10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended September 30, 2012

or

¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Transition Period from             to             

Commission File Number: 001-32586

DRESSER-RAND GROUP INC.

(Exact name of registrant as specified in its charter)

Delaware	20-1780492
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

West8 Tower, Suite 1000 10205 Westheimer Road Houston, TX, U.S.A.	77042
112 Avenue Kleber Cedex 16, Paris, France	75784
(Addresses of principal executive offices)	(Zip Codes)

(713) 354-6100 (Houston)

33 156 26 7171 (Paris)

(Registrant’s telephone numbers, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if smaller reporting company)	Smaller reporting company	¨

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

The number of shares of common stock, $.01 par value, outstanding as of October 25, 2012, was 75,669,424.

TABLE OF CONTENTS

	Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited):		3
Consolidated Statement of Income for the three and nine months ended September 30, 2012 and 2011		3
Consolidated Statement of Comprehensive Income for the three and nine months ended September  30, 2012 and 2011		4
Consolidated Balance Sheet at September 30, 2012 and December 31, 2011		5
Consolidated Statement of Cash Flows for the nine months ended September 30, 2012 and 2011		6
Consolidated Statement of Changes in Stockholders’ Equity for the nine months ended September  30, 2012 and 2011		7
Notes to Consolidated Financial Statements at September 30, 2012		8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		23
Item 3. Quantitative and Qualitative Disclosures about Market Risk		34
Item 4. Controls and Procedures		34
PART II. OTHER INFORMATION
Item 1. Legal Proceedings		34
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		34
Item 6. Exhibits		35
Signatures		37
Exhibits

Page 2 of 37

PART I. — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

DRESSER-RAND GROUP INC.

CONSOLIDATED STATEMENT OF INCOME

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
	($ in millions, except per share amounts)
Net sales of products	$	390.3		$	440.0		$	1,312.4		$	1,118.3
Net sales of services		204.1			190.5			579.6			455.3
Total revenues		594.4			630.5			1,892.0			1,573.6
Cost of products sold		279.5			323.0			989.1			822.5
Cost of services sold		144.3			136.1			419.6			333.1
Total cost of sales		423.8			459.1			1,408.7			1,155.6
Gross profit		170.6			171.4			483.3			418.0
Selling and administrative expenses		90.2			89.6			267.4			266.2
Research and development expenses		6.4			8.6			17.6			20.7
Income from operations		74.0			73.2			198.3			131.1
Interest expense, net		(15.7	)		(13.7	)		(47.9	)		(44.7	)
Early redemption premium on debt		—			—			—			(10.1	)
Other income (expense), net		1.2			(0.5	)		0.8			1.3
Income before income taxes		59.5			59.0			151.2			77.6
Provision for income taxes		17.4			17.9			49.8			26.4
Net income		42.1			41.1			101.4			51.2
Net (income) loss attributable to noncontrolling interest		(0.9	)		(0.8	)		(2.6	)		0.7
Net income attributable to Dresser-Rand	$	41.2		$	40.3		$	98.8		$	51.9
Net income attributable to Dresser-Rand per share
Basic	$	0.55		$	0.52		$	1.31		$	0.66
Diluted	$	0.54		$	0.51		$	1.30		$	0.66
Weighted-average shares outstanding—(in thousands )
Basic		75,542			77,860			75,455			78,373
Diluted		76,351			78,611			76,168			79,134

See accompanying notes to consolidated financial statements.

Page 3 of 37

DRESSER-RAND GROUP INC.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
	($ in millions)
Net income	$	42.1		$	41.1		$	101.4		$	51.2
Other comprehensive income (loss)
Foreign currency translation adjustments		18.7			(76.8	)		(1.4	)		(44.1	)
Unrealized loss on derivatives—net of tax of $- and $0.1 for the three months ended September 30, 2012 and 2011, respectively, and $0.04 and $0.2 for the nine months ended September 30, 2012 and 2011, respectively		—			(0.6	)		(0.1	)		(0.4	)
Pension and other postretirement benefit plans
Amortization of prior service cost and net actuarial loss included in net periodic costs—net of tax of $0.8 and $0.4 for the three months ended September 30, 2012 and 2011, respectively, and $2.5 and $0.9 for the nine months ended September 30, 2012 and 2011, respectively		1.5			0.4			4.3			1.3
Total other comprehensive income (loss)		20.2			(77.0	)		2.8			(43.2	)
Total comprehensive income (loss)		62.3			(35.9	)		104.2			8.0
Comprehensive (income) loss attributable to noncontrolling interest		(0.8	)		(1.0	)		(2.2	)		0.6
Comprehensive income (loss) attributable to Dresser-Rand	$	61.5		$	(36.9	)	$	102.0		$	8.6

See accompanying notes to consolidated financial statements.

Page 4 of 37

DRESSER-RAND GROUP INC.

CONSOLIDATED BALANCE SHEET

(Unaudited)

	September 30,			December 31,
	2012			2011
	($ in millions)
Assets
Current assets
Cash and cash equivalents	$	150.9		$	128.2
Restricted cash		24.3			29.5
Accounts receivable, less allowance for losses of $8.2 at 2012 and $9.3 at 2011		412.2			477.5
Inventories, net		506.3			407.7
Prepaid expenses and other		87.0			67.1
Deferred income taxes, net		40.3			40.3
Total current assets		1,221.0			1,150.3
Property, plant and equipment, net		457.6			456.0
Goodwill		894.2			869.8
Intangible assets, net		511.3			508.0
Deferred income taxes		12.3			11.1
Other assets		76.9			68.5
Total assets	$	3,173.3		$	3,063.7
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable and accruals	$	544.0		$	600.7
Customer advance payments		260.1			272.2
Accrued income taxes payable		12.8			20.1
Current portion of long-term debt		27.4			39.3
Total current liabilities		844.3			932.3
Deferred income taxes		49.1			45.2
Postemployment and other employee benefit liabilities		123.6			135.9
Long-term debt		1,068.5			990.4
Other noncurrent liabilities		84.8			86.9
Total liabilities		2,170.3			2,190.7
Commitments and contingencies (Note 12)
Stockholders’ equity
Common stock, $0.01 par value, 250,000,000 shares authorized; and 75,665,943 and 75,363,784 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively		0.8			0.8
Additional paid-in capital		131.1			105.3
Retained earnings		1,004.3			905.5
Accumulated other comprehensive loss		(135.6	)		(138.8	)
Total Dresser-Rand stockholders’ equity		1,000.6			872.8
Noncontrolling interest		2.4			0.2
Total stockholders’ equity		1,003.0			873.0
Total liabilities and stockholders’ equity	$	3,173.3		$	3,063.7

See accompanying notes to consolidated financial statements.

Page 5 of 37

DRESSER-RAND GROUP INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

	Nine Months Ended September 30,
	2012			2011
	($ in millions)
Cash flows from operating activities
Net income	$	101.4		$	51.2
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		64.2			59.9
Deferred income taxes		7.4			9.3
Stock-based compensation		20.4			9.2
Excess tax benefits from stock-based compensation		(4.0	)		(3.6	)
Amortization of debt financing costs		2.9			10.8
Provision for losses on inventory		0.7			0.4
Loss on sale of property, plant and equipment		0.8			0.2
Net loss from equity investments		1.0			0.1
Changes in working capital and other, net of acquisitions
Accounts receivable		67.1			19.8
Inventories		(95.9	)		(76.8	)
Accounts payable and accruals		(60.2	)		6.2
Customer advances		(15.7	)		50.9
Other, principally tax and pension accruals		(40.8	)		(58.8	)
Net cash provided by operating activities		49.3			78.8
Cash flows from investing activities
Capital expenditures		(48.9	)		(38.8	)
Proceeds from sales of property, plant and equipment		0.8			0.3
Acquisitions, net of cash acquired		(48.8	)		(283.5	)
Other investments		(13.2	)		(10.0	)
Decrease in restricted cash balances		5.2			7.7
Net cash used in investing activities		(104.9	)		(324.3	)
Cash flows from financing activities
Proceeds from exercise of stock options		2.5			2.7
Proceeds from borrowings		387.6			1,306.6
Excess tax benefits from stock-based compensation		4.0			3.6
Repurchase of common stock		—			(505.0	)
Payments for debt financing costs		(0.4	)		(15.7	)
Repayments of borrowings		(316.2	)		(821.7	)
Net cash provided by (used in) financing activities		77.5			(29.5	)
Effect of exchange rate changes on cash and cash equivalents		0.8			1.3
Net increase (decrease) in cash and cash equivalents		22.7			(273.7	)
Cash and cash equivalents, beginning of period		128.2			420.8
Cash and cash equivalents, end of period	$	150.9		$	147.1

See accompanying notes to consolidated financial statements.

Page 6 of 37

DRESSER-RAND GROUP INC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)

	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)			Non- Controlling Interest			Total Stockholders’ Equity
	($ in millions)
At December 31, 2011	$	0.8	$	105.3	$	905.5	$	(138.8	)	$	0.2		$	873.0
Stock-based compensation		—		25.8		—		—			—			25.8
Net income		—		—		98.8		—			2.6			101.4
Other comprehensive income (loss)
Foreign currency translation adjustments		—		—		—		(1.0	)		(0.4	)		(1.4	)
Unrealized loss on derivatives, net of tax of $0.04		—		—		—		(0.1	)		—			(0.1	)
Pension and other postretirement benefit plans
Amortization of prior service cost and net actuarial loss included in net periodic costs—net of tax of $2.5		—		—		—		4.3			—			4.3
At September 30, 2012	$	0.8	$	131.1	$	1,004.3	$	(135.6	)	$	2.4		$	1,003.0

	Common Stock		Additional Paid-in Capital			Retained Earnings		Accumulated Other Comprehensive Loss			Non- Controlling Interest			Total Stockholders’ Equity
	($ in millions)
At December 31, 2010	$	0.8	$	341.9		$	784.8	$	(40.2	)	$	—		$	1,087.3
Stock-based compensation		—		16.0			—		—			—			16.0
Stock repurchases		—		(505.0	)		—		—			—			(505.0	)
Stock issued for acquisition		—		243.5			—		—			—			243.5
Net income		—		—			51.9		—			(0.7	)		51.2
Other comprehensive income (loss)
Foreign currency translation adjustments		—		—			—		(44.1	)		0.1			(44.0	)
Unrealized gain on derivatives, net of tax of $0.2		—		—			—		(0.4	)		—			(0.4	)
Pension and other postretirement benefit plans
Amortization of prior service cost and net actuarial loss included in net periodic costs—net of tax of $0.9		—		—			—		1.3			—			1.3
At September 30, 2011	$	0.8	$	96.4		$	836.7	$	(83.4	)	$	(0.6	)	$	849.9

See accompanying notes to consolidated financial statements.

Page 7 of 37

DRESSER-RAND GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

($ in millions, except per share amounts)

1. Basis of Presentation

Unless the context otherwise indicates, the terms “we,” “our,” “us,” the “Company,” and similar terms refer to Dresser-Rand Group Inc. and its consolidated subsidiaries.

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. The information furnished herein reflects all normal recurring adjustments that are, in the opinion of management, necessary for the fair presentation of the Company’s Consolidated Balance Sheets as of September 30, 2012, and December 31, 2011; the Consolidated Statements of Income and Comprehensive Income for the three and nine months ended September 30, 2012, and 2011; and the Consolidated Statements of Cash Flows and Changes in Stockholders’ Equity for the nine months ended September 30, 2012 and 2011. The year-end balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP.

In preparing financial statements in accordance with U.S. GAAP, management makes informed judgments and estimates that affect the reported amounts of assets, liabilities, revenues and expenses. Management evaluates its estimates and related assumptions regularly, including those related to fair values, allowance for losses on receivables, depreciation and amortization, inventory adjustments related to lower of cost or market, the carrying value and estimated useful lives of long-lived assets, valuation of assets including goodwill and other intangible assets, product warranties, sales allowances, taxes, pensions, postemployment benefits, stock-based compensation, contract losses, penalties, environmental contingencies, product liability, self-insurance programs and other contingencies (including purchase price contingencies). Changes in facts and circumstances or additional information may result in revised estimates and actual results may differ from these estimates.

These financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2011, and our other filings with the Securities and Exchange Commission. Operating results for the three and nine months ended September 30, 2012, are not necessarily indicative of the results that may be expected for the year ending December 31, 2012.

Fair Value Measurements

Fair Value, as defined in U.S. GAAP, is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). U.S. GAAP classifies the inputs used to measure fair value into the following hierarchy:

Level 1	Unadjusted quoted prices in active markets for identical assets or liabilities
Level 2	Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability
Level 3	Unobservable inputs for the asset or liability

Page 8 of 37

DRESSER-RAND GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

(Unaudited)

($ in millions, except per share amounts)

Recurring Fair Value Measurements — Fair values of the Company’s cash and cash equivalents, restricted cash, accounts receivable, short-term borrowings, accounts payable and customer advance payments approximate their carrying values due to the short-term nature of these instruments. The Company’s financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

Nonrecurring Fair Value Measurements — Fair value measurements were applied with respect to the Company’s nonfinancial assets and liabilities measured on a nonrecurring basis, which consists primarily of intangible assets, other long-lived assets and other assets acquired and liabilities assumed, including contingent consideration, related to purchased businesses in business combinations.

Fair Value of Financial Instruments — Financial instruments consist principally of foreign currency derivatives, interest rate swaps, tradable emission allowances and fixed rate long-term debt.

Input levels used for fair value measurements are as follows:

Description	Disclosure	Input Level	Level 2 Inputs	Level 3 Inputs
Acquired assets and liabilities	Note 3	Level 3	Not applicable	Income approach using projected results and weighted-average cost of capital
Financial derivatives	Note 7	Level 2	Quoted prices of similar assets or liabilities in active markets	Not applicable
Tradable emission allowances	Note 7	Level 1	Not applicable	Not applicable
Long-term debt (disclosure only)	Note 9	Level 2	Quoted prices in markets that are not active	Not applicable

2. New Accounting Standards

Effective January 1, 2012, the Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs (“ASU 2011-04”), which amends Accounting Standards Codification 820, Fair Value Measurement (“ASC 820”). The amendments in ASU 2011-04 generally modify ASC 820 to clarify that the highest and best use concept only applies to nonfinancial assets and provide specific requirements for measuring instruments recorded in shareholders’ equity. In addition, ASU 2011-04 added requirements for (1) measuring the fair value of financial instruments that are managed within a portfolio, (2) applying discounts and premiums in fair value measurements, and (3) disclosing further information about Level 3 fair value measurements, a reporting entity’s use of non-financial assets, and the categorization of items that are not measured at fair value when fair value is required to be disclosed. ASC 820 results in common principles and requirements for measuring fair value and for disclosing information about fair value measurements in accordance with U.S. GAAP and International Financial Reporting Standards. The adoption of ASU 2011-04 did not have a material impact on the Company’s consolidated financial statements or fair value measurements.

Effective January 1, 2012, the Company adopted FASB ASU 2011-08, Intangibles — Goodwill and Other (Topic 350): Testing Goodwill for Impairment (“ASU 2011-08”). ASU 2011-08 is intended to reduce the cost and complexity of the annual goodwill impairment test by providing entities with the option of performing a “qualitative” assessment to determine whether further impairment testing is necessary. ASU 2011-08 permits an entity to choose to perform the qualitative assessment on none, some, or all of its reporting units. An entity may also bypass the qualitative assessment for any reporting unit in any period and proceed directly to step one of the quantitative impairment test, and then perform the qualitative assessment in any subsequent period. The Company performs its impairment test annually as of August 31. The adoption of ASU 2011-08 did not have a material impact on the Company’s consolidated financial statements.

Page 9 of 37

DRESSER-RAND GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

(Unaudited)

($ in millions, except per share amounts)

Effective January 1, 2012, FASB ASU 2011-12, Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05 (“ASU 2011-12”) became effective for the Company. The amendments in ASU 2011-12 supersede certain pending paragraphs in FASB ASU 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income (“ASU 2011-05”), to effectively defer only those changes in ASU 2011-05 that relate to the presentation of reclassification adjustments out of accumulated other comprehensive income. The amendments are temporary to allow the FASB time to redeliberate the presentation requirements for reclassifications out of accumulated other comprehensive income for annual and interim financial statements for public, private and non-profit entities. ASU 2011-12 amendments are effective at the same time as the amendments in ASU 2011-05, so that entities will not be required to comply with the presentation requirements in ASU 2011-05 that ASU 2011-12 is deferring. The amendments in ASU 2011-12 are effective for public entities for fiscal years, and interim periods within those years, beginning after December 15, 2011. The adoption of ASU 2011-12 did not have a material impact on the Company’s consolidated financial statements.

In July 2012 the FASB issued ASU 2012-02, Intangibles — Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment (“ASU 2012-02”). The amendments in ASU 2012-02 are intended to reduce cost and complexity by providing an entity with the option to make a qualitative assessment about the likelihood that an indefinite-lived intangible asset is impaired to determine whether it should perform a quantitative impairment test. The amendments in ASU 2012-02 also enhance the consistency of impairment testing guidance among long-lived asset categories by permitting an entity to assess qualitative factors to determine whether it is necessary to calculate the asset’s fair value when testing an indefinite-lived intangible asset for impairment, which is equivalent to the impairment testing requirements for other long-lived assets. In accordance with the amendments in ASU 2012-02, an entity will have an option not to calculate annually the fair value of an indefinite-lived intangible asset if the entity determines that it is not more-likely-than-not that the asset is impaired. The amendments in ASU 2012-02 are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted, including for annual and interim impairment tests performed as of a date before July 27, 2012, if a public entity’s financial statements for the most recent annual or interim period have not yet been issued or, for nonpublic entities, have not yet been made available for issuance. The adoption of ASU 2012-02 is not expected to have a material impact on the Company’s consolidated financial statements.

3. Acquisitions and Other Investments

Acquisitions

On January 4, 2012, the Company acquired Synchrony, Inc. (“Synchrony”), a technology development company with a portfolio of technologies and products including active magnetic bearings, low power, high speed motors and generators, and power electronics for clean, efficient and reliable rotating machinery. Founded in 1993, Synchrony is headquartered in Roanoke County, Virginia, where it operates an ISO 9001 certified production facility, in-house test cells for high-speed machinery, a model shop for prototype fabrication and assembly and an on-site software integration laboratory. Pursuant to the terms of the acquisition agreement, the Company acquired Synchrony for approximately $48.8, net of cash acquired, at which time Synchrony became a 100%-owned indirect subsidiary of the Company. The acquisition gives the Company the ability to integrate Synchrony’s active magnetic bearing capability into its product development process and to offer oil-free solutions in high speed rotating equipment applications, the benefits of which include reduced footprint and weight of the application and more environmentally-friendly applications. The agreement includes the potential for additional contingent consideration of up to a maximum of $10.0 based on technical milestones and business performance. In accordance with the purchase agreement, a payment of $2.7 was made during September 2012 to the sellers of Synchrony because certain technical milestones were met.

The estimated fair value of the additional contingent consideration for the Synchrony acquisition of $1.6 at September 30, 2012, is included in other noncurrent liabilities on the consolidated balance sheet. Changes in the fair value from the date of acquisition are recognized immediately in the consolidated statement of income until the contingencies are resolved.

On May 4, 2011, the Company acquired all of the issued and outstanding capital stock of Grupo Guascor, S.L. (“Guascor”) pursuant to a Share Purchase Agreement (the “SPA”), at which time Guascor became a 100%-owned subsidiary of the Company. Guascor is a supplier of diesel and gas engines and provides customized energy solutions across worldwide energy infrastructure markets based upon reciprocating engine power systems technologies. Pursuant to the SPA, the Company paid approximately $283.5, net of cash acquired, assumed $253.4 of debt, and delivered 5,033,172 shares of Company common stock at closing. The total purchase price was approximately $543.2, subject to a further cash purchase price adjustment to the extent that net debt (debt minus cash), as defined in the SPA, is different from the net debt at the date of closing, which is being contested by the parties and could take several months and potentially years to finalize.

Page 10 of 37

DRESSER-RAND GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

(Unaudited)

($ in millions, except per share amounts)

The purchase prices for Synchrony and Guascor were allocated to their respective net tangible and identifiable intangible assets acquired and liabilities assumed based on their fair value estimates. Our estimates and assumptions are subject to change within the measurement period (up to one year from the acquisition date). Accordingly, the purchase price allocation for Synchrony may be revised as additional information becomes available and as additional analyses are performed. Revisions to the purchase price allocation of Guascor through the end of the measurement period have been reflected in the Consolidated Balance Sheet as of December 31, 2011, herein, and these revisions are summarized in the table below. These revisions were not material to the Consolidated Statements of Income for the three and nine months ended September 30, 2011.

	As Previously
	Reported at					As Revised at
	December 31,		Increase			December 31,
	2011		(Decrease)			2011
Accounts receivable, net	$	476.9	$	0.6		$	477.5
Inventories, net		409.0		(1.3	)		407.7
Total current assets		1,151.0		(0.7	)		1,150.3
Property, plant and equipment, net		466.1		(10.1	)		456.0
Goodwill		851.3		18.5			869.8
Intangible assets, net		499.0		9.0			508.0
Other assets		63.9		4.6			68.5
Total assets		3,042.4		21.3			3,063.7
Accounts payable and accruals		595.4		5.3			600.7
Accrued income taxes payable		19.9		0.2			20.1
Total current liabilities		926.8		5.5			932.3
Deferred income taxes		44.5		0.7			45.2
Long-term debt		987.9		2.5			990.4
Other noncurrent liabilities		75.4		11.5			86.9
Total liabilities		2,170.5		20.2			2,190.7
Total liabilities and stockholders' equity		3,042.4		21.3			3,063.7

Goodwill from each of the acquisitions principally resulted from expected synergies from combining the operations of the acquired businesses and the Company. A portion of the goodwill associated with the Guascor acquisition may be amortized for income tax purposes over a period of not less than five years. Due to the preliminary nature of certain tax planning strategies, the amount of goodwill amortization that may be deductible for income tax purposes associated with the Guascor acquisition has not yet been determined. The amortization of goodwill related to the acquisition of Synchrony is not deductible for income tax purposes.

Page 11 of 37

DRESSER-RAND GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

(Unaudited)

($ in millions, except per share amounts)

The acquisition prices of Synchrony in 2012 and Guascor in 2011 were allocated to the fair values of assets acquired and liabilities assumed as follows:

	2012			2011
Cash and cash equivalents	$	0.1		$	21.7
Restricted cash		—			36.6
Accounts receivable, net		2.1			79.3
Inventory, net		1.5			41.9
Prepaid expenses		0.1			21.1
Total current assets		3.8			200.6
Property, plant and equipment		2.2			206.9
Amortizable intangible assets		22.9			136.5
Goodwill		23.6			452.7
Other assets		3.3			21.4
Total assets acquired		55.8			1,018.1
Accounts payable and accruals		2.6			141.7
Customer advance payments		—			9.0
Accrued income taxes payable		—			3.1
Current portion of long-term debt		—			98.8
Long-term debt		—			154.6
Other noncurrent liabilities		—			67.7
Total liabilities assumed		2.6			474.9
Purchase price		53.2			543.2
Fair value of contingent consideration (non-cash)		(4.3	)		5.5
Fair value of Dresser-Rand common stock as partial consideration		—			(243.5	)
Cash acquired		(0.1	)		(21.7	)
Cash paid	$	48.8		$	283.5

Pro forma financial information for the Synchrony acquisition, assuming it occurred at the beginning of each income statement period, has not been presented because the effect on our results for each of those periods was not considered material. The financial results of the acquired companies have been included in our consolidated financial results from the date of each acquisition and have been incorporated into the Company’s existing new units and aftermarket parts and services segments.

The following unaudited supplemental pro forma results present consolidated information as if the Guascor acquisition had been completed as of January 1, 2010. The pro forma results include: (i) the depreciation associated with the additional fair value of the acquired property, plant and equipment, (ii) the amortization associated with an estimate of the acquired intangible assets, (iii) interest expense associated with debt used to fund the acquisition and the portion of the accelerated stock acquisition plans executed to acquire the number of shares issued in connection with the acquisition, (iv) non-recurring acquisition costs of $14.9 for the nine months ended September 30, 2011, directly related to the acquisition of Guascor, and (v) the income tax effect of these items. The pro forma results should not be considered indicative of the results that would have occurred if the acquisition and related borrowings had been consummated as of January 1, 2010, nor are they indicative of future results.

Page 12 of 37

DRESSER-RAND GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

(Unaudited)

($ in millions, except per share amounts)

	Nine Months Ended September 30, 2011
Total revenues	$	1,701.5
Net income attributable to Dresser-Rand	$	57.8
Diluted earnings per share attributable to Dresser-Rand	$	0.72

Other Investments

In February 2011, the Company entered into an agreement to acquire a noncontrolling interest in Echogen Power Systems, LLC (“Echogen”), a privately-held technology company that is developing and commercializing power generation systems that harness waste heat for power and cooling applications. The Company also received an option to acquire the outstanding shares of Echogen, which expires February 28, 2013, and certain broad license rights in certain of the Company’s key markets. The Company will pay Echogen a royalty based on future equipment sales in these markets. Minimum royalties of $6.0 must be paid in the first five years of commercialization, regardless of the amount of revenues generated, or the license will terminate. As of September 30, 2012, the Company had invested a total of $20.0 for a 32.9% noncontrolling interest in Echogen and had made further commitments to fund $3.0 through February 2013. In determining whether the Company should consolidate Echogen, the Company considered that its board participation, ownership interest and the option to acquire would not give the Company the power to direct the activities of Echogen and, consequently, would not result in the Company being the primary beneficiary. The investment in Echogen is being accounted for under the equity method of accounting, and the amount of the investment recorded in other noncurrent assets on the consolidated balance sheet is $16.9 at September 30, 2012.

In 2008, the Company entered into an agreement by which it acquired a noncontrolling interest in Ramgen Power Systems, LLC (“Ramgen”), a privately-held company that is developing compressor technology that applies proven supersonic aircraft technology to ground-based air and gas compressors. In addition to receiving a noncontrolling interest, the Company received an option to acquire the business of Ramgen at a price of $25.0 and a royalty commitment. The option is exercisable at any time through November 10, 2014. Since entering into the agreement, the Company has made additional investments totaling $27.0, which have resulted in an aggregate noncontrolling interest of 36.0% at September 30, 2012. The Company’s maximum exposure to loss on its investment in Ramgen is limited to amounts invested plus any amounts the Company may choose to invest in the future. In determining whether the Company should consolidate Ramgen, the Company considered that its board participation, ownership interest and the option to acquire would not give the Company the power to direct the activities of Ramgen and, consequently, would not result in the Company being the primary beneficiary. The investment in Ramgen is being accounted for under the equity method of accounting, and the amount of the investment recorded in other noncurrent assets on the consolidated balance sheet is $26.3 at September 30, 2012.

Page 13 of 37

DRESSER-RAND GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

(Unaudited)

($ in millions, except per share amounts)

4. Intangible Assets and Goodwill

The following table sets forth the weighted-average useful life, gross amount and accumulated amortization of intangible assets:

	September 30, 2012					December 31, 2011
	Cost		Accumulated Amortization		Weighted- Average Useful Lives	Cost		Accumulated Amortization
Trade names	$	117.4	$	20.0	39 years	$	117.5	$	17.5
Customer relationships		330.6		62.4	32 years		322.9		52.6
Non-compete agreement		5.4		3.5	3 years		4.9		2.4
Existing technology		161.6		46.1	23 years		143.5		40.5
Contracts and purchase agreements		18.2		8.1	11 years		18.9		7.3
Software		30.6		24.2	10 years		30.6		21.9
In-process research and development		11.8		—	(a)		11.9		—
Total amortizable intangible assets	$	675.6	$	164.3		$	650.2	$	142.2

(a) In-process research and development will be amortized over 10 years beginning at the time revenues are generated. There has been no amortization recorded for in-process research and development as of September 30, 2012.

Intangible asset amortization expense was $7.7 and $22.3 for the three and nine months ended September 30, 2012, respectively, and $10.6 and $26.7 for the three and nine months ended September 30, 2011, respectively.

The Company had no goodwill impairments for the nine months ended September 30, 2012, and the year ended December 31, 2011. The following table represents the changes in goodwill in total and by segment (see Note 14):

	New Units			Aftermarket Parts and Services		Total
Balance, December 31, 2011	$	442.6		$	427.2	$	869.8
Acquisitions		23.6			—		23.6
Foreign currency adjustments		(0.4	)		1.2		0.8
Balance, September 30, 2012	$	465.8		$	428.4	$	894.2

Page 14 of 37

DRESSER-RAND GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

(Unaudited)

($ in millions, except per share amounts)

5. Inventories, net

Inventories were as follows:

	September 30, 2012			December 31, 2011
Raw materials	$	62.3		$	60.0
Finished parts		206.8			187.1
Work-in-process		656.6			530.2
		925.7			777.3
Less: progress payments		(419.4	)		(369.6	)
Total inventories	$	506.3		$	407.7

Finished parts may be used in production or sold to customers. Progress payments represent payments from clients based on milestone completion schedules. Any payments received in excess of inventory investment are classified as “Customer Advance Payments” in the current liabilities section of the consolidated balance sheet. The total allowance for obsolescence for slow-moving inventory for all categories of inventory was $29.3 and $30.5 at September 30, 2012, and December 31, 2011, respectively.

6. Property, plant and equipment

Property, plant and equipment were as follows:

	September 30, 2012			December 31, 2011
Cost:
Land	$	30.6		$	28.4
Buildings and improvements		196.1			179.4
Machinery and equipment		479.9			460.8
		706.6			668.6
Less: accumulated depreciation		(249.0	)		(212.6	)
Property, plant and equipment, net	$	457.6		$	456.0

Depreciation expense was $13.7 and $41.9 for the three and nine months ended September 30, 2012, respectively, and $13.1 and $33.2 for the three and nine months ended September 30, 2011, respectively.

7. Financial Instruments (€ in millions)

The Company manages exposure to changes in foreign currency exchange rates and interest rates through its normal operating and financing activities as well as through the use of financial instruments, principally forward exchange contracts and interest rate swaps.

The purpose of the Company’s hedging activities is to mitigate the economic impact of changes in foreign currency exchange rates and interest rates. The Company attempts to hedge transaction exposures through natural offsets. To the extent that this is not practicable, the Company may enter into forward exchange contracts or interest rate swaps. Major exposure areas considered for hedging include foreign currency denominated receivables and payables, firm committed transactions, forecast sales and purchases and variable interest rates.

Page 15 of 37

DRESSER-RAND GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

(Unaudited)

($ in millions, except per share amounts)

The Company has entered into an interest rate swap agreement to minimize the economic impact of unexpected fluctuations in interest rates on the lease of its compressor testing facility in France. The interest rate swap has a notional amount of €18.0 (approximately $23.1) and effectively converts substantially the entire interest component of the lease from a variable rate of interest to a fixed rate of interest of approximately 3.87% per annum. The interest rate swap has been designated as a cash flow hedge for accounting purposes, and unrealized gains and losses are recognized in other comprehensive income. The fair value of the interest rate swap at September 30, 2012 was $1.1 and the related unrealized loss for the three and nine months ended September 30, 2012 was $0.0 and $0.1, respectively.

None of the Company’s other derivative financial instruments are designated as hedges for accounting purposes. The Company recognizes derivatives at fair value in prepaid expenses and other accounts payable and accruals, as appropriate, on the consolidated balance sheet. Changes in the fair values of derivatives that are not designated as hedges for accounting purposes are immediately recognized in the consolidated statement of income in other (expense) income.

The following table sets forth the Company’s foreign currency exchange contracts that were accounted for at fair value on a recurring basis:

	September 30, 2012		December 31, 2011
Foreign currency exchange contracts assets	$	15.4		$	7.1
Foreign currency exchange contracts liabilities	$	8.5		$	10.5

The net foreign currency gains (losses) recognized for forward currency contracts were $3.2 and $10.3 for the three and nine months ended September 30, 2012, respectively, compared to ($7.0) and ($0.6) for the three and nine months ended September 30, 2011, respectively.

Certain countries in which the Company operates have emission reduction programs under which the Company receives tradable emission allowances. To the extent that actual emissions exceed tradable emission allowances, the Company records a liability at fair value. Changes in the fair value of this liability are recorded in other income (expense). The fair value of the liability from the shortfall of tradable emission allowances was $1.1 and $3.0 at September 30, 2012, and December 31, 2011, respectively.

8. Income taxes

We operate in numerous countries and tax jurisdictions around the world and many of the tax returns we have filed have not been audited. Accordingly, we could be exposed to additional income and other taxes and, as a result, we maintain a reserve for any uncertain tax position we believe is not more-likely-than-not sustainable under audit.

During the three months ended September 30, 2012, the Company filed its 2011 U.S. tax return. The difference between the filed tax return and the estimated tax provision for the year ended December 31, 2011 of $2.5 was recorded as an income tax benefit in the three months ended September 30, 2012. Generally, our estimated income tax provision for the three and nine months ended September 30, 2012 and 2011 differs from the U.S. federal statutory rate of 35% because of different tax rates in foreign tax jurisdictions, certain exemptions and credits allowable for income tax purposes, which are partially offset by state and local income taxes, and valuation allowances on net operating loss carryforwards that more-likely-than-not will not be realized. We will adjust the valuation allowances in the future when it becomes more-likely-than-not that the benefits of deferred tax assets will be realized or not realized.

Approximately $83.0 of our cash is not available for general corporate use in the U.S. because such earnings have been permanently reinvested in foreign countries or foreign markets. Currently, we have no plans to repatriate any of the foreign-based cash or unremitted earnings based on our intended uses of the foreign-based cash and our existing cash and cash equivalents balances in the U.S. If foreign funds are needed for our operations in the U.S., we would be required to accrue and pay U.S. taxes, net of applicable foreign tax credits, to repatriate these funds. However, our intent is to permanently reinvest these funds outside the U.S., and our current plans do not demonstrate a need to repatriate permanently reinvested earnings to fund our U.S. operations.

Page 16 of 37

DRESSER-RAND GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

(Unaudited)

($ in millions, except per share amounts)

9. Long-Term Debt

Long-term debt consists of the following:

	September 30, 2012			December 31, 2011
Senior Secured Credit Facility maturing March 2016	$	603.7		$	506.0
6 1/2% Senior Subordinated Notes due May 2021		375.0			375.0
Syndicated term loan and working capital line maturing December 2013		14.6			16.8
Other working capital lines maturing through 2014		2.6			4.8
Bank loans maturing through 2015		7.2			25.0
Project financing arrangements maturing through 2016		27.2			41.8
Subsidized loans		11.9			11.1
Other notes payable		53.7			49.2
Total debt		1,095.9			1,029.7
Less: current portion		(27.4	)		(39.3	)
Total long-term debt	$	1,068.5		$	990.4

Included in other notes payable is approximately $20.2 for the repurchase of equity shares of Guascor do Brasil Ltda. (“GdB”), an 81.4% owned indirect subsidiary of the Company, from Electrobrás, a Brazilian electric utility. Electrobrás filed a lawsuit in the Civil Courthouse in São Paulo, Brazil, in December 2011, against Guascor and Energia Norte Participações Ltda. (“ENNOR”), claiming that in July 2006 the defendants breached the shareholders’ agreement relating to GdB. Electrobrás has alleged that the defendants failed to repurchase the GdB shares held by Electrobrás pursuant to the terms of the shareholders’ agreement and is seeking enforcement of the agreement. The Company has engaged in settlement negotiations with Electrobrás.

On June 21, 2012, we entered into a Second Amendment (the “Second Amendment”) to our Senior Secured Credit Facility. The Second Amendment amends the Senior Secured Credit Facility to provide for a Euro-denominated revolving loan facility in an aggregate principal amount at any time outstanding not in excess of €50.0 million (the “Euro Facility”) to be made available to Guascor and the other borrowers under the facility. The loans under the Euro Facility bear interest at the Senior Secured Credit Facility rates and will mature on the same date as the loan facilities under the Senior Secured Credit Facility.

At September 30, 2012, we were in compliance with our debt covenants.

The carrying and fair values of the Company’s Senior Subordinated Notes were as follows:

	September 30, 2012				December 31, 2011
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
6 1/2% senior subordinated notes due May 2021	$	375.0	$	393.3	$	375.0	$	384.4

The carrying values of all of the Company’s other long-term debt approximate their fair values.

Page 17 of 37

DRESSER-RAND GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

(Unaudited)

($ in millions, except per share amounts)

10. Pension Plans

The components of net pension expense were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Service cost	$	2.2		$	2.0		$	6.8		$	6.1
Interest cost		4.9			5.1			14.6			15.2
Expected return on plan assets		(5.4	)		(5.5	)		(16.3	)		(16.5	)
Amortization of net actuarial loss		1.9			0.7			5.8			1.9
Amortization of prior service cost		0.1			0.3			0.2			0.9
Net pension expense	$	3.7		$	2.6		$	11.1		$	7.6

The Company made pension contributions of $3.5 and $19.0, respectively, during the three and nine months ended September 30, 2012, and $3.1 and $28.8, respectively, during the three and nine months ended September 30, 2011.

11. Post-Retirement Benefits Other than Pensions

The components of the net post-retirement benefit expense were as follows:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2012		2011			2012		2011
Interest cost	$	0.2	$	0.3		$	0.6	$	0.7
Amortization of net actuarial loss		0.3		0.2			0.8		0.7
Amortization of prior service credit		—		(0.4	)		—		(1.3	)
Net post-retirement benefits expense	$	0.5	$	0.1		$	1.4	$	0.1

12. Commitments and Contingencies (€ in millions)

Legal Proceedings

We are involved in various litigation, claims and administrative proceedings arising in the normal course of business. Amounts recorded for identified contingent liabilities are estimates, which are regularly reviewed and adjusted to reflect additional information when it becomes available. We are indemnified by our former owner, Ingersoll Rand Company Limited, for certain of these matters as part of Ingersoll Rand’s sale of the Company and by the sellers of Guascor for certain of these matters in connection with our acquisition of Guascor. While adverse decisions in certain of these litigation matters, claims and administrative proceedings could have a material effect on a particular period’s results of operations, subject to the uncertainties inherent in estimating future costs for contingent liabilities and the benefit of the indemnities from Ingersoll Rand and the sellers of Guascor, management believes that any future accruals with respect to these currently known contingencies would not have a material effect on the financial condition, liquidity or cash flows of the Company.

Page 18 of 37

DRESSER-RAND GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

(Unaudited)

($ in millions, except per share amounts)

Painted Post Labor Litigation

In November 2007, Local 313 of IUE-CWA, the union that represents certain employees at the Company’s Painted Post, New York, facility (the “IUE”) made an offer to have its striking members return to work under the terms of the previously expired union agreement. The Company rejected that offer and locked out these represented employees. Approximately one week later, after reaching an impasse in negotiations, the Company exercised its right to implement the terms of its last contract offer, ended the lockout, and the employees represented by the IUE agreed to return to work under the implemented terms. Subsequently, the IUE filed several unfair labor practice (“ULP”) charges against the Company with Region 3 of the National Labor Relations Board (“NLRB”), asserting multiple allegations arising from the protracted labor dispute, its termination, contract negotiations and related matters.

Region 3 of the NLRB decided to proceed to complaint on only one-third of the ULP allegations asserted by the IUE, while the remaining claims were dismissed. Notably, the NLRB found that many of the critical aspects of the Company’s negotiations with the IUE were handled appropriately, including the NLRB’s findings that the union’s strike was not an unfair labor practice strike and the Company’s declaration of impasse and its unilateral implementation of its last offer were lawful. The Company, therefore, continued to operate under a more contemporary and competitive implemented contract offer while contract negotiations with the IUE continued in 2008 and 2009. In November 2009, a collective bargaining agreement between the IUE and the Company was ratified, which agreement expires in March 2013. As a result, the Company was not required to make available the retiree medical benefits which the Company eliminated in its implemented last contract offer.

The claims that proceeded to complaint before the NLRB included the Company’s handling of the one week lockout, the negotiation of the recall process used to return employees to the facility after reaching impasse and lifting the lockout, and the termination of two employees who engaged in misconduct on the picket line during the strike. The trial of this matter took place before a NLRB Administrative Law Judge (the “ALJ”) in Elmira and Painted Post, New York, during the summer of 2009. On January 29, 2010, the ALJ issued his decision in which he found in favor of the union on some issues and upheld the Company’s position on others. The Company timely appealed the ALJ’s rulings against the Company to the NLRB in Washington, D.C. On August 6, 2012, the NLRB affirmed the ALJ’s rulings. The Company timely appealed the matter to the U.S. Fifth Circuit Court of Appeals, and continues to believe it complied with the law and that it will ultimately prevail with respect to these ULP allegations. The litigation process, including further appeals, could reasonably take one to two years to resolve with finality. Given the broad scope of possible remedies that may apply pursuant to conflicting case law, the Company cannot estimate the range of loss, if any, at this time. Although the ultimate outcome of these matters cannot be ascertained at this time, it is the opinion of management that the resolution of such matters will not have a material adverse effect on the Company’s financial condition.

United Kingdom (“UK”) Pension Plan

During July 2009, the Company received notification from the current plan trustees of one of its subsidiaries’ pension plans in the UK that sex equalization under the plan may have been achieved later than originally expected. The third-party trustee at the time action was taken believes that it had taken the appropriate steps to properly amend the plan as originally expected. In June 2012, interpretation proceedings commenced in the English High Court to determine whether sex equalization of the plan was correctly implemented. The Company has accrued $4.9 to address its estimate of contingent exposure regarding this dispute over potential unequal treatment of men and women under the pension plan related to a period in the 1990s and is exploring its rights against others.

Enviroil Italia, S.p.A. (“Enviroil”) Litigation

In March 1998, Enviroil, which became an indirect wholly-owned subsidiary of the Company upon the acquisition of Guascor in May 2011, executed an agreement with the Italian Ministry of Economic Development (“MISE”) to construct a plant in Gela, Italy, for the production of heating gas oil from exhausted oil. In August 2007, following the completion of construction and upon commencement of the operation of the plant, an accident occurred and the plant’s operations were discontinued. In November 2008, Enviroil proposed converting the plant into a facility for the manufacturing of solar panels, and this proposal was rejected by MISE. In January 2010, MISE issued a decree declaring Enviroil in default of the agreement and ordering Enviroil to reimburse MISE the approximately €7.0 (approximately $9.0) paid to Enviroil under the agreement, as well as sanctions, interest and other related costs. Enviroil initiated a proceeding in the Court of Caltanissetta requesting an order to suspend the effect of the MISE decree primarily based on Enviroil’s proposed conversion of the plant. The Court of Caltanissetta rejected Enviroil’s request by order issued in October 2010, and following an appeal by Enviroil, issued a second order in December 2010, denying the appeal. In June 2010, while the proceedings in the Court of Caltanissetta were still pending, Enviroil also initiated proceedings before the Lazio Administrative Court requesting the revocation of the MISE decree. The Lazio Administrative Court held a hearing on this matter in October 2012 and is currently considering the arguments presented by the parties at that hearing. In March 2011, Enviroil appealed the decree directly with MISE through an administrative procedure, and engaged in settlement negotiations with MISE, which were unsuccessful and were suspended. Enviroil renewed settlement negotiations with MISE in October 2012, which are currently pending. The Company estimates that its aggregate exposure to loss associated with the Enviroil litigation is $15.3.

Page 19 of 37

DRESSER-RAND GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

(Unaudited)

($ in millions, except per share amounts)

Although the ultimate outcome of these administrative proceedings and pending settlement negotiations cannot be ascertained at this time, the Company has recorded an accrual based on its assessment of the potential liability with respect to this matter. Based on the Company’s assessment of the exposure, the Company believes any liability that may be in excess of amounts recorded would not be material.

Italian Value-Added Tax Claim

The Company is in litigation with the Italian tax authorities regarding value-added taxes for tax years 2005-2008 and the application of Italian and European Union laws. The Company received an adverse judgment in February 2012 for tax years 2005-2006 for approximately €4.2 ($5.4). In July 2012, the Company appealed the judgment and continues to believe that it will prevail on its position that no tax is owed. The Company estimates the total aggregate exposure for taxes, interest and penalties could be up to €10.1 ($13.0).

Brazilian Judicial Reorganization Proceeding

On October 3, 1997, GdB entered into four Electric Power Supply Agreements with Centrais Elétricas do Pará (“CELPA”), to supply electric power to various locations in the State of Pará, Brazil. On February 28, 2012, CELPA filed a request for a judicial reorganization proceeding, which was granted by the Judge of the 13^th Civil Court of the city of Belém on March 5, 2012. CELPA’s unpaid accounts receivable to GdB subject to the judicial reorganization approximated $6.5.

As previously disclosed, CELPA submitted a plan of reorganization, as required by law, which provided for the unsecured creditors to receive amounts outstanding in 60 monthly installments beginning in April 2013. However, as a result of an order from the judge responsible for CELPA’s bankruptcy proceedings, all past due amounts were paid by CELPA to GdB in September 2012.

13. Warranties

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

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

	Nine Months Ended September 30,
	2012			2011
Beginning balance	$	25.6		$	28.2
Liabilities assumed from acquisitions		—			6.7
Provision for warranties issued during period		12.2			10.8
Adjustments to warranties issued in prior periods		(3.3	)		(5.9	)
Payments during the period		(14.0	)		(12.7	)
Foreign currency adjustments		(0.2	)		(0.8	)
Ending balance	$	20.3		$	26.3

Generally, reductions to warranties issued in prior periods represent the lapsing of warranties for which accruals were made based on historical experience, and for which the expected cost was not realized.

Page 20 of 37

DRESSER-RAND GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

(Unaudited)

($ in millions, except per share amounts)

14. Segment Information:

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

1) New units are highly engineered solutions to new requests from clients and standardized equipment such as engines and single stage steam turbines. This segment includes engineering, manufacturing, sales and administrative support.

2) Aftermarket parts and services consist of support solutions for the existing population of installed equipment and the operation and maintenance of several types of energy plants. This segment includes engineering, manufacturing, sales and administrative support.

Unallocated amounts represent expenses and assets that cannot be assigned directly to either reportable segment because of their nature. Unallocated net expenses include certain corporate expenses and research and development expenses. Assets that are directly assigned to the two reportable segments are trade accounts receivable, net inventories and goodwill. Unallocated assets include cash, prepaid expenses and other, deferred taxes, property, plant and equipment and intangible assets.

Segment results for the three and nine months ended September 30, 2012 and 2011, were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Revenues
New units	$	247.5		$	292.6		$	902.6		$	739.0
Aftermarket parts and services		346.9			337.9			989.4			834.6
Total revenues	$	594.4		$	630.5		$	1,892.0		$	1,573.6
Income from operations
New units	$	21.1		$	30.2		$	68.6		$	66.0
Aftermarket parts and services		76.1			68.8			199.3			144.2
Unallocable		(23.2	)		(25.8	)		(69.6	)		(79.1	)
Total income from operations	$	74.0		$	73.2		$	198.3		$	131.1
Depreciation and amortization
New units	$	10.7		$	11.1		$	33.5		$	27.9
Aftermarket parts and services		10.7			12.6			30.7			32.0
Total depreciation and amortization	$	21.4		$	23.7		$	64.2		$	59.9
Total assets (including goodwill)
New units	$	728.4		$	607.8		$	728.4		$	607.8
Aftermarket parts and services		1,076.7			1,007.3			1,076.7			1,007.3
Unallocable		1,368.2			1,374.1			1,368.2			1,374.1
Total assets	$	3,173.3		$	2,989.2		$	3,173.3		$	2,989.2

15. Incentive Stock-Based Compensation Plans

During the nine months ended September 30, 2012, the Compensation Committee of the Company’s Board of Directors (“Compensation Committee”) approved grants of options and stock appreciation rights for 174,201 shares of common stock and grants of 292,254 shares of time-vested restricted stock units to employees and a consultant under the Dresser-Rand Group Inc. 2008 Stock Incentive Plan (the “2008 Plan”). Also during the nine months ended September 30, 2012, the Compensation Committee approved the issuance of Performance Restricted Stock Units with a target grant amount of 66,707 restricted stock units.

Page 21 of 37

DRESSER-RAND GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(continued)

(Unaudited)

($ in millions, except per share amounts)

As permitted by the provisions of its Annual Incentive Plan, in March 2012, the Company elected to issue restricted stock units under the 2008 Plan in lieu of paying the 2011 incentive in cash. The number of restricted stock units issued during the nine months ended September 30, 2012, totaled 307,574 and such units vest in accordance with grant terms and conditions, 12 months from the date of issuance. Total expense associated with the 2011 incentive was approximately $3.5 for the nine months ended September 30, 2012.

The Company also grants shares of restricted stock to non-employee Directors each February. The 15,281 shares granted to non-employee Directors during the nine months ended September 30, 2012, vest after a one year period.

The difference between basic weighted-average shares outstanding and diluted weighted-average shares outstanding in the computation of earnings per share presented in the Consolidated Statement of Income is comprised entirely of the dilutive effect of the stock-based compensation awards described above for all periods presented.

Page 22 of 37

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ($ in millions)

Overview

We are among the largest global suppliers of custom-engineered rotating equipment solutions for long-life, critical applications in the oil, gas, chemical, petrochemical, process, power, military and other industries worldwide. Our high-speed rotating equipment is also supplied to the environmental market space within energy infrastructure.

Our products and services are widely used in oil and gas applications that include gas gathering, gas compression and export, gas lift and high pressure re-injection; carbon dioxide re-injection, enhanced oil recovery, main refrigeration compression and other duties for liquefied natural gas (“LNG”) plants; gas transmission and storage as well as gas processing; a variety of refinery services; ammonia and methanol synthesis gas; ethylene and other petrochemical services and chemical plant services. We are also a supplier of diesel and gas engines that provide customized energy solutions across worldwide energy infrastructure markets based upon reciprocating engine power systems technologies.

Our custom-engineered products are also used in other advanced applications in the environmental markets we serve and use renewable energy sources, reduce carbon footprint, and recover energy and/or increase energy efficiency. These products include, among others, hot gas turbo-expanders for energy recovery in refineries; co- and tri-generation combined heat and power packages for institutional and other clients; and a large number of steam turbine applications to generate power using steam produced by recovering exhaust heat from the main engines in ships, recovering heat from mining and metals production facilities and exhaust heat recovery from gas turbines in on-shore and off-shore sites. We also have substantial experience in the design, construction and development of power generation and cogeneration plants and mini-hydroelectric plants, and the development and exploitation of wind farms and biomass, used oil and landfill gas, photovoltaic solar energy and farming waste processing. Other biomass and biogas applications for our steam turbine product line include gasification of municipal solid waste or incineration of wood, palm oil, sugar or pulp and paper residues to generate power. Our equipment is used for compressed air energy storage (“CAES”) for utility sized power generation. These applications are environmentally-friendly and provide unique grid management features. A typical CAES plant makes use of our classes of axial compressors, centrifugal compressors, gas expanders, controls and rotating equipment system integration capabilities. Other general industrial markets served include steel and distributed power generation. We operate globally with manufacturing facilities in the United States (“U.S.”), France, United Kingdom (“UK”), Germany, Spain, Norway and India.

We provide a wide array of products and services to our worldwide client base in over 150 countries from our global locations in 18 U.S. states and 32 countries (over 76 sales offices, 49 service and support centers, including six engineering and research and development centers, and 13 manufacturing locations).

Our solutions-based service offering combines our industry-leading technology, extensive worldwide service center network, deep product expertise and a culture of safety and continuous improvement. This approach drives our growth as we offer integrated service solutions that help our clients lower the life cycle costs of their high speed rotating equipment, minimize adverse environmental impact and maximize returns on their production and processing equipment. We believe our business model and alliance-based approach based on alliance and frame agreements align us with our clients who increasingly choose service providers that can help optimize performance over the entire life cycle of their equipment. Our alliance/frame agreement program encompasses both the provision of new units and/or parts and services. We offer our clients a dedicated team, advanced business tools, a streamlined engineering and procurement process, and a life cycle approach to manufacturing, operating and maintaining their equipment, whether originally manufactured by us or by another manufacturer.

From a long-term perspective, we believe that the fundamentals driving trends in our industry include population and economic growth; maturing producing oil and gas fields worldwide that require greater use of compression equipment to maintain production levels; the increase in demand for electricity requiring greater use of power generation equipment; the increase in demand for natural gas that is driving growth in gas production, storage, transmission infrastructure and liquefied natural gas; international regulatory and environmental initiatives, including clean fuel legislation and stricter emission controls; the aging installed base that is increasing demand for aftermarket parts and services, overhauls and upgrades; and the increased outsourcing of equipment maintenance and operation. With respect to our long-term business strategy, certain of our key strategic objectives include:

• Increasing sales of aftermarket parts and services to the existing installed base;

• Expanding aftermarket parts and services business to non-Company original equipment manufacturers’ equipment;

• Growing alliances;

Page 23 of 37

• Expanding our performance-based long-term service contracts;

• Introducing new and innovative products and technologies;

• Driving operational excellence;

• Continuing to improve profitability;

• Selectively pursuing acquisitions; and

• Developing local execution capability with strategic investments.

Segment information

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

1) New units are highly engineered solutions to new requests from clients and standardized equipment such as engines and single stage steam turbines. This segment includes engineering, manufacturing, sales and administrative support.

2) Aftermarket parts and services consist of support solutions for the existing population of installed equipment and the operation and maintenance of several types of energy plants. This segment includes engineering, manufacturing, sales and administrative support.

Unallocated amounts represent expenses and assets that cannot be assigned directly to either reportable segment because of their nature. Unallocated net expenses include certain corporate expenses and research and development expenses. Assets that are directly assigned to the two reportable segments are trade accounts receivable, net inventories and goodwill. Unallocated assets include cash, prepaid expenses and other, deferred taxes, property, plant and equipment and intangible assets.

Results of Operations

Three months ended September 30, 2012, compared to the three months ended September 30, 2011:

	Three Months Ended					Three Months Ended					Period to Period Change
	September 30, 2012					September 30, 2011					2011 to 2012			% Change
Consolidated Statement of Operations Data:
Revenues	$	594.4		100.0	%	$	630.5		100.0	%	$	(36.1	)		(5.7	)%
Cost of sales		423.8		71.3			459.1		72.8			(35.3	)		(7.7	)%
Gross profit		170.6		28.7			171.4		27.2			(0.8	)		(0.5	)%
Selling and administrative expenses		90.2		15.2			89.6		14.2			0.6			0.7	%
Research and development expenses		6.4		1.1			8.6		1.4			(2.2	)		(25.6	)%
Income from operations		74.0		12.4			73.2		11.6			0.8			1.1	%
Interest expense, net		(15.7	)	(2.6	)		(13.7	)	(2.2	)		(2.0	)		14.6	%
Other income (expense), net		1.2		0.2			(0.5	)	(0.1	)		1.7			(340.0	)%
Income before income taxes		59.5		10.0			59.0		9.3			0.5			0.8	%
Provision for income taxes		17.4		2.9			17.9		2.8			(0.5	)		(2.8	)%
Net income		42.1		7.1			41.1		6.5			1.0			2.4	%
Net income attributable to noncontrolling interest		(0.9	)	(0.2	)		(0.8	)	(0.1	)		(0.1	)		12.5	%
Net income attributable to Dresser — Rand	$	41.2		6.9	%	$	40.3		6.4	%	$	0.9			2.2	%
Bookings	$	873.4				$	1,170.7				$	(297.3	)		(25.4	)%
Backlog — ending	$	3,111.0				$	2,724.2				$	386.8			14.2	%

Revenues. Revenues were $594.4 for the three months ended September 30, 2012, compared to $630.5 for the three months ended September 30, 2011, a decrease of $36.1 or 5.7%. Generally, oil prices and other macroeconomic conditions that affect the oil and gas industry have an impact on our business over an extended period of time. On a quarterly or annual basis, however, there is typically not a meaningful correlation of those factors to our periodic financial results. Fluctuations in revenues and bookings are generally due to variability in the timing and size of very large orders in the new units segment, which is typical in the oil and gas industry. Furthermore, the highly engineered nature of our worldwide products and services does not easily lend itself to measuring the impact of price, volume and mix on changes in our total revenues from year to year. Nevertheless, based on factors such as measures of labor hours and purchases from suppliers, revenues decreased as a result of lower volume in the new units segment partially offset by higher volume in the aftermarket segment for the three months ended September 30, 2012. An adverse translation impact of foreign currency fluctuations of approximately $42.6 resulting from a stronger U.S. dollar also contributed to lower revenues.

Page 24 of 37

Cost of sales. Cost of sales was $423.8 for the three months ended September 30, 2012, compared to $459.1 for the three months ended September 30, 2011. As a percentage of revenues, cost of sales was 71.3% for the three months ended September 30, 2012, compared to 72.8% for the three months ended September 30, 2011. The decline in cost of sales as a percentage of revenues from the three months ended September 30, 2011 to the three months ended September 30, 2012 was principally the result of a shift in mix both between the segments and within each of the segments.

Gross profit. Gross profit was $170.6 for the three months ended September 30, 2012, compared to $171.4 for the three months ended September 30, 2011. As a percentage of revenues, gross profit was 28.7% for the three months ended September 30, 2012, compared to 27.2% for the three months ended September 30, 2011. We experienced increased gross profit as a percentage of revenues as a result of the factors discussed above.

Selling and administrative expenses. Selling and administrative expenses were $90.2 for the three months ended September 30, 2012, compared to $89.6 for the three months ended September 30, 2011. Selling and administrative expenses for the three months ended September 30, 2011, included approximately $1.9 of non-recurring transaction and integration costs associated with the acquisition of Guascor. Excluding these one-time costs, the increase in selling and administrative expenses was principally the result of inflation. As a percentage of revenues, selling and administrative expenses increased to 15.2% from 14.2%.

Research and development expenses. Research and development expenses for the three months ended September 30, 2012, were $6.4 compared to $8.6 for the three months ended September 30, 2011. The decline in research and development expenses is the result of efficient execution and a delay in expenses to later in 2012. We have continued to execute our strategy to introduce new and innovative products and technologies with a focus on key new product development initiatives for DATUM^®, DATUM^® Integrated Compression System (“ICS”), subsea compression, LNG, steam turbines and reciprocating engines. Additionally, the recent acquisition of Synchrony is expected to provide synergy through product design integration of active magnetic bearing technologies for DATUM^®, DATUM^® ICS and subsea compression.

Income from operations. Income from operations was $74.0 for the three months ended September 30, 2012, compared to $73.2 for the three months ended September 30, 2011, an increase of $0.8. As a percentage of revenues, income from operations for the three months ended September 30, 2012, was 12.4%, compared to 11.6% for the three months ended September 30, 2011. The increase in income from operations and income from operations as a percentage of revenues is the result of the factors discussed above.

Interest expense, net. Interest expense, net was $15.7 for the three months ended September 30, 2012, compared to $13.7 for the three months ended September 30, 2011. The increase in interest expense is principally the result of an increase in borrowings.

Other income (expense), net. Other income, net was $1.2 for the three months ended September 30, 2012, compared to other expense, net of $0.5 for the three months ended September 30, 2011. Other income (expense), net, consists principally of net currency gains and losses, gains and losses on tradable emission allowances and earnings and losses on investments accounted for under the equity method of accounting.

Provision for income taxes. Provision for income taxes was $17.4 for the three months ended September 30, 2012, and $17.9 for the three months ended September 30, 2011. During the three months ended September 30, 2012, we filed our 2011 U.S. tax return. The difference between the filed tax return and the estimated tax provision for the year ended December 31, 2011 of $2.5 was recorded as an income tax benefit in the three months ended September 30, 2012. Our estimated income tax provision for the three months ended September 30, 2012 and 2011, generally differs from the U.S. federal statutory rate of 35% because of different tax rates in foreign tax jurisdictions and certain exemptions and credits allowable for income tax purposes, partially offset by state and local income taxes, and valuation allowances on net operating loss carryforwards that more-likely-than-not will not be realized. We will adjust the valuation allowances in the future when it becomes more-likely-than-not that the benefits of deferred tax assets will be realized or not realized.

Page 25 of 37

Noncontrolling interest. Noncontrolling interest includes the share of net income and net losses in consolidated entities that are not 100% owned by us.

Bookings and backlog. Effective July 1, 2012, the Company elected to voluntarily change its policy for recording contract cancellations. Historically, contract cancellations were recorded as reductions in current period bookings. Beginning July 1, 2012, contract cancellations are being recorded as direct adjustments to backlog with no impact on current period bookings. Contract cancellations in historical periods presented have not been material to bookings or backlog. The change in policy is considered to provide more relevant information about current market activity by recognizing economic events in the periods in which they occur. In accordance with this policy, material contract cancellations directly adjusting backlog will be separately disclosed.

Bookings for the three months ended September 30, 2012, were $873.4 compared to $1,170.7 for the three months ended September 30, 2011, a decrease of $297.3 or 25.4%. During the three months ended September 30, 2011, the Company was awarded contracts for compression equipment and services which includes up to 80 DATUM compressor trains that will be installed on eight floating, production, storage and offloading (“FPSO”) vessels. In the three months ended September 30, 2011, approximately $410.0 and $60.0 have been reflected in the Company’s new units and aftermarket bookings, respectively, in accordance with the Company’s bookings policy. Backlog was $3,111.0 at September 30, 2012, compared to $2,724.2 at September 30, 2011.

Segment Analysis — three months ended September 30, 2012, compared to three months ended September 30, 2011:

	Three Months Ended					Three Months Ended					Period to Period Change
	September 30, 2012					September 30, 2011					2011 to 2012			% Change
Revenues
New units	$	247.5		41.6	%	$	292.6		46.4	%	$	(45.1	)		(15.4	)%
Aftermarket parts and services		346.9		58.4	%		337.9		53.6	%		9.0			2.7	%
Total revenues	$	594.4		100.0	%	$	630.5		100.0	%	$	(36.1	)		(5.7	)%
Gross profit
New units	$	44.9				$	56.2				$	(11.3	)		(20.1	)%
Aftermarket parts and services		125.7					115.2					10.5			9.1	%
Total gross profit	$	170.6				$	171.4				$	(0.8	)		(0.5	)%
Income from operations
New units	$	21.1				$	30.2				$	(9.1	)		(30.1	)%
Aftermarket parts and services		76.1					68.8					7.3			10.6	%
Unallocated		(23.2	)				(25.8	)				2.6			(10.1	)%
Total income from operations	$	74.0				$	73.2				$	0.8			1.1	%
Bookings
New units	$	478.8				$	732.1				$	(253.3	)		(34.6	)%
Aftermarket parts and services		394.6					438.6					(44.0	)		(10.0	)%
Total bookings	$	873.4				$	1,170.7				$	(297.3	)		(25.4	)%
Backlog — ending
New units	$	2,449.9				$	2,180.2				$	269.7			12.4	%
Aftermarket parts and services		661.1					544.0					117.1			21.5	%
Total backlog	$	3,111.0				$	2,724.2				$	386.8			14.2	%

Page 26 of 37

New Units

Revenues. Revenues for this segment were $247.5 for the three months ended September 30, 2012, compared to $292.6 for the three months ended September 30, 2011, a decrease of $45.1 or 15.4%. Generally, oil prices and other macroeconomic conditions that affect the oil and gas industry have an impact on our new units business over an extended period of time. On a quarterly or annual basis, however, there is typically not a meaningful correlation of those factors to our periodic financial results. Fluctuations in revenues and bookings are generally due to variability in the timing and size of very large orders in the new units segment, which is typical in the oil and gas industry. Furthermore, the highly engineered nature of our worldwide products and services does not easily lend itself to measuring the impact of price, volume and mix on changes in our total revenues from year to year. Revenues declined resulting from the timing of large shipments. An adverse translation impact of foreign currency fluctuations of approximately $14.0 resulting from a stronger U.S. dollar also contributed to lower new unit revenues.

Gross profit. Gross profit was $44.9 for the three months ended September 30, 2012, compared to $56.2 for the three months ended September 30, 2011. Gross profit, as a percentage of segment revenues, was 18.1% for the three months ended September 30, 2012, compared to 19.2% for the three months ended September 30, 2011. The decline in gross margin is principally the result of decreased operating leverage of fixed costs resulting from lower volumes.

Income from operations. Income from operations was $21.1 for the three months ended September 30, 2012, compared to $30.2 for the three months ended September 30, 2011. As a percentage of segment revenues, income from operations was 8.5% for the three months ended September 30, 2012, compared to 10.3% for the three months ended September 30, 2011. Income from operations as a percentage of revenues decreased compared to the prior year as a result of the factors discussed above.

Bookings and backlog. Effective July 1, 2012, the Company elected to voluntarily change its policy for recording contract cancellations. This change is more fully described in the Bookings and backlog caption in the section titled Three months ended September 30, 2012, compared to the three months ended September 30, 2011 of this Form 10-Q.

New units bookings for the three months ended September 30, 2012, were $478.8 compared to $732.1 for the three months ended September 30, 2011. During the three months ended September 30, 2011, the Company was awarded contracts for compression equipment and services which includes up to 80 DATUM compressor trains that will be installed on eight FPSO vessels. In the three months ended September 30, 2011, approximately $410.0 has been reflected in the Company’s new units bookings, in accordance with the Company’s bookings policy. Backlog was $2,449.9 at September 30, 2012, compared to $2,180.2 at September 30, 2011.

Aftermarket Parts and Services

Revenues. Revenues for this segment were $346.9 for the three months ended September 30, 2012, compared to $337.9 for the three months ended September 30, 2011, an increase of $9.0 or 2.7%. Generally, oil prices and other macroeconomic conditions that affect the oil and gas industry have an impact on our business over an extended period of time. On a quarterly or annual basis, there is typically not a meaningful correlation of those factors to our periodic financial results. The Company has experienced aftermarket growth in most geographic segments, but particularly in the Middle East and Latin America. An adverse translation impact of foreign currency fluctuations of approximately $28.6 resulting from a stronger U.S. dollar partially offset the increase in revenues.

Gross profit. Gross profit was $125.7 for the three months ended September 30, 2012, compared to $115.2 for the three months ended September 30, 2011. Gross profit as a percentage of segment revenues for the three months ended September 30, 2012, of 36.2% increased from 34.1% for the three months ended September 30, 2011. Gross profit as a percentage of revenues increased principally due to a more favorable mix.

Income from operations. Income from operations was $76.1 for the three months ended September 30, 2012, compared to $68.8 for the three months ended September 30, 2011. As a percentage of segment revenues, income from operations increased to 21.9% for the three months ended September 30, 2012, from 20.4% for the three months ended September 30, 2011. The changes in income from operations and income from operations as a percentage of segment revenues resulted principally from the reasons discussed above.

Bookings and backlog. Effective July 1, 2012, the Company elected to voluntarily change its policy for recording contract cancellations. This change is more fully described in the Bookings and backlog caption in the section titled Three months ended September 30, 2012, compared to the three months ended September 30, 2011 of this Form 10-Q.

Page 27 of 37

Bookings for the three months ended September 30, 2012, were $394.6, compared to $438.6 for the three months ended September 30, 2011. The Company has experienced aftermarket growth in most geographic segments, but particularly in the Middle East and Latin America. During the three months ended September 30, 2011, the Company was awarded contracts for compression equipment and services which includes up to 80 DATUM compressor trains that will be installed on eight FPSO vessels. In the three months ended September 30, 2011, approximately $60.0 has been reflected in the Company’s aftermarket bookings, respectively, in accordance with the Company’s bookings policy. Backlog was $661.1 at September 30, 2012, compared to $544.0 at September 30, 2011.

Nine months ended September 30, 2012, compared to the nine months ended September 30, 2011:

	Nine Months Ended					Nine Months Ended					Period to Period Change
	September 30, 2012					September 30, 2011					2011 to 2012			% Change
Consolidated Statement of Operations Data:
Revenues	$	1,892.0		100.0	%	$	1,573.6		100.0	%	$	318.4			20.2	%
Cost of sales		1,408.7		74.5			1,155.6		73.4			253.1			21.9	%
Gross profit		483.3		25.5			418.0		26.6			65.3			15.6	%
Selling and administrative expenses		267.4		14.1			266.2		16.9			1.2			0.5	%
Research and development expenses		17.6		0.9			20.7		1.3			(3.1	)		(15.0	)%
Income from operations		198.3		10.5			131.1		8.4			67.2			51.3	%
Interest expense, net		(47.9	)	(2.5	)		(44.7	)	(2.8	)		(3.2	)		7.2	%
Early redemption premium on debt		—		—			(10.1	)	(0.6	)		10.1			(100.0	)%
Other income, net		0.8		—			1.3		0.1			(0.5	)		(38.5	)%
Income before income taxes		151.2		8.0			77.6		5.1			73.6			94.8	%
Provision for income taxes		49.8		2.6			26.4		1.7			23.4			88.6	%
Net income		101.4		5.4			51.2		3.4			50.2			98.0	%
Net (income) loss attributable to noncontrolling interest		(2.6	)	(0.1	)		0.7		0.0			(3.3	)		(471.4	)%
Net income attributable to Dresser — Rand	$	98.8		5.3	%	$	51.9		3.4	%	$	46.9			90.4	%
Bookings	$	2,437.6				$	2,296.8				$	140.8			6.1	%
Backlog — ending	$	3,111.0				$	2,724.2				$	386.8			14.2	%

Revenues. Revenues were $1,892.0 for the nine months ended September 30, 2012, compared to $1,573.6 for the nine months ended September 30, 2011, an increase of $318.4 or 20.2%. Generally, oil prices and other macroeconomic conditions that affect the oil and gas industry have an impact on our business over an extended period of time. On a quarterly or annual basis, however, there is typically not a meaningful correlation of those factors to our periodic financial results. Fluctuations in revenues and bookings are generally due to variability in the timing and size of very large orders in the new units segment, which is typical in the oil and gas industry. Furthermore, the highly engineered nature of our worldwide products and services does not easily lend itself to measuring the impact of price, volume and mix on changes in our total revenues from year to year. Nevertheless, based on factors such as measures of labor hours and purchases from suppliers, revenues increased as a result of higher volume during the nine months ended September 30, 2012. The acquisition of Guascor in May 2011 accounted for approximately $88.9 of the increase in revenues in the nine months ended September 30, 2012, compared to the prior year. In addition, the Company has experienced aftermarket growth in most geographic segments, but particularly in the Middle East and Latin America. The Company experienced lower volumes in the nine months ended September 30, 2011, because of the timing of bookings in 2010 and the cycle times necessary to convert those orders to shipments and lower volumes resulting from a flood in our Wellsville facility. An adverse translation impact of foreign currency fluctuations of approximately $93.1 resulting from a stronger U.S. dollar partially offset the increase in revenues.

Cost of sales. Cost of sales was $1,408.7 for the nine months ended September 30, 2012, compared to $1,155.6 for the nine months ended September 30, 2011. As a percentage of revenues, cost of sales was 74.5% for the nine months ended September 30, 2012, compared to 73.4% for the nine months ended September 30, 2011. The increase was caused by the effect of certain higher margin projects during the nine months ended September 30, 2011, which were not replicated in the nine months ended September 30, 2012, leading to a less favorable mix within the segments. This impact was partially offset by the effect of operating leverage on fixed costs.

Gross profit. Gross profit was $483.3 for the nine months ended September 30, 2012, compared to $418.0 for the nine months ended September 30, 2011. As a percentage of revenues, gross profit was 25.5% for the nine months ended September 30, 2012, compared to 26.6% for the nine months ended September 30, 2011. We experienced decreased gross profit as a percentage of revenues as a result of factors discussed above.

Page 28 of 37

Selling and administrative expenses. Selling and administrative expenses were $267.4 for the nine months ended September 30, 2012, compared to $266.2 for the nine months ended September 30, 2011. The effect of having nine months of Guascor selling and administrative expenses in the current period versus only five months in the nine months ended September 30, 2011, was substantially offset because approximately $14.9 of non-recurring transaction and integration costs were incurred in the nine months ended September 30, 2011, associated with the acquisition of Guascor. Inflation was substantially offset by the translation impact of foreign currency fluctuations. As a percentage of revenues, selling and administrative expenses decreased to 14.1% from 16.9% as a result of operating leverage on higher volumes and the factors discussed above.

Research and development expenses. Research and development expenses for the nine months ended September 30, 2012, were $17.6 compared to $20.7 for the nine months ended September 30, 2011. The decline in research and development expenses is the result of efficient execution and a delay in expenses to later in 2012. We have continued to execute our strategy to introduce new and innovative products and technologies with a focus on key new product development initiatives for DATUM^®, DATUM^® ICS, subsea compression, LNG, steam turbines and reciprocating engines. Additionally, the recent acquisition of Synchrony is expected to provide synergy through product design integration of active magnetic bearing technologies for DATUM^®, DATUM^® ICS and subsea compression.

Income from operations. Income from operations was $198.3 for the nine months ended September 30, 2012, compared to $131.1 for the nine months ended September 30, 2011, an increase of $67.2. As a percentage of revenues, income from operations for the nine months ended September 30, 2012, was 10.5%, compared to 8.4% for the nine months ended September 30, 2011. The increase in income from operations and income from operations as a percentage of revenues is the result of the factors discussed above.

Interest expense, net. Interest expense, net was $47.9 for the nine months ended September 30, 2012, compared to $44.7 for the nine months ended September 30, 2011. Interest expense, net for the nine months ended September 30, 2011, includes $8.5 of accelerated amortization of deferred financing fees as a result of terminating our previous senior secured credit facility and executing the cash tender offer to purchase our then-outstanding 7 ³/₈% Senior Subordinated Notes, which was completed in March 2011. This impact has been offset by interest on additional borrowings principally associated with the acquisitions of Guascor and Synchrony, as well as share repurchases executed in 2011.

Early redemption premium on debt. For the nine months ended September 30, 2011, we incurred a prepayment premium of $10.1 as a result of executing the cash tender offer to purchase our then-outstanding 7 ³/₈% Senior Subordinated Notes.

Other income, net. Other income, net was $0.8 for the nine months ended September 30, 2012, compared to other income, net of $1.3 for the nine months ended September 30, 2011. For the nine months ended September 30, 2012, other income, net, consists principally of net currency gains and losses, gains and losses on tradable emission allowances and earnings and losses on investments accounted for under the equity method of accounting.

Provision for income taxes. Provision for income taxes was $49.8 for the nine months ended September 30, 2012, and $26.4 for the nine months ended September 30, 2011. During the three months ended September 30, 2012, we filed our 2011 U.S. tax return. The difference between the filed tax return and the estimated tax provision for the year ended December 31, 2011 of $2.5 was recorded as an income tax benefit in the three months ended September 30, 2012. Our estimated income tax provision for the nine months ended September 30, 2012 and 2011, generally differs from the U.S. federal statutory rate of 35% because of different tax rates in foreign tax jurisdictions and certain exemptions and credits allowable for income tax purposes, partially offset by state and local income taxes, and valuation allowances on net operating loss carryforwards that more-likely-than-not will not be realized. We will adjust the valuation allowances in the future when it becomes more-likely-than-not that the benefits of deferred tax assets will be realized or not realized.

Noncontrolling interest. Noncontrolling interest includes the share of net income and net losses in consolidated entities that are not 100% owned by us.

Bookings and backlog. Effective July 1, 2012, the Company elected to voluntarily change its policy for recording contract cancellations. This change is more fully described in the Bookings and backlog caption in the section titled Three months ended September 30, 2012, compared to the three months ended September 30, 2011 of this Form 10-Q.

Bookings for the nine months ended September 30, 2012, were $2,437.6 compared to $2,296.8 for the nine months ended September 30, 2011, an increase of $140.8 or 6.1%. The Company has experienced aftermarket growth in most geographic segments, but particularly in the Middle East and Latin America. In addition, the timing of new unit orders has also contributed to the increase in bookings. Bookings related to the acquisition of Guascor have increased approximately $58.3 compared to the prior year. During the nine months ended September 30, 2011, the Company was awarded contracts for compression equipment and services which includes up to 80 DATUM compressor trains that will be installed on eight FPSO vessels. In the nine months ended September 30, 2011, approximately $410.0 and $60.0 have been reflected in the Company’s new units and aftermarket bookings, respectively, in accordance with the Company’s bookings policy. Backlog was $3,111.0 at September 30, 2012, compared to $2,724.2 at September 30, 2011.

Page 29 of 37

Segment Analysis — nine months ended September 30, 2012, compared to nine months ended September 30, 2011:

	Nine Months Ended					Nine Months Ended					Period to Period Change
	September 30, 2012					September 30, 2011					2011 to 2012			% Change
Revenues
New units	$	902.6		47.7	%	$	739.0		47.0	%	$	163.6			22.1	%
Aftermarket parts and services		989.4		52.3	%		834.6		53.0	%		154.8			18.5	%
Total revenues	$	1,892.0		100.0	%	$	1,573.6		100.0	%	$	318.4			20.2	%
Gross profit
New units	$	141.4				$	140.9				$	0.5			0.4	%
Aftermarket parts and services		341.9					277.1					64.8			23.4	%
Total gross profit	$	483.3				$	418.0				$	65.3			15.6	%
Income from operations
New units	$	68.6				$	66.0				$	2.6			3.9	%
Aftermarket parts and services		199.3					144.2					55.1			38.2	%
Unallocated		(69.6	)				(79.1	)				9.5			(12.0	)%
Total income from operations	$	198.3				$	131.1				$	67.2			51.3	%
Bookings
New units	$	1,266.7				$	1,274.2				$	(7.5	)		(0.6	)%
Aftermarket parts and services		1,170.9					1,022.6					148.3			14.5	%
Total bookings	$	2,437.6				$	2,296.8				$	140.8			6.1	%
Backlog — ending
New units	$	2,449.9				$	2,180.2				$	269.7			12.4	%
Aftermarket parts and services		661.1					544.0					117.1			21.5	%
Total backlog	$	3,111.0				$	2,724.2				$	386.8			14.2	%

New Units

Revenues. Revenues for this segment were $902.6 for the nine months ended September 30, 2012, compared to $739.0 for the nine months ended September 30, 2011, an increase of $163.6 or 22.1%. Generally, oil prices and other macroeconomic conditions that affect the oil and gas industry have an impact on our business over an extended period of time. On a quarterly or annual basis, however, there is typically not a meaningful correlation of those factors to our periodic financial results. Fluctuations in revenues and bookings are generally due to variability in the timing and size of very large orders in the new units segment, which is typical in the oil and gas industry. Furthermore, the highly engineered nature of our worldwide products and services does not easily lend itself to measuring the impact of price, volume and mix on changes in our total revenues from year to year. Nevertheless, based on factors such as measures of labor hours and purchases from suppliers, volumes increased during the nine months ended September 30, 2012 as a result of the timing of large orders. An adverse translation impact of foreign currency fluctuations of approximately $37.2 resulting from a stronger U.S. dollar partially offset the increase in revenues.

Gross profit. Gross profit was $141.4 for the nine months ended September 30, 2012, compared to $140.9 for the nine months ended September 30, 2011. Gross profit, as a percentage of segment revenues, was 15.7% for the nine months ended September 30, 2012, compared to 19.1% for the nine months ended September 30, 2011. We experienced decreased gross profit as a percentage of sales in our new units segment because the nine months ended September 30, 2011, included certain higher margin projects leading to a less favorable mix for the nine months ended September 30, 2012. Additionally, the flood in May 2011 had an unfavorable impact on the absorption of fixed costs for our Wellsville facility, resulting in higher cost of sales and reduced gross profit for the nine months ended September 30, 2011.

Income from operations. Income from operations was $68.6 for the nine months ended September 30, 2012, compared to $66.0 for the nine months ended September 30, 2011. As a percentage of segment revenues, income from operations was 7.6% for the nine months ended September 30, 2012, compared to 8.9% for the nine months ended September 30, 2011. Income from operations as a percentage of revenues decreased during the nine months ended September 30, 2012, as a result of the factors discussed above.

Page 30 of 37

Bookings and backlog. Effective July 1, 2012, the Company elected to voluntarily change its policy for recording contract cancellations. This change is more fully described in the Bookings and backlog caption in the section titled Three months ended September 30, 2012, compared to the three months ended September 30, 2011 of this Form 10-Q.

New units bookings for the nine months ended September 30, 2012, were $1,266.7 compared to $1,274.2 for the nine months ended September 30, 2011. During the nine months ended September 30, 2011, the Company was awarded contracts for compression equipment and services which includes up to 80 DATUM compressor trains that will be installed on eight FPSO vessels. In the nine months ended September 30, 2011, approximately $410.0 has been reflected in the Company’s new units bookings, in accordance with the Company’s bookings policy. This impact was substantially offset by the timing of large orders. Bookings related to the acquisition of Guascor have decreased approximately $32.0 compared to the prior year. Backlog was $2,449.9 at September 30, 2012, compared to $2,180.2 at September 30, 2011.

Aftermarket Parts and Services

Revenues. Revenues for this segment were $989.4 for the nine months ended September 30, 2012, compared to $834.6 for the nine months ended September 30, 2011, an increase of $154.8 or 18.5%. Generally, oil prices and other macroeconomic conditions that affect the oil and gas industry have an impact on our business over an extended period of time. On a quarterly or annual basis, however, there is typically not a meaningful correlation of those factors to our periodic financial results. During the nine months ended September 30, 2012, the Company has experienced aftermarket growth in most geographic segments, but particularly in the Middle East and Latin America. Additionally, the acquisition of Guascor contributed approximately $90.3 of additional aftermarket revenues for the nine months ended September 30, 2012, compared to the prior year. An adverse translation impact of foreign currency fluctuations of approximately $55.9 resulting from a stronger U.S. dollar partially offset the increase in revenues.

Gross profit. Gross profit was $341.9 for the nine months ended September 30, 2012, compared to $277.1 for the nine months ended September 30, 2011. Gross profit as a percentage of segment revenues for the nine months ended September 30, 2012, of 34.6% increased from 33.2% for the nine months ended September 30, 2011. Gross profit as a percentage of revenues increased principally due to mix within the segment.

Income from operations. Income from operations was $199.3 for the nine months ended September 30, 2012, compared to $144.2 for the nine months ended September 30, 2011. As a percentage of segment revenues, income from operations increased to 20.1% for the nine months ended September 30, 2012, from 17.3% for the nine months ended September 30, 2011. The changes in income from operations and income from operations as a percentage of segment revenues resulted principally from the reasons discussed above as well as higher operating leverage on fixed costs.

Bookings and backlog. Effective July 1, 2012, the Company elected to voluntarily change its policy for recording contract cancellations. This change is more fully described in the Bookings and backlog caption in the section titled Three months ended September 30, 2012, compared to the three months ended September 30, 2011 of this Form 10-Q.

Bookings for the nine months ended September 30, 2012, were $1,170.9, compared to $1,022.6 for the nine months ended September 30, 2011. The Company has experienced aftermarket growth in most geographic segments, but particularly in the Middle East and Latin America. Bookings related to the acquisition of Guascor have increased approximately $90.3 compared to the prior year. During the nine months ended September 30, 2011, the Company was awarded contracts for compression equipment and services which includes up to 80 DATUM compressor trains that will be installed on eight FPSO vessels. In the nine months ended September 30, 2011, approximately $60.0 has been reflected in the Company’s aftermarket bookings, respectively, in accordance with the Company’s bookings policy. Backlog was $661.1 at September 30, 2012, compared to $544.0 at September 30, 2011.

Liquidity and Capital Resources

Current Liquidity

On June 21, 2012, we entered into a Second Amendment (the “Second Amendment”) to our Senior Secured Credit Facility. The Second Amendment amends the Senior Secured Credit Facility to provide for a new Euro-denominated revolving loan facility in an aggregate principal amount at any time outstanding not in excess of €50.0 million (the “Euro Facility”) to be made available to Guascor and the other borrowers under the facility. The proceeds of the Euro Facility will be used to refinance certain existing indebtedness of Guascor and for other general corporate purposes. The loans under the Euro Facility bear interest at the Senior Secured Credit Facility rates and will mature on the same date as the loan facilities under the Senior Secured Credit Facility. As of September 30, 2012, we had the ability to borrow approximately €50.0 ($64.3) under the Euro Facility.

Page 31 of 37

As of September 30, 2012, we had cash and cash equivalents of $150.9 and the ability to borrow $245.4 under the $764.3 revolving portion of our Senior Secured Credit Facility, as $213.9 was used for outstanding letters of credit and $305.0 of borrowings was outstanding. In addition to these letters of credit, $133.0 of letters of credit and bank guarantees were outstanding at September 30, 2012, which were issued by banks offering uncommitted lines of credit. At September 30, 2012, we were in compliance with our debt covenants.

As of September 30, 2012, approximately $147.6 of our cash was held outside of the U.S. Except for approximately $1.6 of cash in Venezuela, there are no legal restrictions regarding repatriation from any of the countries outside of the U.S. where we have cash; however, as of September 30, 2012, approximately $83.0 of our cash is not available for general corporate use in the U.S. because such earnings have been permanently reinvested in foreign countries or foreign markets. Currently, we have no plans to repatriate any of the foreign-based cash or unremitted earnings based on our intended uses of the foreign-based cash and our existing cash and cash equivalents balances in the U.S. If foreign funds are needed for our operations in the U.S., we would be required to accrue and pay U.S. taxes, net of applicable foreign tax credits, to repatriate these funds. However, our intent is to permanently reinvest these funds outside the U.S., and our current plans do not demonstrate a need to repatriate permanently reinvested earnings to fund our U.S. operations.

Although there can be no assurances, based on our current and anticipated levels of operations and conditions in our markets and industry, we believe that our cash flow from operations, available cash and available borrowings under the Senior Secured Credit Facility will be adequate to meet our working capital, capital expenditures, interest payments and other funding requirements for the next 12 months and our long-term future contractual obligations in the U.S. and in foreign countries. The Company may consider accessing the capital markets as a source of cash to the extent it determines market conditions to be favorable.

Sources and Uses of Liquidity

Net cash provided by operating activities for the nine months ended September 30, 2012, was $49.3 compared to $78.8 for the nine months ended September 30, 2011. Net income increased to $101.4 for the nine months ended September 30, 2012, from $51.2 for the nine months ended September 30, 2011, which resulted in a favorable impact on cash flows from operations. Accounts receivable decreased for the nine months ended September 30, 2012, as a result of cyclically lower volume and timely cash collections from clients. Inventories increased for the nine months ended September 30, 2012, associated with the higher backlog. Lower customer advances are attributable to the timing of receipts from two large national oil company clients. Lower accounts payable and accruals for the nine months ended September 30, 2012, were principally the result of the timing of payments. In addition, we made $19.0 of pension contributions in the nine months ended September 30, 2012, compared to $28.8 in the nine months ended September 30, 2011, in accordance with our funding policy.

Net cash used in investing activities was $104.9 for the nine months ended September 30, 2012, compared to $324.3 for the nine months ended September 30, 2011. Capital expenditures increased to $48.9 for the nine months ended September 30, 2012, from $38.8 for the nine months ended September 30, 2011. Cash used in investing activities for the nine months ended September 30, 2012, principally includes $48.8 related to the acquisition of Synchrony (net of cash acquired) and $10.0 related to an additional capital investment in the noncontrolling interest of Echogen Power Systems, LLC (“Echogen”). Cash used in investing activities for the nine months ended September 30, 2011, includes $283.5 related to the acquisition of Guascor (net of cash acquired) and $10.0 related to the initial noncontrolling interest acquired in Echogen.

Net cash provided by financing activities was $77.5 for the nine months ended September 30, 2012, compared to net cash used in financing activities of $29.5 for the nine months ended September 30, 2011. Included in net cash provided by financing activities for the nine months ended September 30, 2012 are $387.6 of borrowings to fund operating cash flows and $316.2 of repayments principally on the Senior Secured Credit Facility. During the nine months ended September 30, 2011, we repurchased $505.0 of common stock in connection with stock repurchase plans that are more fully described in Note 13 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2011. The Company also terminated its existing credit facility, entered into a new Senior Secured Credit Facility (including a $700.0 revolving credit facility and a $400.0 term loan facility), executed a cash tender offer to purchase $370.0 of its then-outstanding 7 ³/₈% senior subordinated notes and issued $375.0 of 6  ¹/₂% Senior Subordinated Notes. These transactions are more fully described in Note 10 to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2011.

Page 32 of 37

The Company is required to maintain sinking funds associated with certain of its borrowings, generally based on the short-term debt service requirements of such borrowings. Sinking fund requirements totaled $23.3 at September 30, 2012, and have been classified as restricted cash in the current assets section of the consolidated balance sheet.

We provide a range of benefits to employees and retired former employees, including pensions, postretirement, postemployment and healthcare benefits. We have considered the impact of the provisions of the Patient Protection and Affordable Care Act (“PPACA”) on our postretirement medical benefit plans as of September 30, 2012. Although there are a number of aspects of the PPACA that could affect our plans, none of these provisions have had a measurable impact on our postretirement medical benefit plan liabilities.

New Accounting Standards

The Company has adopted or is required to adopt, certain new accounting standards which are described in Note 2, New Accounting Standards to the consolidated financial statements (unaudited), none of which have had, or are expected to have, a material effect on the consolidated financial statements included herein in Part I, Financial Information, Item 1, Financial Statements (unaudited).

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Form 10-Q includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements concerning our plans, objectives, goals, strategies, future events, future revenue or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions, business trends and other information that is not historical information. When used in this Form 10-Q, the words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “appears,” “outlook” and similar expressions identify such forward-looking statements. Although we believe that such statements are based on reasonable assumptions, these forward-looking statements are subject to numerous factors, risks and uncertainties that could cause actual outcomes and results to be materially different from those projected. These factors, risks and uncertainties include, among others, the following:

• economic or industry downturns;

• volatility and disruption of the credit markets;

• our ability to implement our business strategy to increase our aftermarket parts and services revenue;

• delivery delays by certain third-party suppliers of large equipment;

• our ability to implement potential tax strategies;

• our ability to generate cash and access capital on reasonable terms;

• competition in our markets;

• the variability of bookings due to volatile market conditions, client subjectivity in placing orders, and timing of large orders;

• failure to integrate our acquisitions, or achieve the expected benefits from acquisitions;

• economic, political and other risks associated with our international sales and operations;

• fluctuations in currency values and exchange rates;

• loss of our senior management or other key personnel;

• environmental compliance costs and liabilities and responses to concerns regarding climate change;

• failure to maintain safety performance acceptable to our clients;

• failure to negotiate new collective bargaining agreements;

• unexpected product claims or regulations;

• infringement of our intellectual property rights or our infringement of others’ intellectual property rights;

Page 33 of 37

• our brand name may be confused with others;

• our pension expenses and funding requirements; and

• other factors described in this Form 10-Q and as set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK ($ in millions)

Our results of operations are affected by fluctuations in the value of local currencies in which we transact business. The most significant exposures are to the Euro, and to a lesser extent, the Norwegian Krone and the British Pound. Assets and liabilities of non-U.S. consolidated entities that use the local currency as the functional currency are translated at period-end exchange rates, while income and expenses are translated using weighted average-for-the-period exchange rates. The effect on our results of operations of fluctuations in currency exchange rates depends on various currency exchange rates and the magnitude of the transactions completed in currencies other than the U.S. dollar. Generally, a weakening of the U.S. dollar improves our reported results when the local currency financial statements are translated into U.S. dollars for inclusion in our consolidated financial statements and the strengthening of the U.S. dollar impacts our results negatively. We enter into financial instruments to mitigate the impact of changes in currency exchange rates on transactions when we deem appropriate. Net foreign currency gains (losses) were $0.5 and ($0.4) for the three and nine months ended September 30, 2012, compared to ($4.5) and ($3.6) for the three and nine months ended September 30, 2011, respectively.

The Company has entered into an interest rate swap agreement to minimize the economic impact of unexpected fluctuations in interest rates on the lease of its compressor testing facility in France. Additionally, certain countries in which the Company operates have emission reduction programs under which the Company receives tradable emission allowances. The interest rate swap agreement and tradable emission allowances are described further in Note 7, Financial Instruments to the consolidated financial statements included herein in Part I, Financial Information, Item 1, Financial Statements (unaudited).

ITEM 4. CONTROLS AND PROCEDURES

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of September 30, 2012. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2012, our disclosure controls and procedures were effective at a reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There have been no changes in internal control over financial reporting during the three months ended September 30, 2012, that have materially affected or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The disclosures required in Item 1 are included in Note 12, Commitments and Contingencies — Legal Proceedings, in the consolidated financial statements included herein in Part I, Financial Information, Item 1, Financial Statements (unaudited) and incorporated herein by reference.

Page 34 of 37

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

The following table contains information about repurchases of our common stock during the three months ended September 30, 2012:

Period	Total Number of Shares Purchased			Average Price Paid Per Share		Total Number of Shares  Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value  of Shares That May Yet Be Purchased Under the Plans or Programs
July 2012		—		$	—		—	$	—
August 2012		673	(a)	$	50.05		—	$	—
September 2012		—		$	—		—	$	—
Total		673					—	$	—

(a) These shares were delivered to us as payment of withholding taxes due on the vesting of restricted stock issued under our 2008 Stock Incentive Plan.

ITEM 6. EXHIBITS

The following exhibits are filed with this report:

Page 35 of 37

Exhibit No.	Description
2.1	Share Purchase Agreement by and among Dresser-Rand Group Inc., Grupo Guascor S.L. and the shareholders of Grupo Guascor S.L. dated March 3, 2011 (incorporated by reference to Exhibit 2.1 to Dresser-Rand Group Inc.'s Current Report on Form 8-K, filed March 4, 2011, File No. 001-32586).
3.1	Amended and Restated Certificate of Incorporation of Dresser-Rand Group Inc. (incorporated by reference to Exhibit 3.1 to Dresser-Rand Group Inc.’s Registration Statement on Form S-1/A, filed July 18, 2005, File No. 333-124963).
3.2	Amended and Restated By-Laws of Dresser-Rand Group Inc. (incorporated by reference to Exhibit 3.2 to Dresser-Rand Group Inc.’s Current Report on Form 8-K, filed February 10, 2012, File No. 001-32586).
4.1	Form of certificate of Dresser-Rand Group Inc. common stock (incorporated by reference to Exhibit 4.1 to Dresser-Rand Group Inc.’s Registration Statement on Form S-1/A, filed July 18, 2005, File No. 333-124963).
4.2	Indenture, dated March 22, 2011, by and among Dresser-Rand Group Inc., the guarantors named therein and Wilmington Trust Company, as trustee (incorporated by reference to Exhibit 4.1 to Dresser-Rand Group Inc.’s Current Report on Form 8-K, filed March 24, 2011, File No. 001-32586).
(4.3)	First Supplemental Indenture, dated as of September 6, 2012, by and among Dresser-Rand Group Inc., DR Acquisition LLC and Wilmington Trust, National Association, as trustee.
(10.1)	Third Amendment to Credit Agreement, dated September 27, 2012, by and among Dresser-Rand Group Inc., D-R Holdings (France) S.A.S., Grupo Guascor, S.L., certain lenders named therein, JPMorgan Chase Bank, N.A., as administrative agent, and J.P. Morgan Europe Limited, as European Administrative Agent.
(10.2)&	Form of Confidentiality, Non-Compete, Severance, and Change In Control Agreement to be entered into with named executive officers other than the chief executive officer (reflecting revisions approved by the Compensation Committee to the form it previously approved, principally addressing Section 409A of the U.S. Internal Revenue Code).
(10.3)&	Plan Red Relocation Policy (applicable to relocation within the U.S. and Canada by named executive officers).
(31.1)	Certification of the President and Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
(31.2)	Certification of the Executive Vice President and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
(32.1)	Certification of the President and Chief Executive Officer pursuant to Title 18, United States Code, Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith). (This certification is being furnished and shall not be deemed “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Registrant specifically incorporates it by reference.)
(32.2)	Certification of the Executive Vice President and Chief Financial Officer pursuant to Title 18, United States Code, Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith). (This certification is being furnished and shall not be deemed “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Registrant specifically incorporates it by reference.)
(101)	The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012, formatted in XBRL: (i) Consolidated Statement of Income, (ii) Consolidated Balance Sheet, (iii) Consolidated Statement of Cash Flows, and (iv) Notes to Consolidated Financial Statements.(1)

& Management contract.

(    ) Filed or furnished herewith.

(1) The XBRL related information in Exhibit 101 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.

Page 36 of 37

SIGNATURES

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

	DRESSER-RAND GROUP INC.
Date: November 1, 2012	/s/ Raymond L. Carney Jr.
	Raymond L. Carney Jr.
	Vice President, Controller and Chief Accounting Officer

Page 37 of 37

EX-4.3

Exhibit 4.3

Execution Version

FIRST SUPPLEMENTAL INDENTURE

FIRST SUPPLEMENTAL INDENTURE (this “Supplemental Indenture”), dated as of September 10, 2012, among DR Acquisition LLC, a Texas limited liability company (the “New Guarantor”), a subsidiary of Dresser-Rand Group Inc., a Delaware corporation (the “Company”), and Wilmington Trust, National Association, as trustee (the “Trustee”) under the Indenture (as defined below).

WITNESSETH

WHEREAS, the Company and the existing Guarantors have heretofore executed and delivered to the Trustee an indenture (as amended, supplemented or otherwise modified, the “Indenture”), dated as of March 22, 2011, providing for the issuance of 6.50% Senior Subordinated Notes due 2021 (the “Notes”);

WHEREAS, Section 4.17 of the Indenture provides that under certain circumstances the New Guarantor shall execute and deliver to the Trustee a supplemental indenture pursuant to which the New Guarantor shall unconditionally guarantee all of the Company’s Obligations under the Notes and the Indenture on the terms and conditions set forth in the Indenture (the “Note Guarantee”); and

WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee, the Company and the New Guarantor are authorized to execute and deliver this Supplemental Indenture.

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the New Guarantor, the Company and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows:

1. DEFINED TERMS. Defined terms used herein without definition shall have the meanings assigned to them in the Indenture.

2. AGREEMENT TO GUARANTEE. The New Guarantor hereby agrees, jointly and severally with all existing Guarantors, to provide an unconditional guarantee on the terms and subject to the conditions set forth in Article 11 of the Indenture and to be bound by all other applicable provisions of the Indenture, including the provisions relating to the subordination of such guarantee set forth in Article 11, and the Notes and to perform all of the obligations and agreements of a Guarantor under the Indenture.

3. NO RECOURSE AGAINST OTHERS. No past, present or future director, manager, officer, employee, incorporator, stockholder or member of the Company, any parent entity of the Company or any Subsidiary, as such, will have any liability for any obligations of the Company or the Guarantors under the Notes, the Indenture, the Note Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. The waiver may not be effective to waive liabilities under the federal securities laws.

4. NOTICES. All notices or other communications to the New Guarantor shall be given as provided in Section 13.02 of the Indenture.

5. RATIFICATION OF INDENTURE; SUPPLEMENTAL INDENTURES PART OF INDENTURE. Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Supplemental Indenture shall form a part of the Indenture for all purposes, and every holder of Notes heretofore or hereafter authenticated and delivered shall be bound hereby.

6. GOVERNING LAW. THIS SUPPLEMENTAL INDENTURE, THE NOTES AND THE NOTE GUARANTEES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

7. COUNTERPARTS. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. The exchange of copies of this Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Supplemental Indenture as to the parties hereto and may be used in lieu of the original Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.

8. EFFECT OF HEADINGS. The Section headings herein are for convenience only and shall not affect the construction hereof.

9. TRUSTEE MAKES NO REPRESENTATION. The Trustee makes no representation as to the validity or sufficiency of this Supplemental Indenture.

[The remainder of this page has been intentionally left blank.]

2

IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed and attested, all as of the date first above written.

DR ACQUISITION LLC
By:	Dresser-Rand Company, its sole member
By:	/s/ Robert J. Saltarelli
	Name: Robert J. Saltarelli
	Title: Vice President and Treasurer
DRESSER-RAND GROUP INC.
By:	/s/ Robert J. Saltarelli
	Name: Robert J. Saltarelli
	Title: Vice President and Treasurer
WILMINGTON TRUST, NATIONAL ASSOCIATION as Trustee
By:	/s/ Geoffrey J. Lewis
	Name: Geoffrey J. Lewis
	Title: Assistant Vice President

First Supplemental Indenture

EX-10.1

Exhibit 10.1

Execution Version

THIRD AMENDMENT

TO

CREDIT AGREEMENT

dated as of

September 27, 2012

among

DRESSER RAND GROUP INC.,

as Domestic Borrower,

D-R HOLDINGS (France) S.A.S.,

as French Borrower,

GRUPO GUASCOR, S.L.,

as Spanish Borrower

THE LENDERS PARTY HERETO,

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent,

and

J.P. MORGAN EUROPE LIMITED,

as European Administrative Agent

THIRD AMENDMENT CREDIT AGREEMENT

THIS THIRD AMENDMENT TO CREDIT AGREEMENT (this “Third Amendment”), dated as of September 27, 2012, is among DRESSER RAND GROUP INC., a Delaware corporation (the “Domestic Borrower”); D-R HOLDINGS (France) S.A.S., a corporation organized under the laws of France (the “French Borrower”); GRUPO GUASCOR, S.L., a sociedad limitada organized under the laws of Spain (the “Spanish Borrower”); JPMORGAN CHASE BANK, N.A., as administrative agent (in such capacity, together with its successors in such capacity, the “Administrative Agent”) for the lenders party to the Credit Agreement referred to below (collectively, the “Lenders”); and the undersigned Lenders.

R E C I T A L S

The Domestic Borrower, the French Borrower, the Spanish Borrower, the Administrative Agent and the Lenders are parties to that certain Credit Agreement dated as of March 15, 2011, as amended by that First Amendment to Credit Agreement dated as of May 11, 2011 and that Second Amendment to Credit Agreement dated as of June 21,2012 (as so amended, the “Credit Agreement”), pursuant to which the Lenders have made certain extensions of credit available to the Domestic Borrower, the French Borrower, and the Spanish Borrower; and

The Domestic Borrower, the French Borrower, and the Spanish Borrower have requested, and the Administrative Agent and the Lenders are willing, to amend certain provisions of the Credit Agreement as more fully provided herein.

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

Section 1. Defined Terms. Each capitalized term used herein but not otherwise defined herein has the meaning given such term in the Credit Agreement. Unless otherwise indicated, all references to Sections and Articles in this Third Amendment refer to Sections and Articles of the Credit Agreement.

Section 2. Amendments to Credit Agreement.

2.1 Amendments to Section 1.01.

(a) Section 1.01 of the Credit Agreement shall be and it hereby is amended by deleting the following definitions and replacing such definitions in their entirety with the following:

“Equivalent” in Dollars of any Foreign Currency or Alternate LC Currency on any date shall mean the equivalent in Dollars of such Foreign Currency or Alternate LC Currency determined by using the quoted spot rate at which the European Administrative Agent’s principal office in London offers to exchange Dollars for such Foreign Currency or Alternate LC Currency in London prior to 4:00 p.m. (London time) (unless otherwise indicated by the terms of this Agreement) on such date as is required pursuant to the terms of this Agreement, and the “Equivalent” in any Foreign Currency of Dollars shall mean the equivalent in such Foreign Currency of Dollars determined by using the quoted spot rate at which the European Administrative Agent’s principal office in London offers to exchange such Foreign Currency for Dollars in London prior to 4:00 p.m. (London time) (unless otherwise indicated by the terms of this Agreement) on such date as is required pursuant to the terms of this Agreement.

(b) Section 1.01 of the Credit Agreement shall be and it hereby is amended by adding the following definitions where appropriate:

“Alternate LC Currency” shall mean (a) Brazilian Real, (b) Canadian Dollars, (c) Chinese Yuan, (d) Colombian Pesos, (e) Indian Rupees, (f) Japanese Yen, (g) Mexican Pesos, (h) Norwegian Krone, (i) Swedish Krona and (j) Trinidad and Tobago Dollars.

2.2 Amendments to Section 2.05.

(a) Section 2.05(b) of the Credit Agreement shall be and it hereby is amended by deleting it in its entirety and replacing it as follows:

Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. To request the issuance of a Letter of Credit (or the amendment, renewal (other than an automatic renewal in accordance with paragraph (c) of this Section) or extension of an outstanding Letter of Credit), a Borrower shall hand deliver or telecopy (or transmit by electronic communication, if arrangements for doing so have been approved by the applicable Issuing Bank) to the applicable Issuing Bank and the Administrative Agent (two (2) Business Days in advance of the requested date of issuance, amendment, renewal or extension) a notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, renewed or extended, and specifying the date of issuance, amendment, renewal or extension (which shall be a Business Day), the date on which such Letter of Credit is to expire (which shall comply with paragraph (c) of this Section), the amount of such Letter of Credit and the currency (either in Dollars, a Foreign Currency, or an Alternate LC Currency) in which it is denominated, the name and address of the beneficiary thereof and such other information as shall be necessary to issue, amend, renew or extend such Letter of Credit. If requested by the applicable Issuing Bank, a Borrower also shall submit a letter of credit application on such Issuing Bank’s standard form in connection with any request for a Letter of Credit. A Letter of Credit shall be issued, amended, renewed or extended only if (and upon issuance, amendment, renewal or extension of each Letter of Credit the applicable Borrower shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension, (i) the Revolving L/C Exposure shall not exceed $600.0 million, (ii) the Revolving Facility Credit Exposure shall not exceed the total Revolving Facility Commitments, and (iii) the Equivalent in Dollars of the Revolving L/C Exposure denominated in a Foreign Currency or an Alternate LC Currency determined on the date of such issuance, amendment, renewal or extension shall not exceed (A) in the case such Foreign Currency is Euros, $350.0 million, (B) in the case such Foreign Currency is Sterling, $75.0 million, and (C) in the case of all Alternate LC Currency, $75.0 million.

2

(b) Section 2.05(d) of the Credit Agreement shall be and it hereby is amended by deleting it in its entirety and replacing it as follows:

Participations. By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further action on the part of the applicable Issuing Bank or the Revolving Facility Lenders, such Issuing Bank hereby grants to each Revolving Facility Lender, and each Revolving Facility Lender hereby acquires from such Issuing Bank, a participation in such Letter of Credit equal to such Revolving Facility Lender’s Revolving Facility Percentage of the aggregate amount available to be drawn under such Letter of Credit. In consideration and in furtherance of the foregoing, each Revolving Facility Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent in Dollars, the Foreign Currency in which such Letter of Credit is denominated, or the Equivalent in Dollars of any Alternate LC Currency in which such Letter of Credit is denominated, as the case may be, for the account of the applicable Issuing Bank, such Revolving Facility Lender’s Revolving Facility Percentage of each L/C Disbursement made by such Issuing Bank not reimbursed by the applicable Borrower on the date due as provided in Section 2.05(e), or of any reimbursement payment required to be refunded to the applicable Borrower for any reason. Each Revolving Facility Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and continuance of a Default or reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever

(c) Section 2.05(e) of the Credit Agreement shall be and it hereby is amended by deleting it in its entirety and replacing it as follows:

Reimbursement. If the applicable Issuing Bank shall make any L/C Disbursement in respect of a Letter of Credit, the Borrower for which such Letter of Credit was issued shall reimburse such L/C Disbursement by paying to the Administrative Agent an amount equal to such L/C Disbursement in Dollars, the Foreign Currency in which such Letter of Credit is denominated, or the Equivalent in Dollars of any Alternate LC Currency in which such Letter of Credit is denominated, as the case may be, not later than 5:00 p.m., Local Time, on the same Business Day such Borrower receives notice under Section 2.05(g) of such L/C Disbursement, provided that such Borrower may, subject to the conditions to borrowing set forth herein, request in accordance with Section 2.03 or Section 2.04 that such payment be financed with an ABR Revolving Facility Borrowing or a Swingline Borrowing or an Eurocurrency Revolving Loan denominated in the applicable Foreign Currency, as applicable, in an equivalent

3

amount and, to the extent so financed, such Borrower’s obligation to make such payment shall be discharged and replaced by the resulting ABR Revolving Facility Borrowing or Swingline Borrowing or Eurocurrency Revolving Loan. If any Borrower fails to reimburse any L/C Disbursement when due, then the Administrative Agent shall promptly notify the applicable Issuing Bank and each other Revolving Facility Lender of the applicable L/C Disbursement, the payment then due from such Borrower and, in the case of a Revolving Facility Lender, such Lender’s Revolving Facility Percentage thereof. Promptly following receipt of such notice, each Revolving Facility Lender shall pay to the Administrative Agent in Dollars, such Foreign Currency, or the Equivalent in Dollars of such Alternate LC Currency, as the case may be, its Revolving Facility Percentage of the payment then due from such Borrower, in the same manner as provided in Section 2.06 with respect to Loans made by such Lender (and Section 2.06 shall apply, mutatis mutandis, to the payment obligations of the Revolving Facility Lenders), and the Administrative Agent shall promptly pay to the applicable Issuing Bank in Dollars, such Foreign Currency, or the Equivalent in Dollars of such Alternate LC Currency, as the case may be, the amounts so received by it from the Revolving Facility Lenders. Promptly following receipt by the Administrative Agent of any payment from such Borrower pursuant to this paragraph, the Administrative Agent shall distribute such payment to the applicable Issuing Bank or, to the extent that Revolving Facility Lenders have made payments pursuant to this paragraph to reimburse such Issuing Bank, then to such Lenders and such Issuing Bank as their interests may appear. Any payment made by a Revolving Facility Lender pursuant to this paragraph to reimburse an Issuing Bank for any L/C Disbursement (other than the funding of an ABR Revolving Loan or a Swingline Borrowing or an Eurocurrency Revolving Loan as contemplated above) shall not constitute a Loan and shall not relieve any Borrower of its obligation to reimburse such L/C Disbursement

(d) Section 2.05(h) of the Credit Agreement shall be and it hereby is amended by deleting it in its entirety and replacing it as follows:

Interim Interest. If an Issuing Bank shall make any L/C Disbursement, then, unless the applicable Borrower shall reimburse such L/C Disbursement in full on the date such L/C Disbursement is made, the unpaid amount thereof shall bear interest, for each day from and including the date such L/C Disbursement is made to but excluding the date that such Borrower reimburses such L/C Disbursement, at the rate per annum then applicable to ABR Revolving Loans or Eurocurrency Revolving Loans denominated in the applicable Foreign Currency, as applicable; provided that, if such L/C Disbursement is not reimbursed by such Borrower when due pursuant to paragraph (e) of this Section, then Section 2.14(c) shall apply; provided further that any L/C Disbursement that is reimbursed after the date such L/C Disbursement is required to be reimbursed under paragraph (e) of this Section, (A) be payable in Dollars, the Foreign Currency in which such Letter of Credit is denominated, or the Equivalent in Dollars of any Alternate LC Currency in which such Letter of Credit is denominated, as the case may be, (B) bear interest at the rate per annum then applicable to ABR Revolving Loans or Eurocurrency Revolving Loans denominated in the applicable Foreign Currency, as applicable, and (C) Section 2.14(c) shall apply. Interest accrued pursuant to this paragraph shall be for the account of the applicable Issuing Bank, except that interest accrued on and after the date of payment by any Revolving Facility Lender pursuant to paragraph (e) of this Section to reimburse such Issuing Bank shall be for the account of such Revolving Facility Lender to the extent of such payment

4

(e) Section 2.05(j) of the Credit Agreement shall be and it hereby is amended by deleting it in its entirety and replacing it as follows:

Cash Collateralization. If any Event of Default shall occur and be continuing, (i) in the case of an Event of Default described in Section 7.01(h), (i) or (l), on the Business Day or (ii) in the case of any other Event of Default, on the third Business Day, in each case, following the date on which any Borrower receives notice from the Administrative Agent (or, if the maturity of the Loans has been accelerated, Revolving Facility Lenders with Revolving L/C Exposure representing greater than 50% of the total Revolving L/C Exposure) demanding the deposit of cash collateral pursuant to this paragraph, such Borrower shall deposit in an account with the Administrative Agent, in the name of the Administrative Agent and for the benefit of the Lenders, an amount in Dollars in cash equal to the Revolving L/C Exposure as of such date plus any accrued and unpaid interest thereon; provided that, upon the occurrence of any Event of Default with respect to any Borrower described in clause (h), (i) or (l) of Section 7.01, the obligation to deposit such cash collateral shall become effective immediately, and such deposit shall become immediately due and payable in Dollars, such Foreign Currency, or the Equivalent in Dollars of such Alternate LC Currency, without demand or other notice of any kind. Each Borrower also shall deposit cash collateral pursuant to this paragraph as and to the extent required by Section 2.12(b). Each such deposit pursuant to this paragraph or pursuant to Section 2.12(b) shall be held by the Administrative Agent as Collateral for the payment and performance of the obligations of the applicable Borrower under this Agreement. The Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account. Other than any interest earned on the investment of such deposits, which investments shall be made at the option and sole discretion of (i) for so long as an Event of Default shall be continuing, the Administrative Agent and (ii) at any other time, the applicable Borrower, in each case, in Permitted Investments and at the risk and expense of such Borrower, such deposits shall not bear interest. Interest or profits, if any, on such investments shall accumulate in such account. Moneys in such account shall be applied by the Administrative Agent to reimburse each Issuing Bank for L/C Disbursements for which such Issuing Bank has not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the reimbursement obligations of the applicable Borrower for the Revolving L/C Exposure at such time or, if the maturity of the Loans has been accelerated (but subject to the consent of Revolving Facility Lenders with Revolving L/C Exposure representing greater than 50% of the total Revolving L/C Exposure), be

5

applied to satisfy other obligations of such Borrower under this Agreement. If any Borrower is required to provide an amount of cash collateral hereunder as a result of the occurrence of an Event of Default, such amount (to the extent not applied as aforesaid) shall be returned to such Borrower within three (3) Business Days after all Events of Default have been cured or waived. If any Borrower is required to provide an amount of cash collateral hereunder pursuant to Section 2.12(b), such amount (to the extent not applied as aforesaid) shall be returned to such Borrower as and to the extent that, after giving effect to such return, such Borrower would remain in compliance with Section 2.12(b) and no Event of Default shall have occurred and be continuing

2.3 Amendment to Section 2.12(b)(i). Section 2.12(b)(i) of the Credit Agreement shall be and it hereby is amended by deleting it in its entirety and replacing it as follows:

If on any date, the Administrative Agent notifies the Domestic Borrower that, on the last day of any month, the sum of (i) the sum of aggregate principal amount of all Revolving Facility Loans denominated in Dollars plus the aggregate principal amount of all Letters of Credit denominated in Dollars then outstanding plus (ii) the Equivalent in Dollars (determined on the third Business Day prior to such interest payment date) of the sum of the aggregate principal amount of all Revolving Facility Loans denominated in Foreign Currencies plus the aggregate principal amount of all Letters of Credit denominated in Foreign Currencies or Alternate LC Currencies then outstanding exceeds 105% of the aggregate Revolving Facility Commitments of the Lenders on such date, the Domestic Borrower and each other Borrower shall, as soon as practicable and in any event within two Business Days following such date, prepay the outstanding principal amount of any Revolving Facility Loans owing by such Borrower in an aggregate amount (or deposit cash collateral in an account with the Administrative Agent pursuant to Section 2.05(j)) sufficient to reduce such sum to an amount not to exceed 100% of the aggregate Revolving Facility Commitments of the Lenders on such date together with any interest accrued to the date of such prepayment on the aggregate principal amount of Revolving Facility Loans prepaid. The Administrative Agent shall give prompt notice of any prepayment required under this Section 2.12(b)(i) to the Domestic Borrower and the Lenders

2.4 Amendments to Section 2.19.

(a) Section 2.19(a) of the Credit Agreement shall be and it hereby is amended by deleting it in its entirety and replacing it as follows:

Unless otherwise specified, each Borrower shall make each payment required to be made by it hereunder (whether of principal, interest, fees or reimbursement of L/C Disbursements, or of amounts payable under Section 2.16, 2.17, 2.18, or 2.21, or otherwise) prior to 2:00 p.m., Local Time, on the date when due, in immediately available funds, without condition or deduction for any defense, recoupment, set-off or counterclaim. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to

6

have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to the Administrative Agent to the applicable account designated to the Borrowers by the Administrative Agent, except payments to be made directly to the applicable Issuing Bank or the applicable Swingline Lender as expressly provided herein and except that payments pursuant to Sections 2.16, 2.17, 2.18, or 2.21 and 9.05 shall be made directly to the Persons entitled thereto. The Administrative Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof. If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. Except for Loans denominated in any Foreign Currency (the principal of and interest on which hereunder shall be paid in such Foreign Currency) and except for reimbursement obligations with respect to any Letter of Credit denominated in any Foreign Currency (which shall be paid in such Foreign Currency), all payments hereunder of (i) principal or interest in respect of any Loan, (ii) reimbursement obligations with respect to any Letter of Credit or (iii) any other amount due hereunder or under any other Loan Document shall be made in Dollars or the Equivalent in Dollars. Any payment required to be made by the Administrative Agent hereunder shall be deemed to have been made by the time required if such Administrative Agent shall, at or before such time, have taken the necessary steps to make such payment in accordance with the regulations or operating procedures of the clearing or settlement system used by such Administrative Agent to make such payment.

(b) Section 2.19(f) of the Credit Agreement shall be and it hereby is amended by deleting it in its entirety and replacing it as follows:

To the extent that the Administrative Agent receives funds for application to the amounts owing by any Borrower under or in respect of this Agreement in currencies other than the currency or currencies required to enable the Administrative Agent to distribute funds to the Lenders in accordance with the terms of this Section 2.19, the Administrative Agent shall be entitled to convert or exchange such funds into Dollars, a Foreign Currency, or an Alternate LC Currency or from Dollars to a Foreign Currency or an Alternate LC Currency or from a Foreign Currency or an Alternate LC Currency to Dollars, as the case may be, to the extent necessary to enable the Agent to distribute such funds in accordance with the terms of this Section 2.19; provided that each Borrower and each of the Lenders hereby agree that the Administrative Agent shall not be liable or responsible for any loss, cost or expense suffered by such Borrower or such Lender as a result of any conversion or exchange of currencies affected pursuant to this Section 2.19(f) or as a result of the failure of the Administrative Agent to effect any such conversion or exchange; and provided further that each applicable Borrower agrees to indemnify the Administrative Agent and each Lender, and hold the Administrative Agent and each Lender harmless, for any and all losses, costs and expenses incurred by the Administrative Agent or any Lender for any conversion or exchange of currencies (or the failure to convert or exchange any currencies) in accordance with this Section 2.19(f).

7

Section 3. Limited Waiver. The Borrower has informed the Administrative Agent that certain letters of credit have been issued in currencies other than Dollars or Foreign Currency in violation of the provisions of Section 2.05 of the Credit Agreement (the “Specified Breach”). In connection with this Third Amendment, the Borrower has requested that the Lenders waive, and the Lenders do hereby waive, the occurrence of the Specified Breach. The foregoing waiver is hereby granted to the extent and only to the extent specifically stated herein only and for no other purpose and, except as expressly set forth in this Third Amendment, shall not be deemed to (a) be a consent or agreement to, or waiver or modification of, any other term or condition of the Credit Agreement, any other Loan Document or any of the documents referred to therein, (b) impair or prejudice any right or rights which the Administrative Agent or the Lenders may now have or may have in the future under or in connection with the Credit Agreement, any other Loan Document or any of the documents referred to therein, or (c) constitute any course of dealing or other basis for altering any obligation of the Borrower or any right, privilege or remedy of the Administrative Agent or the Lenders under the Credit Agreement, the other Loan Documents, or any other contract or instrument. Granting the waiver set forth herein does not and should not be construed to be an assurance or promise that waivers will be granted in the future.

Section 4. Conditions Precedent. This Third Amendment shall not become effective until the date on which each of the following conditions is satisfied (or waived in accordance with Section 9.08 of the Credit Agreement) (the “Third Amendment Effective Date”):

4.1 The Administrative Agent shall have received from the Required Lenders, the Administrative Agent and the Borrowers, counterparts (in such number as may be requested by the Administrative Agent) of this Third Amendment signed on behalf of such Persons.

4.2 No Default or Event of Default shall have occurred and be continuing, after giving effect to the terms of this Third Amendment.

4.3 The Administrative Agent and the Lenders shall have received all fees and other amounts due and payable on or prior to the Third Amendment Effective Date, including, to the extent invoiced, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Borrower under the Credit Agreement.

4.4 Each guarantor shall have executed and delivered the Reaffirmation and Ratification attached to this Third Amendment.

Section 5. Miscellaneous.

5.1 Confirmation. The provisions of the Credit Agreement, as amended by this Third Amendment, shall remain in full force and effect following the effectiveness of this Third Amendment.

8

5.2 Ratification and Affirmation; Representations and Warranties. The Borrowers hereby: (a) acknowledge the terms of this Third Amendment; (b) ratify and affirm their obligations under, and acknowledge, renew and extend their continued liability under, each Loan Document to which they are a party and agree that each Loan Document to which they are a party remains in full force and effect, except as expressly amended hereby, after giving effect to the amendments contained herein; (c) agree that from and after the Third Amendment Effective Date each reference to the Credit Agreement in the Guarantee and Collateral Agreement, the Mortgages and the other Loan Documents shall be deemed to be a reference to the Credit Agreement, as amended by this Third Amendment; and (d) represent and warrant to the Lenders that as of the date hereof, after giving effect to the terms of this Third Amendment: (i) all of the representations and warranties made by the Borrowers contained in each Loan Document to which they are a party are true and correct in all material respects, unless such representations and warranties are stated to relate to a specific earlier date, in which case, such representations and warranties shall be true and correct in all material respects as of such earlier date and (ii) no Default or Event of Default has occurred and is continuing.

5.3 Loan Document. This Third Amendment is a “Loan Document” as defined and described in the Credit Agreement and all of the terms and provisions of the Credit Agreement relating to Loan Documents shall apply hereto.

5.4 Counterparts. This Third Amendment may be executed by one or more of the parties hereto in any number of separate counterparts, and all of such counterparts taken together shall be deemed to constitute one and the same instrument. Delivery of this Third Amendment by facsimile transmission shall be effective as delivery of a manually executed counterpart hereof.

5.5 NO ORAL AGREEMENT. THIS THIRD AMENDMENT, THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS EXECUTED IN CONNECTION HEREWITH AND THEREWITH REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR UNWRITTEN ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO ORAL AGREEMENTS BETWEEN THE PARTIES.

5.6 GOVERNING LAW. THIS THIRD AMENDMENT (INCLUDING, BUT NOT LIMITED TO, THE VALIDITY AND ENFORCEABILITY HEREOF) SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

[SIGNATURES BEGIN NEXT PAGE]

9

IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment to be duly executed as of the date first written above.

DRESSER RAND GROUP INC., as the Domestic Borrower
By:	/s/ Robert J. Saltarelli
Name:	Robert J. Saltarelli
Title:	Vice President and Treasurer
D-R HOLDINGS (France) S.A.S., as the French Borrower
By:	/s/ Mark F. Mai
Name:	Mark F. Mai
Title:	President
GRUPO GUASCOR, S.L., as the Spanish Borrower
By:	/s/ Mark F. Mai
Name:	Mark F. Mai
Title:	Legal Representative

Third Amendment

Signature Page

JPMorgan Chase Bank, N.A., as Administrative Agent and as a Lender
By:	/s/ Preeti Bhatnager
Name: Preeti Bhatnager
Title: Authorized Officer

Third Amendment

Signature Page

J.P. Morgan Europe Limited, as European Administrative Agent and as a Lender
By:	/s/ Altan Kayaalp
Name: Altan Kayaalp
Title: Executive Director

Third Amendment

Signature Page

J.P. Morgan Securities plc, as a Lender
By:	/s/ Altan Kayaalp
Name: Altan Kayaalp
Title: Executive Director

Third Amendment

Signature Page

Bank of America, N.A., as Co-Syndication Agent and as a Lender
By:	/s/ Julie Castano
Name: Julie Castano
Title: Vice President

Third Amendment

Signature Page

Commerzbank AG, New York and Grand Cayman Branch, as Co-Syndication Agent and as a Lender
By:	/s/ Aleksandra Pacholek
Name: Aleksandra Pacholek
Title: AVP
By:	/s/ Michael Weinert
Name: Michael Weinert
Title: AVP

Third Amendment

Signature Page

DNB Bank ASA, Grand Cayman Branch, as Co-Syndication Agent and as a Lender
By:	/s/ Pål Boger
Name: Pål Boger
Title: Vice President
By:	/s/ Philip F. Kurpiewski
Name: Philip F. Kurpiewski
Title: Senior Vice President

Third Amendment

Signature Page

Wells Fargo Bank, N.A., as Co-Syndication Agent and as a Lender
By:	/s/ Robert Corder
Name: Robert Corder
Title: Director

Third Amendment

Signature Page

The Bank of Tokyo-Mitsubishi UFJ, Ltd., as a Lender
By:	/s/ Sherwin Brandford
Name: Sherwin Brandford
Title: Vice President

Third Amendment

Signature Page

Citicorp North America, Inc. as a Lender
By:	/s/ Christopher M. Hartzel
Name: Christopher M. Hartzel
Title: Vice President

Third Amendment

Signature Page

HSBC Bank USA, N.A., as a Lender
By:	/s/ Bruce Robinson
Name: Bruce Robinson
Title: Vice President

Third Amendment

Signature Page

Sumimoto Mitsui Banking Corporation, as a Lender
By:	/s/ Shuji Yabe
Name: Shuji Yabe
Title: Managing Director

Third Amendment

Signature Page

Barclays Bank PLC, as a Lender
By:	/s/ John Laud
Name: John Laud
Title: Relationship Director

Third Amendment

Signature Page

U.S. Bank National Association, as a Lender
By:	/s/ John M. Eyerman
Name: John M. Eyerman
Title: Vice President

Third Amendment

Signature Page

Branch Banking and Trust Company, as a Lender
By:	/s/ Elizabeth Willis
Name: Elizabeth Willis
Title: Assistant Vice President

Third Amendment

Signature Page

Morgan Stanley Bank, N.A., as a Lender
By:	/s/ William Jones
Name: William Jones
Title: Authorized Signatory

Third Amendment

Signature Page

The Northern Trust Company, as a Lender
By:	/s/ Alex Cullen
Name: Alex Cullen
Title: Credit Officer

Third Amendment

Signature Page

REAFFIRMATION AND RATIFICATION: Each guarantor hereby (a) acknowledges the terms of this Third Amendment; (b) ratifies and affirms its obligations under, and acknowledges its continued liability under, each Loan Document to which it is a party, including the Domestic Guarantee and Collateral Agreement, and agrees that each Loan Document to which it is a party, including the Domestic Guarantee and Collateral Agreement, remains in full force and effect as expressly amended hereby; and (c) represents and warrants to the Lenders that, as of the date hereof, after giving effect to the terms of this Third Amendment: (i) all of the representations and warranties made by such guarantor contained in each Loan Document to which such guarantor is a party, including the Domestic Guarantee and Collateral Agreement, are true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representation or warranty that is already qualified or modified by materiality in the text thereof) as though made on and as of the Third Amendment Effective Date (unless such representations and warranties are stated to relate to a specific earlier date, in which case, such representations and warranties shall be true and correct in all material respects as of such earlier date) and (ii) no Default or Event of Default has occurred and is continuing.

ACKNOWLEDGED AND RATIFIED:	DRESSER-RAND COMPANY
	By:	/s/ Robert J. Saltarelli
	Name: Robert J. Saltarelli
	Title: Vice President and Treasurer
	DRESSER-RAND LLC
	By:	/s/ Robert J. Saltarelli
	Name: Robert J. Saltarelli
	Title: Vice President and Treasurer
	D-R STEAM LLC
	By:	/s/ Mark F. Mai
	Name: Mark F. Mai
	Title: Vice President and Secretary
	DRESSER-RAND POWER LLC
	By:	/s/ Robert J. Saltarelli
	Name: Robert J. Saltarelli
	Title: Vice President and Treasurer

Reaffirmation and Ratification

DRESSER-RAND GLOBAL SERVICES, INC.
By:	/s/ Robert J. Saltarelli
Name: Robert J. Saltarelli
Title: Vice President and Treasurer
DR ACQUISITION LLC
By:	Dresser-Rand Company, its sole member
By:	/s/ Robert J. Saltarelli
Name: Robert J. Saltarelli
Title: Vice President and Treasurer

Reaffirmation and Ratification

EX-10.2

EXHIBIT 10.2

CONFIDENTIALITY, NON-COMPETE, SEVERANCE,

AND CHANGE IN CONTROL AGREEMENT

This Confidentiality, Non-Compete, Severance, and Change in Control Agreement (the “Agreement”) is entered into as of this             day of             , 20            by and between             (“Executive”), and Dresser-Rand Group Inc., a Delaware corporation (“DRG”).

WHEREAS, Executive is currently employed by the Company (as defined below) and, by virtue of that employment will receive access to competitively sensitive, confidential, proprietary and trade secret information relating to the current and planned business of the Company; and

WHEREAS, the Company and Executive wish to make certain arrangements to protect the value of such information to the Company during Executive’s employment and following such time as Executive’s employment with the Company may end; and

WHEREAS, in exchange for such protections and in recognition of Executive’s anticipated contributions to the Company, the Company and Executive wish further to make arrangements for the potential payment of severance following the conclusion of Executive’s employment with the Company under certain circumstances, including following a change in control of DRG.

NOW, THEREFORE, in consideration of the mutual representations, warranties, covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:

1. DEFINITIONS.

(a) Affiliate. For purposes of this Agreement, “Affiliate” shall mean any corporation, partnership, limited liability company or similar entity which is under the control of the DRG or under common control with the DRG.

(b) Base Salary. For purposes of this Agreement, “Base Salary” shall mean the annualized rate of salary authorized and being paid to Executive as of the date in question, excluding any bonus, incentive plan payments, benefits, equity compensation, and other forms of compensation that are not paid to Executive on a regular, recurring basis (except where local payroll practices otherwise require, as determined by the Company) under the Company’s standard payroll practices.

(c) Cause. For purposes of this Agreement, “Cause” shall mean the occurrence of any of the following:

(i) the material failure or refusal by Executive to perform his/her duties hereunder (including, without limitation, Executive’s inability to perform such duties as a result of alcohol or drug abuse, chronic alcoholism or drug addiction) or to devote substantially all of his/her business time, attention and energies to the performance of his/her duties hereunder;

(ii) any willful, intentional or grossly negligent act by Executive having the effect of materially injuring the interest, business or prospects of the Company, or any of its subsidiaries or divisions;

(iii) the material violation or material failure by Executive to comply with the Company’s material published rules, regulations or policies, as in effect from time to time;

(iv) Executive’s conviction of a felony offense or conviction of a misdemeanor offense involving moral turpitude, fraud, theft or dishonesty;

(v) any willful or intentional, misappropriation or embezzlement of the property of the Company or any of its subsidiaries (whether or not a misdemeanor or felony); or

(vi) a material breach of any one or more of the covenants of this Agreement by Executive;

provided, however, that in the event that the Company determines to terminate Executive’s employment pursuant to clauses (i), (iii) or (vi) of this definition of Cause, such termination shall only become effective if the Company shall first give Executive written notice of such Cause, which notice shall identify in reasonable detail the manner in which the Company believes Cause to exist and indicates the steps required to cure such Cause, if curable, and Executive shall fail within thirty (30) days of such notice to substantially remedy or correct the same.

(d) Disability. For purposes of this Agreement, “Disability” shall mean, for a period of not less than 90 days within a given twelve month period, Executive’s physical or mental incapacity to perform his/her essential functions, with or without reasonable accommodations therefore, which condition a mutually agreeable physician determines is likely to be continuous and permanent.

(e) Voluntary Termination without Good Reason. For purposes of this Agreement, “Voluntary Termination without Good Reason” shall mean any termination by Executive of Executive’s employment with the Company other than a Voluntary Termination with Good Reason.

2

(f) Voluntary Termination with Good Reason. For purposes of the Agreement, “Voluntary Termination with Good Reason” shall mean the termination by Executive of Executive’s employment with the Company within forty-five (45) days following the occurrence of any of the following events without his/her consent, which is not cured by the Company, if curable, within 30 days as described below:

(i) a material diminution in Executive’s duties and responsibilities;

(ii) the Company materially reduces the compensation or benefits to which Executive is entitled as determined immediately prior to the Change in Control;

(iii) a material breach of any one or more of the covenants of this Agreement by the Company; or

(iv) if, as the result of a Change in Control (as defined below), the Company’s headquarters offices are relocated to a location more than fifty miles away from their location prior to such Change in Control, necessitating Executive’s relocation to such new headquarters location.

Provided, however, that Executive must provide the Company with written notice within fifteen (15) days following the occurrence of an event or action constituting Good Reason and the Company shall have thirty (30) days following receipt of such notice to cure such event or action.

(g) Change in Control. For purposes of this Agreement, a “Change in Control” shall mean the first to occur of any of the following events:

(i) during any 12-month period, the members of the board of directors of DRG (the “Incumbent Directors”) cease for any reason other than due to death or disability to constitute at least a majority of the members of the board, provided that any director whose election, or nomination for election by DRG’s stockholders, was approved by a vote of at least a majority of the members of the board who are at the time Incumbent Directors shall be considered an Incumbent Director, other than any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the board;

(ii) the acquisition or ownership by any individual, entity or “group” (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), other than the Company or any of its subsidiaries, or any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its subsidiaries, of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of the combined voting power of DRG’s then outstanding voting securities entitled to vote generally in the election of directors;

3

(iii) the merger, consolidation or other similar transaction of DRG, as a result of which the stockholders of DRG immediately prior to such merger, consolidation or other transaction, do not, immediately thereafter, beneficially own, directly or indirectly, more than 50% of the combined voting power of the voting securities entitled to vote generally in the election of directors of the merged, consolidated or other surviving company; or

(iv) the sale, transfer or other disposition of all or substantially all of the assets of DRG to one or more persons or entities that are not, immediately prior to such sale, transfer or other disposition, Affiliates of the DRG.

A “Change in Control” shall not be deemed to occur if the Company undergoes a bankruptcy, liquidation or reorganization under the United States Bankruptcy Code.

(h) Date of Termination. For purposes of this Agreement, “Date of Termination” shall mean the date on which Executive’s termination of employment with the Company occurs.

(i) Effective Date. The Effective Date of this Agreement shall be the date first indicated above.

(j) Non-Competition Period. For purposes of this Agreement, the “Non-Competition Period” will be the period described in Schedule A.

(k) Person. For purposes of this Agreement, “Person” shall mean an individual, corporation, partnership, limited liability company, limited liability partnership, syndicate, person, trust, association, organization, or other entity, including any Governmental Entity, and including any successor, by merger or otherwise, of any of the foregoing.

(l) Company. For purposes of this Agreement, the “Company” shall mean DRG and its Affiliates.

2. EMPLOYMENT. Executive acknowledges and agrees that, unless Company and Executive have entered an employment agreement approved by the CEO of Company, his/her employment with the Company is at-will in nature, and nothing herein shall be construed as a guarantee of continued employment for a specific period or under particular terms or otherwise as having altered Executive’s at-will status.

4

3. CONFIDENTIALITY, NONCOMPETITION, ETC.

(a) Confidentiality.

(i) Executive acknowledges that the business of the Company is intensely competitive and that Executive’s employment by the Company has required and will require that Executive have access to and knowledge of confidential information of the Company, which the Company has provided to Executive in the past and hereby agrees to continue to provide to Executive during his/her future employment as necessary to perform his/her assigned duties. Such confidential information includes, but is not limited to, formulae, manufacturing processes, distribution systems, research and development methods and techniques, the identity of the Company’s customers, the identity of the representatives of customers with whom the Company has dealt, the kinds of services provided by the Company to customers and offered to be performed for potential customers, the manner in which such services are performed or offered to be performed, the service needs of actual or prospective customers, pricing information, information concerning the creation, acquisition or disposition of products and services, customer maintenance listings, computer software applications and other programs, personnel information and other trade secrets (the “Confidential Information”). Confidential Information shall not include information which (w) was publicly available prior to the date hereof, (x) was known by Executive from a source other than through Executive’s employment with, or service as a director of, the Company, (y) is acquired by Executive from a third party who was not subject to any restrictions as to its disclosure, or (z) becomes publicly available subsequent to the date hereof, other than as a result of an action by Executive. Executive expressly acknowledges the trade secret status of the Confidential Information and that the Confidential Information constitutes a protectable business interest of the Company. Executive further acknowledges that the direct or indirect disclosure of any such Confidential Information would place the Company at a competitive disadvantage and would do damage, monetary or otherwise, to the Company’s business and that the engaging by Executive in any of the activities prohibited by this Section 3 may constitute improper appropriation and/or use of such information and trade secrets. Executive further acknowledges that by engaging in Competition (as defined below) with the Company, Executive necessarily would rely on and use some or all of the Confidential Information.

(ii) The Company and Executive agree that, for purposes of this Section 3, except as otherwise provided, the business of the Company shall mean the business conducted by the Company, or business that the Company has definitive plans to conduct, during the period of Executive’s employment by the Company. Executive acknowledges that the Company engages in its business throughout the world.

5

(iii) During Executive’s employment by the Company and at all times following the termination of Executive’s employment for any reason, Executive shall not, directly or indirectly, whether individually, as a director, stockholder, owner, partner, employee, principal or agent of any business, or in any other capacity, make known, disclose, furnish, make available or utilize any of the Confidential Information, other than in the proper performance of the duties contemplated herein, or as required or requested by a court of competent jurisdiction or other administrative or legislative body; provided, however, that, in such event, Executive shall promptly notify the Company so that the Company may seek a protective order or other appropriate remedy. If reasonably practicable, Executive shall notify the Company prior to disclosing any of the Confidential Information to a court or other administrative or legislative body. Executive agrees to return all Confidential Information, including all photocopies, extracts and summaries thereof, and any such information stored electronically on tapes, computer disks or in any other manner to the Company at any time upon request by the Company and upon the termination of his/her employment for any reason.

(b) Non-Competition. During the Non-Competition Period, Executive shall not (i) in any city, town, county, parish or other municipality in any state of the United States, or (ii) in any other market in the world that the Company or any of its successors or assigns engages in, or during the Term, has definitive plans to engage in, its business, directly or indirectly engage in Competition (as defined below); provided, however, that it shall not be a violation of this sub-paragraph for Executive to become the registered or beneficial owner of up to five percent (5%) of any class of the capital stock of a competing corporation registered under the Securities Exchange Act of 1934, as amended, provided that Executive does not actively participate in the business of such corporation until such time as this covenant expires.

(c) Definition of Competition. For purposes of this Agreement, “Competition” means, for Executive’s benefit or for the benefit of any other Person, firm or entity, any of the following:

(i) engaging in, or otherwise being employed by or acting as a consultant or other service provider or lender to, or being a director, officer, employee, principal, licensor, trustee, broker, agent, stockholder, member, owner, joint venturer or partner of, any other business or organization anywhere in the world which directly competes with the business of the Company as the same shall be constituted at any time during, or as to which the Company had specific plans known to Executive to engage in during or following, Executive’s employment;

(ii) soliciting from any customer doing business with the Company as of Executive’s Date of Termination business directly competitive with the business of the Company with such customer or such party; or

6

(iii) soliciting from any potential customer of the Company known to Executive business that is directly competitive with the business of the Company which has been the subject of a written or oral bid, offer or proposal by the Company known to Executive, or of substantial preparation known to Executive with a view to making such a bid, proposal or offer, within six (6) months prior to Executive’s Date of Termination.

(d) Solicitation of Company Employees. During Executive’s employment with the Company and continuing through the date that is three (3) years after Executive’s Date of Termination for any reason, Executive will not solicit the employment or services of, or hire, any individual who is employed by or known by Executive to be a consultant to the Company. In the event Executive’s employment with the Company has ended, the foregoing restriction on solicitation and hiring shall apply to any individual who was employed by or known by Executive to be a consultant to the Company upon the Date of Termination or within six (6) months prior thereto, unless such Person is not an employee of, or a consultant to, the Company at the time of such solicitation by Executive and has not been an employee of, or consultant to the Company for six (6) months prior thereto.

(e) Acknowledgements Regarding Covenants. Executive acknowledges that (i) the market for the Company’s business extends throughout the United States and the rest of the world, and that Executive, individually and through his/her status as an officer, is among a limited number of people engaged in the Company’s business on a nationwide and global basis; (ii) the scope and duration of the restrictive covenants contained herein are reasonable and necessary to protect the value of the Company’s Confidential Information given the nature of such Confidential Information and of the Company’s business; and (iii) the restrictive covenants and the other agreements contained herein are an essential part of this Agreement. Executive further represents and warrants and acknowledges and agrees that Executive has been, or has had the opportunity to be, fully advised by counsel in connection with the negotiation, preparation, execution and delivery of this Agreement.

(f) Non-Disparagement. Executive agrees that both during and after termination of this Agreement he/she shall not make any statement, written or verbal, in any forum or media, or take any action, that is intended to injure or damage the goodwill, reputation or business prospects of the Company; provided, however, that the foregoing shall not apply to or restrict in any way the communication of information by Executive to any state or federal law enforcement or administrative agency or in a court, arbitration or administrative proceeding, and Executive will not be in breach of the covenant contained above solely by reason of such communication or testimony.

7

(g) Remedies. In the event Executive breaches any of the provisions of this Section 3, the Company and its successors or assigns shall have the following rights and remedies, each of which shall be independent of the others and severally enforceable, and each of which shall be in addition to, and not in lieu of, any other rights or remedies available to the Company or any of its successors or assigns at law or in equity under this Agreement or otherwise:

(i) The right and remedy to have each and every one of the covenants in this Section 3 specifically enforced and the right and remedy to obtain injunctive relief, it being agreed that any breach or threatened breach of any of the non-competition or other restrictive covenants and agreements contained herein would cause irreparable injury to the Company and its successors or assigns and that money damages would not provide an adequate remedy at law to the Company and its successors or assigns.

(ii) Executive acknowledges and agrees that the restrictive covenants and agreements contained herein are reasonable and valid in geographic, temporal and subject matter scope and in all other respects. If, however, any arbitrator or court subsequently determines that any of such covenant or agreement, or any part thereof, is invalid or unenforceable as written, then such provision shall be reformed to the extent necessary (and to no greater extent) to be valid and enforceable. If such provision cannot be so reformed, it shall be deemed struck by the parties and the remainder of such covenants and agreements shall not thereby be affected and shall be given full effect without regard to the invalid portions.

(iii) If any arbitrator or court determines that any of the restrictive covenants and agreements, or any part thereof, is unenforceable because of the duration or scope of such provision, such arbitrator or court shall have the power to reduce the duration or scope of such provision, as the case may be, and, in its reduced form, such provision shall then be enforceable to the maximum extent permitted by applicable law.

4. RETURN OF COMPANY PROPERTY. Executive agrees that following the termination of employment for any reason, Executive shall return all property of the Company and any of its subsidiaries and any divisions thereof which is then in or thereafter comes into Executive’s possession, including, but not limited to, documents, contracts, agreements, plans, photographs, books, notes, electronically stored data and all copies of the foregoing as well as any automobile or other materials or equipment supplied by the Company to Executive.

8

5. OWNERSHIP OF INVENTIONS. Executive shall disclose promptly, to such person(s) as may be designated by the Company for this purpose from time-to-time, any and all information relating to all Inventions (as hereinafter defined) which Executive makes or conceives or first reduces to practice during his/her employment hereunder. The term “Inventions” for purposes of this Agreement shall mean all inventions, improvements, works of authorship, formulas, processes, methods, computer programs, databases, and trade secrets (whether patentable or not) made or conceived or first reduced to practice by Executive solely, or jointly with others, (i) in the performance of his/her duties, (ii) with the use of time, material or facilities of the Company, (iii) which relate to the Company’s business, including any actual or anticipated product, method, apparatus, substance or article of manufacture within the Company’s field of activity or its research and development efforts, or (iv) which results from or is suggested by work performed for the Company. Executive acknowledges that all Inventions shall be the exclusive property of the Company and, to the extent that the ownership of such Invention does not vest in the Company as a matter of law, he/she hereby assigns and shall continue to assign to the Company, without further compensation, his/her entire right, title and interest in and to all such Inventions and shall execute all documents which the Company may deem necessary with respect thereto. Executive shall make, at the sole discretion and expense of the Company, such applications for United States and foreign patents covering any Inventions as the Company may request. Executive shall execute, acknowledge and deliver all papers, including applications, renewals, assignments, and applications for re-issue, and do all other rightful acts which the Company may consider necessary, to secure the Company’s full rights to the Inventions to secure patents or other registrations thereon, and to enforce the Company’s rights therein. The foregoing obligations shall survive the termination of employment with the Company; provided, however, that the Company will compensate Executive at a reasonable rate after such termination for time or expenses actually spent at the Company’s request on such matters.

Executive represents, warrants and covenants that: (i) he/she does not have applications for patents pending, either domestic or foreign, (ii) there is no invention now in his/her possession which he/she will claim to be excluded herefrom, (iii) his/her performance of the foregoing disclosure and assignment provisions, and his/her performance of his/her duties as an employee of the Company will not breach any invention assignment or proprietary information agreement with any former employer or other party, and (iv) he/she will not bring to the Company or use in the performance of his/her duties with the Company any documents or materials of a former employer or third party that are not generally available to the public or have not been legally transferred to the Company.

6. SEVERANCE UPON TERMINATION WITHOUT CHANGE IN CONTROL.

(a) Time of Termination. Notwithstanding any provision of this Agreement to the contrary, the employment of Executive hereunder shall terminate on the first to occur of the following dates:

(i) the date of Executive’s death or Disability (as defined above);

(ii) the date on which the Company shall give Executive written notice of termination with or without Cause (as defined below);

(iii) the date on which Executive gives the Company written notice of Voluntary Termination with or without Good Reason (as defined below).

9

(b) Payments After Involuntary Termination Without Cause. In the event Executive’s employment hereunder is involuntarily terminated by the Company without Cause (and provided that such termination is not within two (2) years following a Change in Control as defined in Section 7 below), subject to Executive’s compliance with Section 6(d), Executive (or the duly-appointed personal representative of Executive’s estate, if applicable) shall be entitled to receive, as Executive’s sole and exclusive remedy, (i) a payment equal to “Standard Severance Amount” defined in Schedule A, payable in a lump sum payment and subject to withholding of all applicable taxes with respect thereto and deductions for insurance contributions), (ii) any earned but unpaid salary and payment for accrued but unused vacation days, subject to and in accordance with Company policies, through the Date of Termination, (iii) any bonus amount under the Company’s Annual Incentive Plan previously earned in full but not yet paid for fiscal years of the Company prior to the fiscal year in which the Date of Termination occurs, and (iv) continued medical, dental, disability, and life coverage as provided to Executive and his/her eligible dependents immediately prior to such termination for one (1) year following such termination and the Company shall reimburse Executive on a monthly basis for the difference between the amount Executive pays to effect and continue such coverage and the employee contribution amount that active executives of the Company pay for the same or similar coverage.

(c) Termination for Cause or Voluntary Termination With or Without Good Reason. The Company shall be entitled at any time, upon written notice to Executive, to terminate Executive’s employment hereunder for Cause. In the event that Executive’s employment hereunder shall be terminated for Cause, or due to a Voluntary Termination by Executive with or without Good Reason, Executive shall be entitled to receive, as his/her sole and exclusive remedy, (i) any earned but unpaid salary and payment for accrued but unused vacation days, subject to and in accordance with Company policies, through the Date of Termination and (ii) any bonus amount under the Company’s Annual Incentive Plan previously earned in full but not yet paid for fiscal years of the Company prior to the fiscal year in which the Date of Termination occurs.

(d) Release Requirement for Post-Termination Payments. As condition to the receipt of any severance benefits pursuant to Section 6 or Section 7, Executive shall execute, and not revoke, a release within 52days of the Date of Termination, in the form attached hereto as Schedule B, with such changes as the Company may determine are necessary or reasonably required to take into account applicable state or federal law, releasing the Company, and its subsidiaries, and its officers, directors, employees, and agents, from any and all claims and from any and all causes of action of any kind or character, including, but not limited to, all claims and causes of action arising out of Executive’s employment with the Company or the termination of such employment; provided that Executive shall not be expected to waive any rights accruing under this Agreement; and provided further that if Executive refuses to sign such release Executive will still be bound to his/her obligations under this Agreement as if Executive signed such release and received severance benefits pursuant to Section 6 or Section 7. Notwithstanding the foregoing, nothing in the required release or in any other provision of this Agreement shall alter any rights Executive may have (i) with regard to equity awards pursuant to the controlling grant agreements and plan documents, and (ii) with regard to indemnification rights that may exist by virtue of Executive’s previous employment with the Company.

10

7. SEVERANCE UPON TERMINATION FOLLOWING A CHANGE IN CONTROL.

(a) Termination Following Change in Control. In the event Executive’s employment hereunder shall terminate as a result of (i) termination by the Company without Cause, or (ii) Voluntary Termination by Executive with Good Reason, within two (2) years following the occurrence of a Change in Control, subject to Executive’s compliance with Section 6(d), Executive (or the duly-appointed personal representative of Executive’s estate, if applicable) shall be entitled to receive, as Executive’s sole and exclusive remedy, (i) a payment equal to the “Change-In-Control Severance Amount” defined in Schedule A, payable in a lump sum payment and subject to withholding of all applicable taxes with respect thereto and deductions for insurance contributions), (ii) any earned but unpaid salary and payment for accrued but unused vacation days, subject to and in accordance with Company policies, through the Date of Termination, (iii) any bonus amount under the Company’s Annual Incentive Plan previously earned in full but not yet paid for fiscal years of the Company prior to the fiscal year in which the Date of Termination occurs, and (iv) continued medical, dental, disability, and life coverage as provided to Executive and his/her eligible dependents immediately prior to such termination for two (2) years following such termination and the Company shall reimburse Executive on a monthly basis for the difference between the amount Executive pays to effect and continue such coverage and the employee contribution amount that active executives of the Company pay for the same or similar coverage.

8. EXCISE TAX.

(a) Reduction. In the event it shall be determined that any payment or distribution in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement (including, without limitation, the accelerated vesting of incentive or equity awards held by Executive) or otherwise (“Payments”) (i) constitute “parachute payments” within the meaning of Section 280G of the Code, and (ii) but for this Section 8 would be subject to the excise tax imposed by Section 4999 of the Code, or any comparable successor provisions (the “Excise Tax”), then the Payments hereunder shall be either (a) provided to Executive in full, or (b) provided to Executive as to such lesser extent which would result in no portion of such benefits being subject to the Excise Tax, whichever of the foregoing amounts, when taking into account applicable federal, state, local and foreign income and employment taxes, the Excise Tax, and any other applicable taxes, results in the receipt by Executive, on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under the Excise Tax. If a reduction in Payments constituting “parachute payments” is necessary, the Payments hereunder shall be reduced in a manner that provides Executive with the best economic benefit and, to the extent any portions of the Payments hereunder are economically equivalent with each other, each will be reduced pro rata.

11

(b) Other Terms. All determinations required to be made under this Section 8 shall be made by the Company’s accounting firm (the “Accounting Firm”). The Accounting Firm shall provide detailed supporting calculations both to the Company and Executive. All fees and expenses of the Accounting Firm shall be borne solely by the Company. Absent manifest error, any determination by the Accounting Firm shall be binding upon the Company and Executive. For purposes of making the calculations required by this Section 8, the Accounting Firm may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of the Code and other applicable legal authority. The Company and Executive shall furnish to the Accounting Firm such information and documents as the Accounting Firm may reasonably request in order to make a determination under this Section 8.

9. TIME OF PAYMENT; SECTION 409A.

(a) Time of Payment. Unless otherwise provided in this Agreement or the Company’s Annual Incentive Plan, all of the payments due to Executive under Sections 6(b), 6(c) and 7(a) above shall be made on the sixtieth (60th) day following the Date of Termination.

(b) Section 409A of the Code. Notwithstanding anything to the contrary contained herein, this Agreement is intended to satisfy the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and the Treasury Regulations and other guidance thereunder. Accordingly, all provisions herein, or incorporated by reference, shall be construed and interpreted in a manner which is either exempt from or compliant with Section 409A of the Code. Further, for purposes of Section 409A of the Code, each payment of compensation under this Agreement shall be treated as a separate payment of compensation. Any reimbursement or in-kind benefit provided under this Agreement which constitutes a “deferral of compensation” within the meaning of Treasury Regulation Section 1.409A-1(b) shall be made or provided in accordance with the requirements of Section 409A of the Code, including, where applicable, the requirement that (i) any reimbursement is for expenses incurred during the period of time specified in this Agreement, (ii) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during a calendar year may not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year, (iii) the reimbursement of an eligible expense will be made no later than the last day of the calendar year following the year in which the expense is incurred, and (iv) the right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit. Further notwithstanding anything to the contrary in this Agreement, with respect to any amounts payable to Executive under this Agreement in connection with a termination of Executive’s employment that would be considered “non-qualified deferred compensation” under Section 409A of the Code, in no event shall a termination of employment be considered to have occurred under this Agreement unless such termination constitutes Executive’s “separation from service” with the Company as such term is defined in Treasury Regulation Section 1.409A-1(h), and any successor provision thereto.

12

(c) Specified Employee Postponement. Notwithstanding any provision in this Agreement to the contrary, if the payment of any compensation or benefit hereunder (including, without limitation, any severance benefit) would be subject to additional taxes and interest under Section 409A of the Code because the timing of such payment is not delayed as provided in Section 409A(a)(2)(B) of the Code, then any such payment or benefit that Executive would otherwise be entitled to during the first six (6) months following the Date of Termination shall be accumulated and paid or provided, as applicable, on the date that is six (6) months and one (1) day after the Date of Termination (or if such date does not fall on a business day of the Company, the next following business day of the Company), or such earlier date upon which such amount can be paid or provided under Section 409A of the Code without being subject to such additional taxes and interest.

(d) Right to Consult a Tax Advisor. Notwithstanding any contrary provision in this Agreement, Executive shall be solely responsible for any risk that the tax treatment of all or part of any payments provided by this Agreement may be affected by Sections 409A or 280G of the Code, which may impose significant adverse tax consequences, except that Executive shall not be liable for any failure to report or failure to withhold penalties asserted against the Company. Because of the potential tax consequences, Executive has the right, and is encouraged by this paragraph, to consult with a tax advisor of his/her or her choice before signing this Agreement.

10. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement between the parties with respect to its subject matter hereof and merges and supersedes all prior discussions, agreements and understandings of every kind and nature between them. This Agreement may not be changed or modified except by an agreement in writing, signed by the parties hereto.

13

11. EACH PARTY THE DRAFTER. This Agreement and the provisions contained herein shall not be construed or interpreted for or against any party to this Agreement because that party drafted or caused that party’s legal representative to draft any of its provisions.

12. WAIVER. The failure of either party to this Agreement to enforce any of its terms, provisions, or covenants shall not be construed as a waiver of the same or of the right of such party to enforce the same. Waiver by either party hereto of any breach or default by the other party of any term or provision of this Agreement shall not operate as a waiver of any other breach or default.

13. SEVERABILITY. In the event that any one or more of the provisions of this Agreement shall be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remainder of the Agreement shall not in any way be affected or impaired thereby. Moreover, if any one or more of the provisions contained in this Agreement shall be held to be excessively broad as to duration, activity or subject, such provisions shall be construed by limiting and reducing them so as to be enforceable to the maximum extent allowed by applicable law.

14. NOTICES. Any notice given hereunder shall be in writing and shall be deemed to have been given when delivered by messenger or courier service (against appropriate receipt), or mailed by registered or certified mail (return receipt requested), addressed as follows:

If to the Company:

Dresser-Rand Group Inc.

West8Tower, Suite 1000

10205 Westheimer

Houston, Texas 77042

Attention: General Counsel

If to Executive:

at the home address of record as last provided

to the Company by Executive

or at such other address as shall be indicated to either party in writing. Notice of change of address shall be effective only upon receipt.

15. ARBITRATION; EXPENSES OF ENFORCEMENT. Except as otherwise specifically provided in this Agreement, the Company and Executive agree to submit exclusively to final and binding arbitration any and all disputes or disagreements relating to or concerning the interpretation, performance or subject matter of this Agreement in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration Association (“AAA”) using a mutually acceptable single arbitrator. The arbitration will take place in Houston, Texas. Executive and the Company agree that the decision of the arbitrator will be final and binding on both parties. Arbitration shall be commenced by either party filing a demand for arbitration with the AAA within 60 days after such dispute has arisen. Each party in such an arbitration proceeding shall be responsible for the costs and expenses incurred by such party in connection therewith (including attorneys’ fees) which shall not be subject to recovery from the other party in the arbitration except that any and all charges that may be made for the cost of the arbitration and the fees of the arbitrator which shall in all circumstances be paid by the Company. Any court having jurisdiction may enter a judgment upon the award rendered by the arbitrator, but any action seeking such a judgment must be filed in the forum described in Section 17 hereof. Notwithstanding the provisions of this Section 15, the Company may, if it so chooses, bring an action in any court of competent jurisdiction for injunctive relief to enforce Executive’s obligations under Sections 3, 4, or 5 hereof.

14

16. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas, without regard to its conflict of law rules.

17. JURISDICTION; FORUM; JURY-TRIAL WAIVER. By the execution and delivery of this Agreement, the Company and Executive submit to the personal jurisdiction of and venue in any state or federal court in the City of Houston, County of Harris, State of Texas in any suit or proceeding arising out of or relating to this Agreement. To the extent that either party hereto has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, the parties each irrevocably waives such immunity in respect of its obligations with respect to this Agreement. This Section 17 is subject to the provisions of Section 15 hereof. THE PARTIES HERETO AGREE THAT THEY HEREBY IRREVOCABLY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION TO ENFORCE, OR INTERPRET, OR OTHERWISE RELATED TO THE PROVISIONS OF THIS AGREEMENT.

18. DODD-FRANK ACT. As a condition of the Agreement, Executive (i) shall abide by any compensation recovery, recoupment, anti-hedging or other policy applicable to executives of the Company and its Affiliates, as may be in effect from time to time, as approved by the Board or a duly authorized committee thereof or as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank Act”) or other applicable law, and (ii) acknowledges and agrees that the Agreement shall be deemed automatically amended as may be necessary from time to time to ensure compliance with such policies, the Dodd-Frank Act, or other applicable law.

19. INTERPRETATION. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words “include” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.”

20. COUNTERPARTS. This Agreement may be executed in one or more counterparts, which, together, shall constitute one and the same agreement.

15

21. CONFLICT. In the event of a conflict between the terms of this Agreement and the terms of any present or future plan, policy or procedure of the Company or any agreement between the Company and Executive, including but not limited to a stock option agreement or a restricted share agreement, the terms of this Agreement shall take precedence and govern.

22. TERM AND TERMINATION. The term of this Agreement (the “Term”) shall commence on the Effective Date and end on the anniversary of the Effective Date first following six months prior notice by DRG of its election to terminate the Agreement, unless prior to DRG giving such notice or prior to the date the Agreement would otherwise terminate, either:

(a) the employment of Executive is terminated by the Company without Cause (and provided that such termination is not within two (2) years following a Change in Control as defined in Section 7), in which case the Term shall end on the last day of the one-year period following the Date of Termination; or

(b) a Change in Control shall have occurred, in which case the Term shall end on the last day of the two-year period beginning on the date following the occurrence of a Change in Control (as applicable, the “Agreement Termination Date”). The rights and obligations of the parties hereunder arising before, on, or after the Agreement Termination Date, including, without limitation, the obligation of the Company to make payments pursuant to Sections 6 and 7, if any, and the obligations of Executive to honor the restrictive covenants shall survive the termination of the Agreement until fully discharged or satisfied.

[Remainder of page intentionally left blank; signature page to follow]

16

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on the day and year first above written.

DRESSER-RAND GROUP INC.

By:

Name:

Title:

EXECUTIVE

By:

17

SCHEDULE A

For purposes of the foregoing Agreement, the additional terms listed below shall have the definitions indicated.

(a) Standard Severance Amount. For purposes of this Agreement, “Standard Severance Amount” shall mean an amount equal to             times Executive’s Base Salary (determined as of the Date of Termination). For purposes of this definition, Executive’s Base Salary shall be determined without regard to any reduction in compensation that would otherwise constitute Good Reason under Section 1(f)(ii) of this Agreement occurring within three months preceding the Date of Termination.

(b) Change-In-Control Severance Amount. For purposes of this Agreement, “Change-In-Control Severance Amount” shall mean an amount equal to             times the sum of Executive’s Base Salary and annual incentive at target (determined as of the Date of Termination). For purposes of this definition, Executive’s Base Salary shall be determined without regard to any reduction in compensation that would otherwise constitute Good Reason under Section 1(f)(ii) of this Agreement occurring within three months preceding the Date of Termination.

(c) Non-Competition Period. For purposes of this Agreement, the “Non-Competition Period” shall be the period during the Term and if Executive’s employment has terminated during the Term continuing through the later of (i) the date that is one (1) year after Executive’s Date of Termination, or (ii) the date that is two (2) years after Executive’s Date of Termination in the event Executive’s employment terminates as a result of termination by the Company without Cause or Voluntary Termination by Executive with Good Reason if either occurs within two (2) years following the occurrence of a Change in Control.

18

SCHEDULE B

DO NOT SIGN PRIOR TO

FINAL DAY OF EMPLOYMENT

RELEASE AGREEMENT

This RELEASE AGREEMENT (“Release Agreement”) is made between DRESSER-RAND GROUP INC., a Delaware corporation (the “Company”) and            (“Executive”).

WITNESSETH

WHEREAS, Executive and the Company have entered into a Confidentiality, Non-Compete, Severance, and Change In Control Agreement dated as of             , 201     (the “Agreement”);

WHEREAS, pursuant to Sections 6 and 7 of the Agreement, the Company has agreed to provide certain severance payments to Executive if Executive executes this Release Agreement and does not revoke Executive’s consent to this Release Agreement; and

WHEREAS, this Release Agreement and the Company’s obligations under Sections 6 and 7 of the Agreement (as may be applicable) shall become effective only upon the “Effective Date” of this Release Agreement (as defined below).

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein and for other good and valuable consideration, the receipt of which is mutually acknowledged, the Company and Executive agree as follows:

1. Release.

(a) Executive, on behalf of himself, his/her heirs, executors, administrators, successors and assigns, hereby releases, discharges in full and agrees to waive and forego any right he or she may have to commence a lawsuit against the Company, its predecessors, successors, parents, subsidiaries, operating units, Affiliates, divisions and the agents, representatives, officers, directors, shareholders, employees and attorneys of each of the foregoing (individually and collectively called the “Company Releasees”), from and for all rights, claims, debts, liabilities, demands, obligations, promises, acts, agreements, costs, expenses, damages, actions and causes of action, whether in law or in equity, whether known or unknown, suspected or unsuspected, arising from or in any way relating to Executive’s employment with, and termination from, the Company up to and through the Effective Date, including but not limited to, any and all claims pursuant to Title VII of the Civil Rights Act of 1964, 42 U.S.C. §2000e, et seq., as amended by the Civil Rights Act of 1991, which prohibits discrimination in employment based on race, color, creed, national origin, religion or sex; the Civil Rights Act of 1866, 42 U.S.C. §§1981, 1983 and 1985, which prohibits violations of civil rights; the Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. §621, et seq., which protects certain employee benefits; the Americans with Disabilities Act of 1990, as amended, 42 U.S.C. §12101, et seq., which prohibits discrimination against the disabled; the Age Discrimination in Employment Act of 1967, 29 U.S.C.§621, et seq., as amended by the Older Workers Benefit Protection Act of 1990, which prohibits discrimination against those 40 years of age and older (the “ADEA”); the Family and Medical Leave Act of 1993, 29 U.S.C. §2601, et seq., as amended, which provides certain leave rights for medical and other circumstances; the Fair Labor Standards Act, 42 U.S.C. §201, et seq., including the Wage and Hour Law relating to payment of wages; the Worker Adjustment and Retraining Notification Act, which requires certain notices in the event of plant shutdowns and mass layoffs; the Uniformed Services Employment and Reemployment Rights Act of 1994, as amended; and all other federal, state or local laws or regulations. This Release also includes, but is not limited to, a release of any claims for breach of contract, tortious or negligent conduct, mental pain and anguish, impairment of economic opportunities, unlawful interference with employment rights, defamation, intentional or negligent infliction of emotional distress, fraud, misrepresentation, wrongful or constructive discharge, retaliation, wrongful discharge in violation of public policy, breach of any express or implied covenant of good faith and fair dealing, bad faith, unpaid hours worked, overtime pay, vacation pay, punitive damages, compensatory damages, back pay, reinstatement, front pay, liquidated damages, injunctive and other equitable relief, costs or attorneys’ fees, based on or arising from or in any way relating to Executive’s employment with the Company and/or termination of employment. Executive is not waiving any rights or claims that may arise under the ADEA or otherwise after the Effective Date, and this Release Agreement shall not include any rights provided under the bylaws of the Company or its parents and the Company’s benefit plans and agreements with Executive related thereto, including but not limited to stock options, and restricted stock plans and agreements.

19

THE PRECEDING PARAGRAPH MEANS THAT, UPON RECEIPT OF THE PAYMENT DESCRIBED IN THIS RELEASE, EXECUTIVE WILL HAVE WAIVED ANY RIGHT EXECUTIVE MAY HAVE TO BRING A LAWSUIT OR MAKE ANY LEGAL CLAIM OR DEFENSE AGAINST THE COMPANY RELEASEES BASED ON ANY ACTIONS TAKEN BY THE COMPANY RELATED TO THE SUBJECT MATTER OF THIS RELEASE UP TO AND INCLUDING THE EFFECTIVE DATE.

(b) Executive shall execute the Release Agreement on a date which is no earlier than the date upon which Executive’s employment is terminated.

20

(c) Executive acknowledges and agrees that the Company has fully satisfied any and all obligations owed to Executive arising out of Executive’s employment with the Company, exclusive of any ongoing obligations of the Company under the Agreement (including but not limited to the obligation to provide severance pay and benefits to Executive under Sections 6 and 7 thereof) and any rights provided under the Company’s bylaws and the Company’s benefit plans and agreements with Executive related thereto, including but not limited to stock options, and restricted stock plans and agreements. Executive further acknowledges and agrees that the benefits to which Executive is entitled upon the effective date of this Release Agreement are in addition to anything of value to which Executive is otherwise entitled, and that the Company and the other Company Releasees have fully complied with their COBRA continuation coverage obligations.

(d) Executive represents that he/she has no complaints, charges, or lawsuits pending against the Company or any of the other Company Releasees. Executive further covenants and agrees that neither he/she nor his/her heirs, executors, administrators, successors or assigns will be entitled to any Personal recovery in any proceeding of any nature whatsoever against the Company or any of the other Company Releasees arising out of any of the matters released in this Section 1.

(e) Executive has resigned from all positions, if any, with the board of directors of the Company and any officer and/or director positions of any parent, subsidiary, or Affiliate of the Company.

2. Return of Company Property. Executive represents and agrees that Executive has returned to the Company all property of the Company or any of the Company Releasees, including, but not limited to, documents, contracts, agreements, plans, photographs, books, notes, reports, files, memoranda, records and software, credit cards, cardkey passes, door and file keys, computer access codes or disks and instructional manuals, and other physical or electronic property that Executive received and/or prepared or helped prepare in connection with Executive’s employment with the Company, and that Executive has not retained any copies, duplicates, reproductions or excerpts thereof.

3. No Admission of Wrongdoing. Nothing herein is to be deemed to constitute an admission of wrongdoing by the Company or any of the other Company Releasees.

4. Consultation with Attorney/Voluntary Agreement. Executive acknowledges that (i) the Company has advised and hereby does advise Executive of his/her right to consult with an attorney prior to executing this Release Agreement, (ii) Executive has carefully read and fully understands all of the provisions of this Release Agreement, and (iii) Executive is entering into this Release Agreement, including the releases set forth in Section 1 above, knowingly, freely and voluntarily in exchange for good and valuable consideration.

21

5. Consideration & Revocation Period.

(a) Executive acknowledges that he/she has been provided at least twenty-one (21) calendar days to consider the terms of this Release Agreement, although he/she may sign it sooner.

(b) Executive will have seven (7) calendar days from the date on which he/she signs this Release Agreement to revoke his/her consent to the terms of this Release Agreement. Such revocation must be in writing and must be addressed as follows: General Counsel, Dresser-Rand Group Inc., West8Tower, 10205 Westheimer, Houston, Texas 77042. Notice of such revocation must be received within the seven (7) calendar days referenced above. In the event of such revocation by Executive, this Release Agreement shall not become effective and Executive shall not have any rights to severance benefits under Section 6 or 7 of the Agreement.

(c) Provided that Executive does not revoke this Release Agreement, this Release Agreement shall become effective on the eighth (8th) calendar day after the date on which Executive signs this Release Agreement (the “Effective Date”).

6. Assignment. This Release Agreement is Personal to Executive and may not be assigned by Executive. This Agreement will inure to the benefit of the Company and the other Company Releasees and their successors and assigns.

7. Waiver and Amendments. Any waiver, alteration, amendment, or modification of any of the terms of this Release Agreement shall be valid only if made in writing and signed by the parties hereto; provided, however, that any such waiver, alteration, amendment, or modification is consented to on the Company’s behalf by a properly authorized corporate officer. No waiver by either of the parties hereto of their rights hereunder shall be deemed to constitute a waiver with respect to any subsequent occurrences or transactions hereunder unless such waiver specifically states that it is to be construed as a continuing waiver.

8. Severability and Governing Law. If any covenants or such other provisions of this Release Agreement are found to be invalid or unenforceable by a final determination of a court of competent jurisdiction (a) the remaining terms and provisions hereof shall be unimpaired and (b) the invalid or unenforceable term or provision hereof shall be deemed replaced by a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision hereof. THIS RELEASE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO ITS CONFLICT OF LAW RULES.

9. Section Headings and Definitions. The headings contained in this Release Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Release Agreement. Whenever the words “include” or “including” are used in this Release Agreement, they shall be deemed to be followed by the words “without limitation.” Capitalized terms not defined in this Release Agreement shall have the meaning given to such terms in the Agreement.

22

10. Entire Agreement. This Release Agreement and the Agreement constitute the entire understanding and agreement of the parties hereto regarding the employment and termintion of Executive. This Release Agreement supersedes all prior negotiations, discussions, correspondence, communications, understandings, and agreements between the parties relating to the subject matter of this Release Agreement, except that Sections 1.(j), 3., 4., 5., and Schedule A, Section (c) of the Agreement shall continue in full force and effect.

11. Jurisdiction; Forum. Executive acknowledges that any disputes under the Agreement or this Release Agreement shall be subject to the arbitration provisions of Section 15 of the Agreement. Subject to that provision, by the execution and delivery of this Release Agreement, Executive submits to the personal jurisdiction of any state or federal court of and for Houston, Harris County, Texas in any suit or proceeding arising out of or relating to this Release Agreement. To the extent that Executive may acquire any immunity from jurisdiction of any Texas court or from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to himself or his/her property, Executive irrevocably waives such immunity in respect of his/her obligations with respect to this Release Agreement. Executive agrees that an appropriate, convenient and non-exclusive forum for any and all disputes between the parties hereto arising out of this Release Agreement or the transactions contemplated hereby shall be in any state or federal court in the State of Texas.

12. Duplicative Payments and Benefits. Notwithstanding any provision of the Agreement or this Release Agreement to the contrary, the payments and benefits provided hereunder shall be in lieu of any payments and benefits that otherwise would be payable pursuant to any other severance policy or agreement of the Company (including the Dresser-Rand Company Severance Pay Plan) to the extent permitted by law and, if a severance payment or benefit is required by any law, plan, contract or other obligation in connection with (i) termination of employment with the applicable Affiliate of DRG that would trigger payments and benefits pursuant to Sections 6 or 7 of the Agreement, or (ii) by application of other obligations set forth in the Agreement or this Release Agreement, including the restrictive covenants, then any amount to be paid under the Agreement or this Release Agreement shall be reduced by the amount that is legally required to be paid pursuant to such law, plan, contract, or as a result of such other obligations, provided that said reduction shall not exceed amount to be paid under the Agreement or this Release Agreement. With respect to any reduction in the payment amount hereunder arising from a requirement pursuant to any law, plan or contract to make a payment for a restrictive covenant, the amount of the reduction shall be determined by taking into account the full duration of the restrictive covenant that would be applicable to the Executive.

23

13. Counterparts. This Release Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument. The execution of this Release Agreement may be by actual or facsimile signature.

IN WITNESS WHEREOF, the undersigned have executed this Release Agreement as of the dates indicated below.

DRESSER-RAND GROUP INC.

By:

Date:

Title:

Executive

Date:

24

EX-10.3

Exhibit 10.3

Plan Red

Relocation

Policy

Effective: July, 2008

Contents

Introduction	3
Homeowner Policy Summary	4
Renter Policy Summary	6
Relocation Program Eligibility	7
Conflict of Interest	7
National Do Not Call List Authorization	8
Relocation Repayment Agreement	8
Sarbanes-Oxley Act	8
Lump Sum Allowance	8
Temporary Living	9
Customized Web Site	10
Travel Arrangements	11
Selling Your Home	12
Home Sale Assistance Eligibility	12
Real Estate Agent Selection	13
Marketing Assistance	14
Guaranteed Buyout Option	15
Appraisal Process	16
Appraiser Selection Guide	17
Home Sale Incentive	17
Loss on Sale	19
Disclosure	19
Closing the Sale and Obtaining Your Equity	19
Direct Reimbursement of Closing Costs	20
Destination Assistance	21
AIReS Connect	21
Purchasing Your New Home	22
Equity Advance	22
New Home Closing Costs	22
New Home Mortgage	24
Family Transition Assistance	24
Moving Your Household Goods	25
Shipment	25
Automobiles	26
Storage	26
Valuation Protection	26
Tax Considerations	27
Tax Table	29
Attachment A- Relocation Repayment Agreement	30
Attachment B-Broker Exclusion Clause	33
Attachment C-National Do Not Call Authorization	34

	Plan Red Relocation Policy	Effective: March, 2007	2

INTRODUCTION

Congratulations on your upcoming relocation with Dresser-Rand. This is an exciting time for you and your family. It is also a challenging time as you prepare for the change.

Dresser-Rand wants the transition to be as smooth as possible. Therefore, we have prepared this relocation assistance guide for you and your family. This is a tool designed to assist you through the relocation process. This program reimburses you or pays on your behalf, the eligible expenses associated with your relocation including travel, temporary living expenses, home sale expenses, new home closing costs, and estimated federal, state and FICA taxes in the U.S. or provincial and revenue for Canada on expenses which are not tax deductible.

Throughout your relocation there are numerous personal, legal and tax issues to be considered. Making well informed decisions requires an understanding of Dresser-Rand’s relocation policy and your role in the process. Please take the time to read this guide carefully.

Dresser-Rand has partnered with American International Relocation Solutions, (AIReS), to assist you in coordinating your relocation within the United States and Canada. Upon receiving notification of your relocation, AIReS will assign a dedicated Program Manager who will be your primary point of contact throughout your move. Your Program Manager will navigate you through every step of the relocation process and answer any questions. Your Program Manager will also outline the information you need to provide AIReS so that your needs can be responded to quickly and appropriately. (See Attachment A for contact information.)

We encourage you to become fully involved in your move and to work closely with the professionals who have been made available to you. The more actively that you participate and provide information, the more effectively your Program Manager and others can serve you. Planning your move with a clear understanding of the policy will also help to avoid unpleasant surprises such as non-reimbursable costs. The most successful moves are those which are well planned.

Should interpretation of the policy be required, the ultimate authority will be that of the Dresser-Rand policy committee. Settlement of disputes arising from the provisions of this policy will be settled through arbitration.

Best wishes for a successful relocation!

	Plan Red Relocation Policy	Effective: March, 2007	3

HOMEOWNER POLICY SUMMARY

Benefit	Description
Eligibility	•     Full time, regular employee, relocating at the Company’s request
Web-site	•     Customized web access for destination relocation assistance
	•     Password provided by AIReS
Lump Sum	•     Lump sum payment equal to one month’s new annual base salary, minimum $9,000 and maximum $15,000. Covers all Home Finding, Temporary Living Expenses, other than the actual housing expense, Return Trips Home during Temporary Living, the Final Family Move and Miscellaneous expenses
	•     Payment is processed after initiation
	•     Tax assisted in the U.S. and over $650 in Canada
Home Sale Assistance	•     Property eligibility requirement
	•     Disclosure Requirement
	•     90 day Mandatory Marketing Assistance
	•     Amended Value Sale Incentive
	•     Appraised Value Offer
	•     Offer process starts after 30 days of marketing assistance and the offer can be accepted up to 90 days from the date of the offer
Loss on Sale	•     Current employee only and must be following marketing assistance guidelines for eligibility
	•     Employee will receive loss differential based on the original purchase price minus sale price (appraised value offer or amended value sale, whichever is higher) up to a maximum amount of $20,000
	•     Capital improvements are not included in the calculation
	•     Tax assisted
Equity Advance	•     Equity Loan-up to 90% of the employee’s home equity, based on the appraised value offer unless classified as a “key” officer under Sarbanes-Oxley
	•     Final Equity-Employee receives final equity upon acquisition or vacate date, whichever is later
	•     Employee is responsible for all financial payments on the home until acquisition or vacate date, whichever is later
Destination Assistance	•     AIReS acts as the employee advocate and makes first contact with a real estate agent or rental specialist based on housing needs in the destination
Temporary Living	•     Cost for housing direct billed to the Company
	•     Temporary Living expenses for 60 days
Home Purchase Closing	•     For a homeowner in the departure location only
Costs Assistance	•     Reimbursement of actual, reasonable, and customary buyer’s closing costs including typical inspections (general home inspection, termite, and/or radon)
	•     Origination fees up to 1% of the mortgage amount
	•     Discount points paid based on sliding interest rate scale (not automatically eligible for reimbursement; based on current interest rate)
	•     Tax assisted except for origination fees and discount points in the U.S. Not considered income in Canada
National Lender Program	•     Direct bill option in the U.S. through AIReS approved national lenders
Family Transition Assistance	•     AIReS will refer family members to appropriate transition counseling consultant
	•     Up to $1,500 worth of services will directly billed to Company, tax

	Plan Red Relocation Policy	Effective: March, 2007	4

Benefit	Description
	assisted in the U.S., not considered income in Canada
Household Goods Move	•     Packing, shipping, unloading, and debris pick-up
	•     Partial unpack
	•     $100,000 of valuation protection up to $5.00 per lb.
	•     Storage in-transit for up to 60 days
	•     Up to two automobiles shipped (by an open-air carrier) if the distance to the destination location exceeds 400 miles/650 kilometres
Tax Assistance	•     Assistance for federal, state, provincial, local, and FICA (based on destination location) determined using Dresser-Rand derived compensation only

Please note: All currencies are in the employee’s pay currency, except insurance and area touring charges.

	Plan Red Relocation Policy	Effective: March, 2007	5

RENTER POLICY SUMMARY

Benefit	Description
Eligibility	•     Full time, regular employee, relocating at the Company’s request
Web-site	•     Customized web access for destination relocation assistance
	•     Password provided by AIReS
Lump Sum	•     Lump sum payment equal to one month’s new annual base salary, maximum $15,000. Covers all Home Finding, Temporary Living Expenses, other than the actual housing expense, Return Trips Home during Temporary Living, the Final Family Move and Miscellaneous expenses
	•     Payment is processed after initiation
	•     Tax assisted in the U.S. Not considered income in Canada
Lease Cancellation	•     Up to the equivalent of two months’ former rent reimbursed for lease cancellation penalties and/or duplicate rent
	•     Tax assisted in the U.S. Not considered income in Canada
Destination Assistance	•     AIReS acts as the employee advocate and makes first contact with a real estate agent or rental specialist based on housing needs in the destination
Finder’s/Area Touring Fees	•     Reimbursement of actual expenses to secure a lease in the destination location up to a maximum amount equivalent to one month’s new rent
	•     Up to $500 for Area touring, if required
	•     Inclusion of a Transfer Clause in a new lease, should employee be relocated prior to the end of his/her lease
	•     Tax assisted in the U.S. Not considered income in Canada
Temporary Living	•     Cost for housing direct billed to the Company
	•     Temporary Living expenses for 60 days
Family Transition Assistance	•     AIReS will refer family members to appropriate transition counseling consultant
	•     Up to $1,500 worth of services will directly billed to Company, tax assisted in the U.S. Not considered income in Canada
Household Goods Move	•     Packing, shipping, unloading, and debris pick-up
	•     Partial unpack
	•     $100,000 of valuation protection up to $5.00 per lb.
	•     Storage in-transit for up to 60 days
	•     Up to two automobiles shipped (by an open-air carrier) if the distance to the destination location exceeds 400 miles/650 kilometres
Tax Assistance	•     Assistance for federal, state, provincial, local, and FICA (based on destination location) determined using Dresser-Rand derived compensation only

Please note: All currencies are in the employee’s pay currency, except insurance and area touring charges.

	Plan Red Relocation Policy	Effective: March, 2007	6

RELOCATION PROGRAM ELIGIBILITY

The Dresser-Rand relocation program is designed to facilitate a move that brings you substantially closer to your new work location within North America. This policy is applicable to the employee, spouse/domestic partner and dependent children less than 21 years of age living with the employee. To be eligible for this relocation package, the following criteria must be met:

• You must be an exempt full-time employee within the US. or Canada

• The transfer must be company-initiated.

• The distance between the former residence and the new work location must be 50 miles greater than the distance between the former residence and the former work location, per IRS guidelines in the United States or 40 kilometres in Canada according to the CCRA.

• In the United States, you must work full time at the new location for a minimum of thirty-nine (39) weeks within the first year after the transfer. Per IRS rules, moves that fall outside of these guidelines are considered to be fully taxable.

• In the United States, all reimbursable relocation expenses must be incurred within one year from the effective date of your transfer or hire.

• You must sign and return the Relocation Repayment Agreement to the AIReS Program Manager before any relocation benefits can be processed

Transfers for the convenience of the employee are not eligible for relocation benefits.

In the event that an additional member of your household is asked to relocate by Dresser-Rand, only one individual is eligible to receive relocation benefits. This applies when a husband and wife or employee and domestic partner/significant other are both accepting new jobs and being relocated to the same location.

Dresser-Rand reserves the right to end, suspend or amend the relocation policy. Further, Dresser-Rand retains ultimate discretionary authority to interpret the provisions of this policy and to determine eligibility for benefits. Please understand that nothing in this policy constitutes a contract or guarantee of employment.

Dresser-Rand recognizes that circumstances not specifically identified in this policy may arise. If a unique or special situation requires an exception, modification or other action not expressly outlined within this policy, approval must be obtained in writing by Human Resources before any expense is incurred.

CONFLICT OF INTEREST

You and/or spouse, domestic partner, parents, children and their spouses, domestic partner’s children and their spouses should not engage in any activity that might benefit you personally at the expense of the company, or that would be harmful to the company, without the express written consent of the company. For example,

	Plan Red Relocation Policy	Effective: March, 2007	7

finder’s fees, commissions from listing, selling or purchasing your residence, fees or rebates from transporting your household goods or vehicles, lease of rental automobiles, bridge loans to enable you to purchase a residence, fees to family members or friends for baby-sitting and temporary lodging would be a conflict of interest.

NATIONAL DO NOT CALL LIST AUTHORIZATION

You will be asked to sign an authorization allowing AIReS and related providers to contact you in the performance of services authorized on your behalf for matters specific to your relocation.

RELOCATION REPAYMENT AGREEMENT

Moving an employee requires a substantial investment by Dresser-Rand. Therefore, if you voluntarily cancel your move, resign within two years of your effective hire or transfer date or are terminated for gross misconduct, all relocation payments will cease and you will be required to repay a prorated portion of all the expenses incurred by Dresser-Rand for your relocation.

You must sign and return the Relocation Repayment Agreement (see Attachment B) to your AIReS Program Manager before any relocation benefits can be processed.

SARBANES-OXLEY ACT

Due to the Sarbanes-Oxley Act effective July 30, 2002, if you are classified as a Section 16b Executive Officer as set forth in the Proxy Statement filing submitted to the SEC, you may not be able to receive certain benefits in this program. Please discuss this with the Director of Global Compensation if you think you may be classified as a 16b Executive Officer to avoid possible penalties and fines to the Company.

	Plan Red Relocation Policy	Effective: March, 2007	8

LUMP SUM ALLOWANCE

You will be provided a Lump Sum Allowance which is intended to cover all expenses associated with:

• House Hunting Trip(s)

• Temporary Living Expenses, other than the actual housing expense which will be direct billed to Dresser-Rand

• Return Trips Home during Temporary Living

• Interim Living

• The Final Family Move when you and your family move to the new location.

• Pet Transportation

• Miscellaneous Expense Allowance

The funds are yours to spend for expenses incurred with your relocation. You may retain any portion of these funds not spent. Any shortfall of funds is to be covered by you at your expense. It is not necessary to submit individual expenses; however, you are encouraged to save your receipts for your personal records and tax reporting purposes. Your AIReS Program Manager will advise you of the process necessary to request your Lump Sum upon receipt of your signed repayment agreement.

The Lump Sum allowance is calculated based on one month’s new base salary with a maximum of $15,000. The minimum allowance for Homeowners is $9,000. There is no minimum for renters. The lump sum payment is in the employee home country currency.

Will my Lump Sum Be Enough?

Your allowance should cover the expenses normally associated with House Hunting, meals, incidental expenses and return trips home during Temporary Living and the Final Family Move. The lump sum is also to be used to cover expenses not covered by the program such as driver’s license(s), registration fees and security or utility deposits and extended interim living. The Lump Sum is for you to spend for your relocation needs. It is not a “bonus” for accepting a transfer. However, depending on your requirements and how you manage your spending you may have money left over to use for other things,

Suggestions for using a Lump Sum Effectively.

• Plan the events carefully

• Develop a timeline

• Work with your AIReS Program Manager to coordinate your real estate needs efficiently in scheduling your home finding trip only after the value for your current home has been determined. Become educated about the destination area and housing options by allowing your PM to coordinate listing, school and personal family needs information for you.

• Consider advance purchase airline tickets, with a Saturday night stay to reduce your cost.

	Plan Red Relocation Policy	Effective: March, 2007	9

Intra-U.S.: This payment is considered taxable income and will be tax assisted.

Intra-Canada: The allowance is taxable income and will be tax assisted when your earnings are updated. The first $650.00 of this allowance is considered non-taxable when used for miscellaneous items as outlined in the CCRA T4130 document. You will be required to sign a form stating that you have incurred $650 of incidental expenses (no receipts are required). For further information, please reference the section on Moving Expenses and non-accountable allowances in CCRA document T4130.

http://www.cra-arc.gc.ca/E/pub/tg/t4130/t4130-05e.pdf

TEMPORARY LIVING

Temporary living is available should it be necessary for you to live at your new location prior to moving your family, establishing a permanent residence, and/or you are unable to move into your home or apartment at the time of arrival at the new location. Your Program Manager will assist you in obtaining suitable living facilities.

Authorization includes:

• Up to 60 days of temporary living

Temporary living coverage considers that you may be faced with expenses at both the old and new location. If you are not maintaining expenses at the old location, temporary living expenses at the new location will not be covered.

Expenses associated with Temporary living will come from your Lump Sum and include such items as:

• Airfare

• Mileage at the company standard rate if driving personal automobile

• Meals

• Car rental

• Long distance phone calls

• Set up charges for one telephone line and basic cable

• Laundry

• Parking

• Etc.

Payment of Temporary Living accommodations only will be coordinated by AIReS and will be reported as taxable income. Tax assistance will be provided.

Temporary/Interim Living expenses are not taxable for moves within Canada.

	Plan Red Relocation Policy	Effective: March, 2007	10

CUSTOMIZED WEB SITE

AIReS offers a customized and secure private Internet web site that provides you with instant access to real time data 24/7 to track the status of your relocation. To protect your confidential information, the AIReS web site is a secure environment that requires a unique user ID and password for entry.

Your AIReS Program Manager will provide you with your user ID and initial password.

Using the Dresser-Rand Relocation web site you will be able to:

• Access data regarding relocation expense payments,

• Create a personalized moving timeline calendar,

• Links to information that allows you to narrow your home finding search and provides destination area information,

• Access to AIReS Connect that allows you to arrange for utilities and services in the destination area,

• Access interactive timeline tools, planners, and mortgage calculators.

TRAVEL ARANGEMENTS

Dresser-Rand’s preferred travel provider is:

American Express Travel

Travel should be coordinated through the company travel agency whenever possible.

Please Note: Corporate Travel can be used to book travel arrangements for discounts, however, expenses are to be paid from the Lump Sum Allowance. Failure to have the expenses directly charged to you constitutes fraud and could be grounds for termination.

	Plan Red Relocation Policy	Effective: March, 2007	11

SELLING YOUR HOME

Home Sale Assistance Eligibility

Home Sale Assistance is available for your primary residence at the time of transfer. Assistance is limited to occupied single family dwellings, condominiums, or townhouses in North America.

Home Sale Assistance is not available for cooperative apartments, duplexes, mobile homes, property sold under a land contract or other deferred passage-of-title arrangements, seasonal residences, farms, income producing properties, homes with excess acreage or additional lots, and properties that are zoned for agriculture. Properties where the employee is not in title and homes valued in excess of $1,000,000 will need prior Company approval.

Dresser-Rand reserves the right not to provide Home Sale Assistance to any property that is deemed cost prohibitive due to any of the following:

• Severe marketability problems

• Zoning or easement disputes

• Hazardous substances (such as but not limited to: radon, asbestos, synthetic stucco, LP siding, methamphetamines or the by-products of a “meth” lab);

• Cooperative apartments, mobile homes;

• Vacation/secondary homes;

• Homes that cannot be financed by a lending institution or are uninsurable;

• Homes uninhabitable or unmarketable due to the physical condition and/or homes that are structurally unsound;

• Homes that do not qualify for standard insurance rates

• Homes that do not comply with local building codes;

• Homes that are partially completed or are under substantial renovation;

• Investment or rental properties;

• Properties with excessive acreage for the area (+5 acres);

• Houseboats; and

• Vacant lots appraised as contributory value only.

In the event your home is not eligible for Home Sale Assistance, you may be reimbursed for normal and reasonable selling costs associated with the sale of your property. Please refer to the section entitled: “Direct Reimbursement of Closing Costs.”

	Plan Red Relocation Policy	Effective: March, 2007	12

Real Estate Agent Selection

Dresser-Rand understands that getting the best price for your home is vital to a successful relocation. Selection of a knowledgeable real estate broker is very important. Dresser-Rand has arranged for AIReS to provide you access to a network of the most qualified real estate agents available in your community who specialize in assisting relocating associates by participating in AIReS Broker/Agent Network Program. The AIReS Broker/Agent Network has been specially trained to effectively market your home as well as address the needs that are unique to relocation. In addition to giving you access to the most qualified agents in your area, use of one of these agents may relieve you of any pressure you may feel to use the services of a friend, relative or acquaintance in the real estate field.

AIReS will provide you with a list of qualified agents in your area from which to choose. We recommend you interview several brokers from our list to assess their ability to effectively market your home. Please advise them that you are considering using their services and have been referred by AIReS.

Do not sign a listing agreement until you have spoken with your Program Manager. Your selling agent must be registered with AIReS.

Some of the questions you might ask them to help you in your selection process are:

• What locations and price ranges are you most active in?

• How many homes similar to mine have you sold in the last 90 days?

• How do you intend to market my home (number of open houses, how often and where will my home be advertised)?

• What are the comparable home listings and sales you will or have used to arrive at your recommended list price?

Should you decide to list with a broker outside the broker network you must contact your Program Manager first. AIReS will then interview the realtor and verify that the agent is qualified. A registration form will be sent to the broker for signature and the listing process can begin.

Your listing agreement must include the Broker Exclusion Clause (See Attachment C). The exclusion clause protects you from having to pay a broker’s commission should you obtain a sale on your home through the Buyer Value Option. If your listing realtor has any questions regarding the exclusion clause, please contact your Program Manager before signing the listing agreement.

AIReS must sign the sale agreement in lieu of you, the seller. Do not sign any documents associated with the buyer’s offer to purchase.

	Plan Red Relocation Policy	Effective: March, 2007	13

Marketing Assistance

Dresser-Rand understands that getting the best price for your home is vital to a successful relocation. As such, Dresser-Rand has arranged for professional marketing assistance through AIReS’ Marketing Assistance Program. Your Program Manager will work in partnership with your listing agent to ensure that an effective marketing strategy on your home is always in place.

You must participate in the Marketing Assistance Program for a minimum period of 90 days to obtain benefits under this policy.

AIReS will provide you with a list of agents to choose from, and will order a Broker’s Market Analysis (BMA) from two realtors in order to develop a recommended list price and a probable sale price for your home. The Broker’s Market Analyses will also be used by your Program Manager in discussing a marketing strategy for your home. You must list your home no higher than 105% of the average of the two BMA’s provided they are within a 5% variance of one-another. If they are not, a third BMA will be ordered by your AIReS PM and the two closest will serve as the “Suggested Sales Price”.

The marketing strategy will include:

• Suggestions on how to prepare your home for sale

• A recommended listing price and anticipated sales price

• Information on competing properties for sale and recently closed comparable homes

• A designated buyer profile for your property

• Creative home sale promotion ideas

Your Program Manager will monitor the entire listing effort, including a review of homes currently listed in your area and an evaluation of recently closed properties, to ensure that a realistic pricing strategy is in place. Marketing Assistance also includes pro-active marketing-strategy calls, follow-up on buyer and Realtor feedback, follow-up on advertising and open house events. Your Program Manager will also make recommendations to adjust your price, advertising, terms, or conditions accordingly.

Present all offers to your Program Manager for review, approval and signature. Please include the following clause in any purchase agreement: “This offer is subject to the review and approval and signature of AIReS.”

During the sale approval process, your Program Manager will indicate any items that you have agreed to which may not be in your best interest or may not be reimbursable under the Dresser-Rand relocation program. Once the sale has been approved, your Program Manager will work with you and your realtor to coordinate and manage the closing through AIReS.

	Plan Red Relocation Policy	Effective: March, 2007	14

GUARANTEED BUYOUT OPTION AMENDED SALE PROGRAM

The following are the key elements and procedures for the Guaranteed Buyout Option Program in order to meet the IRS requirements. (The same procedure will be followed in Canada as the United States. While not a CCRA requirement, establishing two separate transactions meets certain local and provincial requirements and facilitates the process.):

Any transferred employee offered the Home Sale/Marketing Assistance and Guaranteed Buyout Option/ Amended Sale Program and who lists his or her home with a real estate agent must include a suitable exclusion clause (refer to the section entitled “Broker Exclusion Clause”) in the listing agreement whereby the listing agreement is terminated upon the sale of the home to either the employer or the relocation company. This is also to protect you so you will not owe the broker a commission in case you do not find a buyer and choose to accept the Appraised Value Offer, or you find an outside buyer pursuant to the Amended Sale program.

Under no circumstances should you accept a down payment from any potential buyer.

Under no circumstances should you sign an offer presented by any potential buyer.

You will need to enter into a binding contract (“Contract of Sale”) with AIReS once your buyer has completed all inspections, and all issues pertaining to the inspections have been resolved.

After the execution of the Contract of Sale with AIReS and after you have vacated the home, all of the burdens and benefits of ownership passes to AIReS.

The Contract of Sale between you and AIReS is unconditional and not contingent on any event, including the potential buyer obtaining a mortgage commitment.

Neither you, nor Dresser-Rand in the case of a relocation company transaction, exercise any discretion over the subsequent sale of the home by the relocation services company.

AIReS enters into a separate listing agreement with the real estate broker to assist with the resale of the property.

AIReS enters into a separate agreement to sell the home to the buyer.

AIReS arranges for the transfer of title to the buyer.

The purchase price eventually paid by the buyer has no effect on the purchase price paid to you.

If the above procedures are followed, there will be no tax liability to you for costs reimbursed for the sale of your home. In the event you do not follow these procedures, Dresser-Rand may reimburse the closing costs on the sale of your home, but this reimbursement will NOT be tax assisted/grossed up. These expenses are not considered income in Canada.

	Plan Red Relocation Policy	Effective: March, 2007	15

Appraisal Process

Should your home remain unsold after 30 days of the mandatory 90-day Marketing Assistance period, AIReS will begin the appraisal process which will lead to a Guaranteed Buyout Option, (GBO).

AIReS, on behalf of Dresser-Rand engages the services of professional appraisers to establish the appraised value of your home. Your appraised value offer is determined as the average of two appraisals as long as they are within 5% of each other. If the two are not within 5% of each other, a third appraisal will be ordered. Once the third appraisal is received, the appraisals will be calculated as follows: the two closest appraisals will be averaged and the furthest will not be included. Please note; your PM will order all appropriate inspections for your home simultaneously with the appraisal process. The Appraised Value Offer will be subject to all inspections being completed and clear. Remember, inspection results must be disclosed to all potential purchasers.

AIReS will provide you with a list of appraisers in your area. You will have the option to choose two appraisers and an alternate off the list.

To be eligible for the Appraised Value Offer, you must choose an appraiser that is approved by AIReS. If you would like to recommend an appraiser, your PM will conduct an interview with the appraiser to determine their qualifications. If AIReS deems the appraiser to be qualified to conduct a current fair market appraisal utilizing the approved ERC Appraisal Forms, they will be added to your selection list.

Once the Appraised Value is established, your PM will extend the Appraised Value Offer to you. You must immediately reduce your listing price to within 105% of the Appraised Value Offer if your current listing price is higher, in order to remain eligible to accept the Appraised Value Offer. You will have ninety (90) days to make a decision on the offer. During this time period it will be mandatory for you to market your home for a minimum of sixty (60) days using the Marketing Assistance Program. This program is designed to assist you in selling your home to an outside buyer and close with the relocation company through the amended sale program.

Think of the Appraised Value Offer as you would an offer from any other buyer. Although an independent appraisal process is used to decide how much to offer, the offer does not necessarily represent the highest (or lowest) amount other buyers would be willing to pay for your home. Rather, it should be considered as a “fall back offer” to be accepted only after you have thoroughly marketed your home and have concluded that it is the highest offer you expect to receive within your 90 day offer period.

	Plan Red Relocation Policy	Effective: March, 2007	16

Appraiser Selection Guide

The appraisers used by AIReS are professionals who recognize relocation appraising as a specialty and are committed to maintaining their independence, adhering to the highest standards of professional ethics, and providing the best possible accuracy and highest level of service quality. Below is a list of questions that you may wish to address individually when selecting your appraisers. This will help you select an appraiser who is best suited to your needs.

Experience

• Have you appraised other homes in my area recently?

• How long have you been an appraiser?

• Is appraising your full-time profession or do you also engage in other facets of Real Estate? (i.e. Broker)

Methodology

• May I provide you with comparable sales and a list of capital improvements for my appraisal?

• Will you need any information or documentation that I can assemble for you?

• How do you obtain and verify the market data information that will be utilized in the appraisal?

Timelines

• How quickly will you submit data to the relocation services company?

• If I select you as one of the appraisers, is there anything which would prevent you from completing this assignment on a timely basis?

Home Sale Incentive

A graduated home sale bonus will be paid on the net sales price of your home if you obtain a bona fide buyer within the first 90 days of the Marketing Assistance listing period to a maximum amount of $9,000. To be eligible for this incentive your must follow the Marketing Assistance Program guidelines outlined above. The Home Sale Incentive is for those employees that locate and negotiate an acceptable outside offer. (The acceptance of the Guaranteed buyout does not qualify for payment of the incentive.) The Home Sale Incentive is not eligible for gross up assistance. The incentive will be paid on the following schedule:

Contract within first 30 days:	3.0	%
Contract within days 31-90:	2.0	%
Contract within days 91-120:	1.0	%

In an effort to assist you in selling your home, Dresser-Rand will allow outside offers within 97% of the Appraised Value Offer from AIReS. If your home sells between 97% and 100% of the appraised value, you will receive the appraised value price plus the incentive based on the schedule noted above. The sale must close with the contracted buyer for the employee to be eligible for the incentive payment.

	Plan Red Relocation Policy	Effective: March, 2007	17

EXAMPLES (Based on a sale within 31- 90 days):

Amended Sale	Example 1			Example 2
Suggested Sales Price	$	100,000		$	100,000
Employee Generated Sale	$	102,000		$	102,000
Buyer’s Closing Costs (concessions)		N/A		$	1,000
Net Sales Price	$	102,000		$	101,000
Home Sale Incentive	$	2,040		$	2,020
		(2% x 102,000	)		(2% x 101,000	)
Amended Sale Prior To Appraisals	Example 1			Example 2
Appraised Value Offer		N/A			N/A
Employee Generated Sale	$	102,000		$	102,000
Buyer’s Closing Costs (concessions)		N/A		$	1,000
Net Sales Price	$	102,000		$	101,000
Home Sale Incentive	$	2,040		$	2,020
		(2% x 102,000	)		(2% x 101,000	)
Offer Below Appraised Value	Example 1			Example 2
Appraised Value Offer	$	100,000		$	100,000
Employee Generated Sale	$	98,500		$	98,500
Buyer’s Closing Costs (concessions)		N/A		$	1,500
Net Sales Price	$	98,500		$	97,000
Home Sale Incentive	$	2,040		$	2,020
		(2% x 102,000	)		(2% x 101,000	)

	Plan Red Relocation Policy	Effective: March, 2007	18

Loss on Sale

In a Company-initiated transfer, should your current home’s value be less than the original purchase price, Dresser-Rand will reimburse the you for any loss sustained, provided an independent third party verifies the market situation. The reimbursement will be limited to ten percent (10%) of the current appraised value up to a maximum of $20,000 provided you have marketed and sold the home at a price approved by the Company. The loss on sale benefit will be reduced by any home sale bonus due the employee.

This provision does not provide for reimbursement of capital improvements made to the home or to a cooperative apartment.

Disclosure

It is your responsibility as the homeowner to disclose the full condition of your property to AIReS, as well as to any potential buyers. Failure to disclose may constitute at a minimum misrepresentation and, more likely, fraud that may result in your immediate termination. An AIReS Homeowner Disclosure Statement, and any applicable, mandatory state disclosure forms, will be included in your initial package. Please complete these forms and return them to your AIReS Program Manager along with any other requested documents as soon as possible.

• When you generate a sale, all inspections must be disclosed to the buyer.

• If you do not disclose complete and accurate information that is subsequently discovered, you may be held responsible for all expenses involved in correcting the defect(s) and any possible litigation.

Disclosure: It is the duty of the seller to make known to a buyer, the condition of the property, particularly any defect that could affect its value, habitability, or desirability.

Closing the Sale And Obtaining Your Equity

Once you have accepted the Guaranteed Buyout Option Offer or an Amended Value Sale Offer, AIReS will assume responsibility of all mortgage payments, utilities, and maintenance as of the date of possession. Possession is defined as the day you contract or vacate, whichever is later. Before possession, all expenses will remain your responsibility. Your Program Manager will identify and supply the necessary documents required to contract with AIReS.

Your equity will be your Guaranteed Buyout Offer or Amended Value Offer minus your unpaid mortgage balance, tax pro-ration, costs of any repairs and all other liens against the property.

You will be relieved of the necessity of attending the closing, as all documents will be pre-signed and AIReS will coordinate the closing process.

	Plan Red Relocation Policy	Effective: March, 2007	19

Direct Reimbursement Of Closing Costs

You are eligible for Direct Reimbursement of Closing Costs should one of the following occur:

1. You secure a bona fide purchaser for your property and elect not to close the home through AIReS.

2. Your home is ineligible for the home sale program.

Should you elect not to close your home through AIReS, you will NOT receive tax assistance on the closing costs associated with the sale of your home.

If your home is ineligible for the home sale program, a special determination will be made as to tax assistance. These expenses are not considered income in Canada.

Under this option, you will be reimbursed for the realtor’s sales commission and other typical and customary seller’s closing costs. Examples of reimbursable costs:

• Real Estate Commission (prevailing rate for the area, not to exceed 6% 7% on the first $100,000 and 3% on the remainder in Canada)

• Abstract of Title / Lenders Title Insurance

• Required legal fees

• Documentary Tax / Excise Stamps, Tax Certificates

• State/Provincial local transfer taxes

• Survey Expense

• Inspection Fees as Required by Lender (termite, radon, etc.)

• Escrow / Conveyance Fee

• Local Statutory Costs

• Notary Fees

• Mortgage Recording or Discharge Fees

• Prepayment Penalties: Up to a max of $5,000. This payment will be tax protected

• Transfer Taxes

• FHA/VA Fees

The following costs are examples of items that will NOT be reimbursed:

• Home Owner Warranties

• Buyer Closing Costs

• Origination/discount fees

• Commissions to the Buyer (examples are: repair or decorating allowances, homeowner’s association or property tax credits)

• Buyer Broker Fees

• Contract Review Fees

	Plan Red Relocation Policy	Effective: March, 2007	20

These lists are not all-inclusive. Questionable items should be addressed with your Program Manager before the scheduled closing.

Reimbursement will be coordinated by AIReS upon receipt of documented selling expenses (HUD statement) on the relocation expense report. Keep in mind that under the direct reimbursement of closing costs program, you will be required to attend the closing, and this reimbursement payment will be considered taxable income to you. Tax assistance may be considered for homes that are ineligible for the home sale program, but this is subject to review by the Relocation Coordinator in Corporate Human Resources.

DESTINATION ASSISTANCE

Dresser-Rand understands that finding the right home in the new location is vital to a successful relocation. Destination services provide access to finding a qualified real estate agent who will be able to assist with area counseling and provide specific information such as:

• Types and price ranges of available rental housing or homes for sale

• Town and neighborhood data

• Property tax information

• Commuting information

• Education, medical, religious and other personal information

The Real Estate professionals in the AIReS Real Estate Network have been specially trained to address issues that are unique to relocation.

Your AIReS Program manager will provide assistance to you and act as your advocate throughout your relocation. Should a need arise to change agents or expand your search area, your AIReS Program Manager will coordinate the necessary arrangements on your behalf.

AIReS CONNECT

To help you quickly arrange for home services in the United States, AIReS offers AIReS Connect. This is an interactive website that allows you to set up various types of services for your new home. The service can reduce the amount of time spent waiting on the telephone. Instant connection for utilities and other home services are at your fingertips. AIReS Connect automatically verifies your home address and provides a list of service providers from which you can choose to update the services you wish to receive.

AIReS Connect takes the work out of ordering essential home services and helps you quickly settle into your new home and neighborhood. You are able to spend less time and money ordering essential home services such as local telephone, long distance service and change of address. You can compare service provider offerings in a simple “apples to apples” format. You can select your preferred providers and order services in minutes, 24 hours a day, seven days a week. Best of all, Service Providers participating in AIReS Connect agree to offer their Best Price Guarantee.

	Plan Red Relocation Policy	Effective: March, 2007	21

PURCHASING YOUR NEW HOME

Equity Advance

The Equity Advance program is designed to provide you with financial assistance in the purchase of a home in the new location prior to selling or closing on the home you own in the old location. Eligibility for this program requires the following:

• Your participation in the Marketing Assistance program, and

• Your acceptance of AIReS offer and the return of properly executed documents to AIReS (once an outside buyer has been identified, the price negotiated and the offer deemed acceptable by AIReS) and

• Your use of the Equity Loan funds for the purpose of securing a home in the new location.

The loan is based on 90% of the Guaranteed Offer, less all outstanding liens and encumbrances. The loan may not exceed the maximum required for closing. A copy of the purchase contract on the new residence and a signed Promissory note in the amount of the loan are required. The funds will be made available a maximum of ten (10) days prior to the anticipated closing date of the new residence. This equity loan must be repaid within ten (10) days after closing of the sale or assignment of the residence at the former work location.

New Home Closing Costs

There are numerous expenses associated with the closing of a new home. Current homeowners may be reimbursed for certain reasonable and customary expenses incurred in the purchase of a new residence.

Closing costs are paid by Dresser-Rand for all eligible transferees if they are charges that the buyer is normally required to pay in order to close on a home.

The following criteria must be met for reimbursement:

• You must have owned a home in the departure location to be eligible for assistance. Additionally, you must purchase a home in the destination location within one year from the start of your job (commencement of salary) in the destination location.

Normal and customary closing costs include but are not limited to reimbursement of actual, reasonable, and customary buyer’s closing costs as follows:

• Appraisal, credit report, lender application and survey fees,

• State/provincial and local transfer taxes and tax stamps (buyer’s portion),

• Processing and recording fees,

• Attorney’s fees,

• Title insurance and commitment charges (lender only),

• Closing agent or attorney fees,

• Lender inspections and flood zone certification fees, and

	Plan Red Relocation Policy	Effective: March, 2007	22

• Typical property inspections;

• Reimbursement of actual, reasonable, and customary origination fees not to exceed 1% of the mortgage amount;

• Discount points paid based on the following scale using the Fannie Mae 30 year fixed rate mortgage based on a 60 day lock (FNMA 30/60) on the day you lock your actual rate (The national lender will include; if you use another lender, you will need to obtain the FNMA rate from the Wall Street Journal Money Section):

• Below 7.0% – 0%

• 7.0% to 8.0% – 0.5%

• 8.01% to 9.0% – 1.0%

• 9.01% to 10% – 1.5%

• 10.01% and above 2.0%

Construction loan procurement expense and interest, as well as mortgage loan credit insurance, are not reimbursable.

Non-deductible home purchase expenses will be tax protected/grossed up for income tax purposes. Loan Origination and Discount points may be deducted on a Federal and sometimes the State level; therefore, these items may not be grossed-up for tax purposes.

Expenses which are not eligible for payment or reimbursement include:

• Down payment or deposit

• Property taxes

• Mortgage interest

• Hazard insurance (homeowners policy)

• Private mortgage insurance (PMI)

• Association fees/dues

• Repairs required by lender

• Any costs normally charged to the seller

• Any costs associated with a second mortgage or equity line of credit

• Duplicate lender fees or inspections other than those required by a lender to close on the loan

• Buyer Broker or agency administrative fees or commission

• Soil reports (geological surveys)

• Goods and Services Tax (GST) in Canada

• Improvement assessments by state/provincial, county or city taxing authorities

• Owner’s Title Policy unless required to pay by buyer by standard contract and not as a negotiated item

Note: For U.S. Moves: A copy of the signed HUD1 Settlement Statement must be included with your expense report for reimbursement. . If you use a non-AIReS designated lender, submit your HUD-1 Statement along with a Relocation Expense Report to AIReS for reimbursement once the home has closed.

	Plan Red Relocation Policy	Effective: March, 2007	23

Purchase closing costs are considered taxable income in the U.S. and will be tax assisted.

For Intra-Canada Moves: A copy of the Statement of Adjustments must be included with your expense report for reimbursement.

Purchase closing costs are considered non-taxable income in Canada.

Voluntary charges or those charges not required by the seller in the purchase of a new home are not eligible for payment or reimbursement.

If you have any questions on what is normal and customary for your new area, please check with your Program Manager. Reimbursement of these items will be coordinated by AIReS and will be considered taxable income. Tax assistance will be provided.

New Home Mortgage

Applying for a mortgage can be a time consuming process. To simplify the process, Dresser-Rand has established a relationship with AIReS’ preferred mortgage lenders.

You are free to obtain your loan through the lender of your choice, however the benefits of utilizing AIReS’ preferred lender are:

• Competitive rates for transferring employees

• Pre-approval prior to your house hunting trip

• Prompt mortgage approval and processing turn- around times

• Reduced documentation requirements

• Direct billing of eligible closing costs to AIReS, eliminating the need to provide cash at closing for all reimbursable costs

In Canada, due to Canadian banking restrictions, direct billing is not available for home purchases, so please plan accordingly. If you are a Canadian hire, you should port your mortgage when available since the Company will not reimburse you for any mortgage pre-payment penalties.

In addition to delivering these benefits, these preferred lenders are very familiar with the benefits you are receiving under the relocation guidelines of Dresser-Rand. Your Mortgage Consultant will help you analyze all aspects of your new mortgage.

Your Program Manager will describe the program to you during your initial conversation. Your AIReS Program Manager will provide a list of preferred lenders to you. When contacting lenders, please be sure to identify yourself as an employee of Dresser-Rand working with AIReS.

	Plan Red Relocation Policy	Effective: March, 2007	24

FAMILY TRANSITION ASSISTANCE

Dresser-Rand recognizes the wide range of needs unique to each family during relocation. To assist you and your spouse/domestic partner and family in transitioning to the new location, Dresser-Rand offers family transition services from a provider that specializes in this field.

Based on demonstrated need, assistance to your spouse/domestic partner or qualified family members may be provided up to a maximum of $1,500. Receipts are required for the following benefits that may qualify for reimbursement:

• an assessment of skills,

• licensing requirements for professionals,

• networking strategies,

• resume production,

• interviewing techniques and follow-up.

• elder care issues

• child care issues

Contact your AIReS PM for additional information. Reimbursement for expenses associated with family transition assistance is considered income in the U.S. and tax assistance will be provided. This is not considered income in Canada.

MOVING YOUR HOUSEHOLD GOODS

In anticipation of your forthcoming move, Dresser-Rand will pay to move your household and personal goods. AIReS has contracted with top quality, national van lines to provide this service to you.

You will be given the name of the mover who is best suited to provide you with quality service based on your location.

You should contact your Program Manager as early as possible to establish a preliminary schedule as household goods shipments can take up to three weeks to book. Once a mover has been selected, a representative will be contacting you to arrange for a pre-move survey. This person will work with you in all subsequent scheduling of packing, moving and delivery.

Shipment

The following expenses and services are covered:

• Shipping, packing and partial unpacking of ordinary household goods and personal effects

• Disconnect and reconnect of normal household appliances

• One debris pick up

The following expenses and services are not covered:

	Plan Red Relocation Policy	Effective: March, 2007	25

• Moving furnishings of secondary homes.

• Shipment of hazardous materials such as explosives, chemicals, flammable materials, firearms, garden chemicals.

• Shipment of firewood, lumber or other building materials.

• Shipment of livestock.

• Valuables such as jewelry, currency, dissertations or publishable papers, and other collectibles or items of extraordinary value.

• Removal, disassembling or installation of carpeting, drapery rods, storage sheds or other permanent fixtures.

• Shipment of snowmobiles, boats over 14 feet, recreational vehicles and unusually heavy or cumbersome hobby materials

• Satellite dishes.

• Extra pickups or deliveries.

• Overtime charges (weekends and evening hours).

• Special packing or transportation of frozen foods, plants, wine collections or other perishables.

• Moving or shipping such items as trees, shrubs, construction materials, firewood, livestock and other animals such as pets.

• Tips or other gifts to the moving company’s employees.

• Any services performed by the employee, dependents or relatives.

Automobiles

If the distance to the new location is less than 400 miles/650 kilometres, you may ship one (1) automobile. If the distance to the new location is 400 miles/650 kilometres or greater, you may ship up to two (2) automobiles. Insurance on such vehicles will be provided.

Storage in Transit

If your new home is not accessible for delivery of your household goods or if you are required to vacate your previous residence due to a buyer requiring immediate occupancy, temporary storage will be provided for a period not to exceed 60 days. Delivery out of storage will be covered as well. If a partial shipment is made, you will be responsible for all expenses associated with additional shipments.

Valuation Protection

Valuation protection at full replacement value is provided at $5 per pound, up to $100,000 for your personal property while in transit. The protection does not cover: bank accounts, bills, deeds, evidence of debt, currency, letters of credit, passports, airline or other tickets, securities, bullion, precious stones, stamp or coin collections. Special arrangements should be made for these items.

Additional insurance is at your expense. Consult your personal insurance policy representative for an explanation of coverage for items in transit, as well as coverage for vacant property at the former and/or new locations, if applicable.

Please note: These expenses will be paid in the employee’s destination currency.

	Plan Red Relocation Policy	Effective: March, 2007	26

TAX CONSIDERATIONS

In the United States:

Most reimbursed expenses and payments made under this policy must be included in your gross income. Certain other expenses are excluded from your gross income as non-taxable fringe benefits.

Excludable Expenses

Expenses such as the transportation of household goods and family in-transit moving expenses excluding meals are considered deductible and, therefore, will be excluded from your gross income under provisions of the Internal Revenue Code. These expense amounts will not be grossed-up since these expenses are not considered income to you.

Deductible Expenses

Mortgage points and any payments made which are actually interest payments can be deducted by you. Although they will be reported as income to you, these amounts will not be grossed-up since you can deduct interest on Schedule A of your tax return.

Gross-Up Policy

The Company will pay the estimated federal, state and local taxes on your behalf in order to alleviate the tax burden associated with non-deductible and non-excludable moving expense reimbursements. These gross-up payments will be calculated based on your Company gross income, standard deductions and personal exemptions.

Year-End Information

At year-end, you will be furnished with a copy of an Employee Moving Tax Package by AIReS. This will provide an itemized list of all reimbursements, payments and allowances paid to you, or on your behalf for expenses incurred in connection with your move. You are responsible for reporting taxable moving expense reimbursements on your tax return.

In Canada:

Taxable relocation payments or reimbursements made to you or on your behalf will appear on your T4 in Canada for the year the payment was disbursed to you in compliance with Canada Customs and Revenue Agency (CCRA, formerly Revenue Canada) regulations.

The tax treatment of all taxable expenses within this policy is stated in each benefit section. Tax gross-up calculations will be based on income earned at Dresser-Rand No other income will be considered. Tax gross-up payments are paid directly to the taxing authority by Dresser-Rand

	Plan Red Relocation Policy	Effective: March, 2007	27

Please note the following:

It is imperative to keep records and receipts of all relocation expenses to manage your tax return filing process at year-end.

An itemized Relocation Summary will be prepared and emailed to you in February in the year(s) following the delivery of relocation benefits.

Neither Dresser-Rand nor AIReS will provide tax advice; however, consulting a professional tax advisor independently and at your own cost is recommended.

For tax information, forms and publications, access the CCRA web site: www.ccra-adrc.gc.ca or call 1-800 959-2221.

Once your relocation is complete, please ensure Dresser-Rand Payroll has accurate information on your new location and withholding choices. Payroll change forms are located on the Payroll website:

Canada: http://www.cra-arc.gc.ca/formspubs/forms/td1-e.html

	Plan Red Relocation Policy	Effective: March, 2007	28

TAX TABLE

Reimbursement	Added to W-2	U.S. Taxable Income Per IRS	Added to T4	Canadian Taxable Income Per CCRA
Closing Costs Old Home (paid directly to employee)	Yes	Yes	No	No
Closing Costs Old Home (paid through GBO/BVO Program	No	No	N/A	N/A
Final Move Expenses	Yes – only meals and a portion of mileage	Partial-(meals and a portion of the mileage amount are taxable)	No	No
Home Finding Trip	Yes	Yes	No	No
New Home Purchase Expenses	Yes	Yes	No	No
Miscellaneous Allowance	Yes	Yes	Yes Over $650	Yes The first $650 is non-taxable
Lease Cancellation Fees	Yes	Yes	No	No
Rental Finder’s Fees	Yes	Yes	No	No
Shipment of Household Goods	No	No	No	No
Storage of Household Goods — first 30 days	No	No	No	No
Storage of Household Goods- days 31+	Yes	Yes	No	No
Temporary Living/Duplicate Living Expenses	Yes	Yes	No	No

IRS Tax Information: www.irs.gov

Publication 521 — Moving Expenses

Publication 523 — Selling Your Home

CCRA Tax Information:www.ccra-adrc.gc.ca

1-800-959-2221

	Plan Red Relocation Policy	Effective: March, 2007	29

Attachment A – Relocation Expense Reimbursement Agreement

RELOCATION EXPENSE REIMBURSEMENT AGREEMENT

Employee Name: New Work Location:

Job Assignment Title: Start Date of New Assignment:

1. This Agreement effective this             day of             , 200            (hereinafter “Effective Date”) is by and between             (hereinafter “Employee”) and DRESSER-RAND COMPANY (hereinafter “DRESSER-RAND”). As of the Effective Date of this Agreement, DRESSER-RAND has agreed to incur expenses or reimburse Employee for certain expenses for the purpose of relocating Employee and Employee’s eligible household members to a new DRESSER-RAND work location identified above. The relocation benefits being offered are described in the Relocation Letter of Understanding, a copy of which is attached hereto for reference.

2. Employee confirms that neither they nor any other household member is receiving relocation benefits from any other company or source. If so, Employee acknowledges and agrees that relocation benefits paid by DRESSER-RAND are subject to reduction in an amount equal to any relocation benefits paid by another source.

3. If Employee voluntarily terminates employment with DRESSER-RAND for any reason or requests a transfer from the New Work Location, then Employee agrees to repay DRESSER-RAND any and all relocation expenses, or payments made in lieu of relocation, incurred or reimbursed by DRESSER-RAND on the prorated basis described in 7 below.

4. Likewise, if DRESSER-RAND terminates Employee’s employment for Cause (as defined below), then Employee agrees to repay DRESSER-RAND any and all relocation expenses, or payments made in lieu of relocation, incurred or reimbursed by DRESSER-RAND on the same prorated basis described in 7 below.

5. For purposes of this Agreement, DRESSER-RAND shall have “Cause” to terminate Employee’s employment hereunder upon its determination that Employee engaged in unacceptable conduct such as: 1) having engaged in any act involving fraud, theft, misappropriation, dishonesty, insubordination or embezzlement, 2) committed intentional or negligent acts that impair the goodwill or business of DRESSER-RAND, and/or 3) failed to perform employment duties in any material respect.

6. Nothing in this Agreement shall change Employee’s status as an “At-Will” employee whose employment may be terminated for any reason at any time by either DRESSER-RAND or Employee. Nothing in this Agreement constitutes a contract or guarantee of employment for any specific term or limits either party’s right to terminate the employment relationship.

7. EMPLOYEE’S PRORATED RELOCATION REPAYMENT SCHEDULE:

Employee agrees that from the start date of the new assignment at the new location listed above and if a voluntary termination of employment, a request for transfer out of the assignment location, or Employee’s employment is terminated for Cause occurs then with respect to the periods of times listed below:

If employment is terminated within one year, per this Agreement, then Employee will repay 100% After more than one year, but less than thirteen months, Employee will repay 90%

	Plan Red Relocation Policy	Effective: March, 2007	30

After more than thirteen months, but less than fourteen months, Employee will repay 80%

After more than fourteen months, but less than fifteen months, Employee will repay 70%

After more than fifteen months, but less than sixteen months, Employee will repay 60%

After more than sixteen months, but less than seventeen months, Employee will repay 50%

After more than seventeen months, but less than eighteen months, Employee will repay 40%

After more than eighteen months, but less than nineteen months, Employee will repay 30%

After more than nineteen months, but less than twenty months, Employee will repay 25%

After more than twenty months, but less than twenty-one months, Employee will repay 20%

After more than twenty-one months, but less than twenty-two months, Employee will repay 15%

After more than twenty-two months, but less than twenty-three months, Employee will repay 10%

After more than twenty-three months, but less than twenty-four months, Employee will repay 5%

8. If termination of employment occurs after twenty-four months after the start date of new assignment in the new location, Employee will not be required to repay relocation expenses.

9. Any repayment required under this Agreement will be due and payable to DRESSER-RAND within thirty (30) days of voluntary termination of employment, request for transfer out of the assignment location, or termination for Cause, or will be deducted from Employee’s final pay check(s) including, without limitation, deduction from salary, commissions, bonuses, vacation or other paid leave, severance or separation pay, and expense reimbursements, up to the full amount of the reimbursement owed to DRESSER-RAND. If such paycheck deduction does not fully satisfy the amount of reimbursement due, Employee agrees to immediately repay the remaining unpaid balance to DRESSER-RAND. Employee agrees that DRESSER-RAND may deduct part of his/her wages for any amount due under this Agreement. Employee further agrees that this deduction will be for a lawful purpose. In addition, Employee agrees that signing this Agreement does hereby further constitute Employee’s irrevocable authorization to DRESSER-RAND to withhold any such sum from Employee as provided for in this Agreement. Employee further agrees to fully pay and reimburse DRESSER-RAND for any attorneys’ fees and costs that DRESSER-RAND incurs in enforcing the terms of this Agreement.

10. The terms of this Agreement shall be governed by and interpreted in accordance with the laws of the State of Texas. This Agreement contains the entire agreement and understanding between Employee and DRESSER-RAND with respect to the subject matter hereof and supersedes all prior understandings, arrangements, representations, warranties and agreements between the parties, whether oral or written, with respect to the same.This Agreement may only be modified by a writing that is signed by each DRESSER-RAND’S duly authorized representative. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original, but all of which shall constitute one and the same instrument. Faxed and electronic copies shall be given the full force and effect as an original.

EMPLOYEE HEREBY EXPRESSLY WARRANTS AND REPRESENTS THAT, BEFORE ENTERING INTO THIS AGREEMENT, THAT THEY HAVE READ, INFORMED THEMSELF OF AND UNDERSTAND ALL THE TERMS, CONTENTS, CONDITIONS AND EFFECTS OF ALL PROVISIONS

AGREEMENT CONTINUED ON NEXT PAGE

	Plan Red Relocation Policy	Effective: March, 2007	31

OF THIS AGREEMENT, THAT NO PROMISE OR REPRESENTATION OF ANY KIND HAS BEEN MADE, EXCEPT FOR THOSE EXPRESSLY STATED IN THIS AGREEMENT AND THAT THEY ARE ENTERING INTO THIS AGREEMENT ON A KNOWING AND VOLUNTARY BASIS.

IN WITNESS THEREOF, this Agreement is accepted and agreed to by Employee as of the Effective

Date first written above.

Employee                                                                          

Name Printed:                                                                    

STATE OF	)
	) SS:
COUNTY OF	)

On this             day of             , 200            , before me personally appeared                                              , to me known to be the person who executed the foregoing instrument and acknowledged that they executed the same in their representative capacity and as their own free act and deed.

NOTARY PUBLIC

My Commission Expires:                                     

SEAL

	Plan Red Relocation Policy	Effective: March, 2007	32

Attachment B – Broker Exclusion Clause

This clause must be included in any listing agreement to protect you from having to pay a broker’s commission.

If your broker has any questions regarding including this clause in the listing, have your agent immediately contact your Program Manager.

Do not sign the listing agreement without the Exclusion Clause.

This addendum shall override any conflicting clauses or statements in the Listing Agreement.

1. The real estate agent/broker expressly acknowledges and agrees that the seller(s)/owner(s) hereby reserve the right:

(a) To sell the property to AIReS Services Corporation or any affiliate of AIReS Services Corporation(AIReS) at any time, and in such event, this Listing Agreement is deemed cancelled with no obligation for payment of a commission or continuance of the listing thereafter; or(b) To turn over or assign any acceptable written offer hereunder to AIReS for negotiation, completion and closing, with payment of commission being the obligation of AIReS.

(b) No commission or compensation shall be earned by, or be due and payable to, the real estate agent/ broker until a sale has been consummated, the deed delivered to the buyer(s), and the purchase price delivered to the seller(s)/owner(s) or to AIReS. No monies above and beyond the percentage commission rate specified in the listing agreement will be paid to the real estate agent/broker for any reason.

2. The real estate agent/broker agrees to provide AIReS, its designate such information with regard to any prospective buyer(s) as may be necessary for AIReS to determine that an offer is bona fide; that the prospective buyer(s) can reasonably be expected to qualify for any mortgage or other loan required to consummate the purchase and sale; or that the prospective buyer(s) can perform any other term or condition of any offer, counteroffer or prospective contract.

Real Estate Agent/Broker Date

Seller Date

Seller Date

	Plan Red Relocation Policy	Effective: March, 2007	33

Attachment C – National Do No Call List Authorization

I/we understand and agree that AIReS and their supplier partners including but not limited to; real estate brokers/agents, appraisers, inspection companies, van line companies, household goods suppliers and mortgage companies may contact us for the purpose of providing relocation services. AIReS and their service partners may contact us by mail, telephone, fax or e-mail solely as it relates to the delivery of relocation services authorized on my/our behalf by Dresser-Rand. (Employer).

Signature:                                     

Date:                     

	Plan Red Relocation Policy	Effective: March, 2007	34

EX-31.1

Exhibit 31.1

SECTION 302 CERTIFICATION

I, Vincent R. Volpe Jr., certify that:

1. I have reviewed this quarterly report on Form 10-Q for the quarter ending September 30, 2012, of Dresser-Rand Group Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 1, 2012	/s/ Vincent R. Volpe Jr.
	Vincent R. Volpe Jr.
	President, Chief Executive Officer and Director

EX-31.2

Exhibit 31.2

SECTION 302 CERTIFICATION

I, Mark E. Baldwin, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the quarter ending September 30, 2012, of Dresser-Rand Group Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 1, 2012	/s/ Mark E. Baldwin
	Mark E. Baldwin
	Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Dresser-Rand Group Inc. (the “Company”) on Form 10-Q for the quarter ending September 30, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Vincent R. Volpe Jr., President, Chief Executive Officer and Director of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 1, 2012	/s/ Vincent R. Volpe Jr.
	Vincent R. Volpe Jr.
	President, Chief Executive Officer and Director

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Dresser-Rand Group Inc. (the “Company”) on Form 10-Q for the quarter ending September 30, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mark E. Baldwin, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 1, 2012	/s/ Mark E. Baldwin
	Mark E. Baldwin
	Executive Vice President and Chief Financial Officer

XML

Weighted Average Useful Life, Gross Amount and Accumulated Amortization of Intangible Assets (Detail) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2012 Y		Dec. 31, 2011
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	$ 675.6		$ 650.2
Accumulated Amortization	164.3		142.2
Trade names
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	117.4		117.5
Accumulated Amortization	20.0		17.5
Weighted- Average Useful Lives	39
Customer relationships
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	330.6		322.9
Accumulated Amortization	62.4		52.6
Weighted- Average Useful Lives	32
Non-compete agreement
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	5.4		4.9
Accumulated Amortization	3.5		2.4
Weighted- Average Useful Lives	3
Existing technology
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	161.6		143.5
Accumulated Amortization	46.1		40.5
Weighted- Average Useful Lives	23
Contracts and purchase agreements
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	18.2		18.9
Accumulated Amortization	8.1		7.3
Weighted- Average Useful Lives	11
Software
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	30.6		30.6
Accumulated Amortization	24.2		21.9
Weighted- Average Useful Lives	10
In-process research and development
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	11.8		11.9
Accumulated Amortization	$ 0		$ 0
Weighted- Average Useful Lives	10	[1]

[1] In-process research and development will be amortized over 10 years beginning at the time revenues are generated. There has been no amortization recorded for in-process research and development as of September 30, 2012.

XML

Components of Net Pension Expense (Detail) (Defined Benefit Pension, USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Defined Benefit Pension
Defined Benefit Plan Disclosure [Line Items]
Service cost	$ 2.2	$ 2.0	$ 6.8	$ 6.1
Interest cost	4.9	5.1	14.6	15.2
Expected return on plan assets	(5.4)	(5.5)	(16.3)	(16.5)
Amortization of net actuarial loss	1.9	0.7	5.8	1.9
Amortization of prior service cost	0.1	0.3	0.2	0.9
Net pension and net post-retirement benefits expense (income)	$ 3.7	$ 2.6	$ 11.1	$ 7.6

XML

Foreign Currency Exchange Contracts Accounted for at Fair Value on Recurring Basis (Detail) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Foreign currency exchange contracts assets	$ 15.4	$ 7.1
Foreign currency exchange contracts liabilities	$ 8.5	$ 10.5

XML

Pension Plans - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Defined Benefit Plan Disclosure [Line Items]
Contribution by employer	$ 3.5	$ 3.1	$ 19.0	$ 28.8

XML

Property, Plant and Equipment - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Property, Plant and Equipment [Line Items]
Depreciation expense	$ 13.7	$ 13.1	$ 41.9	$ 33.2

XML

Warranties (Tables)

9 Months Ended

Sep. 30, 2012

Changes in Product Warranty Liability

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

	Nine Months Ended September 30,
	2012			2011
Beginning balance	$	25.6		$	28.2
Liabilities assumed from acquisitions		—			6.7
Provision for warranties issued during period		12.2			10.8
Adjustments to warranties issued in prior periods		(3.3	)		(5.9	)
Payments during the period		(14.0	)		(12.7	)
Foreign currency adjustments		(0.2	)		(0.8	)
Ending balance	$	20.3		$	26.3

XML

Commitments and Contingencies - Additional Information (Detail) In Millions, unless otherwise specified	1 Months Ended				9 Months Ended			9 Months Ended			9 Months Ended
	Feb. 29, 2012 USD ($)	Feb. 29, 2012 EUR (€)	Jan. 31, 2010 USD ($)	Jan. 31, 2010 EUR (€)	Sep. 30, 2012 USD ($) M Person	Mar. 05, 2012 USD ($)	Mar. 31, 2011 USD ($)	Sep. 30, 2012 Maximum	Feb. 29, 2012 Maximum USD ($)	Feb. 29, 2012 Maximum EUR (€)	Sep. 30, 2012 Minimum
Commitments and Contingencies Disclosure [Line Items]
Number of employees engaged in misconduct during strike and involuntary terminated					2
Estimated appeal processing period								3 years			1 year
Contingent exposure accrued					$ 4.9
Damage sought by ministry of economic development			9.0	7.0
Estimated aggregate loss exposure associated with Enviroil litigation							15.3
Litigation with the Italian tax authorities, adverse judgment received	5.4	4.2
Litigation with the Italian tax authorities, total aggregate exposure for taxes, interest and penalties									13.0	10.1
Unpaid accounts receivable to GdB subject to judicial reorganization						$ 6.5
Monthly Installments					60

XML

Acquisitions and Other Investments (Tables)

9 Months Ended

Sep. 30, 2012

Consolidated Balance Sheet Reflecting Revisions to Purchase Price Allocation of Guascor

These revisions were not material to the Consolidated Statements of Income for the three and nine months ended September 30, 2011.

	As Previously
	Reported at					As Revised at
	December 31,		Increase			December 31,
	2011		(Decrease)			2011
Accounts receivable, net	$	476.9	$	0.6		$	477.5
Inventories, net		409.0		(1.3	)		407.7
Total current assets		1,151.0		(0.7	)		1,150.3
Property, plant and equipment, net		466.1		(10.1	)		456.0
Goodwill		851.3		18.5			869.8
Intangible assets, net		499.0		9.0			508.0
Other assets		63.9		4.6			68.5
Total assets		3,042.4		21.3			3,063.7
Accounts payable and accruals		595.4		5.3			600.7
Accrued income taxes payable		19.9		0.2			20.1
Total current liabilities		926.8		5.5			932.3
Deferred income taxes		44.5		0.7			45.2
Long-term debt		987.9		2.5			990.4
Other noncurrent liabilities		75.4		11.5			86.9
Total liabilities		2,170.5		20.2			2,190.7
Total liabilities and stockholders' equity		3,042.4		21.3			3,063.7

Acquisition Prices Allocated to Fair Values of Assets Acquired and Liabilities Assumed

The acquisition prices of Synchrony in 2012 and Guascor in 2011 were allocated to the fair values of assets acquired and liabilities assumed as follows:

	2012			2011
Cash and cash equivalents	$	0.1		$	21.7
Restricted cash		—			36.6
Accounts receivable, net		2.1			79.3
Inventory, net		1.5			41.9
Prepaid expenses		0.1			21.1
Total current assets		3.8			200.6
Property, plant and equipment		2.2			206.9
Amortizable intangible assets		22.9			136.5
Goodwill		23.6			452.7
Other assets		3.3			21.4
Total assets acquired		55.8			1,018.1
Accounts payable and accruals		2.6			141.7
Customer advance payments		—			9.0
Accrued income taxes payable		—			3.1
Current portion of long-term debt		—			98.8
Long-term debt		—			154.6
Other noncurrent liabilities		—			67.7
Total liabilities assumed		2.6			474.9
Purchase price		53.2			543.2
Fair value of contingent consideration (non-cash)		(4.3	)		5.5
Fair value of Dresser-Rand common stock as partial consideration		—			(243.5	)
Cash acquired		(0.1	)		(21.7	)
Cash paid	$	48.8		$	283.5

Unaudited Supplemental Pro Forma Results

The following unaudited supplemental pro forma results present consolidated information as if the Guascor acquisition had been completed as of January 1, 2010. The pro forma results include: (i) the depreciation associated with the additional fair value of the acquired property, plant and equipment, (ii) the amortization associated with an estimate of the acquired intangible assets, (iii) interest expense associated with debt used to fund the acquisition and the portion of the accelerated stock acquisition plans executed to acquire the number of shares issued in connection with the acquisition, (iv) non-recurring acquisition costs of $14.9 for the nine months ended September 30, 2011, directly related to the acquisition of Guascor, and (v) the income tax effect of these items. The pro forma results should not be considered indicative of the results that would have occurred if the acquisition and related borrowings had been consummated as of January 1, 2010, nor are they indicative of future results.

	Nine Months Ended September 30, 2011
Total revenues	$	1,701.5
Net income attributable to Dresser-Rand	$	57.8
Diluted earnings per share attributable to Dresser-Rand	$	0.72

XML

Long-Term Debt (Detail) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Debt Instrument [Line Items]
Long-term debt	$ 1,095.9	$ 1,029.7
Less: current portion	(27.4)	(39.3)
Total long-term debt	1,068.5	990.4
Senior secured credit facility maturing March 2016
Debt Instrument [Line Items]
Long-term debt	603.7	506.0
6 1/2% Senior Subordinated Notes due May 2021
Debt Instrument [Line Items]
Long-term debt	375.0	375.0
Syndicated term loan and working capital line maturing December 2013
Debt Instrument [Line Items]
Long-term debt	14.6	16.8
Other working capital facilities maturing through 2014
Debt Instrument [Line Items]
Long-term debt	2.6	4.8
Bank loans maturing through 2015
Debt Instrument [Line Items]
Long-term debt	7.2	25.0
Project financing arrangements maturing through 2016
Debt Instrument [Line Items]
Long-term debt	27.2	41.8
Subsidized loans
Debt Instrument [Line Items]
Long-term debt	11.9	11.1
Other Note Payable
Debt Instrument [Line Items]
Long-term debt	$ 53.7	$ 49.2

XML

Changes in Goodwill in Total and by Segment (Detail) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2012
Goodwill [Line Items]
Beginning Balance	$ 869.8
Acquisitions	23.6
Foreign currency adjustments	0.8
Ending Balance	894.2
New Units
Goodwill [Line Items]
Beginning Balance	442.6
Acquisitions	23.6
Foreign currency adjustments	(0.4)
Ending Balance	465.8
Aftermarket parts and services
Goodwill [Line Items]
Beginning Balance	427.2
Acquisitions	0
Foreign currency adjustments	1.2
Ending Balance	$ 428.4

XML

Acquisition Prices Allocated to Fair Values of Assets Acquired and Liabilities Assumed (Detail) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012 Synchrony, Inc	Jan. 04, 2012 Synchrony, Inc	Dec. 31, 2011 Guascor	May 04, 2011 Guascor
Business Acquisition [Line Items]
Cash and cash equivalents	$ 0.1		$ 21.7
Restricted cash	0		36.6
Accounts receivable, net	2.1		79.3
Inventory, net	1.5		41.9
Prepaid expenses	0.1		21.1
Total current assets	3.8		200.6
Property, plant and equipment	2.2		206.9
Amortizable intangible assets	22.9		136.5
Goodwill	23.6		452.7
Other assets	3.3		21.4
Total assets acquired	55.8		1,018.1
Accounts payable and accruals	2.6		141.7
Customer advance payments	0		9.0
Accrued income taxes payable	0		3.1
Current portion of long-term debt	0		98.8
Long-term debt	0		154.6
Other noncurrent liabilities	0		67.7
Total liabilities assumed	2.6		474.9
Purchase price	53.2		543.2
Fair value of contingent consideration (non-cash)	(4.3)		5.5
Fair value of Dresser-Rand common stock as partial consideration	0		(243.5)
Cash acquired	(0.1)		(21.7)
Cash paid	$ 48.8	$ 48.8	$ 283.5	$ 283.5

XML

Long-Term Debt - Additional Information (Detail) In Millions, unless otherwise specified	Sep. 30, 2012 USD ($)	Dec. 31, 2011 USD ($)	Sep. 30, 2012 Other Note Payable USD ($)	Dec. 31, 2011 Other Note Payable USD ($)	Sep. 30, 2012 Other Note Payable Repurchase of Equity shares of Guascor do Brasil Ltda USD ($)	Jun. 21, 2012 Euro-denominated revolving loan facility EUR (€)
Debt Instrument [Line Items]
Long-term debt	$ 1,095.9	$ 1,029.7	$ 53.7	$ 49.2	$ 20.2
Percent of ownership interest in Guascor do Brasil Ltda	81.40%
Aggregate principal amount of Euro-denominated revolving loan facility						€ 50.0

XML

Incentive Stock-Based Compensation Plans - Additional Information (Detail) (USD $) In Millions, except Share data, unless otherwise specified	9 Months Ended
	Sep. 30, 2012
Non Employee Directors
Schedule of Share based Compensation Arrangements by Share based Payment Award, Performance Options [Line Items]
Number of shares granted	15,281
Stock-based compensation plans, vesting period	1 year
Restricted Stock Units
Schedule of Share based Compensation Arrangements by Share based Payment Award, Performance Options [Line Items]
Number of shares granted	307,574
Stock-based compensation plans, vesting period	12 months
Total stock compensation expense	3.5
Options and stock appreciation rights | Common Stock
Schedule of Share based Compensation Arrangements by Share based Payment Award, Performance Options [Line Items]
Options and appreciation rights approved for stock compensation arrangements	174,201
Options and stock appreciation rights | Time Lapse Restricted Units
Schedule of Share based Compensation Arrangements by Share based Payment Award, Performance Options [Line Items]
Options and appreciation rights approved for stock compensation arrangements	292,254
Options and stock appreciation rights | Performance Restricted Stock
Schedule of Share based Compensation Arrangements by Share based Payment Award, Performance Options [Line Items]
Options and appreciation rights approved for stock compensation arrangements	66,707

XML

Financial Instruments - Additional Information (Detail) In Millions, unless otherwise specified	3 Months Ended	9 Months Ended			3 Months Ended		9 Months Ended
	Sep. 30, 2012 USD ($)	Sep. 30, 2012 USD ($)	Sep. 30, 2012 EUR (€)	Dec. 31, 2011 USD ($)	Sep. 30, 2012 Foreign Exchange Forward USD ($)	Sep. 30, 2011 Foreign Exchange Forward USD ($)	Sep. 30, 2012 Foreign Exchange Forward USD ($)	Sep. 30, 2011 Foreign Exchange Forward USD ($)
Financial Instruments [Line Items]
Interest rate swap notional amount	$ 23.1	$ 23.1	€ 18.0
Interest rate swap, fixed interest rate per annum	3.87%	3.87%
Fair value of interest rate swap	1.1	1.1
Unrealized loss related to interest rate swap	0	0.1
Net foreign currency gains (losses) recognized					3.2	(7.0)	10.3	(0.6)
Fair value of tradable emission allowances liability	$ 1.1	$ 1.1		$ 3.0

XML

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (Parenthetical) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Unrealized gain (loss) on derivatives, tax		$ 0.10	$ 0.04	$ 0.20
Amortization of prior service cost and net actuarial loss included in net periodic costs, tax	$ 0.8	$ 0.4	$ 2.5	$ 0.9

XML

Inventories (Detail) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Inventory Disclosure [Line Items]
Raw materials	$ 62.3	$ 60.0
Finished parts	206.8	187.1
Work-in-process	656.6	530.2
Inventory, Gross, Total	925.7	777.3
Less: progress payments	(419.4)	(369.6)
Total inventories	$ 506.3	$ 407.7

XML

Financial Instruments (€ in millions) (Tables)

9 Months Ended

Sep. 30, 2012

Foreign Currency Exchange Contracts Accounted for at Fair Value on Recurring Basis

The following table sets forth the Company’s foreign currency exchange contracts that were accounted for at fair value on a recurring basis:

	September 30, 2012		December 31, 2011
Foreign currency exchange contracts assets	$	15.4		$	7.1
Foreign currency exchange contracts liabilities	$	8.5		$	10.5

XML

Property, plant and equipment (Tables)

9 Months Ended

Sep. 30, 2012

Property, Plant and Equipment

Property, plant and equipment were as follows:

	September 30, 2012			December 31, 2011
Cost:
Land	$	30.6		$	28.4
Buildings and improvements		196.1			179.4
Machinery and equipment		479.9			460.8
		706.6			668.6
Less: accumulated depreciation		(249.0	)		(212.6	)
Property, plant and equipment, net	$	457.6		$	456.0

XML

Components of Net Post-Retirement Benefit Expense (Income) (Detail) (Other Postretirement Benefit Plans, Defined Benefit, USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Other Postretirement Benefit Plans, Defined Benefit
Defined Benefit Plan Disclosure [Line Items]
Interest cost	$ 0.2	$ 0.3	$ 0.6	$ 0.7
Amortization of net actuarial loss	0.3	0.2	0.8	0.7
Amortization of prior service credit	0	(0.4)	0	(1.3)
Net pension and net post-retirement benefits expense (income)	$ 0.5	$ 0.1	$ 1.4	$ 0.1

XML

Inventories, net - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Inventory Disclosure [Line Items]
Allowance for obsolescence for slow-moving inventory	$ 29.3	$ 30.5

XML

Long-Term Debt (Tables)

9 Months Ended

Sep. 30, 2012

Long-Term Debt

Long-term debt consists of the following:

	September 30, 2012			December 31, 2011
Senior Secured Credit Facility maturing March 2016	$	603.7		$	506.0
6 1/2% Senior Subordinated Notes due May 2021		375.0			375.0
Syndicated term loan and working capital line maturing December 2013		14.6			16.8
Other working capital lines maturing through 2014		2.6			4.8
Bank loans maturing through 2015		7.2			25.0
Project financing arrangements maturing through 2016		27.2			41.8
Subsidized loans		11.9			11.1
Other notes payable		53.7			49.2
Total debt		1,095.9			1,029.7
Less: current portion		(27.4	)		(39.3	)
Total long-term debt	$	1,068.5		$	990.4

Carrying and Fair Values of Senior Subordinated Notes

The carrying and fair values of the Company’s Senior Subordinated Notes were as follows:

	September 30, 2012				December 31, 2011
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
6 1/2% senior subordinated notes due May 2021	$	375.0	$	393.3	$	375.0	$	384.4

XML

Pension Plans (Tables)

9 Months Ended

Sep. 30, 2012

Components of Net Pension Expense

The components of net pension expense were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Service cost	$	2.2		$	2.0		$	6.8		$	6.1
Interest cost		4.9			5.1			14.6			15.2
Expected return on plan assets		(5.4	)		(5.5	)		(16.3	)		(16.5	)
Amortization of net actuarial loss		1.9			0.7			5.8			1.9
Amortization of prior service cost		0.1			0.3			0.2			0.9
Net pension expense	$	3.7		$	2.6		$	11.1		$	7.6

XML

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (USD $) In Millions, unless otherwise specified	Total	Common Stock	Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Non-Controlling Interest
Beginning Balance at Dec. 31, 2010	$ 1,087.3	$ 0.8	$ 341.9	$ 784.8	$ (40.2)
Stock-based compensation	16.0		16.0
Stock repurchases	(505.0)		(505.0)
Stock issued for acquisition	243.5		243.5
Net income	51.2			51.9		(0.7)
Other comprehensive income (loss)
Foreign currency translation adjustments	(44.1)				(44.1)	0.1
Unrealized (loss) gain on derivatives, net of tax of $0.04 and $0.2 in 2012 and 2011, respectively	(0.4)				(0.4)
Pension and other postretirement benefit plans
Amortization of prior service cost and net actuarial loss included in net periodic costs-net of tax of $2.5 and $0.9 in 2012 and 2011, respectively	1.3				1.3
Ending Balance at Sep. 30, 2011	849.9	0.8	96.4	836.7	(83.4)	(0.6)
Beginning Balance at Dec. 31, 2011	873.0	0.8	105.3	905.5	(138.8)	0.2
Stock-based compensation	25.8		25.8
Net income	101.4			98.8		2.6
Other comprehensive income (loss)
Foreign currency translation adjustments	(1.4)				(1.0)	(0.4)
Unrealized (loss) gain on derivatives, net of tax of $0.04 and $0.2 in 2012 and 2011, respectively	(0.1)				(0.1)
Pension and other postretirement benefit plans
Amortization of prior service cost and net actuarial loss included in net periodic costs-net of tax of $2.5 and $0.9 in 2012 and 2011, respectively	4.3				4.3
Ending Balance at Sep. 30, 2012	$ 1,003.0	$ 0.8	$ 131.1	$ 1,004.3	$ (135.6)	$ 2.4

XML

Post-Retirement Benefits Other than Pensions (Tables)

9 Months Ended

Sep. 30, 2012

Components of Net Post-Retirement Benefit Expense

The components of the net post-retirement benefit expense were as follows:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2012		2011			2012		2011
Interest cost	$	0.2	$	0.3		$	0.6	$	0.7
Amortization of net actuarial loss		0.3		0.2			0.8		0.7
Amortization of prior service credit		—		(0.4	)		—		(1.3	)
Net post-retirement benefits expense	$	0.5	$	0.1		$	1.4	$	0.1

XML

Weighted Average Useful Life, Gross Amount and Accumulated Amortization of Intangible Assets (Parenthetical) (Detail) (In-process research and development)	9 Months Ended
	Sep. 30, 2012 Y
In-process research and development
Finite-Lived Intangible Assets [Line Items]
Weighted Average Useful Lives	10	[1]

[1] In-process research and development will be amortized over 10 years beginning at the time revenues are generated. There has been no amortization recorded for in-process research and development as of September 30, 2012.

XML

Carrying and Fair Value of Senior Subordinated Notes (Detail) (6 1/2% Senior Subordinated Notes due May 2021, USD $) In Millions, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
6 1/2% Senior Subordinated Notes due May 2021
Significant Accounting Policies [Line Items]
Long term debt, carrying value	$ 375.0	$ 375.0
Long term debt, fair value	$ 393.3	$ 384.4

XML

CONSOLIDATED STATEMENT OF INCOME (USD $) In Millions, except Share data in Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Net sales of products	$ 390.3	$ 440.0	$ 1,312.4	$ 1,118.3
Net sales of services	204.1	190.5	579.6	455.3
Total revenues	594.4	630.5	1,892.0	1,573.6
Cost of products sold	279.5	323.0	989.1	822.5
Cost of services sold	144.3	136.1	419.6	333.1
Total cost of sales	423.8	459.1	1,408.7	1,155.6
Gross profit	170.6	171.4	483.3	418.0
Selling and administrative expenses	90.2	89.6	267.4	266.2
Research and development expenses	6.4	8.6	17.6	20.7
Income from operations	74.0	73.2	198.3	131.1
Interest expense, net	(15.7)	(13.7)	(47.9)	(44.7)
Early redemption premium on debt	0	0	0	(10.1)
Other income (expense), net	1.2	(0.5)	0.8	1.3
Income before income taxes	59.5	59.0	151.2	77.6
Provision for income taxes	17.4	17.9	49.8	26.4
Net income	42.1	41.1	101.4	51.2
Net (income) loss attributable to noncontrolling interest	(0.9)	(0.8)	(2.6)	0.7
Net income attributable to Dresser-Rand	$ 41.2	$ 40.3	$ 98.8	$ 51.9
Net income attributable to Dresser-Rand per share
Basic	$ 0.55	$ 0.52	$ 1.31	$ 0.66
Diluted	$ 0.54	$ 0.51	$ 1.30	$ 0.66
Weighted-average shares outstanding-(in thousands )
Basic	75,542	77,860	75,455	78,373
Diluted	76,351	78,611	76,168	79,134

XML

Property, Plant and Equipment (Detail) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Cost:
Land	$ 30.6	$ 28.4
Buildings and improvements	196.1	179.4
Machinery and equipment	479.9	460.8
Property, Plant and Equipment, Gross, Total	706.6	668.6
Less: accumulated depreciation	(249.0)	(212.6)
Property, plant and equipment, net	$ 457.6	$ 456.0

XML

CONSOLIDATED BALANCE SHEET (Parenthetical) (USD $) In Millions, except Share data, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Accounts receivable, allowance for losses	$ 8.2	$ 9.3
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	250,000,000	250,000,000
Common stock, shares issued	75,665,943	75,363,784
Common stock, shares outstanding	75,665,943	75,363,784

XML

Segment Information - Additional Information (Detail)	Sep. 30, 2012 Entity
Segment Reporting Information [Line Items]
Number of reportable segments	2

XML

Acquisitions and Other Investments - Additional Information (Detail) (USD $) In Millions, except Share data, unless otherwise specified	9 Months Ended	1 Months Ended	9 Months Ended		1 Months Ended		1 Months Ended	9 Months Ended		9 Months Ended		9 Months Ended
	Sep. 30, 2011	Jan. 04, 2012 Synchrony, Inc	Sep. 30, 2012 Synchrony, Inc	Jan. 04, 2012 Synchrony, Inc Maximum	May 04, 2011 Guascor	Dec. 31, 2011 Guascor	May 04, 2011 Guascor Minimum	Sep. 30, 2012 Echogen	Feb. 28, 2011 Echogen	Sep. 30, 2012 Ramgen Power Systems LLC.	Dec. 31, 2008 Ramgen Power Systems LLC.	Sep. 30, 2012 Ramgen Power Systems LLC. Maximum
Business Acquisition [Line Items]
Business acquisition, ownership percentage		100.00%			100.00%
Cash paid		$ 48.8	$ 48.8		$ 283.5	$ 283.5
Business acquisition, additional contingent consideration				10.0
Payment made to seller of Synchrony			2.7
Estimated fair values of additional consideration			1.6
Business acquisition, assumed debt					253.4
Common stock issued for acquisition					5,033,172
Purchase price					543.2
Business acquisition, amortization of goodwill for tax purpose, expected tax deductible term							5 years
Business acquisition, non-recurring acquisition and integration cost	14.9
Minimum royalties that should be paid in first five years of commercialization									6.0
Option to acquire outstanding shares, expiration date								Feb. 28, 2013
Percentage of aggregate non-controlling interest acquired								32.90%		36.00%
Equity method Investments								16.9		26.3
Investment to acquire noncontrolling interest								20.0
Additional investment allowed								Further commitments to fund $3.0 through February 2013
Additional investment commitments, month and year								2013-02
Option to acquire business											25.0
Dates within which options may be exercised to acquire business												2014-11-10
Additional optional investments										$ 27.0

XML

Warranties

9 Months Ended

Sep. 30, 2012

Warranties

13. Warranties

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

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

	Nine Months Ended September 30,
	2012			2011
Beginning balance	$	25.6		$	28.2
Liabilities assumed from acquisitions		—			6.7
Provision for warranties issued during period		12.2			10.8
Adjustments to warranties issued in prior periods		(3.3	)		(5.9	)
Payments during the period		(14.0	)		(12.7	)
Foreign currency adjustments		(0.2	)		(0.8	)
Ending balance	$	20.3		$	26.3

Generally, reductions to warranties issued in prior periods represent the lapsing of warranties for which accruals were made based on historical experience, and for which the expected cost was not realized.

XML

Consolidated Balance Sheet Reflecting Revisions to Purchase Price Allocation of Guascor (Detail) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2011
Business Acquisition [Line Items]
Accounts receivable, net	$ 412.2	$ 477.5
Inventories, net	506.3	407.7
Total current assets	1,221.0	1,150.3
Property, plant and equipment, net	457.6	456.0
Goodwill	894.2	869.8
Intangible assets, net	511.3	508.0
Other assets	76.9	68.5
Total assets	3,173.3	3,063.7	2,989.2
Accounts payable and accruals	544.0	600.7
Accrued income taxes payable	12.8	20.1
Total current liabilities	844.3	932.3
Deferred income taxes	49.1	45.2
Long-term debt	1,068.5	990.4
Other noncurrent liabilities	84.8	86.9
Total liabilities	2,170.3	2,190.7
Total liabilities and stockholders' equity	3,173.3	3,063.7
As Previously Reported
Business Acquisition [Line Items]
Accounts receivable, net		476.9
Inventories, net		409.0
Total current assets		1,151.0
Property, plant and equipment, net		466.1
Goodwill		851.3
Intangible assets, net		499.0
Other assets		63.9
Total assets		3,042.4
Accounts payable and accruals		595.4
Accrued income taxes payable		19.9
Total current liabilities		926.8
Deferred income taxes		44.5
Long-term debt		987.9
Other noncurrent liabilities		75.4
Total liabilities		2,170.5
Total liabilities and stockholders' equity		3,042.4
Increase (Decrease)
Business Acquisition [Line Items]
Accounts receivable, net		0.6
Inventories, net		(1.3)
Total current assets		(0.7)
Property, plant and equipment, net		(10.1)
Goodwill		18.5
Intangible assets, net		9.0
Other assets		4.6
Total assets		21.3
Accounts payable and accruals		5.3
Accrued income taxes payable		0.2
Total current liabilities		5.5
Deferred income taxes		0.7
Long-term debt		2.5
Other noncurrent liabilities		11.5
Total liabilities		20.2
Total liabilities and stockholders' equity		$ 21.3

XML

Incentive Stock-Based Compensation Plans

9 Months Ended

Sep. 30, 2012

Incentive Stock-Based Compensation Plans

15. Incentive Stock-Based Compensation Plans

During the nine months ended September 30, 2012, the Compensation Committee of the Company’s Board of Directors (“Compensation Committee”) approved grants of options and stock appreciation rights for 174,201 shares of common stock and grants of 292,254 shares of time-vested restricted stock units to employees and a consultant under the Dresser-Rand Group Inc. 2008 Stock Incentive Plan (the “2008 Plan”). Also during the nine months ended September 30, 2012, the Compensation Committee approved the issuance of Performance Restricted Stock Units with a target grant amount of 66,707 restricted stock units.

As permitted by the provisions of its Annual Incentive Plan, in March 2012, the Company elected to issue restricted stock units under the 2008 Plan in lieu of paying the 2011 incentive in cash. The number of restricted stock units issued during the nine months ended September 30, 2012, totaled 307,574 and such units vest in accordance with grant terms and conditions, 12 months from the date of issuance. Total expense associated with the 2011 incentive was approximately $3.5 for the nine months ended September 30, 2012.

The Company also grants shares of restricted stock to non-employee Directors each February. The 15,281 shares granted to non-employee Directors during the nine months ended September 30, 2012, vest after a one year period.

The difference between basic weighted-average shares outstanding and diluted weighted-average shares outstanding in the computation of earnings per share presented in the Consolidated Statement of Income is comprised entirely of the dilutive effect of the stock-based compensation awards described above for all periods presented.

XML

CONSOLIDATED STATEMENT OF CASH FLOWS (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Cash flows from operating activities
Net income	$ 101.4	$ 51.2
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	64.2	59.9
Deferred income taxes	7.4	9.3
Stock-based compensation	20.4	9.2
Excess tax benefits from stock-based compensation	(4.0)	(3.6)
Amortization of debt financing costs	2.9	10.8
Provision for losses on inventory	0.7	0.4
Loss on sale of property, plant and equipment	0.8	0.2
Net loss from equity investments	1.0	0.1
Changes in working capital and other, net of acquisitions
Accounts receivable	67.1	19.8
Inventories	(95.9)	(76.8)
Accounts payable and accruals	(60.2)	6.2
Customer advances	(15.7)	50.9
Other, principally tax and pension accruals	(40.8)	(58.8)
Net cash provided by operating activities	49.3	78.8
Cash flows from investing activities
Capital expenditures	(48.9)	(38.8)
Proceeds from sales of property, plant and equipment	0.8	0.3
Acquisitions, net of cash acquired	(48.8)	(283.5)
Other investments	(13.2)	(10.0)
Decrease in restricted cash balances	5.2	7.7
Net cash used in investing activities	(104.9)	(324.3)
Cash flows from financing activities
Proceeds from exercise of stock options	2.5	2.7
Proceeds from borrowings	387.6	1,306.6
Excess tax benefits from stock-based compensation	4.0	3.6
Repurchase of common stock	0	(505.0)
Payments for debt financing costs	(0.4)	(15.7)
Repayments of borrowings	(316.2)	(821.7)
Net cash provided by (used in) financing activities	77.5	(29.5)
Effect of exchange rate changes on cash and cash equivalents	0.8	1.3
Net increase (decrease) in cash and cash equivalents	22.7	(273.7)
Cash and cash equivalents, beginning of period	128.2	420.8
Cash and cash equivalents, end of period	$ 150.9	$ 147.1

XML

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Net income	$ 42.1	$ 41.1	$ 101.4	$ 51.2
Other comprehensive income (loss)
Foreign currency translation adjustments	18.7	(76.8)	(1.4)	(44.1)
Unrealized loss on derivatives-net of tax of $- and $0.1 for the three months ended September 30, 2012 and 2011, respectively, and $0.04 and $0.2 for the nine months ended September 30, 2012 and 2011, respectively	0	(0.6)	(0.1)	(0.4)
Pension and other postretirement benefit plans
Amortization of prior service cost and net actuarial loss included in net periodic costs-net of tax of $0.8 and $0.4 for the three months ended September 30, 2012 and 2011, respectively, and $2.5 and $0.9 for the nine months ended September 30, 2012 and 2011, respectively	1.5	0.4	4.3	1.3
Total other comprehensive income (loss)	20.2	(77.0)	2.8	(43.2)
Total comprehensive income (loss)	62.3	(35.9)	104.2	8.0
Comprehensive (income) loss attributable to noncontrolling interest	(0.8)	(1.0)	(2.2)	0.6
Comprehensive income (loss) attributable to Dresser-Rand	$ 61.5	$ (36.9)	$ 102.0	$ 8.6

XML

Income taxes

9 Months Ended

Sep. 30, 2012

Income taxes

8. Income taxes

We operate in numerous countries and tax jurisdictions around the world and many of the tax returns we have filed have not been audited. Accordingly, we could be exposed to additional income and other taxes and, as a result, we maintain a reserve for any uncertain tax position we believe is not more-likely-than-not sustainable under audit.

During the three months ended September 30, 2012, the Company filed its 2011 U.S. tax return. The difference between the filed tax return and the estimated tax provision for the year ended December 31, 2011 of $2.5 was recorded as an income tax benefit in the three months ended September 30, 2012. Generally, our estimated income tax provision for the three and nine months ended September 30, 2012 and 2011 differs from the U.S. federal statutory rate of 35% because of different tax rates in foreign tax jurisdictions, certain exemptions and credits allowable for income tax purposes, which are partially offset by state and local income taxes, and valuation allowances on net operating loss carryforwards that more-likely-than-not will not be realized. We will adjust the valuation allowances in the future when it becomes more-likely-than-not that the benefits of deferred tax assets will be realized or not realized.

Approximately $83.0 of our cash is not available for general corporate use in the U.S. because such earnings have been permanently reinvested in foreign countries or foreign markets. Currently, we have no plans to repatriate any of the foreign-based cash or unremitted earnings based on our intended uses of the foreign-based cash and our existing cash and cash equivalents balances in the U.S. If foreign funds are needed for our operations in the U.S., we would be required to accrue and pay U.S. taxes, net of applicable foreign tax credits, to repatriate these funds. However, our intent is to permanently reinvest these funds outside the U.S., and our current plans do not demonstrate a need to repatriate permanently reinvested earnings to fund our U.S. operations.

XML

Document and Entity Information	9 Months Ended
	Sep. 30, 2012	Oct. 25, 2012
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3
Trading Symbol	DRC
Entity Registrant Name	DRESSER-RAND GROUP INC.
Entity Central Index Key	0001316656
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		75,669,424

XML

Long-Term Debt

9 Months Ended

Sep. 30, 2012

Long-Term Debt

9. Long-Term Debt

Long-term debt consists of the following:

	September 30, 2012			December 31, 2011
Senior Secured Credit Facility maturing March 2016	$	603.7		$	506.0
6 1/2% Senior Subordinated Notes due May 2021		375.0			375.0
Syndicated term loan and working capital line maturing December 2013		14.6			16.8
Other working capital lines maturing through 2014		2.6			4.8
Bank loans maturing through 2015		7.2			25.0
Project financing arrangements maturing through 2016		27.2			41.8
Subsidized loans		11.9			11.1
Other notes payable		53.7			49.2
Total debt		1,095.9			1,029.7
Less: current portion		(27.4	)		(39.3	)
Total long-term debt	$	1,068.5		$	990.4

Included in other notes payable is approximately $20.2 for the repurchase of equity shares of Guascor do Brasil Ltda. (“GdB”), an 81.4% owned indirect subsidiary of the Company, from Electrobrás, a Brazilian electric utility. Electrobrás filed a lawsuit in the Civil Courthouse in São Paulo, Brazil, in December 2011, against Guascor and Energia Norte Participações Ltda. (“ENNOR”), claiming that in July 2006 the defendants breached the shareholders’ agreement relating to GdB. Electrobrás has alleged that the defendants failed to repurchase the GdB shares held by Electrobrás pursuant to the terms of the shareholders’ agreement and is seeking enforcement of the agreement. The Company has engaged in settlement negotiations with Electrobrás.

On June 21, 2012, we entered into a Second Amendment (the “Second Amendment”) to our Senior Secured Credit Facility. The Second Amendment amends the Senior Secured Credit Facility to provide for a Euro-denominated revolving loan facility in an aggregate principal amount at any time outstanding not in excess of €50.0 million (the “Euro Facility”) to be made available to Guascor and the other borrowers under the facility. The loans under the Euro Facility bear interest at the Senior Secured Credit Facility rates and will mature on the same date as the loan facilities under the Senior Secured Credit Facility.

At September 30, 2012, we were in compliance with our debt covenants.

The carrying and fair values of the Company’s Senior Subordinated Notes were as follows:

	September 30, 2012				December 31, 2011
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
6 1/2% senior subordinated notes due May 2021	$	375.0	$	393.3	$	375.0	$	384.4

The carrying values of all of the Company’s other long-term debt approximate their fair values.

XML

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Parenthetical) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Unrealized loss on derivatives, tax		$ 0.10	$ 0.04	$ 0.20
Amortization of prior service cost and net actuarial loss included in net periodic costs, tax	$ 0.8	$ 0.4	$ 2.5	$ 0.9

XML

Acquisitions and Other Investments

9 Months Ended

Sep. 30, 2012

Acquisitions and Other Investments

3. Acquisitions and Other Investments

Acquisitions

On January 4, 2012, the Company acquired Synchrony, Inc. (“Synchrony”), a technology development company with a portfolio of technologies and products including active magnetic bearings, low power, high speed motors and generators, and power electronics for clean, efficient and reliable rotating machinery. Founded in 1993, Synchrony is headquartered in Roanoke County, Virginia, where it operates an ISO 9001 certified production facility, in-house test cells for high-speed machinery, a model shop for prototype fabrication and assembly and an on-site software integration laboratory. Pursuant to the terms of the acquisition agreement, the Company acquired Synchrony for approximately $48.8, net of cash acquired, at which time Synchrony became a 100%-owned indirect subsidiary of the Company. The acquisition gives the Company the ability to integrate Synchrony’s active magnetic bearing capability into its product development process and to offer oil-free solutions in high speed rotating equipment applications, the benefits of which include reduced footprint and weight of the application and more environmentally-friendly applications. The agreement includes the potential for additional contingent consideration of up to a maximum of $10.0 based on technical milestones and business performance. In accordance with the purchase agreement, a payment of $2.7 was made during September 2012 to the sellers of Synchrony because certain technical milestones were met.

The estimated fair value of the additional contingent consideration for the Synchrony acquisition of $1.6 at September 30, 2012, is included in other noncurrent liabilities on the consolidated balance sheet. Changes in the fair value from the date of acquisition are recognized immediately in the consolidated statement of income until the contingencies are resolved.

On May 4, 2011, the Company acquired all of the issued and outstanding capital stock of Grupo Guascor, S.L. (“Guascor”) pursuant to a Share Purchase Agreement (the “SPA”), at which time Guascor became a 100%-owned subsidiary of the Company. Guascor is a supplier of diesel and gas engines and provides customized energy solutions across worldwide energy infrastructure markets based upon reciprocating engine power systems technologies. Pursuant to the SPA, the Company paid approximately $283.5, net of cash acquired, assumed $253.4 of debt, and delivered 5,033,172 shares of Company common stock at closing. The total purchase price was approximately $543.2, subject to a further cash purchase price adjustment to the extent that net debt (debt minus cash), as defined in the SPA, is different from the net debt at the date of closing, which is being contested by the parties and could take several months and potentially years to finalize.

The purchase prices for Synchrony and Guascor were allocated to their respective net tangible and identifiable intangible assets acquired and liabilities assumed based on their fair value estimates. Our estimates and assumptions are subject to change within the measurement period (up to one year from the acquisition date). Accordingly, the purchase price allocation for Synchrony may be revised as additional information becomes available and as additional analyses are performed. Revisions to the purchase price allocation of Guascor through the end of the measurement period have been reflected in the Consolidated Balance Sheet as of December 31, 2011, herein, and these revisions are summarized in the table below. These revisions were not material to the Consolidated Statements of Income for the three and nine months ended September 30, 2011.

	As Previously
	Reported at					As Revised at
	December 31,		Increase			December 31,
	2011		(Decrease)			2011
Accounts receivable, net	$	476.9	$	0.6		$	477.5
Inventories, net		409.0		(1.3	)		407.7
Total current assets		1,151.0		(0.7	)		1,150.3
Property, plant and equipment, net		466.1		(10.1	)		456.0
Goodwill		851.3		18.5			869.8
Intangible assets, net		499.0		9.0			508.0
Other assets		63.9		4.6			68.5
Total assets		3,042.4		21.3			3,063.7
Accounts payable and accruals		595.4		5.3			600.7
Accrued income taxes payable		19.9		0.2			20.1
Total current liabilities		926.8		5.5			932.3
Deferred income taxes		44.5		0.7			45.2
Long-term debt		987.9		2.5			990.4
Other noncurrent liabilities		75.4		11.5			86.9
Total liabilities		2,170.5		20.2			2,190.7
Total liabilities and stockholders' equity		3,042.4		21.3			3,063.7

Goodwill from each of the acquisitions principally resulted from expected synergies from combining the operations of the acquired businesses and the Company. A portion of the goodwill associated with the Guascor acquisition may be amortized for income tax purposes over a period of not less than five years. Due to the preliminary nature of certain tax planning strategies, the amount of goodwill amortization that may be deductible for income tax purposes associated with the Guascor acquisition has not yet been determined. The amortization of goodwill related to the acquisition of Synchrony is not deductible for income tax purposes.

The acquisition prices of Synchrony in 2012 and Guascor in 2011 were allocated to the fair values of assets acquired and liabilities assumed as follows:

	2012			2011
Cash and cash equivalents	$	0.1		$	21.7
Restricted cash		—			36.6
Accounts receivable, net		2.1			79.3
Inventory, net		1.5			41.9
Prepaid expenses		0.1			21.1
Total current assets		3.8			200.6
Property, plant and equipment		2.2			206.9
Amortizable intangible assets		22.9			136.5
Goodwill		23.6			452.7
Other assets		3.3			21.4
Total assets acquired		55.8			1,018.1
Accounts payable and accruals		2.6			141.7
Customer advance payments		—			9.0
Accrued income taxes payable		—			3.1
Current portion of long-term debt		—			98.8
Long-term debt		—			154.6
Other noncurrent liabilities		—			67.7
Total liabilities assumed		2.6			474.9
Purchase price		53.2			543.2
Fair value of contingent consideration (non-cash)		(4.3	)		5.5
Fair value of Dresser-Rand common stock as partial consideration		—			(243.5	)
Cash acquired		(0.1	)		(21.7	)
Cash paid	$	48.8		$	283.5

Pro forma financial information for the Synchrony acquisition, assuming it occurred at the beginning of each income statement period, has not been presented because the effect on our results for each of those periods was not considered material. The financial results of the acquired companies have been included in our consolidated financial results from the date of each acquisition and have been incorporated into the Company’s existing new units and aftermarket parts and services segments.

The following unaudited supplemental pro forma results present consolidated information as if the Guascor acquisition had been completed as of January 1, 2010. The pro forma results include: (i) the depreciation associated with the additional fair value of the acquired property, plant and equipment, (ii) the amortization associated with an estimate of the acquired intangible assets, (iii) interest expense associated with debt used to fund the acquisition and the portion of the accelerated stock acquisition plans executed to acquire the number of shares issued in connection with the acquisition, (iv) non-recurring acquisition costs of $14.9 for the nine months ended September 30, 2011, directly related to the acquisition of Guascor, and (v) the income tax effect of these items. The pro forma results should not be considered indicative of the results that would have occurred if the acquisition and related borrowings had been consummated as of January 1, 2010, nor are they indicative of future results.

	Nine Months Ended September 30, 2011
Total revenues	$	1,701.5
Net income attributable to Dresser-Rand	$	57.8
Diluted earnings per share attributable to Dresser-Rand	$	0.72

Other Investments

In February 2011, the Company entered into an agreement to acquire a noncontrolling interest in Echogen Power Systems, LLC (“Echogen”), a privately-held technology company that is developing and commercializing power generation systems that harness waste heat for power and cooling applications. The Company also received an option to acquire the outstanding shares of Echogen, which expires February 28, 2013, and certain broad license rights in certain of the Company’s key markets. The Company will pay Echogen a royalty based on future equipment sales in these markets. Minimum royalties of $6.0 must be paid in the first five years of commercialization, regardless of the amount of revenues generated, or the license will terminate. As of September 30, 2012, the Company had invested a total of $20.0 for a 32.9% noncontrolling interest in Echogen and had made further commitments to fund $3.0 through February 2013. In determining whether the Company should consolidate Echogen, the Company considered that its board participation, ownership interest and the option to acquire would not give the Company the power to direct the activities of Echogen and, consequently, would not result in the Company being the primary beneficiary. The investment in Echogen is being accounted for under the equity method of accounting, and the amount of the investment recorded in other noncurrent assets on the consolidated balance sheet is $16.9 at September 30, 2012.

In 2008, the Company entered into an agreement by which it acquired a noncontrolling interest in Ramgen Power Systems, LLC (“Ramgen”), a privately-held company that is developing compressor technology that applies proven supersonic aircraft technology to ground-based air and gas compressors. In addition to receiving a noncontrolling interest, the Company received an option to acquire the business of Ramgen at a price of $25.0 and a royalty commitment. The option is exercisable at any time through November 10, 2014. Since entering into the agreement, the Company has made additional investments totaling $27.0, which have resulted in an aggregate noncontrolling interest of 36.0% at September 30, 2012. The Company’s maximum exposure to loss on its investment in Ramgen is limited to amounts invested plus any amounts the Company may choose to invest in the future. In determining whether the Company should consolidate Ramgen, the Company considered that its board participation, ownership interest and the option to acquire would not give the Company the power to direct the activities of Ramgen and, consequently, would not result in the Company being the primary beneficiary. The investment in Ramgen is being accounted for under the equity method of accounting, and the amount of the investment recorded in other noncurrent assets on the consolidated balance sheet is $26.3 at September 30, 2012.

XML

New Accounting Standards

9 Months Ended

Sep. 30, 2012

New Accounting Standards

2. New Accounting Standards

Effective January 1, 2012, the Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs (“ASU 2011-04”), which amends Accounting Standards Codification 820, Fair Value Measurement (“ASC 820”). The amendments in ASU 2011-04 generally modify ASC 820 to clarify that the highest and best use concept only applies to nonfinancial assets and provide specific requirements for measuring instruments recorded in shareholders’ equity. In addition, ASU 2011-04 added requirements for (1) measuring the fair value of financial instruments that are managed within a portfolio, (2) applying discounts and premiums in fair value measurements, and (3) disclosing further information about Level 3 fair value measurements, a reporting entity’s use of non-financial assets, and the categorization of items that are not measured at fair value when fair value is required to be disclosed. ASC 820 results in common principles and requirements for measuring fair value and for disclosing information about fair value measurements in accordance with U.S. GAAP and International Financial Reporting Standards. The adoption of ASU 2011-04 did not have a material impact on the Company’s consolidated financial statements or fair value measurements.

Effective January 1, 2012, the Company adopted FASB ASU 2011-08, Intangibles — Goodwill and Other (Topic 350): Testing Goodwill for Impairment (“ASU 2011-08”). ASU 2011-08 is intended to reduce the cost and complexity of the annual goodwill impairment test by providing entities with the option of performing a “qualitative” assessment to determine whether further impairment testing is necessary. ASU 2011-08 permits an entity to choose to perform the qualitative assessment on none, some, or all of its reporting units. An entity may also bypass the qualitative assessment for any reporting unit in any period and proceed directly to step one of the quantitative impairment test, and then perform the qualitative assessment in any subsequent period. The Company performs its impairment test annually as of August 31. The adoption of ASU 2011-08 did not have a material impact on the Company’s consolidated financial statements.

Effective January 1, 2012, FASB ASU 2011-12, Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05 (“ASU 2011-12”) became effective for the Company. The amendments in ASU 2011-12 supersede certain pending paragraphs in FASB ASU 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income (“ASU 2011-05”), to effectively defer only those changes in ASU 2011-05 that relate to the presentation of reclassification adjustments out of accumulated other comprehensive income. The amendments are temporary to allow the FASB time to redeliberate the presentation requirements for reclassifications out of accumulated other comprehensive income for annual and interim financial statements for public, private and non-profit entities. ASU 2011-12 amendments are effective at the same time as the amendments in ASU 2011-05, so that entities will not be required to comply with the presentation requirements in ASU 2011-05 that ASU 2011-12 is deferring. The amendments in ASU 2011-12 are effective for public entities for fiscal years, and interim periods within those years, beginning after December 15, 2011. The adoption of ASU 2011-12 did not have a material impact on the Company’s consolidated financial statements.

In July 2012 the FASB issued ASU 2012-02, Intangibles — Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment (“ASU 2012-02”). The amendments in ASU 2012-02 are intended to reduce cost and complexity by providing an entity with the option to make a qualitative assessment about the likelihood that an indefinite-lived intangible asset is impaired to determine whether it should perform a quantitative impairment test. The amendments in ASU 2012-02 also enhance the consistency of impairment testing guidance among long-lived asset categories by permitting an entity to assess qualitative factors to determine whether it is necessary to calculate the asset’s fair value when testing an indefinite-lived intangible asset for impairment, which is equivalent to the impairment testing requirements for other long-lived assets. In accordance with the amendments in ASU 2012-02, an entity will have an option not to calculate annually the fair value of an indefinite-lived intangible asset if the entity determines that it is not more-likely-than-not that the asset is impaired. The amendments in ASU 2012-02 are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted, including for annual and interim impairment tests performed as of a date before July 27, 2012, if a public entity’s financial statements for the most recent annual or interim period have not yet been issued or, for nonpublic entities, have not yet been made available for issuance. The adoption of ASU 2012-02 is not expected to have a material impact on the Company’s consolidated financial statements.

XML

Segment Information:

9 Months Ended

Sep. 30, 2012

Segment Information:

14. Segment Information:

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

1) New units are highly engineered solutions to new requests from clients and standardized equipment such as engines and single stage steam turbines. This segment includes engineering, manufacturing, sales and administrative support.

2) Aftermarket parts and services consist of support solutions for the existing population of installed equipment and the operation and maintenance of several types of energy plants. This segment includes engineering, manufacturing, sales and administrative support.

Unallocated amounts represent expenses and assets that cannot be assigned directly to either reportable segment because of their nature. Unallocated net expenses include certain corporate expenses and research and development expenses. Assets that are directly assigned to the two reportable segments are trade accounts receivable, net inventories and goodwill. Unallocated assets include cash, prepaid expenses and other, deferred taxes, property, plant and equipment and intangible assets.

Segment results for the three and nine months ended September 30, 2012 and 2011, were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Revenues
New units	$	247.5		$	292.6		$	902.6		$	739.0
Aftermarket parts and services		346.9			337.9			989.4			834.6
Total revenues	$	594.4		$	630.5		$	1,892.0		$	1,573.6
Income from operations
New units	$	21.1		$	30.2		$	68.6		$	66.0
Aftermarket parts and services		76.1			68.8			199.3			144.2
Unallocable		(23.2	)		(25.8	)		(69.6	)		(79.1	)
Total income from operations	$	74.0		$	73.2		$	198.3		$	131.1
Depreciation and amortization
New units	$	10.7		$	11.1		$	33.5		$	27.9
Aftermarket parts and services		10.7			12.6			30.7			32.0
Total depreciation and amortization	$	21.4		$	23.7		$	64.2		$	59.9
Total assets (including goodwill)
New units	$	728.4		$	607.8		$	728.4		$	607.8
Aftermarket parts and services		1,076.7			1,007.3			1,076.7			1,007.3
Unallocable		1,368.2			1,374.1			1,368.2			1,374.1
Total assets	$	3,173.3		$	2,989.2		$	3,173.3		$	2,989.2

XML

Pension Plans

9 Months Ended

Sep. 30, 2012

Pension Plans

10. Pension Plans

The components of net pension expense were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Service cost	$	2.2		$	2.0		$	6.8		$	6.1
Interest cost		4.9			5.1			14.6			15.2
Expected return on plan assets		(5.4	)		(5.5	)		(16.3	)		(16.5	)
Amortization of net actuarial loss		1.9			0.7			5.8			1.9
Amortization of prior service cost		0.1			0.3			0.2			0.9
Net pension expense	$	3.7		$	2.6		$	11.1		$	7.6

The Company made pension contributions of $3.5 and $19.0, respectively, during the three and nine months ended September 30, 2012, and $3.1 and $28.8, respectively, during the three and nine months ended September 30, 2011.

XML

Property, plant and equipment

9 Months Ended

Sep. 30, 2012

Property, plant and equipment

6. Property, plant and equipment

Property, plant and equipment were as follows:

	September 30, 2012			December 31, 2011
Cost:
Land	$	30.6		$	28.4
Buildings and improvements		196.1			179.4
Machinery and equipment		479.9			460.8
		706.6			668.6
Less: accumulated depreciation		(249.0	)		(212.6	)
Property, plant and equipment, net	$	457.6		$	456.0

Depreciation expense was $13.7 and $41.9 for the three and nine months ended September 30, 2012, respectively, and $13.1 and $33.2 for the three and nine months ended September 30, 2011, respectively.

XML

Segment Results (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Segment Reporting Information [Line Items]
Revenues	$ 594.4	$ 630.5	$ 1,892.0	$ 1,573.6
Income from operations	74.0	73.2	198.3	131.1
Depreciation and amortization	21.4	23.7	64.2	59.9
Total assets	3,173.3	2,989.2	3,173.3	2,989.2	3,063.7
New Units
Segment Reporting Information [Line Items]
Revenues	247.5	292.6	902.6	739.0
Income from operations	21.1	30.2	68.6	66.0
Depreciation and amortization	10.7	11.1	33.5	27.9
Total assets	728.4	607.8	728.4	607.8
Aftermarket parts and services
Segment Reporting Information [Line Items]
Revenues	346.9	337.9	989.4	834.6
Income from operations	76.1	68.8	199.3	144.2
Depreciation and amortization	10.7	12.6	30.7	32.0
Total assets	1,076.7	1,007.3	1,076.7	1,007.3
Unallocable
Segment Reporting Information [Line Items]
Income from operations	(23.2)	(25.8)	(69.6)	(79.1)
Total assets	$ 1,368.2	$ 1,374.1	$ 1,368.2	$ 1,374.1

XML

Intangible Assets and Goodwill

9 Months Ended

Sep. 30, 2012

Intangible Assets and Goodwill

4. Intangible Assets and Goodwill

The following table sets forth the weighted-average useful life, gross amount and accumulated amortization of intangible assets:

	September 30, 2012					December 31, 2011
	Cost		Accumulated Amortization		Weighted- Average Useful Lives	Cost		Accumulated Amortization
Trade names	$	117.4	$	20.0	39 years	$	117.5	$	17.5
Customer relationships		330.6		62.4	32 years		322.9		52.6
Non-compete agreement		5.4		3.5	3 years		4.9		2.4
Existing technology		161.6		46.1	23 years		143.5		40.5
Contracts and purchase agreements		18.2		8.1	11 years		18.9		7.3
Software		30.6		24.2	10 years		30.6		21.9
In-process research and development		11.8		—	(a)		11.9		—
Total amortizable intangible assets	$	675.6	$	164.3		$	650.2	$	142.2

(a) In-process research and development will be amortized over 10 years beginning at the time revenues are generated. There has been no amortization recorded for in-process research and development as of September 30, 2012.

Intangible asset amortization expense was $7.7 and $22.3 for the three and nine months ended September 30, 2012, respectively, and $10.6 and $26.7 for the three and nine months ended September 30, 2011, respectively.

The Company had no goodwill impairments for the nine months ended September 30, 2012, and the year ended December 31, 2011. The following table represents the changes in goodwill in total and by segment (see Note 14):

	New Units			Aftermarket Parts and Services		Total
Balance, December 31, 2011	$	442.6		$	427.2	$	869.8
Acquisitions		23.6			—		23.6
Foreign currency adjustments		(0.4	)		1.2		0.8
Balance, September 30, 2012	$	465.8		$	428.4	$	894.2

XML

Inventories, net

9 Months Ended

Sep. 30, 2012

Inventories, net

5. Inventories, net

Inventories were as follows:

	September 30, 2012			December 31, 2011
Raw materials	$	62.3		$	60.0
Finished parts		206.8			187.1
Work-in-process		656.6			530.2
		925.7			777.3
Less: progress payments		(419.4	)		(369.6	)
Total inventories	$	506.3		$	407.7

Finished parts may be used in production or sold to customers. Progress payments represent payments from clients based on milestone completion schedules. Any payments received in excess of inventory investment are classified as “Customer Advance Payments” in the current liabilities section of the consolidated balance sheet. The total allowance for obsolescence for slow-moving inventory for all categories of inventory was $29.3 and $30.5 at September 30, 2012, and December 31, 2011, respectively.

XML

Financial Instruments (€ in millions)

9 Months Ended

Sep. 30, 2012

Financial Instruments (€ in millions)

7. Financial Instruments (€ in millions)

The Company manages exposure to changes in foreign currency exchange rates and interest rates through its normal operating and financing activities as well as through the use of financial instruments, principally forward exchange contracts and interest rate swaps.

The purpose of the Company’s hedging activities is to mitigate the economic impact of changes in foreign currency exchange rates and interest rates. The Company attempts to hedge transaction exposures through natural offsets. To the extent that this is not practicable, the Company may enter into forward exchange contracts or interest rate swaps. Major exposure areas considered for hedging include foreign currency denominated receivables and payables, firm committed transactions, forecast sales and purchases and variable interest rates.

The Company has entered into an interest rate swap agreement to minimize the economic impact of unexpected fluctuations in interest rates on the lease of its compressor testing facility in France. The interest rate swap has a notional amount of €18.0 (approximately $23.1) and effectively converts substantially the entire interest component of the lease from a variable rate of interest to a fixed rate of interest of approximately 3.87% per annum. The interest rate swap has been designated as a cash flow hedge for accounting purposes, and unrealized gains and losses are recognized in other comprehensive income. The fair value of the interest rate swap at September 30, 2012 was $1.1 and the related unrealized loss for the three and nine months ended September 30, 2012 was $0.0 and $0.1, respectively.

None of the Company’s other derivative financial instruments are designated as hedges for accounting purposes. The Company recognizes derivatives at fair value in prepaid expenses and other accounts payable and accruals, as appropriate, on the consolidated balance sheet. Changes in the fair values of derivatives that are not designated as hedges for accounting purposes are immediately recognized in the consolidated statement of income in other (expense) income.

The following table sets forth the Company’s foreign currency exchange contracts that were accounted for at fair value on a recurring basis:

	September 30, 2012		December 31, 2011
Foreign currency exchange contracts assets	$	15.4		$	7.1
Foreign currency exchange contracts liabilities	$	8.5		$	10.5

The net foreign currency gains (losses) recognized for forward currency contracts were $3.2 and $10.3 for the three and nine months ended September 30, 2012, respectively, compared to ($7.0) and ($0.6) for the three and nine months ended September 30, 2011, respectively.

Certain countries in which the Company operates have emission reduction programs under which the Company receives tradable emission allowances. To the extent that actual emissions exceed tradable emission allowances, the Company records a liability at fair value. Changes in the fair value of this liability are recorded in other income (expense). The fair value of the liability from the shortfall of tradable emission allowances was $1.1 and $3.0 at September 30, 2012, and December 31, 2011, respectively.

XML

Segment Information: (Tables)

9 Months Ended

Sep. 30, 2012

Segment Results

Segment results for the three and nine months ended September 30, 2012 and 2011, were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Revenues
New units	$	247.5		$	292.6		$	902.6		$	739.0
Aftermarket parts and services		346.9			337.9			989.4			834.6
Total revenues	$	594.4		$	630.5		$	1,892.0		$	1,573.6
Income from operations
New units	$	21.1		$	30.2		$	68.6		$	66.0
Aftermarket parts and services		76.1			68.8			199.3			144.2
Unallocable		(23.2	)		(25.8	)		(69.6	)		(79.1	)
Total income from operations	$	74.0		$	73.2		$	198.3		$	131.1
Depreciation and amortization
New units	$	10.7		$	11.1		$	33.5		$	27.9
Aftermarket parts and services		10.7			12.6			30.7			32.0
Total depreciation and amortization	$	21.4		$	23.7		$	64.2		$	59.9
Total assets (including goodwill)
New units	$	728.4		$	607.8		$	728.4		$	607.8
Aftermarket parts and services		1,076.7			1,007.3			1,076.7			1,007.3
Unallocable		1,368.2			1,374.1			1,368.2			1,374.1
Total assets	$	3,173.3		$	2,989.2		$	3,173.3		$	2,989.2

XML

Long-Term Debt (Parenthetical) (Detail)	9 Months Ended	12 Months Ended
	Sep. 30, 2012	Dec. 31, 2011
Senior secured credit facility maturing March 2016
Debt Instrument [Line Items]
Long-term debt, maturity date	2016-03	2016-03
6 1/2% Senior Subordinated Notes due May 2021
Debt Instrument [Line Items]
Long-term debt, maturity date	2021-05	2021-05
Long-term debt, interest rate	6.50%	6.50%
Syndicated term loan and working capital line maturing December 2013
Debt Instrument [Line Items]
Long-term debt, maturity date	2013-12	2013-12
Other working capital facilities maturing through 2014
Debt Instrument [Line Items]
Long-term debt, maturity date	2014	2014
Bank loans maturing through 2015
Debt Instrument [Line Items]
Long-term debt, maturity date	2015	2015
Project financing arrangements maturing through 2016
Debt Instrument [Line Items]
Long-term debt, maturity date	2016	2016

XML

Commitments and Contingencies (€ in millions)

9 Months Ended

Sep. 30, 2012

Commitments and Contingencies (€ in millions)

12. Commitments and Contingencies (€ in millions)

Legal Proceedings

We are involved in various litigation, claims and administrative proceedings arising in the normal course of business. Amounts recorded for identified contingent liabilities are estimates, which are regularly reviewed and adjusted to reflect additional information when it becomes available. We are indemnified by our former owner, Ingersoll Rand Company Limited, for certain of these matters as part of Ingersoll Rand’s sale of the Company and by the sellers of Guascor for certain of these matters in connection with our acquisition of Guascor. While adverse decisions in certain of these litigation matters, claims and administrative proceedings could have a material effect on a particular period’s results of operations, subject to the uncertainties inherent in estimating future costs for contingent liabilities and the benefit of the indemnities from Ingersoll Rand and the sellers of Guascor, management believes that any future accruals with respect to these currently known contingencies would not have a material effect on the financial condition, liquidity or cash flows of the Company.

Painted Post Labor Litigation

In November 2007, Local 313 of IUE-CWA, the union that represents certain employees at the Company’s Painted Post, New York, facility (the “IUE”) made an offer to have its striking members return to work under the terms of the previously expired union agreement. The Company rejected that offer and locked out these represented employees. Approximately one week later, after reaching an impasse in negotiations, the Company exercised its right to implement the terms of its last contract offer, ended the lockout, and the employees represented by the IUE agreed to return to work under the implemented terms. Subsequently, the IUE filed several unfair labor practice (“ULP”) charges against the Company with Region 3 of the National Labor Relations Board (“NLRB”), asserting multiple allegations arising from the protracted labor dispute, its termination, contract negotiations and related matters.

Region 3 of the NLRB decided to proceed to complaint on only one-third of the ULP allegations asserted by the IUE, while the remaining claims were dismissed. Notably, the NLRB found that many of the critical aspects of the Company’s negotiations with the IUE were handled appropriately, including the NLRB’s findings that the union’s strike was not an unfair labor practice strike and the Company’s declaration of impasse and its unilateral implementation of its last offer were lawful. The Company, therefore, continued to operate under a more contemporary and competitive implemented contract offer while contract negotiations with the IUE continued in 2008 and 2009. In November 2009, a collective bargaining agreement between the IUE and the Company was ratified, which agreement expires in March 2013. As a result, the Company was not required to make available the retiree medical benefits which the Company eliminated in its implemented last contract offer.

The claims that proceeded to complaint before the NLRB included the Company’s handling of the one week lockout, the negotiation of the recall process used to return employees to the facility after reaching impasse and lifting the lockout, and the termination of two employees who engaged in misconduct on the picket line during the strike. The trial of this matter took place before a NLRB Administrative Law Judge (the “ALJ”) in Elmira and Painted Post, New York, during the summer of 2009. On January 29, 2010, the ALJ issued his decision in which he found in favor of the union on some issues and upheld the Company’s position on others. The Company timely appealed the ALJ’s rulings against the Company to the NLRB in Washington, D.C. On August 6, 2012, the NLRB affirmed the ALJ’s rulings. The Company timely appealed the matter to the U.S. Fifth Circuit Court of Appeals, and continues to believe it complied with the law and that it will ultimately prevail with respect to these ULP allegations. The litigation process, including further appeals, could reasonably take one to two years to resolve with finality. Given the broad scope of possible remedies that may apply pursuant to conflicting case law, the Company cannot estimate the range of loss, if any, at this time. Although the ultimate outcome of these matters cannot be ascertained at this time, it is the opinion of management that the resolution of such matters will not have a material adverse effect on the Company’s financial condition.

United Kingdom (“UK”) Pension Plan

During July 2009, the Company received notification from the current plan trustees of one of its subsidiaries’ pension plans in the UK that sex equalization under the plan may have been achieved later than originally expected. The third-party trustee at the time action was taken believes that it had taken the appropriate steps to properly amend the plan as originally expected. In June 2012, interpretation proceedings commenced in the English High Court to determine whether sex equalization of the plan was correctly implemented. The Company has accrued $4.9 to address its estimate of contingent exposure regarding this dispute over potential unequal treatment of men and women under the pension plan related to a period in the 1990s and is exploring its rights against others.

Enviroil Italia, S.p.A. (“Enviroil”) Litigation

In March 1998, Enviroil, which became an indirect wholly-owned subsidiary of the Company upon the acquisition of Guascor in May 2011, executed an agreement with the Italian Ministry of Economic Development (“MISE”) to construct a plant in Gela, Italy, for the production of heating gas oil from exhausted oil. In August 2007, following the completion of construction and upon commencement of the operation of the plant, an accident occurred and the plant’s operations were discontinued. In November 2008, Enviroil proposed converting the plant into a facility for the manufacturing of solar panels, and this proposal was rejected by MISE. In January 2010, MISE issued a decree declaring Enviroil in default of the agreement and ordering Enviroil to reimburse MISE the approximately €7.0 (approximately $9.0) paid to Enviroil under the agreement, as well as sanctions, interest and other related costs. Enviroil initiated a proceeding in the Court of Caltanissetta requesting an order to suspend the effect of the MISE decree primarily based on Enviroil’s proposed conversion of the plant. The Court of Caltanissetta rejected Enviroil’s request by order issued in October 2010, and following an appeal by Enviroil, issued a second order in December 2010, denying the appeal. In June 2010, while the proceedings in the Court of Caltanissetta were still pending, Enviroil also initiated proceedings before the Lazio Administrative Court requesting the revocation of the MISE decree. The Lazio Administrative Court held a hearing on this matter in October 2012 and is currently considering the arguments presented by the parties at that hearing. In March 2011, Enviroil appealed the decree directly with MISE through an administrative procedure, and engaged in settlement negotiations with MISE, which were unsuccessful and were suspended. Enviroil renewed settlement negotiations with MISE in October 2012, which are currently pending. The Company estimates that its aggregate exposure to loss associated with the Enviroil litigation is $15.3.

Although the ultimate outcome of these administrative proceedings and pending settlement negotiations cannot be ascertained at this time, the Company has recorded an accrual based on its assessment of the potential liability with respect to this matter. Based on the Company’s assessment of the exposure, the Company believes any liability that may be in excess of amounts recorded would not be material.

Italian Value-Added Tax Claim

The Company is in litigation with the Italian tax authorities regarding value-added taxes for tax years 2005-2008 and the application of Italian and European Union laws. The Company received an adverse judgment in February 2012 for tax years 2005-2006 for approximately €4.2 ($5.4). In July 2012, the Company appealed the judgment and continues to believe that it will prevail on its position that no tax is owed. The Company estimates the total aggregate exposure for taxes, interest and penalties could be up to €10.1 ($13.0).

Brazilian Judicial Reorganization Proceeding

On October 3, 1997, GdB entered into four Electric Power Supply Agreements with Centrais Elétricas do Pará (“CELPA”), to supply electric power to various locations in the State of Pará, Brazil. On February 28, 2012, CELPA filed a request for a judicial reorganization proceeding, which was granted by the Judge of the 13^th Civil Court of the city of Belém on March 5, 2012. CELPA’s unpaid accounts receivable to GdB subject to the judicial reorganization approximated $6.5.

As previously disclosed, CELPA submitted a plan of reorganization, as required by law, which provided for the unsecured creditors to receive amounts outstanding in 60 monthly installments beginning in April 2013. However, as a result of an order from the judge responsible for CELPA’s bankruptcy proceedings, all past due amounts were paid by CELPA to GdB in September 2012.

XML

Intangible Assets and Goodwill (Tables)

9 Months Ended

Sep. 30, 2012

Weighted Average Useful Life, Gross Amount and Accumulated Amortization of Intangible Assets

The following table sets forth the weighted-average useful life, gross amount and accumulated amortization of intangible assets:

	September 30, 2012					December 31, 2011
	Cost		Accumulated Amortization		Weighted- Average Useful Lives	Cost		Accumulated Amortization
Trade names	$	117.4	$	20.0	39 years	$	117.5	$	17.5
Customer relationships		330.6		62.4	32 years		322.9		52.6
Non-compete agreement		5.4		3.5	3 years		4.9		2.4
Existing technology		161.6		46.1	23 years		143.5		40.5
Contracts and purchase agreements		18.2		8.1	11 years		18.9		7.3
Software		30.6		24.2	10 years		30.6		21.9
In-process research and development		11.8		—	(a)		11.9		—
Total amortizable intangible assets	$	675.6	$	164.3		$	650.2	$	142.2

(a) In-process research and development will be amortized over 10 years beginning at the time revenues are generated. There has been no amortization recorded for in-process research and development as of September 30, 2012.

Changes in Goodwill in Total and by Segment

The Company had no goodwill impairments for the nine months ended September 30, 2012, and the year ended December 31, 2011. The following table represents the changes in goodwill in total and by segment (see Note 14):

	New Units			Aftermarket Parts and Services		Total
Balance, December 31, 2011	$	442.6		$	427.2	$	869.8
Acquisitions		23.6			—		23.6
Foreign currency adjustments		(0.4	)		1.2		0.8
Balance, September 30, 2012	$	465.8		$	428.4	$	894.2

XML

Income Taxes - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Income Taxes [Line Items]
Income tax benefit due to difference between filed tax return and estimated tax provision	$ 2.5
U.S. federal statutory income tax rate	35.00%	35.00%	35.00%	35.00%
Estimated income tax provision difference from U.S. federal statutory	Our estimated income tax provision for the three and nine months ended September 30, 2012 and 2011 differs from the U.S. federal statutory rate of 35% because of different tax rates in foreign tax jurisdictions, certain exemptions and credits allowable for income tax purposes, which are partially offset by state and local income taxes, and valuation allowances on net operating loss carryforwards that more-likely-than-not will not be realized.	Our estimated income tax provision for the three and nine months ended September 30, 2012 and 2011 differs from the U.S. federal statutory rate of 35% because of different tax rates in foreign tax jurisdictions, certain exemptions and credits allowable for income tax purposes, which are partially offset by state and local income taxes, and valuation allowances on net operating loss carryforwards that more-likely-than-not will not be realized.	Our estimated income tax provision for the three and nine months ended September 30, 2012 and 2011 differs from the U.S. federal statutory rate of 35% because of different tax rates in foreign tax jurisdictions, certain exemptions and credits allowable for income tax purposes, which are partially offset by state and local income taxes, and valuation allowances on net operating loss carryforwards that more-likely-than-not will not be realized.	Our estimated income tax provision for the three and nine months ended September 30, 2012 and 2011 differs from the U.S. federal statutory rate of 35% because of different tax rates in foreign tax jurisdictions, certain exemptions and credits allowable for income tax purposes, which are partially offset by state and local income taxes, and valuation allowances on net operating loss carryforwards that more-likely-than-not will not be realized.
Foreign market investments	$ 83.0		$ 83.0

XML

Intangible Assets and Goodwill - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Intangible Assets by Major Class [Line Items]
Intangible asset amortization expense	$ 7.7	$ 10.6	$ 22.3	$ 26.7

XML

CONSOLIDATED BALANCE SHEET (USD $) In Millions, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Current assets
Cash and cash equivalents	$ 150.9	$ 128.2
Restricted cash	24.3	29.5
Accounts receivable, less allowance for losses of $8.2 at 2012 and $9.3 at 2011	412.2	477.5
Inventories, net	506.3	407.7
Prepaid expenses and other	87.0	67.1
Deferred income taxes, net	40.3	40.3
Total current assets	1,221.0	1,150.3
Property, plant and equipment, net	457.6	456.0
Goodwill	894.2	869.8
Intangible assets, net	511.3	508.0
Deferred income taxes	12.3	11.1
Other assets	76.9	68.5
Total assets	3,173.3	3,063.7
Current liabilities
Accounts payable and accruals	544.0	600.7
Customer advance payments	260.1	272.2
Accrued income taxes payable	12.8	20.1
Current portion of long-term debt	27.4	39.3
Total current liabilities	844.3	932.3
Deferred income taxes	49.1	45.2
Postemployment and other employee benefit liabilities	123.6	135.9
Long-term debt	1,068.5	990.4
Other noncurrent liabilities	84.8	86.9
Total liabilities	2,170.3	2,190.7
Commitments and contingencies (Note 12)
Stockholders' equity
Common stock, $0.01 par value, 250,000,000 shares authorized; and 75,665,943 and 75,363,784 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively	0.8	0.8
Additional paid-in capital	131.1	105.3
Retained earnings	1,004.3	905.5
Accumulated other comprehensive loss	(135.6)	(138.8)
Total Dresser-Rand stockholders' equity	1,000.6	872.8
Noncontrolling interest	2.4	0.2
Total stockholders' equity	1,003.0	873.0
Total liabilities and stockholders' equity	$ 3,173.3	$ 3,063.7

XML

Basis of Presentation

9 Months Ended

Sep. 30, 2012

Basis of Presentation

1. Basis of Presentation

Unless the context otherwise indicates, the terms “we,” “our,” “us,” the “Company,” and similar terms refer to Dresser-Rand Group Inc. and its consolidated subsidiaries.

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. The information furnished herein reflects all normal recurring adjustments that are, in the opinion of management, necessary for the fair presentation of the Company’s Consolidated Balance Sheets as of September 30, 2012, and December 31, 2011; the Consolidated Statements of Income and Comprehensive Income for the three and nine months ended September 30, 2012, and 2011; and the Consolidated Statements of Cash Flows and Changes in Stockholders’ Equity for the nine months ended September 30, 2012 and 2011. The year-end balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP.

In preparing financial statements in accordance with U.S. GAAP, management makes informed judgments and estimates that affect the reported amounts of assets, liabilities, revenues and expenses. Management evaluates its estimates and related assumptions regularly, including those related to fair values, allowance for losses on receivables, depreciation and amortization, inventory adjustments related to lower of cost or market, the carrying value and estimated useful lives of long-lived assets, valuation of assets including goodwill and other intangible assets, product warranties, sales allowances, taxes, pensions, postemployment benefits, stock-based compensation, contract losses, penalties, environmental contingencies, product liability, self-insurance programs and other contingencies (including purchase price contingencies). Changes in facts and circumstances or additional information may result in revised estimates and actual results may differ from these estimates.

These financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2011, and our other filings with the Securities and Exchange Commission. Operating results for the three and nine months ended September 30, 2012, are not necessarily indicative of the results that may be expected for the year ending December 31, 2012.

Fair Value Measurements

Fair Value, as defined in U.S. GAAP, is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). U.S. GAAP classifies the inputs used to measure fair value into the following hierarchy:

Level 1	Unadjusted quoted prices in active markets for identical assets or liabilities
Level 2	Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability
Level 3	Unobservable inputs for the asset or liability

Recurring Fair Value Measurements — Fair values of the Company’s cash and cash equivalents, restricted cash, accounts receivable, short-term borrowings, accounts payable and customer advance payments approximate their carrying values due to the short-term nature of these instruments. The Company’s financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

Nonrecurring Fair Value Measurements — Fair value measurements were applied with respect to the Company’s nonfinancial assets and liabilities measured on a nonrecurring basis, which consists primarily of intangible assets, other long-lived assets and other assets acquired and liabilities assumed, including contingent consideration, related to purchased businesses in business combinations.

Fair Value of Financial Instruments — Financial instruments consist principally of foreign currency derivatives, interest rate swaps, tradable emission allowances and fixed rate long-term debt.

Input levels used for fair value measurements are as follows:

Description	Disclosure	Input Level	Level 2 Inputs	Level 3 Inputs
Acquired assets and liabilities	Note 3	Level 3	Not applicable	Income approach using projected results and weighted-average cost of capital
Financial derivatives	Note 7	Level 2	Quoted prices of similar assets or liabilities in active markets	Not applicable
Tradable emission allowances	Note 7	Level 1	Not applicable	Not applicable
Long-term debt (disclosure only)	Note 9	Level 2	Quoted prices in markets that are not active	Not applicable

XML

Changes in Product Warranty Liability (Detail) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Guarantor Obligations [Line Items]
Beginning balance	$ 25.6	$ 28.2
Liabilities assumed from acquisitions	0	6.7
Provision for warranties issued during period	12.2	10.8
Adjustments to warranties issued in prior periods	(3.3)	(5.9)
Payments during the period	(14.0)	(12.7)
Foreign currency adjustments	(0.2)	(0.8)
Ending balance	$ 20.3	$ 26.3

XML

Inventories, net (Tables)

9 Months Ended

Sep. 30, 2012

Inventories

Inventories were as follows:

	September 30, 2012			December 31, 2011
Raw materials	$	62.3		$	60.0
Finished parts		206.8			187.1
Work-in-process		656.6			530.2
		925.7			777.3
Less: progress payments		(419.4	)		(369.6	)
Total inventories	$	506.3		$	407.7

XML

Unaudited Supplemental Pro Forma Results (Detail) (USD $) In Millions, except Per Share data, unless otherwise specified	9 Months Ended
	Sep. 30, 2011
Business Acquisition, Pro Forma Information [Line Items]
Total revenues	$ 1,701.5
Net income attributable to Dresser-Rand	$ 57.8
Diluted earnings per share attributable to Dresser-Rand	$ 0.72

XML

Post-Retirement Benefits Other than Pensions

9 Months Ended

Sep. 30, 2012

Post-Retirement Benefits Other than Pensions

11. Post-Retirement Benefits Other than Pensions

The components of the net post-retirement benefit expense were as follows:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2012		2011			2012		2011
Interest cost	$	0.2	$	0.3		$	0.6	$	0.7
Amortization of net actuarial loss		0.3		0.2			0.8		0.7
Amortization of prior service credit		—		(0.4	)		—		(1.3	)
Net post-retirement benefits expense	$	0.5	$	0.1		$	1.4	$	0.1