First quarter 2008 results included a credit in connection with a curtailment amendment of $7.2 million ($4.7 million after tax or $0.06 per diluted share).

Vincent R. Volpe Jr., president and chief executive officer of Dresser-Rand, said, We are off to an outstanding start for the year. Our strong first quarter operating results were the result of a combination of successful efforts to increase sales and control costs and expenses. On a year-over-year basis, first quarter revenues increased 40% and operating income, adjusted for an unusual pension settlement charge, improved 65% compared with first quarter 2008 operating income, adjusted for an unusual curtailment amendment.

We are also pleased with the aftermarket bookings of $246 million, which is around 4% above the first quarter 2008 level. As we previously indicated, we expect continued steady bookings in this segment, which, by nature, generates the majority of the Company’s operating income. This is an inherent strength of the Dresser-Rand business model.

In the new unit segment, as expected, the bookings were low principally, we believe, due to clients’ delays in order placement. Because we expect the activity to pick up over the latter part of the year, we presently maintain previous guidance of bookings between $700 million and $1,100 million for the segment. Should the slowdown last longer than expected we have contingency plans already in place, which will allow us to flex our manufacturing structure as necessary, without the need for major restructuring or impact on the present guidance for full year operating income of between $320 million and $360 million.

Additionally, we are using the slowdown in New Unit activity to reinforce a variety of operational excellence initiatives and accelerate some of our product development activity. Indeed, we consider this lull, in many ways, an opportunity.

Total operating income for the first quarter 2009 was $64.2 million, including a settlement charge of $1.3 million. This compares with operating income of $46.9 million for the first quarter 2008, which included curtailment amendment income of $7.2 million.

As a percentage of revenues, operating income for the first quarter 2009 were 12.6% compared with 12.9% for the corresponding period in 2008. Adjusting for unusual items, operating income margin for the first quarter 2009 was 12.9% (adjusted to exclude the pension settlement charge) compared with 10.9% for the corresponding period in 2008 (adjusted to exclude the curtailment amendment). The improvement was principally due to favorable operating leverage from higher sales volume and good control over costs and expenses. This is despite the impact of a significant shift in sales mix as lower margin new unit sales increased to 54.7% of total sales compared with 41.1% for the first quarter of 2008.

Bookings of $355.8 million for the first quarter 2009 were $219.9 million lower than the $575.7 million for first quarter 2008. The $2,087.6 million backlog at the end of March 2009 was 1.6% lower than the $2,122.3 million backlog at the end of March 2008.

New Units Segment

New unit revenues of $278.4 million for the first quarter 2009 were $128.9 million higher than the $149.5 million for first quarter 2008, an increase of 86.2%.

New unit operating income of $25.2 million for the first quarter 2009 compares with operating income of $9.2 million for the first quarter 2008. This segment’s operating margin of 9.1% compares with 6.2% for the first quarter 2008. These increases were principally due to higher sales and favorable operating leverage.

New unit bookings of $109.4 million for the first quarter 2009 were 67.7% lower than the bookings of $339.0 million for the corresponding period in 2008.

The $1,663.4 million backlog at March 31, 2009, was 6.5% lower than the $1,779.6 million backlog at March 31, 2008.

Aftermarket Parts and Services Segment

Aftermarket parts and services revenues of $230.5 million for the first quarter 2009 compare with $214.3 million for the first quarter 2008, an increase of 7.6%.

Aftermarket operating income of $58.9 million for the first quarter 2009 compares with $50.0 million for the first quarter 2008. This segment’s operating margin of around 25.6% compares with 23.3% for the first quarter 2008. These increases were principally due to higher sales and favorable operating leverage.

Aftermarket bookings of $246.4 million for the first quarter 2009 were 4.1% higher than bookings of $236.7 million for the corresponding period in 2008.

The $424.2 million backlog at March 31, 2009, was 23.8% above the $342.7 million backlog at March 31, 2008.

Liquidity and Capital Resources

As of March 31, 2009, cash and cash equivalents totaled $160.0 million and borrowing availability under the $500 million revolving credit portion of the Company’s senior credit facility was $235.1 million because $264.9 million was used for outstanding letters of credit.

In the first quarter 2009, cash provided by operating activities was $23.4 million compared with $53.8 million for the corresponding period in 2008. The decrease of $30.4 million was principally from changes in working capital and pension contributions of $27.8 million made in the first quarter of 2009. In the first quarter 2009, capital expenditures totaled $7.0 million. As of March 31, 2009, net debt (net of cash and cash equivalents) was around $210.2 million compared with $223.2 million, at December 31, 2008.