The rotating equipment and services industry manufactures and services a wide range of technologically advanced equipment, including centrifugal and reciprocating compressors, steam and gas turbines, expanders and control systems. Demand for these solutions comes from a wide variety of large end markets, including the three major segments of the oil and gas industries (upstream, involving the production of oil and gas; midstream, involving the preparation and transportation of natural gas and liquids for future use; and downstream, involving refining), and the petrochemical, chemical, general industrial and power industries.

The rotating equipment industry includes a wide and diverse range of products, which can be grouped into two distinct categories:

“standard” equipment, based on a single, non-custom design, used for low-horsepower, lower-pressure and lower-volume applications in wellhead production from onshore or shallow-water offshore platform production; and custom-engineered equipment, built to customer specifications, engineered for the specific operating environment and application in which it will be put to use.

The industry is typically divided into two segments: new unit sales and aftermarket parts and services. Overall demand for compression products and services is generally linked to oil and natural gas consumption, both domestically and internationally. It is believed that the rotating equipment and aftermarket services industry continues to have significant growth potential due to a number of factors described below. Natural gas consumption increased worldwide at an average rate of 2.4% per year as a result of worldwide economic growth and the recognition of natural gas as a clean air fuel. Increased demand for forecasted natural gas is driving substantial growth in spending on liquefied natural gas infrastructure. Forecast spending on LNG plant equipment for 2005-2008 is $13.4 billion, 155% more than was spent on such equipment from 1964-2004. Decline rates associated with maturing natural gas fields in the United States and other countries have resulted in increased requirements for compression products and services to maintain commercially viable levels of production.

The Company is a leading supplier of turbomachinery for the oil and gas industries worldwide. Centrifugal compressors utilize turbomachinery technology that employs a series of graduated impellers to increase pressure. Applications for the Company’s turbo products include gas lift and injection, gas gathering, storage and transmission, synthetic fuels, ethylene, fertilizer, refineries and chemical production.

In 1995, the Company introduced the DATUM product line, which incorporates enhanced engineering features that provide significant operating and maintenance benefits for the clients. The DATUM is a comprehensive line of radial and axial split, modular and scalable construction, for flows to 500,000 cubic feet per minute(CFM), and discharge pressures to over 10,000 pounds per square inch gauge (psig).

The Company is a leading supplier of reciprocating compressors, offering products ranging from medium to high speed separable units driven by engines to large slow speed motor driven process reciprocating compressors. The Company offers 11 models of process reciprocating compressors, with power capacity ranging from 5 to 45,000 HP, and pressures ranging from vacuum to 60,000 psig. The Company offers six models of separable compressors, with power ratings to 10,500 HP. Applications for the Company’s reciprocating compressors include refiner processes, natural gas transmission and processing, high pressure injection, pipelines, production, natural gas liquid recovery, gas gathering, gas lift, gas reinjection and fuel gas booster.

The Company is a leading supplier of standard and engineered mechanical drive steam turbines and turbine generator sets. The Company’s mechanical drive steam turbine models have power capacity ranging from 2 to 75,000 HP and are used primarily to drive pumps, fans, blowers and compressors.

The Company’s aftermarket parts and services business offers a range of services designed to enable clients to maximize their return on assets by optimizing the performance of their mission-critical rotating equipment. The Company offers a broad range of aftermarket parts and services.

Cost of goods sold was $149.6 million, $538.0 million and $1,132.1 million for the period from October 30, 2004 through December 31, 2004, the period from January 1, 2004 through October 29, 2004, and the year ended December 31, 2003, respectively.

Gross profit was 25.2% for the period from October 30, 2004 through December 31, 2004 and 24.8% for the period from January 1, 2004 through October 29, 2004 compared to 15.2% for the year ended December 31, 2003.

Operating income for the period from October 30, 2004 through December 31, 2004 and for the period from January 1, 2004 through October 29, 2004 increased as a percentage of revenues to 13.0% and 6.9%, respectively, compared to 2.9% the year ended December 31, 2003.