Robbins & Myers 10-Q 2009 Q2 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 February 28, 2009 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)

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

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. YES þ   NO o

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. (Check one):

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

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2) YES o   NO þ

Common shares, without par value, outstanding as of February 28, 2009: 32,816,602

TABLE OF CONTENTS

	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 2. Unregistered Sales of Equity Securities and Use of Proceeds.
	Item 4. Submission of Matters to a Vote of Security Holders.
	Item 6. Exhibits
SIGNATURES
EX-31.1
EX-31.2
EX-32.1
EX-32.2

ROBBINS & MYERS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
(In thousands)

	February 28,			August 31,
	2009			2008
	(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	72,125		$	123,405
Accounts receivable		130,411			153,648
Inventories:
Finished products		34,015			29,926
Work in process		43,387			42,399
Raw materials		35,693			37,472
		113,095			109,797
Other current assets		7,308			8,017
Deferred taxes		12,389			13,476
Total Current Assets		335,328			408,343
Goodwill		252,570			278,906
Other Intangible Assets		4,877			6,853
Deferred Taxes		21,398			21,969
Other Assets		9,745			10,931
Property, Plant and Equipment		286,559			297,877
Less accumulated depreciation		(160,252	)		(160,162	)
		126,307			137,715
TOTAL ASSETS	$	750,225		$	864,717
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable	$	61,971		$	86,012
Accrued expenses		80,894			102,876
Current portion of long-term debt		762			3,192
Total Current Liabilities		143,627			192,080
Long-Term Debt—Less Current Portion		30,305			30,435
Deferred Taxes		44,729			44,628
Other Long-Term Liabilities		76,806			82,118
Minority Interest		15,807			15,439
Shareholders’ Equity
Common stock		147,107			183,605
Retained earnings		324,064			294,409
Accumulated other comprehensive income		(32,220	)		22,003
Total Shareholders’ Equity		438,951			500,017
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	750,225		$	864,717

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					Six Months Ended
	February 28,		February 29,			February 28,		February 29,
	2009		2008			2009		2008
Net sales	$	163,825	$	184,932		$	341,796	$	358,468
Cost of sales		107,049		118,697			217,044		229,371
Gross profit		56,776		66,235			124,752		129,097
SG&A expenses		35,941		41,113			77,523		80,754
Other income		0		(1,099	)		0		(1,099	)
Income before interest and income taxes		20,835		26,221			47,229		49,442
Interest expense, net		90		779			143		1,506
Income before income taxes and minority interest		20,745		25,442			47,086		47,936
Income tax expense		5,290		8,583			14,247		16,538
Minority interest		392		522			568		1,123
Net income	$	15,063	$	16,337		$	32,271	$	30,275
Net income per share:
Basic	$	0.46	$	0.47		$	0.96	$	0.88
Diluted	$	0.46	$	0.47		$	0.96	$	0.88
Weighted average common shares outstanding:
Basic		32,802		34,488			33,620		34,429
Diluted		32,804		34,620			33,679		34,548
Dividends per share:
Declared	$	0.0400	$	0.0375		$	0.0775	$	0.0700
Paid	$	0.0400	$	0.0375		$	0.0775	$	0.0700

See Notes to Consolidated Condensed Financial Statements

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ROBBINS & MYERS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)

	Six Months Ended
	February 28,			February 29,
	2009			2008
Operating Activities:
Net income	$	32,271		$	30,275
Adjustments to reconcile net income to net cash and cash equivalents provided by operating activities:
Depreciation		7,500			6,837
Amortization		648			933
Net gain on sale of facility		0			(1,099	)
Stock compensation expense		1,758			1,436
Changes in operating assets and liabilities:
Accounts receivable		10,387			16,368
Inventories		(17,289	)		(10,163	)
Accounts payable		(17,650	)		(9,186	)
Accrued expenses		(14,197	)		(15,015	)
Other		1,497			(1,585	)
Net Cash and Cash Equivalents Provided by Operating Activities		4,925			18,801
Investing Activities:
Capital expenditures, net of nominal disposals		(7,044	)		(8,755	)
Proceeds from sale of facility		0			3,996
Acquisition of business, net of cash acquired		0			(5,061	)
Net Cash and Cash Equivalents Used by Investing Activities		(7,044	)		(9,820	)
Financing Activities:
Proceeds from debt borrowings		2,590			9,997
Repayments of long-term debt		(4,785	)		(8,861	)
Proceeds from exercise of options and sale of common stock		815			2,413
Tax benefit from exercise of options		44			1,539
Share repurchases		(39,114	)		0
Cash dividends paid		(2,616	)		(2,409	)
Net Cash and Cash Equivalents (Used) Provided by Financing Activities		(43,066	)		2,679
Exchange rate impact on cash		(6,095	)		3,004
(Decrease) Increase in Cash and Cash Equivalents		(51,280	)		14,664
Cash and Cash Equivalents at Beginning of Period		123,405			116,110
Cash and Cash Equivalents at End of Period	$	72,125		$	130,774

See Notes to Consolidated Condensed Financial Statements

4

ROBBINS & MYERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
February 28, 2009
(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 February 28, 2009, and August 31, 2008, and the results of our operations for the three and six months periods ended February 28, 2009, and February 29, 2008, and cash flows for the six month periods ended February 28, 2009, and February 29, 2008. All intercompany transactions have been eliminated. Certain amounts in the prior period financial statements have been reclassified to conform to the current year presentation.

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, 2008. A summary of our significant accounting policies is presented therein beginning on page 23. There have been no material changes in the accounting policies followed by us during fiscal year 2009 other than the adoption of Statement of Financial Accounting Standard (“SFAS”) No. 157, “Fair Value Measurements” and SFAS No. 159 “The Fair Value Option for Financial Assets and Financial Liabilities—Including an Amendment of Financial Accounting Standards Board (“FASB”) Statement No. 115”, as discussed in Notes 13 and 14.

NOTE 2 — Statement of Operations Information

In the second quarter of fiscal 2008 we sold a facility related to a previously disposed Romaco segment product line for $3,996,000, with a resulting gain of $1,099,000, which is included on the “Other income” line of our Consolidated Condensed Income Statement.

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NOTE 3—Goodwill and Other Intangible Assets

Changes in the carrying amount of goodwill for the six month period ended February 28, 2009, by operating segment, are as follows:

	Process Solutions			Fluid Mgmt.			Romaco
	Segment			Segment			Segment			Total
	(In thousands)
Balance as of September 1, 2008	$	157,870		$	108,703		$	12,333		$	278,906
Translation adjustments		(18,587	)		(5,976	)		(1,773	)		(26,336	)
Balance as of February 28, 2009	$	139,283		$	102,727		$	10,560		$	252,570

Information regarding our other intangible assets is as follows:

	As of February 28, 2009						As of August 31, 2008
	Carrying		Accumulated				Carrying		Accumulated
	Amount		Amortization		Net		Amount		Amortization		Net
	(In thousands)
Patents and Trademarks	$	10,746	$	7,849	$	2,897	$	11,899	$	7,480	$	4,419
Non-compete Agreements		8,639		7,504		1,135		9,099		7,338		1,761
Financing Costs		9,499		9,095		404		9,679		9,006		673
Other		5,635		5,194		441		5,171		5,171		0
Total	$	34,519	$	29,642	$	4,877	$	35,848	$	28,995	$	6,853

NOTE 4—Net Income per Share

	Three Months Ended				Six Months Ended
	February 28,		February 29,		February 28,		February 29,
	2009		2008		2009		2008
	(In thousands, except per share amounts)
Numerator:
Net income	$	15,063	$	16,337	$	32,271	$	30,275
Denominator:
Basic weighted average shares		32,802		34,488		33,620		34,429
Effect of dilutive options and restricted shares		2		132		59		119
Diluted shares		32,804		34,620		33,679		34,548
Basic net income per share	$	0.46	$	0.47	$	0.96	$	0.88
Diluted net income per share	$	0.46	$	0.47	$	0.96	$	0.88

For the three and six month periods ended February 28, 2009, 266,000 of stock options outstanding were antidilutive and excluded from the computation of dilutive earnings per share.

On January 9, 2008, we declared a 2-for-1 stock split of our common shares effected in the form of a share distribution. The record date for this stock split was February 4, 2008, and the additional shares were issued on February 28, 2008.

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NOTE 5—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:

	Six Months Ended
	February 28, 2009
	(In thousands)
Balance at beginning of the period	$	7,853
Warranty expense		526
Deductions/payments		(1,193	)
Translation adjustment impact		(311	)
Balance at end of the period	$	6,875

NOTE 6—Long-Term Debt

	February 28, 2009
	(In thousands)
Senior debt:
Revolving credit loan	$	0
Senior notes		30,000
Other		1,067
Total debt		31,067
Less current portion		762
Long-term debt	$	30,305

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 and the Senior Notes, discussed below, is unsecured except for the pledge of the stock of our U.S. subsidiaries and two-thirds of the stock of certain non-U.S. subsidiaries. We have $30,250,000 of standby letters of credit outstanding at February 28, 2009. 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 $119,750,000 of unused borrowing capacity.

We have $30,000,000 of Senior Notes (“Senior Notes”) outstanding with an interest rate of 6.84%, due May 1, 2010.

The Agreement and Senior Notes contain 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 February 28, 2009, we are in compliance with these covenants.

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NOTE 7 — Retirement Benefits

Retirement and other postretirement plan costs are as follows:

Pension Benefits

	Three Months Ended						Six Months Ended
	February 28,			February 29,			February 28,			February 29,
	2009			2008			2009			2008
	(In thousands)						(In thousands)
Service cost	$	475		$	726		$	965		$	1,088
Interest cost		2,341			2,905			4,746			4,189
Expected return on plan assets		(1,817	)		(3,000	)		(3,696	)		(3,938	)
Amortization of prior service cost		188			36			376			122
Amortization of unrecognized losses		153			249			305			372
FAS 88 settlement expense		113			0			226			0
Net periodic benefit cost	$	1,453		$	916		$	2,922		$	1,833

Other Postretirement Benefits

	Three Months Ended				Six Months Ended
	February 28,		February 29,		February 28,		February 29,
	2009		2008		2009		2008
	(In thousands)				(In thousands)
Service cost	$	121	$	77	$	242	$	154
Interest cost		449		319		898		638
Amortization of prior service cost		53		141		106		282
Amortization of unrecognized losses		175		40		350		80
Net periodic benefit cost	$	798	$	577	$	1,596	$	1,154

NOTE 8—Income Taxes

The effective tax rate was 25.5% for the second quarter and 30.3% for the year to date period of fiscal 2009. The effective tax rate was lower than the statutory tax rate due to repatriation of a portion of the earnings of certain international subsidiaries, which results in an overall lower effective tax rate.

The effective tax rate was 33.7% for the second quarter and 34.5% for the year to date period of fiscal 2008.

In June 2006, the FASB issued Interpretation No. 48 (FIN No. 48), “Accounting for Uncertainty in Income Taxes”,which was effective for fiscal years beginning after December 15, 2006. The Company adopted the provisions of FIN No. 48 on September 1, 2007.

The balance of unrecognized tax benefits including interest and penalties, as of February 28, 2009 and August 31, 2008 was $5.7 million and $6.3 million, respectively, all of which would affect the effective tax rate if recognized in future periods.

We have estimated the reasonably possible expected net change in unrecognized tax benefits through February 28, 2010 based on the anticipated positions taken in the next twelve months, expected settlements or payments of uncertain tax positions and the lapses of the applicable statutes of limitations of unrecognized tax benefits. We do not anticipate a significant change in the balance of unrecognized tax benefits within the next 12 months.

8

NOTE 9—Comprehensive Income (Loss)

The Company’s comprehensive income (loss) during the three and six months ended February 28, 2009 was significantly impacted by the strengthening of the US Dollar versus other global currencies, most notably the Euro, the British Pound and the Canadian Dollar. The following table sets forth the reconciliation of net income to comprehensive income (loss):

	Three Months Ended					Six Months Ended
	February 28,			February 29,		February 28,			February 29,
	2009			2008		2009			2008
	(In thousands)					(In thousands)
Net income	$	15,063		$	16,337	$	32,271		$	30,275
Foreign currency translation		(11,884	)		1,243		(54,223	)		12,913
Comprehensive income (loss)	$	3,179		$	17,580	$	(21,952	)	$	43,188

NOTE 10—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. As of February 28, 2009, we had $4,900,000 of compensation expense not yet recognized related to nonvested stock awards. The weighted average period that this compensation cost will be recognized is seventeen months. Stock options of 13,000 shares and 168,000 shares were exercised in the first six months of fiscal 2009 and 2008, respectively.

Total stock compensation expense for all stock based awards for the first six months of fiscal 2009 and 2008 was $1,758,000 ($1,143,000 after tax) and $1,436,000,000 ($933,000 after tax), respectively.

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NOTE 11—Business Segments

The following tables present information about our reportable business segments.

	Three Months Ended						Six Months Ended
	February 28,			February 29,			February 28,			February 29,
	2009			2008			2009			2008
	(In thousands)						(In thousands)
Unaffiliated customer sales:
Fluid Management	$	72,318		$	76,509		$	154,588		$	148,864
Process Solutions		63,056			74,952			135,340			145,801
Romaco		28,451			33,471			51,868			63,803
Total	$	163,825		$	184,932		$	341,796		$	358,468
Income (Loss) before Interest and Taxes (“EBIT”):
Fluid Management	$	19,553		$	20,970		$	44,193		$	39,418
Process Solutions		4,667			7,474			11,536			15,430
Romaco		442			2,106			(1,001	)		3,651
Corporate and eliminations		(3,827	)		(4,329	)		(7,499	)		(9,057	)
Total	$	20,835		$	26,221		$	47,229		$	49,442

The Romaco segment results for the second quarter and year to date periods of fiscal 2008 include a facility sale gain of $1,099,000. In addition, the comparability of the segment data is impacted due to changes in the foreign currency exchange rates, especially the strengthening of the US Dollar against all major currencies worldwide in fiscal 2009.

NOTE 12— 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 $39.0 million under the Program and were accounted for as treasury shares.

NOTE 13 — New Accounting Pronouncements

In September 2006, the FASB issued FASB Statement No. 157, “Fair Value Measurements” (SFAS No. 157). We adopted SFAS No. 157 on September 1, 2008. See Note 14.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities—Including an Amendment of FASB Statement No. 115 (SFAS No. 159)”. This standard permits an entity to choose to measure many financial instruments and certain other items at fair value. The fair value option permits a company to choose to measure eligible items at fair value at specified election dates. A company will report unrealized gains and losses on items for which the fair value option has been elected in earnings after adoption. SFAS No. 159 was effective for us on September 1, 2008. We did not elect to measure any eligible items at fair value. Therefore, the adoption of SFAS No. 159 had no impact on the consolidated financial statements.

In December 2007, the FASB issued SFAS No. 141(R), “Business Combinations” (“SFAS No. 141(R)”). SFAS No. 141(R) revised the requirements of SFAS No. 141 related to fair value principles, the cost allocation process, and accounting for non-controlling (minority) interests. SFAS No. 141(R) will be effective for us beginning in fiscal 2010.

10

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements” (“SFAS No. 160”). SFAS No. 160 amends ARB 51, “Consolidated Financial Statements”, and requires all entities to report noncontrolling (minority) interests in subsidiaries within equity in the consolidated financial statements, but separate from the parent shareholders’ equity. SFAS No. 160 also requires any acquisitions or dispositions of noncontrolling interests that do not result in a change of control to be accounted for as equity transactions. Further, SFAS No. 160 requires that a parent recognize a gain or loss in net income when a subsidiary is deconsolidated. SFAS No. 160 will be effective for us beginning in fiscal 2010. We are currently evaluating the effect, if any, the adoption of SFAS No. 160 will have on our consolidated financial statements.

In April 2008, the FASB issued FASB Staff Position FAS 142-3, “Determination of the Useful Life of Intangible Assets” (FSP FAS 142-3). FSP FAS 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB Statement No. 142, “Goodwill and Other Intangible Assets”. FSP FAS 142-3 also requires expanded disclosure related to the determination of intangible asset useful lives. FSP FAS 142-3 will be effective for us beginning in our fiscal year 2010. We are currently evaluating the impact that the adoption of FSP FAS 142-3 will have on our consolidated financial statements.

In May 2008, the FASB issued FASB Statement No. 162, “The Hierarchy of Generally Accepted Accounting Principles” (SFAS No. 162). SFAS No. 162 is intended to improve financial reporting by identifying a consistent framework, or hierarchy, for selecting accounting principles to be used in preparing financial statements that are presented in conformity with generally accepted accounting principles. SFAS No. 162 will become effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles.” We do not anticipate the adoption of SFAS No. 162 will have a material impact on our consolidated financial statements.

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NOTE 14 — Fair Value Measurements

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”, 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 SFAS No.157 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). The adoption of SFAS No. 157 did not have an impact on our consolidated financial statements.

On February 12, 2008, the FASB issued FASB Staff Position (FSP) No. 157-2, which delays the effective date of SFAS No. 157 for nonfinancial assets and liabilities to fiscal years beginning after November 15, 2008. For these non-financial assets and liabilities, SFAS No. 157 is effective for us on September 1, 2009. With this deferral, we have not applied the provisions of SFAS No. 157 to goodwill and intangible assets. We are still assessing the impact the adoption of SFAS No. 157 for nonfinancial assets and liabilities will have on our consolidated financial statements.

The following table summarizes the bases used to measure certain financial assets at fair value on a recurring basis as of February 28, 2009 (in thousands):

			Quoted Prices		Significant
			in Active		Other		Significant
			Markets for		Observable		Unobservable
	February 28,		Identical Assets		Inputs		Inputs
	2009		(Level 1)		(Level 2)		(Level 3)
Cash and cash equivalents(1)	$	72,125	$	72,125	$	—	$	—
Total assets at fair value	$	72,125	$	72,125	$	—	$	—

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

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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 global energy, industrial, chemical and pharmaceutical markets. We attribute our success to our close and continuing interaction with customers, our manufacturing, sourcing and application engineering expertise and our ability to serve customers globally. We continually develop initiatives to improve our performance in these key areas. For the first six months of fiscal 2009, demand for our products serving the energy, industrial, pharmaceutical and chemical markets slowed, especially in the second quarter; we believe demand for these products was affected by the worldwide economic downturn, as well as lower oil and natural gas prices in fiscal 2009. In response to the recent uncertain global economic environment, we have implemented and continue to implement plans to address the weaker market environment in order to reduce the impact on our profitability while continuing to address the long-term strategic direction of our business platforms as discussed below. With approximately 61% of our sales outside the United States, we were unfavorably impacted by foreign currency translation in the first half of fiscal 2009 due to the U.S. Dollar strengthening relative to our other principal operating currencies, namely the British Pound, the Euro and the Canadian Dollar. 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 the shareholders’ equity. The devaluation of most foreign currencies against the U.S. Dollar in fiscal 2009 has impacted our financial condition at the end of the second quarter of fiscal 2009. Our business consists of three market focused segments: Fluid Management, Process Solutions and Romaco.

Fluid Management.Energy markets served by our Fluid Management segment are declining. Our primary objective for this segment is to ensure that we continue to capture and increase the opportunities in this market by reaching out to a wider market. We increased our manufacturing capacity through improved asset utilization and measured levels of capital expenditures, and we are delivering valued new product offerings in our niche market sectors. 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, grinders, rod guides, tubing rotators and pipeline closures, used in oil and gas exploration and recovery, specialty chemical, wastewater treatment and a variety of other industrial applications.

Process Solutions.Key end markets served by our Process Solutions segment, chemical and pharmaceutical, have slowed. Our primary objectives in this segment are to improve productivity through integration of operations and process improvements and to increase our presence in Asia. Our Process Solutions business segment designs, manufactures and services glass-lined reactors and storage vessels, standard and customized fluid-agitation equipment and systems and customized fluoropolymer-lined fittings, vessels and accessories, primarily for the pharmaceutical and specialty chemical markets.

Romaco.Our customer base within the key markets served by the Romaco segment, including pharmaceutical, cosmetics and healthcare, has been expanding in developing areas of the world, although these markets have also slowed. We remain focused on simplifying this business, consolidating duplicate facilities, managing its cost structure in order to further improve profit levels, and cost-effectively serving customers in developing global areas. 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 powder packaging for various products including tablets and powder; as well as customized packaging.

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The following tables present the components of our consolidated income statement and segment information for the three and six month periods of fiscal 2009 and 2008.

	Three Months Ended						Six Months Ended
	February 28,			February 29,			February 28,			February 29,
	2009			2008			2009			2008
Net Sales		100.0	%		100.0	%		100.0	%		100.0	%
Cost of sales		65.3			64.2			63.5			64.0
Gross profit		34.7			35.8			36.5			36.0
SG&A expenses		22.0			22.2			22.7			22.5
Other income		0.0			(0.6	)		0.0			(0.3	)
EBIT		12.7			14.2			13.8			13.8
Interest expense		0.1			0.4			0.0			0.4
Income tax expense		3.2			4.7			4.2			4.6
Minority interest		0.2			0.3			0.2			0.3
Net income		9.2	%		8.8	%		9.4	%		8.4	%

	Three Months Ended						Six Months Ended
	February 28,			February 29,			February 28,			February 29,
	2009			2008			2009			2008
	(In thousands, except percents)
Segment
Fluid Management:
Sales	$	72,318		$	76,509		$	154,588		$	148,864
EBIT		19,553			20,970			44,193			39,418
EBIT%		27.0	%		27.4	%		28.6	%		26.5	%
Process Solutions:
Sales	$	63,056		$	74,952		$	135,340		$	145,801
EBIT		4,667			7,474			11,536			15,430
EBIT%		7.4	%		10.0	%		8.5	%		10.6	%
Romaco:
Sales	$	28,451		$	33,471		$	51,868		$	63,803
EBIT		442			2,106			(1,001	)		3,651
EBIT%		1.6	%		6.3	%		(1.9	)%		5.7	%

The Company’s operating performance is evaluated using several measures. One of those measures, EBIT, is income before interest and income taxes and is reconciled to net income on our Consolidated Condensed Income Statement. We evaluate performance of our business segments and allocate resources based on EBIT. EBIT is not, however, a measure of performance calculated in accordance with accounting principles generally accepted in the United States and should not be considered as an alternative to net income as a measure of our operating results. EBIT is not a measure of cash available for use by management.

Impact of Other Charges

In the second quarter of fiscal 2008 we sold a facility related to a previously disposed Romaco segment product line for $4.0 million and a resulting gain of $1.1 million which is included on the “Other income” line of our Consolidated Condensed Income Statement.

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Three months ended February 28, 2009 and February 29, 2008

Net Sales

Consolidated net sales for the second quarter of fiscal 2009 were $163.8 million, $21.1 million lower than net sales for the second quarter of fiscal 2008. Excluding the impact of currency translation, sales decreased by $6.2 million, or 3.4%.

The Fluid Management segment had sales of $72.3 million in the second quarter of fiscal 2009 compared with $76.5 million in the second quarter of fiscal 2008, a decrease of $4.2 million, primarily due to foreign currency translation impact. Excluding currency translation, sales increased $0.6 million, or 0.7%. Orders for this segment were $55.8 million in the second quarter of fiscal 2009 compared to $74.2 million in the prior year period. Excluding the impact of foreign currency translation, orders decreased by 19.7%, mainly due to decreased demand for oilfield equipment products due to lower levels of oil and gas exploration and recovery activity fueled by lower oil and natural gas prices worldwide, and order cancellations. Ending backlog at February 28, 2009 is $44.1 million compared to $63.2 million at August 31, 2008.

The Process Solutions segment had sales of $63.1 million in the second quarter of fiscal 2009 compared with $75.0 million in the second quarter of fiscal 2008, a decrease of 15.9%. Excluding the impact of currency translation, sales decreased $4.5 million, or 6.0%, from the prior year period. Excluding currency translation, orders decreased 38.4% from prior year period. This decrease, we believe, is due to the worldwide economic downturn and credit crises. Ending backlog at February 28, 2009 is $100.8 million compared to $123.5 million at August 31, 2008.

The Romaco segment, which is primarily a Euro-based business, had sales of $28.5 million in the second quarter of fiscal 2009 compared with $33.5 million in the second quarter of fiscal 2008. Excluding the impact of currency translation, sales decreased $2.3 million or 6.9% from the prior year period. Adjusting for changes in currency exchange rates, orders decreased 51.1% from prior year levels due to the timing of large project orders and the current economic slowdown. Ending backlog at February 28, 2009 is $40.6 million compared to $51.3 million at August 31, 2008.

Earnings Before Interest and Income Taxes (EBIT)

Consolidated EBIT for the second quarter of fiscal 2009 was $20.8 million, a decrease of $5.4 million from the second quarter of fiscal 2008. Second quarter 2008 results included other income of $1.1 million resulting from a gain on the sale of a facility. After the net change in other income, EBIT decreased $4.3 million, primarily due to decreased sales caused by reduced demand as a result of the general worldwide economic downturn and a drop in oil and natural gas prices in fiscal 2009.

The Fluid Management segment had EBIT of $19.6 million in the second quarter of fiscal 2009 as compared with $21.0 million in the second quarter of fiscal 2008. Excluding foreign currency translation impact, EBIT declined by $0.6 million due to severance cost in 2009.

The Process Solutions segment had EBIT of $4.7 million in the second quarter of fiscal 2009 compared with $7.5 million in the second quarter of fiscal 2008, a decrease of $2.8 million. The decrease in EBIT is due principally to the lower sales volume described above and unfavorable product mix.

The Romaco segment had EBIT of $0.4 million in the second quarter of fiscal 2009, a decrease of $1.7 million from the second quarter of fiscal 2008. The change in other income contributed $1.1 million of this decrease and related to a facility disposition in fiscal 2008. The remaining $0.6 million decrease in profitability was a result of lower sales described above.

Interest Expense

Net interest expense was $0.1 million in the second quarter of fiscal 2009 and $0.8 million in the same period of fiscal 2008. The decrease resulted primarily from lower debt levels in fiscal 2009 due to repayment of $70 million of our Senior Notes on May 1, 2008.

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Income Taxes

The effective tax rate was 25.5% for the second quarter of fiscal 2009 compared to 33.7% in the prior year period. The effective tax rate was lower than the statutory tax rate due to repatriation of a portion of the earnings of certain international subsidiaries, which resulted in an overall lower effective tax rate.

The Company adopted the provisions of FIN No. 48 on September 1, 2007. The total amount of unrecognized tax benefits as of the date of adoption was $6.3 million all of which would affect the effective tax rate if recognized in future periods. As a result of the implementation of FIN No. 48, the Company recognized a $5.5 million increase in the liability for unrecognized tax benefits accounted for as a decrease to retained earnings (cumulative effect) as of September 1, 2007. The balance of unrecognized tax benefits including interest and penalties, as of February 28, 2009 and August 31, 2008 was $5.7 million and $6.3 million, respectively.

Six months ended February 28, 2009 and February 29, 2008

Net Sales

Consolidated net sales for the first half of fiscal 2009 were $341.8 million, $16.7 million lower than net sales for the same period of fiscal 2008. Excluding the impact of currency translation and an acquisition early in the second quarter of fiscal 2008, sales increased by $4.9 million, or 1.4%, mainly due to the strong performance of our Fluids Management segment, especially in the first quarter of fiscal 2009.

The Fluid Management segment had sales of $154.6 million in the first half of fiscal 2009 compared with $148.9 million in the same period of fiscal 2008. Excluding currency translation, sales increased by $13.5 million, or 9.1%, driven by strong demand for oilfield equipment products due to high levels of oil and gas exploration and recovery activity in the first quarter of fiscal 2009. Orders for this segment were $140.3 million in the first half of fiscal 2009 compared to $157.0 million in the same prior year period. Ending backlog at February 28, 2009 is $44.1 million compared to $63.2 million at August 31, 2008.

The Process Solutions segment had sales of $135.3 million in the first half of fiscal 2009 compared with $145.8 million in the same period of fiscal 2008, a decrease of 7.2%. Excluding the impact of currency translation and an acquisition early in the second quarter of fiscal 2008, sales decreased marginally by $0.4 million, or 0.3%, from the prior year period. Excluding currency translation and acquisition impact, orders decreased 19.4%, primarily driven by lower demand in our pharmaceutical markets. Ending backlog at February 28, 2009 is $100.8 million compared to $123.5 million at August 31, 2008.

The Romaco segment had sales of $51.9 million in the first half of fiscal 2009 compared with $63.8 million in the same period of fiscal 2008. Excluding the impact of currency translation, sales decreased $8.2 million or 12.9% over the prior year period. Adjusting for changes in currency exchange rates, orders decreased 34.7% from the same period in the prior year due to the timing of large project orders and the current economic slowdown. Ending backlog at February 28, 2009 is $40.6 million compared to $51.3 million at August 31, 2008.

Earnings Before Interest and Income Taxes (EBIT)

Consolidated EBIT for the first half of fiscal 2009 was $47.2 million, a decrease of $2.2 million from the same period of the prior year. First half of 2008 results included other income of $1.1 million resulting from a gain on the sale of a facility. After the net change in other income, EBIT decreased $1.1 million. Excluding the impact of currency translation and other income in fiscal 2008, EBIT increased by $0.6 million. This increase is attributable to the higher sales volume described above, offset by some higher operating costs.

The Fluid Management segment had EBIT of $44.2 million in the first half of fiscal 2009 as compared with $39.4 million in the same prior year period, an increase of $4.8 million, or 12.1%. This increase in EBIT is due principally to the sales increase described above.

The Process Solutions segment had EBIT of $11.5 million in the first half of fiscal 2009 compared with $15.4 million in the comparable period of fiscal 2008. Excluding the impact of currency translation and an acquisition in the second quarter of fiscal 2008, six month EBIT decreased $3.1 million. This decrease is due principally to unfavorable sales mix and higher selling and operating expenses.

The Romaco segment had negative EBIT of $1.0 million in the first half of fiscal 2009, a decrease of $4.7 million over the same period of the prior year. The change in other income contributed $1.1 million of this decrease and related to a facility disposition in fiscal 2008. The remaining $3.6 million decrease in profitability was due to lower sales volume described above.

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Interest Expense

Net interest expense was $0.1 million in the first half of fiscal 2009 and $1.5 million in the same period of fiscal 2008. The decrease resulted primarily from lower debt levels in fiscal 2009 due to repayment of $70 million of our Senior Notes on May 1, 2008.

Income Taxes

The effective tax rate was 30.3% for the first half of fiscal 2009 compared with 34.5% in the comparable prior year period. The effective tax rate was lower than the statutory tax rate due to repatriation of a portion of the earnings of certain international subsidiaries, which resulted in an overall lower effective tax rate.

The Company adopted the provisions of FIN No. 48 on September 1, 2007. The total amount of unrecognized tax benefits as of the date of adoption was $6.3 million all of which would affect the effective tax rate if recognized in future periods. As a result of the implementation of FIN No. 48, the Company recognized a $5.5 million increase in the liability for unrecognized tax benefits accounted for as a decrease to retained earnings (cumulative effect) as of September 1, 2007. The balance of unrecognized tax benefits, including interest and penalties as of February 28, 2009 and August 31, 2008 was $5.7 million and $6.3 million, respectively.

Liquidity and Capital Resources

Operating Activities

In the first half of fiscal 2009, our cash flow provided by operations was $4.9 million, $13.9 million lower than in the same period of the prior year. This change was primarily due to the change in the composition of our working capital with increased inventory levels, and lower cash collections compared to the same period last year. Seasonally we use cash in the first half of the year for payments related to certain assets and liabilities such as insurance premiums and variable compensation.

We expect our fiscal 2009 operating cash flow to be adequate to fund fiscal year 2009 operating needs, shareholder dividends, planned capital expenditures and any additional share repurchases.

Investing Activities

Our capital expenditures were $7.0 million in the first half of fiscal 2009 compared with $8.8 million in the first half of fiscal 2008. Our capital expenditures were primarily for capacity expansion in the Fluid Management segment, support for cost reduction initiatives, and replacement items. There was no cash generated from facility sales in fiscal 2009, compared with $4.0 million in the prior year. We made an acquisition in our Process Solutions segment in the second quarter of fiscal 2008 for $5.1 million.

Financing Activities

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 have acquired approximately 2.0 million of our outstanding common shares for $39.0 million under the repurchase program in the first quarter of fiscal 2009.

Credit Agreement

Our Bank Credit Agreement (“Agreement”) provides that we may borrow on a revolving credit basis up to a maximum of $150 million and includes a $100 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 and the Senior Notes is unsecured, except for the pledge of the stock of our U.S. subsidiaries and two-thirds of the stock of certain non-U.S. subsidiaries. While no amounts are outstanding under the Agreement at February 28, 2009, we have $30.3 million of standby letters of credit outstanding at February 28, 2009. These standby letters of credit are used as security for advance payments received from customers, and

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for future payments to our vendors and reduce the amount we may borrow under the Agreement. Accordingly, under the Agreement we have $119.7 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.

Following is information regarding our long-term contractual obligations and other commitments outstanding as of February 28, 2009:

	Payments Due by Period
					Two to		Four to
Long-term contractual			One year		three		five		After five
obligations	Total		or less		years		years		years
	(In thousands)
Long-term debt	$	31,067	$	762	$	30,305	$	0	$	0
Operating leases (1)		17,000		6,000		7,000		3,000		1,000
Total contractual cash obligations	$	48,067	$	6,762	$	37,305	$	3,000	$	1,000

(1) Operating leases are estimated as of February 28, 2009, and consist primarily of building and equipment leases.

The only other commercial commitments outstanding were standby letters of credit of $30.3 million, which are substantially due within one year.

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, 2008. There have been no material changes in the accounting policies followed by us during fiscal year 2009 other than the adoption of Statement of Financial Accounting Standard (“SFAS”) No. 157, “Fair Value Measurements” and SFAS No. 159 “The Fair Value Option for Financial Assets and Financial Liabilities—Including an Amendment of FASB Statement No. 115”, as discussed in Notes 13 and 14.

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; increases in competition; changes in the availability and cost of our raw materials; foreign exchange rate fluctuations; work stoppages related to union negotiations; customer order cancellations; business disruptions caused by the implementation of business computer systems; the possibility of product liability suits that could harm our business; events or circumstances which result in an impairment of 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; 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.

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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 February 28, 2009. 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, 2008.

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 February 28, 2009. 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 (SEC) 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 February 28, 2009.

(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.

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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, 2008.

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

The Company did not repurchase any of its common shares during the quarter ended February 28, 2009.

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

a)	The Annual Meeting of Shareholders of Robbins & Myers, Inc. was held on January 7, 2009.
b)	Our Board of Directors is divided into two classes, with one class of directors elected at each annual meeting of shareholders. At the Annual Meeting on January 7, 2009, the following persons were elected directors of Robbins & Myers, Inc. for a term of office expiring at the annual meeting of shareholders to be held in 2011: Andrew G. Lampereur, Thomas P. Loftis, Dale L. Medford and Albert J. Neupaver. The other directors whose terms of office continued after the Annual Meeting are: David T. Gibbons, Richard J. Giromini, Stephen F. Kirk and Peter C. Wallace.
c)	At the Annual Meeting on January 7, 2009, two items were voted on by shareholders, namely:

1) The election of directors in which, as noted above, Messrs. Lampereur, Loftis, Medford and Neupaver were elected:

	Votes For		Votes Withheld
Andrew G. Lampereur		31,538,917		247,431
Thomas P. Loftis		31,305,231		481,117
Dale L. Medford		31,488,335		298,013
Albert J. Neupaver		31,601,344		185,004

2) Appointment of Ernst & Young LLP as our independent auditors for the fiscal year ending August 31, 2009, was approved with 31,487,989 votes cast for approval, 291,043 against approval and 7,311 abstentions.

Item 6. Exhibits

a) Exhibits — see INDEX TO EXHIBITS

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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: March 25, 2009	BY	/s/ Christopher M. Hix
		Christopher M. Hix
		Vice President and Chief Financial Officer (Principal Financial Officer)
DATE: March 25, 2009	BY	/s/ Kevin J. Brown
		Kevin J. Brown
		Corporate Controller (Principal Accounting Officer)

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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

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