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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the Quarter ended October 2, 2009

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

For the transition period from to

Commission file number - 001-34045

Colfax Corporation

(Exact name of registrant as specified in its charter)

Delaware		54-1887631
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

8730 Stony Point Parkway, Suite 150 Richmond, Virginia		23235
(Address of principal executive offices)		(Zip Code)

(804) 560-4070

(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 ¨

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 ¨ No ¨

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

Large accelerated filer ¨ Accelerated filer ¨

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

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

As of October 2, 2009, there were 43,229,104 shares of the registrant’s common stock, par value $.001 per share, outstanding.

COLFAX CORPORATION

FORM 10-Q

INDEX

	Page
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements	1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3. Quantitative and Qualitative Disclosures About Market Risk	26
Item 4. Controls and Procedures	26

PART II – OTHER INFORMATION	27
Item 1. Legal Proceedings	27
Item 1A. Risk Factors	27
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 3. Defaults Upon Senior Securities	28
Item 4. Submission of Matters to a Vote of Security Holders	28
Item 5. Other Information	28
Item 6. Exhibits	28

SIGNATURES	29

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

COLFAX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Dollars in thousands, except per share amounts

(unaudited)

	Three Months Ended						Nine Months Ended
	October 2,			September 26,			October 2,			September 26,
	2009			2008			2009			2008

Net sales	$	128,545		$	153,461		$	394,053		$	445,543
Cost of sales		82,339			98,983			255,277			286,110

Gross profit		46,206			54,478			138,776			159,433
Initial public offering related costs		-			-			-			57,017
Selling, general and administrative expenses		28,136			33,233			86,248			97,516
Research and development expenses		1,523			1,478			4,610			4,430
Restructuring and other related charges		9,608			-			10,755			-
Asbestos liability and defense income		(4,303	)		(6,312	)		(1,176	)		(6,749	)
Asbestos coverage litigation expenses		1,845			5,148			8,838			12,257

Operating income (loss)		9,397			20,931			29,501			(5,038	)
Interest expense		1,834			1,951			5,466			9,684

Income (loss) before income taxes		7,563			18,980			24,035			(14,722	)
Provision (benefit) for income taxes		2,188			5,329			7,433			(3,772	)

Net income (loss)	$	5,375		$	13,651		$	16,602		$	(10,950	)

Net income (loss) per share—basic and diluted	$	0.12		$	0.31		$	0.38		$	(0.43	)

See accompanying notes to condensed consolidated financial statements.

- 1 - -

COLFAX CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

Dollars in thousands

	October 2,			December 31,
	2009			2008
	(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	50,833		$	28,762
Trade receivables, less allowance for doubtful accounts of $3,125 and $2,486		89,601			101,064
Inventories, net		77,369			80,327
Deferred income taxes, net		6,496			6,327
Asbestos insurance asset		33,690			26,473
Asbestos insurance receivable		34,972			36,371
Prepaid and other current assets		15,093			15,533

Total current assets		308,054			294,857
Deferred income taxes, net		50,207			53,428
Property, plant and equipment, net		93,060			92,090
Goodwill		168,060			165,530
Intangible assets, net		12,553			13,516
Long-term asbestos insurance asset		376,676			277,542
Deferred loan costs, pension and other assets		16,594			16,113
	$	1,025,204		$	913,076

LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt and capital leases	$	7,698		$	5,420
Accounts payable		37,991			52,138
Accrued asbestos liability		36,696			28,574
Accrued payroll		20,562			19,162
Accrued taxes		5,115			11,457
Other accrued liabilities		46,678			37,535

Total current liabilities		154,740			154,286
Long-term debt, less current portion		85,236			91,701
Long-term asbestos liability		418,885			328,684
Pension and accrued post-retirement benefits		129,663			130,188
Deferred income tax liability		8,170			7,685
Other liabilities		31,885			33,601
Total liabilities		828,579			746,145
Shareholders’ equity:
Common stock: $0.001 par value; authorized 200,000,000; issued and
outstanding 43,229,104 and 43,211,026		43			43
Additional paid-in capital		402,229			400,259
Retained deficit		(96,699	)		(113,301	)
Accumulated other comprehensive loss		(108,948	)		(120,070	)

Total shareholders’ equity		196,625			166,931
	$	1,025,204		$	913,076

See accompanying notes to condensed consolidated financial statements.

- 2 - -

COLFAX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Dollars in thousands

(unaudited)

	Nine Months Ended
	October 2,			September 26,
	2009			2008
Cash flows from operating activities:
Net income (loss)	$	16,602		$	(10,950	)
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:
Depreciation, amortization and fixed asset impairment charges		11,240			11,345
Noncash stock-based compensation		1,970			10,814
Write off of deferred loan costs		-			4,614
Amortization of deferred loan costs		507			769
(Gain) loss on sale of fixed assets		(33	)		47
Deferred income taxes		1,731			(18,063	)
Changes in operating assets and liabilities:
Trade receivables		15,885			(14,839	)
Inventories		5,777			(17,290	)
Accounts payable and accrued liabilities, excluding
asbestos-related accrued expenses		(14,821	)		5,814
Other current assets		984			(1,996	)
Change in asbestos liability and asbestos-related accrued
expenses, net of asbestos insurance asset and receivable		(5,384	)		(5,464	)
Changes in other operating assets and liabilities		(456	)		4,508

Net cash provided by (used in) operating activities		34,002			(30,691	)

Cash flows from investing activities:
Purchases of fixed assets		(7,779	)		(13,329	)
Acquisitions, net of cash received		(1,260	)		-
Proceeds from sale of fixed assets		238			23
Net cash used in investing activities		(8,801	)		(13,306	)

Cash flows from financing activities:
Borrowings under term credit facility		-			100,000
Payments under term credit facility		(3,750	)		(207,778	)
Proceeds from borrowings on revolving credit facilities		-			28,185
Repayments of borrowings on revolving credit facilities		-			(28,158	)
Payments on capital leases		(447	)		(197	)
Payments for deferred loan costs		-			(3,249	)
Proceeds from the issuance of common stock, net of offering costs		-			193,020
Dividends paid to preferred shareholders		-			(38,546	)
Net cash (used in) provided by financing activities		(4,197	)		43,277

Effect of exchange rates on cash		1,067			556

Increase (decrease) in cash and cash equivalents		22,071			(164	)
Cash and cash equivalents, beginning of period		28,762			48,093
Cash and cash equivalents, end of period	$	50,833		$	47,929

See accompanying notes to condensed consolidated financial statements.

- 3 - -

COLFAX CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Dollars in thousands, unless otherwise noted

1. Organization and Nature of Operations

Colfax Corporation (the “Company”, “Colfax”, “we” or “us”) is a global supplier of a broad range of fluid handling products, including pumps, fluid handling systems and controls, and specialty valves. We believe that we are a leading manufacturer of rotary positive displacement pumps, which include screw pumps, gear pumps and progressive cavity pumps. We have a global manufacturing footprint, with production facilities in Europe, North America and Asia, as well as worldwide sales and distribution channels. Our products serve a variety of applications in five strategic markets: commercial marine, oil and gas, power generation, global navy and general industrial. We design and engineer our products to high quality and reliability standards for use in critical fluid handling applications where performance is paramount. We also offer customized fluid handling solutions to meet individual customer needs based on our in-depth technical knowledge of the applications in which our products are used. Our products are marketed principally under the Allweiler, Fairmount, Houttuin, Imo, LSC, Portland Valve, Tushaco, Warren, and Zenith brand names. We believe that our brands are widely known and have a premium position in our industry. Allweiler, Houttuin, Imo and Warren are among the oldest and most recognized brands in the fluid handling industry, with Allweiler dating back to 1860.

2. General

The unaudited condensed consolidated financial statements included in this quarterly report have been prepared by the Company according to the rules and regulations of the Securities and Exchange Commission (“SEC”) and according to accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements. The accompanying balance sheet information as of December 31, 2008 is derived from our audited financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted in accordance with the SEC’s rules and regulations for interim financial statements. The unaudited condensed consolidated financial statements included herein should be read in conjunction with the audited financial statements and related footnotes included in our Annual Report on Form 10-K for the year ended December 31, 2008 filed with the SEC on March 6, 2009. Subsequent events were evaluated through November 16, 2009, the date these financial statements were issued.

The financial statements reflect, in the opinion of management, all adjustments which consist solely of normal recurring adjustments necessary to present fairly the Company’s financial position and results of operations as of and for the periods indicated. Significant intercompany transactions and accounts are eliminated in consolidation.

We make certain estimates and assumptions in preparing our condensed consolidated financial statements in accordance with GAAP. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the periods presented. Actual results may differ from those estimates.

Certain prior period amounts have been reclassified to conform to current year presentations.

The results of operations for the three and nine months ended October 2, 2009 are not necessarily indicative of the results of operations that may be achieved for the full year. Quarterly results are affected by seasonal variations in our fluid handling business. As our customers seek to fully utilize capital spending budgets before the end of the year, historically our shipments have peaked during the fourth quarter. Also, our European operations typically experience a slowdown during the July and August holiday season. General economic conditions as well as backlog levels may, however, impact future seasonal variations. Our results for the nine months ended October 2, 2009 include the impact of three additional business days as compared to 2008. The third quarter of 2009 had one additional business day compared to 2008. The fourth quarter of 2009 will have four fewer business days than the fourth quarter of 2008.

- 4 - -

3. Recent Accounting Pronouncements

In October 2009, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2009-13, Multiple-Deliverable Revenue Arrangements—a consensus of the FASB Emerging Issues Task Force. ASU No. 2009-13 addresses the unit of accounting for arrangements involving multiple deliverables and how arrangement consideration should be allocated to the separate units of accounting. The Company will be required to adopt the provisions of ASU No. 2009-13 prospectively beginning January 1, 2011. Earlier retrospective application is permitted. The Company is evaluating the effects of implementing the provisions of this new guidance.

4. Warranty Costs

Estimated expenses related to product warranties are accrued at the time products are sold to customers and recorded as part of cost of sales. Estimates are established using historical information as to the nature, frequency, and average costs of warranty claims.

Warranty activity for the nine months ended October 2, 2009 and September 26, 2008 consisted of the following:

	Nine Months Ended
	October 2,			September 26,
	2009			2008

Warranty liability at beginning of the period	$	3,108		$	2,971
Accrued warranty expense, net of adjustments		679			1,338
Cost of warranty service work performed		(493	)		(1,128	)
Foreign exchange translation effect		151			(49	)

Warranty liability at end of the period	$	3,445		$	3,132

5. Income Taxes

For the three and nine months ended October 2, 2009, the Company earned approximately $7.6 million and $24.0 million, respectively, before taxes and had $2.2 million and $ 7.4 million, respectively, of income tax expense. The effective tax rates of 28.9% and 30.9%, respectively, for the three and nine months ended October 2, 2009 represent the estimated annual tax rate for the year applied to the current period income before tax plus the tax effect of any significant unusual items, discrete items or changes in tax law.

The effective tax rate for the three months ended October 2, 2009 differs from the U.S. statutory rate primarily due to international tax rates which are lower than the U.S. tax rate and the net effect of the realization of previously unrecognized tax benefits as well as other discrete items. The effective tax rate for the nine months ended October 2, 2009 differs from the U.S. federal statutory tax rate primarily due to international tax rates which are lower than the U.S. tax rate, including the impact of the reduction in 2009 of the Swedish tax rate from 28.0% to 26.3% that is applied to our Swedish operations offset in part by a net increase to our valuation allowance and unrecognized tax benefit liability.

For the three and nine months ended September 26, 2008, the Company had effective tax expense (benefit) rates of 28.1% and (25.6)%. The effective tax expense rate for the three months ended September 26, 2008 was lower than the U.S. federal statutory rate primarily due to expected lower effective tax rates on normal operations in Germany and other international jurisdictions compared to the U.S. tax rate plus the net effect of the realization of previously unrecognized tax benefits. The lower effective tax (benefit) rate for the nine months ended September 26, 2008 compared to the U.S. federal statutory rate is primarily due to an $11.8 payment to reimburse certain selling shareholders for underwriters discounts that are not deductible for tax purposes offset in part by an expected lower overall rate on normal operations due to reductions in the German corporate tax rates in 2008, other international tax rates that are lower than the U.S. tax rate, changes in overall profitability and the net effect of the realization of previously unrecognized tax benefits.

- 5 - -

The Company is subject to income tax in the U.S., state and international locations. The Company’s significant operations outside the U.S. are located in Germany and Sweden. In Sweden tax years from 2003 to 2008 and in Germany tax years 2003 and 2006 to 2008 remain subject to examination. In the U.S., tax years from 2005 and beyond generally remain open for examination by U.S. and state tax authorities as well as tax years ending in 1997, 1998, 2000 and 2003 that have U.S. net operating loss tax attributes that have been carried forward to open tax years or are available to be carried forward to future tax years.

Due to the difficulty in predicting with reasonable certainty when tax audits will be fully resolved and closed, the range of reasonably possible significant increases or decreases in the liability for unrecognized tax benefits that may occur within the next 12 months is difficult to ascertain. Currently, we estimate it is reasonably possible the expiration of various statutes of limitations and resolution of tax audits may reduce our tax expense in the next 12 months from zero to $1.4 million.

6. Restructuring and Other Related Charges

The Company has initiated a series of restructuring actions during 2009 in response to current and expected future economic conditions. As a result, the Company recorded pre-tax restructuring and related costs of $9.6 million and $10.8 million for the three and nine month periods ended October 2, 2009, respectively. As of October 2, 2009, we have reduced our company-wide workforce by 230 associates from December 31, 2008. Additionally, 628 associates participate in a German government-sponsored furlough program in which the government pays the wage-related costs of workers that work less than a full work week. Payroll taxes and other employee benefits related to employees’ furlough time are included in restructuring costs. We expect to incur an additional $0.2 million of these costs during the fourth quarter of 2009. We are currently implementing a voluntary termination program to convert a portion of the furloughed workforce to permanent headcount reductions.

During the second quarter of 2009, we closed a repair facility in Aberdeen, NC. We recorded a non-cash impairment loss of $0.2 million to reduce the carrying value of this facility to its estimated fair value. Further, by the end of 2009, we expect to close our facility in Sanford, NC and move production to the Company’s facilities in Monroe, NC and Columbia, KY. Cash expenses associated with the Sanford, NC facility closing are expected to be approximately $2.0 million of which $0.5 million was incurred in the third quarter of 2009, and the remaining costs are expected to be incurred in the fourth quarter of 2009. Of the total cash expenses, severance and other employee termination-related costs are expected to be approximately $0.9 million and employee and equipment relocation costs are expected to be approximately $1.1 million. During the three months ended October 2, 2009, we recorded $0.5 million of non-cash asset impairment charges to reduce the carrying value of the Sanford, NC facility’s building and equipment that will be sold or disposed of to their estimated fair values.

We recognize the cost of involuntary termination benefits at the communication date or ratably over any remaining expected future service period. Voluntary termination benefits are recognized as a liability and a loss when employees accept the offer and the amount can be reasonably estimated. We record asset impairment charges to reduce the carrying amount of long-lived assets that will be sold or disposed of to their estimated fair values. Fair values are estimated using observable inputs including third party appraisals and quoted market prices.

- 6 - -

A summary of restructuring activity for the nine months ended October 2, 2009 is shown below.

	Nine Months Ended October 2, 2009
						Foreign			Reserve
						Currency			Balance at
	Provisions		Payments			Translation			Oct. 2, 2009
Restructuring Charges:
Termination benefits (1)	$	8,930	$	(1,878	)	$	(5	)	$	7,047
Furlough charges (2)		959		(987	)		28			-
Facility closure charges (3)		218		(218	)		-			-
Total Restructuring Charges		10,107	$	(3,083	)	$	23		$	7,047

Other Related Charges:
Asset impairment charges (4)		648

Total Restructuring and Other Related Charges	$	10,755

(1)	Includes severance and other termination benefits such as outplacement services.

(2)	Includes payroll taxes and other employee benefits related to German employees’ furlough time.

(3)	Includes the cost of relocating and training associates and relocating equipment in connection with the closing of the Sanford, NC facility.

(4)	Includes asset impairment charges associated with the building and equipment at the Aberdeen, NC and Sanford, NC locations.

7. Earnings per Share

The following table presents the computation of basic and diluted earnings (loss) per share:

	Three Months Ended				Nine Months Ended
	October 2,		September 26,		October 2,		September 26,
	2009		2008		2009		2008
Numerator:
Net income (loss)	$	5,375	$	13,651	$	16,602	$	(10,950	)
Dividends on preferred stock		-		-		-		(3,492	)
Income (loss) available to common shareholders	$	5,375	$	13,651	$	16,602	$	(14,442	)

Denominator:
Weighted-average shares of common stock outstanding - basic		43,229,104		44,006,026		43,220,492		33,601,388
Net income (loss) per share - basic	$	0.12	$	0.31	$	0.38	$	(0.43	)

Weighted-average shares of common stock outstanding - basic		43,229,104		44,006,026		43,220,492		33,601,388
Net effect of potentally dilutive securities (1)		95,891		60,892		53,685		-
Weighted-average shares of common stock outstanding - diluted		43,324,995		44,066,918		43,274,177		33,601,388
Net income (loss) per share - diluted	$	0.12	$	0.31	$	0.38	$	(0.43	)

(1)	Potentially dilutive securities consist of options and restricted stock units.

In the three and nine months ended October 2, 2009, respectively, approximately 0.5 million and 0.6 million potentially dilutive stock options, restricted stock units and deferred stock units were excluded from the calculation of diluted earnings per share, since their effect would have been anti-dilutive. In the nine months ended September 26, 2008, 0.7 million potentially dilutive stock options and restricted stock units were excluded from the calculation of diluted earnings per share, since their effect would have been anti-dilutive.

- 7 - -

8. Comprehensive Income (Loss)

	Three Months Ended					Nine Months Ended
	October 2,		September 26,			October 2,		September 26,
	2009		2008			2009		2008

Net income (loss)	$	5,375	$	13,651		$	16,602	$	(10,950	)
Other comprehensive income (loss):
Foreign currency translation, net of tax		6,472		(8,033	)		8,093		(3,976	)
Unrecognized pension and post-retirement benefit
plan costs, net of tax		583		(871	)		1,799		(9	)
Unrecognized gains (losses) on hedging activities,
net of tax		29		(119	)		1,230		(841	)
Other comprehensive income (loss)		7,084		(9,023	)		11,122		(4,826	)
Comprehensive income (loss)	$	12,459	$	4,628		$	27,724	$	(15,776	)

9. Inventories

Inventories consisted of the following:

	October 2,			December 31,
	2009			2008

Raw materials	$	31,942		$	34,074
Work in process		36,216			33,691
Finished goods		21,895			21,600

		90,053			89,365
Less-Customer progress billings		(4,197	)		(2,115	)
Less-Allowance for excess, slow-moving and obsolete inventory		(8,487	)		(6,923	)

	$	77,369		$	80,327

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10. Net Periodic Benefit Cost – Defined Benefit Plans

The following sets forth the components of net periodic benefit cost of the non-contributory defined benefit pension plans and the Company’s other post-retirement employee benefit plans for periods presented.

	Three Months Ended						Nine Months Ended
	October 2,			September 26,			October 2,			September 26,
	2009			2008			2009			2008

Pension Benefits - U.S. Plans
Service cost	$	-		$	-		$	-		$	-
Interest cost		3,470			3,576			10,410			10,727
Expected return on plan assets		(4,566	)		(4,774	)		(13,698	)		(14,323	)
Amortization		702			585			2,106			1,755

Net periodic benefit credit	$	(394	)	$	(613	)	$	(1,182	)	$	(1,841	)

Pension Benefits - Non U.S. Plans
Service cost	$	285		$	267		$	855		$	809
Interest cost		1,145			959			3,306			2,893
Expected return on plan assets		(277	)		(232	)		(816	)		(710	)
Amortization		187			87			537			313

Net periodic benefit cost	$	1,340		$	1,081		$	3,882		$	3,305

Other Post-retirement Benefits
Service cost	$	-		$	-		$	-		$	-
Interest cost		132			108			394			323
Amortization		88			37			264			112

Net periodic benefit cost	$	220		$	145		$	658		$	435

11. Financial Instruments

The carrying values of financial instruments, including accounts receivable, accounts payable and other accrued liabilities, approximate their fair values due to their short-term maturities. The fair value of long-term debt is estimated to approximate the carrying amount based on current interest rates for similar types of borrowings. The estimated fair values may not represent actual values of the financial instruments that could be realized as of the balance sheet date or that will be realized in the future.

The Company periodically enters into foreign currency, interest rate swap, and commodity derivative contracts. The Company uses interest rate swaps to manage exposure to interest rate fluctuations. Foreign currency contracts are used to manage exchange rate fluctuations and generally hedge transactions between the Euro and the U.S. dollar. Commodity futures contracts are used to manage costs of raw materials used in the Company’s production processes.

The Company enters into such contracts with financial institutions of good standing, and the total credit exposure related to non-performance by those institutions is not material to the operations of the Company. The Company does not enter into contracts for trading purposes.

- 9 - -

We designate a portion of our derivative instruments as cash flow hedges for accounting purposes. For all derivatives designated as hedges, we formally document the relationship between the hedging instrument and the hedged item, as well as the risk management objective and the strategy for using the hedging instrument. We assess whether the hedging relationship between the derivative and the hedged item is highly effective at offsetting changes in the cash flows both at inception of the hedging relationship and on an ongoing basis. Any change in the fair value of the derivative that is not effective at offsetting changes in the cash flows or fair values of the hedged item is recognized currently in earnings.

Interest rate swaps and other derivative contracts are recognized on the balance sheet as assets and liabilities, measured at fair value on a recurring basis using significant observable inputs, which is Level 2 as defined in the fair value hierarchy. For transactions in which we are hedging the variability of cash flows, changes in the fair value of the derivative are reported in accumulated other comprehensive income (loss) (AOCI), to the extent they are effective at offsetting changes in the hedged item, until earnings are affected by the hedged item. Changes in the fair value of derivatives not designated as hedges are recognized currently in earnings.

On June 24, 2008, the Company entered into an interest rate swap with an aggregate notional value of $75 million whereby it exchanged its LIBOR-based variable rate interest for a fixed rate of 4.1375%. The notional value decreases to $50 million and then $25 million on June 30, 2010 and June 30, 2011, respectively, and expires on June 29, 2012. The fair values of the swap agreement were liabilities of $3.7 million at October 2, 2009 and $5.0 million at December 31, 2008, and are recorded in “Other long-term liabilities” on the consolidated balance sheets. The swap agreement has been designated as a cash flow hedge, and therefore changes in its fair value are recorded as an adjustment to other comprehensive income. There has been no ineffectiveness related to this arrangement since its inception. During the three and nine months ended October 2, 2009, $0.7 million and $2.1 million of losses on the swap were reclassified from AOCI to interest expense. At October 2, 2009, the Company expects to reclassify $2.5 million of net losses on the interest rate swap from accumulated other comprehensive income to earnings during the next twelve months.

The Company had copper and nickel futures contracts with notional values of $0.6 million at October 2, 2009 and $3.6 million at December 31, 2008. The fair values of the contracts were liabilities of $0.1 million at October 2, 2009 and $2.1 million at December 31, 2008, and are recorded in “Other accrued liabilities” on the consolidated balance sheets. The Company has not elected hedge accounting for these contracts, and therefore changes in the fair value are recognized in earnings. For the three and nine months ended October 2, 2009, respectively, the consolidated statements of operations include $0.3 million and $1.9 million of unrealized gains as a result of changes in the fair value of these commodity contracts. For the three and nine months ended September 26, 2008, respectively, the consolidated statements of operations include $0.8 million and $0.4 million of unrealized losses as a result of changes in the fair value of these commodity contracts. Realized losses on these commodity contracts of $0.2 million and $0.9 million were recognized in the three and nine months ended October 2, 2009, respectively, and less than $0.1 million of realized gains were recognized in the both the three and nine months ended September 26, 2008.

The Company had foreign currency contracts with notional values of $8.5 million at October 2, 2009 and $16.5 million at December 31, 2008. The fair values of the contracts were assets of $0.2 million at October 2, 2009 and $1.1 million at December 31, 2008, and are recorded in “Other current assets” on the consolidated balance sheets. The Company has not elected hedge accounting for these contracts, and therefore changes in the fair value are recognized in earnings. For the three and nine months ended October 2, 2009, respectively, the consolidated statements of operations include less than $0.1 million of unrealized gains and $0.8 million of unrealized losses as a result of changes in the fair value of these contracts. The consolidated statements of operations include $0.1 million of unrealized losses for both the three and nine months ended September 26, 2008, respectively, as a result of changes in the fair value of these contracts. Realized gains on these contracts of $0.4 million and $0.8 million were recognized in the three and nine months ended October 2, 2009, respectively. Realized losses of $0.1 million and $0.2 million were recognized in the three and nine months ended September 26, 2008, respectively.

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12. Commitments and Contingencies

Asbestos Liabilities and Insurance Assets

Two of our subsidiaries are each one of many defendants in a large number of lawsuits that claim personal injury as a result of exposure to asbestos from products manufactured with components that are alleged to have contained asbestos. Such components were acquired from third-party suppliers, and were not manufactured by any of our subsidiaries nor were the subsidiaries producers or direct suppliers of asbestos. The manufactured products that are alleged to have contained asbestos generally were provided to meet the specifications of the subsidiaries’ customers, including the U.S. Navy. Of the 26,391 pending claims, approximately 4,800 of such claims have been brought in various federal and state courts in Mississippi; approximately 3,100 of such claims have been brought in the Supreme Court of New York County, New York; approximately 200 of such claims have been brought in the Superior Court, Middlesex County, New Jersey; and approximately 1,100 claims have been filed in state courts in Michigan and the U.S. District Court, Eastern and Western Districts of Michigan. The remaining pending claims have been filed in state and federal courts in Alabama, California, Kentucky, Louisiana, Pennsylvania, Rhode Island, Texas, Virginia, the U.S. Virgin Islands and Washington.

In most instances, the subsidiaries settle asbestos claims for amounts management considers reasonable given the facts and circumstances of each claim. The annual average settlement payment per asbestos claimant has fluctuated during the past several years. Management expects such fluctuations to continue in the future based upon, among other things, the number and type of claims settled in a particular period and the jurisdictions in which such claims arise. To date, the majority of settled claims have been dismissed for no payment.

Claims activity related to asbestos is as follows(1):

	Nine Months Ended
	October 2,			September 26,
	2009			2008

Claims unresolved at the beginning of the period		35,357			37,554
Claims filed(2)		2,512			3,282
Claims resolved(3)		(11,478	)		(4,229	)

Claims unresolved at the end of the period		26,391			36,607

(1)	Excludes claims filed by one legal firm that have been “administratively dismissed.”

(2)	Claims filed include all asbestos claims for which notification has been received or a file has been opened.

(3)	Claims resolved include asbestos claims that have been settled or dismissed or that are in the process of being settled or dismissed based upon agreements or understandings in place with counsel for the claimants.

The Company has projected each subsidiary’s future asbestos-related liability costs with regard to pending and future unasserted claims based upon the Nicholson methodology. The Nicholson methodology is the standard approach used by most experts and has been accepted by numerous courts. It is the Company’s policy to record a liability for asbestos-related liability costs for the longest period of time that it can reasonably estimate. The Company believes that it can reasonably estimate the asbestos-related liability for pending and future claims that will be resolved in the next 15 years and has recorded that liability as its best estimate. While it is reasonably possible that the subsidiaries will incur costs after this period, the Company does not believe the reasonably possible loss or range of reasonably possible loss is estimable at the current time. Accordingly, no accrual has been recorded for any costs which may be paid after the next 15 years. Defense costs, not expected to be recovered from insurers, associated with asbestos-related liabilities as well as costs incurred related to litigation against the subsidiaries’ insurers are expensed as incurred.

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A quarterly analysis of claims data including filing and dismissal rates, alleged disease mix, filing jurisdiction, as well as settlement values performed during the third quarter of 2009 resulted in the determination that the Company should revise its 15 year estimate of asbestos-related liability for pending and future claims. As a result, the Company recorded an $11.6 million pretax charge in the third quarter of 2009, which was comprised of an increase to its asbestos-related liabilities of $111.3 million offset by expected insurance recoveries of $99.7 million.

Each subsidiary has separate, substantial insurance coverage resulting from the independent corporate history of each entity. In its evaluation of the insurance asset, the Company used different insurance allocation methodologies for each subsidiary based upon the applicable law pertaining to the affected subsidiary.

For one of the subsidiaries, on October 14, 2009, the Delaware Court of Chancery ruled that asbestos-related costs should be allocated among excess insurers using an “all sums” allocation (which allows an insured to collect all sums paid in connection with a claim from any insurer whose policy is triggered, up to the policy’s applicable limits) and that the subsidiary has rights to excess insurance policies purchased by a former owner of the business. Based upon this ruling mandating an “all sums” allocation, as well as the language of the underlying insurance policies and the determination that defense costs are outside policy limits, the Company as of October 2, 2009, increased its future expected recovery percentage from 67% to 90% of asbestos-related costs following the exhaustion in the future of its primary and umbrella layers of insurance and recorded a pretax gain of $17.3 million. Presently, this subsidiary is having all of its liability and defense costs covered in full by its primary and umbrella insurance carrier, whose coverage may exhaust as early as the first quarter of 2010. Presently no cost sharing or allocation agreement is in place with the Company’s excess insurers. In addition to the primary and umbrella insurance coverage, the subsidiary has a substantial amount of excess insurance coverage available to it from solvent carriers.

In 2003, the other subsidiary brought legal action against a large number of its insurers and its former parent to resolve a variety of disputes concerning insurance for asbestos bodily injury claims asserted against it. Although none of the insurance companies contested coverage, they disputed the timing, reasonableness and allocation of payments. For this subsidiary it was determined by court ruling in the fourth quarter of 2007, that the allocation methodology mandated by the New Jersey courts will apply. Based upon this ruling and upon a series of other favorable rulings regarding interpretation of certain policy provisions related to deductibles, the number of occurrences, the Company expects to recover approximately 88.5% of all liability and defense costs.

Certain insurance carriers have agreed to settle with this subsidiary by reimbursing the subsidiary for amounts it paid for liability and defense costs as well as entering into formal agreements detailing the payments of future liability and defense costs in an agreed to allocation. In addition, a number of non-settling insurance carriers have paid significant amounts for liability and defense costs paid by the subsidiary in the past and continue to pay a share of costs as they are incurred. Presently, certain insurers are paying approximately 22.7% of costs for current asbestos-related liability and defense costs as they are incurred.

The Company has established reserves of $455.6 million and $357.3 million as of October 2, 2009 and December 31, 2008, respectively, for the probable and reasonably estimable asbestos-related liability cost it believes the subsidiaries will pay through the next 15 years. It has also established recoverables of $410.4 million and $304.0 million as of October 2, 2009 and December 31, 2008, respectively, for the insurance recoveries that are deemed probable during the same time period. Net of these recoverables, the Company’s expected cash outlay on a non-discounted basis for asbestos-related bodily injury claims over the next 15 years was $45.2 million and $53.3 million as of October 2, 2009 and December 31, 2008, respectively. In addition the Company has recorded a receivable for liability and defense costs it had previously paid in the amount of $35.0 million and $36.4 million as of October 2, 2009 and December 31, 2008, respectively, for which insurance recovery is deemed probable. The Company has recorded the reserves for the asbestos liabilities as “Accrued asbestos liability” and “Long-term asbestos liability” and the related insurance recoveries as “Asbestos insurance asset” and “Long-term asbestos insurance asset” while the receivable for previously paid liability and defense costs is recorded in “Asbestos insurance receivable” in the accompanying condensed consolidated balance sheets.

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The income related to these liabilities and legal defense was $4.3 million and $1.2 million, net of estimated insurance recoveries, for the three and nine months ended October 2, 2009, respectively, compared to income of $6.3 million and $6.7 million for the three and nine months ended September 26, 2008, respectively. Legal costs related to the subsidiaries’ action against their asbestos insurers was $1.8 million and $8.8 million for the three and nine months ended October 2, 2009, respectively, compared to $5.1 million and $12.3 million for the three and nine months ended September 26, 2008, respectively.

Management’s analyses are based on currently known facts and a number of assumptions. However, projecting future events, such as new claims to be filed each year, the average cost of resolving each claim, coverage issues among layers of insurers, the method in which losses will be allocated to the various insurance policies, interpretation of the effect on coverage of various policy terms and limits and their interrelationships, the continuing solvency of various insurance companies, the amount of remaining insurance available, as well as the numerous uncertainties inherent in asbestos litigation could cause the actual liabilities and insurance recoveries to be higher or lower than those projected or recorded which could materially affect our financial condition, results of operations or cash flow.

Guarantees

At October 2, 2009, there were $14.2 million of letters of credit outstanding. Additionally, at October 2, 2009, we had issued $12.2 million of bank guarantees securing primarily customer prepayments, performance, and product warranties in our European and Asian operations.

General Litigation

On June 3, 1997, one of our subsidiaries was served with a complaint in a case brought by Litton Industries, Inc. (“Litton”) in the Superior Court of New Jersey which alleges damages in excess of $10.0 million incurred as a result of losses under a government contract bid transferred in connection with the sale of its former Electro-Optical Systems business. In the third quarter of 2004, this case was tried and the jury rendered a verdict of $2.1 million for the plaintiffs. After appeals by both parties, the Supreme Court of New Jersey upheld the plaintiffs’ right to a refund of their attorney’s fees and costs of trial, but remanded the issue to the trial court to reconsider the amount of fees using a proportionality analysis of the relationship between the fee requested and the damages recovered. The date for the new trial on additional claims allowed by the Appellate Division of the New Jersey Superior Court and the recalculation of attorney’s fees has not been set. The subsidiary intends to continue to defend this matter vigorously. At October 2, 2009, the Company’s consolidated balance sheet includes a liability, reflected in “Other liabilities”, related to this matter of $9.5 million, which is unchanged from the prior period.

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In April 1999, the Company’s Imo Industries subsidiary resolved through a settlement the matter of Young v. Imo Industries Inc. that was pending in the United States District Court for the District of Massachusetts. This matter had been brought on behalf of a class of retirees of one of the subsidiary’s divisions relating to retiree health care obligations. On June 15, 2005, a motion was filed seeking an order that certain of the features of the plan as implemented by the Company were in violation of the settlement agreement. On December 16, 2008, the parties executed a Memorandum of Understanding, memorializing the principal terms of a new settlement agreement that will resolve the litigation in its entirety. As a result of the parties’ efforts in this regard, the case has been removed from the trial calendar, pending the filing of a final settlement agreement with the court. A final settlement agreement was signed on July 17, 2009 which will supersede and replace the Stipulation and Agreement of Settlement and Dismissal of Claims entered into by the parties on November 30, 1998. The Court preliminarily approved the settlement agreement; final approval will be discussed at a fairness hearing currently scheduled for November 24, 2009. At October 2, 2009, the Company’s consolidated balance sheet includes an accumulated post retirement benefit obligation of $2.4 million for this matter.

The Company is also involved in various other pending legal proceedings arising out of the ordinary course of the Company’s business. None of these legal proceedings are expected to have a material adverse effect on the financial condition, results of operations or cash flow of the Company. With respect to these proceedings and the litigation and claims described in the preceding paragraphs, management of the Company believes that it will either prevail, has adequate insurance coverage or has established appropriate reserves to cover potential liabilities. Any costs that management estimates may be paid related to these proceedings or claims are accrued when the liability is considered probable and the amount can be reasonably estimated. There can be no assurance, however, as to the ultimate outcome of any of these matters, and if all or substantially all of these legal proceedings were to be determined adversely to the Company, there could be a material adverse effect on the financial condition, results of operations or cash flow of the Company.

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

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and notes included in Part I, Item I “Financial Statements” of this quarterly report and the audited financial statements and related footnotes included in our Annual Report on Form 10-K for the year ended December 31, 2008 filed with the SEC on March 6, 2009.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Some of the statements contained in this Form 10-Q that are not historical facts are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 21E of the Exchange Act. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date this Form 10-Q is filed with the SEC. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including statements regarding: projections of revenue, profit margins, expenses, tax provisions and tax rates, earnings or losses from operations, impact of foreign exchange rates, cash flows, pension and benefit obligations and funding requirements, synergies or other financial items; plans, strategies and objectives of management for future operations including statements relating to potential acquisitions, compensation plans, purchase commitments; developments, performance or industry or market rankings relating to products or services; future economic conditions or performance; the outcome of outstanding claims or legal proceedings including asbestos-related liabilities and insurance coverage litigation; potential gains and recoveries of costs; assumptions underlying any of the foregoing; and any other statements that address activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the future. Forward-looking statements may be characterized by terminology such as “believe,” “anticipate,” “should,” “would,” “intend,” “plan,” “will,” “expect,” “estimate,” “project,” “positioned,” “strategy,” and similar expressions. These statements are based on assumptions and assessments made by our management in light of their experience and perception of historical trends, current conditions, expected future developments and other factors we believe to be appropriate. These forward-looking statements are subject to a number of risks and uncertainties, including but not limited to the following:

•

risks associated with our international operations;

•

significant movements in foreign currency exchange rates;

•

changes in the general economy, including the current global economic downturn as well as the cyclical nature of our markets;

•

our ability to accurately estimate the cost of or realize savings from restructuring programs;

•

availability and cost of raw materials, parts and components used in our products;

•

the competitive environment in our industry;

•

our ability to identify, acquire and successfully integrate attractive acquisition targets;

•

the amount of and our ability to estimate our asbestos-related liabilities;

•

material disruption at any of our significant manufacturing facilities;

•

the solvency of our insurers and the likelihood of payment for asbestos-related claims;

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•

our ability to manage and grow our business and execution of our business and growth strategies;

•

loss of key management;

•

our ability and the ability of customers to access required capital at a reasonable cost;

•

our ability to expand our business in our targeted markets;

•

our ability to cross-sell our product portfolio to existing customers;

•

the level of capital investment and expenditures by our customers in our strategic markets;

•

our financial performance; and

•

others risks and factors, listed under the “Risk Factors” section of this Form 10-Q as well as our Annual Report on Form 10-K for the year ended December 31, 2008 filed with the SEC on March 6, 2009.

Any such forward-looking statements are not guarantees of future performance and actual results, developments and business decisions may differ materially from those envisaged by such forward-looking statements. These forward-looking statements speak only as of the date this Form 10-Q is filed with the SEC. We do not assume any obligation and do not intend to update any forward-looking statement except as required by law.

Overview

We are a global supplier of a broad range of fluid handling products, including pumps, fluid handling systems and controls, and specialty valves. We believe that we are a leading manufacturer of rotary positive displacement pumps, which include screw pumps, gear pumps and progressive cavity pumps. We have a global manufacturing footprint, with production facilities in Europe, North America and Asia, as well as worldwide sales and distribution channels. Our products serve a variety of applications in five strategic markets: commercial marine, oil and gas, power generation, global navy and general industrial. We design and engineer our products to high quality and reliability standards for use in critical fluid handling applications where performance is paramount. We also offer customized fluid handling solutions to meet individual customer needs based on our in-depth technical knowledge of the applications in which our products are used. Our products are marketed principally under the Allweiler, Fairmount, Houttuin, Imo, LSC, Portland Valve, Tushaco, Warren and Zenith brand names. We believe that our brands are widely known and have a premium position in our industry. Allweiler, Houttuin, Imo and Warren are among the oldest and most recognized brands in the markets in which we participate, with Allweiler dating back to 1860.

We believe that one of our most significant competitive advantages comes through a comprehensive set of tools and processes we employ that we refer to as the Colfax Business System (“CBS”). CBS is a disciplined strategic planning and execution methodology designed to achieve excellence and world-class financial performance in all aspects of our business by focusing on the Voice of the Customer and continuously improving quality, delivery and cost.

Outlook

The economic downturn had a significant impact our sales and operating profit through the third quarter of 2009. Our order rates are down significantly and if current economic conditions continue, our business results will continue to be negatively affected. In addition, we have had project delivery push-outs as well as cancellations which are likely to continue until conditions improve. We will continue to monitor global economic conditions and presently expect the following market conditions:

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•

In the commercial marine industry, we expect international trade and demand for crude oil and other commodities as well as the age of the global merchant fleet to continue to create demand for new ship construction over the long term. We expect sales to grow in 2009 primarily from our beginning of the year backlog. We also believe the increase in the size of the global fleet will create an opportunity to supply aftermarket parts and service. We expect new orders to continue to be significantly lower than in the past two years and we are also likely to have additional order cancellations as well as delivery date extensions.

•

We expect activity within the crude oil market to remain favorable long term as capacity constraints and global demand drive further development of heavy oil fields, but we have been experiencing project delays. In pipeline applications, we expect demand for our highly efficient products to remain strong as our customers continue to focus on total cost of ownership. In refinery applications, a reduction in capital investment by our customers continues to impact the demand for our products.

•

In the power generation industry, we expect activity in Asia and the Middle East to remain strong as economic growth and fundamental undersupply of power generation capacity continues to drive investment in energy infrastructure projects. In the world’s developed economies, we expect efficiency improvements will continue to drive demand. Activity in this market is currently stable but we are experiencing delivery date push outs.

•

In the U.S., we expect Congress to continue to appropriate funds for new ship construction as older naval vessels are decommissioned. We also expect increased demand for integrated fluid handling systems for both new ship platforms and existing ship classes that reduce operating costs and improve efficiency as the U.S. Navy seeks to man vessels with fewer personnel. Outside of the U.S., we expect other sovereign nations will continue to expand their fleets as they address national security concerns. We expect both increased sales and orders in the near term.

•

In the general industrial market, we expect that global infrastructure development will drive capital investment over the long term and will benefit local suppliers as well as international exporters of fluid handling equipment. However, demand has softened across the board and has declined significantly in several portions of this market, including machinery support, building products, chemical, distribution, and waste water, primarily in Europe and North America.

Based on declining orders and our culture of continuous improvement, we initiated a series of restructuring actions during 2009 to better position the Company’s cost structure for future periods. As a result, the Company recorded pre-tax restructuring and other related costs of $9.6 million and $10.8 million for the three and nine month periods ended October 2, 2009, respectively. As of October 2, 2009, we have reduced our company-wide workforce by 230 associates from December 31, 2008. Additionally, 628 associates participate in a German government-sponsored furlough program in which the government pays the wage-related costs of workers that work less than a full work week. We are currently implementing a voluntary termination program to convert a portion of the furloughed workforce to permanent headcount reductions. We closed a repair facility in Aberdeen, NC and have announced our plan to close an additional facility in Sanford, NC and move the production operations to two of our other facilities, which we expect to complete by the end of 2009. We expect to realize savings of approximately $16 million in 2009 from our restructuring activities to date. We continue to monitor our order rates and will adjust our manufacturing capacity and cost structure as demand warrants.

Key Performance Measures

The discussion of our results of operations that follows focuses on some of the key financial measures that we use to evaluate our business. We evaluate growth using several measures described below, including net sales, orders and order backlog. Our sales growth is affected by many factors, particularly the impact of acquisitions, the impact of fluctuating foreign exchange rates and growth in our existing businesses. To facilitate the comparison between reporting periods, we describe the impact of each of these three factors, to the extent they impact the periods presented, on our sales growth below in tabular format under the heading “Sales and Orders.”

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Orders and order backlog are highly indicative of our future revenue and thus a key measure of anticipated performance. Orders consist of orders for products or services from our customers. Order backlog consists of unfilled orders.

Seasonality

We experience seasonality in our fluid handling business. As our customers seek to fully utilize capital spending budgets before the end of the year, historically our shipments have peaked during the fourth quarter. Also, our European operations typically experience a slowdown during the July and August holiday season. General economic conditions as well as backlog levels may, however, impact future seasonal variations.

Results of Operations

Items Affecting Comparability of Reported Results

Our results for the nine months ended October 2, 2009 include the impact of three additional business days as compared to the nine months ended September 26, 2008. The third quarter of 2009 had one additional business day as compared to 2008. The fourth quarter of 2009 will have four fewer business days than the fourth quarter of 2008. The comparability of our operating results for the three and nine months ended October 2, 2009 and September 26, 2008 is affected by the following significant items:

Acquisitions

Acquisitions affect our reported results and can make period to period comparisons of results difficult. As a result, we disclose our sales growth between periods both from existing and acquired businesses.

On August 31, 2009, we completed the acquisition of PD-Technik Ingenieurbüro GmbH (“PD-Technik”), a provider of marine aftermarket related products and services located in Hamburg, Germany, for $1.3 million, net of cash acquired in the transaction.

Selling, general and administrative expenses for the three and nine months ended September 26, 2008 include $0.6 million of due diligence costs related to a potential acquisition that did not result in a purchase agreement.

Foreign Currency Fluctuations

A significant portion of our sales, approximately 66% and 67%, respectively, for the three and nine months ended October 2, 2009, is denominated in currencies other than the U.S. dollar, most notably the Euro and the Swedish Krona. Because much of our manufacturing and employee costs are outside the U.S., a significant portion of our costs are also denominated in currencies other than the U.S. dollar. Changes in foreign exchange rates can impact our results and are quantified, when significant, in our discussion of the results of our operations.

Restructuring and Other Related Charges

Our results for the three and nine months ended October 2, 2009 include $9.6 million and $10.8 million, respectively, of restructuring and other related charges incurred to better position the Company’s cost structure for future periods.

IPO-related Costs

Results for the nine months ended September 26, 2008 include $57.0 million of nonrecurring costs associated with our initial public offering in May 2008.

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Legacy Legal Adjustment

Selling, general and administrative expenses for the nine months ended September 26, 2008 include a $4.1 million charge to legacy legal reserves related to a non-asbestos legal matter that was settled in the third quarter of 2008.

Asbestos-related (Income) Expense

Asbestos-related (income) expense includes all asbestos-related costs and is comprised of projected indemnity cost, changes in the projected asbestos liability, changes in the probable insurance recovery of the projected asbestos-related liability, changes in the probable recovery of asbestos liability and defense costs paid in prior periods, and actual defense costs expensed in the period (“Asbestos liability and defense income”). It also includes legal costs related to the actions against two of our subsidiaries’ respective insurers and a former parent company of one of the subsidiaries (“Asbestos coverage litigation expenses”).

The table below presents asbestos-related expense (income) for the periods indicated:

	Three Months Ended						Nine Months Ended
	October 2,			September 26,			October 2,			September 26,
(Amounts in millions)	2009			2008			2009			2008

Asbestos liability and defense income	$	(4.3	)	$	(6.3	)	$	(1.2	)	$	(6.7	)
Asbestos coverage litigation expenses		1.8			5.1			8.8			12.3
Asbestos-related (income) expense	$	(2.5	)	$	(1.2	)	$	7.7		$	5.6

Asbestos liability and defense income was $4.3 million and $1.2 million for the three and nine months ended October 2, 2009, respectively, compared to income of $6.3 million and $6.7 million for the three and nine months ended September 26, 2008, respectively. The decrease in asbestos liability and defense income for the three and nine months ended October 2, 2009 relates primarily to a $17.3 million increase in the insurance asset as a result of a favorable court ruling and a determination that defense costs do not erode insurance limits, offset by an $11.6 million increase to the asbestos liability arising from a revision to our 15 year estimate of asbestos-related liabilities. These two items recorded in the three months ended October 2, 2009, resulted in a net pretax gain of $5.7 million. During 2008, the Company recorded pretax gains totaling $7.9 million resulting from a carrier acknowledging an additional $7.0 million of solvent coverage and the receipt of $0.9 million from an insurer previously considered insolvent.

Legal costs related to the subsidiaries’ action against their asbestos insurers were $1.8 million and $8.8 million for the three and nine months ended October 2, 2009, respectively, compared to $5.1 million and $12.3 million for the three and nine months ended September 26, 2008, respectively. Legal costs were higher in the prior year due to trial preparation efforts by one of our subsidiaries against a number of its insurers and former parent. The trial had been expected to begin in the fourth quarter of 2008 but has been delayed until the fourth quarter of 2009. See Note 12 to our Condensed Consolidated Financial Statements for a further discussion of recent developments in asbestos litigation.

Sales and Orders

Our sales are affected by many factors including but not limited to acquisitions, fluctuating foreign exchange rates and growth (decline) in our existing businesses. To facilitate the comparison between reporting periods, we disclose the impact of each of these factors to the extent they impact the periods presented. The impact of foreign currency translation is the difference between sales from existing businesses valued at current-year foreign exchange rates and the same sales valued at prior-year foreign exchange rates. Sales growth (decline) from existing businesses excludes the impact of foreign exchange rate fluctuations, thus providing a measure of growth due to factors such as price, mix and volume.

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Orders and order backlog are highly indicative of our future revenue and thus are key measures of anticipated performance. Orders consist of orders for products or services from our customers, net of cancellations, during a period. Order backlog consists of unfilled orders at the end of a period. The components of order growth are presented on the same basis as sales growth.

The following tables present components of the decline in our sales and orders, as well as sales by fluid handling product for the periods indicated:

	Sales						Orders
(Amounts in millions)	$			%			$			%

Three Months Ended September 26, 2008	$	153.5					$	173.8

Components of Change:
Existing Businesses		(18.4	)		(12.0	)%		(44.3	)		(25.5	)%
Acquisitions		0.5			0.3	%		0.4			0.2	%
Foreign Currency Translation		(7.1	)		(4.6	)%		(5.6	)		(3.2	)%
Total		(25.0	)		(16.2	)%		(49.5	)		(28.5	)%

Three Months Ended October 2, 2009	$	128.5					$	124.3

	Sales						Orders						Backlog at
(Amounts in millions)	$			%			$			%			Period End

Nine Months Ended September 26, 2008	$	445.5					$	542.9					$	383.1

Components of Change:
Existing Businesses		(11.4	)		(2.5	)%		(162.6	)		(29.9	)%		(83.9	)	(21.9	)%
Acquisitions		0.5			0.1	%		0.4			0.1	%		0.5		0.1	%
Foreign Currency Translation		(40.5	)		(9.1	)%		(31.5	)		(5.8	)%		(1.7	)	(0.4	)%
Total		(51.4	)		(11.6	)%		(193.7	)		(35.7	)%		(85.1	)	(22.2	)%

Nine Months Ended October 2, 2009	$	394.1					$	349.2					$	298.0

	Three Months Ended				Nine Months Ended
	October 2,		September 26,		October 2,		September 26,
(Amounts in millions)	2009		2008		2009		2008
Net Sales by Product:
Pumps, including aftermarket parts and service	$	107.1	$	136.3	$	336.7	$	392.2
Systems, including installation service		17.8		12.5		49.1		41.4
Valves		3.1		2.0		6.5		5.9
Other		0.5		2.7		1.8		6.0

Total net sales	$	128.5	$	153.5	$	394.1	$	445.5

As detailed above, for the three months ended October 2, 2009, sales from existing businesses were down 12.0%, primarily due to a significant decline in sales volume in the general industrial end market as well as declines in the commercial marine and oil and gas end markets, resulting from the global economic downturn, partially offset by sales volume increases in the global navy and power generation end markets. For the nine month period, sales from existing businesses decreased 2.5%, as increased sales volumes in the commercial marine, global navy and oil and gas end markets were more than offset by the decline in the general industrial end market resulting from the global economic downturn. Foreign currency translation negatively impacted sales and orders for both the three and nine month periods ending October 2, 2009, primarily due to the strengthening of the U.S. dollar against the Euro.

- 20 - -

Orders, net of cancellations, from existing businesses for the three and nine months ended October 2, 2009 declined 25.5% and 29.9%, respectively, over the comparable period in the prior year. In both periods, the declines in orders from existing businesses were primarily attributable to a significant decline in demand in the commercial marine, general industrial, oil and gas and power generation end markets. We experienced commercial marine project cancellations of approximately $0.5 million and $15.5 million for the three and nine months ended October 2, 2009, respectively, as a result of the economic downturn. Backlog as of October 2, 2009 of $298.0 million decreased $85.1 million, or 22.2%, as compared to $383.1 million at September 27, 2008. Since July 3, 2009, backlog decreased $4.6 million, or 1.6%, excluding the impacts of foreign currency translation and acquisitions, which had positive impacts of $9.8 million and $0.5 million, respectively.

Gross Profit

The following table presents our gross profit figures for the periods indicated:

	Three Months Ended						Nine Months Ended
	October 2,			September 26,			October 2,			September 26,
(Amounts in millions)	2009			2008			2009			2008

Gross Profit	$	46.2		$	54.5		$	138.8		$	159.4
Gross Profit Margin		35.9	%		35.5	%		35.2	%		35.8	%

Gross profit decreased $8.3 million to $46.2 million for the three months ended October 2, 2009. Gross profit from existing businesses decreased $6.0 million, with an additional $2.3 million negative impact of foreign exchange rates. For the quarter, gross profit margin improved over the prior year period as our restructuring programs offset the impact of lower revenues in the quarter.

Gross profit for the nine months ended October 2, 2009 decreased $20.7 million to $138.8 million, primarily due to a $14.5 million negative impact of foreign exchange rates. The margin decline was primarily driven by decreased production resulting in lower absorption of fixed manufacturing costs which more than offset restructuring program cost savings and favorable pricing and product mix in the commercial marine and general industrial markets.

Selling, General and Administrative Expenses (“SG&A”)

The following table presents our selling, general and administrative expenses for the periods indicated:

	Three Months Ended						Nine Months Ended
	October 2,			September 26,			October 2,			September 26,
(Amounts in millions)	2009			2008			2009			2008

SG&A Expenses	$	28.1		$	33.2		$	86.2		$	97.5
SG&A Expenses as a percentage of sales		21.9	%		21.7	%		21.9	%		21.9	%

Selling, general and administrative expenses decreased $5.1 million to $28.1 million for the three months ended October 2, 2009 compared to $33.2 million for the three months ended September 26, 2008. The impact of foreign exchange rates reduced SG&A expenses by $1.5 million. Excluding this impact, selling, general and administrative expenses for the three months ended October 2, 2009 were $3.6 million lower than the prior year period, primarily attributable to $1.9 million of lower selling expenses and $1.3 million of higher income on raw material futures and foreign currency contracts for which we did not elect hedge accounting.

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Selling, general and administrative expenses decreased $11.3 million to $86.2 million for the nine months ended October 2, 2009 compared to $97.5 million for the nine months ended September 26, 2008, due primarily to the $7.8 million negative impact of foreign exchange rates. The remaining decrease was primarily due to lower charges for legacy legal matters.

Operating Income

The table below presents operating income data for the periods indicated:

	Three Months Ended						Nine Months Ended
	October 2,			September 26,			October 2,			September 26,
(Amounts in millions)	2009			2008			2009			2008

Operating income (loss)	$	9.4		$	20.9		$	29.5		$	(5.0	)
Operating margin		7.3	%		13.6	%		7.5	%		(1.1	)%

Operating income for the three months ended October 2, 2009 decreased $11.5 million to $9.4 million from $20.9 million for the three months ended September 26, 2008. This decrease was largely due to $9.6 million of restructuring and other related charges incurred in the current-year period as well as a $0.4 million negative impact of foreign exchange rates. Excluding these impacts, operating income was $1.5 million lower than the prior year quarter, primarily attributable to lower sales from existing businesses, offset substantially by lower SG&A expenses.

Operating income for the nine months ended October 2, 2009 increased $34.5 million to $29.5 million from a loss of $5.0 million for the nine months ended September 26, 2008. This increase was primarily due to the absence of $57.0 million of initial public offering-related costs incurred in the second quarter of 2008. The impact of foreign exchange rates reduced operating income by $6.0 million. Excluding these impacts, operating income was $16.5 million lower than the nine months ended September 26, 2008, primarily due to lower sales volume from existing businesses and restructuring charges incurred in the current-year period.

Interest Expense

For a description of our outstanding indebtedness, please refer to “—Liquidity and Capital Resources” below.

Interest expense for the three months ended October 2, 2009 decreased $0.1 million to $1.8 million from $2.0 million for the three months ended September 26, 2008. The decrease was primarily due to lower debt levels during the third quarter of 2009 compared to the same period in 2008. A decrease in the weighted-average interest rate on our variable rate borrowings from 5.7% for the three months ended September 26, 2008 to 5.6% for the three months ended October 2, 2009 contributed less than $0.1 million to the decrease in interest expense.

Interest expense for the nine months ended October 2, 2009 decreased $4.2 million to $5.5 million from $9.7 million for the nine months ended September 26, 2008. The decrease was primarily due to lower debt levels during 2009 compared to 2008 as a result of debt repayments of $105.4 million from a portion of the IPO proceeds in the second quarter of 2008. A decrease in the weighted-average interest rate on our variable rate borrowings from 5.9% for the nine months ended September 26, 2008 to 5.6% for the nine months ended October 2, 2009 contributed approximately $0.2 million to the decrease in interest expense.

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Provision for Income Taxes

The effective income tax rates for the three and nine months ended October 2, 2009 were 28.9% and 30.9%, respectively. Our effective tax rate for the three months ended October 2, 2009 was lower than the U.S. federal statutory rate primarily due to international tax rates which are lower than the U.S. tax rate and the net effect of the realization of previously unrecognized tax benefits as well as other discrete items. The effective tax rate for the nine months ended October 2, 2009 differs from the U.S. federal statutory rate primarily due to international tax rates which are lower than the U.S. tax rate, including the impact of the reduction in 2009 of the Swedish tax rate from 28% to 26.3% that is applied to our Swedish operations, offset in part by a net increase to our valuation allowance and unrecognized tax benefit liability.

Liquidity and Capital Resources

Overview

Historically, we have financed our capital and working capital requirements through a combination of cash flows from operating activities and borrowings under our credit facility. We expect that our primary ongoing requirements for cash will be for working capital, funding for potential acquisitions, capital expenditures, asbestos-related outflows and pension plan funding. If additional funds are needed for strategic acquisitions or other corporate purposes, we believe we could raise additional funds in the form of debt or equity.

Borrowings

During the nine months ended October 2, 2009, we made principal payments of $3.8 million on our Term A Note, leaving $92.5 million outstanding at the end of the period. At October 2, 2009, the interest rate on the Term A Note was 2.50% inclusive of 2.25% margin and the annual commitment fee on our $150.0 million revolver was 0.4%. At October 2, 2009, there was $14.2 million outstanding on the letter of credit sub-facility, leaving approximately $135.8 million available under the revolver loan. Of the total $135.8 million available, it is unlikely that we would be able to draw on Lehman Brothers’ $6.0 million commitment due to their bankruptcy and resulting default under the terms of the revolver.

Substantially all assets and stock of the Company’s domestic subsidiaries and 65% of the shares of certain European subsidiaries are pledged as collateral against borrowings under our credit agreement. Certain European assets are pledged against borrowings directly made to our European subsidiary. Our credit agreement contains customary covenants limiting the Company’s ability to, among other things, pay cash dividends, incur debt or liens, redeem or repurchase Company stock, enter into transactions with affiliates, make investments, merge or consolidate with others or dispose of assets. In addition, our credit agreement contains financial covenants requiring the Company to maintain a total leverage ratio of not more than 3.25 to 1.0 and a fixed charge coverage ratio of not less than 1.5 to 1.0, measured at the end of each quarter. If the Company does not comply with the various covenants under our credit agreement and related agreements, the lenders may, subject to various customary cure rights, require the immediate payment of all amounts outstanding under the Term A Note and revolver and foreclose on the collateral. The Company believes it is in compliance with all such covenants as of October 2, 2009 and expects to be in compliance for the next 12 months.

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Comparative Cash Flows

The table below presents selected cash flow data for the periods indicated:

	Nine Months Ended
	October 2,			September 26,
(Amounts in millions)	2009			2008

Net cash provided by (used in) operating activities	$	34.0		$	(30.7	)

Purchases of fixed assets		(7.8	)		(13.3	)
Acquisitions, net of cash acquired		(1.3	)		-
Other		0.3			-

Net cash used in investing activities	$	(8.8	)	$	(13.3	)

Proceeds and repayments of borrowings, net		(3.8	)		(107.8	)
Net proceeds from IPO		-			193.0
Dividends paid to preferred shareholders		-			(38.5	)
Payments made for loan costs		-			(3.2	)
Other uses, net		(0.4	)		(0.2	)

Net cash (used in) provided by financing activities	$	(4.2	)	$	43.3

Cash flows from operating activities can fluctuate significantly from period to period as working capital needs, the timing of payments for items such as pension funding decisions and other items impact reported cash flows. Changes in significant operating cash flow items are discussed below.

Cash paid for asbestos-related costs net of insurance proceeds, including the disposition of claims, defense costs and legal expenses related to litigation against our insurers, was a significant cash outflow. For the nine months ended October 2, 2009 and September 26, 2008 net cash paid for asbestos-related costs, net of insurance proceeds, was $13.0 million and $10.9 million, respectively.

Funding requirements of our defined benefit plans, including both pensions and other post-retirement benefits, can vary significantly among periods due to government funding requirements, investment strategy, changes in the fair value of plan assets and actuarial assumptions. For the nine months ended October 2, 2009 and September 26, 2008, cash contributions for defined benefit plans were $4.3 million and $3.6 million, respectively.

Net cash used in operating activities for the nine months ended September 26, 2008 includes cash paid for nonrecurring IPO-related costs of $42.4 million ($30.6 million of special bonuses and related fringe costs paid under previously adopted executive compensation plans and $11.8 million to reimburse the selling stockholders for the underwriting discount on the shares sold by them in the IPO).

Changes in working capital also affected the operating cash flows for the periods presented. We define working capital as trade receivables plus inventories less accounts payable.

As the result of lower sales volumes, working capital, excluding the effect of foreign currency translation, decreased $6.0 million from December 31, 2008 to October 2, 2009, reflecting a $5.8 million decline in inventory. A $15.7 million reduction in accounts payable was more than offset by a $15.9 million decrease in accounts receivable.

- 24 - -

Net working capital as a percentage of sales is a key ratio that we use to measure working capital efficiency. For the nine months ended October 2, 2009 and September 26, 2008, net working capital as a percentage of annualized sales was 24.7% and 22.6%, respectively.

Investing activities consist primarily of purchases of fixed assets.

In all periods presented, capital expenditures were invested in new and replacement machinery, equipment and information technology. We generally target capital expenditures at approximately 2.0% to 2.5% of revenues.

In August 2009, we acquired PD-Technik for $1.3 million, net of cash acquired in the transaction.

Financing cash flows consist primarily of borrowings and repayments of indebtedness, payment of dividends to shareholders and redemptions of stock.

During the nine months ended October 2, 2009, we repaid $3.8 million of long-term borrowings.

Net IPO proceeds of $193.0 million were received in the first nine months of 2008. We used these proceeds to: (i) repay approximately $105.4 million of indebtedness outstanding under our credit facility existing at that time, (ii) pay dividends to existing preferred stockholders of record immediately prior to the consummation of the IPO in the amount of $38.5 million, (iii) pay $11.8 million to the selling stockholders in the IPO as reimbursement for the underwriting discount incurred on the shares sold by them, and (iv) pay special bonuses of approximately $27.8 million to certain of our executives under previously adopted executive compensation plans. The remainder of the proceeds was applied to working capital.

We paid approximately $3.2 million in deferred loan costs related to our new credit facility entered into in May 2008.

Critical Accounting Estimates

The methods, estimates and judgments we use in applying our critical accounting policies have a significant impact on the results we report in our financial statements. We evaluate our estimates and judgments on an ongoing basis. Our estimates are based upon our historical experience, our evaluation of business and macroeconomic trends, and information from other outside sources as appropriate. Our experience and assumptions form the basis for our judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may vary from what our management anticipates and different assumptions or estimates about the future could change our reported results.

There have been no significant changes for the nine months ended October 2, 2009 to the items that we disclosed as our critical accounting policies and estimates in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2008 filed with the SEC on March 6, 2009.

Recent Accounting Pronouncements

See Note 3 to our Condensed Consolidated Financial Statements for a discussion of recently issued and adopted accounting pronouncements.

- 25 - -

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risk from changes in interest rates, foreign currency exchange rates and commodity prices that could impact our results of operations and financial condition. We address our exposure to these risks through our normal operating and financing activities.

Information concerning market risk for the nine months ended October 2, 2009 is discussed below.

Interest Rate Risk

We are subject to exposure from changes in interest rates based on our financing activities. Under our credit facility, all of our borrowings at October 2, 2009 are variable rate facilities based on LIBOR or EURIBOR. In order to mitigate our interest rate risk, we periodically enter into interest rate swap or collar agreements. A hypothetical increase in the interest rate of 1.00% on the portion of our variable rate debt that is not hedged during the nine months ended October 2, 2009 would have increased our interest cost by approximately $0.2 million.

On June 24, 2008, we entered into an interest rate swap with an aggregate notional value of $75 million whereby we exchanged our LIBOR-based variable rate interest for a fixed rate of 4.1375%. The notional value decreases to $50 million and then $25 million on June 30, 2010 and June 30, 2011, respectively and expires on June 29, 2012. The fair value of the swap agreement, based on third-party quotes, was a liability of $3.7 million at October 2, 2009. The swap agreement has been designated as a cash flow hedge, and therefore changes in its fair value are recorded as an adjustment to other comprehensive income.

Exchange Rate Risk

We have manufacturing sites throughout the world and sell our products globally. As a result, we are exposed to movements in the exchange rates of various currencies against the U.S. dollar and against the currencies of other countries in which we manufacture and sell products and services. During the three and nine months ended October 2, 2009, approximately 65.8% and 66.9%, respectively, of our sales were derived from operations outside the U.S., with approximately 61.8% and 63.4%, respectively, generated from our European operations. In particular, we have more sales in European currencies than we have expenses in those currencies. Therefore, when European currencies strengthen or weaken against the U.S. dollar, operating profits increase or decrease, respectively. To assist with the matching of revenues and expenses and assets and liabilities in foreign currencies, we may periodically enter into derivative instruments such as cross currency swaps or forward contracts. To illustrate the potential impact of changes in foreign currency exchange rates, assuming a 10% increase in average foreign exchange rates compared to the U.S. dollar, income before income taxes for the three and nine months ended October 2, 2009, would have increased by $0.3 million and $2.9 million, respectively.

Commodity Price Risk

We are exposed to changes in the prices of raw materials used in our production processes. Commodity futures contracts are periodically used to manage such exposure. As of October 2, 2009, we had copper and nickel futures contracts with notional values of $0.6 million that were in an unrealized loss position of $0.1 million. We have not elected hedge accounting for these futures contracts, and therefore changes in their fair value are included in net income.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective in providing reasonable assurance that the information required to be disclosed in this report has been recorded, processed, summarized and reported as of the end of the period covered by this report.

- 26 - -

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commissions rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There was no change in our “internal control over financial reporting” (as defined in Rule 13a-15(f)) identified in connection with the evaluation required by Rule 13a-15(d) of the Exchange Act that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

Discussion of legal matters is incorporated by reference to Part I, Item 1, Note 12, “Commitments and Contingencies,” in the Notes to the Condensed Consolidated Financial Statements.

Item 1A. Risk Factors

An investment in our common stock involves a high degree of risk. The following risk factor is provided to supplement and update the Risk Factors previously disclosed in the Risk Factors section of our Annual Report on Form 10-K for the year ended December 31, 2008, filed with the SEC on March 6, 2009.

Changes in the general economy, including the current global financial crisis and economic downturn, and the cyclical nature of our markets could harm our operations and financial performance.

Our financial performance depends, in large part, on conditions in the markets we serve and on the general condition of the global economy. Any sustained weakness in demand, downturn or uncertainty in the global economy could reduce our sales and profitability, and result in restructuring efforts. Restructuring efforts are inherently risky and we may not be able to predict the cost and timing of such actions accurately or properly estimate the impact on demand, if any. We also may not be able to realize the anticipated savings we expected from restructuring activities. The current global economic downturn may materially affect demand for our products and we may not be able to predict the effect on our results. In addition, our products are sold in many industries, some of which are cyclical and may experience periodic downturns. Cyclical weakness in the industries we serve could lead to reduced demand for our products and affect our profitability and financial performance.

We believe that many of our customers and suppliers are reliant on liquidity from global credit markets and in some cases, require external financing to purchase products or finance operations. If the current conditions impacting the credit markets and general economy are prolonged, demand for our products may be negatively affected and orders may be canceled or delayed, which could materially impact our financial position, results of operations and cash flow. Further, lack of liquidity by our customers could impact our ability to collect amounts owed to us and lack of liquidity by financial institutions could impact our ability to fully access our existing credit facility.

- 27 - -

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

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Submission of Matters to a Vote of Security Holders

None.

Item 5. Other Information

None.

Item 6. Exhibits

Exhibit No.		Exhibit Description

31.01		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.02		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.01		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.

32.02		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.

- 28 - -

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.

Registrant: Colfax Corporation

By:


/s/ JOHN A. YOUNG John A. Young	President and Chief Executive Officer (Principal Executive Officer)	November 16, 2009

/s/ G. SCOTT FAISON G. Scott Faison	Senior Vice President, Finance and Chief Financial Officer (Principal Financial and Accounting Officer)	November 16, 2009

- 29 - -

Exhibit 31.01

CERTIFICATIONS

I, John A. Young, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Colfax Corporation;

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)) 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)

[Paragraph omitted in accordance with SEC Release No. 34-47986]

(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: November 16, 2009

/s/ John A. Young
John A. Young President and Chief Executive Officer (Principal Executive Officer)

Exhibit 31.02

CERTIFICATIONS

I, G. Scott Faison, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Colfax Corporation;

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)) for the registrant and have:

(a)

(b)

[Paragraph omitted in accordance with SEC Release No. 34-47986]

(c)

(d)

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)

(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.

Dated: November 16, 2009

/s/ G. Scott Faison
G. Scott Faison Senior Vice President, Finance and Chief Financial Officer (Principal Financial and Accounting Officer)

Exhibit 32.01

Certification Pursuant to 18 U.S.C. Section 1350

(as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)

I, John A. Young, as President and Chief Executive Officer of Colfax Corporation (the “Company”), certify, pursuant to 18 U.S.C. Section 1350 (as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002), that to my knowledge:

(1)

the accompanying Quarterly Report on Form 10-Q of the Company for the quarterly period ended October 2, 2009 (the “Report”), filed with the U.S. Securities and Exchange Commission, 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 Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: November 16, 2009

/s/ John A. Young
John A. Young President and Chief Executive Officer (Principal Executive Officer)

Exhibit 32.02

Certification Pursuant to 18 U.S.C. Section 1350

(as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)

I, G. Scott Faison, as Senior Vice President, Finance and Chief Financial Officer of Colfax Corporation (the “Company”), certify, pursuant to 18 U.S.C. Section 1350 (as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002), that to my knowledge:

(1)

(2)

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

Dated: November 16, 2009

/s/ G. Scott Faison
G. Scott Faison Senior Vice President, Finance and Chief Financial Officer (Principal Financial and Accounting Officer)