Gardner Denver, Inc. Announces Restructuring Initiatives and Updated Guidance for the Fourth Quarter of 2008
QUINCY, IL (December 19, 2008) - Gardner Denver, Inc. (NYSE: GDI) announced restructuring initiatives that
are expected to be completed in 2009. These initiatives are driven by both deteriorating global economic
conditions and the integration of the Company's October 2008 acquisition of CompAir Holdings Limited
("CompAir").
The Company began aggressive cost reduction activities in the third quarter of 2008, in recognition of a slowing
global economy. As a result of the continued deterioration in end market conditions in excess of previous
expectations, the Company is responding with further cost reduction actions, including a reduction of its global
salaried workforce, implementing a hiring freeze and strict controls on discretionary spending. The Company
notified employees representing approximately 9% of its global salaried workforce that their positions would be
eliminated within the next nine months, with the majority of affected employees expected to leave the organization
by the second quarter of 2009. The Company also announced a manufacturing plant closure in the U.K. as a part of
its integration of CompAir. The Company expects to record an additional charge of approximately $5 million in
the fourth quarter of 2008, primarily related to severance expense associated with these actions, reducing diluted
earnings per share ("DEPS") by approximately $0.07. These initiatives are expected to reduce costs by
approximately $7 million in 2009.
"Orders for our products serving industrial end market segments, in particular in the U.S. and Europe, have slowed
significantly faster than was originally expected," stated Barry L. Pennypacker, Gardner Denver's President and
Chief Executive Officer. "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. The decline in
demand has translated into lower revenues, operating margin and diluted earnings per share. "At present, we are
uncertain how long orders will remain at these depressed levels. However, management has proactively identified
opportunities to reduce costs and we plan to continue to rationalize our manufacturing footprint.
"Our previously announced plant closures and profit improvement initiatives are on track to be completed by the
end of December 2008 and the costs and expected benefits of these projects are consistent with our previous
projections. We remain committed to aligning our business structure with our goal of operating excellence using the
principles of the 'Gardner Denver Way.' We are pressing ahead with our efforts to lean out our manufacturing and
administrative processes, reduce overhead and streamline operations to improve efficiencies. We are pleased with
progress made to date in the integration of CompAir and believe incremental synergies are available, including our
ability to leverage the combined supply chain to reduce material costs. As a result of these efforts, we expect to be
well positioned when demand for industrial equipment recovers and remain focused on progressing toward the
Company's long-term operating margin improvement goals. Our lean efforts are already producing benefits in the
form of increased cash flows, which we are using to repay debt and improve the Company's liquidity position."
Unfavorable changes in foreign currency exchange rates, primarily attributable to the strengthening of the U.S.
dollar ("USD") relative to the Euro and British pound sterling ("GBP") during October and November, have
lowered the USD equivalent earnings of our foreign operations more than anticipated in the Company's previous
forecast. For the fourth quarter of 2008, DEPS is expected to be lower by approximately $0.05 as a result of the
strengthening of the USD against the Euro and GBP since the time the guidance was originally issued.
The Company previously provided a fourth quarter 2008 DEPS guidance range of $0.77 to $0.83, which included
restructuring charges of approximately $0.06 but did not reflect the further reduction in revenue volume, the
incremental restructuring expenses, and unfavorable changes in foreign currency exchange rates. Accordingly, the
Company has revised its fourth quarter guidance to $0.48 to $0.52, to incorporate these adjustments. Full-year
DEPS are preliminarily projected to be in the range of $3.00 to $3.04, compared to a previous forecast of $3.29 to
$3.35. The Company intends to provide its initial full-year 2009 DEPS guidance range when it releases earnings
for the fourth quarter of 2008 on or about February 12, 2009.
Gardner Denver, Inc., with 2007 revenues of $1.9 billion, is a leading worldwide manufacturer of reciprocating,
rotary and vane compressors, liquid ring pumps and blowers for various industrial and transportation applications,
pumps used in the petroleum and industrial market segments, and other fluid transfer equipment serving chemical,
petroleum, and food industries. Gardner Denver's news releases are available by visiting the Investor Relations
page on the Company's website (www.gardnerdenver.com).
Contact:
Helen W. Cornell
Executive Vice President, Finance & CFO
(217) 228-8209
