QUINCY, IL -- (Marketwire) -- 02/12/09 -- Gardner Denver, Inc. (NYSE: GDI)

Fourth Quarter Highlights:

--  Adjusted Diluted Earnings Per Share were $0.74 for the fourth quarter
    of 2008, which excludes expenses for profit improvement initiatives and
    other adjustments of $0.14.  DEPS, as reported under accounting principles
    generally accepted in the U.S. ("GAAP"), were $0.60.
--  Cash provided by operating activities exceeded $73 million for the
    fourth quarter and $277 million for the year, a new twelve-month record.
--  Inventory turnover for comparable operations, which excludes the
    recently acquired CompAir businesses, improved to an annualized rate of 5.6
    times for the fourth quarter of 2008, compared to 5.3 times for the same
    three-month period of 2007, as a result of process improvements
    attributable to the Company's lean initiatives.  Inventory reductions
    generated more than $15 million in cash in the fourth quarter of 2008.
    

Gardner Denver, Inc. (NYSE: GDI) announced that revenues and operating income for the three months ended December 31, 2008 were $524.2 million and $53.2 million, respectively; and net income and diluted earnings per share ("DEPS") for the three-month period of 2008 were $30.9 million and $0.60, respectively. For the twelve-month period of 2008, revenues and operating income were $2.0 billion and $258.2 million, respectively; and net income and DEPS were $166.0 million and $3.12, respectively. The three and twelve-month periods ended December 31, 2008 included expenses for profit improvement initiatives, non-recurring expenses, certain mark-to-market currency adjustments and incremental taxes associated with cash repatriation totaling $0.14 DEPS and $0.42 DEPS, respectively.

Operating income, as adjusted to exclude the impact of expenses incurred for profit improvement initiatives, non-recurring expenses and certain mark-to-market currency adjustments ("Adjusted Operating Income") for the three and twelve-month periods ended December 31, 2008 was $63.2 million and $286.8 million, respectively. DEPS, as adjusted for the impact of profit improvement initiatives, non-recurring expenses, certain mark-to-market currency adjustments and incremental taxes associated with cash repatriation ("Adjusted DEPS") for the three and twelve-month periods ended December 31, 2008 were $0.74 and $3.54, respectively. Adjusted Operating Income, on a consolidated and segment basis and Adjusted DEPS are both non-GAAP financial measures. See "Reconciliation of Operating Income and DEPS to Adjusted Operating Income and Adjusted DEPS" at the end of this press release. Gardner Denver believes excluding these expenses and adjustments from operating income and DEPS provides a more meaningful comparison to the corresponding reported periods and assists investors in performing financial analysis that is consistent with financial models developed by research analysts.

CEO's Comments Regarding Results

"The global economic environment presented a challenging landscape in the fourth quarter of 2008," said Barry L. Pennypacker, Gardner Denver's President and Chief Executive Officer. For the quarter, orders were less than the previous year in all major product lines except loading arms. "Although end market conditions deteriorated more quickly than our original expectations, the Company responded with previously developed contingency plans, including a reduction of the global salaried workforce, implementation of a hiring freeze and strict controls on discretionary spending. By accelerating our restructuring initiatives, I believe we will be better positioned to meet end market demand as the economy improves and we begin to realize organic growth again. I am proud of the efforts of the Gardner Denver team in their responsiveness to the operating environment and needs of our customers.

"In the fourth quarter of 2008, we completed the closure of two manufacturing facilities in the U.S. and the transfer of their activities into existing locations. We also announced the closure and consolidation of a large manufacturing facility in the U.K., which we expect to be substantively completed by the fourth quarter of 2009. Furthermore, we continue to proactively identify and evaluate further cost reduction and rationalization projects.

"The momentum in our lean efforts continues to build, and we are seeing tangible results in inventory reduction and increased cash flows, which we are using primarily to repay debt and strengthen the Company's liquidity position. As a result of the investment we have made in lean initiatives, among other efforts, we generated more than $35 million in cash from inventory reductions in 2008, of which nearly $30 million was generated in the last six months of the year. For the twelve-month period of 2008, cash provided by operating activities exceeded $277 million, compared to $182 million in 2007.

"We have experienced some near-term gross margin pressure as production levels were reduced, both due to lean initiatives and lower demand, but we believe our efforts will lead to operating margin improvements in the long-term, and more importantly, improved manufacturing flexibility so that we are able to respond more quickly to increases in demand when end market conditions improve. In the fourth quarter of 2008, Gardner Denver's operations (excluding CompAir) maintained inventory turnover of 5.6 times, despite a significant slowing of production, which demonstrates the progress we are achieving in improving our operations.

"I am pleased with the CompAir integration progress made to date and remain excited about the opportunities that will be created by rationalizing the complementary product lines and leveraging the geographic reach of the businesses. When completed, the integration is expected to enhance our combined channels of distribution to serve the global market and we see many opportunities for sales of Quantima®, CompAir's award-winning oil-free compressor product, among other complementary product lines. We also believe that substantial material cost synergies are available, based on our ability to leverage the combined supply chain."

Outlook

Commenting on the global demand environment, Mr. Pennypacker stated, "Deteriorating worldwide economic conditions and the financial crisis have clouded our visibility into many of our key end market segments and we remain cautious in our outlook for 2009. In the fourth quarter of 2008, demand decelerated further in North America and Western Europe and began to decline in end market segments in Asia and Eastern Europe. We expect to see demand improve first in our shorter lead-time products that are more susceptible to swings in the economy, such as those that serve light industry and Class 8 trucks and original equipment manufacturers' products for medical and environmental applications. At this point, we have not yet seen signs of that demand improving.

"Orders for our products serving industrial end market segments were particularly weak in the fourth quarter, especially in the U.S. and Europe. Demand for these products tends to correlate with the level of manufacturing capacity utilization. The rapid decline in industrial production in the U.S. and Europe has resulted in reduced levels of capacity utilization and deferred purchases of capital equipment such as compressor packages. Orders for petroleum pumps also slowed in the fourth quarter of 2008. Declining energy prices have led certain oil and gas exploration and production companies to lower their spending expectations. These lower energy prices are also resulting in lower rig counts in North America. At present, we are uncertain how long petroleum pump orders will remain at these depressed levels. However, management has identified opportunities to reduce costs to mitigate the lower revenue volume.

"We have already made changes in 2009 to streamline the Company's organizational structure and execute our business plans with greater velocity. In January 2009, Gardner Denver's five divisions were reorganized into two product groups. The Industrial Products Group includes the former Compressor and Blower Divisions, plus the multistage centrifugal blower operations formerly managed in the Engineered Products Division. The Engineered Products Group is composed of the former Engineered Products, Thomas Products and Fluid Transfer Divisions. These changes are designed to streamline the Company, improve organizational efficiencies and create greater focus on our customers' needs.

"Based on the uncertain economic outlook, our existing backlog and manufacturing rationalization plans, we are projecting full-year 2009 DEPS, excluding incremental restructuring costs, to be in a range of $2.30 to $2.80. Including estimated restructuring costs of approximately $33 million (primarily consisting of severance expense) for further consolidation of manufacturing capacity, the full-year 2009 DEPS is expected to be in a range of $1.84 to $2.34. Actual restructuring costs incurred in 2009 will be dependent on, among other things, the length and severity of the current economic downturn. The first quarter DEPS, excluding restructuring costs, is expected to be in a range of $0.51 to $0.66. Including restructuring costs of approximately $13 million, the first quarter DEPS is expected to be in a range of $0.33 to $0.48. The DEPS guidance for the first quarter reflects the resolution of various open tax matters, which has the effect of improving DEPS by $0.06. Other than this tax benefit, the effective tax rate assumed in the DEPS guidance for 2009 is 29 percent."

This outlook assumes DEPS are reduced in the first quarter of 2009 by $0.05 to $0.07 due to acquisitions completed in 2008. For the full-year 2009, these acquisitions are expected to generate cash but not materially impact DEPS.

Mr. Pennypacker noted, "Although the weakened economic environment will undoubtedly pose challenges for us, Gardner Denver has a demonstrated history of generating cash from operations in a variety of economic conditions. I am confident that the strength of our businesses and our CompAir integration and other lean initiatives will continue to improve our cash generating ability over the long term."

The Company invested approximately $41.0 million in capital expenditures during the twelve-month period of 2008, compared to $47.8 million in the same period of 2007. Depreciation and amortization expense was $61.5 million for the twelve months ended December 31, 2008, compared to $58.6 million in the twelve-month period of 2007. Capital spending is expected to be approximately $35 million to $40 million in 2009.

Upon the completion of the CompAir acquisition on October 20, 2008, the Company's debt to total capital increased to approximately 33 percent. By December 31, 2008, debt repayments and changes in foreign currency exchange rates reduced this ratio to approximately 31 percent.

Fourth Quarter Results

Revenues increased $13.9 million (3 percent) to $524.2 million for the three months ended December 31, 2008, compared to the same period of 2007. Compressor and Vacuum Products segment revenues increased 12 percent for the three-month period of 2008, compared to the previous year, as a result of the incremental effect of the CompAir and Best Aire acquisitions, partially offset by unfavorable changes in foreign currency exchange rates and lower volume as a result of the global economic slowdown. Orders decreased 6 percent in the three months ended December 31, 2008, when compared with the same period of 2007, despite the addition of acquired businesses, reflecting unfavorable changes in foreign currency exchange rates and significant declines in demand on a global basis. Unfavorable changes in foreign currency exchange rates, primarily attributable to the strengthening of the U.S. dollar relative to the euro and British pound sterling during the fourth quarter of 2008, also lowered the U.S. dollar equivalent of the operating earnings of the Company's foreign operations.

Fluid Transfer Products segment revenues decreased 26 percent for the three months ended December 31, 2008, compared to the same period of 2007, primarily due to lower volume in most product lines and unfavorable changes in foreign currency exchange rates. The most significant volume reduction in Fluid Transfer Products occurred in loading arms because a large shipment of liquid natural gas and compressed natural gas loading arms destined for South America in the fourth quarter of 2007 did not recur in 2008. Orders decreased 3 percent in the fourth quarter, compared with the same period of 2007, because unfavorable changes in foreign currency exchange rates and lower demand for petroleum pumps more than offset the increased demand for loading arms. See "Selected Financial Data Schedule" at the end of this press release.

Gross profit decreased $9.3 million (6 percent) to $158.7 million for the three months ended December 31, 2008, compared to the same period of 2007, primarily as a result of volume reductions and unfavorable product mix attributable to lower petroleum pump shipments in the fourth quarter of 2008 than in the comparable period of 2007. Gross profit was also reduced by a non-recurring charge to Cost of Sales of approximately $2.5 million associated with valuing the CompAir inventory at fair value on the acquisition date.