##### Table of Contents



SECURITIES AND EXCHANGE
    COMMISSION
 Washington, D.C.
    20549
  Form 10-Q
   þ

QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the Quarterly Period Ended
    June 30, 2009o

TRANSITION REPORT UNDER SECTION 13 OR 15(d)
    OF THE EXCHANGE ACTFor 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.)West8 Tower, Suite 1000
    10205 Westheimer Road
    Houston, TX(Address of principal
    executive offices)

77042(Zip Code)   (713) 354-6100
 (Registrants telephone
    number, including area code)
   (Former name, former address and
    former fiscal year, if changed since last report)
  þ o
  o o
  12b-2
  Large
    accelerated
    filer þ
    Accelerated
    filer o
    Non-accelerated
    filer o
    Smaller
    reporting
    company o   o þ




---



##### 



DRESSER-RAND
    GROUP INC.
  TABLE OF
    CONTENTS
   
 PagePART I.  FINANCIAL
    INFORMATIONItem 1.


Financial Statements (unaudited):Consolidated Statement of Income for the three
    and six months ended June 30, 2009 and 2008


3Consolidated Balance Sheet at June 30, 2009
    and December 31, 2008


4Consolidated Statement of Cash Flows for the six
    months ended June 30, 2009 and 2008


5Notes to Unaudited Consolidated Financial
    Statements at June 30, 2009


6Item 2.


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


21Item 3.


Quantitative and Qualitative Disclosure about
    Market Risk


32Item 4.


Controls and Procedures


32PART II.  OTHER
    INFORMATIONItem 1.


Legal Proceedings


32Item 2.


Unregistered Sales of Equity Securities and Use
    of Proceeds


33Item 4.


Submission of Matters to a Vote of Security
    Holders


34Item 6.


Exhibits


34Signatures


35ExhibitsEX-10.1EX-31.1EX-31.2EX-32.1EX-32.2   2




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##### Table of Contents



PART I. 
    FINANCIAL INFORMATION  ITEM 1.
    FINANCIAL
    STATEMENTS   DRESSER-RAND
    GROUP INC.
  CONSOLIDATED STATEMENT OF
    INCOME
  Three Months Ended


Six Months EndedJune 30,


June 30,2009


2008


2009


2008(Unaudited; $ in millions, except per share amounts)Net sales of products

$
494.5


$
448.2


$
905.4


$
735.3Net sales of services


111.6



93.0



209.6



169.7Total revenues


606.1



541.2



1,115.0



905.0Cost of products sold


361.1



329.5



665.4



535.7Cost of services sold


75.0



61.7



142.5



113.6Total cost of sales


436.1



391.2



807.9



649.3Gross profit


170.0



150.0



307.1



255.7Selling and administrative expenses


68.9



68.9



136.5



132.8Research and development expenses


4.9



3.8



9.0



5.9Plan settlement / curtailment amendment






1.8



1.3



(5.4
)Income from operations


96.2



75.5



160.3



122.4Interest expense, net


(8.4
)


(7.1
)


(15.3
)


(14.1
)Other income, net


5.1



1.2



0.8



3.0Income before income taxes


92.9



69.6



145.8



111.3Provision for income taxes


32.6



22.9



51.0



37.4Net income

$
60.3


$
46.7


$
94.8


$
73.9Net income per common share-basic and diluted

$
0.74


$
0.55


$
1.16


$
0.86Weighted average shares outstanding  (In
    thousands)Basic


81,647



85,337



81,614



85,425Diluted


81,822



85,555



81,702



85,609    3




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##### Table of Contents



DRESSER-RAND
    GROUP INC.
  CONSOLIDATED
    BALANCE SHEET
  June 30,


December 31,2009


2008(Unaudited; $ in millions, except share amounts)ASSETSCurrent assetsCash and cash equivalents

$
201.2


$
147.1Accounts receivable, less allowance for losses of $13.8 at 2009
    and $11.6 at 2008


326.4



366.3Inventories, net


394.7



328.5Prepaid expenses


29.4



43.4Deferred income taxes, net


23.4



22.5Total current assets


975.1



907.8Property, plant and equipment, net


252.3



250.3Goodwill


442.4



429.1Intangible assets, net


436.1



441.6Other assets


25.9



23.4Total assets

$
2,131.8


$
2,052.2LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesAccounts payable and accruals

$
401.5


$
430.9Customer advance payments


302.3



275.0Accrued income taxes payable


18.0



30.2Loans payable


0.2



0.2Total current liabilities


722.0



736.3Deferred income taxes


22.5



22.9Postemployment and other employee benefit liabilities


110.5



135.3Long-term debt


370.0



370.1Other noncurrent liabilities


34.2



27.4Total liabilities


1,259.2



1,292.0Commitments and contingencies (Notes 8 through 12)Stockholders equityCommon stock, $0.01 par value, 250,000,000 shares
    authorized; and, 82,419,819 and 81,958,846 shares issued
    and outstanding, respectively


0.8



0.8Additional paid-in capital


389.3



384.6Retained earnings


522.1



427.3Accumulated other comprehensive loss


(39.6
)


(52.5
)Total stockholders equity


872.6



760.2Total liabilities and stockholders equity

$
2,131.8


$
2,052.2    4




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##### Table of Contents



DRESSER-RAND
    GROUP INC.
  CONSOLIDATED STATEMENT OF CASH
    FLOWS
  Six MonthsEnded June 30,2009


2008(Unaudited; $ in millions)Cash flows from operating activitiesNet income

$
94.8


$
73.9Adjustments to arrive at net cash provided by operating
    activities:Depreciation and amortization


25.6



24.9Deferred income taxes


(0.3
)


(0.6
)Stock-based compensation


4.9



2.9Amortization of debt financing costs


1.6



1.5Provision for losses on inventory


2.4



1.3Plan settlement / curtailment amendment


(0.2
)


(11.8
)Loss on sale of property, plant and equipment


0.1



0.2Equity loss on investments


0.3



Working capital and otherAccounts receivable


40.5



5.1Inventories


(63.2
)


(10.0
)Accounts payable and accruals


(31.2
)


10.4Customer advances


18.6



33.4Other


(25.5
)


(27.0
)Net cash provided by operating activities


68.4



104.2Cash flows from investing activitiesCapital expenditures


(13.9
)


(14.8
)Proceeds from sales of property, plant and equipment


1.0



0.2Other investments


(5.0
)


Net cash used in investing activities


(17.9
)


(14.6
)Cash flows from financing activitiesProceeds from exercise of stock options


0.1



1.3Repurchase of common stock






(27.7
)Payments of long-term debt


(0.1
)


(0.1
)Net cash used in financing activities






(26.5
)Effect of exchange rate changes on cash and cash equivalents


3.6



3.8Net increase in cash and cash equivalents


54.1



66.9Cash and cash equivalents, beginning of the period


147.1



206.2Cash and cash equivalents, end of period

$
201.2


$
273.1    5




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##### Table of Contents



DRESSER-RAND
    GROUP INC.NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS
    ($ in millions)
  1.
    Basis of
    presentation  Form 10-K
  2.
    New
    accounting standards  Noncontrolling Interests in Consolidated
    Financial Statements  an amendment of ARB
    No. 51 Consolidated Financial
    Statements
  Business Combinations
  Assets Acquired and Liabilities Assumed in
    a Business Combination That Arise From Contingencies
  Subsequent Events.
 6




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##### Table of Contents



DRESSER-RAND
    GROUP INC.
    NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
    ($ in millions)
    Accounting
    for Transfers of financial Assets Amendments to FASB Interpretation No. 46(R). Accounting for Transfers and Servicing of Financial Assets
    and Extinguishments of Liabilities Consolidation of Variable
    Interest Entities
  3.
    Intangible
    assets and goodwill    June 30, 2009


Weighted


December 31, 2008Accumulated


Average





AccumulatedCost


Amortization


Useful Lives


Cost


AmortizationTrade names

$
93.2


$
10.3



39 years


$
92.8


$
9.2Customer relationships


253.4



30.3



38 years



250.5



26.5Software


30.6



14.3



10 years



30.6



12.7Existing technology


137.2



25.0



24 years



136.3



22.1Non-compete agreement


2.1



0.5



4 years



2.1



0.2Total amortizable intangible assets

$
516.5


$
80.4






$
512.3


$
70.7       June 30,2009Beginning balance

$
429.1Adjustments


3.1Foreign currency adjustments


10.2Ending balance

$
442.4  7




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##### Table of Contents



DRESSER-RAND
    GROUP INC.
    NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
    ($ in millions)
   4.
    Inventories    June 30,


December 31,2009


2008Raw materials and supplies

$
155.9


$
141.7Work-in-process
    and finished goods


533.1



496.4689.0



638.1Less:Progress payments


(294.3
)


(309.6
)Total inventories

$
394.7


$
328.5     5.  Property,
    plant and equipment
    June 30,


December 31,2009


2008Cost:Land

$
15.2


$
14.7Buildings and improvements


102.0



88.0Machinery and equipment


269.8



266.3387.0



369.0Less:Accumulated depreciation


(134.7
)


(118.7
)Property, plant and equipment, net

$
252.3


$
250.3   6.
    Investments     8




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##### Table of Contents



DRESSER-RAND
    GROUP INC.
    NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
    ($ in millions)
    7.
    Financial
    Instruments          Level 1

Unadjusted quoted prices in active markets for identical assets
    or liabilitiesLevel 2

Unadjusted quoted prices in active markets for similar assets or
    liabilities, orUnadjusted quoted prices for identical or similar assets or
    liabilities in markets that are not active, orInputs other than quoted prices that are observable for the
    asset or liabilityLevel 3

Unobservable inputs for the asset or liability       June 30,


December 31,2009


2008Foreign currency exchange contracts assets

$
5.2


$
25.4Foreign currency exchange contracts liabilities

$
8.0


$
17.1       8.
    Income
    taxes   9




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##### Table of Contents



DRESSER-RAND
    GROUP INC.
    NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
    ($ in millions)
    9.
    Pension
    plans    Three Months


Six MonthsEnded


EndedJune 30,


June 30,2009


2008


2009


2008Service cost

$
1.6


$
1.8


$
3.1


$
3.6Interest cost


5.0



5.2



9.9



10.3Expected return on plan assets


(4.5
)


(5.8
)


(9.0
)


(11.6
)Amortization of prior service cost


0.2







0.4



Amortization of net actuarial loss


0.9



0.1



1.9



0.2Plan settlement










1.3



Net periodic pension cost

$
3.2


$
1.3


$
7.6


$
2.5     10.
    Postretirement
    benefits other than pensions    Three Months


Six MonthsEnded


EndedJune 30,


June 30,2009


2008


2009


2008Service cost

$



$



$



$
0.1Interest cost


0.2



0.3



0.5



0.8Amortization of prior service credit


(2.0
)


(1.8
)


(4.0
)


(3.6
)Amortization of net actuarial loss


0.3







0.5



Curtailment amendment / partial settlement






1.8







(5.4
)Net periodic postretirement benefits (income) cost

$
(1.5
)

$
0.3


$
(3.0
)

$
(8.1
)    10




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##### Table of Contents



DRESSER-RAND
    GROUP INC.
    NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
    ($ in millions)
    11.
    Commitments
    and contingencies         11




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##### Table of Contents



DRESSER-RAND
    GROUP INC.
    NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
    ($ in millions)
        12.
    Warranty
    accruals      Six MonthsEndedJune 30,2009


2008Beginning balance

$
37.0


$
28.5Provisions for warranties issued during the period


10.7



11.4Adjustments to warranties issued in prior periods


0.8



4.0Payments during period


(7.5
)


(13.6
)Foreign currency adjustments


0.5



0.8Ending balance

$
41.5


$
31.1   13.
    Segment
    information         12




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##### Table of Contents



DRESSER-RAND
    GROUP INC.
    NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
    ($ in millions)
      Three Months EndedJune 30,


Six Months Ended June 30,2009


2008


2009


2008RevenuesNew units

$
348.3


$
299.2


$
626.7


$
448.7Aftermarket parts and services


257.8



242.0



488.3



456.3Total revenues

$
606.1


$
541.2


$
1,115.0


$
905.0Operating incomeNew units

$
48.1


$
25.7


$
73.3


$
34.9Aftermarket parts and services


67.6



70.8



126.5



120.8Unallocated


(19.5
)


(21.0
)


(39.5
)


(33.3
)Total operating income

$
96.2


$
75.5


$
160.3


$
122.4Depreciation and amortizationNew units

$
7.7


$
7.8


$
14.5


$
13.4Aftermarket parts and services


5.5



4.7



11.1



11.5Total depreciation and amortization

$
13.2


$
12.5


$
25.6


$
24.9Total assets (including goodwill)New units

$
383.1


$
317.5


$
383.1


$
317.5Aftermarket parts and services


774.3



735.0



774.3



735.0Unallocated


974.4



1,005.3



974.4



1,005.3Total assets

$
2,131.8


$
2,057.8


$
2,131.8


$
2,057.8   14.
    Stockholders
    equity    AccumulatedOtherComprehensiveCommon


Additional


Retained


(Loss)Stock


Paid-in Capital


Earnings


Income


TotalAt December 31, 2008

$
0.8


$
384.6


$
427.3


$
(52.5
)

$
760.2Stock-based employee compensation






4.7











4.7Net income










94.8







94.8Other comprehensive income (loss)Foreign currency translation adjustment














13.4



13.4Pension and other postretirement benefit plans  net of
    $0.3 tax:Benefit plans amortization














(0.8
)


(0.8
)Plan settlement














0.3



0.3At June 30, 2009

$
0.8


$
389.3


$
522.1


$
(39.6
)

$
872.6  13




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##### Table of Contents



DRESSER-RAND
    GROUP INC.
    NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
    ($ in millions)
    Three Months


Six MonthsEnded


EndedJune 30,


June 30,2009


2008


2009


2008Net income

$
60.3


$
46.7


$
94.8


$
73.9Other comprehensive income (loss):Foreign currency adjustments


25.8



(3.4
)


13.4



15.5Pension and other postretirement benefit plans  net
    of $0.3 tax in 2009 and $1.7 tax in 2008:Adoption of FASB Statement No. 158














(0.3
)Benefit plans amortization


(0.4
)


(1.1
)


(0.8
)


(2.1
)Benefit plan amendment














2.2Curtailment amendment














(4.5
)Partial settlement






1.2



0.3



1.2Net gain from remeasurement














0.9Total comprehensive income

$
85.7


$
43.4


$
107.7


$
86.8     15.
    Supplemental
    guarantor financial information     14




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##### Table of Contents



DRESSER-RAND
    GROUP INC.
    NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
    ($ in millions)
    CONDENSED
    CONSOLIDATING STATEMENT OF INCOME
    For the three months ended June 30, 2009
  Subsidiary


Subsidiary


ConsolidatingIssuer


Guarantors


Non-Guarantors


Adjustments


TotalNet sales

$



$
356.5


$
300.4


$
(50.8
)

$
606.1Cost of sales






247.6



221.3



(32.8
)


436.1Gross profit






108.9



79.1



(18.0
)


170.0Selling and administrative expenses


39.1



15.5



28.6



(14.3
)


68.9Research and development expenses






4.4



0.5







4.9(Loss) income from operations


(39.1
)


89.0



50.0



(3.7
)


96.2Equity earnings in affiliates


86.5



4.1







(90.6
)


Interest expense, net


(7.9
)






(0.5
)






(8.4
)Intercompany interest and fees


6.6



(1.5
)


(5.1
)






Other (expense) income, net


(0.3
)


0.5



4.9







5.1Income before income taxes


45.8



92.1



49.3



(94.3
)


92.9(Benefit) provision for income taxes


(14.5
)


32.7



14.4







32.6Net income

$
60.3


$
59.4


$
34.9


$
(94.3
)

$
60.3   CONDENSED
    CONSOLIDATING STATEMENT OF INCOME
    For the three months ended June 30, 2008
  Subsidiary


Subsidiary


ConsolidatingIssuer


Guarantors


Non-Guarantors


Adjustments


TotalNet sales

$



$
325.6


$
261.0


$
(45.4
)

$
541.2Cost of sales






238.4



191.7



(38.9
)


391.2Gross profit






87.2



69.3



(6.5
)


150.0Selling and administrative expenses


31.9



14.4



28.8



(6.2
)


68.9Research and development expenses






3.8











3.8Partial settlement






1.8











1.8(Loss) income from operations


(31.9
)


67.2



40.5



(0.3
)


75.5Equity earnings in affiliates


65.2



1.5







(66.7
)


Interest (expense) income, net


(8.1
)






1.0







(7.1
)Intercompany interest and fees


5.8



2.7



(8.5
)






Other income (expense), net


5.5



(5.6
)


1.3







1.2Income before income taxes


36.5



65.8



34.3



(67.0
)


69.6(Benefit) provision for income taxes


(10.2
)


25.2



7.9







22.9Net income

$
46.7


$
40.6


$
26.4


$
(67.0
)

$
46.7  15




---



##### Table of Contents



DRESSER-RAND
    GROUP INC.
    NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
    ($ in millions)
  CONDENSED
    CONSOLIDATING STATEMENT OF INCOME
    For the six months ended June 30, 2009
  Subsidiary


Subsidiary


ConsolidatingIssuer


Guarantors


Non-Guarantors


Adjustments


TotalNet sales

$



$
673.0


$
535.3


$
(93.3
)

$
1,115.0Cost of sales






474.7



400.3



(67.1
)


807.9Gross profit






198.3



135.0



(26.2
)


307.1Selling and administrative expenses


71.1



30.4



56.0



(21.0
)


136.5Research and development expenses






8.1



0.9







9.0Plan settlement










1.3







1.3(Loss) income from operations


(71.1
)


159.8



76.8



(5.2
)


160.3Equity earnings in affiliates


142.1



6.5







(148.6
)


Interest (expense) income, net


(15.5
)






0.2







(15.3
)Intercompany interest and fees


11.1



(2.3
)


(8.8
)






Other income (expense), net


0.6



(0.3
)


0.5







0.8Income before income taxes


67.2



163.7



68.7



(153.8
)


145.8(Benefit) provision for income taxes


(27.6
)


58.3



20.3







51.0Net income

$
94.8


$
105.4


$
48.4


$
(153.8
)

$
94.8   CONDENSED
    CONSOLIDATING STATEMENT OF INCOME
    For the six months ended June 30, 2008
  Subsidiary


Subsidiary


ConsolidatingIssuer


Guarantors


Non-Guarantors


Adjustments


TotalNet sales

$



$
601.6


$
377.6


$
(74.2
)

$
905.0Cost of sales






441.7



267.6



(60.0
)


649.3Gross profit






159.9



110.0



(14.2
)


255.7Selling and administrative expenses


64.5



28.7



51.4



(11.8
)


132.8Research and development expenses






5.7



0.2







5.9Curtailment amendment / partial settlement






(5.4
)










(5.4
)(Loss) income from operations


(64.5
)


130.9



58.4



(2.4
)


122.4Equity earnings in affiliates


115.5



2.7







(118.2
)


Interest (expense) income, net


(16.1
)






2.0







(14.1
)Intercompany interest and fees


7.4



2.5



(9.9
)






Other income (expense), net


5.3



(4.7
)


2.4







3.0Income before income taxes


47.6



131.4



52.9



(120.6
)


111.3(Benefit) provision for income taxes


(26.3
)


48.3



15.4







37.4Net income

$
73.9


$
83.1


$
37.5


$
(120.6
)

$
73.9  16




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##### Table of Contents



DRESSER-RAND
    GROUP INC.
    NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
    ($ in millions)
  CONDENSED
    CONSOLIDATING BALANCE SHEET
    June 30, 2009
  Subsidiary


Subsidiary


ConsolidatingIssuer


Guarantors


Non-Guarantors


Adjustments


TotalASSETSCash and cash equivalents

$
17.3


$



$
183.9


$



$
201.2Accounts receivable, net






147.6



178.7



0.1



326.4Inventories, net






267.2



140.4



(12.9
)


394.7Prepaid expenses and deferred income taxes


25.0



4.0



23.9



(0.1
)


52.8Total current assets


42.3



418.8



526.9



(12.9
)


975.1Investment in affiliates


1,826.2



73.8







(1,900.0
)


Property, plant and equipment, net






159.2



93.1







252.3Intangible assets, net






437.7



440.8







878.5Other assets


23.5



1.0



1.4







25.9Total assets

$
1,892.0


$
1,090.5


$
1,062.2


$
(1,912.9
)

$
2,131.8LIABILITIES AND STOCKHOLDERS EQUITYAccounts payable and accruals

$
(25.5
)

$
359.7


$
387.6


$



$
721.8Loans payable






0.2











0.2Total current liabilities


(25.5
)


359.9



387.6







722.0Long-term debt


370.0















370.0Intercompany accounts


666.6



(720.9
)


54.3







Other noncurrent liabilities


8.3



99.9



59.0







167.2Total liabilities


1,019.4



(261.1
)


500.9







1,259.2Common stock


0.8















0.8Other stockholders equity


871.8



1,351.6



561.3



(1,912.9
)


871.8Total stockholders equity


872.6



1,351.6



561.3



(1,912.9
)


872.6Total liabilities and stockholders equity

$
1,892.0


$
1,090.5


$
1,062.2


$
(1,912.9
)

$
2,131.8  17




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##### Table of Contents



DRESSER-RAND
    GROUP INC.
    NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
    ($ in millions)
  CONDENSED
    CONSOLIDATING BALANCE SHEET
    December 31, 2008
  Subsidiary


Subsidiary


ConsolidatingIssuer


Guarantors


Non-Guarantors


Adjustments


TotalASSETSCash and cash equivalents

$
26.5


$



$
120.6


$



$
147.1Accounts receivable, net






166.8



199.4



0.1



366.3Inventories, net






233.7



102.5



(7.7
)


328.5Prepaid expenses and deferred income taxes


23.1



3.7



39.3



(0.2
)


65.9Total current assets


49.6



404.2



461.8



(7.8
)


907.8Investment in affiliates


1,668.3



65.6







(1,733.9
)


Property, plant, and equipment, net






159.8



90.5







250.3Intangible assets, net






445.3



425.4







870.7Other assets


20.4



1.2



1.8







23.4Total assets

$
1,738.3


$
1,076.1


$
979.5


$
(1,741.7
)

$
2,052.2LIABILITIES AND STOCKHOLDERS EQUITYAccounts payable and accruals

$
(55.9
)

$
416.9


$
375.1


$



$
736.1Loans payable






0.2











0.2Total current liabilities


(55.9
)


417.1



375.1







736.3Long-term debt


370.0



0.1











370.1Intercompany accounts


660.7



(712.4
)


51.7







Other noncurrent liabilities


3.3



125.9



56.4







185.6Total liabilities


978.1



(169.3
)


483.2







1,292.0Common stock


0.8















0.8Other stockholders equity


759.4



1,245.4



496.3



(1,741.7
)


759.4Total stockholders equity


760.2



1,245.4



496.3



(1,741.7
)


760.2Total liabilities and stockholders equity

$
1,738.3


$
1,076.1


$
979.5


$
(1,741.7
)

$
2,052.2  18




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##### Table of Contents



DRESSER-RAND
    GROUP INC.
    NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
    ($ in millions)
  CONDENSED
    CONSOLIDATING STATEMENT OF CASH FLOWS
    For the six months ended June 30, 2009
  Subsidiary


Subsidiary


ConsolidatingIssuer


Guarantors


Non-Guarantors


Adjustments


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

$
(7.4
)

$
19.5


$
56.3


$



$
68.4Cash flows from investing activities:Capital expenditures






(11.8
)


(2.1
)






(13.9
)Proceeds from sale of property, plant and equipment






1.0











1.0Other investments


(5.0
)














(5.0
)Net cash used in investing activities


(5.0
)


(10.8
)


(2.1
)






(17.9
)Cash flows from financing activities:Proceeds from exercise of stock options


0.1















0.1Payments of long-term debt






(0.1
)










(0.1
)Change in intercompany accounts


3.1



(8.6
)


5.5







Net cash provided by (used in) financing activities


3.2



(8.7
)


5.5







Effect of exchange rate changes










3.6







3.6Net (decrease) increase in cash and equivalents


(9.2
)






63.3







54.1Cash and cash equivalents, beginning of period


26.5







120.6







147.1Cash and cash equivalents, end of period

$
17.3


$



$
183.9


$



$
201.2  19




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##### Table of Contents



DRESSER-RAND
    GROUP INC.
    NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
    ($ in millions)
  CONDENSED
    CONSOLIDATING STATEMENT OF CASH FLOWS
    For the six months ended June 30, 2008
  Subsidiary


Subsidiary


ConsolidatingIssuer


Guarantors


Non-Guarantors


Adjustments


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

$
(18.4
)

$
93.7


$
29.0


$
(0.1
)

$
104.2Cash flows from investing activities:Capital expenditures






(11.4
)


(3.4
)






(14.8
)Proceeds from sale of property, plant and equipment






0.1



0.1







0.2Net cash used in investing activities






(11.3
)


(3.3
)






(14.6
)Cash flows from financing activities:Proceeds from exercised options


1.3















1.3Payments of long-term debt






(0.1
)










(0.1
)Repurchase of common stock


(27.7
)














(27.7
)Change in intercompany accounts


39.7



(82.3
)


42.5



0.1



Net cash provided by (used in) financing activities


13.3



(82.4
)


42.5



0.1



(26.5
)Effect of exchange rate changes










3.8







3.8Net (decrease) increase in cash and equivalents


(5.1
)






72.0







66.9Cash and cash equivalents, beginning of period


70.7







135.5







206.2Cash and cash equivalents, end of period

$
65.6


$



$
207.5


$



$
273.1  20




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##### Table of Contents



ITEM 2.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS ($ in millions)  Overview
        end-users
   21




---



##### Table of Contents



Results
    of Operations
  Three
    months ended June 30, 2009, compared to the three months
    ended June 30, 2008:
  Three Months Ended


Three Months EndedJune 30,


June 30,


Period to Period Change2009


2008


2008 to 2009


% ChangeStatement of Operations Data:Total revenues

$
606.1



100.0
%

$
541.2



100.0
%

$
64.9



12.0
%Cost of sales


436.1



72.0



391.2



72.3



44.9



11.5
%Gross profit


170.0



28.0



150.0



27.7



20.0



13.3
%Selling and administrative expenses


68.9



11.3



68.9



12.7







0.0
%Research and development expenses


4.9



0.8



3.8



0.7



1.1



28.9
%Plan settlement










1.8



0.3



(1.8
)


(100.0
)%Operating income


96.2



15.9



75.5



14.0



20.7



27.4
%Interest expense, net


(8.4
)


(1.4
)


(7.1
)


(1.3
)


(1.3
)


18.3
%Other income, net


5.1



0.8



1.2



0.2



3.9



325.0
%Income before income taxes


92.9



15.3



69.6



12.9



23.3



33.5
%Provision for income taxes


32.6



5.4



22.9



4.3



9.7



42.4
%Net income

$
60.3



9.9
%

$
46.7



8.6
%

$
13.6



29.1
%Bookings

$
404.7






$
503.6






$
(98.9
)


(19.6
)%Backlog  ending

$
1,949.2






$
2,085.8






$
(136.6
)


(6.5
)%   Total revenues.
  Cost of sales.
  Gross profit.
  Selling and administrative expenses.
 22




---



##### Table of Contents



Research and development expenses.
  Plan settlement / curtailment
    amendment. Medicare-eligible
  Operating income.
  Interest expense, net.
  Other income, net.
  Provision for income taxes.
  Bookings and backlog.
  Segment
    information
     23




---



##### Table of Contents



Segment
    Analysis  three months ended June 30, 2009,
    compared to three months ended June 30, 2008:
  Three Months Ended June 30,





Period to Period Change2009





2008





2008 to 2009


% ChangeRevenuesNew units

$
348.3



57.5
%

$
299.2



55.3
%

$
49.1



16.4
%Aftermarket parts and services


257.8



42.5
%


242.0



44.7
%


15.8



6.5
%Total revenues

$
606.1



100.0
%

$
541.2



100.0
%

$
64.9



12.0
%Gross profitNew units

$
71.0






$
47.1






$
23.9



50.7
%Aftermarket parts and services


99.0







102.9







(3.9
)


(3.8
)%Total gross profit

$
170.0






$
150.0






$
20.0



13.3
%Operating incomeNew units

$
48.1






$
25.7






$
22.4



87.2
%Aftermarket parts and services


67.6







70.8







(3.2
)


(4.5
)%Unallocated


(19.5
)






(21.0
)






1.5



(7.1
)%Total operating income

$
96.2






$
75.5






$
20.7



27.4
%BookingsNew units

$
169.0






$
232.2






$
(63.2
)


(27.2
)%Aftermarket parts and services


235.7







271.4







(35.7
)


(13.2
)%Total bookings

$
404.7






$
503.6






$
(98.9
)


(19.6
)%Backlog - endingNew units

$
1,535.6






$
1,707.8






$
(172.2
)


(10.1
)%Aftermarket parts and services


413.6







378.0







35.6



9.4
%Total backlog

$
1,949.2






$
2,085.8






$
(136.6
)


(6.5
)%   New
    Units
  Revenues.
 24




---



##### Table of Contents



Gross profit.
  Operating income.
  Bookings and Backlog.
  Aftermarket
    Parts and Services
  Revenues.
  Gross profit.
  Operating income.
  Bookings and Backlog.
 25




---



##### Table of Contents



Results
    of Operations
  Six
    months ended June 30, 2009, compared to the six months
    ended June 30, 2008:
  Six Months Ended


Six Months EndedJune 30,


June 30,


Period to Period Change2009


2008


2008 to 2009


% ChangeStatement of Operations Data:Total revenues

$
1,115.0



100.0
%

$
905.0



100.0
%

$
210.0



23.2
%Cost of sales


807.9



72.5



649.3



71.7



158.6



24.4
%Gross profit


307.1



27.5



255.7



28.3



51.4



20.1
%Selling and administrative expenses


136.5



12.2



132.8



14.7



3.7



2.8
%Research and development expenses


9.0



0.8



5.9



0.7



3.1



52.5
%Plan settlement / curtailment amendment


1.3



0.1



(5.4
)


(0.6
)


6.7



(124.1
)%Operating income


160.3



14.4



122.4



13.5



37.9



31.0
%Interest expense, net


(15.3
)


(1.4
)


(14.1
)


(1.6
)


(1.2
)


8.5
%Other income, net


0.8



0.1



3.0



0.4



(2.2
)


(73.3
)%Income before income taxes


145.8



13.1



111.3



12.3



34.5



31.0
%Provision for income taxes


51.0



4.6



37.4



4.1



13.6



36.4
%Net income

$
94.8



8.5
%

$
73.9



8.2
%

$
20.9



28.3
%Bookings

$
760.5






$
1,079.3






$
(318.8
)


(29.5
)%Backlog  ending

$
1,949.2






$
2,085.8






$
(136.6
)


(6.5
)%   Total revenues.
  Cost of sales.
  Gross profit.
  Selling and administrative expenses.
 26




---



##### Table of Contents



Research and development expenses.
  Plan settlement / curtailment
    amendment.
    Operating income.
  Interest expense, net.
  Other income, net.
  Provision for income taxes.
  Bookings and backlog.
 27




---



##### Table of Contents



Segment
    Analysis  six months ended June 30, 2009,
    compared to six months ended June 30, 2008:
  Six Months Ended June 30,





Period to Period Change2009





2008





2008 to 2009


% ChangeRevenuesNew units

$
626.7



56.2
%

$
448.7



49.6
%

$
178.0



39.7
%Aftermarket parts and services


488.3



43.8
%


456.3



50.4
%


32.0



7.0
%Total revenues

$
1,115.0



100.0
%

$
905.0



100.0
%

$
210.0



23.2
%Gross profitNew units

$
118.5






$
72.3






$
46.2



63.9
%Aftermarket parts and services


188.6







183.4







5.2



2.8
%Total gross profit

$
307.1






$
255.7






$
51.4



20.1
%Operating incomeNew units

$
73.3






$
34.9






$
38.4



110.0
%Aftermarket parts and services


126.5







120.8







5.7



4.7
%Unallocated


(39.5
)






(33.3
)






(6.2
)


18.6
%Total operating income

$
160.3






$
122.4






$
37.9



31.0
%BookingsNew units

$
278.4






$
571.2






$
(292.8
)


(51.3
)%Aftermarket parts and services


482.1







508.1







(26.0
)


(5.1
)%Total bookings

$
760.5






$
1,079.3






$
(318.8
)


(29.5
)%Backlog  endingNew units

$
1,535.6






$
1,707.8






$
(172.2
)


(10.1
)%Aftermarket parts and services


413.6







378.0







35.6



9.4
%Total backlog

$
1,949.2






$
2,085.8






$
(136.6
)


(6.5
)%   New
    Units
  Revenues.
  Gross profit.
  Operating income.
 28




---



##### Table of Contents



Bookings and Backlog.
  Aftermarket
    Parts and Services
  Revenues.
  Gross profit.
  Operating income.
  Bookings and Backlog.
  Liquidity
    and Capital Resources
  work-in-process Work-in-process
     29




---



##### Table of Contents



New
    accounting standards
  Noncontrolling Interests in Consolidated
    Financial Statements  an amendment of ARB
    No. 51 Consolidated Financial
    Statements
  Business Combinations
  Assets Acquired and Liabilities Assumed in
    a Business Combination That Arise From Contingencies
  Subsequent Events.
  Accounting
    for Transfers of financial Assets Amendments to FASB Interpretation No. 46(R). Accounting for Transfers and Servicing of
    Financial Assets and Extinguishments of Liabilities Consolidation of Variable
    Interest Entities
 30




---



##### Table of Contents



SPECIAL
    NOTE REGARDING FORWARD-LOOKING STATEMENTS
  form 10-Q Form 10-Q,
  
    the economic recession and the volatility and disruption of the
    credit markets;
    economic or industry downturns;
    our inability to implement our business strategy to increase our
    aftermarket parts and services revenue;
    our inability to generate cash and access capital on reasonable
    terms;
    competition in our markets;
    failure to integrate our acquisitions, or achieve the expected
    benefits from any future acquisitions;
    economic, political, currency and other risks associated with
    our international sales and operations;
    fluctuations in currency values and exchange rates;
    loss of our senior management or other key personnel;
    environmental compliance costs and liabilities;
    failure to maintain safety performance acceptable to our clients;
    failure to negotiate new collective bargaining agreements;
    unexpected product claims or regulations;
    infringement of our intellectual property rights or our
    infringement of others intellectual property rights;
    our pension expenses and funding requirements; and
    other factors described in this report and as set forth in the
    Companys Annual Report on
    Form 10-K
    for the year ended December 31, 2008. 31




---



##### Table of Contents



ITEM 3.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK ($ in
    millions)  non-U.S. subsidiaries
    ITEM 4.
    CONTROLS
    AND PROCEDURES  Rules 13a-15(e)
   PART II. 
    OTHER INFORMATION  ITEM 1.
    LEGAL
    PROCEEDINGS ($ in millions)       32




---



##### Table of Contents



ITEM 2.
    UNREGISTERED
    SALES OF EQUITY SECURITIES AND USE OF PROCEEDS  Issuer
    Purchases of Equity Securities
    ApproximateDollar Valueof SharesTotal Number


That May Yetof Shares


Be PurchasedTotal Number


Average Price


Purchased as Part of


Under theof Shares


Paid per


Publicly Announced Plans


Plans orPeriod

Purchased(1)


Share


or Programs


ProgramsApril 2009










May 2009


651


$
25.03



June 2009










Total


651







     (1)
    
    These shares were delivered to us as payment of withholding
    taxes due on the vesting of restricted stock issued under our
    Stock Incentive Plan. 33




---



##### Table of Contents



ITEM 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS      Proposals:

Votes For


Against


Withheld


AbstainElection of DirectorsWilliam E. Macaulay


73,016,990







3,717,527



Vincent R. Volpe Jr.


73,015,415







3,719,102



Rita V. Foley


68,267,279







8,467,238



Louis A. Raspino


68,274,190







8,460,327



Philip R. Roth


73,018,379







3,716,138



Michael L. Underwood


73,016,212







3,718,305



Jean-Paul Vettier


68,272,314







8,462,203



Joseph C. Winkler III


73,016,065







3,718,452



Ratify appointment of Independent Registered Public
    Accountants


76,671,602



45,314







17,601     ITEM 6.
    EXHIBITS    Exhibit No.

Description3
.1

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

Amended and Restated By-Laws of Dresser-Rand Group Inc.
    (incorporated by reference to Exhibit 3.1 to Dresser-Rand Group
    Inc.s Current Report on Form 8-K, filed November 16, 2007,
    File No. 001-32586).10
.1

Offer Letter, dated May 12, 2009, from Dresser-Rand Group Inc.
    to James Garman.*31
.1

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

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

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

Certification of the Executive Vice President and Chief
    Financial Officer pursuant to Title 18, United States Code,
    Section 1350, as adopted pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002 (furnished herewith). (This
    certification is being furnished and shall not be deemed
    filed with the SEC for purposes of Section 18 of the
    Exchange Act, or otherwise subject to the liability of that
    section, and shall not be deemed to be incorporated by reference
    into any filing under the Securities Act or the Exchange Act,
    except to the extent that the Registrant specifically
    incorporates it by reference).     *
    
    Executive Compensation Plans and Arrangements. 34




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##### Table of Contents



SIGNATURES    DRESSER-RAND GROUP INC.
  
      35