##### Table of Contents





UNITED
    STATES 
    SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549FORM 10-K
 þ ANNUAL
    REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2007
 o TRANSITION
    REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934
 For the transition period
    fromto
  
  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 þ
  Rule 12b-2
  Large
    accelerated
    filer  þ
    Accelerated
    filer  o
    Non-accelerated
    filer  o
    Smaller
    reporting
    company  o   Rule 12b-2 o þ
      Documents Incorporated by Reference




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##### 





Table of
    Contents
  
  PageCautionary Statements Regarding Forward-Looking
    Statements


2PART IItem 1.


Business


3Item 1A.


Risk Factors


14Item 1B.


Unresolved Staff Comments


18Item 2.


Properties


18Item 3.


Legal Proceedings


18Item 4.


Submission of Matters to a Vote of Security
    Holders


18PART IIItem 5.


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


18Item 6.


Selected Financial Data


20Item 7.


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


20Item 7A.


Quantitative and Qualitative Disclosures about
    Market Risk


37Item 8.


Financial Statements and Supplementary Data


39Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


84Item 9A.


Controls and Procedures


84Item 9B.


Other Information


85PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


85Item 11.


Executive Compensation


86Item 12.


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


86Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


86Item 14.


Principal Accounting Fees and Services


86PART IVItem 15.


Exhibits and Financial Statement Schedules


87SIGNATURES


88INDEX TO EXHIBITS


89Ex-12 (Computation of Ratio of Earnings to Fixed Charges)


92Ex-21 (Subsidiaries of the Registrant)


93Ex-23 (Consent of Independent Registered Public Accounting Firm)


95Ex-24 (Power of Attorney)


96Ex-31 (Certifications Pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002)


97Ex-32 (Certifications Pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002)


99Form of Restricted Stock Award AgreementForm of Long-Term Cash Bonus AgreementRatio of Earnings to Fixed ChargesSubsidiariesConsent of Independent Registered Public Accounting FirmPower of AttorneyCertificationCertificationCertificationCertification




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##### Table of Contents



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




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##### Table of Contents



PART I  ITEM 1.
    BUSINESS  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
    non-U.S. sales,
  Significant
    Accomplishments in 2007
    
    Increased revenues 12% as a result of organic growth (7%) and
    the favorable effect of changes in foreign currency exchange
    rates (5%). The organic growth included volume increases in each
    of the reportable segments and significant price increases for
    fluid transfer products.
    Improved net income 54% as a result of revenue growth, cost
    reductions achieved primarily through acquisition integration
    initiatives and a lower effective income tax rate. The lower
    effective tax rate resulted primarily from non-recurring,
    non-cash reductions to net deferred tax liabilities related to
    corporate income tax rate changes in Germany, the United Kingdom
    and China, which were enacted in 2007 and will become effective
    in 2008, and foreign tax credits.
    Generated more than $181 million in net cash from operating
    activities in 2007, compared to $167 million in 2006.
    Used cash provided by operating activities to repay more than
    $125 million of debt.
    Relocated production of certain liquid ring pumps from Germany
    to China and laboratory vacuum products from Skokie, Illinois to
    Monroe, Louisiana and Sheboygan, Wisconsin to reduce costs. 3




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##### Table of Contents




    Relocated production of certain blower products from Schopfheim,
    Germany to Bradford, United Kingdom to better use existing
    capacity. The manufacturing processes remaining in Schopfheim
    were realigned to improve labor efficiency, increase production
    volume and reduce inventory.
    Developed new products and redesigned existing products to
    enhance features and benefits for customers. The new product
    introductions included a compressed natural gas loading arm for
    the marine market and expanding the line of variable speed
    rotary screw compressors available on a global basis. The
    Company also completed a redesign of its reciprocating
    locomotive compressor and introduced a rotary screw locomotive
    compressor to enable the penetration of key accounts.  Future
    Initiatives
      
    Pursue international markets.
    Non-U.S. revenues,
    as a percentage of total revenues, have grown to 59% in 2007
    from 21% in 1994, the Companys first year as an
    independent company. By growing internationally, the Company
    reduces the impact of an economic down cycle in any one
    particular country and participates in faster growing regions of
    the world, such as Asia Pacific.
    Acquire complementary products, in particular those that provide
    access to faster growing end market segments, such as medical
    and environmental applications, or serve to otherwise diversify
    revenues while providing synergies to generate an appropriate
    return on the Companys investment.
    Embrace new technologies to improve the efficiencies of our
    operations, whether in production, design, communications or
    management.
    Develop new products to bring value to the customer.
    Reduce costs and eliminate waste to improve asset management and
    return on invested capital.
    Focus on manufacturing proprietary products and outsourcing
    items that are not central to our engineering value proposition.
    Develop our people, since the organizations vision and
    execution of its strategic plan is completely dependent on the
    capabilities of its staff.    History
  OPI Sutorbilt DuroFlow ®
 4




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##### Table of Contents



Date of Acquisition

Acquired Entity

Approximate Transaction Value (USD million)January 2004

Syltone plc

$
113September 2004

nash_elmo Holdings, LLC


225June 2005

Bottarini S.p.A.


10July 2005

Thomas Industries Inc.


484January 2006

Todo Group


16           TODO-MATIC Emco Wheaton
  Markets
    and Products
   5




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##### Table of Contents



Compressor
    and Vacuum Products Segment
    Gardner Denver, Champion,
    Thomas, Bottarini Belliss & Morcom Gardner
    Denver, Bottarini, Electra-Screw, Electra-Saver, Enduro,
    RotorChamp, Tamrotor Tempest
  Sutorbilt,
    DuroFlow, CycloBlower, Drum, Wittig, Elmo Rietschle 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
    Welch
 6




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##### Table of Contents



Fluid
    Transfer Products Segment
    Gardner Denver OPI Gardner Denver Oberdorfer Gardner Denver
  Partek, Liqua-Blaster American Water Blaster
  Emco Wheaton, TODO Perolo
   7




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Customers
    and Customer Service
        Competition
       8




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##### Table of Contents



Research
    and Development
          Manufacturing
  work-in-process
  9001-2000
  Raw
    Materials and Suppliers
   9




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##### Table of Contents



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
    Employees
   10




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##### Table of Contents



Executive
    Officers of the Registrant
    Name

Position

AgeRoss J. Centanni

Executive Chairman of the Board


62Barry L. Pennypacker

President and Chief Executive Officer


47Helen W. Cornell

Executive Vice President, Finance and Chief  Financial Officer


49Tracy D. Pagliara

Executive Vice President, Administration, General  Counsel and
    Secretary


45J. Dennis Shull

Executive Vice President and General Manager, Compressor Division


59Richard C. Steber

Vice President and General Manager, Engineered Products Division


57T. Duane Morgan

Vice President and General Manager, Fluid Transfer Products


58James J. Kregel

Vice President and General Manager, Thomas Products Division


57Winfried Kaiser

Vice President and General Manager, Blower Division


52Bob D. Elkins

Vice President, Chief Information Officer


59   Ross J. Centanni,
  Barry L. Pennypacker
  Helen W. Cornell,
  Tracy D. Pagliara,
 11




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##### Table of Contents



J. Dennis Shull,
  Richard C. Steber,
  T. Duane Morgan,
  James J. Kregel,
  Winfried Kaiser,
  Bob D. Elkins,
 12




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Compliance
    Certifications
  Form 10-K
  Environmental
    Matters
      on-site
    Available
    Information
  www.gardnerdenver.com. Form 10-K; Form 10-Q; Form 8-K; Form 10-K.
 13




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##### Table of Contents



ITEM 1A.
    RISK
    FACTORS  We have
    exposure to economic downturns and operate in cyclical
    markets.
      We face
    robust competition in the markets we serve, which could
    materially and adversely affect our operating results.
    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 may
    not be able to continue to identify and complete other strategic
    acquisitions and effectively integrate such acquired companies
    to achieve desired financial benefits.
   14




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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.  Our
    success depends on our executive officers and other key
    personnel.
   15




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The
    nature of our products creates the possibility of significant
    product liability and warranty claims, which could harm our
    business.
    The risk
    of regulatory noncompliance could have a significant impact on
    our business.
    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.
   16




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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.
    Communication
    or information systems failure may disrupt our business and
    result in financial loss and liability to our clients.
  back-up back-up
  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.
   17




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##### Table of Contents



and/or
  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       18




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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 Programs(2)October 1, 2007 - October 31, 2007






n/a







818,851November 1, 2007 - November 30, 2007






n/a







3,098,251December 1, 2007 - December 31, 2007






n/a







3,098,251Total














3,098,251   (1)
    
    Includes shares exchanged or
    surrendered in connection with the exercise of options under
    Gardner Denvers stock options plans.(2)
    
    In November 2007, the Board of
    Directors approved a new share repurchase program to acquire up
    to 2.7 million shares of Gardner Denvers common stock.  Stock
    Performance Graph
    
 19




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##### Table of Contents



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

2007

2006(1)

2005(2)

2004(3)

2003Revenues

$
1,868,844


1,669,176


1,214,552


739,539


439,530Net income


205,104


132,908


66,951


37,123


20,643Basic earnings per share(4)


3.85


2.54


1.40


0.98


0.64Diluted earnings per share(4)


3.80


2.49


1.37


0.96


0.63Long-term debt (excluding current maturities)


263,987


383,459


542,641


280,256


165,756Total assets

$
1,905,607


1,750,231


1,715,060


1,028,609


589,733   (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.  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
     20




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Overview
    and Description of Business
             21




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##### Table of Contents



2007


2006


2005Revenues


100.0



100.0



100.0Cost of sales


66.8



67.1



68.8Gross profit


33.2



32.9



31.2Selling and administrative expenses


17.6



18.9



21.1Operating income


15.6



14.0



10.1Interest expense


1.4



2.2



2.5Other income, net


(0.2
)


(0.2
)


(0.3
)Income before income taxes


14.4



12.0



7.9Provision for income taxes


3.4



4.0



2.4Net income


11.0



8.0



5.5   Year
    Ended December 31, 2007, Compared with Year Ended
    December 31, 2006
  Revenues
       22




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Gross
    Profit
    Selling
    and Administrative Expenses
    Operating
    Income
       23




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Interest
    Expense
  non-U.S. dollar
  Other
    Income, Net
    Provision
    For Income Taxes
    Net
    Income
    Year
    Ended December 31, 2006, Compared with Year Ended
    December 31, 2005
  Revenues
       24




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Gross
    Profit
  step-up
  Selling
    and Administrative Expenses
  Share-based Payment
  Operating
    Income
    step-up
   25




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##### Table of Contents



Interest
    Expense
    Other
    Income, Net
    Provision
    For Income Taxes
    Net
    Income
    Outlook
     26




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##### Table of Contents



Liquidity
    and Capital Resources
  Operating
    Working Capital
   27




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##### Table of Contents



Cash
    Flows
    Capital
    Expenditures and Commitments
      Liquidity
         28




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##### Table of Contents



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

$
281.8


24.5


116.2


1.4


139.7Estimated interest payments(1)


67.0


15.8


22.9


21.0


7.3Capital leases


7.9


0.4


0.6


0.6


6.3Operating leases


82.5


19.0


26.1


15.5


21.9Purchase obligations(2)


225.7


212.1


13.5


0.1


Total

$
664.9


271.8


179.3


38.6


175.2   (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. 29




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##### Table of Contents



(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, 2007. For this reason, these
    numbers will not provide a complete and reliable indicator of
    the Companys expected future cash outflows.  Employers Accounting for Defined Benefit Pension
    and Other Postretirement Plans  an amendment of FASB
    Statements No. 87, 88, 106 and 123(R)
    non-U.S. pension non-U.S. qualified
  non-U.S. plans
     30




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Contingencies
    and/or
        on-site
   31




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Changes
    in Accounting Principles and Effects of New Accounting
    Pronouncements
  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) (EITF 06-3) Disclosure of Accounting Policies. EITF 06-3 EITF 06-3
  Fair Value Measurements
    The Fair Value Option for Financial Assets and
    Financial Liabilities
  Business Combinations ®
 32




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Business Combinations ® Elements of Financial Statements. ® ®
  Noncontrolling Interests in Consolidated Financial
    Statements  an amendment of ARB No. 51,
  Certain
    Assumptions Used in Valuation Methods
  Critical
    Accounting Policies and Estimates
   33




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##### Table of Contents



Allowance
    for Doubtful Accounts
    Inventory
    Reserves
  first-in, last-in,
  Goodwill
    and Other Intangibles
      Warranty
    Reserves
   34




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Employee
    Medical and Workers Compensation Benefit Claims
    Business
    Combinations
    Stock-Based
    Compensation
    Pension
    and Other Postretirement Benefits
   35




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##### Table of Contents



Income
    Taxes
    Loss
    Contingencies
    Derivative
    Financial Instruments
       36




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##### Table of Contents



ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK      Commodity
    Price Risk
      Interest
    Rate Risk
    Exchange
    Rate Risk
  non-U.S. subsidiaries
  non-U.S. subsidiaries non-U.S. subsidiaries
 37




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##### Table of Contents



non-U.S. subsidiaries non-U.S. dollar
    non-U.S. dollar
 38




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##### Table of Contents



ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA 
 Report of
    Independent Registered Public Accounting Firm  
  Internal Control - Integrated Framework
       39




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##### Table of Contents



Internal Control 
    Integrated Framework
  Accounting for Uncertainty
    in Income Taxes, an interpretation of Statement of Financial
    Accounting Standard No. 109.
  Employers Accounting for Defined Benefit Pension
    and Other Postretirement Plans
  Share-Based Payment.
     40




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Consolidated
    Statements of OperationsGARDNER DENVER,
    INC.



Years ended
    December 31

(Dollars in thousands except
    per share amounts) 2007


2006


2005Revenues

$
1,868,844



1,669,176



1,214,552Cost of sales


1,248,921



1,119,860



836,237Gross profit


619,923



549,316



378,315Selling and administrative expenses


328,404



314,967



255,671Operating income


291,519



234,349



122,644Interest expense


26,211



37,379



30,433Other income, net


(3,052
)


(3,645
)


(3,433
)Income before income taxes


268,360



200,615



95,644Provision for income taxes


63,256



67,707



28,693Net income

$
205,104



132,908



66,951Basic earnings per share

$
3.85



2.54



1.40Diluted earnings per share

$
3.80



2.49



1.37   The accompanying notes are an
    integral part of these consolidated financial
    statements.
 41




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##### Table of Contents



Consolidated
    Balance SheetsGARDNER DENVER,
    INC.



December 31

(Dollars in thousands except
    per share amounts) 2007


2006AssetsCurrent assets:Cash and equivalents

$
92,922



62,331Accounts receivable, net


308,748



261,115Inventories, net


256,446



225,067Deferred income taxes


21,034



14,362Other current assets


22,378



16,843Total current assets


701,528



579,718Property, plant and equipment, net


293,380



276,493Goodwill


685,496



676,780Other intangibles, net


206,314



196,466Other assets


18,889



20,774Total assets

$
1,905,607



1,750,231Liabilities and Stockholders EquityCurrent liabilities:Short-term borrowings and current maturities of long-term debt

$
25,737



23,789Accounts payable


101,615



90,703Accrued liabilities


184,850



202,475Total current liabilities


312,202



316,967Long-term debt, less current maturities


263,987



383,459Postretirement benefits other than pensions


17,354



22,598Deferred income taxes


64,188



66,460Other liabilities


88,163



108,217Total liabilities


745,894



897,701Stockholders equity:Common stock, $0.01 par value; 100,000,000 shares
    authorized; 53,546,267 and 52,625,999 shares outstanding at
    December 31, 2007 and 2006, respectively


573



564Capital in excess of par value


515,940



490,856Retained earnings


545,084



339,289Accumulated other comprehensive income


128,010



50,731Treasury stock at cost; 3,758,853 and 3,734,507 shares at
    December 31, 2007 and 2006, respectively


(29,894
)


(28,910
)Total stockholders equity


1,159,713



852,530Total liabilities and stockholders equity

$
1,905,607



1,750,231   The accompanying notes are an
    integral part of these consolidated financial
    statements.
 42




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##### Table of Contents



Consolidated
    Statements of Stockholders EquityGARDNER DENVER,
    INC.



Years ended
    December 31

(Dollars in
    thousands) 2007


2006


2005Number of Common Shares IssuedBalance at beginning of year


56,361



27,808



21,687Stock offering










5,658Stock issued for benefit plans and options exercises


944



557



463Stock issued for stock split






27,996



Balance at end of year


57,305



56,361



27,808Common StockBalance at beginning of year

$
564



278



217Stock offering










57Stock issued for benefit plans and options exercises


9



6



4Stock issued for stock split






280



Balance at end of year

$
573



564



278Capital in Excess of Par ValueBalance at beginning of year

$
490,856



472,825



262,091Stock offering










199,171Stock issued for benefit plans and options exercises


13,665



9,447



11,563Stock issued for stock split






(438
)


Stock-based compensation


11,419



9,022



Balance at end of year

$
515,940



490,856



472,825Retained EarningsBalance at beginning of year

$
339,289



206,381



139,430Net income


205,104



132,908



66,951Adjustment to initially apply FIN 48


691







Balance at end of year

$
545,084



339,289



206,381Accumulated Other Comprehensive IncomeBalance at beginning of year

$
50,731



8,124



30,185Foreign currency translation adjustments, net


63,918



48,244



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


(1,667
)


(330
)


1,699Minimum pension liability adjustments, net of tax






4,422



(4,053
)Pension and other postretirement prior service cost and
    actuarial gain or loss, net of tax


9,597







Other comprehensive income (loss)


71,848



52,336



(22,061
)Adjustment to initially apply SFAS No. 158






(9,729
)


Cumulative prior period translation adjustment


5,440







Currency translation


(9
)






Balance at end of year

$
128,010



50,731



8,124Treasury StockBalance at beginning of year

$
(28,910
)


(29,319
)


(26,447
)Purchases of treasury stock


(957
)


(2,375
)


(2,872
)Deferred compensation


(27
)


2,784



Balance at end of year

$
(29,894
)


(28,910
)


(29,319
)Total Stockholders Equity

$
1,159,713



852,530



658,289Comprehensive IncomeNet income

$
205,104



132,908



66,951Other comprehensive income (loss)


71,848



52,336



(22,061
)Comprehensive income

$
276,952



185,244



44,890  The accompanying notes are an
    integral part of these consolidated financial
    statements.
 43




---



##### Table of Contents



Consolidated
    Statements of Cash FlowsGARDNER DENVER,
    INC.



Years ended
    December 31

(Dollars in
    thousands) 2007


2006


2005Cash flows from operating activities:Net income

$
205,104



132,908



66,951Adjustments to reconcile net income to net cash provided by
    operating activities:Depreciation and amortization


58,584



52,209



38,322Unrealized foreign currency transaction (gain) loss, net


(681
)


514



(98
)Net loss (gain) on asset dispositions


364



808



(699
)LIFO liquidation income


(1,292
)


(400
)


Stock issued for employee benefit plans


4,664



3,773



3,305Stock-based compensation expense


4,988



5,340



Excess tax benefits from stock-based compensation


(6,320
)


(3,674
)


Deferred income taxes


(13,555
)


(2,698
)


1,996Foreign currency hedging transactions










1,491Changes in assets and liabilities:Receivables


(36,374
)


(18,488
)


(8,624
)Inventories


(16,231
)


(7,449
)


378Accounts payable and accrued liabilities


566



30



2,275Other assets and liabilities, net


(18,189
)


4,319



9,778Net cash provided by operating activities


181,628



167,192



115,075Cash flows from investing activities:Capital expenditures


(47,783
)


(41,115
)


(35,518
)Net cash paid in business combinations


(205
)


(21,120
)


(481,917
)Disposals of property, plant and equipment


1,676



11,596



3,749Other


679







(2,225
)Net cash used in investing activities


(45,633
)


(50,639
)


(515,911
)Cash flows from financing activities:Principal payments on short-term borrowings


(37,074
)


(33,266
)


(26,620
)Proceeds from short-term borrowings


39,377



28,339



18,354Principal payments on long-term debt


(276,351
)


(331,576
)


(659,635
)Proceeds from long-term debt


148,799



158,197



922,439Proceeds from issuance of common stock










199,228Proceeds from stock option exercises


9,003



5,773



6,006Excess tax benefits from stock-based compensation


6,320



3,674



Purchase of treasury stock


(960
)


(1,260
)


(2,872
)Debt issuance costs






(570
)


(8,186
)Other


(959
)


(159
)


Net cash (used in) provided by financing activities


(111,845
)


(170,848
)


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


6,441



5,720



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


30,591



(48,575
)


46,305Cash and equivalents, beginning of year


62,331



110,906



64,601Cash and equivalents, end of year

$
92,922



62,331



110,906   The accompanying notes are an
    integral part of these consolidated financial
    statements.
 44




---



##### Table of Contents



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
  Principles
    of Consolidation
    Use of
    Estimates
    Reclassifications
   45




---



##### Table of Contents



Year Ended December 31,2006




2005Amounts ReclassifiedCost of sales

$
35,803






23,010Selling and administrative expenses


17,130






13,303Depreciation and amortization


(52,209
)





(38,322
)Other income, net


(724
)





2,009Total costs and expenses

$







   Accounting for Uncertainty in Income
    Taxes  an interpretation of FASB Statement
    No. 109
  Foreign
    Currency Translation
    Revenue
    Recognition
    Cash
    and Equivalents
    Accounts
    Receivable
     46




---



##### Table of Contents



Inventories
  first-in, last-in,
  Property,
    Plant and Equipment
    Goodwill
    and Other Intangibles
      Impairment
    of Long-Lived Assets and Long-Lived Assets to be
    Disposed
    Warranty
    Reserves
   47




---



##### Table of Contents



Pension
    and Other Postretirement Benefits
    Income
    Taxes
    Research
    and Development
    Derivative
    Financial Instruments
       48




---



##### Table of Contents



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
    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) (EITF 06-3)
 49




---



##### Table of Contents



Disclosure of Accounting Policies. EITF 06-3 EITF 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)
  The Fair Value Option for Financial Assets and
    Financial Liabilities
  Business Combinations Business
    Combinations Elements of Financial
    Statements.
 50




---



##### Table of Contents



Noncontrolling Interests in Consolidated Financial
    Statements  an amendment of ARB No. 51,
  Certain
    Assumptions Used in Valuation Methods
  Note 2:
    Business
    Combinations    Date of Acquisition

Acquired Entity

Net Transaction ValueJanuary 9, 2006

Todo Group

126.2 million 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)     Acquisition
    of Thomas Industries Inc.
   51




---



##### Table of Contents



agreed-upon
  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 (reversed) accrued, net


(2,360
)


1,347



(1,013
)Amounts paid


(3,449
)


(719
)


(4,168
)Other, primarily foreign currency translation


301



263



564Balance at December 31, 2006


3,149



1,577



4,726Additional amounts reversed, net


(213
)


(244
)


(457
)Amounts paid


(2,013
)


(1,036
)


(3,049
)Other, primarily foreign currency translation


196



26



222Balance at December 31, 2007

$
1,119



323



1,442  52




---



##### Table of Contents



2005UnauditedRevenues

$
1,435,471Net income(1)


72,099Diluted earnings per share(1)

$
1.37   (1)
    
    Net income for 2005 reflects the
    negative effect of recording $3.9 million, before income
    tax, in inventory
    step-up
    adjustments relating to recording the Thomas inventories at fair
    value.  Note 3:
    Allowance
    for Doubtful Accounts    2007


2006


2005Balance at beginning of year

$
10,314



9,605



7,543Provision charged to expense


960



1,644



2,489Charged to other accounts(1)


625



700



1,751Deductions


(2,162
)


(1,635
)


(2,178
)Balance at end of year

$
9,737



10,314



9,605   (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    2007


2006Raw materials, including parts and subassemblies

$
142,546



125,278Work-in-process


47,622



38,052Finished goods


77,629



72,228267,797



235,558Excess of FIFO costs over LIFO costs


(11,351
)


(10,491
)Inventories, net

$
256,446



225,067    53




---



##### Table of Contents



Note 5:
    Property,
    Plant and Equipment    2007


2006Land and land improvements

$
27,921



24,711Buildings


140,455



134,907Machinery and equipment


240,333



210,704Tooling, dies, patterns, etc.


54,265



46,333Office furniture and equipment


45,956



39,262Other


12,587



7,900Construction in progress


21,934



11,663543,451



475,480Accumulated depreciation


(250,071
)


(198,987
)Property, plant and equipment, net

$
293,380



276,493   Note 6:
    Goodwill
    and Other Intangible Assets      Compressor &


Fluid TransferVacuum Products


Products


TotalBalance as of December 31, 2005

$
573,377



46,867



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

$
600,626



76,154



676,780Adjustments to goodwill


(34,608
)


(403
)


(35,011
)Foreign currency translation


42,512



1,215



43,727Balance as of December 31, 2007

$
608,530



76,966



685,496  54




---



##### Table of Contents



2007


2006Gross Carrying

Accumulated


Gross Carrying

AccumulatedAmount

Amortization


Amount

AmortizationAmortized intangible assets:Customer lists and relationships

$
74,187


(16,063
)


63,300


(9,723
)Acquired technology


44,658


(28,431
)


40,246


(20,927
)Other


9,634


(3,074
)


10,595


(3,787
)Unamortized intangible assets:Trademarks


125,403






116,762


Total other intangible assets

$
253,882


(47,568
)


230,903


(34,437
)   non-U.S. dollar
    Note 7:
    Accrued
    Liabilities    2007

2006Salaries, wages and related fringe benefits

$
59,386


55,220Taxes


13,390


39,024Advance payments on sales contracts


37,154


17,045Product warranty


15,087


15,298Product liability, and medical and workers compensation
    claims


13,503


13,802Other


46,330


62,086Total accrued liabilities

$
184,850


202,475     2007


2006


2005Balance as of January 1

$
15,298



15,254



10,671Product warranty accruals


12,409



12,561



9,575Settlements


(13,168
)


(14,216
)


(10,008
)Other (primarily acquisitions and foreign currency translation)


548



1,699



5,016Balance as of December 31

$
15,087



15,298



15,254  55




---



##### Table of Contents



Note 8:
    Debt    2007

2006Short-term debt

$
4,099


1,740Long-term debt:Credit Line, due 2010(1)

$
58,329


109,968Term Loan, due 2010(2)


76,103


145,000Senior Subordinated Notes at 8%, due 2013


125,000


125,000Secured Mortgages(3)


9,993


9,635Variable Rate Industrial Revenue Bonds, due 2018 (4)


8,000


8,000Capitalized leases and other long-term debt


8,200


7,905Total long-term debt, including current maturities


285,625


405,508Current maturities of long-term debt


21,638


22,049Long-term debt, less current maturities

$
263,987


383,459   (1)
    
    The loans under this facility may
    be denominated in U.S. dollars or several foreign currencies. At
    December 31, 2007, the outstanding balance consisted of
    euro borrowings of 25,000, 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 5.2% and 6.7%, as of
    December 31, 2007 for the euro and British pound loans,
    respectively. The interest rates averaged 4.7% and 6.6%, for the
    year ended December 31, 2007 for the euro and British pound
    loans, respectively.(2)
    
    The Term Loan is denominated in
    U.S. dollars and the interest rate varies with prime and/or
    LIBOR. At December 31, 2007, this rate was 5.6% and
    averaged 6.2% for the year ended December 31, 2007.(3)
    
    This amount consists of two
    fixed-rate commercial loans with an outstanding balance of
    6,846 at December 31, 2007. 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, 2007, this rate was 3.5% and averaged 3.7% for
    the year ended December 31, 2007. These industrial revenue
    bonds are secured by an $8,100 standby letter of credit.           56




---



##### Table of Contents



Note 9:
    Benefit
    Plans  Pension
    and Postretirement Benefit Plans
       57




---



##### Table of Contents



Pension Benefits


OtherU.S. Plans


Non-U.S. Plans


Postretirement Benefits2007


2006


2007


2006


2007


2006Reconciliation of benefit obligations:Obligations as of January 1

$
75,018



74,909


$
211,703



182,292


$
25,139



31,026Service cost






2,907



3,847



5,639



16



40Interest cost


4,202



3,963



10,916



8,904



1,412



1,491Actuarial (gains) losses


(473
)


(1,303
)


(8,812
)


(6,764
)


(4,966
)


(4,320
)Employee contributions










814



986







Plan amendments






2











(496
)


(715
)Benefit payments


(5,885
)


(5,460
)


(6,357
)


(4,573
)


(1,629
)


(2,383
)Acquisitions










337



401







Effect of foreign currency exchange rate changes










6,397



24,818







Benefit obligations as of December 31

$
72,862



75,018


$
218,845



211,703


$
19,476



25,139Reconciliation of fair value of plan assets:Fair value of plan assets as of January 1

$
63,223



56,830


$
147,407



122,077Actual return on plan assets


1,744



8,238



14,840



8,101Acquisitions










343



Employer contributions


806



3,615



19,430



4,787Employee contributions










814



986Benefit payments and plan expenses


(5,885
)


(5,460
)


(7,253
)


(5,739
)Effect of foreign currency exchange rate changes










3,425



17,195Fair value of plan assets as of December 31

$
59,888



63,223


$
179,006



147,407Funded status as of December 31

$
(12,974
)


(11,795
)

$
(39,839
)


(64,296
)

$
(19,476
)


(25,139
)    58




---



##### Table of Contents



Pension Benefits

OtherU.S. Plans

Non-U.S. Plans

Postretirement Benefits2007

2006

2007

2006

2007


2006Net actuarial losses (gains)

$
8,966


6,835

$
10,339


21,921

$
(10,551
)


(6,412
)Prior-service cost (credit)


25


39








(986
)


(932
)Amounts included in accumulated other comprehensive loss (income)

$
8,991


6,874

$
10,339


21,921

$
(11,537
)


(7,344
)       2007


2006Accrued liabilities

$
(2,727
)


(2,893
)Postretirement benefits other than pensions


(17,237
)


(22,476
)Other liabilities


(52,325
)


(75,861
)Total pension and other postretirement accrued benefit liability

$
(72,289
)


(101,230
)      U.S. Plans

Non-U.S. Plans2007

2006

2007

2006Projected benefit obligation

$
72,862


75,018

$
27,518


211,342Accumulated benefit obligation


72,862


75,018


26,966


181,336Fair value of plan assets


59,888


63,223


6,888


147,060   non-U.S. defined
 59




---



##### Table of Contents



Pension Benefits


OtherU.S. Plans


Non-U.S. Plans


Postretirement Benefits2007


2006


2005


2007


2006


2005


2007


2006


2005Net periodic benefit (income) cost:Service cost

$




2,907



2,996


$
3,847



5,639



4,298


$
16



40



83Interest cost


4,202



3,962



3,731



10,916



8,904



7,824



1,413



1,491



1,507Expected return on plan assets


(4,535
)


(4,353
)


(4,489
)


(11,926
)


(9,950
)


(8,251
)










Amortization of transition liability










4























Amortization of prior-service cost (credit)


14



(57
)


(82
)














(443
)


(274
)


(106
)Amortization of net loss (gain)


186



452



223



400



512



197



(828
)


(469
)


(744
)Net periodic benefit (income) cost


(133
)


2,911



2,383



3,237



5,105



4,068


$
158



788



740SFAS No. 88 (gain)/loss due tosettlements or curtailments  special termination
    benefits






(294
)














291











Total net periodic benefit (income) cost recognized

$
(133
)


2,617



2,383


$
3,237



5,105



4,359


$
158



788



740Other changes in plan assets and benefit obligations
    recognized in other comprehensive income:Net actuarial loss (gain)

$
2,317



N/A



N/A


$
(11,191
)


N/A



N/A


$
(4,967
)


N/A



N/AAmortization of net actuarial (loss) gain


(186
)


N/A



N/A



(400
)


N/A



N/A



828



N/A



N/APrior service cost






N/A



N/A







N/A



N/A



(497
)


N/A



N/AAmortization of prior service (cost) credit


(14
)


N/A



N/A







N/A



N/A



443



N/A



N/AEffect of foreign currency exchange rate changes






N/A



N/A



9



N/A



N/A







N/A



N/ATotal recognized in other comprehensive income

$
2,117



N/A



N/A


$
(11,582
)


N/A



N/A


$
(4,193
)


N/A



N/ATotal recognized in net periodic benefit cost and other
    comprehensive income

$
1,984



N/A



N/A


$
(8,345
)


N/A



N/A


$
(4,035
)


N/A



N/A    60




---



##### Table of Contents



Pension Benefits

OtherU.S. Plans

Non-U.S. Plans

Postretirement Benefits2007

2006

2005

2007

2006

2005

2007

2006

2005Discount rate


5.9
%


5.6
%


6.0
%


5.1
%


4.6
%


5.3
%


5.9
%


5.6
%


6.0
%Expected long-term rate of return on plan assets


8.0
%


8.0
%


8.9
%


7.5
%


7.6
%


7.5
%


N/A



N/A



N/ARate of compensation increases


N/A



5.5
%


5.0
%


3.9
%


3.4
%


3.4
%


N/A



N/A



N/A     Pension Benefits

OtherU.S. Plans

Non-U.S. Plans

Postretirement Benefits2007

2006

2005

2007

2006

2005

2007

2006

2005Discount rate


6.1
%


5.9
%


5.6
%


5.8
%


5.1
%


4.6
%


6.1
%


5.9
%


5.6
%Rate of compensation increases


N/A



N/A



5.0
%


4.2
%


3.9
%


3.4
%


N/A



N/A



N/A     2007

2006

2005Healthcare cost trend rate assumed for next year


10.0
%


11.0
%


11.8
%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



2013     1% Increase

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

$
86

$
(76
)Effect on the postretirement benefit obligation 
    increase (decrease)


1,059


(955
)   non-U.S. pension
  Pension BenefitsNon-U.S.

OtherU.S. Plans

Plans

Postretirement
    Benefits2008

$
6,470


5,629


2,3072009


6,007


6,594


2,3072010


6,336


7,354


2,3352011


5,859


9,910


2,2952012


5,787


9,541


2,265Aggregate
    2013-2017


26,050


64,702


10,118  61




---



##### Table of Contents



non-U.S. pension
    U.S. Plans


Non-U.S. PlansCurrentWeightedCurrent








AverageTarget








Target2007


2006


Allocation


2007


2006


AllocationAsset category:Equity securities


62
%


54
%


62
%


48
%


61
%


59
%Debt securities


32
%


25
%


33
%


21
%


32
%


31
%Other


6
%


21
%


5
%


31
%


7
%


10
%Total


100
%


100
%


100
%


100
%


100
%


100
%   non-U.S. plans
  Defined
    Contribution Plans
    Other
  non-U.S. locations.
 62




---



##### Table of Contents



Note 10:
    Stockholders
    Equity and Earnings Per Share         63




---



##### Table of Contents



2007

2006

2005Amt.





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

$
205,104


53,222,731

$
3.85

$
132,908


52,330,405

$
2.54

$
66,951


47,827,508

$
1.40Diluted earnings per share:Effect of dilutive securities:Stock options granted and outstanding





820,426








1,129,702








1,082,716Income available to common stockholders and assumed conversions

$
205,104


54,043,157

$
3.80

$
132,908


53,460,107

$
2.49

$
66,951


48,910,224

$
1.37     Note 11:
    Accumulated
    Other Comprehensive Income   64




---



##### Table of Contents



Foreign











AccumulatedCurrency


Unrecognized


Minimum


Pension and


OtherTranslation


Gains (Losses) on


Pension


Postretirement


ComprehensiveAdjustment


Cash Flow Hedges


Liability


Benefit Plans


IncomeBalance 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
)


50,731Before tax income (loss)


63,918



(2,689
)






13,666



74,895Income tax effect(2)






1,022







(4,069
)


(3,047
)Other comprehensive income (loss)


63,918



(1,667
)






9,597



71,848Cumulative prior period translation adjustment(3)


5,440















5,440Currency translation(4)














(9
)


(9
)Balance at December 31, 2007

$
133,467



(110
)






(5,347
)


128,010   (1)
    
    Reflects adoption of the
    recognition provisions of SFAS No. 158 as of
    December 31, 2006. See Note 9  Benefit
    Plans.(2)
    
    The income tax effect relative to
    pension and postretirement benefit plans in 2007 reflects a
    reduction  in the German and United Kingdom income tax rates.(3)
    
    Represents the cumulative
    translation gain for the period September 30, 2004 to
    December 31, 2006 relative to certain assets and
    liabilities associated with the Companys 2004 acquisition
    of Nash Elmo which were moved from a U.S. dollar subsidiary to
    various
    non-U.S.
    dollar (primarily euro) subsidiaries based on the exchange rates
    in effect at the acquisition date. This gain was previously
    estimated to be approximately $15.7 million.(4)
    
    The Company uses the historical
    rate approach in determining the U.S. dollar amounts of changes
    to accumulated other comprehensive income associated with
    non-U.S.
    pension benefit plans. 65




---



##### Table of Contents



Note 12:
    Income
    Taxes    2007

2006

2005U.S.

$
147,018


113,865


30,098Non-U.S.


121,342


86,750


65,546Income before income taxes

$
268,360


200,615


95,644     2007


2006


2005Current:U.S. federal

$
46,856



46,374



7,079U.S. state and local


4,762



3,750



1,161Non-U.S.


30,377



16,428



18,457Deferred:U.S. federal


(7,981
)


(3,538
)


2,503U.S. state and local


(421
)


(303
)


215Non-U.S.


(10,337
)


4,996



(722
)Provision for income taxes

$
63,256



67,707



28,693     2007


2006


2005U.S. federal corporate statutory rate


35.0
%


35.0
%


35.0
%State and local taxes, less federal tax benefit


1.7



1.7



1.4Foreign income taxes


(8.4
)


(4.4
)


(5.4
)Export benefit






(0.4
)


(1.1
)Manufacturing benefit


(0.9
)


(0.5
)


(0.3
)American Jobs Creation Act Dividend










0.9Repatriation tax effect


(3.7
)


1.7



Other, net


(0.1
)


0.7



(0.5
)Effective income tax rate


23.6
%


33.8
%


30.0
%  66




---



##### Table of Contents



2007


2006Deferred tax assets:Reserves and accruals

$
31,734



38,580Postretirement benefits other than pensions


7,446



9,599Postretirement benefits  pensions


11,068



10,785Tax loss carryforwards


7,484



9,207Foreign tax credit carryforwards


5,080



527Other


5,247



2,232Total deferred tax assets


68,059



70,930Valuation allowance


(5,431
)


(8,025
)Deferred tax liabilities:LIFO inventory


(615
)


(3,658
)Property, plant and equipment


(31,194
)


(33,259
)Intangibles


(71,077
)


(72,192
)Other


(2,896
)


(5,894
)Total deferred tax liabilities


(105,782
)


(115,003
)Net deferred income tax liability

$
(43,154
)


(52,098
)     AmountTax reserve balance at January 1, 2007

$
15,283Decreases related to prior year tax positions


(4,952
)Changes due to currency fluctuations


366Changes related to current year tax positions


Settlements


(2,868
)Lapses of statutes of limitations


(506
)Tax reserve balance at December 31, 2007

$
7,323      67




---



##### Table of Contents



Tax

Valuation


Net TaxBenefit

Allowance


Benefit2008

$
69


(69
)


2009


522


(180
)


3422010


772


(747
)


252011


181


(163
)


182012


1,063


(963
)


1002013


44






442016


481






4812024


346






3462028


28






282029


65






65Indefinite life


3,913


(3,309
)


604Total

$
7,484


(5,431
)


2,053   non-U.S. subsidiaries
   68




---



##### Table of Contents



Note 13.
    Stock-Based
    Compensation Plans  ,
  Statement of Cash Flows,
  2007


2006Selling and administrative expenses

$
4,988


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


4,988



5,340Income before income taxes


(4,988
)


(5,340
)Provision for income taxes


1,087



1,509Net income

$
(3,901
)

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

$
(0.07
)

$
(0.07
)     2007


2006Net cash provided by operating activities

$
(6,320
)

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

$
6,320


$
3,674  69




---



##### Table of Contents



Plan
    Descriptions
          Stock
    Option Awards
    Outstanding



Weighted-AverageWeighted-Average

Aggregate

RemainingShares


Exercise Price

Intrinsic Value

Contractual LifeOutstanding at December 31, 2006


2,422


$
15.78Granted


251



36.00Exercised


(774
)


11.63Forfeited or canceled


(29
)


27.54Outstanding at December 31, 2007


1,870



20.06

$
25,297


3.9 yearsExercisable at December 31, 2007


1,292


$
15.54

$
22,903


3.4 years      70




---



##### Table of Contents



Restricted
    Stock Awards
    Weighted-AverageGrant DateShares

Fair ValueNonvested at December 31, 2006


45

$
30.58Granted


45


36.36Vested





Forfeited





Nonvested at December 31, 2007


90

$
33.43     Valuation
    Assumptions
    2007


2006


2005Assumptions:Risk-free interest rate


4.7
%


4.7
%


3.9
%Dividend yield










Volatility factor


29



27



33Expected life (in years)


4.9



4.8



4.4   Pro
    Forma Net Earnings
   71




---



##### Table of Contents



2005Net income, as reported

$
66,951Less: Total stock-based employee compensation expense determined
    under fair-value method, net of related tax effects


(2,074
)Pro forma net income

$
64,877Basic earnings per share, as reported

$
1.40Basic earnings per share, pro forma


1.36Diluted earnings per share, as reported


1.37Diluted earnings per share, pro forma


1.33       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
       72




---



##### Table of Contents



Fair
    Value of Financial Instruments
          2007


2006Average


Average







Average


AverageNotional

Receive


Pay


Fair


Notional

Receive


Pay


FairAmount

Rate


Rate


Value


Amount

Rate


Rate


ValueForeign currency forwards

$
29,757


N/A



N/A



580






N/A



N/A



Interest rate swaps

$
30,000


4.9
%


4.1
%


(141
)


70,000


5.4
%


4.4
%


1,850     Note 15:
    Contingencies    and/or
   73




---



##### Table of Contents



on-site
    Note 16:
    Segment
    Information     74




---



##### Table of Contents



Year Ended December 31,2006


2005Operating Income:Compressor and Vacuum Products

$
(747
)


1,639Fluid Transfer Products


23



370Other income, net


(724
)


2,009Net

$




     Revenues


Operating Income


Identifiable Assets at December, 312007


2006


2005


2007


2006


2005


2007


2006


2005Compressor and Vacuum Products

$
1,440,311



1,310,505



982,476


$
169,660



140,058



84,732


$
1,557,281



1,471,139



1,412,055Fluid Transfer Products


428,533



358,671



232,076



121,859



94,291



37,912



234,370



202,399



166,345Total

$
1,868,844



1,669,176



1,214,552



291,519



234,349



122,644



1,791,651



1,673,538



1,578,400Interest expense














26,211



37,379



30,433Other income, net














(3,052
)


(3,645
)


(3,433
)Income before income taxes













$
268,360



200,615



95,644General corporate (unallocated)


























113,956



76,693



136,660Total assets

























$
1,905,607



1,750,231



1,715,060   75




---



##### Table of Contents



LIFO Liquidation


Depreciation andIncome (before Tax)


Amortization Expense


Capital Expenditures2007


2006


2005


2007


2006


2005


2007


2006


2005Compressor and Vacuum Products

$
679



275






$
52,575



46,809



33,705


$
39,877



36,576



30,588Fluid Transfer Products


613



125







6,009



5,400



4,617



7,906



4,539



4,930Total

$
1,292



400






$
58,584



52,209



38,322


$
47,783



41,115



35,518   Property, Plant and EquipmentRevenues


at December 31,2007


2006


2005


2007


2006


2005United States

$
764,967



695,210



495,282


$
102,852



103,443



108,372Europe


654,699



601,786



418,165



161,408



150,582



156,559Asia


246,008



191,757



167,273



16,702



17,300



13,981Canada


51,772



81,593



56,942



193



129



141Latin America


96,248



56,594



43,169



11,566



4,382



2,952Other


55,150



42,236



33,721



659



657



586Total

$
1,868,844



1,669,176



1,214,552


$
293,380



276,493



282,591   Note 17:
    Guarantor
    Subsidiaries     76




---



##### Table of Contents



Consolidating
    Statement of Operations
    Year Ended December 31, 2007
  Parent


Guarantor


Non-GuarantorCompany


Subsidiaries


Subsidiaries


Eliminations


ConsolidatedRevenues

$
425,290



485,863



1,215,750



(258,059
)


1,868,844Cost of sales


276,629



337,656



890,247



(255,611
)


1,248,921Gross profit


148,661



148,207



325,503



(2,448
)


619,923Selling and administrative expenses


80,349



51,669



196,386







328,404Operating income


68,312



96,538



129,117



(2,448
)


291,519Interest expense (income)


26,735



(10,536
)


10,012







26,211Other income, net


(1,421
)


(20
)


(1,611
)






(3,052
)Income before income taxes


42,998



107,094



120,716



(2,448
)


268,360Provision for income taxes


5,205



39,108



19,377



(434
)


63,256Net income

$
37,793



67,986



101,339



(2,014
)


205,104   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
)


1,669,176Cost of sales


292,420



311,357



710,062



(193,979
)


1,119,860Gross profit


144,732



120,811



280,213



3,560



549,316Selling and administrative expenses


79,124



49,188



186,655







314,967Operating income


65,608



71,623



93,558



3,560



234,349Interest expense (income)


36,317



(9,349
)


10,411







37,379Other income, net


(1,355
)


(52
)


(2,238
)






(3,645
)Income 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   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
)


1,214,552Cost of sales


245,853



195,058



426,912



(31,586
)


836,237Gross profit


97,020



69,081



210,780



1,434



378,315Selling and administrative expenses


68,801



41,695



145,089



86



255,671Operating income


28,219



27,386



65,691



1,348



122,644Interest expense


29,211







1,222







30,433Other income, net


(1,667
)


(50
)


(1,716
)






(3,433
)Income 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  77




---



##### Table of Contents



Consolidating
    Balance Sheet
    December 31, 2007
  Parent


Guarantor


Non-GuarantorCompany


Subsidiaries


Subsidiaries


Eliminations


ConsolidatedAssetsCurrent assets:Cash and equivalents

$
10,409



(2,261
)


84,774







92,922Accounts receivable, net


59,537



56,634



192,577







308,748Inventories, net


25,340



70,134



175,086



(14,114
)


256,446Deferred income taxes


15,204



2,006







3,824



21,034Other current assets


4,367



5,977



12,034







22,378Total current assets


114,857



132,490



464,471



(10,290
)


701,528Intercompany (payable) receivable


(278,396
)


276,809



1,587







Investments in affiliates


914,680



198,654



29



(1,113,334
)


29Property, plant and equipment, net


54,606



48,260



190,514







293,380Goodwill


111,033



211,983



362,480







685,496Other intangibles, net


7,537



47,560



151,217







206,314Other assets


17,266



479



5,074



(3,959
)


18,860Total assets

$
941,583



916,235



1,175,372



(1,127,583
)


1,905,607Liabilities and Stockholders EquityShort-term borrowings and current maturities of long-term debt

$
19,639







6,098







25,737Accounts payable and accruedliabilities


70,407



39,017



177,649



(608
)


286,465Total current liabilities


90,046



39,017



183,747



(608
)


312,202Long-term intercompany (receivable) payable


(14,541
)


(18,176
)


32,717







Long-term debt, less current maturities


189,463



77



74,447







263,987Deferred income taxes






26,306



41,841



(3,959
)


64,188Other liabilities


52,561



313



52,643







105,517Total liabilities


317,529



47,537



385,395



(4,567
)


745,894Stockholders equity:Common stock


573















573Capital in excess of par value


515,194



672,918



441,162



(1,113,334
)


515,940Retained earnings


150,768



165,606



238,392



(9,682
)


545,084Accumulated other comprehensive (loss) income


(12,587
)


30,174



110,423







128,010Treasury stock, at cost


(29,894
)














(29,894
)Total stockholders equity


624,054



868,698



789,977



(1,123,016
)


1,159,713Total liabilities and stockholders equity

$
941,583



916,235



1,175,372



(1,127,583
)


1,905,607  78




---



##### Table of Contents



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) receivable


(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 accruedliabilities


52,477



86,768



164,605



(10,672
)


293,178Total current liabilities


72,616



86,768



168,255



(10,672
)


316,967Long-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


52,781



3,036



74,998







130,815Total 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  79




---



##### Table of Contents



Consolidating
    Condensed Statement of Cash Flows
    Year Ended December 31, 2007
  Parent


Guarantor


Non-GuarantorCompany


Subsidiaries


Subsidiaries


Eliminations


ConsolidatedNet cash provided by (used in) operating activities

$
104,695



7,606



71,950



(2,623
)


181,628Cash flows from investing activities:Capital expenditures


(11,356
)


(7,554
)


(28,873
)






(47,783
)Net cash paid in business combinations


(205
)














(205
)Disposals of property, plant and equipment


91



159



1,426







1,676Other


662



38



(21
)






679Net cash used in investing activities


(10,808
)


(7,357
)


(27,468
)






(45,633
)Cash flows from financing activities:Net change in long-term intercompany receivables/payables


12,381



(1,936
)


(13,068
)


2,623



Principal payments on short-term borrowings










(37,074
)






(37,074
)Proceeds from short-term borrowings










39,377







39,377Principal payments on long-term debt


(226,656
)


(1
)


(49,694
)






(276,351
)Proceeds from long-term debt


111,042







37,757







148,799Proceeds from stock option exercises


9,003















9,003Excess tax benefits from stock-based compensation


6,320















6,320Purchase of treasury stock


(960
)














(960
)Other










(959
)






(959
)Net cash (used in) provided by financing activities


(88,870
)


(1,937
)


(23,661
)


2,623



(111,845
)Effect of exchange rate changes on cash and equivalents


45







6,396







6,441Increase (decrease) in cash and equivalents


5,062



(1,688
)


27,217







30,591Cash and equivalents, beginning of year


5,347



(573
)


57,557







62,331Cash and equivalents, end of year

$
10,409



(2,261
)


84,774







92,922  80




---



##### Table of Contents



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


Guarantor


Non-GuarantorCompany


Subsidiaries


Subsidiaries


Eliminations


ConsolidatedNet cash provided by (used in) operating activities

$
126,096



(45,711
)


101,288



(14,481
)


167,192Cash flows from investing activities:Capital expenditures


(9,070
)


(4,753
)


(27,292
)






(41,115
)Net cash paid in business combinations


(3,683
)






(17,437
)






(21,120
)Disposals of property, plant and equipment


2,947



975



7,674







11,596Other


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 option exercises


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 year

$
5,347



(573
)


57,557







62,331  81




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##### Table of Contents



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


Guarantor


Non-GuarantorCompany


Subsidiaries


Subsidiaries


Eliminations


ConsolidatedNet cash provided by (used in) operating activities

$
79,754



(21,069
)


56,603



(213
)


115,075Cash flows from investing activities:Capital expenditures


(14,885
)


(4,825
)


(15,808
)






(35,518
)Net cash paid in business combinations


(738,890
)


222,053



34,920







(481,917
)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 option exercises


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   Note 18:
    Quarterly
    Financial and Other Supplemental Information
    (Unaudited)  First Quarter


Second Quarter


Third Quarter


Fourth Quarter2007


2006


2007


2006


2007


2006


2007


2006Revenues

$
441,418



399,294



459,869



416,312



457,230



414,028



510,327



439,542Gross profit


148,927



132,684



153,832



134,323



149,180



133,599



167,984



148,710Net income(1)

$
42,816



30,512



44,771



32,984



53,652



32,117



63,865



37,295Basic earnings per share(2)

$
0.81



0.59



0.84



0.63



1.00



0.61



1.19



0.71Diluted earnings per share(2)

$
0.80



0.57



0.83



0.62



0.99



0.60



1.18



0.70Common stock prices(2):High

$
39.87



32.73



43.94



40.73



46.09



38.76



41.10



39.60Low

$
31.01



24.28



34.60



31.04



34.25



30.44



30.37



29.77  82




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##### Table of Contents



(1)
    
    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.(2)
    
    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.      Year Ended December 31, 2007First


Second


Third


Fourth


TotalQuarter


Quarter


Quarter


Quarter


YearRevenues

$
441,418



459,869



457,230



510,327



1,868,844Cost of sales


292,491



306,037



308,050



342,343



1,248,921Gross profit


148,927



153,832



149,180



167,984



619,923Selling and administrative expenses


81,022



82,848



82,095



82,439



328,404Operating income


67,905



70,984



67,085



85,545



291,519Interest expense


6,737



6,858



6,566



6,050



26,211Other income, net


(746
)


(760
)


(657
)


(889
)


(3,052
)Income before income taxes


61,914



64,886



61,176



80,384



268,360Provision for income taxes


19,098



20,115



7,524



16,519



63,256Net income

$
42,816



44,771



53,652



63,865



205,104Basic earnings per share

$
0.81



0.84



1.00



1.19



3.85Diluted earnings per share

$
0.80



0.83



0.99



1.18



3.80Amounts ReclassifiedSelling and administrative expenses

$
193



524



214







931Other income, net


(193
)


(524
)


(214
)






(931
)Total costs and expenses

$
















Segment Operating IncomeCompressor and Vacuum Products

$
38,695



40,834



41,770



48,361



169,660Fluid Transfer Products


29,210



30,150



25,315



37,184



121,859Total

$
67,905



70,984



67,085



85,545



291,519Amounts ReclassifiedSegment operating income:Compressor and Vacuum Products

$
(267
)


(516
)


(552
)






(1,335
)Fluid Transfer Products


74



(8
)


338







404Other income, net


(193
)


(524
)


(214
)






(931
)Net

$
















   83




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##### Table of Contents



Year Ended December 31, 2006First


Second


Third


Fourth


TotalQuarter


Quarter


Quarter


Quarter


YearRevenues

$
399,294



416,312



414,028



439,542



1,669,176Cost of sales


266,610



281,989



280,429



290,832



1,119,860Gross profit


132,684



134,323



133,599



148,710



549,316Selling and administrative expenses


78,329



75,731



77,719



83,188



314,967Operating income


54,355



58,592



55,880



65,522



234,349Interest expense


10,232



9,580



8,762



8,805



37,379Other income, net


(748
)


(887
)


(831
)


(1,179
)


(3,645
)Income before income taxes


44,871



49,899



47,949



57,896



200,615Provision for income taxes


14,359



16,915



15,832



20,601



67,707Net income

$
30,512



32,984



32,117



37,295



132,908Basic earnings per share

$
0.59



0.63



0.61



0.71



2.54Diluted earnings per share

$
0.57



0.62



0.60



0.70



2.49Amounts ReclassifiedCost of sales

$
7,435



12,275



8,880



7,213



35,803Selling and administrative expenses


4,624



2,688



3,936



5,882



17,130Depreciation and amortization


(11,998
)


(14,529
)


(13,000
)


(12,682
)


(52,209
)Other income, net


(61
)


(434
)


184



(413
)


(724
)Total costs and expenses

$
















Segment Operating IncomeCompressor and Vacuum Products

$
35,594



33,420



33,363



37,681



140,058Fluid Transfer Products


18,761



25,172



22,517



27,841



94,291Total

$
54,355



58,592



55,880



65,522



234,349Amounts ReclassifiedSegment operating income:Compressor and Vacuum Products

$
(214
)


(331
)


31



(233
)


(747
)Fluid Transfer Products


153



(103
)


153



(180
)


23Other income, net


(61
)


(434
)


184



(413
)


(724
)Net

$
















   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)
 84




---



##### Table of Contents



Form 10-K,
  Internal
    Control over Financial Reporting
  Managements
    Report on Internal Control Over Financial
    Reporting
  Rules 13a-15(f) 15d-15(f).
  Internal Control 
    Integrated Framework Internal
    Control  Integrated Framework,
  Attestation
    Report of Registered Public Accounting Firm
    Changes
    in Internal Control over Financial Reporting
    ITEM 9B.
    OTHER
    INFORMATION   PART III  ITEM 10.
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE  Executive Officers of the
    Registrant 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;
 85




---



##### Table of Contents



Corporate Governance; Board of Directors Committees
  www.gardnerdenver.com
  ITEM 11.
    EXECUTIVE
    COMPENSATION  Compensation of Directors,
    Compensation Discussion & Analysis and
    Executive Management Compensation Report of the
    Compensation Committee
  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
 86




---



##### 



PART IV  ITEM 15.
    EXHIBITS AND
    FINANCIAL STATEMENT SCHEDULES    (1)
    Financial Statements: The following consolidated financial
    statements of the Company and the report of the Independent
    Registered Public Accounting Firm are contained in Item 8
    as indicated:   
  Page No.Report of Independent Registered Public
    Accounting Firm


39Consolidated Statements of Operations - Years
    Ended December 31, 2007, 2006 and 2005


41Consolidated Balance Sheets - December 31,
    2007 and 2006


42Consolidated Statements of Stockholders
    Equity - Years Ended December 31, 2007, 2006 and 2005


43Consolidated Statements of Cash Flows - Years
    Ended December 31, 2007, 2006 and 2005


44Notes to Consolidated Financial Statements


45          Form 10-K,
 87




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##### Table of Contents



SIGNATURES      By
    /s/  Barry
    L. Pennypacker         Signature

Title/s/  Ross
    J. CentanniRoss
    J. Centanni

Executive Chairman of the Board and Director/s/  Barry
    L. PennypackerBarry
    L. Pennypacker

President and Chief Executive Officer (Principal Executive
    Officer)/s/  Helen
    W. CornellHelen
    W. Cornell

Executive Vice President, Finance and Chief Financial Officer
    (Principal Financial Officer)/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*David
    D. Petratis

Director*Diane
    K. Schumacher

Director*Charles
    L. Szews

Director*Richard
    L. Thompson

Director   Tracy
    D. Pagliara
  Tracy D. Pagliara Attorney-in-fact
 88




---



##### Table of Contents



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, filed as Exhibit 10.1 to
    Gardner Denver, Inc.s Annual Report on
    Form 10-K
    dated February 28, 2007, and incorporated herein by
    reference.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, filed as Exhibit 10.2 to
    Gardner Denver, Inc.s Annual Report on
    Form 10-K,
    dated February 28, 2007, and incorporated herein by
    reference.10.3

Amendment No. 3 to Third Amended and Restated Credit
    Agreement, dated as of May 18, 2007, filed as
    Exhibit 10 to Gardner Denver, Inc.s Quarterly Report
    on
    Form 10-Q
    dated August 8, 2007 and incorporated herein by reference.10.4

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.10.5

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.10.6*

Amended and Restated Gardner Denver, Inc. Long-Term Incentive
    Plan as effective on February 18, 2008, filed as
    Exhibit 10.1 to Gardner Denver, Inc.s Current Report
    on
    Form 8-K,
    dated February 18, 2008, and incorporated herein by
    reference.10.7*

Gardner Denver, Inc. Supplemental Excess Defined Contribution
    Plan, September 1, 1998 Restatement, as amended on various
    dates, filed as Exhibit 99.1 to Gardner Denver, Inc.s
    Current Report on
    Form 8-K,
    dated December 13, 2007, and incorporated herein by
    reference. 89




---



##### Table of Contents



Exhibit No.

Description10.8*

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 Annual Report on
    Form 10-K,
    dated March 28, 2002, and incorporated herein by reference.10.9*

Gardner Denver, Inc. Phantom Stock Plan for Outside Directors,
    amended and restated effective as of August 1, 2007, filed
    as Exhibit 10.1 to Gardner Denver, Inc.s Quarterly
    Report on
    Form 10-Q
    dated August 8, 2007 and incorporated herein by reference.10.10*

Gardner Denver, Inc. Executive and Director Stock Repurchase
    Program, amended and restated effective July 24, 2007,
    filed as Exhibit 10.2 to Gardner Denver, Inc.s
    Quarterly Report on
    Form 10-Q
    dated August 8, 2007 and incorporated herein by reference.10.11*

Form of Gardner Denver, Inc. Incentive Stock Option Agreement,
    filed as Exhibit 10.2 to Gardner Denver, Inc.s
    Current Report on
    Form 8-K
    dated February 18, 2008, and incorporated herein by
    reference.10.12*

Form of Gardner Denver, Inc. Non-Qualified Stock Option
    Agreement, filed as Exhibit 10.3 to Gardner Denver,
    Inc.s Current Report on
    Form 8-K
    dated February 18, 2008, and incorporated herein by
    reference.10.13*

Form of Gardner Denver, Inc. Restricted Stock Units Agreement,
    filed as Exhibit 10.4 to Gardner Denver, Inc.s
    Current Report on
    Form 8-K
    dated February 18, 2008, and incorporated herein by
    reference.10.14*

Form of Gardner Denver, Inc. Nonemployee Director Stock Option
    Agreement, filed as Exhibit 10.5 to Gardner Denver,
    Inc.s Current Report on
    Form 8-K
    dated February 18, 2008, and incorporated herein by
    reference.10.15*

Form of Gardner Denver, Inc. Nonemployee Director Restricted
    Stock Units Agreement, filed as Exhibit 10.6 to Gardner
    Denver, Inc.s Current Report on
    Form 8-K
    dated February 18, 2008, and incorporated herein by
    reference.10.16*

Form of Gardner Denver, Inc. Restricted Stock Award Agreement.**10.17*

Form of Restricted Stock Agreement for awards granted to
    Nonemployee Directors Pursuant to the Amended and Restated
    Long-Term Incentive Plan as effective May 1, 2007, file as
    Exhibit 10.2 to Gardner Denver, Inc.s Quarterly
    Report on
    Form 10-Q,
    dated May 9, 2007, and incorporated herein by reference.10.18*

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.10.19*

Form of Gardner Denver, Inc. Long-Term Cash Bonus Agreement
    between Gardner Denver, Inc. and executive bonus award
    participant, effective February 18, 2008.**10.20*

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 Annual Report on
    Form 10-K,
    dated March 28, 2002, and incorporated herein by reference.10.21*

Form of Change in Control Agreement dated May 2, 2005,
    entered into between Gardner Denver, Inc. and its Chief
    Executive Officer (Ross J. Centanni), filed as
    Exhibit 10.14 to Gardner Denver, Inc.s Annual Report
    on
    Form 10-K,
    dated March 15, 2006, and incorporated herein by reference.10.22*

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 Annual Report on
    Form 10-K,
    dated March 15, 2006, and incorporated herein by reference.10.23*

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.12

Ratio of Earnings to Fixed Charges.**21

Subsidiaries of Gardner Denver, Inc.**23

Consent of Independent Registered Public Accounting Firm.** 90




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##### Table of Contents



Exhibit No.

Description24

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. 91