10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2011

OR

o 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 1-13215

GARDNER DENVER, INC.

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization) 76-0419383
(I.R.S. Employer
Identification No.)

1500 Liberty Ridge Drive, Suite 3000
Wayne, Pennsylvania 19087
(Address of principal executive offices and Zip Code)

(610) 249-2000
(Registrant’s telephone number, including area code)

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 þ No o

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 þ No o

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.

Large accelerated filer þ Accelerated filer o Non-accelerated filer o (Do not check if a smaller reporting company) Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes

Yes o No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 52,280,052 shares of Common Stock, par value $0.01 per share, as of April 29, 2011.

GARDNER DENVER, INC.
Table of Contents

	Page
PART I — FINANCIAL INFORMATION
Item 1 Financial Statements
Condensed Consolidated Statements of Operations		3
Condensed Consolidated Balance Sheets		4
Condensed Consolidated Statements of Cash Flows		5
Notes to Condensed Consolidated Financial Statements		6
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations		29
Item 3 Quantitative and Qualitative Disclosures About Market Risk		40
Item 4 Controls and Procedures		42
PART II — OTHER INFORMATION
Item 1 Legal Proceedings		43
Item 1A Risk Factors		43
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds		43
Item 6 Exhibits		43
SIGNATURES		44
INDEX TO EXHIBITS		45
EX-31.1
EX-31.2
EX-32.1
EX-32.2
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT

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PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

GARDNER DENVER, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(Unaudited)

	Three Months Ended
	March 31,
	2011			2010
Revenues	$	531,853		$	422,164
Cost of sales		347,397			288,357
Gross profit		184,456			133,807
Selling and administrative expenses		96,021			87,694
Other operating expense (income), net		1,612			(1,351	)
Operating income		86,823			47,464
Interest expense		5,347			6,116
Other income, net		(962	)		(635	)
Income before income taxes		82,438			41,983
Provision for income taxes		22,539			9,730
Net income		59,899			32,253
Less: Net income attributable to noncontrolling interests		421			295
Net income attributable to Gardner Denver	$	59,478		$	31,958
Net earnings per share attributable to Gardner Denver common stockholders
Basic earnings per share	$	1.14		$	0.61
Diluted earnings per share	$	1.13		$	0.61
Cash dividends declared per common share	$	0.05		$	0.05

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

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GARDNER DENVER, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amounts)
(Unaudited)

	March 31,			December 31,
	2011			2010
Assets
Current assets:
Cash and cash equivalents	$	185,305		$	157,029
Accounts receivable (net of allowance of $11,654 at March 31, 2011 and $11,531 at December 31, 2010)		398,736			369,860
Inventories, net		295,586			241,485
Deferred income taxes		30,881			34,628
Other current assets		31,177			25,535
Total current assets		941,685			828,537
Property, plant and equipment (net of accumulated depreciation of $353,309 at March 31, 2011 and $338,010 at December 30, 2010)		287,883			286,563
Goodwill		586,156			571,796
Other intangibles, net		297,091			289,588
Other assets		51,338			50,614
Total assets	$	2,164,153		$	2,027,098
Liabilities and Stockholders’ Equity
Current liabilities:
Short-term borrowings and current maturities of long-term debt	$	37,622		$	37,228
Accounts payable		183,539			143,331
Accrued liabilities		193,974			179,041
Total current liabilities		415,135			359,600
Long-term debt, less current maturities		245,721			250,682
Postretirement benefits other than pensions		13,408			13,678
Deferred income taxes		64,375			62,157
Other liabilities		147,453			151,308
Total liabilities		886,092			837,425
Stockholders’ equity:
Common stock, $0.01 par value; 100,000,000 shares authorized; 52,240,515 and 52,181,335 shares outstanding at March 31, 2011 and December 31, 2010, respectively		596			595
Capital in excess of par value		599,362			591,988
Retained earnings		762,557			705,699
Accumulated other comprehensive income		92,177			61,425
Treasury stock at cost; 7,351,869 and 7,268,653 shares at March 31, 2011 and December 31, 2010, respectively		(188,729	)		(182,544	)
Total Gardner Denver stockholders’ equity		1,265,963			1,177,163
Noncontrolling interests		12,098			12,510
Total stockholders’ equity		1,278,061			1,189,673
Total liabilities and stockholders’ equity	$	2,164,153		$	2,027,098

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

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GARDNER DENVER, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)

	Three Months Ended
	March 31,
	2011			2010
Cash Flows From Operating Activities
Net income	$	59,899		$	32,253
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		14,921			15,629
Foreign currency transaction loss (gain), net		1,245			(1,001	)
Net loss (gain) on asset dispositions		716			(310	)
Stock issued for employee benefit plans		476			971
Stock-based compensation expense		2,334			1,857
Excess tax benefits from stock-based compensation		(1,513	)		(1,489	)
Deferred income taxes		149			3,247
Changes in assets and liabilities:
Receivables		(19,907	)		(14,798	)
Inventories		(47,055	)		(4,585	)
Accounts payable and accrued liabilities		47,671			(6,545	)
Other assets and liabilities, net		(11,091	)		1,459
Net cash provided by operating activities		47,845			26,688
Cash Flows From Investing Activities
Capital expenditures		(8,030	)		(4,759	)
Disposals of property, plant and equipment		492			187
Other, net		(21	)		—
Net cash used in investing activities		(7,559	)		(4,572	)
Cash Flows From Financing Activities
Principal payments on short-term borrowings		(6,595	)		(3,505	)
Proceeds from short-term borrowings		3,646			7,307
Principal payments on long-term debt		(6,578	)		(24,711	)
Proceeds from long-term debt		10			8,010
Proceeds from stock option exercises		3,037			7,339
Excess tax benefits from stock-based compensation		1,513			1,489
Purchase of treasury stock		(6,169	)		(8,841	)
Cash dividends paid		(2,622	)		(2,624	)
Other		(1,024	)		(1,001	)
Net cash used in financing activities		(14,782	)		(16,537	)
Effect of exchange rate changes on cash and cash equivalents		2,772			(2,492	)
Net increase in cash and cash equivalents		28,276			3,087
Cash and cash equivalents, beginning of year		157,029			109,736
Cash and cash equivalents, end of period	$	185,305		$	112,823

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

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GARDNER DENVER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except per share amounts and amounts described in millions)
(Unaudited)

Note 1. Summary of Significant Accounting Policies

Basis of Presentation

     The accompanying condensed consolidated financial statements include the accounts of Gardner Denver, Inc. and its majority-owned subsidiaries (collectively referred to herein as “Gardner Denver” or the “Company”). Certain prior year balance sheet items have been reclassified to conform to the current year presentation. In consolidation, all significant intercompany transactions and accounts have been eliminated.

     The financial information presented as of any date other than December 31, 2010 has been prepared from the books and records of the Company without audit. The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, the condensed consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of such financial statements.

     The unaudited interim condensed consolidated financial statements should be read in conjunction with the complete consolidated financial statements and notes thereto included in Gardner Denver’s Annual Report on Form 10-K for the year ended December 31, 2010.

     The results of operations for the three-month period ended March 31, 2011 are not necessarily indicative of the results to be expected for the full year. The balance sheet at December 31, 2010 has been derived from the audited financial statements as of that date but does not include all of the information and notes required by GAAP for complete financial statements.

     Other than as specifically indicated in these “Notes to Condensed Consolidated Financial Statements” included in this Quarterly Report on Form 10-Q, the Company has not materially changed its significant accounting policies from those disclosed in its Form 10-K for the year ended December 31, 2010.

New Accounting Standards

Recently Adopted Accounting Pronouncements

     In October 2009, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2009-13, Revenue Recognition (Topic 605) — Multiple-Deliverable Revenue Arrangements — a consensus of the FASB Emerging Issues Task Force (“ASU 2009-13”). ASU 2009-13 updates the existing multiple-element revenue arrangements guidance currently included under FASB Accounting Standards

6

Codification (“ASC”) 605-25, Revenue Recognition, Multiple-Element Arrangements. The revised guidance primarily provides two significant changes: (i) eliminates the need for objective and reliable evidence of fair value for the undelivered element in order for a delivered item to be treated as a separate unit of accounting, and (ii) eliminates the residual method to allocate the arrangement consideration. In addition, the guidance expands the disclosure requirements for revenue recognition. ASU 2009-13 was effective for fiscal years beginning on or after June 15, 2010. Adoption of this guidance in the first quarter of 2011 did not have a material effect on the Company’s results of operations, financial position and cash flows.

     In January 2010, the FASB issued ASU No. 2010-06, Fair Value Measurements and Disclosures (Topic 820) — Improving Disclosures about Fair Value Measurements (“ASU 2010-06”). This update requires the following new disclosures: (i) the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and a description of the reasons for the transfers; and (ii) a reconciliation for fair value measurements using significant unobservable inputs (Level 3), including separate information about purchases, sales, issuance, and settlements. The update also clarifies existing requirements about fair value measurement disclosures and disclosures about inputs and valuation techniques. The new disclosures and clarifications of existing disclosures were effective for interim and annual reporting periods beginning after December 15, 2009, except for the reconciliation of Level 3 activity, which was effective for the Company in the first quarter of 2011. See Note 11 “Hedging Activities and Fair Value Measurements” for the disclosures required by ASU 2010-06. Adoption of this guidance had no effect on the Company’s results of operations, financial position and cash flows.

Note 2. Restructuring

     In 2008, 2009 and 2010, the Company announced restructuring plans designed to address (i) rationalization of the Company’s manufacturing footprint, (ii) slowing global economic growth and the resulting deterioration in the Company’s end markets, (iii) integration of CompAir Holdings Limited (“CompAir”) into its existing operations and (iv) additional cost reductions and margin improvement initiatives. These plans included the closure and consolidation of manufacturing facilities in Europe and the U.S., and various voluntary and involuntary employee termination and relocation programs. Execution of these plans was substantively completed during 2010. The Company recorded additional charges during the three-month period of 2011 in connection with the continued rationalization of facilities and other cost reduction initiatives. Charges recorded in connection with these plans, in accordance with FASB ASC 420, Exit or Disposal Cost Obligations and FASB ASC 712, Compensation-Nonretirement Postemployment Benefits, are included in “Other operating expense (income), net” in the Condensed Consolidated Statements of Operations, and are summarized for the fiscal years ended December 31, 2009 and 2010 and the three-month period ended March 31, 2011 by reportable segment as follows:

	Industrial		Engineered Products
	Products Group		Group			Total
Fiscal year 2009	$	25,791	$	20,335		$	46,126
Fiscal year 2010		3,687		(1,491	)		2,196
Three months ended March 31, 2011		891		89			980
Total	$	30,369	$	18,933		$	49,302

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     The following table summarizes the activity in the restructuring accrual accounts:

	Termination
	Benefits			Other			Total
Balance as of December 31, 2010	$	4,593		$	1,450		$	6,043
Charged to expense		384			596			980
Paid		(2,184	)		(809	)		(2,993	)
Other, net		474			29			503
Balance as of March 31, 2011	$	3,267		$	1,266		$	4,533

Note 3. Inventories

     Inventories as of March 31, 2011 and December 31, 2010 consisted of the following:

	March 31,			December 31,
	2011			2010
Raw materials, including parts and subassemblies	$	197,004		$	163,192
Work-in-process		55,490			38,419
Finished goods		59,148			54,898
		311,642			256,509
Excess of FIFO costs over LIFO costs		(16,056	)		(15,024	)
Inventories, net	$	295,586		$	241,485

Note 4. Goodwill and Other Intangible Assets

     The changes in the carrying amount of goodwill attributable to each business segment for the three-month period ended March 31, 2011, and the year ended December 31, 2010, are presented in the table below:

	Industrial			Engineered
	Products Group			Products Group			Total
Balance as of December 31, 2009	$	256,824		$	321,190		$	578,014
Acquisitions		—			5,202			5,202
Foreign currency translation		(6,740	)		(4,680	)		(11,420	)
Balance as of December 31, 2010		250,084			321,712			571,796
Foreign currency translation		6,613			7,747			14,360
Balance as of March 31, 2011	$	256,697		$	329,459		$	586,156

     The net goodwill balances as of March 31, 2011 and December 31, 2010 and 2009 reflect cumulative impairment charges of $252.5 million and zero for the Industrial Products and Engineered Products Groups, respectively.

     The $5.2 million increase in goodwill related to acquisitions in 2010 was associated with the valuation of ILMVAC GmbH (“ILMVAC”).

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     The following table presents the gross carrying amount and accumulated amortization of identifiable intangible assets, other than goodwill, at the dates presented:

	March 31, 2011					December 31, 2010
	Gross					Gross
	Carrying		Accumulated			Carrying		Accumulated
	Amount		Amortization			Amount		Amortization
Amortized intangible assets:
Customer lists and relationships	$	124,377	$	(33,048	)	$	118,844	$	(29,973	)
Acquired technology		98,321		(56,641	)		94,689		(53,224	)
Trade names		57,547		(9,445	)		55,320		(8,621	)
Other		7,523		(3,667	)		7,344		(3,424	)
Unamortized intangible assets:
Trade names		112,124		—			108,633		—
Total other intangible assets	$	399,892	$	(102,801	)	$	384,830	$	(95,242	)

     Amortization of intangible assets for the three-month periods ended March 31, 2011 and 2010 was $4.3 million and $4.5 million, respectively. Amortization of intangible assets held as of March 31, 2011 is anticipated to be approximately $16.8 million annually in 2012 through 2015 based upon exchange rates as of March 31, 2011. The increase in the carrying amount of identifiable assets other than goodwill between December 31, 2010 and March 31, 2011 was due primarily to the effect of changes in foreign currency exchange rates.

Note 5. Accrued Liabilities

Accrued liabilities as of March 31, 2011 and December 31, 2010 consisted of the following:

	March 31,		December 31,
	2011		2010
Salaries, wages and related fringe benefits	$	49,716	$	50,540
Taxes		35,730		25,367
Advance payments on sales contracts		40,157		39,026
Product warranty		21,033		19,100
Other		47,338		45,008
Total accrued liabilities	$	193,974	$	179,041

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     A reconciliation of the changes in the accrued product warranty liability for the three-month periods ended March 31, 2011 and 2010 is as follows:

	Three Months Ended
	March 31,
	2011			2010
Balance at beginning of period	$	19,100		$	19,312
Product warranty accruals		6,732			5,590
Settlements		(5,308	)		(6,201	)
Effect of foreign currency translation		509			(567	)
Balance at end of period	$	21,033		$	18,134

Note 6. Pension and Other Postretirement Benefits

     The following table summarizes the components of net periodic benefit cost for the Company’s defined benefit pension plans and other postretirement benefit plans recognized for the three-month periods ended March 31, 2011 and 2010:

	Three Months Ended March 31,
	Pension Benefits												Other Postretirement
	U.S. Plans						Non-U.S. Plans						Benefits
	2011			2010			2011			2010			2011			2010
Service cost	$	—		$	—		$	262		$	272		$	7		$	4
Interest cost		897			965			2,970			2,964			193			249
Expected return on plan assets		(1,054	)		(885	)		(2,757	)		(2,625	)		—			—
Recognition of:
Unrecognized prior service cost		—			—			9			6			(15	)		(25	)
Unrecognized net actuarial loss (gain)		308			359			219			256			(318	)		(325	)
Net periodic benefit cost (income)		151			439			703			873			(133	)		(97	)
FASB ASC 715-30 curtailment gain		—			—			—			(837	)		—			—
Total net periodic benefit cost (income)	$	151		$	439		$	703		$	36		$	(133	)	$	(97	)

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Note 7. Debt

     The Company’s debt at March 31, 2011 and December 31, 2010 is summarized as follows:

	March 31,		December 31,
	2011		2010
Short-term debt	$	5,111	$	7,440
Long-term debt:
Credit Line, due 2013 (1)	$	—	$	—
Term Loan, denominated in U.S. dollars, due 2013 (2)		71,538		75,000
Term Loan, denominated in euros (“EUR”), due 2013 (3)		65,978		65,250
Senior Subordinated Notes at 8%, due 2013 (4)		125,000		125,000
Secured Mortgages (5)		7,762		7,322
Capitalized leases and other long-term debt		7,954		7,898
Total long-term debt, including current maturities		278,232		280,470
Current maturities of long-term debt		32,511		29,788
Total long-term debt, less current maturities	$	245,721	$	250,682

(1)	The loans under this facility may be denominated in U.S. dollars (“USD”) or several foreign currencies. The interest rates under the facility are based on prime, federal funds and/or LIBOR for the applicable currency.
(2)	The interest rate for this loan varies with prime, federal funds and/or LIBOR. At March 31, 2011, this rate was 2.3% and averaged 2.3% for the three-month period ended March 31, 2011.
(3)	The interest rate for this loan varies with LIBOR. At March 31, 2011, this rate was 2.9% and averaged 2.8% for the three-month period ended March 31, 2011.
(4)	On March 23, 2011, the Company issued notice to redeem all $125.0 million in aggregate principal amount outstanding of its Senior Subordinated Notes at 8%, plus accrued and unpaid interest to, but not including, the date of redemption. The redemption occurred on May 2, 2011. See Note 17 “Subsequent Events.”
(5)	This amount consists of two fixed-rate commercial loans with an outstanding balance of €5,476 at March 31, 2011. The loans are secured by the Company’s facility in Bad Neustadt, Germany.

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Note 8. Stock-Based Compensation

     The following table summarizes the total stock-based compensation expense included in the consolidated statements of operations and the realized excess tax benefits included in the consolidated statements of cash flows for the three-month periods ended March 31, 2011 and 2010:

	Three Months Ended
	March 31,
	2011			2010
Selling and administrative expenses	$	2,334		$	1,857
Total stock-based compensation expense included in operating expenses	$	2,334		$	1,857
Income before income taxes		(2,334	)		(1,857	)
Provision for income taxes		659			607
Net income	$	(1,675	)	$	(1,250	)
Net cash provided by operating activities	$	(1,513	)	$	(1,489	)
Net cash used in financing activities	$	1,513		$	1,489

Stock Option Awards

     A summary of the Company’s stock option activity for the three-month period ended March 31, 2011 is presented in the following table (underlying shares in thousands):

								Weighted-
				Outstanding				Average
				Weighted-		Aggregate		Remaining
				Average		Intrinsic		Contractual
	Shares			Exercise Price		Value		Life
Outstanding at December 31, 2010		863		$	32.69
Granted		166		$	75.79
Exercised		(102	)	$	29.92
Forfeited		—		$	—
Expired or canceled		—		$	—
Outstanding at March 31, 2011		927		$	40.64	$	34,675	4.8 years
Exercisable at March 31, 2011		493		$	31.37	$	23,013	3.7 years

     The aggregate intrinsic value was calculated as the difference between the exercise price of the underlying stock options and the quoted closing price of the Company’s common stock at March 31, 2011 multiplied by the number of in-the-money stock options. The weighted-average estimated grant-date fair value of employee stock options granted during the three-month period ended March 31, 2011 was $28.16.

     The total pre-tax intrinsic values of stock options exercised during the three-month periods ended March 31, 2011 and 2010 were $4.5 million and $6.3 million, respectively. Pre-tax unrecognized stock-based compensation

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expense for stock options, net of estimated forfeitures, was $5.8 million as of March 31, 2011 and will be recognized as expense over a weighted-average period of 2.4 years.

Valuation Assumptions

     The fair value of each stock option grant under the Company’s Amended and Restated Long-Term Incentive Plan was estimated on the date of grant using the Black-Scholes option-pricing model. The weighted-average assumptions used for the periods indicated are noted in the table below:

	Three Months Ended
	March 31,
	2011			2010
Assumptions:
Risk-free interest rate		2.0	%		2.3	%
Dividend yield		0.3	%		0.5	%
Volatility factor		44			43
Expected life (in years)		4.4			4.8

Restricted Share Awards

     A summary of the Company’s restricted share award activity for the three-month period ended March 31, 2011 is presented in the following table (underlying shares in thousands):

				Weighted-
				Average Grant-
				Date Fair Value
	Shares			(per share)
Nonvested at December 31, 2010		161		$	35.13
Granted		30		$	75.32
Vested		(34	)	$	35.88
Forfeited		—		$	—
Nonvested at March 31, 2011		157		$	42.73

     The restricted shares granted in the three-month period of 2011 were valued at the market close price of the Company’s common stock on the date of grant. Pre-tax unrecognized compensation expense for nonvested restricted share awards, net of estimated forfeitures, was $3.5 million as of March 31, 2011, which will be recognized as expense over a weighted-average period of 2.2 years. The total fair value of restricted share awards that vested during the three-month periods of 2011 and 2010 was $2.5 million and $0.2 million, respectively.

Note 9. Stockholders’ Equity and Earnings Per Share

     In November 2008, the Company’s Board of Directors authorized a share repurchase program to acquire up to 3.0 million shares of the Company’s outstanding common stock. During the three-month period ended March 31, 2011, the Company repurchased 72 thousand shares under this program at a total cost of $5.3 million.

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     The following table details the calculation of basic and diluted earnings per common share for the three-month periods ended March 31, 2011 and 2010 (shares in thousands):

	Three Months Ended
	March 31,
	2011		2010
Net income attributable to Gardner Denver	$	59,478	$	31,958
Weighted average shares of common stock outstanding:
Basic		52,207		52,245
Effect of stock-based compensation awards		427		440
Diluted		52,634		52,685
Earnings Per Share:
Basic	$	1.14	$	0.61
Diluted	$	1.13	$	0.61

     For the three-month periods ended March 31, 2011 and 2010, respectively, anti-dilutive equity-based awards to purchase 82 thousand and 129 thousand weighted-average shares of common stock were outstanding. Antidilutive equity-based awards outstanding were not included in the computation of diluted earnings per common share.

Note 10. Accumulated Other Comprehensive Income (Loss)

     The Company’s other comprehensive income (loss) consists of (i) unrealized foreign currency net gains and losses on the translation of the assets and liabilities of its foreign operations, (ii) realized and unrealized foreign currency gains and losses on intercompany notes of a long-term nature and certain hedges of foreign subsidiaries, (iii) unrealized gains and losses on cash flow hedges (consisting of interest rate swaps), net of income taxes, and (iv) pension and other postretirement prior service cost and actuarial gains or losses, net of income taxes.

14

     The following table sets forth the changes in each component of accumulated other comprehensive income (loss):

							Unrealized
	Cumulative						Gains						Accumulated
	Currency			Foreign			(Losses) on			Pension and			Other
	Translation			Currency Gains			Cash Flow			Postretirement			Comprehensive
	Adjustment(1)			(Losses)			Hedges			Benefit Plans			Income
Balance at December 31, 2009	$	134,573		$	(21,319	)	$	(250	)	$	(30,490	)	$	82,514
Before tax (loss) income		(38,820	)		8,920			(706	)		287			(30,319	)
Income tax effect		—			297			268			(84	)		481
Other comprehensive (loss) income		(38,820	)		9,217			(438	)		203			(29,838	)
Balance at March 31, 2010	$	95,753		$	(12,102	)	$	(688	)	$	(30,287	)	$	52,676
Balance at December 31, 2010	$	69,282		$	19,095		$	(933	)	$	(26,019	)	$	61,425
Before tax income (loss)		31,245			3,524			404			(669	)		34,504
Income tax effect		—			(3,527	)		(154	)		(71	)		(3,752	)
Other comprehensive income (loss)		31,245			(3	)		250			(740	)		30,752
Balance at March 31, 2011	$	100,527		$	19,092		$	(683	)	$	(26,759	)	$	92,177

(1) Income taxes are generally not provided for foreign currency translation adjustments, as such adjustments relate to permanent investments in international subsidiaries.

     The Company’s comprehensive income (loss) for the three-month periods ended March 31, 2011 and 2010 was as follows:

	Three Months Ended
	March 31,
	2011		2010
Net income attributable to Gardner Denver	$	59,478	$	31,958
Other comprehensive income (loss)		30,752		(29,838	)
Comprehensive income attributable to Gardner Denver		90,230		2,120
Net income attributable to noncontrolling interests		421		295
Other comprehensive income (loss)		192		(723	)
Comprehensive income (loss) attributable to noncontrolling interests		613		(428	)
Total comprehensive income	$	90,843	$	1,692

Note 11. Hedging Activities and Fair Value Measurements

Hedging Activities

     The Company is exposed to certain market risks during the normal course of its business arising from adverse changes in commodity prices, interest rates, and foreign currency exchange rates. The Company’s exposure to

15

these risks is managed through a combination of operating and financing activities. The Company selectively uses derivative financial instruments (“derivatives”), including foreign currency forward contracts and interest rate swaps, to manage the risks from fluctuations in foreign currency exchange rates and interest rates, respectively. The Company does not purchase or hold derivatives for trading or speculative purposes. Fluctuations in commodity prices, interest rates, and foreign currency exchange rates can be volatile, and the Company’s risk management activities do not totally eliminate these risks. Consequently, these fluctuations could have a significant effect on the Company’s financial results.

     The Company’s exposure to interest rate risk results primarily from its borrowings of $283.3 million at March 31, 2011. The Company manages its debt centrally, considering tax consequences and its overall financing strategies. The Company manages its exposure to interest rate risk by maintaining a mixture of fixed and variable rate debt and, from time to time, uses pay-fixed interest rate swaps as cash flow hedges of variable rate debt in order to adjust the relative proportions.

     A substantial portion of the Company’s operations is conducted by its subsidiaries outside of the U.S. in currencies other than the USD. Almost all of the Company’s non-U.S. subsidiaries conduct their business primarily in their local currencies, which are also their functional currencies. The USD, EUR, British pound sterling (“GBP”), and Chinese yuan (“CNY”) are the principal currencies in which the Company and its subsidiaries enter into transactions. The Company is exposed to the impacts of changes in foreign currency exchange rates on the translation of its non-U.S. subsidiaries’ assets, liabilities, and earnings into USD. The Company partially offsets these exposures by having certain of its non-U.S. subsidiaries act as the obligor on a portion of its borrowings and by denominating such borrowings, as well as a portion of the borrowings for which the Company is the obligor, in currencies other than the USD.

     The Company and its subsidiaries are also subject to the risk that arises when they, from time to time, enter into transactions in currencies other than their functional currency. To mitigate this risk, the Company and its subsidiaries typically settle intercompany trading balances monthly. The Company also selectively uses forward currency contracts to manage this risk. These contracts for the sale or purchase of European and other currencies generally mature within one year.

     In accordance with FASB ASC 815, Derivatives and Hedging (“FASB ASC 815”), the Company records its derivatives as assets or liabilities on the balance sheet at fair value. Changes in the fair value of derivatives are recognized either in net income or in other comprehensive income, depending on the designated purpose of the derivative. All cash flows associated with derivatives are classified as operating cash flows in the Condensed Consolidated Statements of Cash Flows. It is the Company’s policy not to speculate in derivative instruments.

     Fluctuations due to changes in foreign currency exchange rates in the value of non-USD borrowings that have been designated as hedges of the Company’s net investment in foreign operations are included in other comprehensive income.

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     The following tables summarize the notional amounts, fair values and classification of the Company’s outstanding derivatives by risk category and instrument type within the Condensed Consolidated Balance Sheets:

	March 31, 2011
				Asset		Liability
		Notional		Derivatives		Derivatives
	Balance Sheet Location	Amount(1)		Fair Value(1)		Fair Value(1)
Derivatives designated as hedging instruments under FASB ASC 815
Interest rate swap contracts	Other liabilities	$	78,349	$	—	$	1,157
Derivatives not designated as hedging instruments under FASB ASC 815
Foreign currency forwards	Current liabilities	$	118,023	$	770	$	1,798

	December 30, 2010
				Asset		Liability
		Notional		Derivatives		Derivatives
	Balance Sheet Location	Amount(1)		Fair Value(1)		Fair Value(1)
Derivatives designated as hedging instruments under FASB ASC 815
Interest rate swap contracts	Other liabilities	$	76,742	$	—	$	1,560
Derivatives not designated as hedging instruments under FASB ASC 815
Foreign currency forwards	Accrued liabilities	$	113,871	$	709	$	1,884

(1) Notional amounts represent the gross contract amounts of the outstanding derivatives excluding the total notional amount of positions that have been effectively closed through offsetting positions. The net gains and net losses associated with positions that have been effectively closed through offsetting positions but not yet settled are included in the asset and liability derivatives fair value columns, respectively.

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     Gains and losses on derivatives designated as cash flow hedges in accordance with FASB ASC 815 included in the Condensed Consolidated Statement of Operations for the three-month periods ended March 31, 2011 and 2010, respectively, are as presented in the table below:

	Three Months Ended
	March 31,
Interest rate swap contracts(1)	2011			2010
Amount of gain or (loss) recognized in AOCI on derivatives (effective portion)	$	(282	)	$	(1,087	)
Amount of gain or (loss) reclassified from AOCI into income (effective portion)		122			(381	)
Amount of gain or (loss) recognized in income on derivatives (ineffective portion and amount excluded from effectiveness testing)		—			—

(1) Losses on derivatives reclassified from accumulated other comprehensive income (“AOCI”) into income (effective portion) were included in the interest expense line on the face of the Condensed Consolidated Statements of Operations.

     At March 31, 2011, the Company is the fixed rate payor on three interest rate swap contracts that effectively fix the LIBOR-based index used to determine the interest rates charged on a total of $50.0 million and €20.0 million of the Company’s LIBOR-based variable rate borrowings. These contracts carry fixed rates ranging from 1.8% to 2.2% and have expiration dates ranging from 2012 to 2013. These swap agreements qualify as hedging instruments and have been designated as cash flow hedges of forecasted LIBOR-based interest payments. Based on LIBOR-based swap yield curves as of March 31, 2011, the Company expects to reclassify losses of $1.2 million out of AOCI into earnings during the next 12 months. The Company’s LIBOR-based variable rate borrowings outstanding at March 31, 2011 were $71.5 million and €46.5 million.

     There were 48 foreign currency forward contracts outstanding as of March 31, 2011 with notional amounts ranging from $0.1 million to $9.7 million. The Company has not designated any forward contracts as hedging instruments. The majority of these contracts are used to hedge the change in fair value of recognized foreign currency denominated assets or liabilities caused by changes in foreign currency exchange rates. The changes in the fair value of these contracts generally offset the changes in the fair value of a corresponding amount of the hedged items, both of which are included in the other operating expense (income), net, line on the face of the Condensed Consolidated Statements of Operations. The Company recorded net losses of $0.4 million and net gains of $3.2 million during the three-month periods ended March 31, 2011 and 2010, respectively, relating to foreign currency forward contracts outstanding during all or part of each period. Total net foreign currency gains or losses reported in other operating expense were losses of $1.2 million and gains of $1.0 million for the three-month periods ended March 31, 2011 and 2010, respectively.

     As of March 31, 2010, the Company had designated approximately €14.0 million of its term loan denominated in EUR as a hedge of its net investment in subsidiaries with EUR functional currencies. Accordingly, changes in the fair value of this debt due to changes in the USD to EUR exchange rate have been recorded through other comprehensive income. The portion of the EUR term loan designated as a net investment hedge as of March 31, 2011 and December 31, 2010 was €0. During the three-month periods ended March 31, 2011 and 2010, the Company recorded gains of zero and $1.0 million, net of tax, respectively, through other comprehensive income. As of March 31, 2011 and December 31, 2010, the net balances of such gains and losses included in accumulated other comprehensive income were losses of $5.1 million, net of tax.

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Fair Value Measurements

     The Company’s financial instruments consist primarily of cash equivalents, trade receivables, trade payables, deferred compensation assets and obligations, derivatives and debt instruments. The book values of these instruments, other than the Senior Subordinated Notes, are a reasonable estimate of their respective fair values.

     The Senior Subordinated Notes outstanding are carried at cost. Their estimated fair value was approximately $125.9 million as of March 31, 2011 based upon non-binding market quotations that were corroborated by observable market data (Level 2). See Note 17 “Subsequent Events.”

     The following table summarizes the Company’s fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2011:

	Level 1		Level 2		Level 3		Total
Financial Assets
Foreign currency forwards (1)	$	—	$	770	$	—	$	770
Trading securities held in deferred compensation plan (2)		8,722		—		—		8,722
Total	$	8,722	$	770	$	—	$	9,492
Financial Liabilities
Foreign currency forwards (1)	$	—	$	1,798	$	—	$	1,798
Interest rate swaps (3)		—		1,157		—		1,157
Phantom stock plan (4)		—		5,515		—		5,515
Deferred compensation plan (5)		8,722		—		—		8,722
Total	$	8,722	$	8,470	$	—	$	17,192

(1)	Based on internally-developed models that use as their basis readily observable market parameters such as current spot and forward rates, and the LIBOR index.
(2)	Based on the observable price of publicly traded mutual funds which, in accordance with FASB ASC 710, Compensation – General, are classified as “Trading” securities and accounted for using the mark-to-market method.
(3)	Measured as the present value of all expected future cash flows based on the LIBOR-based swap yield curve as of March 31, 2011. The present value calculation uses discount rates that have been adjusted to reflect the credit quality of the Company and its counterparties.
(4)	Based on the price of the Company’s common stock.
(5)	Based on the fair value of the investments in the deferred compensation plan.

Note 12. Income Taxes

     As of March 31, 2011, the total balance of unrecognized tax benefits was $3.9 million compared with $4.5 million at December 31, 2010. The decrease in the balance was primarily due to a settlement of the 2003, 2004, and most of the tax items in the 2005 tax audits in Germany, and the reversal of a German and United Kingdom reserve due to the statute expiring. The unrecognized tax benefits at March 31, 2011 include $4.9 million of

19

uncertain tax positions that would affect the Company’s effective tax rate if recognized, of which $2.0 million would be offset by a reduction of a corresponding deferred tax asset. The Company does not expect any significant changes to its unrecognized tax benefits within the next twelve months.

     The Company’s accounting policy with respect to interest expense on underpayments of income tax and related penalties is to recognize such interest expense and penalties as part of the provision for income taxes. The Company’s income tax liabilities at March 31, 2011 include approximately $0.7 million of accrued interest and $0.3 million of penalties.

     The Company’s U.S. federal income tax returns for the tax years 2008 and 2009 are under examination by the Internal Revenue Service. The examination was initiated during the quarter ending September 30, 2010. As of the date of this report, the examination has not identified any material changes. The statutes of limitations for the U.S. state tax returns are open beginning with the 2006 tax year, except for three states for which the statutes have been extended, beginning with the 2003 tax year for one state and the 2006 tax year for two states.

     The Company is subject to income tax in approximately 30 jurisdictions outside the U.S. The statute of limitations varies by jurisdiction. The Company’s significant operations outside the U.S. are located in China, the United Kingdom and Germany. In Germany, the Company is finalizing the remaining tax audit for the 2005 tax year. Tax years 2006 and beyond remain subject to potential examination. As of the date of this report, the examinations have not identified any material changes. In China and the United Kingdom, tax years prior to 2006 are closed. In addition, audits are being conducted in other various countries. To date, no material adjustments have been proposed as a result of these audits.

     The provision for income taxes was $22.5 million and the effective tax rate was 27.3% in the first quarter of 2011, compared to $9.7 million and 23.2%, respectively, in the first quarter of 2010. The year over year increase in the effective tax rate reflects a higher proportion of taxable income in the U.S. in 2011 compared to 2010.

Note 13. Supplemental Information

     The components of other operating expense (income), net, and supplemental cash flow information are as follows:

	Three Months Ended
	March 31,
	2011			2010
Other Operating Expense (Income), Net
Foreign currency losses (gains), net	$	1,245		$	(1,001	)
Restructuring charges, net (1)		980			1,354
Other, net		(613	)		(1,704	)
Total other operating expense (income), net	$	1,612		$	(1,351	)
Supplemental Cash Flow Information
Cash taxes paid	$	13,979		$	8,512
Interest paid		2,009			3,435

(1) See Note 2 “Restructuring.”

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Note 14. Contingencies

     The Company is a party to various legal proceedings, lawsuits and administrative actions, which are of an ordinary or routine nature for a company of its size and sector. In addition, due to the bankruptcies of several asbestos manufacturers and other primary defendants, among other things, the Company has been named as a defendant in a number of asbestos personal injury lawsuits. The Company has also been named as a defendant in a number of silica personal injury lawsuits. The plaintiffs in these suits allege exposure to asbestos or silica from multiple sources and typically the Company is one of approximately 25 or more named defendants. In the Company’s experience to date, the substantial majority of the plaintiffs have not suffered an injury for which the Company bears responsibility.

     Predecessors to the Company sometimes manufactured, distributed and/or sold products allegedly at issue in the pending asbestos and silica litigation lawsuits (the “Products”). However, neither the Company nor its predecessors ever mined, manufactured, mixed, produced or distributed asbestos fiber or silica sand, the materials that allegedly caused the injury underlying the lawsuits. Moreover, the asbestos-containing components of the Products, if any, were enclosed within the subject Products.

     The Company has entered into a series of agreements with certain of its or its predecessors’ legacy insurers and certain potential indemnitors to secure insurance coverage and/or reimbursement for the costs associated with the asbestos and silica lawsuits filed against the Company. The Company has also pursued litigation against certain insurers or indemnitors where necessary. The latest of these actions, Gardner Denver, Inc. v. Certain Underwriters at Lloyd’s, London, et al., was filed on July 9, 2010, in the Eighth Judicial District, Adams County, Illinois, as case number 10-L-48 (the “Adams County Case”). In the lawsuit, the Company seeks, among other things, to require certain excess insurer defendants to honor their insurance policy obligations to the Company, including payment in whole or in part of the costs associated with the asbestos lawsuits filed against the Company.

     The Company believes that the pending and future asbestos and silica lawsuits are not likely to, in the aggregate, have a material adverse effect on its consolidated financial position, results of operations or liquidity, based on: the Company’s anticipated insurance and indemnification rights to address the risks of such matters; the limited potential asbestos exposure from the Products described above; the Company’s experience that the vast majority of plaintiffs are not impaired with a disease attributable to alleged exposure to asbestos or silica from or relating to the Products or for which the Company otherwise bears responsibility; various potential defenses available to the Company with respect to such matters; and the Company’s prior disposition of comparable matters. However, due to inherent uncertainties of litigation and because future developments, including, without limitation, potential insolvencies of insurance companies or other defendants, an adverse determination in the Adams County Case, or other inability to collect from the Company’s historical insurers or indemnitors could cause a different outcome. While the outcome of legal proceedings is inherently uncertain, based on presently known facts, experience, and circumstances, the Company believes that the amounts accrued on its balance sheet are adequate and that the liabilities arising from the asbestos and silica personal injury lawsuits will not have a material adverse effect on the Company’s consolidated financial position, results of operations or liquidity. In the event of unexpected future developments, it is possible that the ultimate resolution of these matters may be material to the Company’s consolidated financial position, results of operations or liquidity. However, at this time, based on presently available information, the Company views this possibility as remote.

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     The Company has been identified as a potentially responsible party (“PRP”) with respect to several sites designated for cleanup under U.S. federal “Superfund” or similar state laws that impose liability for cleanup of certain waste sites and for related natural resource damages. Persons potentially liable for such costs and damages generally include the site owner or operator and persons that disposed or arranged for the disposal of hazardous substances found at those sites. Although these laws impose joint and several liability, in application, the PRPs typically allocate the investigation and cleanup costs based upon the volume of waste contributed by each PRP. Based on currently available information, the Company was only a small contributor to these waste sites, and the Company has, or is attempting to negotiate, de minimis settlements for their cleanup. The cleanup of the remaining sites is substantially complete and the Company’s future obligations entail a share of the sites’ ongoing operating and maintenance expense.

     The Company is also addressing three on-site cleanups for which it is the primary responsible party. Two of these cleanup sites are in the operation and maintenance stage and the third is in the implementation stage. Based on currently available information, the Company does not anticipate that any of these sites will result in material additional costs beyond those already accrued on its balance sheet.

     The Company has an accrued liability on its balance sheet to the extent costs are known or can be reasonably estimated for its remaining financial obligations for these matters. Based on currently available information, the Company does not anticipate any material adverse effect on its results of operations, financial condition, liquidity or competitive position as a result of compliance with federal, state, local or foreign environmental laws or regulations, or cleanup costs relating to the sites discussed above.

Note 15. Guarantor Subsidiaries

     The Company’s obligations under its 8% Senior Subordinated Notes due 2013 (the “Notes”) are jointly and severally, fully and unconditionally guaranteed by certain wholly-owned domestic subsidiaries of the Company (the “Guarantor Subsidiaries”). The Company’s subsidiaries that do not guarantee the Notes are referred to as the “Non-Guarantor Subsidiaries.” The guarantor condensed consolidating financial data below presents the statements of operations, balance sheets and statements of cash flows data (i) for Gardner Denver, Inc. (the “Parent Company”), the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries on a consolidated basis (which is derived from Gardner Denver’s historical reported financial information); (ii) for the Parent Company alone (accounting for its Guarantor Subsidiaries and Non-Guarantor Subsidiaries on a cost basis under which the investments are recorded by each entity owning a portion of another entity at historical cost); (iii) for the Guarantor Subsidiaries alone; and (iv) for the Non-Guarantor Subsidiaries alone.

     On March 23, 2011, the Company announced that it had issued a notice to redeem all $125.0 million in aggregate principal amount outstanding of the Notes. The Notes were redeemed on May 2, 2011 for a total of $125.0 million, consisting of the redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to, but not including, the date of redemption. See Note 17 “Subsequent Events.”

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Condensed Consolidating Statement of Operations
Three Months Ended March 31, 2011

							Non-
	Parent			Guarantor			Guarantor
	Company			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Revenues	$	111,991		$	127,131		$	389,580		$	(96,849	)	$	531,853
Cost of sales		75,806			87,365			279,153			(94,927	)		347,397
Gross profit		36,185			39,766			110,427			(1,922	)		184,456
Selling and administrative expenses		23,980			10,407			61,634			—			96,021
Other operating expense (income), net		4,052			(5,511	)		3,071			—			1,612
Operating income		8,153			34,870			45,722			(1,922	)		86,823
Interest expense (income)		5,637			(3,767	)		3,477			—			5,347
Other income, net		(290	)		(2	)		(670	)		—			(962	)
Income before income taxes		2,806			38,639			42,915			(1,922	)		82,438
Provision for income taxes		1,116			14,760			7,392			(729	)		22,539
Net income		1,690			23,879			35,523			(1,193	)		59,899
Less: Net income attributable to noncontrolling interests		—			—			421			—			421
Net income attributable to Gardner Denver	$	1,690		$	23,879		$	35,102		$	(1,193	)	$	59,478

Condensed Consolidating Statement of Operations
Three Months Ended March 31, 2010

							Non-
	Parent			Guarantor			Guarantor
	Company			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Revenues	$	74,452		$	98,070		$	328,343		$	(78,701	)	$	422,164
Cost of sales		54,804			73,446			238,147			(78,040	)		288,357
Gross profit		19,648			24,624			90,196			(661	)		133,807
Selling and administrative expenses		19,749			10,014			57,931			—			87,694
Other operating (income) expense, net		(2,328	)		2,225			(1,248	)		—			(1,351	)
Operating income		2,227			12,385			33,513			(661	)		47,464
Interest expense (income)		5,880			(3,770	)		4,006			—			6,116
Other income, net		(405	)		(4	)		(226	)		—			(635	)
(Loss) income before income taxes		(3,248	)		16,159			29,733			(661	)		41,983
Provision for income taxes		(744	)		5,527			5,169			(222	)		9,730
Net (loss) income		(2,504	)		10,632			24,564			(439	)		32,253
Less: Net income attributable to noncontrolling interests		—			—			295			—			295
Net (loss) income attributable to Gardner Denver	$	(2,504	)	$	10,632		$	24,269		$	(439	)	$	31,958

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Condensed Consolidating Balance Sheet
March 31, 2011

							Non-
	Parent			Guarantor			Guarantor
	Company			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	64,603		$	—		$	120,702		$	—		$	185,305
Accounts receivable, net		64,072			70,208			264,456			—			398,736
Inventories, net		37,886			73,760			202,427			(18,487	)		295,586
Deferred income taxes		20,287			—			6,568			4,026			30,881
Other current assets		3,054			3,891			24,232			—			31,177
Total current assets		189,902			147,859			618,385			(14,461	)		941,685
Intercompany receivable (payable)		13,371			(3,971	)		(9,400	)		—			—
Investments in affiliates		830,658			186,313			41,297			(1,058,268	)		—
Property, plant and equipment, net		51,525			47,586			188,772			—			287,883
Goodwill		76,680			190,722			318,754			—			586,156
Other intangibles, net		8,056			43,143			245,892			—			297,091
Other assets		49,903			340			6,447			(5,352	)		51,338
Total assets	$	1,220,095		$	611,992		$	1,410,147		$	(1,078,081	)	$	2,164,153
Liabilities and Stockholders’ Equity
Current liabilities:
Short-term borrowings and current maturities of long-term debt	$	31,964		$	—		$	5,658		$	—		$	37,622
Accounts payable and accrued liabilities		94,035			85,452			199,296			(1,270	)		377,513
Total current liabilities		125,999			85,452			204,954			(1,270	)		415,135
Long-term intercompany payable (receivable)		260,941			(322,642	)		61,701			—			—
Long-term debt, less current maturities		231,464			75			14,182			—			245,721
Deferred income taxes		—			23,819			45,908			(5,352	)		64,375
Other liabilities		83,431			789			76,641			—			160,861
Total liabilities		701,835			(212,507	)		403,386			(6,622	)		886,092
Stockholders’ equity:
Common stock		596			—			—			—			596
Capital in excess of par value		598,117			500,824			558,689			(1,058,268	)		599,362
Retained earnings		133,129			298,217			343,070			(11,859	)		762,557
Accumulated other comprehensive (loss) income		(24,853	)		25,458			92,904			(1,332	)		92,177
Treasury stock, at cost		(188,729	)		—			—			—			(188,729	)
Total Gardner Denver stockholders’ equity		518,260			824,499			994,663			(1,071,459	)		1,265,963
Noncontrolling interests		—			—			12,098			—			12,098
Total stockholders’ equity		518,260			824,499			1,006,761			(1,071,459	)		1,278,061
Total liabilities and stockholders’ equity	$	1,220,095		$	611,992		$	1,410,147		$	(1,078,081	)	$	2,164,153

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Condensed Consolidating Balance Sheet
December 31, 2010

							Non-
	Parent			Guarantor			Guarantor
	Company			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	27,725		$	—		$	129,304		$	—		$	157,029
Accounts receivable, net		56,129			66,819			246,912			—			369,860
Inventories, net		31,233			59,552			166,982			(16,282	)		241,485
Deferred income taxes		21,888			62			8,191			4,487			34,628
Other current assets		3,589			3,967			17,979			—			25,535
Total current assets		140,564			130,400			569,368			(11,795	)		828,537
Intercompany receivable (payable)		65,596			(55,402	)		(10,194	)		—			—
Investments in affiliates		839,218			186,314			41,297			(1,066,829	)		—
Property, plant and equipment, net		51,786			47,156			187,621			—			286,563
Goodwill		76,680			190,722			304,394			—			571,796
Other intangibles, net		8,081			43,469			238,038			—			289,588
Other assets		51,373			172			5,903			(6,834	)		50,614
Total assets	$	1,233,298		$	542,831		$	1,336,427		$	(1,085,458	)	$	2,027,098
Liabilities and Stockholders’ Equity
Current liabilities:
Short-term borrowings and current maturities of long-term debt	$	29,845		$	—		$	7,383		$	—		$	37,228
Accounts payable and accrued liabilities		91,781			57,748			172,843			—			322,372
Total current liabilities		121,626			57,748			180,226			—			359,600
Long-term intercompany payable (receivable)		256,407			(340,249	)		83,842			—			—
Long-term debt, less current maturities		237,200			75			13,407			—			250,682
Deferred income taxes		—			23,865			45,126			(6,834	)		62,157
Other liabilities		89,480			772			74,734			—			164,986
Total liabilities		704,713			(257,789	)		397,335			(6,834	)		837,425
Stockholders’ equity:
Common stock		595			—			—			—			595
Capital in excess of par value		590,743			509,385			558,689			(1,066,829	)		591,988
Retained earnings		134,061			274,337			307,967			(10,666	)		705,699
Accumulated other comprehensive (loss) income		(14,270	)		16,898			59,926			(1,129	)		61,425
Treasury stock, at cost		(182,544	)		—			—			—			(182,544	)
Total Gardner Denver stockholders’ equity		528,585			800,620			926,582			(1,078,624	)		1,177,163
Noncontrolling interests		—			—			12,510			—			12,510
Total stockholders’ equity		528,585			800,620			939,092			(1,078,624	)		1,189,673
Total liabilities and stockholders’ equity	$	1,233,298		$	542,831		$	1,336,427		$	(1,085,458	)	$	2,027,098

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Condensed Consolidating Statement of Cash Flows
Three Months Ended March 31, 2011

							Non-
	Parent			Guarantor			Guarantor
	Company			Subsidiaries			Subsidiaries			Eliminations		Consolidated
Net Cash Provided by (Used In) Operating Activities	$	43,158		$	(18,705	)	$	23,392		$	—	$	47,845
Cash Flows From Investing Activities
Capital expenditures		(2,145	)		(2,569	)		(3,316	)		—		(8,030	)
Net cash paid in business combinations		(21	)		—			—			—		(21	)
Disposals of property, plant and equipment		9			267			216			—		492
Net cash used in investing activities		(2,157	)		(2,302	)		(3,100	)		—		(7,559	)
Cash Flows From Financing Activities
Net change in long-term intercompany receivables/payables		7,546			21,013			(28,559	)		—		—
Principal payments on short-term borrowings		(883	)		—			(5,712	)		—		(6,595	)
Proceeds from short-term borrowings		—			—			3,646			—		3,646
Principal payments on long-term debt		(6,578	)		—			—			—		(6,578	)
Proceeds from long-term debt		—			—			10			—		10
Proceeds from stock option exercises		3,037			—			—			—		3,037
Excess tax benefits from stock-based compensation		1,513			—			—			—		1,513
Purchase of treasury stock		(6,169	)		—			—			—		(6,169	)
Cash dividends paid		(2,622	)		—			—			—		(2,622	)
Other		—			—			(1,024	)		—		(1,024	)
Net cash (used in) provided by financing activities		(4,156	)		21,013			(31,639	)		—		(14,782	)
Effect of exchange rate changes on cash and cash equivalents		33			(6	)		2,745			—		2,772
Net increase (decrease) in cash and cash equivalents		36,878			—			(8,602	)		—		28,276
Cash and cash equivalents, beginning of year		27,725			—			129,304			—		157,029
Cash and cash equivalents, end of period	$	64,603		$	—		$	120,702		$	—	$	185,305

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Condensed Consolidating Statement of Cash Flows
Three Months Ended March 31, 2010

							Non-
	Parent			Guarantor			Guarantor
	Company			Subsidiaries			Subsidiaries			Eliminations		Consolidated
Net Cash Provided by (Used In) Operating Activities	$	21,612		$	(9,628	)	$	14,704		$	—	$	26,688
Cash Flows From Investing Activities
Capital expenditures		(881	)		(614	)		(3,264	)		—		(4,759	)
Disposals of property, plant and equipment		29			12			146			—		187
Other		170			(170	)		—			—		—
Net cash used in investing activities		(682	)		(772	)		(3,118	)		—		(4,572	)
Cash Flows From Financing Activities
Net change in long-term intercompany receivables/payables		3,082			10,350			(13,432	)		—		—
Principal payments on short-term borrowings		(633	)		—			(2,872	)		—		(3,505	)
Proceeds from short-term borrowings		—			—			7,307			—		7,307
Principal payments on long-term debt		(24,362	)		—			(349	)		—		(24,711	)
Proceeds from long-term debt		8,000			—			10			—		8,010
Proceeds from stock option exercises		7,339			—			—			—		7,339
Excess tax benefits from stock-based compensation		1,463			—			26			—		1,489
Purchase of treasury stock		(8,841	)		—			—			—		(8,841	)
Cash dividends paid		(2,624	)		—			—			—		(2,624	)
Other		—			—			(1,001	)		—		(1,001	)
Net cash (used in) provided by financing activities		(16,576	)		10,350			(10,311	)		—		(16,537	)
Effect of exchange rate changes on cash and cash equivalents		42			—			(2,534	)		—		(2,492	)
Net increase (decrease) in cash and cash equivalents		4,396			(50	)		(1,259	)		—		3,087
Cash and cash equivalents, beginning of year		3,404			54			106,278			—		109,736
Cash and cash equivalents, end of period	$	7,800		$	4		$	105,019		$	—	$	112,823

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Note 16. Segment Results

     The Company has determined its reportable segments in accordance with FASB ASC 280 Segment Reporting (“FASB ASC 280”) and evaluates the performance of its reportable segments based on, among other measures, operating income, which is defined as income before interest expense, other income, net, and income taxes. Reportable segment operating income and segment operating margin (defined as segment operating income divided by segment revenues) are indicative of short-term operating performance and ongoing profitability. Management closely monitors the operating income and operating margin of each reportable segment to evaluate past performance and actions required to improve profitability.

     In the Industrial Products Group, the Company designs, manufactures, markets and services the following products and related aftermarket parts for industrial and commercial applications: rotary screw, reciprocating, and sliding vane air and gas compressors; positive displacement, centrifugal and side channel blowers; and vacuum pumps primarily serving manufacturing, transportation and general industry and selected OEM and engineered system applications. The Company also markets and services complementary ancillary products. Stationary air compressors are used in manufacturing, process applications and materials handling, and to power air tools and equipment. Blowers are used primarily in pneumatic conveying, wastewater aeration, numerous applications in industrial manufacturing and engineered vacuum systems. The markets served are primarily in Europe, the U.S. and Asia.

     In the Engineered Products Group, the Company designs, manufactures, markets and services a diverse group of pumps, compressors, liquid ring vacuum pumps, water jetting and loading arm systems and related aftermarket parts. These products are used in well drilling, well servicing and production of oil and natural gas; industrial, commercial and transportation applications; and in industrial cleaning and maintenance. Liquid ring pumps are used in many different applications such as water removal, distilling, reacting, flare gas recovery, efficiency improvement, lifting and handling, and filtering, principally in the pulp and paper, industrial manufacturing, petrochemical and power industries. This segment also designs, manufactures, markets and services other engineered products and components and equipment for the chemical, petroleum and food industries. The markets served are primarily in the U.S., Europe, Canada and Asia.

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     The following table provides financial information by business segment for the three-months ended March 31, 2011 and 2010:

	Three Months Ended
	March 31,
	2011			2010
Industrial Products Group
Revenues	$	286,210		$	246,394
Operating income		30,802			19,553
Operating income as a percentage of revenues		10.8	%		7.9	%
Engineered Products Group
Revenues	$	245,643		$	175,770
Operating income		56,021			27,911
Operating income as a percentage of revenues		22.8	%		15.9	%
Reconciliation of Segment Results to Consolidated Results
Total segment operating income	$	86,823		$	47,464
Interest expense		5,347			6,116
Other income, net		(962	)		(635	)
Consolidated income before income taxes	$	82,438		$	41,983

Note 17. Subsequent Events

     On March 23, 2011, the Company announced that it had issued a notice to redeem all $125.0 million in aggregate principal amount of its outstanding Senior Subordinated Notes at 8% due 2013 (the “Notes”). The Notes were redeemed on May 2, 2011 for a total of $125.0 million, consisting of the redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to, but not including, the date of redemption. The Company financed the redemption using available cash and borrowings under its revolving credit facility. In the second quarter of 2011, the Company will recognize a loss of approximately $0.8 million (consisting of unamortized debt issuance costs) on the early extinguishment of this debt.

     On April 20, 2011, the Company announced that it had reached an agreement with the minority shareholders of its two joint ventures in China, Shanghai CompAir Compressor Co. Ltd. and Shanghai CompAir-Dalong High Pressure Equipment Co. Ltd., to acquire all of their equity interests in these entities, representing 49 percent and 40 percent of the two entities, respectively. The purchase price is RMB 122.0 million (approximately $18.7 million based on exchange rates at the date of the agreement). The transaction is currently expected to close during the third quarter of 2011 and will be accounted for by the Company as an equity transaction.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

     The following management’s discussion and analysis of financial condition and results of operations should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, including the financial statements, accompanying notes and management’s discussion and analysis of financial condition and results of operations, and the interim condensed consolidated financial statements and accompanying notes included in this Quarterly Report on Form 10-Q.

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Operating Segments

     In the Industrial Products Group, the Company designs, manufactures, markets and services the following products and related aftermarket parts for industrial and commercial applications: rotary screw, reciprocating, and sliding vane air compressors; and positive displacement, centrifugal and side channel blowers; primarily serving general industrial and OEM applications. This segment also markets and services complementary ancillary products. Stationary air compressors are used in manufacturing, process applications and materials handling, and to power air tools and equipment. Blowers are used primarily in pneumatic conveying, wastewater aeration, numerous applications in industrial manufacturing and engineered vacuum systems. The markets served are primarily in Europe, the U.S. and Asia.

     In the Engineered Products Group, the Company designs, manufactures, markets and services a diverse group of products for industrial, commercial and OEM applications, engineered systems and general industry. Products include reciprocating pumps, liquid ring pumps, diaphragm vacuum pumps, water jetting systems and related aftermarket parts. These products are used in oil and natural gas well drilling, servicing and production; medical and laboratory; and in industrial cleaning and maintenance. Liquid ring pumps are used in many different applications such as water removal, distilling, reacting, flare gas recovery, efficiency improvement, lifting and handling, and filtering, principally in the pulp and paper, industrial manufacturing, petrochemical and power industries. This segment also designs, manufactures, markets and services other fluid transfer components and equipment for the chemical, petroleum and food industries. The markets served are primarily in the U.S., Europe, Canada and Asia.

     The Company has determined its reportable segments in accordance with FASB ASC 280 and evaluates the performance of its reportable segments based on, among other measures, operating income, which is defined as income before interest expense, other income, net, and income taxes. Reportable segment operating income and segment operating margin (defined as segment operating income divided by segment revenues) are indicative of short-term operating performance and ongoing profitability. Management closely monitors the operating income and operating margin of each business segment to evaluate past performance and identify actions required to improve profitability. See Note 16 “Segment Results” in the “Notes to Condensed Consolidated Financial Statements” included in this Quarterly Report on Form 10-Q.

Non-GAAP Financial Measures

     To supplement the Company’s financial information presented in accordance with GAAP, management, from time to time, uses additional measures to clarify and enhance understanding of past performance and prospects for the future. These measures may exclude, for example, the impact of unique and infrequent items or items outside of management’s control (e.g. foreign currency exchange rates). Such measures are provided in addition to and should not be considered to be a substitute for, or superior to, the comparable measure under GAAP.

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Results of Operations

Performance during the Quarter Ended March 31, 2011 Compared
with the Quarter Ended March 31, 2010

Revenues

     Revenues increased $109.7 million, or 26%, to $531.9 million in the three-month period ended March 31, 2011, compared to $422.2 million in the three-month period of 2010. This increase was attributable to higher volume in both segments ($89.5 million, or 21%), price increases ($9.1 million, or 2%), favorable changes in foreign currency exchange rates ($6.7 million, or 2%) and the acquisition of ILMVAC in the third quarter of 2010 ($4.4 million, or 1%).

     Revenues in the Industrial Products Group increased $39.8 million, or 16%, to $286.2 million in the first quarter of 2011, compared to $246.4 million in the first quarter of 2010. This increase reflects higher volume (12%), price increases (2%) and favorable changes in foreign currency exchange rates (2%). The volume increase was attributable to improvement in demand for OEM products, compressors and aftermarket parts and services on a global basis. Strong growth was experienced in all major geographic regions, particularly in the Americas and in Asia.

     Revenues in the Engineered Products Group increased $69.9 million, or 40%, to $245.7 million in the first quarter of 2011, compared to $175.8 million in the first quarter of 2010. This increase reflects higher volume (33%), price increases (3%), the acquisition of ILMVAC (3%) and favorable changes in foreign currency exchange rates (1%). The volume increase reflected strong demand for drilling and well servicing pumps, medical OEM products and loading arms.

Gross Profit

     Gross profit increased $50.7 million, or 38%, to $184.5 million in the three-month period ended March 31, 2011, compared to $133.8 million in the three-month period of 2010, and as a percentage of revenues was 34.7% in 2011, compared to 31.7% in 2010. The increase in gross profit primarily reflects the volume increases discussed above, favorable product mix, cost reductions and favorable changes in foreign currency exchange rates. The improvement in gross profit as a percentage of revenues was due primarily to the benefits of operational improvements, cost reductions, volume leverage and favorable product mix.

Selling and Administrative Expenses

     Selling and administrative expenses increased $8.3 million, or 9%, to $96.0 million in the first quarter of 2011, compared to $87.7 million in the first quarter of 2010. This increase reflects higher compensation and benefit expenses, unfavorable changes in foreign currency exchange rates ($1.2 million) and the acquisition of ILMVAC ($1.0 million), partially offset by cost reductions. As a percentage of revenues, selling and administrative expenses improved to 18.1% in the first quarter of 2011 compared to 20.8% in the first quarter of 2010, primarily as a result of cost reductions and leverage from higher revenues.

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Other Operating Expense (Income), Net

     Other operating expense, net, of $1.6 million in the first quarter of 2011 compares to other operating income, net, of $1.4 million in the first quarter of 2010. Net foreign currency losses of $1.2 million recorded in the first quarter of 2011 reflected the effect of the weakening of the USD against primarily the EUR and GBP on the Company’s financial instruments denominated in the EUR and GBP. Net foreign currency gains of $1.0 million recorded in the first quarter of 2010 reflected the effect of the strengthening of the USD against those currencies. Results in 2010 also reflected an insurance settlement received in the first quarter.

Operating Income

     Operating income of $86.8 million in the first quarter of 2011 increased $39.3 million, or 83%, compared to $47.5 million in the first quarter of 2010. Operating income as a percentage of revenues in the first quarter of 2011 was 16.3% compared to 11.2% in the first quarter of 2010. This improvement was due primarily to incremental profitability on revenue growth, favorable product mix and the benefits of operational improvements previously implemented. Charges associated with profit improvement initiatives and other items totaled $1.7 million, or 0.3% of revenues, in 2011 and $1.1 million, or 0.3% of revenues, in 2010.

     The Industrial Products Group generated segment operating income and segment operating margin of $30.8 million and 10.8%, respectively, in the first quarter of 2011, compared to $19.6 million and 7.9%, respectively, in the first quarter of 2010 (see Note 16 “Segment Results” in the “Notes to Condensed Consolidated Financial Statements” included in this Quarterly Report on Form 10-Q for a reconciliation of segment operating income to consolidated operating income). The year over year improvement in operating income and operating margin was primarily attributable to incremental profit on revenue growth and cost reductions. Charges associated with profit improvement initiatives and other items totaled $1.4 million, or 0.5% of revenues, in 2011 and $0.9 million, or 0.4% of revenues, in 2010.

     The Engineered Products Group generated segment operating income and segment operating margin of $56.0 million and 22.8%, respectively, in the first quarter of 2011, compared to $27.9 million and 15.9%, respectively, in the first quarter of 2010 (see Note 16 “Segment Results” in the “Notes to Condensed Consolidated Financial Statements” included in this Quarterly Report on Form 10-Q for a reconciliation of segment operating income to consolidated operating income). The year over year improvement in operating income and operating margin was primarily attributable to incremental profit on revenue growth, favorable product mix and cost reductions. Charges associated with profit improvement initiatives and other items totaled $0.3 million, or 0.1% of revenues, in 2011 and $0.1 million, or 0.1% of revenues, in 2010.

Interest Expense

     Interest expense of $5.3 million in the first quarter of 2011 decreased $0.8 million from $6.1 million in the first quarter of 2010 due primarily to lower average borrowings in the first quarter of 2011 compared to the first quarter of 2010, partially offset by a higher weighted average interest rate in 2011. The weighted average interest rate, including the amortization of debt issuance costs, increased to 7.5% in the first quarter of 2011 compared to 6.9% in the first quarter of 2010 due primarily to the greater relative weight of the fixed interest rate on the Company’s 8% Senior Subordinated Notes.

32

Provision for Income Taxes

     The provision for income taxes was $22.5 million and the effective tax rate was 27.3% in the first quarter of 2011, compared to $9.7 million and 23.2%, respectively, in the first quarter of 2010. The year over year increase in the provision reflects higher taxable income, and the increase in the effective tax rate reflects a higher proportion of taxable income in the U.S. in 2011 compared to 2010.

Net Income Attributable to Gardner Denver

     Net income attributable to Gardner Denver of $59.5 million and diluted earnings per share (“DEPS”) of $1.13 in the first quarter of 2011 compares with net income attributable to Gardner Denver and DEPS of $32.0 million and $0.61, respectively, in the first quarter of 2010. This improvement reflects the net effect of the operating income, interest expense and income tax factors discussed above. Results in the first quarter of 2011 included charges for profit improvement initiatives and other items totaling $1.2 million after income taxes, or $0.02 on a diluted per share basis. Results in the first quarter of 2010 included net charges for profit improvement initiatives and other items totaling $0.8 million after income taxes, or $0.01 on a diluted per share basis.

Outlook

     In general, the Company believes that demand for products in its Industrial Products Group tends to correlate with the rate of total industrial capacity utilization and the rate of change of industrial production because compressed air is often used as a fourth utility in the manufacturing process. Capacity utilization rates above 80% have historically indicated a good demand environment for industrial equipment such as compressor and vacuum products. Over longer time periods, the Company believes that demand also tends to follow economic growth patterns indicated by the rates of change in the gross domestic product around the world. The significant contraction in manufacturing capacity utilization in the U.S. and Europe, which began in 2008, has resulted in lower demand for capital equipment, such as compressor packages, as existing equipment remained idle. The Company believes there have been recent improvements in global capacity utilization rates, and that capacity utilization will continue to improve gradually.

     In the first quarter of 2011, orders in the Industrial Products Group increased $45.7 million, or 16%, to $323.5 million, compared to $277.8 million in the first quarter of 2010. This increase reflected on-going improvement in demand for OEM products, compressors and aftermarket parts and services, with growth realized in all major geographic regions ($41.3 million, or 14%), and the favorable effect of changes in foreign currency exchange rates ($4.4 million, or 2%). Order backlog for the Industrial Products Group increased 20% to $255.0 million as of March 31, 2011 from $211.7 million at December 31, 2010 due primarily to the growth in orders as discussed above ($36.5 million, or 17%) and the favorable effect of changes in foreign currency exchange rates ($6.8 million, or 3%). Order backlog for the Industrial Products Group as of March 31, 2011 increased 21% compared to $210.5 million as of March 31, 2010, due primarily to the growth in orders ($34.7 million, or 16%) and favorable changes in foreign currency exchange rates ($9.8 million, or 5%). The Company currently expects that continued gradual improvement in capacity utilization rates will result in higher demand for products and services in its Industrial Products Group, particularly for replacement opportunities and aftermarket parts and services. It also expects that marginal expansion of customer plants will drive demand for compressors and vacuum products.

33

     Orders in the Engineered Products Group increased 39% to $288.4 million in the first quarter of 2011, compared to $207.5 million in the first quarter of 2010, due to strong demand for drilling and well servicing pumps and medical OEM products ($74.4 million, or 36%), the acquisition of ILMVAC ($3.8 million, or 2%) and the favorable effect of changes in foreign currency exchange rates ($2.7 million, or 1%). Order backlog for the Engineered Products Group increased 15% to $392.1 million as of March 31, 2011 from $341.8 million at December 31, 2010 due primarily to the growth in orders ($42.2 million, or 13%) and the favorable effect of changes in foreign currency exchange rates ($8.1 million, or 2%). Order backlog for the Engineered Products Group as of March 31, 2011 increased 71% compared to $229.3 million as of March 31, 2010, primarily as a result of the growth in orders ($150.3 million, or 65%), the favorable effect of changes in foreign currency exchange rates ($10.9 million, or 5%) and the acquisition of ILMVAC ($1.6 million, or 1%). Orders for products in the Engineered Products Group have historically corresponded to demand for petrochemical products and been influenced by prices for oil and natural gas, and rig count, among other factors, which the Company cannot predict. Revenues for Engineered Products depend more on existing backlog levels than revenues for Industrial Products. Many of these products are used in process applications, such as oil and gas refining and chemical processing, which are industries that typically experience increased demand very late in economic cycles. Improving backlog during the preceding six months has provided the Company with better visibility into the demand for the remainder of 2011. The Company currently anticipates that demand for well servicing pumps and aftermarket fluid ends will remain strong during 2011 compared to 2010. The Company also expects shipments of drilling pumps to remain steady based on its anticipation of a stable rig count for the remainder of the year.

     Order backlog consists of orders believed to be firm for which a customer purchase order has been received or communicated. However, since orders may be rescheduled or canceled, order backlog is not necessarily indicative of future revenue levels.

Liquidity and Capital Resources

Operating Working Capital

     During the three-month period ended March 31, 2011, net working capital (defined as total current assets less total current liabilities) increased to $526.6 million from $468.9 million at December 31, 2010. Operating working capital (defined as accounts receivable plus inventories, less accounts payable and accrued liabilities) increased $27.8 million to $316.8 million from $289.0 million at December 31, 2010 due to higher accounts receivable ($28.9 million) and inventory ($54.1 million), partially offset by higher accounts payable ($40.2 million) and accrued liabilities ($15.0 million). The increase in accounts receivable was due primarily to higher revenues, the timing of shipments within the first quarter and the effect of changes in foreign currency exchange rates ($9.0 million). Days sales in receivables increased to 67 at March 31, 2011 from 64 at December 31, 2010 due primarily to the timing of shipments within the first quarter, and were down from 71 days at March 31, 2010. The increase in inventory primarily reflects growth attributable to increases in both orders and backlog during the first three months of 2011 and the effect of changes in foreign currency exchange rates ($7.0 million). Inventory turns were 4.7 in the first quarter of 2011, compared with 5.8 in the fourth quarter of 2010 and 5.2 in the first quarter of 2010. The impact of growth in orders and backlog was partially offset by productivity improvements. The increase in accounts payable and accrued liabilities was due primarily to the timing of payments to vendors, higher accrued income taxes and product warranty, and higher customer advance payments.

34

Cash Flows

     Cash provided by operating activities of $47.8 million in the three-month period of 2011 increased $21.1 million from $26.7 million in the comparable period of 2010. This improvement was primarily due to higher net income (excluding non-cash charges for depreciation and amortization and unrealized foreign currency transaction gains and losses) and lower cash used by operating working capital in 2011 compared to 2010. Operating working capital used cash of $19.3 million in 2011 and $25.9 million in 2010. Cash used in accounts receivable of $19.9 million and $14.8 million in 2011 and 2010, respectively, reflected increased sales and the timing of shipments within the quarter in both periods. Cash used in inventory of $47.1 million and $4.6 million in 2011 and 2010, respectively, reflected the growth in orders and backlog during the three-month period of each year. Accounts payable and accrued expenses generated cash of $47.7 million in 2011 and used cash of $6.5 million in 2010. The year over year improvement was due primarily to the timing of payments to vendors in 2011 and higher employee termination benefit payments in 2010.

     Net cash used in investing activities of $7.6 million and $4.6 million in the three-month periods of 2011 and 2010, respectively, consisted primarily of capital expenditures on assets intended to increase production output to meet improving demand and reduce costs. The Company currently expects capital expenditures to total approximately $45 million for the full year 2011. As a result of the Company’s application of lean principles, non-capital or less capital-intensive solutions are often utilized in process improvement initiatives and capital replacement. Capital expenditures related to environmental projects have not been significant in the past and are not expected to be significant in the foreseeable future.

     Net cash used in financing activities of $14.8 million in the three-month period of 2011 compares with $16.5 million used in the three-month period of 2010. Cash provided by operating activities was used for net repayments of short-term and long-term borrowings totaling $9.5 million in the three-month period of 2011 and $12.9 million in the three-month period of 2010. Cash used for the repurchase of shares of the Company’s common stock totaled $6.2 million and $8.8 million in 2011 and 2010, respectively, including shares exchanged or surrendered in connection with its stock option plans of $0.9 million in 2011 and $0.2 million in 2010. Cash dividends paid were $2.6 million ($0.05 per common share) in both years.

Share Repurchase Program

     In November 2008, the Company’s Board of Directors authorized a share repurchase program to acquire up to 3.0 million shares of the Company’s outstanding common stock, of which approximately 2.1 million shares remain available for repurchase as of March 31, 2011.

Liquidity

     The Company’s debt to total capital ratio (defined as total debt divided by the sum of total debt plus total stockholders’ equity) was 18.1% as of March 31, 2011 compared to 19.5% as of December 31, 2010. This decrease primarily reflects a $4.6 million net decrease in borrowings between these two dates.

     The Company’s primary cash requirements include working capital, capital expenditures, principal and interest payments on indebtedness, cash dividends on its common stock, selective acquisitions and any stock

35

repurchases. The Company’s primary sources of funds are its ongoing net cash flows from operating activities and availability under its Revolving Line of Credit (as defined below). At March 31, 2011, the Company had cash and cash equivalents of $185.3 million, of which $2.9 million was pledged to financial institutions as collateral to support issued standby letters of credit and similar instruments. The Company also had $295.4 million of unused availability under its Revolving Line of Credit at March 31, 2011. Based on the Company’s financial position at March 31, 2011 and its pro-forma results of operations for the twelve months then ended, the unused availability under its Revolving Line of Credit would not have been limited by the financial ratio covenants in the 2008 Credit Agreement (as described below).

     On September 19, 2008, the Company entered into the 2008 Credit Agreement consisting of (i) a $310.0 million Revolving Line of Credit (the “Revolving Line of Credit”), (ii) a $180.0 million term loan (“U.S. Dollar Term Loan”) and (iii) a €120.0 million term loan (“Euro Term Loan”). In addition, the 2008 Credit Agreement provides for a possible increase in the Revolving Line of Credit of up to $200.0 million.

     On October 15 and 16, 2008, the Company borrowed $200.0 million and £40.0 million, respectively, pursuant to the Revolving Line of Credit. This amount was used by the Company, in part to retire the outstanding balances under its previous credit agreement, at which point it was terminated, and in part to pay a portion of the cash purchase price of the Company’s acquisition of CompAir. On October 17, 2008, the Company borrowed $180.0 million and €120.0 million pursuant to the U.S. Dollar Term Loan and the Euro Term Loan, respectively. These facilities, together with a portion of the borrowing under the Revolving Line of Credit and existing cash, were used to pay the cash portion of the CompAir acquisition.

     The interest rates per annum applicable to loans under the 2008 Credit Agreement are, at the Company’s option, either a base rate plus an applicable margin percentage or a Eurocurrency rate plus an applicable margin. The base rate is the greater of (i) the prime rate or (ii) one-half of 1% over the weighted average of rates on overnight federal funds as published by the Federal Reserve Bank of New York. The Eurocurrency rate is LIBOR.

     The initial applicable margin percentage over LIBOR under the 2008 Credit Agreement was 2.5% with respect to the term loans and 2.1% with respect to loans under the Revolving Line of Credit, and the initial applicable margin percentage over the base rate was 1.25% with respect to floating rate loans. After the Company’s delivery of its financial statements and compliance certificate for each fiscal quarter, the applicable margin percentages are subject to adjustments based upon the ratio of the Company’s consolidated total debt to consolidated adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) (each as defined in the 2008 Credit Agreement) being within certain defined ranges. The applicable margin percentage over LIBOR was adjusted down during the third quarter of 2010. At March 31, 2011, the applicable margin percentage over LIBOR under the 2008 Credit Agreement was 2.0% with respect to the term loans and 1.65% with respect to loans under the Revolving Line of Credit, and the applicable margin percentage over the base rate was 0.75% with respect to floating rate loans.

     The obligations under the 2008 Credit Agreement are guaranteed by the Company’s existing and future domestic subsidiaries. The obligations under the 2008 Credit Agreement are also secured by a pledge of the capital stock of each of the Company’s existing and future material domestic subsidiaries, as well as 65% of the capital stock of each of the Company’s existing and future first-tier material foreign subsidiaries.

     The 2008 Credit Agreement includes customary covenants. Subject to certain exceptions, these covenants restrict or limit the ability of the Company and its subsidiaries to, among other things: incur liens; engage in

36

mergers, consolidations and sales of assets; incur additional indebtedness; pay dividends and redeem stock; make investments (including loans and advances); enter into transactions with affiliates, make capital expenditures and incur rental obligations. In addition, the 2008 Credit Agreement requires the Company to maintain compliance with certain financial ratios on a quarterly basis, including a maximum total leverage ratio test and a minimum interest coverage ratio test. As of March 31, 2011, the Company was in compliance with each of the financial ratio covenants under the 2008 Credit Agreement.

     The 2008 Credit Agreement contains customary events of default, including upon a change of control. If an event of default occurs, the lenders under the 2008 Credit Agreement will be entitled to take various actions, including the acceleration of amounts due under the 2008 Credit Agreement.

     The U.S. Dollar and Euro Term Loans have a final maturity of October 15, 2013. The U.S. Dollar Term Loan requires quarterly principal payments aggregating approximately $11.5 million, $25.4 million and $34.6 million in fiscal years 2011 through 2013, respectively. The Euro Term Loan requires quarterly principal payments aggregating approximately €7.5 million, €16.5 million and €22.5 million in fiscal years 2011 through 2013, respectively.

     The Revolving Line of Credit also matures on October 15, 2013. Loans under this facility may be denominated in USD or several foreign currencies and may be borrowed by the Company or two of its foreign subsidiaries as outlined in the 2008 Credit Agreement.

     The Company issued $125.0 million of 8% Senior Subordinated Notes (the “Notes”) in 2005. The Notes had a fixed annual interest rate of 8% and were guaranteed by certain of the Company’s domestic subsidiaries (the “Guarantors”). On March 23, 2011, the Company announced that it had issued a notice to redeem all $125.0 million in aggregate principal amount of the Notes. The Notes were redeemed on May 2, 2011 for a total of $125.0 million, consisting of the redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to, but not including, the date of redemption. The Company financed the redemption using $55.0 million of available cash and $70.0 million of borrowings under its Revolving Line of Credit. Availability under the Company’s Revolving Line of Credit on May 2, 2011, subsequent to the redemption, was $226.5 million. Management currently believes that the Company’s liquidity position, including available cash and availability under the Revolving Line of Credit, is adequate.

     Management currently expects that the Company’s cash on hand and future cash flows from operating activities will be sufficient to fund its working capital, capital expenditures, scheduled principal and interest payments on indebtedness, cash dividends on its common stock and any stock repurchases for at least the next twelve months. The Company continues to consider acquisition opportunities, but the size and timing of any future acquisitions and the related potential capital requirements cannot be predicted. In the event that suitable businesses are available for acquisition upon acceptable terms, the Company may obtain all or a portion of the necessary financing through the incurrence of additional long-term borrowings.

Contractual Obligations and Commitments

     The following table and accompanying disclosures summarize the Company’s significant contractual obligations at March 31, 2011 and the effect such obligations are expected to have on its liquidity and cash flow in future periods:

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			Payments Due by Period
			Balance						After
(Dollars in millions)	Total		of 2011		2012-2013		2014 2015		2015
Contractual Cash Obligations
Debt (1)	$	275.5	$	153.0	$	118.8	$	0.8	$	2.9
Estimated interest payments (1) (2)		31.3		9.8		15.3		2.5		3.7
Capital leases		7.8		0.7		0.9		2.8		3.4
Operating leases		88.0		20.5		34.2		15.9		17.4
Purchase obligations (3)		307.7		298.6		9.1		—		—
Total	$	710.3	$	482.6	$	178.3	$	22.0	$	27.4

(1)	The redemption price, consisting of the principal and accrued and unpaid interest, totaling $125.0 million, of the 8% Senior Subordinated Notes is presented as a 2011 payment based on the Company’s redemption of these Notes on May 2, 2011.
(2)	Estimated interest payments for long-term debt were calculated as follows: for fixed-rate debt and term debt, interest was calculated based on applicable rates and payment dates; for variable-rate debt and/or non-term debt, interest rates and payment dates were estimated based on management’s determination of the most likely scenarios for each relevant debt instrument.
(3)	Purchase obligations consist primarily of agreements to purchase inventory or services made in the normal course of business to meet operational requirements. The purchase obligation amounts do not represent the entire anticipated purchases in the future, but represent only those items for which the Company is contractually obligated as of March 31, 2011. For this reason, these amounts will not provide a complete and reliable indicator of the Company’s expected future cash outflows.

     The above table does not include the Company’s total pension and other postretirement benefit liabilities and net deferred income tax liabilities recognized on the consolidated balance sheet as of March 31, 2011 because such liabilities, due to their nature, do not represent expected liquidity needs. There have not been material changes to such liabilities or the Company’s minimum pension funding obligations other than as disclosed in Note 6 “Pension and Other Postretirement Benefits” and Note 12 “Income Taxes” in the “Notes to Condensed Consolidated Financial Statements” included in this Quarterly Report on Form 10-Q. Also please refer to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010.

     In the normal course of business, the Company or its subsidiaries may sometimes be required to provide surety bonds, standby letters of credit or similar instruments to guarantee its performance of contractual or legal obligations. As of March 31, 2011, the Company had $73.3 million in such instruments outstanding and had pledged $2.9 million of cash to the issuing financial institutions as collateral for such instruments.

Contingencies

     Refer to Note 14 “Contingencies” in the “Notes to Condensed Consolidated Financial Statements” included in this Quarterly Report on Form 10-Q, which is incorporated herein by reference, for a description of various legal proceedings, lawsuits and administrative actions.

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New Accounting Standards

     Refer to Note 1 “Summary of Significant Accounting Policies” in the “Notes to Condensed Consolidated Financial Statements” included in this Quarterly Report on Form 10-Q, which is incorporated herein by reference, for a description of new accounting pronouncements, including the expected impact on the Company’s Condensed Consolidated Financial Statements and related disclosures.

Critical Accounting Policies and Estimates

     Management has evaluated the accounting policies used in the preparation of the Company’s condensed financial statements and related notes and believes those policies to be reasonable and appropriate. Certain of these accounting policies require the application of significant judgment by management in selecting appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. These judgments are based on historical experience, trends in the industry, information provided by customers and information available from other outside sources, as appropriate. The most significant areas involving management judgments and estimates may be found in the Company’s 2010 Annual Report on Form 10-K, filed on February 28, 2011, in the Critical Accounting Policies and Estimates section of Management’s Discussion and Analysis and in Note 1 “Summary of Significant Accounting Policies” in the “Notes to Consolidated Financial Statements.” There were no significant changes to the Company’s critical accounting polices during the quarter ended March 31, 2011.

Cautionary Statement Regarding Forward-Looking Statements

     All of the statements in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” other than historical facts, are forward-looking statements, including, without limitation, the statements made under the caption “Outlook.” As a general matter, forward-looking statements are those focused upon anticipated events or trends, expectations, and beliefs relating to matters that are not historical in nature. The words “could,” “anticipate,” “preliminary,” “expect,” “believe,” “estimate,” “intend,” “plan,” “will,” “foresee,” “project,” “forecast,” or the negative thereof or variations thereon, and similar expressions identify forward-looking statements.

     The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for these forward-looking statements. In order to comply with the terms of the safe harbor, the Company notes that forward-looking statements are subject to known and unknown risks, uncertainties and other factors relating to the Company’s operations and business environment, all of which are difficult to predict and many of which are beyond the control of the Company. These known and unknown risks, uncertainties and other factors could cause actual results to differ materially from those matters expressed in, anticipated by or implied by such forward-looking statements.

     These risks, uncertainties and other factors include, but are not limited to: (1) the Company’s exposure to the risks associated with future global economic down turns, which may negatively impact its revenues, liquidity, suppliers and customers; (2) exposure to cycles in specific markets, particularly the level of oil and natural gas prices and oil and natural gas drilling production, which affect demand for the Company’s petroleum products, and industrial production and manufacturing capacity utilization rates, which affect demand for the Company’s

39

industrial products; (3) the risks associated with competition in the Company’s market segments, particularly the pricing of the Company’s products; (4) the risks of large or rapid increases in raw material costs or substantial decreases in their availability, and the Company’s dependence on particular suppliers, particularly copper, aluminum, iron casting and other metal suppliers; (5) economic, political and other risks associated with the Company’s international sales and operations, including changes in currency exchange rates (primarily between the USD, the EUR, the GBP and the CNY); (6) the risks associated with the potential loss of key customers for petroleum products and the potential resulting negative impact on the Company’s profitability and cash flows; (7) the risks associated with potential product liability and warranty claims due to the nature of the Company’s products; (8) the risks that the Company will not realize the expected financial benefits from potential future restructuring actions; (9) the ability to attract and retain quality executive management and other key personnel; (10) the risk that communication or information systems failure may disrupt the Company’s business and result in financial loss and liability to its customers; (11) the ability to avoid employee work stoppages and other labor difficulties; (12) the risks associated with potential changes in shale oil and gas regulation; (13) the risks associated with pending asbestos and silica personal injury lawsuits; (14) the risk of non-compliance with U.S. and foreign laws and regulations applicable to the Company’s international operations, including the U.S. Foreign Corrupt Practices Act and other similar laws; (15) the risks associated with environmental compliance costs and liabilities, including the compliance costs and liabilities of future climate change regulations; (16) the risks associated with enforcing the Company’s intellectual property rights and defending against potential intellectual property claims; (17) the risk of possible future charges if the Company determines that the value of goodwill and other intangible assets, representing a significant portion of the Company’s total assets, are impaired; (18) risks associated with the Company’s indebtedness and changes in the availability or costs of new financing to support the Company’s operations and future investments; (19) the ability to continue to identify and complete strategic acquisitions and effectively integrate such acquired companies to achieve desired financial benefits; and (20) changes in discount rates used for actuarial assumptions in pension and other postretirement obligation and expense calculations and market performance of pension plan assets. The foregoing factors should not be construed as exhaustive and should be read together with important information regarding risks and factors that may affect the Company’s future performance set forth under Item 1A “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010.

     These statements reflect the current views and assumptions of management with respect to future events. The Company does not undertake, and hereby disclaims, any duty to update these forward-looking statements, even though its situation and circumstances may change in the future. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this report. The inclusion of any statement in this report does not constitute an admission by the Company or any other person that the events or circumstances described in such statement are material.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

     The Company is exposed to certain market risks during the normal course of business arising from adverse changes in commodity prices, interest rates, and currency exchange rates. The Company’s exposure to these risks is managed through a combination of operating and financing activities. The Company selectively uses derivative financial instruments (“derivatives”), including foreign currency forward contracts and interest rate swaps, to manage the risks from fluctuations in currency exchange rates and interest rates. The Company does not hold derivatives for trading or speculative purposes. Fluctuations in commodity prices, interest rates, and currency

40

exchange rates can be volatile, and the Company’s risk management activities do not totally eliminate these risks. Consequently, these fluctuations could have a significant effect on the Company’s financial results.

     Notional transaction amounts and fair values for the Company’s outstanding derivatives, by risk category and instrument type, as of March 31, 2011 and December 31, 2010, are summarized in Note 11 “Hedging Activities and Fair Value Measurements” in the “Notes to Consolidated Financial Statements.”

Commodity Price Risk

     The Company is a purchaser of certain commodities, principally aluminum. In addition, the Company is a purchaser of components and parts containing various commodities, including cast iron, aluminum, copper and steel. The Company generally buys these commodities and components based upon market prices that are established with the vendor as part of the purchase process. The Company does not use commodity financial instruments to hedge commodity prices.

     The Company has long-term contracts with some of its suppliers of key components. However, to the extent that commodity prices increase and the Company does not have firm pricing from its suppliers, or its suppliers are not able to honor such prices, then the Company may experience margin declines to the extent it is not able to increase selling prices of its products.

Interest Rate Risk

     The Company’s exposure to interest rate risk results primarily from its borrowings of $283.3 million at March 31, 2011. The Company manages its debt centrally, considering tax consequences and its overall financing strategies. The Company manages its exposure to interest rate risk by maintaining a mixture of fixed and variable rate debt and uses pay-fixed interest rate swaps as cash flow hedges of variable rate debt in order to adjust the relative proportions. The interest rates on approximately 75% of the Company’s borrowings were effectively fixed as of March 31, 2011. If the relevant LIBOR amounts for all of the Company’s borrowings had been 100 basis points higher than actual in the three-month period of 2011, the Company’s interest expense would have increased by $0.2 million.

Exchange Rate Risk

     A substantial portion of the Company’s operations is conducted by its subsidiaries outside of the U.S. in currencies other than the USD. Almost all of the Company’s non-U.S. subsidiaries conduct their business primarily in their local currencies, which are also their functional currencies. Other than the USD, the EUR, GBP, and CNY are the principal currencies in which the Company and its subsidiaries enter into transactions.

     The Company is exposed to the impacts of changes in currency exchange rates on the translation of its non-U.S. subsidiaries’ assets, liabilities, and earnings into USD. The Company partially offsets these exposures by having certain of its non-U.S. subsidiaries act as the obligor on a portion of its borrowings and by denominating such borrowings, as well as a portion of the borrowings for which the Company is the obligor, in currencies other than the USD. Of the Company’s total net assets of $1,278.1 million at March 31, 2011, approximately $886.6 million was denominated in currencies other than the USD. Borrowings by the Company’s non-U.S. subsidiaries at March 31, 2011 totaled $19.8 million, and the Company’s consolidated borrowings

41

denominated in currencies other than the USD totaled $85.8 million. Fluctuations due to changes in currency exchange rates in the value of non-USD borrowings that have been designated as hedges of the Company’s net investment in foreign operations are included in other comprehensive income.

     The Company and its subsidiaries are also subject to the risk that arises when they, from time to time, enter into transactions in currencies other than their functional currency. To mitigate this risk, the Company and its subsidiaries typically settle intercompany trading balances monthly. The Company also selectively uses forward currency contracts to manage this risk. At March 31, 2011, the notional amount of open forward currency contracts was $118.0 million and their aggregate fair value was a liability of $1.0 million.

     To illustrate the impact of currency exchange rates on the Company’s financial results, the Company’s operating income for the three-month period of 2011 would have decreased by approximately $4.6 million if the USD had been 10% more valuable than actual relative to other currencies. This calculation assumes that all currencies change in the same direction and proportion to the USD and that there are no indirect effects of the change in the value of the USD such as changes in non-USD sales volumes or prices.

Item 4. Controls and Procedures

     The Company’s management carried out an evaluation (as required by Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), with the participation of the President and Chief Executive Officer and the Vice President and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon this evaluation, the President and Chief Executive Officer and Vice President and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report on Form 10-Q, such that the information relating to the Company and its consolidated subsidiaries required to be disclosed by the Company in the reports that it files or submits under the Exchange Act (i) is recorded, processed, summarized, and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms, and (ii) is accumulated and communicated to the Company’s management, including its principal executive and financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

     In addition, the Company’s management carried out an evaluation, as required by Rule 13a-15(d) of the Exchange Act, with the participation of the President and Chief Executive Officer and the Vice President and Chief Financial Officer, of changes in the Company’s internal control over financial reporting. Based on this evaluation, the President and Chief Executive Officer and the Vice President and Chief Financial Officer concluded that there were no changes in the Company’s internal control over financial reporting that occurred during the quarter ended March 31, 2011 that have materially affected, or that are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings

     The Company is a party to various legal proceedings and administrative actions. The information regarding these proceedings and actions is included under Note 14 “Contingencies” to the Company’s Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q, which is incorporated herein by reference.

Item 1A. Risk Factors

     For information regarding factors that could affect the Company’s results of operations, financial condition and liquidity, see (i) the risk factors discussion provided under Part I, Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010 and (ii) the “Cautionary Statement Regarding Forward-Looking Statements” included in Part I, Item 2 of this Quarterly Report on Form 10-Q, which are incorporated herein by reference.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

     Repurchases of equity securities during the three months ended March 31, 2011 are listed in the following table.

					Total Number of		Maximum Number
					Shares Purchased		of Shares that May
	Total Number				as Part of Publicly		Yet Be Purchased
	of Shares		Average Price		Announced Plans		Under the Plans or
Period	Purchased(1)		Paid per Share(2)		or Programs(3)		Programs(3)
January 1, 2011 — January 31, 2011		—		—		—		2,176,987
February 1, 2011 — February 28, 2011		11,993		75.83		—		2,176,987
March 1, 2011 — March 31, 2011		72,000		73.04		72,000		2,104,987
Total		83,993		73.44		72,000		2,104,987

(1)	Includes shares exchanged or surrendered in connection with the exercise or vesting of equity awards under Gardner Denver’s Amended and Restated Long-Term Incentive Plan.
(2)	Excludes commissions.
(3)	In November 2008, the Board of Directors authorized the Company to acquire up to 3.0 million shares of its common stock. As of March 31, 2011, 895,013 shares had been repurchased under this repurchase program.

Item 6. Exhibits

     See the list of exhibits in the Index to Exhibits to this Quarterly Report on Form 10-Q, which is incorporated herein by reference.

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SIGNATURES

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

	GARDNER DENVER, INC. (Registrant)
Date: May 5, 2011	By:	/s/ Barry L. Pennypacker
		Barry L. Pennypacker
		President and Chief Executive Officer
Date: May 5, 2011	By:	/s/ Michael M. Larsen
		Michael M. Larsen
		Vice President and Chief Financial Officer
Date: May 5, 2011	By:	/s/ David J. Antoniuk
		David J. Antoniuk
		Vice President and Corporate Controller (Principal Accounting Officer)

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GARDNER DENVER, INC.

INDEX TO EXHIBITS

Exhibit
No.	Description
3.1	Certificate of Incorporation of Gardner Denver, Inc., as amended on May 3, 2006, filed as Exhibit 3.1 to Gardner Denver, Inc.’s Current Report on Form 8-K, filed May 3, 2006, and incorporated herein by reference.
3.2	Amended and Restated Bylaws of Gardner Denver, Inc., filed as Exhibit 3.2 to Gardner Denver, Inc.’s Current Report on Form 8-K, filed August 4, 2008, and incorporated herein by reference.
4.1	Amended and Restated Rights Agreement, dated as of January 17, 2005, between Gardner Denver, Inc. and National City Bank as Rights Agent, filed as Exhibit 4.1 to Gardner Denver, Inc.’s Current Report on Form 8-K, filed January 21, 2005, and incorporated herein by reference.
4.2	Amendment No. 1 to the Amended and Restated Rights Agreement, dated as of October 29, 2009, between Gardner Denver, Inc. and Wells Fargo Bank, National Association as Rights Agent, filed as Exhibit 4.2 to Gardner Denver, Inc.’s Current Report on Form 8-K, filed October 29, 2009, and incorporated herein by reference.
31.1*	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) of the Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) of the Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS§	XBRL Instance Document
101.SCH§	XBRL Taxonomy Extension Schema Document
101.CAL§	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB§	XBRL Taxonomy Extension Label Linkbase Document
101.PRE§	XBRL Taxonomy Extension Presentation Linkbase Document

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

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§ These exhibits are furnished herewith. In accordance with Rule 406T of Regulation S-T, these exhibits are not deemed to be filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are not deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under these sections.

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EX-31.1

Exhibit 31.1

CEO Form 10-Q Certification

I, Barry L. Pennypacker, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Gardner Denver, 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 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 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: May 5, 2011	/s/ Barry L. Pennypacker
	Barry L. Pennypacker
	President and Chief Executive Officer Gardner Denver, Inc.

EX-31.2

Exhibit 31.2

CFO Form 10-Q Certification

I, Michael M. Larsen, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Gardner Denver, 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 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 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: May 5, 2011	/s/ Michael M. Larsen
	Michael M. Larsen
	Vice President and Chief Financial Officer Gardner Denver, Inc.

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 Gardner Denver, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2011, as filed with the Securities and Exchange Commission on the date hereof (the “Periodic Report”), I, Barry L. Pennypacker, certify, pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350, that:

(1) The Periodic Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

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

/s/ Barry L. Pennypacker  

Barry L. Pennypacker 

President and Chief Executive Officer
Gardner Denver, Inc.
May 5, 2011 

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

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 Gardner Denver, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2011, as filed with the Securities and Exchange Commission on the date hereof (the “Periodic Report”), I, Michael M. Larsen, certify, pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350, that:

(1) The Periodic Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

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

/s/ Michael M. Larsen  

Michael M. Larsen 

Vice President and Chief Financial Officer
Gardner Denver, Inc.
May 5, 2011 

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.