and
reviewed annually for changes in our international and domestic business outlook.

Recent Accounting Pronouncements

See Note 1 to our consolidated financial statements included elsewhere in this report.

43

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ITEM 7A.Quantitative and Qualitative Disclosures About Market Risk

Variable Rate Debt

We are exposed to market risk due to variable interest rates under our financing and interest rate swap arrangements.

The
interest rate under our revolving credit facility is based upon, at our option, either a base rate plus an applicable margin, which varies from 0.25% to 1.25% based on our leverage
ratio, or one, two, three or six month LIBOR, plus an applicable margin which varies from 1.25% to 2.25% based on our leverage ratio. At February 22, 2006, the applicable rate was one month
LIBOR, which was 4.57% and the applicable margin was 1.25%. We had $80.0 million outstanding at December 31, 2005 under the revolving credit facility.

At
December 31, 2005, we had $471.8 million outstanding under our seven-year term loan that was subject to a variable interest rate. This facility provides, at
our option, for interest at a base rate plus an applicable margin of 0.50% or one, two, three or six month LIBOR, plus an applicable margin of 1.50%. At February 22, 2006, the applicable rate
was one month LIBOR, which was 4.57%. We have entered into interest rate swap agreements related to the seven-year term loan, which are described below in "Interest
Rate Swap Arrangements." At December 31, 2005, after consideration of these interest rate swap agreements, only $171.8 million of the seven-year term
loan remains effectively subject to a variable interest rate.

At
December 31, 2005, we had $200.0 million outstanding under our ABS facility that was subject to a variable interest rate at one month LIBOR, which was 4.57% at
February 22, 2006, plus 0.74%. We have entered into interest rate swap agreements, which are described below in "Interest Rate Swap
Arrangements." At December 31, 2005, after consideration of these interest rate swap agreements, only $20.0 million of the ABS facility remains effectively
subject to a variable interest rate.

In
addition, $100.0 million of our 71/4% senior notes are subject to interest rate swap agreements which convert the fixed rate to a variable rate. The variable
rate under these interest rate swap agreements is six month LIBOR, in arrears, plus an average applicable margin of 3.21%. At February 22, 2006, six month LIBOR was 4.96%.

As
of December 31, 2005, we had approximately $371.8 million of outstanding indebtedness that was effectively subject to floating interest rates and a 1.0% increase in
interest rates would result in an approximate $3.7 million annual increase in our interest expense.

Interest Rate Swap Arrangements

We are also a party to interest rate swap agreements which are recorded at fair value in our financial statements. A change in the underlying interest rates may
also result in a change in their recorded value.

At
December 31, 2005, the notional amount of the interest rate swap agreements related to the seven-year term loan was $300.0 million. The fair value of these
interest rate swap agreements was an asset of approximately $5.9 million, which was recorded as a noncurrent asset. The interest rate swap agreements amortize ratably from June 2007
through March 2010. The weighted average fixed rate of these interest rate swap agreements is 4.02%, for an all-in weighted average fixed rate of 5.52% on this portion of the term
loan, inclusive of the term loan's applicable margin of 1.50%.

At
December 31, 2005, the notional amount of the interest rate swap agreements related to our ABS facility was $180.0 million and the fair value of these interest rate swap
agreements was a liability of approximately $1.1 million, which was recorded as a noncurrent liability. The interest rate swap agreements amortize through 2019. The weighted average fixed rate
of these swap agreements is 4.94%, for an all-in fixed rate of 5.68% on this portion of the ABS facility, inclusive of the ABS facility's applicable margin of 0.74%.

44

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The
notional amount of the interest rate swap agreements related to our 71/4% senior notes was $100.0 million. The fair value of these interest rate swap agreements
at December 31, 2005, was a liability of approximately $3.9 million. These interest rate swap agreements terminate in May 2010.

ITEM 8.Financial Statements and Supplementary Data

The consolidated statements of Holdings and Universal included in this Report beginning on page F-1 are incorporated herein by reference.

ITEM 9.Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

None.

ITEM 9A.Controls and Procedures

Management's Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) and Rule 15d-15(b) under the Securities Exchange Act of 1934 (the "Exchange Act"), Holdings
and Universal management, including the Chief Executive Officer and Chief Financial Officer, evaluated as of December 31, 2005, the effectiveness of their disclosure controls and procedures as
defined in Exchange Act Rule 13a-15(e) and Rule 15d-15(e). Based on that evaluation, the Chief Executive Officer and Chief Financial Officer of Holdings and
Universal concluded that their disclosure controls and procedures, as of December 31, 2005, were effective for the purpose of ensuring that information required to be disclosed by Holdings and
Universal in this report is recorded, processed, summarized and reported within the time periods specified by the rules and forms of the Exchange Act and is accumulated and communicated to management,
including the Chief Executive Officer and Chief Financial Officer as appropriate to allow timely decisions regarding required disclosures.

Management's Annual Report on Internal Control Over Financial Reporting

As required by Exchange Act Rule 13a-15(c) and 15d-15(c), Holdings' management, including the Chief Executive Officer and Chief
Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting. Management conducted an evaluation of the effectiveness of internal control over
financial reporting based on the Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Because of its inherent limitations,
internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness as to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Based on the results of management's evaluation described above,
management concluded that Holdings' internal control over financial reporting was effective as of December 31, 2005.

The
assessment of the effectiveness of internal control over financial reporting as of December 31, 2005, was audited by Deloitte & Touche LLP, an independent registered
public accounting firm, as stated in their report found on the following page of this report.

Changes in Internal Control Over Financial Reporting

There were no changes in Holdings' internal control over financial reporting during the last fiscal quarter that materially affected, or are reasonably likely to
materially affect, their internal control over financial reporting.

ITEM 9B.Other Information

None.

45

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To
the Board of Directors and Stockholders of
Universal Compression Holdings, Inc.
Houston, TX

We
have audited management's assessment, included in the accompanying Management's Annual Report on Internal Control over Financial Reporting, that Universal Compression
Holdings, Inc. and subsidiaries ("Holdings") maintained effective internal control over financial reporting as of December 31, 2005 based on criteria established in Internal ControlIntegrated
Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission. Holdings' management
is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to
express an opinion on management's assessment and an opinion on the effectiveness of Holdings' internal control over financial reporting based on our audit.

We
conducted our audit in accordance with the 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 effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control
over financial reporting, evaluating management's assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.

A
company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or
persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that
receipts and expenditures of the company are being
made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because
of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material
misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to
future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In
our opinion, management's assessment that Holdings maintained effective internal control over financial reporting as of December 31, 2005, is fairly stated, in all material
respects, based on the criteria established inInternal ControlIntegrated Frameworkissued by the Committee of Sponsoring Organizations of
the Treadway Commission. Also in our opinion, Holdings maintained, in all material respects, effective internal control over financial reporting as of December 31, 2005, based on the criteria
established inInternal ControlIntegrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission.

We
have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement
schedules as of and for the year ended December 31, 2005 of Holdings and our reports dated March 3, 2006 expressed an unqualified opinion on those financial statements and financial
statement schedule.

/s/
DELOITTE & TOUCHE LLP

Houston,
TX
March 3, 2006

46

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PART III

ITEM 10.Directors and Executive Officers of the Registrant

The information included or to be included in our definitive proxy statement for our 2006 Annual Meeting of Stockholders under the caption "Proposal 1: Election
of Directors" is incorporated by reference herein.

On
August 25, 2005, we submitted to the New York Stock Exchange a certification of our Chairman and Chief Executive Officer that he was not aware of any violation by the Company
of the New York Stock Exchange's corporate governance listing standards as of the date of certification.

ITEM 11.Executive Compensation

The information included or to be included under the caption "Executive Compensation" in our definitive proxy statement for our 2006 Annual Meeting of
Stockholders is incorporated by reference herein.

ITEM 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information included or to be included under the captions "Security Ownership of Certain Beneficial Owners and Management" and "Equity Compensation Plan
Information" in our definitive proxy statement for our 2006 Annual Meeting of Stockholders is incorporated by reference herein.

ITEM 13.Certain Relationships and Related Transactions

The information included or to be included under the caption "Certain Relationships and Related Transactions" in our definitive proxy statement for our 2006
Annual Meeting of Stockholders is incorporated by reference herein.

ITEM 14.Principal Accountant Fees and Services

The information included or to be included under the caption "Proposal 3: Ratification of Appointment of Independent Auditors" in our definitive proxy statement
for our 2006 Annual Meeting of Stockholders is incorporated by reference herein.

47

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PART IV

ITEM 15.Exhibits and Financial Statement Schedules



EXHIBIT INDEX

|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1         |  | Restated Certificate of Incorporation of Universal Compression Holdings, Inc. (incorporated by reference to Exhibit 3.1 of Universal Compression Holdings, Inc.'s Quarterly Report on Form 10-Q for the quarter
ended June 30, 2000).                                                                      
|3.2         |  | Restated Bylaws of Universal Compression Holdings, Inc. (incorporated by reference to Exhibit 3.2 of Universal Compression Holdings, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2000).                                                                                            
|            |  | 71/4% Senior Notes due 2010                                                                                                                                                                                                                                                                                
|4.1         |  | Indenture, dated May 27, 2003, by and between Universal Compression, Inc., as Issuer, and The Bank of New York, as Trustee (incorporated by reference to Exhibit 4.11 of Universal Compression Holdings, Inc.'s Annual Report on Form 10-K for
the fiscal year ended March 31, 2003).                      
|4.2         |  | Specimen of Universal Compression, Inc.'s 71/4% Senior Notes due 2010 (incorporated by reference to Exhibit 4.11 of Universal Compression Holdings, Inc.'s Annual Report on Form 10-K for the fiscal year ended
March 31, 2003).                                                                           
|            |  | ABS Facility                                                                                                                                                                                                                                                                                               
|10.1*       |  | Indenture, dated October 28, 2005, between UCO Compression 2005 LLC, as Issuer, and Wells Fargo Bank, National Association, as Indenture Trustee, with respect to the $225,000,000 ABS facility consisting of $200,000,000 of Series 2005-1
Notes and $25,000,000 of Series 2005-2 Notes.                  
|10.2*       |  | Series 2005-1 Supplement, dated as of October 28, 2005, to Indenture, dated as of October 28, 2005, between UCO Compression 2005 LLC, as Issuer, and Wells Fargo Bank, National Association, as Indenture Trustee, with respect to the
$200,000,000 of Series 2005-1 Notes with regard to the ABS Facility.
|            |  |                                                                                                                                                                                                                                                                                                            

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|10.3* |  | Series 2005-2 Supplement, dated as of October 28, 2005, to Indenture, dated as of October 28, 2005, between UCO Compression 2005 LLC, as Issuer, and Wells Fargo Bank, National Association, as Indenture Trustee, with respect to the
$25,000,000 of Series 2005-2 Notes with regard to the ABS Facility.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.4* |  | Guaranty, dated as of October 28, 2005 issued by Universal Compression Holdings, Inc. for the benefit of UCO Compression 2005 LLC, as Issuer, and Wells Fargo Bank, National Association, as Indenture Trustee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.5* |  | Management Agreement, dated as of October 28, 2005, by and between Universal Compression, Inc., as Manager and UCO Compression 2005 LLC, as Issuer.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.6* |  | Back-up Management Agreement, dated as of October 28, 2005, by and among Caterpillar Inc., as Back-up Manager, UCO Compression 2005 LLC, as Issuer and Universal Compression, Inc., as Manager.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.7* |  | Insurance and Indemnity Agreement, dated as of October 28, 2005, by and among Ambac Assurance Corporation, as Insurer, UCO Compression 2005 LLC, as Issuer, Universal Compression, Inc., as Contributor and Manager, UCO Compression 2002 LLC, as Old
Lessee, and Wells Fargo Bank, National Association, as Indenture Trustee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.8* |  | Intercreditor and Collateral Agency Agreement dated as of October 28, 2005, by and among Universal Compression, Inc., in its individual capacity and as Manager, UCO Compression 2005 LLC, as Issuer, Wells Fargo Bank, National Association, as
Indenture Trustee, Wachovia Bank, National Association, as Bank Agent, the Various Financing Institutions that from time to time may become parties thereto as UCI Lenders and JP Morgan Chase Bank, N.A., in its individual capacity and as
Intercreditor Collateral Agent.                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|      |  | Bank Agreements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.9  |  | $650,000,000 Senior Secured Credit Agreement, dated as January 14, 2005, among Universal Compression, Inc., as Co-US Borrower and Guarantor, Universal Compression Holdings, Inc., as Co-US Borrower and Guarantor, UC Canadian Partnership Holdings
Company, as Canadian Borrower, Wachovia Bank, National Association, as US Administrative Agent, Congress Financial Corporation (Canada), as Canadian Administrative Agent, JPMorgan Chase Bank, N.A., as Syndication Agent, Deutsche Bank Securities Inc.,
The Bank of Nova Scotia and The Royal Bank of Scotland plc as Co-Documentation Agents and the Lenders signatory thereto arranged by Wachovia Capital Markets, LLC and J.P. Morgan Securities Inc. as Joint Lead Arrangers and Joint Book Runners and
Deutsche Bank Securities Inc. as Co-Arranger (incorporated by reference to Exhibit 10.1 of Universal Compression Holdings, Inc.'s Quarterly Report on Form 10-Q for the quarter ended December 31, 2004).
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

49

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|10.10  |  | First Amendment to Senior Secured Credit Agreement dated as of September 22, 2005, among Universal Compression, Inc., as Co-US Borrower and Guarantor, Universal Compression Holdings, Inc., as Co-US Borrower and Guarantor, UC Canadian Partnership
Holdings Company, as Canadian Borrower, Wachovia Bank, National Association, as US Administrative Agent, Congress Financial Corporation (Canada), as Canadian Administrative Agent, JPMorgan Chase Bank, N.A., as Syndication Agent, Deutsche Bank
Securities Inc., The Bank of Nova Scotia and The Royal Bank of Scotland plc as Co-Documentation Agents and the Lenders signatory thereto arranged by Wachovia Capital Markets, LLC as Sole Lead Arranger and Sole Book Runner (incorporated by reference
to Exhibit 10.1 of Universal Compression Holdings, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005).
|------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.11  |  | Collateral Agreement, dated as of January 14, 2005, made by Universal Compression, Inc. and Universal Compression Holdings, Inc. in favor of Wachovia Bank, National Association, as Administrative Agent (incorporated by reference to Exhibit 10.2
of Universal Compression Holdings, Inc.'s Quarterly Report on Form 10-Q for the quarter ended December 31, 2004).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|10.12  |  | Pledge and Security Agreement (Assignment of Pledged Securities), dated as of January 14, 2005, made by Universal Compression International, Inc., Enterra Compression Investment Company, Universal Compression Services, LLC and Universal Compression
Canadian Holdings, Inc., as Pledgors to Wachovia Bank, National Association, as Administrative Agent (incorporated by reference to Exhibit 10.3 of Universal Compression Holdings, Inc.'s Quarterly Report on Form 10-Q for the quarter ended
December 31, 2004).                                                                                                                                                                                                                                                                                                                                                                          
|10.13  |  | Supplement to Collateral Agreement, dated as of February 15, 2005, made by Universal Compression Holdings, Inc. in favor of Wachovia Bank, National Association, as Administrative Agent (incorporated by reference to Exhibit 10.13 of
Universal Compression Holdings, Inc.'s Annual Report on Form 10-K for the year ended March 31, 2005).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.14  |  | Supplement to Pledge Agreement dated as of February 15, 2005, made by Universal Compression International, Inc. and Universal Compression Services, LLC in favor of Wachovia Bank, National Association, as Administrative Agent (incorporated by
reference to Exhibit 10.14 of Universal Compression Holdings, Inc.'s Annual Report on Form 10-K for the year ended March 31, 2005).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.15  |  | Supplement to Pledge Agreement dated as of February 15, 2005, made by Universal Compression Services, LLC in favor of Wachovia Bank, National Association, as Administrative Agent (incorporated by reference to Exhibit 10.15 of Universal
Compression Holdings, Inc.'s Annual Report on Form 10-K for the year ended March 31, 2005).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|       |  | Executive Compensation Plans and Arrangements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.16 |  | Universal Compression Holdings, Inc. Incentive Stock Option Plan (incorporated by reference to Exhibit 10 of Universal Compression Holdings, Inc.'s Quarterly Report on Form 10-Q for the period ended September 30, 1998).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|10.17 |  | Amendment Number One to Incentive Stock Option Plan, dated April 20, 2000 (incorporated by reference to Exhibit 10.3 of Amendment No. 2, filed with the SEC on May 22, 2000, to Universal Compression Holdings, Inc.'s Registration
Statement on Form S-1 (File No. 333-34090)).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

50

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|10.18  |  | Amendment Number Two to Incentive Stock Option Plan, dated May 15, 2000 (incorporated by reference to Exhibit 10.4 of Amendment No. 2, filed with the SEC on May 22, 2000, to Universal Compression Holdings, Inc.'s Registration Statement
on Form S-1 (File No. 333-34090)).                                            
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.19  |  | Amendment Number Three to Incentive Stock Option Plan, dated November 27, 2000 (incorporated by reference to Exhibit 4.7 of Universal Compression Holdings, Inc.'s Registration Statement on Form S-8 filed with the SEC on February 9,
 2001 (File No. 333-55260)).                                                      
|10.20  |  | Amendment Number Four to Incentive Stock Option Plan, dated August 15, 2002 (incorporated by reference to Exhibit 4.8 of Universal Compression Holdings, Inc.'s Registration Statement on Form S-8 filed with the SEC on September 12, 2002
(File No. 333-99473)).                                                        
|10.21  |  | Amendment Number Five to Incentive Stock Option Plan, dated July 23, 2004 (incorporated by reference to Exhibit 4.9 of Universal Compression Holdings, Inc.'s Registration Statement on Form S-8 filed with the SEC on October 29, 2004
(File No. 333-120108)).                                                           
|10.22  |  | Form of Non-Qualified Stock Option Agreement under the Incentive Stock Option Plan for outside directors of Universal Compression Holdings, Inc.'s Board of Directors (incorporated by reference to Exhibit 10.22 of Universal Compression
Holdings, Inc.'s Annual Report on Form 10-K for the year ended March 31, 2005).
|10.23  |  | Form of Non-Qualified Stock Option Agreement under the Incentive Stock Option Plan for employees (incorporated by reference to Exhibit 10.23 of Universal Compression Holdings, Inc.'s Annual Report on Form 10-K for the year ended
March 31, 2005).                                                                     
|10.24  |  | Form of Incentive Stock Option Agreement under the Incentive Stock Option Plan (incorporated by reference to Exhibit 10.24 of Universal Compression Holdings, Inc.'s Annual Report on Form 10-K for the year ended March 31,
2005).                                                                                       
|10.25  |  | Universal Compression Holdings, Inc. Restricted Stock Plan for Executive Officers (incorporated by reference to Exhibit 4.2 of Universal Compression Holdings, Inc.'s Registration Statement on Form S-8 filed with the SEC on August 17,
2001 (File No. 333-67784)).                                                     
|10.26  |  | Amendment Number One to Restricted Stock Plan for Executive Officers, dated July 23, 2004 (incorporated by reference to Exhibit 4.11 of Universal Compression Holdings, Inc.'s Registration Statement on Form S-8 filed with the SEC on
October 29, 2004 (File No. 333-120108)).                                          
|10.27  |  | Form of Restricted Stock Agreement under the Restricted Stock Plan for Executive Officers (incorporated by reference to Exhibit 10.8 of Universal Compression Holdings, Inc.'s Quarterly Report on Form 10-Q for the quarter ended
September 30, 2001).                                                                   
|10.28  |  | Universal Compression Holdings, Inc. Directors' Stock Plan (incorporated by reference to Exhibit 4.3 of Universal Compression Holdings, Inc.'s Registration Statement on Form S-8 filed with the SEC on August 17, 2001 (File
No. 333-67784)).                                                                            
|10.29* |  | Universal Compression, Inc. Employees' Supplemental Savings Plan as revised and restated effective January 1, 2005.                                                                                                                                                                                                       
|        |  |                                                                                                                                                                                                                                                                                                                           

51

---



|10.30* |  | Amendment Number One to Employees' Supplemental Savings Plan (as revised and restated effective January 1, 2005), dated March 2, 2006, and generally effective as of January 1, 2006.                                                                                                                                                                           
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.31  |  | Universal Compression Holdings, Inc. Employee Stock Purchase Plan (incorporated by reference to Exhibit 4.1 of Universal Compression Holdings, Inc.'s Registration Statement on Form S-8 filed with the SEC on August 17, 2001 (File
No. 333- 67784)).                                                                                                          
|10.32  |  | Amendment Number One to Employee Stock Purchase Plan, dated December 20, 2001 (incorporated by reference to Exhibit 10.56 of Universal Compression Holdings, Inc.'s Annual Report on Form 10-K for the fiscal year ended March 31,
2002).                                                                                                                       
|10.33  |  | Form of Indemnification Agreement for executive officers and directors of Universal Compression Holdings, Inc. (incorporated by reference to Exhibit 10.27 of Amendment No. 1, filed with the SEC on May 3, 2000, to Universal
Compression Holdings, Inc.'s Registration Statement on Form S-1 (File No. 333-34090)).                                           
|10.34  |  | Form of Change of Control Agreement for executive officers of Universal Compression Holdings, Inc. (incorporated by reference to Exhibit 10.2 of Universal Compression Holdings, Inc.'s Quarterly Report on Form 10-Q for the quarter ended
September 30, 2005).                                                                                                
|10.35  |  | Letter dated March 15, 2001, with respect to certain retirement benefits to be provided to Stephen A. Snider (incorporated by reference to Exhibit 10.43 of Universal Compression Holdings, Inc.'s Annual Report on Form 10-K for the
fiscal year ended March 31, 2001).                                                                                        
|10.36  |  | Summary of Officers' Incentive Plan for Fiscal Year 2006 (incorporated by reference to Exhibit 10.1 of Universal Compression Holdings, Inc.'s Form 8-K filed August 3, 2005).                                                                                                                                                                                   
|10.37* |  | Summary Compensation Sheet for Executive Officers and Directors                                                                                                                                                                                                                                                                                                 
|        |  | Registration Rights Agreements                                                                                                                                                                                                                                                                                                                                  
|10.38   |  | Registration Rights Agreement, dated February 20, 1998 by and among Universal Compression Holdings, Inc., Castle Harlan Partners III, L.P. and each other party listed as signatory thereto (incorporated by reference to Exhibit 10.14 to
Universal Compression Holdings, Inc.'s Registration Statement on Form S-4 dated March 19, 1998 (File No. 333-48283)).
|10.39   |  | Form of Instruments of Accession to Registration Rights Agreement for each of Richard W. FitzGerald and Valerie L. Banner (incorporated by reference to Exhibit 4.10 to Universal Compression Holdings, Inc.'s Registration Statement on
Form S-1 (File No. 333-34090)).                                                                                        
|10.40   |  | Instrument of Accession to Registration Rights Agreement, dated April 28, 2000, for Energy Spectrum Partners LP (incorporated by reference to Exhibit 10.19 to Amendment No. 2 dated May 22, 2000, to Universal Compression Holdings,
Inc.'s Registration Statement on Form S-1 (File No. 333-34090)).                                                          
|        |  | Miscellaneous                                                                                                                                                                                                                                                                                                                                                   
|10.41   |  | Purchase Agreement dated December 9, 2005 by and between Universal Compression Holdings, Inc. and J.P. Morgan Securities, Inc. (incorporated by reference to Exhibit 10.1 of Universal Compression Holdings, Inc.'s Form 8-K filed
December 12, 2005).                                                                                                          
|21.1*   |  | List of Subsidiaries.                                                                                                                                                                                                                                                                                                                                           
|23.1*   |  | Consent of Deloitte & Touche LLP.                                                                                                                                                                                                                                                                                                                               
|        |  |                                                                                                                                                                                                                                                                                                                                                                 

52

---



|24.1* |  | Powers of attorney (set forth on the signature page hereof).
|----- |  | ------------------------------------------------------------
|31.1* |  | Rule 13a-14(a) Certifications of the CEO.                   
|31.2* |  | Rule 13a-14(a) Certifications of the CFO.                   
|31.3* |  | Rule 15d-14(a) Certification of the CEO                     
|31.4* |  | Rule 15d-14(a) Certification of the CFO                     
|32.1* |  | Section 1350 Certifications.                                
|32.2* |  | Section 1350 Certifications.                                

---

53

---





INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

|                                                                                                              |  | Page
|------------------------------------------------------------------------------------------------------------- |  | ----
|Report of Independent Registered Public Accounting Firm                                                       |  | F-2 
|Consolidated Balance SheetsUniversal Compression Holdings, Inc.                                              |  | F-3 
|Consolidated Statements of OperationsUniversal Compression Holdings, Inc.                                    |  | F-4 
|Consolidated Statements of Stockholders' Equity and Comprehensive IncomeUniversal Compression Holdings, Inc. |  | F-5 
|Consolidated Statements of Cash FlowsUniversal Compression Holdings, Inc.                                    |  | F-6 
|Consolidated Balance SheetsUniversal Compression, Inc.                                                       |  | F-7 
|Consolidated Statements of OperationsUniversal Compression, Inc.                                             |  | F-8 
|Consolidated Statements of Stockholder's Equity and Comprehensive IncomeUniversal Compression, Inc.          |  | F-9 
|Consolidated Statements of Cash FlowsUniversal Compression, Inc.                                             |  | F-10
|Notes to Consolidated Financial Statements                                                                    |  | F-11
|Report of Independent Registered Public Accounting Firm                                                       |  | E-1 
|Schedule IParent Company Only Financials                                                                     |  | E-2 
|Schedule IIValuation and Qualifying Accounts                                                                 |  | E-6 

F-1

---





REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To
the Board of Directors and Stockholders of
Universal Compression Holdings, Inc.
Houston, TX

We
have audited the accompanying consolidated balance sheets of Universal Compression Holdings, Inc. and subsidiaries ("Holdings") as of December 31, 2005 and
March 31, 2005, and the related consolidated statements of operations, stockholders' equity and comprehensive income, and cash flows for the nine-month period ended
December 31, 2005 and each of the two years in the period ended March 31, 2005. We have also audited the accompanying consolidated balance sheets of Universal Compression, Inc.
and subsidiaries ("Universal") as of December 31, 2005 and March 31, 2005, and the related consolidated statements of operations, stockholder's equity and comprehensive income, and cash
flows for the nine-month period ended December 31, 2005 and each of the two years in the period ended March 31, 2005. These financial statements are the responsibility of
Holdings' and Universal's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We
conducted our audits in accordance with the 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. Our audit of Universal 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 Universal's internal control over financial
reporting. Accordingly, we express no such opinion on Universal's internal control over financial reporting. An audit also includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes 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.

In
our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Holdings and Universal at December 31, 2005 and
March 31, 2005, and the results
of each of their operations and each of their cash flows for the nine-month period ended December 31, 2005 and each of the two years in the period ended March 31, 2005, in
conformity with accounting principles generally accepted in the United States of America.

We
have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Holdings' internal control over financial
reporting as of December 31, 2005, based on criteria established inInternal ControlIntegrated Frameworkissued by the Committee of
Sponsoring Organizations of the Treadway Commission and our report dated March 3, 2006 expressed an unqualified opinion on management's assessment of the effectiveness of Holdings' internal
control over financial reporting and an unqualified opinion on the effectiveness of Holdings' internal control over financial reporting.

/s/
DELOITTE & TOUCHE LLP

Houston,
TX
March 3, 2006

F-2

---





UNIVERSAL COMPRESSION HOLDINGS, INC.        CONSOLIDATED BALANCE SHEETS        (In thousands)

|                                          |                                                                                                                                                                                                     | December 31, 2005                          |           | March 31, 2005 |          
|----------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | --------- | -------------- | ---------
|ASSETS                                    |                                                                                                                                                                                                    
|Current assets:                           |                                                                                                                                                                                                     |                                            |           |                |          
|                                          | Cash and cash equivalents                                                                                                                                                                           |                                            | $         | 39,262         |          
|                                          | Restricted cash                                                                                                                                                                                     |                                            |           | 4,187          |          
|                                          | Accounts receivable, net of allowance for bad debts of $3,616 and $2,747 as of December 31, 2005 and March 31, 2005, respectively                                                                   |                                            |           | 121,642        |          
|                                          | Inventories, net of reserve for obsolescence of $10,896 and $10,981 as of December 31, 2005 and March 31, 2005, respectively                                                                        |                                            |           | 108,273        |          
|                                          | Deferred income taxes                                                                                                                                                                               |                                            |           | 7,447          |          
|                                          | Other                                                                                                                                                                                               |                                            |           | 19,787         |          
|                                          |                                                                                                                                                                                                     |                                            |           |                |          
|                                          |                                                                                                                                                                                                     | Total current assets                       |           |                | 300,598  
|Contract compression equipment            |                                                                                                                                                                                                     |                                            | 1,567,470 |                |          
|Other property                            |                                                                                                                                                                                                     |                                            | 167,946   |                |          
|Accumulated depreciation and amortization |                                                                                                                                                                                                     |                                            | (375,575  | )              |          
|                                          |                                                                                                                                                                                                     |                                            |           |                |          
|                                          |                                                                                                                                                                                                     | Net property, plant and equipment          |           |                | 1,359,841
|Goodwill                                  |                                                                                                                                                                                                     |                                            | 403,261   |                |          
|Derivative financial instruments          |                                                                                                                                                                                                     |                                            | 6,954     |                |          
|Other assets                              |                                                                                                                                                                                                     |                                            | 24,641    |                |          
|                                          |                                                                                                                                                                                                     |                                            |           |                |          
|                                          |                                                                                                                                                                                                     | Total assets                               |           | $              | 2,095,295
|                                          |                                                                                                                                                                                                     |                                            |           |                |          
|LIABILITIES AND STOCKHOLDERS' EQUITY      |                                                                                                                                                                                                    
|Current liabilities:                      |                                                                                                                                                                                                     |                                            |           |                |          
|                                          | Accounts payable, trade                                                                                                                                                                             |                                            | $         | 55,014         |          
|                                          | Accrued liabilities                                                                                                                                                                                 |                                            |           | 43,796         |          
|                                          | Unearned revenue                                                                                                                                                                                    |                                            |           | 36,367         |          
|                                          | Accrued interest                                                                                                                                                                                    |                                            |           | 2,458          |          
|                                          | Current portion of long-term debt and capital lease obligations                                                                                                                                     |                                            |           | 18,249         |          
|                                          |                                                                                                                                                                                                     |                                            |           |                |          
|                                          |                                                                                                                                                                                                     | Total current liabilities                  |           |                | 155,884  
|Capital lease obligations                 |                                                                                                                                                                                                     |                                            | 285       |                |          
|Long-term debt                            |                                                                                                                                                                                                     |                                            | 904,807   |                |          
|Deferred income taxes                     |                                                                                                                                                                                                     |                                            | 186,632   |                |          
|Derivative financial instruments          |                                                                                                                                                                                                     |                                            | 6,006     |                |          
|Other liabilities                         |                                                                                                                                                                                                     |                                            | 10,369    |                |          
|                                          |                                                                                                                                                                                                     |                                            |           |                |          
|                                          |                                                                                                                                                                                                     | Total liabilities                          |           |                | 1,263,983
|Commitments and contingencies (Note 13)   |                                                                                                                                                                                                     |                                            |           |                |          
|Stockholders' equity:                     |                                                                                                                                                                                                     |                                            |           |                |          
|                                          | Common stock, $.01 par value, 200,000 and 200,000 shares authorized, 32,306 and 32,003 shares issued, 29,866 and 32,002 shares outstanding as of December 31, 2005 and March 31, 2005, respectively |                                            |           | 323            |          
|                                          | Treasury stock, 2,440 and 1 shares at cost outstanding as of December 31, 2005 and March 31, 2005, respectively                                                                                     |                                            |           | (100,011       | )        
|                                          | Additional paid-in capital                                                                                                                                                                          |                                            |           | 759,105        |          
|                                          | Deferred compensation                                                                                                                                                                               |                                            |           | (6,065         | )        
|                                          | Accumulated other comprehensive loss                                                                                                                                                                |                                            |           | (12,428        | )        
|                                          | Retained earnings                                                                                                                                                                                   |                                            |           | 190,388        |          
|                                          |                                                                                                                                                                                                     |                                            |           |                |          
|                                          |                                                                                                                                                                                                     | Total stockholders' equity                 |           |                | 831,312  
|                                          |                                                                                                                                                                                                     |                                            |           |                |          
|                                          |                                                                                                                                                                                                     | Total liabilities and stockholders' equity |           | $              | 2,095,295
|                                          |                                                                                                                                                                                                     |                                            |           |                |          

See accompanying notes to consolidated financial statements.

F-3

---



UNIVERSAL COMPRESSION HOLDINGS, INC.        CONSOLIDATED STATEMENTS OF OPERATIONS        (In thousands, except per share amounts)

|                                                                  |                                                      |                          |        | Twelve Months Ended March 31, |        
|----------------------------------------------------------------- | ---------------------------------------------------- | ------------------------ | ------ | ----------------------------- | -------
|
|
|Revenue:                                                          |                                                      |                          |        |                               |        
|                                                                  | Domestic contract compression                        |                          | $      | 248,414                       |        
|                                                                  | International contract compression                   |                          |        | 94,831                        |        
|                                                                  | Fabrication                                          |                          |        | 143,710                       |        
|                                                                  | Aftermarket services                                 |                          |        | 126,692                       |        
|                                                                  |                                                      |                          |        |                               |        
|                                                                  |                                                      | Total revenue            |        |                               | 613,647
|                                                                  |                                                      |                          |        |                               |        
|Costs and expenses:                                               |                                                      |                          |        |                               |        
|                                                                  | Domestic contract compressiondirect costs           |                          |        | 88,158                        |        
|                                                                  | International contract compressiondirect costs      |                          |        | 23,756                        |        
|                                                                  | Fabricationdirect costs                             |                          |        | 129,519                       |        
|                                                                  | Aftermarket servicesdirect costs                    |                          |        | 100,879                       |        
|                                                                  | Depreciation and amortization                        |                          |        | 79,899                        |        
|                                                                  | Selling, general and administrative                  |                          |        | 65,269                        |        
|                                                                  | Interest expense, net                                |                          |        | 40,221                        |        
|                                                                  | Debt extinguishment costs                            |                          |        |                              |        
|                                                                  | Gain on termination of interest rate swap agreements |                          |        |                              |        
|                                                                  | Asset impairment expense                             |                          |        |                              |        
|                                                                  | Facility consolidation costs                         |                          |        |                              |        
|                                                                  | Foreign currency (gain) loss                         |                          |        | (692                          | )      
|                                                                  | Other (income) loss, net                             |                          |        | 216                           |        
|                                                                  |                                                      |                          |        |                               |        
|                                                                  |                                                      | Total costs and expenses |        |                               | 527,225
|                                                                  |                                                      |                          |        |                               |        
|Income before income taxes                                        |                                                      |                          | 86,422 |                               |        
|Income tax expense                                                |                                                      |                          | 31,053 |                               |        
|                                                                  |                                                      |                          |        |                               |        
|                                                                  |                                                      | Net income               |        | $                             | 55,369 
|                                                                  |                                                      |                          |        |                               |        
|Weighted average common and common equivalent shares outstanding: |                                                      |                          |        |                               |        
|                                                                  |                                                      | Basic                    |        |                               | 31,773 
|                                                                  |                                                      | Diluted                  |        |                               | 32,758 
|Earnings per shareBasic                                          |                                                      | $                        | 1.74   |                               | $      
|                                                                  |                                                      |                          |        |                               |        
|Earnings per shareDiluted                                        |                                                      | $                        | 1.69   |                               | $      
|                                                                  |                                                      |                          |        |                               |        

See
accompanying notes to consolidated financial statements.

F-4

---





UNIVERSAL COMPRESSION HOLDINGS, INC.        CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY  AND COMPREHENSIVE INCOME        (In thousands, except for share data)

|                                                    |  | Common
Stock
Shares |   | Common
Stock
Amount |     | Additional
Paid in
Capital |   | Retained
Earnings |   | Treasury
Stock |         | Deferred
Compensation |   | Accumulated
Other
Comprehensive
Income (Loss) |   | Total |       
|--------------------------------------------------- |  | ------------------- | - | ------------------- | --- | -------------------------- | - | ----------------- | - | -------------- | ------- | --------------------- | - | --------------------------------------------- | - | ----- | ------
|Balance, March 31, 2003                             |  | 30,731,378          |   | $                   | 308 |                            | $ | 724,491           |   | $              | 70,622  |                       | $ | (17                                           | ) | $     | (2,009
|Option exercises                                    |  | 350,746             |   |                     | 3   |                            |   | 7,558             |   |                |         |                       |   | 6                                             |   |       |       
|Shares issued in employee benefit plans             |  | 116,729             |   |                     | 1   |                            |   | 2,242             |   |                |         |                       |   |                                               |   |       |       
|Restricted stock transactions                       |  | 94,147              |   |                     | 1   |                            |   | (167              | ) |                |         |                       |   |                                               |   |       | 167   
|Amortization of deferred compensation               |  |                     |   |                     |     |                            |   |                   |   |                |         |                       |   |                                               |   |       | 586   
|Comprehensive income:                               |  |                     |   |                     |     |                            |   |                   |   |                |         |                       |   |                                               |   |       |       
|Interest rate swap agreement loss, net of tax       |  |                     |   |                     |     |                            |   |                   |   |                |         |                       |   |                                               |   |       |       
|Net income                                          |  |                     |   |                     |     |                            |   |                   |   |                | 30,787  |                       |   |                                               |   |       |       
|Foreign currency translation adjustment, net of tax |  |                     |   |                     |     |                            |   |                   |   |                |         |                       |   |                                               |   |       |       
|Total comprehensive income                          |  |                     |   |                     |     |                            |   |                   |   |                |         |                       |   |                                               |   |       |       
|                                                    |  |                     |   |                     |     |                            |   |                   |   |                |         |                       |   |                                               |   |       |       
|Balance, March 31, 2004                             |  | 31,293,000          |   | $                   | 313 |                            | $ | 734,124           |   | $              | 101,409 |                       | $ | (11                                           | ) | $     | (1,256
|                                                    |  |                     |   |                     |     |                            |   |                   |   |                |         |                       |   |                                               |   |       |       
|Option exercises                                    |  | 433,838             |   |                     | 4   |                            |   | 8,420             |   |                |         |                       |   |                                               |   |       |       
|Shares issued in employee benefit plans             |  | 80,591              |   |                     | 1   |                            |   | 2,438             |   |                |         |                       |   |                                               |   |       |       
|Restricted stock transactions                       |  | 194,636             |   |                     | 2   |                            |   | 6,916             |   |                |         |                       |   |                                               |   |       | (7,147
|Amortization of deferred compensation               |  |                     |   |                     |     |                            |   |                   |   |                |         |                       |   |                                               |   |       | 965   
|Comprehensive income:                               |  |                     |   |                     |     |                            |   |                   |   |                |         |                       |   |                                               |   |       |       
|Interest rate swap agreement gain, net of tax       |  |                     |   |                     |     |                            |   |                   |   |                |         |                       |   |                                               |   |       |       
|Net income                                          |  |                     |   |                     |     |                            |   |                   |   |                | 33,610  |                       |   |                                               |   |       |       
|Foreign currency translation adjustment, net of tax |  |                     |   |                     |     |                            |   |                   |   |                |         |                       |   |                                               |   |       |       
|Total comprehensive income                          |  |                     |   |                     |     |                            |   |                   |   |                |         |                       |   |                                               |   |       |       
|                                                    |  |                     |   |                     |     |                            |   |                   |   |                |         |                       |   |                                               |   |       |       
|Balance, March 31, 2005                             |  | 32,002,065          |   | $                   | 320 |                            | $ | 751,898           |   | $              | 135,019 |                       | $ | (11                                           | ) | $     | (7,438
|                                                    |  |                     |   |                     |     |                            |   |                   |   |                |         |                       |   |                                               |   |       |       
|Option exercises                                    |  | 246,315             |   |                     | 2   |                            |   | 5,224             |   |                |         |                       |   |                                               |   |       |       
|Shares issued in employee benefit plans             |  | 58,205              |   |                     | 1   |                            |   | 2,034             |   |                |         |                       |   |                                               |   |       |       
|Restricted stock transactions                       |  | (1,556              | ) |                     |     |                            |   | (51               | ) |                |         |                       |   |                                               |   |       | 51    
|Amortization of deferred compensation               |  |                     |   |                     |     |                            |   |                   |   |                |         |                       |   |                                               |   |       | 1,322 
|Treasury stock purchased                            |  | (2,439,024          | ) |                     |     |                            |   |                   |   |                |         |                       |   | (100,000                                      | ) |       |       
|Comprehensive income:                               |  |                     |   |                     |     |                            |   |                   |   |                |         |                       |   |                                               |   |       |       
|Interest rate swap agreement loss, net of tax       |  |                     |   |                     |     |                            |   |                   |   |                |         |                       |   |                                               |   |       |       
|Net income                                          |  |                     |   |                     |     |                            |   |                   |   |                | 55,369  |                       |   |                                               |   |       |       
|Foreign currency translation adjustment, net of tax |  |                     |   |                     |     |                            |   |                   |   |                |         |                       |   |                                               |   |       |       
|Total comprehensive income                          |  |                     |   |                     |     |                            |   |                   |   |                |         |                       |   |                                               |   |       |       
|                                                    |  |                     |   |                     |     |                            |   |                   |   |                |         |                       |   |                                               |   |       |       
|Balance, December 31, 2005                          |  | 29,866,005          |   | $                   | 323 |                            | $ | 759,105           |   | $              | 190,388 |                       | $ | (100,011                                      | ) | $     | (6,065
|                                                    |  |                     |   |                     |     |                            |   |                   |   |                |         |                       |   |                                               |   |       |       

See accompanying notes to consolidated financial statements.

F-5

---



UNIVERSAL COMPRESSION HOLDINGS, INC.        CONSOLIDATED STATEMENTS OF CASH FLOWS        (In thousands)

|                                                             |                                                            |                                                                                                              |                                           | Twelve Months Ended March 31, |  
|------------------------------------------------------------ | ---------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------ | ----------------------------------------- | ----------------------------- | -
|
|
|Cash flows from operating activities:                        |                                                            |                                                                                                              |                                           |                               |  
|                                                             | Net income                                                 |                                                                                                              | $                                         | 55,369                        |  
|                                                             |                                                            | Adjustments to reconcile net income to cash provided by operating activities, net of effect of acquisitions: |                                           |                               |  
|                                                             | Depreciation and amortization                              |                                                                                                              |                                           | 79,899                        |  
|                                                             | Non-cash gain from interest rate swap agreement settlement |                                                                                                              |                                           |                              |  
|                                                             | Loss on early extinguishment of debt                       |                                                                                                              |                                           |                              |  
|                                                             | Loss on asset impairment                                   |                                                                                                              |                                           |                              |  
|                                                             | Gain on asset sales                                        |                                                                                                              |                                           | (92                           | )
|                                                             | Amortization of debt issuance costs                        |                                                                                                              |                                           | 1,671                         |  
|                                                             | Amortization of deferred compensation                      |                                                                                                              |                                           | 1,322                         |  
|                                                             | Increase in deferred taxes                                 |                                                                                                              |                                           | 24,988                        |  
|                                                             | (Increase) decrease in other assets                        |                                                                                                              |                                           | (5,898                        | )
|                                                             | (Increase) decrease in receivables                         |                                                                                                              |                                           | (4,212                        | )
|                                                             | (Increase) decrease in inventories                         |                                                                                                              |                                           | (12,582                       | )
|                                                             | Increase (decrease) in accounts payable                    |                                                                                                              |                                           | (2,928                        | )
|                                                             | Increase (decrease) in accrued liabilities                 |                                                                                                              |                                           | 6,331                         |  
|                                                             | Increase (decrease) in unearned revenue                    |                                                                                                              |                                           | 4,166                         |  
|                                                             | Increase (decrease) in accrued interest                    |                                                                                                              |                                           | (3,161                        | )
|                                                             |                                                            |                                                                                                              |                                           |                               |  
|                                                             |                                                            |                                                                                                              | Net cash provided by operating activities |                               |  
|                                                             |                                                            |                                                                                                              |                                           |                               |  
|Cash flows from investing activities:                        |                                                            |                                                                                                              |                                           |                               |  
|                                                             | Additions to property, plant and equipment                 |                                                                                                              |                                           | (118,085                      | )
|                                                             | Proceeds from sale of property, plant and equipment        |                                                                                                              |                                           | 11,808                        |  
|                                                             | Cash paid for acquisitions                                 |                                                                                                              |                                           |                              |  
|                                                             | Increase in restricted cash                                |                                                                                                              |                                           | (4,187                        | )
|                                                             |                                                            |                                                                                                              |                                           |                               |  
|                                                             |                                                            |                                                                                                              | Net cash used in investing activities     |                               |  
|                                                             |                                                            |                                                                                                              |                                           |                               |  
|Cash flows from financing activities:                        |                                                            |                                                                                                              |                                           |                               |  
|                                                             | Principal repayments of long-term debt                     |                                                                                                              |                                           | (89,905                       | )
|                                                             | Proceeds from issuance of debt                             |                                                                                                              |                                           | 155,000                       |  
|                                                             | Debt extinguishment premium and cost                       |                                                                                                              |                                           |                              |  
|                                                             | Common stock issuance                                      |                                                                                                              |                                           | 5,995                         |  
|                                                             | Interest rate swap agreement settlement                    |                                                                                                              |                                           |                              |  
|                                                             | Debt issuance costs                                        |                                                                                                              |                                           | (5,399                        | )
|                                                             | Purchase of treasury stock                                 |                                                                                                              |                                           | (100,000                      | )
|                                                             | Payments on capital lease agreements                       |                                                                                                              |                                           | (425                          | )
|                                                             |                                                            |                                                                                                              |                                           |                               |  
|                                                             |                                                            |                                                                                                              | Net cash used in financing activities     |                               |  
|                                                             |                                                            |                                                                                                              |                                           |                               |  
|Effect of exchange rate changes on cash and cash equivalents |                                                            |                                                                                                              | 864                                       |                               |  
|Net increase (decrease) in cash and cash equivalents         |                                                            |                                                                                                              | 539                                       |                               |  
|Cash and cash equivalents at beginning of period             |                                                            |                                                                                                              | 38,723                                    |                               |  
|                                                             |                                                            |                                                                                                              |                                           |                               |  
|Cash and cash equivalents at end of period                   |                                                            | $                                                                                                            | 39,262                                    |                               | $
|                                                             |                                                            |                                                                                                              |                                           |                               |  
|Supplemental disclosure of cash flow information:            |                                                            |                                                                                                              |                                           |                               |  
|                                                             | Cash paid for interest                                     |                                                                                                              | $                                         | 41,697                        |  
|                                                             |                                                            |                                                                                                              |                                           |                               |  
|                                                             | Cash paid for income taxes                                 |                                                                                                              | $                                         | 6,425                         |  
|                                                             |                                                            |                                                                                                              |                                           |                               |  

See accompanying notes to consolidated financial statements.

F-6

---





UNIVERSAL COMPRESSION, INC.    CONSOLIDATED BALANCE SHEETS    (In thousands)

|                                          |                                                                                                                                   | December 31, 2005                          |           | March 31, 2005 |          
|----------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | --------- | -------------- | ---------
|ASSETS                                    |                                                                                                                                   |                                            |           |                |          
|Current assets:                           |                                                                                                                                   |                                            |           |                |          
|                                          | Cash and cash equivalents                                                                                                         |                                            | $         | 39,262         |          
|                                          | Restricted cash                                                                                                                   |                                            |           | 4,187          |          
|                                          | Accounts receivable, net of allowance for bad debts of $3,616 and $2,747 as of December 31, 2005 and March 31, 2005, respectively |                                            |           | 121,642        |          
|                                          | Inventories, net of reserve for obsolescence of $10,896 and $10,981 as of December 31, 2005 and March 31, 2005, respectively      |                                            |           | 108,273        |          
|                                          | Deferred income taxes                                                                                                             |                                            |           | 7,447          |          
|                                          | Other                                                                                                                             |                                            |           | 19,787         |          
|                                          |                                                                                                                                   |                                            |           |                |          
|                                          |                                                                                                                                   | Total current assets                       |           |                | 300,598  
|Contract compression equipment            |                                                                                                                                   |                                            | 1,567,470 |                |          
|Other property                            |                                                                                                                                   |                                            | 167,946   |                |          
|Accumulated depreciation and amortization |                                                                                                                                   |                                            | (375,575  | )              |          
|                                          |                                                                                                                                   |                                            |           |                |          
|                                          |                                                                                                                                   | Net property, plant and equipment          |           |                | 1,359,841
|Goodwill                                  |                                                                                                                                   |                                            | 403,261   |                |          
|Note receivableaffiliate                 |                                                                                                                                   |                                            | 100,277   |                |          
|Derivative financial instruments          |                                                                                                                                   |                                            | 6,954     |                |          
|Other assets                              |                                                                                                                                   |                                            | 24,641    |                |          
|                                          |                                                                                                                                   |                                            |           |                |          
|                                          |                                                                                                                                   | Total assets                               |           | $              | 2,195,572
|                                          |                                                                                                                                   |                                            |           |                |          
|LIABILITIES AND STOCKHOLDER'S EQUITY      |                                                                                                                                   |                                            |           |                |          
|Current liabilities:                      |                                                                                                                                   |                                            |           |                |          
|                                          | Accounts payable, trade                                                                                                           |                                            | $         | 55,014         |          
|                                          | Accrued liabilities                                                                                                               |                                            |           | 43,796         |          
|                                          | Unearned revenue                                                                                                                  |                                            |           | 36,367         |          
|                                          | Accrued interest                                                                                                                  |                                            |           | 2,458          |          
|                                          | Current portion of long-term debt and capital lease obligations                                                                   |                                            |           | 18,249         |          
|                                          |                                                                                                                                   |                                            |           |                |          
|                                          |                                                                                                                                   | Total current liabilities                  |           |                | 155,884  
|Capital lease obligations                 |                                                                                                                                   |                                            | 285       |                |          
|Long-term debt                            |                                                                                                                                   |                                            | 904,807   |                |          
|Deferred income taxes                     |                                                                                                                                   |                                            | 186,729   |                |          
|Derivative financial instruments          |                                                                                                                                   |                                            | 6,006     |                |          
|Other liabilities                         |                                                                                                                                   |                                            | 10,369    |                |          
|                                          |                                                                                                                                   |                                            |           |                |          
|                                          |                                                                                                                                   | Total liabilities                          |           |                | 1,264,080
|Commitments and contingencies (Note 13)   |                                                                                                                                   |                                            |           |                |          
|Stockholder's equity:                     |                                                                                                                                   |                                            |           |                |          
|                                          | Common stock, $10 par value, 5.0 shares authorized, 4.9 issued and outstanding as of December 31, 2005 and March 31, 2005         |                                            |           | 49             |          
|                                          | Additional paid-in capital                                                                                                        |                                            |           | 745,876        |          
|                                          | Accumulated other comprehensive loss                                                                                              |                                            |           | (12,428        | )        
|                                          | Retained earnings                                                                                                                 |                                            |           | 197,995        |          
|                                          |                                                                                                                                   |                                            |           |                |          
|                                          |                                                                                                                                   | Total stockholder's equity                 |           |                | 931,492  
|                                          |                                                                                                                                   |                                            |           |                |          
|                                          |                                                                                                                                   | Total liabilities and stockholder's equity |           | $              | 2,195,572
|                                          |                                                                                                                                   |                                            |           |                |          

See
accompanying notes to consolidated financial statements.

F-7

---



UNIVERSAL COMPRESSION, INC.        CONSOLIDATED STATEMENTS OF OPERATIONS        (In thousands)

|                           |                                                      |                          |        | Twelve Months Ended March 31, |        
|-------------------------- | ---------------------------------------------------- | ------------------------ | ------ | ----------------------------- | -------
|
|
|Revenue:                   |                                                      |                          |        |                               |        
|                           | Domestic contract compression                        |                          | $      | 248,414                       |        
|                           | International contract compression                   |                          |        | 94,831                        |        
|                           | Fabrication                                          |                          |        | 143,710                       |        
|                           | Aftermarket services                                 |                          |        | 126,692                       |        
|                           |                                                      |                          |        |                               |        
|                           |                                                      | Total revenue            |        |                               | 613,647
|                           |                                                      |                          |        |                               |        
|Costs and expenses:        |                                                      |                          |        |                               |        
|                           | Domestic contract compressiondirect costs           |                          |        | 88,158                        |        
|                           | International contract compressiondirect costs      |                          |        | 23,756                        |        
|                           | Fabricationdirect costs                             |                          |        | 129,519                       |        
|                           | Aftermarket servicesdirect costs                    |                          |        | 100,879                       |        
|                           | Depreciation and amortization                        |                          |        | 79,899                        |        
|                           | Selling, general and administrative                  |                          |        | 65,269                        |        
|                           | Interest expense, net                                |                          |        | 40,221                        |        
|                           | Interest income from affiliate                       |                          |        | (277                          | )      
|                           | Debt extinguishment costs                            |                          |        |                              |        
|                           | Gain on termination of interest rate swap agreements |                          |        |                              |        
|                           | Asset impairment expense                             |                          |        |                              |        
|                           | Facility consolidation costs                         |                          |        |                              |        
|                           | Foreign currency (gain) loss                         |                          |        | (692                          | )      
|                           | Other (income) loss, net                             |                          |        | 216                           |        
|                           |                                                      |                          |        |                               |        
|                           |                                                      | Total costs and expenses |        |                               | 526,948
|                           |                                                      |                          |        |                               |        
|Income before income taxes |                                                      |                          | 86,699 |                               |        
|Income tax expense         |                                                      |                          | 31,150 |                               |        
|                           |                                                      |                          |        |                               |        
|                           |                                                      | Net income               |        | $                             | 55,549 
|                           |                                                      |                          |        |                               |        

See
accompanying notes to consolidated financial statements.

F-8

---





UNIVERSAL COMPRESSION, INC.        CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY        AND COMPREHENSIVE INCOME        (In thousands)

|                           |                                                     | Common
Stock |    | Additional
Paid in
Capital |   | Retained
Earnings |        | Accumulated
Other
Comprehensive
Income (loss) |         | Total 
|-------------------------- | --------------------------------------------------- | ------------ | -- | -------------------------- | - | ----------------- | ------ | --------------------------------------------- | ------- | ------
|Balance, March 31, 2003    |                                                     | $            | 49 |                            | $ | 710,349           |        | $                                             | 78,049  |       
|                           |                                                     |              |    |                            |   |                   |        |                                               |         |       
|                           | Capital contribution from stockholder               |              |    |                           |   |                   | 15,345 |                                               |         |      
|                           | Comprehensive income:                               |              |    |                            |   |                   |        |                                               |         |       
|                           | Net income                                          |              |    |                           |   |                   |       |                                               |         | 30,787
|                           | Foreign currency translation adjustment, net of tax |              |    |                           |   |                   |       |                                               |         |      
|                           | Interest rate swap agreement loss, net of tax       |              |    |                           |   |                   |       |                                               |         |      
|                           | Total comprehensive income                          |              |    |                            |   |                   |        |                                               |         |       
|                           |                                                     |              |    |                            |   |                   |        |                                               |         |       
|Balance, March 31, 2004    |                                                     | $            | 49 |                            | $ | 725,694           |        | $                                             | 108,836 |       
|                           |                                                     |              |    |                            |   |                   |        |                                               |         |       
|                           | Capital contribution from stockholder               |              |    |                           |   |                   | 11,599 |                                               |         |      
|                           | Comprehensive income:                               |              |    |                            |   |                   |        |                                               |         |       
|                           | Net income                                          |              |    |                           |   |                   |       |                                               |         | 33,610
|                           | Foreign currency translation adjustment, net of tax |              |    |                           |   |                   |       |                                               |         |      
|                           | Interest rate swap agreement gain, net of tax       |              |    |                           |   |                   |       |                                               |         |      
|                           | Total comprehensive income                          |              |    |                            |   |                   |        |                                               |         |       
|                           |                                                     |              |    |                            |   |                   |        |                                               |         |       
|Balance, March 31, 2005    |                                                     | $            | 49 |                            | $ | 737,293           |        | $                                             | 142,446 |       
|                           |                                                     |              |    |                            |   |                   |        |                                               |         |       
|                           | Capital contribution from stockholder               |              |    |                           |   |                   | 8,583  |                                               |         |      
|                           | Comprehensive income:                               |              |    |                            |   |                   |        |                                               |         |       
|                           | Net income                                          |              |    |                           |   |                   |       |                                               |         | 55,549
|                           | Foreign currency translation adjustment, net of tax |              |    |                           |   |                   |       |                                               |         |      
|                           | Interest rate swap agreement loss, net of tax       |              |    |                           |   |                   |       |                                               |         |      
|                           | Total comprehensive income                          |              |    |                            |   |                   |        |                                               |         |       
|                           |                                                     |              |    |                            |   |                   |        |                                               |         |       
|Balance, December 31, 2005 |                                                     | $            | 49 |                            | $ | 745,876           |        | $                                             | 197,995 |       
|                           |                                                     |              |    |                            |   |                   |        |                                               |         |       

See
accompanying notes to consolidated financial statements.

F-9

---



UNIVERSAL COMPRESSION, INC.    CONSOLIDATED STATEMENTS OF CASH FLOWS    (In thousands)

|                                                             |                                                            |                                                                                                              |        | Twelve Months Ended March 31, |         
|------------------------------------------------------------ | ---------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------ | ------ | ----------------------------- | --------
|
|
|Cash flows from operating activities:                        |                                                            |                                                                                                              |        |                               |         
|                                                             | Net income                                                 |                                                                                                              | $      | 55,549                        |         
|                                                             |                                                            | Adjustments to reconcile net income to cash provided by operating activities, net of effect of acquisitions: |        |                               |         
|                                                             | Depreciation and amortization                              |                                                                                                              |        | 79,899                        |         
|                                                             | Non-cash gain from interest rate swap agreement settlement |                                                                                                              |        |                              |         
|                                                             | Loss on early extinguishment of debt                       |                                                                                                              |        |                              |         
|                                                             | Loss on asset impairment                                   |                                                                                                              |        |                              |         
|                                                             | Gain on asset sales                                        |                                                                                                              |        | (92                           | )       
|                                                             | Amortization of debt issuance costs                        |                                                                                                              |        | 1,671                         |         
|                                                             | Amortization of deferred compensation                      |                                                                                                              |        | 1,322                         |         
|                                                             | Increase in deferred taxes                                 |                                                                                                              |        | 25,085                        |         
|                                                             | (Increase) decrease in other assets                        |                                                                                                              |        | (5,898                        | )       
|                                                             | (Increase) decrease in receivables                         |                                                                                                              |        | (4,212                        | )       
|                                                             | (Increase) decrease in inventories                         |                                                                                                              |        | (12,582                       | )       
|                                                             | Increase (decrease) in accounts payable                    |                                                                                                              |        | (2,928                        | )       
|                                                             | Increase (decrease) in accrued liabilities                 |                                                                                                              |        | 6,331                         |         
|                                                             | Increase (decrease) in unearned revenue                    |                                                                                                              |        | 4,166                         |         
|                                                             | Increase (decrease) in accrued interest                    |                                                                                                              |        | (3,438                        | )       
|                                                             |                                                            |                                                                                                              |        |                               |         
|                                                             |                                                            | Net cash provided by operating activities                                                                    |        |                               | 144,873 
|                                                             |                                                            |                                                                                                              |        |                               |         
|Cash flows from investing activities:                        |                                                            |                                                                                                              |        |                               |         
|                                                             | Additions to property, plant and equipment                 |                                                                                                              |        | (118,085                      | )       
|                                                             | Proceeds from sale of property, plant and equipment        |                                                                                                              |        | 11,808                        |         
|                                                             | Cash paid for acquisitions                                 |                                                                                                              |        |                              |         
|                                                             | Loan to affiliate                                          |                                                                                                              |        | (100,000                      | )       
|                                                             | Increase in restricted cash                                |                                                                                                              |        | (4,187                        | )       
|                                                             |                                                            |                                                                                                              |        |                               |         
|                                                             |                                                            | Net cash used in investing activities                                                                        |        |                               | (210,464
|                                                             |                                                            |                                                                                                              |        |                               |         
|Cash flows from financing activities:                        |                                                            |                                                                                                              |        |                               |         
|                                                             | Principal repayments of long-term debt                     |                                                                                                              |        | (89,905                       | )       
|                                                             | Proceeds from issuance of debt                             |                                                                                                              |        | 155,000                       |         
|                                                             | Debt extinguishment premium and cost                       |                                                                                                              |        |                              |         
|                                                             | Capital contribution from stockholder                      |                                                                                                              |        | 5,995                         |         
|                                                             | Interest rate swap agreement settlement                    |                                                                                                              |        |                              |         
|                                                             | Debt issuance costs                                        |                                                                                                              |        | (5,399                        | )       
|                                                             | Payments on capital lease agreements                       |                                                                                                              |        | (425                          | )       
|                                                             |                                                            |                                                                                                              |        |                               |         
|                                                             |                                                            | Net cash used in financing activities                                                                        |        |                               | 65,266  
|                                                             |                                                            |                                                                                                              |        |                               |         
|Effect of exchange rate changes on cash and cash equivalents |                                                            |                                                                                                              | 864    |                               |         
|                                                             |                                                            |                                                                                                              |        |                               |         
|Net increase (decrease) in cash and cash equivalents         |                                                            |                                                                                                              | 539    |                               |         
|Cash and cash equivalents at beginning of period             |                                                            |                                                                                                              | 38,723 |                               |         
|                                                             |                                                            |                                                                                                              |        |                               |         
|Cash and cash equivalents at end of period                   |                                                            | $                                                                                                            | 39,262 |                               | $       
|                                                             |                                                            |                                                                                                              |        |                               |         
|Supplemental disclosure of cash flow information:            |                                                            |                                                                                                              |        |                               |         
|                                                             | Cash paid for interest                                     |                                                                                                              | $      | 41,697                        |         
|                                                             |                                                            |                                                                                                              |        |                               |         
|                                                             | Cash paid for income taxes                                 |                                                                                                              | $      | 6,425                         |         
|                                                             |                                                            |                                                                                                              |        |                               |         

See
accompanying notes to consolidated financial statements.

F-10

---





UNIVERSAL COMPRESSION HOLDINGS, INC.  UNIVERSAL COMPRESSION, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.     Basis of Presentation and Summary of Significant Accounting Policies

Organization

These notes apply to the consolidated financial statements of both Universal Compression Holdings, Inc. ("Holdings") and Universal Compression, Inc.
("Universal") and their subsidiaries. The term "Company" will be used if a statement is applicable to both Holdings and Universal. Holdings is a holding company, which conducts its operations through
its wholly-owned subsidiary, Universal.

Nature of Operations

The Company is the second largest natural gas compression services company in the world in terms of compressor fleet horsepower, with a fleet as of
December 31, 2005 of approximately 7,100 compressor units comprising approximately 2.5 million horsepower. The Company provides a full range of natural gas compression services and
products including sales, operations, maintenance and fabrication to the natural gas industry, both domestically and internationally. These services and products are essential to the natural gas
industry, as gas must be compressed to be delivered from the wellhead to end-users.

Principles of Consolidation

The accompanying consolidated financial statements include the Company and its subsidiaries. All significant intercompany accounts and transactions have been
eliminated in consolidation.

Results of Operations for Universal

Universal's results of operations were identical to Holdings for the twelve months ended March 31, 2005 and 2004. For the nine months ended
December 31, 2005, the only differences were Holdings' income before taxes and income tax expense were $0.3 million and $0.1 million, respectively, lower than the corresponding
amounts for Universal. The impact of these differences for purposes of disclosures is immaterial and therefore separate disclosures for Universal that would be impacted by these differences has not
been presented in these notes.

Fiscal Year

In December 2005, the Company's board of directors approved a change to its fiscal year end from March 31 to December 31, effective in 2005.
As a result of this change, the Company is reporting a nine-month transition period ended December 31, 2005.

Consolidated
comparative financial data for the nine months ended December 31, 2005 and 2004 are summarized below (shares outstanding and earnings per share information is for
Holdings only) (in

F-11

---



thousands,
except per share amounts). All data for the nine months ended December 31, 2004 are derived from the Company's unaudited consolidated financial statements.

Nine Months Ended December 31,2005

2004(Unaudited)Revenue:Domestic contract compression

$
248,414

$
219,321International contract compression


94,831


73,428Fabrication


143,710


165,957Aftermarket services


126,692


110,728Total revenue


613,647


569,434Costs and expenses:Domestic contract compressiondirect costs


88,158


80,134International contract compressiondirect costs


23,756


16,752Fabricationdirect costs


129,519


153,713Aftermarket servicesdirect costs


100,879


87,733Depreciation and amortization


79,899


69,407Selling, general and administrative


65,269


55,684Interest expense, net


40,221


49,792Debt extinguishment costs





475Gain on termination of interest rate swap agreements





(3,197
)Foreign currency (gain) loss


(692
)

286Other (income) loss, net


216


(228
)Total costs and expenses


527,225


510,551Income before income taxes


86,422


58,883Income tax expense


31,053


20,783Net income

$
55,369

$
38,100Weighted average common and common equivalent shares outstanding:Basic


31,773


31,330Diluted


32,758


31,998Earnings per shareBasic

$
1.74

$
1.22Earnings per shareDiluted

$
1.69

$
1.19


Use of Estimates

In preparing the Company's financial statements, management makes estimates and assumptions that affect the amounts reported in the financial statements and
related disclosures. Actual results may differ from these estimates.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash flows are computed
using the indirect method.

F-12

---



Revenue Recognition

Revenue is recognized by the Company's four reportable business segments using the following criteria: (a) persuasive evidence of an exchange arrangement
exists; (b) delivery has occurred or services have been rendered; (c) the buyer's price is fixed or determinable and (d) collectibility is reasonably assured.

Revenue
from contract compression service is recorded when earned, which generally occurs monthly at the time the monthly compression service is provided to customers in accordance with
contracts. Aftermarket services revenue is recorded as products are delivered or services are performed for the customer. Fabrication revenue is recognized using the completed-contract method which
recognizes revenue upon completion of the contract. This method is used because the typical contract is completed within two to three months.

Concentration of Credit Risk

Trade accounts receivable are due from companies of varying size engaged principally in oil and gas activities in the United States and in international locations
including Canada, Latin America and the Asia Pacific region. The Company reviews the financial condition of customers prior to extending credit and periodically updates customer credit information.
Payment terms are on a short-term basis and in accordance with industry standards. No single customer accounted for 10% or more of the Company's revenue for the nine months ended
December 31, 2005 and the twelve months ended March 31, 2005 and 2004. For the nine months ended December 31, 2005 and the twelve months ended March 31, 2005 and 2004, the
Company wrote off bad debts, net of recoveries totaling $0.6 million, $1.8 million, and $5.6 million, respectively.

Inventories

Inventories are recorded at the lower of average cost or market (net realizable value). Some items of compression equipment are acquired and placed in inventories
for subsequent sale.

A
reserve is recorded against inventory balances for estimated obsolescence. This reserve is based on specific identification and historical experience.

Properties and Equipment

Property, plant and equipment are carried at cost. Depreciation for financial reporting purposes is computed on the straight-line basis using
estimated useful lives. For compression equipment, depreciation begins with the first compression service. The estimated useful lives as of December 31, 2005 were as follows:

Buildings

20-35 yearsCompression equipment

15-30 yearsOther properties and equipment

2-25 years


Maintenance
and repairs are charged to expense as incurred. Overhauls and major improvements that increase the value or extend the life of contract compressor units are capitalized and
depreciated over the estimated useful life of up to 6.5 years.

Depreciation
expense for the nine months ended December 31, 2005 and the twelve months March 31, 2005 and 2004 was $79.0 million, $92.7 million and
$84.5 million, respectively.

Properties
and equipment are 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.

F-13

---



Included
within net income for the twelve months ended March 31, 2005 is a $3.1 million loss on the impairment of the Company's Tulsa, Oklahoma fabrication facility due to the decision
to permanently discontinue operations and dispose of this facility. The carrying value of this facility was written down to estimated market value, which was determined by the Company based upon
recent appraisals.

Goodwill

Goodwill and intangible assets acquired in connection with business combinations represent the excess of consideration over the fair value of tangible net assets
acquired. Certain assumptions and estimates are employed in determining the fair value of assets acquired and liabilities assumed, as well as in determining the allocation of goodwill to the
appropriate reporting unit.

The
Company performs an impairment test for goodwill assets annually or earlier if indicators of potential impairment exist. The Company's goodwill impairment test involves a comparison
of the fair value of each of our reporting units with their carrying value. The fair value is determined using discounted cash flows and other market-related valuation models. Certain estimates and
judgments are required in the application of the fair value models. In February 2005, the Company performed an impairment analysis in accordance with Statement of Financial Accounting Standards
("SFAS") No. 142, "Goodwill and Other Intangible Assets," and determined that no impairment had occurred. During the nine months ended December 31, 2005, no event occurred or
circumstances changed that would more likely than not reduce the fair value of a reporting unit below its carrying value. As a result, an interim test for goodwill impairment between our annual test
dates was not performed. If for any reason the fair value of our goodwill or that of any of our reporting units declines below the carrying value in the future, the Company may incur charges for the
impairment.

Note ReceivableAffiliate (Universal only)

In December 2005, Universal entered into a revolving loan agreement with Holdings. The balance of loans to Holdings, including accrued interest, at
December 31, 2005 was $100.3 million. The revolving loan agreement and all accrued interest are due on December 14, 2007. The revolving loan agreement bears interest at LIBOR plus
1.25%. Holdings may borrow up to a total of $115 million during the term of the agreement. Holdings can prepay amounts outstanding under the revolving loan agreement at anytime without penalty.

Other Assets

Included in other assets are debt issuance costs, net of accumulated amortization, totaling approximately $14.5 million and $12.4 million at
December 31, 2005 and March 31, 2005, respectively. Such costs are amortized over the period of the respective debt agreements on a straight-line method which approximates
the effective interest method.

Warranty

The Company accrues amounts for estimated warranty claims based upon current and historical product warranty costs and any other related information known.

Stock-Based Compensation

In electing to follow Accounting Principles Board ("APB") No. 25, "Accounting for Stock Issued to Employees," for expense recognition purposes, the Company
is obligated to provide the expanded disclosures required under SFAS No. 123, "Accounting for Stock Based Compensation," and SFAS No. 148, "Accounting for Stock-Based
Compensation-Transition and Disclosure-an amendment of SFAS No. 123," for stock-based compensation granted in 1998 and thereafter. In addition, if materially different from reported
results, the Company is obligated to disclose pro forma net income and

F-14

---



earnings
per share had compensation expense relating to the nine months ended December 31, 2005 and the twelve months ended March 31, 2005 and 2004 been measured under the fair value
recognition provisions of SFAS No. 123 (see Note 8).

Income Taxes

The Company accounts for income taxes using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected
future tax consequences of events that
have been recognized in the Company's financial statements or tax returns. In estimating future tax consequences, all expected future events are considered other than enactments of changes in the tax
laws or rates.

The
Company provides compression services to a global market. As such, the Company is subject to taxation not only in the United States but also in numerous foreign jurisdictions. Having
to consider these different jurisdictions complicates the estimate of future taxable income, which in turn determines the realizability of its deferred tax assets. Numerous judgments and assumptions
are inherent in the determination of future taxable income, including assumptions on future operating conditions and asset utilization. The judgments and assumptions used to determine future taxable
income are consistent with those used for other financial statement purposes.

Additionally,
we must consider any prudent and feasible tax planning strategies that would minimize the amount of deferred tax liabilities recognized or the amount of any valuation
allowance recognized against deferred tax assets. The principal tax planning strategy available to the Company relates to the permanent reinvestment of the earnings of foreign subsidiaries. The
assumptions related to the permanent reinvestment of the foreign earnings are analyzed and reviewed annually for changes in our international and domestic business outlook.

Foreign Currency Translation

The majority of the Company's foreign subsidiaries have designated the local currency as their functional currency and, as such, gains and losses resulting from
financial statement translation of foreign operations are included as a separate component of accumulated other comprehensive income (loss) within stockholders' equity. Gains and losses from balances
that are receivable or payable in currency other than functional currency are included in the consolidated statements of operations during the period incurred.

Fair Value of Financial Instruments

The Company's financial instruments consist of trade receivables and payables (which have carrying values that approximate fair value) and long-term
debt. The fair value of the Company's revolving credit facility (see Note 5) is representative of its carrying value based upon variable rate terms. The fair value of the 71/4%
senior notes approximated their carrying values of $171.1 million and $170.9 million at December 31, 2005 and March 31, 2005, respectively. The carrying amounts of
$200.0 million for the notes under the asset-backed securitization facility ("ABS facility") and $471.8 million under the seven-year term loan approximate their fair values.
The estimated fair value amounts have been determined by the Company using appropriate valuation methodologies and information available to management as of December 31, 2005.

Hedging and Use of Derivative Instruments

The Company utilizes interest rate swap agreements to hedge the exposure to variable cash flows on its floating rate debt (cash flow hedge) and hedge the exposure
to changes in the fair value of its fixed rate debt (fair value hedge). The swaps are not used for trading or speculative purposes. In accordance with SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," as

F-15

---



amended,
we record these interest rate swap agreements on the balance sheet as either derivative assets or derivative liabilities measured at their fair value. Fair value was estimated using a
discounted cash flow approach. These instruments qualify for hedge accounting as they either reduce the interest rate risk of the underlying hedged item and are designated as a cash flow hedge at
inception or they reduce the risk related to changes in the fair value of the hedged item and are designated as a fair value hedge at inception. These swaps result in financial impacts that are
inversely correlated to those of the items being hedged. Changes in the fair value of the swaps designated as cash flow hedges are deferred in accumulated other comprehensive loss, net of tax, to the
extent the contracts are effective as hedges until settlement of the underlying hedged transaction. Changes in the fair value of the swaps designated as fair value hedges are recorded to interest
expense in the period of change together with the offsetting gain or loss on the fair value of the underlying debt. To qualify for hedge accounting treatment, companies must formally document,
designate and assess the effectiveness of the transactions. If the necessary correlation ceases to exist or if physical delivery of the hedged item becomes improbable, we would discontinue hedge
accounting and apply mark-to-market accounting. Amounts paid or received from interest rate swap agreements are charged or credited to interest expense and matched with the
cash flows and interest expense of the debt being hedged, resulting in an adjustment to the effective interest rate.

Environmental Liabilities

The costs to remediate and monitor environmental matters are accrued when such liabilities are considered probable and a reasonable estimate of such costs is
determinable.

Net Income Per Share

Net income per share, basic and diluted, is calculated in accordance with SFAS No. 128, "Earnings per share." The only potentially dilutive securities
issued by Holdings are stock options and unvested restricted stock grants, neither of which would impact the calculation of net income for dilutive earnings per share purposes.

The
dilutive effects of stock options and unvested restricted stock grants outstanding for the nine months ended December 31, 2005 and the twelve months ended March 31,
2005 and 2004 were 985,000, 832,000 and 435,000 shares, respectively. For the nine months ended December 31, 2005 and the twelve months ended March 31, 2005 and 2004 outstanding stock
options of 194,000, 239,000 and 782,000, respectively, were excluded from the computation of diluted earnings per share as the options' exercise prices were greater than the average market price of
the common stock for such periods.

New Accounting Pronouncements

In November 2004, the Financial Accounting Standards Board ("FASB") issued SFAS No. 151, "Inventory Costsan amendment of
ARB 43, Chapter 4." SFAS No. 151 provides clarification that abnormal amounts of idle facility expense, freight, handling costs and wasted material be recognized as current period
charges. In addition, SFAS No. 151 requires the allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. SFAS
No. 151 is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The implementation of SFAS No. 151 is not expected to have a material impact
on the Company's financial statements.

In
December 2004, the FASB issued SFAS No. 123R, "Share-Based Payment." This statement is a revision to SFAS No. 123 and supercedes APB Opinion No. 25. This
statement requires that the compensation cost relating to share-based payment transactions be recognized in the financial statements. That cost will be measured based on the fair value of the equity
or liability instruments issued. This statement will be effective for the Company beginning in calendar year 2006. See Note 8

F-16

---



for
the pro forma impact that the adoption of SFAS No. 123R would have on the Company's results of operations.

In
December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary Assetsan amendment of APB Opinion No. 29," to address the measurement of
exchanges of nonmonetary assets. SFAS No. 153 eliminates the exception from fair value measurement for nonmonetary exchanges of similar productive assets and replaces it with a general
exception for exchanges of nonmonetary assets that do not have commercial substance. This statement was adopted by the Company beginning July 1, 2005. The adoption of this statement did not
have a material impact on the Company's financial statements.

In
December 2004, the FASB issued FASB Staff Position ("FSP") No. 109-1, "Application of FASB Statement No. 109, Accounting for Income Taxes, concerning
the Tax Deduction on Qualified
Production Activities provided for by the American Jobs Creation Act of 2004." The American Jobs Creation Act provides for a tax deduction from income of qualified domestic production activities. FSP
No. 109-1 provides for the treatment of the deduction as a "special deduction" as described in SFAS No. 109. Based upon the Company's analysis of
FSP No. 109-1, the Company does not expect to benefit from this special deduction for several more years and as such, this deduction will have no effect on existing deferred
tax assets or liabilities.

In
December 2004, the FASB issued FSP No. 109-2, "Accounting and Disclosure Guidance for the Foreign Repatriation Provision within the American Jobs
Creation Act of 2004," which provides guidance under SFAS No. 109 with respect to recording the potential impact of the repatriation provisions of the Act on a company's income tax expense and
deferred tax liability. FSP No. 109-2 states that a company is allowed time beyond the financial reporting period of enactment to evaluate the effect of the Act on its plan for
reinvestment or repatriation of foreign earnings for purposes of applying SFAS No. 109. The Company has no current plans to repatriate foreign earnings under the provisions in the Act. Any such
repatriation under the Act must have occurred by December 31, 2005. Accordingly, the Company's financial statements were not impacted by FSP No. 109-2.

In
March 2005, the FASB issued FASB Interpretation ("FIN") No. 47, "Accounting for Conditional Asset Retirement Obligations, an interpretation of FASB Statement
No. 143." This statement clarifies that an entity is required to recognize a liability for the fair value of a conditional asset retirement obligation when incurred, if the liability's fair
value can be reasonably estimated. The provisions of FIN 47 were effective December 31, 2005. The adoption of this interpretation did not have a material impact on the Company's
financial statements.

In
May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Correctionsa replacement of APB Opinion No. 20 and FASB Statement
No. 3." SFAS No. 154 requires retrospective application to prior periods' financial statements for changes in accounting principle, unless it is impracticable to determine either the
period-specific effects or the cumulative effect of the change. SFAS No. 154 also requires that a change in depreciation, amortization, or depletion method for long-lived,
non-financial assets be accounted for as a change in accounting estimate affected by a change in accounting principle. SFAS No. 154 is effective for accounting changes and
corrections of errors made in fiscal years beginning after December 15, 2005. The implementation of SFAS No. 154 is not expected to have a material impact on the Company's financial
statements.

2.     Goodwill and Intangible Assets

The Company's acquisitions were accounted for as purchases and, accordingly, the results of operations of the acquired businesses are included in the accompanying
financial statements from the dates of acquisition. Goodwill has been recognized for the amount of the excess of the purchase price over the fair value of the net assets acquired and is accounted for
in accordance with SFAS No. 142.

F-17

---



The
changes in the carrying amount of goodwill from March 31, 2004 to December 31, 2005, are as follows (in thousands):

|                                       |  | Domestic
Contract
Compression |         | International
Contract
Compression |   | Aftermarket
Services |   | Fabrication |        | Total
|-------------------------------------- |  | ----------------------------- | ------- | ---------------------------------- | - | -------------------- | - | ----------- | ------ | -----
|Balance as of March 31, 2004           |  | $                             | 261,752 |                                    | $ | 52,896               |   | $           | 46,681 |      
|                                       |  |                               |         |                                    |   |                      |   |             |        |      
|Acquisitions                           |  |                               |        |                                    |   | 7,550                |   |             | 1,603  |      
|Purchase price adjustments and other   |  |                               |        |                                    |   | (22                  | ) |             | 511    |      
|Impact of foreign currency translation |  |                               |        |                                    |   | 1,265                |   |             |       |      
|                                       |  |                               |         |                                    |   |                      |   |             |        |      
|Balance as of March 31, 2005           |  | $                             | 261,752 |                                    | $ | 61,689               |   | $           | 48,795 |      
|                                       |  |                               |         |                                    |   |                      |   |             |        |      
|Acquisitions                           |  |                               |        |                                    |   |                     |   |             |       |      
|Purchase price adjustments and other   |  |                               |        |                                    |   | 97                   |   |             | 892    |      
|Impact of foreign currency translation |  |                               |        |                                    |   | 994                  |   |             |       |      
|                                       |  |                               |         |                                    |   |                      |   |             |        |      
|Balance as of December 31, 2005        |  | $                             | 261,752 |                                    | $ | 62,780               |   | $           | 49,687 |      
|                                       |  |                               |         |                                    |   |                      |   |             |        |      

During
February 2005, we performed an impairment analysis on our goodwill in accordance with SFAS No. 142 and determined that no impairment had occurred.

At
December 31, 2005, the Company had intangible assets with a gross carrying value of $8.6 million, which relate to acquired customer contracts and non-compete
agreements. The carrying amount net of accumulated amortization at December 31, 2005 was $4.4 million. Intangible assets are amortized on a straight-line basis with useful
lives ranging from 10 months to 15 years. In addition, the Company had an intangible asset with a gross carrying value of $0.4 million at December 31, 2005 related to an
acquired registration certificate. This asset is not being amortized as it has been deemed to have an indefinite life.

3.     Business Acquisitions

In November 2004, the Company purchased the Canadian contract compression fleet of Hanover Compressor Company for $56.9 million in cash. As a result
of the acquisition, the Company recorded $46.2 million in property, plant and equipment, $3.1 million in identifiable intangible assets and $7.6 million in goodwill. At the time
of the acquisition, the acquired fleet totaled approximately 83,000 horsepower. The acquisition was funded by $50.0 million in borrowings under the revolving credit facility and
$6.9 million in cash. The pro forma information set forth below assumes the acquisition is accounted for as if the purchase occurred at the beginning of the twelve months ended March 31,
2005. The pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have been achieved had the acquisition
been consummated at that time (in thousands, except per share amounts):

Twelve Months Ended
March 31, 2005As Reported

Pro Forma
as Adjusted(unaudited)Revenue

$
763,070

$
771,288Net income

$
33,610

$
36,199Earnings per common sharebasic

$
1.07

$
1.15Earnings per common sharediluted

$
1.04

$
1.12


F-18

---



4.     Inventories, Net

Inventories, net consisted of the following (in thousands):

As of December 31,
2005

As of March 31,
2005Raw materials

$
67,125

$
62,599Work-in-progress


50,810


40,560Finished goods


1,234


3,216Total inventories


119,169


106,375Reserve for obsolescence


(10,896
)

(10,981
)Inventories, net

$
108,273

$
95,394


5.     Long-Term Debt

The Company's debt consisted of the following (in thousands):

As of December 31,
2005

As of March 31,
2005Notes due January 2023, bearing interest at a variable rate of LIBOR, plus 1.27% due monthly (see "ABS Facility" below)(1).

$


$
200,000Notes due October 2025, bearing interest at a variable rate of LIBOR, plus 0.74% due monthly (see "ABS Facility" below)(2)


200,000


Senior notes, bearing interest at 71/4% per annum, due 2010 (see "71/4% Senior Notes" below)(3)


171,078


170,948Seven-year term loan due February 2012, bearing interest at a variable rate of LIBOR plus 1.50% and 1.75% at December 31, 2005 and March 31, 2005, respectively (see "2005 Credit Facility" below)(4)


471,812


400,000Revolving credit facility due 2010, bearing interest at a variable rate of LIBOR, plus 1.25% and 1.75% at December 31, 2005 and March 31, 2005, respectively (see "2005 Credit Facility" below)


80,000


86,225Total debt


922,890


857,173Less current maturities


18,083


19,824Total long-term debt

$
904,807

$
837,349


---

F-19

---





ABS Facility

In February 2001, the Company entered into a $200.0 million asset-backed securitization operating facility (the "ABS facility"). In October, 2005,
the Company completed the planned restructuring of the ABS facility and added a $25.0 million revolving warehouse facility, increasing the total borrowing capacity to $225.0 million.
Under the restructured ABS facility, the notes will amortize based on the revenues of the secured assets, which is expected to result in a fourteen year amortization. The Company has pledged
compression equipment with a carrying value of $262.0 million as of December 31, 2005 as collateral for the ABS facility. Under the ABS facility, the Company had $4.2 million of
restricted cash as of December 31, 2005.

71/4% Senior Notes

In May 2003, the Company issued $175.0 million of 71/4% senior notes (the "71/4% senior notes") in a private
placement. The net proceeds from the sale, together with other available funds, were used to repurchase or redeem the outstanding $229.8 million of 97/8% senior discount notes
due 2008. The Company exchanged the private notes for publicly-traded notes in the quarter ended September 2003. Due to this early extinguishment of debt, the Company recognized expenses of
$14.4 million in the quarter ended June 30, 2003 resulting primarily from the redemption and tender premiums of $12.0 million, write-off of unamortized debt issuance
costs of $1.9 million and $0.5 million of other costs.

2005 Credit Facility

In January 2005, Holdings, Universal and their wholly-owned subsidiary, UC Canadian Partnership Holdings Company, closed a $650.0 million senior
secured credit facility (the "2005 Credit Facility") with a syndicate of lenders and financial institutions consisting of a $250.0 million, five-year revolving credit facility and a
$400.0 million seven-year term loan. The 2005 Credit Facility bears interest, if the borrowings are in US dollars, at the Company's option, of a base rate or LIBOR plus a margin or,
if the borrowings are in Canadian dollars, at the Company's option, of Canadian prime rate plus a variable amount depending on its leverage ratio or the CDOR rate plus a specified amount depending on
the lender. The 2005 Credit Facility is secured by substantially all of the domestic assets of the Company (except for the assets pledged to the ABS facility), as well as, all the capital stock of the
direct and indirect US subsidiaries of Universal and 65% of the capital stock of Universal's first tier foreign subsidiaries.

In
September 2005, the Company entered into an amendment to the 2005 Credit Facility (the "Amendment"). The Amendment, among other things, reduced the interest rate applicable to
the Company's seven-year term loan by 0.25%, resulting in a rate of LIBOR plus 1.50% and reduced the borrowing capacity under the revolving credit facility by $75.0 million to
$175.0 million. In addition, under the terms of the Amendment, in October 2005, $75.0 million of the Company's outstanding revolving credit facility balance was funded to the
seven-year term loan. The additional $75.0 million of seven-year term loan will amortize over the remaining term of the original seven-year term loan.
Additionally, the Amendment increases the Company's ability to enter into future unsecured indebtedness from $125.0 million to $200.0 million.

The
Company used approximately $508.6 million under the 2005 Credit Facility, together with $100 million under the ABS facility, to repay and redeem the outstanding
$522.0 million under the

F-20

---



then
outstanding operating facility and repay $50.0 million in debt under the Company's now terminated $125.0 million revolving credit facility. Due to this early extinguishment of debt,
the Company recognized expenses of $26.1 million in the twelve months ended March 31, 2005 consisting primarily of redemption premiums of $19.5 million and the
write-off of unamortized debt issuance costs of $6.5 million.

Restricted Net Assets of Subsidiaries

Certain of Holdings' subsidiaries have restrictions on their ability to pay dividends and make intercompany loans and advances pursuant to their financing
arrangements. The amount of restricted net assets of Holdings' subsidiaries as of December 31, 2005 is approximately $669.1 million.

The
Company has pledged property and compression equipment with a carrying value of $872.0 million as of December 31, 2005 as collateral for the 2005 Credit Facility.

Covenants
in our credit facilities require that we maintain various financial ratios. As of December 31, 2005, the Company was in compliance with all financial covenants.

Maturities of Long-Term Debt

Maturities of long-term debt as of December 31, 2005 are as follows (in thousands):

2006

$
18,0832007


19,2952008


19,2952009


19,2952010


270,373Thereafter


576,549Total

$
922,890


6.     Capital Leases

Properties and equipment include the following amounts for capitalized leases (in thousands):

As of December 31,
2005

As of March 31,
2005Compression equipment

$
563

$
898Furniture and fixtures





2,556Less accumulated depreciation


(212
)

(1,095
)Net assets under capital leases

$
351

$
2,359


Compression
equipment with a carrying value of $0.3 million as of December 31, 2005 has been pledged as collateral relating to these capital leases.

F-21

---



Future
minimum lease payments under non-cancelable capital leases as of December 31, 2005 are as follows (in thousands):

2006

$
1272007


3012008


2009


2010 and thereafter


Total minimum lease payments


428Less imputed interest costs


(51
)Present value of net minimum lease payments

$
377


7.     Income Taxes

The components of income before income taxes were as follows (in thousands):

Twelve Months Ended March 31,Nine Months Ended
December 31,
20052005

2004United States

$
52,363

$
20,211

$
19,813Foreign


34,059


30,612


28,715Consolidated income before income taxes

$
86,422

$
50,823

$
48,528


Income
tax expense consisted of the following (in thousands):

Twelve Months Ended March 31,Nine Months Ended
December 31,
20052005

2004Current:Federal

$
372

$


$
State


39





Foreign


6,963


9,069


9,119Deferred:Federal


17,624


5,178


6,379State


2,427


888


894Foreign


3,628


2,078


1,349Total

$
31,053

$
17,213

$
17,741


A
reconciliation of the provision for income taxes and the amount computed by applying the federal statutory income tax rate to income before taxes is as follows (in thousands):

Twelve Months Ended March 31,Nine Months Ended
December 31,
20052005

2004Income tax expense at statutory rate

$
30,248

$
17,790

$
16,985State taxes


1,468


671


581Foreign tax (benefit)


(984
)

(306
)

600Non-deductible expenses (benefit) and other


321


(942
)

(425
)Total

$
31,053

$
17,213

$
17,741


F-22

---



Deferred
income tax balances are the direct effect of taxable temporary differences between the financial statement carrying amounts and tax basis of assets and liabilities at the
enacted tax rates expected to be in effect when the taxes are actually paid or recovered.

The
Company has not provided U.S. deferred taxes on the indefinitely (permanently) reinvested cumulative earnings of approximately $137.6 million generated by its
non-U.S. affiliate companies. Such earnings are from ongoing operations which will be used to fund growth in the non-U.S. affiliates' countries as well as future international
expansion. Because of the availability of foreign tax credits, it is not practical to determine the U.S. income tax liability that would be payable if such earnings were not indefinitely reinvested.

The
tax effects of temporary differences that give rise to deferred tax assets and deferred tax liabilities are (in thousands):

As of December 31,
2005

As of March 31,
2005Deferred tax assets:Net operating loss carryforwards

$
134,688

$
156,027AMT Credit carryforward


411


0Accrued reserves


7,447


6,138Foreign tax credit


4,150


2,951Other


12,357


9,772Subtotal


159,053


174,888Valuation allowance


(890
)

(1,634
)Total


158,163


173,254Deferred tax liabilities:Depreciation differences on properties and equipment


(326,937
)

(324,278
)Other


(10,411
)

(855
)Total


(337,348
)

(325,133
)Net deferred tax liability

$
(179,185
)
$
(151,879
)


F-23

---



Net operating loss carryforwards have been adjusted primarily for depreciation allowed or allowable in prior years with a corresponding adjustment to depreciable property and equipment.
With the enactment of the American Jobs Creation Act, the Company has changed its position with respect to foreign taxes and has begun to recognize foreign tax credits instead of deducting foreign
taxes paid. As of December 31, 2005, the Company has foreign tax carryovers of $4.2 million with a valuation allowance of $0.9 million which was established at March 31,
2001 against the Company's deferred tax assets related to foreign tax credits available at that time. Based on the carryover period, the valuation allowance is still necessary for those taxes;
however, evidence exists that indicates it is more likely than not that new or current foreign tax credits will be utilized before they expire. The Company also believes it is more likely than not
that all other deferred tax assets will be realized on future tax returns primarily from the generation of future taxable income through both profitable operations and future reversals of existing
taxable temporary differences and that no other valuation allowance is necessary.

At
December 31, 2005, the Company had federal net operating loss ("NOL") carryforwards of approximately $358.4 million available to offset future taxable
income. The carryforward amounts have been adjusted to reflect depreciation allowed or allowable in previous years that was not taken on the tax returns. Annual utilization of the carryforwards could
be limited by Section 382 of the Internal Revenue Code of 1986, as amended. If not utilized, the NOL carryforwards will expire as follows (in thousands):

2018

$
1,8602019


63,0032020


66,3612021


96,3352022


64,8012023


51,7702024


14,269Total

$
358,399


8.     Stock Options

In order to motivate and retain key employees, the Company established an incentive stock option plan. Stock options granted under the plan are exercisable over a
ten-year period. Options generally vest over the following time period:

Year 1

331/3
%Year 2

331/3
%Year 3

331/3
%


The
Company has elected to follow Accounting Principles Board ("APB") No. 25, "Accounting for Stock Issued to Employees" and related interpretations in accounting for its
stock-based compensation and to provide the disclosures required under SFAS No. 123, Accounting for Stock Based Compensation and SFAS No. 148, "Accounting for Stock-Based
Compensation-Transition and Disclosure-an amendment of SFAS No. 123."

APB
No. 25 requires no recognition of compensation expense for the stock-based compensation arrangements provided by the Company, namely option grants where the exercise price is
equal to the market value at the date of grant. However, APB No. 25 requires recognition of compensation expense for variable award plans over the vesting periods of such plans, based upon the
then-current market values of the underlying stock. In contrast, SFAS No. 123 requires recognition of compensation expense for grants of stock, stock options, and other equity
instruments, over the vesting periods of such grants,

F-24

---



based
on the estimated grant-date fair values of those grants. See "New Accounting Pronouncements" in Note 1 for a discussion of SFAS No. 123R, a revision to SFAS
No. 123.

Under
the incentive stock option plan, options to purchase common stock may be granted until 2011. Options generally are granted at fair market value at the date of grant, are
exercisable in installments beginning one year from the date of grant, and expire 10 years after the date of grant.

As
of December 31, 2005, 2,219,014 stock options were outstanding under the plan. Transactions are summarized as follows:

Stock
Options

Weighted Average
Exercise PriceOptions outstanding, March 31, 2003

2,910,366

$
22.66Granted

5,000


20.97Exercised

(350,746
)

21.75Cancelled

(125,605
)

26.56Options outstanding, March 31, 2004

2,439,015

$
22.56Granted

607,750


32.62Exercised

(433,838
)

19.20Cancelled

(119,975
)

25.61Options outstanding, March 31, 2005

2,492,952

$
25.46Granted

1,000


37.90Exercised

(246,315
)

21.22Cancelled

(28,623
)

26.23Options outstanding, December 31, 2005

2,219,014

$
25.92Options exercisable at March 31, 2004

1,700,296

$
23.06Options exercisable at March 31, 2005

1,736,076

$
23.83Options exercisable at December 31, 2005

1,677,609

$
24.74


Exercise
prices for options outstanding as of December 31, 2005 ranged from $6.73 to $38.15. The following table provides certain information with respect to stock options
outstanding at December 31, 2005:

Range of Exercise Prices

Stock Options
Outstanding

Weighted Average
Exercise Price

Weighted Average
Remaining
Contractual LifeUnder $7.00

57,102

$
6.73

2.1$7.01-$23.00

1,010,904


19.63

6.2$23.01-$31.00

479,758


29.58

7.7Over $31.00

671,250


34.40

6.32,219,014

$
25.92

6.5


F-25

---



The
following table provides certain information with respect to stock options exercisable at December 31, 2005:

Range of Exercise Prices

Stock Options
Exercisable

Weighted Average
Exercise PriceUnder $7.00

57,102

$
6.73$7.01-$23.00

872,952


20.06$23.01-$31.00

267,055


29.19Over $31.00

480,500


32.921,677,609

$
24.74


In
electing to continue to follow APB No. 25 for expense recognition purposes, the Company is obligated to provide the expanded disclosures required under SFAS No. 123 for
stock-based compensation granted in 1998 and thereafter, including, if materially different from reported results disclosure of pro forma net income and earnings per share had compensation expense
relating to the nine months ended December 31, 2005 and the twelve months ended March 31, 2005 and 2004 been measured under the fair value recognition provisions of SFAS No. 123.

The
weighted average fair values at date of grant for options granted during the nine months ended December 31, 2005 and the twelve months ended March 31, 2005 and 2004
were $14.30, $15.51 and $10.16, respectively, and were estimated using the Black-Scholes option valuation model with the following weighted average assumptions:

March 31,December 31,
20052005

2004Expected life in years

5

6

7Interest rate

4.06
%
4.16
%
3.56
%Volatility

33.30
%
40.77
%
42.88
%Dividend yield

0.00
%
0.00
%
0.00
%


The
following table summarizes results as if we had recorded compensation expense under the provisions of SFAS No. 123 (earnings per share information is for Holdings only) (in
thousands, except per share amounts):

|                                                                                                      |             |   |        | Twelve Months Ended March 31, |  
|----------------------------------------------------------------------------------------------------- | ----------- | - | ------ | ----------------------------- | -
|
|
|Net income, as reported                                                                               |             | $ | 55,369 |                               | $
|Add: Stock-based compensation for restricted stock awards included in reported net income, net of tax |             |   | 847    |                               |  
|Deduct: Stock-based compensation determined under the fair value method, net of tax                   |             |   | (3,061 | )                             |  
|                                                                                                      |             |   |        |                               |  
|Pro forma net income                                                                                  |             | $ | 53,155 |                               | $
|                                                                                                      |             |   |        |                               |  
|Basic earnings per share:                                                                             |             |   |        |                               |  
|                                                                                                      | As reported |   | $      | 1.74                          |  
|                                                                                                      | Pro forma   |   | $      | 1.67                          |  
|Diluted earnings per share:                                                                           |             |   |        |                               |  
|                                                                                                      | As reported |   | $      | 1.69                          |  
|                                                                                                      | Pro forma   |   | $      | 1.62                          |  

F-26

---



9.     Stockholders' Equity

In December 2005, Holdings entered into an underwriting agreement with Weatherford International Ltd. and J. P. Morgan
Securities Inc., as sole underwriter, in connection with the offering of 6,750,000 shares of Holdings' common stock by Weatherford. Holdings did not sell any shares of common stock in
connection with the offering and did not receive any of the proceeds from the sale of the shares by Weatherford. In connection with the underwriting agreement, Holdings entered into a purchase
agreement with J. P. Morgan Securities, pursuant to which it agreed to purchase 2,439,024 of the 6,750,000 shares of common stock acquired by them in the offering, at a price of $41.00 per share. The
purchase price of approximately $100.0 million was funded from borrowings of approximately $80.0 million under the revolving credit facility with the balance of the funding provided from
available cash.

10.   Accounting for Interest Rate Swap Agreements

In accordance with SFAS No. 133, all derivative instruments must be recognized on the balance sheet at fair value, and changes in such fair values are
recognized in earnings unless specific hedging criteria are met. Changes in the values of derivatives that meet these hedging criteria will ultimately offset related earnings effects of the hedged
item pending recognition in earnings.

In
June 2004, the Company reduced the notional amount of interest rate swap agreements that convert variable interest payments under the ABS facility to fixed interest payments in
connection with a debt repayment of $80.0 million. In accordance with SFAS No. 133, the Company recorded a gain of $3.2 million to earnings that had previously been recorded in
accumulated other comprehensive income as a result of the reduction in the notional amount of such interest rate swap agreements. As of December 31, 2005 and March 31, 2005, the Company
had interest rate swap agreements with a notional amount of $180.0 million and $83.9 million, respectively, related to the $200.0 million outstanding under the ABS facility. The
swaps outstanding at December 31, 2005 amortize ratably through 2019 and have a weighted average fixed rate of 4.94%. The swaps outstanding at March 31, 2005 would have terminated in
February 2013 and had a weighted average fixed rate of 5.21%. In accordance with SFAS No. 133, the Company's balance sheet at December 31, 2005 and March 31, 2005 included
a $1.1 million and a $2.2 million, respectively, derivative liability related to the interest rate swap agreements.

In
January 2005, the Company entered into interest rate swap agreements to convert variable interest payments related to $300 million of the seven-year term
loan to fixed interest payments. These swaps amortize ratably from June 2007 through March 2010 and have a weighted average fixed rate of 4.02%, resulting in a net effective fixed
interest rate on this $300 million of debt of 5.52% (4.02% plus the 1.50% margin applicable to the seven-year term loan). In accordance with SFAS No. 133, the Company's
balance sheet at December 31, 2005 and March 31, 2005 included a $5.9 million and $3.9 million, respectively, derivative asset related to the interest rate swap agreements.

These
swaps, which the Company has designated as cash flow hedging instruments, meet the specific hedge criteria and any changes in their fair values were recognized in accumulated other
comprehensive income or loss. Because the terms of the hedged item and the swaps substantially coincide, the hedge is expected to exactly offset changes in expected cash flows due to fluctuations in
the variable rate and, therefore, the Company currently does not expect any ineffectiveness.

As
of December 31, 2005 and March 31, 2005, the Company had interest rate swap agreements to hedge $100.0 million of its $175.0 million 71/4%
senior notes. The swaps are used to hedge the change in fair value of the debt and, in effect, convert the fixed interest payment to a variable interest payment based on the six-month
LIBOR rate. The swaps are accounted for in accordance with SFAS No. 133 and, as such, are recorded at fair value on the balance sheet. The Company's balance sheet at December 31, 2005
and March 31, 2005, included a $3.9 million and $4.1 million, respectively,

F-27

---



derivative
liability related to the interest rate swap agreements. The change in the debt's fair value for that portion which is hedged is recorded as an adjustment to the carrying value of the debt
with the offset being recorded to interest expense. The swaps, which the Company has designated as fair value hedging instruments, meet the specific hedge criteria and any changes in their fair values
were recognized in interest expense. For the nine months ended December 31, 2005 and the twelve months ended March 31, 2005, the change in the debt's fair value and the change in the
swaps' fair value exactly offset and did not impact net income. Because the terms of the hedged item and the swaps substantially coincide, the hedge is expected to exactly offset changes in fair
values due to fluctuations in the variable rate and, therefore, the Company currently does not expect any ineffectiveness.

The
counterparties to the Company's interest rate swap agreements are major international financial institutions. The Company monitors the credit quality of these financial institutions
and does not expect non-performance by them.

11.   Employee Benefits

The Company has a defined contribution 401(k) plan covering substantially all employees. Prior to January 1, 2006, the Company made matching contributions
under this plan in the form of Company stock equal to 50% of each participant's contribution, with a maximum match of 3% of eligible pay. For the nine months ended December 31, 2005, the
Company's stock contributions of approximately 33,000 shares to the plan were valued at approximately $1.2 million. For the twelve months ended March 31, 2005, the Company's stock
contributions of approximately 45,000 shares to the plan were valued at approximately $1.5 million. Effective January 1, 2006, the matching formula for the 401(k) plan was amended to
provide a match of 75% of the participant's contribution, with a maximum match of 4.5% of eligible pay, for employees who have five or more years of service. The match for employees with less than
five years of service remains 50% of each participant's contribution of up to 6%, with a maximum match of 3% of eligible pay.

The
Employee Stock Purchase Plan ("ESPP") is intended to encourage employees to participate in the Company's growth by providing them the opportunity to acquire a proprietary interest in
the Company's long-term performance and success through the purchase of shares of common stock at a price possibly less than fair market value. In 2001, the Company's stockholders approved
the ESPP, under which 250,000 shares of the Company's common stock could be purchased
by employees. An employee is eligible to participate after completing 90 days of employment. Each quarter, an eligible employee may elect to withhold up to 10% of his or her eligible pay limit
to purchase shares of the Company's common stock at a price equal to 85% to 100% of the fair market value of the stock as of the first trading day of the quarter or the last trading day of the
quarter, whichever is lower. The ESPP will terminate on the date that all shares of common stock authorized for sale under the ESPP have been purchased, except as otherwise extended by authorizing
additional shares under the ESPP. At December 31, 2005, 69,111 shares remained available for purchase under the ESPP.

The
Company utilizes grants of restricted stock as long-term compensation for designated employees. The Company's restricted stock plan provides for the award of up to
1,350,000 shares of the Company's common stock to certain officers and designated employees. Unearned compensation was charged for the market value of the restricted shares as these shares were issued
in accordance with the restricted stock plan. The unearned compensation is shown as a reduction to stockholders' equity in the accompanying consolidated balance sheets and is being amortized ratably
over the restricted period of five years. During the nine months ending December 31, 2005 and the twelve months ended March 31, 2005, $1.3 million and $1.0 million,
respectively, were charged to expense relating to the restricted stock. The weighted average share price for the approximately 2,544 shares of restricted stock granted during the nine months ended
December 31, 2005 was $40.70. The weighted average share price for the approximately 195,000 shares of restricted stock granted during the twelve months ended March 31,

F-28

---



2005
was $35.46. Generally, common stock subject to restricted stock grants will vest 0% upon the first anniversary of the grant and 25% on each anniversary thereafter through the fifth anniversary.

The
Employees' Supplemental Savings Plan ("the ESSP") provides executive officers and designated employees the opportunity to defer up to 25% of their eligible compensation that cannot
be deferred under the existing 401(k) plan due to IRS limitations. Participants can also defer up to 100% of their bonuses. Prior to January 1, 2006 the Company matched 50% of the participant's
deferrals, with a maximum match of 3% of eligible pay. The vesting periods are generally the same as the 401(k) plan. The Company's matching contributions related to the ESSP have been in the form of
common stock. Effective January 1, 2006, the matching formula for the ESSP plan was amended to provide a match of 75% of the participant's deferrals, with a maximum match of 4.5% of eligible
pay, for employees who have five or more years of service. The match for employees with less than five years of service remains 50% of each participant's deferrals, with a maximum match of 3% of
eligible pay. Deferrals from bonuses are not eligible for the match. The match limits of 3% and 4.5% are aggregate amounts and include both the 401(k) plan and the ESSP match amounts.

The
Incentive Stock Option Plan (the "ISO Plan") authorizes the Company to grant stock options to its employees, consultants and directors. The Company has granted options to new
employees we have gained through acquisitions, in the ordinary course of providing incentives to current employees and as inducements for the hiring of new employees. In July 2004, an amendment
to the ISO Plan was approved, increasing by 1,000,000 the number of shares of common stock available for grant under the
ISO Plan from 5,012,421 shares to 6,012,421 shares to allow the continuation of this long-term incentive program.

12.   Facility Consolidation Costs

On April 28, 2003, the Company announced the transfer of substantially all of its fabrication activities based in Tulsa, Oklahoma to its existing facility
in Houston, Texas. Engineering, production and related support functions were consolidated with Houston-based functions. Total costs related to the facility consolidation were $1.8 million
during the twelve months ended March 31, 2004 and are shown separately as facility consolidation costs in the consolidated statements of operations. The costs incurred were related to the
fabrication segment. See below for further details of the costs incurred (in thousands):

Twelve Months Ended
March 31, 2004Severance and personnel costs

$
1,131Relocation costs


289Other costs


401Total facility consolidation costs

$
1,821


13.   Commitments and Contingencies

In the ordinary course of business, the Company is involved in various pending or threatened legal actions. In the opinion of management, the amount of ultimate
liability, if any, with respect to these actions will not have a material adverse effect on the Company's financial position, results of operations or cash flows.

In
the quarter ended September 30, 2005, the Company's operations were impacted by two major hurricanes that entered the Gulf of Mexico (Hurricanes Katrina and Rita). Of our
2.5 million horsepower worldwide contract compression fleet, 394 units totaling 212,000 horsepower were located in the paths taken by these hurricanes. The Company had eight units totaling
approximately 3,700

F-29

---



horsepower
that were lost due to the hurricanes. The Company's southern Louisiana-area aftermarket services locations suffered minimal damage.

The
Company maintains insurance coverage of up to $50 million for windstorm, property and flood damage. The deductible for windstorm damage under the Company's insurance coverage
is $1 million per named storm. In addition, most of our contract compression contracts with customers provide that the customer is responsible for loss of or damage to equipment caused by
windstorms and floods and require the customer to maintain physical loss insurance for the replacement cost of the equipment. Of the eight units that were lost, the customers are responsible for
maintaining the physical loss insurance. There were a total of nine units, of the 394 units in the hurricanes path, on which the Company is responsible for carrying the physical loss insurance that
incurred some damage. The cost of repairing these units was primarily incurred in the quarter ended December 31, 2005 and was approximately $0.3 million. The Company believes that the
impact of these hurricanes will not have a material adverse impact on its results of operations, financial condition or cash flows.

The
Company has no other commitments or contingent liabilities, which, in the judgment of management, would result in losses that would have a material adverse affect on the Company's
consolidated financial position, results of operations or cash flows.

14.   Industry Segments and Geographic Information

The Company has four principal business segments: domestic contract compression, international contract compression, fabrication and aftermarket services. The
domestic contract compression segment provides natural gas compression to customers in the United States. The international contract compression segment provides natural gas compression to
international customers, including Canada. The fabrication segment provides services related to the design, engineering and assembly of natural gas compressors for sale to third parties in addition to
those that the Company uses in its contract compression fleet. The aftermarket services segment sells parts and components and provides maintenance to customers who own compression equipment and
customers who use equipment provided by other companies. Fabrication and aftermarket services revenue presented in the table below include only sales to third parties.

The
Company's reportable segments are strategic business units that offer distinct products and services. They are managed separately since each business segment requires different
marketing strategies due to customer specifications. The Company evaluates the performance of its reportable segments based on segment gross profit. Gross profit is defined as total revenue less
direct costs. The segment gross profit measure used by management for evaluation purposes excludes inter-segment transactions and, accordingly, there is no inter-segment revenue to be reported.

F-30

---



The
following table presents revenue, gross profit and identifiable assets by business (in thousands):

Twelve Months Ended March 31,Nine Months Ended
December 31,
20052005

2004Revenue:Domestic contract compression

$
248,414

$
296,239

$
280,951International contract compression


94,831


102,167


82,589Fabrication


143,710


213,994


183,685Aftermarket services


126,692


150,670


141,561Total

$
613,647

$
763,070

$
688,786Gross Profit:Domestic contract compression

$
160,256

$
186,865

$
178,543International contract compression


71,075


78,448


64,159Fabrication


14,191


15,285


15,888Aftermarket services


25,813


29,656


30,891Total

$
271,335

$
310,254

$
289,481


As of December 31,
2005

As of March 31,
2005

As of March 31,
2004Identifiable Assets:Domestic contract compression

$
1,432,301

$
1,423,979

$
1,453,716International contract compression


402,174


353,880


258,240Fabrication


102,412


99,462


107,605Aftermarket services


158,408


145,437


152,890Total

$
2,095,295

$
2,022,758

$
1,972,451


No
one customer accounted for more than 10% of net sales for any of the periods presented.

F-31

---



Geographic Area

The following table illustrates revenue, gross profit and identifiable assets by geographic locations (in thousands). The basis of attributing revenue and gross
profit to specific geographic locations is primarily based upon the geographic location of the sale, service or where the assets are utilized.

Twelve Months Ended March 31,Nine Months Ended
December 31,
20052005

2004Revenue:United States

$
428,781

$
535,258

$
493,262Canada


60,530


81,357


90,198Argentina


59,328


45,950


40,869Other international


65,008


100,505


64,457Total

$
613,647

$
763,070

$
688,786Gross Profit:United States

$
187,935

$
218,410

$
212,602Canada


18,898


19,754


16,238Argentina


28,073


31,401


28,782Other international


36,429


40,689


31,859Total

$
271,335

$
310,254

$
289,481


As of December 31,
2005

As of March 31,
2005

As of March 31,
2004Identifiable Assets:United States

$
1,632,946

$
1,619,113

$
1,667,163Canada


157,612


140,928


96,116Argentina


117,388


107,035


80,657Other international


187,349


155,682


128,515Total

$
2,095,295

$
2,022,758

$
1,972,451


15.   Selected Quarterly Financial Data (Unaudited)

Summarized quarterly financial data is as follows (earnings per share information is for Holdings only) (in thousands, except per share data):

|                                     |                                          | December 31 |   | September 30 |  | June 30
|------------------------------------ | ---------------------------------------- | ----------- | - | ------------ |  | -------
|Nine Months Ended December 31, 2005: |                                          |             |   |              |  |        
|                                     | Revenue                                  |             | $ | 224,835      |  | $      
|                                     | Gross profit                             |             |   | 98,712       |  |        
|                                     | Net income (loss)                        |             |   | 19,554       |  |        
|                                     | Earnings (loss) per common sharebasic   |             | $ | 0.62         |  | $      
|                                     | Earnings (loss) per common sharediluted |             | $ | 0.60         |  | $      

|                                    |                                          | March 31 |   | December 31 |   | September 30 |         | June 30
|----------------------------------- | ---------------------------------------- | -------- | - | ----------- | - | ------------ | ------- | -------
|Twelve Months Ended March 31, 2005: |                                          |          |   |             |   |              |         |        
|                                    | Revenue                                  |          | $ | 193,636     |   | $            | 192,676 |        
|                                    | Gross profit                             |          |   | 79,152      |   |              | 79,656  |        
|                                    | Net income (loss)                        |          |   | (4,490      | ) |              | 14,125  |        
|                                    | Earnings (loss) per common sharebasic   |          | $ | (0.14       | ) | $            | 0.45    |        
|                                    | Earnings (loss) per common sharediluted |          | $ | (0.14       | ) | $            | 0.44    |        

F-32

---



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
Universal Compression Holdings, Inc.
Houston, TX

We
have audited the consolidated financial statements of Universal Compression Holdings, Inc. and subsidiaries ("Holdings"), Universal Compression, Inc., and subsidiaries
("Universal") (collectively "the Company") as of December 31, 2005 and March 31, 2005, and for the nine-month period ended December 31, 2005 and each of the two years
in the period ended March 31, 2005, management's assessment of the effectiveness of Holdings' internal control over financial reporting as of December 31, 2005, and the effectiveness of
Holdings' internal control over financial reporting as of December 31, 2005, and have issued our reports thereon dated March 3, 2006; such consolidated financial statements and reports
are included elsewhere in this Form 10-K. Our audits also included the financial statement schedules of Holdings and Universal listed in Item 15. These financial statement
schedules are the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, such financial statement schedules, when considered in
relation to the basic consolidated financial statements taken as a whole for each of Holdings and Universal, present fairly, in all material respects, the information set forth therein.

/S/
DELOITTE & TOUCHE LLP

Houston,
TX
March 3, 2006

E-1

---





UNIVERSAL COMPRESSION HOLDINGS, INC.        SCHEDULE I        (PARENT COMPANY ONLY)        CONDENSED BALANCE SHEETS        (In thousands)

|                                                                                                                                                                                                    |                                            | December 31,
2005 |         | March 31,
2005
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ----------------- | ------- | --------------
|ASSETS                                                                                                                                                                                             
|Investment in subsidiary                                                                                                                                                                            |                                            | $                 | 931,492 |               
|Deferred income taxes                                                                                                                                                                               |                                            |                   | 97      |               
|                                                                                                                                                                                                    |                                            |                   |         |               
|                                                                                                                                                                                                    | Total assets                               |                   | $       | 931,589       
|                                                                                                                                                                                                    |                                            |                   |         |               
|LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                                                               
|Note payable to subsidiary                                                                                                                                                                          |                                            | $                 | 100,277 |               
|Common stock, $.01 par value, 200,000 and 200,000 shares authorized, 32,306 and 32,003 shares issued, 29,866 and 32,002 shares outstanding as of December 31, 2005 and March 31, 2005,
respectively |                                            |                   | 323     |               
|Other stockholders' equity                                                                                                                                                                          |                                            |                   | 830,989 |               
|                                                                                                                                                                                                    |                                            |                   |         |               
|                                                                                                                                                                                                    | Total stockholders' equity                 |                   |         | 831,312       
|                                                                                                                                                                                                    |                                            |                   |         |               
|                                                                                                                                                                                                    | Total liabilities and stockholders' equity |                   | $       | 931,589       
|                                                                                                                                                                                                    |                                            |                   |         |               

See
accompanying notes to condensed financial statements.

E-2

---



UNIVERSAL COMPRESSION HOLDINGS, INC.        SCHEDULE I        (PARENT COMPANY ONLY)        CONDENSED STATEMENTS OF OPERATIONS        (In thousands)

|                                                                  |            |   |        | Twelve Months
Ended March 31,
|----------------------------------------------------------------- | ---------- | - | ------ | -----------------------------
|
|
|Interest expense                                                  |            | $ | (277   | )                            
|Equity earnings in subsidiary, net of tax                         |            |   | 55,549 |                              
|Benefit from income taxes                                         |            |   | 97     |                              
|                                                                  |            |   |        |                              
|                                                                  | Net income |   | $      | 55,369                       
|                                                                  |            |   |        |                              
|Weighted average common and common equivalent shares outstanding: |            |   |        |                              
|                                                                  | Basic      |   |        | 31,773                       
|                                                                  | Diluted    |   |        | 32,758                       
|Earnings per shareBasic                                          |            | $ | 1.74   |                              
|                                                                  |            |   |        |                              
|Earnings per shareDiluted                                        |            | $ | 1.69   |                              
|                                                                  |            |   |        |                              

See
accompanying notes to condensed financial statements.

E-3

---



UNIVERSAL COMPRESSION HOLDINGS, INC.        SCHEDULE I        (PARENT COMPANY ONLY)        CONDENSED STATEMENTS OF CASH FLOWS        (In thousands)

|                                                     |                                          |                                           |   | Twelve Months
Ended March 31, |       
|---------------------------------------------------- | ---------------------------------------- | ----------------------------------------- | - | ----------------------------- | ------
|
|
|Cash flows from investing activities:                |                                          |                                           |   |                               |       
|                                                     | Investment in subsidiary                 |                                           | $ | (5,995                        | )     
|                                                     |                                          |                                           |   |                               |       
|                                                     |                                          | Net cash used in investing activities     |   |                               | (5,995
|                                                     |                                          |                                           |   |                               |       
|Cash flows from financing activities:                |                                          |                                           |   |                               |       
|                                                     | Common stock issuance                    |                                           |   | 5,995                         |       
|                                                     | Proceeds from note payable to subsidiary |                                           |   | 100,000                       |       
|                                                     | Purchase of treasury stock               |                                           |   | (100,000                      | )     
|                                                     |                                          |                                           |   |                               |       
|                                                     |                                          | Net cash provided by financing activities |   |                               | 5,995 
|                                                     |                                          |                                           |   |                               |       
|Net increase (decrease) in cash and cash equivalents |                                          |                                           |  |                               |       
|Cash and cash equivalents at beginning of period     |                                          |                                           |  |                               |       
|                                                     |                                          |                                           |   |                               |       
|Cash and cash equivalents at end of period           |                                          | $                                         |  |                               | $     
|                                                     |                                          |                                           |   |                               |       

See
accompanying notes to condensed financial statements.

E-4

---





UNIVERSAL COMPRESSION HOLDINGS, INC.        SCHEDULE I        (PARENT COMPANY ONLY)        NOTES TO CONDENSED FINANCIAL STATEMENTS

1. Basis of Presentation

These condensed parent company financial statements have been preprared in accordance with Rule 12-04, Schedule I of
Regulation S-X, as restricted net assets of Universal Compression Holdings, Inc. ("Holdings") subsidiary exceeds 25% of the consolidated net assets of Holdings. Holdings is a
holding company, which conducts its operations through its wholly-owned subsidiary, Universal Compression Inc. ("Universal").

2. Debt

In January 2005, Holdings, Universal and their wholly-owned subsidiary, UC Canadian Partnership Holdings Company (collectively "the Borrowers"), closed a
$650.0 million senior secured credit facility (the "2005 Credit Facility") with a syndicate of lenders and financial institutions consisting of a $250.0 million, five-year
revolving credit facility and a $400.0 million seven-year term loan. The 2005 Credit Facility bears interest, if the borrowings are in US dollars, at the Borrower's option, of a
base rate or LIBOR plus a margin or, if the borrowings are in Canadian dollars, at the Borrower's option, of Canadian prime rate plus a variable amount depending on its leverage ratio or the CDOR rate
plus a specified amount depending on the lender. The 2005 Credit Facility is secured by substantially all of the domestic assets of Holdings and Universal (except for the assets pledged to the
asset-backed securitization operating facility ("ABS facility") of a
subsidiary of Universal), as well as, all the capital stock of the direct and indirect US subsidiaries of Universal and 65% of the capital stock of Universal's first tier foreign subsidiaries.

In
September 2005, the Borrowers entered into an amendment to the 2005 Credit Facility (the "Amendment"). The Amendment, among other things, reduced the interest rate applicable
to the Borrowers' seven-year term loan by 0.25%, resulting in a rate of LIBOR plus 1.50% and reduced the borrowing capacity under the revolving credit facility by $75.0 million to
$175.0 million. In addition, under the terms of the Amendment, in October 2005, $75.0 million of the Borrowers' outstanding revolving credit facility balance was funded to the
seven-year term loan. The additional $75.0 million of seven-year term loan will amortize over the remaining term of the original seven-year term loan.
Additionally, the Amendment increases the Borrowers' ability to enter into future unsecured indebtedness from $125.0 million to $200.0 million.

The
Borrowers have pledged property and compression equipment with a carrying value of $872.0 million as of December 31, 2005 as collateral for the 2005 Credit Facility.
The Borrowers are co-borrowers under the 2005 Credit Facility and are jointly and severally liable for the borrowings of the other co-borrowers.

As
of December 31, 2005 and March 31, 2005, the combined Borrowers had borrowings outstanding under the seven-year term loan of $471.8 million and
$400.0 million, respectively. As of December 31, 2005 and March 31, 2005, the combined Borrowers had borrowings outstanding under the revolving credit facility of
$80.0 million and $86.2 million, respectively. All of the outstanding borrowings at December 31, 2005 were the direct borrowings of Universal. Should Universal default on its
borrowings, Holdings will be jointly liable for all amounts outstanding.

In
December 2005, Holdings entered into a revolving loan agreement with Universal. The balance of loans from Universal, including accrued interest, at December 31, 2005 is
$100.3 million. The revolving loan agreement and all accrued interest are due on December 14, 2007. The revolving loan agreement bears interest at LIBOR plus 1.25%. Holdings may borrow
up to a total of $115 million during the term of the agreement. Holdings can prepay amounts outstanding under the revolving loan agreement at anytime without penalty.

E-5

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UNIVERSAL COMPRESSION HOLDINGS, INC.  UNIVERSAL COMPRESSION, INC.  SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS

|Item                                              |  | Balance at
Beginning
of Period |       | Charged to
Costs and
Expenses(1) |   | Collections/
Deductions(2) |  | Balance at
Close of
Period
|------------------------------------------------- |  | ------------------------------ | ----- | -------------------------------- | - | -------------------------- |  | --------------------------
|
|December 31, 2005 Allowance for doubtful accounts |  | $                              | 2,747 |                                  | $ | 1,507                      |  | $                         
|March 31, 2005 Allowance for doubtful accounts    |  | $                              | 3,189 |                                  | $ | 1,335                      |  | $                         
|March 31, 2004 Allowance for doubtful accounts    |  | $                              | 8,146 |                                  | $ | 653                        |  | $                         

---

|Item                                                 |  | Balance at
Beginning
of Period |        | Charged to
Costs and
Expenses(1) |   | Inventory
Write-offs(2) |  | Balance at
Close of
Period
|---------------------------------------------------- |  | ------------------------------ | ------ | -------------------------------- | - | ----------------------- |  | --------------------------
|
|December 31, 2005 Reserve for inventory obsolescence |  | $                              | 10,981 |                                  | $ | 1,465                   |  | $                         
|March 31, 2005 Reserve for inventory obsolescence    |  | $                              | 12,041 |                                  | $ | 1,897                   |  | $                         
|March 31, 2004 Reserve for inventory obsolescence    |  | $                              | 10,468 |                                  | $ | 2,313                   |  | $                         

---

|Item                               |  | Balance at
Beginning
of Period |       | Charged to
Costs and
Expenses(1) |   | Deductions(2) |  | Balance at
Close of
Period
|---------------------------------- |  | ------------------------------ | ----- | -------------------------------- | - | ------------- |  | --------------------------
|
|December 31, 2005 Warranty accrual |  | $                              | 3,025 |                                  | $ | 3,205         |  | $                         
|March 31, 2005 Warranty accrual    |  | $                              | 1,493 |                                  | $ | 3,353         |  | $                         
|March 31, 2004 Warranty accrual    |  | $                              | 524   |                                  | $ | 3,429         |  | $                         

---

E-6

---





SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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, on March 3, 2006.

| |  | Universal Compression Holdings, Inc.
| |  | ------------------------------------
| |  | By:                                 

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Stephen A. Snider, Ernie L. Danner,
J. Michael Anderson and D. Bradley Childers, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this Report, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every
act and thing requisite and necessary to be done as fully to all said attorneys-in-fact and agents, or any of them, may lawfully do or cause to be done by virtue thereof.

Pursuant
to the requirements of the Securities Act of 1934, this report has been signed by the following persons in the capacities indicated on March 3, 2006.

|Name                                              |  | Title                                                                             
|------------------------------------------------- |  | ----------------------------------------------------------------------------------
|                                                  |  |                                                                                   
|/s/STEPHEN A. SNIDERStephen A. Snider             |  | President, Chief Executive Officer and Director (Principal Executive Officer)     
|/s/J. MICHAEL ANDERSONJ. Michael Anderson         |  | Senior Vice President and Chief Financial Officer (Principal Financial Officer)   
|/s/KENNETH R. BICKETTKenneth R. Bickett           |  | Vice President, Accounting and Corporate Controller (Principal Accounting Officer)
|/s/ERNIE L. DANNERErnie L. Danner                 |  | Executive Vice President and Director                                             
|/s/THOMAS C. CASEThomas C. Case                   |  | Director                                                                          
|/s/JANET F. CLARKJanet F. Clark                   |  | Director                                                                          
|/s/BERNARD J. DUROC-DANNERBernard J. Duroc-Danner |  | Director                                                                          
|                                                  |  |                                                                                   

II-1

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|/s/URIEL E. DUTTONUriel E. Dutton           |  | Director
|------------------------------------------- |  | --------
|/s/LISA W. RODRIGUEZLisa W. Rodriguez       |  | Director
|/s/WILLIAM M. PRUELLAGEWilliam M. Pruellage |  | Director
|/s/SAMUEL URCISSamuel Urcis                 |  | Director

II-2

---



SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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, on March 3, 2006.

| |  | Universal Compression, Inc.
| |  | ---------------------------
| |  | By:                        

Pursuant
to the requirements of the Securities Exchange act of 1934, this report has been signed by the following persons in the capacities indicated on March 3, 2006.

|Name                                      |  | Title                                                                             
|----------------------------------------- |  | ----------------------------------------------------------------------------------
|                                          |  |                                                                                   
|/s/STEPHEN A. SNIDERStephen A. Snider     |  | President, Chief Executive Officer and Director (Principal Executive Officer)     
|/s/J. MICHAEL ANDERSONJ. Michael Anderson |  | Senior Vice President and Chief Financial Officer (Principal Financial Officer)   
|/s/KENNETH R. BICKETTKenneth R. Bickett   |  | Vice President, Accounting and Corporate Controller (Principal Accounting Officer)
|/s/ERNIE L. DANNERErnie L. Danner         |  | Executive Vice President and Director                                             

II-3

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EXHIBIT INDEX

|Exhibit No. |   | Description                                                                                                                                                                                                                                                                                                                    
|----------- | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1         |   | Restated Certificate of Incorporation of Universal Compression Holdings, Inc. (incorporated by reference to Exhibit 3.1 of Universal Compression Holdings, Inc.'s Quarterly Report on Form 10-Q for the
quarter ended June 30, 2000).                                                                                          
|3.2         |   | Restated Bylaws of Universal Compression Holdings, Inc. (incorporated by reference to Exhibit 3.2 of Universal Compression Holdings, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2000).                                                                                                                
|            |   | 71/4% Senior Notes due 2010                                                                                                                                                                                                                                                                                                    
|4.1         |   | Indenture, dated May 27, 2003, by and between Universal Compression, Inc., as Issuer, and The Bank of New York, as Trustee (incorporated by reference to Exhibit 4.11 of Universal Compression Holdings, Inc.'s Annual Report on
Form 10-K for the fiscal year ended March 31, 2003).                                          
|4.2         |   | Specimen of Universal Compression, Inc.'s 71/4% Senior Notes due 2010 (incorporated by reference to Exhibit 4.11 of Universal Compression Holdings, Inc.'s Annual Report on Form 10-K for the fiscal year
ended March 31, 2003).                                                                                               
|            |   | ABS Facility                                                                                                                                                                                                                                                                                                                   
|10.1        | * | Indenture, dated October 28, 2005, between UCO Compression 2005 LLC, as Issuer, and Wells Fargo Bank, National Association, as Indenture Trustee, with respect to the $225,000,000 ABS facility consisting of $200,000,000 of Series 2005-1
Notes and $25,000,000 of Series 2005-2 Notes.                                      
|10.2        | * | Series 2005-1 Supplement, dated as of October 28, 2005, to Indenture, dated as of October 28, 2005, between UCO Compression 2005 LLC, as Issuer, and Wells Fargo Bank, National Association, as Indenture Trustee, with respect to the
$200,000,000 of Series 2005-1 Notes with regard to the ABS Facility.                    
|10.3        | * | Series 2005-2 Supplement, dated as of October 28, 2005, to Indenture, dated as of October 28, 2005, between UCO Compression 2005 LLC, as Issuer, and Wells Fargo Bank, National Association, as Indenture Trustee, with respect to the
$25,000,000 of Series 2005-2 Notes with regard to the ABS Facility.                     
|10.4        | * | Guaranty, dated as of October 28, 2005 issued by Universal Compression Holdings, Inc. for the benefit of UCO Compression 2005 LLC, as Issuer, and Wells Fargo Bank, National Association, as Indenture Trustee.                                                                                                                
|10.5        | * | Management Agreement, dated as of October 28, 2005, by and between Universal Compression, Inc., as Manager and UCO Compression 2005 LLC, as Issuer.                                                                                                                                                                            
|10.6        | * | Back-up Management Agreement, dated as of October 28, 2005, by and among Caterpillar Inc., as Back-up Manager, UCO Compression 2005 LLC, as Issuer and Universal Compression, Inc., as Manager.                                                                                                                                
|10.7        | * | Insurance and Indemnity Agreement, dated as of October 28, 2005, by and among Ambac Assurance Corporation, as Insurer, UCO Compression 2005 LLC, as Issuer, Universal Compression, Inc., as Contributor and Manager, UCO Compression 2002 LLC,
as Old Lessee, and Wells Fargo Bank, National Association, as Indenture Trustee.
|            |   |                                                                                                                                                                                                                                                                                                                                

---



|10.8  | * | Intercreditor and Collateral Agency Agreement dated as of October 28, 2005, by and among Universal Compression, Inc., in its individual capacity and as Manager, UCO Compression 2005 LLC, as Issuer, Wells Fargo Bank, National Association, as
Indenture Trustee, Wachovia Bank, National Association, as Bank Agent, the Various Financing Institutions that from time to time may become parties thereto as UCI Lenders and JP Morgan Chase Bank, N.A., in its individual capacity and as
Intercreditor Collateral Agent.                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|----- | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |   | Bank Agreements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.9  |   | $650,000,000 Senior Secured Credit Agreement, dated as January 14, 2005, among Universal Compression, Inc., as Co-US Borrower and Guarantor, Universal Compression Holdings, Inc., as Co-US Borrower and Guarantor, UC Canadian Partnership
Holdings Company, as Canadian Borrower, Wachovia Bank, National Association, as US Administrative Agent, Congress Financial Corporation (Canada), as Canadian Administrative Agent, JPMorgan Chase Bank, N.A., as Syndication Agent, Deutsche Bank
Securities Inc., The Bank of Nova Scotia and The Royal Bank of Scotland plc as Co-Documentation Agents and the Lenders signatory thereto arranged by Wachovia Capital Markets, LLC and J.P. Morgan Securities Inc. as Joint Lead Arrangers
and Joint Book Runners and Deutsche Bank Securities Inc. as Co-Arranger (incorporated by reference to Exhibit 10.1 of Universal Compression Holdings, Inc.'s Quarterly Report on Form 10-Q for the quarter ended December 31,
2004).
|10.10 |   | First Amendment to Senior Secured Credit Agreement dated as of September 22, 2005, among Universal Compression, Inc., as Co-US Borrower and Guarantor, Universal Compression Holdings, Inc., as Co-US Borrower and Guarantor, UC Canadian
Partnership Holdings Company, as Canadian Borrower, Wachovia Bank, National Association, as US Administrative Agent, Congress Financial Corporation (Canada), as Canadian Administrative Agent, JPMorgan Chase Bank, N.A., as Syndication Agent, Deutsche
Bank Securities Inc., The Bank of Nova Scotia and The Royal Bank of Scotland plc as Co-Documentation Agents and the Lenders signatory thereto arranged by Wachovia Capital Markets, LLC as Sole Lead Arranger and Sole Book Runner (incorporated by
reference to Exhibit 10.1 of Universal Compression Holdings, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005).                                                                          
|10.11 |   | Collateral Agreement, dated as of January 14, 2005, made by Universal Compression, Inc. and Universal Compression Holdings, Inc. in favor of Wachovia Bank, National Association, as Administrative Agent (incorporated by reference to
Exhibit 10.2 of Universal Compression Holdings, Inc.'s Quarterly Report on Form 10-Q for the quarter ended December 31, 2004).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|10.12 |   | Pledge and Security Agreement (Assignment of Pledged Securities), dated as of January 14, 2005, made by Universal Compression International, Inc., Enterra Compression Investment Company, Universal Compression Services, LLC and Universal
Compression Canadian Holdings, Inc., as Pledgors to Wachovia Bank, National Association, as Administrative Agent (incorporated by reference to Exhibit 10.3 of Universal Compression Holdings, Inc.'s Quarterly Report on Form 10-Q
for the quarter ended December 31, 2004).                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|10.13 |   | Supplement to Collateral Agreement, dated as of February 15, 2005, made by Universal Compression Holdings, Inc. in favor of Wachovia Bank, National Association, as Administrative Agent (incorporated by reference to Exhibit 10.13 of
Universal Compression Holdings, Inc.'s Annual Report on Form 10-K for the year ended March 31, 2005).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|      |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

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|10.14 |   | Supplement to Pledge Agreement dated as of February 15, 2005, made by Universal Compression International, Inc. and Universal Compression Services, LLC in favor of Wachovia Bank, National Association, as Administrative Agent (incorporated
by reference to Exhibit 10.14 of Universal Compression Holdings, Inc.'s Annual Report on Form 10-K for the year ended March 31, 2005).
|----- | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.15 |   | Supplement to Pledge Agreement dated as of February 15, 2005, made by Universal Compression Services, LLC in favor of Wachovia Bank, National Association, as Administrative Agent (incorporated by reference to Exhibit 10.15 of Universal
Compression Holdings, Inc.'s Annual Report on Form 10-K for the year ended March 31, 2005).                                              
|      |   | Executive Compensation Plans and Arrangements                                                                                                                                                                                                                                                                                                                                        
|10.16 |  | Universal Compression Holdings, Inc. Incentive Stock Option Plan (incorporated by reference to Exhibit 10 of Universal Compression Holdings, Inc.'s Quarterly Report on Form 10-Q for the period ended September 30,
1998).                                                                                                                                                          
|10.17 |  | Amendment Number One to Incentive Stock Option Plan, dated April 20, 2000 (incorporated by reference to Exhibit 10.3 of Amendment No. 2, filed with the SEC on May 22, 2000, to Universal Compression Holdings, Inc.'s
Registration Statement on Form S-1 (File No. 333-34090)).                                                                                                     
|10.18 |  | Amendment Number Two to Incentive Stock Option Plan, dated May 15, 2000 (incorporated by reference to Exhibit 10.4 of Amendment No. 2, filed with the SEC on May 22, 2000, to Universal Compression Holdings, Inc.'s Registration
Statement on Form S-1 (File No. 333-34090)).                                                                                                       
|10.19 |  | Amendment Number Three to Incentive Stock Option Plan, dated November 27, 2000 (incorporated by reference to Exhibit 4.7 of Universal Compression Holdings, Inc.'s Registration Statement on Form S-8 filed with the SEC on
February 9, 2001 (File No. 333-55260)).                                                                                                                  
|10.20 |  | Amendment Number Four to Incentive Stock Option Plan, dated August 15, 2002 (incorporated by reference to Exhibit 4.8 of Universal Compression Holdings, Inc.'s Registration Statement on Form S-8 filed with the SEC on
September 12, 2002 (File No. 333-99473)).                                                                                                                   
|10.21 |  | Amendment Number Five to Incentive Stock Option Plan, dated July 23, 2004 (incorporated by reference to Exhibit 4.9 of Universal Compression Holdings, Inc.'s Registration Statement on Form S-8 filed with the SEC on October 29,
 2004 (File No. 333-120108)).                                                                                                                     
|10.22 |  | Form of Non-Qualified Stock Option Agreement under the Incentive Stock Option Plan for outside directors of Universal Compression Holdings, Inc.'s Board of Directors (incorporated by reference to Exhibit 10.22 of Universal Compression
Holdings, Inc.'s Annual Report on Form 10-K for the year ended March 31, 2005).                                                           
|10.23 |  | Form of Non-Qualified Stock Option Agreement under the Incentive Stock Option Plan for employees (incorporated by reference to Exhibit 10.23 of Universal Compression Holdings, Inc.'s Annual Report on Form 10-K for the year ended
March 31, 2005).                                                                                                                                
|10.24 |  | Form of Incentive Stock Option Agreement under the Incentive Stock Option Plan (incorporated by reference to Exhibit 10.24 of Universal Compression Holdings, Inc.'s Annual Report on Form 10-K for the year ended March 31,
2005).                                                                                                                                                  
|10.25 |  | Universal Compression Holdings, Inc. Restricted Stock Plan for Executive Officers (incorporated by reference to Exhibit 4.2 of Universal Compression Holdings, Inc.'s Registration Statement on Form S-8 filed with the SEC on
August 17, 2001 (File No. 333-67784)).                                                                                                                
|      |   |                                                                                                                                                                                                                                                                                                                                                                                      

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|10.26 |   | Amendment Number One to Restricted Stock Plan for Executive Officers, dated July 23, 2004 (incorporated by reference to Exhibit 4.11 of Universal Compression Holdings, Inc.'s Registration Statement on Form S-8 filed with the SEC
on October 29, 2004 (File No. 333-120108)).                                                                                
|----- | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.27 |   | Form of Restricted Stock Agreement under the Restricted Stock Plan for Executive Officers (incorporated by reference to Exhibit 10.8 of Universal Compression Holdings, Inc.'s Quarterly Report on Form 10-Q for the quarter ended
September 30, 2001).                                                                                                         
|10.28 |   | Universal Compression Holdings, Inc. Directors' Stock Plan (incorporated by reference to Exhibit 4.3 of Universal Compression Holdings, Inc.'s Registration Statement on Form S-8 filed with the SEC on August 17, 2001 (File
No. 333-67784)).                                                                                                                  
|10.29 | * | Universal Compression, Inc. Employees' Supplemental Savings Plan as revised and restated effective January 1, 2005.                                                                                                                                                                                                                                             
|10.30 | * | Amendment Number One to Employees' Supplemental Savings Plan (as revised and restated effective January 1, 2005), dated March 2, 2006, and generally effective as of January 1, 2006.                                                                                                                                                                           
|10.31 |   | Universal Compression Holdings, Inc. Employee Stock Purchase Plan (incorporated by reference to Exhibit 4.1 of Universal Compression Holdings, Inc.'s Registration Statement on Form S-8 filed with the SEC on August 17, 2001
(File No. 333- 67784)).                                                                                                          
|10.32 |   | Amendment Number One to Employee Stock Purchase Plan, dated December 20, 2001 (incorporated by reference to Exhibit 10.56 of Universal Compression Holdings, Inc.'s Annual Report on Form 10-K for the fiscal year ended March 31,
 2002).                                                                                                                      
|10.33 |   | Form of Indemnification Agreement for executive officers and directors of Universal Compression Holdings, Inc. (incorporated by reference to Exhibit 10.27 of Amendment No. 1, filed with the SEC on May 3, 2000, to Universal
Compression Holdings, Inc.'s Registration Statement on Form S-1 (File No. 333-34090)).                                           
|10.34 |   | Form of Change of Control Agreement for executive officers of Universal Compression Holdings, Inc. (incorporated by reference to Exhibit 10.2 of Universal Compression Holdings, Inc.'s Quarterly Report on Form 10-Q for the quarter
ended September 30, 2005).                                                                                                
|10.35 |   | Letter dated March 15, 2001, with respect to certain retirement benefits to be provided to Stephen A. Snider (incorporated by reference to Exhibit 10.43 of Universal Compression Holdings, Inc.'s Annual Report on Form 10-K for the
fiscal year ended March 31, 2001).                                                                                        
|10.36 |   | Summary of Officers' Incentive Plan for Fiscal Year 2006 (incorporated by reference to Exhibit 10.1 of Universal Compression Holdings, Inc.'s Form 8-K filed August 3, 2005).                                                                                                                                                                                   
|10.37 | * | Summary Compensation Sheet for Executive Officers and Directors                                                                                                                                                                                                                                                                                                 
|      |    | Registration Rights Agreements                                                                                                                                                                                                                                                                                                                                  
|10.38 |    | Registration Rights Agreement, dated February 20, 1998 by and among Universal Compression Holdings, Inc., Castle Harlan Partners III, L.P. and each other party listed as signatory thereto (incorporated by reference to
Exhibit 10.14 to Universal Compression Holdings, Inc.'s Registration Statement on Form S-4 dated March 19, 1998 (File No. 333-48283)).
|10.39 |    | Form of Instruments of Accession to Registration Rights Agreement for each of Richard W. FitzGerald and Valerie L. Banner (incorporated by reference to Exhibit 4.10 to Universal Compression Holdings, Inc.'s Registration Statement
on Form S-1 (File No. 333-34090)).                                                                                        
|      |    |                                                                                                                                                                                                                                                                                                                                                                 

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|10.40 |   | Instrument of Accession to Registration Rights Agreement, dated April 28, 2000, for Energy Spectrum Partners LP (incorporated by reference to Exhibit 10.19 to Amendment No. 2 dated May 22, 2000, to Universal Compression Holdings,
 Inc.'s Registration Statement on Form S-1 (File No. 333-34090)).
|----- | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |   | Miscellaneous                                                                                                                                                                                                                                                                                          
|10.41 |   | Purchase Agreement dated December 9, 2005 by and between Universal Compression Holdings, Inc. and J.P. Morgan Securities, Inc. (incorporated by reference to Exhibit 10.1 of Universal Compression Holdings, Inc.'s
Form 8-K filed December 12, 2005).                                                 
|21.1  | * | List of Subsidiaries.                                                                                                                                                                                                                                                                                  
|23.1  | * | Consent of Deloitte & Touche LLP.                                                                                                                                                                                                                                                                      
|24.1  | * | Powers of attorney (set forth on the signature page hereof).                                                                                                                                                                                                                                           
|31.1  | * | Rule 13a-14(a) Certifications of the CEO.                                                                                                                                                                                                                                                              
|31.2  | * | Rule 13a-14(a) Certifications of the CFO.                                                                                                                                                                                                                                                              
|31.3  | * | Rule 15d-14(a) Certification of the CEO                                                                                                                                                                                                                                                                
|31.4  | * | Rule 15d-14(a) Certification of the CFO                                                                                                                                                                                                                                                                
|32.1  | * | Section 1350 Certifications.                                                                                                                                                                                                                                                                           
|32.2  | * | Section 1350 Certifications.                                                                                                                                                                                                                                                                           

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