##### Table of Contents



Securities and Exchange Commission
 Washington, D.C. 20549
 Form 10-Q
 þ
    
    Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the Quarterly Period Ended March 31, 2010
 o
    
    Transition Report under Section 13 or 15(d) of the Exchange Act
 For the Transition Period from  to
 Commission file number 001-32586
 Dresser-Rand Group Inc.
  Delaware
    
    20-1780492(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)West 8 Tower, Suite 1000
10205 Westheimer Road 
Houston, TX
    
    77042(Address of principal executive offices)
    
    (Zip Code)
 (Registrants telephone number, including area code)
 (Former name, former address and former fiscal year, if changed since last report)
 þ o
 o Yes o No
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if smaller reporting company)
 o þ




---



##### 



PagePART I. FINANCIAL INFORMATIONItem 1. Financial Statements (unaudited):Consolidated Statement of Income for the three months ended March 31, 2010 and 2009
    
    
    3Consolidated Balance Sheet at March 31, 2010 and December 31, 2009
    
    
    4Consolidated Statement of Cash Flows for the three months ended March 31, 2010 and 2009
    
    
    5Notes to Unaudited Consolidated Financial Statements at March 31, 2010
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
    
    
    18Item 3. Quantitative and Qualitative Disclosure about Market Risk
    
    
    23Item 4. Controls and Procedures
    
    
    23PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    24Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    25Item 6. Exhibits
    
    
    25Signatures
    
    
    26ExhibitsExhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   Page 2 of 26




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##### Table of Contents



PART
I.  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
  
  Three months ended March 31,2010
    
    
    2009(Unaudited; $ in millions, exceptper share amounts)Net sales of products
    
    $
    398.5
    
    
    $
    410.9Net sales of services
    
    
    103.6
    
    
    
    98.0Total revenues
    
    
    502.1
    
    
    
    508.9Cost of products sold
    
    
    287.1
    
    
    
    304.3Cost of services sold
    
    
    72.9
    
    
    
    67.5Total cost of sales
    
    
    360.0
    
    
    
    371.8Gross profit
    
    
    142.1
    
    
    
    137.1Selling and administrative expenses
    
    
    71.4
    
    
    
    67.6Research and development expenses
    
    
    6.3
    
    
    
    4.0Plan settlement
    
    
    
    
    
    
    1.3Income from operations
    
    
    64.4
    
    
    
    64.2Interest expense, net
    
    
    (8.2
    )
    
    
    (7.0
    )Other expense, net
    
    
    (16.2
    )
    
    
    (4.3
    )Income before income taxes
    
    
    40.0
    
    
    
    52.9Provision for income taxes
    
    
    17.7
    
    
    
    18.4Net income
    
    $
    22.3
    
    
    $
    34.5Net income per shareBasic
    
    $
    0.27
    
    
    $
    0.42Diluted
    
    $
    0.27
    
    
    $
    0.42Weighted average shares outstanding  (in thousands)Basic
    
    
    81,865
    
    
    
    81,573Diluted
    
    
    82,243
    
    
    
    81,607
   Page 3 of 26




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March 31,
    
    
    December 31,2010
    
    
    2009(Unaudited; $ in millions, exceptshare amounts)AssetsCurrent assetsCash and cash equivalents
    
    $
    178.9
    
    
    $
    223.2Accounts receivable, less allowance for losses of $15.3 at 2010 and $14.4 at 2009
    
    
    259.9
    
    
    
    289.8Inventories, net
    
    
    321.8
    
    
    
    353.0Prepaid expenses and other
    
    
    31.2
    
    
    
    24.9Deferred income taxes, net
    
    
    44.0
    
    
    
    45.4Total current assets
    
    
    835.8
    
    
    
    936.3Property, plant and equipment, net
    
    
    272.3
    
    
    
    268.9Goodwill
    
    
    482.8
    
    
    
    486.0Intangible assets, net
    
    
    432.1
    
    
    
    430.9Other assets
    
    
    27.0
    
    
    
    28.1Total assets
    
    $
    2,050.0
    
    
    $
    2,150.2Liabilities and Stockholders EquityCurrent liabilitiesAccounts payable and accruals
    
    $
    340.4
    
    
    $
    412.0Customer advance payments
    
    
    130.7
    
    
    
    165.2Accrued income taxes payable
    
    
    12.1
    
    
    
    8.1Loans payable
    
    
    
    
    
    
    0.1Total current liabilities
    
    
    483.2
    
    
    
    585.4Deferred income taxes, net
    
    
    37.9
    
    
    
    38.5Postemployment and other employee benefit liabilities
    
    
    105.5
    
    
    
    109.9Long-term debt
    
    
    370.0
    
    
    
    370.0Other noncurrent liabilities
    
    
    36.3
    
    
    
    33.8Total liabilities
    
    
    1,032.9
    
    
    
    1,137.6Commitments and contingencies (Notes 8 through 12)Stockholders equityCommon stock, $0.01 par value, 250,000,000 shares authorized;
and 82,510,715 and 82,513,744 shares issued and
outstanding, respectively
    
    
    0.8
    
    
    
    0.8Additional paid-in capital
    
    
    398.8
    
    
    
    396.6Retained earnings
    
    
    660.4
    
    
    
    638.1Accumulated other comprehensive loss
    
    
    (42.9
    )
    
    
    (22.9
    )Total stockholders equity
    
    
    1,017.1
    
    
    
    1,012.6Total liabilities and stockholders equity
    
    $
    2,050.0
    
    
    $
    2,150.2
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Three months ended March 31,2010
    
    
    2009(Unaudited; $ in millions)Cash flows from operating activitiesNet income
    
    $
    22.3
    
    
    $
    34.5Adjustments to arrive at net cash provided by operating activitiesDepreciation and amortization
    
    
    13.2
    
    
    
    12.3Deferred income taxes
    
    
    0.5
    
    
    
    (0.4
    )Stock-based compensation
    
    
    1.6
    
    
    
    1.9Excess tax benefits from share-based compensation
    
    
    (0.6
    )
    
    
    Amortization of debt financing costs
    
    
    0.8
    
    
    
    0.8Provision for losses on inventory
    
    
    1.2
    
    
    
    0.9Plan settlement
    
    
    
    
    
    
    (0.2
    )Loss on sale of property, plant and equipment
    
    
    0.2
    
    
    
    0.2Net income from equity investment
    
    
    (0.1
    )
    
    
    Working capital and other, net of acquisitionsAccounts receivable
    
    
    31.1
    
    
    
    63.6Inventories
    
    
    26.8
    
    
    
    (37.1
    )Accounts payable and accruals
    
    
    (42.3
    )
    
    
    (38.3
    )Customer advances
    
    
    (30.2
    )
    
    
    8.0Other
    
    
    (0.5
    )
    
    
    (22.8
    )Net cash provided by operating activities
    
    
    24.0
    
    
    
    23.4Cash flows from investing activitiesCapital expenditures
    
    
    (5.0
    )
    
    
    (7.0
    )Proceeds from sales of property, plant and equipment
    
    
    0.1
    
    
    
    1.0Acquisitions, net of cash
    
    
    (58.3
    )
    
    
    Net cash used in investing activities
    
    
    (63.2
    )
    
    
    (6.0
    )Cash flows from financing activitiesProceeds from exercise of stock options
    
    
    0.1
    
    
    
    Excess tax benefits from share-based compensation
    
    
    0.6
    
    
    
    Payments of long-term debt
    
    
    (0.1
    )
    
    
    (0.1
    )Net cash provided by (used in)
financing activities
    
    
    0.6
    
    
    
    (0.1
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    (5.7
    )
    
    
    (4.4
    )Net (decrease) increase in cash and cash equivalents
    
    
    (44.3
    )
    
    
    12.9Cash and cash equivalents, beginning of the period
    
    
    223.2
    
    
    
    147.1Cash and cash equivalents, end of period
    
    $
    178.9
    
    
    $
    160.0
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1. Basis of presentation
   2. New accounting standards
 Revenue Recognition
 Accounting for Transfers of Financial Assets Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities
 Amendments to FASB Interpretation No. 46(R)
 Improving Disclosures About Fair Value
Measurements
 Subsequent Events  Amendments to Certain
Recognition and Disclosure Requirements ,
  Page 6 of 26




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##### Table of Contents



3. Acquisitions and other investments
     2010Accounts receivable, net
    
    $
    3.5Inventory, net
    
    
    2.2Total current assets
    
    
    5.7Property, plant and equipment
    
    
    10.8Amortizable intangible assets
    
    
    9.3Goodwill
    
    
    13.5Total assets acquired
    
    
    39.3Accounts payable and accruals
    
    
    1.3Total liabilities assumed
    
    
    1.3Purchase
price
    
    
    38.0Fair value
of contingent consideration (non-cash)
    
    
    (3.8
    )Cash paid
    
    $
    34.2
   Other Investments
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D-R Arabia
 4. Intangible assets and goodwill
  March 31, 2010
    
    
    Weighted
    
    
    December 31, 2009Accumulated
    
    
    Average
    
    
    
    
    
    
    AccumulatedCost
    
    
    Amortization
    
    
    Useful Lives
    
    
    Cost
    
    
    AmortizationTrade names
    
    $
    94.1
    
    
    $
    12.2
    
    
    39  years
    
    $
    93.1
    
    
    $
    11.6Customer relationships
    
    
    263.3
    
    
    
    36.2
    
    
    37  years
    
    
    258.6
    
    
    
    34.5Software
    
    
    30.6
    
    
    
    16.5
    
    
    10  years
    
    
    30.6
    
    
    
    15.8Existing technology
    
    
    136.8
    
    
    
    29.4
    
    
    24  years
    
    
    137.1
    
    
    
    27.9Non-compete agreements
    
    
    2.6
    
    
    
    1.0
    
    
    4  years
    
    
    2.1
    
    
    
    0.8Total amortizable intangible assets
    
    $
    527.4
    
    
    $
    95.3
    
    
    
    
    
    
    $
    521.5
    
    
    $
    90.6
   AftermarketNew units
    
    
    parts and services
    
    
    TotalBalance, December 31, 2009
    
    $
    157.0
    
    
    $
    329.0
    
    
    $
    486.0Acquisitions
    
    
    
    
    
    
    13.5
    
    
    
    13.5Foreign currency adjustments
    
    
    (6.6
    )
    
    
    (10.1
    )
    
    
    (16.7
    )Balance, March 31, 2010
    
    $
    150.4
    
    
    $
    332.4
    
    
    $
    482.8
  Page 8 of 26




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5. Inventories
  March 31,
    
    
    December 31,2010
    
    
    2009Raw materials and supplies
    
    $
    133.4
    
    
    $
    132.6Work-in-process and finished goods
    
    
    395.0
    
    
    
    485.0528.4
    
    
    
    617.6Less: Progress payments
    
    
    (206.6
    )
    
    
    (264.6
    )Total inventories
    
    $
    321.8
    
    
    $
    353.0
  6. Property, plant and equipment
  March 31,
    
    
    December 31,2010
    
    
    2009Cost:Land
    
    $
    16.2
    
    
    $
    15.3Buildings and improvements
    
    
    117.5
    
    
    
    113.9Machinery and equipment
    
    
    290.4
    
    
    
    285.3424.1
    
    
    
    414.5Less: Accumulated depreciation
    
    
    (151.8
    )
    
    
    (145.6
    )Property, plant and equipment, net
    
    $
    272.3
    
    
    $
    268.9
 7.
Financial Instruments ( in millions)
      Page 9 of 26




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March 31,
    
    
    December 31,2010
    
    
    2009Foreign currency exchange contracts assets
    
    $
    5.0
    
    
    $
    5.9Foreign currency exchange contracts liabilities
    
    $
    6.0
    
    
    $
    7.2
    Level 1
    
    Unadjusted quoted prices in active markets for identical assets or liabilitiesLevel 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 liabilityLevel 3
    
    Unobservable inputs for the asset or liability
  Description
    
    Disclosure
    
    Input Level
    
    InputsLong-term debt (note disclosure only)
    
    Note 7
    
    Level 1
    
    Quoted market pricesFinancial derivatives
    
    Note 7
    
    Level 2
    
    Quoted market prices of similar instruments
 8. Income taxes
    Page 10 of 26




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9. Pension plans
  Three months ended March 31,2010
    
    
    2009Service cost
    
    $
    1.9
    
    
    $
    1.5Interest cost
    
    
    5.2
    
    
    
    4.9Expected return on plan assets
    
    
    (5.2
    )
    
    
    (4.5
    )Amortization of prior service cost
    
    
    0.3
    
    
    
    0.2Amortization of net actuarial loss
    
    
    0.7
    
    
    
    1.0Plan settlement
    
    
    
    
    
    
    1.3Net pension expense
    
    $
    2.9
    
    
    $
    4.4
  10. Postretirement benefits other than pensions
  Three months ended March 31,2010
    
    
    2009Interest cost
    
    $
    0.2
    
    
    $
    0.3Amortization of prior service credit
    
    
    (2.3
    )
    
    
    (2.0
    )Amortization of net actuarial loss
    
    
    0.4
    
    
    
    0.2Net
post-retirement benefits income
    
    $
    (1.7
    )
    
    $
    (1.5
    )
 11. Commitments and contingencies (£ in millions)
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12. Warranty accruals
   Three months ended March 31,2010
    
    
    2009Beginning balance
    
    $
    39.2
    
    
    $
    37.0Provisions for warranties issued during the period
    
    
    3.8
    
    
    
    4.3Adjustments to warranties issued in prior periods
    
    
    0.3
    
    
    
    Payments during period
    
    
    (5.1
    )
    
    
    (3.3
    )Foreign currency adjustments
    
    
    (0.9
    )
    
    
    (0.9
    )Ending balance
    
    $
    37.3
    
    
    $
    37.1
  Page 12 of 26




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13. Segment information
  1)
    
    New units are highly engineered solutions to new requests from customers. The segment
includes engineering, manufacturing, sales and administrative support.
 2)
    
    Aftermarket parts and services consist of support solutions for the existing population of
installed equipment. The segment includes engineering, manufacturing, sales and
administrative support.
   Three months ended March 31,2010
    
    
    2009RevenuesNew units
    
    $
    285.1
    
    
    $
    278.4Aftermarket parts and services
    
    
    217.0
    
    
    
    230.5Total revenues
    
    $
    502.1
    
    
    $
    508.9Operating IncomeNew units
    
    $
    40.3
    
    
    $
    25.2Aftermarket parts and services
    
    
    45.9
    
    
    
    58.9Unallocated
    
    
    (21.8
    )
    
    
    (19.9
    )Total operating income
    
    $
    64.4
    
    
    $
    64.2Depreciation and AmortizationNew units
    
    $
    7.4
    
    
    $
    6.8Aftermarket parts and services
    
    
    5.8
    
    
    
    5.5Total depreciation and amortization
    
    $
    13.2
    
    
    $
    12.3Assets (including Goodwill)New units
    
    $
    320.5
    
    
    $
    333.2Aftermarket parts and services
    
    
    743.8
    
    
    
    736.0Unallocated
    
    
    985.7
    
    
    
    935.9Total assets
    
    $
    2,050.0
    
    
    $
    2,005.1
 14. Stockholders equity
  AccumulatedOtherCommon
    
    
    Additional
    
    
    Retained
    
    
    ComprehensiveStock
    
    
    Paid-in Capital
    
    
    Earnings
    
    
    (Loss) Income
    
    
    TotalAt December 31, 2009
    
    $
    0.8
    
    
    $
    396.6
    
    
    $
    638.1
    
    
    $
    (22.9
    )
    
    $
    1,012.6Stock-based employee compensation
    
    
    
    
    
    
    2.2
    
    
    
    
    
    
    
    
    
    
    
    2.2Net income
    
    
    
    
    
    
    
    
    
    
    22.3
    
    
    
    
    
    
    
    22.3Other comprehensive income (loss)Foreign currency adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19.2
    )
    
    
    (19.2
    )Unrealized loss on derivatives, net of $0.1 tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.2
    )
    
    
    (0.2
    )Pension and other postretirement benefit plans  net of
$0.3 tax:Benefit plans amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.6
    )
    
    
    (0.6
    )At March 31, 2010
    
    $
    0.8
    
    
    $
    398.8
    
    
    $
    660.4
    
    
    $
    (42.9
    )
    
    $
    1,017.1
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Three months ended March 31,2010
    
    
    2009Net income
    
    $
    22.3
    
    
    $
    34.5Other comprehensive incomeForeign currency adjustments
    
    
    (19.2
    )
    
    
    (12.4
    )Unrealized loss on derivatives, net of $0.1 tax
    
    
    (0.2
    )
    
    
    Pension and other postretirement benefit plans  net of $0.3 taxBenefit plans amortization
    
    
    (0.6
    )
    
    
    (0.4
    )Plan settlement
    
    
    
    
    
    
    0.3Total comprehensive income
    
    $
    2.3
    
    
    $
    22.0
  15. Supplemental guarantor financial information
     Page 14 of 26




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CONDENSED CONSOLIDATING STATEMENT OF INCOME
For the three months ended March 31, 2010
 SubsidiarySubsidiary
    
    
    Non-
    
    
    ConsolidatingIssuer
    
    
    Guarantors
    
    
    Guarantors
    
    
    Adjustments
    
    
    TotalNet sales
    
    $
    
    
    
    $
    247.2
    
    
    $
    301.6
    
    
    $
    (46.7
    )
    
    $
    502.1Cost of sales
    
    
    
    
    
    
    180.7
    
    
    
    217.0
    
    
    
    (37.7
    )
    
    
    360.0Gross profit
    
    
    
    
    
    
    66.5
    
    
    
    84.6
    
    
    
    (9.0
    )
    
    
    142.1Selling and administrative expenses
    
    
    35.2
    
    
    
    12.7
    
    
    
    31.3
    
    
    
    (7.8
    )
    
    
    71.4Research and development expenses
    
    
    
    
    
    
    5.2
    
    
    
    1.1
    
    
    
    
    
    
    
    6.3(Loss) income from operations
    
    
    (35.2
    )
    
    
    48.6
    
    
    
    52.2
    
    
    
    (1.2
    )
    
    
    64.4Equity earnings in affiliates
    
    
    39.9
    
    
    
    3.7
    
    
    
    
    
    
    
    (43.6
    )
    
    
    Interest expense, net
    
    
    (7.8
    )
    
    
    
    
    
    
    (0.4
    )
    
    
    
    
    
    
    (8.2
    )Intercompany interest and fees
    
    
    14.2
    
    
    
    (1.9
    )
    
    
    (12.3
    )
    
    
    
    
    
    
    Other income (expense), net
    
    
    2.0
    
    
    
    
    
    
    
    (18.2
    )
    
    
    
    
    
    
    (16.2
    )Income before income taxes
    
    
    13.1
    
    
    
    50.4
    
    
    
    21.3
    
    
    
    (44.8
    )
    
    
    40.0(Benefit) provision for income taxes
    
    
    (9.2
    )
    
    
    17.2
    
    
    
    9.7
    
    
    
    
    
    
    
    17.7Net income
    
    $
    22.3
    
    
    $
    33.2
    
    
    $
    11.6
    
    
    $
    (44.8
    )
    
    $
    22.3
 CONDENSED CONSOLIDATING STATEMENT OF INCOME
For the three months ended March 31, 2009
 SubsidiarySubsidiary
    
    
    Non-
    
    
    ConsolidatingIssuer
    
    
    Guarantors
    
    
    Guarantors
    
    
    Adjustments
    
    
    TotalNet sales
    
    $
    
    
    
    $
    316.4
    
    
    $
    235.0
    
    
    $
    (42.5
    )
    
    $
    508.9Cost of sales
    
    
    
    
    
    
    227.0
    
    
    
    179.1
    
    
    
    (34.3
    )
    
    
    371.8Gross profit
    
    
    
    
    
    
    89.4
    
    
    
    55.9
    
    
    
    (8.2
    )
    
    
    137.1Selling and administrative
expenses
    
    
    32.0
    
    
    
    15.0
    
    
    
    27.4
    
    
    
    (6.8
    )
    
    
    67.6Research and development
expenses
    
    
    
    
    
    
    3.6
    
    
    
    0.4
    
    
    
    
    
    
    
    4.0Plan settlement
    
    
    
    
    
    
    
    
    
    
    1.3
    
    
    
    
    
    
    
    1.3(Loss) income from operations
    
    
    (32.0
    )
    
    
    70.8
    
    
    
    26.8
    
    
    
    (1.4
    )
    
    
    64.2Equity earnings in affiliates
    
    
    55.6
    
    
    
    2.4
    
    
    
    
    
    
    
    (58.0
    )
    
    
    Interest (expense) income, net
    
    
    (7.7
    )
    
    
    
    
    
    
    0.7
    
    
    
    
    
    
    
    (7.0
    )Intercompany interest and fees
    
    
    4.6
    
    
    
    (0.8
    )
    
    
    (3.8
    )
    
    
    
    
    
    
    Other income (expense), net
    
    
    0.8
    
    
    
    (0.8
    )
    
    
    (4.3
    )
    
    
    
    
    
    
    (4.3
    )Income before income taxes
    
    
    21.3
    
    
    
    71.6
    
    
    
    19.4
    
    
    
    (59.4
    )
    
    
    52.9(Benefit) provision for
income taxes
    
    
    (13.2
    )
    
    
    25.6
    
    
    
    6.0
    
    
    
    
    
    
    
    18.4Net income
    
    $
    34.5
    
    
    $
    46.0
    
    
    $
    13.4
    
    
    $
    (59.4
    )
    
    $
    34.5
  Page 15 of 26




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##### Table of Contents



CONDENSED CONSOLIDATING BALANCE SHEET
March 31, 2010
 Subsidiary
    
    
    Subsidiary 
Non-
    
    
    ConsolidatingIssuer
    
    
    Guarantors
    
    
    Guarantors
    
    
    Adjustments
    
    
    TotalASSETSCash and cash equivalents
    
    $
    13.4
    
    
    $
    
    
    
    $
    165.5
    
    
    $
    
    
    
    $
    178.9Accounts receivable, net
    
    
    
    
    
    
    108.5
    
    
    
    151.4
    
    
    
    
    
    
    
    259.9Inventories, net
    
    
    
    
    
    
    188.9
    
    
    
    143.1
    
    
    
    (10.2
    )
    
    
    321.8Prepaid and other expenses and deferred
income taxes
    
    
    39.9
    
    
    
    2.1
    
    
    
    33.2
    
    
    
    
    
    
    
    75.2Total current assets
    
    
    53.3
    
    
    
    299.5
    
    
    
    493.2
    
    
    
    (10.2
    )
    
    
    835.8Investment in affiliates
    
    
    1,943.9
    
    
    
    69.9
    
    
    
    
    
    
    
    (2,013.8
    )
    
    
    Property, plant and equipment, net
    
    
    
    
    
    
    180.3
    
    
    
    92.0
    
    
    
    
    
    
    
    272.3Intangible assets, net
    
    
    
    
    
    
    455.2
    
    
    
    459.7
    
    
    
    
    
    
    
    914.9Other assets
    
    
    25.3
    
    
    
    0.6
    
    
    
    1.1
    
    
    
    
    
    
    
    27.0Total assets
    
    $
    2,022.5
    
    
    $
    1,005.5
    
    
    $
    1,046.0
    
    
    $
    (2,024.0
    )
    
    $
    2,050.0LIABILITIES AND STOCKHOLDERS EQUITYAccounts payable and accruals
    
    $
    14.4
    
    
    $
    182.8
    
    
    $
    286.0
    
    
    $
    
    
    
    $
    483.2Total current liabilities
    
    
    14.4
    
    
    
    182.8
    
    
    
    286.0
    
    
    
    
    
    
    
    483.2Long-term debt
    
    
    370.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    370.0Intercompany accounts
    
    
    600.4
    
    
    
    (690.3
    )
    
    
    89.9
    
    
    
    
    
    
    
    Other noncurrent liabilities
    
    
    20.6
    
    
    
    91.5
    
    
    
    67.6
    
    
    
    
    
    
    
    179.7Total liabilities
    
    
    1,005.4
    
    
    
    (416.0
    )
    
    
    443.5
    
    
    
    
    
    
    
    1,032.9Common stock
    
    
    0.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.8Other stockholders equity
    
    
    1,016.3
    
    
    
    1,421.5
    
    
    
    602.5
    
    
    
    (2,024.0
    )
    
    
    1,016.3Total stockholders equity
    
    
    1,017.1
    
    
    
    1,421.5
    
    
    
    602.5
    
    
    
    (2,024.0
    )
    
    
    1,017.1Total liabilities and stockholders equity
    
    $
    2,022.5
    
    
    $
    1,005.5
    
    
    $
    1,046.0
    
    
    $
    (2,024.0
    )
    
    $
    2,050.0
 CONDENSED CONSOLIDATING BALANCE SHEET
December 31, 2009
 Subsidiary
    
    
    Subsidiary 
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 and other 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
  Page 16 of 26




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##### Table of Contents



CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the three months ended March 31, 2010
 SubsidiarySubsidiary
    
    
    Non-
    
    
    ConsolidatingIssuer
    
    
    Guarantors
    
    
    Guarantors
    
    
    Adjustments
    
    
    TotalCash flows from operating activitiesNet cash provided by (used in) operating activities
    
    $
    84.4
    
    
    $
    (70.5
    )
    
    $
    10.1
    
    
    $
    
    
    
    $
    24.0Cash flows from investing activitiesCapital expenditures
    
    
    
    
    
    
    (3.5
    )
    
    
    (1.5
    )
    
    
    
    
    
    
    (5.0
    )Proceeds from sale of property, plant and equipment
    
    
    
    
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    0.1Acquisitions, net of cash
    
    
    (34.2
    )
    
    
    
    
    
    
    (24.1
    )
    
    
    
    
    
    
    (58.3
    )Net cash used in investing activities
    
    
    (34.2
    )
    
    
    (3.4
    )
    
    
    (25.6
    )
    
    
    
    
    
    
    (63.2
    )Cash flows from financing activitiesProceeds from exercise of stock options
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.1Excess tax benefits from share-based compensation
    
    
    
    
    
    
    0.6
    
    
    
    
    
    
    
    
    
    
    
    0.6Payment of long-term debt
    
    
    
    
    
    
    (0.1
    )
    
    
    
    
    
    
    
    
    
    
    (0.1
    )Change in intercompany accounts
    
    
    (94.5
    )
    
    
    73.4
    
    
    
    21.1
    
    
    
    
    
    
    
    Net cash (used in) provided by financing activities
    
    
    (94.4
    )
    
    
    73.9
    
    
    
    21.1
    
    
    
    
    
    
    
    0.6Effect of exchange rate changes
    
    
    
    
    
    
    
    
    
    
    (5.7
    )
    
    
    
    
    
    
    (5.7
    )Net decrease in cash and equivalents
    
    
    (44.2
    )
    
    
    
    
    
    
    (0.1
    )
    
    
    
    
    
    
    (44.3
    )Cash and cash equivalents, beginning of period
    
    
    57.6
    
    
    
    
    
    
    
    165.6
    
    
    
    
    
    
    
    223.2Cash and cash equivalents, end of period
    
    $
    13.4
    
    
    $
    
    
    
    $
    165.5
    
    
    $
    
    
    
    $
    178.9
 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the three months ended March 31, 2009
 SubsidiarySubsidiary
    
    
    Non-
    
    
    ConsolidatingIssuer
    
    
    Guarantors
    
    
    Guarantors
    
    
    Adjustments
    
    
    TotalCash flows from operating activitiesNet cash provided by (used in) operating
activities
    
    $
    55.4
    
    
    $
    (64.8
    )
    
    $
    32.8
    
    
    $
    
    
    
    $
    23.4Cash flows from investing activitiesCapital expenditures
    
    
    
    
    
    
    (6.6
    )
    
    
    (0.4
    )
    
    
    
    
    
    
    (7.0
    )Proceeds from sale of property, plant and equipment
    
    
    
    
    
    
    1.0
    
    
    
    
    
    
    
    
    
    
    
    1.0Net cash used in investing activities
    
    
    
    
    
    
    (5.6
    )
    
    
    (0.4
    )
    
    
    
    
    
    
    (6.0
    )Cash flows from financing activitiesPayment of long-term debt
    
    
    
    
    
    
    (0.1
    )
    
    
    
    
    
    
    
    
    
    
    (0.1
    )Change in intercompany accounts
    
    
    (66.9
    )
    
    
    70.5
    
    
    
    (3.6
    )
    
    
    
    
    
    
    Net cash (used in) provided by financing activities
    
    
    (66.9
    )
    
    
    70.4
    
    
    
    (3.6
    )
    
    
    
    
    
    
    (0.1
    )Effect of exchange rate changes
    
    
    
    
    
    
    
    
    
    
    (4.4
    )
    
    
    
    
    
    
    (4.4
    )Net (decrease) increase in cash and equivalents
    
    
    (11.5
    )
    
    
    
    
    
    
    24.4
    
    
    
    
    
    
    
    12.9Cash and cash equivalents, beginning of period
    
    
    26.5
    
    
    
    
    
    
    
    120.6
    
    
    
    
    
    
    
    147.1Cash and cash equivalents, end of period
    
    $
    15.0
    
    
    $
    
    
    
    $
    145.0
    
    
    $
    
    
    
    $
    160.0
  Page 17 of 26




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS ($ in millions)
 Overview
     Results of Operations
 Three months ended March 31, 2010, compared to the three months ended March 31, 2009:
 Three months ended
    
    
    Three months ended
    
    
    Period to Period ChangeMarch 31, 2010
    
    

March 31, 2009
    
    
    2009 to 2010
    
    
    % ChangeStatement of Operations Data:Total revenues
    
    $
    502.1
    
    
    
    100.0
    %
    
    $
    508.9
    
    
    
    100.0
    %
    
    $
    (6.8
    )
    
    
    (1.3
    )%Cost of sales
    
    
    360.0
    
    
    
    71.7
    
    
    
    371.8
    
    
    
    73.1
    
    
    
    (11.8
    )
    
    
    (3.2
    )%Gross profit
    
    
    142.1
    
    
    
    28.3
    
    
    
    137.1
    
    
    
    26.9
    
    
    
    5.0
    
    
    
    3.6
    %Selling and administrative
expenses
    
    
    71.4
    
    
    
    14.2
    
    
    
    67.6
    
    
    
    13.3
    
    
    
    3.8
    
    
    
    5.6
    %Research and development
expenses
    
    
    6.3
    
    
    
    1.3
    
    
    
    4.0
    
    
    
    0.8
    
    
    
    2.3
    
    
    
    57.5
    %Plan settlement
    
    
    
    
    
    
    
    
    
    
    1.3
    
    
    
    0.2
    
    
    
    (1.3
    )
    
    
    (100.0
    )%Operating income
    
    
    64.4
    
    
    
    12.8
    
    
    
    64.2
    
    
    
    12.6
    
    
    
    0.2
    
    
    
    0.3
    %Interest expense, net
    
    
    (8.2
    )
    
    
    (1.6
    )
    
    
    (7.0
    )
    
    
    (1.4
    )
    
    
    (1.2
    )
    
    
    17.1
    %Other expense, net
    
    
    (16.2
    )
    
    
    (3.2
    )
    
    
    (4.3
    )
    
    
    (0.8
    )
    
    
    (11.9
    )
    
    
    276.7
    %Income before income taxes
    
    
    40.0
    
    
    
    8.0
    
    
    
    52.9
    
    
    
    10.4
    
    
    
    (12.9
    )
    
    
    (24.3
    )%Provision for income taxes
    
    
    17.7
    
    
    
    3.5
    
    
    
    18.4
    
    
    
    3.6
    
    
    
    (0.7
    )
    
    
    (3.8
    )%Net income
    
    $
    22.3
    
    
    
    4.5
    %
    
    $
    34.5
    
    
    
    6.8
    %
    
    $
    (12.2
    )
    
    
    (35.4
    )%Bookings
    
    $
    565.3
    
    
    
    
    
    
    $
    355.8
    
    
    
    
    
    
    $
    209.5
    
    
    
    58.9
    %Backlog  ending
    
    $
    1,748.1
    
    
    
    
    
    
    $
    2,087.6
    
    
    
    
    
    
    $
    (339.5
    )
    
    
    (16.3
    )%
 Total revenues.
  Page 18 of 26




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##### Table of Contents



Cost of sales.
 Gross profit.
 Selling and administrative expenses.
 Research and development expenses.
 Plan Settlement.
 Operating income.
 Interest expense, net.
 Other expense, net.
 Provision for income taxes.
  Page 19 of 26




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##### Table of Contents



Bookings and backlog.
 Segment information
  1)
    
    New units are highly engineered solutions to new requests from customers. The segment
includes engineering, manufacturing, sales and administrative support.
 2)
    
    Aftermarket parts and services consist of support solutions for the existing population of
installed equipment. The segment includes engineering, manufacturing, sales and
administrative support.
  Segment Analysis  three months ended March 31, 2010, compared to three months ended March
31, 2009:
 Three months ended March 31,
    
    
    
    
    
    
    Period to Period Change2010
    
    
    
    
    
    
    2009
    
    
    
    
    
    
    2009 to 2010
    
    
    % ChangeRevenuesNew units
    
    $
    285.1
    
    
    
    56.8
    %
    
    $
    278.4
    
    
    
    54.7
    %
    
    $
    6.7
    
    
    
    2.4
    %Aftermarket parts and
services
    
    
    217.0
    
    
    
    43.2
    %
    
    
    230.5
    
    
    
    45.3
    %
    
    
    (13.5
    )
    
    
    (5.9
    )%Total revenues
    
    $
    502.1
    
    
    
    100.0
    %
    
    $
    508.9
    
    
    
    100.0
    %
    
    $
    (6.8
    )
    
    
    (1.3
    )%Gross profitNew units
    
    $
    63.4
    
    
    
    
    
    
    $
    47.5
    
    
    
    
    
    
    $
    15.9
    
    
    
    33.5
    %Aftermarket parts and
services
    
    
    78.7
    
    
    
    
    
    
    
    89.6
    
    
    
    
    
    
    
    (10.9
    )
    
    
    (12.2
    )%Total gross profit
    
    $
    142.1
    
    
    
    
    
    
    $
    137.1
    
    
    
    
    
    
    $
    5.0
    
    
    
    3.6
    %Operating incomeNew units
    
    $
    40.3
    
    
    
    
    
    
    $
    25.2
    
    
    
    
    
    
    $
    15.1
    
    
    
    59.9
    %Aftermarket parts and
services
    
    
    45.9
    
    
    
    
    
    
    
    58.9
    
    
    
    
    
    
    
    (13.0
    )
    
    
    (22.1
    )%Unallocated
    
    
    (21.8
    )
    
    
    
    
    
    
    (19.9
    )
    
    
    
    
    
    
    (1.9
    )
    
    
    9.5
    %Total operating income
    
    $
    64.4
    
    
    
    
    
    
    $
    64.2
    
    
    
    
    
    
    $
    0.2
    
    
    
    0.3
    %BookingsNew units
    
    $
    301.3
    
    
    
    
    
    
    $
    109.4
    
    
    
    
    
    
    $
    191.9
    
    
    
    175.4
    %Aftermarket parts and
services
    
    
    264.0
    
    
    
    
    
    
    
    246.4
    
    
    
    
    
    
    
    17.6
    
    
    
    7.1
    %Total bookings
    
    $
    565.3
    
    
    
    
    
    
    $
    355.8
    
    
    
    
    
    
    $
    209.5
    
    
    
    58.9
    %Backlog  endingNew units
    
    $
    1,368.4
    
    
    
    
    
    
    $
    1,663.4
    
    
    
    
    
    
    $
    (295.0
    )
    
    
    (17.7
    )%Aftermarket parts and
services
    
    
    379.7
    
    
    
    
    
    
    
    424.2
    
    
    
    
    
    
    
    (44.5
    )
    
    
    (10.5
    )%Total backlog
    
    $
    1,748.1
    
    
    
    
    
    
    $
    2,087.6
    
    
    
    
    
    
    $
    (339.5
    )
    
    
    (16.3
    )%
 New Units
 Revenues.
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##### Table of Contents



Gross profit.
 Operating income.
 Bookings and Backlog.
 Aftermarket Parts and Services
 Revenues.
 Gross profit.
 Operating income.
 Bookings and Backlog.
 Liquidity and Capital Resources
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New accounting standards
 Revenue Recognition
 Accounting for Transfers of Financial Assets Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities
 Amendments to FASB Interpretation No. 46(R)
 Improving Disclosures About Fair Value
Measurements
 Subsequent Events  Amendments to Certain
Recognition and Disclosure Requirements ,
 SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
  
    
    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;
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
    
    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 report and as set forth in the Companys Annual Report on
Form 10-K for the year ended December 31, 2009.
 
 ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK ( and  in millions)
  
 
 ITEM 4. CONTROLS AND PROCEDURES
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PART II.  OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS ($ and £ in millions)
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 Issuer Purchases of Equity Securities
  Total Number
    
    
    Approximateof  Shares
    
    
    Dollar ValuePurchased as
    
    
    of SharesPart of
    
    
    That May YetPublicly
    
    
    Be PurchasedTotal Number
    
    
    Average Price
    
    
    Announced
    
    
    Under theof Shares
    
    
    Paid Per
    
    
    Plans or
    
    
    Plans orPeriod
    
    Purchased (1)
    
    
    Share
    
    
    Programs
    
    
    ProgramsJanuary 2010
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    February 2010
    
    
    80,021
    
    
    $
    31.20
    
    
    
    
    
    
    
    March 2010
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    Total
    
    
    80,021
    
    
    
    
    
    
    
    
    
    
    
    
 (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. 
 ITEM 6. EXHIBITS
  Exhibit No.
    
    Description3.1
    
    
    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 16,
2007, File No. 001-32586).10.1
    
    
    Dresser-Rand Annual Incentive Program, adopted February 12, 2010
(incorporated by reference to Exhibit 10.1 to the Company’s Current
Report on Form 8-K, filed on February 17, 2010, File
No. 001-32586).10.2
    
    
    Dresser-Rand Group Inc. Form of Grant Notice and Standard Terms and
Conditions for Performance Restricted Stock Units (incorporated by reference to
Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on
March 17, 2010, File No. 001-32586).10.3
    
    
    Second Amendment to the Dresser-Rand Group Inc. 2008 Stock Incentive
Plan, adopted March 15, 2010 (incorporated by reference to
Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed on
March 17, 2010, File No. 001-32586).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).
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SIGNATURES
  DRESSER-RAND GROUP INC.Date:   April 29, 2010
    /s/ Raymond L. Carney Jr.Raymond L. Carney Jr.Vice President, Controller and 
Chief
Accounting Officer  Page 26 of 26