Stanadyne 10-Q 2007 Q1 Quarterly report

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 quarterly period ended March 31, 2007

¨ 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	Exact name of registrant as specified in its charter, Principal Executive Office Address and Telephone Number	State of Incorporation	I.R.S. Employer Identification No.
333-124154	Stanadyne Holdings, Inc. 92 Deerfield Road Windsor, CT 06095 (860) 525-0821	Delaware	20-1398860
333-45823	Stanadyne Corporation 92 Deerfield Road Windsor, CT 06095 (860) 525-0821	Delaware	22-2940378

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.

Stanadyne Holdings, Inc.    Yes  x    No  ¨

Stanadyne Corporation        Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Stanadyne Holdings, Inc.	Large Accelerated Filer  ¨    Accelerated Filer  ¨    Non-Accelerated Filer  x
Stanadyne Corporation	Large Accelerated Filer  ¨    Accelerated Filer  ¨    Non-Accelerated Filer  x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Stanadyne Holdings, Inc.    Yes  ¨    No  x

Stanadyne Corporation        Yes  ¨    No  x

The number of shares of the registrant’s common stock (only one class for each registrant) outstanding as of May 1, 2007:

Stanadyne Holdings, Inc.	106,097,581 shares
Stanadyne Corporation	1,000 shares (100% owned by Stanadyne Automotive Holding Corp., a direct and wholly-owned     subsidiary of Stanadyne Holdings, Inc.)

STANADYNE HOLDINGS, INC. AND SUBSIDIARIES

STANADYNE CORPORATION AND SUBSIDIARIES

TABLE OF CONTENTS

Part I Financial Information
Item 1 Financial Statements
Stanadyne Holdings, Inc.:
Condensed Consolidated Balance Sheets as of March 31, 2007 and December 31, 2006 (unaudited)	4
Condensed Consolidated Statements of Operations for the three months ended March 31, 2007 and 2006 (unaudited)	5
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2007 and 2006 (unaudited)	6
Stanadyne Corporation
Condensed Consolidated Balance Sheets as of March 31, 2007 and December 31, 2006 (unaudited)	7
Condensed Consolidated Statements of Operations for the three months ended March 31, 2007 and 2006 (unaudited)	8
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2007 and 2006 (unaudited)	9
Notes to Condensed Consolidated Financial Statements	10-22
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations	23-29
Item 3 Quantitative and Qualitative Disclosures About Market Risk	30
Item 4 Controls and Procedures	31
Part II Other Information
Item 6 Exhibits	32
Signatures	33

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STANADYNE HOLDINGS, INC. AND SUBSIDIARIES

STANADYNE CORPORATION AND SUBSIDIARIES

TABLE OF CONTENTS

Explanatory Note

This Form 10-Q is a combined quarterly report being filed separately by two registrants: Stanadyne Holdings, Inc. and Stanadyne Corporation. Unless the context indicates otherwise, any reference in this report to “Holdings” refers to Stanadyne Holdings, Inc., and any reference to “Stanadyne” refers to Stanadyne Corporation, the indirect wholly-owned subsidiary of Holdings. The “Company,” “we,” “us” and “our” refer to Stanadyne Holdings, Inc. together with its direct and indirect subsidiaries, including Stanadyne Corporation. Each Registrant hereto is filing on its own behalf all of the information contained in this quarterly report that relates to such Registrant. Each Registrant hereto is not filing any information that does not relate to such Registrant, and therefore makes no representation as to any such information.

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PART I: FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS

STANADYNE HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands)

	March 31, 2007			December 31, 2006
ASSETS
Current Assets:
Cash and cash equivalents	$	19,138		$	25,394
Restricted cash		1,091			975
Accounts receivable, net of allowance for uncollectible accounts of $288 as of March 31, 2007 and December 31, 2006		43,822			40,804
Inventories, net		35,339			34,575
Prepaid expenses and other assets		1,173			1,587
Deferred income taxes		5,704			5,078
Total current assets		106,267			108,413
Property, plant and equipment, net		95,468			98,117
Goodwill		144,575			144,575
Intangible and other assets, net		92,840			94,430
Total assets	$	439,150		$	445,535
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	22,851		$	22,406
Accrued liabilities		33,916			42,297
Current maturities of long-term debt		5,734			6,673
Current portion of capital lease obligations		291			299
Total current liabilities		62,792			71,675
Long-term debt, excluding current maturities		257,478			255,330
Deferred income taxes		30,943			27,965
Capital lease obligations, excluding current portion		388			454
Other non current liabilities		36,987			46,742
Total liabilities		388,588			402,166
Minority interest in consolidated subsidiary		77			—
Commitments and Contingencies		—			—
Stockholders’ equity:
Common stock		1,064			1,064
Additional paid-in capital		53,750			53,661
Other accumulated comprehensive income		645			589
Accumulated deficit		(4,827	)		(11,798	)
Treasury stock, at cost		(147	)		(147	)
Total stockholders’ equity		50,485			43,369
Total liabilities and stockholders’ equity	$	439,150		$	445,535

See notes to condensed consolidated financial statements

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STANADYNE HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(in thousands)

	Three Months Ended March 31, 2007			Three Months Ended March 31, 2006
Net sales	$	74,487		$	75,739
Cost of goods sold		56,548			58,496
Gross profit		17,939			17,243
Selling, general and administrative expenses		9,219			10,593
Amortization of intangible assets		1,024			1,024
Management fees		188			188
Pension plan curtailment gain		(10,015	)		—
Operating income		17,523			5,438
Interest, expense		(6,977	)		(7,149	)
Income (loss) from continuing operations before income taxes and minority interest		10,546			(1,711	)
Income tax expense (benefit)		4,125			(633	)
Income (loss) from continuing operations before minority interest		6,421			(1,078	)
Minority interest in (income) loss of consolidated subsidiary		(77	)		55
Income (loss) from continuing operations		6,344			(1,023	)
Loss from discontinued operations, net of income tax benefit of $255 in 2006		—			(1,179	)
Net income (loss)	$	6,344		$	(2,202	)

See notes to condensed consolidated financial statements

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STANADYNE HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

	Three Months Ended March 31, 2007			Three Months Ended March 31, 2006
Cash flows from operating activities:
Net income (loss)	$	6,344		$	(2,202	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization		5,483			6,231
Amortization of debt discount and deferred financing fees		2,744			2,505
Stock-based compensation expense		88			316
Deferred income tax expense (benefit)		2,265			(659	)
Income (loss) applicable to minority interest		77			(55	)
Loss on disposal of property, plant and equipment		1			381
Changes in operating assets and liabilities		(21,353	)		(6,558	)
Net cash used in operating activities		(4,351	)		(41	)
Cash flows from investing activities:
Net proceeds from sale of discontinued operations		104			—
Increase in restricted cash		(116	)		—
Capital expenditures		(932	)		(3,903	)
Proceeds from disposal of property, plant and equipment		2			277
Net cash used in investing activities		(942	)		(3,626	)
Cash flows from financing activities:
Payments on foreign term loan		(62	)		(30	)
Net (payments) proceeds on foreign overdraft facilities		(876	)		1,956
Principal payments on long-term debt		—			(163	)
Payments of capital lease obligations		(72	)		(74	)
Proceeds from exercise of stock options		—			144
Proceeds from the sale of common stock		—			376
Net cash (used in) provided by financing activities		(1,010	)		2,209
Cash and cash equivalents:
Net decrease in cash and cash equivalents		(6,303	)		(1,458	)
Effect of exchange rate changes on cash		47			(61	)
Cash and cash equivalents at beginning of period		25,394			23,081
Cash and cash equivalents at end of period	$	19,138		$	21,562

See notes to condensed consolidated financial statements

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STANADYNE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands)

	March 31, 2007		December 31, 2006
ASSETS
Current Assets:
Cash and cash equivalents	$	18,859	$	25,118
Restricted cash		1,091		975
Accounts receivable, net of allowance for uncollectible accounts of $288 as of March 31, 2007 and December 31, 2006		43,822		40,804
Inventories, net		35,339		34,575
Prepaid expenses and other assets		1,170		1,576
Deferred income taxes		5,704		5,078
Total current assets		105,985		108,126
Property, plant and equipment, net		95,468		98,117
Goodwill		144,575		144,575
Intangible and other assets, net		91,013		92,545
Total assets	$	437,041	$	443,363
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	22,851	$	22,406
Accrued liabilities		33,906		42,288
Current maturities of long-term debt		5,734		6,673
Current portion of capital lease obligations		291		299
Total current liabilities		62,782		71,666
Long-term debt, excluding current maturities		181,606		181,638
Deferred income taxes		36,326		32,744
Capital lease obligations, excluding current portion		388		454
Other non current liabilities		36,986		46,742
Due to Stanadyne Holdings, Inc.		971		891
Total liabilities		319,059		334,135
Minority interest in consolidated subsidiary		77		—
Commitments and Contingencies		—		—
Stockholders’ equity:
Common stock		—		—
Additional paid-in capital		105,000		105,000
Other accumulated comprehensive income		645		589
Retained earnings		12,260		3,639
Total stockholders’ equity		117,905		109,228
Total liabilities and stockholders’ equity	$	437,041	$	443,363

See notes to condensed consolidated financial statements

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STANADYNE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(in thousands)

	Three Months Ended March 31, 2007			Three Months Ended March 31, 2006
Net sales	$	74,487		$	75,739
Cost of goods sold		56,548			58,496
Gross profit		17,939			17,243
Selling, general and administrative expenses		9,200			10,549
Amortization of intangible assets		1,024			1,024
Management fees		188			188
Pension plan curtailment gain		(10,015	)		—
Operating income		17,542			5,482
Other expenses:
Interest, net		(4,743	)		(5,150	)
Income from continuing operations before income taxes and minority interest		12,799			332
Income tax expense (benefit)		4,728			(88	)
Income from continuing operations before minority interest		8,071			420
Minority interest in (income) loss of consolidated subsidiary		(77	)		55
Income from continuing operations		7,994			475
Loss from discontinued operations, net of income tax benefit of $255 in 2006		—			(1,179	)
Net income (loss)	$	7,994		$	(704	)

See notes to condensed consolidated financial statements

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STANADYNE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

	Three Months Ended March 31, 2007			Three Months Ended March 31, 2006
Cash flows from operating activities:
Net income (loss)	$	7,994		(704	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization		5,483		6,231
Amortization of deferred financing fees		506		506
Stock-based compensation expense		88		316
Deferred income tax benefit		2,966		(15	)
Income (loss) applicable to minority interest		77		(55	)
Loss on disposal of property, plant and equipment		1		381
Changes in operating assets and liabilities		(21,470	)	(6,701	)
Net cash used in operating activities		(4,355	)	(41	)
Cash flows from investing activities:
Net proceeds from sale of discontinued operations		104		—
Increase in restricted cash		(116	)	—
Capital expenditures		(932	)	(3,903	)
Proceeds from disposal of property, plant and equipment		2		277
Net cash used in investing activities		(942	)	(3,626	)
Cash flows from financing activities:
Payments on foreign term loan		(62	)	(30	)
Net (payments) proceeds on foreign overdraft facilities		(876	)	1,956
Principal payments on long-term debt		—		(163	)
Payments of capital lease obligations		(72	)	(74	)
Net cash (used in) provided by financing activities		(1,010	)	1,689
Cash and cash equivalents:
Net decrease in cash and cash equivalents		(6,307	)	(1,978	)
Effect of exchange rate changes on cash		48		(61	)
Cash and cash equivalents at beginning of period		25,118		23,081
Cash and cash equivalents at end of period		18,859		21,042

See notes to condensed consolidated financial statements

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STANADYNE HOLDINGS, INC. AND SUBSIDIARIES

STANADYNE CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in thousands, except where noted otherwise)

(1) Business, Organization and Significant Accounting Policies

Description of Business. Stanadyne Holdings, Inc. (“Holdings”) owns all of the outstanding common stock of Stanadyne Automotive Holdings Corp. (“SAHC”). SAHC owns all of the outstanding common stock of Stanadyne Corporation (together with its consolidated subsidiaries, “Stanadyne”). A majority of the outstanding common stock of Holdings is owned by funds managed by Kohlberg Management IV, L.L.C. Collectively, Holdings, SAHC and Stanadyne hereinafter are referred to as the “Company.” Holdings and Stanadyne are separate reporting companies. Holdings is a holding company with no operations beyond those of its indirectly, wholly-owned subsidiary, Stanadyne. Stanadyne is a leading designer and manufacturer of highly engineered, precision manufactured engine components, including fuel injection equipment for diesel engines. Stanadyne sells engine components to original equipment manufacturers in a variety of applications, including agricultural and construction vehicles and equipment, industrial products, automobiles, light duty trucks and marine equipment. The aftermarket is a core element of Stanadyne’s operations. Stanadyne’s previously wholly-owned subsidiary, Precision Engine Products Corp. (“PEPC”), was a supplier of roller-rocker arms, hydraulic valve lifters and lash adjusters to automotive engine manufacturers and the independent automotive aftermarket. On July 31, 2006, PEPC was sold to Defiance, Inc., a part of GenTek, Inc. (see Note 10).

Transactions. On August 6, 2004, KSTA Acquisition, LLC (“KSTA”), a Delaware limited company, acquired all of the outstanding capital stock of SAHC from American Industrial Partners Capital Fund II, L.P. (“AIP”) and certain other stockholders, on the terms and conditions specified in the stock purchase agreement entered into on June 23, 2004. Subsequent to such purchase of stock, KSTA distributed the stock of SAHC to its parent, Holdings, and then immediately merged with and into Stanadyne, with Stanadyne continuing as the surviving corporation. As a result of such merger, Stanadyne assumed by operation of law all of the rights and obligations of KSTA. Holdings was formed at the direction of an investor group led by Kohlberg Management IV, L.L.C., which now owns a majority of the outstanding common stock of Holdings. These transactions were financed by a cash equity investment in Holdings by an investor group led by Kohlberg Management IV, L.L.C., borrowings under Stanadyne’s new senior secured credit facility, and the issuance of notes. The merger and the related transactions, including the issuance of certain notes, the entering into of Stanadyne’s new senior secured credit facility, the repayment of certain existing indebtedness, including the tender for and the subsequent redemption of Stanadyne’s senior subordinated unsecured notes, and the payment of related fees and expenses, are collectively referred to as the “Transactions.”

On December 20, 2004, Holdings issued $100.0 million of senior discount notes (the “Discount Notes”) due in 2015. The Discount Notes bear interest at a stated annual rate of 12%. The Discount Notes were issued at a discount price of 58.145% of face value resulting in net proceeds of approximately $58.1 million before considering financing costs. Interest will accrete until August 15, 2009. The Discount Notes are unsecured senior obligations of Holdings and are subordinated to all existing and future senior indebtedness, including obligations under Stanadyne’s senior secured bank facility. The Discount Notes are not guaranteed by any of Holdings’ subsidiaries and are effectively subordinated to all of Stanadyne’s secured debt. Proceeds from the issuance of these Discount Notes were used for a $55.9 million distribution/return of capital to Holdings’ common stockholders and $2.2 million of related financing costs.

Basis of Presentation. The financial statements presented herein have been prepared in accordance with accounting principles generally accepted in the United States of America and, in the opinion of management, reflect all adjustments (considering of normal recurring accruals) necessary for a fair presentation for the periods presented. The Company’s quarterly results are subject to fluctuation; consequently, the results of operations and cash flows for any quarter are not necessarily indicative of the results and cash flows for any future period. These notes to condensed consolidated financial statements apply to Holdings and Stanadyne unless otherwise noted.

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STANADYNE HOLDINGS, INC. AND SUBSIDIARIES

STANADYNE CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in thousands, except where noted otherwise)

Principles of Consolidation. The condensed consolidated financial statements of Holdings include the accounts of Holdings and all of Holdings’ wholly-owned subsidiaries: SAHC, Stanadyne, PEPC, Stanadyne, SpA (“SpA”) and Precision Engine Products LTDA (“PEPL”). The condensed consolidated financial statements of Stanadyne include the accounts of Stanadyne and all of Stanadyne’s wholly-owned subsidiaries: PEPC, SpA and PEPL. A joint venture, Stanadyne Amalgamations Private Limited (“SAPL”), is fully consolidated with Holdings and Stanadyne based on the Company’s 51% controlling share, while the remaining 49% is recorded as a minority interest. Intercompany balances have been eliminated in consolidation. Results of operations related to PEPC, including PEPL, are presented as discontinued operations for all periods presented herein.

Stock Options. On January 1, 2006, the Company adopted Statement of Financial Accounting Standards No. 123R “Share-Based Payment” (“SFAS 123R”), using the modified prospective method. The modified prospective method recognizes compensation costs for all stock option awards granted subsequent to January 1, 2006, as well as to the unvested portion of stock option awards outstanding as of January 1, 2006.

In 2004, Holdings established the 2004 Equity Incentive Plan to provide for the award of non-qualified stock options to attract and retain people who are in a position to make a significant contribution to the success of the Company and its subsidiaries. Awards granted under the 2004 Equity Incentive Plan vest over a period of three to four years contingent upon achievement of certain financial performance targets as defined by the 2004 Equity Incentive Plan and expire 10 years after the date of grant.

The Company uses a Black-Scholes option-pricing model to calculate the fair value of options. The key assumptions for this valuation method include the expected term of the option, stock price volatility, risk-free interest rate, dividend yield, exercise price, and forfeiture rate. Many of these assumptions are judgmental and highly sensitive in the determination of compensation expense.

The following table summarizes information about our stock option plan for the three months ended March 31, 2007:

	Outstanding				Exercisable
	Stock Options Outstanding		Weighted Average Exercise Price *		Stock Options Outstanding	Weighted Average Exercise Price *
January 1, 2007	13,865,000		$	0.48	3,226,250	$	0.47
Cancelled	(295,000	)		0.64	—		—
March 31, 2007	13,570,000		$	0.48	3,226,250	$	0.47

* Represents per share price.

During the first quarter of 2007, two employees left the Company resulting in the cancellation of 295,000 unvested stock options. No options were granted in the first quarter of 2007.

As of March 31, 2007, there was $346 of total unrecognized compensation cost related to non-vested share-based compensation awards granted under the 2004 Equity Incentive Plan. The total stock-based employee compensation expense for the year ending December 31, 2007 for the stock options awarded through March 31, 2007 is expected to be $352.

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STANADYNE HOLDINGS, INC. AND SUBSIDIARIES

STANADYNE CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in thousands, except where noted otherwise)

(2) Inventories

Components of inventories are as follows:

	As of March 31, 2007		As of December 31, 2006
Raw materials and purchased parts	$	16,293	$	15,543
Work-in-process		12,667		13,823
Finished goods		6,379		5,209
	$	35,339	$	34,575

(3) Intangible and Other Assets

Major components of intangible and other assets at March 31, 2007 and December 31, 2006 are listed below:

Holdings:	As of March 31, 2007				As of December 31, 2006
	Gross Carrying Value		Accumulated Amortization		Gross Carrying Value		Accumulated Amortization
Trademarks / trade names	$	51,100	$	—	$	51,100	$	—
Technology / patents		24,300		6,779		24,300		6,140
Customer contracts		15,252		4,046		15,252		3,665
Debt issuance costs		18,447		5,903		18,447		5,339
Other		514		45		516		41
	$	109,613	$	16,773	$	109,615	$	15,185

Stanadyne:	As of March 31, 2007				As of December 31, 2006
	Gross Carrying Value		Accumulated Amortization		Gross Carrying Value		Accumulated Amortization
Trademarks / trade names	$	51,100	$	—	$	51,100	$	—
Technology / patents		24,300		6,779		24,300		6,140
Customer contracts		15,252		4,046		15,252		3,665
Debt issuance costs		16,091		5,374		16,091		4,868
Other		514		45		516		41
	$	107,257	$	16,244	$	107,259	$	14,714

Amortization expense of intangible assets for the Company, exclusive of debt issuance costs, was $1,024 for the three months ended March 31, 2007 and 2006. Estimated annual amortization expense for the Company’s intangible assets is expected to be $3,761 in 2007, $3,264 in 2008, $3,249 in 2009, $3,160 in 2010 and $2,944 in 2011.

Amortization of debt discount and deferred financing fees is included as interest expense in the accompanying condensed consolidated statements of operations for Holdings of $2,744 and $2,505 for the three months ended March 31, 2007 and 2006, respectively. Amortization of deferred financing fees is included as interest expense in the accompanying condensed consolidated statements of operations for Stanadyne of $506 and $507 for the three months ended March 31, 2007 and 2006, respectively.

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STANADYNE HOLDINGS, INC. AND SUBSIDIARIES

STANADYNE CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in thousands, except where noted otherwise)

(4) Long-term Debt

Long-term debt consisted of:

	Holdings				Stanadyne
	March 31, 2007		December 31, 2006		March 31, 2007		December 31, 2006
Revolving credit lines	$	—	$	—	$	—	$	—
Term loan		21,200		21,200		21,200		21,200
Stanadyne Senior Subordinated Notes		160,000		160,000		160,000		160,000
Holdings Senior Discount Notes, net of unamortized discount		75,872		73,692		—		—
SAPL debt		1,043		1,186		1,043		1,186
SpA debt		5,097		5,925		5,097		5,925
Long-term debt		263,212		262,003		187,340		188,311
Less current maturities of long-term debt		5,734		6,673		5,734		6,673
Long-term debt, excluding current maturities	$	257,478	$	255,330	$	181,606	$	181,638

(5) Pension Plans, Defined Contribution Plan and Other Postretirement Health Care and Life Insurance

Pension Plans

The Company has a noncontributory defined benefit pension plan for eligible domestic employees and also has two nonqualified plans, which are designed to supplement the benefits payable to designated employees. The components of the net periodic pension (income) cost for the periods shown are as follows:

	Three Months Ended March 31,
	2007			2006
Service cost	$	776		$	777
Interest cost		1,279			1,279
Expected return on plan assets		(1,273	)		(1,273	)
Amortization of prior service costs		(15	)		(15	)
Recognized net actuarial loss		27			27
Curtailment gain		(10,015	)		—
Net periodic pension (income) cost	$	(9,221	)	$	795

It is the policy of the Company to fund the pension plan in an amount at least equal to the minimum required contribution as determined by the plan’s actuaries, but not in excess of the maximum tax-deductible amount under Section 404 of the Internal Revenue Code. The Company may make discretionary contributions of any amount within this range based on financial circumstances and strategic considerations, which typically vary from year to year.

Effective March 31, 2007, Stanadyne amended the Stanadyne Corporation Pension Plan (a defined benefit plan) (the “Pension Plan”) to freeze the Pension Plan with respect to all participants so that no future benefits will accrue after that date. As required by law, benefits already accrued as of such date will not be affected. With respect to such benefits, participants continue to vest and all other retirement options, including early retirement reduction factors, continue unchanged. The assets continue to be held in trust for participants until they retire. The accrual of benefits for certain executives participating in the Supplemental Retirement Benefit Plan is based on the accrual of benefits under the Pension Plan. Therefore, the freeze of the Pension Plan also resulted in the freeze of the Supplemental Retirement Benefit Plan.

The effect of the Pension Plan freeze resulted in curtailment gains of $9,996 for the Pension Plan and $19 for the Supplemental Retirement Benefit Plan. These one-time curtailment gains are equal to the reduction in the plans’ projected benefit obligations (“PBO”) due to the freeze of $9,382 and unrecognized prior service costs of $633.

-13-

STANADYNE HOLDINGS, INC. AND SUBSIDIARIES

STANADYNE CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in thousands, except where noted otherwise)

Defined Contribution Plan

Effective April 1, 2007, Stanadyne amended the Stanadyne Corporation Savings Plus Plan (a 401(k) plan) to: (i) increase Stanadyne’s matching contribution to 100% of employee pre-tax contributions on the first 1% of compensation and 50% of employee pre-tax contributions on the next 5% of compensation so that if an employee contributes 6% of compensation, the Stanadyne match would total 3.5% of that employee’s compensation; and (ii) provide for automatic enrollment at 3% of compensation for all new employees and all current employees who are not then contributing 3% or more of compensation.

Postretirement Health Care and Life Insurance

The Company’s domestic subsidiaries make available certain health care and life insurance benefits for eligible retired employees. The components of the net periodic benefit costs for the periods shown were as follows:

	Three Months Ended March 31,
	2007			2006
Service cost	$	54		$	54
Interest cost		122			105
Recognized net actuarial loss		(13	)		(5	)
Net periodic postretirement benefit cost	$	163		$	154

(6) Income Taxes

Holdings had an effective income tax rate of 39.1% for the three months ended March 31, 2007 compared to 36.9% for the three months ended March 31, 2006. Holdings’ tax rate is affected by a limitation on the deductibility of interest on the Discount Notes for U.S. federal income tax purposes. The yield-to-maturity for the interest expense on the Discount Notes exceeds the applicable federal rate by six percentage points, resulting in a reduction in the deductible interest expense (including original issue discount) accrued on the notes to the extent attributable to such excess.

Stanadyne had an effective income tax rate of 36.9% for the three months ended March 31, 2007, compared to 26.4% for the three months ended March 31, 2006.

The Company applies the estimated annual tax rate to the year to date earnings to provide consistent quarterly tax rates based on the estimated effective tax rate for the year. To the extent there are differences between components of planned and actual net income, the estimated annual tax rate for the year could change and, in turn, have an impact on future quarterly tax rates.

The effective tax rate on the pre-tax loss from discontinued operations was 17.8% for the three months ended March 31, 2006. The Company had no discontinued operations for the first three months of 2007.

The Company adopted the provisions of FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”) on January 1, 2007. As a result of the implementation of FIN 48, the Company recognized a decrease in the liability for unrecognized tax benefits of approximately $627, which was accounted for as a decrease to accumulated deficit and an increase to retained earnings for Holdings and Stanadyne, respectively, as of January 1, 2007. The Company had no federal, state, local or foreign unrecognized tax benefits as of January 1, 2007. The Company does not expect the annual effective tax rate to change due to any unrecognized tax benefits. The Company would recognize interest and penalties as income tax expense if any unrecognized tax benefits were reported.

-14-

STANADYNE HOLDINGS, INC. AND SUBSIDIARIES

STANADYNE CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in thousands, except where noted otherwise)

The Company files income tax returns in the U.S. federal jurisdiction, various states, and foreign jurisdictions, and the Company is subject to routine audit by many different tax authorities. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years prior to 2002. It is possible that a state tax examination will be settled during the next twelve months; however, no unrecognized tax benefits have been accrued related to this state tax jurisdiction and any that may result from the examination are not expected to be material to the financial statements.

(7) Contingencies

The Company is involved in various legal and regulatory proceedings generally incidental to its business. While the results of any litigation or regulatory issue contain an element of uncertainty, management believes that the outcome of any known, pending or threatened legal proceeding, or all of them combined, will not have a material adverse effect on the Company’s consolidated financial position or results of operations.

The Company presents restricted cash as a current asset on its condensed consolidated balance sheets and as an investing activity on its condensed consolidated statements of cash flows. This cash represents net proceeds from the sale of PEPC assets and its use is limited by the terms of the Company’s term loan agreement to sale-related costs and repayment of principal.

The Company is subject to potential environmental liabilities as a result of various claims and legal actions, which are pending or may be asserted against the Company. Reserves for such liabilities have been established and no insurance recoveries have been anticipated in the determination of the reserves. In management’s opinion, the aforementioned claims will be resolved without material adverse effect on the consolidated results of operations, financial position or cash flows of the Company. In conjunction with the acquisition of SAHC from Metromedia Company (“Metromedia”) on December 11, 1997, Metromedia agreed to partially indemnify Stanadyne and AIP for certain environmental matters. The effect of this indemnification is to limit the Company’s financial exposure for known environmental issues.

The Company estimates and records the liability associated with its manufactured products at the time they are sold. The changes in the Company’s warranty accrual are provided below:

	Three Months Ended March 31,
	2007			2006
Warranty liability, beginning of period	$	5,667		$	4,935
Warranty expense based on products sold		277			685
Warranty claims paid		(379	)		(116	)
Warranty liability, end of period	$	5,565		$	5,504

The Company’s warranty accrual is included as a component of accrued liabilities on the condensed consolidated balance sheets.

-15-

STANADYNE HOLDINGS, INC. AND SUBSIDIARIES

STANADYNE CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in thousands, except where noted otherwise)

(8) Comprehensive Income (Loss)

Comprehensive income (loss) is as follows:

	Holdings Three Months Ended March 31,
	2007		2006
Net income (loss)	$	6,344	$	(2,202	)
Other comprehensive income, net of tax:
Foreign currency translation adjustments		56		243
Comprehensive income (loss)	$	6,400	$	(1,959	)

	Stanadyne Three Months Ended March 31,
	2007		2006
Net income (loss)	$	7,994	$	(704	)
Other comprehensive income, net of tax:
Foreign currency translation adjustments		56		243
Comprehensive income (loss)	$	8,050	$	(461	)

(9) Segments

The Company had two reportable segments, Precision Products and Precision Engine, the latter classified as a discontinued operation as a result of the sale of that segment on July 31, 2006 to Defiance, Inc. Precision Products manufactures its own proprietary products including fuel pumps for diesel and gasoline engines, injectors and filtration systems for diesel engines, and various non-proprietary products manufactured under contract for other companies. The Company’s proprietary products currently account for the majority of Precision Products’ sales. Accordingly, the Company has one reportable segment.

(10) Discontinued Operations

On July 31, 2006, Stanadyne concluded the sale of certain assets and liabilities of Precision Engine Products Corp. to Defiance, Inc. (“Buyer”), according to the terms of the Purchase Agreement entered into on June 30, 2006. Gross proceeds from the sale totaled $25.3 million in cash, including $0.4 million due to a working capital adjustment based on the July 31, 2006 account balances. Gross proceeds were reduced by transaction costs of $0.8 million for net proceeds of $24.5 million of which $23.5 million was applied to a repayment of the Term Loans. The terms of the Purchase Agreement include a potential $10 million earn-out payment based on the achievement of certain performance levels in the twelve months following the sale. Any proceeds related to the earn-out will be recorded as income when earned.

For the three months ended March 31, 2006, loss from discontinued operations of $1.2 million represented the loss from the discontinued operations of the PEPC segment of $1.4 million and related income tax benefit of $0.2 million. The loss did not include any allocation of corporate costs that were previously allocated to the discontinued operations. Those costs are expected to continue in the future and are included in continuing operations. Revenues of the discontinued operations for the three months ended March 31, 2006 were $15.0 million. For the three months ended March 31, 2007, there were no activities related to the discontinued operations.

-16-

STANADYNE HOLDINGS, INC. AND SUBSIDIARIES

STANADYNE CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in thousands, except where noted otherwise)

(11) Supplemental Consolidating Condensed Financial Statements

The Notes issued August 6, 2004 by Stanadyne are guaranteed jointly, fully, severally and unconditionally by PEPC (the “Subsidiary Guarantor”) on a subordinated basis and are not guaranteed by SpA, PEPL and SAPL (the “Non-Guarantor Subsidiaries”).

Supplemental consolidating condensed financial statements for Stanadyne (“Parent”), the Subsidiary Guarantor and the Non-Guarantor Subsidiaries are presented below. Separate complete financial statements of the Subsidiary Guarantor are not required.

-17-

STANADYNE HOLDINGS, INC. AND SUBSIDIARIES

STANADYNE CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in thousands, except where noted otherwise)

(11) Supplemental Consolidating Condensed Financial Statements (continued)

	Stanadyne Corporation and Subsidiaries Consolidating Condensed Balance Sheet March 31, 2007
	Stanadyne Corporation Parent		Subsidiary Guarantor			Non-Guarantor Subsidiaries		Eliminations			Stanadyne Corporation & Subsidiaries
ASSETS
Current assets:
Cash and cash equivalents	$	17,811	$	10		$	321	$	717		$	18,859
Restricted cash		1,091		—			—		—			1,091
Accounts receivable, net		38,037		27			5,758		—			43,822
Inventories, net		29,509		—			7,227		(1,397	)  (a)		35,339
Other current assets		5,208		618			1,048		—			6,874
Total current assets		91,656		655			14,354		(680	)		105,985
Property, plant and equipment, net		74,252		—			21,216		—			95,468
Goodwill		139,065		—			5,510		—			144,575
Intangible and other assets, net		90,580		2,362			433		(2,362	)  (b)		91,013
Investment in subsidiaries		17,123		—			—		(17,123	)  (c)		—
Total assets	$	412,676	$	3,017		$	41,513	$	(20,165	)	$	437,041
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	48,075	$	2,353		$	6,202	$	127		$	56,757
Current maturities of long-term debt and capital lease obligations		—		—			6,025		—			6,025
Total current liabilities		48,075		2,353			12,227		127			62,782
Long-term debt and capital lease obligations		181,200		—			794		—			181,994
Other non-current liabilities		61,900		5,135			8,639		(2,362	)  (b)		73,312
Minority interest in consolidated subsidiary		—		—			—		77			77
Intercompany accounts		3,572		(3,298	)		705		(8	)		971
Stockholders’ equity		117,929		(1,173	)		19,148		(17,999	)  (c)		117,905
Total liabilities and stockholders’ equity	$	412,676	$	3,017		$	41,513	$	(20,165	)	$	437,041

(a) Amount represents the elimination of inventory for out of period transfers with subsidiaries.

(b) Reclassification of deferred tax asset to consolidated net deferred tax liability.

(c) Elimination of investments in subsidiaries of the Parent and Subsidiary Guarantor.

-18-

STANADYNE HOLDINGS, INC. AND SUBSIDIARIES

STANADYNE CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in thousands, except where noted otherwise)

(11) Supplemental Consolidating Condensed Financial Statements (continued)

	Stanadyne Corporation and Subsidiaries Consolidating Condensed Balance Sheet December 31, 2006
	Stanadyne Corporation Parent		Subsidiary Guarantor			Non- Guarantor Subsidiaries		Eliminations			Stanadyne Corporation & Subsidiaries
ASSETS
Cash and cash equivalents	$	24,463	$	9		$	107	$	539		$	25,118
Restricted cash		975		—			—		—			975
Accounts receivable, net		35,031		132			5,641		—			40,804
Inventories, net		27,934		—			8,004		(1,363	)  (a)		34,575
Other current assets		5,526		618			510		—			6,654
Total current assets		93,929		759			14,262		(824	)		108,126
Property, plant and equipment, net		76,420		—			21,719		(22	)		98,117
Intangible and other assets, net		231,175		—			5,945		—			237,120
Deferred taxes		—		2,473			—		(2,473	)  (b)		—
Investment in subsidiaries		14,579		—			—		(14,579	)  (c)		—
Total assets	$	416,103	$	3,232		$	41,926	$	(17,898	)	$	443,363
LIABILITIES AND STOCKHOLDER’S EQUITY
Accounts payable and accrued liabilities	$	54,574	$	2,525		$	7,452	$	143		$	64,694
Current maturities of long-term debt and capital lease obligations		—		—			6,972		—			6,972
Total current liabilities		54,574		2,525			14,424		143			71,666
Long-term debt and capital lease obligations		181,200		—			892		—			182,092
Other non-current liabilities		68,148		5,135			8,676		(2,473	)  (b)		79,486
Intercompany accounts		3,059		(3,265	)		1,410		(313	)		891
Stockholder’s equity		109,122		(1,163	)		16,524		(15,255	)  (c)		109,228
Total liabilities and stockholder’s equity	$	416,103	$	3,232		$	41,926	$	(17,898	)	$	443,363

(a) Amount represents the elimination of inventory for out of period transfers with subsidiaries.

(b) Reclassification of deferred tax asset to consolidated net deferred tax liability.

(c) Elimination of investments in subsidiaries of the Parent and Subsidiary Guarantor.

-19-

STANADYNE HOLDINGS, INC. AND SUBSIDIARIES

STANADYNE CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in thousands, except where noted otherwise)

(11) Supplemental Consolidating Condensed Financial Statements (continued)

	Stanadyne Corporation and Subsidiaries Consolidating Condensed Statement of Operations Three Months Ended March 31, 2007
	Stanadyne Corporation Parent			Subsidiary Guarantor			Non- Guarantor Subsidiaries			Eliminations			Stanadyne Corporation & Subsidiaries
Net sales	$	70,386		$	—		$	6,968		$	(2,867	)  (a)	$	74,487
Cost of goods sold		51,517			—			7,818			(2,787	)  (a)		56,548
Gross profit (loss)		18,869			—			(850	)		(80	)		17,939
Selling, general, administrative and other operating income (expenses)		(119	)		8			508			—			397
Operating income (loss)		18,988			(8	)		(1,358	)		(80	)		17,542
Interest expense		(4,674	)		—			(69	)		—			(4,743	)
Income (loss) from continuing operations before income tax expense (benefit) and minority interest		14,314			(8	)		(1,427	)		(80	)		12,799
Income tax expense (benefit)		5,356			2			(630	)		—			4,728
Income (loss) from continuing operations before minority interest		8,958			(10	)		(797	)		(80	)		8,071
Minority interest in income of consolidated subsidiary		—			—			—			(77	)		(77	)
Net income (loss)	$	8,958		$	(10	)	$	(797	)	$	(157	)	$	7,994
	Stanadyne Corporation and Subsidiaries Consolidating Condensed Statement of Operations Three Months Ended March 31, 2006
	Stanadyne Corporation Parent			Subsidiary Guarantor			Non- Guarantor Subsidiaries			Eliminations			Stanadyne Corporation & Subsidiaries
Net sales	$	71,463		$	—		$	6,097		$	(1,821	)  (a)	$	75,739
Cost of goods sold		53,624			—			6,624			(1,752	)  (a)		58,496
Gross profit (loss)		17,839			—			(527	)		(69	)		17,243
Selling, general, administrative and other operating expenses		11,284			—			477			—			11,761
Operating income (loss)		6,555			—			(1,004	)		(69	)		5,482
Interest		(5,105	)		—			(45	)		—			(5,150	)
Income (loss) from continuing operations before income tax expense (benefit) and minority interest		1,450			—			(1,049	)		(69	)		332
Income tax (benefit) expense		(405	)		—			317			—			(88	)
Income (loss) from continuing operations before minority interest		1,855			—			(1,366	)		(69	)		420
Minority interest in loss of consolidated subsidiary		—			—			—			55			55
Income (loss) from continuing operations		1,855			—			(1,366	)		(14	)		475
(Loss) income from discontinued operations		—			(1,267	)		142			(54	)		(1,179	)
Net income (loss)	$	1,855		$	(1,267	)	$	(1,224	)	$	(68	)	$	(704	)

(a) Elimination of intercompany sales and cost of goods sold.

-20-

STANADYNE HOLDINGS, INC. AND SUBSIDIARIES

STANADYNE CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in thousands, except where noted otherwise)

(11) Supplemental Consolidating Condensed Financial Statements (continued)

	Stanadyne Corporation and Subsidiaries Consolidating Condensed Statement of Cash Flows Three Months Ended March 31, 2007
	Stanadyne Corporation Parent			Subsidiary Guarantor			Non- Guarantor Subsidiaries			Eliminations			Stanadyne Corporation & Subsidiaries
Cash flows from operating activities:
Net income (loss)	$	8,958		$	(10	)	$	(797	)	$	(157	)	$	7,994
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization		4,585			—			898			—			5,483
Amortization of deferred financing fees		506			—			—			—			506
Stock-based compensation expense		88			—			—			—			88
Other adjustments		3,571			112			(717	)		—			2,966
Loss applicable to minority interest		—			—			—			77			77
Changes in operating assets and liabilities		(20,453	)		(205	)		(1,139	)		328			(21,469	)
Net cash used in operating activities		(2,745	)		(103	)		(1,755	)		248			(4,355	)
Cash flows from investing activities:
Increase in restricted cash		(116	)		—			—			—			(116	)
Capital expenditures		(467	)		—			(440	)		(23	)		(930	)
Net proceeds from sale of discontinued operations		—			104			—			—			104
Investment in subsidiary		(3,351	)		—			—			3,351			—
Net cash (used in) provided by investing activities		(3,934	)		104			(440	)		3,328			(942	)
Cash flows from financing activities:
Net payments on debt		—			—			(1,010	)		—			(1,010	)
Net proceeds from equity		—			—			3,385			(3,385	)		—
Net cash (used in) provided by financing activities		—			—			2,375			(3,385	)		(1,010	)
Net (decrease) increase in cash and cash equivalents		(6,679	)		1			180			191			(6,307	)
Effect of exchange rate changes on cash		27			—			35			(14	)		48
Cash and cash equivalents at beginning of period		24,462			9			107			540			25,118
Cash and cash equivalents at end of period	$	17,810		$	10		$	322		$	717		$	18,859

-21-

STANADYNE HOLDINGS, INC. AND SUBSIDIARIES

STANADYNE CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in thousands, except where noted otherwise)

(11) Supplemental Consolidating Condensed Financial Statements (concluded)

	Stanadyne Corporation and Subsidiaries Consolidating Condensed Statement of Cash Flows Three Months Ended March 31, 2006
	Stanadyne Corporation Parent			Subsidiary Guarantor			Non- Guarantor Subsidiaries			Eliminations			Stanadyne Corporation & Subsidiaries
Cash flows from operating activities:
Net income (loss)	$	1,856		$	(1,268	)	$	(1,224	)	$	(68	)	$	(704	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		4,733			653			845			—			6,231
Amortization of deferred financing fees		506			—			—			—			506
Other adjustments		(517	)		1,026			201			(28	)		682
Loss applicable to minority interest		—			—			—			(55	)		(55	)
Changes in operating assets and liabilities		(6,234	)		746			(1,697	)		484			(6,701	)
Net cash provided by (used in) operating activities		344			1,157			(1,875	)		333			(41	)
Cash flows from investing activities:
Capital expenditures		(2,593	)		(1,211	)		(207	)		108			(3,903	)
Proceeds from disposal of property, plant and equipment		—			385			—			(108	)		277
Net cash used in investing activities		(2,593	)		(826	)		(207	)		—			(3,626	)
Cash flows from financing activities:
Net (payments on) proceeds from debt		(163	)		—			1,852			—			1,689
Net cash (used in) provided by financing activities		(163	)		—			1,852			—			1,689
Net (decrease) increase in cash and cash equivalents		(2,412	)		331			(230	)		333			(1,978	)
Effect of exchange rate changes on cash		4			—			11			(76	)		(61	)
Cash and cash equivalents at beginning of period		22,376			14			460			231			23,081
Cash and cash equivalents at end of period	$	19,968		$	345		$	241		$	488		$	21,042

-22-

STANADYNE HOLDINGS, INC. AND SUBSIDIARIES

STANADYNE CORPORATION AND SUBSIDIARIES

ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(1) Overview

This Management Discussion and Analysis of Financial Condition and Results of Operations reflects the results of operations and financial condition of Holdings and its subsidiaries, which are materially the same as the results of operations and financial condition of Stanadyne and its subsidiaries. Therefore, the discussions provided are applicable to both Holdings and Stanadyne except where otherwise noted.

We are a leading designer and manufacturer of highly-engineered, precision manufactured engine components, primarily for the off-highway markets. We manufacture our own proprietary products including fuel pumps for diesel and gasoline engines, injectors and filtration systems for diesel engines, and various non-proprietary products manufactured under contract for other companies.

On July 31, 2006, Stanadyne concluded the sale of certain assets and liabilities of Precision Engine Products Corp. (“PEPC” or “Precision Engine”) to Defiance, Inc., a part of GenTek, Inc. The sale included the U.S.-based assets of PEPC, certain acquired liabilities as defined in the Purchase Agreement, and all of the stock in PEPC’s wholly-owned subsidiary in Brazil, Precision Engine Products, Ltda. We no longer report segment information since, subsequent to the sale of Precision Engine, we operate only the Precision Products business. The results of operations for Precision Engine are classified as discontinued operations for all periods herein.

Sales in the first quarter of 2007 totaled $74.5 million and were $1.2 million less than sales in the first quarter of 2006. Continued strength in our end markets for off-highway equipment used in agricultural, industrial and construction activities as well as the select on-highway applications we produce, drove sales to our Original Equipment Manufacturers (“OEMs”) in the first quarter of 2007 higher by 5.2%. Sales to the service markets in the first quarter of 2007 decreased $3.6 million or 11.8% compared to the first quarter of 2006 due primarily to an expected decline in demand from General Motors (“GM”) for diesel fuel pumps, as vehicles age and go out of service.

Operating income for the first quarter of 2007 totaled $17.5 million and 23.6% of net sales, including a one time curtailment gain of $10.0 million as a result of the amendment made to our defined benefit pension plans. The pension plan amendment reduced the amount of future benefits that would have been payable by freezing the level of benefits earned as of March 31, 2007. Effective April 1, 2007, Stanadyne increased the level of company contributions available to employees participating in the 401(k) plan. These changes are intended to provide employees with more visibility and control of their plans for retirement.

Operating income excluding the curtailment gain totaled $7.5 million and 10.1% of net sales in the first quarter of 2007 versus $5.4 million and 7.2% of net sales for the first quarter of 2006. This $2.1 million improvement was due to a combination of higher gross profit and lower SG&A costs. Our gross profit in the first quarter of 2007 improved overall by $0.7 million due primarily to a $1.2 million impact from sales volume, mix and price changes, partially offset by $0.7 million lower gross profit in our Brescia, Italy plant. SG&A costs in the first quarter of 2007 were lower primarily as a result of the $1.8 million severance costs recorded in the first quarter of 2006.

Stanadyne’s liquidity remained strong in the first quarter of 2007, with cash on hand of $20.2 million, including $1.1 million of restricted cash, and $27.5 million of availability on the U.S.-based Revolving Credit Facility.

In February, 2007, Stanadyne obtained permission from the Peoples Republic of China to establish a wholly-owned manufacturing entity in the Changshu development zone. Located 90 kilometers from Shanghai, the Changshu plant is being leased from the local development zone and is scheduled to be operational by the end of 2007. This plant will produce engine components for use by Cummins Engine Company in China and will require approximately $3.5 million of capital investment this year. The annual revenues are expected to be minor relative to our overall sales. We believe establishing a manufacturing presence in China with an existing customer is a strategically important step in realizing the opportunities for our business in the Asian markets.

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Basis of Presentation

The following table displays unaudited information for the three month periods ended March 31, 2007 and 2006 for Holdings and Stanadyne. Amounts are presented in thousands of dollars and as a percentage of net sales. Historical results and percentage relationships are not necessarily indicative of the results that may be expected for any future period.

	Holdings
	Three months ended March 31, 2007				Three months ended March 31, 2006
	$		%		$		%
Net sales	74,487		100.0		75,739		100.0
Cost of goods sold	56,548		75.9		58,496		77.2
Gross profit	17,939		24.1		17,243		22.8
SG&A	9,219		12.4		10,593		14.0
Amortization of intangibles	1,024		1.4		1,024		1.4
Management fees	188		0.3		188		0.2
Pension liability curtailment gain	(10,015	)	(13.4	)	—		0.0
Operating income	17,523		23.5		5,438		7.2
Income (loss) from continuing operations	6,344		8.5		(1,023	)	(1.4	)
Loss from discontinued operations	—		—		(1,179	)	(1.6	)
Net income (loss)	6,344		8.5		(2,202	)	(2.9	)

	Stanadyne
	Three months ended March 31, 2007				Three months ended March 31, 2006
	$		%		$		%
Net sales	74,487		100.0		75,739		100.0
Cost of goods sold	56,548		75.9		58,496		77.2
Gross profit	17,939		24.1		17,243		22.8
SG&A	9,200		12.4		10,549		13.9
Amortization of intangibles	1,024		1.4		1,024		1.4
Management fees	188		0.3		188		0.2
Pension liability curtailment gain	(10,015	)	(13.4	)	—		0.0
Operating income	17,542		23.6		5,482		7.2
Income from continuing operations	7,994		10.7		475		0.6
Loss from discontinued operations	—		—		(1,179	)	(1.6	)
Net income (loss)	7,994		10.7		(704	)	(0.9	)

Comparison of Results of Operations:

The Three Months Ended March 31, 2007 for Holdings and Stanadyne

Compared to

The Three Months Ended March 31, 2006 for Holdings and Stanadyne

Net Sales. Net sales for the three months ended March 31, 2007 totaled $74.5 million and were $1.2 million less than the $75.7 million for the comparable period in 2006. This 1.7% decrease in first quarter sales resulted from a decline in service revenues.

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Sales to our OEM customers comprised 63.8% of our first quarter 2007 sales as compared to 59.6% of first quarter 2006 sales, representing an increase of $2.4 million or 5.2%. Higher OEM revenues were primarily due to higher demand for our fuel injection equipment from Deere & Company (“Deere”) and Daimler-Benz. Sales to Deere in the first quarter of 2007 increased by $3.1 million or 10.3% and included the impact of higher prices integral to the renewal of the supply agreement. Sales of the new high pressure gasoline injection pump to Daimler Benz represented $1.4 million in additional OEM sales. Higher first quarter OEM sales were partially offset by lower demand for diesel fuel injection pumps supplied to General Engine Products for the military HUMMV.

Sales to the service markets in the first quarter of 2007 decreased $3.6 million or 11.8% compared to the first quarter of 2006. Service demand from GM for diesel fuel pumps continued to decline as expected as vehicles age and go out of service. GM also reduced their inventory of our service pumps during the first quarter of 2007, further reducing service sales. As a result, our first quarter 2007 sales to GM were approximately $5.3 million less than in the same period in 2006. Strength in the parts aftermarket in the first quarter of 2007 provided $1.3 million in higher sales as compared to the same period in 2006 and helped offset the decline in GM sales.

Sales by major product line in the first quarter of 2007 when compared to the same period of 2006 reflected increases in our fuel injector and fuel filtration sales, partially offset by sales declines in our fuel pump and Precision Components and Assembly (“PCA”) business.

Gross Profit.Our gross profit totaled $17.9 million and 24.1% of net sales in the first quarter of 2007, and compared favorably to the $17.2 million and 22.8% of net sales for the same period in 2006. Although the first quarter gross profit was negatively impacted by lower sales volume to the more profitable service customers noted above, this was offset by improved pricing. The 2007 first quarter gross profit improved overall by $0.7 million due primarily to a $1.2 million impact of sales volume, mix and price changes, partially offset by $0.7 million lower gross profit in our Stanadyne, SpA plant. The reorganization of the Brescia, Italy plant into a more “lean” operation began in the fourth quarter of 2006. During the first quarter of 2007 as the inventory levels decreased, machine reliability problems and lack of adequate cross-training of our workforce interrupted production flow, resulting in higher operating costs. Corrective actions are underway in the second quarter of 2007 that should be reflected in the results later this year.

Selling, General and Administrative Expenses (“SG&A”).SG&A totaled $9.2 million or 12.4% of net sales in the first quarter of 2007 as compared to $10.5 million or 13.9% of net sales for the same period of 2006. This $1.3 million decrease was due primarily to $1.8 million of severance benefits for the former CEO and $0.2 million higher stock-based compensation expense both recorded in the first quarter of 2006, offset by $0.5 million of higher research and development costs recorded in the first quarter of 2007.

Pension Curtailment Gain. Changes to the U.S.-based defined benefit pension plans in the first quarter of 2007 resulted in a curtailment of the liability associated with future benefits. Effective March 31, 2007, Stanadyne amended the Stanadyne Corporation Pension Plan (a defined benefit plan) to freeze the benefits for all participants so that no future benefits will accrue after that date. The effect of the Pension Plan freeze resulted in curtailment gain of $10.0 million. This one-time curtailment gain is equal to the reduction in the projected benefit obligations (PBO) due to the freeze, offset by any unrecognized losses immediately prior to the freeze, plus any remaining unrecognized prior service costs.

Amortization of Intangible Assets.Amortization of intangible assets totaled $1.0 million in the first quarters of 2007 and 2006.

Operating Income. First quarter 2007 operating income totaled $17.5 million and 23.6% of net sales versus $5.5 million and 7.2% of net sales for the same period in 2006. This $12.0 million increase in first quarter operating profit resulted from the $10.0 million pension liability curtailment gain, a $0.7 million increase in gross profit and $1.3 million lower SG&A costs.

Income (Loss) from Continuing Operations. Income from continuing operations for Stanadyne in the first quarter of 2007 totaled $8.0 million and 10.7% of net sales versus income from continuing operations of $0.5 million or 0.6% of net sales reported for the first quarter of 2006. This $7.5 million increase in income from continuing operations resulted from the combined result of $12.0 million higher operating income and $0.3 million lower interest expense on reduced debt levels, partially offset by a $4.8 million in higher income taxes.

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Income from continuing operations for Holdings in the first quarter of 2007 totaled $6.3 million versus a loss of $1.0 million in the first quarter of 2006. This improvement in income from continuing operations was $0.2 million less than the amounts reported for Stanadyne due to $0.2 million of additional first quarter interest expense on the Discount Notes.

Loss From Discontinued Operations. Losses from discontinued operations in the first quarter of 2006 of $1.2 million, as reflected in the accompanying condensed consolidated statements of operations, represented the loss from operations of the former Precision Engine segment of $1.4 million, net of related income tax benefits of $0.2 million.

Liquidity and Capital Resources

Stanadyne’s principal sources of liquidity are cash on hand and cash flows from operations, supplemented by a U.S.-based revolving credit facility under which $27.5 million was available for borrowing as of March 31, 2007. Stanadyne occasionally utilizes capital leasing and, for its foreign operations in Italy and India, maintains a combination of overdraft, working capital and term loan facilities with local financial institutions on an as-needed basis.

As of March 31, 2007, there were borrowings of $21.2 million under the Term Loans, no borrowings under the Revolving Credit Line, $5.1 million in foreign overdraft facilities and $1.0 million in foreign term loans. Unless the availability of funds under the Revolving Credit Line is less than $5.0 million, the U.S.-based Senior Credit Facilities are not subject to financial covenants. Cash on hand totaled $20.2 million on March 31, 2007 and included $1.1 million of restricted cash from the sale of the former Precision Engine segment.

Holdings has no independent financial resources of its own. The Senior Bank Facility and the indenture governing the Notes limit the ability of Stanadyne and its subsidiaries to pay dividends or make other distributions to Holdings.

Cash Flows From Operating Activities. Stanadyne’s net cash flows from operating activities for the three months ended March 31, 2007 were negative $4.4 million as compared to zero or breakeven in the first quarter of 2006. Cash flows from operating activities before changes in asset and liability accounts reflected $0.4 million more cash in the first three months of 2007 than in the same period in 2006. Higher gross profit and lower SG&A and interest costs in the first quarter of 2007 were partially offset by higher income taxes.

Changes in asset and liability accounts, primarily working capital accounts, excluding the $10.0 million curtailment of the pension benefits liability, required $4.8 million more cash in the first three months of 2007 versus the comparable period in 2006. Increases in accounts receivable and inventories required $1.9 million less cash in the first quarter of 2007 when compared to the first quarter of 2006. This improvement in first quarter 2007 cash flow was offset by $1.9 million less cash from an income tax refund received in the first quarter of 2006. Finally, $4.9 million more cash was consumed in the first quarter of 2007 due to a $ 1.2 million reduction in accounts payable and payments from accrued liability balances, including $0.6 million in employee severance benefits, $0.4 million in payroll taxes and $1.2 million in federal income taxes.

Cash flows from operating activities for Holdings for the three months ended March 31, 2007 were identical to the amounts reported for Stanadyne.

Cash Flows From Investing Activities. Cash flows from investing activities for the three months ended March 31, 2007 were $0.9 million. Capital expenditures for the first quarter of 2007 totaled $0.9 million compared to $3.9 million for the same period in 2006. Capital expenditures in 2007 reflect amounts applied to increased capacity, cost reduction, quality enhancements, safety and ergonomics improvements and general maintenance projects, as well as less than $0.1 million for the start-up activities in the new Changshu, China location. Capital expenditures in 2006 included $1.2 million expended in the former Precision Engine segment.

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Cash Flows From Financing Activities. Cash flows from financing activities for Stanadyne and Holdings in the first three months of 2007 resulted in a net reduction in cash of $1.0 million compared to an increase in cash of $1.7 million for the same period of 2006.

There were no cash flows from financing activities in our U.S.-based operations during the first quarter of 2007. Remaining balances under the Term Loan are not due until 2010. There were no borrowings under the U.S.-based Revolving Credit Line as of March 31, 2007 and 2006, which after reductions for outstanding letters of credit, represented $27.5 million of available liquidity at each date, respectively.

Cash flows from financing activities in our foreign operations in the first three months of 2007 included a reduction in overdraft borrowings of $0.8 million at SpA as well as payments of capital lease obligations totaling $0.1 million this year. Cash flows from financing activities in SAPL reflected a net reduction of $0.1 million in outstanding indebtedness, comprised of a scheduled installment against the term loan and a reduction in overdraft borrowings.

Pension Plans. We maintain a qualified defined benefit pension plan (the “Qualified Plan”), which covers substantially all domestic hourly and salary employees and an unfunded nonqualified plan to provide benefits in excess of amounts permitted to be paid under the provisions of the tax law to participants in the Qualified Plan.

The value of the Qualified Plan assets increased to $72.9 million at December 31, 2006 from $66.8 million at December 31, 2005. Solid investment performance in 2006 coupled with a 25 basis point increase in the discount rate were not sufficient to offset the growth in the unfunded pension obligation due to period interest and service costs. The Qualified Plan unfunded benefit obligation increased to $30.0 million at December 31, 2006 from $26.9 million at December 31, 2005. The Company’s minimum required contribution in 2007 is $6,472. This contribution, due in September 2007, is subject to change as a result of amendments to the pension plan described below.

Effective March 31, 2007, Stanadyne amended the Stanadyne Corporation Pension Plan (a defined benefit plan) (the “Pension Plan”) to freeze the Pension Plan with respect to all participants so that no future benefits will accrue after that date. As required by law, benefits already accrued as of such date will not be affected. With respect to such benefits, participants continue to vest and all other retirement options, including early retirement reduction factors, continue unchanged. The assets continue to be held in trust for participants until they retire. The accrual of benefits for certain executives participating in the Supplemental Retirement Benefit Plan is based on the accrual of benefits under the Pension Plan. Therefore, the freeze of the Pension Plan also resulted in the freeze of the Supplemental Retirement Benefit Plan.

The effect of the Pension Plan freeze resulted in curtailment gains of $9,996 for the Pension Plan and $19 for the Supplemental Retirement Benefit Plan. These one-time curtailment gains are equal to the reduction in the plans’ projected benefit obligations (“PBO”) due to the freeze of $9,382 and unrecognized prior service costs of $633.

(2) New Accounting Pronouncements

In July 2006, FASB issued Interpretation 48, “Accounting for Uncertainty in Income Taxes—An Interpretation of Statement of Financial Accounting Standards No. 109” (“FIN 48”). FIN 48 provides guidance on the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on accounting for derecognition, classification, interest and penalties in interim periods, disclosures and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. The adoption of FIN 48, effective January 1, 2007, resulted in a reduction of recorded tax contingencies and an increase to retained earnings of approximately $627.

In September 2006, FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension Plan and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106 and 132(R)” (“SFAS 158”). SFAS 158 requires an employer to: (a) recognize in its statement of financial position an asset for a plan’s over-funded status or a liability for a plan’s under-funded status; (b) measure a plan’s assets and its obligations that determine its funded status as of the end of the employer’s fiscal year (with limited exceptions); (c) recognize changes in the funded status of its defined benefit postretirement plan in which the changes occur as a component of accumulated

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other comprehensive income (loss). SFAS 158 is effective for the Company as of December 31, 2007. The Company is currently evaluating the impact the adoption of SFAS 158 will have on its consolidated financial statements.

(3) Critical Accounting Policies

We prepare our condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America. As such, we are required to make certain estimates, judgments and assumptions that we believe are reasonable based upon the information available. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. The significant accounting policies which we believe are the most critical to aid in fully understanding and evaluating our reported financial results include: product warranty reserves, inventory reserves for excess or obsolescence, pension and postretirement benefit liabilities, self-insurance reserves and stock-based compensation.

Product Warranty Reserves. We provide a limited warranty for specific products and recognize the projected cost for this warranty in the period the products are sold. Liability reserves are determined by applying historical warranty experience rates to current period product sales. Warranty accruals are adjusted for known or anticipated warranty claims as new information becomes available.

Inventory Reserves. We maintain our inventories at the lower of cost or market value. Cost is determined on a last-in, first-out (“LIFO”) basis for all domestic inventory and on a first-in, first-out (“FIFO”) basis for all foreign inventory. When conditions warrant (usually highlighted by slow-moving product or products with pricing constraints), reserves are established to reduce the value of inventory to net realizable values. Annually, we review and identify all inventories in excess of three years sales requirements. We reserve for this “slow moving” inventory as it has no realizable value. If business conditions change during the year, this evaluation is conducted more frequently.

Pension and Other Postretirement Benefits. We provide for pension and other postretirement benefits and make assumptions with the assistance of independent actuaries about discount rates, expected long-term rates of return on plan assets and health care cost trends to determine the net periodic pension and postretirement health care cost. These estimates are based on our best judgment, including consideration of both current and future market conditions. We consider both internal and external evidence to determine the appropriate assumptions. In the event a change in any of the assumptions is warranted, future pension cost as determined under Statement of Financial Accounting Standards No. 87 “Employers’ Accounting for Pensions” could increase or decrease.

Self-Insurance Reserves. We are self-insured for a substantial portion of our health care and workers’ compensation insurance programs. With advice and assistance from outside experts, reserves are established using estimates based on, among other factors, reported claims to date, prior claims history, and projections of claims incurred but not reported. Future medical cost trends are incorporated in the projected costs to settle existing claims. If actual results in any of these areas change from prior periods, adjustments to recorded reserves may be required.

Stock-Based Compensation. We adopted SFAS 123R effective January 1, 2006 using the modified prospective method in which compensation cost is recognized over the service period for all awards granted subsequent to our adoption of SFAS 123R as well as for the unvested portions of awards outstanding on the date of our adoption of SFAS 123R. SFAS 123R establishes fair value as the measurement objective in accounting for share-based payment arrangements and requires all entities to apply a fair-value-based measurement method in accounting for share-based payment transactions with employees, except for equity instruments held by employee share ownership plans.

(4) Cautionary Statement

This quarterly report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including, without limitation, statements with respect to the financial condition, results of operations and business of the Company and management’s discussion and analysis of financial condition and results of operations. Forward-looking statements

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generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “project,” or “continue” or the negative thereof or other similar words. From time to time, we also may provide oral or written forward-looking statements in other materials we release to the public. Any or all of our forward-looking statements in this report and in any public statements we make may turn out to be wrong. They can be affected by inaccurate assumptions we might make or by known or unknown risks or uncertainties. Consequently, no forward-looking statements can be guaranteed. Actual results may vary materially.

Investors are cautioned not to place undue reliance on any forward-looking statements. Investors should also understand that it is not possible to predict or identify all the risks and uncertainties that could affect future events and should not consider the following list to be a complete statement of all potential risks and uncertainties.

Any change in the following factors may materially adversely affect our business and our financial results:

• changes in technology, manufacturing techniques or customer demands;

• loss or adverse change in our relationship with our material customers;

• changes in the performance or growth of our customers;

• increased competition and pricing pressures in our existing and future markets;

• changes in the price and availability of raw materials, particularly steel and aluminum;

• risks associated with international operations;

• the loss of key members of management;

• risk that our intellectual property may be misappropriated;

• loss of any of our key manufacturing facilities;

• adverse state or federal legislative or regulatory developments or litigation or other disputes;

• changes in the business, market trends, projected growth rates and general economic conditions related to the markets in which we operate, including agricultural and construction equipment, industrial machinery, trucks, marine equipment and automobiles;

• our ability to satisfy our debt obligations, including related covenants; and

• increases in our cost of borrowing or inability or unavailability of additional debt or equity capital.

The forgoing factors are not exhaustive, and new factors may emerge or changes to the foregoing factors may occur that could impact our business. Except to the extent required by law, we undertake no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

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ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to market risks which include changes in interest rates and changes in foreign currency exchange rates as measured against the U.S. dollar.

Interest Rate Risk. The carrying values of Stanadyne’s revolving credit lines and term loans approximate fair value. The term loans are primarily LIBOR-based borrowings and are re-priced every one to three months. A 10% change in the interest rate on the term loans would have changed the recorded interest expense for the first three months of 2007 by $0.05 million. The Notes and Discount Notes bear interest at a fixed rate and, therefore, are not sensitive to interest rate fluctuation. The fair value of Stanadyne’s $160.0 million in Notes based on bid prices on March 31, 2007 was approximately $169.0 million. The fair value of Holdings’ Discount Notes based on bid prices at March 31, 2007 was $79.6 million.

Foreign Currency Risk. The Company has a subsidiary in Italy, a joint venture in India and a branch office in France, and therefore is exposed to changes in foreign currency exchange rates. Changes in exchange rates may positively or negatively affect the Company’s sales, gross margins, and retained earnings. However, historically, these locations have contributed less than 15% of the Company’s net sales and retained earnings, with most of these sales attributable to the Italian subsidiary. The Company also sells its products from the United States to foreign customers for payment in foreign currencies as well as U.S. dollars. Foreign currency exchange was immaterial to continuing operations for the three months ended March 31, 2007 and 2006. Foreign currency exchange for discontinued operations was related to the Company’s operations in Brazil. Foreign currency exchange for the three months ended March 31, 2007 was a net loss of $0.04 million compared to a net difference of approximately zero for the three months ended March 31, 2006. The Company does not hedge against foreign currency risk.

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STANADYNE HOLDINGS, INC. AND SUBSIDIARIES

STANADYNE CORPORATION AND SUBSIDIARIES

ITEM 4: CONTROLS AND PROCEDURES

(a) Evaluation of disclosure controls and procedures

As of the end of the period covered by this quarterly report, an evaluation of the effectiveness of the design and operation of Holdings’ disclosure controls and procedures was conducted under the supervision and with the participation of the President and Chief Financial Officer of Holdings. Based on this evaluation, the President and Chief Financial Officer of Holdings have concluded that Holdings’ disclosure controls and procedures were adequate and designed to ensure that information required to be disclosed by Holdings in this report is recorded, processed, summarized and reported in a timely manner, including that such information is accumulated and communicated to management, including the President and Chief Financial Officer of Holdings, as appropriate to allow timely decisions regarding required disclosure.

As of the end of the period covered by this quarterly report, an evaluation of the effectiveness of the design and operation of Stanadyne’s disclosure controls and procedures was conducted under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer of Stanadyne. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer of Stanadyne have concluded that Stanadyne’s disclosure controls and procedures were adequate and designed to ensure that information required to be disclosed by Stanadyne in this report is recorded, processed, summarized and reported in a timely manner, including that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer of Stanadyne, as appropriate to allow timely decisions regarding required disclosure.

(b) Changes in internal controls

There was no change in internal control over financial reporting that materially affected or is reasonably likely to materially affect Holdings’ internal control over financial reporting, including any corrective actions with regard to significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, subsequent to the evaluation described above.

Reference is made to the Certifications of the President and Chief Financial Officer of Holdings about these and other matters filed as exhibits to this report.

There was no change in internal control over financial reporting that materially affected or is reasonably likely to materially affect Stanadyne’s internal control over financial reporting, including any corrective actions with regard to significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, subsequent to the evaluation described above.

Reference is made to the Certifications of the Chief Executive Officer and Chief Financial Officer of Stanadyne about these and other matters filed as exhibits to this report.

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PART II: OTHER INFORMATION

ITEM 6: EXHIBITS

31.1	Certification of President of Stanadyne Holdings, Inc. Pursuant to Rule 15d-14(a) of the Securities Exchange Act as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer of Stanadyne Holdings, Inc. Pursuant to Rule 15d-14(a) of the Securities Exchange Act as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.3	Certification of Chief Executive Officer of Stanadyne Corporation Pursuant to Rule 15d-14(a) of the Securities Exchange Act as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.4	Certification of Chief Financial Officer of Stanadyne Corporation Pursuant to Rule 15d-14(a) of the Securities Exchange Act as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of President and Chief Financial Officer of Stanadyne Holdings, Inc. Pursuant to Rule 15d-14(b) of the Securities Exchange Act and 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Executive Officer and Chief Financial Officer of Stanadyne Corporation Pursuant to Rule 15d-14(b) of the Securities Exchange Act and 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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Signature

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.

	Stanadyne Holdings, Inc.
	(Registrant)
Date: May 15, 2007	/s/ Stephen S. Langin
	Stephen S. Langin
	Chief Financial Officer

Signature

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.

	Stanadyne Corporation
	(Registrant)
Date: May 15, 2007	/s/ Stephen S. Langin
	Stephen S. Langin
	Vice President and Chief Financial Officer

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EXHIBIT INDEX:

31.1	Certification of President of Stanadyne Holdings, Inc. Pursuant to Rule 15d-14(a) of the Securities Exchange Act as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer of Stanadyne Holdings, Inc. Pursuant to Rule 15d-14(a) of the Securities Exchange Act as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.3	Certification of Chief Executive Officer of Stanadyne Corporation Pursuant to Rule 15d-14(a) of the Securities Exchange Act as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.4	Certification of Chief Financial Officer of Stanadyne Corporation Pursuant to Rule 15d-14(a) of the Securities Exchange Act as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of President and Chief Financial Officer of Stanadyne Holdings, Inc. Pursuant to Rule 15d-14(b) of the Securities Exchange Act and 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Executive Officer and Chief Financial Officer of Stanadyne Corporation Pursuant to Rule 15d-14(b) of the Securities Exchange Act and 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002