----

**Securities and Exchange Commission****Washington, D.C. 20549**

**Form 10-Q**

| x      | **Quarterly Report under   Section 13 or 15(d) of the Securities Exchange Act of 1934**                                                                                                                               |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | **For the Quarterly Period Ended September   30, 2005**                                                                                                                                                                    |
|   |                                                                                                                                                                                                                       |
| 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.**                                                          |
|----------------------------------------------------------------------------------------|
|                                                                                        |
| *(Exact name of registrant as specified in   its charter)*                             |
|                                                                                   |   |   |
| **Delaware**                                                                           |   | **20-1780492** |
|                                                                                        |   |  |
| *(State or   other jurisdiction of   incorporation or organization)*                   |   | *(I.R.S.   Employer   Identification No.)* |
|                                                                                   |   |   |
| **Paul Clark Drive   Olean, NY**                                                       |   | **14760** |
|                                                                                        |   |  |
| *(Address of principal executive offices)*                                             |   | *(Zip Code)* |
|                                                                                   |   |   |
| **(716) 375-3000**                                                                |
|                                                                                        |
| *(Registrant’s telephone number, including area code)*                            |
|                                                                                   |
| **N/A**                                                                                |
|                                                                                        |
| *(Former name, former address and former   fiscal year, if changed since last report)* |

Indicate by check mark whether theregistrant (1) has filed all reports required to be filed bySection 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days.  x  Yes     o  No

Indicate by check mark whether theregistrant is an accelerated filer (as defined in Rule 12b-2 of theExchange Act).  o  Yes     x  No

Indicate by check mark whether theregistrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  o  Yes     x  No

The number of shares of common stock, $.01 par value, outstanding as of November 1, 2005, was 85,444,897.

----

DRESSER-RAND GROUP INC. TABLE OF CONTENTS

|                                                                                                 |                                                                                                                                                                                                        | **Page** |
|------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------|
|                                                                                                 |                                                                                                                                                                                                        |          |
| **PART I.  FINANCIAL INFORMATION**                                                              |                                                                                                                                                                                                        |
|                                                                                                 |                                                                                                                                                                                                        |
| Item 1. Financial Statements (unaudited)                                                             |                                                                                                                                                                                                        |
|                                                                                                 |                                                                                                                                                                                                        |
|                                                                                                 | Consolidated Statement of Operations (Successor) and Combined   Statement of Operations   (Predecessor) for the three months and nine months ended September 30, 2005,   (Successor) and 2004 (Predecessor) | 3        |
|                                                                                                 |                                                                                                                                                                                                        |     |
|                                                                                                 | Consolidated Balance Sheet at September 30, 2005, and December 31,   2004                                                                                                                                   | 4        |
|                                                                                                 |                                                                                                                                                                                                        |     |
|                                                                                                 | Consolidated Statement of Cash Flows (Successor) and Combined Statement   of Cash Flows (Predecessor) for the nine months ended September 30, 2005,   (Successor) and 2004 (Predecessor)                    | 5        |
|                                                                                                 |                                                                                                                                                                                                        |     |
|                                                                                                 | Notes to Consolidated and Combined Financial Statements at September   30, 2005                                                                                                                             | 6-14     |
|                                                                                                 |                                                                                                                                                                                                        |     |
| Item 2. Management’s Discussion and   Analysis of Financial Condition and Results of Operations | 15-23                                                                                                                                                                                                       |
|                                                                                                 |                                                                                                                                                                                                        |
| Item 3. Quantitative and Qualitative   Disclosure about Market Risk                                  | 24                                                                                                                                                                                                          |
|                                                                                                 |                                                                                                                                                                                                        |
| Item 4. Controls and Procedures                                                                      | 25-26                                                                                                                                                                                                       |
|                                                                                                 |                                                                                                                                                                                                        |
| **PART II.    OTHER INFORMATION**                                                               |                                                                                                                                                                                                        |
|                                                                                                 |                                                                                                                                                                                                        |
| Item 1.    Legal Proceedings                                                                    | 27                                                                                                                                                                                                          |
|                                                                                                 |                                                                                                                                                                                                        |
| Item 5.    Other Information                                                                    | 27                                                                                                                                                                                                          |
|                                                                                                 |                                                                                                                                                                                                        |
| Item 6. Exhibits                                                                                     | 28                                                                                                                                                                                                          |
|                                                                                                 |                                                                                                                                                                                                        |
| Signatures                                                                                           | 29                                                                                                                                                                                                          |
|                                                                                                 |                                                                                                                                                                                                        |
| Exhibits                                                                                             |                                                                                                                                                                                                        |

Page 2 of 30

----

DRESSER-RAND GROUP INC.CONSOLIDATED STATEMENT OF OPERATIONS (SUCCESSOR) AND COMBINED STATEMENT OF OPERATIONS (PREDECESSOR) (Unaudited; dollars in thousands, except per share amounts)

**PART I. - FINANCIAL INFORMATION**

**ITEM 1.  FINANCIAL STATEMENTS**

|                                             |   | **Successor   Three months ended   September 30, 2005** |               |   | **Predecessor   Three months ended   September 30, 2004** |   | **Successor   Nine months ended   September 30, 2005** |   |   | **Predecessor   Nine months ended   September 30, 2004** |   |
|--------------------------------------------------|--------|---------------------------------------------------------|--------------------|--------|-----------------------------------------------------------|--------|--------------------------------------------------------|--------|--------|----------------------------------------------------------|--------|
|                                             |   |                                                         |                    |   |                                                      |        |                                                        |   |        |                                                          |   |   |  |  |   |
| Net sales of products                            |   | $                                                       | 258,065            |   |                                                      | $      | 166,798                                                |   | $      | 683,656                                                  |   |   | $ | 506,187 |   |
| Net sales of services                            |   |                                                    | 51,694             |   |                                                      |   | 49,364                                                 |   |   | 162,581                                                  |   |   |   | 148,354 |   |
| Net sales to affiliates                          |   |                                                    | —   |   |                                                      |   | 657                                                    |   |   | —                                         |   |   |   | 1,639 |   |
| Other operating revenue                          |   |                                                    | —   |   |                                                      |   | 444                                                    |   |   | —                                         |   |   |   | 1,314 |   |
|                                             |   |                                                         |                    |   |                                                      |        |                                                        |   |        |                                                          |   |   |  |  |   |
| Total                                            |   |                                                    | 309,759            |   |                                                      |   | 217,263                                                |   |   | 846,237                                                  |   |   |   | 657,494 |   |
|                                             |   |                                                         |                    |   |                                                      |        |                                                        |   |        |                                                          |   |   |  |  |   |
| Cost of products sold                            |   |                                                    | 192,804            |   |                                                      |   | 124,482                                                |   |   | 533,685                                                  |   |   |   | 386,024 |   |
| Cost of services sold                            |   |                                                    | 40,050             |   |                                                      |   | 35,403                                                 |   |   | 124,160                                                  |   |   |   | 112,216 |   |
| Cost of products sold to   affiliates            |   |                                                    | —   |   |                                                      |   | 312                                                    |   |   | —                                         |   |   |   | 968 |   |
|                                             |   |                                                         |                    |   |                                                      |        |                                                        |   |        |                                                          |   |   |  |  |   |
| Total                                            |   |                                                    | 232,854            |   |                                                      |   | 160,197                                                |   |   | 657,845                                                  |   |   |   | 499,208 |   |
|                                             |   |                                                         |                    |   |                                                      |        |                                                        |   |        |                                                          |   |   |  |  |   |
| Gross   profit                                   |   |                                                    | 76,905             |   |                                                      |   | 57,066                                                 |   |   | 188,392                                                  |   |   |   | 158,286 |   |
| Selling and administrative   expenses            |   |                                                    | 39,814             |   |                                                      |   | 32,983                                                 |   |   | 118,331                                                  |   |   |   | 110,493 |   |
| Research and development   expenses              |   |                                                    | 1,249              |   |                                                      |   | 1,603                                                  |   |   | 4,745                                                    |   |   |   | 4,695 |   |
|                                             |   |                                                         |                    |   |                                                      |        |                                                        |   |        |                                                          |   |   |  |  |   |
| Income   from operations                         |   |                                                    | 35,842             |   |                                                      |   | 22,480                                                 |   |   | 65,316                                                   |   |   |   | 43,098 |   |
| Interest (expense) income,   net                 |   |                                                    | (14,966            | )      |                                                      |   | 1,204                                                  |   |   | (44,619                                                  | )      |   |   | 2,306 |   |
| Early redemption premium on   debt               |   |                                                    | (3,688             | )      |                                                      |   | —                                       |   |   | (3,688                                                   | )      |   |   | —   |   |
| Other expense, net                               |   |                                                    | (978               | )      |                                                      |   | (89                                                    | )      |   | (1,558                                                   | )      |   |   | (2,754 | ) |
|                                             |   |                                                         |                    |   |                                                      |        |                                                        |   |        |                                                          |   |   |  |  |   |
| Income   before income taxes                     |   |                                                    | 16,210             |   |                                                      |   | 23,595                                                 |   |   | 15,451                                                   |   |   |   | 42,650 |   |
| Provision for income taxes                       |   |                                                    | 5,776              |   |                                                      |   | 2,543                                                  |   |   | 10,560                                                   |   |   |   | 4,918 |   |
|                                             |   |                                                         |                    |   |                                                      |        |                                                        |   |        |                                                          |   |   |  |  |   |
| Net   income                                     |   | $                                                       | 10,434             |   |                                                      | $      | 21,052                                                 |   | $      | 4,891                                                    |   |   | $ | 37,732 |   |
|                                             |   |                                                         |                    |   |                                                      |        |                                                        |   |        |                                                          |   |   |  |  |   |
| Net income per share:                            |   |                                                    |               |   |                                                      |   |                                                   |   |   |                                                     |   |   |   |   |   |
| Basic   and diluted                              |   | $                                                       | 0.15               |   |                                                      |   |                                                   |   | $      | 0.08                                                     |   |   |   |   |   |
|                                             |   |                                                         |                    |   |                                                      |   |                                                   |   |        |                                                          |   |   |   |   |   |
| Shares used in computing   net income per share: |   |                                                    |               |   |                                                      |   |                                                   |   |   |                                                     |   |   |   |   |   |
| Basic   and diluted                              |   |                                                    | 71,904,027         |   |                                                      |   |                                                   |   |   | 60,178,986                                               |   |   |   |   |   |
|                                             |   |                                                         |                    |   |                                                      |   |                                                   |   |        |                                                          |   |   |   |   |   |

See accompanying notes to consolidated and combined financial statements.

Page 3 of 30

----

DRESSER-RAND GROUP INC.CONSOLIDATED BALANCE SHEET (SUCCESSOR) (dollars in thousands, except per share amounts)

|                                                                                                                                               |   | **September 30,   2005** |               | **December 31,   2004** |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|--------------------|-------------------------|--------|
|                                                                                                                                               |   |                          |               |                         |   |
|                                                                                                                                               |   | **(unaudited)**          |               |                    |   |   |
| **Assets**                                                                                                                                         |   |                     |               |                    |   |   |   |
| Current assets                                                                                                                                     |   |                     |               |                    |   |   |   |
| Cash   and cash equivalents                                                                                                                        |   | $                        | 109,504            |                    | $      | 111,500 |   |
| Accounts   receivable, less allowance for doubtful accounts of $8,757 in 2005 and   $14,569 in 2004                                                |   |                     | 225,117            |                    |   | 265,479 |   |
| Inventories,   net                                                                                                                                 |   |                     | 163,371            |                    |   | 175,873 |   |
| Prepaid   expenses                                                                                                                                 |   |                     | 18,842             |                    |   | 14,256 |   |
| Deferred   income taxes                                                                                                                            |   |                     | 11,817             |                    |   | 7,445 |   |
|                                                                                                                                               |   |                          |                    |                    |        |  |   |
| Total   current assets                                                                                                                             |   |                     | 528,651            |                    |   | 574,553 |   |
| Investments in and advances   to partially owned companies - at equity                                                                             |   |                     | —   |                    |   | 12,448 |   |
| Property, plant and   equipment, less accumulated depreciation of $21,137 in 2005 and $3,949 in   2004                                             |   |                     | 233,598            |                    |   | 226,764 |   |
| Goodwill                                                                                                                                           |   |                     | 399,286            |                    |   | 423,330 |   |
| Intangible assets, net                                                                                                                             |   |                     | 472,279            |                    |   | 479,587 |   |
| Other assets                                                                                                                                       |   |                     | 26,559             |                    |   | 34,392 |   |
|                                                                                                                                               |   |                          |                    |                    |        |  |   |
| Total   assets                                                                                                                                     |   | $                        | 1,660,373          |                    | $      | 1,751,074 |   |
|                                                                                                                                               |   |                          |                    |                    |        |  |   |
| **Liabilities   and Shareholders’ Equity**                                                                                                    |   |                     |               |                    |   |   |   |
| Current liabilities                                                                                                                                |   |                     |               |                    |   |   |   |
| Accounts   payable and accruals                                                                                                                    |   | $                        | 297,450            |                    | $      | 271,275 |   |
| Customer   advance payments                                                                                                                        |   |                     | 113,988            |                    |   | 38,661 |   |
| Income   taxes payable                                                                                                                             |   |                     | 5,000              |                    |   | 12,977 |   |
| Loans   payable                                                                                                                                    |   |                     | 63                 |                    |   | 2,734 |   |
| Current   maturities of long-term debt                                                                                                             |   |                     | —   |                    |   | 4,015 |   |
|                                                                                                                                               |   |                          |                    |                    |        |  |   |
| Total   current liabilities                                                                                                                        |   |                     | 416,501            |                    |   | 329,662 |   |
| Deferred income taxes                                                                                                                              |   |                     | 29,743             |                    |   | 27,287 |   |
| Postemployment and other   employee benefit liabilities                                                                                            |   |                     | 112,537            |                    |   | 111,640 |   |
| Long-term debt                                                                                                                                     |   |                     | 599,148            |                    |   | 816,664 |   |
| Other noncurrent   liabilities                                                                                                                     |   |                     | 15,915             |                    |   | 12,924 |   |
|                                                                                                                                               |   |                          |                    |                    |        |  |   |
| Total   liabilities                                                                                                                                |   |                     | 1,173,844          |                    |   | 1,298,177 |   |
| Commitments and   contingencies                                                                                                                    |   |                     |               |                    |   |   |   |
| (Notes   7 through 10)                                                                                                                             |   |                     |               |                    |   |   |   |
| Shareholders’ Equity                                                                                                                          |   |                     |               |                    |   |   |   |
| Common   stock, $0.01 par value, 250,000,000 shares authorized in 2005 and 101,200,000   shares in 2004; 85,444,897 shares issued and outstanding. |   |                     | 854                |                    |   | 542 |   |
| Additional   paid in capital                                                                                                                       |   |                     | 492,226            |                    |   | 436,642 |   |
| Retained   earnings                                                                                                                                |   |                     | 12,120             |                    |   | 7,229 |   |
| Accumulated   other comprehensive (loss) income                                                                                                    |   |                     | (18,671            | )                       |   | 8,484 |   |
|                                                                                                                                               |   |                          |                    |                    |        |  |   |
| Total   shareholders’ equity                                                                                                                  |   |                     | 486,529            |                    |   | 452,897 |   |
|                                                                                                                                               |   |                          |                    |                    |        |  |   |
| Total   liabilities and shareholders’ equity                                                                                                  |   | $                        | 1,660,373          |                    | $      | 1,751,074 |   |
|                                                                                                                                               |   |                          |                    |                    |        |  |   |

See accompanying notes to consolidated and combined financial statements.

Page 4 of 30

----

DRESSER-RAND GROUP INC.CONSOLIDATED STATEMENT OF CASH FLOWS (SUCCESSOR) AND COMBINED STATEMENT OF CASH FLOWS (PREDECESSOR) (Unaudited; dollars in thousands)

|                                                                            |   | **Successor   Nine months ended   September 30, 2005** |               |   | **Predecessor   Nine months ended   September 30, 2004** |   |
|---------------------------------------------------------------------------------|--------|--------------------------------------------------------|--------------------|--------|----------------------------------------------------------|--------|
|                                                                            |   |                                                        |               |   |                                                          |   |
| Cash flows from operating   activities                                          |   |                                                   |               |   |                                                     |   |   |   |
| Net   income                                                                    |   | $                                                      | 4,891              |   |                                                     | $      | 37,732 |   |
| Adjustments   to arrive at net cash provided by (used in) operating activities: |   |                                                   |               |   |                                                     |   |   |   |
| Depreciation   and amortization                                                 |   |                                                   | 48,045             |   |                                                     |   | 20,284 |   |
| Amortization   of deferred financing costs                                      |   |                                                   | 8,627              |   |                                                     |   | —   |   |
| Provision   for (adjustment to) allowance for doubtful accounts                 |   |                                                   | (1,373             | )      |                                                     |   | 3,181 |   |
| Provision   for losses on inventory                                             |   |                                                   | 2,743              |   |                                                     |   | 5,209 |   |
| Deferred   income taxes                                                         |   |                                                   | (2,459             | )      |                                                     |   | 5,404 |   |
| Employee   Compensation                                                         |   |                                                   | 3,237              |   |                                                     |   | —   |   |
| Other                                                                           |   |                                                   | (3,323             | )      |                                                     |   | 1,098 |   |
| (Increase)   decrease in:                                                       |   |                                                   |               |   |                                                     |   |   |   |
| Accounts   receivable                                                           |   |                                                   | 48,362             |   |                                                     |   | 48,624 |   |
| Inventories                                                                     |   |                                                   | 13,003             |   |                                                     |   | (23,209 | ) |
| Other   current and noncurrent assets                                           |   |                                                   | (9,965             | )      |                                                     |   | (14,046 | ) |
| Increase   (decrease) in:                                                       |   |                                                   |               |   |                                                     |   |   |   |
| Accounts   payable and accruals                                                 |   |                                                   | 8,372              |   |                                                     |   | (19,545 | ) |
| Customer   advance payments                                                     |   |                                                   | 75,838             |   |                                                     |   | 18,604 |   |
| Other   current and noncurrent liabilities                                      |   |                                                   | 26,386             |   |                                                     |   | (18,852 | ) |
|                                                                            |   |                                                        |                    |   |                                                     |        |  |   |
| Net   cash provided by (used in) operating activities                           |   |                                                   | 222,384            |   |                                                     |   | 64,484 |   |
|                                                                            |   |                                                        |                    |   |                                                     |        |  |   |
| Cash flows from investing   activities                                          |   |                                                   |               |   |                                                     |   |   |   |
| Capital   expenditures                                                          |   |                                                   | (10,747            | )      |                                                     |   | (4,532 | ) |
| Acquisitions                                                                    |   |                                                   | (57,218            | )      |                                                     |   | —   |   |
| Proceeds   from equity investment dispositions                                  |   |                                                   | 10,000             |   |                                                     |   | —   |   |
| Proceeds   from sales of property, plant and equipment                          |   |                                                   | 244                |   |                                                     |   | 1,723 |   |
| Proceeds   from sale of marketable securities                                   |   |                                                   | —   |   |                                                     |   | 1,037 |   |
|                                                                            |   |                                                        |                    |   |                                                     |        |  |   |
| Net   cash provided by investing activities                                     |   |                                                   | (57,721            | )      |                                                     |   | (1,772 | ) |
|                                                                            |   |                                                        |                    |   |                                                     |        |  |   |
| Cash flows from financing   activities                                          |   |                                                   |               |   |                                                     |   |   |   |
| Proceeds   from (payments of) short-term borrowings                             |   |                                                   | (2,638             | )      |                                                     |   | (991 | ) |
| Proceeds   from (payments of) long term debt                                    |   |                                                   | (211,162           | )      |                                                     |   | (21 | ) |
| Proceeds   from initial public offering - net                                   |   |                                                   | 608,925            |   |                                                     |   | —   |   |
| Cash   dividend paid                                                            |   |                                                   | (557,686           | )      |                                                     |   | —   |   |
| Proceeds   from sale of stock to employees                                      |   |                                                   | 1,420              |   |                                                     |   | —   |   |
| Changes   in due to (from) affiliates                                           |   |                                                   | —   |   |                                                     |   | (49,760 | ) |
|                                                                            |   |                                                        |                    |   |                                                     |        |  |   |
| Net   cash (used in) provided by financing activities                           |   |                                                   | (161,141           | )      |                                                     |   | (50,772 | ) |
|                                                                            |   |                                                        |                    |   |                                                     |        |  |   |
| Effect of exchange rate   changes on cash                                       |   |                                                   | (5,518             | )      |                                                     |   | (203 | ) |
|                                                                            |   |                                                        |                    |   |                                                     |        |  |   |
| Net increase (decrease) in   cash and cash equivalents                          |   |                                                   | (1,996             | )      |                                                     |   | 11,737 |   |
| Cash and cash equivalents,   beginning of the period                            |   |                                                   | 111,500            |   |                                                     |   | 41,537 |   |
|                                                                            |   |                                                        |                    |   |                                                     |        |  |   |
| Cash and cash equivalents,   end of period                                      |   | $                                                      | 109,504            |   |                                                     | $      | 53,274 |   |
|                                                                            |   |                                                        |                    |   |                                                     |        |  |   |

See accompanying notes to consolidated and combined financial statements.

Page 5 of 30

----

DRESSER-RAND GROUP INC.NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

**1.     Basis of presentation**

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information. Accordingly, they do not include all of the information and notes required by such principles applicable to annual financial statements. These financial statements are unaudited but, in the opinion of management, contain all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of our financial position and results of operations.  These financial statements should be read in conjunction with our other filings with the Securities and Exchange Commission. Operating results for the 2005 periods presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2005.

On October 29, 2004, pursuant to an Equity Purchase Agreement with Dresser-Rand Holdings, LLC, we acquired from Ingersoll-Rand Company Limited, LLC, (“I-R”) the Dresser-Rand Company and the operations of Dresser-Rand Canada, Inc. and Dresser-Rand GmbH (the “Acquisition”).  We used the proceeds from $430 million sale of common stock, borrowings of $420 million in senior subordinated notes and borrowings of $395 million under our senior secured credit facility to fund the Acquisition.

The Acquisition of the Dresser-Rand entities was accounted for under the purchase method of accounting.  As a result, the financial results presented for 2004 represent the (“Predecessor”) and the financial results presented for the period subsequent to the Acquisition represent the Successor entity (the “Successor”).  We allocated the Acquisition consideration to the tangible and intangible assets acquired and liabilities assumed by us based upon their respective fair values as of the date of the Acquisition, which resulted in a significant change in our annual depreciation and amortization expenses. To clarify and emphasize that the Successor financial statements have been presented on new basis of accounting, we have separated Predecessor and Successor financial statements with a vertical black line, where appropriate.  

**2.     Recently issued  accounting standards**

In November 2004, the Financial Accounting Standards Board (FASB) issued SFAS No. 151*, Inventory Costs, an Amendment of Accounting Research Bulletin No. 43, and Chapter 4*. SFAS No. 151 clarifies that abnormal amounts of idle facility expense, freight handling costs and wasted materials (spoilage) should be recognized as current-period charges and require the allocation of fixed production overheads to inventory based on the normal capacity of the production facilities. The guidance in this statement is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The adoption of this statement is not anticipated to have a material impact on our financial reporting.

In December 2004, the FASB issued SFAS No. 123R, *Share-Based Payments*, that is a revision of SFAS No. 123, *Accounting for Stock-Based Compensation*.  SFAS No. 123R supersedes APB Opinion No. 25, *Accounting for Stock Issued to Employees*. SFAS 123R focuses primarily on accounting for transactions in which an entity obtains employee services in exchange for equity.  We have elected to early adopt the provisions of SFAS 123R as of October 30, 2004. As a result, we recognized compensation cost in relation to share-based compensation arrangements of $380,000 and $3,237,000 for the three months and nine months ended September 30, 2005, respectively.

In December 2004, the FASB issued SFAS No. 153, *Exchanges of Non-monetary Assets*, an Amendment of APB Opinion No. 29, *Accounting for Non-monetary Transactions*. SFAS No. 153 eliminates the exception from fair value measurement for non-monetary exchanges of similar productive assets in paragraph 21 (b) of APB Opinion No. 29 and replaces it with an exception for exchanges that do not have commercial substance. SFAS No. 153 specifies that a non-monetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. This statement is effective for exchanges occurring in fiscal years beginning after June 15, 2005.

Page 6 of 30

----

DRESSER-RAND GROUP INC. NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS – (Continued)

In March 2005, the FASB issued Interpretation No. 47, an interpretation of SFAS No. 143, *Accounting for Conditional Asset Retirement Obligations*.  Interpretation No. 47 requires that a legal obligation to perform an asset retirement activity in which the timing and (or) method of settlement are conditional on a future event that may not be within our control be recognized as a liability at the fair value of a conditional asset retirement obligation, if the fair value of the liability can be reasonably estimated.  SFAS No. 143 acknowledges that in some cases, sufficient information may not be available to reasonably estimate the fair value of an asset retirement obligation.  This Interpretation is effective for our December 31, 2005 financial statements.  We are currently assessing the impact the Interpretation will have on our financial position and results of operation.

In May 2005, the FASB issued SFAS No.154, *Accounting Changes and Error Corrections*. SFAS No.154 provides guidance on the accounting for and reporting of changes and error corrections. This statement is effective for fiscal years beginning after December 31, 2005.

**3.     Sale of common stock**

On August 10, 2005, we completed our initial public offering of 31,050,000 shares of our common stock for net proceeds of $608.9 million.  On September 12, 2005, we used $55.0 million of the net proceeds to redeem $50.0 million face value amount of our 7-3/8% senior subordinated notes due 2014, and to pay the applicable redemption premium of $3.7 million and accrued interest of $1.3 million to the redemption date.  Our Board of Directors approved the payment of a dividend on August 11, 2005, of the remaining net proceeds, excluding certain related costs, of $557.7 million ($10.26 per share) to our stockholders existing immediately prior to the offering, consisting of affiliates of First Reserve Corporation and certain members of senior management.

**4.     Acquisitions**

On September 8, 2005, we acquired from Tuthill Corporation certain assets of its Tuthill Energy Systems Division (“TES”).  TES is an international manufacturer of single and multi-stage steam turbines and portable ventilators under the Coppus, Murray and Nadrowski brands which complement our steam turbine business.  The current estimated cost of TES is approximately $57.0 million, net of $4.0 million cash acquired, subject to future adjustments for agreement on the final working capital at the closing date and other related matters.  We have preliminarily allocated the cost based on current estimates of the fair value of assets acquired and liabilities assumed as follows (in thousands):

| Accounts receivable                         |   | $      | 13,458 |   |
|---------------------------------------------|--------|--------|--------|--------|
| Inventory – net                        |   |   | 7,690  |   |
| Prepaid expenses and other   current assets |   |   | 208    |   |
|                                        |   |        |        |   |
| Total current assets                        |   |   | 21,356 |   |
| Property, plant and   equipment, net        |   |   | 20,319 |   |
| Intangible assets and   goodwill            |   |   | 28,414 |   |
|                                        |   |        |        |   |
| Total assets acquired                       |   |   | 70,089 |   |
|                                        |   |        |        |   |
|                                        |   |   |   |   |
| Accounts payable and   accruals             |   |   | 10,570 |   |
| Other liabilities                           |   |   | 2,501  |   |
|                                        |   |        |        |   |
| Total liabilities assumed                   |   |   | 13,071 |   |
|                                        |   |        |        |   |
| Cash paid – net                        |   | $      | 57,018 |   |
|                                        |   |        |        |   |

The above amounts are estimates as final appraisals and other required information to determine final cost and assign fair values have not been received.  Also, certain restructuring of operations will be necessary to obtain appropriate synergies in the combined steam turbine business.  Accordingly, the above amounts may be revised when all required information is obtained and the restructuring plan is finalized which is expected to be accomplished during the fourth quarter of 2005.  Pro forma financial information, assuming that TES had been acquired at the beginning of each period for which an income statement is presented, has not been presented because the effect on our results for these periods was not considered material.  TES results have been included in our financial results since September 8, 2005, and were not material to the results of operations for the three months and nine months ended September 30, 2005.

Page 7 of 30

----

DRESSER-RAND GROUP INC. NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS – (Continued)

During the third quarter of 2005, we purchased the other 50% of our Multiphase Power and Processing Technologies (MppT) joint venture for a payment of $200,000 and an agreement to pay $300,000 on April 1, 2006, and $425,000 on April 1, 2007.  The net present value of the total consideration is $876,000, bringing our total investment in MppT to $2.9 million at the date of the purchase.  MppT owns patents and technology for inline, compact, gas-liquid scrubbers.

**5.     Intangible assets and goodwill**

The cost and related accumulated amortization of intangible assets were:

|                                |   | **September   30, 2005** |    | **December   31, 2004**        |   |
|-------------------------------------|--------|--------------------------|---------|--------------------------------|--------|
|                                |   |                          |    |                                |   |
| ***(In thousands)***                |   | **Cost**                 |    | **Accumulated   amortization** |   | **Cost** |   | **Accumulated   amortization** |   |
|                                     |   |                          |         |                           |        |  |   |  |  |   |  |  |   |
|                                |   | **(unaudited)**          |    |                           |   |   |   |   |   |
| Trade names                         |   | $                        | 89,692  |                           | $      | 1,903 |   | $ | 82,700 |   | $ | 344 |   |
| Customer relationships              |   |                     | 232,648 |                           |   | 5,216 |   |   | 227,746 |   |   | 936 |   |
| Software and technology             |   |                     | 158,765 |                           |   | 7,281 |   |   | 149,653 |   |   | 1,304 |   |
| Other amortizable intangible assets |   |                     | 33,640  |                           |   | 28,066 |   |   | 31,828 |   |   | 9,756 |   |
|                                |   |                          |         |                           |        |  |   |  |  |   |  |  |   |
| Total                               |   | $                        | 514,745 |                           | $      | 42,466 |   | $ | 491,927 |   | $ | 12,340 |   |
|                                |   |                          |         |                           |        |  |   |  |  |   |  |  |   |

Changes in cost in the above table from December 31, 2004 to September 30, 2005, arose from translation adjustments and the amounts related to the TES and MppT acquisitions.  Such TES amounts are subject to change when final appraisals are received.

Amortization of intangible assets for the three months and nine months ended September 30, 2005, was $8.4 million and $30.1 million, respectively.

The changes in goodwill for the nine months ended September 30, 2005, were:

| Balance at December 31,   2004  |   | $      | 423,330 |   |
|---------------------------------|--------|--------|---------|--------|
| TES acquisition                 |   | $      | 5,120   |   |
| Translation adjustments         |   |   | (29,164 | )      |
|                            |   |        |         |   |
| Balance at September 30,   2005 |   | $      | 399,286 |   |
|                            |   |        |         |   |

The goodwill from the TES acquisition is subject to change when the final appraisals are received and the working capital adjustment is finalized.

Page 8 of 30

----

DRESSER-RAND GROUP INC. NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS – (Continued)

**6.     Inventories**

Inventories were as follows:

| ***(In thousands)***               |   | **September 30,   2005** |     | **December 31,   2004** |   |
|------------------------------------|--------|--------------------------|----------|-------------------------|--------|
|                                    |   |                          |          |                    |        |  |   |
|                               |   | **(unaudited)**          |     |                    |   |   |
| Raw materials and supplies         |   | $                        | 80,970   |                    | $      | 60,728 |   |
| Work-in-process and finished goods |   |                     | 289,669  |                    |   | 209,247 |   |
|                               |   |                          |          |                    |        |  |   |
|                               |   |                     | 370,639  |                    |   | 269,975 |   |
| Less progress payments             |   |                     | (207,268 | )                       |   | (94,102 | ) |
|                               |   |                          |          |                    |        |  |   |
| Total inventories - net            |   | $                        | 163,371  |                    | $      | 175,873 |   |
|                               |   |                          |          |                    |        |  |   |

The progress payments represent payments from customers based on milestone completion schedules.  Any payments received in excess of the related inventory investment are classified as “Customer Advance Payments” in the current liabilities section of the balance sheet.

**7.     Income taxes**

Our estimated income tax provision for the nine months ended September 30, 2005, results in an effective rate that differs from U.S. Federal statutory rate of 35% principally because, in certain tax jurisdictions, we have incurred net operating losses from inception and are currently forecasting net operating losses for 2005.  As a result, we have provided a valuation allowance for the deferred tax assets in those jurisdictions on the basis that it is more likely than not, as defined by generally accepted accounting principles, that we will not realize the net operating loss assets.  We will adjust that valuation allowance in the future when, based principally on attained results, it becomes more likely than not that the benefits of the net operating loss carried forward will be realized.  Our effective income tax rate for the three months ended September 30, 2005, results from the difference between provision for income tax required for the ninemonths ended September 30, 2005, and that recorded for the six months ended June 30, 2005.  Our effective income tax rate for the three months and nine months ended September 30, 2004, differed from the U.S. Federal statutory rate of 35%, primarily because the Predecessor period reflected the non-taxable partnership structure in existence for most of the domestic operations.

As mentioned in Note 1, the Successor began operations as a new entity on October 29, 2004.  We operate in numerous countries around the world and file tax returns as appropriate.  The Acquisition was an asset purchase in the United States and a stock purchase outside the United States.  The purchase price was allocated among the entities acquired based on estimated fair values.  Deferred taxes were recorded to reflect the difference between the purchase price allocated to foreign entities and their underlying tax basis.  Management believes that it has provided adequate estimated liabilities for taxes based on the allocation of the purchase price and its understanding of the tax laws and regulations in those countries.  Since few tax returns have been filed since beginning operations and none have been audited by the appropriate taxing authorities, we could be exposed to additional income and other taxes.

In October 2004, the American Jobs Creation Act of 2004 (the “Act”) was enacted.  The Act raises a number of issues with respect to accounting for income taxes. For companies that pay U.S. income taxes on manufacturing activities in the U.S., the Act provides a deduction from taxable income equal to a stipulated percentage of qualified income from domestic production activities.  On December 21, 2004, the FASB issued guidance regarding the accounting implications of the Act related to the deduction for qualified domestic production activities which should be accounted for as a special deduction under SFAS No. 109, *Accounting for Income Taxes.*The guidance applies to financial statements for periods ending after the date the Act was enacted.  In years in which there is U.S. taxable income starting in 2005, this essentially results in a one percentage point reduction in the statutory rate. The Act also creates a temporary incentivefor U.S. multinationals to repatriate accumulated income earned abroad by providing an 85% dividends received deduction for certain dividends from controlled foreign corporations. The deduction is subject to a number of limitations.  As part of the sale of the Predecessor, all previously undistributed foreign earnings were deemed distributed to I-R.  Accordingly, while we are still evaluating the potential impact of these dividend repatriation provisions, any amounts repatriated under the Act are not likely to be significant.

Page 9 of 30

----

DRESSER-RAND GROUP INC. NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS – (Continued)

**8.     Pension plans**

The components of net periodic pension cost for defined benefit pension plans are as follows:

| ***(In thousands)***              |   | **Successor   Three months ended   September 30, 2005** |               |   | **Predecessor   Three months ended   September 30, 2004** |   | **Successor   Nine months ended   September 30, 2005** |   |   | **Predecessor   Nine months ended   September 30, 2004** |   |
|-----------------------------------|--------|---------------------------------------------------------|--------------------|--------|-----------------------------------------------------------|--------|--------------------------------------------------------|--------|--------|----------------------------------------------------------|--------|
|                                   |   |                                                         |                    |   |                                                      |        |                                                        |   |        |                                                          |   |   |  |  |   |
| Service cost                      |   | $                                                       | 1,269              |   |                                                      | $      | 951                                                    |   | $      | 3,862                                                    |   |   | $ | 3,757 |   |
| Interest cost                     |   |                                                    | 4,254              |   |                                                      |   | 5,216                                                  |   |   | 12,891                                                   |   |   |   | 15,250 |   |
| Expected return on plan assets    |   |                                                    | (4,822             | )      |                                                      |   | (6,501                                                 | )      |   | (14,575                                                  | )      |   |   | (19,126 | ) |
| Net amortization of unrecognized: |   |                                                    |               |   |                                                      |   |                                                   |   |   |                                                     |   |   |   |   |   |
| Prior service cost                |   |                                                    | —   |   |                                                      |   | 235                                                    |   |   | —                                         |   |   |   | 408 |   |
| Plan net losses                   |   |                                                    | —   |   |                                                      |   | 997                                                    |   |   | —                                         |   |   |   | 2,991 |   |
|                              |   |                                                         |                    |   |                                                      |        |                                                        |   |        |                                                          |   |   |  |  |   |
| Net periodic pension cost         |   | $                                                       | 701                |   |                                                      | $      | 898                                                    |   | $      | 2,178                                                    |   |   | $ | 3,280 |   |
|                              |   |                                                         |                    |   |                                                      |        |                                                        |   |        |                                                          |   |   |  |  |   |

**9.     Postretirement benefits other than pensions**

The components of net periodic postretirement benefits cost for such plans are as follows:

| ***(In thousands)***                      |   | **Successor   Three months ended   September 30, 2005** |               |   | **Predecessor   Three months ended   September 30, 2004** |   | **Successor   Nine months ended   September 30, 2005** |   |   | **Predecessor   Nine months ended   September 30, 2004** |   |
|-------------------------------------------|--------|---------------------------------------------------------|--------------------|--------|-----------------------------------------------------------|--------|--------------------------------------------------------|--------|--------|----------------------------------------------------------|--------|
|                                           |   |                                                         |                    |   |                                                      |        |                                                        |   |        |                                                          |   |   |  |  |   |
| Service cost                              |   | $                                                       | 499                |   |                                                      | $      | 466                                                    |   | $      | 1,498                                                    |   |   | $ | 1,444 |   |
| Interest cost                             |   |                                                    | 684                |   |                                                      |   | 2,734                                                  |   |   | 2,052                                                    |   |   |   | 8,411 |   |
| Net amortization of unrecognized:         |   |                                                    |               |   |                                                      |   |                                                   |   |   |                                                     |   |   |   |   |   |
| Prior service cost                        |   |                                                    | —   |   |                                                      |   | (259                                                   | )      |   | —                                         |   |   |   | (775 | ) |
| Plan net losses                           |   |                                                    | —   |   |                                                      |   | 793                                                    |   |   | —                                         |   |   |   | 2,692 |   |
|                                      |   |                                                         |                    |   |                                                      |        |                                                        |   |        |                                                          |   |   |  |  |   |
| Net periodic postretirement benefits cost |   | $                                                       | 1,183              |   |                                                      | $      | 3,734                                                  |   | $      | 3,550                                                    |   |   | $ | 11,772 |   |
|                                      |   |                                                         |                    |   |                                                      |        |                                                        |   |        |                                                          |   |   |  |  |   |

**10.     Commitments and contingencies**

As a result of the enhanced compliance processes implemented by us shortly prior to and following the Acquisition, we have recently discovered that our Brazilian subsidiary engaged in a number of transactions that resulted in steam turbine parts and services being provided to Moa Nickel S.A., a Cuban mining company jointly owned by the Government of Cuba and Sherritt International Corp., a Canadian company.  Our revenues from these transactions were approximately $4 million in the aggregate since December, 1999, when we acquired a controlling interest in the Brazilian subsidiary.  This amount represents approximately 0.08% of our consolidated revenues from 2000 through September 30, 2005.  Of the $4 million, approximately $2.5 million in revenues were in connection with the sale of a spare part ordered in October, 2003, which was delivered and installed in Cuba, with the assistance of non-U.S. employees of our Brazilian subsidiary, in May,2005.  When these transactions came to our attention, we instructed our Brazilian subsidiary in July, 2005, to cease dealings with Cuba.  These transactions were apparently in violation of the U.S. Treasury Department’s Office of Foreign Assets Control’s regulations with respect to Cuba.  We have informed the U.S. Treasury Department of these matters and are currently engaged in preliminary discussions with the Department.  Our inquiry into these transactions is continuing and the Department’s review of this matter is in a very preliminary stage.  Cuba is subject to economic sanctions administered by the U.S. Treasury Department’s Office of Foreign Assets Control, and is identified by the U.S. State Department as a terrorist-sponsoring state.  To the extent we violated any regulations with respect to Cuba or the Department determines that other violations have occurred, we will be subject to fines or other sanctions, including possible criminalpenalties, with related business consequences.  We do not expect these matters to have a material adverse effect on our financial results, cash flow or liquidity.  In addition, the Department’s investigation into our activities with respect to Cuba may result in additional scrutiny of our activities with respect to other countries that are the subject of sanctions.

Page 10 of 30

----

DRESSER-RAND GROUP INC. NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS – (Continued)

We are involved in various litigation, claims and administrative proceedings, including environmental matters, arising in the normal course of business. Amounts recorded for identified contingent liabilities are estimates, which are regularly reviewed and adjusted to reflect additional information when it becomes available.  Subject to the uncertainties inherent in estimating future costs for contingent liabilities, management believes that any future adjustments to recorded amounts, with respect to these currently known contingencies, would not have a material effect on the financial condition, results of operations, liquidity or cash flows of the Company or Predecessor for any year. 

In connection with the Acquisition, the Equity Purchase Agreement provides that, with the exception of non-Superfund off-site liabilities and non-asbestos environmental tort claims which have a three year limit for a claim to be filed, I-R will remain responsible without time limitations for known environmental conditions as of the Closing Date that meet certain requirements set forth in the Equity Purchase Agreement. The most important of these requirements is that with regard to environmental contamination, regulatory authorities would be expected to require investigation or remediation if they knew about the contamination.  The Company and I-R have agreed on many, but not all, of the matters for which I-R will remain responsible.  The remaining issues to be resolved are not expected to be material.

In 2002, the Predecessor received $10.0 million of grant funds from the New York Empire State Development Corporation (“ESDC”). The grants were designated to provide resources for workforce development and capital equipment. The Predecessor recorded $8.0 million of these grants as income in other income (expense) and $2.0 million as a reduction in basis of acquired property and equipment in 2002.  The grant vests ratably over a five-year period commencing in 2001 and concluding in 2005, based on certain criteria. Prior to the end of 2003, the Predecessor and ESDC restructured the grant to reflect the then existing business environment that reduced the original $10.0 million to $8.4 million. On the basis of the adjusted grant level, the Predecessor agreed to reimburse ESDC in the amount of $1.6 million, ratably, over a three-year period, beginning in December 2003. The restructured ESDC grant provides, among other conditions, that we meet certainemployment levels at December 31 of each year; otherwise, we could be obligated to reimburse the ESDC a portion of the grant.  Management expects that it will meet the required employment level on December 31, 2005.

**11.     Warranty accruals**

We maintain a product warranty liability that represents estimated future claims for equipment, parts and services covered during a warranty period.  A warranty liability is provided at the time of revenue recognition based on historical experience and adjusted as required.

The following table represents the changes in the product warranty liability:

|                                                 |   | **Nine   Months ended**              |   |
|------------------------------------------------------|--------|--------------------------------------|--------|
|                                                 |   |                                      |   |
| ***(In thousands)***                                 |   | **Successor   September 30,   2005** |   |   | **Predecessor   September 30,   2004** |   |
|                                                      |   |                                      |        |   |   |  |  |   |
| Balance, beginning of   period                       |   | $                                    | 21,078 |   |   | $ | 23,699 |   |
| Provisions   for warranties issued during the period |   |                                 | 9,350  |   |   |   | 6,599 |   |
| Adjustments   to warranties issued in prior periods  |   |                                 | 1,436  |   |   |   | (426 | ) |
| Payments   during the period                         |   |                                 | (9,379 | ) |   |   | (10,850 | ) |
| Translation   adjustments                            |   |                                 | (1,266 | ) |   |   | 960 |   |
|                                                 |   |                                      |        |   |   |  |  |   |
| Balance, end of period                               |   | $                                    | 21,219 |   |   | $ | 19,982 |   |
|                                                 |   |                                      |        |   |   |  |  |   |

Page 11 of 30

----

DRESSER-RAND GROUP INC. NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS – (Continued)

**12.     Other comprehensive (loss) income**

The components of other comprehensive (loss) income are as follows:

| ***(In thousands)***                      |   | **Successor Three   months ended   September 30, 2005** |               |   | **Predecessor Three   months ended   September 30, 2004** |   | **SuccessorNine months   ended   September 30, 2005** |   |   | **Predecessor Nine   months   ended   September 30, 2004** |   |
|-------------------------------------------|--------|---------------------------------------------------------|--------------------|--------|-----------------------------------------------------------|--------|-------------------------------------------------------|--------|--------|------------------------------------------------------------|--------|
|                                           |   |                                                         |                    |   |                                                      |        |                                                       |   |        |                                                            |   |   |  |  |   |
| Net (loss) income                         |   | $                                                       | 10,434             |   |                                                      | $      | 21,052                                                |   | $      | 4,891                                                      |   |   | $ | 37,732 |   |
| Other comprehensive (loss) income:        |   |                                                    |               |   |                                                      |   |                                                  |   |   |                                                       |   |   |   |   |   |
| Change in value of cash   flow hedge      |   |                                                    | —   |   |                                                      |   | 29                                                    |   |   | —                                           |   |   |   | 171 |   |
| Foreign currency   translation adjustment |   |                                                    | (2,560             | )      |                                                      |   | 2,389                                                 |   |   | (27,155                                                    | )      |   |   | 4,394 |   |
|                                      |   |                                                         |                    |   |                                                      |        |                                                       |   |        |                                                            |   |   |  |  |   |
| Comprehensive (loss) income               |   | $                                                       | 7,874              |   |                                                      | $      | 23,470                                                |   | $      | (22,264                                                    | )      |   | $ | 42,297 |   |
|                                      |   |                                                         |                    |   |                                                      |        |                                                       |   |        |                                                            |   |   |  |  |   |

The components of accumulated other comprehensive (loss) income are as follows:

| ***(In thousands)***                            |   | **September 30,   2005** |    | **December 31,   2004** |   |
|-------------------------------------------------|--------|--------------------------|---------|-------------------------|--------|
|                                                 |   |                          |         |                    |        |  |   |
|                                            |   | **(unaudited)**          |    |                    |   |   |
| Minimum pension liability                       |   | $                        | (922    | )                       | $      | (922 | ) |
| Foreign currency   translation adjustment       |   |                     | (17,749 | )                       |   | 9,406 |   |
|                                            |   |                          |         |                    |        |  |   |
| Accumulated other   comprehensive (loss) income |   | $                        | (18,671 | )                       | $      | 8,484 |   |
|                                            |   |                          |         |                    |        |  |   |

Page 12 of 30

----

DRESSER-RAND GROUP INC. NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS – (Continued)

**13.     Segment information:**

We have two reportable segments based on the engineering and production processes, and the products and services provided by each segment as follows:

| 1)     | New Units   are highly engineered solutions to new customer requests. The segment   includes engineering, manufacturing, sales and administrative support.                                                           |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                 |
| 2)     | Aftermarket   Parts and Services consist of aftermarket support solutions for the existing   population of installed equipment. The segment includes engineering,   manufacturing, sales and administrative support. |

Unallocable amounts represent expenses and assets that cannot be assigned directly to either reportable segment because of their nature.  Unallocable expenses included Ingersoll-Rand corporate allocations (Predecessor), corporate expenses (Successor), research and development expenses, and restructuring charges.  Assets that are directly assigned to the two reportable segments include trade accounts receivable, net inventories, and goodwill.  Unallocable assets include cash, prepaid expenses, deferred taxes, property, plant and equipment, and intangibles.

| ***(In thousands)***                |   |   | **SuccessorThree monthsendedSeptember 30, 2005** |   |   |   | **PredecessorThree monthsendedSeptember 30, 2004** |   |   | **SuccessorNine monthsendedSeptember 30, 2005** |   |   |   | **PredecessorNine monthsendedSeptember 30, 2004** |   |
|-------------------------------------|--------|--------|--------------------------------------------------|--------|--------|--------|----------------------------------------------------|--------|--------|-------------------------------------------------|--------|--------|--------|---------------------------------------------------|--------|
|                                     |   |        |                                                  |   |   |        |                                                    |   |        |                                                 |   |   |        |                                                   |   |
| **Sales**                           |   |   |                                             |   |   |   |                                               |   |   |                                            |   |   |   |                                              |   |
| New   units                         |   | $      | 162,587                                          |   |   | $      | 85,913                                             |   | $      | 399,044                                         |   |   | $      | 256,590                                           |   |
| Aftermarket   parts and services    |   |   | 147,172                                          |   |   |   | 131,350                                            |   |   | 447,193                                         |   |   |   | 400,904                                           |   |
|                                |   |        |                                                  |   |   |        |                                                    |   |        |                                                 |   |   |        |                                                   |   |
| Total                               |   | $      | 309,759                                          |   |   | $      | 217,263                                            |   | $      | 846,237                                         |   |   | $      | 657,494                                           |   |
|                                |   |        |                                                  |   |   |        |                                                    |   |        |                                                 |   |   |        |                                                   |   |
| **Operating   Income**              |   |   |                                             |   |   |   |                                               |   |   |                                            |   |   |   |                                              |   |
| New   units                         |   | $      | 8,342                                            |   |   | $      | 345                                                |   | $      | 4,713                                           |   |   | $      | 2,007                                             |   |
| Aftermarket   parts and services    |   |   | 38,417                                           |   |   |   | 29,788                                             |   |   | 93,197                                          |   |   |   | 72,858                                            |   |
| Unallocable                         |   |   | (10,917                                          | )      |   |   | (7,653                                             | )      |   | (32,594                                         | )      |   |   | (31,767                                           | )      |
|                                |   |        |                                                  |   |   |        |                                                    |   |        |                                                 |   |   |        |                                                   |   |
| Total                               |   | $      | 35,842                                           |   |   | $      | 22,480                                             |   | $      | 65,316                                          |   |   | $      | 43,098                                            |   |
|                                |   |        |                                                  |   |   |        |                                                    |   |        |                                                 |   |   |        |                                                   |   |
| **Depreciation   and Amortization** |   |   |                                             |   |   |   |                                               |   |   |                                            |   |   |   |                                              |   |
| New   units                         |   | $      | 7,799                                            |   |   | $      | 2,717                                              |   | $      | 22,499                                          |   |   | $      | 8,438                                             |   |
| Aftermarket   parts and services    |   |   | 6,636                                            |   |   |   | 3,594                                              |   |   | 25,546                                          |   |   |   | 11,846                                            |   |
|                                |   |        |                                                  |   |   |        |                                                    |   |        |                                                 |   |   |        |                                                   |   |
| Total                               |   | $      | 14,435                                           |   |   | $      | 6,311                                              |   | $      | 48,045                                          |   |   | $      | 20,284                                            |   |
|                                |   |        |                                                  |   |   |        |                                                    |   |        |                                                 |   |   |        |                                                   |   |
| **Total   Assets**                  |   |   |                                             |   |   |   |                                               |   |   |                                            |   |   |   |                                              |   |
| New   units                         |   | $      | 249,075                                          |   |   |   |                                               |   | $      | 249,075                                         |   |   |   |                                              |   |
| Aftermarket   parts and services    |   |   | 529,025                                          |   |   |   |                                               |   |   | 529,025                                         |   |   |   |                                              |   |
| Unallocable                         |   |   | 882,273                                          |   |   |   |                                               |   |   | 882,273                                         |   |   |   |                                              |   |
|                                |   |        |                                                  |   |   |   |                                               |   |        |                                                 |   |   |   |                                              |   |
| Total                               |   | $      | 1,660,373                                        |   |   |   |                                               |   | $      | 1,660,373                                       |   |   |   |                                              |   |
|                                |   |        |                                                  |   |   |   |                                               |   |        |                                                 |   |   |   |                                              |   |

Page 13 of 30

----

DRESSER-RAND GROUP INC. NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS – (Continued)

**14.     Stockholders’ equity:**

Changes in stockholders’ equity for nine months ended September 30, 2005, were:

| **(In thousands)**                  |   | **Common   Stock** |   | **Additional   Paid-in Capital** |   | **Retained   Earnings** |   | **Accumulated   Other   Comprehensive   (Loss)** |   | **Total** |   |
|-------------------------------------|--------|--------------------|--------|----------------------------------|--------|-------------------------|--------|--------------------------------------------------|--------|-----------|--------|
|                                     |   |                    |   |                                  |   |                         |   |                                                  |   |           |   |
| Balances at December 31,   2004     |   | $                  | 542    |                             | $      | 436,642                 |   | $                                                | 7,229  |      | $      | 8,484 |   | $ | 452,897 |   |
| Net income                          |   |               |   |                             |   |                    |   |                                             | 4,891  |      |   |   |   |   | 4,891 |   |
| Stock-based employee   compensation |   |               | 2      |                             |   | 4,655                   |   |                                             |   |      |   |   |   |   | 4,657 |   |
| Currency translation                |   |               |   |                             |   |                    |   |                                             |   |      |   | (27,155 | ) |   | (27,155 | ) |
| IPO net proceeds                    |   |               | 310    |                             |   | 608,615                 |   |                                             |   |      |   |   |   |   | 608,925 |   |
| Cash dividends                      |   |               |   |                             |   | (557,686                | )      |                                             |   |      |   |   |   |   | (557,686 | ) |
|                                |   |                    |        |                             |        |                         |   |                                                  |        |      |        |  |   |  |  |   |
| Balances at September 30,   2005    |   | $                  | 854    |                             | $      | 492,226                 |   | $                                                | 12,120 |      | $      | (18,671 | ) | $ | 486,529 |   |
|                                |   |                    |        |                             |        |                         |   |                                                  |        |      |        |  |   |  |  |   |

**15.     Changes in existing financing arrangements:**

On August 26, 2005, we increased the availability under the revolving credit portion of our senior credit facility from $300 million to $350 million.

Page 14 of 30

----

DRESSER-RAND GROUP INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION  AND RESULTS OF OPERATIONS – (Continued)

| **ITEM 2.** | **MANAGEMENT’S   DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS** |
|-------------|--------------------------------------------------------------------------------------------------|

**Overview**

We are a global supplier of rotating equipment solutions to the worldwide oil, gas, petrochemical and industrial process industries. Our segments are new units and aftermarket parts and services. Our services and products are used for a range of applications, including oil and gas production, refinery processes, natural gas processing, pipelines, petrochemical production, high-pressure field injection and enhanced oil recovery. We also serve general industrial markets including paper, steel, sugar, distributed power and government markets. 

We operate globally with manufacturing facilities in the United States, France, Germany, Norway, India and Brazil, and have 24 service and support centers worldwide. We have sales and services locations in all of the major international energy markets and established coverage of 105 countries.

***New Units***.  We manufacture highly-engineered turbo and reciprocating compression equipment and steam turbines. Our products are custom-designed to client specifications for long-life, critical applications.     

***Aftermarket Parts and Services***.  We offer a range of aftermarket parts and services, including installation, maintenance, monitoring, operation, repairs, overhauls and upgrades. With a typical operating life of 30 years or more, rotating equipment requires substantial aftermarket parts and services over its operating life. The cumulative revenues from these aftermarket activities often significantly exceed the initial purchase price of a new unit. 

**Results of Operations**

***Three months ended September 30, 2005—Successor compared to three months ended September 30, 2004—Predecessor***

|                                  |   | **Successor**                               |   |   | **Predecessor**                             |   | **Period to Period   Change** |   |
|---------------------------------------|--------|---------------------------------------------|--------|--------|---------------------------------------------|--------|-------------------------------|--------|
|                                  |   |                                             |   |   |                                             |   |                               |   |
| ***(In thousands)***                  |   | **Three Months Ended   September 30, 2005** |   |   | **Three Months Ended   September 30, 2004** |   | **2004 to   2005**            |   | **Change** |   |
|                                       |   |                                             |   |   |                                             |   |                               |   |  |   |
| **Statement   of Operations Data:**   |   |                                        |   |   |                                        |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Sales, net                            |   | $                                           | 309.8  |   |                                        | 100.0  | %                             |   | $ | 217.3 |   |   | 100.0 | % | $ | 92.5 |   |   | 42.6 | % |
| Cost of goods sold                    |   |                                        | 232.9  |   |                                        | 75.2   | %                             |   |   | 160.2 |   |   | 73.7 | % |   | 72.7 |   |   | 45.4 | % |
|                                  |   |                                             |        |   |                                             |        |                          |   |  |  |   |  |  |   |  |  |   |   |   |   |
| Gross profit                          |   |                                        | 76.9   |   |                                        | 24.8   | %                             |   |   | 57.1 |   |   | 26.3 | % |   | 19.8 |   |   | 34.8 | % |
| Selling and administrative   expenses |   |                                        | 39.8   |   |                                        | 12.8   | %                             |   |   | 33.0 |   |   | 15.3 | % |   | 6.8 |   |   | 20.7 | % |
| Research and development   expenses   |   |                                        | 1.2    |   |                                        | 0.4    | %                             |   |   | 1.6 |   |   | 0.7 | % |   | (0.4 | ) |   | (22.1 | )% |
|                                  |   |                                             |        |   |                                             |        |                          |   |  |  |   |  |  |   |  |  |   |   |   |   |
| Operating income                      |   |                                        | 35.8   |   |                                        | 11.6   | %                             |   |   | 22.5 |   |   | 10.3 | % |   | 13.3 |   |   | 59.4 | % |
| Interest (expense) income,   net      |   |                                        | (14.9  | )      |                                        | (4.9   | )%                            |   |   | 1.2 |   |   | 0.6 | % |   | (16.1 | ) |   | N/M |   |
| Other (expense), net                  |   |                                        | (4.7   | )      |                                        | (1.5   | )%                            |   |   | (0.1 | ) |   | 0.0 | % |   | (4.6 | ) |   | N/M |   |
|                                  |   |                                             |        |   |                                             |        |                          |   |  |  |   |  |  |   |  |  |   |   |   |   |
| Income (loss) before income   taxes   |   |                                        | 16.2   |   |                                        | 5.2    | %                             |   |   | 23.6 |   |   | 10.9 | % |   | (7.4 | ) |   | (31.3 | )% |
| Provision for income taxes            |   |                                        | 5.8    |   |                                        | 1.8    | %                             |   |   | 2.5 |   |   | 1.2 | % |   | 3.3 |   |   | 127.1 | % |
|                                  |   |                                             |        |   |                                             |        |                          |   |  |  |   |  |  |   |  |  |   |   |   |   |
| Net income                            |   | $                                           | 10.4   |   |                                        | 3.4    | %                             |   | $ | 21.1 |   |   | 9.7 | % | $ | (10.7 | ) |   | (50.4 | )% |
|                                  |   |                                             |        |   |                                             |        |                          |   |  |  |   |  |  |   |  |  |   |   |   |   |

Page 15 of 30

----

DRESSER-RAND GROUP INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION  AND RESULTS OF OPERATIONS – (Continued)

There were significant differences in the basis of financial reporting between the Successor and Predecessor periods as a result of the Acquisition on October 29, 2004, and the resultant application of purchase accounting to the assets and liabilities acquired.

***Sales****.* The worldwide market demand for oil and gas products continues to increase in 2005 which has increased the demand for our products and services. Total sales increased by $92.5 million, or 42.6% for the three months ended September 30, 2005, compared to the same period in 2004.  Our backlog increased 48.9% at September 30, 2005, compared to September 30, 2004.  

***Cost of goods sold****.*  As a percentage of sales, cost of goods sold increased slightly to 75.2% for the three months ended September 30, 2005, from 73.7% for the same period in 2004. Cost of goods sold increased due to volume and mix by $8.1 million from costs related to purchase accounting which were recognized during the third quarter of 2005, reflecting additional depreciation and amortization. 

***Selling and administrative expenses****.*  Selling and administrative expenses increased by $6.8 million for the three months ended September 30, 2005, from the same period in 2004, but decreased as a percentage of sales. Establishing corporate functions for the stand alone company was the principal cause of a $5.7 million direct increase in expenses during the third quarter of 2005 compared to $2.2 million of administrative expenses allocated to us from Ingersoll-Rand during the third quarter of 2004.  An additional $1.7 million of increases were the result of the consolidation of TES and expenses related to the acquisition.

***Research and development****.*  Research and development expenses for the three months ended September 30, 2005, and 2004 were $1.2 million and $1.6 million, respectively. 

***Operating income****. *Improved volume along with productivity improvements were the principal causes of the increase in operating income of $13.3 million to $35.8 million for the three months ended September 30, 2005, from $22.5 million for the same period in 2004. 

***Interest (expense) income, net***.  Interest expense was $14.9 million for the three months ended September 30, 2005, compared to interest income of $1.2 million for the same period in 2004.  The difference was primarily from interest on the outstanding principal of the senior secured credit facility and the senior subordinated notes issued in connection with the Acquisition.  The 2005 period also included $2.8 million additional amortization of deferred financing fees related to the accelerated payment of long-term debt during the period.  We were obligated to use commercially reasonable efforts to register the notes under the Securities Act and consummate an exchange offer no later than August 25, 2005.  We were unable to register the notes by that date.  Accordingly, the annual interest on the notes increased by (1) .25% for the first 90 days following August 25, 2005, increasing our interest expense by about$90,000 during the three months ended September 30, 2005, and (2) will increase by .25% at the beginning of each subsequent 90-day period, up to a maximum of 1% until all such registration defaults are cured.  We will now be required to incorporate financial information through September 30, 2005, into any registration statement filed with the Securities and Exchange Commission.

***Early redemption premium on debt.***  We used a portion of the proceeds from our initial public offering to prepay $50 million of our notes incurring a premium payment of $3.7 million.

***Provision for income taxes****.*  Provision for income taxes for the three months ended September 30, 2005, resulted from the difference between the provision for income tax required for the nine months ended September 30, 2005, and that recorded for the six months ended June 30, 2005.  The provision results in an effective tax rate that differs from the U.S. Federal statutory rate of 35% principally because of current and forecasted net operating losses in certain tax jurisdictions.  As a result, we have provided a valuation allowance for that deferred tax asset on the basis that it is more likely than not that we will not realize that asset.  The effective tax rate for the three months ended September 30, 2004, differs from the U.S. Federal statutory rate of 35% primarily because the Predecessor period reflected the non-taxable partnership structure in existence for most of the domestic operations.

***Bookings and backlog****.* Bookings represent the value of firm orders placed during the three months ended September 30, 2005, whether or not filled. Backlog as of any date represents the firm orders left unfilled as of that date. Bookings during this third quarter of 2005 were $288.9 million, slightly lower than the $289.0 million in bookings for the period in 2004. The backlog at September 30, 2005, was $872.8 million compared to $586.2 million at September 30, 2004, a 48.9% increase. This increase is attributable to increased demand in the new units segment.

Page 16 of 30

----

DRESSER-RAND GROUP INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION  AND RESULTS OF OPERATIONS – (Continued)

***Segment Analysis - three months ended September 30, 2005—Successor compared to three months ended September 30, 2004—Predecessor***

|                             |   | **Successor**                               |   |   | **Predecessor**                               |   | **Period to Period   Change** |   |
|----------------------------------|--------|---------------------------------------------|--------|--------|-----------------------------------------------|--------|-------------------------------|--------|
|                             |   |                                             |   |   |                                               |   |                               |   |
| ***(In thousands)***             |   | **Three Months Ended   September 30, 2005** |   |   | **Three Months   Ended September   30, 2004** |   | **2004 to   2005**            |   | **Change** |   |
|                                  |   |                                             |   |   |                                               |   |                               |   |  |   |
| **Sales, net**                   |   |                                        |   |   |                                          |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| New   units                      |   | $                                           | 162.6  |   |                                          | 52.5   | %                             |   | $ | 85.9 |   |   | 39.5 | % | $ | 76.7 |   |   | 89.2 | % |
| Aftermarket   parts and services |   |                                        | 147.2  |   |                                          | 47.5   | %                             |   |   | 131.4 |   |   | 60.5 | % |   | 15.8 |   |   | 12.0 | % |
|                             |   |                                             |        |   |                                               |        |                          |   |  |  |   |  |  |   |  |  |   |   |   |   |
|                             |   | $                                           | 309.8  |   |                                          | 100.0  | %                             |   | $ | 217.3 |   |   | 100.0 | % | $ | 92.5 |   |   | 42.6 | % |
|                             |   |                                             |        |   |                                               |        |                          |   |  |  |   |  |  |   |  |  |   |   |   |   |
| **Gross   Profit**               |   |                                        |   |   |                                          |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| New   units                      |   | $                                           | 21.5   |   |                                          |   |                          |   | $ | 10.5 |   |   |   |   | $ | 11.0 |   |   | 103.8 | % |
| Aftermarket   parts and services |   |                                        | 55.4   |   |                                          |   |                          |   |   | 46.6 |   |   |   |   |   | 8.8 |   |   | 19.1 | % |
|                             |   |                                             |        |   |                                          |   |                          |   |  |  |   |   |   |   |  |  |   |   |   |   |
| Total   gross profit             |   | $                                           | 76.9   |   |                                          |   |                          |   | $ | 57.1 |   |   |   |   | $ | 19.8 |   |   | 34.8 | % |
|                             |   |                                             |        |   |                                          |   |                          |   |  |  |   |   |   |   |  |  |   |   |   |   |
| **Operating   Income**           |   |                                        |   |   |                                          |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| New   units                      |   | $                                           | 8.3    |   |                                          |   |                          |   | $ | 0.3 |   |   |   |   | $ | 8.0 |   |   | N/M |   |
| Aftermarket   parts and services |   |                                        | 38.4   |   |                                          |   |                          |   |   | 29.8 |   |   |   |   |   | 8.6 |   |   | 29.0 | % |
| Unallocated   corporate expense  |   |                                        | (10.9  | )      |                                          |   |                          |   |   | (7.6 | ) |   |   |   |   | (3.3 | ) |   | 42.6 | % |
|                             |   |                                             |        |   |                                          |   |                          |   |  |  |   |   |   |   |  |  |   |   |   |   |
| Total operating income           |   | $                                           | 35.8   |   |                                          |   |                          |   | $ | 22.5 |   |   |   |   | $ | 13.3 |   |   | 59.4 | % |
|                             |   |                                             |        |   |                                          |   |                          |   |  |  |   |   |   |   |  |  |   |   |   |   |

**New Units**

***Sales****.*  Sales in the segment increased $76.7 million for the three months ended September 30, 2005, compared to the same period in 2004. The increase is primarily attributable to higher backlog coming into the period, as orders typically have lead times from as little as three months to over twelve months depending on the complexity of the configuration. 

***Gross profit****.*  Gross profit increased by $11.0 million for the three months ended September 30, 2005, compared to the same period in 2004.  As a percentage of segment revenues, gross profit increased slightly to 13.2% for the period in 2005 from 12.3% for the same period in 2004. The increase was primarily due to margins on buyouts and a reduction in costs primarily due to improved direct labor and engineering absorption, no severance costs in 2005 and a reduction in the provisions for obsolete and slow moving inventory.  Gross profit increases were offset by additional depreciation and amortization from purchase accounting recognized in the third quarter of 2005. 

***Operating income****.* Operating income increased by $8.0 million for the three months ended September 30, 2005, compared to the same period in 2004. This increase is attributable to the $ 11.0 million change in gross profit mentioned above reduced by a $3.0 million increase in the allocation of selling and administrative expenses due to the increase in sales. 

***Bookings and backlog****.*  Bookings for the three months ended September 30, 2005, were $121.3 million, 16.0% below the bookings for the same period in 2004. The decline is attributable to a very large order booked in 2004.  The backlog at September 30, 2005, was $687.3 million, or 64.5% above the $417.8 million backlog at September 30, 2004. This increase is attributable to increased worldwide demand.

**Aftermarket Parts and Services**

***Sales****.*  Sales increased by $15.8 million, or 12.0%, for the three months ended September 30, 2005, compared to the same period in 2004 primarily from higher parts sales.

Page 17 of 30

----

DRESSER-RAND GROUP INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION  AND RESULTS OF OPERATIONS – (Continued)

***Gross profit****.*  Gross profit increased by $8.8 million for the three months ended September 30, 2005, compared to the same period in 2004 as a result of the increases in sales. As a percentage of sales, gross profit increased to 37.6% for the three months ended September 30, 2005, from 35.4% for the same period in 2004, as a result of reduced allocations of costs and expenses due to the stronger growth in new unit sales.

***Operating income****.*  Operating income increased by $8.6 million, or 29.0% for the three months ended September 30, 2005, compared to the same period in 2004.  This increase is mainly attributable to the change in gross profit mentioned above. 

***Bookings and backlog****.*  Bookings for the three months ended September 30, 2005, were $167.6 million, 16.0% above bookings for the same period in 2004.  Backlog at September 30, 2005, was $185.5 million, or 10.2% above the $168.4 million backlog at September 30, 2004. 

***Nine months ended September 30, 2005—Successor compared to nine months ended September 30, 2004—Predecessor***

|                                   |   | **Successor**                              |   |   | **Predecessor**                            |   | **Period to   Period   Change** |   |
|----------------------------------------|--------|--------------------------------------------|--------|--------|--------------------------------------------|--------|---------------------------------|--------|
|                                   |   |                                            |   |   |                                            |   |                                 |   |
| ***(In thousands)***                   |   | **Nine Months Ended   September 30, 2005** |   |   | **Nine Months Ended   September 30, 2004** |   | **2004 to2005**                 |   | **Change** |   |
|                                        |   |                                            |   |   |                                            |   |                                 |   |  |   |
| **Statement   of Operations Data:**    |   |                                       |   |   |                                       |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Sales, net                             |   | $                                          | 846.2  |   |                                       | 100.0  | %                               |   | $ | 657.5 |   |   | 100.0 | % | $ | 188.7 |   |   | 28.7 | % |
| Cost of goods sold                     |   |                                       | 657.8  |   |                                       | 77.7   | %                               |   |   | 499.2 |   |   | 75.9 | % |   | 158.6 |   |   | 31.8 | % |
|                                   |   |                                            |        |   |                                            |        |                            |   |  |  |   |  |  |   |  |  |   |   |   |   |
| Gross profit                           |   |                                       | 188.4  |   |                                       | 22.3   | %                               |   |   | 158.3 |   |   | 24.1 | % |   | 30.1 |   |   | 19.0 | % |
| Selling and administrative   expenses  |   |                                       | 118.3  |   |                                       | 14.0   | %                               |   |   | 110.5 |   |   | 16.8 | % |   | 7.8 |   |   | 7.1 | % |
| Research and development   expenses    |   |                                       | 4.7    |   |                                       | 0.6    | %                               |   |   | 4.7 |   |   | 0.7 | % |   | 0.0 |   |   | 1.1 | % |
|                                   |   |                                            |        |   |                                            |        |                            |   |  |  |   |  |  |   |  |  |   |   |   |   |
| Operating income                       |   |                                       | 65.3   |   |                                       | 7.7    | %                               |   |   | 43.1 |   |   | 6.6 | % |   | 22.2 |   |   | 51.6 | % |
| Interest (expense) income,   net       |   |                                       | (44.6  | )      |                                       | (5.3   | )%                              |   |   | 2.4 |   |   | 0.3 | % |   | (47.0 | ) |   | N/M |   |
| Other income (expense), net            |   |                                       | (5.2   | )      |                                       | (0.6   | )%                              |   |   | (2.8 | ) |   | (0.4 | )% |   | (2.4 | ) |   | 90.5 | % |
|                                   |   |                                            |        |   |                                            |        |                            |   |  |  |   |  |  |   |  |  |   |   |   |   |
| Income (loss) before income   taxes    |   |                                       | 15.5   |   |                                       | 1.8    | %                               |   |   | 42.7 |   |   | 6.5 | % |   | (27.2 | ) |   | (63.8 | )% |
| (Benefit) Provision for   income taxes |   |                                       | 10.6   |   |                                       | 1.2    | %                               |   |   | 5.0 |   |   | 0.8 | % |   | 5.6 |   |   | 114.7 | % |
|                                   |   |                                            |        |   |                                            |        |                            |   |  |  |   |  |  |   |  |  |   |   |   |   |
| Net income                             |   | $                                          | 4.9    |   |                                       | 0.6    | %                               |   | $ | 37.7 |   |   | 5.7 | % | $ | (32.8 | ) |   | (87.0 | )% |
|                                   |   |                                            |        |   |                                            |        |                            |   |  |  |   |  |  |   |  |  |   |   |   |   |

***Sales****.*  The demand for oil and gas products continues to increase in 2005 driving strong demand for our products and services. Total sales increased by $188.7 million, or 28.7% for the nine months ended September 30, 2005, compared to the same period in 2004. Our backlog at December 31, 2004, increased 51.8% compared to December 31, 2003, which contributed to increased sales during this 2005 period.

***Cost of goods sold****.*  As a percentage of sales, cost of goods sold increased to 77.7% for the nine months ended September 30, 2005, from 75.9% for the same period in 2004. Cost of goods sold increased by $34.4 million for adjustments related to purchase accounting which were recognized during 2005, reflecting additional depreciation and amortization and the purchase accounting value of inventory sold. 

***Selling and administrative expenses****.*  Selling and administrative expenses increased by $7.8 million for the nine months ended September 30, 2005, from the same period in 2004, but decreased as a percentage of sales. Establishing corporate functions for the stand-alone company was the principal cause of a $14.8 million direct increase in expenses during the nine months ended September 30, 2005, compared to $14.6 million of administrative expenses allocated to us from Ingersoll-Rand during the period 2004.  Third party commissions increased $1.2 million over 2004 due to the increase in sales.  An additional $1.7 million of increases were the result of the consolidation of TES and expenses related to the acquisition.  Other costs increased to support current and future growth.

***Research and development****.*  Research and development expenses for the nine months ended September 30, 2005, and 2004 were $4.7 million and $4.7 million, respectively. 

Page 18 of 30

----

DRESSER-RAND GROUP INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION  AND RESULTS OF OPERATIONS – (Continued)

***Operating income****.*  Operating income increased by $22.2 million to $65.3 million for the nine months ended September 30, 2005, from $43.1 million for the same period in 2004 primarily attributable to the factors discussed above regarding increased sales and gross profit partially offset by high selling and administrative expenses.

***Interest (expense) income, net****.*  Interest expense was $44.6 million for the nine months ended September 30, 2005, compared to interest income of $2.4 million for the same period in 2004.  The difference was primarily from interest on the outstanding principal of the senior secured credit facility and senior subordinated notes issued in connection with the Acquisition.  Additionally, we are obligated to use commercially reasonable efforts to register the notes under the Securities Act and consummate an exchange offer no later than August 25, 2005.  We were not able to register the notes by that date.  Accordingly, the annual interest on the notes increased by (1) .25% for the first 90 days following August 25, 2005, increasing our interest expense by about $90 thousand during the nine months ended September 30, 2005, and (2) will increase by .25% at the beginning of each subsequent 90-day period, up to a maximumof 1% until all such registration defaults are cured. We will now be required to incorporate financial information through September 30, 2005, into any registration statement filed with the Securities and Exchange Commission. 

***Early redemption premium on debt.***  We used a portion of the proceeds from our initial public offering to prepay $50 million of our notes incurring a premium payment of $3.7 million.

***Provision for income taxes****.*  Provision for income taxes for the nine months ended September 30, 2005, was $10.6 million and results in an effective tax rate that differs from the U.S. Federal statutory rate of 35% principally because of current and forecasted net operating losses in certain tax jurisdictions.  As a result, we have provided a valuation allowance for that deferred tax asset on the basis that it is more likely than not that we will not realize that asset.  The effective tax rate for the nine months ended September 30, 2004, differs from the U.S. Federal statutory rate of 35% primarily because the Predecessor period reflected the non-taxable partnership structure in existence for most of the domestic operations.

***Bookings and backlog****.*  Bookings during the nine months ended September 30, 2005, were $1,036.0 million, 26.6% higher than the $818.2 million in bookings for the period in 2004.   The backlog at September 30, 2005, was $872.8 million, or 48.9% above the $586.2 million backlog at September 30, 2004.  The increase is attributable to increased worldwide demand in the new units segment.

Page 19 of 30

----

DRESSER-RAND GROUP INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION  AND RESULTS OF OPERATIONS – (Continued)

***Segment Analysis - nine months ended September 30, 2005—Successor compared to nine months ended September 30, 2004—Predecessor***

|                                  |        | **Successor**                             |        |   | **Predecessor**                           |        | **Period to Period  Change** |   |
|----------------------------------|--------|-------------------------------------------|--------|--------|-------------------------------------------|--------|------------------------------|--------|
|                             |   |                                           |   |   |                                           |   |                              |   |
| ***(In thousands)***             |   | **Nine Months Ended  September 30, 2005** |        |   | **Nine Months Ended  September 30, 2004** |        | **2004 to  2005**            |        | **Change** |   |
|                                  |   |                                           |   |   |                                           |   |                              |   |  |   |
| **Sales, net**                   |   |                                      |   |   |                                      |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| New   units                      |   | $                                         | 399.0  |   |                                      | 47.2   | %                            |   | $ | 256.6 |   |   | 39.0 | % | $ | 142.4 |   |   | 55.5 | % |
| Aftermarket   parts and services |   |                                      | 447.2  |   |                                      | 52.8   | %                            |   |   | 400.9 |   |   | 61.0 | % |   | 46.3 |   |   | 11.5 | % |
|                             |   |                                           |        |   |                                           |        |                         |   |  |  |   |  |  |   |  |  |   |   |   |   |
|                             |   | $                                         | 846.2  |   |                                      | 100.0  | %                            |   | $ | 657.5 |   |   | 100.0 | % | $ | 188.7 |   |   | 28.7 | % |
|                             |   |                                           |        |   |                                           |        |                         |   |  |  |   |  |  |   |  |  |   |   |   |   |
| **Gross Profit**                 |   |                                      |   |   |                                      |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| New   units                      |   | $                                         | 40.4   |   |                                      |   |                         |   | $ | 31.7 |   |   |   |   | $ | 8.7 |   |   | 27.4 | % |
| Aftermarket   parts and services |   |                                      | 148.0  |   |                                      |   |                         |   |   | 126.6 |   |   |   |   |   | 21.4 |   |   | 16.9 | % |
|                             |   |                                           |        |   |                                      |   |                         |   |  |  |   |   |   |   |  |  |   |   |   |   |
| Total   gross profit             |   | $                                         | 188.4  |   |                                      |   |                         |   | $ | 158.3 |   |   |   |   | $ | 30.1 |   |   | 19.0 | % |
|                             |   |                                           |        |   |                                      |   |                         |   |  |  |   |   |   |   |  |  |   |   |   |   |
| **Operating   Income**           |   |                                      |   |   |                                      |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| New   units                      |   | $                                         | 4.7    |   |                                      |   |                         |   | $ | 2.0 |   |   |   |   | $ | 2.7 |   |   | 134.8 | % |
| Aftermarket   parts and services |   |                                      | 93.2   |   |                                      |   |                         |   |   | 72.9 |   |   |   |   |   | 20.3 |   |   | 27.9 | % |
| Unallocated   corporate expense  |   |                                      | (32.6  | )      |                                      |   |                         |   |   | (31.8 | ) |   |   |   |   | (0.8 | ) |   | 2.6 | % |
|                             |   |                                           |        |   |                                      |   |                         |   |  |  |   |   |   |   |  |  |   |   |   |   |
| Total operating income           |   | $                                         | 65.3   |   |                                      |   |                         |   | $ | 43.1 |   |   |   |   | $ | 22.2 |   |   | 51.6 | % |
|                             |   |                                           |        |   |                                      |   |                         |   |  |  |   |   |   |   |  |  |   |   |   |   |

**New Units**

***Sales****.*  Sales in the new units segment increased $142.4 million for the nine months ended September 30, 2005, compared to the same period in 2004. The increase is primarily attributable to higher backlog coming into the period, as orders typically have lead times from as little as three months to over twelve months depending on the complexity of the configuration.  Improved new order rates also contributed.  Our operations in North America, France and Norway accounted for most of this increase.  

***Gross profit****.*  Gross profit increased by $8.7 million for the nine months ended September 30, 2005, compared to the same period in 2004.  As a percentage of segment revenues, gross profit decreased to 10.1% for the period in 2005 from 12.4% for the same period in 2004.  The decrease was due to higher allocations including the additional costs related to purchase accounting recognized in the period for higher depreciation and amortization and the purchase accounting value of inventory sold.

***Operating income****.*  Operating income increased by $2.7 million for the nine months ended September 30, 2005, compared to the same period in 2004. This increase is attributable to the $8.7 million increase in gross profit mentioned above, less a $6.0 million increase in the allocation of costs and expenses due to the increase in sales. 

***Bookings****.*  Bookings for the nine months ended September 30, 2005, were $558.3 million, 45.2% higher than the $384.5 million in bookings for the same period in 2004. 

**Aftermarket Parts and Services**

***Sales****.*  Sales increased by $46.3 million, or 11.5%, for the nine months ended September 30, 2005, compared to the same period in 2004 primarily from higher parts sales.

***Gross profit****.*  Gross profit increased by $21.4 million for the nine months ended September 30, 2005, compared to the same period in 2004 as a result of the increases in volume. As a percentage of sales, gross profit increased to 33.1% for the nine months ended September 30, 2005, from 31.6% for the same period in 2004, due to a more favorable product mix from increased parts revenue and lower allocations from stronger growth in new units. 

Page 20 of 30

----

DRESSER-RAND GROUP INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION  AND RESULTS OF OPERATIONS – (Continued)

***Operating income****.*  Operating income increased by $20.3 million, or 27.9% for the nine months ended September 30, 2005, compared to the same period in 2004.  This increase is mainly attributable to the change in gross profit mentioned above.

***Bookings****.*  Bookings for the nine months ended September 30, 2005, were $477.7 million, 10.2% above bookings for the same period in 2004. 

**Liquidity and Capital Resources**

Historically, our primary source of cash has been from operations. Prior to the Acquisition, our Predecessor participated in Ingersoll-Rand’s centralized treasury management system whereby, in certain countries, our Predecessor’s cash receipts were remitted to I-R and I-R funded our Predecessor’s cash disbursements. Our Predecessor’s primary cash disbursements were for capital expenditures and working capital. Following the consummation of the Acquisition, we initially relied upon a transition services agreement with I-R to provide these services until we could establish our own cash management system. As of April 2, 2005, we were no longer reliant upon I-R for any cash management services. 

Net cash provided by operating activities for the nine months ended September 30, 2005, was $222.4 million, compared to $64.5 million for the same period in 2004.  The increase of $157.8 million in net cash provided by operating activities was mainly from a reduction in inventories and an increase in customer advance payments.  Inventories-net declined $13.0 million and customer advance payments increased $75.8 million from December 31, 2004, a result of our increased efforts to collect customer payments in line with or ahead of the costs of inventory work-in-process.  In addition, other current and noncurrent liabilities increased $26.4 million for the nine months ended September 30, 2005, compared to a decrease of $18.9 million for the nine months ended September 30, 2004.  This change over the periods is primarily attributable to accrued interest on new debt and other accruals related to being a stand-alone company compared tobeing a division of I-R.

Net cash used by investing activities for the nine months ended September 30, 2005, was $57.7 million, compared to $1.8 million for the same period in 2004.  Capital expenditures for the nine months ended September 30, 2005, were $10.7 million.  We sold our investment in a partially owned entity in the first quarter of 2005 for $10 million.

On September 8, 2005, we acquired from Tuthill Corporation certain assets of its Tuthill Energy Systems Division (“TES”).  TES is an international manufacturer of single and multi-stage steam turbines and portable ventilators under the Coppus, Murray and Nadrowski brands which complement our steam turbine business.  The current estimated cost of TES is approximately $57.0 million, net of $4.0 million cash acquired, subject to future adjustments for agreement on the final working capital at the closing date and other related matters.  We have preliminarily allocated the cost based on current estimates of the fair value of assets acquired and liabilities assumed as follows (in thousands):

| Accounts receivable                         |   | $      | 13,458 |   |
|---------------------------------------------|--------|--------|--------|--------|
| Inventory – net                        |   |   | 7,690  |   |
| Prepaid expenses and other   current assets |   |   | 208    |   |
|                                        |   |        |        |   |
| Total current assets                        |   |   | 21,356 |   |
| Property, plant and   equipment, net        |   |   | 20,319 |   |
| Intangible assets and   goodwill            |   |   | 28,414 |   |
|                                        |   |        |        |   |
| Total assets acquired                       |   |   | 70,089 |   |
|                                        |   |        |        |   |
|                                        |   |   |   |   |
| Accounts payable and   accruals             |   |   | 10,570 |   |
| Other liabilities                           |   |   | 2,501  |   |
|                                        |   |        |        |   |
| Total liabilities assumed                   |   |   | 13,071 |   |
|                                        |   |        |        |   |
| Cash paid – net                        |   | $      | 57,018 |   |
|                                        |   |        |        |   |

Page 21 of 30

----

DRESSER-RAND GROUP INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION  AND RESULTS OF OPERATIONS – (Continued)

The above amounts are estimates as final appraisals and other required information to determine final cost and assign fair values have not been received.  Also, certain restructuring of operations will be necessary to obtain appropriate synergies in the combined steam turbine business.  Accordingly, the above amounts may be revised when all required information is obtained and the restructuring plan is finalized which is expected to be accomplished during the fourth quarter of 2005.  Pro forma financial information, assuming that TES had been acquired at the beginning of each period for which an income statement is presented, has not been presented because the effect on our results for these periods was not considered material.  TES results have been included in our financial results since September 8, 2005, and were not material to the results of operations for the three months and nine months ended September 30, 2005.

During the third quarter of 2005, we purchased the other 50% of our Multiphase Power and Processing Technologies (MppT) joint venture for a payment of $200,000 and an agreement to pay $300,000 on April 1, 2006, and $425,000 on April 1, 2007.  The net present value of the total consideration is $876,000, bringing our total investment in MppT to $2.9 million at the date of the purchase.  MppT owns patents and technology for inline, compact, gas-liquid scrubbers.

Net cash used in financing activities was $161.1 million for the nine months ended September 30, 2005, related primarily to our initial public offering and payments on long-term debt, compared to $50.8 million for the nine months ended September 30, 2004, related primarily to the impact of the net change in intercompany accounts with I-R. 

On August 10, 2005, we completed our initial public offering of 31,050,000 shares of our common stock for net proceeds of approximately $608.9 million.  On September 12, 2005, we used approximately $55.0 million of the net proceeds to redeem $50.0 million face value amount of our 7-3/8% senior subordinated notes due 2014, including the payment of $3.7 million applicable redemption premium and $1.3 million accrued interest to the redemption date.  Our Board of Directors approved the payment of a dividend on August 11, 2005, of the remaining net proceeds, excluding certain costs, of approximately $557.7 million (10.26 per share) to our stockholders existing immediately prior to the offering, consisting of affiliates of First Reserve Corporation and certain members of senior management.   In addition, we have paid $161.2 million in long-term debt and $2.6 million in short-term debt for a total debt reduction during 2005 of $213.8million.

On August 26, 2005, we increased the availability under the revolving credit portion of our senior credit facility from $300 million to $350 million.  As of September 30, 2005, we had a cash balance of $109.5 million and the ability to borrow $178.7 million under our $350 million senior secured revolving credit facility, as $171.3 million was used for outstanding letters of credit.  Although there can be no assurances, based on our current and anticipated levels of operations and conditions in our markets and industry, we believe that our cash flow from operations, available cash and available borrowings under the senior secured revolving credit facility will be adequate to meet our working capital, capital expenditures, debt service and other funding requirements for the next twelve months and our long-term future contractual obligations. 

**SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS**

**Risk Factors**

Statements included or incorporated by reference in the report may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  The statements may relate to our future prospects, developments and business strategies.  These forward-looking statements relate to analyses and other information that are based upon forecasts of future results and estimates of amounts not determinable which involve a number of risks, uncertainties, and other factors described below and elsewhere in this Form 10-Q and in other documents we file with the SEC from time-to-time, that could cause actual results to differ materially from those stated.  We undertake no obligation to update or revise forward-looking statements which may be made to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events.  These risks, uncertainties and factors include,without limitation:

| • | material   weaknesses in our internal controls;                                                              |
|--------|--------------------------------------------------------------------------------------------------------------|
|   |                                                                                                         |
| • | economic or   industry downturns;                                                                            |
|   |                                                                                                         |
| • | our   inability to implement our business strategy to increase our aftermarket   parts and services revenue; |

Page 22 of 30

----

DRESSER-RAND GROUP INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION  AND RESULTS OF OPERATIONS – (Continued)

| • | competition   in our markets;                                                                                |
|--------|--------------------------------------------------------------------------------------------------------------|
|   |                                                                                                         |
| • | failure to   complete or achieve the expected benefits from any future acquisitions;                         |
|   |                                                                                                         |
| • | economic,   political, currency and other risks associated with our international sales   and operations;    |
|   |                                                                                                         |
| • | loss of our   senior management;                                                                             |
|   |                                                                                                         |
| • | our brand   name may be confused with others;                                                                |
|   |                                                                                                         |
| • | environment   compliance costs and liabilities;                                                              |
|   |                                                                                                         |
| • | failure to   maintain safety performance acceptable to our clients;                                          |
|   |                                                                                                         |
| • | failure to   negotiate new collective bargaining agreements;                                                 |
|   |                                                                                                         |
| • | our ability   to operate as a standalone company;                                                            |
|   |                                                                                                         |
| • | unexpected   product claims or regulations;                                                                  |
|   |                                                                                                         |
| • | infringement   on our intellectual property or our infringement on others’ intellectual   property; and |
|   |                                                                                                         |
| • | other   factors described in this report.                                                                    |

Page 23 of 30

----

DRESSER-RAND GROUP INC. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

| **ITEM 3.** | **QUANTITATIVE AND QUALITATIVE DISCLOSURE   ABOUT MARKET RISK** |
|-------------|-----------------------------------------------------------------|

Our results of operations are affected by fluctuations in the value of local currencies in which we transact business.  We record the effect of translating our non-U.S. subsidiaries’ financial statements into U.S. dollars using exchange rates as they exist at the end of each month.  The effect on our results of operations of fluctuations in currency exchange rates depends on various currency exchange rates and the magnitude of the transactions completed in currencies other than the U.S. dollar. The net foreign currency loss was $1.0 million for the nine months ended September 30, 2005, compared to a net currency loss $1.9 million for the nine months ended September 30, 2004.

We enter into financial instruments to mitigate the impact of changes in currency exchange rates that may result from long-term customer contracts where we deem appropriate.

We have interest rate risk related to the term loan portion of senior secured credit facility as the interest rate on the principal outstanding on the loans is variable.  A 1% increase in the interest rate would have the affect of increasing interest expense by $2.3 million annually, based on the outstanding principal balance at September 30, 2005.

Page 24 of 30

----

DRESSER-RAND GROUP INC. CONTROLS AND PROCEDURES

| **ITEM 4.** | **CONTROLS AND PROCEDURES** |
|-------------|-----------------------------|

The Company’s Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of the Company’s disclosure controls (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of September 30, 2005.

In June 2004, the Public Company Accounting Oversight Board (PCAOB) adopted rules for purposes of implementing Section 404 of the Sarbanes-Oxley Act of 2002, which included revised definitions of material weaknesses and significant deficiencies in internal control over financial reporting. The PCAOB defines a material weakness as “a significant deficiency, or a combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.” The new rules describe certain circumstances as being both significant deficiencies and strong indicators that a material weakness in internal control over financial reporting exists. 

During the transition from a subsidiary of a multinational company to a stand-alone entity, we identified a number of factors leading us to conclude that we have material weaknesses in internal control over financial reporting including the following: 

|   | • | identification   by our auditors of misstatements in internal drafts of our financial   statements that were not initially identified by our internal control   process, indicating a weakness with respect to our ability to properly   monitor and account for non-routine transactions, and to apply GAAP in   transactions subject to new or complex accounting pronouncements;                |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                               |
|   | • | the need for   a Chief Financial Officer with SEC reporting experience, a Director of   Financial Reporting with strong accounting and SEC reporting experience and   additional skilled accounting and SEC experienced personnel to enhance the   accounting department to remedy insufficient experience in public company   accounting and periodic reporting matters among our existing staff; |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                               |
|   | • | the need to   develop a tax department;                                                                                                                                                                                                                                                                                                                                                            |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                               |
|   | • | the need to   develop a risk management department;                                                                                                                                                                                                                                                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                               |
|   | • | the need to   establish an internal audit department; and                                                                                                                                                                                                                                                                                                                                          |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                               |
|   | • | the need to   enhance our documentation of our systems and controls.                                                                                                                                                                                                                                                                                                                               |

We have already taken a number of actions to begin to address the items identified including: 

|   | • | hiring, in   the third quarter of 2005, an Assistant Controller-Director Tax Worldwide                                                                                                                                                                                                    |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                      |
|   | • | hiring an   experienced Chief Financial Officer with broad finance and SEC reporting   experience, a Chief Accounting Officer with significant accounting experience   and SEC reporting experience, a Director of Risk Management, a Director of   Internal Audit and a General Counsel; |
|   |   |                                                                                                                                                                                                                                                                                      |
|   | • | changing the   organizational relationship of the worldwide accounting organization so that   the Controllers of the operating units report directly to our Vice-President,   Controller and Chief Accounting Officer.                                                                    |
|   |   |                                                                                                                                                                                                                                                                                      |
|   | • | engaging   additional outside consultants to assist our personnel with internal audit   work;                                                                                                                                                                                             |
|   |   |                                                                                                                                                                                                                                                                                      |
|   | • | outsourcing   a substantial portion of our tax functions to a professional service firm;   and                                                                                                                                                                                            |
|   |   |                                                                                                                                                                                                                                                                                      |
|   | • | engaging   external resources to supplement our Section 404 evaluation efforts.                                                                                                                                                                                                           |

Page 25 of 30

----

DRESSER-RAND GROUP INC. CONTROLS AND PROCEDURES - Continued

While we have taken actions to address the items identified, additional measures will be necessary and these measures, along with other measures we expect to take to improve our internal control over financial reporting, may not be sufficient to address the issues identified by our independent auditors or ensure that our internal control over financial reporting is effective. In addition, we may in the future identify further material weaknesses or significant deficiencies in our internal control over financial reporting. 

Beginning with the year ending December 31, 2006, pursuant to Section 404 of the Sarbanes-Oxley Act, our management will be required to deliver a report that assesses the effectiveness of our internal control over financial reporting, and our auditors will be required to deliver an attestation report on management’s assessment of and the effectiveness of our internal control over financial reporting. We have substantial effort ahead of us to complete the documentation and testing of our internal control over financial reporting and remediate any additional internal control over financial reporting deficiencies identified in these efforts. We may not be able to complete the required management assessment by our reporting deadline. An inability to complete this assessment would result in receiving something other than an unqualified report from our auditors with respect to our internal control over financial reporting. In addition, if material weaknesses arenot remediated, we would not be able to conclude that our internal control over financial reporting was effective, which would result in the inability of our external auditors to deliver an unqualified report, or any report, on our internal control over financial reporting.

Taking into consideration the previously mentioned material weaknesses in our internal control over financial reporting, our Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were not effective to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms.

There have been no other changes in the Company’s internal control over financial reporting that occurred during the period covered by the report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Page 26 of 30

----

DRESSER-RAND GROUP INC. OTHER INFORMATION – LEGAL PROCEEDINGS

**PART II. – OTHER INFORMATION**

**ITEM 1.  LEGAL PROCEEDINGS**

As a result of the enhanced compliance processes implemented by us shortly prior to and following the Acquisition of the Company from Ingersoll-Rand in October, 2004, we have recently discovered that our Brazilian subsidiary engaged in a number of transactions that resulted in steam turbine parts and services being provided to Moa Nickel S.A., a Cuban mining company jointly owned by the Government of Cuba and Sherritt International Corp., a Canadian company.  Our revenues from these transactions were approximately $4.0 million in the aggregate since December, 1999, when we acquired a controlling interest in the Brazilian subsidiary.  This amount represents approximately 0.08% of our consolidated revenues from 2000 through September 30, 2005.  Of the $4.0 million, approximately $2.5 million in revenues were in connection with the sale of a spare part ordered in October, 2003, which was delivered and installed in Cuba, with the assistance of non-U.S.employees of our Brazilian subsidiary, in May, 2005.  When these transactions came to our attention, we instructed our Brazilian subsidiary in July, 2005, to cease dealings with Cuba.  These transactions were apparently in violation of the U.S. Treasury Department’s Office of Foreign Assets Control’s regulations with respect to Cuba.  We have informed the U.S. Treasury Department of these matters and are currently engaged in preliminary discussions with the Department.  Our inquiry into these transactions is continuing and the Department’s review of this matter is in a very preliminary stage.  Cuba is subject to economic sanctions administered by the U.S. Treasury Department’s Office of Foreign Assets Control, and is identified by the U.S. State Department as a terrorist-sponsoring state.  To the extent we violated any regulations with respect to Cuba or the Department determines that other violations have occurred, we will be subject to fines or othersanctions, including possible criminal penalties, with related business consequences.  We do not expect these matters to have a material adverse effect on our financial results, cash flow or liquidity.  In addition, the Department’s investigation into our activities with respect to Cuba may result in additional scrutiny of our activities with respect to other countries that are the subject of sanctions.

**ITEM 5.  OTHER INFORMATION**

On August 26, 2005, we increased the availability under the revolving credit portion of our senior credit facility from $300 million to $350 million.  In connection with that increase, we entered into agreements in the forms attached as Exhibit 10.2 which Exhibit is incorporated into this Item 5 by reference.

On November 10, the Company issued a press release announcing its 2005 third quarter results and conducted a webcast that included a powerpoint slide presentation.  The press release, transcript of the webcast and powerpoint slide presentation are attached as Exhibit 99.1, 99.2 and 99.3, respectively, all of which are incorporated into this Item 5 by reference.

These exhibits are 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 the registrant specifically incorporated it by reference.

Page 27 of 30

----

DRESSER-RAND GROUP INC. OTHER INFORMATION – EXHIBITS

**ITEM 6.  EXHIBITS**

The following exhibits are filed with this report:

| Exhibit 3.1  | Amended and   Restated Articles of Incorporation (incorporated by reference to Exhibit 3.1   to Amendment No. 4 to the Registrant’s Registration Statement on Form S-1   (File No. 333-124963) filed with the SEC on August 2, 2005 (the “Form S-1”)).                                                                                                                                                                                                                                                                                                                                                                                                     |
|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| Exhibit 3.2  | Amended and   Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Registrant’s   Form S-1).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| Exhibit 10.1 | Amendment to   the Amended and Restated Limited Liability Company Agreement of Dresser-Rand   Holdings, LLC effective as of June 24, 2005 (incorporated by reference to   Exhibit 10.20 to the Registrant’s Form S-1).                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| Exhibit 10.2 | Commitment   Increase Supplement dated as of August 26, 2005, to the Credit Agreement   dated as of October 29, 2004, among Dresser-Rand Group Inc., the Foreign   Borrowers party thereto from time to time, the lenders party thereto,   Citicorp North America, Inc. as administrative agent and collateral agent,   Morgan Stanley Senior Funding, Inc. and UBS Securities LLC, each as   co-syndication agent, Citigroup Global Markets Inc., Morgan Stanley Senior   Fundings, Inc.and UBS Securities LLC, as joint lead arrangers and joint book   managers, and Natexis Banques Populaires and Bear Stearns Corporate Lending   Inc., as co-documentation agents. |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| Exhibit 31.1 | Certification   of the President and Chief Executive Officer pursuant to Section 302 of the   Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| Exhibit 31.2 | Certification   of the Executive Vice President and Chief Financial Officer pursuant to   Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| Exhibit 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.)                       |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| Exhibit 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.)        |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| Exhibit 99.1 | Dresser-Rand   Group Inc. Press Release, dated November 10, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| Exhibit 99.2 | Dresser-Rand   Group Inc. Transcript of Webcast, November 10, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| Exhibit 99.3 | Dresser-Rand   Group Inc. Powerpoint Slide Presentation, November 10, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |

Page 28 of 30

----

DRESSER-RAND GROUP INC. OTHER INFORMATION – SIGNATURES

**SIGNATURES**

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

|                |   | **DRESSER-RAND GROUP INC.**      |
|---------------------|--------|----------------------------------|
|                |   |                             |
|                |   |                             |
| November 14,   2005 |   | /s/ Lonnie   A. Arnett           |
|                |   |                                  |
|                |   | Lonnie A.   Arnett               |
|                |   | Vice   President, Controller and |
|                |   | Chief   Accounting Officer       |

Page 29 of 30

----

DRESSER-RAND GROUP INC. OTHER INFORMATION – EXHIBITS

**EXHIBIT INDEX**

| **Exhibit** |   | **Description**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|-------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|             |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 3.1         |   | Amended and   Restated Articles of Incorporation (incorporated by reference to Exhibit 3.1   to Amendment No. 4 to the Registrant’s Registration Statement on Form S-1   (File No. 333-124963) filed with the SEC on August 2, 2005 (the “Form S-1”)).                                                                                                                                                                                                                                                                                                                                                                                                |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 3.2         |   | Amended and   Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Registrant’s   Form S-1).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.1        |   | Amendment to   the Amended and Restated Limited Liability Company Agreement of Dresser-Rand   Holdings, LLC effective as of June 24, 2005 (incorporated by reference to   Exhibit 10.20 to the Registrant’s Form S-1).                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.2        |   | Commitment Increase Supplement dated as ofAugust 26, 2005, to the Credit Agreement dated as of October 29, 2004, amongDresser-Rand Group Inc., the Foreign Borrowers party thereto from time to time,the lenders party thereto, Citicorp North America, Inc. as administrative agentand collateral agent, Morgan Stanley Senior Funding, Inc. and UBS SecuritiesLLC, each as co-syndication agent, Citigroup Global Markets Inc., Morgan StanleySenior Fundings, Inc.and UBS Securities LLC, as joint lead arrangers and jointbook managers, and Natexis Banques Populaires and Bear Stearns Corporate LendingInc., as co-documentation agents.                      |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 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.) |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 99.1        |   | Dresser-Rand Group Inc. Press Release,   dated November 10, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 99.2        |   | Dresser-Rand Group Inc. Transcript of   Webcast, November 10, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 99.3        |   | Dresser-Rand Group Inc. Powerpoint Slide   Presentation, November 10, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |

Page 30 of 30

----