<PAGE>
competes with other fabricators of natural gas compressors for sales in this
market. The demand for newly constructed natural gas compressor packages is a
function of growth in the consumption of natural gas and the age of producing
wells. Natural gas compression is required to maintain production rates and to
maximize recoverable reserves as natural gas reservoirs age and field pressure
declines.
The remaining demand for natural gas compression is met through rental of
natural gas compressor packages. In addition to well age and natural gas
consumption, a structural shift in U.S. oil and gas operations has affected
demand for natural gas compression package rentals. Many of the major oil
companies have directed their focus toward international operations and away
from domestic natural gas reserves. Accordingly, these companies recently have
been selling their domestic natural gas reserves and minimizing staff in
domestic operations. As a result, demand for rental packages of natural gas
compressors is expected to increase as buyers of natural gas reserves or
producers with reduced staffs are less likely to own and operate natural gas
compressor packages and more likely to rent natural gas compressor packages to
meet their natural gas compression needs.
International Operations. While most of Energy Industries' operations are
domestic, Energy Industries sells natural gas compressor packages and parts in
Canada through ENSERV, Inc. ("Enserv") and outside the U.S. and Canada through
Atlas Copco Airpower, N.V. ("Atlas Copco"). The following table compares
domestic and international sales for the twelve months ended December 31, 1993
and 1994 and the nine months ended June 30, 1995. Because the Company acquired
Energy Industries in November 1993, the Company's consolidated financial
results for its fiscal year ended September 30, 1994 include only eleven months
of Energy Industries' operations. For comparative purposes, however, the fiscal
1994 sales presented in the following table are for the twelve months ended
September 30, 1994 and include Energy Industries' sales information for an
additional month when Energy Industries was not owned by the Company. The
Company did not own Energy Industries prior to November 1993.
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED
NINE MONTHS SEPTEMBER 30,
ENDED --------------------
JUNE 30, 1995 1994 1993
------------- --------- ---------
(IN THOUSANDS, EXCEPT % AMOUNTS)
<S> <C> <C> <C>
CUSTOMER PACKAGE SALES:
Domestic............................ $18,277 $ 21,397 $ 16,727
International....................... 3,602 8,445 5,293
------- --------- ---------
Total............................. $21,879 $ 29,842 $ 22,020
======= ========= =========
PERCENT OF TOTAL SALES:
Domestic............................ 83.5% 71.7% 76.0%
International....................... 16.5% 28.3% 24.0%
</TABLE>
Energy Industries has entered into an agreement whereby it is an exclusive
supplier of gas compressor packages and parts to Enserv in Canada. This
agreement runs through October 1996.
Additionally, Energy Industries has entered into a marketing agreement with
Atlas Copco, headquartered in Belgium, for package sales outside North America.
As compensation for use of its worldwide marketing and distribution network,
Atlas Copco receives a commission on all such international sales of Energy
Industries' equipment. This agreement runs through 1998 and is subject to
automatic annual renewal unless notice is given of a party's desire to
terminate the relationship.
Competition. The principal competitive factors in natural gas compression
markets are price, service, availability and delivery time. Energy Industries
operates in a highly competitive environment and competes with a large number
of companies, some of which are larger and have greater resources than Energy
Industries.
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