Robbins & Myers 10-Q 2010 Q3 Quarterly report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the Quarterly Period Ended May 31, 2010

File Number 001-13651

Robbins & Myers, Inc.

(Exact name of registrant as specified in its charter)

Ohio	31-0424220
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

51 Plum Street, Suite 260, Dayton, Ohio	45440
(Address of Principal executive offices)	(Zip Code)

(937) 458-6600
(Registrant’s telephone number, including area code)

None
(Former name, former address and former fiscal year, if changed since last report)

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. YESþ NOo

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YESo NOo

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

Large accelerated filero	Accelerated filerþ	Non-accelerated filero	Smaller reporting companyo
		(Do not check if a smaller reporting company)

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

Common shares, without par value, outstanding as of May 31, 2010: 32,946,912

TABLE OF CONTENTS

CONSOLIDATED CONDENSED BALANCE SHEET
CONSOLIDATED CONDENSED INCOME STATEMENT
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
	Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3. Quantitative and Qualitative Disclosures About Market Risk
	Item 4. Controls and Procedures
Part II—Other Information
	Item 1A. Risk Factors
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
	Item 6. Exhibits
SIGNATURES
INDEX TO EXHIBITS
EX-31.1
EX-31.2
EX-32.1
EX-32.2

ROBBINS & MYERS, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEET
(In thousands)

	May 31,			August 31,
	2010			2009
	(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	122,697		$	108,169
Accounts receivable		104,050			114,191
Inventories:
Finished products		32,286			33,034
Work in process		39,921			37,984
Raw materials		29,635			34,754
		101,842			105,772
Other current assets		10,869			11,573
Deferred taxes		11,218			12,519
Total Current Assets		350,676			352,224
Goodwill		258,800			267,687
Other Intangible Assets		3,611			5,789
Deferred Taxes		24,692			26,477
Other Assets		9,474			9,490
Property, Plant and Equipment		296,850			303,448
Less accumulated depreciation		(173,932	)		(168,261	)
		122,918			135,187
TOTAL ASSETS	$	770,171		$	796,854
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable	$	53,041		$	55,918
Accrued expenses		80,227			68,059
Current portion of long-term debt		641			30,194
Total Current Liabilities		133,909			154,171
Long-Term Debt—Less Current Portion		161			265
Deferred Taxes		43,867			44,194
Other Long-Term Liabilities		112,056			115,113
Robbins & Myers, Inc. Shareholders’ Equity:
Common stock		153,182			150,344
Retained earnings		358,800			344,530
Accumulated other comprehensive loss		(46,488	)		(25,923	)
Total Robbins & Myers, Inc. Shareholders’ Equity		465,494			468,951
Noncontrolling Interest		14,684			14,160
Total Equity		480,178			483,111
TOTAL LIABILITIES AND EQUITY	$	770,171		$	796,854

See Notes to Consolidated Condensed Financial Statements

2

ROBBINS & MYERS, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED INCOME STATEMENT

(In thousands, except per share data)
(Unaudited)

	Three Months Ended				Nine Months Ended
	May 31,				May 31,
	2010		2009		2010		2009
Net sales	$	146,965	$	143,375	$	406,297	$	485,171
Cost of sales		95,587		93,582		269,955		310,626
Gross profit		51,378		49,793		136,342		174,545
Selling, general & administrative expenses		38,300		37,398		106,982		114,921
Income before interest and income taxes		13,078		12,395		29,360		59,624
Interest expense, net		102		99		406		242
Income before income taxes		12,976		12,296		28,954		59,382
Income tax expense		4,650		1,628		9,949		15,875
Net income including noncontrolling interest		8,326		10,668		19,005		43,507
Less: Net income attributable to noncontrolling interest		164		382		620		950
Net income attributable to Robbins & Myers, Inc.	$	8,162	$	10,286	$	18,385	$	42,557
Net income per share:
Basic	$	0.25	$	0.31	$	0.56	$	1.28
Diluted	$	0.25	$	0.31	$	0.56	$	1.28
Weighted average common shares outstanding:
Basic		32,941		32,829		32,913		33,353
Diluted		33,016		32,845		32,973		33,365
Dividends per share:
Declared	$	0.0425	$	0.0400	$	0.1250	$	0.1175
Paid	$	0.0425	$	0.0400	$	0.1250	$	0.1175

See Notes to Consolidated Condensed Financial Statements

3

ROBBINS & MYERS, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)

	Nine Months Ended
	May 31,
	2010			2009
Operating Activities:
Net income including noncontrolling interest	$	19,005		$	43,507
Adjustments to reconcile net income to net cash and cash equivalents provided by operating activities:
Depreciation		11,646			11,233
Amortization		485			911
Net gain on asset sales		(547	)		—
Stock compensation expense		2,200			2,661
Changes in operating assets and liabilities:
Accounts receivable		4,954			32,461
Inventories		(1,070	)		(15,711	)
Accounts payable		(877	)		(31,470	)
Accrued expenses		18,532			(20,002	)
Other		2,786			1,495
Net Cash and Cash Equivalents Provided by Operating Activities		57,114			25,085
Investing Activities:
Capital expenditures, net of nominal disposals		(6,706	)		(12,914	)
Proceeds from asset sales		1,094			—
Net Cash and Cash Equivalents Used by Investing Activities		(5,612	)		(12,914	)
Financing Activities:
Proceeds from debt borrowings		5,648			4,191
Repayments of long-term debt		(35,305	)		(7,226	)
Net proceeds from issuance of common stock, including stock option tax benefit		639			1,246
Share buyback program		—			(39,114	)
Cash dividends paid		(4,115	)		(3,929	)
Net Cash and Cash Equivalents Used by Financing Activities		(33,133	)		(44,832	)
Exchange Rate Impact on Cash		(3,841	)		(2,198	)
Increase (Decrease) in Cash and Cash Equivalents		14,528			(34,859	)
Cash and Cash Equivalents at Beginning of Period		108,169			123,405
Cash and Cash Equivalents at End of Period	$	122,697		$	88,546

See Notes to Consolidated Condensed Financial Statements

4

ROBBINS & MYERS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
May 31, 2010
(Unaudited)

NOTE 1—Preparation of Financial Statements

In the opinion of management, the accompanying unaudited consolidated condensed financial statements of Robbins & Myers, Inc. and subsidiaries (“Company”, “we”, “our” or “us”) contain all adjustments, consisting of normally recurring items, necessary to present fairly our financial condition as of May 31, 2010, and August 31, 2009, and the results of our operations for the three and nine month periods ended May 31, 2010 and 2009, and cash flows for the nine month periods ended May 31, 2010 and 2009. The results of operations for any interim period are not necessarily indicative of results for the full year.

Beginning with the first quarter of fiscal 2010, we realigned our business segment reporting structure as a result of organizational, management and operational changes implemented in the first quarter of fiscal 2010. Our Chemineer brand is now included in our Fluid Management segment, instead of the Process Solutions segment where it was previously reported. The Fluid Management segment is now comprised of R&M Energy Systems, Moyno, Chemineer and Tarby brands. The Process Solutions segment is now comprised of Pfaudler, Tycon-Technoglass, and Edlon brands. The Romaco segment is unchanged and includes Noack, Siebler, FrymaKoruma, Macofar and Promatic brands. All intercompany transactions have been eliminated.

Our Company has a Venezuelan subsidiary with net sales, operating income and total assets representing approximately one percent of our consolidated financial statement amounts for fiscal 2009 and year to date fiscal 2010. Regulations in Venezuela require the purchase and sale of foreign currency to be made at an official rate of exchange that is fixed from time to time by the Venezuelan government. We have historically used the official exchange rate to translate the financial statements of our Venezuelan subsidiary which had been fixed at 2.15 bolivar fuerte (“VEF”) to each U.S. Dollar for several years, despite significant inflation. In early January 2010, the Venezuelan government devalued its currency and established a two-tier exchange structure. The official exchange rate was devalued from 2.15 VEF to each U.S. Dollar to 4.30 for non-essential goods and services and to 2.60 for essential goods. We expect our operations to fall into the essential classification. As a result of this devaluation, we translated our Venezuelan subsidiary’s financial statements at the official rate for essential goods of 2.60 VEF to each U.S. Dollar effective as of our second quarter of fiscal 2010.

In addition, the Venezuelan three year cumulative inflation rate exceeded 100 percent as of the beginning of our second quarter of fiscal 2010. As a result, the financial statements of our Venezuelan subsidiary were consolidated and reported under highly inflationary accounting rules in the second quarter of fiscal 2010 and we recorded an income statement exchange loss of $0.6 million. Under highly inflationary accounting, the financial statements of our Venezuelan subsidiary are and will be remeasured into our Company’s reporting currency (U.S. Dollars) and exchange gains and losses from this remeasurement are and will be reflected in current earnings, rather than accumulated other comprehensive income on the balance sheet, until such time as the economy is no longer considered highly inflationary. Discussions with the Venezuelan authorities are currently underway, and if we are unsuccessful in sustaining the essential goods exchange rate of 2.60 VEF to each U.S. Dollar, we could incur an additional income statement loss; however we do not expect that impact to be material to our financial statements.

While we believe that the disclosures are adequately presented, it is suggested that these consolidated condensed financial statements be read in conjunction with the consolidated financial statements and notes included in our most recent Annual Report on Form 10-K for the fiscal year ended August 31, 2009. A summary of our significant accounting policies is presented therein on page 30. There have been no material changes in the accounting policies followed by us during fiscal year 2010 other than the adoption of a new accounting standard related to noncontrolling interests in consolidated financial statements. Certain amounts presented in the prior period financial statements have been reclassified to conform to our current year presentation and to reflect the segment realignment discussed above.

5

NOTE 2—Goodwill and Other Intangible Assets

As discussed in Note 1 above, the Company made certain changes to its business segments effective in the first quarter of fiscal 2010. This resulted in a $45.0 million reclassification of goodwill from the Process Solutions segment to the Fluid Management segment. Changes in the carrying amount of goodwill for the nine month period ended May 31, 2010, by operating segment, are as follows:

	Process			Fluid
	Solutions			Mgmt.			Romaco
	Segment			Segment			Segment			Total
				(In thousands)
Balance as of September 1, 2009	$	149,578		$	106,189		$	11,920		$	267,687
Chemineer goodwill reclassification		(45,000	)		45,000			—			—
Translation adjustments		(7,022	)		(288	)		(1,577	)		(8,887	)
Balance as of May 31, 2010	$	97,556		$	150,901		$	10,343		$	258,800

Information regarding our other intangible assets is as follows:

	As of May 31, 2010						As of August 31, 2009
	Carrying		Accumulated				Carrying		Accumulated
	Amount		Amortization		Net		Amount		Amortization		Net
					(In thousands)
Patents and Trademarks	$	10,563	$	8,373	$	2,190	$	11,661	$	8,138	$	3,523
Non-compete Agreements		8,638		7,657		981		8,998		7,622		1,376
Financing Costs		9,522		9,082		440		9,631		9,145		486
Other		5,162		5,162		—		5,601		5,197		404
Total	$	33,885	$	30,274	$	3,611	$	35,891	$	30,102	$	5,789

The amortization expense for the three and nine month periods ended May 31, 2010 was $144,000 and $485,000 respectively. We estimate that the amortization expense will be approximately $200,000 for the remainder of fiscal 2010 and $700,000 for each of the next five years beginning fiscal 2011. The expected amortization expense is an estimate. Actual amounts of amortization expense may differ from the estimated amounts due to changes in foreign currency exchange rates, impairment of intangible assets, intangible asset acquisitions, accelerated amortization of intangible assets and other events.

6

NOTE 3—Net Income per Share

	Three Months Ended				Nine Months Ended
	May 31,				May 31,
	2010		2009		2010		2009
			(In thousands, except per share amounts)
Numerator:
Net income attributable to Robbins & Myers, Inc.	$	8,162	$	10,286	$	18,385	$	42,557
Denominator:
Basic weighted average shares		32,941		32,829		32,913		33,353
Effect of dilutive options and restricted shares/units		75		16		60		12
Diluted weighted average shares		33,016		32,845		32,973		33,365
Basic net income per share	$	0.25	$	0.31	$	0.56	$	1.28
Diluted net income per share	$	0.25	$	0.31	$	0.56	$	1.28

For the three and nine month periods ended May 31, 2010, 231,000 of stock options outstanding were antidilutive and excluded from the computation of diluted net income per share. For the same periods in the prior year, 250,000 and 247,000 respectively of stock options outstanding were antidilutive and excluded from the computation of diluted net income per share.

NOTE 4—Product Warranties

Warranty obligations are contingent upon product failure rates, material required for the repairs and service delivery costs. We estimate the warranty accrual based on specific product failures that are known to us plus an additional amount based on the historical relationship of warranty claims to sales.

Changes in our product warranty liability during the period are as follows:

	Nine Months Ended
	May 31, 2010
	(In thousands)
Balance at beginning of the period	$	7,221
Warranty expense		2,162
Deductions/payments		(2,875	)
Translation adjustment impact		(157	)
Balance at end of the period	$	6,351

7

NOTE 5—Long-Term Debt

	May 31, 2010
	(In thousands)
Debt:
Revolving credit loan	$	—
Other		802
Total debt		802
Less current portion		641
Long-term debt	$	161

Our Bank Credit Agreement (“Agreement”) provides that we may borrow on a revolving credit basis up to a maximum of $150,000,000 and includes a $100,000,000 expansion feature. All outstanding amounts under the Agreement are due and payable on December 19, 2011. Interest is variable based upon formulas tied to LIBOR or an alternative base rate defined in the Agreement, at our option, and is payable quarterly. Indebtedness under the Agreement is unsecured except for the pledge of the stock of our U.S. subsidiaries and approximately two-thirds of the stock of certain non-U.S. subsidiaries. We have $26,664,000 of standby letters of credit outstanding at May 31, 2010. These standby letters of credit are used as security for advance payments received from customers and for future payments to our vendors. Accordingly, under the Agreement we have $123,336,000 of unused borrowing capacity.

The Agreement contains certain restrictive covenants including limitations on indebtedness, asset sales, sales and lease backs, and cash dividends as well as financial covenants relating to interest coverage, leverage and net worth. As of May 31, 2010, we are in compliance with these covenants.

We repaid our $30,000,000 of Senior Notes on the May 3, 2010 due date from available cash balances.

8

NOTE 6—Retirement Benefits

Retirement and other postretirement plan costs are as follows:

Pension Benefits

	Three Months Ended						Nine Months Ended
	May 31,						May 31,
	2010			2009			2010			2009
	(In thousands)						(In thousands)
Service cost	$	479		$	570		$	1,852		$	1,838
Interest cost		2,296			2,286			7,195			7,484
Expected return on plan assets		(1,667	)		(2,067	)		(5,037	)		(6,267	)
Amortization of transition (asset)/obligation		(8	)		(7	)		(25	)		(23	)
Amortization of prior service cost		184			188			549			564
Amortization of unrecognized losses		700			259			2,296			557
Settlement expense		—			100			—			326
Net periodic benefit cost	$	1,984		$	1,329		$	6,830		$	4,479

Other Postretirement Benefits

	Three Months Ended				Nine Months Ended
	May 31,				May 31,
	2010		2009		2010		2009
	(In thousands)				(In thousands)
Service cost	$	13	$	62	$	323	$	304
Interest cost		306		137		996		1,035
Amortization of prior service cost		54		53		160		159
Amortization of unrecognized losses		307		54		451		404
Net periodic benefit cost	$	680	$	306	$	1,930	$	1,902

9

NOTE 7—Income Taxes

The effective tax rate was 35.8% for the third quarter and 34.4% for the year to date period of fiscal 2010, which approximated the U.S. federal statutory tax rate of 35.0%. Tax expense in the third quarter of fiscal 2010 included a benefit of approximately $800,000 from changes in estimates of uncertain tax positions resulting from information obtained in examinations by tax authorities, reduced by additional tax expense of approximately $600,000 from the finalization of certain estimates upon filing the U.S. federal tax return.

The effective tax rate was 13.2% for the third quarter of fiscal 2009 and 26.7% for the year to date period of fiscal 2009. The fiscal 2009 effective tax rate was lower than the statutory tax rate primarily due to finalizing certain tax estimates in the third quarter of fiscal 2009 with the filing of the Company’s U.S. federal tax return. Excluding this impact, the effective tax rate was 29.9% for the third quarter of fiscal 2009 and 30.2% for the year to date period of fiscal 2009.

NOTE 8—Comprehensive Income (Loss)

The following table sets forth the reconciliation of net income to comprehensive (loss) income:

	Three Months Ended						Nine Months Ended
	May 31,						May 31,
	2010			2009			2010			2009
	(In thousands)						(In thousands)
Net income including noncontrolling interest	$	8,326		$	10,668		$	19,005		$	43,507
Other comprehensive (loss) income:
Foreign currency translation		(13,892	)		28,086			(19,437	)		(27,117	)
Minimum pension liability adjustment, net of tax		—			—			(675	)		—
Comprehensive (loss) income		(5,566	)		38,754			(1,107	)		16,390
Comprehensive income attributable to noncontrolling interest		(581	)		(657	)		(1,073	)		(245	)
Comprehensive (loss) income attributable to Robbins & Myers, Inc.	$	(6,147	)	$	38,097		$	(2,180	)	$	16,145

10

NOTE 9—Stock Compensation

We sponsor a long-term incentive stock plan to provide for the granting of stock-based compensation to certain officers and other key employees. Under the plan, the stock option price per share may not be less than the fair market value per share as of the date of grant. Outstanding grants become exercisable over a three-year period. In addition, we sponsor a long-term incentive plan for selected participants who receive share based grants and also earn performance share based awards on varying target levels, based on earnings per share and return on net assets. As of May 31, 2010, we had $3,217,000 of compensation expense not yet recognized related to nonvested stock awards. The weighted average period over which this compensation cost will be recognized is twenty months. There were 334 stock options exercised in the first nine months of fiscal 2010 and 24,462 shares were exercised in the same period of the prior year.

Total stock compensation expense for all stock based awards for the first nine months of fiscal 2010 and 2009 was $2,200,000 ($1,430,000 after tax) and $2,661,000 ($1,730,000 after tax), respectively.

NOTE 10—Business Segments

The following tables present information about our reportable business segments. As discussed in Note 1 to the Consolidated Condensed Financial Statements, effective in the first quarter of fiscal 2010, the Company realigned its business segment reporting structure as a result of organizational, management and operational changes. Our Chemineer brand is now included in our Fluid Management segment, instead of the Process Solutions segment where it was previously reported. The financial information presented herein reflects the impact of this change for all periods presented. Inter-segment sales were not material and were eliminated at the consolidated level.

	Three Months Ended						Nine Months Ended
	May 31,						May 31,
	2010			2009			2010			2009
	(In thousands)						(In thousands)
Unaffiliated Customer Sales:
Fluid Management	$	79,813		$	72,542		$	214,971		$	259,943
Process Solutions		39,898			46,373			123,298			148,900
Romaco		27,254			24,460			68,028			76,328
Total	$	146,965		$	143,375		$	406,297		$	485,171
Income Before Interest and Income Taxes (“EBIT”):
Fluid Management	$	20,104		$	17,153		$	50,471		$	67,660
Process Solutions		(1,895	)		2,246			(6,084	)		7,468
Romaco		1,357			(464	)		939			(1,465	)
Corporate and Eliminations		(6,488	)		(6,540	)		(15,966	)		(14,039	)
Total	$	13,078		$	12,395		$	29,360		$	59,624

	May 31,		August 31,
	2010		2009
	(In thousands)
Identifiable Assets:
Fluid Management	$	319,191	$	327,491
Process Solutions		237,708		269,146
Romaco		88,093		98,335
Corporate and Eliminations		125,179		101,882
Total	$	770,171	$	796,854

11

NOTE 11—Share Repurchase Program

On October 27, 2008, we announced that our Board of Directors authorized the repurchase of up to 3.0 million of our currently outstanding common shares (the “Program”). Repurchases under the Program have and will generally be made in the open market or in privately negotiated transactions not exceeding prevailing market prices, subject to regulatory considerations and market conditions, and have and will be funded from the Company’s available cash and credit facilities. In the first quarter of fiscal 2009, we acquired approximately 2.0 million of our outstanding common shares for $39.1 million under the Program and were accounted for as treasury shares.

NOTE 12—New Accounting Pronouncements

In December 2007, the Financial Accounting Standards Board (“FASB”) issued and, in April 2009, amended a new business combination standard codified within Accounting Standards Codification™ (“ASC”) 805, which changed the accounting for business acquisitions. Accounting for business combinations under this standard requires the acquiring entity in a business combination to recognize all (and only) the assets acquired and liabilities assumed in the transaction and establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed in a business combination. This standard was effective for us on September 1, 2009. The standard had no immediate impact on our consolidated financial statements but could affect our financial position and results of operations depending on future acquisitions.

In December 2007, the FASB issued a new standard which established the accounting for and reporting of noncontrolling interests (“NCIs”) in partially owned consolidated subsidiaries and the loss of control of subsidiaries. This standard requires all entities to report NCIs (previously reported as minority interests) in subsidiaries within equity in the consolidated financial statements, but separate from the parent shareholders’ equity. This standard also requires any acquisitions or dispositions of NCIs that do not result in a change of control to be accounted for as equity transactions. Further, it requires that a parent recognize a gain or loss in net income when a subsidiary is deconsolidated. The standard was effective for us on September 1, 2009. Provisions of this standard were applied to all NCIs prospectively, except for the presentation and disclosure requirements, which were applied retrospectively to all periods presented. As a result, upon adoption, we retroactively reclassified the “Minority Interest” balance reported in the liabilities section of the consolidated balance sheet to a new component of equity with respect to NCIs in consolidated subsidiaries. The adoption of this standard also impacted certain captions identifying net income including NCI and net income attributable to Robbins & Myers, Inc. Additional disclosures required by this standard are also included in Note 8. The adoption of this standard did not have a material impact on our consolidated financial statements.

In April 2008, the FASB issued an accounting standard which amended the list of factors that should be considered in developing renewal or extension assumptions used to determine the useful life of recognized intangible assets under ASC 350, “Intangibles-Goodwill and Other”. The new standard applies to intangible assets that are acquired individually or with a group of other assets as well as intangible assets acquired in business combinations and asset acquisitions. Under this standard, entities estimating the useful life of a recognized intangible asset must consider the historical experience in renewing or extending similar arrangements, or, in the absence of historical experience, must consider assumptions that market participants would use about renewal or extension. This standard was effective for the Company on September 1, 2009 and required certain additional disclosures (included in Note 2 above) and application to useful life estimates prospectively for intangible assets acquired after August 31, 2009. The adoption of this standard did not have a material impact on our consolidated financial statements.

In December 2008, the FASB issued an accounting standard which provides additional guidance on employers’ disclosures about the plan assets of defined benefit pension or other postretirement plans. The disclosures required by the standard include a description of how investment allocation decisions are made, major categories of plan assets, and concentrations of risk within plan assets. Additionally, this standard requires disclosures similar to those required for fair value measurements and disclosures under ASC 820 with respect to

12

fair value of plan assets, such as the inputs and valuation techniques used to measure fair value and information with respect to classification of plan assets in hierarchy of the source of information used to determine their value (see Note 13). The disclosures under this standard are required for annual periods ending after December 15, 2009. We are currently evaluating the requirements of these additional disclosures.

In January 2010, the FASB issued Accounting Standard Update (“ASU”) No. 2010-06, “Improving Disclosures about Fair Value Measurements”, that amends existing disclosure requirements under ASC 820, by adding required disclosures about items transferring into and out of levels 1 and 2 in the fair value hierarchy; adding separate disclosures about purchase, sales, issuances, and settlements relative to level 3 measurements; and clarifying, among other things, the existing fair value disclosures about the level of disaggregation. This ASU is effective for us in the fourth quarter of fiscal 2010, except for the requirement to provide level 3 activity of purchases, sales, issuances, and settlements on a gross basis, which is effective beginning our fiscal 2012. Since this standard impacts disclosure requirements only, we do not expect its adoption to have a material impact on our consolidated financial statements.

In February 2010, the FASB issued ASU No. 2010-09, “Amendments to Certain Recognition and Disclosure Requirements”, which amends ASC 855, “Subsequent Events”. This ASU which was effective immediately, removes the requirement for an SEC filer to disclose a date through which subsequent events have been evaluated. We adopted this standard in the second quarter of fiscal 2010. The adoption of this standard did not have a material impact on our consolidated financial statements.

In May 2010, the FASB issued ASU No. 2010-19, “Foreign Currency Issues: Multiple Foreign Currency Exchange Rates”. The ASU was an announcement made by the staff of the U.S. Securities and Exchange Commission and provided the staff’s view on certain foreign currency issues related to investments in Venezuela. The ASU was effective as of the announcement date of March 18, 2010. The adoption of this standard did not have a material impact on our consolidated financial statements.

13

NOTE 13 —Fair Value Measurements

In September 2006, the FASB issued an accounting standard, codified in ASC 820, “Fair Value Measurements and Disclosures,” which defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. We adopted this standard on September 1, 2008 for all financial assets and liabilities recognized or disclosed at fair value in our consolidated financial statements on a recurring basis (at least annually).

In February 2008, the FASB deferred the effective date for certain nonfinancial assets and liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually) to fiscal years beginning after November 15, 2008. The Company adopted the remaining provisions of this fair value measurement standard related to nonfinancial assets and liabilities, including goodwill and intangibles, prospectively on September 1, 2009.

The following table summarizes the bases used to measure certain financial assets at fair value on a recurring basis as of May 31, 2010 (in thousands):

			Quoted Prices		Significant
			in Active		Other		Significant
	Fair Value at		Markets for		Observable		Unobservable
	May 31,		Identical Assets		Inputs		Inputs
	2010		(Level 1)		(Level 2)		(Level 3)
Cash and cash equivalents(1)	$	122,697	$	122,697	$	—	$	—
Total assets at fair value	$	122,697	$	122,697	$	—	$	—

(1) Our cash and cash equivalents primarily consist of cash in banks, commercial paper and overnight investments in highly rated financial institutions.

Non-Financial Assets and Liabilities at Fair value on a Nonrecurring Basis

Certain assets and liabilities are measured at fair value on a nonrecurring basis; that is, the assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (e.g., when there is evidence of impairment). At May 31, 2010, no fair value adjustments or fair value measurements were required for nonfinancial assets or liabilities.

Fair Value of Financial Instruments

The Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and debt. The fair values of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate their carrying values because of the short-term nature of these instruments. The fair value of long-term debt instruments equal their carrying value due to the short period until maturity or the variable rate nature of the instruments.

14

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

Results of Operations

Overview

We are a leading designer, manufacturer and marketer of engineered, application-critical equipment and systems for the energy, industrial, chemical and pharmaceutical markets worldwide. We attribute our success to our close and continuing interaction with customers; innovative products; our manufacturing, sourcing and application engineering expertise; competitive cost structure and our ability to serve and support customers globally. We attempt to continually develop initiatives to improve our performance in these key areas. In late calendar year 2008 through mid calendar year 2009, demand for most of our products started slowing due to lower oil and natural gas prices as well as the worldwide economic downturn, which affected our operating results. We responded to these challenging business conditions by cutting costs and initiating restructuring programs which are intended to reduce manufacturing capacity while increasing utilization, standardizing product offerings to allow greater utilization of our lower cost manufacturing capacities, leveraging functional resources, and further integrating our business activities. In addition, we are continuing our focus on emerging markets where economic growth remains well above the global average, and we are committed to increasing margins through productivity initiatives, reductions in discretionary spending and close management of fixed costs. We expect to continue our restructuring and other permanent cost cutting measures through fiscal 2010 and into fiscal 2011. We are cautiously optimistic that worldwide economic recovery will continue to gain strength in our fourth quarter of fiscal 2010, following four quarters of sequential growth in consolidated orders and an increase in consolidated backlog throughout fiscal 2010.

Our Company has a Venezuelan subsidiary with net sales, operating income and total assets representing approximately one percent of our consolidated financial statement amounts for fiscal 2009 and year to date fiscal 2010. As of May 31, 2010, the U.S. Dollar amount of our net assets in Venezuela is approximately $8.8 million. Regulations in Venezuela require the purchase and sale of foreign currency to be made at an official rate of exchange that is fixed from time to time by the Venezuelan government. We have historically used the official exchange rate to translate the financial statements of our Venezuelan subsidiary which had been fixed at 2.15 bolivar fuerte (“VEF”) to each U.S. Dollar for several years, despite significant inflation. In early January 2010, the Venezuelan government devalued its currency and established a two-tier exchange structure. The official exchange rate was devalued from 2.15 VEF to each U.S. Dollar to 4.30 for non-essential goods and services and to 2.60 for essential goods. We expect our operations to fall into the essential classification. As a result of this devaluation, we translated our Venezuelan subsidiary’s financial statements at the official rate for essential goods of 2.60 VEF to each U.S. Dollar effective as of our second quarter of fiscal 2010.

In addition, the Venezuelan three year cumulative inflation rate exceeded 100 percent as of the beginning of our second quarter of fiscal 2010. As a result, the financial statements of our Venezuelan subsidiary were consolidated and reported under highly inflationary accounting rules in the second quarter of fiscal 2010 and we recorded an income statement exchange loss of $0.6 million. Under highly inflationary accounting, the financial statements of our Venezuelan subsidiary are and will be remeasured into our Company’s reporting currency (U.S. Dollars) and exchange gains and losses from this remeasurement are and will be reflected in current earnings, rather than accumulated other comprehensive income on the balance sheet, until such time as the economy is no longer considered highly inflationary. Discussions with the Venezuelan authorities are currently underway, and if we are unsuccessful in sustaining the essential goods exchange rate of 2.60 VEF to each U.S. Dollar, we could incur an additional income statement loss; however we do not expect that impact to be material to our financial statements.

With approximately 62% of our sales outside the United States, our reported sales were favorably impacted by foreign currency translation in the first nine months of fiscal 2010 compared with the same period in the prior year, due to the U.S. Dollar weakening relative to our other principal operating currencies. Additionally, the assets and liabilities of our foreign operations are translated at the exchange rates in effect at the balance sheet date, with related gains or losses reported as a separate component of shareholders’ equity, except for Venezuela discussed above.

Our business consists of three market focused segments: Fluid Management, Process Solutions and Romaco. Beginning with the first quarter of fiscal 2010, we realigned our business segment reporting structure as a result

15

of organizational, management and operational changes implemented in the first quarter of fiscal 2010. Our Chemineer brand is now included in our Fluid Management segment, instead of the Process Solutions segment where it was previously reported. Certain amounts presented in the prior period financial statements have been reclassified to conform to our current year presentation and to reflect this segment realignment.

Fluid Management.Order levels from customers served by our Fluid Management segment have recovered from fiscal 2009 and are showing a strong upward trend in fiscal 2010. Our primary objectives for this segment are to expand our geographic reach, commercialize new products in our niche market sectors, develop new customer relationships, capture synergies within the segment and more tightly integrate our operations. Our Fluid Management business segment designs, manufactures and markets equipment and systems, including hydraulic drilling power sections, down-hole and industrial progressing cavity pumps, wellhead systems, rod guides, tubing rotators, pipeline closures and customized fluid agitation equipment and systems. These products are used in oil and gas exploration and recovery, specialty chemical, wastewater treatment and a variety of other industrial applications.

Process Solutions.Order levels in our Process Solutions segment have improved sequentially each quarter of fiscal 2010. However, pricing trends remain unfavorable, especially in global chemical markets. Our primary objectives in this segment are to improve productivity, rationalize capacity through integration of operations and process improvements, increase capabilities and leverage our lower cost locations, integrate and harmonize our global standards and increase our focus on aftermarket opportunities. We are also aiming to create a more fully integrated supply chain and go-to-market business model to improve the effectiveness and efficiency of the distribution of our brands and to enhance our revenue growth. Our Process Solutions business segment designs, manufactures and services glass-lined reactors and storage vessels, customized process equipment and systems and customized fluoropolymer-lined fittings, vessels and accessories, primarily for the pharmaceutical and specialty chemical markets.

Romaco.The primary target markets for Romaco include pharmaceutical, healthcare and cosmetics. Order levels in our Romaco segment have also trended higher in the first nine months of fiscal 2010 compared with fiscal 2009. Our primary objectives are to maintain our simplified business model, streamline operations by consolidating duplicate facilities, further develop our global distribution capabilities, and increase our focus on aftermarket opportunities. Our Romaco business segment designs, manufactures and markets packaging and secondary processing equipment for the pharmaceutical, healthcare, nutriceutical and cosmetic industries. Packaging applications include dosing; filling and sealing of vials, capsules, tubes, bottles and blisters; tablet counting and packaging for bottles; blister and sachet packaging for various products including tablets and powder; customized packaging; as well as secondary processing for sauces and semi solids.

16

The following tables present the components of our consolidated income statement and segment information for the three and nine month periods of fiscal 2010 and 2009.

	Three Months Ended						Nine Months Ended
	May 31,						May 31,
	2010			2009			2010			2009
Net sales		100.0	%		100.0	%		100.0	%		100.0	%
Cost of sales		65.0			65.3			66.4			64.0
Gross profit		35.0			34.7			33.6			36.0
SG&A expenses		26.1			26.1			26.4			23.7
EBIT		8.9	%		8.6	%		7.2	%		12.3	%

	Three Months Ended						Nine Months Ended
	May 31,						May 31,
	2010			2009			2010			2009
	(In thousands, except percents)
Segment
Fluid Management:
Sales	$	79,813		$	72,542		$	214,971		$	259,943
EBIT		20,104			17,153			50,471			67,660
EBIT %		25.2	%		23.6	%		23.5	%		26.0	%
Process Solutions:
Sales	$	39,898		$	46,373		$	123,298		$	148,900
EBIT		(1,895	)		2,246			(6,084	)		7,468
EBIT %		(4.7)	%		4.8	%		(4.9)	%		5.0	%
Romaco:
Sales	$	27,254		$	24,460		$	68,028		$	76,328
EBIT		1,357			(464	)		939			(1,465	)
EBIT %		5.0	%		(1.9)	%		1.4	%		(1.9)	%

The comparability of the segment data is impacted by changes in foreign currency exchange rates due to translation of the non-U.S. Dollar denominated subsidiary results into U.S. Dollars.

EBIT (Income before interest and income taxes) is a non-GAAP measure. The Company uses this measure to evaluate its performance and believes this measure is helpful to investors in assessing its performance. A reconciliation of this measure to net income is included in our Consolidated Condensed Income Statement. EBIT is not a measure of cash available for use by the Company.

17

Three months ended May 31, 2010 and May 31, 2009

Net Sales

Consolidated net sales for the third quarter of fiscal 2010 were $147.0 million, $3.6 million higher than net sales for the third quarter of fiscal 2009. Excluding the impact of currency translation, sales increased marginally by $0.6 million, or 0.4%.

The Fluid Management segment had sales of $79.8 million in the third quarter of fiscal 2010 compared with $72.5 million in the third quarter of fiscal 2009. Currency translation accounted for $1.5 million of the increase, and the remaining $5.8 million increase, or 8.0%, was primarily from increased demand for oilfield equipment products due to higher levels of oil and gas exploration and recovery activity. This higher activity was fueled by higher oil prices worldwide in the second and third quarters of fiscal 2010 compared with the same period in the prior year, a higher level of demand for horizontal drilling rigs used in shale formations and higher general industrial activity, especially in our third quarter of fiscal 2010. Orders for this segment were impacted by the same factors and increased to $85.0 million in the third quarter of fiscal 2010 compared with $49.7 million in the prior year period, when oil and gas prices were beginning to decline after reaching record highs. Excluding the marginal impact of foreign currency translation, orders increased by $33.6 million, or 67.6%. Ending backlog at May 31, 2010 is $52.0 million compared with $35.1 million at August 31, 2009.

The Process Solutions segment had sales of $39.9 million in the third quarter of fiscal 2010 compared with $46.4 million in the third quarter of fiscal 2009, a decrease of 14.0%. Excluding the impact of currency translation, sales decreased $8.0 million, or 17.2%, over the prior year period. Orders for this segment were $47.3 million in the third quarter of fiscal 2010 compared with $42.0 million in the prior year period. Adjusting for changes in currency exchange rates, orders increased by 12.0% from prior year period. This increase, we believe, is due to the recovery from the economic downturn and credit crises in the prior year. Ending backlog at May 31, 2010 is $68.3 million compared with $59.7 million at August 31, 2009.

The Romaco segment, which is a European-based business, had sales of $27.3 million in the third quarter of fiscal 2010 compared with $24.5 million in the third quarter of fiscal 2009. Excluding the impact of currency translation, sales increased $2.8 million or 11.3% from the prior year period. Orders for the third quarter of fiscal 2010 were $26.9 million and comparable to $27.3 million in the same period in the prior year. Excluding the marginal impact due to foreign currency, orders in the third quarter of fiscal 2010 were $0.8 million lower than the same period in the prior year. Ending backlog at May 31, 2010 is $39.7 million compared with $40.1 million at August 31, 2009.

Earnings Before Interest and Income Taxes (EBIT)

Consolidated EBIT for the third quarter of fiscal 2010 was $13.1 million, an increase of $0.7 million from the third quarter of fiscal 2009. This slight increase in EBIT, resulting from strong performance by our Fluid Management and Romaco segments was dampened by decreased sales volume and pricing pressure in our Process Solutions segment.

The Fluid Management segment had EBIT of $20.1 million in the third quarter of fiscal 2010 compared with $17.2 million in the third quarter of fiscal 2009. This increase in EBIT is primarily due to the higher sales volume described above compared with the third quarter of fiscal 2009.

The Process Solutions segment had negative EBIT of $1.9 million in the third quarter of fiscal 2010 compared with EBIT of $2.2 million in the third quarter of fiscal 2009, a decrease of $4.1 million. The decrease in EBIT is due principally to the sales decrease described above and pricing pressure in certain product lines.

The Romaco segment had EBIT of $1.4 million in the third quarter of fiscal 2010, compared with negative EBIT of $0.5 million in the same period of fiscal 2009. We believe that the increased profitability in our third quarter of fiscal 2010 compared with the same period in the prior year was due to improved sales as described above and from our continuing operational streamlining, personnel reductions and cost-cutting measures.

Income Taxes

The effective tax rate was 35.8% for the third quarter of fiscal 2010 compared with 13.2% in the prior year period. The third quarter fiscal 2010 effective tax rate approximated the U.S. federal statutory rate, while the

18

third quarter fiscal 2009 effective tax rate was lower than the statutory tax rate due to finalizing certain tax estimates in the third quarter of fiscal 2009 with the filing of the Company’s U.S. federal tax return.

Nine months ended May 31, 2010 and May 31, 2009

Net Sales

Consolidated net sales for the first nine months of fiscal 2010 were $406.3 million, $78.9 million lower than net sales for the same period of fiscal 2009. Excluding the impact of currency translation, sales decreased by $92.2 million, or 19.0% , due to lower sales in all three of our segments in the first six months of fiscal 2010. Sales in the third quarter of fiscal 2010 were higher than the comparable period of the prior year.

The Fluid Management segment had sales of $215.0 million in the first nine months of fiscal 2010 compared with $259.9 million in the same period of fiscal 2009. Excluding the impact of foreign currency translation, sales decreased $48.8 million, or 18.8%. Although sales were strong in the third quarter of fiscal 2010, the nine month fiscal 2010 sales decrease was primarily due to lower customer demand early in the fiscal year resulting from reduced levels of oil and gas exploration and recovery activity in that period. Orders for this segment were $233.0 million in the first nine months of fiscal 2010 compared with $216.7 million in the same period in fiscal 2009 and are substantially higher than latter fiscal 2009 when demand was at a low. Ending backlog at May 31, 2010 is $52.0 million compared with $35.1 million at August 31, 2009.

The Process Solutions segment had sales of $123.3 million in the first nine months of fiscal 2010 compared with $148.9 million in the same period of fiscal 2009. Excluding currency translation impact, sales decreased $31.2 million, or 21.0%, from the prior year period. Segment orders in the first nine months of fiscal 2010 continued to improve from the latter half of fiscal 2009 to $134.0 million reflecting improved market conditions, but were lower than the $140.3 million in the same period in the prior year due to the large level of orders in the first quarter of fiscal 2009. Excluding currency translation, orders in the first nine month period of fiscal 2010 decreased by $10.9 million, or 7.8%, from the same period in the prior year. Ending backlog at May 31, 2010 is $68.3 million compared with $59.7 million at August 31, 2009.

The Romaco segment had sales of $68.0 million in the first nine months of fiscal 2010 compared with $76.3 million in the same period of fiscal 2009. Excluding the impact of currency translation, sales decreased $12.1 million, or 15.9% over the prior year period. Orders in the first nine month of fiscal 2010 were $84.8 million compared with $75.2 million in the same period of prior year. Adjusting for changes in currency exchange rates, orders increased 4.9% from the same period of fiscal 2009. We believe this order increase is an outcome of the global economic recovery combined with our increased focus on market opportunities and product innovation. Ending backlog at May 31, 2010 is $39.7 million compared with $40.1 million at August 31, 2009.

Earnings Before Interest and Income Taxes (EBIT)

Consolidated EBIT for the first nine months of fiscal 2010 was $29.4 million, a decrease of $30.3 million from the same period of the prior year. Excluding the impact of currency translation, EBIT decreased by $30.9 million. This decrease is mainly attributable to the lower sales volume described above in all of our segments and pricing pressure in our Process Solutions segment. Consistent with the sales variances described above, the unfavorable variances related to the first six months of the fiscal year.

The Fluid Management segment had EBIT of $50.5 million in the first nine months of fiscal 2010 compared with $67.7 million in the same prior year period. Excluding the impact of currency translation, EBIT decreased by $17.8 million, or 26.4%. This decrease is mainly due to the sales decrease described above and a Venezuelan hyper-inflationary currency loss of $0.9 million, offset by an insurance recovery of $0.8 million and an asset sale gain of $0.6 million.

The Process Solutions segment had negative EBIT of $6.1 million in the first nine months of fiscal 2010 compared with EBIT of $7.5 million in the comparable period of fiscal 2009. Excluding the impact of currency translation, nine month EBIT declined $13.4 million. This decrease is due principally to lower sales and pricing pressure in certain product lines in fiscal 2010.

The Romaco segment had EBIT of $0.9 million in the first nine months of fiscal 2010, compared with negative EBIT of $1.5 million in the same period of prior year. Currency translation did not impact EBIT in this segment.

19

This increase in EBIT, despite lower sales in the first nine months of fiscal 2010 year resulted from operational efficiencies.

Corporate costs were $1.9 million higher in the first nine months of fiscal 2010 compared with the same period in fiscal 2009, primarily due to costs associated with strategic and legal matters.

Income Taxes

The effective tax rate was 34.4% for the first nine months of fiscal 2010 compared with 26.7% in the comparable prior year period. The current year rate approximates the U.S. statutory tax rate. The prior year effective tax rate was lower than the statutory tax rate, primarily due to finalizing certain tax estimates in the third quarter of fiscal 2009 with the filing of the Company’s U.S. federal tax return.

Liquidity and Capital Resources

Operating Activities

In the first nine months of fiscal 2010, our cash flow provided by operations was $57.1 million, $32.0 million higher than in the same period of the prior year. This increase from the prior year, despite lower net income, was from positive contributions from working capital compared with the prior year. Specifically within accrued expenses, positive cash contributions resulted from increased customer advance payments and accruals for variable employee compensation.

We expect our available cash, fiscal 2010 operating cash flow and amounts available under our credit agreement to be adequate to fund fiscal year 2010 operating needs, shareholder dividends, capital expenditures and additional share repurchases, if any.

Investing Activities

Our capital expenditures were $6.7 million in the first nine months of fiscal 2010 compared with $12.9 million in the first nine months of fiscal 2009. We reduced our capital expenditures due to lower production levels and completion of prior year investment programs.

Financing Activities

We repaid our $30.0 million of Senior Notes on the May 3, 2010 due date from available cash balances.

On October 27, 2008 we announced that our Board of Directors authorized the repurchase of up to 3.0 million of our currently outstanding common shares. We previously acquired approximately 2.0 million of our outstanding common shares for $39.1 million under the repurchase program in the first quarter of fiscal 2009. There were no such share repurchases in the first nine months of fiscal 2010.

Credit Agreement

Our Bank Credit Agreement (“Agreement”) provides that we may borrow on a revolving credit basis up to a maximum of $150.0 million and includes a $100.0 million expansion feature. All outstanding amounts under the Agreement are due and payable on December 19, 2011. Interest is variable based upon formulas tied to LIBOR or an alternative base rate defined in the Agreement, at our option, and is payable quarterly. Indebtedness under the Agreement is unsecured, except for the pledge of the stock of our U.S. subsidiaries and approximately two-thirds of the stock of certain non-U.S. subsidiaries. While no amounts are outstanding under the Agreement at May 31, 2010, we have $26.7 million of standby letters of credit outstanding at May 31, 2010. These standby letters of credit are used as security for advance payments received from customers, and for future payments to our vendors and reduce the amount we may borrow under the Agreement. Accordingly, under the Agreement we have $123.3 million of unused borrowing capacity.

Six banks participate in our revolving credit agreement. We are not dependent on any single bank for our financing needs.

20

Following is information regarding our long-term contractual obligations and other commitments outstanding as of May 31, 2010:

	Payments Due by Period
Long-term contractual
obligations	Total		One year or less		Two to three years		Four to five years		After five years
					(In thousands)
Long-term debt	$	802	$	641	$	161	$	—	$	—
Operating leases (1)		14,000		5,000		6,000		2,000		1,000
Total contractual cash obligations	$	14,802	$	5,641	$	6,161	$	2,000	$	1,000

(1) Operating leases are estimated as of May 31, 2010, and consist primarily of building and equipment leases.

Unrecognized tax benefits, including interest and penalties, in the amount of $5.0 million, have been excluded from the table because we are unable to make a reasonably reliable estimate of the timing of the future payments. The only other commercial commitments outstanding at May 31, 2010 were standby letters of credit of $26.7 million, which are substantially due within one year.

21

Critical Accounting Policies

In preparing our consolidated financial statements, we follow accounting principles generally accepted in the United States of America, which in many cases require us to make assumptions, estimates and judgments that affect the amounts reported. Many of these policies are straightforward. There are, however, some policies that are critical because they are important in determining the financial condition and results of operations and some may involve management judgments due to the sensitivity of the methods, assumptions and estimates necessary in determining the related income statement, asset and/or liability amounts. These policies are described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Report on Form 10-K for the year ended August 31, 2009. There have been no material changes in the accounting policies followed by us during fiscal year 2010 other than the adoption of a new accounting standard related to noncontrolling interests in consolidated financial statements, as discussed in Note 12.

Safe Harbor Statement

In addition to historical information, this report contains forward-looking statements identified by use of words such as “expects,” “anticipates,” “believes,” and similar expressions. These statements reflect management’s current expectations and involve known and unknown risks, uncertainties, contingencies and other factors that could cause actual results, performance or achievements to differ materially from those stated. The most significant of these risks and uncertainties are described in our Form 10-K report filed with the Securities and Exchange Commission and include, but are not limited to: the cyclical nature of some of our markets; a significant decline in capital expenditures in our primary markets; a major decline in oil and natural gas prices; reduced demand due to the general worldwide economic downturn and general credit market crises; our ability to realize the benefits of our restructuring programs; increases in competition; changes in the availability and cost of our raw materials; foreign exchange rate fluctuations as well as economic or political instability in international markets and the performance of our business in hyperinflationary environments, such as Venezuela; work stoppages related to union negotiations; customer order cancellations; the possibility of product liability lawsuits that could harm our business; events or circumstances which result in an impairment of, or valuation against, assets; the potential impact of U.S. and foreign legislation, government regulations, and other governmental action, including those relating to export and import of products and materials, and changes in the interpretation and application of such laws and regulations; the outcome of audit, compliance, administrative or investigatory reviews; proposed changes in U.S. tax law which could impact our future tax expense and cash flow; and decline in the market value of our pension plans’ investment portfolios affecting our financial condition and results of operations. Except as otherwise required by law, we do not undertake any obligation to publicly update or revise these forward-looking statements to reflect events or circumstances after the date hereof.

22

Item 3. Quantitative and Qualitative Disclosures About Market Risk

In our normal operations, we have market risk exposure to foreign currency exchange rates and interest rates. There has been no significant change in our market risk exposure with respect to these items during the quarter ended May 31, 2010, except for the effect of the change to highly inflationary accounting for our Venezuelan subsidiary as discussed in the “Overview” section of “Management’s Discussion and Analysis of Financial Condition and Results of Operations” at Item 2 of this Report. For additional information see “Qualitative and Quantitative Disclosures About Market Risk” at Item 7A of our Annual Report on Form 10-K for the year ended August 31, 2009.

Item 4. Controls and Procedures

(A) Evaluation of Disclosure Controls and Procedures

Management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), conducted an evaluation of the effectiveness of the design and operation of our “disclosure controls and procedures” (“Disclosure Controls”) as of May 31, 2010. Disclosure Controls are controls and procedures designed to reasonably assure that information required to be disclosed in our reports filed under the Exchange Act, such as this Form 10-Q, is recorded, processed, summarized and reported within the time periods specified in the U.S. Securities and Exchange Commission’s rules and forms. Disclosure Controls are also designed to reasonably assure that such information is accumulated and communicated to our management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. Our quarterly evaluation of Disclosure Controls includes an evaluation of some components of our internal control over financial reporting, and internal control over financial reporting is also separately evaluated on an annual basis.

Based on this evaluation, management, including our Chief Executive Officer and our Chief Financial Officer has concluded that our disclosure controls and procedures were effective as of May 31, 2010.

(B) Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting that occurred during the fiscal quarter covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

23

Part II—Other Information

Item 1A. Risk Factors

For information regarding factors that could affect the Company’s operations, financial condition and liquidity, see the risk factors discussed in Item 1A of our Annual Report on Form 10-K for the fiscal year ended August 31, 2009.

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

A summary of the Company’s repurchases of its common shares during the quarter ended May 31, 2010 is as follows:

ISSUER PURCHASES OF EQUITY SECURITIES

					Total Number of
					Shares Purchased as		Maximum Number of Shares
	Total Number		Average Price		Part of Publicly		that May
	of Shares		Paid per		Announced Plans or		Yet Be Purchased Under
Period	Purchased (a)		Share		Programs(b)		the Plans or Programs
March 2010		0		—		0		992,463
April 2010		0		—		0		992,463
May 2010		0		—		0		992,463
Total		0				0

(a)

The Company did not purchase any of its common shares during the quarter ended May 31, 2010.

(b)

On October 27, 2008, our Board of Directors approved the repurchase of up to 3.0 million of our outstanding common shares (the “Program”). In the first quarter of fiscal 2009, we repurchased an aggregate of 2,007,537 of our outstanding common shares pursuant to the Program. In connection with the Program, the Company entered into a Rule 10b5-1 securities repurchase plan which was effective November 17, 2008 through January 7, 2009. The Program will expire when we have repurchased all the authorized shares under the Program, unless terminated earlier by a Board resolution.

Item 6. Exhibits

     a) Exhibits – see INDEX TO EXHIBITS

24

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

			ROBBINS & MYERS, INC.
DATE:	June 24, 2010	BY	/s/ Christopher M. Hix
			Christopher M. Hix
			Vice President and Chief Financial Officer
			(Principal Financial Officer)
DATE:	June 24, 2010	BY	/s/ Kevin J. Brown
			Kevin J. Brown
			Corporate Controller
			(Principal Accounting Officer)

25

INDEX TO EXHIBITS

(31)	RULE 13A-14(A) CERTIFICATIONS
	31.1	Rule 13a-14(a) CEO Certification	(F)
	31.2	Rule 13a-14(a) CFO Certification	(F)
(32)	SECTION 1350 CERTIFICATIONS
	32.1	Section 1350 CEO Certification	(F)
	32.2	Section 1350 CFO Certification	(F)

“F” Filed herewith.

26