##### 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, 2008
 or
 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


19Item 2.


Properties


19Item 3.


Legal Proceedings


20Item 4.


Submission of Matters to a Vote of Security
    Holders


20PART IIItem 5.


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


20Item 6.


Selected Financial Data


21Item 7.


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


22Item 7A.


Quantitative and Qualitative Disclosures about
    Market Risk


43Item 8.


Financial Statements and Supplementary Data


45Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


95Item 9A.


Controls and Procedures


95Item 9B.


Other Information


96PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


96Item 11.


Executive Compensation


96Item 12.


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


97Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


97Item 14.


Principal Accounting Fees and Services


97PART IVItem 15.


Exhibits, Financial Statement Schedules


98SIGNATURES


99INDEX TO EXHIBITS


100Ex-12 (Computation of Ratio of Earnings to Fixed Charges)Ex-21 (Subsidiaries of the Registrant)Ex-23 (Consent of Independent Registered Public Accounting Firm)Ex-24 (Power of Attorney)Ex-31 (Certifications Pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002)Ex-32 (Certifications Pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002)




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Cautionary
    Statements Regarding Forward-Looking Statements  Form 10-K,
    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 2008
        
    Completed the acquisition of CompAir, a global provider of
    complementary and innovative compressor products. This
    acquisition broadens the Companys geographic presence,
    diversifies its end markets served, thereby reducing reliance on
    certain product applications, and provides opportunities to
    reduce operating costs and achieve sales and marketing
    efficiencies. The transaction was completed in October 2008. 3




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
    Increased revenues 8% as a result of acquisitions (5%), the
    favorable effect of changes in foreign currency exchange rates
    (2%) and organic growth (1%). The organic growth was
    attributable to increases in the Compressor and Vacuum Products
    segment (4%), partially offset by declines in the Fluid Transfer
    Products segment (9%).
    Initiated cost reductions and restructuring programs to mitigate
    the significant decline in global demand, which deteriorated
    more quickly than the Companys original expectations. The
    Company responded by accelerating its restructuring initiatives
    and implementing previously developed contingency plans,
    including a reduction of the global salaried workforce, a hiring
    freeze and strict controls on discretionary spending. As part of
    the Companys profit improvement initiatives, the Company
    completed the closure of two manufacturing facilities in the
    U.S. and the transfer of their activities into existing
    locations and announced the closure of a manufacturing facility
    in the U.K., which is expected to be substantively completed by
    the fourth quarter of 2009. Costs recognized in 2008 as a result
    of the profit improvement initiatives totaled $11.1 million.
    Generated more than $277 million in net cash from operating
    activities in 2008, compared to $182 million in 2007. As a
    result of the investments in lean initiatives, among other
    efforts, the Company generated more than $35 million in
    cash from inventory reductions in 2008, of which nearly
    $30 million was generated in the last six months of the
    year.
    Used cash provided by operating activities to repay
    approximately $207 million of debt and repurchase more than
    $100 million in Gardner Denver stock, completing the
    repurchase authorization under the 2007 share repurchase
    program. The Board of Directors has authorized a new share
    repurchase program to acquire up to 3 million shares of its
    outstanding common stock, representing approximately 6% of the
    shares currently outstanding. The Company has not repurchased
    any of its common stock under this authorization.
    Developed new products to deliver key features and benefits for
    the Companys customers. The new product introductions
    included a new wireless system for monitoring fuel delivery by
    tanker trucks to help customers reduce costs and potential
    thefts. In the Compressor and Vacuum Products segment, the
    Company developed the ESP 20/20 compressor monitoring system,
    which constantly monitors compressor performance, tracking
    temperatures, pressures, flow levels, lubricant and filter
    conditions. The ESP 20/20 sends information real-time to users
    and to Gardner Denver and its distributors via a wireless
    internet connection to enable quick response to ensure
    customers compressed air needs are uninterrupted. In 2008,
    CompAir introduced the Quantima compressor, an innovative
    oil-free compressor that significantly reduces energy
    consumption and
    CO2
    emissions, helping customers to reduce their carbon footprint.  Future
    Initiatives
      
    Accelerate organic growth through new product development based
    on the needs of the customer, by concentrating on end market
    segments and geographic regions that are growing at above
    average rates and by penetrating the market to gain share. By
    accelerating organic growth, the Company reduces the impact of
    economic down cycles and participates in faster growing regions
    of the world, such as Asia Pacific.
    Expand aftermarket parts and service revenues. Typically, sales
    of aftermarket parts and services generate above average margins
    and demand for these products tends to be less cyclical than
    that of new units. 4




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
    Complete selective acquisitions, 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.
    Reduce costs and eliminate waste through operational excellence
    in order to increase margins and return on invested capital.      History
  OPI Sutorbilt DuroFlow ®
    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


16August 2008

Best Aire, Inc.


6October 2008

CompAir Holdings Limited


378    5




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TODO-MATIC Emco Wheaton
      Markets
    and Products
    Compressor
    and Vacuum Products Segment
   6




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sub-fractional Gardner Denver,
    Champion, Thomas, Bottarini, CompAir, Mako, Reavell Belliss & Morcom Gardner Denver, Bottarini,
    Electra-Screw, Electra-Saver, Enduro, RotorChamp, Tamrotor,
    CompAir Tempest CompAir Dryclon Quantima CompAir
  Sutorbilt,
    DuroFlow, CycloBlower, Drum, Wittig, Elmo Rietschle TurboTron. Gardner Denver, Lamson Hoffman Elmo
    Rietschle Gardner Denver, Hydrovane,
    Elmo Rietschle, Thomas, Welch, Drum Wittig Gardner Denver, Invincible, Thomas, Elmo Rietschle Cat Vac Nash Elmo
    Rietschle
       7




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Fluid
    Transfer Products Segment
    Gardner Denver OPI Gardner Denver Oberdorfer Gardner Denver
  Partek, Liqua-Blaster American Water Blaster
  Emco Wheaton, Todo Perolo
    Customers
    and Customer Service
   8




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Competition
       9




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Research
    and Development
          Manufacturing
  work-in-process
  9001-2000
  Raw
    Materials and Suppliers
   10




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Order
    Backlog
  Form 10-K.
  Patents,
    Trademarks and Other Intellectual Property
    Gardner Denver Aeon,
    Belliss & Morcom, Bottarini, Champion, CompAir,
    CycloBlower, Drum, DuroFlow, Elmo Rietschle, Emco Wheaton,
    Hoffman, Hydrovane, Lamson, Legend, Nash, Oberdorfer, OPI,
    Quantima, Reavell, Sutorbilt, Tamrotor, Thomas, Todo, Webster,
    Welch Wittig.
  Gardner Denver
    Employees
    Executive
    Officers of the Registrant
    11




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Name

Position

AgeBarry L. Pennypacker

President and Chief Executive Officer


48Helen W. Cornell

Executive Vice President, Finance and Chief  Financial Officer


50J. Dennis Shull

Executive Vice President, Gardner Denver, Inc. and President,
    Industrial Products Group


60T. Duane Morgan

Vice President, Gardner Denver, Inc. and President, Engineered
    Products Group


59Jeremy T. Steele

Vice President, General Counsel, Chief Compliance Officer and
    Assistant Secretary


36Armando L. Castorena

Vice President, Human Resources


46Bob D. Elkins

Vice President, Chief Information Officer


60   Barry L. Pennypacker
  Helen W. Cornell,
  J. Dennis Shull,
  T. Duane Morgan,
 12




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Jeremy T. Steele,
  Armando Castorena,
  Bob D. Elkins,
  Compliance
    Certifications
  Form 10-K
  Environmental
    Matters
     13




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on-site
    Available
    Information
  www.gardnerdenver.com Form 10-K; Form 10-Q; Form 8-K;
  ITEM 1A.
    RISK
    FACTORS  We have
    exposure to the risks associated with the current global
    economic crisis, which may negatively impact our revenues,
    liquidity, suppliers and customers.
    We may
    not realize the expected financial benefits from the acquisition
    of CompAir and from recently announced restructuring
    actions.
   14




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We
    operate in cyclical markets, which may make our revenues and
    operating results fluctuate.
      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.
    An
    increasing percentage of our sales and operations are in
    non-U.S.
    jurisdictions and is subject to the economic, political,
    regulatory and other risks of international
    operations.
  Non-U.S. operations
  
    nationalization of private enterprises;
    political or economic instability in certain countries,
    especially during the current global economic crisis;
    differences in foreign laws, including increased difficulties in
    protecting intellectual property and uncertainty in enforcement
    of contract rights; 15




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
    changes in the legal and regulatory policies of foreign
    jurisdictions;
    credit risks;
    currency fluctuations, in particular, changes in currency
    exchange rates between the U.S. dollar, the euro, the
    British pound sterling and the Chinese yuan;
    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.  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.
  debt-to-total-capitalization
  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, restructuring costs, execution of our
    growth strategy, or other purposes;
    a portion of our cash flow will 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 credit agreement, the
    indenture covering 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
    borrowings under the credit agreement bear interest at floating
    rates, which could result in higher interest expense in the
    event of an increase in interest rates.  The
    nature of our products creates the possibility of significant
    product liability and warranty claims, which could harm our
    business.
   16




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Our
    success depends on our executive management and other key
    personnel.
    We may
    not be able to continue to identify and complete strategic
    acquisitions and effectively integrate acquired companies to
    achieve desired financial benefits.
      We face
    risks associated with our pension and other postretirement
    benefit obligations.
     17




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The risk
    of regulatory non-compliance could have a significant impact on
    our business.
    Environmental-compliance
    costs and liabilities could adversely affect our financial
    condition.
  and/or
      Communication
    or information systems failure may disrupt our business and
    result in financial loss and liability to our clients.
  back-up back-up
  We are a
    defendant in certain asbestos and silicosis personal injury
    lawsuits, which could adversely affect our financial
    condition.
   18




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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
  ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS    ITEM 2.
    PROPERTIES   19




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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        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

Paid per Share

or Programs

Plans or Programs(1)October 1, 2008 - October 31, 2008



n/a



November 1, 2008 - November 30, 2008



n/a



3,000,000December 1, 2008 - December 31, 2008



n/a



3,000,000Total







3,000,000   (1)
    
    In November 2008, the Board of
    Directors approved a new share repurchase program to acquire up
    to 3.0 million shares of Gardner Denvers common stock. 20




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

2008(1)

2007

2006(2)

2005(3)(5)

2004(4)(5)Revenues

$
2,018,332



1,868,844



1,669,176



1,214,552



739,539Net income


165,981



205,104



132,908



66,951



37,123Basic earnings per share(6)


3.16



3.85



2.54



1.40



0.98Diluted earnings per share(6)


3.12



3.80



2.49



1.37



0.96Long-term debt (excluding current maturities)


506,700



263,987



383,459



542,641



280,256Total assets

$
2,340,125



1,905,607



1,750,231



1,715,060



1,028,609   (1)
    
    The Company acquired the assets of
    Best Aire in August 2008 and the outstanding shares of CompAir
    in October 2008.(2)
    
    The Company acquired the
    outstanding shares of Todo in January 2006.(3)
    
    The Company acquired the
    outstanding shares of Bottarini and Thomas in June 2005 and July
    2005, respectively.(4)
    
    The Company acquired the
    outstanding shares of Syltone and Nash Elmo in January 2004 and
    September 2004, respectively. 21




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(5)
    
    In fiscal 2006, the Company adopted
    the fair value recognition provisions of Statement of Financial
    Accounting Standards (SFAS) No. 123 (revised
    2004), Share-Based Payment,requiring the
    Company to recognize expense related to the fair value of the
    Companys stock-based compensation awards. Had
    SFAS No. 123(R) been in effect for the earliest period
    presented, results would have been as follows for fiscal 2005
    and 2004, respectively: net income - $64.9 million and
    $35.8 million; diluted earnings per share  $1.33
    and $0.93.(6)
    
    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
    Rule 5-03 Regulation S-X mark-to-market
  Overview
    and Description of Business
   22




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23




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2008


2007


2006Revenues


100.0



100.0



100.0Cost of sales


68.4



66.8



67.1Gross profit


31.6



33.2



32.9Selling and administrative expenses


17.3



17.5



18.6Other operating expense, net


1.5



0.1



0.3Operating income


12.8



15.6



14.0Interest expense


1.3



1.4



2.2Other income, net


(0.1
)


(0.2
)


(0.2
)Income before income taxes


11.6



14.4



12.0Provision for income taxes


3.4



3.4



4.0Net income


8.2



11.0



8.0   Year
    Ended December 31, 2008, Compared with Year Ended
    December 31, 2007
  Revenues
   24




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Gross
    Profit
    Selling
    and Administrative Expenses
    Other
    Operating Expense, Net
  mark-to-market
  Operating
    Income
   25




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mark-to-market
  mark-to-market
    Interest
    Expense
    Other
    Income, Net
    Provision
    For Income Taxes
   26




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Net
    Income
  mark-to-market
  Year
    Ended December 31, 2007, Compared with Year Ended
    December 31, 2006
  Revenues
        Gross
    Profit
    Selling
    and Administrative Expenses
   27




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Other
    Operating Expense, Net
    Operating
    Income
        Interest
    Expense
  non-U.S. dollar
  Other
    Income, Net
   28




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Provision
    For Income Taxes
    Net
    Income
    Outlook
         29




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Liquidity
    and Capital Resources
  Operating
    Working Capital
   30




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Cash
    Flows
         31




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Liquidity
                 32




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Off-Balance
    Sheet Arrangements
   33




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Contractual
    Obligations and Commitments
    Payments Due by Period(Dollars in millions)




Less than








More thanContractual Cash Obligations

Total


1 year


1 - 3 years


3 - 5 years


5 yearsDebt

$
536.5



35.8



97.7



389.3



13.7Estimated interest payments(1)


88.7



23.4



36.5



23.8



5.0Capital leases


7.2



0.4



0.7



0.6



5.5Operating leases


120.5



29.6



40.2



20.3



30.4Purchase obligations(2)


213.4



209.9



3.5







Total

$
966.3



299.1



178.6



434.0



54.6   (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, 2008. For this reason, these
    numbers will not provide a complete and reliable indicator of
    the Companys expected future cash outflows.      non-U.S. pension non-U.S. qualified
  non-U.S. plans
 34




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Contingencies
    and/or
       35




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on-site
    Changes
    in Accounting Principles and Effects of New Accounting
    Pronouncements
  Recently
    Adopted Accounting Pronouncements
  Accounting for Uncertainty in Income Taxes 
    an interpretation of FASB Statement No. 109
  Fair Value Measurements No. FAS 157-2, Effective Date of FASB Statement No. 157,
  Employers Accounting for Defined Benefit Pension
    and Other Postretirement Plans  an amendment of FASB
    Statements No. 87, 88, 106 and 132(R)
 36




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The Fair Value Option for Financial Assets and
    Financial Liabilities
  Certain Assumptions Used in Valuation Methods
  No. 157-3, Determining the Fair Value of a Financial Asset When
    the Market for That Asset is Not Active No. 157-3). No. 157-3 No. 157-3 No. 157-3
  Recently
    Issued Accounting Pronouncements
  Business Combinations Business
    Combinations Elements of Financial
    Statements.
 37




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Noncontrolling Interests in Consolidated Financial
    Statements  an amendment of ARB No. 51
  Disclosures about Derivative Instruments and Hedging
    Activities  an amendment of FASB Statement
    No. 133
  No. 142-3, Determination of the Useful Life of Intangible
    Assets No. 142-3) Goodwill and Other Intangible Assets No. 142-3 No. 142-3 No. 142-3
  No. 132R-1, Employers Disclosures about Postretirement
    Benefit Plan Assets No. 132R-1). No. 132R-1
 38




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Critical
    Accounting Policies and Estimates
    Allowance
    for Doubtful Accounts
    Inventory
    Reserves
  first-in, last-in,
  Goodwill
    and Other Intangibles
  Goodwill and Other Intangible
    Assets,
 39




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, Accounting for the Impairment
    or Disposal of Long-Lived Assets,
      Warranty
    Reserves
    Employee
    Medical and Workers Compensation Benefit Claims
   40




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Business
    Combinations
    Stock-Based
    Compensation
    Pension
    and Other Postretirement Benefits
   41




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Income
    Taxes
    Loss
    Contingencies
    Derivative
    Financial Instruments
       42




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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
 43




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non-U.S. subsidiaries non-U.S. dollar
    non-U.S. dollar
 44




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ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA  Report of
    Independent Registered Public Accounting Firm
     Internal Control  Integrated Framework
        Internal Control  Integrated Framework
   45




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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
     46




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Consolidated
    Statements of Operations
  GARDNER
    DENVER, INC.
  Years ended December
    31
 (Dollars in thousands except
    per share amounts)
  2008


2007


2006Revenues

$
2,018,332



1,868,844



1,669,176Cost of sales


1,380,042



1,248,921



1,119,860Gross profit


638,290



619,923



549,316Selling and administrative expenses


348,577



327,049



309,609Other operating expense, net


31,514



1,355



5,358Operating income


258,199



291,519



234,349Interest expense


25,483



26,211



37,379Other income, net


(750
)


(3,052
)


(3,645
)Income before income taxes


233,466



268,360



200,615Provision for income taxes


67,485



63,256



67,707Net income

$
165,981



205,104



132,908Basic earnings per share

$
3.16



3.85



2.54Diluted earnings per share

$
3.12



3.80



2.49   The accompanying notes are an
    integral part of these consolidated financial
    statements.
 47




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##### Table of Contents



Consolidated
    Balance Sheets
  GARDNER
    DENVER, INC.
  December 31
    (Dollars in thousands except per share amounts)
  2008


2007AssetsCurrent assets:Cash and equivalents

$
120,735



92,922Accounts receivable, net


388,098



308,748Inventories, net


284,825



256,446Deferred income taxes


33,014



21,034Other current assets


30,892



22,378Total current assets


857,564



701,528Property, plant and equipment, net


305,012



293,380Goodwill


804,648



685,496Other intangibles, net


346,263



206,314Other assets


26,638



18,889Total assets

$
2,340,125



1,905,607Liabilities and Stockholders EquityCurrent liabilities:Short-term borrowings and current maturities of long-term debt

$
36,968



25,737Accounts payable


135,864



101,615Accrued liabilities


224,550



184,850Total current liabilities


397,382



312,202Long-term debt, less current maturities


506,700



263,987Postretirement benefits other than pensions


17,481



17,354Deferred income taxes


91,218



64,188Other liabilities


128,596



88,163Total liabilities


1,141,377



745,894Stockholders equity:Common stock, $0.01 par value; 100,000,000 shares
    authorized; 51,785,125 and 53,546,267 shares outstanding at
    December 31, 2008 and 2007, respectively


583



573Capital in excess of par value


545,671



515,940Retained earnings


711,065



545,084Accumulated other comprehensive income


72,268



128,010Treasury stock at cost; 6,469,971 and 3,758,853 shares at
    December 31, 2008 and 2007, respectively


(130,839
)


(29,894
)Total stockholders equity


1,198,748



1,159,713Total liabilities and stockholders equity

$
2,340,125



1,905,607   The accompanying notes are an
    integral part of these consolidated financial
    statements.
 48




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##### Table of Contents



Consolidated
    Statements of Stockholders Equity
  GARDNER
    DENVER, INC.
  Years ended December 31
    (Dollars and shares in thousands)
  2008


2007


2006Number of Common Shares IssuedBalance at beginning of year


57,305



56,361



27,808Stock issued for benefit plans and options exercises


950



944



557Stock issued for stock split










27,996Balance at end of year


58,255



57,305



56,361Common StockBalance at beginning of year

$
573



564



278Stock issued for benefit plans and options exercises


10



9



6Stock issued for stock split










280Balance at end of year

$
583



573



564Capital in Excess of Par ValueBalance at beginning of year

$
515,940



490,856



472,825Stock issued for benefit plans and options exercises


15,822



13,665



9,447Stock issued for stock split










(438
)Stock-based compensation


13,909



11,419



9,022Balance at end of year

$
545,671



515,940



490,856Retained EarningsBalance at beginning of year

$
545,084



339,289



206,381Net income


165,981



205,104



132,908Adjustment to initially apply FIN 48






691



Balance at end of year

$
711,065



545,084



339,289Accumulated Other Comprehensive IncomeBalance at beginning of year

$
128,010



50,731



8,124Foreign currency translation adjustments, net


(43,244
)


63,918



48,244Unrecognized gain (loss) on cash flow hedges, net of tax


110



(1,667
)


(330
)Minimum pension liability adjustments, net of tax










4,422Pension and other postretirement prior service cost and
    actuarial gain or loss, net of tax


(12,612
)


9,597



Other comprehensive (loss) income


(55,746
)


71,848



52,336Adjustment to initially apply SFAS No. 158










(9,729
)Cumulative prior period translation adjustment






5,440



Currency translation


4



(9
)


Balance at end of year

$
72,268



128,010



50,731Treasury StockBalance at beginning of year

$
(29,894
)


(28,910
)


(29,319
)Purchases of treasury stock


(100,901
)


(957
)


(2,375
)Deferred compensation


(44
)


(27
)


2,784Balance at end of year

$
(130,839
)


(29,894
)


(28,910
)Total Stockholders Equity

$
1,198,748



1,159,713



852,530Comprehensive IncomeNet income

$
165,981



205,104



132,908Other comprehensive (loss) income


(55,746
)


71,848



52,336Comprehensive income

$
110,235



276,952



185,244   The accompanying notes are an
    integral part of these consolidated financial
    statements.
 49




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##### Table of Contents



Consolidated
    Statements of Cash Flows
  GARDNER
    DENVER, INC.
  Years ended December 31
    (Dollars in thousands)
  2008


2007


2006Cash flows from operating activities:Net income

$
165,981



205,104



132,908Adjustments to reconcile net income to net cash provided byoperating activities:Depreciation and amortization


61,484



58,584



52,209Foreign currency transaction loss (gain), net


10,622



(681
)


514Net loss on asset dispositions


608



364



808LIFO liquidation income


(569
)


(1,292
)


(400
)Stock issued for employee benefit plans


4,732



4,664



3,773Stock-based compensation expense


4,500



4,988



5,340Excess tax benefits from stock-based compensation


(8,523
)


(6,320
)


(3,674
)Deferred income taxes


(4,264
)


(13,555
)


(2,698
)Changes in assets and liabilities:Receivables


9,463



(36,374
)


(18,488
)Inventories


35,058



(16,231
)


(7,449
)Accounts payable and accrued liabilities


(20,570
)


566



30Other assets and liabilities, net


19,277



(18,189
)


4,319Net cash provided by operating activities


277,799



181,628



167,192Cash flows from investing activities:Capital expenditures


(41,047
)


(47,783
)


(41,115
)Net cash paid in business combinations


(356,506
)


(205
)


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


2,236



1,676



11,596Other


912



679



Net cash used in investing activities


(394,405
)


(45,633
)


(50,639
)Cash flows from financing activities:Principal payments on short-term borrowings


(66,940
)


(37,074
)


(33,266
)Proceeds from short-term borrowings


64,920



39,377



28,339Principal payments on long-term debt


(628,068
)


(276,351
)


(331,576
)Proceeds from long-term debt


877,130



148,799



158,197Proceeds from stock option exercises


11,099



9,003



5,773Excess tax benefits from stock-based compensation


8,523



6,320



3,674Purchase of treasury stock


(100,919
)


(960
)


(1,260
)Debt issuance costs


(8,891
)






(570
)Other


(1,258
)


(959
)


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


155,596



(111,845
)


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


(11,177
)


6,441



5,720Increase (decrease) in cash and equivalents


27,813



30,591



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


92,922



62,331



110,906Cash and equivalents, end of year

$
120,735



92,922



62,331   The accompanying notes are an
    integral part of these consolidated financial
    statements.
 50




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##### Table of Contents



Notes to Consolidated Financial
    StatementsGARDNER 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
  Rule 5-03 Regulation S-X
 51




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##### Table of Contents



Year Ended December 31,2007





2006Amounts ReclassifiedSelling and administrative expenses

$
(1,355
)






(5,358
)Other operating expense, net


1,355







5,358Net

$








   Foreign
    Currency Translation
    Revenue
    Recognition
  Revenue
    Recognition.
    and/or
  Cash
    and Equivalents
   52




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##### Table of Contents



Accounts
    Receivable
      Inventories
  first-in, last-in,
  Property,
    Plant and Equipment
    Asset
    Retirement Obligations
    Goodwill
    and Other Long-Lived Assets
  Goodwill and Other Intangible
    Assets,
 53




---



##### Table of Contents



, Accounting for the Impairment
    or Disposal of Long-Lived Assets,
  Warranty
    Reserves
    Pension
    and Other Postretirement Benefits
   54




---



##### Table of Contents



Income
    Taxes
    Accounting for Uncertainty in Income Taxes 
    an interpretation of FASB Statement No. 109
  Research
    and Development
    Derivative
    Financial Instruments
       55




---



##### Table of Contents



Stock-Based
    Compensation
  Accounting for Stock Issued to Employees, Accounting for Stock-Based Compensation, Share-Based Payment,
  Comprehensive
    Income
    Note 2:
    New
    Accounting Standards  Recently
    Adopted Accounting Pronouncements
    Fair Value Measurements
 56




---



##### Table of Contents



No. FAS 157-2, Effective Date of FASB Statement No. 157,
  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
  Certain Assumptions Used in Valuation Methods
  No. 157-3, Determining the Fair Value of a Financial Asset When
    the Market for That Asset is Not Active No. 157-3). No. 157-3 No. 157-3 No. 157-3
  Recently
    Issued Accounting Pronouncements
  Business Combinations
 57




---



##### Table of Contents



Business Combinations Elements of Financial Statements.
  Noncontrolling Interests in Consolidated Financial
    Statements  an amendment of ARB No. 51
  Disclosures about Derivative Instruments and Hedging
    Activities  an amendment of FASB Statement
    No. 133
 58




---



##### Table of Contents



No. 142-3, Determination of the Useful Life of Intangible
    Assets No. 142-3) Goodwill and Other Intangible Assets No. 142-3 No. 142-3 No. 142-3
  No. 132R-1, Employers Disclosures about Postretirement
    Benefit Plan Assets No. 132R-1). No. 132R-1
  Note 3:
    Business
    Combinations    Date of Acquisition

Acquired Entity

Transaction ValueOctober 20, 2008

CompAir Holdings  Limited

£218.2 million (approximately $378.4 million)August 6, 2008

Best Aire, Inc.

$5.9 millionJanuary 9, 2006

Todo Group

126.2 million Swedish Kronor (approximately $16.1 million)     Acquisition
    of CompAir Holdings Limited
     59




---



##### Table of Contents



CompAir
    Holdings Limited
  Assets
    Acquired and Liabilities Assumed
  October 20,
    2008
 (Dollars
    in thousands)
   Cash & equivalents

$
24,094Accounts receivable, net


101,634Inventories, net


73,102Property, plant and equipment


37,477Other assets


11,292Identifiable intangible assets


166,018Goodwill


155,466Current liabilities


(117,913
)Long-term debt


(5,921
)Long-term deferred income taxes


(35.350
)Other long-term liabilities


(31,497
)Aggregate purchase price

$
378,402      Amortizable intangible assets:Technology

$
40,647Trademarks


52,821Customer relationships


64,248Other


8,302Unamortizable intangible assets:Goodwill


155,466Total intangible assets

$
321,484       2008(1)


2007(2)Unaudited


UnauditedRevenues

$
2,448,154



2,401,188Net income


164,524



185,708Diluted earnings per share

$
3.10



3.44   (1)
    
    Net income and diluted earnings per
    share in 2008 reflect charges totaling approximately
    $10.4 million, before income tax, for mark-to-market
    adjustments for cash transactions and forward currency contracts
    on GBP entered into to limit the impact of changes in the USD to
    GBP exchange rate on the amount of USD-denominated borrowing
    capacity that remained available on the Companys revolving
    credit facility following the completion of the CompAir
    acquisition.(2)
    
    Net income and diluted earnings per
    share in 2007 reflect a charge of approximately
    $3.3 million, before income tax, attributable to the
    valuation of the inventory of CompAir at the acquisition date. 60




---



##### Table of Contents



Note 4:
    Restructuring  Accounting for Costs Associated
    with Exit or Disposal Activities Employers Accounting for
    Postemployment Benefits  an amendment of FASB
    Statements No. 5 and 43,
  No. 95-3, Recognition of Liabilities in Connection with a
    Purchase Business Combination.
    TerminationBenefits


Other


TotalBalance at December 31, 2007

$
1,119



323



1,442Charged to expense


10,079



1,027



11,106Acquisition purchase price allocation


7,455



1,446



8,901Paid


(4,321
)


(367
)


(4,688
)Other, net (primarily foreign currency translation)


(698
)


(64
)


(762
)Balance at December 31, 2008

$
13,634



2,365



15,999   Note 5:
    Allowance
    for Doubtful Accounts    2008


2007


2006Balance at beginning of year

$
8,755



9,184



8,105Provision charged to expense


1,702



960



1,644Acquisitions


2,752







Charged to other accounts (1)


(451
)


773



1,070Deductions


(2,116
)


(2,162
)


(1,635
)Balance at end of year

$
10,642



8,755



9,184   (1)
    
    Includes primarily the effect of
    foreign currency translation adjustments for the Companys
    subsidiaries with functional currencies other than the U.S.
    dollar. 61




---



##### Table of Contents



Note 6:
    Inventories    2008


2007Raw materials, including parts and subassemblies

$
159,425



142,546Work-in-process


47,060



47,622Finished goods


90,951



77,629297,436



267,797Excess of FIFO costs over LIFO costs


(12,611
)


(11,351
)Inventories, net

$
284,825



256,446     Note 7:
    Property,
    Plant and Equipment    2008


2007Land and land improvements

$
28,818



27,921Buildings


143,489



140,455Machinery and equipment


269,898



240,333Tooling, dies, patterns, etc.


64,162



54,265Office furniture and equipment


50,107



45,956Other


17,759



12,587Construction in progress


14,455



21,934588,688



543,451Accumulated depreciation


(283,676
)


(250,071
)Property, plant and equipment, net

$
305,012



293,380   Note 8:
    Goodwill
    and Other Intangible Assets   62




---



##### Table of Contents



Compressor &


Fluid TransferVacuum Products


Products


TotalBalance 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



685,496Acquisitions


157,533







157,533Adjustments to goodwill


(6,008
)


5,716



(292
)Foreign currency translation


(30,681
)


(7,408
)


(38,089
)Balance as of December 31, 2008

$
729,374



75,274



804,648  63




---



##### Table of Contents



2008


2007Gross Carrying


Accumulated


Gross Carrying


AccumulatedAmount


Amortization


Amount


AmortizationAmortized intangible assets:Customer lists and relationships

$
133,596



(17,654
)


74,187



(16,063
)Acquired technology


91,713



(36,464
)


44,658



(28,431
)Trademarks


57,332



(3,450
)


4,534



(2,670
)Other


4,728



(2,883
)


2,043



(404
)Unamortized intangible assets:Trademarks


119,345







128,460



Total other intangible assets

$
406,714



(60,451
)


253,882



(47,568
)   non-U.S. dollar
    Note 9:
    Accrued
    Liabilities    2008


2007Salaries, wages and related fringe benefits

$
65,843



59,386Taxes


14,133



13,390Advance payments on sales contracts


36,938



37,154Product warranty


19,141



15,087Product liability, and medical and workers compensation
    claims


11,604



13,503Restructuring


15,999



1,442Other


60,892



44,888Total accrued liabilities

$
224,550



184,850     2008


2007


2006Balance as of January 1

$
15,087



15,298



15,254Product warranty accruals


16,073



12,409



12,561Settlements


(15,168
)


(13,168
)


(14,216
)Acquisitions


3,975







Charged to other accounts (1)


(826
)


548



1,699Balance as of December 31

$
19,141



15,087



15,298   (1)
    
    Includes primarily the effect of
    foreign currency translation adjustments for the Companys
    subsidiaries with functional currencies other than the U.S.
    dollar. 64




---



##### Table of Contents



Note 10:
    Debt    2008


2007Short-term debt

$
11,786



4,099Long-term debt:Credit Line, due 2010(1)

$




58,329Credit Line, due 2013(2)


37,000



Term Loan, due 2010(1)






76,103Term Loan denominated in U.S. dollars, due 2013(3)


177,750



Term Loan denominated in euros, due 2013(4)


165,284



Senior Subordinated Notes at 8%, due 2013


125,000



125,000Secured Mortgages(5)


8,911



9,993Variable Rate Industrial Revenue Bonds, due 2018(6)


8,000



8,000Capitalized leases and other long-term debt


9,937



8,200Total long-term debt, including current maturities


531,882



285,625Current maturities of long-term debt


25,182



21,638Long-term debt, less current maturities

$
506,700



263,987   (1)
    
    The Credit Line and Term Loan due
    in 2010 were repaid with proceeds from the new 2008 Credit
    Agreement.(2)
    
    The loans under this facility may
    be denominated in U.S. dollars or several foreign currencies. At
    December 31, 2008, the outstanding balance consisted only
    of U.S. dollar borrowings. The interest rates under the facility
    are based on prime, federal funds and/or LIBOR for the
    applicable currency. The weighted-average interest rate was 2.9%
    as of December 31, 2008. The interest rate averaged 4.7%
    for the period from the loans inception to
    December 31, 2008.(3)
    
    The interest rate for this loan
    varies with prime, federal funds and/or LIBOR. At
    December 31, 2008, this rate was 3.0% and averaged 5.0% for
    the period from the loans inception to December 31,
    2008.(4)
    
    The interest rate for this loan
    varies with LIBOR. At December 31, 2008, the rate was 5.2%
    and averaged 6.5% for the period from the loans inception
    to December 31, 2008.(5)
    
    This amount consists of two
    fixed-rate commercial loans with an outstanding balance of
    6,389 at December 31, 2008. The loans are secured by
    the Companys facility in Bad Neustadt, Germany.(6)
    
    The interest rate varies with
    market rates for tax-exempt industrial revenue bonds. At
    December 31, 2008, this rate was 2.6% and averaged 2.8% for
    the year ended December 31, 2008. These industrial revenue
    bonds are secured by an $8,100 standby letter of credit.           65




---



##### Table of Contents



66




---



##### Table of Contents



Note 11:
    Benefit
    Plans  Pension
    and Postretirement Benefit Plans
           67




---



##### Table of Contents



Pension Benefits


OtherU.S. Plans


Non-U.S. Plans


Postretirement Benefits2008


2007


2008


2007


2008


2007Reconciliation of benefit obligations:Obligations as of January 1

$
72,862



75,018


$
218,845



211,703


$
19,476



25,139Service cost










1,098



3,847



20



16Interest cost


4,229



4,202



11,910



10,916



1,139



1,412Actuarial (gains) losses


(1,353
)


(473
)


(30,738
)


(8,812
)


(1,985
)


(4,966
)Employee contributions














814







Plan amendments










519











(496
)Benefit payments


(4,885
)


(5,885
)


(6,368
)


(6,357
)


(1,839
)


(1,629
)Acquisitions


1,997







17,106



337



652



Effect of foreign currency exchange
    rate changes










(43,114
)


6,397



46



Benefit obligations as of December 31

$
72,850



72,862


$
169,258



218,845


$
17,509



19,476Reconciliation of fair value of plan assets:Fair value of plan assets as of January 1

$
59,888



63,223


$
179,006



147,407Actual return on plan assets


(15,938
)


1,744



(18,461
)


14,840Acquisitions


1,600







1,482



343Employer contributions


3,816



806



6,558



19,430Employee contributions














814Benefit payments and plan expenses


(4,885
)


(5,885
)


(6,368
)


(7,253
)Effect of foreign currency exchange
    rate changes










(39,552
)


3,425Fair value of plan assets as of December 31

$
44,481



59,888


$
122,665



179,006Funded status as of December 31

$
(28,369
)


(12,974
)

$
(46,593
)


(39,839
)

$
(17,509
)


(19,476
)    68




---



##### Table of Contents



Pension Benefits


OtherU.S. Plans


Non-U.S. Plans


Postretirement Benefits2008


2007


2008


2007


2008


2007Net actuarial losses (gains)

$
28,032



8,966


$
11,218



10,339


$
(11,189
)


(10,551
)Prior-service cost (credit)


10



25



479







(612
)


(986
)Amounts included in accumulated other comprehensive loss (income)

$
28,042



8,991


$
11,697



10,339


$
(11,801
)


(11,537
)       2008


2007Accrued liabilities

$
(3,099
)


(2,727
)Postretirement benefits other than pensions


(15,764
)


(17,237
)Other liabilities


(73,608
)


(52,325
)Total pension and other postretirement accrued benefit liability

$
(92,471
)


(72,289
)     U.S. Plans

Non-U.S. Plans2008

2007

2008

2007Projected benefit obligation

$
72,850



72,862


$
58,759



27,518Accumulated benefit obligation


72,850



72,862



55,905



26,966Fair value of plan assets


44,481



59,888



18,965



6,888  69




---



##### Table of Contents



non-U.S. defined
    Pension Benefits


OtherU.S. Plans


Non-U.S. Plans


Postretirement Benefits2008


2007


2006


2008


2007


2006


2008


2007


2006Net periodic benefit (income) cost:Service cost

$








2,907


$
1,098



3,847



5,639


$
20



16



40Interest cost


4,229



4,202



3,962



11,910



10,916



8,904



1,139



1,413



1,491Expected return on plan assets


(4,630
)


(4,535
)


(4,353
)


(12,561
)


(11,926
)


(9,950
)










Amortization of prior-service cost (credit)


15



14



(57
)


38











(374
)


(443
)


(274
)Amortization of net loss (gain)


149



186



452



(86
)


400



512



(1,346
)


(828
)


(469
)Net periodic benefit (income) cost


(237
)


(133
)


2,911



399



3,237



5,105


$
(561
)


158



788SFAS No. 88 (gain)/loss due to settlements or
    curtailments  special termination benefits










(294
)






















Total net periodic benefit (income) cost recognized

$
(237
)


(133
)


2,617


$
399



3,237



5,105


$
(561
)


158



788Other changes in plan assets and benefit obligations
    recognized in other comprehensive income:Net actuarial loss (gain)

$
19,215



2,317



N/A


$
796



(11,191
)


N/A


$
(1,984
)


(4,967
)


N/AAmortization of net actuarial (loss) gain


(149
)


(186
)


N/A



86



(400
)


N/A



1,346



828



N/APrior service cost










N/A



519







N/A







(497
)


N/AAmortization of prior service (cost) credit


(15
)


(14
)


N/A



(38
)






N/A



374



443



N/AEffect of foreign currency exchange rate changes










N/A



(5
)


9



N/A











N/ATotal recognized in other comprehensive income

$
19,051



2,117



N/A


$
1,358



(11,582
)


N/A


$
(264
)


(4,193
)


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

$
18,814



1,984



N/A


$
1,757



(8,345
)


N/A


$
(825
)


(4,035
)


N/A    70




---



##### Table of Contents



Pension Benefits

OtherU.S. Plans

Non-U.S. Plans

Postretirement Benefits2008

2007

2006

2008

2007

2006

2008

2007

2006Discount rate


6.1
%


5.9
%


5.6
%


5.8
%


5.1
%


4.6
%


6.1
%


5.9
%


5.6
%Expected long-term rate of return on plan assets


8.0
%


8.0
%


8.0
%


7.5
%


7.5
%


7.6
%


N/A



N/A



N/ARate of compensation increases


N/A



N/A



5.5
%


4.1
%


3.9
%


3.4
%


N/A



N/A



N/A     Pension Benefits

OtherU.S. Plans

Non-U.S. Plans

Postretirement Benefits2008

2007

2006

2008

2007

2006

2008

2007

2006Discount rate


6.3
%


6.1
%


5.9
%


6.4
%


5.8
%


5.1
%


6.4
%


6.1
%


5.9
%Rate of compensation increases


N/A



N/A



N/A



3.4
%


4.2
%


3.9
%


N/A



N/A



N/A     2008


2007


2006Healthcare cost trend rate assumed for next year


8.9
%


10.0
%


11.0
%Rate to which the cost trend rate is assumed to decline (the
    ultimate trend rate)


5.1
%


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)

$
74


$
(65
)Effect on the postretirement benefit obligation 
    increase (decrease)


972



(869
)  71




---



##### Table of Contents



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

OtherU.S. Plans

Plans

Postretirement
    Benefits2009

$
6,565



6,039



2,0742010


6,857



6,300



2,1112011


5,986



7,047



2,0842012


5,818



7,231



2,0762013


5,355



8,990



2,047Aggregate
    2014-2018


26,414



51,893



9,016   non-U.S. pension
    U.S. Plans


Non-U.S. PlansCurrentWeightedCurrent








AverageTarget








Target2008


2007


Allocation


2008


2007


AllocationAsset category:Equity securities


60
%


62
%


60
%


43
%


48
%


46
%Debt securities


28
%


32
%


32
%


32
%


21
%


32
%Other


12
%


6
%


8
%


25
%


31
%


22
%Total


100
%


100
%


100
%


100
%


100
%


100
%   non-U.S. plans non-U.S. plans
 72




---



##### Table of Contents



Defined
    Contribution Plans
    Other
  non-U.S. locations.
    Note 12:
    Stockholders
    Equity and Earnings Per Share         73




---



##### Table of Contents



2008


2007


2006Amt.








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

$
165,981



52,599,571


$
3.16


$
205,104



53,222,731


$
3.85


$
132,908



52,330,405


$
2.54Diluted earnings per share:Effect of dilutive
    securities:Stock options
    granted and
    outstanding






541,432











820,426











1,129,702Income available
    to common
    stockholders and
    assumed conversions

$
165,981



53,141,003


$
3.12


$
205,104



54,043,157


$
3.80


$
132,908



53,460,107


$
2.49     Note 13:
    Accumulated
    Other Comprehensive Income   74




---



##### Table of Contents



AccumulatedForeign


Unrecognized


Minimum


Pension and


OtherCurrency


(Losses) Gains on


Pension


Postretirement


ComprehensiveAdjustments


Cash Flow Hedges


Liability


Benefit Plans


IncomeBalance 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
)


128,010Before tax (loss) income(6)


(48,829
)


177







(20,148
)


(68,800
)Income tax effect(5)(6)


5,585



(67
)






7,536



13,054Other comprehensive (loss) income


(43,244
)


110







(12,612
)


(55,746
)Currency translation(4)














4



4Balance at December 31, 2008(6)

$
90,223











(17,955
)


72,268   (1)
    
    Reflects adoption of the
    recognition provisions of SFAS No. 158 as of
    December 31, 2006. See Note 11 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.(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.
    benefit plans.(5)
    
    Deferred income taxes were recorded
    in 2008 on unrealized foreign currency gains and losses
    associated with (i) the Companys Term Loan
    denominated in euro under its 2008 Credit Agreement which was
    designated as a hedge of the Companys net euro investment
    in its European subsidiaries and (ii) intercompany notes
    considered to be of a long-term nature, due to differences in
    the treatment of these items for accounting purposes, as
    required by SFAS No. 52, Foreign Currency
    Translation and income tax purposes.(6)
    
    Includes foreign currency losses on
    hedges of the Companys net euro investment in its European
    subsidiaries of approximately $5.2 million before income
    tax, the income tax effect of approximately $2.0 million
    and balance of approximately $7.7 million at
    December 31, 2008. 75




---



##### Table of Contents



Note 14:
    Income
    Taxes    2008


2007


2006U.S.

$
105,111



147,018



113,865Non-U.S.


128,355



121,342



86,750Income before income taxes

$
233,466



268,360



200,615     2008


2007


2006Current:U.S. federal

$
36,538



46,856



46,374U.S. state and local


3,652



4,762



3,750Non-U.S.


29,565



30,377



16,428Deferred:U.S. federal


(1,880
)


(7,981
)


(3,538
)U.S. state and local


977



(421
)


(303
)Non-U.S.


(1,367
)


(10,337
)


4,996Provision for income taxes

$
67,485



63,256



67,707     2008


2007


2006U.S. federal corporate statutory rate


35.0
%


35.0
%


35.0
%State and local taxes, less federal tax benefit


2.0



1.7



1.7Foreign income taxes


(7.2
)


(8.4
)


(4.4
)Export benefit










(0.4
)Manufacturing benefit


(1.0
)


(0.9
)


(0.5
)Repatriation, net of foreign financing tax effect


(0.5
)


(3.7
)


1.7Other, net


0.6



(0.1
)


0.7Effective income tax rate


28.9
%


23.6
%


33.8
%  76




---



##### Table of Contents



2008


2007Deferred tax assets:Reserves and accruals

$
36,295



31,734Postretirement benefits other than pensions


9,985



7,446Postretirement benefits  pensions


11,205



11,068Tax loss carryforwards


33,299



7,484Foreign tax credit carryforwards


5,803



5,080Other


6,708



5,247Total deferred tax assets


103,295



68,059Valuation allowance


(14,920
)


(5,431
)Deferred tax liabilities:LIFO inventory


(8,576
)


(615
)Property, plant and equipment


(30,580
)


(31,194
)Intangibles


(102,731
)


(71,077
)Other


(4,692
)


(2,896
)Total deferred tax liabilities


(146,579
)


(105,782
)Net deferred income tax liability

$
(58,204
)


(43,154
)     2008


2007Tax reserve balance at January 1

$
7,323



15,283CompAir opening balance sheet unrecognized tax benefits


1,575



Changes related to prior year tax positions


1,554



(4,952
)Changes due to currency fluctuations


(420
)


366Changes related to current year tax positions


117



Settlements


(259
)


(2,868
)Lapses of statutes of limitations


(2,088
)


(506
)Tax reserve balance at December 31

$
7,802



7,323    77




---



##### Table of Contents



Tax


Valuation


Net TaxBenefit


Allowance


Benefit2009

$
555



(530
)


252010


987



(587
)


4002011


487



(328
)


1592012


443



(311
)


1322013


279



(150
)


1292014


79







792017


358







3582018


42







422019


62







622022


131







1312023


601







6012024


65







652027


309



(110
)


1992028


587







587Indefinite life


28,314



(12,904
)


15,410Total

$
33,299



(14,920
)


18,379   non-U.S. subsidiaries
   78




---



##### Table of Contents



Note 15.
    Stock-Based
    Compensation Plans    Statement of Cash
    Flows,
  2008


2007


2006Selling and administrative expenses

$
4,500



4,988



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


4,500



4,988



5,340Income before income taxes


(4,500
)


(4,988
)


(5,340
)Provision for income taxes


1,143



1,087



1,509Net income

$
(3,357
)


(3,901
)


(3,831
)Basic and diluted earnings per share

$
(0.06
)


(0.07
)


(0.07
)Net cash provided by operating activities

$
(8,523
)


(6,320
)


(3,674
)Net cash used in financing activities

$
8,523



6,320



3,674   Plan
    Descriptions
   79




---



##### Table of Contents



Stock
    Option Awards
        Outstanding





Weighted-AverageWeighted-Average


Aggregate


RemainingShares


Exercise Price


Intrinsic Value


Contractual LifeOutstanding at December 31, 2007


1,870


$
20.06Granted


328



36.68Exercised


(823
)


13.48Forfeited or canceled


(38
)


27.01Outstanding at December 31, 2008


1,337



27.99


$
3,472



3.8 yearsExercisable at December 31, 2008


808


$
23.06


$
3,472



3.0 years       Valuation
    Assumptions
   80




---



##### Table of Contents



2008


2007


2006Assumptions:Risk-free interest rate


2.6
%


4.7
%


4.7
%Dividend yield










Volatility factor


31



29



27Expected life (in years)


4.5



4.9



4.8   Restricted
    Share Awards
      Weighted-AverageGrant DateShares


Fair ValueNonvested at December 31, 2007


90


$
33.43Granted


77



37.48Vested


(2
)


38.32Forfeited


(6
)


35.82Nonvested at December 31, 2008


159


$
35.25       Note 16: Off-Balance
    Sheet Risk, Concentrations of Credit Risk and Fair Value of
    Financial Instruments
  Off-Balance
    Sheet Risk and Concentrations of Credit Risk
   81




---



##### Table of Contents



Fair
    Value of Financial Instruments
        2008


2007Average


Average








Average


AverageNotional


Receive


Pay


Fair


Notional


Receive


Pay


FairAmount


Rate


Rate


Value


Amount


Rate


Rate


ValueDerivatives not designated as hedgesForeign currency forwards

$
235,327



N/A



N/A



10,286


$
29,757



N/A



N/A



580Derivatives designated as cash flow hedgesInterest rate swaps

$




N/A



N/A






$
30,000



4.9
%


4.1
%


(141
)      82




---



##### Table of Contents



Level 1

Quoted prices in active markets for identical assets or
    liabilities as of the reporting date.Level 2

Inputs other than Level 1 that are observable, either
    directly or indirectly, such as quoted prices for similar assets
    or liabilities; quoted prices in markets that are not active; or
    other inputs that are observable or can be corroborated by
    observable market data for substantially the full term of the
    assets or liabilities as of the reporting date.Level 3

Unobservable inputs that are supported by little or no market
    activity and that are significant to the fair value of the
    assets or liabilities.     Financial Assets

Level 1


Level 2


Level 3


TotalForeign currency forwards(1)

$




10,286







10,286Trading securities held in deferred compensation plan(2)


9,479











9,479Total

$
9,479



10,286







19,765Financial LiabilitiesInterest rate swaps

$












Phantom stock plan(3)






1,412







1,412Deferred compensation plan(4)


9,479











9,479Total

$
9,479



1,412







10,891   (1)
    
    Based on internally-developed
    models that use as their basis readily observable market
    parameters such as current spot and forward rates, and the LIBOR
    index.(2)
    
    Based on the observable price of
    publicly traded mutual funds which, in accordance with EITF
    No. 97-14,
    Accounting for Deferred Compensation Arrangements where
    Amounts Earned are Held in a Rabbi Trust and Invested,
    are classified as Trading securities and accounted
    for using the mark-to-market method.(3)
    
    The Phantom Stock Plan for Outside
    Directors, which is an unfunded plan, has been established to
    more closely align the interests of the nonemployee directors
    and stockholders by increasing each nonemployee directors
    proprietary interest in the Company in the form of phantom
    stock units. The fair value of each phantom stock unit is
    based on the price of the Companys common stock.(4)
    
    Based on the fair value of the
    investments in the deferred compensation plan.  Note 17:
    Contingencies   83




---



##### Table of Contents



and/or
        on-site
   84




---



##### Table of Contents



Note 18:
    Supplemental
    Information    2008


2007


2006Other Operating Expense, NetForeign currency losses, net(1)

$
12,929



297



1,653Restructuring charges(2)


11,106



(244
)


Other employee termination and certain retirement costs(3)


4,995



746



3,919Other, net


2,484



556



(214
)Total other operating expense, net

$
31,514



1,355



5,358Supplemental Cash Flow InformationCash taxes paid

$
61,958



92,781



63,238Interest paid


23,629



25,877



34,943   (1)
    
    Foreign currency losses, net, in
    2008 were primarily associated with mark-to-market adjustments
    for cash transactions and forward currency contracts entered
    into in order to limit the impact of changes in the USD to GBP
    exchange rate on the amount of USD-denominated borrowing
    capacity that remained available on the Companys revolving
    credit facility following completion of the acquisition of
    CompAir.(2)
    
    See Note 4
    Restructuring.(3)
    
    Includes certain costs not
    associated with exit or disposal activities as defined in
    SFAS No. 146, Accounting for Costs Associated
    with Exit or Disposal Activities.  Note 19:
    Segment
    Information         85




---



##### Table of Contents



Revenues


Operating Income


Identifiable Assets at December, 312008


2007


2006


2008


2007


2006


2008


2007


2006Compressor and Vacuum Products

$
1,622,546



1,440,311



1,310,505


$
159,023



169,660



140,058


$
1,950,946



1,557,447



1,471,139Fluid Transfer Products


395,786



428,533



358,671



99,176



121,859



94,291



235,430



234,204



202,399Total

$
2,018,332



1,868,844



1,669,176



258,199



291,519



234,349



2,186,376



1,791,651



1,673,538Interest expense














25,483



26,211



37,379Other income, net














(750
)


(3,052
)


(3,645
)Income before income taxes













$
233,466



268,360



200,615General corporate (unallocated)


























153,749



113,956



76,693Total assets

























$
2,340,125



1,905,607



1,750,231   LIFO Liquidation


Depreciation andIncome (before tax)


Amortization Expense


Capital Expenditures2008


2007


2006


2008


2007


2006


2008


2007


2006Compressor and Vacuum Products

$
569



679



275


$
55,256



52,575



46,809


$
32,047



39,877



36,576Fluid Transfer Products






613



125



6,228



6,009



5,400



9,000



7,906



4,539Total

$
569



1,292



400


$
61,484



58,584



52,209


$
41,047



47,783



41,115     Property, Plant and EquipmentRevenues


at December 31,2008


2007


2006


2008


2007


2006United States

$
747,934



764,967



695,210


$
105,586



102,852



103,443Europe


760,752



669,142



601,786



160,132



161,408



150,582Asia


292,804



246,008



191,757



25,412



16,702



17,300Canada


54,517



51,772



81,593



1,269



193



129Latin America


98,578



96,248



56,594



8,240



11,566



4,382Other


63,747



40,707



42,236



4,373



659



657Total

$
2,018,332



1,868,844



1,669,176


$
305,012



293,380



276,493   Note 20:
    Guarantor
    Subsidiaries   86




---



##### Table of Contents



87




---



##### Table of Contents



Consolidating
    Statement of Operations
    Year Ended December 31, 2008
  Parent


Guarantor


Non-GuarantorCompany


Subsidiaries


Subsidiaries


Eliminations


ConsolidatedRevenues

$
407,936



499,812



1,394,098



(283,514
)


2,018,332Cost of sales


283,810



357,655



1,021,295



(282,718
)


1,380,042Gross profit


124,126



142,157



372,803



(796
)


638,290Selling and administrative expenses


80,994



55,184



212,399







348,577Other operating (income) expense, net


(18,329
)


7,465



42,378







31,514Operating income


61,461



79,508



118,026



(796
)


258,199Interest expense (income)


23,524



(11,924
)


13,883







25,483Other expense (income), net


1,157



(18
)


(1,889
)






(750
)Income before income taxes


36,780



91,450



106,032



(796
)


233,466Provision for income taxes


7,473



42,087



18,614



(689
)


67,485Net income

$
29,307



49,363



87,418



(107
)


165,981   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


82,800



58,111



186,138







327,049Other operating (income) expense, net


(2,451
)


(6,442
)


10,248







1,355Operating 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


81,029



56,033



172,547







309,609Other operating (income) expense, net


(1,905
)


(6,845
)


14,108







5,358Operating 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  88




---



##### Table of Contents



Consolidating
    Balance Sheet
    December 31, 2008
  Parent


Guarantor


Non-GuarantorCompany


Subsidiaries


Subsidiaries


Eliminations


ConsolidatedAssetsCurrent assets:Cash and equivalents

$
2,126



807



117,802







120,735Accounts receivable, net


67,813



57,247



263,038







388,098Inventories, net


37,641



58,493



210,203



(21,512
)


284,825Deferred income taxes


25,864







5,168



1,982



33,014Other current assets


12,032



4,604



14,256







30,892Total current assets


145,476



121,151



610,467



(19,530
)


857,564Intercompany (payable) receivable


(369,870
)


368,024



1,846







Investments in affiliates


886,150



198,653



104,024



(1,188,798
)


29Property, plant and equipment, net


57,286



48,787



198,939







305,012Goodwill


124,045



200,490



480,113







804,648Other intangibles, net


6,911



45,959



293,393







346,263Other assets


30,718



359



5,325



(9,793
)


26,609Total assets

$
880,716



983,423



1,694,107



(1,218,121
)


2,340,125Liabilities and Stockholders EquityShort-term borrowings and current maturities of long-term debt

$
23,659



42



13,267







36,968Accounts payable and accrued liabilities


64,147



46,296



254,401



(4,430
)


360,414Total current liabilities


87,806



46,338



267,668



(4,430
)


397,382Long-term intercompany (receivable) payable


(338,041
)


(107,540
)


445,581







Long-term debt, less current maturities


491,323



119



15,258







506,700Deferred income taxes






28,639



72,372



(9,793
)


91,218Other liabilities


68,302



1,093



76,682







146,077Total liabilities


309,390



(31,351
)


877,561



(14,223
)


1,141,377Stockholders equity:Common stock


583















583Capital in excess of par value


544,575



778,472



411,422



(1,188,798
)


545,671Retained earnings


180,137



213,239



332,772



(15,083
)


711,065Accumulated other comprehensive (loss) income


(23,130
)


23,063



72,352



(17
)


72,268Treasury stock, at cost


(130,839
)














(130,839
)Total stockholders equity


571,326



1,014,774



816,546



(1,203,898
)


1,198,748Total liabilities and stockholders equity

$
880,716



983,423



1,694,107



(1,218,121
)


2,340,125  89




---



##### 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  90




---



##### Table of Contents



Consolidating
    Condensed Statement of Cash Flows
    Year Ended December 31, 2008
  Parent


Guarantor


Non-GuarantorCompany


Subsidiaries


Subsidiaries


Eliminations


ConsolidatedNet cash provided by operating activities

$
97,715



8,060



172,024







277,799Cash flows from investing activities:Capital expenditures


(11,927
)


(6,940
)


(22,180
)






(41,047
)Net cash paid in business combinations


(6,798
)


615



(350,323
)






(356,506
)Disposals of property, plant and equipment


28



533



1,675







2,236Other


(331
)


331



912







912Net cash used in investing activities


(19,028
)


(5,461
)


(369,916
)






(394,405
)Cash flows from financing activities:Net change in long-term intercompany receivables/payables


(306,617
)


384



306,233







Principal payments on short-term borrowings


(691
)






(66,249
)






(66,940
)Proceeds from short-term borrowings


2,396



42



62,482







64,920Principal payments on long-term debt


(545,463
)






(82,605
)






(628,068
)Proceeds from long-term debt


853,864



43



23,223







877,130Proceeds from stock option exercises


11,099















11,099Excess tax benefits from stock-based compensation


8,252







271







8,523Purchase of treasury stock


(100,919
)














(100,919
)Debt issuance costs


(8,891
)














(8,891
)Other










(1,258
)






(1,258
)Net cash (used in) provided by financing activities


(86,970
)


469



242,097







155,596Effect of exchange rate changes on cash and equivalents










(11,177
)






(11,177
)(Decrease) increase in cash and equivalents


(8,283
)


3,068



33,028







27,813Cash and equivalents, beginning of year


10,409



(2,261
)


84,774







92,922Cash and equivalents, end of year

$
2,126



807



117,802







120,735  91




---



##### 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 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 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  92




---



##### 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  93




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##### Table of Contents



Note 21:
    Quarterly
    Financial and Other Supplemental Information
    (Unaudited)  First Quarter


Second Quarter


Third Quarter


Fourth Quarter2008


2007


2008(1)


2007


2008(2)


2007


2008(3)


2007Revenues

$
495,670



441,418



518,112



459,869



480,310



457,230



524,240



510,327Gross profit

$
161,326



148,927



167,876



153,832



150,385



149,180



158,703



167,984Net income

$
50,859



42,816



49,566



44,771



34,638



53,652



30,918



63,865Basic earnings per share

$
0.96



0.81



0.94



0.84



0.65



1.00



0.60



1.19Diluted earnings per share

$
0.95



0.80



0.93



0.83



0.65



0.99



0.60



1.18Common stock prices:High

$
39.10



39.87



57.87



43.94



56.99



46.09



35.62



41.10Low

$
27.35



31.01



37.05



34.60



30.58



34.25



17.70



30.37   (1)
    
    Results for the quarter ended
    June 30, 2008 reflect certain retirement benefits totaling
    $3.9 million ($2.8 million after taxes).(2)
    
    Results for the quarter ended
    September 30, 2008 reflect restructuring charges and other
    employee termination benefits totaling $2.4 million
    ($1.6 million after income taxes), expenses associated with
    an unconsummated acquisition of $2.3 million
    ($1.6 million after income taxes) and mark-to-market
    adjustments of $8.8 million ($5.7 million after income
    taxes) for cash transactions and forward currency contracts on
    GBP entered into to limit the impact of changes in the USD to
    GBP exchange rate on the amount of USD-denominated borrowing
    capacity that remained available on the Companys new
    revolving credit facility following the completion of the
    CompAir acquisition.(3)
    
    Results for the quarter ended
    December 31, 2008 reflect restructuring charges totaling
    $8.7 million ($6.4 million after income taxes) and
    mark-to-market adjustments of $1.6 million
    ($1.2 million after income taxes) for cash transactions and
    forward currency contracts on GBP entered into to limit the
    impact of changes in the USD to GBP exchange rate on the amount
    of USD-denominated borrowing capacity that remained available on
    the Companys new revolving credit facility following the
    completion of the CompAir acquisition.      2008First


SecondQuarter


QuarterAmounts ReclassifiedSelling and administrative expenses

$
1,241



(3,913
)Other operating expense, net


(1,241
)


3,913Net

$




   2007First


Second


Third


Fourth


Total


2006Quarter


Quarter


Quarter


Quarter


Year


Total YearAmounts ReclassifiedSelling and administrative expenses

$
(434
)


(1,324
)


(1,395
)


1,798



(1,355
)


(5,358
)Other operating expense, net


434



1,324



1,395



(1,798
)


1,355



5,358Net

$




















   Note 22:
    Subsequent
    Events (Unaudited)   94




---



##### Table of Contents



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(b) Rule 13a-15(e) Form 10-K. Form 10-K,
  Internal
    Control over Financial Reporting
  Managements
    Report on Internal Control Over Financial
    Reporting
  Rule 13a-15(f)
  Internal Control 
    Integrated Framework ,
  73-day
   95




---



##### Table of Contents



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 at the
    Meeting, Directors Whose Terms of Office
    Will Continue After the Meeting; Section 16(a) Beneficial Ownership Reporting
    Compliance; Part I:
    Corporate Governance; Board
    of Directors Committees
  www.gardnerdenver.com
  ITEM 11.
    EXECUTIVE
    COMPENSATION  Part III: Compensation
    Matters, Compensation of Directors,
    Compensation Discussion & Analysis and
    Executive Management Compensation Report of our
    Compensation Committee
 96




---



##### Table of Contents



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 Relationships and
    Transactions
  ITEM 14.
    PRINCIPAL
    ACCOUNTING FEES AND SERVICES  Accounting
    Fees
 97




---



##### 



PART IV  ITEM 15.
    EXHIBITS,
    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


45Consolidated Statements of Operations - Years Ended
    December 31, 2008, 2007 and 2006


47Consolidated Balance Sheets - December 31, 2008 and
    2007


48Consolidated Statements of Stockholders Equity -
    Years Ended December 31, 2008, 2007 and 2006


49Consolidated Statements of Cash Flows - Years Ended
    December 31, 2008, 2007 and 2006


50Notes to Consolidated Financial Statements


51          Form 10-K,
 98




---



##### Table of Contents



SIGNATURES      By
    /s/  Barry
    L. Pennypacker         Signature

Title/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

Chairman of the Board of Directors*Raymond
    R. Hipp

Director*David
    D. Petratis

Director*Diane
    K. Schumacher

Director*Charles
    L. Szews

Director*Richard
    L. Thompson

Director   *By
    /s/  Jeremy
    T. Steele  Jeremy T. Steele  99




---



##### Table of Contents



GARDNER
    DENVER, INC.
 INDEX TO EXHIBITS
  Exhibit No.

Description2.1

Share Purchase Agreement, dated July 20, 2008, among
    Gardner Denver, Inc., Nicholas Sanders and certain other
    individuals named therein, Alchemy Partners (Guernsey) Limited
    and David Rimmer, filed as Exhibit 2.1 to Gardner Denver,
    Inc.s Current Report on
    Form 8-K,
    filed October 21, 2008, and incorporated herein by
    reference.2.2

Share Purchase Agreement, dated July 20, 2008, between
    Gardner Denver, Inc. and Invensys International Holdings
    Limited, filed as Exhibit 2.2 to Gardner Denver,
    Inc.s Current Report on
    Form 8-K,
    filed October 21, 2008, and incorporated herein by
    reference.2.3

Share Purchase Agreement, dated July 20, 2008, between
    Gardner Denver, Inc. and David Fisher, filed as Exhibit 2.3
    to Gardner Denver, Inc.s Current Report on
    Form 8-K,
    filed October 21, 2008, and incorporated herein by
    reference.2.4

Share Purchase Agreement, dated July 20, 2008, between
    Gardner Denver, Inc. and John Edmunds, filed as Exhibit 2.4
    to Gardner Denver, Inc.s Current Report on
    Form 8-K,
    filed October 21, 2008, and incorporated herein by
    reference.2.5

Share Purchase Agreement, dated July 20, 2008, between
    Gardner Denver, Inc. and Robert Dutnall, filed as
    Exhibit 2.5 to Gardner Denver, Inc.s Current Report
    on
    Form 8-K,
    filed October 21, 2008, 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,
    filed May 3, 2006, and incorporated herein by reference.3.2

Amended and Restated Bylaws of Gardner Denver, Inc., filed as
    Exhibit 3.2 to Gardner Denver, Inc.s Current Report
    on
    Form 8-K,
    filed August 4, 2008, 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,
    filed 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,
    filed May 4, 2005, and incorporated herein by reference.10.0+

Credit Agreement dated September 19, 2008 between Gardner
    Denver, Inc., Gardner Denver Holdings GmbH & Co. KG,
    GD First (UK) Limited, JPMorgan Chase Bank, N.A., individually
    and as LC Issuer, Swing Line Lender and as Agent for the
    Lenders, Bank of America, N.A., individually and as Syndication
    Agent, Mizuho Corporate Bank Ltd. and U.S. Bank, National
    Association, individually and as Documentation Agents, and the
    other Lenders named therein, filed as Exhibit 10.1 to
    Gardner Denver, Incs Current Report on
    Form 8-K,
    filed October 21, 2008, and incorporated herein by
    reference.10.1*

Gardner Denver, Inc. Long-Term Incentive Plan As Amended and
    Restated, filed as Exhibit 10.1 to Gardner Denver,
    Inc.s Current Report on
    Form 8-K,
    filed November 10, 2008, and incorporated herein by
    reference.10.2*

Gardner Denver, Inc. Supplemental Excess Defined Contribution
    Plan, January 1, 2008 Restatement, filed as
    Exhibit 99.1 to Gardner Denver, Inc.s Current Report
    on
    Form 8-K,
    filed December 19, 2007, and incorporated herein by
    reference.10.3*

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,
    filed March 28, 2002, and incorporated herein by reference.10.4*

Gardner Denver, Inc. Phantom Stock Plan for Outside Directors,
    amended and restated effective August 1, 2007, filed as
    Exhibit 10.1 to Gardner Denver, Inc.s Quarterly
    Report on
    Form 10-Q,
    filed August 8, 2007, and incorporated herein by reference.10.5*

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,
    filed August 8, 2007, and incorporated herein by reference. 100




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##### Table of Contents



Exhibit No.

Description10.6*

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,
    filed February 21, 2008, and incorporated herein by
    reference.10.7*

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,
    filed February 21, 2008, and incorporated herein by
    reference.10.8*

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,
    filed February 21, 2008, and incorporated herein by
    reference.10.9*

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,
    filed February 21, 2008, and incorporated herein by
    reference.10.10*

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,
    filed February 21, 2008, and incorporated herein by
    reference.10.11*

Form of Gardner Denver, Inc. Restricted Stock Agreement, filed
    as Exhibit 10.16 to Gardner Denvers Annual Report on
    Form 10-K,
    filed February 29, 2008, and incorporated herein by
    reference.10.12*

Form of Non-Employee Director Restricted Stock Agreement, filed
    as Exhibit 10.2 to Gardner Denver, Inc.s Quarterly
    Report on
    Form 10-Q,
    filed May 9, 2007, and incorporated herein by reference.10.13*

Gardner Denver, Inc. Executive Annual Bonus Plan, As Amended and
    Restated, filed as Exhibit 10.3 to Gardner Denver,
    Inc.s Current Report on
    Form 8-K,
    filed November 10, 2008, and incorporated herein by
    reference.10.14*

Form of Gardner Denver, Inc. Long-Term Cash Bonus Award
    Agreement, filed as Exhibit 10.2 to Gardner Denver,
    Inc.s Current Report on
    Form 8-K,
    filed November 10, 2008, and incorporated herein by
    reference.10.15*

Form of Executive Change in Control Agreement entered into
    between Gardner Denver, Inc. and its President and Chief
    Executive Officer and Executive Vice President, Finance and
    Chief Financial Officer, filed as Exhibit 10.5 to Gardner
    Denver, Inc.s Current Report on
    Form 8-K,
    filed November 10, 2008, and incorporated herein by
    reference.10.16*

Form of Executive Change in Control Agreement entered into
    between Gardner Denver, Inc. and its executive officers, filed
    as Exhibit 10.4 to Gardner Denver, Inc.s Current
    Report on
    Form 8-K,
    filed November 10, 2008, and incorporated herein by
    reference.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,
    filed August 8, 2003, and incorporated herein by reference.10.18*

Offer Letter of Employment entered into as of January 3,
    2008 by Gardner Denver, Inc. and Barry Pennypacker, filed as
    Exhibit 10.1 to Gardner Denver, Incs Current Report
    on
    Form 8-K,
    filed January 4, 2008, and incorporated herein by reference.10.19*

Chairman Emeritus Agreement entered into as of May 2, 2008
    by Gardner Denver, Inc. and Ross J. Centanni, filed as
    Exhibit 10 to Gardner Denver, Incs Quarterly Report
    on
    Form 10-Q,
    filed May 7, 2008, and incorporated herein by reference.10.20*

Waiver and Release Agreement dated August 27, 2008 between
    Gardner Denver, Inc. and Tracy D. Pagliara, filed as
    Exhibit 10.1 to Gardner Denver, Incs Current Report
    on
    Form 8-K,
    filed August 27, 2008, and incorporated herein by reference.10.21*

Retirement Agreement dated January 6, 2009 between Gardner
    Denver, Inc. and Richard C. Steber, filed as Exhibit 10.1
    to Gardner Denver, Inc.s Current Report on
    Form 8-K,
    filed January 8, 2009, and incorporated herein by reference.11

Statement re: Computation of Earnings Per Share, incorporated
    herein by reference to Note 12 Stockholders
    Equity and Earnings per Share to the Companys Notes
    to Consolidated Financial Statements included in this Annual
    Report on
    Form 10-K.** 101




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##### Table of Contents



Exhibit No.

Description12

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.***
    
    This exhibit is furnished herewith and shall not be deemed
    filed for purposes of Section 18 of the
    Securities Exchange Act of 1934, or otherwise subject to the
    liability of that section, and shall not be deemed to be
    incorporated by reference into any filing under the Securities
    Act of 1933 or the Securities Exchange Act of 1934. 102