1057234--3/1/2007--UNIVERSAL_COMPRESSION_HOLDINGS

related topics

{investment, property, distribution}

{debt, indebtedness, cash}

{operation, international, foreign}

{acquisition, growth, future}

{customer, product, revenue}

{cost, regulation, environmental}

{provision, law, control}

{gas, price, oil}

{system, service, information}

{personnel, key, retain}

{competitive, industry, competition}

{product, liability, claim}

{financial, litigation, operation}

{operation, natural, condition}

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. Our international operations subject us to risks that are difficult to predict. We face significant competition that may cause us to lose market share and harm our financial performance. We depend on particular suppliers and are vulnerable to product shortages and price increases. We do not insure against all potential losses and could be seriously harmed by unexpected liabilities. A substantial portion of our cash flow must be used to service our debt obligations, and we are vulnerable to interest rate increases. Our credit facilities impose restrictions on us that may affect our ability to successfully operate our business. Our new enterprise resource planning ( ERP ) system implementation may encounter problems that would negatively impact our business. 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 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 are subject to substantial environmental regulation, and changes in these regulations could increase our costs or liabilities. 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. Our proposed merger with Hanover is subject to the receipt of consents and approvals from various government entities that may impose conditions on, jeopardize or delay completion of the merger or reduce the anticipated benefits of the merger. While the merger is pending, we will be subject to business uncertainties and contractual restrictions that could adversely affect our business. Failure to complete the merger could negatively impact our stock price and our future business and financial results because of, among other things, the disruption that would occur as a result of uncertainties relating to a failure to complete the merger. The merger agreement limits our ability to pursue an alternative acquisition proposal and may require us to pay a termination fee of up to $70 million if we do.

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1057234--3/1/2007--UNIVERSAL_COMPRESSION_HOLDINGS_INC