In addition to the historical data contained herein, this document includes "forward-looking statements" regarding future market strength, order levels, revenues and earnings of the Company, as well as expectations regarding cash flows and future capital spending made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company's actual results may differ materially from those described in forward-looking statements. These statements are based on current expectations of the Company's performance and are subject to a variety of factors, some of which are not under the control of the Company, which can affect the Company's results of operations, liquidity or financial condition. Such factors may include overall demand for, and pricing of, the Company's products; the size and timing of orders; the Company's ability to successfully execute large subsea and drilling systems projects it has been awarded; the Company's ability to convert backlog into revenues on a timely and profitable basis; changes in the price of (and demand for) oil and gas in both domestic and international markets; raw material costs and availability; political and social issues affecting the countries in which the Company does business; fluctuations in currency markets worldwide; and variations in global economic activity. In particular, current and projected oil and gas prices historically have generally directly affected customers' spending levels and their related purchases of the Company's products and services. Additionally, changes in oil and gas price expectations may impact the Company's financial results due to changes it may make in its cost structure, staffing or spending levels based on these expectations. Finally, results could be affected by the following factors related to the proposed acquisition of NATCO: the ability to satisfy the closing conditions of the transaction, including obtaining regulatory approvals for the transaction and the approval of the merger agreement by the NATCO stockholders; the timing of the satisfaction of the required approvals; the risk that the businesses will not be integrated successfully; the risk that the cost savings and any other synergies from the transaction may not be fully realized or may take longer to realize than expected; disruption from the transaction making it more difficult to maintain relationships with customers, employees or suppliers; the impact of other acquisitions that Cameron or NATCO have made or may make before the transaction; and competition and its effect on pricing. See additional factors discussed in "Factors That May Affect Financial Condition and Future Results" contained herein.

Because the information herein is based solely on data currently available, it is subject to change as a result of changes in conditions over which the Company has no control or influence, and should not therefore be viewed as assurance regarding the Company's future performance. Additionally, the Company is not obligated to make public indication of such changes unless required under applicable disclosure rules and regulations.

THIRD QUARTER 2009 COMPARED TO THIRD QUARTER 2008

Consolidated Results -

The Company's net income for the third quarter of 2009 totaled $124.9 million, or $0.56 per diluted share, compared to $163.0 million, or $0.71 per diluted share, for the third quarter of 2008. The Company's consolidated condensed results of operations for the three months ended September 30, 2008 and the consolidated condensed balance sheet as of December 31, 2008 have been retrospectively revised to reflect the adoption of FASB Accounting Standards Codification Topic 470-20, (ASC 470-20), effective January 1, 2009. The standard was issued by the Financial Accounting Standards Board in May 2008 to clarify the accounting for convertible debt instruments that may be settled in cash upon conversion (including partial cash settlements). The new guidance requires issuers of these instruments to separately account for the related liability and equity components in a manner that will reflect an issuer's nonconvertible debt borrowing rate in its reported interest expense. Retrospective revision of the financial statements for prior periods is required. As a result, the Company's consolidated net income for the third quarter of 2008 has been retrospectively revised from $166.3 million, or $0.73 per diluted share, as previously reported, to $163.0 million, or $0.71 per diluted share.

Included in operating results for the third quarter of 2009 were employee severance and related benefit costs associated primarily with workforce reductions during this period and certain other costs incurred mainly in connection with the pending acquisition of NATCO Group, Inc., totaling $5.9 million, or $0.02 per diluted share.

Revenues

Revenues for the third quarter of 2009 totaled $1.2 billion, a decrease of $272.9 million, or 18.1%, from $1.5 billion for the third quarter of 2008. Drilling & Production Systems (DPS) segment revenues declined 17.3% as a result of lower levels of major drilling and subsea project activities and the effects of lower surface equipment sales due to lower drilling and production activity levels throughout much of the world. Valves & Measurement (V&M) segment revenues were down 23.2%, largely reflecting lower activity levels in the U.S. and Canadian markets while Compression Systems (CS) segment revenues decreased 11.2%, mainly as a result of lower sales of reciprocating compression equipment caused by the effect of lower natural gas prices on activity levels and weakness in the North American markets.

Costs and Expenses

Cost of sales (exclusive of depreciation and amortization) for the third quarter of 2009 totaled $828.0 million, a decrease of $222.8 million, or 21.2%, from $1.1 billion for the third quarter of 2008. Cost of sales as a percent of revenues decreased from 69.8% for the three months ended September 30, 2008 to 67.2% for the three months ended September 30, 2009. References to margins in this Management's Discussion and Analysis of Financial Condition and Results of Operations refers to Revenues minus Cost of Sales (exclusive of depreciation and amortization) as shown separately on the Company's Consolidated Condensed Results of Operations statement for the three- and nine-month periods ended September 30, 2009 and 2008. The decrease in the ratio of cost of sales to revenues was attributable primarily to a 3.3 percentage-point decline in the ratio related to the DPS segment, primarily as a result of higher margins on drilling and subsea equipment sales as well as process systems projects, including the recovery of previously expensed costs related to a large subsea project, partially offset by (i) an increase in the ratio in the CS segment due mainly to a reclassification of a provision previously recorded in selling and administrative expenses to cost of sales and other inventory related costs (approximately a 0.4 percentage-point increase) and (ii) the impact on sales mix of the decline in the sales volumes in the V&M segment (approximately a 0.3 percentage-point increase).

Selling and administrative expenses for the three months ended September 30, 2009 were $169.7 million as compared to $165.3 million for the three months ended September 30, 2008, an increase of $4.4 million, or 2.7%. As a percentage of revenues, selling and administrative costs increased from 11.0% for the third quarter of 2008 to 13.8% for the third quarter of 2009. The increase was mainly attributable to (i) an increase of $4.6 million in the provision for doubtful accounts taken by the DPS segment during the third quarter of 2009 that was primarily related to certain past due receivables from an international customer, (ii) higher legal, consulting and other third party service provider costs of approximately $3.9 million and (iii) higher facility-related costs of $2.6 million. These increased costs were partially offset by a $5.6 reclassification of a previously recorded provision to cost of sales by the CS segment.

Depreciation and amortization expense for the third quarter of 2009 was $38.3 million, an increase of nearly $5.8 million, or 18.0%, from $32.5 million for the third quarter of 2008. Nearly 40% of the increase was due to the effects of newly acquired businesses with the remaining increase primarily the result of higher depreciation expense associated with increased levels of capital spending in periods prior to the third quarter of 2009, as well as higher amortization of acquired intangibles.

Interest income totaled $1.4 million for the three months ended September 30, 2009 compared to $9.7 million for the three months ended September 30, 2008. The decrease was due primarily to lower short-term interest rates during the third quarter of 2009 as compared to the third quarter of 2008.

Interest expense was $22.6 million for the three months ended September 30, 2009 compared to $23.6 million for the three months ended September 30, 2008, a decrease of $1.0 million. Interest expense for the third quarter of 2008 has been retrospectively revised from $18.4 million to $23.6 million to reflect the adoption of ASC 470-20 as described above. The primary reason for the decrease in interest expense was due to a reduction in interest expense in the third quarter of 2009 related to the Company's convertible debentures.

The income tax provision for the third quarter of 2009 was $43.7 million compared to $79.2 million for the third quarter of 2008. The effective tax rates during the third quarter of 2009 and 2008 were 25.9% and 32.7%, respectively. The effective tax rate for the third quarter of 2009 is lower than the comparable previous period due primarily to a lowering of the annual estimated effective tax rate to 27% as a result of changes in the Company's international structure implemented earlier in 2009 and a net reduction recorded during the third quarter of 2009 related to adjustments to prior year accruals totaling approximately $1.8 million.

Revenues and income before income taxes for the DPS, V&M and CS segments are discussed in more detail below.

Segment Results -

DPS Segment

                                Quarter Ended
                                September 30,              Decrease
(dollars in millions)         2009        2008                    $       %
Revenues                     $ 791.5     $ 957.0     $ (165.5 )     (17.3 )%
Income before income taxes   $ 149.7     $ 171.5     $  (21.8 )     (12.7 )%

DPS segment revenues for the third quarter of 2009 totaled $791.5 million, a decrease of $165.5 million, or 17.3%, from $957.0 million for the third quarter of 2008. Almost one-half of the decrease in sales by the segment was the result of a nearly 26% decline in surface equipment sales as activity was down in all major regions of the world, except Latin America. Drilling equipment sales declined nearly 22% primarily due to the lower level of activity relating to completion of equipment for new major deepwater rig construction projects, lower levels of drilling riser production and lower demand for land blowout preventers and related equipment. Subsea equipment sales declined 9% as lower activity levels for projects offshore Brazil and the western coast of Australia more than offset higher revenues for projects offshore West Africa during the third quarter of 2009 as compared to the third quarter of 2008. Revenues associated with process systems were up 11% in the third quarter of 2009 as compared to the same period last year due to activity levels relating to certain large projects during the third quarter of 2009.

Income before income taxes totaled $149.7 million for the three months ended September 30, 2009 compared to $171.5 million for the three months ended September 30, 2008, a decrease of $21.8 million, or 12.7%. Cost of sales as a percent of revenues decreased from 72.0% in the third quarter of 2008 to 67.1% in the third quarter of 2009. The decrease in the ratio of cost of sales to revenues was due primarily to (i) the impact of higher net margins on deepwater drilling projects (approximately a 2.0 percentage-point decrease) and (ii) an improvement in margins on large subsea projects and process systems projects, including the impact of a recovery of previously expensed costs related to a large subsea project (approximately a 3.1 percentage-point decrease in the ratio).

Selling and administrative expenses for the third quarter of 2009 totaled $89.0 million, an increase of $9.2 million, or 11.5%, from $79.8 million during the comparable period of 2008. Selling and administrative expenses as a percent of revenues increased from 8.3% in the third quarter of 2008 to 11.2% in the third quarter of 2009. The increase was mainly attributable to (i) a $4.6 million increase in the provision for doubtful accounts mostly related to certain past due receivables from an international customer and (ii) higher headcount and employee-related costs and other discretionary spending, primarily in the subsea business.

Depreciation and amortization increased $5.1 million, from $16.9 million for the three months ended September 30, 2008 to $22.0 million for the three months ended September 30, 2009. Nearly half of the increase was due to the effects of newly acquired businesses with the remaining increase primarily the result of higher depreciation expense associated with increased levels of capital spending in periods prior to the third quarter of 2009 for new machinery and equipment as well as higher amortization of acquired intangibles.

V&M Segment

                                Quarter Ended
                                September 30,             Decrease
(dollars in millions)         2009        2008                   $       %
Revenues                     $ 294.7     $ 383.7     $ (89.0 )     (23.2 )%
Income before income taxes   $  56.6     $  84.7     $ (28.1 )     (33.2 )%

Revenues for the V&M segment for the third quarter of 2009 totaled $294.7 million as compared to $383.7 million in the third quarter of 2008, a decline of $89.0 million, or 23.2%. Lower sales of engineered and distributed valves and of measurement products due largely to the impact of a decrease in market activity in the United States and Canada accounted for virtually all of the decline in revenues.

Income before income taxes totaled $56.6 million for the third quarter of 2009, a decrease of $28.1 million, or 33.2%, compared to $84.7 million for the third quarter of 2008. Cost of sales as a percent of revenues declined from 65.0% in the third quarter of 2008 to 63.8% in the third quarter of 2009. Improved sourcing of materials as well as a shift in mix toward sales of higher margin products during the third quarter of 2009 as compared to the third quarter of 2008 resulted in a reduction in the ratio of cost of sales to revenues of approximately 3.5 percentage-points for engineered products and process valves combined. A mix shift toward higher margin measurement and aftermarket sales also reduced the cost of sales to revenue ratio by approximately 1.2 percentage points. Offsetting these reductions was the impact of a reduction in the amount of distributed product sales in the third quarter of 2009 as compared to the third quarter of 2008 which added nearly 3.8 percentage points to the ratio.

Selling and administrative expenses for the third quarter of 2009 were $40.7 million, a decrease of $0.7 million, or 1.7%, as compared to $41.4 million in the third quarter of 2008. However, as a percent of revenues, selling and administrative expenses increased from 10.8% in the third quarter of 2008 to 13.8% in the third quarter of 2009 as costs did not decline as quickly as revenues.

Depreciation and amortization increased $1.2 million from $8.1 million in the third quarter of 2008 to $9.3 million in the third quarter of 2009. The increase was due largely to higher capital spending in periods prior to the third quarter of 2009.

CS Segment

                                Quarter Ended
                                September 30,             Decrease
(dollars in millions)         2009        2008                   $       %
Revenues                     $ 145.6     $ 164.0     $ (18.4 )     (11.2 )%
Income before income taxes   $  20.5     $  28.4     $  (7.9 )     (28.1 )%

CS segment revenues for the three months ended September 30, 2009 totaled $145.6 million, a decrease of $18.4 million, or 11.2%, from $164.0 million for the three months ended September 30, 2008. Sales of reciprocating compression equipment were down 30% in the third quarter of 2009 as compared to the third quarter of 2008. This decrease was partially offset by an 8% increase in sales of centrifugal compression equipment during the same period. The decrease in reciprocating compression equipment sales was due primarily to a 74% decline in sales of Ajax units, primarily to U.S.-based lease fleet operators, and a 21% reduction in aftermarket revenues reflecting weaker market conditions and the impact of low natural gas prices in North America on activity levels. A 41% increase in sales of centrifugal engineered units, primarily attributable to higher international shipments of gas compression and engineered air equipment, more than offset a 45% decrease in shipments of plant air machines and an 11% decrease in demand for aftermarket parts and services. The decline in shipments of plant air machines was largely attributable to the absence in the third quarter of 2009 of several multi-unit shipments that had occurred in the third quarter of 2008 to various international customers, as well as overall weakness in the industrial markets.

Income before income taxes for the CS segment totaled $20.5 million for the third quarter of 2009 compared to $28.4 million for the third quarter of 2008, a decrease of $7.9 million, or 28.1%. Cost of sales as a percent of revenues increased from 68.2% in the third quarter of 2008 to 74.1% for the same period in 2009. The increase in the ratio of cost of sales to revenues was due primarily to (i) a reclassification of a provision previously recorded in selling and administrative expenses to cost of sales which resulted in an approximate 3.3 percentage-point increase in the ratio and (ii) higher inventory write-offs in the third quarter of 2009 (resulting in an approximate 2.3 percentage-point increase in the cost of sales to revenues ratio).

Corporate Segment

The Corporate segment's loss before income taxes was $58.1 million in the third quarter of 2009 as compared to $42.4 million in the third quarter of 2008. The loss before income taxes for the Corporate segment for the third quarter of 2008 was retrospectively revised from $37.2 million to $42.4 million to reflect the adoption of ASC 470-20 described above under "Consolidated Results". The adoption of ASC 470-20, effective January 1, 2009, required the Company to retrospectively revise its 2008 financial statements for consistency with the results for the third quarter of 2009 reported under this new accounting standard.

Selling and administrative expenses for the third quarter of 2009 totaled $26.8 million, an increase of $2.5 million, or 10.4%, from $24.3 million during the comparable period of 2008. The primary reason for the increase was higher employee incentive costs.

The decrease in interest income and in interest expense and the severance and other restructuring expense incurred during the third quarter of 2009 as compared to the same period in 2008 are discussed in "Consolidated Results" above.

Orders -

Orders were as follows (dollars in millions):

           Quarter Ended
           September 30,                 Decrease
        2009          2008                       $       %
DPS   $   961.8     $ 1,945.4     $   (983.6 )     (50.6 )%
V&M       253.4         475.4         (222.0 )     (46.7 )%
CS        127.8         191.0          (63.2 )     (33.0 )%
      $ 1,343.0     $ 2,611.8     $ (1,268.8 )     (48.6 )%

Orders for the third quarter of 2009 decreased $1.3 billion, or 48.6%, from the third quarter of 2008. Approximately $15.7 million of orders were cancelled by customers during the third quarter of 2009.

DPS segment orders for the third quarter of 2009 totaled $961.8 million, a decrease of $983.6 million, or 50.6%, from over $1.9 billion for the third quarter of 2008. Orders for drilling equipment in the third quarter of 2009 declined nearly 77% from the third quarter of 2008 largely due to a lower level of activity with regard to new deepwater rig construction projects and lower levels of awards for new land equipment. Orders for subsea equipment were down 52% in the third quarter of 2009 as compared to the same period in 2008 as the third quarter of 2008 included an award for a major subsea project offshore West Africa totaling in excess of $800 million compared to orders received in the third quarter of 2009 under a new frame agreement for future delivery of subsea trees for projects offshore Brazil currently valued at approximately $300 million. The total value to the Company of this new frame agreement is expected to approximate $500 million as additional orders are received in the future. Surface equipment orders decreased 19% during the three months ended September 30, 2009 when compared to the same period in 2008 primarily due to a decline during these same periods of nearly 51% in average U.S. rig counts as a result of a more than 40% decrease in average crude oil prices and a nearly 65% decrease in average natural gas prices. Orders for process systems were up 14% during the third quarter of 2009 as compared to the third quarter of 2008, due primarily to a large multiphase pumping system order received in the third quarter of 2009 for use on offshore platforms in the Gulf of Mexico.

Orders in the CS segment for the three months ended September 30, 2009 totaled $127.8 million, a decrease of $63.2 million, or 33.0%, from $191.0 million for the three months ended September 30, 2008. Centrifugal compression equipment orders declined 32% in the third quarter of 2009 when compared to the similar period in 2008, accounting for nearly 56% of the total decrease in segment orders, whereas reciprocating compression equipment orders decreased nearly 35% in the third quarter of 2009. The global decline in economic activity that began in late 2008 contributed significantly to the decline in centrifugal compression equipment orders for plant air machines and for engineered products, primarily those designed for air separation applications. Nearly 59% of the decline in orders within the reciprocating compression equipment product line was due to a 79% reduction in demand for Superior compressors in the third quarter of 2009 as compared to the same period in 2008 due largely to the strong order levels in the third quarter of 2008 from international customers which did not repeat in the third quarter of 2009. The impact of lower natural gas prices on activity levels and the lack of a repeat of the strong order levels experienced in the third quarter of 2008 also contributed to declines in demand for Ajax units and aftermarket parts and services in the current quarter as compared to last year.

NINE MONTHS ENDED SEPTEMBER 30, 2009 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
2008

Consolidated Results -

The Company's net income for the first nine months of 2009 totaled $378.2 million, or $1.71 per diluted share, compared to $434.7 million, or $1.88 per diluted share, for the first nine months of 2008. The Company's consolidated condensed results of operations for the first nine months of 2008 and the consolidated condensed balance sheet as of December 31, 2008 have been retrospectively revised to reflect the adoption of ASC 470-20, effective January 1, 2009. ASC 470-20 was issued by the Financial Accounting Standards Board in May 2008 to clarify the accounting for convertible debt instruments that may be settled in cash upon conversion (including partial cash settlements). The standard requires issuers of these instruments to separately account for the related liability and equity components in a manner that will reflect an issuer's nonconvertible debt borrowing rate in its reported interest expense. Retrospective revision of the financial statements for prior periods is required under ASC 470-20. As a result of the adoption of this new standard, the Company's consolidated net income for the first nine months of 2008 has been retrospectively revised from $444.6 million, or $1.93 per diluted share, as previously reported, to $434.7 million, or $1.88 per diluted share.

Included in operating results for the first nine months of 2009 were employee severance and related benefit costs associated primarily with workforce reductions during this period and certain other costs incurred mainly in connection with the pending acquisition of NATCO Group, Inc., totaling $39.0 million, or $0.11 per diluted share.

Revenues

Revenues for the first nine months of 2009 totaled $3.8 billion, a decrease of $565.8 million, or 13.1%, from $4.3 billion for the first nine months of 2008. DPS segment revenues declined 11.3%, accounting for nearly 56% of the decrease in consolidated revenues, as a result of lower surface equipment sales due to lower worldwide drilling and production activity levels and due to lower shipments and activity levels relating to certain large subsea projects. V&M segment revenues were down 19.4%, largely reflecting lower activity levels in the U.S., Canadian and U.K. markets while CS segment revenues decreased 8.5%, mainly as a result of a decline in reciprocating compression parts and equipment sales resulting from the impact of lower natural gas prices on activity levels and weakness in the U.S. market. Included in consolidated revenues for the first nine months of 2009 were $19.8 million of fees associated with cancellation of existing orders.