##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
      Form 10-K
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal
    year ended  December 31, 2009oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission File Number:
    001-32586
      DRESSER-RAND GROUP
    INC.
 (Exact name of registrant as
    specified in its charter)
  Delaware

20-1780492(State or other jurisdiction
    of

(I.R.S. Employer Identification
    No.)incorporation or
    organization)   West8 Tower, Suite 1000
    10205 Westheimer Rd.
    Houston, Texas 77042 (Address Of Principal
    Executive Offices)
 (713) 354-6100
    (Registrants Telephone Number, Including Area Code)
    Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, $0.01 par value

New York Stock Exchange       Securities registered pursuant to
    Section 12(g) of the Act:
 None
 
 (Title of class)
 
 (Title of class)
  þ o
  o þ
  þ o
  Regulation S-T o o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
  Large accelerated
    filer þ

Accelerated
    filer o

Non-accelerated
    filer o

Smaller reporting
    company o(Do not check if a smaller reporting company)   Rule 12b-2 o þ
      DOCUMENTS INCORPORATED BY
    REFERENCE




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##### 



TABLE
    OF CONTENTS
   
 PagePART IItem 1.


Business


3Item 1A.


Risk Factors


15Item 1B.


Unresolved Staff Comments


23Item 2.


Properties


23Item 3.


Legal Proceedings


23Item 4.


Submission of Matters to a Vote of Security
    Holders


24PART IIItem 5.


Market for Registrants Common Equity and
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


25Item 6.


Selected Financial Data


27Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


28Item 7A.


Quantitative and Qualitative Disclosures About
    Market Risk


45Item 8.


Financial Statements and Supplementary Data


45Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


45Item 9A.


Controls and Procedures


45Item 9B.


Other Information


46PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


46Item 11.


Executive Compensation


46Item 12.


Security Ownership of Certain Beneficial Owners
    and Management


46Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


46Item 14.


Principal Accounting Fees and Services


46PART IVItem 15.


Exhibits, Financial Statements and Schedules


47EX-10.19EX-10.26EX-10.27EX-10.28EX-10.29EX-10.49EX-10.51EX-10.52EX-21.1EX-23.1EX-31.1EX-31.2EX-32.1EX-32.2   2




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##### Table of Contents



ITEM 1.
    BUSINESS
    ($ in millions)  Overview
  Form 10-K,
  Form 10-K,
  2 and/or
    and/or
  
    lower clients total cost of ownership and improve
    equipment performance;
    lower both our clients and our transaction costs; 3




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
    better forecast our future revenues;
    develop a broad, continuing
    business-to-business
    relationship with our clients that often results in a
    substantial increase in the level of activity with those
    clients; and
    provide access to the entire organization that enhances
    communications.      
    the increased worldwide demand for energy resulting from
    population and economic growth;
    the maturation of production fields worldwide, which requires
    increased use of compression equipment to maintain production
    levels;
    the increase in demand for natural gas, which is driving growth
    in gas production, storage and transmission infrastructure;
    regulatory and environmental initiatives, including clean fuel
    legislation and stricter emissions controls worldwide;
    the increased interest in and government support for renewable
    energy sources such as wind, solar and wave as well as
    environmentally focused solutions such as compressed air energy
    and carbon capture and sequestration;
    the aging installed base of equipment, which is increasing
    demand for aftermarket parts and services, revamps and
    upgrades; and
    the increased outsourcing of equipment maintenance and
    operations.  Business
    Strategy
         4




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2
    Increase Sales of Aftermarket Parts and Services to the
    Existing Installed Base.
  Expand Aftermarket Parts and Services Business to
    Non-Dresser-Rand Original Equipment Manufacturers
    Equipment.
 5




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Grow Alliances.
  Expand our Performance-Based Long-Term Service
    Contracts. +
  Introduce New and Innovative Products and
    Technologies. New Product Development.
  Continue to Improve Profitability.
  Selectively Pursue Acquisitions.
 6




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Services
    and Products
    
  Form 10-K.
  New
    Units
    Dresser-Rand
    Major Product Categories
  End MarketsMaximum


Up


Mid


Down


PetroProduct

Performance


Stream


Stream


Stream


Chemical


Chemical


Industrial


PowerTurbo ProductsCentrifugal Compressors


up to 500k CFM



ü



ü



ü



ü



ü



ü



üGas Turbines & Power Recovery Turbines


up to 50+ MW



ü



ü



ü



ü



ü



ü



üHot Gas Expanders


up to 1600 °F











ü



ü











üReciprocating CompressorsProcess


up to 45k HP



ü



ü



ü



ü



ü



üSeparable


up to 11k HP,



ü



ü



ü7500 psigSteam Turbines


up to 75 MW



ü



ü



ü



ü



ü



ü



ü   Turbo Products. 2
   7




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Reciprocating Compressors. 2 2 3
  Steam Turbines.
  New
    Product Development
       8




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Revamp/Upgrade
    Opportunities
      and/or
    Aftermarket
    Parts and Services
    
    Replacement Parts
    Equipment Repair & Rerates
    Field Service Turnaround
    Equipment Installation
    U.S. Navy Service and Repair
    Applied Technology
    Operation and Maintenance Contracts
    Long-Term Service Agreements
    Rotor/Spare Parts Storage
    Special Coatings/Weldings 9




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
    Condition Monitoring
    Product Training
    Controls Retrofit
    Turnkey Installation/Project Management
    Site/Reliability Audits        Sales and
    Marketing
    Manufacturing
    and Engineering Design
   10




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day-to-day
    Clients
    and/or
  Competition
   11




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Research
    and Development
    Employees
    Painted
    Post, N.Y.
     12




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Wellsville,
    N.Y.
    Other
    Labor Relations Matters
  contract-by-contract and/or
  Environmental
    and Government Regulation
       13




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Intellectual
    Property
          Additional
    Information
  www.dresser-rand.com www.sec.gov. Form 10-K. 1-800-SEC-0330.
  www.dresser-rand.com c/o General www.dresser-rand.com Form 8-K
 14




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ITEM 1A.
    RISK
    FACTORS  Economic
    recessions could adversely affect our business.
    Volatility
    and disruption of the credit markets may negatively impact
    us.
    Our
    operating results and cash flows could be harmed because of
    industry downturns.
      We may
    not be successful in implementing our business strategy to
    increase our aftermarket parts and services
    revenue.
   15




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We
    face intense competition that may cause us to lose market share
    and harm our financial performance.
    We may
    not be able to integrate our acquisitions successfully, or
    achieve the expected benefits from, any future acquisitions,
    which could adversely affect our results.
    
    use of available cash, new borrowings or borrowings under our
    restated senior secured credit facility to consummate the
    acquisition;
    demands on management related to the increase in our size after
    an acquisition;
    diversion of managements attention from existing
    operations to the integration of acquired companies;
    integration into our existing systems;
    difficulties in the assimilation and retention of
    employees; and
    potential adverse effects on our operating results.    Economic,
    political and other risks associated with worldwide sales and
    operations could adversely affect our business.
    
    changes in foreign currency exchange rates;
    exchange controls which impact our ability to convert currencies;
    changes in a specific countrys or regions political
    or economic conditions, particularly in developing countries;
    civil unrest in any of the countries in which we operate;
    tariffs, other trade protection measures and import or export
    licensing requirements; 16




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
    potentially negative consequences from changes in tax laws;
    difficulty in staffing and managing widespread operations;
    differing labor regulations;
    requirements relating to withholding taxes on remittances and
    other payments by subsidiaries;
    different regimes controlling the protection of our intellectual
    property;
    restrictions on our ability to own or operate subsidiaries, make
    investments or acquire new businesses in these jurisdictions;
    restrictions on our ability to repatriate dividends from our
    subsidiaries;
    difficulty in collecting international accounts receivable;
    difficulty in enforcement of contractual obligations governed by
    non-U.S. law;
    unexpected transportation delays or interruptions;
    unexpected changes in regulatory requirements; and
    the burden of complying with multiple and potentially
    conflicting laws.           17




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Fluctuations
    in the value of the U.S. dollar and other currencies and the
    volatility of exchange rates may adversely affect our financial
    condition and results of operations.
    period-to-period
    and/or
  If we
    lose our senior management or key personnel, our business may be
    materially and adversely affected.
   18




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Environmental
    compliance costs and liabilities and responses to concerns
    regarding climate change could affect our financial condition,
    results of operations and cash flows adversely.
  clean-up and/or
  clean-up
  clean-up clean-up and/or
    Failure
    to maintain a safety performance that is acceptable to our
    clients could result in the loss of future
    business.
     19




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Our
    business could suffer if we are unsuccessful in negotiating new
    collective bargaining agreements.
  contract-by-contract
  We may
    be faced with product claims or adverse consequences of
    regulations as a result of the hazardous applications in which
    our products are used.
    Third
    parties may infringe our intellectual property or we may
    infringe the intellectual property of third parties, and we may
    expend significant resources enforcing or defending our rights
    or suffer competitive injury.
      Our
    business may be adversely affected if we encounter difficulties
    as we implement an Oracle based information management
    system.
   20




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Our
    brand name may be subject to confusion.
    We
    require a significant amount of cash to operate our business and
    to service our indebtedness. Our ability to generate cash and
    access capital on reasonable terms and conditions depends on
    many factors beyond our control.
    The
    covenants in our restated senior secured credit facility and the
    indenture governing our senior subordinated notes impose
    restrictions that may limit our operating and financial
    flexibility.
    
    incur liens;
    borrow money, guarantee debt and, in the case of restricted
    subsidiaries, sell preferred stock;
    issue redeemable preferred stock;
    pay dividends;
    make redemptions and repurchases of certain capital stock;
    make capital expenditures and specified types of investments;
    prepay, redeem or repurchase subordinated debt;
    sell assets or engage in acquisitions, mergers, consolidations
    and asset dispositions;
    amend material agreements;
    change the nature of our business; and
    engage in affiliate transactions.    and/or
 21




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and/or
  Our
    pension expenses and funding requirements are affected by
    factors outside our control, including the performance of plan
    assets, interest rates, actuarial data and experience and
    changes in laws and regulations.
    We
    have reported material weaknesses in our internal controls over
    financial reporting in prior years.
  Form 10-K Controls and Procedures Form 10-K
    The
    market price of our common stock may be volatile.
    
    actual or anticipated variations in operating results;
    changes in opinions and earnings and other financial estimates
    by securities analysts;
    actual or anticipated changes in economic, political or market
    conditions, such as recessions, depressions or international
    currency fluctuations;
    actual or anticipated changes in the regulatory environment
    affecting our industry;
    changes in the market valuations of our industry peers; and
    announcements by us or our competitors of significant
    acquisitions, strategic partnerships, divestitures, joint
    ventures, new products and technologies, or other strategic
    initiatives.   22




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Provisions
    in our amended and restated certificate of incorporation and
    amended and restated bylaws and Delaware law may discourage a
    takeover attempt.
    ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS    ITEM 2.
    PROPERTIES    Approx.Location

Status

Square Feet


TypeBielefeld, Germany

Owned


30,492


Manufacturing and servicesBurlington, Iowa

Owned


114,000


Manufacturing and servicesCampinas, Brazil

Owned


36,870


ServicesHouston, Texas

Owned


109,800


Manufacturing and servicesHouston, Texas

Owned/Leased


173,002


Warehouse and officesKongsberg, Norway

Leased


119,737


Manufacturing and servicesLe Havre, France

Owned


829,359


Manufacturing and servicesNaroda, India

Leased


102,000


Manufacturing and servicesOberhausen, Germany

Owned


75,122


Manufacturing and servicesOlean, New York

Owned/Leased


934,012


Manufacturing and servicesPainted Post, New York

Owned


840,000


Manufacturing and servicesPeterborough, United Kingdom

Owned/Leased


176,306


Manufacturing and servicesShanghai, China

Leased


92,493


Manufacturing and servicesWellsville, New York

Owned


396,912


Manufacturing and services   ITEM 3.
    LEGAL
    PROCEEDINGS ($ and £ in millions)     23




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ITEM 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS   24




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##### Table of Contents



PART II  ITEM 5.
    MARKET
    FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER
    MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES    High


Low2009Three months ended March 31, 2009

$
23.99


$
17.19Three months ended June 30, 2009

$
29.36


$
22.57Three months ended September 30, 2009

$
32.66


$
23.75Three months ended December 31, 2009

$
32.42


$
27.592008Three months ended March 31, 2008

$
40.74


$
27.47Three months ended June 30, 2008

$
41.76


$
30.49Three months ended September 30, 2008

$
40.56


$
30.23Three months ended December 31, 2008

$
30.11


$
12.74       Issuer
    Purchases of Equity Securities
    ApproximateDollar ValueTotal Number


of Sharesof Shares


That May YetAverage Price


Purchased as Part of


Be PurchasedTotal Number of


Paid Per


Publicly Announced Plans


Under thePeriod

Shares Purchased (1)


Share


or Programs


Plans or ProgramsOctober 2009










November 2009


1,222


$
31.05



December 2009










Total


1,222







     (1)
    
    These shares were delivered to us as payment of withholding
    taxes due on the vesting of restricted stock issued under our
    Stock Incentive Plan. 25




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##### Table of Contents



Performance
    Graph
    Comparison
    of Cumulative Total Return
  
  INDEXED RETURNSBase



Years EndingPeriodCompany/Index


8/5/05



12/30/05



12/29/06



12/31/07



12/31/08



12/31/09Dresser-Rand Group Inc.


$
100



$
106



$
107



$
171



$
76



$
139S&P 500 Index



100




103




119




125




79




91PHLX Oil Service Sector Index



100




110




121




182




73




118    26




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ITEM 6.
    SELECTED
    FINANCIAL DATA ($ in millions, except per share
    amounts)  Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations Form 10-K.
  Year Ended December 31,2009


2008


2007


2006


2005Statement of Income Data:Net sales, third parties

$
2,289.6


$
2,194.7


$
1,665.0


$
1,501.5


$
1,206.9Other operating revenue


















1.3Total revenues


2,289.6



2,194.7



1,665.0



1,501.5



1,208.2Cost of sales


1,632.1



1,576.1



1,216.1



1,097.8



921.0Gross profit


657.5



618.6



448.9



403.7



287.2Selling and administrative expenses(1)


287.3



273.8



239.0



228.8



164.0Research and development expenses


20.3



12.7



12.8



10.4



7.1Curtailment amendment/partial settlement(2)


1.3



(5.4
)






(11.8
)


Income from operations


348.6



337.5



197.1



176.3



116.1Interest expense, net


(31.8
)


(29.4
)


(36.8
)


(47.9
)


(57.0
)Early redemption premium on debt


















(3.7
)Other (expense) income, net


(4.9
)


(6.8
)


7.3



8.9



(2.8
)Income before income taxes


311.9



301.3



167.6



137.3



52.6Provision for income taxes


101.1



103.6



60.9



58.5



15.5Net income

$
210.8


$
197.7


$
106.7


$
78.8


$
37.1Net income per share:Basic

$
2.58


$
2.36


$
1.25


$
0.92


$
0.56Diluted

$
2.57


$
2.36


$
1.25


$
0.92


$
0.56Cash flow data:Cash flows provided by operating activities

$
129.8


$
234.8


$
216.0


$
164.1


$
212.4Cash flows used in investing activities


(62.6
)


(136.3
)


(26.0
)


(19.5
)


(59.5
)Cash flows provided by (used in) financing activities


1.9



(148.6
)


(140.8
)


(100.1
)


(160.1
)   As of December 31,2009


2008


2007


2006


2005Balance Sheet Data:Cash and cash equivalents

$
223.2


$
147.1


$
206.2


$
146.8


$
98.0Total assets


2,150.2



2,052.2



1,950.9



1,771.3



1,657.9Debt:Current portion of debt


0.1



0.2



0.2



0.1



0.1Long-term debt, net of current maturities


370.0



370.1



370.3



505.6



598.1Total debt


370.1



370.3



370.5



505.7



598.2Stockholders equity


1,012.6



760.2



805.2



631.9



514.7     (1)
    
    2006 amount includes stock-based compensation
    expense  exit units of $23.6 as disclosed in our
    Annual Report on
    form 10-K
    for the year ended December 31, 2006.(2)
    
    See Note 12, Post-retirement Benefits other than
    Pensions, in the Notes to Consolidated Financial Statements. 27




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ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS ($ in millions)  Safe
    Harbor Statement Under Private Securities Litigation
    Reform Act of 1995
  Form 10-K Form 10-K,
  
    economic or industry downturns;
    volatility and disruption of the credit markets;
    our inability to implement our business strategy to increase our
    aftermarket parts and services revenue;
    our inability to generate cash and access capital on reasonable
    terms;
    competition in our markets;
    the variability of bookings due to volatile market conditions,
    client subjectivity in placing orders, and timing of large
    orders;
    failure to integrate our acquisitions, or achieve the expected
    benefits from any future acquisitions;
    economic, political, currency and other risks associated with
    our international sales and operations;
    fluctuations in currency values and exchange rates;
    loss of our senior management or other key personnel;
    environmental compliance costs and liabilities;
    failure to maintain safety performance acceptable to our clients;
    failure to negotiate new collective bargaining agreements;
    unexpected product claims or regulations;
    infringement of our intellectual property rights or our
    infringement of others intellectual property rights;
    our pension expenses and funding requirements; and
    other factors described in this
    Form 10-K.  Risk Factors Form 10-K.
  Overview
  Business, Form 10-K
   28




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Corporate
    History
          Basis of
    Presentation
    Effects
    of Currency Fluctuations
     29




---



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Revenues
    Cost of
    Sales
    Selling
    and Administrative Expenses
    Research
    and Development Expenses
    Other
    (Expense) Income
    Depreciation
    and Amortization
    Bookings
    and Backlog
  New
    Units
   30




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Aftermarket
    Parts and Services
    Letters
    of Credit, Bank Guarantees and Surety Bonds
    Results
    of Operations
  Year
    ended December 31, 2009, compared to the year ended
    December 31, 2008
  Year Ended


Year EndedDecember 31, 2009


December 31, 2008Statement of Operations Data:Total revenues

$
2,289.6



100.0
%

$
2,194.7



100.0
%Cost of sales


1,632.1



71.3



1,576.1



71.8Gross profit


657.5



28.7



618.6



28.2Selling and administrative expenses


287.3



12.5



273.8



12.5Research and development expenses


20.3



0.9



12.7



0.6Curtailment amendment/partial settlement


1.3



0.1



(5.4
)


(0.2
)Operating income


348.6



15.2



337.5



15.3Interest expense, net


(31.8
)


(1.4
)


(29.4
)


(1.3
)Other expense, net


(4.9
)


(0.2
)


(6.8
)


(0.3
)Income before income taxes


311.9



13.6



301.3



13.7Provision for income taxes


101.1



4.4



103.6



4.7Net income

$
210.8



9.2
%

$
197.7



9.0
%Bookings

$
1,661.5






$
2,523.3Backlog  ending

$
1,711.7






$
2,251.5   Total revenues.
  Cost of sales.
 31




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Gross profit.
  Selling and administrative expenses.
  Research and development expenses.
  Curtailment amendment/partial settlement.
  Operating income.
  Interest expense, net.
  Other expense, net.
 32




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Provision for income taxes.
  Bookings and backlog.
    Segment
    information
         33




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Segment
    Analysis  year ended December 31, 2009, compared
    to year ended December 31, 2008
  Year Ended


Year EndedDecember 31, 2009


December 31, 2008RevenuesNew units

$
1,258.8



55.0
%

$
1,202.7



54.8
%Aftermarket parts and services


1,030.8



45.0
%


992.0



45.2
%Total revenues

$
2,289.6



100.0
%

$
2,194.7



100.0
%Gross profitNew units

$
262.9






$
217.2Aftermarket parts and services


394.6







401.4Total gross profit

$
657.5






$
618.6Operating incomeNew units

$
169.0






$
131.9Aftermarket parts and services


264.7







276.7Unallocated corporate expenses


(85.1
)






(71.1
)Total operating income

$
348.6






$
337.5BookingsNew units

$
727.2






$
1,429.3Aftermarket parts and services


934.3







1,094.0Total bookings

$
1,661.5






$
2,523.3Backlog  endingNew units

$
1,370.8






$
1,830.5Aftermarket parts and services


340.9







421.0Total backlog

$
1,711.7






$
2,251.5   New
    Units
  Revenues.
  Gross profit.
  Operating income.
  Bookings and Backlog.
 34




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##### Table of Contents



Aftermarket
    Parts and Services
  Revenues.
  Gross profit.
  Operating income.
  Bookings and backlog.
    Year
    ended December 31, 2008 compared to the year ended
    December 31, 2007
  Year Ended


Year EndedDecember 31, 2008


December 31, 2007Statement of Operations Data:Revenues

$
2,194.7



100.0
%

$
1,665.0



100.0
%Cost of sales


1,576.1



71.8



1,216.1



73.0Gross profit


618.6



28.2



448.9



27.0Selling and administrative expenses


273.8



14.4



239.0



14.4Research and development expenses


12.7



0.6



12.8



0.8Plan settlement/curtailment amendment


(5.4
)


(0.2
)






Operating income


337.5



15.3



197.1



11.8Interest expense, net


(29.4
)


(1.3
)


(36.8
)


(2.2
)Other (expense) income, net


(6.8
)


(0.3
)


7.3



0.4Income before income taxes


301.3



13.7



167.6



10.1Provision for income taxes


103.6



4.7



60.9



3.7Net income

$
197.7



9.0
%

$
106.7



6.4
%Bookings

$
2,523.3






$
2,194.7Backlog  ending

$
2,251.5






$
1,859.3   Total revenues.
 35




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##### Table of Contents



Cost of sales.
  Gross profit. Form 10-K.
  Selling and administrative expenses.
  Research and development expenses.
  Curtailment amendment/partial settlement.
  Operating income.
  Interest expense, net.
 36




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##### Table of Contents



Other (expense) income, net.
  Provision for income taxes.
  Bookings and backlog.
  Segment
    Analysis  year ended December 31, 2008 compared
    to year ended December 31, 2007
  Year Ended


Year EndedDecember 31, 2008


December 31, 2007RevenuesNew units

$
1,202.7



54.8
%

$
813.5



48.9
%Aftermarket parts and services


992.0



45.2
%


851.5



51.1
%Total revenues

$
2,194.7



100.0
%

$
1,665.0



100.0
%Gross profitNew units

$
217.2






$
127.2Aftermarket parts and services


401.4







321.7Total gross profit

$
618.6






$
448.9Operating incomeNew units

$
131.9






$
56.4Aftermarket parts and services


276.7







213.8Unallocated corporate expenses


(71.1
)






(73.1
)Total operating income

$
337.5






$
197.1BookingsNew units

$
1,429.3






$
1,321.5Aftermarket parts and services


1,094.0







873.2Total bookings

$
2,523.3






$
2,194.7Backlog  endingNew units

$
1,830.5






$
1,543.0Aftermarket parts and services


421.0







316.3Total backlog

$
2,251.5






$
1,859.3   New
    Units
  Revenues.
  Gross profit.
 37




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##### Table of Contents



Form 10-K.
  Operating income.
  Bookings and Backlog.
  Aftermarket
    Parts and Services
  Revenues.
  Gross profit. Form 10-K.
  Operating income.
  Bookings and Backlog.
  Liquidity
    and Capital Resources
     38




---



##### Table of Contents



39




---



##### Table of Contents



Fair Value Measurements at December 31, 2009Quoted Prices inActive Markets for


Significant Other


SignificantIdentical Assets


Observable Inputs


Unobservable InputsTotal


(Level 1)


(Level 2)


(Level 3)Asset CategoryCash and cash equivalents

$
2.8


$



$
2.8


$
U.S. equities


6.5







6.5



U.S. large-cap equities


53.8



53.8







U.S. small-cap value equities


8.8



8.8







U.S. small-cap growth equities


8.8



8.8







International equities


65.9



1.8



64.1



U.S. fixed income(1)


49.1



49.1







International fixed income(2)


30.6







30.6



Global asset allocations(3)


27.9



14.1



13.8



Insurance contracts(4)


21.7











21.7Total

$
275.9


$
136.4


$
117.8


$
21.7     (1)
    
    U.S. Fixed Income: Includes investments in the broad fixed
    income market such as government and agency bonds, mortgage
    bonds, and corporate bonds. Duration of the bonds may range from
    short (e.g., three months or less) to very long (e.g.,
    12 years or longer). Credit quality of U.S. Fixed Income is
    generally high quality in nature (e.g., AAA to BBB) but can also
    include lower quality or high yield bonds (e.g., BB or lower).
    Common indices are the Barclays Aggregate and Citigroup Broad
    Investment Grade Index.  (2)
    
    International Fixed Income: Includes investments in the broad
    fixed income market such as government and corporate bonds.
    Duration of the bonds ranges up to 16.8 years. Credit
    quality of International Fixed Income is generally high quality
    in nature (e.g., AAA to A). Common indices are the FTSE UK Glits
    >15 Years, iBoxx £ Non-Gilts ex BBB 15 Year
    + and FTSE A Index-Linked > 5 Years.  (3)
    
    Global Asset Allocation: Broadly diversified strategy where
    investment managers have the capacity to invest in multiple
    asset classes and the ability to alter asset class allocations
    with agreed tolerances. There is no common index for this asset
    class and typically a blended index of equities and fixed income
    is utilized, ex. 60% S&P 500/40% Barclays Aggregate.  (4)
    
    Insurance Contract: Provided by insurance companies that pay
    benefits to retirees.   40




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##### Table of Contents



Contractual
    Obligations ( in millions)
    30-year
          Payments Due by PeriodTotal


2010


2011-2012


2013-2014


ThereafterDebt obligations

$
370.1


$
0.1


$



$
370.0


$
Operating lease obligations


52.0



15.1



21.0



9.7



6.2Postemployment benefits


235.2



21.0



42.2



45.0



127.0Interest


136.4



27.3



54.6



54.5



Acquisition agreement


10.0



10.0











Contingent consideration


24.1



24.1











License agreement (trademark)


1.8



0.4



0.9



0.5



Total

$
829.6


$
98.0


$
118.7


$
479.7


$
133.2   Critical
    Accounting Policies
  Form 10-K,
  Revenue recognition
  and/or
 41




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##### Table of Contents




    The delivered unit(s) has value to the client on a stand-alone
    basis.
    There is objective and reliable evidence of the fair value of
    the undelivered unit(s).      Inventories
  Income Taxes  740-10 Accounting for
    Uncertainty in Income Taxes, an interpretation of FASB Statement
    No. 109) 740-10
    Employee benefit plans
 42




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##### Table of Contents



1% Increase

1% DecreaseEffect on total service and interest cost components

$
0.1


$
(0.1
)Effect on postretirement benfit obligations


1.5



(1.4
)   Commitments contingencies
    Goodwill and other intangible assets
   43




---



##### Table of Contents



New
    Accounting Standards
  Noncontrolling Interests in
    Consolidated Financial Statements  an amendment of
    ARB No. 51) Consolidated Financial
    Statements
  Business Combinations)
  805-20-25-18A Assets Acquired
    and Liabilities Assumed in a Business Combination That Arise
    From Contingencies) 805-20-25-18A 805-20-25-18A
  Subsequent Events).
  105-10 The FASB Accounting
    Standards Codification and the Hierarchy of Generally Accepted
    Accounting Principles 105-10 105-10
  2009-13, Revenue Recognition 2009-13 2009-13
  2009-16, Accounting for
    Transfers of Financial Assets Accounting for Transfers and Servicing of Financial Assets
    and Extinguishments of Liabilities 2009-16 2009-16 2009-16 2009-16
 44




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##### Table of Contents



2009-17, Amendments to FASB
    Interpretation No. 46(R) 2009-17 2009-17 2009-17
  2010-6, Improving Disclosures About Fair Value Measurements 2010-6 2010-6
  ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK ($ in
    Millions)  non-U.S. dollar non-U.S. subsidiaries
  ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA  Exhibits, Financial
    Statements and Schedules Form 10-K.
  ITEM 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE    ITEM 9A.
    CONTROLS
    AND PROCEDURES  Disclosure
    Controls and Procedures
  Rules 13a-15(e)
  Managements
    Report on Internal Control Over Financial Reporting
  Rules 13a-15(f) Internal Control  Integrated
    Framework
 45




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##### Table of Contents



Form 10-K.
  Changes
    in Internal Control Over Financial Reporting
    ITEM 9B.
    OTHER
    INFORMATION   PART III  ITEM 10.
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE    ITEM 11.
    EXECUTIVE
    COMPENSATION    ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
    MANAGEMENT    ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
    INDEPENDENCE    ITEM 14.
    PRINCIPAL
    ACCOUNTING FEES AND SERVICES   46




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##### Table of Contents



PART IV
  ITEM 15.
    EXHIBITS,
    FINANCIAL STATEMENTS AND SCHEDULES    Form 10-K
  (1)

Consolidated Financial StatementsReport of Independent Registered Public Accounting Firm

F-2Consolidated Statement of Income for the years ended
    December 31, 2009, 2008 and 2007

F-3Consolidated Balance Sheet at December 31, 2009 and 2008

F-4Consolidated Statement of Cash Flows for the years ended
    December 31, 2009, 2008 and 2007

F-5Consolidated Statement of Changes in Stockholders Equity
    for the years ended December 31, 2009, 2008 and 2007

F-6Notes to Consolidated Financial Statements

F-7 to F-43(2)

Consolidated Financial Statement SchedulesSchedule II  Valuation and Qualifying Accounts
    and Reserves  For the years ended December 31,
    2009, 2008 and 2007Schedules not included have been omitted because they are not
    applicable or the required information is shown in the
    consolidated financial statement or notes.(3)

Exhibits     3
.1

Amended and Restated Certificate of Incorporation of
    Dresser-Rand Group Inc. (incorporated by reference to Exhibit
    3.1 to Dresser-Rand Group Inc.s Registration Statement on
    Form S-1/A, filed July 18, 2005, File No. 333-124963).3
.2

Amended and Restated By-Laws of Dresser-Rand Group Inc.
    (incorporated by reference to Exhibit 3.1 to Dresser-Rand Group
    Inc.s Current Report on Form 8-K, filed November 12, 2009,
    File No. 001-32586).4
.1

Form of certificate of Dresser-Rand Group Inc. common stock
    (incorporated by reference to Exhibit 4.1 to Dresser-Rand Group
    Inc.s Registration Statement on Form S-1/A, filed July 18,
    2005, File No. 333-124963).4
.2

Indenture dated as of October 29, 2004 among Dresser-Rand Group
    Inc., the guarantors party thereto and Citibank, N.A., as
    trustee (incorporated by reference to Exhibit 4.2 to
    Dresser-Rand Group Inc.s Registration Statement on Form
    S-1, filed May 16, 2005, File No. 333-124963).4
.3

First Supplemental Indenture, dated as of December 22, 2005
    among Dresser-Rand Group Inc., the guarantors party thereto and
    Citibank, N.A., as trustee (incorporated by reference to Exhibit
    4.2 to Dresser-Rand Group Inc.s Registration Statement on
    Form S-4, filed January 23, 2006, File No. 333-131212).10
.1

Equity Purchase Agreement, dated as of August 25, 2004, by and
    among FRC Acquisition LLC and Ingersoll-Rand Company Limited
    (incorporated by reference to Exhibit 10.1 to Dresser-Rand Group
    Inc.s Registration Statement on Form S-1, filed May 16,
    2005, File No. 333-124963).10
.2

Amended and Restated Credit Agreement, dated as of August 30,
    2007, among Dresser-Rand Group Inc., certain of its foreign
    subsidiaries, the syndicate of lenders party thereto, Citicorp
    North America, Inc., as Administrative Agent, J.P. Morgan
    Securities Inc. and UBC Securities LLC, as Co-Syndication
    Agents, Citigroup Global Markets Inc., J.P. Morgan
    Securities Inc. and UBS Securities LLC, as Joint Lead Arrangers
    and Joint Book Managers, and Natixis and Wells Fargo Bank, N.A.,
    as Co-Documentation Agents (incorporated by reference to Exhibit
    10.1 to Dresser-Rand Group Inc.s Current Report on Form
    8-K, filed August 31, 2007, File No. 001-32586).10
.3

Amendment No. 1, dated as of April 24, 2008, to the Amended and
    Restated Credit Agreement dated as of August 30, 2007
    (incorporated by reference to Exhibit 10.2 to Dresser-Rand Group
    Inc.s Quarterly Report on Form 10-Q, filed April 29, 2008,
    File No. 001-32586). 47




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##### Table of Contents



10
.4

Domestic Guarantee and Collateral Agreement, dated and effective
    as of October 29, 2004, among D-R Interholding, LLC,
    Dresser-Rand Group Inc., the domestic subsidiary loan parties
    named therein and Citicorp North America, Inc. as collateral
    agent (incorporated by reference to Exhibit 10.4 to Dresser-Rand
    Group Inc.s Registration Statement on Form S-1, filed May
    16, 2005, File No. 333-124963).10
.5

Supplement No. 1 dated as of December 22, 2005, to the Domestic
    Guarantee and Collateral Agreement dated and effective as of
    October 29, 2004, among D-R Interholding, LLC, Dresser-Rand
    Group Inc., the domestic subsidiary loan parties named therein
    and Citicorp North America, Inc. as collateral agent
    (incorporated by reference to Exhibit 10.7 to Dresser-Rand Group
    Inc.s Registration Statement on Form S-4, filed January
    23, 2006, File No. 333-131212).10
.6

License Agreement, dated as of October 26, 2004, by and between
    Dresser, Inc. and Dresser-Rand Group Inc. (incorporated by
    reference to Exhibit 10.7 to Dresser-Rand Group Inc.s
    Registration Statement on Form S-1, filed May 16, 2005, File No.
    333-124963).10
.7

License Agreement, dated as of October 29, 2004, by and between
    Dresser-Rand Company, Dresser-Rand A.S., Ingersoll-Rand Energy
    Systems Corporation and the Energy Systems Division of
    Ingersoll-Rand Company (incorporated by reference to Exhibit
    10.8 to Dresser-Rand Group Inc.s Registration Statement on
    Form S-1, filed May 16, 2005, File No. 333-124963).10
.8

Amended and Restated Employment Agreement, dated June 11, 2008,
    by and among Vincent R. Volpe and Dresser-Rand Group Inc.
    (incorporated by reference to Exhibit 10.1 to Dresser-Rand Group
    Inc.s Current Report on Form 8-K, filed June 12, 2008,
    File No. 001-32586).*10
.9

Employment Agreement, dated July 25, 1990, by and between
    Jean-Francois Chevrier and Dresser-Rand S.A. (incorporated by
    reference to Exhibit 10.11 to Dresser-Rand Group Inc.s
    Registration Statement on Form S-1, filed May 16, 2005, File No.
    333-124963).*10
.10

Amended and Restated Stockholder Agreement, effective as of July
    15, 2005, by and among Dresser-Rand Group Inc., D-R
    Interholding, LLC, Dresser-Rand Holdings, LLC and certain
    management employees, together with any other stockholder who
    may be made party to this agreement (incorporated by reference
    to Exhibit 10.12 to Dresser-Rand Group Inc.s Registration
    Statement on Form S-1/A, filed July 18, 2005, File No.
    333-124963).*10
.11

Dresser-Rand Group Inc. Stock Incentive Plan (incorporated by
    reference to Exhibit 10.13 to Dresser-Rand Group Inc.s
    Registration Statement on Form S-1, filed May 16, 2005, File No.
    333-124963).*10
.12

Dresser-Rand Group Inc. 2005 Stock Incentive Plan (incorporated
    by reference to Exhibit 10.16 to Dresser-Rand Group Inc.s
    Registration Statement on Form S-1/A, filed July 18, 2005, File
    No. 333-124963).*10
.13

First Amendment to Dresser-Rand Group Inc. 2005 Stock Incentive
    Plan, dated October 28, 2008 (incorporated by reference to
    Exhibit 10.1 to Dresser-Rand Group Inc.s Quarterly Report
    on Form 10-Q, filed October 30, 2008, File No. 001-32586).*10
.14

Dresser-Rand Group Inc. 2005 Directors Stock Incentive Plan
    (incorporated by reference to Exhibit 10.18 to Dresser-Rand
    Group Inc.s Registration Statement on Form S-1/A, filed
    July 18, 2005, File No. 333-124963).*10
.15

Amendment No. 1 to the Dresser-Rand Group Inc.
    2005 Directors Stock Incentive Plan, effective January 1,
    2007 (incorporated by reference to Exhibit 10.29 to Dresser-Rand
    Group Inc.s Annual Report on Form 10-K, filed February 26,
    2008, File No. 001-32586).*10
.16

Amendment No. 2 to the Dresser-Rand Group Inc.
    2005 Directors Stock Incentive Plan, dated February 12,
    2008 (incorporated by reference to Exhibit 10.30 to Dresser-Rand
    Group Inc.s Annual Report on Form 10-K, filed February 26,
    2008, File No. 001-32586).*10
.17

Third Amendment to the Dresser-Rand Group Inc.
    2005 Directors Stock Incentive Plan, dated October 28, 2008
    (incorporated by reference to Exhibit 10.2 to Dresser-Rand Group
    Inc.s Quarterly Report on Form 10-Q, filed October 30,
    2008, File No. 001-32586).*10
.18

Dresser-Rand Group Inc. 2008 Stock Incentive Plan (incorporated
    by reference to Exhibit 4.4 to Dresser-Rand Group Inc.s
    Registration Statement on Form S-8, filed May 14, 2008, File No.
    333-150894).*10
.19

First Amendment to the Dresser-Rand Group Inc. 2008 Stock
    Incentive Plan.* 48




---



##### Table of Contents



10
.20

Form of Grant Notice for 2008 Stock Incentive Plan Nonqualified
    Stock Options (incorporated by reference to Exhibit 10.2 to
    Dresser-Rand Group Inc.s Current Report on Form 8-K, filed
    May 14, 2008, File No. 001-32586).*10
.21

Form of Grant Notice for 2008 Stock Incentive Plan Restricted
    Stock (incorporated by reference to Exhibit 10.3 to Dresser-Rand
    Group Inc.s Current Report on Form 8-K, filed May 14,
    2008, File No. 001-32586).*10
.22

Form of Grant Notice for 2008 Stock Incentive Plan Restricted
    Stock Units (incorporated by reference to Exhibit 10.4 to
    Dresser-Rand Group Inc.s Current Report on Form 8-K, filed
    May 14, 2008, File No. 001-32586).*10
.23

Form of Grant Notice for 2008 Stock Incentive Plan Stock
    Appreciation Rights (incorporated by reference to Exhibit 10.5
    to Dresser-Rand Group Inc.s Current Report on Form 8-K,
    filed May 14, 2008, File No. 001-32586).*10
.24

Form of Grant Notice for 2008 Stock Incentive Plan Restricted
    Stock for Non-Employee Directors (incorporated by reference to
    Exhibit 10.49 to Dresser-Rand Group Inc.s Annual Report on
    Form 10-K, filed February 23, 2009, File No. 001-32586).10
.25

Form of Grant Notice for 2008 Stock Incentive Plan Restricted
    Stock Units for Non-Employee Directors (incorporated by
    reference to Exhibit 10.50 to Dresser-Rand Group Inc.s
    Annual Report on Form 10-K, filed February 23, 2009, File No.
    001-32586).10
.26

Dresser-Rand Group Inc. Standard Terms and Conditions for
    Restricted Stock.*10
.27

Dresser-Rand Group Inc. Standard Terms and Conditions for Stock
    Appreciation Rights.*10
.28

Dresser-Rand Group Inc. Standard Terms and Conditions for
    Restricted Stock Units.*10
.29

Dresser-Rand Group Inc. Standard Terms and Conditions for
    Employee Nonqualified Stock Options.*10
.30

Annual Incentive Plan (incorporated by reference to Exhibit
    10.17 to Dresser-Rand Group Inc.s Registration Statement
    on Form S-1/A, filed July 18, 2005, File No. 333-124963).*10
.31

Form of Indemnification Agreement between Dresser-Rand Group
    Inc. and each of its directors and certain other executive
    officers (incorporated by reference to Exhibit 10.2 to
    Dresser-Rand Group Inc.s Current Report on Form 8-K, filed
    June 12, 2008, File No. 001-32586).*10
.32

Offer Letter, dated July 15, 2007, from Dresser-Rand Group Inc.
    to Mark Baldwin (incorporated by reference to Exhibit 10.1 to
    Dresser-Rand Group Inc.s Current Report on Form 8-K, filed
    July 19, 2007, File No. 001-32586).*10
.33

Offer Letter, dated August 27, 2007, from Dresser-Rand Group
    Inc. to Mark Mai (incorporated by reference to Exhibit 10.3 to
    Dresser-Rand Group Inc.s Quarterly Report on Form 10-Q,
    filed October 31, 2007, File No. 001-32586).*10
.34

Offer Letter, dated July 7, 2008, from Dresser-Rand Group Inc.
    to Raymond L. Carney (incorporated by reference to Exhibit 10.1
    to Dresser-Rand Group Inc.s Current Report on Form 8-K,
    filed November 4, 2008, File No. 001-32586).*10
.35

Participation Agreement, dated as of December 20, 2007, by and
    among Dresser-Rand S.A. (France), as Construction Agent and
    Lessee, Citibank International plc (Paris Branch), as Lessor,
    the Persons named therein as Note Holders, and Citibank
    International plc (Paris Branch) as Agent (incorporated by
    reference to Exhibit 10.1 to Dresser-Rand Group Inc.s
    Current Report on Form 8-K, filed December 31, 2007, File No.
    001-32586).10
.36

Lease Agreement, dated as of December 28, 2007 by and between
    Citibank International plc (Paris Branch), as Lessor, and
    Dresser-Rand S.A. (France), as Lessee (incorporated by reference
    to Exhibit 10.2 to Dresser-Rand Group Inc.s Current Report
    on Form 8-K, filed December 31, 2007, File No. 001-32586).10
.37

Parent Guaranty, dated as of December 28, 2007 by Dresser-Rand
    Group Inc. (incorporated by reference to Exhibit 10.3 to
    Dresser-Rand Group Inc.s Current Report on Form 8-K, filed
    December 31, 2007, File No. 001-32586).10
.38

The Dresser-Rand Company Non-Qualified Retirement Plan restated
    effective as of January 1, 2009 (incorporated by reference to
    Exhibit 10.42 to Dresser-Rand Group Inc.s Annual Report on
    Form 10-K, filed February 23, 2009, File No. 001-32586).*10
.39

Dresser-Rand Non-Employee Director Fee Deferral Plan, which was
    effective as of January 1, 2009 (incorporated by reference to
    Exhibit 10.43 to Dresser-Rand Group Inc.s Annual Report on
    Form 10-K, filed February 23, 2009, File No. 001-32586). 49




---



##### Table of Contents



10
.40

Offer Letter, dated August 22, 2008, from Dresser-Rand Company
    to Jerry Walker (incorporated by reference to Exhibit 10.44 to
    Dresser-Rand Group Inc.s Annual Report on Form 10-K, filed
    February 23, 2009, File No. 001-32586).*10
.41

Offer Letter, dated October 29, 2008, from Dresser-Rand Company
    to Luciano Mozzato (incorporated by reference to Exhibit 10.45
    to Dresser-Rand Group Inc.s Annual Report on Form 10-K,
    filed February 23, 2009, File No. 001-32586).*10
.42

English translation of letter agreement, dated December 29,
    2008, between Dresser-Rand S.A. and Nicoletta Giadrossi
    (incorporated by reference to Exhibit 10.46 to Dresser-Rand
    Group Inc.s Annual Report on Form 10-K, filed February 23,
    2009, File No. 001-32586).*10
.43

Letter of Assignment, dated February 5, 2007, from Dresser-Rand
    Company to Jean-Francois Chevrier (incorporated by reference to
    Exhibit 10.47 to Dresser-Rand Group Inc.s Annual Report on
    Form 10-K, filed February 23, 2009, File No. 001-32586).*10
.44

Letter of Agreement, dated January 24, 2009, from Dresser-Rand
    S.A. to Jean-Francois Chevrier (incorporated by reference to
    Exhibit 10.48 to Dresser-Rand Group Inc.s Annual Report on
    Form 10-K, filed February 23, 2009, File No. 001-32586).*10
.45

Offer Letter, dated December 14, 2008, from Dresser-Rand Company
    to Nicoletta Giadrossi (incorporated by reference to Exhibit
    10.51 to Dresser-Rand Group Inc.s Annual Report on Form
    10-K, filed February 23, 2009, File No. 001-32586).*10
.46

Offer Letter, dated May 12, 2009, from Dresser-Rand Group Inc.
    to James Garman (incorporated by reference to Exhibit 10.1 to
    Dresser-Rand Group Inc.s Quarterly Report on Form 10-Q,
    filed July 29, 2009, File No. 001-32586).*10
.47

Form of Confidentiality, Non-Compete, Severance and Change in
    Control Agreement with U.S. named executive officers
    (incorporated by reference to Exhibit 10.1 to Dresser-Rand Group
    Inc.s Current Report on Form 8-K, filed December 8, 2009,
    File No. 001-32586).*10
.48

Form of Confidentiality, Non-Compete, Severance and Change in
    Control Agreement with named executive officers residing in
    France (incorporated by reference to Exhibit 10.2 to
    Dresser-Rand Group Inc.s Current Report on Form 8-K, filed
    December 8, 2009, File No. 001-32586).*10
.49

Cash Bonus Retention Agreement, dated December 4, 2009, between
    James Garman and Dresser-Rand Company.*10
.50

Dresser-Rand Annual Incentive Program, adopted February 12, 2010
    (incorporated by reference to Exhibit 10.1 to Dresser-Rand Group
    Inc.s Current Report on Form 8-K, filed February 17, 2010,
    File No. 001-32586).*10
.51

Dresser-Rand Group Inc. Standard Terms and Conditions for
    Restricted Stock (for Non-Employee Directors)10
.52

Dresser-Rand Group Inc. Standard Terms and Conditions for
    Restricted Stock Units (for Non-Employee Directors)21
.1

List of Subsidiaries23
.1

Consent of PricewaterhouseCoopers LLP24
.1

Powers of Attorney (included in signature page of this Form 10-K)31
.1

Certification of the President and Chief Executive Officer
    pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31
.2

Certification of the Executive Vice President and Chief
    Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002.32
.1

Certification of the President and Chief Executive Officer
    pursuant to Title 18, United States Code, Section 1350, as
    adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
    2002 (furnished herewith). (This certification is being
    furnished and shall not be deemed filed with the SEC
    for purposes of Section 18 of the Exchange Act, or otherwise
    subject to the liability of that section, and shall not be
    deemed to be incorporated by reference into any filing under the
    Securities Act or the Exchange Act, except to the extent that
    the Registrant specifically incorporates it by reference.)32
.2

Certification of the Executive Vice President and Chief
    Financial Officer pursuant to Title 18, United States Code,
    Section 1350, as adopted pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002 (furnished herewith). (This
    certification is being furnished and shall not be deemed
    filed with the SEC for purposes of Section 18 of the
    Exchange Act, or otherwise subject to the liability of that
    section, and shall not be deemed to be incorporated by reference
    into any filing under the Securities Act or the Exchange Act,
    except to the extent that the Registrant specifically
    incorporates it by reference.)    *
    
    Executive Compensation Plans and Arrangements. 50




---



##### Table of Contents



SIGNATURES
      By:
    /s/  VINCENT
    R. VOLPE JR.   Title:
    President, Chief Executive   Form 10-K Form 10-K
    Signature

Title

Date/s/  VINCENT
    R. VOLPE JR.Vincent
    R. Volpe Jr.

President, Chief Executive
    Officer and Director

February 25, 2010/s/  MARK
    E. BALDWINMark
    E. Baldwin

Executive Vice President 
    and Chief Financial Officer

February 25, 2010/s/  RAYMOND
    L. CARNEY JR.Raymond
    L. Carney Jr.

Vice President, Controller and 
    Chief Accounting Officer

February 25, 2010/s/  WILLIAM
    E. MACAULAYWilliam
    E. Macaulay

Chairman of the Board of Directors

February 25, 2010/s/  RITA
    V. FOLEYRita
    V. Foley

Director

February 25, 2010/s/  LOUIS
    A. RASPINOLouis
    A. Raspino

Director

February 25, 2010/s/  PHILIP
    R. ROTHPhilip
    R. Roth

Director

February 25, 2010/s/  STEPHEN
    A. SNIDERStephen
    A. Snider

Director

February 25, 2010/s/  MICHAEL
    L. UNDERWOODMichael
    L. Underwood

Director

February 25, 2010/s/  JOSEPH
    C. WINKLERJoseph
    C. Winkler

Director

February 25, 2010  51




---



##### Table of Contents



DRESSER-RAND
    GROUP INC.
  INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS
   
 PageReport of Independent Registered Public
    Accounting Firm

F-2Consolidated Financial StatementsConsolidated Statement of Income for the years
    ended December 31, 2009, 2008, and 2007

F-3Consolidated Balance Sheet at December 31,
    2009 and 2008

F-4Consolidated Statement of Cash Flow for the years
    ended December 31, 2009, 2008 and 2007

F-5Consolidated Statement of Changes in
    Stockholders Equity for the years ended December 31,
    2009, 2008, and 2007

F-6Notes to Consolidated Financial Statements

F-7 to F-43  F-1




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM     Internal Control  Integrated
    Framework
          F-2




---



##### Table of Contents



DRESSER-RAND
    GROUP INC.
  CONSOLIDATED
    STATEMENT OF INCOME
  Year Ended December 31,2009


2008


2007($ in millions, except per share amounts)Net sales of products

$
1,840.8


$
1,805.1


$
1,339.5Net sales of services


448.8



389.6



325.5Total revenues


2,289.6



2,194.7



1,665.0Cost of products sold


1,324.4



1,307.2



989.5Cost of services sold


307.7



268.9



226.6Total cost of sales


1,632.1



1,576.1



1,216.1Gross profit


657.5



618.6



448.9Selling and administrative expenses


287.3



273.8



239.0Research and development expenses


20.3



12.7



12.8Plan settlement/curtailment amendment


1.3



(5.4
)


Income from operations


348.6



337.5



197.1Interest expense, net


(31.8
)


(29.4
)


(36.8
)Other (expense) income, net


(4.9
)


(6.8
)


7.3Income before income taxes


311.9



301.3



167.6Provision for income taxes


101.1



103.6



60.9Net income

$
210.8


$
197.7


$
106.7Net income per share:Basic

$
2.58


$
2.36


$
1.25Diluted

$
2.57


$
2.36


$
1.25Weighted average shares outstanding  (in
    thousands):Basic


81,662



83,678



85,470Diluted


81,876



83,837



85,586    F-3




---



##### Table of Contents



DRESSER-RAND
    GROUP INC.
  CONSOLIDATED
    BALANCE SHEET
  December 31,


December 31,2009


2008($ in millions, exceptper share amounts)AssetsCurrent assetsCash and cash equivalents

$
223.2


$
147.1Accounts receivable, less allowance for losses of $14.4 at 2009
    and $11.6 at 2008


289.8



366.3Inventories, net


353.0



328.5Prepaid expenses


24.9



43.4Deferred income taxes, net


45.4



22.5Total current assets


936.3



907.8Property, plant and equipment, net


268.9



250.3Goodwill


486.0



429.1Intangible assets, net


430.9



441.6Other assets


28.1



23.4Total assets

$
2,150.2


$
2,052.2Liabilities and Stockholders EquityCurrent liabilitiesAccounts payable and accruals

$
412.0


$
430.9Customer advance payments


165.2



275.0Accrued income taxes payable


8.1



30.2Loans payable


0.1



0.2Total current liabilities


585.4



736.3Deferred income taxes, net


38.5



22.9Postemployment and other employee benefit liabilities


109.9



135.3Long-term debt


370.0



370.1Other noncurrent liabilities


33.8



27.4Total liabilities


1,137.6



1,292.0Commitments and contingencies (Notes 9, 11 through 18)Stockholders equityCommon stock, $0.01 par value, 250,000,000 shares
    authorized;and, 82,513,744 and 81,958,846 shares issued andoutstanding, respectively


0.8



0.8Additional paid-in capital


396.6



384.6Retained earnings


638.1



427.3Accumulated other comprehensive loss


(22.9
)


(52.5
)Total stockholders equity


1,012.6



760.2Total liabilities and stockholders equity

$
2,150.2


$
2,052.2    F-4




---



##### Table of Contents



DRESSER-RAND
    GROUP INC.
  CONSOLIDATED
    STATEMENT OF CASH FLOW
  Year Ended December 31,2009


2008


2007($ in millions)Cash flows from operating activitiesNet income

$
210.8


$
197.7


$
106.7Adjustments to arrive at net cash provided by operating
    activities:Depreciation and amortization


51.5



48.8



49.3Deferred income taxes


(7.0
)


(2.6
)


(1.7
)Stock-based compensation


11.0



6.0



8.1Excess tax benefits from share-based compensation






(0.4
)


Amortization of debt financing costs


3.2



3.1



6.9Provision for losses on inventory


6.7



3.3



0.4Plan settlement / curtailment amendment


(0.2
)


(11.8
)


Loss (gain) on sale of property, plant and equipment


2.2







(0.6
)Net loss from equity investment


1.2







Working capital and other, net of acquisitionsAccounts receivable


82.1



(57.9
)


2.4Inventories


(20.7
)


(51.2
)


(71.6
)Accounts payable and accruals


(55.3
)


77.7



40.6Customer advances


(121.5
)


25.4



93.9Other


(34.2
)


(3.3
)


(18.4
)Net cash provided by operating activities


129.8



234.8



216.0Cash flows from investing activitiesCapital expenditures


(41.1
)


(40.2
)


(23.7
)Proceeds from sales of property, plant and equipment


1.2



0.3



5.8Acquisitions, net of cash acquired


(12.7
)


(91.4
)


(8.1
)Other investments


(10.0
)


(5.0
)


Net cash used in investing activities


(62.6
)


(136.3
)


(26.0
)Cash flows from financing activitiesProceeds from exercise of stock options


2.1



1.4



0.4Excess tax benefits from share-based compensation






0.4



Repurchase of common stock






(150.2
)


Payments for debt financing costs










(4.5
)Proceeds of long-term debt










0.5Payments of long-term debt


(0.2
)


(0.2
)


(137.2
)Net cash provided by (used in) financing activities


1.9



(148.6
)


(140.8
)Effect of exchange rate changes on cash and cash equivalents


7.0



(9.0
)


10.2Net increase (decrease) in cash and cash equivalents


76.1



(59.1
)


59.4Cash and cash equivalents, beginning of the period


147.1



206.2



146.8Cash and cash equivalents, end of period

$
223.2


$
147.1


$
206.2    F-5




---



##### Table of Contents



DRESSER-RAND
    GROUP INC.
  CONSOLIDATED
    STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY
  AccumulatedAdditional





Other


TotalCommon


Paid-in


Retained


Comprehensive


ComprehensiveStock


Capital


Earnings


Income (Loss)


Income (Loss)


Total($ in millions)At December 31, 2006

$
0.9


$
518.8


$
123.1


$
(10.9
)





$
631.9Stock-based compensation






8.5















8.5Adoption of FASB Interpretation No. 48










(0.1
)










(0.1
)Net income










106.7






$
106.7



Other comprehensive income (loss)Foreign currency adjustments














34.2



34.2



Pension and other post retirement benefit plans  net
    of $15.3 taxAmortization of prior service credit included in net periodic
    costs














(0.3
)


(0.3
)


Benefit plan amendments














4.8



4.8



Net actuarial gain arising during year














8.1



8.1



Curtailment amendment














11.4



11.4



Total comprehensive income

















$
164.9



164.9At December 31, 2007

$
0.9


$
527.3


$
229.7


$
47.3






$
805.2Stock-based compensation






7.4















7.4Stock repurchase


(0.1
)


(150.1
)














(150.2
)Net income










197.7






$
197.7



Other comprehensive income (loss)Foreign currency adjustments














(48.3
)


(48.3
)


Pension and other postretirement benefit plans  net
    of $30.8 taxAdoption of FASB Statement No. 158










(0.1
)


(0.3
)


(0.3
)


(0.1
)Amortization of prior service cost and net actuarial loss
    included in net periodic costs














(4.4
)


(4.4
)


Benefit plan amendments














2.2



2.2



Net actuarial loss arising during the year














(45.7
)


(45.7
)


Curtailment amendment/partial settlement














(3.3
)


(3.3
)


Total comprehensive income

















$
97.9



97.9At December 31, 2008

$
0.8


$
384.6


$
427.3


$
(52.5
)





$
760.2Stock-based compensation






12.0















12.0Net income










210.8






$
210.8



Other comprehensive income (loss)Foreign currency adjustments














32.0



32.0



Pension and other postretirement benefit plans  net
    of $0.1 taxAmortization of prior service cost and net actuarial loss
    included in net periodic costs














(1.4
)


(1.4
)


Benefit plan amendments














0.6



0.6



Net actuarial loss arising during the year














(1.8
)


(1.8
)


Plan settlement














0.2



0.2



Total comprehensive income

















$
240.4



240.4At December 31, 2009

$
0.8


$
396.6


$
638.1


$
(22.9
)





$
1,012.6    F-6




---



##### Table of Contents



DRESSER-RAND
    GROUP INC.



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share amounts) 1.
    Business
    Activities and Certain Related Party Transactions      Dresser-Rand
    Name
    2.
    Summary
    of Significant Accounting Policies    Principles
    of Consolidation
    Use of
    Estimates
    Fair
    Value Measurements
  Fair Value Measurements and
    Disclosures
    Level 2
    Unadjusted quoted prices in active markets for similar assets or
    liabilities, or unadjusted quoted prices for identical or
    similar assets or liabilities in markets that are not
    active, or inputs other than quoted prices that are
    observable for the asset or liability   F-7




---



##### Table of Contents



DRESSER-RAND
    GROUP INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 ($ in
    millions, except per share amounts)
      Description

Disclosure

Input Level

Level 3 InputsGoodwill and intangible asset impairment testing

Note 2

Level 3

Estimated by independent third party appraisal firmsAcquired assets and liabilities

Notes 2 and 3

Level 3

Estimated by independent third party appraisal firmsPension plan assets

Note 11

Levels 1, 2 and 3

Valued by insurance companies and estimated by certified
    actuariesLong-term debt (note disclosure only)

Note 10

Level 1

Not applicableForeign currency derivatives

Note 14

Level 2

Not applicable   Cash
    and Cash Equivalents
    Allowance
    for Losses on Receivables
    Inventories
    Property,
    Plant and Equipment
    Capitalized
    Software
  350-40 No. 98-1 Accounting for the Costs of Computer Software Developed or
    Obtained for Internal Use
  Impairment
    of Long-Lived Assets
  360-10 Accounting for the
    Impairment or Disposal of Long Lived Assets)
 F-8




---



##### Table of Contents



DRESSER-RAND
    GROUP INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 ($ in
    millions, except per share amounts)
     Intangible
    Assets
  350-20 Goodwill and Other
    Intangible Assets) 350-20 350-20 non-amortizable
    Income
    Taxes
  country-by-country
    Product
    Warranty
    Environmental
    Costs
    Revenue
    Recognition
   F-9




---



##### Table of Contents



DRESSER-RAND
    GROUP INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 ($ in
    millions, except per share amounts)
 
    and/or
  
    The delivered unit(s) has value to the client on a stand-alone
    basis.
    There is objective and reliable evidence of the fair value of
    the undelivered unit(s).      Taxes
    Imposed on Revenue Transactions
    Shipping
    and Handling Costs
    Research
    and Development Costs
    Comprehensive
    Income (Loss)
    Foreign
    Currency
  non-U.S. consolidated average-for-the-year
 F-10




---



##### Table of Contents



DRESSER-RAND
    GROUP INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 ($ in
    millions, except per share amounts)
 
    non-U.S. entities
    Financial
    Instruments
      815-10 Accounting for Derivative
    Instruments and Hedging Activities, ) 815-10 815-10, 815-10, 815-10.
  Stock-based
    Compensation
  718-10 Share-Based Payment Staff Accounting Bulletin No. 107).
  Conditional
    Asset Retirement Obligations
  410-20 Accounting for Conditional Asset
    Retirement Obligations). 410-20
 F-11




---



##### Table of Contents



DRESSER-RAND
    GROUP INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 ($ in
    millions, except per share amounts)
   410-20
  New
    Accounting Standards
  Noncontrolling Interests in
    Consolidated Financial Statements  an amendment of
    ARB No. 51) Consolidated Financial
    Statements
  Business Combinations)
  805-20-25-18A Assets Acquired
    and Liabilities Assumed in a Business Combination That Arise
    From Contingencies) 805-20-25-18A 805-20-25-18A
  Subsequent Events).
  105-10 The FASB Accounting
    Standards Codification and the Hierarchy of Generally Accepted
    Accounting Principles 105-10 105-10
  2009-13, Revenue Recognition
 F-12




---



##### Table of Contents



DRESSER-RAND
    GROUP INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 ($ in
    millions, except per share amounts)
   2009-13 2009-13
  2009-16, Accounting for
    Transfers of Financial Assets Accounting for Transfers and Servicing of Financial Assets
    and Extinguishments of Liabilities 2009-16 2009-16 2009-16 2009-16
  2009-17, Amendments to FASB
    Interpretation No. 46(R) 2009-17 2009-17 2009-17
  2010-6, Improving Disclosures About Fair Value Measurements 2010-6 2010-6
  Reclassification
    3.
    Acquisitions
    and other investments           F-13




---



##### Table of Contents



DRESSER-RAND
    GROUP INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 ($ in
    millions, except per share amounts)
               2009


2008


2007Accounts receivable, net

$
0.8


$
11.6


$
Inventory, net


0.5



29.4



4.6Prepaid expenses






1.1



Total current assets


1.3



42.1



4.6Property, plant and equipment


6.6



39.6



0.5Amortizable intangible assets


2.4



33.4



3.0Goodwill


4.0



24.2



Other assets






0.3



Total assets acquired


14.3



139.6



8.1Accounts payable and accruals


0.4



18.4



Customer advance payments






26.0



Other liabilities


1.2



3.8



Total liabilities assumed


1.6



48.2



Cash paid  net of $18.6 cash acquired in 2008

$
12.7


$
91.4


$
8.1     Other
    Investments
   F-14




---



##### Table of Contents



DRESSER-RAND
    GROUP INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 ($ in
    millions, except per share amounts)
       4.
    Earnings
    per Share    Year Ended December 31,2009


2008


2007Net income

$
210.8


$
197.7


$
106.7Weighted -average common shares outstanding:(In thousands)Basic


81,662



83,678



85,470Dilutive effect of stock compensation awards


214



159



116Diluted


81,876



83,837



85,586Net income per share:Basic

$
2.58


$
2.36


$
1.25Diluted

$
2.57


$
2.36


$
1.25   5.
    Inventories    December 31,2009


2008Raw materials and supplies

$
132.6


$
141.7Work-in-process
    and finished goods


485.0



496.4617.6



638.1Less: Progress payments


(264.6
)


(309.6
)Total inventories

$
353.0


$
328.5  F-15




---



##### Table of Contents



DRESSER-RAND
    GROUP INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 ($ in
    millions, except per share amounts)
     6.
    Property,
    Plant and Equipment    December 31,2009


2008Cost:Land

$
15.3


$
14.7Buildings and improvements


113.9



102.2Machinery and equipment


285.3



252.1414.5



369.0Less: Accumulated depreciation


(145.6
)


(118.7
)Property, plant and equipment, net

$
268.9


$
250.3     7.
    Intangible
    Assets and Goodwill    December 31, 2009


Weighted


December 31, 2008Accumulated


Average





AccumulatedCost


Amortization


Useful Lives


Cost


AmortizationTrade names

$
93.1


$
11.6



39 years


$
92.8


$
9.2Customer relationships


258.6



34.5



37 years



250.5



26.5Software


30.6



15.8



10 years



30.6



12.7Existing technology


137.1



27.9



24 years



136.3



22.1Non-compete agreement


2.1



0.8



4 years



2.1



0.2Total amortizable intangible assets

$
521.5


$
90.6






$
512.3


$
70.7       AftermarketNew units


parts and services


TotalBalance, December 31, 2007

$
131.6


$
315.9


$
447.5Acquisitions


10.8



13.4



24.2Adjustments






(0.6
)


(0.6
)Foreign currency adjustments


(8.7
)


(33.3
)


(42.0
)Balance, December 31, 2008


133.7



295.4



429.1Acquisitions


0.1



3.9



4.0Adjustments


21.2



7.1



28.3Foreign currency adjustments


2.0



22.6



24.6Balance, December 31, 2009

$
157.0


$
329.0


$
486.0  F-16




---



##### Table of Contents



DRESSER-RAND
    GROUP INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 ($ in
    millions, except per share amounts)
    8.
    Accounts
    Payable and Accruals    December 31,2009


2008Accounts payable

$
178.1


$
221.3Accruals:Payroll and benefits


68.0



62.2Warranties


39.2



37.0Taxes other than income


24.9



24.2Third party commissions


16.5



15.2Interest


6.5



5.7Insurance and claims


8.4



8.7Legal, audit and consulting


6.5



4.0Pension and postretirement benefits


4.9



4.1Forward exchange contracts


7.2



17.1Repairs and maintanence


3.1



6.8Accrued contingent consideration


24.1



Other


24.6



24.6Total accounts payable and accruals

$
412.0


$
430.9   9.
    Income
    Taxes    Year Ended December 31,2009


2008


2007United States

$
161.2


$
158.6


$
78.6Foreign


150.7



142.7



89.0Total

$
311.9


$
301.3


$
167.6     Year Ended December 31,2009


2008


2007Current tax expenseUnited States

$
51.6


$
55.3


$
27.0Foreign


56.5



50.9



35.6Total current


108.1



106.2



62.6Deferred tax (benefit) expenseUnited States


(0.5
)


1.1



1.6Foreign


(6.5
)


(3.7
)


(3.3
)Total deferred


(7.0
)


(2.6
)


(1.7
)Total provision for income taxes

$
101.1


$
103.6


$
60.9  F-17




---



##### Table of Contents



DRESSER-RAND
    GROUP INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 ($ in
    millions, except per share amounts)
 
    Year Ended December 31,2009


2008


2007U.S Statutory rate


35.0
%


35.0
%


35.0
%(Decrease) increase in rates resulting from:Foreign operations


(4.1
)%


(1.3
)%


0.3
%State and local income taxes, net of U.S. tax


0.4
%


0.4
%


1.2
%Valuation allowances


1.2
%


0.9
%


0.2
%Export/manufacturing deductions


(0.5
)%


(0.8
)%


(1.0
)%Stock-based compensation










0.8
%Other


0.4
%


0.2
%


(0.2
)%Effective tax rate


32.4
%


34.4
%


36.3
%     740-10 Accounting for
    Uncertainty in Income Taxes)
  Year Ended December 31,2009


2008


2007Beginning balance

$
2.4


$
2.2


$
2.1Additions based on tax positions related to current year


0.5



0.3



0.2Settlements


(0.2
)






(0.2
)Foreign currency adjustments


0.1



(0.1
)


0.1Ending balance

$
2.8


$
2.4


$
2.2     Jurisdiction

Open YearsBrazil


2004 - 2008Canada


2003 - 2008France


2006 - 2008Germany


2003 - 2008India


2005 - 2008Italy


2004 - 2008Malaysia


2004 - 2008Netherlands


2004 - 2008Norway


2004 - 2008United Kingdom


2005 - 2008United States


2004 - 2008Venezuela


2004 - 2008  F-18




---



##### Table of Contents



DRESSER-RAND
    GROUP INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 ($ in
    millions, except per share amounts)
       December 31,2009


2008Deferred tax liabilitiesDepreciation and amortization

$
67.0


$
65.8Deferred tax assetsInventories and receivables

$
(9.0
)

$
(6.7
)Foreign tax credit carryforward


(1.5
)


Other accrued expenses


(22.9
)


(12.2
)Tax net operating loss carryforwards


(12.3
)


(7.2
)Pension and employee benefits


(39.6
)


(45.8
)Total deferred tax assets


(85.3
)


(71.9
)Valuation allowances


11.4



6.5Net deferred tax assets


(73.9
)


(65.4
)Total net deferred tax (assets) liabilities

$
(6.9
)

$
0.4Presented in the balance sheet as:Current deferred tax assets

$
(45.4
)

$
(22.5
)Non-current deferred tax liabilities


38.5



22.9Total net deferred tax (assets) liabilities

$
(6.9
)

$
0.4         10.
    Long-Term
    Debt  Senior
    Secured Credit Facility
   F-19




---



##### Table of Contents



DRESSER-RAND
    GROUP INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 ($ in
    millions, except per share amounts)
 
    1 2 1 2
      Senior
    Subordinated Notes
  3 8
     F-20




---



##### Table of Contents



DRESSER-RAND
    GROUP INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 ($ in
    millions, except per share amounts)
     December 31,2009


2008Senior subordinated notes

$
370.0


$
370.0Other debt


0.1



0.3Total debt


370.1



370.3Less: current maturity


(0.1
)


(0.2
)Total long-term debt

$
370.0


$
370.1   
  11.
    Pension
    Plans  Non-U.S. plans
    December 31,2009


2008Change in projected benefit obligationsBenefit obligation at beginning of the period

$
334.6


$
350.6Service cost


6.4



7.5Interest cost


20.1



22.2Employee contributions


0.3



0.3Expenses paid


(0.9
)


(0.9
)Actuarial loss (gain)


23.2



(6.3
)Plan amendments


1.6



3.1Settlements


(6.1
)


Acquistions






12.1Benefits paid


(20.7
)


(20.2
)Foreign currency adjustments


13.0



(33.8
)Benefit obligation at end of the period

$
371.5


$
334.6Change in plan assetsFair value at beginning of the period

$
215.1


$
298.7Actual return on assets


40.8



(57.1
)Settlements


(6.1
)


Acquistions






12.9Company contributions


37.4



9.4Employee contributions


0.3



0.3Expenses paid


(0.9
)


(0.9
)Benefits paid


(20.7
)


(20.2
)Foreign currency adjustments


10.0



(28.0
)Fair value of assets at end of the period

$
275.9


$
215.1 F-21




---



##### Table of Contents



DRESSER-RAND
    GROUP INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 ($ in
    millions, except per share amounts)
   December 31,2009


2008Amounts recognized in the balance sheet consist of:Current liabilities

$
2.6


$
2.5Noncurrent liabilities


93.0



117.0Total balance sheet liability

$
95.6


$
119.5Amounts recognized in accumulated othercomprehensive loss (income) consists of:Net actuarial loss

$
65.0


$
68.9Prior service cost


3.7



3.0Total

$
68.7


$
71.9     715-10
  December 31,2009


2008Weighted-average assumptions used for benefit obligationsDiscount rateU.S. plans


5.80
%


6.10
%Non-U.S.
    plans


5.64
%


6.28
%Rate of compensation increaseU.S. plans


N/A



N/ANon-U.S.
    plans


4.25
%


3.73
%  F-22




---



##### Table of Contents



DRESSER-RAND
    GROUP INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 ($ in
    millions, except per share amounts)
     For Year Ended December 31,2009


2008


2007Net pension expenseService cost

$
6.4


$
6.9


$
6.9Interest cost


20.1



20.5



18.6Expected return on plan assets


(18.3
)


(23.2
)


(21.9
)Amortization of net actuarial loss


3.9



0.3



Amortization of prior service cost


0.8



0.1



Plan Settlement


1.3







Net pension expense


14.2



4.6



3.6Amounts recognized in othercomprehensive (income) lossNet actuarial loss (gain)


0.8



74.1



(15.8
)Prior service cost


2.0



2.4



0.2Amortization of net actuarial loss


(5.2
)


(0.3
)


Amortization of prior service cost


(0.8
)


(0.1
)


Total recognized in othercomprehensive (income) loss


(3.2
)


76.1



(15.6
)Total recognized

$
11.0


$
80.7


$
(12.0
)Weighted-average assumptions used for netperiodic pension costDiscount rateU.S. plans


6.10
%


6.10
%


5.60
%Non-U.S.
    plans


6.28
%


5.82
%


4.94
%Rate of compensation increaseU.S. plans


N/A



N/A



N/ANon-U.S.
    plans


3.73
%


4.27
%


3.88
%Expected return on plan assetsU.S. plans


8.50
%


8.50
%


8.50
%Non-U.S.
    plans


6.77
%


6.53
%


6.87
%         December 31,2009


2008Projected benefit obligation

$
359.9


$
263.4Accumulated benefit obligation


337.4



256.9Fair value of plan assets


264.6



151.6  F-23




---



##### Table of Contents



DRESSER-RAND
    GROUP INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 ($ in
    millions, except per share amounts)
 
  715-10
    Fair Value Measurements at December 31, 2009Quoted Prices inActive Markets for


Significant Other


SignificantIdentical Assets


Observable Inputs


Unobservable InputsTotal


(Level 1)


(Level 2)


(Level 3)Asset CategoryCash and cash equivalents

$
2.8


$



$
2.8


$
U.S. equities


6.5







6.5



U.S. large-cap equities


53.8



53.8







U.S. small-cap value equities


8.8



8.8







U.S. small-cap growth equities


8.8



8.8







International equities


65.9



1.8



64.1



U.S. fixed income(1)


49.1



49.1







International fixed income(2)


30.6







30.6



Global asset allocations(3)


27.9



14.1



13.8



Insurance contracts(4)


21.7











21.7Total

$
275.9


$
136.4


$
117.8


$
21.7     (1)
    
    U.S. Fixed Income: Includes investments in the broad fixed
    income market such as government and agency bonds, mortgage
    bonds, and corporate bonds. Duration of the bonds may range from
    short (e.g., three months or less) to very long (e.g.,
    12 years or longer). Credit quality of U.S. Fixed Income is
    generally high quality in nature (e.g., AAA to BBB) but can also
    include lower quality or high yield bonds (e.g., BB or lower).
    Common indices are the Barclays Aggregate and Citigroup Broad
    Investment Grade Index.(2)
    
    International Fixed Income: Includes investments in the broad
    fixed income market such as government and corporate bonds.
    Duration of the bonds ranges up to 16.8 years. Credit
    quality of International Fixed Income is generally high quality
    in nature (e.g., AAA to A). Common indices are the FTSE UK Glits
    >15 Years, iBoxx £ Non-Gilts ex BBB 15 Year
    + and FTSE A Index-Linked > 5 Years.(3)
    
    Global Asset Allocation: Broadly diversified strategy where
    investment managers have the capacity to invest in multiple
    asset classes and the ability to alter asset class allocations
    with agreed tolerances. There is no common index for this asset
    class and typically a blended index of equities and fixed income
    is utilized, ex. 60% S&P 500/40% Barclays Aggregate.  (4)
    
    Insurance Contract: Provided by insurance companies that pay
    benefits to retirees. F-24




---



##### Table of Contents



DRESSER-RAND
    GROUP INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 ($ in
    millions, except per share amounts)
      InsuranceContractsBalance, December 31, 2008

$
17.0Actual return on assets


1.0Company contributions


1.9Foreign exchange


3.2Benefit payments


(0.7
)Settlements


(0.7
)Balance, December 31, 2009

$
21.7         Defined
    Contribution Plans
  non-U.S. defined non-U.S. benefit
  12.
    Post-retirement
    Benefits other than Pensions     F-25




---



##### Table of Contents



DRESSER-RAND
    GROUP INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 ($ in
    millions, except per share amounts)
       December 31,2009


2008Change in benefit obligationsBenefit obligation at beginning of the period

$
17.2


$
29.4Service cost






0.3Interest cost


1.0



1.4Benefits paid


(0.5
)


(0.4
)Actuarial losses (gains)


1.1



(1.7
)Plan amendments


(2.6
)


(5.4
)Settlement payment






(6.4
)Unfunded benefit obligation at end of the periodand balance sheet liability

$
16.2


$
17.2Amounts recognized in the balance sheet:Current liabilities

$
0.9


$
0.6Noncurrent liabilities


15.3



16.6Total balance sheet liability

$
16.2


$
17.2Amounts recognized in accumulated othercomprehensive income:Net actuarial loss

$
5.0


$
4.9Net prior service credit


(11.6
)


(17.0
)Total

$
(6.6
)

$
(12.1
)       715-10
 F-26




---



##### Table of Contents



DRESSER-RAND
    GROUP INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 ($ in
    millions, except per share amounts)
     Year Ended December 31,2009


2008


2007Net post-retirement benefits (income) costService cost

$



$
0.2


$
1.4Interest cost


1.0



1.3



2.4Amortization ofNet prior service credit


(8.0
)


(7.4
)


(0.7
)Net actuarial loss (gain)


1.0



(0.1
)


0.1Curtailment amendment/partial settlement






(5.4
)


Total post-retirement benefits (income) cost


(6.0
)


(11.4
)


3.2Amounts recognized as other comprehensive loss (income)Adoption of ASC
    715-10
    (formerly, FASB Statement No. 158)






0.4



Net actuarial loss (gain)


1.1



(1.7
)


2.5Curtailment amendment/partial settlement






5.4



(18.6
)Plan amendments


(2.6
)


(5.4
)


(8.2
)Amortization ofNet prior service credit


8.0



7.4



0.7Net actuarial (loss) gain


(1.0
)


0.1



(0.1
)Total recognized in comprehensive loss (income)


5.5



6.2



(23.7
)Total recognized

$
(0.5
)

$
(5.2
)

$
(20.5
)   Year Ended December 31,2009


2008


2007Weighted-average assumptions used to determinebenefit obligations at December 31Discount rate


5.70
%


6.10
%


6.20
%Measurement date


12/31/09



12/31/08



11/30/07Weighted-average assumptions used to determinenet periodic benefit cost (income) for yearsended December 31Discount rate


6.10
%


6.20
%


5.70
%Discount rate at remeasurement date


N/A



6.60
%


N/AMeasurement date


12/31/08



11/30/2007



11/30/06Remeasurement date


N/A



04/01/08



N/AAssumed health care cost trend ratesCurrent year trend rate


9.00
%


9.00
%


10.00
%Ultimate trend rate


4.75
%


4.75
%


5.00
%Year that the rate reaches the ultimate trend rateBenefit obligations at end of period


2031



2031



2013Net periodic benefit cost for the year


2031



2013



2012    F-27




---



##### Table of Contents



DRESSER-RAND
    GROUP INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 ($ in
    millions, except per share amounts)
     1%

1%Increase

DecreaseEffect on total service and interest cost components

$
0.1


$
(0.1
)Effect on postretirement benfit obligations


1.5



(1.4
)   13.
    Share
    Repurchase    14.
    Financial
    Instruments    Year Ended December 31,2009


2008Foreign currency exchange contracts assets

$
5.9


$
25.4Foreign currency exchange contracts liabilities

$
7.2


$
17.1       15.
    Commitments
    and Contingencies ( in millions)     F-28




---



##### Table of Contents



DRESSER-RAND
    GROUP INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 ($ in
    millions, except per share amounts)
 
                 F-29




---



##### Table of Contents



DRESSER-RAND
    GROUP INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 ($ in
    millions, except per share amounts)
         16.
    Warranties      Year Ended December 31,2009


2008


2007Beginning balance

$
37.0


$
28.5


$
23.4Acquisitions






1.1



Provision for warranties issued during period


21.2



29.1



18.9Adjustments to warranties issued in prior periods


(0.5
)


4.1



2.6Payments during the period


(19.6
)


(23.1
)


(17.9
)Foreign currency adjustments


1.1



(2.7
)


1.5Ending balance

$
39.2


$
37.0


$
28.5   17.
    Incentive
    Stock-Based Compensation Plans   F-30




---



##### Table of Contents



DRESSER-RAND
    GROUP INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 ($ in
    millions, except per share amounts)
     Weighted-averageShares


Exercise PriceBalance, December 31, 2007


1,097,059


$
25.47Granted


158,194


$
30.94Excercised


(64,955
)

$
21.94Forfeited


(15,765
)

$
26.94Expired


(2,225
)

$
25.18Balance, December 31, 2008


1,172,308


$
26.37Granted


517,152


$
21.98Excercised


(112,232
)

$
23.18Forfeited


(48,563
)

$
25.57Expired


(12,037
)

$
25.40Balance, December 31, 2009


1,516,628


$
25.16Excerisable December 31, 2007


139,184


$
22.34Excerisable December 31, 2008


248,814


$
24.82Excerisable December 31, 2009


400,123


$
26.56       718-10 SEC Staff Accounting
    Bulletin No. 107)
  2009


2008


2007Option term (years)


5.4



5.5



5.7Volatility


57.7
%


39.9
%


34.5
%Risk-free interest rate (zero coupon US Treasury note)


2.07
%


0.88
%


4.75
%Dividend yield










    F-31




---



##### Table of Contents



DRESSER-RAND
    GROUP INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 ($ in
    millions, except per share amounts)
     Weighted-AverageShares


Grant PriceNonvested at December 31, 2007


401,357


$
25.92Granted


246,662


$
33.42Vested


(109,327
)

$
25.09Forfeited


(17,093
)

$
28.97Nonvested at December 31, 2008


521,599


$
29.40Granted


579,570


$
21.81Vested


(158,964
)

$
29.16Forfeited


(33,371
)

$
25.37Nonvested at December 31, 2009


908,834


$
24.77     18.
    Significant
    Clients and Concentration of Credit Risk      19.
    Other
    (Expense) Income    Year Ended December 31,2009


2008


2007Foreign currency gains (losses)

$
7.3


$
(15.6
)

$
6.9(Loss) gain on forward exchange contracts


(11.1
)


9.1



(1.4
)Gain on sale of investment










2.3Net loss from equity investment


(1.2
)






Other


0.1



(0.3
)


(0.5
)Total other (expense) income, net

$
(4.9
)

$
(6.8
)

$
7.3   20.
    Segment
    Information:       F-32




---



##### Table of Contents



DRESSER-RAND
    GROUP INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 ($ in
    millions, except per share amounts)
     Year Ended December 31,2009


2008


2007RevenuesNew units

$
1,258.8


$
1,202.7


$
813.5Aftermarket parts and services


1,030.8



992.0



851.5Total revenues

$
2,289.6


$
2,194.7


$
1,665.0Operating incomeNew units

$
169.0


$
131.9


$
56.4Aftermarket parts and services


264.7



276.7



213.8Unallocable


(85.1
)


(71.1
)


(73.1
)Total operating income

$
348.6


$
337.5


$
197.1Depreciation and amortizationNew units

$
27.7


$
28.2


$
26.4Aftermarket parts and services


23.8



20.6



22.9Total depreciation and amortization

$
51.5


$
48.8


$
49.3GoodwillNew units

$
157.0


$
133.7


$
131.6Aftermarket parts and services


329.0



295.4



315.9Total goodwill

$
486.0


$
429.1


$
447.5Total assets (including goodwill)New units

$
356.0


$
352.4


$
315.0Aftermarket parts and services


767.7



765.8



697.8Unallocable


1,026.5



934.0



938.1Total assets

$
2,150.2


$
2,052.2


$
1,950.9Revenues by destinationNorth America

$
865.2


$
901.1


$
693.0Latin America


239.4



251.3



218.6Europe


430.1



538.4



300.2Asia-Pacific


380.3



263.0



202.9Middle East, Africa


374.6



240.9



250.3Total revenues

$
2,289.6


$
2,194.7


$
1,665.0Long-lived assets by geographic areaNorth America

$
178.9


$
166.3


$
149.3Latin America


4.6



3.6



3.7Europe


75.7



72.0



54.7Asia-Pacific


9.7



8.4



9.0Middle East, Africa










Total long-lived assets

$
268.9


$
250.3


$
216.7    F-33




---



##### Table of Contents



DRESSER-RAND
    GROUP INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 ($ in
    millions, except per share amounts)
 
    21.
    Selected
    Unaudited Quarterly Financial Data:  Three Months EndedMarch 31,


June 30,


September 30,


December 31,2009


2009


2009


2009Total revenues

$
508.9


$
606.1


$
612.1


$
562.5Gross profit


137.1



170.0



182.2



168.2Net income


34.5



60.3



74.6



41.4Net income per shareBasic


0.42



0.74



0.91



0.51Diluted


0.42



0.74



0.91



0.50   Three Months EndedMarch 31,


June 30,


September 30,


December 31,2008


2008


2008


2008Total revenues

$
363.8


$
541.2


$
543.9


$
745.8Gross profit


105.7



150.0



157.4



205.5Net income


27.2



46.7



46.8



77.0Net income per share-basic and diluted


0.32



0.55



0.57



0.94   22.
    Supplemental
    Cash Flow Information:  Year Ended December 31,2009


2008


2007Cash paid for interest, net of amounts capitalized

$
30.0


$
33.0


$
36.8Cash paid for income taxes, net of refunds


122.4



100.4



71.1   23.
    Supplemental
    guarantor financial information:     F-34




---



##### Table of Contents



DRESSER-RAND
    GROUP INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 ($ in
    millions, except per share amounts)
   CONDENSED
    CONSOLIDATING STATEMENT OF INCOME
    For the year ended December 31, 2009
  SubsidiarySubsidiary


Non-


ConsolidatingIssuer


Guarantors


Guarantors


Adjustments


TotalNet sales

$



$
1,354.1


$
1,105.6


$
(170.1
)

$
2,289.6Cost of sales






962.7



804.0



(134.6
)


1,632.1Gross profit






391.4



301.6



(35.5
)


657.5Selling and administrative expenses


139.2



60.5



121.9



(34.3
)


287.3Research and development expenses






17.7



2.6







20.3Plan settlement/curtailment amendment










1.3







1.3(Loss) income from operations


(139.2
)


313.2



175.8



(1.2
)


348.6Equity earnings in affiliates


285.4



14.8







(300.2
)


Interest expense, net


(31.0
)






(0.8
)






(31.8
)Intercompany interest and fees


23.7



(7.0
)


(16.7
)






Other income (expense), net


2.7



(0.4
)


(7.2
)






(4.9
)Income before income taxes


141.6



320.6



151.1



(301.4
)


311.9(Benefit) provision for income taxes


(69.2
)


120.1



50.2







101.1Net income

$
210.8


$
200.5


$
100.9


$
(301.4
)

$
210.8  F-35




---



##### Table of Contents



DRESSER-RAND
    GROUP INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 ($ in
    millions, except per share amounts)
   CONDENSED
    CONSOLIDATING STATEMENT OF INCOME
    For the year ended December 31, 2008
  SubsidiarySubsidiary


Non-


ConsolidatingIssuer


Guarantors


Guarantors


Adjustments


TotalNet sales

$



$
1,320.1


$
1,029.8


$
(155.2
)

$
2,194.7Cost of sales






960.4



747.1



(131.4
)


1,576.1Gross profit






359.7



282.7



(23.8
)


618.6Selling and administrative expenses


125.9



59.2



110.6



(21.9
)


273.8Research and development expenses






11.7



1.0







12.7Curtailment amendment/partial settlement






(5.4
)










(5.4
)(Loss) income from operations


(125.9
)


294.2



171.1



(1.9
)


337.5Equity earnings in affiliates


280.1



6.7







(286.8
)


Interest (expense) income, net


(31.4
)


0.2



1.8







(29.4
)Intercompany interest and fees


18.4



4.0



(22.4
)






Other income (expense), net


2.2



(2.9
)


(6.1
)






(6.8
)Income before income taxes


143.4



302.2



144.4



(288.7
)


301.3(Benefit) provision for income taxes


(54.3
)


110.3



47.6







103.6Net income

$
197.7


$
191.9


$
96.8


$
(288.7
)

$
197.7  F-36




---



##### Table of Contents



DRESSER-RAND
    GROUP INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 ($ in
    millions, except per share amounts)
   CONDENSED
    CONSOLIDATING STATEMENT OF INCOME
    For the year ended December 31, 2007
  SubsidiarySubsidiary


Non-


ConsolidatingIssuer


Guarantors


Guarantors


Adjustments


TotalNet sales

$



$
1,115.9


$
679.9


$
(130.8
)

$
1,665.0Cost of sales






860.7



471.6



(116.2
)


1,216.1Gross profit






255.2



208.3



(14.6
)


448.9Selling and administrative expenses


114.0



52.3



90.4



(17.7
)


239.0Research and development expenses






12.6



0.2







12.8(Loss) income from operations


(114.0
)


190.3



117.7



3.1



197.1Equity earnings in affiliates


174.8



1.5







(176.3
)


Interest expense, net


(35.1
)


(0.4
)


(1.3
)






(36.8
)Intercompany interest and fees


28.0



(1.7
)


(26.3
)






Other income (expense), net


7.6



(1.7
)


1.4







7.3Income before income taxes


61.3



188.0



91.5



(173.2
)


167.6(Benefit) provision for income taxes


(45.4
)


72.9



33.4







60.9Net income

$
106.7


$
115.1


$
58.1


$
(173.2
)

$
106.7  F-37




---



##### Table of Contents



DRESSER-RAND
    GROUP INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 ($ in
    millions, except per share amounts)
   CONDENSED
    CONSOLIDATING BALANCE SHEET
    December 31, 2009
  SubsidiarySubsidiary


Non-


ConsolidatingIssuer


Guarantors


Guarantors


Adjustments


TotalAssetsCash and cash equivalents

$
57.6


$



$
165.6


$



$
223.2Accounts receivables, net






126.4



163.4







289.8Inventories, net






215.0



147.0



(9.0
)


353.0Prepaid expenses and deferred income taxes


33.4



2.2



34.7







70.3Total current assets


91.0



343.6



510.7



(9.0
)


936.3Investment in affiliates


1,911.9



64.6







(1,976.5
)


Property, plant, and equipment, net






171.2



97.7







268.9Intangible assets, net






436.5



480.4







916.9Other assets


26.1



0.7



1.3







28.1Total assets

$
2,029.0


$
1,016.6


$
1,090.1


$
(1,985.5
)

$
2,150.2Liabilities and Stockholders EquityAccounts payable and accruals

$
(90.9
)

$
306.3


$
369.9


$



$
585.3Loans payable






0.1











0.1Total current liabilities


(90.9
)


306.4



369.9







585.4Long-term debt


370.0















370.0Intercompany accounts


717.0



(756.7
)


39.7







Other noncurrent liabilities


20.3



86.5



75.4







182.2Total liabilities


1,016.4



(363.8
)


485.0







1,137.6Common stock


0.8















0.8Other stockholders equity


1,011.8



1,380.4



605.1



(1,985.5
)


1,011.8Total stockholders equity


1,012.6



1,380.4



605.1



(1,985.5
)


1,012.6Total liabilities and stockholders equity

$
2,029.0


$
1,016.6


$
1,090.1


$
(1,985.5
)

$
2,150.2  F-38




---



##### Table of Contents



DRESSER-RAND
    GROUP INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 ($ in
    millions, except per share amounts)
   CONDENSED
    CONSOLIDATING BALANCE SHEET
    December 31, 2008
  SubsidiarySubsidiary


Non-


ConsolidatingIssuer


Guarantors


Guarantors


Adjustments


TotalAssetsCash and cash equivalents

$
26.5


$



$
120.6


$



$
147.1Accounts receivable, net






166.8



199.4



0.1



366.3Inventories, net






233.7



102.5



(7.7
)


328.5Prepaid expenses and deferred income taxes


23.1



3.7



39.3



(0.2
)


65.9Total current assets


49.6



404.2



461.8



(7.8
)


907.8Investment in affiliates


1,668.3



65.6







(1,733.9
)


Property, plant, and equipment, net






159.8



90.5







250.3Intangible assets, net






445.3



425.4







870.7Other assets


20.4



1.2



1.8







23.4Total assets

$
1,738.3


$
1,076.1


$
979.5


$
(1,741.7
)

$
2,052.2Liabilities and Stockholders EquityAccounts payable and accruals

$
(55.9
)

$
416.9


$
375.1


$



$
736.1Loans payable






0.2











0.2Total current liabilities


(55.9
)


417.1



375.1







736.3Long-term debt


370.0



0.1











370.1Intercompany accounts


660.7



(712.4
)


51.7







Other noncurrent liabilities


3.3



125.9



56.4







185.6Total liabilities


978.1



(169.3
)


483.2







1,292.0Common stock


0.8















0.8Other stockholders equity


759.4



1,245.4



496.3



(1,741.7
)


759.4Total stockholders equity


760.2



1,245.4



496.3



(1,741.7
)


760.2Total liabilities and stockholders equity

$
1,738.3


$
1,076.1


$
979.5


$
(1,741.7
)

$
2,052.2  F-39




---



##### Table of Contents



DRESSER-RAND
    GROUP INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 ($ in
    millions, except per share amounts)
   CONDENSED
    CONSOLIDATING STATEMENT OF CASH FLOWS
    For the year ended December 31, 2009
  SubsidiarySubsidiary


Non-


ConsolidatingIssuer


Guarantors


Guarantors


Adjustments


TotalCash flows from operating activities:Net cash (used in) provided by operating activities

$
(88.5
)

$
138.4


$
79.9


$



$
129.8Cash flows from investing activities:Capital expenditures






(27.4
)


(13.7
)






(41.1
)Proceeds from sale of property, plant and equipment






1.2











1.2Acquisitions


(12.7
)














(12.7
)Other investments


(10.0
)














(10.0
)Net cash used in investing activities


(22.7
)


(26.2
)


(13.7
)






(62.6
)Cash flows from financing activities:Proceeds from exercise of stock options


2.1















2.1Payments of long-term debt






(0.2
)










(0.2
)Change in intercompany accounts


140.2



(112.0
)


(28.2
)






Net cash provided by (used in) financing activities


142.3



(112.2
)


(28.2
)






1.9Effect of exchange rate changes on cash and cash equivalents










7.0







7.0Net increase in cash and equivalents


31.1







45.0







76.1Cash and cash equivalents, beginning of period


26.5







120.6







147.1Cash and cash equivalents, end of period

$
57.6


$



$
165.6


$



$
223.2  F-40




---



##### Table of Contents



DRESSER-RAND
    GROUP INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 ($ in
    millions, except per share amounts)
   CONDENSED
    CONSOLIDATING STATEMENT OF CASH FLOWS
    For the year ended December 31, 2008
  SubsidiarySubsidiary


Non-


ConsolidatingIssuer


Guarantors


Guarantors


Adjustments


TotalCash flows from operating activities:Net cash (used in) provided by operating activities

$
(121.3
)

$
273.8


$
82.3


$



$
234.8Cash flows from investing activities:Capital expenditures






(32.8
)


(7.4
)






(40.2
)Proceeds from sale of property, plant and equipment






0.1



0.2







0.3Other Investment


(5.0
)














(5.0
)Acquisitions


(91.4
)














(91.4
)Net cash used in investing activities


(96.4
)


(32.7
)


(7.2
)






(136.3
)Cash flows from financing activities:Proceeds from exercise of stock options


1.4















1.4Payments of long-term debt






(0.2
)










(0.2
)Repurchase of common stock


(150.2
)














(150.2
)Excess tax benefits from share-based compensation






0.4











0.4Change in intercompany accounts


322.3



(241.3
)


(81.0
)






Net cash provided by (used in) financing activities


173.5



(241.1
)


(81.0
)






(148.6
)Effect of exchange rate changes










(9.0
)






(9.0
)Net decrease in cash and equivalents


(44.2
)






(14.9
)






(59.1
)Cash and cash equivalents, beginning of period


70.7







135.5







206.2Cash and cash equivalents, end of period

$
26.5


$



$
120.6


$



$
147.1  F-41




---



##### Table of Contents



DRESSER-RAND
    GROUP INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 ($ in
    millions, except per share amounts)
   CONDENSED
    CONSOLIDATING STATEMENT OF CASH FLOWS
    For the year ended December 31, 2007
  SubsidiarySubsidiary


Non-


ConsolidatingIssuer


Guarantors


Guarantors


Adjustments


TotalCash flows from operating activities:Net cash (used in) provided by operating activities

$
(110.5
)

$
187.0


$
139.6


$
(0.1
)

$
216.0Cash flows from investing activities:Capital expenditures






(18.6
)


(5.1
)






(23.7
)Acquisitions






(8.1
)










(8.1
)Proceeds from the sale of equity investment






5.1



0.7







5.8Net cash used in investing activities






(21.6
)


(4.4
)






(26.0
)Cash flows from financing activities:Net change in debt


(62.2
)


0.5



(75.0
)






(136.7
)Proceeds from exercise of stock options


0.4















0.4Cash paid for debt issuance costs


(4.5
)














(4.5
)Change in intercompany accounts


210.6



(165.9
)


(44.8
)


0.1



Net cash provided by (used in) financing activities


144.3



(165.4
)


(119.8
)


0.1



(140.8
)Effect of exchange rate changes










10.2







10.2Net increase in cash and equivalents


33.8







25.6







59.4Cash and cash equivalents, beginning of period


36.9







109.9







146.8Cash and cash equivalents, end of period

$
70.7


$



$
135.5


$



$
206.2  F-42




---



##### Table of Contents



DRESSER-RAND
    GROUP INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 ($ in
    millions, except per share amounts)
   24.
    Subsequent
    Events             F-43




---



##### Table of Contents



Dresser-Rand
    Group Inc.
    SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS
    AND RESERVES
    for the years ended December 31, 2009, 2008 and 2007
    ($ in millions)
  AdditionsBeginning


Charges to








EndingBalance at


Costs and


Charges to





Balance atDescription

01/01/09


Expenses


Other Accounts


Deductions


12/31/2009Allowance for losses on receivables

$
11.6


$
4.7


$



$
1.9(a
)

$
14.4Valuation allowance for deferred tax asset


6.5



3.9



1.0(b
)





$
11.4      (a)
    
    - Impact of foreign exchange of $(0.2) and write-off of bad
    debts of $2.1.  (b)
    
    - Impact of foreign exchange.  AdditionsBeginning


Charges to








EndingBalance at


Costs and


Charges to





Balance atDescription

01/01/08


Expenses


Other Accounts


Deductions


12/31/2008Allowance for losses on receivables

$
5.9


$
7.6


$



$
1.9(a
)

$
11.6Valuation allowance for deferred tax asset


5.5



1.6



(0.6
)(b)






6.5      (a)
    
    - Impact of foreign exchange of $.7 and write-off of bad
    debts of $1.2.  (b)
    
    - Impact of foreign exchange.  AdditionsBeginning


Charges to








EndingBalance at


Costs and


Charges to





Balance atDescription

01/01/07


Expenses


Other Accounts


Deductions


12/31/2007Allowance for losses on receivables

$
6.1


$
1.2


$



$
1.4
(a)

$
5.9Valuation allowance for deferred tax asset


4.3



0.5



0.7
(b)






5.5      (a)
    
    - Impact of foreign exchange of $(0.2) and write-off of bad
    debts of $1.6.  (b)
    
    - Impact of foreign exchange. S-1