##### 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 September 30, 2009
 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 
incorporation or organization)
    
    (I.R.S. Employer Identification No.)West8 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
Yes o No
 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
Yes þ No




---



##### 



PagePART I. FINANCIAL INFORMATIONItem 1. Financial Statements (unaudited):Consolidated Statement of Income for the three and nine months ended September 30, 2009 and 2008
    
    
    3Consolidated Balance Sheet at September 30, 2009 and December 31, 2008
    
    
    4Consolidated Statement of Cash Flows for the nine months ended September 30, 2009 and 2008
    
    
    5Notes to Unaudited Consolidated Financial Statements at September 30, 2009
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    20Item 3. Quantitative and Qualitative Disclosure about Market Risk
    
    
    29Item 4. Controls and Procedures
    
    
    29PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    29Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    31Item 6. Exhibits
    
    
    31Signatures
    
    
    32Exhibits
    
    
    33Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   Page 2 of 33




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##### Table of Contents



PART I.  FINANCIAL INFORMATION
 
 ITEM 1.
    
    FINANCIAL STATEMENTS
  
  Three months ended September 30,
    
    
    Nine months ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(Unaudited; $ in millions, except per share amounts)Net sales of products
    
    $
    494.8
    
    
    $
    451.7
    
    
    $
    1,400.3
    
    
    $
    1,187.0Net sales of services
    
    
    117.3
    
    
    
    92.2
    
    
    
    326.8
    
    
    
    261.9Total revenues
    
    
    612.1
    
    
    
    543.9
    
    
    
    1,727.1
    
    
    
    1,448.9Cost of products sold
    
    
    350.3
    
    
    
    320.0
    
    
    
    1,015.7
    
    
    
    855.6Cost of services sold
    
    
    79.6
    
    
    
    66.5
    
    
    
    222.2
    
    
    
    180.2Total cost of sales
    
    
    429.9
    
    
    
    386.5
    
    
    
    1,237.9
    
    
    
    1,035.8Gross profit
    
    
    182.2
    
    
    
    157.4
    
    
    
    489.2
    
    
    
    413.1Selling and administrative expenses
    
    
    70.9
    
    
    
    71.1
    
    
    
    207.4
    
    
    
    204.0Research and development expenses
    
    
    5.7
    
    
    
    3.5
    
    
    
    14.6
    
    
    
    9.3Plan settlement / curtailment amendment
    
    
    
    
    
    
    
    
    
    
    1.3
    
    
    
    (5.4
    )Income from operations
    
    
    105.6
    
    
    
    82.8
    
    
    
    265.9
    
    
    
    205.2Interest expense, net
    
    
    (8.3
    )
    
    
    (7.1
    )
    
    
    (23.6
    )
    
    
    (21.2
    )Other income (expense), net
    
    
    3.2
    
    
    
    (5.4
    )
    
    
    4.0
    
    
    
    (2.4
    )Income before income taxes
    
    
    100.5
    
    
    
    70.3
    
    
    
    246.3
    
    
    
    181.6Provision for income taxes
    
    
    25.9
    
    
    
    23.5
    
    
    
    76.9
    
    
    
    60.9Net income
    
    $
    74.6
    
    
    $
    46.8
    
    
    $
    169.4
    
    
    $
    120.7Net income per common share-basic and diluted
    
    $
    0.91
    
    
    $
    0.57
    
    
    $
    2.07
    
    
    $
    1.43Weighted average shares outstanding  
(In thousands)Basic
    
    
    81,705
    
    
    
    82,392
    
    
    
    81,644
    
    
    
    84,407Diluted
    
    
    82,013
    
    
    
    82,608
    
    
    
    81,794
    
    
    
    84,591
   Page 3 of 33




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September 30,
    
    
    December 31,2009
    
    
    2008(Unaudited; $ in millions, exceptshare and per share amounts)AssetsCurrent assetsCash and cash equivalents
    
    $
    198.2
    
    
    $
    147.1Accounts receivable, less allowance for losses of $12.2 at 2009 and $11.6 at 2008
    
    
    309.6
    
    
    
    366.3Inventories, net
    
    
    373.0
    
    
    
    328.5Prepaid expenses
    
    
    42.8
    
    
    
    43.4Deferred income taxes, net
    
    
    22.9
    
    
    
    22.5Total current assets
    
    
    946.5
    
    
    
    907.8Property, plant and equipment, net
    
    
    259.6
    
    
    
    250.3Goodwill
    
    
    464.9
    
    
    
    429.1Intangible assets, net
    
    
    436.6
    
    
    
    441.6Other assets
    
    
    24.5
    
    
    
    23.4Total assets
    
    $
    2,132.1
    
    
    $
    2,052.2Liabilities and Stockholders EquityCurrent liabilitiesAccounts payable and accruals
    
    $
    392.5
    
    
    $
    430.9Customer advance payments
    
    
    210.2
    
    
    
    275.0Accrued income taxes payable
    
    
    17.1
    
    
    
    30.2Loans payable
    
    
    0.1
    
    
    
    0.2Total current liabilities
    
    
    619.9
    
    
    
    736.3Deferred income taxes, net
    
    
    21.1
    
    
    
    22.9Postemployment and other employee benefit liabilities
    
    
    111.7
    
    
    
    135.3Long-term debt
    
    
    370.0
    
    
    
    370.1Other noncurrent liabilities
    
    
    35.5
    
    
    
    27.4Total liabilities
    
    
    1,158.2
    
    
    
    1,292.0Commitments and contingencies (Notes 8 through 12)Stockholders equityCommon stock, $0.01 par value, 250,000,000 shares authorized;
and, 82,519,183 and 81,958,846 shares issued and
outstanding, respectively
    
    
    0.8
    
    
    
    0.8Additional paid-in capital
    
    
    394.2
    
    
    
    384.6Retained earnings
    
    
    596.7
    
    
    
    427.3Accumulated other comprehensive loss
    
    
    (17.8
    )
    
    
    (52.5
    )Total stockholders equity
    
    
    973.9
    
    
    
    760.2Total liabilities and stockholders equity
    
    $
    2,132.1
    
    
    $
    2,052.2
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Nine months ended September 30,2009
    
    
    2008(Unaudited; $ in millions)Cash flows from operating activitiesNet income
    
    $
    169.4
    
    
    $
    120.7Adjustments to arrive at net cash provided by operating activities:Depreciation and amortization
    
    
    37.9
    
    
    
    37.0Deferred income taxes
    
    
    (1.3
    )
    
    
    2.3Stock-based compensation
    
    
    8.0
    
    
    
    4.4Amortization of debt financing costs
    
    
    2.4
    
    
    
    2.3Provision for losses on inventory
    
    
    4.2
    
    
    
    2.1Plan settlement / curtailment amendment
    
    
    (0.2
    )
    
    
    (11.8
    )Loss on sale of property, plant and equipment
    
    
    0.1
    
    
    
    0.3Equity loss on investments
    
    
    0.8
    
    
    
    Working capital and other, net of acquisitionsAccounts receivable
    
    
    61.8
    
    
    
    18.5Inventories
    
    
    (38.2
    )
    
    
    (52.4
    )Accounts payable and accruals
    
    
    (49.8
    )
    
    
    34.2Customer advances
    
    
    (77.5
    )
    
    
    44.2Other
    
    
    (38.0
    )
    
    
    (34.8
    )Net cash provided by operating activities
    
    
    79.6
    
    
    
    167.0Cash flows from investing activitiesCapital expenditures
    
    
    (21.1
    )
    
    
    (27.6
    )Proceeds from sales of property, plant and equipment
    
    
    1.0
    
    
    
    0.3Acquisitions, net of cash acquired
    
    
    (12.7
    )
    
    
    (89.6
    )Other investments
    
    
    (5.0
    )
    
    
    Net cash used in investing activities
    
    
    (37.8
    )
    
    
    (116.9
    )Cash flows from financing activitiesProceeds from exercise of stock options
    
    
    2.1
    
    
    
    1.4Repurchase of common stock
    
    
    
    
    
    
    (150.2
    )Payments of long-term debt
    
    
    (0.1
    )
    
    
    (0.2
    )Net cash provided by (used in) financing activities
    
    
    2.0
    
    
    
    (149.0
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    7.3
    
    
    
    (4.2
    )Net increase (decrease) in cash and cash equivalents
    
    
    51.1
    
    
    
    (103.1
    )Cash and cash equivalents, beginning of the period
    
    
    147.1
    
    
    
    206.2Cash and cash equivalents, end of period
    
    $
    198.2
    
    
    $
    103.1
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1. Basis of presentation
   2. New accounting standards
 Noncontrolling Interests in Consolidated Financial Statements  an
amendment of ARB No. 51) Consolidated
Financial Statements
 Business
Combinations)
 Assets Acquired and Liabilities Assumed in a Business Combination That Arise From
Contingencies) .
 Subsequent Events).
 Accounting for Transfers of Financial Assets) Amendments to FASB Interpretation No. 46(R)). Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities Consolidation
of Variable Interest Entities
  Page 6 of 33




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The FASB Accounting
Standards Codification and the Hierarchy of Generally Accepted Accounting Principles
 3. Acquisitions and other investments (£ in millions)
        Page 7 of 33




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2009
    
    
    2008Accounts receivable, net
    
    $
    0.8
    
    
    $
    11.6Inventory, net
    
    
    0.5
    
    
    
    29.4Prepaid expenses
    
    
    
    
    
    
    1.1Total current assets
    
    
    1.3
    
    
    
    42.1Property, plant and equipment
    
    
    7.0
    
    
    
    39.6Amortizable intangible assets
    
    
    3.0
    
    
    
    33.4Goodwill
    
    
    3.3
    
    
    
    24.2Other assets
    
    
    
    
    
    
    0.3Total assets acquired
    
    
    14.6
    
    
    
    139.6Accounts payable and accruals
    
    
    0.4
    
    
    
    18.4Customer advance payments
    
    
    
    
    
    
    26.0Other liabilities
    
    
    1.5
    
    
    
    3.8Total liabilities assumed
    
    
    1.9
    
    
    
    48.2Cash paid  net of $18.6 cash acquired in 2008
    
    $
    12.7
    
    
    $
    91.4
  Other Investments
    Page 8 of 33




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4. Intangible assets and goodwill
  September 30, 2009
    
    
    Weighted
    
    December 31, 2008Accumulated
    
    
    Average
    
    
    
    
    
    AccumulatedCost
    
    
    Amortization
    
    
    Useful Lives
    
    Cost
    
    
    AmortizationTrade names
    
    $
    93.1
    
    
    $
    10.9
    
    
    39 years
    
    $
    92.8
    
    
    $
    9.2Customer relationships
    
    
    259.4
    
    
    
    32.6
    
    
    37 years
    
    
    250.5
    
    
    
    26.5Software
    
    
    30.6
    
    
    
    15.0
    
    
    10 years
    
    
    30.6
    
    
    
    12.7Existing technology
    
    
    137.0
    
    
    
    26.5
    
    
    24 years
    
    
    136.3
    
    
    
    22.1Non-compete agreement
    
    
    2.2
    
    
    
    0.7
    
    
    4 years
    
    
    2.1
    
    
    
    0.2Total amortizable intangible assets
    
    $
    522.3
    
    
    $
    85.7
    
    
    
    
    $
    512.3
    
    
    $
    70.7
   September 30,2009Beginning balance
    
    $
    429.1Acquisitions
    
    
    3.3Adjustments
    
    
    4.2Foreign currency adjustments
    
    
    28.3Ending balance
    
    $
    464.9
 5. Inventories
  September 30,
    
    
    December 31,2009
    
    
    2008Raw materials and supplies
    
    $
    143.1
    
    
    $
    141.7Work-in-process and finished goods
    
    
    508.2
    
    
    
    496.4651.3
    
    
    
    638.1Less: Progress payments
    
    
    (278.3
    )
    
    
    (309.6
    )Total inventories
    
    $
    373.0
    
    
    $
    328.5
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6. Property, plant and equipment
  September 30,
    
    
    December 31,2009
    
    
    2008Cost:Land
    
    $
    15.2
    
    
    $
    14.7Buildings and improvements
    
    
    105.8
    
    
    
    88.0Machinery and equipment
    
    
    281.0
    
    
    
    266.3402.0
    
    
    
    369.0Less: Accumulated depreciation
    
    
    (142.4
    )
    
    
    (118.7
    )Property, plant and equipment, net
    
    $
    259.6
    
    
    $
    250.3
 7. Financial Instruments
    Fair Value Measurements and Disclosures
 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
   September 30,
    
    
    December 31,2009
    
    
    2008Foreign currency exchange contracts assets
    
    $
    14.9
    
    
    $
    25.4Foreign currency exchange contracts liabilities
    
    $
    10.9
    
    
    $
    17.1
   Page 10 of 33




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8. Income taxes
   9. Pension plans
  Three months ended September 30,
    
    
    Nine months ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Service cost
    
    $
    1.7
    
    
    $
    1.8
    
    
    $
    4.8
    
    
    $
    5.4Interest cost
    
    
    5.1
    
    
    
    5.1
    
    
    
    15.0
    
    
    
    15.4Expected return on plan assets
    
    
    (4.7
    )
    
    
    (5.8
    )
    
    
    (13.7
    )
    
    
    (17.4
    )Amortization of prior service cost
    
    
    0.2
    
    
    
    
    
    
    
    0.6
    
    
    
    Amortization of net actuarial loss
    
    
    1.0
    
    
    
    
    
    
    
    2.9
    
    
    
    0.2Plan settlement
    
    
    
    
    
    
    
    
    
    
    1.3
    
    
    
    Net periodic pension cost
    
    $
    3.3
    
    
    $
    1.1
    
    
    $
    10.9
    
    
    $
    3.6
  10. Postretirement benefits other than pensions
  Three months ended September 30,
    
    
    Nine months ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Service cost
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    0.1Interest cost
    
    
    0.3
    
    
    
    0.3
    
    
    
    0.8
    
    
    
    1.1Amortization of prior service credit
    
    
    (2.0
    )
    
    
    (1.9
    )
    
    
    (6.0
    )
    
    
    (5.5
    )Amortization of net actuarial loss (gain)
    
    
    0.2
    
    
    
    (0.1
    )
    
    
    0.7
    
    
    
    (0.1
    )Curtailment amendment / partial
settlement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5.4
    )Net periodic postretirement benefits
income
    
    $
    (1.5
    )
    
    $
    (1.7
    )
    
    $
    (4.5
    )
    
    $
    (9.8
    )
  Page 11 of 33




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11. Commitments and contingencies (£ in millions)
       Page 12 of 33




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12. Warranty accruals
   Nine months ended September 30,2009
    
    
    2008Beginning balance
    
    $
    37.0
    
    
    $
    28.5Acquisitions
    
    
    
    
    
    
    1.1Provisions for warranties issued during the period
    
    
    17.0
    
    
    
    18.4Adjustments to warranties issued in prior periods
    
    
    
    
    
    
    4.5Payments during period
    
    
    (13.5
    )
    
    
    (18.3
    )Foreign currency adjustments
    
    
    1.3
    
    
    
    (1.4
    )Ending balance
    
    $
    41.8
    
    
    $
    32.8
 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.
   Page 13 of 33




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##### Table of Contents



Three months ended September 30,
    
    
    Nine months ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008RevenuesNew units
    
    $
    347.2
    
    
    $
    306.7
    
    
    $
    973.9
    
    
    $
    755.4Aftermarket parts and services
    
    
    264.9
    
    
    
    237.2
    
    
    
    753.2
    
    
    
    693.5Total revenues
    
    $
    612.1
    
    
    $
    543.9
    
    
    $
    1,727.1
    
    
    $
    1,448.9Operating incomeNew units
    
    $
    55.9
    
    
    $
    37.8
    
    
    $
    129.2
    
    
    $
    72.7Aftermarket parts and services
    
    
    70.2
    
    
    
    63.8
    
    
    
    196.7
    
    
    
    184.6Unallocated
    
    
    (20.5
    )
    
    
    (18.8
    )
    
    
    (60.0
    )
    
    
    (52.1
    )Total operating income
    
    $
    105.6
    
    
    $
    82.8
    
    
    $
    265.9
    
    
    $
    205.2Depreciation and amortizationNew units
    
    $
    6.5
    
    
    $
    7.3
    
    
    $
    21.0
    
    
    $
    20.7Aftermarket parts and services
    
    
    5.8
    
    
    
    4.8
    
    
    
    16.9
    
    
    
    16.3Total depreciation and amortization
    
    $
    12.3
    
    
    $
    12.1
    
    
    $
    37.9
    
    
    $
    37.0Total assets (including goodwill)New units
    
    $
    367.2
    
    
    $
    347.1
    
    
    $
    367.2
    
    
    $
    347.1Aftermarket parts and services
    
    
    773.8
    
    
    
    729.6
    
    
    
    773.8
    
    
    
    729.6Unallocated
    
    
    991.1
    
    
    
    900.6
    
    
    
    991.1
    
    
    
    900.6Total assets
    
    $
    2,132.1
    
    
    $
    1,977.3
    
    
    $
    2,132.1
    
    
    $
    1,977.3
 14. Stockholders equity
  AccumulatedOtherCommon
    
    
    Additional
    
    
    Retained
    
    
    ComprehensiveStock
    
    
    Paid-in Capital
    
    
    Earnings
    
    
    (Loss) Income
    
    
    TotalAt December 31, 2008
    
    $
    0.8
    
    
    $
    384.6
    
    
    $
    427.3
    
    
    $
    (52.5
    )
    
    $
    760.2Stock-based compensation
    
    
    
    
    
    
    9.6
    
    
    
    
    
    
    
    
    
    
    
    9.6Net income
    
    
    
    
    
    
    
    
    
    
    169.4
    
    
    
    
    
    
    
    169.4Other comprehensive income (loss):Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    35.6
    
    
    
    35.6Pension and other postretirement benefit plans 
net of $0.4 tax:Benefit plans amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1.2
    )
    
    
    (1.2
    )Plan settlement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.3
    
    
    
    0.3At September 30, 2009
    
    $
    0.8
    
    
    $
    394.2
    
    
    $
    596.7
    
    
    $
    (17.8
    )
    
    $
    973.9
  Three months ended September 30,
    
    
    Nine months ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net income
    
    $
    74.6
    
    
    $
    46.8
    
    
    $
    169.4
    
    
    $
    120.7Other comprehensive income (loss):Foreign currency adjustments
    
    
    22.2
    
    
    
    (42.0
    )
    
    
    35.6
    
    
    
    (26.5
    )Pension and other postretirement benefit plans  net of
$0.4 tax in 2009 and $2.4 tax in 2008:Adoption of FASB Statement No. 158
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.3
    )Benefit plans amortization
    
    
    (0.4
    )
    
    
    (1.2
    )
    
    
    (1.2
    )
    
    
    (3.3
    )Benefit plan amendment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2.2Curtailment amendment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4.5
    )Plan settlement / partial settlement
    
    
    
    
    
    
    
    
    
    
    0.3
    
    
    
    1.2Net gain from remeasurement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.9Total comprehensive income
    
    $
    96.4
    
    
    $
    3.6
    
    
    $
    204.1
    
    
    $
    90.4
  Page 14 of 33




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##### Table of Contents



15. Supplemental guarantor financial information
    CONDENSED CONSOLIDATING STATEMENT OF INCOME
For the three months ended September 30, 2009
 SubsidiarySubsidiary
    
    
    Non-
    
    
    ConsolidatingIssuer
    
    
    Guarantors
    
    
    Guarantors
    
    
    Adjustments
    
    
    TotalNet sales
    
    $
    
    
    
    $
    353.6
    
    
    $
    296.1
    
    
    $
    (37.6
    )
    
    $
    612.1Cost of sales
    
    
    
    
    
    
    253.4
    
    
    
    211.7
    
    
    
    (35.2
    )
    
    
    429.9Gross profit
    
    
    
    
    
    
    100.2
    
    
    
    84.4
    
    
    
    (2.4
    )
    
    
    182.2Selling and administrative expenses
    
    
    30.7
    
    
    
    15.0
    
    
    
    31.3
    
    
    
    (6.1
    )
    
    
    70.9Research and development expenses
    
    
    
    
    
    
    5.0
    
    
    
    0.7
    
    
    
    
    
    
    
    5.7(Loss) income from operations
    
    
    (30.7
    )
    
    
    80.2
    
    
    
    52.4
    
    
    
    3.7
    
    
    
    105.6Equity earnings in affiliates
    
    
    82.1
    
    
    
    6.8
    
    
    
    
    
    
    
    (88.9
    )
    
    
    Interest expense, net
    
    
    (7.8
    )
    
    
    
    
    
    
    (0.5
    )
    
    
    
    
    
    
    (8.3
    )Intercompany interest and fees
    
    
    9.5
    
    
    
    (7.5
    )
    
    
    (2.0
    )
    
    
    
    
    
    
    Other income, net
    
    
    0.4
    
    
    
    0.3
    
    
    
    2.5
    
    
    
    
    
    
    
    3.2Income before income taxes
    
    
    53.5
    
    
    
    79.8
    
    
    
    52.4
    
    
    
    (85.2
    )
    
    
    100.5(Benefit) provision for income taxes
    
    
    (21.1
    )
    
    
    33.2
    
    
    
    13.8
    
    
    
    
    
    
    
    25.9Net income
    
    $
    74.6
    
    
    $
    46.6
    
    
    $
    38.6
    
    
    $
    (85.2
    )
    
    $
    74.6
  Page 15 of 33




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##### Table of Contents



CONDENSED CONSOLIDATING STATEMENT OF INCOME
For the three months ended September 30, 2008
 SubsidiarySubsidiary
    
    
    Non-
    
    
    ConsolidatingIssuer
    
    
    Guarantors
    
    
    Guarantors
    
    
    Adjustments
    
    
    TotalNet sales
    
    $
    
    
    
    $
    319.4
    
    
    $
    271.1
    
    
    $
    (46.6
    )
    
    $
    543.9Cost of sales
    
    
    
    
    
    
    232.7
    
    
    
    197.7
    
    
    
    (43.9
    )
    
    
    386.5Gross profit
    
    
    
    
    
    
    86.7
    
    
    
    73.4
    
    
    
    (2.7
    )
    
    
    157.4Selling and administrative expenses
    
    
    28.3
    
    
    
    14.0
    
    
    
    31.0
    
    
    
    (2.2
    )
    
    
    71.1Research and development expenses
    
    
    
    
    
    
    3.2
    
    
    
    0.3
    
    
    
    
    
    
    
    3.5(Loss) income from operations
    
    
    (28.3
    )
    
    
    69.5
    
    
    
    42.1
    
    
    
    (0.5
    )
    
    
    82.8Equity earnings in affiliates
    
    
    66.1
    
    
    
    1.0
    
    
    
    
    
    
    
    (67.1
    )
    
    
    Interest (expense) income, net
    
    
    (8.5
    )
    
    
    0.3
    
    
    
    1.1
    
    
    
    
    
    
    
    (7.1
    )Intercompany interest and fees
    
    
    5.5
    
    
    
    0.8
    
    
    
    (6.3
    )
    
    
    
    
    
    
    Other expense, net
    
    
    (0.7
    )
    
    
    (0.1
    )
    
    
    (4.6
    )
    
    
    
    
    
    
    (5.4
    )Income before income
taxes
    
    
    34.1
    
    
    
    71.5
    
    
    
    32.3
    
    
    
    (67.6
    )
    
    
    70.3(Benefit) provision for income
taxes
    
    
    (12.7
    )
    
    
    25.0
    
    
    
    11.2
    
    
    
    
    
    
    
    23.5Net income
    
    $
    46.8
    
    
    $
    46.5
    
    
    $
    21.1
    
    
    $
    (67.6
    )
    
    $
    46.8
 CONDENSED CONSOLIDATING STATEMENT OF INCOME
For the nine months ended September 30, 2009
 SubsidiarySubsidiary
    
    
    Non-
    
    
    ConsolidatingIssuer
    
    
    Guarantors
    
    
    Guarantors
    
    
    Adjustments
    
    
    TotalNet sales
    
    $
    
    
    
    $
    1,026.6
    
    
    $
    831.4
    
    
    $
    (130.9
    )
    
    $
    1,727.1Cost of sales
    
    
    
    
    
    
    728.2
    
    
    
    612.0
    
    
    
    (102.3
    )
    
    
    1,237.9Gross profit
    
    
    
    
    
    
    298.4
    
    
    
    219.4
    
    
    
    (28.6
    )
    
    
    489.2Selling and administrative
expenses
    
    
    101.7
    
    
    
    45.5
    
    
    
    87.4
    
    
    
    (27.2
    )
    
    
    207.4Research and development
expenses
    
    
    
    
    
    
    13.1
    
    
    
    1.5
    
    
    
    
    
    
    
    14.6Plan settlement
    
    
    
    
    
    
    
    
    
    
    1.3
    
    
    
    
    
    
    
    1.3(Loss) income from operations
    
    
    (101.7
    )
    
    
    239.8
    
    
    
    129.2
    
    
    
    (1.4
    )
    
    
    265.9Equity earnings in affiliates
    
    
    224.2
    
    
    
    13.3
    
    
    
    
    
    
    
    (237.5
    )
    
    
    Interest expense, net
    
    
    (23.3
    )
    
    
    
    
    
    
    (0.3
    )
    
    
    
    
    
    
    (23.6
    )Intercompany interest and fees
    
    
    20.5
    
    
    
    (9.8
    )
    
    
    (10.7
    )
    
    
    
    
    
    
    Other income, net
    
    
    1.0
    
    
    
    
    
    
    
    3.0
    
    
    
    
    
    
    
    4.0Income before income taxes
    
    
    120.7
    
    
    
    243.3
    
    
    
    121.2
    
    
    
    (238.9
    )
    
    
    246.3(Benefit) provision for income
taxes
    
    
    (48.7
    )
    
    
    91.5
    
    
    
    34.1
    
    
    
    
    
    
    
    76.9Net income
    
    $
    169.4
    
    
    $
    151.8
    
    
    $
    87.1
    
    
    $
    (238.9
    )
    
    $
    169.4
  Page 16 of 33




---



##### Table of Contents



CONDENSED CONSOLIDATING STATEMENT OF INCOME
For the nine months ended September 30, 2008
 SubsidiarySubsidiary
    
    
    Non-
    
    
    ConsolidatingIssuer
    
    
    Guarantors
    
    
    Guarantors
    
    
    Adjustments
    
    
    TotalNet sales
    
    $
    
    
    
    $
    921.0
    
    
    $
    648.7
    
    
    $
    (120.8
    )
    
    $
    1,448.9Cost of sales
    
    
    
    
    
    
    674.5
    
    
    
    465.3
    
    
    
    (104.0
    )
    
    
    1,035.8Gross profit
    
    
    
    
    
    
    246.5
    
    
    
    183.4
    
    
    
    (16.8
    )
    
    
    413.1Selling and administrative expenses
    
    
    92.8
    
    
    
    42.7
    
    
    
    82.5
    
    
    
    (14.0
    )
    
    
    204.0Research and development expenses
    
    
    
    
    
    
    8.9
    
    
    
    0.4
    
    
    
    
    
    
    
    9.3Curtailment amendment / partial
settlement
    
    
    
    
    
    
    (5.4
    )
    
    
    
    
    
    
    
    
    
    
    (5.4
    )(Loss) income from operations
    
    
    (92.8
    )
    
    
    200.3
    
    
    
    100.5
    
    
    
    (2.8
    )
    
    
    205.2Equity earnings in affiliates
    
    
    181.6
    
    
    
    3.7
    
    
    
    
    
    
    
    (185.3
    )
    
    
    Interest (expense) income, net
    
    
    (24.5
    )
    
    
    0.3
    
    
    
    3.0
    
    
    
    
    
    
    
    (21.2
    )Intercompany interest and fees
    
    
    12.8
    
    
    
    3.4
    
    
    
    (16.2
    )
    
    
    
    
    
    
    Other income (expense), net
    
    
    4.6
    
    
    
    (4.8
    )
    
    
    (2.2
    )
    
    
    
    
    
    
    (2.4
    )Income (loss) before income taxes
    
    
    81.7
    
    
    
    202.9
    
    
    
    85.1
    
    
    
    (188.1
    )
    
    
    181.6(Benefit) provision for income taxes
    
    
    (39.0
    )
    
    
    73.3
    
    
    
    26.6
    
    
    
    
    
    
    
    60.9Net income
    
    $
    120.7
    
    
    $
    129.6
    
    
    $
    58.5
    
    
    $
    (188.1
    )
    
    $
    120.7
 CONDENSED CONSOLIDATING BALANCE SHEET
September 30, 2009
 SubsidiarySubsidiary
    
    
    Non-
    
    
    ConsolidatingIssuer
    
    
    Guarantors
    
    
    Guarantors
    
    
    Adjustments
    
    
    TotalASSETSCash and cash equivalents
    
    $
    40.3
    
    
    $
    
    
    
    $
    157.9
    
    
    $
    
    
    
    $
    198.2Accounts receivables, net
    
    
    
    
    
    
    124.7
    
    
    
    184.9
    
    
    
    
    
    
    
    309.6Inventories, net
    
    
    
    
    
    
    245.0
    
    
    
    137.1
    
    
    
    (9.1
    )
    
    
    373.0Prepaid expenses and deferred income taxes
    
    
    25.9
    
    
    
    3.2
    
    
    
    36.6
    
    
    
    
    
    
    
    65.7Total current assets
    
    
    66.2
    
    
    
    372.9
    
    
    
    516.5
    
    
    
    (9.1
    )
    
    
    946.5Investment in affiliates
    
    
    1,859.0
    
    
    
    66.5
    
    
    
    
    
    
    
    (1,925.5
    )
    
    
    Property, plant, and equipment, net
    
    
    
    
    
    
    166.3
    
    
    
    93.3
    
    
    
    
    
    
    
    259.6Intangible assets, net
    
    
    
    
    
    
    440.2
    
    
    
    461.3
    
    
    
    
    
    
    
    901.5Other assets
    
    
    22.3
    
    
    
    0.8
    
    
    
    1.4
    
    
    
    
    
    
    
    24.5Total assets
    
    $
    1,947.5
    
    
    $
    1,046.7
    
    
    $
    1,072.5
    
    
    $
    (1,934.6
    )
    
    $
    2,132.1LIABILITIES AND STOCKHOLDERS EQUITYAccounts payable and accruals
    
    $
    (53.2
    )
    
    $
    322.6
    
    
    $
    350.4
    
    
    $
    
    
    
    $
    619.8Loans payable
    
    
    
    
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    0.1Total current liabilities
    
    
    (53.2
    )
    
    
    322.7
    
    
    
    350.4
    
    
    
    
    
    
    
    619.9Long-term debt
    
    
    370.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    370.0Intercompany accounts
    
    
    650.2
    
    
    
    (703.1
    )
    
    
    52.9
    
    
    
    
    
    
    
    Other noncurrent liabilities
    
    
    6.6
    
    
    
    100.1
    
    
    
    61.6
    
    
    
    
    
    
    
    168.3Total liabilities
    
    
    973.6
    
    
    
    (280.3
    )
    
    
    464.9
    
    
    
    
    
    
    
    1,158.2Common stock
    
    
    0.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.8Other stockholders equity
    
    
    973.1
    
    
    
    1,327.0
    
    
    
    607.6
    
    
    
    (1,934.6
    )
    
    
    973.1Total stockholders equity
    
    
    973.9
    
    
    
    1,327.0
    
    
    
    607.6
    
    
    
    (1,934.6
    )
    
    
    973.9Total liabilities and stockholders equity
    
    $
    1,947.5
    
    
    $
    1,046.7
    
    
    $
    1,072.5
    
    
    $
    (1,934.6
    )
    
    $
    2,132.1
  Page 17 of 33




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##### Table of Contents



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
 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the nine months ended September 30, 2009
 SubsidiarySubsidiary
    
    
    Non-
    
    
    ConsolidatingIssuer
    
    
    Guarantors
    
    
    Guarantors
    
    
    Adjustments
    
    
    TotalCash flows from operating activities:Net cash (used in) provided by operating activities
    
    $
    (44.2
    )
    
    $
    79.1
    
    
    $
    44.7
    
    
    $
    
    
    
    $
    79.6Cash flows from investing activities:Capital expenditures
    
    
    
    
    
    
    (16.7
    )
    
    
    (4.4
    )
    
    
    
    
    
    
    (21.1
    )Proceeds from sale of property, plant and equipment
    
    
    
    
    
    
    1.0
    
    
    
    
    
    
    
    
    
    
    
    1.0Acquisitions
    
    
    (12.7
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12.7
    )Other investments
    
    
    (5.0
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5.0
    )Net cash used in investing activities
    
    
    (17.7
    )
    
    
    (15.7
    )
    
    
    (4.4
    )
    
    
    
    
    
    
    (37.8
    )Cash flows from financing activities:Proceeds from exercise of stock options
    
    
    2.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2.1Payments of long-term debt
    
    
    
    
    
    
    (0.1
    )
    
    
    
    
    
    
    
    
    
    
    (0.1
    )Change in intercompany accounts
    
    
    73.6
    
    
    
    (63.3
    )
    
    
    (10.3
    )
    
    
    
    
    
    
    Net cash provided by (used in) financing activities
    
    
    75.7
    
    
    
    (63.4
    )
    
    
    (10.3
    )
    
    
    
    
    
    
    2.0Effect of exchange rate changes on cash and cash
equivalents
    
    
    
    
    
    
    
    
    
    
    7.3
    
    
    
    
    
    
    
    7.3Net increase in cash and equivalents
    
    
    13.8
    
    
    
    
    
    
    
    37.3
    
    
    
    
    
    
    
    51.1Cash and cash equivalents, beginning of period
    
    
    26.5
    
    
    
    
    
    
    
    120.6
    
    
    
    
    
    
    
    147.1Cash and cash equivalents, end of period
    
    $
    40.3
    
    
    $
    
    
    
    $
    157.9
    
    
    $
    
    
    
    $
    198.2
  Page 18 of 33




---



##### Table of Contents



CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the nine months ended September 30, 2008
 SubsidiarySubsidiary
    
    
    Non-
    
    
    ConsolidatingIssuer
    
    
    Guarantors
    
    
    Guarantors
    
    
    Adjustments
    
    
    TotalCash flows from operating activities:Net cash (used in) provided by operating
activities
    
    $
    (47.2
    )
    
    $
    155.2
    
    
    $
    69.4
    
    
    $
    (10.4
    )
    
    $
    167.0Cash flows from investing activities:Capital expenditures
    
    
    
    
    
    
    (22.2
    )
    
    
    (5.4
    )
    
    
    
    
    
    
    (27.6
    )Proceeds from sale of property, plant and equipment
    
    
    
    
    
    
    0.1
    
    
    
    0.2
    
    
    
    
    
    
    
    0.3Acquisitions
    
    
    (89.6
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (89.6
    )Net cash used in investing activities
    
    
    (89.6
    )
    
    
    (22.1
    )
    
    
    (5.2
    )
    
    
    
    
    
    
    (116.9
    )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
    )Change in intercompany accounts
    
    
    214.9
    
    
    
    (132.9
    )
    
    
    (82.1
    )
    
    
    0.1
    
    
    
    Net cash provided by (used in) financing activities
    
    
    66.1
    
    
    
    (133.1
    )
    
    
    (82.1
    )
    
    
    0.1
    
    
    
    (149.0
    )Effect of exchange rate changes
    
    
    
    
    
    
    
    
    
    
    (4.2
    )
    
    
    
    
    
    
    (4.2
    )Net decrease in cash and equivalents
    
    
    (70.7
    )
    
    
    
    
    
    
    (22.1
    )
    
    
    (10.3
    )
    
    
    (103.1
    )Cash and cash equivalents, beginning of period
    
    
    70.7
    
    
    
    
    
    
    
    135.5
    
    
    
    
    
    
    
    206.2Cash and cash equivalents, end of period
    
    $
    
    
    
    $
    
    
    
    $
    113.4
    
    
    $
    (10.3
    )
    
    $
    103.1
 Page 19 of 33




---



##### Table of Contents



ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS ($ in millions)
 Overview
      Page 20 of 33




---



##### Table of Contents



Results of Operations
 Three months ended September 30, 2009, compared to the three months ended September 30, 2008:
 Three months ended September 30,
    
    
    Three months ended September 30,
    
    
    Period to Period Change2009
    
    
    2008
    
    
    2008 to 2009
    
    
    % ChangeStatement of Operations Data:Total revenues
    
    $
    612.1
    
    
    
    100.0
    %
    
    $
    543.9
    
    
    
    100.0
    %
    
    $
    68.2
    
    
    
    12.5
    %Cost of sales
    
    
    429.9
    
    
    
    70.2
    
    
    
    386.5
    
    
    
    71.1
    
    
    
    43.4
    
    
    
    11.2
    %Gross profit
    
    
    182.2
    
    
    
    29.8
    
    
    
    157.4
    
    
    
    28.9
    
    
    
    24.8
    
    
    
    15.8
    %Selling and administrative
expenses
    
    
    70.9
    
    
    
    11.6
    
    
    
    71.1
    
    
    
    13.1
    
    
    
    (0.2
    )
    
    
    (0.3
    )%Research and development
expenses
    
    
    5.7
    
    
    
    0.9
    
    
    
    3.5
    
    
    
    0.6
    
    
    
    2.2
    
    
    
    62.9
    %Operating income
    
    
    105.6
    
    
    
    17.3
    
    
    
    82.8
    
    
    
    15.2
    
    
    
    22.8
    
    
    
    27.5
    %Interest expense, net
    
    
    (8.3
    )
    
    
    (1.4
    )
    
    
    (7.1
    )
    
    
    (1.3
    )
    
    
    (1.2
    )
    
    
    16.9
    %Other income (expense), net
    
    
    3.2
    
    
    
    0.5
    
    
    
    (5.4
    )
    
    
    (1.0
    )
    
    
    8.6
    
    
    
    (159.3
    )%Income before income taxes
    
    
    100.5
    
    
    
    16.4
    
    
    
    70.3
    
    
    
    12.9
    
    
    
    30.2
    
    
    
    43.0
    %Provision for income taxes
    
    
    25.9
    
    
    
    4.2
    
    
    
    23.5
    
    
    
    4.3
    
    
    
    2.4
    
    
    
    10.2
    %Net income
    
    $
    74.6
    
    
    
    12.2
    %
    
    $
    46.8
    
    
    
    8.6
    %
    
    $
    27.8
    
    
    
    59.4
    %Bookings
    
    $
    290.8
    
    
    
    
    
    
    $
    733.1
    
    
    
    
    
    
    $
    (442.3
    )
    
    
    (60.3
    )%Backlog  ending
    
    $
    1,644.9
    
    
    
    
    
    
    $
    2,385.9
    
    
    
    
    
    
    $
    (741.0
    )
    
    
    (31.1
    )%
 Total revenues.
 Cost of sales.
 Gross profit.
 Selling and administrative expenses.
 Research and development expenses.
 Operating income.
 Interest expense, net.
  Page 21 of 33




---



##### Table of Contents



Other income (expense), net.
 Provision for income taxes.
 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 September 30, 2009, compared to three months ended
September 30, 2008:
 Three months ended September 30,
    
    
    
    
    
    
    Period to Period Change2009
    
    
    
    
    
    
    2008
    
    
    
    
    
    
    2008 to 2009
    
    
    % ChangeRevenuesNew units
    
    $
    347.2
    
    
    
    56.7
    %
    
    $
    306.7
    
    
    
    56.4
    %
    
    $
    40.5
    
    
    
    13.2
    %Aftermarket parts and
services
    
    
    264.9
    
    
    
    43.3
    %
    
    
    237.2
    
    
    
    43.6
    %
    
    
    27.7
    
    
    
    11.7
    %Total revenues
    
    $
    612.1
    
    
    
    100.0
    %
    
    $
    543.9
    
    
    
    100.0
    %
    
    $
    68.2
    
    
    
    12.5
    %Gross profitNew units
    
    $
    80.2
    
    
    
    
    
    
    $
    60.8
    
    
    
    
    
    
    $
    19.4
    
    
    
    31.9
    %Aftermarket parts and
services
    
    
    102.0
    
    
    
    
    
    
    
    96.6
    
    
    
    
    
    
    
    5.4
    
    
    
    5.6
    %Total gross profit
    
    $
    182.2
    
    
    
    
    
    
    $
    157.4
    
    
    
    
    
    
    $
    24.8
    
    
    
    15.8
    %Operating incomeNew units
    
    $
    55.9
    
    
    
    
    
    
    $
    37.8
    
    
    
    
    
    
    $
    18.1
    
    
    
    47.9
    %Aftermarket parts and
services
    
    
    70.2
    
    
    
    
    
    
    
    63.8
    
    
    
    
    
    
    
    6.4
    
    
    
    10.0
    %Unallocated
    
    
    (20.5
    )
    
    
    
    
    
    
    (18.8
    )
    
    
    
    
    
    
    (1.7
    )
    
    
    9.0
    %Total operating income
    
    $
    105.6
    
    
    
    
    
    
    $
    82.8
    
    
    
    
    
    
    $
    22.8
    
    
    
    27.5
    %BookingsNew units
    
    $
    79.0
    
    
    
    
    
    
    $
    442.2
    
    
    
    
    
    
    $
    (363.2
    )
    
    
    (82.1
    )%Aftermarket parts and
services
    
    
    211.8
    
    
    
    
    
    
    
    290.9
    
    
    
    
    
    
    
    (79.1
    )
    
    
    (27.2
    )%Total bookings
    
    $
    290.8
    
    
    
    
    
    
    $
    733.1
    
    
    
    
    
    
    $
    (442.3
    )
    
    
    (60.3
    )%Backlog  endingNew units
    
    $
    1,289.2
    
    
    
    
    
    
    $
    1,966.0
    
    
    
    
    
    
    $
    (676.8
    )
    
    
    (34.4
    )%Aftermarket parts and
services
    
    
    355.7
    
    
    
    
    
    
    
    419.9
    
    
    
    
    
    
    
    (64.2
    )
    
    
    (15.3
    )%Total backlog
    
    $
    1,644.9
    
    
    
    
    
    
    $
    2,385.9
    
    
    
    
    
    
    $
    (741.0
    )
    
    
    (31.1
    )%
  Page 22 of 33




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##### Table of Contents



New Units
 Revenues.
 Gross profit.
 Operating income.
 Bookings and Backlog.
 Aftermarket Parts and Services
 Revenues.
 Gross profit.
 Operating income.
 Bookings and Backlog.
  Page 23 of 33




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##### Table of Contents



Results of Operations
 Nine months ended September 30, 2009, compared to the nine months ended September 30, 2008:
 Nine months ended September 30,
    
    
    Nine months ended September 30,
    
    
    Period to Period Change2009
    
    
    2008
    
    
    2008 to 2009
    
    
    % ChangeStatement of Operations Data:Total revenues
    
    $
    1,727.1
    
    
    
    100.0
    %
    
    $
    1,448.9
    
    
    
    100.0
    %
    
    $
    278.2
    
    
    
    19.2
    %Cost of sales
    
    
    1,237.9
    
    
    
    71.7
    
    
    
    1,035.8
    
    
    
    71.5
    
    
    
    202.1
    
    
    
    19.5
    %Gross profit
    
    
    489.2
    
    
    
    28.3
    
    
    
    413.1
    
    
    
    28.5
    
    
    
    76.1
    
    
    
    18.4
    %Selling and administrative expenses
    
    
    207.4
    
    
    
    12.0
    
    
    
    204.0
    
    
    
    14.1
    
    
    
    3.4
    
    
    
    1.7
    %Research and development expenses
    
    
    14.6
    
    
    
    0.8
    
    
    
    9.3
    
    
    
    0.6
    
    
    
    5.3
    
    
    
    57.0
    %Plan settlement / curtailment
amendment
    
    
    1.3
    
    
    
    0.1
    
    
    
    (5.4
    )
    
    
    (0.4
    )
    
    
    6.7
    
    
    
    (124.1
    )%Operating income
    
    
    265.9
    
    
    
    15.4
    
    
    
    205.2
    
    
    
    14.2
    
    
    
    60.7
    
    
    
    29.6
    %Interest expense, net
    
    
    (23.6
    )
    
    
    (1.3
    )
    
    
    (21.2
    )
    
    
    (1.5
    )
    
    
    (2.4
    )
    
    
    11.3
    %Other income (expense), net
    
    
    4.0
    
    
    
    0.2
    
    
    
    (2.4
    )
    
    
    (0.2
    )
    
    
    6.4
    
    
    
    (266.7
    )%Income before income taxes
    
    
    246.3
    
    
    
    14.3
    
    
    
    181.6
    
    
    
    12.5
    
    
    
    64.7
    
    
    
    35.6
    %Provision for income taxes
    
    
    76.9
    
    
    
    4.5
    
    
    
    60.9
    
    
    
    4.2
    
    
    
    16.0
    
    
    
    26.3
    %Net income
    
    $
    169.4
    
    
    
    9.8
    %
    
    $
    120.7
    
    
    
    8.3
    %
    
    $
    48.7
    
    
    
    40.3
    %Bookings
    
    $
    1,051.3
    
    
    
    
    
    
    $
    1,812.5
    
    
    
    
    
    
    $
    (761.2
    )
    
    
    (42.0
    )%Backlog  ending
    
    $
    1,644.9
    
    
    
    
    
    
    $
    2,385.9
    
    
    
    
    
    
    $
    (741.0
    )
    
    
    (31.1
    )%
 Total revenues.
 Cost of sales.
 Gross profit.
 Selling and administrative expenses.
 Research and development expenses.
  Page 24 of 33




---



##### Table of Contents



Plan settlement / curtailment amendment
  Operating income.
 Interest expense, net.
 Other income (expense), net.
 Provision for income taxes.
 Bookings and backlog.
  Page 25 of 33




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##### Table of Contents



Segment
Analysis  nine months ended September 30, 2009, compared to nine months ended
September 30, 2008:
 Nine months ended September 30,
    
    
    
    
    
    
    Period to Period Change2009
    
    
    
    
    
    
    2008
    
    
    
    
    
    
    2008 to 2009
    
    
    % ChangeRevenuesNew units
    
    $
    973.9
    
    
    
    56.4
    %
    
    $
    755.4
    
    
    
    52.1
    %
    
    $
    218.5
    
    
    
    28.9
    %Aftermarket parts and
services
    
    
    753.2
    
    
    
    43.6
    %
    
    
    693.5
    
    
    
    47.9
    %
    
    
    59.7
    
    
    
    8.6
    %Total revenues
    
    $
    1,727.1
    
    
    
    100.0
    %
    
    $
    1,448.9
    
    
    
    100.0
    %
    
    $
    278.2
    
    
    
    19.2
    %Gross profitNew units
    
    $
    198.7
    
    
    
    
    
    
    $
    133.1
    
    
    
    
    
    
    $
    65.6
    
    
    
    49.3
    %Aftermarket parts and
services
    
    
    290.5
    
    
    
    
    
    
    
    280.0
    
    
    
    
    
    
    
    10.5
    
    
    
    3.8
    %Total gross profit
    
    $
    489.2
    
    
    
    
    
    
    $
    413.1
    
    
    
    
    
    
    $
    76.1
    
    
    
    18.4
    %Operating incomeNew units
    
    $
    129.2
    
    
    
    
    
    
    $
    72.7
    
    
    
    
    
    
    $
    56.5
    
    
    
    77.7
    %Aftermarket parts and
services
    
    
    196.7
    
    
    
    
    
    
    
    184.6
    
    
    
    
    
    
    
    12.1
    
    
    
    6.6
    %Unallocated
    
    
    (60.0
    )
    
    
    
    
    
    
    (52.1
    )
    
    
    
    
    
    
    (7.9
    )
    
    
    15.2
    %Total operating income
    
    $
    265.9
    
    
    
    
    
    
    $
    205.2
    
    
    
    
    
    
    $
    60.7
    
    
    
    29.6
    %BookingsNew units
    
    $
    357.5
    
    
    
    
    
    
    $
    1,013.4
    
    
    
    
    
    
    $
    (655.9
    )
    
    
    (64.7
    )%Aftermarket parts and
services
    
    
    693.8
    
    
    
    
    
    
    
    799.1
    
    
    
    
    
    
    
    (105.3
    )
    
    
    (13.2
    )%Total bookings
    
    $
    1,051.3
    
    
    
    
    
    
    $
    1,812.5
    
    
    
    
    
    
    $
    (761.2
    )
    
    
    (42.0
    )%Backlog  endingNew units
    
    $
    1,289.2
    
    
    
    
    
    
    $
    1,966.0
    
    
    
    
    
    
    $
    (676.8
    )
    
    
    (34.4
    )%Aftermarket parts and
services
    
    
    355.7
    
    
    
    
    
    
    
    419.9
    
    
    
    
    
    
    
    (64.2
    )
    
    
    (15.3
    )%Total backlog
    
    $
    1,644.9
    
    
    
    
    
    
    $
    2,385.9
    
    
    
    
    
    
    $
    (741.0
    )
    
    
    (31.1
    )%
 New Units
 Revenues.
 Gross profit.
 Operating income.
 Bookings and Backlog.
 Aftermarket Parts and Services
 Revenues.
  Page 26 of 33




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##### Table of Contents



Gross profit.
 Operating income.
 Bookings and Backlog.
 Liquidity and Capital Resources
     New accounting standards
 Noncontrolling Interests in Consolidated Financial Statements  an
amendment of ARB No. 51) Consolidated
Financial Statements
 Business
Combinations)
  Page 27 of 33




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Assets Acquired and Liabilities Assumed in a Business Combination That Arise From
Contingencies) .
 Subsequent Events).
 Accounting for Transfers of Financial Assets) Amendments to FASB Interpretation No. 46(R)). Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities Consolidation
of Variable Interest Entities
 The FASB Accounting
Standards Codification and the Hierarchy of Generally Accepted Accounting Principles
 SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
  
    
    the economic recession and the volatility and disruption of the credit markets;
 
    
    economic or industry downturns;
 
    
    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, subjectivity clients
exercise in placing orders, and timing of large orders;
 
    
    failure to integrate acquisitions, or achieve the expected benefits from any future
acquisitions;
  Page 28 of 33




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##### Table of Contents




    
    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, 2008.
 
 ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK ($ in millions)
   
 ITEM 4.
    
    CONTROLS AND PROCEDURES
   
 PART II.  OTHER INFORMATION
 
 ITEM 1.
    
    LEGAL PROCEEDINGS (£ in millions)
    Page 29 of 33




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Page 30 of 33




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ITEM 2.
    
    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 Issuer Purchases of Equity Securities
  Total Numberof Shares
    
    
    ApproximatePurchased as
    
    
    Dollar Value ofPart of
    
    
    Shares ThatPublicly
    
    
    May Yet BeTotal Number
    
    
    Average Price
    
    
    Announced
    
    
    Purchasedof Shares
    
    
    Paid Per
    
    
    Plans or
    
    
    Under the PlansPeriod
    
    Purchased (1)
    
    
    Share
    
    
    Programs
    
    
    or ProgramsJuly 2009
    
    
    
    
    
    
    
    
    
    
    August 2009
    
    
    855
    
    
    $
    30.96
    
    
    
    September 2009
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    855
    
    
    
    
    
    
    
    
 (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).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).
  Page 31 of 33




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##### Table of Contents



SIGNATURES
  DRESSER-RAND GROUP INC.Date: October 29, 2009
    
    /s/ Raymond L. Carney Jr.

Raymond L. Carney Jr.Vice President, Controller andChief Accounting Officer
  Page 32 of 33




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##### Table of Contents



EXHIBIT INDEX
 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).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).
  Page 33 of 33