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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
Annual Report Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
(Mark One)
[x] Annual report pursuant to Section 15(d) of the Securities Exchange Act
of 1934 (No Fee Required)
For the fiscal year ended December 31, 2001
OR
[ ] Transition report pursuant to Section 15(d) of the Securities Exchange
Act of 1934 (No Fee Required)
For the transition period from ____ to ____
Commission file nos.: 001-15843
333-48279
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
Universal Compression, Inc. 401(k) Retirement and Savings Plan
4440 Brittmoore Road
Houston, Texas 77041-8004
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
UNIVERSAL COMPRESSION HOLDINGS, INC.
UNIVERSAL COMPRESSION, INC.
4440 Brittmoore Road
Houston, Texas 77041-8004
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ITEM 4.
PAGE(S)
INDEPENDENT AUDITORS' REPORT.................................................4
FINANCIAL STATEMENTS:
Statements of net assets available for benefits.......................5
Statements of changes in net assets available for plan benefits.......6
Notes to financial statements......................................7-11
SUPPLEMENTAL SCHEDULE:
Schedule of assets held at December 31, 2001*...............................12
Schedule of reportable transactions at December 31, 2001*...................13
* Refers to required schedule in Form 5500 (Annual Return/Report of Employee
Benefit Plan) for the year ended December 31, 2001.
2
SIGNATURES
THE PLAN. Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
Universal Compression, Inc. 401(k)
Retirement and Savings Plan:
Date: June 28, 2002 By /s/ RICK KLEIN
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RICK KLEIN
HUMAN RESOURCES MANAGER
3
INDEPENDENT AUDITORS' REPORT
Universal Compression, Inc.
401(k) Retirement and Savings Plan:
We have audited the accompanying statements of net assets available for benefits
of the Universal Compression, Inc. 401(k) Retirement and Savings Plan (the
"Plan") as of December 31, 2001 and 2000, and the related statement of changes
in net assets available for benefits for the year ended December 31, 2001. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
Except as explained in the following paragraph, we conducted our audits in
accordance with auditing standards generally accepted in the United States of
America. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit 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.
As permitted by 29 CFR 2520.103-8 of the U.S. Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974, investment assets held by Wells Fargo Bank and Merrill
Lynch Trust Company, the trustees of the Plan, and transactions in those assets
were excluded from the scope of our audit of the Plan's 2000 financial
statements, except for comparing the information provided by the trustees, which
is summarized in Note 6, with the related information included in the financial
statements.
Because of the significance of the information that we did not audit, we are
unable to and do not, express an opinion on the Plan's financial statements as
of December 31, 2000. The form and content of the information included in the
2000 financial statements, other than that derived from the information
certified by the trustees, have been audited by us in accordance with auditing
standards generally accepted in the United States of America and, in our
opinion, are presented in compliance with the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974.
In our opinion, the financial statements referred to above, of the Universal
Compression, Inc. 401(k) Retirement and Savings Plan as of December 31, 2001,
and for the year then ended, present fairly, in all material respects, the
net assets available for benefits of the Plan as of December 31, 2001, and
changes in its net assets available for benefits for the year then ended in
conformity with accounting principles generally accepted in the United States
of America.
Our audit of the Plan's financial statements as of and for the year ended
December 31, 2001, was made for the purpose of forming an opinion on the
financial statements taken as a whole. The supplemental schedules listed in the
table of contents are presented for the purpose of additional analysis and are
not a required part of the basic financial statements, but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. These supplemental schedules are the responsibility of the Plan's
management. The supplemental schedules have been subjected to the auditing
procedures applied in the audit of the basic financial statements for the year
ended December 31, 2001, and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ Deloitte & Touche
April 16, 2002
4
UNIVERSAL COMPRESSION, INC.
401(k) RETIREMENT AND SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS,
DECEMBER 31, 2001 AND 2000
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ASSETS 2001 2000
INVESTMENTS - At fair value $17,169,866 $14,741,167
RECEIVABLES - Contributions:
Employee 139,963 89,126
Employer 39,548 29,811
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Total contributions receivable 176,511 118,937
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LOANS TO PARTICIPANTS 1,202,800 980,293
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NET ASSETS AVAILABLE FOR BENEFITS $18,549,177 $15,840,397
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See notes to financial statements.
5
UNIVERSAL COMPRESSION, INC.
401(k) RETIREMENT AND SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2001
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ADDITIONS:
Investment income $ 263,327
Contributions:
Employee 4,877,377
Employer 1,040,375
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Total additions 6,181,079
DEDUCTIONS:
Employee withdrawals 2,006,965
Administrative expenses 6,750
Net decrease in fair value of investments 1,458,584
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Total deductions 3,472,299
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INCREASE IN NET ASSETS AVAILABLE FOR BENEFITS 2,708,780
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 15,840,397
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End of year $18,549,177
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See notes to financial statements.
6
UNIVERSAL COMPRESSION, INC.
401(K) RETIREMENT AND SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS AS OF DECEMBER 31, 2001 AND 2000
AND FOR THE YEAR ENDED DECEMBER 31, 2001
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1. PLAN DESCRIPTION
The following brief description of the Universal Compression, Inc. 401(k)
Retirement and Savings Plan (the "Plan") is provided for general information
purposes only. Participants should refer to the Plan agreement for more
complete information.
GENERAL - The Plan is a defined contribution plan with a 401(k) feature
which covers substantially all employees of Universal Compression, Inc. and
its subsidiaries (collectively the "Company").
PARTICIPATION - Employees are eligible to enter and participate in the Plan
if they 1) have attained the age of eighteen and 2) have been an employee
for thirty days.
CONTRIBUTIONS - Participants may make contributions of up to 15% of
compensation through payroll deferrals. Various provisions of the Internal
Revenue Code may limit contributions of some highly compensated employees.
All contributions are exempt, up to the allowed maximum, from federal and
state income tax withholding in the year they are deferred, but are subject
to payroll taxes. The Company contributes a matching amount equal to 50% of
the first 6% of compensation deferred by a participant, subject to Internal
Revenue Code limits. Employer matching contributions attributable to each
participant's contributions on or after September 1, 2001 were made in the
form of Universal Compression Holdings, Inc. common stock.
PARTICIPANTS' ACCOUNTS - Contributions are invested as directed by the
participant. The selection from available investment funds is the sole
responsibility of each participant, and the Plan is intended to satisfy the
requirements of Section 404(c) of ERISA. Effective September 1, 2001,
employer matching contributions are invested in the Universal Compression
Holdings, Inc. Common Stock Fund. Shares and common stock dividends are
allocated to individual participant accounts in proportion to the amounts
of their contributions and related employer contributions.
Participants' accounts are charged with investment advisory and other fees
by the Trustees. All other expenses of administering the Plan are borne by
the Company.
VESTING AND DISTRIBUTION - Participants are 100% vested at all times in
their own contributions, plus any earnings accrued thereon, and based upon a
graduated schedule over five years, in employer matching contributions, plus
any earnings thereon.
A participant may request a distribution from his deferral account,
including his additional deferral account and rollover account, made on a
pretax basis, only if he suffers a hardship or is at least age 59 1/2. A
hardship distribution must comply with Section 401(k) of the Internal
Revenue Code.
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PAYMENT OF BENEFITS - On termination of service for any reason a participant
or, if the participant is dead, his beneficiary, may request the
distribution of the balance in all of his accounts. Distributions are made
as soon as practicable after the request for the distribution. However, with
limited exception, a participant may not delay distribution beyond April 1
of the year following the calendar year in which he attains age 70 1/2. A
beneficiary of a deceased participant may elect that a distribution be
delayed until a date that follows the occasion for distribution by not more
than one year. At December 31, 2001 and 2000, Plan assets included
approximately $0 and $2,057, respectively, of distributions payable to
former Plan participants.
EMPLOYEE LOANS RECEIVABLE - Participants may borrow, with some limitations,
from their accounts a minimum of $1,000 up to a maximum equal to the lesser
of $50,000 or 50% of their vested account balance. Loan terms range from 1-5
years or up to 15 years for the purchase of a primary residence. The loans
are secured by the balance in the participant's account and bear interest at
Prime plus 1%. Principal and interest is repaid on an after tax basis
through payroll deductions. Loan receipts will be reinvested based on the
participant's investment election for deferrals and additional deferrals at
the time of repayment.
FORFEITURES - Upon termination of employment, participants' nonvested
balances are forfeited. Such forfeitures can be applied to reduce employer
contributions or administrative expenses otherwise payable by the Company.
PLAN TERMINATION - Although it has not expressed any intention to do so, the
Company may terminate the Plan at any time subject to the provisions of the
ERISA. In the event the Plan is terminated, each participant shall be
entitled to 100% of all vested contributions, plus any earnings accrued
thereon, as of the date of termination.
PARTY-IN-INTEREST TRANSACTIONS - The investment by the Trustees of Plan
contributions into mutual funds managed by affiliates of the Trustees are
party-in-interest transactions, and the related management fees are deducted
from investment earnings. The Company is also a party-in-interest.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING - The financial statements are prepared on the accrual
basis of accounting.
INVESTMENT, VALUATION AND INCOME RECOGNITION - Investment, valuation and
income recognition are stated at fair value as determined by the Trustees
based upon quoted market prices for the underlying securities, and realized
and unrealized gains or losses are computed based on the changes in the fair
value of the assets during the Plan year.
USE OF ESTIMATES - The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of
America requires the Plan's management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements
and the reported amounts of additions to and deductions from such assets and
liabilities during the reporting period. Actual results could differ from
these estimates.
3. INVESTMENTS
The assets of the Plan are held and managed by the Trustee, Wells Fargo
Bank. In 2001, participants had the option of directing the investment of
their accounts into any of the following:
AMERICAN CENTURY INCOME & GROWTH FUND - seeks dividend growth, current
income and capital appreciation by investing in common stocks of
established companies.
INVESCO DYNAMICS FUND - seeks capital appreciation by investing
primarily in foreign and domestic common stocks.
8
INVESCO HIGH YIELD FUND - seeks high current income. Capital
appreciation is a secondary objective. The fund invests in fixed income
securities, preferred stocks and money market securities.
JANUS BALANCED FUND - seeks long-term growth of capital balanced by
current income by normally investing 40% to 60% of assets in securities
selected for their growth potential and 40% to 60% of assets in
securities selected for their income potential.
JANUS OVERSEAS FUND - seeks long-term growth of capital by investing in
a diversified portfolio of foreign and domestic common stocks.
PIMCO LOW DURATION FUND - seeks total return by investing in fixed
income securities with an average portfolio duration between one and
three years. The fund primarily invests in mortgaged-backed securities,
corporate bonds, and emerging market bonds.
WELLS FARGO INDEX FUND - seeks to replicate the return of the Standard &
Poor's 500 Composite Stock Price Index by investing in substantially all
of the stocks of the index in substantially the same weightings as the
Index.
WELLS FARGO LARGE COMPANY GROWTH FUND - seeks to provide long-term
capital appreciation by investing primarily in large, high-quality
domestic companies believed to have superior growth potential.
WELLS FARGO STABLE RETURN FUND - seeks safety of principal while
providing low-volatility total return by investing primarily in
guaranteed investment contracts ("GICs"), GIC alternatives, marketable
securities and money market instruments.
WELLS FARGO OUTLOOK FUNDS - these funds invest in a diversified mix of
domestic and international stocks, bonds and money market securities.
Each of the Outlook Funds, (Outlook 2010, Outlook 2020, Outlook 2030 and
Outlook 2040), are pre-mixed funds, investing in various blends of
stocks, bonds, and money market instruments seeking to produce
competitive returns over a set period of time. These funds seek higher
returns initially and then reallocate to a more conservative investment
mix as they approach their target dates (i.e. the year of each fund).
TIDEWATER INC. COMMON STOCK FUND - participants of the former parent
company, Tidewater Inc., were allowed to retain any of the common stock
of Tidewater Inc. in the Plan that had been in the predecessor's plan.
UNIVERSAL COMPRESSION HOLDINGS, INC. COMMON STOCK FUND (company match
only) (effective September 1, 2001) -- invests in the common stock of
Universal Compression Holdings, Inc., the parent of the Company. Cash
dividends thereon are reinvested in such Common Stock Fund. Effective
September 1, 2001, all employer matching contributions are invested in
the Universal Compression Holdings, Inc. Common Stock Fund only.
9
The following presents investments that represent 5% or more of the
Plan's net assets at year end:
DECEMBER 31,
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2001 2000
American Century Income & Growth Fund $4,119,575 $4,070,146
Janus Overseas Fund 1,121,941 1,128,644
Pimco Low Duration Fund 1,380,822 921,179
Wells Fargo Index Fund 1,278,053 1,072,691
Wells Fargo Stable Return Fund 4,424,821 3,483,007
Loan Fund 1,202,800 980,293
Tidewater, Inc. Common Stock Fund 1,981,828 3,193,334
During 2001, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) increased
(decreased) in fair value by $1,458,584 as follows:
Mutual funds $(1,142,797)
Common collective trust 236,083
Common stock funds (551,870)
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Total $(1,458,584)
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4. NONPARTICIPANT-DIRECTED INVESTMENTS
Information about the net assets and significant components of the changes
in net assets relating to the nonparticipant-directed investments is as
follows:
At December 31, 2001
Net assets - common stock $374,768
Year Ended December 31, 2001 Change in net assets:
Contributions $ 339,276
Interest, other income and net transfer (92)
Net appreciation in fair value of investments 43,157
Distribution to participants (7,539)
Administrative expense (34)
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Total $ 374,768
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10
5. TAX STATUS OF THE PLAN
The Internal Revenue Service has determined and informed the Company by a
letter dated May 28, 1999, that the Plan and related trust are designed in
accordance with applicable sections of the Internal Revenue Code ("IRC").
Though the Plan has been amended since that date, the plan administrator
believes that the Plan continues to be designed and is currently being
operated in compliance with the applicable requirements of the IRC.
6. INFORMATION PROVIDED TO THE PLAN ADMINISTRATOR BY THE TRUSTEES
The following unaudited information has been certified by the Trustee or
former Trustee to be complete and accurate and is included in the statement
of net assets available for benefits for 2000:
Investments, at fair value and loans to participants $ 15,721,460
7. SUBSEQUENT EVENTS
On April 1, 2002, the Company changed the Plan Trustee from Wells Fargo to
Union Bank of California. The change was made to provide participants with
more investment choices and easier access to their account information. The
Company also increased the maximum employee contribution percentage from 15%
to 25% effective January 1, 2002, subject to the maximum limitation by the
Internal Revenue Service.
11
UNIVERSAL COMPRESSION, INC.
401(k) RETIREMENT AND SAVINGS PLAN
SCHEDULE H; LINE 4(i) -
SCHEDULE OF ASSETS HELD FOR INVESTMENT,
DECEMBER 31, 2001
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(B) IDENTITY OF ISSUER,
BORROWER, LESSOR (C) DESCRIPTION OF (D) FAIR
(A) OR SIMILAR PARTY INVESTMENT VALUE
American Century Income & Growth Fund Registered Investment Company $ 4,119,575
Invesco Dynamics Fund Registered Investment Company 680,426
Invesco High Yield Fund Registered Investment Company 161,221
Janus Balanced Fund Registered Investment Company 597,693
Janus Overseas Fund Registered Investment Company 1,121,941
Pimco Low Duration Fund Registered Investment Company 1,380,822
* Wells Fargo Index Fund Registered Investment Company 1,278,053
* Wells Fargo Large Company Growth Fund Registered Investment Company 567,792
* Wells Fargo Stable Return Fund Common Collective Trust 4,424,821
* Wells Fargo Outlook 2010 Fund Registered Investment Company 125,724
* Wells Fargo Outlook 2020 Fund Registered Investment Company 140,298
* Wells Fargo Outlook 2030 Fund Registered Investment Company 142,555
* Wells Fargo Outlook 2040 Fund Registered Investment Company 72,349
* Loan Fund Loans to Participants 1,202,800
* Tidewater, Inc. Common Stock Fund Common Stock 1,981,828
* Universal Compression Holdings, Inc. Common Stock - Employer Matching
Common Stock Fund Contribution Only 374,768
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TOTAL $ 18,372,666
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*Party-in-interest
12
UNIVERSAL COMPRESSION, INC.
401(k) RETIREMENT AND SAVINGS PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS,
FOR THE YEAR ENDED DECEMBER 31, 2001
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(F)
(D) CURRENT
(C) PURCHASE VALUE OF (G)
(A) (B) DESCRIPTION PRICE/ (E) ASSET ON NET
IDENTITY OF DESCRIPTION OF SELLING COST TRANSACTION GAIN OR
PARTY INVOLVED OF ASSET TRANSACTION PRICE OF ASSET DATE (LOSS)
INDIVIDUAL TRANSACTIONS BY ISSUE -
No individual reportable
transactions noted
SERIES OF TRANSACTIONS BY ISSUE:
Wells Fargo Stable Common Collective Purchase $ 1,334,432 $ 1,334,432 $ 1,334,432 $
Return Fund Trust
American Century Registered Purchase 1,035,763 1,035,763 1,035,763
Income & Investment
Growth Fund Company
13