##### 



UNITED
    STATES 
    SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549FORM 10-K
 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES
    EXCHANGE ACT OF 1934
  For the fiscal year ended December 31, 2006
  
   GARDNER DENVER, INC.
 (Exact name of registrant as
    specified in its charter)
  Delaware(State or other
    jurisdiction of
    incorporation or organization)

76-0419383(I.R.S. Employer
    Identification No.)1800 Gardner Expressway
    Quincy, IL(Address of principal
    executive offices)

62305(Zip Code)   (217) 222-5400
     Title of each class

Name of each exchange on
    which registeredCommon Stock of $0.01 par value
    per share

New York Stock ExchangeRights to Purchase Preferred Stock

New York Stock Exchange   None
  þ o
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
  Large
    accelerated
    filer  þ
    Accelerated
    filer  o
    Non-acceleratedfiler  o  Rule 12b-2 o þ
      Documents Incorporated by Reference




---



##### 



Table of
    Contents
  
  PageCautionary
    Statements Regarding Forward-Looking Statements


2PART IItem 1.


Business


3Item 1A.


Risk
    Factors


14Item 1B.


Unresolved Staff
    Comments


19Item 2.


Properties


19Item 3.


Legal
    Proceedings


19Item 4.


Submission of
    Matters to a Vote of Security Holders


19PART IIItem 5.


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


19Item 6.


Selected Financial
    Data


20Item 7.


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


21Item 7A.


Quantitative and
    Qualitative Disclosures about Market Risk


35Item 8.


Financial
    Statements and Supplementary Data


35Item 9.


Changes in and
    Disagreements with Accountants on Accounting and Financial
    Disclosure


79Item 9A.


Controls and
    Procedures


79Item 9B.


Other
    Information


79PART IIIItem 10.


Directors,
    Executive Officers and Corporate Governance


79Item 11.


Executive
    Compensation


80Item 12.


Security Ownership
    of Certain Beneficial Owners and Management and Related
    Stockholder Matters


80Item 13.


Certain
    Relationships and Related Transactions, and Director
    Independence


80Item 14.


Principal
    Accounting Fees and Services


80PART IVItem 15.


Exhibits and
    Financial Statement Schedules


81SIGNATURES


84INDEX TO EXHIBITS


85




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##### 



Cautionary
    Statements Regarding Forward-Looking Statements  Form 10-K,
   2




---



##### 



PART I  ITEM 1.
    BUSINESS    non-U.S. sales,
  Service marks, trademarks
    and/or
    tradenames and related designs or logotypes owned by Gardner
    Denver, Inc. or its subsidiaries are shown in italics.
  Executive
    Overview
  Significant
    Accomplishments in 2006
    
    Grew revenues 37% as a result of acquisitions (19%) and organic
    growth (18%), including a slight benefit attributable to foreign
    currency translation. The organic growth included significant
    volume and price increases for fluid transfer products as a
    result of strong demand for oil and natural gas drilling and
    servicing pumps.
    Improved net income 99% as a result of growth in unit volume,
    price increases, acquisitions and cost reductions achieved
    primarily through acquisition integration initiatives.
    Generated $167 million in net cash from operating
    activities in 2006, compared to $115 million in 2005.
    Used cash provided by operating activities and excess cash from
    the Companys
    non-U.S. subsidiaries
    to reduce debt by more than $161 million.
    Completed the integration of Thomas Industries, Inc.
    (Thomas) administrative functions and relocated
    manufacturing of blowers used for mobile applications from
    Germany to the U.K.
    Substantially completed the integration of nashelmo
    Holdings LLC (Nash Elmo) by relocating production of
    liquid ring pumps from Germany to China and Brazil.
    Improved return on equity to 18% for the twelve months ending
    December 31, 2006 from 13% for the twelve months ending
    December 31, 2005.
    Completed the acquisition of the Todo Group (Todo). 3




---



##### 



Challenges
  Non-U.S. revenues,
  
    Exposure to economic downturns and market cycles, in particular
    the level of oil and natural gas prices and oil and gas drilling
    and production, which affect demand for the Companys
    petroleum products, and industrial production and manufacturing
    capacity utilization rates, which affect demand for the
    Companys compressor and vacuum products.
    Risks of large or rapid increases in raw material costs or
    substantial decreases in their availability, and the
    Companys dependence on particular suppliers, particularly
    iron casting and other metal suppliers.
    Risks associated with robust competition in the Companys
    markets, particularly the pricing of the Companys products.
    The ability to effectively integrate acquisitions and realize
    anticipated cost savings, synergies and revenue enhancements
    without incurring significant unexpected cash integration costs
    to achieve such benefits.
    The Companys ability to continue to identify and complete
    other strategic acquisitions and effectively integrate such
    acquisitions to achieve desired financial benefits.    History
  OPI Sutorbilt DuroFlow ®
     4




---



##### 



Gardner
    Denver
  Gardner Denver
    Gardner Denver
         5




---



##### 



TODO-MATIC Emco Wheaton
 6




---



##### 



Markets
    and Products
    Compressor
    and Vacuum Products Segment
    sub-fractional Gardner Denver,
    Champion, Thomas, Bottarini Belliss & Morcom sub-fractional Gardner Denver,
    Bottarini, Electra-Screw, Electra-Saver, Enduro, RotorChamp,
    Tamrotor Tempest
  Sutorbilt, DuroFlow,
    CycloBlower, Drum, Wittig TurboTron. Gardner Denver, Lamson Hoffman Elmo Rietschle Gardner Denver, Elmo Rietschle, Thomas, Welch, Drum Wittig . Gardner Denver, Invincible,
    Thomas, Elmo Rietschle Cat Vac Nash Elmo Rietschle
   7




---



##### 



Welch
    Fluid
    Transfer Products Segment
    Gardner Denver OPI Gardner Denver Oberdorfer Gardner Denver
  Partek, Liqua-Blaster American Water Blaster
 8




---



##### 



Emco Wheaton, TODO Perolo
    Customers
    and Customer Service
      Rietschle
  Competition
     9




---



##### 



Research
    and Development
          Manufacturing
   10




---



##### 



work-in-process
  9001-2000
  Raw
    Materials
    Backlog
  Form 10-K.
  Patents,
    Trademarks and Other Intellectual Property
    Gardner Denver Aeon,
    Belliss & Morcom, Bottarini, Champion, CycloBlower,
    Drum, DuroFlow, Elmo Rietschle, Emco Wheaton, Hoffman, Lamson,
    Legend, Nash, Oberdorfer, OPI, Sutorbilt, Tamrotor, Thomas,
    TODO, Webster, Welch Wittig. ® Gardner
    Denver ®
   11




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##### 



Employees
    Executive
    Officers of the Registrant
    Name

Position

AgeRoss J. Centanni

Chairman, President and Chief
    Executive Officer


61Helen W. Cornell

Vice President, Finance and Chief
    Financial Officer


48Tracy D. Pagliara

Vice President, Administration,
    General Counsel and Secretary


44J. Dennis Shull

Executive Vice President and
    General Manager, Compressor Division


58Richard C. Steber

Vice President and General
    Manager, Engineered Products Division


56T. Duane Morgan

Vice President and General
    Manager, Fluid Transfer Products


57James J. Kregel

Vice President and General
    Manager, Thomas Products Division


55Winfried Kaiser

Vice President and General
    Manager, Blower Division


51   Ross J. Centanni,
  Helen W. Cornell,
  Tracy D. Pagliara,
  J. Dennis Shull,
 12




---



##### 



Richard C. Steber,
  T. Duane Morgan,
  James J. Kregel,
  Winfried Kaiser,
  Compliance
    Certifications
  Form 10-K
  Environmental
    Matters
   13




---



##### 



on-site
    Available
    Information
  www.gardnerdenver.com Form 10-K; Form 10-Q; Form 8-K; Form 10-K.
  ITEM 1A.
    RISK
    FACTORS  We have exposure to economic downturns and operate in
    cyclical markets.
     14




---



##### 



Large or rapid increases in the costs of raw materials or
    substantial decreases in their availability and our dependence
    on particular suppliers of raw materials could materially and
    adversely affect our operating results.
    We face robust competition in the markets we serve, which
    could materially and adversely affect our operating results.
    We may not be able to effectively integrate acquired
    businesses and fully realize the related anticipated cost
    savings, synergies, or revenue enhancements.
      
    our ability to effectively eliminate redundant administrative
    overhead and rationalize manufacturing capacity is difficult to
    predict. Accordingly, the actual amount and timing of the
    resulting cost savings are inherently difficult to predict.
    we may incur significant cash integration costs in achieving
    cost savings, and any cost savings or other synergies from
    acquisitions may be offset by such integration costs.
    the cost savings and other synergies realized from acquisitions
    may be offset by increases in other expenses, by operating
    losses, or by problems unrelated to any specific acquisition.  Our success depends on our executive officers and other key
    personnel.
   15




---



##### 



We may not be able to continue to make the acquisitions
    necessary for us to realize our growth strategy.
    Economic, political and other risks associated with
    international sales and operations could adversely affect our
    business.
  Non-U.S. operations
  
    nationalization of private enterprises;
    political or economic instability in certain countries;
    differences in foreign laws, including increased difficulties in
    protecting intellectual property and uncertainty in enforcement
    of contract rights;
    changes in the legal and regulatory policies of foreign
    jurisdictions;
    credit risks;
    currency fluctuations;
    exchange controls;
    changes in tariff restrictions;
    royalty and tax increases;
    export and import restrictions and restrictive regulations of
    foreign governments;
    potential problems obtaining supply of raw materials;
    shipping products during times of crisis or war; and
    other factors inherent in foreign operations.  The
    nature of our products creates the possibility of significant
    product liability and warranty claims, which could harm our
    business.
   16




---



##### 



Environmental-compliance
    costs and liabilities could adversely affect our financial
    condition.
  and/or
      We are a
    defendant in certain asbestos and silicosis personal injury
    lawsuits, which could adversely affect our financial
    condition.
      Our
    indebtedness could adversely affect our financial
    flexibility.
    
    we may have a limited ability to borrow additional amounts for
    working capital, capital expenditures, acquisitions, debt
    service requirements, execution of our growth strategy, or other
    purposes;
    a portion of our cash flow may be used to pay principal and
    interest on our debt, which will reduce the funds available for
    working capital, capital expenditures, acquisitions and other
    purposes;
    we may be more vulnerable to adverse changes in general
    economic, industry and competitive conditions;
    the various covenants contained in our senior credit agreement,
    the indenture governing the senior subordinated notes, and the
    documents governing our other existing indebtedness may place us
    at a relative competitive disadvantage as compared to some of
    our competitors; and 17




---



##### 




    borrowings under the senior credit agreement bear interest at
    floating rates, which could result in higher interest expense in
    the event of an increase in interest rates.  and/or
  Third
    parties may infringe upon our intellectual property or may claim
    we have infringed their intellectual property, and we may expend
    significant resources enforcing or defending our rights or
    suffer competitive injury.
    Our
    business could suffer if we experience employee work stoppages
    or other labor difficulties.
  and/or
  Our
    pension and other postretirement benefit obligations and expense
    (or income) are dependent upon assumptions used in calculating
    such amounts and actual results of investment
    activity.
    A
    significant portion of our assets consists of goodwill and other
    intangible assets, the value of which may be reduced if we
    determine that those assets are impaired.
   18




---



##### 



ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS    ITEM 2.
    PROPERTIES    ITEM 3.
    LEGAL
    PROCEEDINGS  Form 10-K.
  ITEM 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS   PART II ITEM 5. MARKET
    FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
    AND ISSUER PURCHASES OF EQUITY SECURITIES      two-for-one
  Total Number ofShares Purchased


Maximum Number ofTotal Number





As Part of Publicly


Shares That May Yet Beof Shares


Average Price


Announced Plans


Purchased Under thePeriod

Purchased (1)


Paid per Share


or Programs


Plans or ProgramsOctober 1,
    2006-October 31, 2006






n/a







826,516November 1,
    2006-November 30, 2006






n/a







826,516December 1,
    2006-December 31,
    2006


990


$
38.04







826,516Total


990


$
38.04







826,516   (1)
    
    Includes shares exchanged or
    surrendered in connection with the exercise of options under
    Gardner Denvers stock options plans. 19




---



##### 



Stock
    Performance Graph
    
  12/31/01


12/31/02


12/31/03


12/31/04


12/31/05


12/31/06Gardner Denver, Inc.



100




90.95




106.94




162.59




220.88




334.32S&P 500 Index



100




77.90




100.25




111.15




116.61




135.03S&P SmallCap 600 Index



100




85.37




118.48




145.32




156.48




180.14S&P 600 Industrial Machinery



100




95.75




130.39




167.41




182.82




220.79    ITEM 6.
    SELECTED
    FINANCIAL DATA  Years Ended December 31(Dollars in thousands except per
    share amounts)

2006 (1)

2005 (2)

2004 (3)

2003

2002Revenues

$
1,669,176


1,214,552


739,539


439,530


418,158Net income


132,908


66,951


37,123


20,643


19,602Basic earnings per share(4)


2.54


1.40


0.98


0.64


0.62Diluted earnings per share(4)


2.49


1.37


0.96


0.63


0.61Long-term debt (excluding current
    maturities)


383,459


542,641


280,256


165,756


112,663Total assets

$
1,750,231


1,715,060


1,028,609


589,733


478,730   (1)
    
    The Company acquired the
    outstanding shares of Todo in January 2006.(2)
    
    The Company acquired the
    outstanding shares of Bottarini and Thomas in June 2005 and July
    2005, respectively.(3)
    
    The Company acquired the
    outstanding shares of Syltone and Nash Elmo in January 2004 and
    September 2004, respectively.(4)
    
    Per share amounts in all years
    reflect the effect of a two-for-one stock split (in the form of
    a 100% stock dividend) that was completed on June 1, 2006. 20




---



##### 



ITEM 7. MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  Non-GAAP Financial
    Measures
    Disclosures about Segments of an Enterprise and Related
    Information.
  Managements
    Discussion and Analysis
    Overview
    and Description of Business
         21




---



##### 



22




---



##### 



2006


2005


2004Revenues


100.0
%


100.0



100.0Costs and expenses:Cost of sales (excluding
    depreciation and amortization)


65.0



67.0



67.4Depreciation and amortization


3.1



3.1



2.9Selling and administrative expenses


17.9



20.0



21.3Interest expense


2.2



2.5



1.4Other income, net


(0.2
)


(0.5
)


(0.1
)Total costs and expenses


88.0



92.1



92.9Income before income taxes


12.0



7.9



7.1Provision for income taxes


4.0



2.4



2.1Net income


8.0
%


5.5



5.0   Year
    Ended December 31, 2006, Compared with Year Ended
    December 31, 2005
  Revenues
        Costs
    and Expenses
  year-over-year step-up
 23




---



##### 



Share-based
    Payment
  step-up
         24




---



##### 



two-for-one
  Year
    Ended December 31, 2005, Compared with Year Ended
    December 31, 2004
  Revenues
        Costs
    and Expenses
  step-up
     25




---



##### 



non-U.S. earnings non-U.S. jurisdictions.
    Outlook
   26




---



##### 



Liquidity
    and Capital Resources
  Operating
    Working Capital
   27




---



##### 



Cash
    Flows
  non-U.S.
  Capital
    Expenditures and Commitments
      Liquidity
         28




---



##### 



non-U.S. subsidiaries
    Contractual
    Obligations and Commitments
    (Dollars in millions)



Payments Due by PeriodLess than





More thanContractual Cash Obligations

Total

1 year

1 - 3 years

3 - 5 years

5 yearsDebt

$
399.7


23.5


89.9


147.4


138.9Estimated interest payments(1)


105.8


25.3


31.6


22.4


26.5Capital leases


7.5


0.2


0.6


0.6


6.1Operating leases


63.7


16.7


22.6


12.3


12.1Purchase obligations(2)


220.2


209.6


9.2


1.1


0.3Total

$
796.9


275.3


153.9


183.8


183.9   (1)
    
    Estimated interest payments for
    long-term debt were calculated as follows: for fixed-rate debt
    and term debt, interest was calculated based on applicable rates
    and payment dates; for variable-rate debt
    and/or
    non-term debt, interest rates and payment dates were estimated
    based on managements determination of the most likely
    scenarios for each relevant debt instrument. Management expects
    to settle such interest payments with cash flows from operating
    activities
    and/or
    short-term borrowings.(2)
    
    Purchase obligations consist
    primarily of agreements to purchase inventory or services made
    in the normal course of business to meet operational
    requirements. The purchase obligation amounts do not represent
    the entire anticipated purchases in the future, but represent
    only those items for which the Company is contractually
    obligated as of December 31, 2006. For this reason, these
    numbers will not provide a complete and reliable indicator of
    the Companys expected future cash outflows. 29




---



##### 



non-U.S. pension non-U.S. qualified
  non-U.S. plans
      Contingencies
   30




---



##### 



and/or
        on-site
    Changes
    in Accounting Principles and Effects of New Accounting
    Pronouncements
  Inventory
    Costs - an amendment to ARB No. 43, Chapter 4.
 31




---



##### 



Share-Based Payment Accounting for Stock-Based
    Compensation. Accounting for Stock Issued to
    Employees, Statement of Cash Flows.
    Accounting Changes and Error Corrections,
  Accounting for Uncertainty in Income Taxes 
    an interpretation of FASB Statement No. 109
  06-3 How Taxes Collected from Customers and Remitted to
    Governmental Authorities Should Be Presented in the Income
    Statement (That Is, Gross versus Net Presentation) 06-3) Disclosure of Accounting Policies. 06-3 06-3
  Fair Value Measurements
 32




---



##### 



Employers Accounting for Defined Benefit Pension
    and Other Postretirement Plans  an amendment of FASB
    Statements No. 87, 88, 106 and 132(R)
  Considering the Effects of
    Prior Year Misstatements when Quantifying Misstatements in
    Current Year Financial Statements
  The Fair Value Option for Financial Assets and
    Financial Liabilities
  Critical
    Accounting Policies
    Inventories
    and Warranty Reserves
  first-in, last-in,
 33




---



##### 



Goodwill
    and Other Intangibles
      Pension
    and Other Postretirement Benefits
    Income
    Taxes
    Contingencies
   34




---



##### 



ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK    non-U.S. dollar
      ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA Report on
    Managements Assessment of Internal Control Over Financial
    Reporting  Rules 13a-15(f) 15d-15(f).
  Internal
    ControlIntegrated Framework Internal ControlIntegrated Framework,
   35




---



##### 



Report of
    Independent Registered Public Accounting Firm           Share-Based
    Payment. Employers
    Accounting for Defined Benefit Pension and Other Postretirement
    Plans
  Internal ControlIntegrated
    Framework
     36




---



##### 



Report of
    Independent Registered Public Accounting Firm     Internal ControlIntegrated Framework
        Internal ControlIntegrated Framework Internal ControlIntegrated Framework
       37




---



##### 



Consolidated
    Statements of Operations



GARDNER
    DENVER, INC.  Years ended
    December 31
 (Dollars in thousands except
    per share amounts)
  2006


2005


2004Revenues

$
1,669,176



1,214,552



739,539Costs and expenses:Cost of sales (excluding
    depreciation and amortization)


1,084,057



813,227



498,435Depreciation and amortization


52,209



38,322



21,901Selling and administrative expenses


297,837



242,368



157,453Interest expense


37,379



30,433



10,102Other income, net


(2,921
)


(5,442
)


(638
)Total costs and
    expenses


1,468,561



1,118,908



687,253Income before income
    taxes


200,615



95,644



52,286Provision for income
    taxes


67,707



28,693



15,163Net income

$
132,908



66,951



37,123Basic earnings per
    share

$
2.54



1.40



0.98Diluted earnings per
    share

$
2.49



1.37



0.96   The accompanying notes are an
    integral part of these statements.
  38




---



##### 



Consolidated
    Balance Sheets



GARDNER
    DENVER, INC.  December 31
 (Dollars in thousands except
    per share amounts)
  2006


2005AssetsCurrent assets:Cash and equivalents

$
62,331



110,906Accounts receivable, net


261,115



229,467Inventories, net


225,067



207,326Deferred income taxes


14,362



25,754Other current assets


16,843



12,814Total current assets


579,718



586,267Property, plant and equipment, net


276,493



282,591Goodwill


676,780



620,244Other intangibles, net


196,466



203,516Other assets


20,774



22,442Total assets

$
1,750,231



1,715,060Liabilities and
    Stockholders EquityCurrent liabilities:Short-term borrowings and current
    maturities of long-term debt

$
23,789



26,081Accounts payable


90,703



103,028Accrued liabilities


211,852



184,735Total current liabilities


326,344



313,844Long-term debt, less current
    maturities


383,459



542,641Postretirement benefits other than
    pensions


22,598



31,387Deferred income taxes


66,460



86,171Other liabilities


98,840



82,728Total liabilities


897,701



1,056,771Stockholders equity:Common stock, $0.01 par
    value; 100,000,000 shares authorized; 52,625,999 and
    51,998,704 shares outstanding at December 31, 2006 and
    2005, respectively


564



278Capital in excess of par value


490,856



472,825Retained earnings


339,289



206,381Accumulated other comprehensive
    income


50,731



8,124Treasury stock at cost, 3,734,507
    and 3,618,052 shares at December 31, 2006 and 2005,
    respectively


(28,910
)


(29,319
)Total stockholders equity


852,530



658,289Total liabilities and
    stockholders equity

$
1,750,231



1,715,060   The accompanying notes are an
    integral part of these statements.
  39




---



##### 



Consolidated
    Statements of Stockholders Equity



GARDNER
    DENVER, INC.  Years ended
    December 31
 (Dollars and shares in
    thousands)
  AccumulatedCapital in





Other

TotalNumber

Common

Excess of

Treasury

Retained

Comprehensive

Stockholders

Comprehensiveof Shares

Stock

Par Value

Stock

Earnings

Income

Equity

IncomeBalance December 31, 2003


17,839

$
178


174,474



(25,947
)


102,307


14,893



265,905Stock offering


3,450


35


79,522














79,557Stock issued for benefit plans and
    options exercises


398


4


8,095














8,099Treasury stock












(500
)









(500
)Net income
















37,123






37,123



37,123Foreign currency translation
    adjustments



















15,524



15,524



15,524Unrecognized gain on cash flow
    hedges, net



















188



188



188Minimum pension liability
    adjustments



















(420
)


(420
)


(420
)52,415Balance December 31, 2004


21,687

$
217


262,091



(26,447
)


139,430


30,185



405,476Stock offering


5,658


57


199,171














199,228Stock issued for benefit plans and
    options exercises


463


4


11,563














11,567Treasury stock












(2,872
)









(2,872
)Net income
















66,951






66,951



66,951Foreign currency translation
    adjustments



















(19,707
)


(19,707
)


(19,707
)Unrecognized gain on cash flow
    hedges, net



















1,699



1,699



1,699Minimum pension liability
    adjustments



















(4,053
)


(4,053
)


(4,053
)44,890Balance December 31, 2005


27,808

$
278


472,825



(29,319
)


206,381


8,124



658,289Stock issued for benefit plans and
    options exercises


557


6


9,447














9,453Stock issued for stock split


27,996


280


(438
)













(158
)Stock-based compensation
    (Note 13)








9,022














9,022Treasury stock












(2,375
)









(2,375
)Deferred compensation












2,784










2,784Net income
















132,908






132,908



132,908Foreign currency translation
    adjustments



















48,244



48,244



48,244Unrecognized loss on cash flow
    hedges, net



















(330
)


(330
)


(330
)Minimum pension liability
    adjustments



















4,422



4,422



4,422185,244Adjustments to initially apply
    SFAS No. 158, net of tax (Note 9)Reversal of minimum pension
    liability



















5,206



5,206Recognition of funded status of
    benefit plans



















(14,935
)


(14,935
)Balance December 31, 2006


56,361

$
564


490,856



(28,910
)


339,289


50,731



852,530   The accompanying notes are an
    integral part of these statements.
   40




---



##### 



Consolidated
    Statements of Cash Flows



GARDNER
    DENVER, INC.  Years ended
    December 31
 (Dollars in
    thousands)
  2006


2005


2004Cash flows from operating
    activities:Net income

$
132,908



66,951



37,123Adjustments to reconcile net
    income to net cash provided by operating activities:Depreciation and amortization


52,209



38,322



21,901Unrealized foreign currency
    transaction loss (gain), net


514



(98
)


(980
)Net loss (gain) on asset
    dispositions


808



(699
)


(40
)LIFO liquidation income


(400
)






(132
)Stock issued for employee benefit
    plans


3,773



3,305



3,239Stock-based compensation expense


5,340







Excess tax benefits from
    stock-based compensation


(3,674
)






Deferred income taxes


(2,698
)


1,996



537Foreign currency hedging
    transactions






1,491



(1,258
)Changes in assets and liabilities:Receivables


(18,488
)


(8,624
)


(6,011
)Inventories


(7,449
)


378



(1,745
)Accounts payable and accrued
    liabilities


30



2,275



20,526Other assets and liabilities, net


4,319



9,778



2,334Net cash provided by operating
    activities


167,192



115,075



75,494Cash flows from investing
    activities:Net cash paid in business
    combinations


(21,120
)


(481,917
)


(295,313
)Capital expenditures


(41,115
)


(35,518
)


(19,550
)Disposals of property, plant and
    equipment


11,596



3,749



557Other






(2,225
)


Net cash used in investing
    activities


(50,639
)


(515,911
)


(314,306
)Cash flows from financing
    activities:Principal payments on short-term
    borrowings


(33,266
)


(26,620
)


(3,648
)Proceeds from short-term borrowings


28,339



18,354



327Principal payments on long-term
    debt


(331,576
)


(659,635
)


(274,470
)Proceeds from long-term debt


158,197



922,439



362,533Proceeds from issuance of common
    stock






199,228



79,557Proceeds from stock options


5,773



6,006



4,860Excess tax benefits from
    stock-based compensation


3,674







Purchase of treasury stock


(1,260
)


(2,872
)


(500
)Debt issuance costs


(570
)


(8,186
)


(1,847
)Other


(159
)






Net cash (used in) provided by
    financing activities


(170,848
)


448,714



166,812Effect of exchange rate changes on
    cash and equivalents


5,720



(1,573
)


3,798(Decrease) increase in cash and
    equivalents


(48,575
)


46,305



(68,202
)Cash and equivalents, beginning of
    year


110,906



64,601



132,803Cash and equivalents, end of year

$
62,331



110,906



64,601   The accompanying notes are an
    integral part of these statements.
  41




---



##### 



Notes to
    Consolidated Financial Statements
 GARDNER DENVER, INC.
 (Dollars in thousands except
    per share amounts or amounts described in
    millions)
   Note 1:
    Summary
    of Significant Accounting Policies  Basis
    of Presentation
  Form 10-K two-for-one
  Principles
    of Consolidation
    Use of
    Estimates
    Foreign
    Currency Translation
    Revenue
    Recognition
    Cash
    Equivalents
    Accounts
    Receivable
   42




---



##### 



Inventories
    and Warranty Reserves
  first-in, last-in,
  Property,
    Plant and Equipment
    Goodwill
    and Other Intangibles
      Impairment
    of Long-Lived Assets and Long-Lived Assets to be
    Disposed
    Pension
    and Other Postretirement Benefits
   43




---



##### 



Income
    Taxes
    Research
    and Development
    Derivative
    Financial Instruments
       44




---



##### 



Stock-Based
    Compensation
  Accounting for Stock Issued to Employees, Accounting for Stock-Based Compensation, Share-Based Payment,
  Comprehensive
    Income
    Changes
    in Accounting Principles and Effects of New Accounting
    Pronouncements
  , Inventory
    Costs - an amendment to ARB No. 43, Chapter 4.
      Accounting Changes and Error Corrections,
 45




---



##### 



Accounting for Uncertainty in Income Taxesan
    interpretation of FASB Statement No. 109
  06-3 How Taxes Collected from Customers and Remitted to
    Governmental Authorities Should Be Presented in the Income
    Statement (That Is, Gross versus Net Presentation) 06-3) Disclosure of Accounting Policies. 06-3 06-3
  Fair Value Measurements
  Employers Accounting for Defined Benefit Pension
    and Other Postretirement Plansan amendment of FASB
    Statements No. 87, 88, 106 and 132(R)
  Considering the Effects of
    Prior Year Misstatements when Quantifying Misstatements in
    Current Year Financial Statements
 46




---



##### 



The Fair Value Option for Financial Assets and
    Financial Liabilities
  Note 2:
    Business
    Combinations    Date of Acquisition

Acquired Entity

Net Transaction ValueJanuary 9, 2006

Todo Group

126.2 Swedish Kronor
    (approximately $16.1 million)July 1, 2005

Thomas Industries Inc.

$483.5 millionJune 1, 2005

Bottarini S.p.A.

8.0 million
    (approximately $10.0 million)September 1, 2004

nash_elmo Holdings, LLC

$224.6 millionJanuary 2, 2004

Syltone plc

£63.0 (approximately
    $112.5 million)   TODO-MATIC Emco
    Wheaton
    Acquisition
    of Thomas Industries
    Inc.
  agreed-upon
   47




---



##### 



Thomas Industries Inc.
 Purchase Price Allocation and Adjustments
 December 31, 2006
  Total intangible assets recorded
    as of December 31, 2005

$
360,373Purchase accounting adjustments
    recorded in 2006:Fair value of other assets and
    liabilities, net


3,036Fair value of property, plant and
    equipment, net


3,115Termination benefits and other
    related liabilities


(2,872
)Income taxes, net


(3,829
)Other, net


1,780Total intangible assets recorded
    as of December 31, 2006

$
361,603Goodwill

$
262,258Identifiable intangible assets


99,345Total

$
361,603   No. 95-3, Recognition of Liabilities in Connection with a
    Purchase Business Combination.
  Voluntary and involuntary employee
    termination and relocation

$
14,454Lease termination and related costs


1,007Other


1,026Total

$
16,487     TerminationBenefits


Other


TotalEstablished at July 1, 2005

$
16,814



686



17,500Amounts paid


(8,157
)






(8,157
)Balance at December 31, 2005


8,657



686



9,343Additional amounts accrued
    (reversed), net


(2,360
)


1,347



(1,013
)Amounts paid


(3,449
)


(719
)


(4,168
)Other


301



263



564Balance at December 31, 2006

$
3,149



1,577



4,726     48




---



##### 



Unaudited2005

2004Revenues

$
1,435,471


1,305,970Net income(1)(2)


72,099


136,819Diluted earnings per share(1)(2)

$
1.37


2.81   (1)
    
    Net income and diluted earnings per
    share for 2004, include a one-time gain of $160.4 million,
    pre-tax, related to Thomas sale of its equity interest in
    the Genlyte Thomas Group LLC (GTG) on July 31,
    2004. Assuming that Thomas had sold its interest in GTG on
    January 1, 2004, and had not generated this one-time gain,
    and used a portion of the net proceeds from the sale to repay
    all of Thomas existing debt, other than capitalized lease
    obligations, diluted pro forma earnings per share for 2004 would
    have been $0.86.(2)
    
    Net income for 2005 and 2004
    reflect the negative impact of recording $3.9 million and
    $3.6 million, respectively, in inventory pre-tax
    step-up
    adjustments relating to recording the Thomas and Nash Elmo
    inventories, respectively, at fair value.  Note 3:
    Allowance
    for Doubtful Accounts    2006


2005


2004Balance at beginning of year

$
9,605



7,543



4,534Provision charged to expense


1,644



2,489



918Charged to other accounts(1)


700



1,751



4,007Deductions


(1,635
)


(2,178
)


(1,916
)Balance at end of year

$
10,314



9,605



7,543   (1)
    
    Includes the allowance for doubtful
    accounts of acquired businesses at the dates of acquisition and
    the effect of foreign currency translation adjustments for those
    companies whose functional currency is not the U.S. dollar.  Note 4:
    Inventories    2006


2005Raw materials, including parts and
    subassemblies

$
125,278



95,855Work-in-process


38,052



37,230Finished goods


72,228



80,494235,558



213,579Excess of FIFO costs over LIFO
    costs


(10,491
)


(6,253
)Inventories, net

$
225,067



207,326    49




---



##### 



Note 5:
    Property,
    Plant and Equipment    2006


2005Land and land improvements

$
24,711



20,306Buildings


134,907



138,081Machinery and equipment


210,704



194,936Tooling, dies, patterns, etc.


46,333



37,824Office furniture and equipment


39,262



27,903Other


7,900



13,073Construction in progress


11,663



10,303475,480



442,426Accumulated depreciation


(198,987
)


(159,835
)Property, plant and equipment, net

$
276,493



282,591   Note 6:
    Goodwill
    and Other Intangible Assets      Compressor &


Fluid TransferVacuum Products


Products


TotalBalance as of December 31,
    2004

$
336,075



38,084



374,159Acquisitions


256,942







256,942Adjustments to goodwill


4,332







4,332Foreign currency translation


(13,908
)


(1,281
)


(15,189
)Balance as of December 31,
    2005

$
583,441



36,803



620,244Acquisitions






13,641



13,641Adjustments to goodwill


(6,181
)


12,365



6,184Foreign currency translation


33,430



3,281



36,711Balance as of December 31,
    2006

$
610,690



66,090



676,780  50




---



##### 



2006


2005Gross Carrying

Accumulated


Gross Carrying

AccumulatedAmount

Amortization


Amount

AmortizationAmortized intangible assets:Customer lists and relationships

$
63,300


(9,723
)


105,896


(7,389
)Acquired technology


40,246


(19,378
)


30,802


(13,164
)Other


10,595


(5,336
)


13,453


(3,558
)Unamortized intangible assets:Trademarks


116,762






77,476


Total other intangible assets

$
230,903


(34,437
)


227,627


(24,111
)     Note 7:
    Accrued
    Liabilities    2006

2005Salaries, wages and related fringe
    benefits

$
55,220


41,932Taxes


48,401


42,363Advance payments on sales contracts


17,045


15,208Product warranty


15,298


15,254Product liability, workers
    compensation and insurance


13,802


11,711Other


62,086


58,267Total accrued liabilities

$
211,852


184,735     2006


2005


2004Balance as of January 1

$
15,254



10,671



6,635Product warranty accruals


12,561



9,575



7,476Settlements


(14,216
)


(10,008
)


(7,611
)Other (primarily acquisitions and
    foreign currency translation)


1,699



5,016



4,171Balance as of December 31

$
15,298



15,254



10,671  51




---



##### 



Note 8:
    Debt  Debt as of
    December 31, 2006 and 2005 consists of the following:
  2006

2005Short-term debt

$
1,740


5,456Long-term debt:Credit Line, due 2010(1)

$
109,968


158,900Term Loan, due 2010(2)


145,000


255,000Senior Subordinated Notes at 8%,
    due 2013


125,000


125,000Secured Mortgages(3)


9,635


8,892Variable Rate Industrial Revenue
    Bonds, due 2018(4)


8,000


8,000Capitalized leases and other
    long-term debt


7,905


7,474Total long-term debt, including
    current maturities


405,508


563,266Current maturities of long-term
    debt


22,049


20,625Long-term debt, less current
    maturities

$
383,459


542,641   (1)
    
    The loans under this facility may
    be denominated in U.S. dollars or several foreign
    currencies. At December 31, 2006, the outstanding balance
    consisted of U.S. dollar borrowings of $18,500, Euro
    borrowings of 53,000, and British pound borrowings of
    £11,000. The interest rates under the facility are based on
    prime, federal funds
    and/or LIBOR
    for the applicable currency. The weighted-average interest rates
    were 5.9%, 4.4% and 5.9%, as of December 31, 2006 for the
    U.S. dollar, Euro and British pound loans, respectively.
    The interest rates averaged 6.2%, 4.1% and 6.0%, for the year
    ended December 31, 2006 for the U.S. dollar, Euro and
    British pound loans, respectively.(2)
    
    The interest rate varies with prime
    and/or
    LIBOR. At December 31, 2006, this rate was 6.3% and
    averaged 6.4% for the year ended December 31, 2006.(3)
    
    This amount consists of two
    fixed-rate commercial loans assumed in the 2004 acquisition of
    Nash Elmo with an outstanding balance of 7,302 at
    December 31, 2006. The loans are secured by the
    Companys facility in Bad Neustadt, Germany.(4)
    
    The interest rate varies with
    market rates for tax-exempt industrial revenue bonds. At
    December 31, 2006, this rate was 4.0% and averaged 3.5% for
    the year ended December 31, 2006. These industrial revenue
    bonds are secured by an $8,100 standby letter of credit. The
    proceeds from the bonds were used to construct the
    Companys Peachtree City, Georgia facility.           52




---



##### 



Note 9:
    Benefit
    Plans  Pension
    and Postretirement Benefit Plans
         53




---



##### 



Pension Benefits


OtherU.S. Plans


Non-U.S. Plans


Postretirement Benefits2006


2005


2006


2005


2006


2005Reconciliation of benefit
    obligations:Obligations as of January 1

$
74,909



60,669


$
182,292



150,483


$
31,026



25,493Service cost


2,907



2,996



5,639



4,298



40



83Interest cost


3,963



3,731



8,904



7,824



1,491



1,507Actuarial (gains) losses


(1,303
)


1,936



(6,764
)


26,496



(4,320
)


4,271Employee contributions










986



988







Plan amendments


2



55











(715
)


Benefit payments


(5,460
)


(4,867
)


(4,573
)


(2,719
)


(2,383
)


(2,485
)Acquisitions






10,389



401



12,536







2,157Special termination benefits














291







Effect of foreign currency
    exchange rate changes










24,818



(17,905
)






Obligations as of December 31

$
75,018



74,909


$
211,703



182,292


$
25,139



31,026Reconciliation of fair value of
    plan assets:Fair value of plan assets as of
    January 1

$
56,830



47,773


$
122,077



114,394Actual return on plan assets


8,238



2,643



8,101



17,760Acquisitions






9,003







1,207Employer contributions


3,615



2,278



4,787



4,213Employee contributions










986



988Benefit payments


(5,460
)


(4,867
)


(5,739
)


(3,534
)Effect of foreign currency
    exchange rate changes










17,195



(12,951
)Fair value of plan assets as of
    December 31

$
63,223



56,830


$
147,407



122,077Funded status as of
    December 31

$
(11,795
)


(18,079
)

$
(64,296
)


(60,215
)

$
(25,139
)


(31,026
)  54




---



##### 



Pension Benefits

OtherU.S. Plans


Non-U.S. Plans

Postretirement Benefits2006

2005


2006

2005

2006


2005Recognized in accumulated other
    comprehensive income:Net actuarial losses (gains)

$
6,835





$
21,921




$
(6,412
)


Prior-service cost (credit)


39












(932
)


Not recognized in accumulated
    other comprehensive income:Net actuarial losses (gains)





12,470






23,270






(2,323
)Prior-service cost (credit)





(314
)












(492
)Amounts not yet recognized as a
    component of net periodic benefit cost

$
6,874


12,156


$
21,921


23,270

$
(7,344
)


(2,815
)     Incremental EffectBefore Application

of Applying SFAS


After Applicationof
    SFAS No. 158

No. 158


of
    SFAS No. 158Accrued liabilities

$
211,459


393



211,852Postretirement benefits other than
    pensions


30,105


(7,507
)


22,598Deferred income tax liabilities


72,975


(6,515
)


66,460Other liabilities


70,276


28,564



98,840Total liabilities


882,766


14,935



897,701Accumulated other comprehensive
    income


60,460


(9,729
)


50,731Total stockholders equity


862,259


(9,729
)


852,530Total liabilities and
    stockholders equity

$
1,745,025


5,206



1,750,231     2006


2005Funded status

$
(101,230
)


(109,320
)Unrecognized net actuarial loss


22,344



33,417Unrecognized prior-service credit


(893
)


(806
)Accumulated other comprehensive
    income


(21,451
)


Total pension and other
    postretirement benefit liability recognized on the Consolidated
    Balance Sheet

$
(101,230
)


(76,709
)  55




---



##### 



2006


2005Accrued liabilities

$
(2,893
)


(2,454
)Postretirement benefits other than
    pensions


(22,476
)


(31,387
)Deferred income taxes






5,890Other liabilities


(75,861
)


(58,386
)Accumulated other comprehensive
    income






9,628Total pension and other
    postretirement accrued benefit liability

$
(101,230
)


(76,709
)     U.S. Plans

Non-U.S. Plans2006

2005

2006

2005Projected benefit obligation

$
75,018


74,909

$
211,342


182,292Accumulated benefit obligation


75,018


74,734


181,336


155,202Fair value of plan assets


63,223


56,830


147,060


122,077   non-U.S. defined
    Pension Benefits


OtherU.S. Plans


Non-U.S. Plans


Postretirement Benefits2006


2005


2004


2006


2005


2004


2006


2005


2004Service cost

$
2,907



2,996



2,119


$
5,639



4,298



4,187


$
40



83



16Interest cost


3,962



3,731



3,356



8,904



7,824



6,413



1,491



1,507



1,649Expected return on plan assets


(4,353
)


(4,489
)


(3,701
)


(9,950
)


(8,251
)


(6,853
)










Amortization of transition liability






4



5























25Amortization of prior-service cost


(57
)


(82
)


(86
)














(274
)


(106
)


(156
)Amortization of net loss (gain)


452



223



255



512



197



211



(469
)


(744
)


(559
)Net periodic benefit cost


2,911



2,383



1,948



5,105



4,068



3,958


$
788



740



975SFAS No. 88 (gain)/loss
    due to settlements or curtailments  special
    termination benefits


(294
)














291



Total net periodic benefit cost
    recognized

$
2,617



2,383



1,948


$
5,105



4,359



3,958      56




---



##### 



Pension Benefits


OtherU.S. Plans


Non-U.S. Plans


Postretirement Benefits2006


2005


2004


2006


2005


2004


2006


2005


2004Discount rate


5.6
%


6.0
%


6.3
%


4.6
%


5.3
%


5.5
%


5.6
%


6.0
%


6.3
%Expected long-term rate of return
    on plan assets


8.0
%


8.9
%


9.0
%


7.6
%


7.5
%


7.6
%


N/A



N/A



N/ARate of compensation increases


5.5
%


5.0
%


5.0
%


3.4
%


3.4
%


3.4
%


N/A



N/A



N/A     Pension Benefits


OtherU.S. Plans


Non-U.S. Plans


Postretirement Benefits2006


2005


2004


2006


2005


2004


2006


2005


2004Discount rate


5.9
%


5.6
%


6.0
%


5.1
%


4.6
%


5.4
%


5.9
%


5.6
%


6.0
%Rate of compensation increases


N/A



5.0
%


5.0
%


3.9
%


3.4
%


3.4
%


N/A



N/A



N/A     2006


2005


2004Healthcare cost trend rate assumed
    for next year


11.0
%


11.8
%


7.9
%Rate to which the cost trend rate
    is assumed to decline (the ultimate trend rate)


5.0
%


5.0
%


5.0
%Year that the rate reaches the
    ultimate trend rate


2013



2013



2010     1% Increase

1% DecreaseEffect on total of service and
    interest cost components of net periodic benefit
    cost  increase (decrease)

$
109

$
(97
)Effect on the postretirement
    benefit obligation  increase (decrease)


1,532


(1,360
)    57




---



##### 



non-U.S. pension
  Pension BenefitsNon-U.S.

OtherU.S. Plans

Plans

Postretirement
    Benefits2007

$
6,205


4,768


2,7412008


6,080


4,979


2,8172009


5,935


5,427


2,8102010


6,650


5,919


2,8492011


6,326


6,643


2,794Aggregate
    2012-2016

$
33,712


40,314


12,727   non-U.S. pension
  U.S. Plans


Non-U.S. PlansCurrent








Current2006


2005


Target


2006


2005


TargetAsset category:Equity securities


54
%


69
%


70
%


61
%


60
%


59
%Debt securities


25
%


31
%


30
%


32
%


29
%


31
%Other


21
%










7
%


11
%


10
%Total


100
%


100
%


100
%


100
%


100
%


100
%     Defined
    Contribution Plans
    Other
   58




---



##### 



Note 10:
    Stockholders
    Equity and Earnings Per Share  two-for-one Form 10-K two-for-one
      2006

2005

2004Amt.





Amt.





Amt.Net

Wtd. Avg.

Per

Net

Wtd. Avg.

Per

Net

Wtd. Avg.

PerIncome

Shares

Share

Income

Shares

Share

Income

Shares

ShareBasic earnings per
    share:Income available to common
    stockholders

$
132,908


52,330,405

$
2.54

$
66,951


47,827,508

$
1.40

$
37,123


37,909,682

$
0.98Diluted earnings per
    share:Effect of dilutive securities:Stock options granted and
    outstanding





1,129,702








1,082,716








845,278Income available to common
    stockholders and assumed conversions

$
132,908


53,460,107

$
2.49

$
66,951


48,910,224

$
1.37

$
37,123


38,754,960

$
0.96     Note 11:
    Accumulated
    Other Comprehensive Income   59




---



##### 



Foreign











AccumulatedCurrency


Unrecognized


Minimum


Pension and


OtherTranslation


Gains (Losses) on


Pension


Postretirement


ComprehensiveAdjustment


Cash Flow Hedges


Liability


Benefit Plans


IncomeBalance at December 31, 2003

$
20,048







(5,155
)






14,893Before tax income (loss)


15,524



303



(560
)






15,267Income tax effect






(115
)


140







25Other comprehensive income (loss)


15,524



188



(420
)






15,292Balance at December 31, 2004


35,572



188



(5,575
)






30,185Before tax (loss) income


(19,707
)


2,740



(6,505
)






(23,472
)Income tax effect






(1,041
)


2,452







1,411Other comprehensive (loss) income


(19,707
)


1,699



(4,053
)






(22,061
)Balance at December 31, 2005


15,865



1,887



(9,628
)






8,124Before tax income (loss)


48,244



(532
)


7,244







54,956Income tax effect






202



(2,822
)






(2,620
)Other comprehensive income (loss)


48,244



(330
)


4,422







52,336Reversal of minimum pension
    liability(1)










8,274







8,274Income tax effect(1)










(3,068
)






(3,068
)Recognition of funded status of
    benefit plans(1)














(21,451
)


(21,451
)Income tax effect(1)














6,516



6,516Balance at December 31, 2006

$
64,109



1,557







(14,935
)


50,731   (1)
    
    Reflects adoption of the
    recognition provisions of SFAS No. 158 as of
    December 31, 2006. See Note 9 Benefit
    Plans.    2006

2005


2004Net income

$
132,908


66,951



37,123Other comprehensive income (loss)


52,336


(22,061
)


15,292Comprehensive income

$
185,244


44,890



52,415   Note 12:
    Income
    Taxes    2006

2005

2004U. S

$
113,865


30,098


26,934Non-U.S.


86,750


65,546


25,352Income before income taxes

$
200,615


95,644


52,286  60




---



##### 



2006


2005


2004Current:U.S. federal

$
46,374



7,079



8,458U.S. state and local


3,750



1,161



692Non-U.S.


16,428



18,457



6,584Deferred:U.S. federal


(3,538
)


2,503



(513
)U.S. state and local


(303
)


215



(44
)Non-U.S.


4,996



(722
)


(14
)Provision for income taxes

$
67,707



28,693



15,163     2006


2005


2004U.S. federal corporate
    statutory rate


35.0
%


35.0
%


35.0
%State and local taxes, less
    federal tax benefit


1.7



1.4



1.2Foreign income taxes


(4.4
)


(5.4
)


(4.4
)Export benefit


(0.4
)


(1.1
)


(2.5
)Manufacturing benefit


(0.5
)


(0.3
)


American Jobs Creation Act Dividend






0.9



Repatriation cost


1.7







Other, net


0.7



(0.5
)


(0.3
)Effective income tax rate


33.8
%


30.0
%


29.0
%     2006


2005Deferred tax assets:Reserves and accruals

$
39,871



34,131Postretirement benefits other than
    pensions


16,293



12,239Tax loss carryforwards


9,207



9,702Foreign tax credit carryforwards


527



765Other


5,032



7,137Total deferred tax assets


70,930



63,974Valuation allowance


(8,025
)


(5,778
)Deferred tax
    liabilities:LIFO inventory


(3,658
)


(5,095
)Property, plant and equipment


(33,259
)


(30,097
)Intangibles


(72,192
)


(63,238
)Other


(5,894
)


(20,183
)Total deferred tax liabilities


(115,003
)


(118,613
)Net deferred income tax liability

$
(52,098
)


(60,417
)    61




---



##### 



Tax

Valuation


Net TaxBenefit

Allowance


Benefit2006

$
333


(333
)


2007


474


(466
)


82008


88


(65
)


232009


2,206


(2,197
)


92010


1,873


(1,856
)


172011


533


(533
)


2016


730


(730
)


2024


710






7102028


29


(29
)


2029


68


(68
)


Indefinite life


2,163


(1,748
)


415Total

$
9,207


(8,025
)


1,182   non-U.S. subsidiaries
        Note 13.
    Stock-Based
    Compensation Plans  ,
   62




---



##### 



Statement of Cash Flows,
  2006Selling and administrative expenses

$
5,340Total stock-based compensation
    expense included in operating expenses


5,340Income before income taxes


(5,340
)Provision for income taxes


1,509Net income

$
(3,831
)Basic and diluted earnings per
    share

$
(0.07
)Net cash provided by operating
    activities

$
(3,674
)Net cash used in financing
    activities

$
3,674   Plan
    Descriptions
       63




---



##### 



Stock
    Option Awards
    Outstanding



Weighted-AverageWeighted-Average

Aggregate

RemainingShares


Exercise Price

Intrinsic Value

Contractual LifeOutstanding at December 31,
    2005


2,665


$
12.39Granted


361



31.98Exercised


(581
)


9.94Forfeited or canceled


(23
)


24.80Outstanding at December 31,
    2006


2,422



15.78

$
52,224


4.2 yearsExercisable at December 31,
    2006


1,632


$
11.59

$
41,968


3.7 years       Restricted
    Stock Awards
    Weighted-AverageGrant DateShares


Fair ValueNonvested at December 31, 2005


36


$
8.85Granted


50



30.58Vested


(36
)


8.85Forfeited


(5
)


30.58Nonvested at December 31, 2006


45


$
30.58    64




---



##### 



Valuation
    Assumptions
    2006


2005


2004Assumptions:Risk-free interest rate


4.7
%


3.9
%


3.1
%Dividend yield










Volatility factor


27



33



34Expected life (in years)


4.8



4.4



4.5   Pro
    Forma Net Earnings
    2005


2004Net income, as reported

$
66,951



37,123Less: Total stock-based employee
    compensation expense determined under fair-value method, net of
    related tax effects


(2,074
)


(1,359
)Pro forma net income

$
64,877



35,764Basic earnings per share, as
    reported

$
1.40



0.98Basic earnings per share, pro forma

$
1.36



0.95Diluted earnings per share, as
    reported

$
1.37



0.96Diluted earnings per share, pro
    forma

$
1.33



0.93    65




---



##### 



Note 14: Off-Balance
    Sheet Risk, Concentrations of Credit Risk and Fair Value of
    Financial Instruments
  Off-Balance
    Sheet Risk and Concentrations of Credit Risk
        Fair
    Value of Financial Instruments
          2006

2005Average


Average






Average


AverageNotional

Receive


Pay


Fair

Notional

Receive


Pay


FairAmount

Rate


Rate


Value

Amount

Rate


Rate


ValueForeign currency forwards

$



N/A



N/A






2,581


N/A



N/A



(252
)Interest rate swaps

$
70,000


5.4
%


4.4
%


1,850


165,000


4.3
%


3.8
%


3,376    66




---



##### 



Note 15:
    Contingencies    and/or
        on-site
 67




---



##### 



Note 16:
    Segment
    Information           68




---



##### 



Revenues


Operating Earnings


Identifiable Assets at December, 312006


2005


2004


2006


2005


2004


2006


2005


2004Compressor and Vacuum Products

$
1,310,505



982,476



572,181


$
140,805



83,093



42,398


$
1,481,203



1,422,119



811,290Fluid Transfer Products


358,671



232,076



167,358



94,268



37,542



19,352



192,335



156,281



143,253Total

$
1,669,176



1,214,552



739,539



235,073



120,635



61,750



1,673,538



1,578,400



954,543Interest expense














(37,379
)


(30,433
)


(10,102
)Other income, net














2,921



5,442



638Income before income taxes













$
200,615



95,644



52,286General corporate (unallocated)


























76,693



136,660



74,066Total assets

























$
1,750,231



1,715,060



1,028,609   LIFO Liquidation


Depreciation andIncome (before Tax)


Amortization Expense


Capital Expenditures2006


2005


2004


2006


2005


2004


2006


2005


2004Compressor and Vacuum Products

$
275







132


$
46,809



33,705



17,414


$
36,576



30,588



15,221Fluid Transfer Products


125











5,400



4,617



4,487



4,539



4,930



4,329Total

$
400







132


$
52,209



38,322



21,901


$
41,115



35,518



19,550   Property, Plant and EquipmentRevenues


at December 31,2006


2005


2004


2006


2005


2004United States

$
695,210



495,282



327,551


$
103,443



108,372



71,026Europe


601,786



418,165



237,775



150,582



156,559



70,055Asia


191,757



167,273



93,150



17,300



13,981



5,834Canada


81,593



56,942



37,564



129



141



263Latin America


56,594



43,169



32,227



4,382



2,952



1,532Other


42,236



33,721



11,272



657



586



109Total

$
1,669,176



1,214,552



739,539


$
276,493



282,591



148,819   Note 17:
    Guarantor
    Subsidiaries   69




---



##### 



Selected
    Consolidating Balance Sheet Line Items
    December 31, 2005
    AS REVISED
  Parent


Guarantor


Non-GuarantorCompany


Subsidiaries


Subsidiaries


Eliminations


ConsolidatedAssetsInvestments in affiliates

$
926,888



245,611



32



(1,172,499
)


32Other assets


21,287



(5,973
)


5,503



1,593



22,410Total assets


1,172,042



620,167



1,099,051



(1,176,200
)


1,715,060Liabilities and
    Stockholders EquityLong-term inter-company payable
    (receivable)


48,596



(195,088
)


160,574



(14,082
)


Total liabilities


626,285



(106,874
)


547,769



(10,409
)


1,056,771Stockholders equity:Capital in excess of par value


472,334



698,185



474,673



(1,172,367
)


472,825Total stockholders equity


545,757



727,041



551,282



(1,165,791
)


658,289Total liabilities and
    stockholders equity

$
1,172,042



620,167



1,099,051



(1,176,200
)


1,715,060   Selected
    Consolidating Balance Sheet Line Items
    December 31, 2005
    AS PREVIOUSLY REPORTED
  Parent


Guarantor


Non-GuarantorCompany


Subsidiaries


Subsidiaries


Eliminations


ConsolidatedAssetsInvestments in affiliates

$
671,182



40,645



32



(711,791
)


68Other assets


21,287



(5,973
)


5,503



1,557



22,374Total assets


916,336



415,201



1,099,051



(715,528
)


1,715,060Liabilities and
    Stockholders EquityLong-term inter-company
    (receivable) payable


(207,110
)


(98,395
)


319,587



(14,082
)


Total liabilities


370,579



(10,181
)


706,782



(10,409
)


1,056,771Stockholders equity:Capital in excess of par value


472,334



396,526



315,660



(711,695
)


472,825Total stockholders equity


545,757



425,382



392,269



(705,119
)


658,289Total liabilities and
    stockholders equity

$
916,336



415,201



1,099,051



(715,528
)


1,715,060  70




---



##### 



RECONCILIATION
    OF THE CHANGES
  Long-TermInvestment





Inter-Company


Capital in ExcessIn Affiliates


Other Assets


(Receivable) Payable


of par ValueParent CompanyDecember 31, 2005 balance as
    previously reported

$
671,182



21,287



(207,110
)


472,334Reclassification of Investment in
    Guarantor Subsidiaries from Long-term inter-company (receivable)
    payable


301,659







301,659



Reclassification of Investment in
    Non-guarantor Subsidiaries from Long-term inter-company
    (receivable) payable


(45,953
)






(45,953
)


December 31, 2005 balance as
    revised

$
926,888



21,287



48,596



472,334   Long-TermInvestment





Inter-Company


Capital in ExcessIn Affiliates


Other Assets


(Receivable) Payable


of par ValueGuarantor
    SubsidiariesDecember 31, 2005 balance as
    previously reported

$
40,645



(5,973
)


(98,395
)


396,526Reclassification of Investment in
    Non-guarantor Subsidiaries from Long-term inter-company
    (receivable) payable


204,966







204,966



Reclassification of Capital in
    excess of par from Long-term inter-company (receivable) payable










(301,659
)


301,659December 31, 2005 balance as
    revised

$
245,611



(5,973
)


(195,088
)


698,185   Long-TermInvestment





Inter-Company


Capital in ExcessIn Affiliates


Other Assets


(Receivable) Payable


of par ValueNon-Guarantor
    SubsidiariesDecember 31, 2005 balance as
    previously reported

$
32



5,503



319,587



315,660Reclassification of Capital in
    excess of par from Long-term inter-company (receivable) payable










(159,013
)


159,013December 31, 2005 balance as
    revised

$
32



5,503



160,574



474,673   71




---



##### 



Long-TermInvestment





Inter-Company


Capital in ExcessIn Affiliates


Other Assets


(Receivable) Payable


of par ValueEliminationsDecember 31, 2005 balance as
    previously reported

$
(711,791
)


1,557



(14,082
)


(711,695
)Reclassification of Investment in
    Guarantor Subsidiaries from Long-term inter-company (receivable)
    payable


(301,659
)






(301,659
)


Reclassification of Investment in
    Non-guarantor Subsidiaries from Long-term inter-company
    (receivable) payable


(159,013
)






(159,013
)


Reclassification of Capital in
    excess of par from Long-term inter-company (receivable) payable










460,672



(460,672
)Other


(36
)


36







December 31, 2005 balance as
    revised

$
(1,172,499
)


1,593



(14,082
)


(1,172,367
)   Consolidating
    Statement of Operations
    Year Ended December 31, 2006
  Parent


Guarantor


Non-GuarantorCompany


Subsidiaries


Subsidiaries


Eliminations


ConsolidatedRevenues

$
437,152



432,168



990,275



(190,419
)


1,669,176Costs and expenses:Cost of sales (excluding
    depreciation and amortization)


283,979



301,886



692,171



(193,979
)


1,084,057Depreciation and amortization


10,388



12,615



29,206







52,209Selling and administrative expenses


79,135



52,889



165,813







297,837Interest expense (income)


36,317



(9,349
)


10,411







37,379Other (income) expense, net


(3,313
)


(6,897
)


7,289







(2,921
)Total costs and expenses


406,506



351,144



904,890



(193,979
)


1,468,561Income before income taxes


30,646



81,024



85,385



3,560



200,615Provision for income taxes


12,188



32,223



23,296







67,707Net income

$
18,458



48,801



62,089



3,560



132,908  72




---



##### 



Consolidating
    Statement of Operations
    Year Ended December 31, 2005
  Parent


Guarantor


Non-GuarantorCompany


Subsidiaries


Subsidiaries


Eliminations


ConsolidatedRevenues

$
342,873



264,139



637,692



(30,152
)


1,214,552Costs and expenses:Cost of sales (excluding
    depreciation and amortization)


237,376



190,570



416,867



(31,586
)


813,227Depreciation and amortization


9,874



7,036



21,412







38,322Selling and administrative expenses


70,342



42,848



129,178







242,368Interest expense


29,211







1,222







30,433Other (income) expense, net


(4,605
)


(3,751
)


2,828



86



(5,442
)Total costs and expenses


342,198



236,703



571,507



(31,500
)


1,118,908Income before income taxes


675



27,436



66,185



1,348



95,644Provision for income taxes


246



10,014



18,433







28,693Net income

$
429



17,422



47,752



1,348



66,951   Consolidating
    Statement of Operations
    Year Ended December 31, 2004
  Parent


Guarantor


Non-GuarantorCompany


Subsidiaries


Subsidiaries


Eliminations


ConsolidatedRevenues

$
297,981



109,596



361,815



(29,853
)


739,539Costs and expenses:Cost of sales (excluding
    depreciation and amortization)


205,807



80,962



243,410



(31,744
)


498,435Depreciation and amortization


9,587



2,450



9,864







21,901Selling and administrative expenses


61,321



16,080



80,052







157,453Interest expense


6,644







3,458







10,102Other (income) expense, net


(2,291
)


(1,208
)


2,061



800



(638
)Total costs and expenses


281,068



98,284



338,845



(30,944
)


687,253Income before income taxes


16,913



11,312



22,970



1,091



52,286Provision for income taxes


5,395



3,608



6,160







15,163Net income

$
11,518



7,704



16,810



1,091



37,123  73




---



##### 



Consolidating
    Balance Sheet
    December 31, 2006
  Parent


Guarantor


Non-GuarantorCompany


Subsidiaries


Subsidiaries


Eliminations


ConsolidatedAssetsCurrent assets:Cash and equivalents

$
5,347



(573
)


57,557







62,331Accounts receivable, net


61,671



54,357



145,087







261,115Inventories, net


31,846



59,218



133,047



956



225,067Deferred income taxes


8,760



6,750







(1,148
)


14,362Other current assets


(772
)


5,085



12,530







16,843Total current assets


106,852



124,837



348,221



(192
)


579,718Intercompany (payable) receivables


(257,370
)


253,992



2,538



840



Investments in affiliates


920,520



215,130



29



(1,135,650
)


29Property, plant and equipment, net


53,438



48,720



174,335







276,493Goodwill


113,441



191,146



372,193







676,780Other intangibles, net


7,915



44,249



144,302







196,466Other assets


17,684



703



4,498



(2,140
)


20,745Total assets

$
962,480



878,777



1,046,116



(1,137,142
)


1,750,231Liabilities and
    Stockholders EquityShort-term borrowings and current
    maturities of long-term debt

$
20,139







3,650







23,789Accounts payable and accrued
    liabilities


60,163



86,768



166,296



(10,672
)


302,555Total current liabilities


80,302



86,768



169,946



(10,672
)


326,344Long-term intercompany
    (receivable) payable


(37,613
)


(12,714
)


52,587



(2,260
)


Long-term debt, less current
    maturities


302,753



77



80,629







383,459Deferred income taxes






26,731



41,869



(2,140
)


66,460Other liabilities


45,095



3,036



73,307







121,438Total liabilities


390,537



103,898



418,338



(15,072
)


897,701Stockholders equity:Common stock


564















564Capital in excess of par value


490,270



683,557



452,679



(1,135,650
)


490,856Retained earnings


109,475



81,091



135,143



13,580



339,289Accumulated other comprehensive
    income


544



10,231



39,956







50,731Treasury stock, at cost


(28,910
)














(28,910
)Total stockholders equity


571,943



774,879



627,778



(1,122,070
)


852,530Total liabilities and
    stockholders equity

$
962,480



878,777



1,046,116



(1,137,142
)


1,750,231  74




---



##### 



Consolidating
    Balance Sheet
    December 31, 2005
  Parent


Guarantor


Non-GuarantorCompany


Subsidiaries


Subsidiaries


Eliminations


ConsolidatedAssetsCurrent assets:Cash and equivalents

$
5,557



(369
)


105,718







110,906Accounts receivable, net


68,006



41,944



119,517







229,467Inventories, net


35,684



54,867



114,009



2,766



207,326Deferred income taxes


4,377



4,308



22,987



(5,918
)


25,754Other current assets


(716
)


2,846



10,684







12,814Total current assets


112,908



103,596



372,915



(3,152
)


586,267Intercompany (payable) receivables


(68,284
)


53,141



17,285



(2,142
)


Investments in affiliates


926,888



245,611



32



(1,172,499
)


32Property, plant and equipment, net


57,167



49,397



176,027







282,591Goodwill


113,441



144,864



361,939







620,244Other intangibles, net


8,635



29,531



165,350







203,516Other assets


21,287



(5,973
)


5,503



1,593



22,410Total assets

$
1,172,042



620,167



1,099,051



(1,176,200
)


1,715,060Liabilities and
    Stockholders EquityShort-term borrowings and current
    maturities of long-term debt

$
19,616







6,465







26,081Accounts payable and accrued
    liabilities


86,776



73,930



135,382



(8,325
)


287,763Total current liabilities


106,392



73,930



141,847



(8,325
)


313,844Long-term intercompany payable
    (receivable)


48,596



(195,088
)


160,574



(14,082
)


Long-term debt, less current
    maturities


428,854



78



113,709







542,641Deferred income taxes






4,380



85,311



(3,520
)


86,171Other liabilities


42,443



9,826



46,328



15,518



114,115Total liabilities


626,285



(106,874
)


547,769



(10,409
)


1,056,771Stockholders equity:Common stock


278















278Capital in excess of par value


472,334



698,185



474,673



(1,172,367
)


472,825Retained earnings


89,449



33,420



78,947



4,565



206,381Accumulated other comprehensive
    income (loss)


13,015



(4,564
)


(2,338
)


2,011



8,124Treasury stock, at cost


(29,319
)














(29,319
)Total stockholders equity


545,757



727,041



551,282



(1,165,791
)


658,289Total liabilities and
    stockholders equity

$
1,172,042



620,167



1,099,051



(1,176,200
)


1,715,060  75




---



##### 



Consolidating
    Condensed Statement of Cash Flows
    Year Ended December 31, 2006
  Parent


Guarantor


Non-GuarantorCompany


Subsidiaries


Subsidiaries


Eliminations


ConsolidatedCash flows provided by (used in)
    operating activities

$
126,096



(45,711
)


101,288



(14,481
)


167,192Cash flows from investing
    activities:Net cash paid in business
    combinations


(3,683
)






(17,437
)






(21,120
)Capital expenditures


(9,070
)


(4,753
)


(27,292
)






(41,115
)Disposals of property, plant and
    equipment


2,947



975



7,674







11,596Other, net


19



(19
)










Net cash used in investing
    activities


(9,787
)


(3,797
)


(37,055
)






(50,639
)Cash flows from financing
    activities:Net change in long-term
    intercompany receivables/payables


5,711



49,323



(69,515
)


14,481



Principal payments on short-term
    borrowings










(33,266
)






(33,266
)Proceeds from short-term borrowings










28,339







28,339Principal payments on long-term
    debt


(264,087
)






(67,489
)






(331,576
)Proceeds from long-term debt


134,500







23,697







158,197Proceeds from stock options


5,773















5,773Excess tax benefits from
    stock-based compensation


3,492







182







3,674Purchase of treasury stock


(1,260
)














(1,260
)Debt issuance costs


(570
)














(570
)Other


(158
)






(1
)






(159
)Net cash (used in) provided by
    financing activities


(116,599
)


49,323



(118,053
)


14,481



(170,848
)Effect of exchange rate changes on
    cash and equivalents


80



(19
)


5,659







5,720Decrease in cash and equivalents


(210
)


(204
)


(48,161
)






(48,575
)Cash and equivalents, beginning of
    year


5,557



(369
)


105,718







110,906Cash and equivalents, end of period

$
5,347



(573
)


57,557







62,331  76




---



##### 



Consolidating
    Condensed Statement of Cash Flows
    Year Ended December 31, 2005
  Parent


Guarantor


Non-GuarantorCompany


Subsidiaries


Subsidiaries


Eliminations


ConsolidatedCash flows provided by operating
    activities

$
79,754



(21,069
)


56,603



(213
)


115,075Cash flows from investing
    activities:Net cash paid in business
    combinations


(738,890
)


222,053



34,920







(481,917
)Capital expenditures


(14,885
)


(4,825
)


(15,808
)






(35,518
)Disposals of property, plant and
    equipment


2,102



44



1,603







3,749Other


6







(2,231
)






(2,225
)Net cash (used in) provided by
    investing activities


(751,667
)


217,272



18,484







(515,911
)Cash flows from financing
    activities:Net change in long-term
    intercompany receivables/payables


308,741



(198,883
)


(110,071
)


213



Principal payments on short-term
    borrowings










(26,620
)






(26,620
)Proceeds from short-term borrowings










18,354







18,354Principal payments on long-term
    debt


(641,068
)






(18,567
)






(659,635
)Proceeds from long-term debt


813,119







109,320







922,439Proceeds from issuance of common
    stock


199,228















199,228Proceeds from stock options


6,006















6,006Purchase of treasury stock


(2,872
)














(2,872
)Debt issuance costs


(7,885
)


(301
)










(8,186
)Net cash provided by (used in)
    financing activities


675,269



(199,184
)


(27,584
)


213



448,714Effect of exchange rate changes on
    cash and equivalents


(656
)






(917
)






(1,573
)Increase (decrease) in cash and
    equivalents


2,700



(2,981
)


46,586







46,305Cash and equivalents, beginning of
    year


2,857



2,612



59,132







64,601Cash and equivalents, end of year

$
5,557



(369
)


105,718







110,906  77




---



##### 



Consolidating
    Condensed Statement of Cash Flows
    Year Ended December 31, 2004
  Parent


Guarantor


Non-GuarantorCompany


Subsidiaries


Subsidiaries


Eliminations


ConsolidatedCash flows provided by operating
    activities

$
31,135



9,123



33,525



1,711



75,494Cash flows from investing
    activities:Net cash paid in business
    combinations


(219,094
)






(76,219
)






(295,313
)Capital expenditures


(10,050
)


(1,043
)


(8,457
)






(19,550
)Disposals of property, plant and
    equipment


(46
)


221



382







557Net cash used in investing
    activities


(229,190
)


(822
)


(84,294
)






(314,306
)Cash flows from financing
    activities:Net change in long-term
    intercompany receivables/payables


20,236



(5,683
)


(12,842
)


(1,711
)


Principal payments on short-term
    borrowings










(3,648
)






(3,648
)Proceeds from short-term borrowings










327







327Principal payments on long-term
    debt


(258,500
)


(6
)


(15,964
)






(274,470
)Proceeds from long-term debt


353,202







9,331







362,533Proceeds from issuance of common
    stock


79,557















79,557Proceeds from stock options


4,860















4,860Purchase of treasury stock


(500
)














(500
)Debt issuance costs


(1,847
)














(1,847
)Net cash provided by (used in)
    financing activities


197,008



(5,689
)


(22,796
)


(1,711
)


166,812Effect of exchange rate changes on
    cash and equivalents










3,798







3,798Increase (decrease) in cash and
    equivalents


(1,047
)


2,612



(69,767
)






(68,202
)Cash and equivalents, beginning of
    year


3,904







128,899







132,803Cash and equivalents, end of year

$
2,857



2,612



59,132







64,601   Note 18:
    Quarterly
    Financial Information (Unaudited)  First Quarter


Second Quarter


Third Quarter


Fourth Quarter2006


2005


2006


2005


2006


2005


2006


2005Revenues

$
399,294



238,824



416,312



250,346



414,028



356,095



439,542



369,287Gross margin(1)


NA



NA



NA



NA



NA



NA



NA



NANet income(2)

$
30,512



10,292



32,984



14,663



32,117



16,661



37,295



25,335Basic earnings per share(3)

$
0.59



0.26



0.63



0.31



0.61



0.32



0.71



0.49Diluted earnings per share(3)

$
0.57



0.25



0.62



0.30



0.60



0.32



0.70



0.48Common stock prices(3):High

$
32.73



21.57



40.73



20.98



38.76



22.51



39.60



26.08Low

$
24.28



16.99



31.04



17.41



30.44



16.41



29.77



21.27   (1)
    
    The Company reports cost of sales
    excluding depreciation and amortization expense in its
    consolidated statements of operations and, accordingly, does not
    report gross margin net of these expenses.(2)
    
    The quarter ended June 30,
    2006 reflects a $2.3 million ($1.5 million after
    income taxes) net charge to depreciation and amortization
    expense as a result of the finalization of the fair value of the
    Thomas tangible and amortizable intangible assets, of which
    $1.0 million ($0.7 million after income taxes) was
    associated with the six-month period ended December 31,
    2005.(3)
    
    All share amounts reflect the
    effect of a
    two-for-one
    stock split (in the form of a 100% stock dividend) that was
    completed on June 1, 2006.   78




---



##### 



ITEM 9. CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE    ITEM 9A.
    CONTROLS
    AND PROCEDURES  Disclosure
    Controls and Procedures
  Rule 13a-15(e) Form 10-K,
  Managements
    Report on Internal Control over Financial Reporting
    Changes
    in Internal Control over Financial Reporting
    ITEM 9B.
    OTHER
    INFORMATION   PART III  ITEM 10.
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE  Proposal I - Election
    of Directors, Nominees for Election, Directors Whose Terms of Office Will Continue After the
    Meeting; Section 16(a) Beneficial Ownership Reporting
    Compliance; Corporate Governance; Board of Directors Committees
 79




---



##### 



www.gardnerdenver.com
  ITEM 11.
    EXECUTIVE
    COMPENSATION  Compensation of Directors,
    Compensation Discussion & Analysis and
    Executive Management Compensation
 ITEM 12. SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS  Security
    Ownership of Management and Certain Beneficial Owners
 ITEM 13. CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
    INDEPENDENCE  Director
    Independence Certain Relationships and
    Related Transactions
  ITEM 14.
    PRINCIPAL
    ACCOUNTING FEES AND SERVICES  Accounting Fees
 80




---



##### 



PART IV  ITEM 15.
    EXHIBITS AND
    FINANCIAL STATEMENT SCHEDULES  a)
    Documents filed as a part of this report:  Form 10-K:
  Page No.Internal Controls -
    Report of Managements Assessment of Internal Control Over
    Financial Reporting


35Financial
    Statements - Report of Independent Registered Public Accounting
    Firm


36Internal Controls -
    Report of Independent Registered Public Accounting
    Firm


37Consolidated
    Statements of Operations - Years Ended December 31, 2006,
    2005 and 2004


38Consolidated
    Balance Sheets - December 31, 2006 and 2005


39Consolidated
    Statements of Stockholders Equity - Years Ended
    December 31, 2006, 2005 and 2004


40Consolidated
    Statements of Cash Flows - Years Ended December 31, 2006,
    2005 and 2004


41Notes to
    Consolidated Financial Statements


42   b)
    Schedules      2.1

Agreement and Plan of Merger dated
    March 8, 2005 among Gardner Denver, Inc., PT Acquisition
    Corporation and Thomas Industries Inc., filed as
    Exhibit 2.1 to Gardner Denver, Inc.s Current Report
    on
    Form 8-K,
    dated March 9, 2005, and incorporated herein by reference.3.1

Certificate of Incorporation of
    Gardner Denver, Inc., as amended on May 3, 2006, filed as
    Exhibit 3.1 to Gardner Denver, Inc.s Current Report
    on
    Form 8-K,
    dated May 3, 2006 (SEC File
    No. 001-13215),
    and incorporated herein by reference.3.2

Bylaws of Gardner Denver, Inc., as
    amended on July 31, 2001, filed as Exhibit 3.2 to
    Gardner Denver, Inc.s Quarterly Report on
    Form 10-Q,
    dated August 13, 2001 (SEC File
    No. 001-13215),
    and incorporated herein by reference.4.1

Amended and Restated Rights
    Agreement, dated as of January 17, 2005, between Gardner
    Denver, Inc. and National City Bank as Rights Agent, filed as
    Exhibit 4.1 to Gardner Denver, Inc.s Current Report
    on
    Form 8-K,
    dated January 21, 2005, and incorporated herein by
    reference.4.2

Form of Indenture by and among
    Gardner Denver, Inc., the Guarantors and The Bank of New York
    Trust Company, N.A., as trustee, filed as Exhibit 4.1 to
    Gardner Denver, Inc.s Current Report on
    Form 8-K,
    dated May 4, 2005, and incorporated herein by reference.10.0+

Third Amended and Restated Credit
    Agreement dated as of May 13, 2005 among Gardner Denver,
    Inc. (the Borrower), the financial institutions from
    time to time party thereto (the Lenders), JPMorgan
    Chase Bank, N.A., successor by merger to Bank One, NA, as a
    Lender, an LC Issuer, the Swing Line Lender and as agent for
    itself and the other Lenders, Wachovia Bank, National
    Association, as a Lender and as Syndication Agent for the
    Revolving Loan Facility, Harris Trust and Savings Bank, National
    City Bank of the Midwest and KeyBank National Association, as
    Lenders and as Co-Documentation Agents for the Revolving Credit
    Facility, and Bear Stearns Corporate Lending Inc., as a Lender
    and as Syndication Agent for the Term Loan Facility, filed
    as Exhibit 10.1 to Gardner Denver, Inc.s Current
    Report on
    Form 8-K,
    dated May 16, 2005, and incorporated herein by reference.10.1

Amendment No. 1 to Third
    Amended and Restated Credit Agreement, dated as of June 28,
    2006, by and among the Borrowers, Lenders and Agent. ** 81




---



##### 



10.2

Amendment No. 2 to Third
    Amended and Restated Credit Agreement, dated as of
    August 16, 2006, by and among the Borrowers, Lenders and
    Agent. **10.3

Form of Escrow and Security
    Agreement by and between Gardner Denver, Inc. and The Bank of
    New York Trust Company, N.A., as trustee and escrow agent,
    filed as Exhibit 10.1 to Gardner Denver, Inc.s
    Current Report on
    Form 8-K,
    dated May 4, 2005, and incorporated herein by reference.10.4

Form of Registration Rights
    Agreement by and among Gardner Denver, Inc., the guarantors and
    the initial purchasers named therein, filed as Exhibit 10.2
    to Gardner Denver, Inc.s Current Report on
    Form 8-K,
    dated May 4, 2005, and incorporated herein by reference.10.5*

Gardner Denver, Inc. Long-Term
    Incentive Plan, as amended May 4, 2004 filed as
    Exhibit 10.1 to Gardner Denver, Inc.s Quarterly
    Report on
    Form 10-Q
    dated May 10, 2004 and incorporated herein by reference.10.6*

Gardner Denver, Inc. Supplemental
    Excess Defined Contribution Plan, September 1, 1998
    Restatement, as amended on various dates. **10.7*

Amended and Restated Form of
    Indemnification Agreements between Gardner Denver, Inc. and its
    directors, officers or representatives, filed as
    Exhibit 10.4 to Gardner Denver, Inc.s
    Form 10-K,
    dated March 28, 2002, and incorporated herein by reference.10.8*

Gardner Denver, Inc. Phantom Stock
    Plan for Outside Directors, as amended May 4, 1998,
    March 7, 2000 and November 8, 2005, with an effective
    date of January 1, 2006, filed as Exhibit 10.7 to
    Gardner Denver, Inc.s
    Form 10-K,
    dated March 15, 2006.10.9*

Gardner Denver, Inc. Executive
    Stock Repurchase Program, as amended May 6, 2003 filed as
    Exhibit 10.7 to Gardner Denver, Inc.s Quarterly
    Report on
    Form 10-Q
    dated May 8, 2003 and incorporated herein by reference.10.10*

Gardner Denver, Inc. Incentive
    Stock Option Agreement, filed as Exhibit 10.8 to Gardner
    Denver, Inc.s
    Form 10-K
    dated March 22, 2001, and incorporated herein by reference.10.11*

Gardner Denver, Inc. Nonstatutory
    Stock Option Agreement, filed as Exhibit 10.9 to Gardner
    Denver, Inc.s
    Form 10-K
    dated March 22, 2001, and incorporated herein by reference.10.12*

Form of Gardner Denver, Inc.
    Nonemployee Director Stock Option Agreement, as amended
    July 29, 2003 filed as Exhibit 10.10 to Gardner
    Denver, Inc.s Quarterly Report on
    Form 10-Q
    dated November 12, 2003 and incorporated herein by
    reference.10.13*

Gardner Denver, Inc. Executive
    Annual Bonus Plan, as amended May 3, 2005 and effective
    January 1, 2006, filed as Exhibit 10.4 to Gardner
    Denver, Inc.s Quarterly Report on
    Form 10-Q,
    dated August 9, 2005, and incorporated herein by reference.10.14*

Form of Gardner Denver, Inc.
    Long-Term Cash Bonus Agreement between Gardner Denver, Inc. and
    executive bonus award participants, filed as Exhibit 10.12
    to Gardner Denver, Inc.s
    Form 10-K,
    dated March 28, 2002, and incorporated herein by reference.10.15*

Form of Change in Control
    Agreement dated May 2, 2005, entered into between Gardner
    Denver, Inc. and its Chief Executive Officer, filed as
    Exhibit 10.14 to Gardner Denver, Inc.s
    Form 10-K,
    dated March 15, 2006.10.16*

Form of Change in Control
    Agreement dated May 2, 2005, entered into between Gardner
    Denver, Inc. and its executive officers, filed as
    Exhibit 10.15 to Gardner Denver, Inc.s
    Form 10-K,
    dated March 15, 2006.10.17*

Gardner Denver, Inc. Executive
    Retirement Planning Program Services, dated May 5, 2003,
    filed as Exhibit 10.15 to Gardner Denver, Inc.s
    Quarterly Report on
    Form 10-Q
    dated August 8, 2003 and incorporated herein by reference.10.18*

Summary of Compensation Payable to
    Nonemployee Directors. **12

Ratio of Earnings to Fixed
    Charges. **21

Subsidiaries of Gardner Denver,
    Inc. **23

Consent of Independent Registered
    Public Accounting Firm. **24

Power of Attorney. **31.1

Certification of Chief Executive
    Officer Pursuant to
    Rule 13a-14(a)
    of the Exchange Act, as Adopted Pursuant to Section 302 of
    the Sarbanes-Oxley Act of 2002. ** 82




---



##### 



31.2

Certification of Chief Financial
    Officer Pursuant to
    Rule 13a-14(a)
    of the Exchange Act, as Adopted Pursuant to Section 302 of
    the Sarbanes-Oxley Act of 2002. **32.1

Certification of Chief Executive
    Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
    Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
    **32.2

Certification of Chief Financial
    Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
    Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
    **   +
    
    The registrant hereby agrees to furnish supplementally a copy of
    any omitted schedules to this agreement to the SEC upon request.*
    
    Management contract or compensatory plan.**
    
    Filed herewith 83




---



##### 



SIGNATURES      By
    /s/  Ross
    J. Centanni       Signature

Title/s/  Ross
    J. CentanniRoss
    J. Centanni

Chairman, President and CEO
    (Principal Executive Officer) and Director/s/  Helen
    W. CornellHelen
    W. Cornell

Vice President, Finance and CFO
    (Principal FinancialOfficer)/s/  David
    J. AntoniukDavid
    J. Antoniuk

Vice President and Corporate
    Controller (Principal Accounting Officer)*Donald
    G. Barger, Jr.

Director*Frank
    J. Hansen

Director*Raymond
    R. Hipp

Director*Thomas
    M. McKenna

Director*David
    D. Petratis

Director*Diane
    K. Schumacher

Director*Charles
    L. Szews

Director*Richard
    L. Thompson

Director     Tracy D. Pagliara Attorney-in-fact
 84




---



##### 



GARDNER
    DENVER, INC.
 INDEX TO
    EXHIBITS  Exhibit No.

Description2.1

Agreement and Plan of Merger dated
    March 8, 2005 among Gardner Denver, Inc., PT Acquisition
    Corporation and Thomas Industries Inc., filed as
    Exhibit 2.1 to Gardner Denver, Inc.s Current Report
    on
    Form 8-K,
    dated March 9, 2005, and incorporated herein by reference.3.1

Certificate of Incorporation of
    Gardner Denver, Inc., as amended on May 3, 2006, filed as
    Exhibit 3.1 to Gardner Denver, Inc.s Current Report
    on
    Form 8-K,
    dated May 3, 2006 (SEC File
    No. 001-13215),
    and incorporated herein by reference.3.2

Bylaws of Gardner Denver, Inc., as
    amended on July 31, 2001, filed as Exhibit 3.2 to
    Gardner Denver, Inc.s Quarterly Report on
    Form 10-Q,
    dated August 13, 2001 (SEC File
    No. 001-13215),
    and incorporated herein by reference.4.1

Amended and Restated Rights
    Agreement, dated as of January 17, 2005, between Gardner
    Denver, Inc. and National City Bank as Rights Agent, filed as
    Exhibit 4.1 to Gardner Denver, Inc.s Current Report
    on
    Form 8-K,
    dated January 21, 2005, and incorporated herein by
    reference.4.2

Form of Indenture by and among
    Gardner Denver, Inc., the Guarantors and The Bank of
    New York Trust Company, N.A., as trustee, filed as
    Exhibit 4.1 to Gardner Denver, Inc.s Current Report
    on
    Form 8-K,
    dated May 4, 2005, and incorporated herein by reference.10.0+

Third Amended and Restated Credit
    Agreement dated as of May 13, 2005 among Gardner Denver,
    Inc. (the Borrower), the financial institutions from
    time to time party thereto (the Lenders), JPMorgan
    Chase Bank, N.A., successor by merger to Bank One, NA, as a
    Lender, an LC Issuer, the Swing Line Lender and as agent for
    itself and the other Lenders, Wachovia Bank, National
    Association, as a Lender and as Syndication Agent for the
    Revolving Loan Facility, Harris Trust and Savings Bank,
    National City Bank of the Midwest and KeyBank National
    Association, as Lenders and as Co-Documentation Agents for the
    Revolving Credit Facility, and Bear Stearns Corporate Lending
    Inc., as a Lender and as Syndication Agent for the Term Loan
    Facility, filed as Exhibit 10.1 to Gardner Denver,
    Inc.s Current Report on
    Form 8-K,
    dated May 16, 2005, and incorporated herein by reference.10.1

Amendment No. 1 to Third
    Amended and Restated Credit Agreement, dated as of June 28,
    2006, by and among the Borrowers, Lenders and agent. **10.2

Amendment No. 2 to Third
    Amended and Restated Credit Agreement, dated as of
    August 16, 2006, by and among the Borrowers, Lenders and
    agent. **10.3

Form of Escrow and Security
    Agreement by and between Gardner Denver, Inc. and The Bank of
    New York Trust Company, N.A., as trustee and escrow agent, filed
    as Exhibit 10.1 to Gardner Denver, Inc.s Current
    Report on
    Form 8-K,
    dated May 4, 2005, and incorporated herein by reference.10.4

Form of Registration Rights
    Agreement by and among Gardner Denver, Inc., the guarantors and
    the initial purchasers named therein, filed as Exhibit 10.2
    to Gardner Denver, Inc.s Current Report on
    Form 8-K,
    dated May 4, 2005, and incorporated herein by reference.10.5*

Gardner Denver, Inc. Long-Term
    Incentive Plan, as amended May 4, 2004 filed as
    Exhibit 10.1 to Gardner Denver, Inc.s Quarterly
    Report on
    Form 10-Q
    dated May 10, 2004 and incorporated herein by reference.10.6*

Gardner Denver Inc. Supplemental
    Excess Defined Contribution Plan, September 1, 1998
    Restatement, as amended on various dates. **10.7*

Amended and Restated Form of
    Indemnification Agreements between Gardner Denver, Inc. and its
    directors, officers or representatives, filed as
    Exhibit 10.4 to Gardner Denver, Inc.s
    Form 10-K,
    dated March 28, 2002, and incorporated herein by reference.10.8*

Gardner Denver, Inc. Phantom Stock
    Plan for Outside Directors, as amended May 4, 1998,
    March 7, 2000 and November 8, 2005, with an effective
    date of January 1, 2006, filed as Exhibit 10.7 to
    Gardner Denver, Inc.s
    Form 10-K,
    dated March 15, 2006. 85




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##### 



Exhibit No.

Description10.9*

Gardner Denver, Inc. Executive
    Stock Repurchase Program, as amended May 6, 2003 filed as
    Exhibit 10.7 to Gardner Denver, Inc.s Quarterly
    Report on
    Form 10-Q
    dated May 8, 2003 and incorporated herein by reference.10.10*

Gardner Denver, Inc. Incentive
    Stock Option Agreement, filed as Exhibit 10.8 to Gardner
    Denver, Inc.s
    Form 10-K
    dated March 22, 2001, and incorporated herein by reference.10.11*

Gardner Denver, Inc. Nonstatutory
    Stock Option Agreement, filed as Exhibit 10.9 to Gardner
    Denver, Inc.s
    Form 10-K
    dated March 22, 2001, and incorporated herein by reference.10.12*

Form of Gardner Denver, Inc.
    Nonemployee Director Stock Option Agreement, as amended
    July 29, 2003 filed as Exhibit 10.10 to Gardner
    Denver, Inc.s Quarterly Report on
    Form 10-Q
    dated November 12, 2003 and incorporated herein by
    reference.10.13*

Gardner Denver, Inc. Executive
    Annual Bonus Plan, as amended May 3, 2005 and effective
    January 1, 2006, filed as Exhibit 10.4 to Gardner
    Denver, Inc.s Quarterly Report on
    Form 10-Q,
    dated August 9, 2005, and incorporated herein by reference.10.14*

Form of Gardner Denver, Inc.
    Long-Term Cash Bonus Agreement between Gardner Denver, Inc. and
    executive bonus award participants, filed as Exhibit 10.12
    to Gardner Denver, Inc.s
    Form 10-K,
    dated March 28, 2002, and incorporated herein by reference.10.15*

Form of Change in Control
    Agreement dated May 2, 2005, entered into between Gardner
    Denver, Inc. and its Chief Executive Officer, filed as
    Exhibit 10.14 to Gardner Denver, Inc.s
    Form 10-K,
    dated March 28, 2006.10.16*

Form of Change in Control
    Agreement dated May 2, 2005, entered into between Gardner
    Denver, Inc. and its executive officers, filed as
    Exhibit 10.15 to Gardner Denver, Inc.s
    Form 10-K,
    dated March 15, 2006.10.17*

Gardner Denver, Inc. Executive
    Retirement Planning Program Services, dated May 5, 2003,
    filed as Exhibit 10.15 to Gardner Denver, Inc.s
    Quarterly Report on
    Form 10-Q
    dated August 8, 2003 and incorporated herein by reference.10.18*

Summary of Compensation Payable to
    Nonemployee Directors. **12

Ratio of Earnings to Fixed
    Charges. **21

Subsidiaries of Gardner Denver,
    Inc. **23

Consent of Independent Registered
    Public Accounting Firm. **24

Power of Attorney. **31.1

Certification of Chief Executive
    Officer Pursuant to
    Rule 13a-14(a)
    of the Exchange Act, as Adopted Pursuant to Section 302 of
    the Sarbanes-Oxley Act of 2002. **31.2

Certification of Chief Financial
    Officer Pursuant to
    Rule 13a-14(a)
    of the Exchange Act, as Adopted Pursuant to Section 302 of
    the Sarbanes-Oxley Act of 2002. **32.1

Certification of Chief Executive
    Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
    Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
    **32.2

Certification of Chief Financial
    Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
    Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
    **   +
    
    The registrant hereby agrees to furnish supplementally a copy of
    any omitted schedules to this agreement to the SEC upon request.*
    
    Management contract or compensatory plan.**
    
    Filed herewith. 86