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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION  FORM 10-K [X]
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934For the fiscal year ended August 31, 2004OR[   ]
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934For the transition period from  to
 Commission File Number 0-288 ROBBINS & MYERS, INC. 
  Ohio
    
    31-0424220(State or other jurisdiction of
    
    (I.R.S. employerincorporation)
    
    identification number)1400 Kettering Tower, Dayton, Ohio
    
    45423(Address of principal executive offices)
    
    (Zip Code)
 (937) 222-2610 
  Securities registered pursuant to Section 12(b) of the Act: Name of each exchange onTitle of each class
    
    which registered(1) Common Shares, without par value
    
    New York(2) 8.00 % Convertible Subordinated Notes, Due 2008
    
    New York
 Securities registered pursuant to Section 12(g) of the Act:    None 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 requirement for at least the past 90 days.       Yes [x]   No [  ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrants knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K.     [  ] Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act).       Yes [x]   No [  ]




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Number of Common Shares, without par value, outstanding
at October 15, 2004
    
    
    14,530,289Aggregate market value of Common Shares, without par
value, held by non-affiliates of the Company at February 29, 2004
(the last business day of the Companys second fiscal
quarter)
    
    $
    229,397,901
 DOCUMENT INCORPORATED BY REFERENCE Robbins & Myers, Inc., Proxy Statement, dated November 8, 2004, for its Annual
Meeting of Shareholders on December 8, 2004; definitive copies of the foregoing
have been filed with the Commission. Only such portions of the Proxy Statement
as are specifically incorporated by reference under Part III of this Report
shall be deemed filed as part of this Report.




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TABLE OF CONTENTS  ITEM 1. BUSINESSITEM 2. PROPERTIESITEM 3. LEGAL PROCEEDINGSITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSPART IIITEM 5. MARKET FOR THE REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIESITEM 6. SELECTED FINANCIAL DATAITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATACONSOLIDATED BALANCE SHEETCONSOLIDATED SHAREHOLDERS EQUITY STATEMENTCONSOLIDATED INCOME STATEMENTCONSOLIDATED CASH FLOW STATEMENTNOTES TO CONSOLIDATED FINANCIAL STATEMENTSITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSUREITEM 9A. CONTROLS AND PROCEDURESITEM 9B. OTHER INFORMATIONPART IIIITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTITEM 11. EXECUTIVE COMPENSATIONITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERSITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONSITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICESPART IVITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULESSIGNATURESINDEX TO EXHIBITSEX-21.1 List of SubsidiariesEX-23.1 ConsentEX-24.1 Power of AttorneyEX-31.1 CertificationEX-31.2 CertificationEX-32.1 CertificationEX-32.2 Certification    Table of Contents  
 ITEM 1. BUSINESS OVERVIEW Robbins & Myers, Inc. is an Ohio corporation. As used in this report, the terms
Company, we, our, or us mean Robbins & Myers, Inc. and its subsidiaries
unless the context indicates another meaning. We are a leading designer,
manufacturer and marketer of highly engineered, application-critical equipment
and systems for the pharmaceutical, energy and industrial markets worldwide.
Our principal brand names  Pfaudler®, Moyno®, Chemineer®, Laetus®,
FrymaKoruma®, Siebler®, Hapa® and Hercules®  hold the number one or two market
share position in the niche markets they serve. 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. Our fiscal 2004 sales were approximately $586 million, and no one
customer accounted for more than 5% of these sales. Our business consists of three market-focused segments: Pharmaceutical, Energy
and Industrial. Pharmaceutical. Our Pharmaceutical business segment includes our Reactor
Systems and Romaco businesses and is focused primarily on the pharmaceutical
and healthcare industries. Our Reactor Systems business designs, manufacturers
and markets primary processing equipment and engineered systems and we believe
has the leading worldwide position in glass-lined reactors and storage vessels.
Our Romaco business designs, manufacturers and markets secondary processing,
dosing, filling, printing and security equipment. Several of our Romaco brands
hold the number one or two worldwide position in the niche markets they serve.
Major customers of our pharmaceutical segment include Bayer, GlaxoSmithKline,
Merck, Novartis and Pfizer. Energy. Our Energy business segment designs, manufactures and markets equipment
and systems used in oil and gas exploration and recovery. Our equipment and
systems include hydraulic drilling power sections, down-hole pumps and a broad
line of ancillary equipment, such as rod guides, rod and tubing rotators,
wellhead systems, pipeline closure products and valves. These products and
systems are used at the wellhead and in subsurface drilling and production.
Several of our energy products, including hydraulic drilling power sections and
down-hole pumps, hold the number one or two worldwide position in their
respective markets. Major customers of our energy segment include Schlumberger
and Chevron Texaco. Industrial. Our Industrial business segment is comprised of our Moyno, Tarby,
Chemineer and Edlon businesses, which design, manufacture and market products
that are used in specialty chemical, wastewater treatment and a variety of
other industrial applications. Our Moyno and Tarby businesses manufacture pumps
that utilize progressing cavity technology to provide fluids-handling solutions
for a wide range of applications involving the flow of viscous, abrasive and
solid-laden slurries and sludges. Our Chemineer business manufactures
high-quality standard and customized fluid-agitation equipment and systems. Our
Edlon business manufactures customized fluoropolymer-lined pipe, fittings,
vessels and accessories. Our industrial segment has a highly diversified
customer base and sells its products to over 3,500 customers worldwide. Information concerning our sales, income before interest and income taxes
(EBIT), identifiable assets by segment, and sales and identifiable assets by
geographic area for the years ended August 31, 2004, 2003 and 2002 is set forth
in Note 12 to the Consolidated Financial Statements included at Item 8 and is
incorporated herein by reference. Pharmaceutical Business Segment Our Pharmaceutical business segment, which includes our Reactor Systems and
Romaco businesses, primarily serves the pharmaceutical, healthcare,
nutriceutical and fine chemicals markets. We believe that long term our
Pharmaceutical business segment will benefit from high levels of capital
expenditures within these industries. We expect the need for new and enhanced
processing equipment will be driven by numerous factors, including the
accelerating pace of the drug discovery process, the cost advantages of
pharmaceuticals over alternative forms of treatment, the aging of the
population, the increasing availability of generic drugs due to the expiration
of patents, the impact of increasing direct-to-consumer advertising by
pharmaceutical manufacturers, the growing demand for nutriceutical products and
escalating healthcare expenditures in emerging markets. 1




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Reactor Systems Our Reactor Systems business, which includes our Pfaudler and TyconTechnoglass
brands, designs, manufactures and markets glass-lined reactor and storage
vessels, engineered systems, mixing systems and accessories, including
instrumentation and piping. This equipment is principally used in the primary
processing of pharmaceuticals and fine chemicals. A reactor system performs
critical functions in batch processing by providing a pressure- and
temperature-controlled agitation environment for the often complex chemical
reactions necessary to process pharmaceuticals and fine chemicals. To produce a reactor, we fabricate a specialized steel vessel, which may
include an outer jacket for a heating and cooling system, and line the vessel
with glass by bonding the glass to the inside steel surface.
Application-specific glasses are bonded with the inner steel surface of the
vessel to provide an inert and corrosion-resistant surface. Our Reactor Systems business sells reactor vessels with capacities up to 15,000
gallons, which are generally both custom ordered and designed, and are often
equipped with accessories, such as drives, glass-lined agitators and baffles.
We also sell these vessels as part of an engineered system. Using our
application engineering expertise and our understanding of our customers
requirements, we are able to engineer and produce a complete modular system,
which may be installed at the customers facility or delivered to the customer
as a skid-mounted system. Additionally, we manufacture and sell glass-lined
storage vessels with capacities up to 25,000 gallons, primarily to the same
customers that use glass-lined reactor systems. Sales, Marketing and Distribution. We primarily market and sell Pfaudler and
TyconTechnoglass equipment and systems through our direct sales force, which
includes approximately 10 direct sales employees in the U.S. and 20 outside the
U.S., who are supported by numerous other personnel including our application
engineers. We also use approximately 30 manufacturers representatives in the
marketing of reactor systems equipment. We are focused on continuing to develop
preferred supplier relationships with major pharmaceutical companies as they
continue to expand their production operations in emerging markets and seek to
limit the number of suppliers that service their needs worldwide. Aftermarket Sales.Aftermarket products and services, which include field
service, replacement parts, accessories and reconditioning of glass-lined
vessels, are an important part of our Reactor Systems business. Glass-lined
vessels require regular maintenance and care because they are subjected to
harsh operating conditions, and there is often a need to maintain a high-purity
processing environment. Our aftermarket capabilities take advantage of our
large installed base of Pfaudler glass-lined vessels and meet the needs of our
customers, who are increasingly inclined to outsource various maintenance and
service functions. We service our own and competitors equipment from our various facilities and
have two units dedicated to serving the aftermarket  Glasteel Parts and
Service (GPS) and Chemical Reactor Services (CRS). GPS and CRS are the leading
providers of aftermarket services for glass-lined equipment in the U.S. and in
Europe, respectively. Through our joint venture, Universal Glasteel Equipment,
we refurbish and sell used, glass-lined vessels. Markets and Competition. We believe we have the number one worldwide market
position in glass-lined reactors and storage vessels, representing a global
market share in excess of 50%. Our Pfaudler brand has the leading market share
in glass-lined reactors and vessels, as well as the largest installed base in
most of the countries in which Pfaudler operates, including Germany, Mexico,
Brazil, India, Scotland and the U.S. Our TyconTechnoglass brand has the leading
market share in Italy and significant project business globally. Our Pfaudler
and TyconTechnoglass brands compete principally with DeDeitrich, a French
company, in all world markets except Japan, China and India. Romaco Romaco designs, manufactures and markets secondary processing, dosing, filling,
printing and security equipment used by the pharmaceutical, healthcare,
nutriceutical and cosmetics industries. The principal brand names in our Romaco
business are Laetus, FrymaKoruma, Hapa and Siebler. Romaco equipment and systems are used in:  
    
    secondary processing of pharmaceuticals and cosmetic liquids, solids, creams and powders; 2




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
    
    dosing, filling and sealing of vials, capsules, tubes, bottles and blisters; as well as customized packaging; and  
    
    high quality and high security on demand printing lines and robust, reliable packaging inspection systems. Romacos expertise extends from secondary processing through the final
packaging of pharmaceuticals, nutriceuticals and cosmetics. For example, Romaco
provides modular processing, dosing and filling systems, which can include
equipment for the in-line labeling of drugs and the printing of dispensing
packages. Romacos application engineers work closely with customers to design
specific equipment and systems to meet their requirements. Sales, Marketing and Distribution. We distribute Romaco products through our
distribution network, which currently includes 17 sales and service centers
around the world. In the geographic areas served by these centers, we sell
directly to end users through our own sales force. We use manufacturers
representatives to cover territories that are not effectively covered by our
direct sales network. Aftermarket Sales. Aftermarket sales of our Romaco business were approximately
$51 million in fiscal 2004, or 29% of Romacos total sales. Included in these
aftermarket sales are certain proprietary consumables, such as inks and labels. Markets and Competition. Romaco has a large installed base of equipment in
Europe, where it has its greatest market share, and a smaller presence in the
U.S. and Asia. We believe there are opportunities in the U.S. and Asia to
effectively introduce Romaco products to customers in these markets. We believe
Romaco is one of the top three worldwide manufacturers of the type of
pharmaceutical equipment it provides; however, the market is fragmented with
many competitors, none of which is dominant. Given the fragmented nature of the
industry, we believe there are strategic opportunities to expand our market
share through acquisitions of companies and particular product lines. Energy Business Segment Our energy business designs, manufactures and markets a variety of specialized
equipment and systems used in oil and gas exploration and recovery. Our
equipment and systems are used at the wellhead and in subsurface drilling and
production and include:  
    
    hydraulic drilling power sections and down-hole progressing cavity pumps, which we market under our Moyno brand name;  
    
    tubing wear prevention equipment, such as rod guides and rod and tubing rotators;  
    
    a broad line of ancillary equipment used at the wellhead; and  
    
    pipeline closure products and valves, which we market under our Yale, Hercules and Sentry brand names. Hydraulic drilling power sections are used to drive the drill bit in horizontal
and directional drilling applications, often drilling multiple wells from a
single location. Down-hole pumps are used primarily to lift crude oil to the
surface where there is insufficient natural pressure and for dewatering gas
wells. The largest oil and natural gas recovery markets that benefit from using
down-hole pumps are in Canada, the U.S., Venezuela, Indonesia and Kazakhstan.
Rod guides are placed on down-hole rods used to pump oil to protect the rods
and the production tubing from damage during operation and to enhance the flow
of fluid to the surface. Tubing rotator products are an effective way of evenly
distributing down-hole tubing wear. Wellhead products are used at the wellhead
to control the flow of oil, gas and other material from the well. Pipeline
closure products are used in oil and gas pipelines to allow access to a
pipeline at selected intervals for inspection and cleaning. Principal brands of
our energy segment include Moyno, Yale and Hercules. Sales, Marketing and Distribution. We sell our hydraulic drilling power
sections directly to oilfield service companies through our sales office near
Houston, Texas. We sell our tubing wear prevention products and certain
wellhead equipment in the U.S. and Canada through major national distributors
and our service centers in key 3




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oilfield locations. We currently operate seven service centers in the U.S. and
six service centers in Alberta, Canada. We sell down-hole pumps in the U.S.
through three distributors; in Canada and Venezuela through our service
centers; and in Asia through several distributors. We sell wellhead and closure
products through distributor networks in the U.S. and Canada. Aftermarket Sales. Aftermarket sales in our energy business consist principally
of the relining of stators and the refurbishment of rotors. However,
replacement items, such as power sections and down-hole pump rotors and rod
guides, which wear out after regular usage, are complete products and are not
identifiable by us as aftermarket sales. Markets and Competition. Our energy business is a leading manufacturer of
hydraulic drilling power sections worldwide. We are also the leading
manufacturer of rod guides, wellhead components and pipeline closure products
and the second leading manufacturer of down-hole progressing cavity pumps.
While the oil and gas exploration and recovery equipment marketplace is highly
fragmented, we believe that, with our leading products, we are effectively
positioned as a full-line supplier with the capability to provide customers
with complete system sourcing. Oil and gas service companies use the most advanced technologies available in
the exploration and recovery of oil and gas. Accordingly, new product
innovation is critical to our business. We continually develop new elastomer
compounds, as well as new stator manufacturing technologies, for use in power
sections and down-hole pumps that allow drilling and recovery operations to be
conducted in deeper formations and under more adverse conditions. We are also
focused on innovations that reduce downtime in drilling and production
activities for end-users of our equipment who incur high costs for any
downtime. In addition, we regularly introduce new wellhead equipment and rod
guide designs and materials to improve the efficiency of well production. Industrial Business Segment Our industrial business segment is comprised of our Moyno, Tarby, Chemineer and
Edlon businesses, which design, manufacture and market products that are used
in specialty chemical, wastewater treatment and a variety of other industrial
applications. Our industrial businesses have strong brand names and market
share and maintain strict operating discipline. Moyno and Tarby Our Moyno and Tarby businesses design, manufacture and market progressing
cavity pumps and related products for use in the wastewater treatment,
specialty chemical, food and beverage, pulp and paper and general industrial
markets. Prices range from several hundred dollars for small pumps to $200,000
for large pumps, such as those used in wastewater treatment applications. Progressing cavity technology utilizes a motor-driven, high-strength, single or
multi-helix rotor within an elastomer-lined stator. The spaces between the
helixes create continual cavities, which enable the fluid to move from the
suction end to the discharge end. The continuous seal creates positive
displacement and an even flow regardless of the speed of the application.
Progressing cavity pumps are versatile as they can be positioned at any angle
and can deliver flow in either direction without modification or accessories.
Since progressing cavity pumps have no valves, they are able to efficiently
handle fluids ranging from high-pressure water and shear-sensitive materials to
heavy, viscous, abrasive and solid-laden slurries and sludges in municipal
wastewater treatment operations. Sales, Marketing and Distribution. We sell our pumps through approximately 35
U.S. and 30 non-U.S. distributors and approximately 25 U.S. and 15 non-U.S.
manufacturers representatives. These networks are managed by five regional
sales offices in the U.S. and offices in the U.K., Mexico, China and Singapore. Markets and Competition. Moyno has a large installed base and a dominant market
share in progressing cavity pumps in the U.S. and a smaller presence in Europe
and Asia. While we believe Moyno is the U.S. leader in the manufacture of
progressing cavity pumps, the worldwide market is highly competitive and
includes several competitors, none of which is dominant. In addition, there are
several other types of positive displacement pumps, including gear, lobe and
air-operated diaphragm pumps that compete with progressing cavity pumps in
certain applications. 4




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Chemineer Chemineer manufactures industrial mixers that range in price from hundreds of
dollars for small portable mixers to over $1 million for large, customized
mixers. These products include top-entry, side-entry, gear-driven, belt-driven,
high-shear and static mixers, which are marketed under the Chemineer, Greerco,
Kenics and Prochem brand names for various industrial applications, ranging
from simple storage tank agitation to critical applications in polymerization
and fermentation processes. Chemineers high-quality gear-driven agitators are available in various sizes,
a wide selection of mounting methods and drives of up to 1,000 horsepower.
Chemineer competes in the small-mixer market with DT small mixers, a line of
fixed mounted mixers with drive ranges from one-half to five horsepower for
less demanding applications, and the Chemineer XPress portable mixers, a line
of portable gear-driven and direct-drive mixers, which can be clamp mounted to
handle small-batch mixing needs. Our belt-driven, side-entry mixers are used primarily in the pulp and paper and
mineral processing industries. Our static mixers are continuous mixing and
processing devices with no moving parts, and are used in specialized mixing and
heat transfer applications. Our high-shear mixers are used primarily for paint,
cosmetics, plastics and adhesive applications. Sales, Marketing and Distribution. Chemineer sells industrial mixers through
regional sales offices and through a network of approximately 30 U.S. and 30
non-U.S. manufacturers representatives. Our Chemineer business maintains
regional sales offices in Mexico, Canada, the U.K., Singapore, China and Korea. Markets and Competition. The mixer equipment industry is highly competitive. We
believe that Lightnin, a unit of SPX Corporation, holds more than 50% of the
world market share, and that we hold the number two market position worldwide.
In addition, there are numerous smaller manufacturers with whom we compete. We
believe that Chemineers application engineering expertise, diverse products,
product quality and customer support capabilities allow us to compete
effectively in the marketplace. Edlon Edlon manufactures and markets fluoropolymer-lined pipe and fittings,
fluoropolymer coated and lined vessels for process equipment, fluoropolymer
roll covers for paper machines and glass-lined reactor systems accessories.
Edlons products are used principally in the specialty chemical, pharmaceutical
and semiconductor markets to provide corrosion protection and high-purity fluid
assurance and in the paper industry for release applications. Edlon has
introduced newly designed storage tanks for de-ionized water and ultra-pure
chemicals and expanded the range of products it sells to chip producers and
wafer manufacturers in the semiconductor industry. Sales, Marketing and Distribution. We sell our Edlon products in the U.S.
through a distributor network for higher-volume items, such as lined pipe and
fittings, as well as through our direct sales force and sales representatives
for lower-volume products. Outside the U.S., we sell our Edlon products through
sales representatives, except in the U.K. where we sell our products through
our direct sales force. Markets and Competition. Edlon primarily competes by offering highly engineered
products and products made for special needs, which are not readily supplied by
competitors. Edlon is able to compete effectively based on its extensive
knowledge and application expertise with fluoropolymers. BACKLOG Our order backlog was $114.3 million at August 31, 2004 compared with $111.4
million at August 31, 2003. We expect to ship substantially all of our backlog
during the next 12 months. CUSTOMERS Sales are not concentrated with any customer, as no customer represented more
than 5% of sales in fiscal 2004, 2003 or 2002. 5




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RAW MATERIALS Raw materials are purchased from various vendors that generally are located in
the same country as our facility using the raw materials. Because of high
global demand for steel, the costs have increased significantly in 2004.
However, the supply of steel and other raw materials and components has been
adequate and available without significant delivery delays. No events are known
or anticipated that would change the availability of raw materials. No one
supplier provides more than 5% of our raw materials. GENERAL We own a number of patents relating to the design and manufacture of our
products. While we consider these patents important to our operations, we
believe that the successful manufacture and sale of our products depend more
upon technological know-how and manufacturing skills. We are committed to
maintaining high quality manufacturing standards and have completed ISO
certification at several facilities. During fiscal 2004, we spent approximately $6.7 million on research and
development activities compared with $6.4 million in fiscal 2003 and $6.2
million in fiscal 2002. Compliance with federal, state and local laws regulating the discharge of
materials into the environment is not anticipated to have any material effect
upon our capital expenditures, earnings or competitive position. At August 31, 2004, we had 3,824 employees, which included approximately 600 at
majority-owned joint ventures. Approximately 725 of these employees were
covered by collective bargaining agreements at various locations. The labor
agreement with the employees of Chemineers principal manufacturing facility
extends to March of 2007. The labor agreement with the employees of Pfaudlers
facility in Rochester, New York extends to September 2007. The labor agreement
with the employees of Moynos principal manufacturing facility expires in
February 2005. The Company considers labor relations at each of its locations
to be good. CERTIFICATIONS Peter C. Wallace, our President and Chief Executive Officer, certified to the
New York Stock Exchange on October 22, 2004 that, as of that date, he was not
aware of any violation by the Company of the NYSEs Corporate Governance
Listing Standards. We have filed with the SEC the certifications of Mr.
Wallace and Kevin J. Brown, our Chief Financial Officer, that are required by
Section 302 of the Sarbanes-Oxley Act of 2002 relating to the financial
statements and disclosures contained in our Annual Report on Form 10-K for the
year ended August 31, 2004. AVAILABLE INFORMATION We make available free of charge on or through our web site, at
www.robbinsmyers.com, our annual reports on Form 10-K, quarterly reports on

Form 10-Q, current reports on Form 8-K and all amendments to those reports as
soon as reasonably practicable after such materials are electronically filed
with the Securities and Exchange Commission (SEC). Additionally, the public
may read and copy any materials we file with the SEC at the SECs Public
Reference Room at 450 Fifth Street, N.W., Washington, D.C., 20549. Information
regarding operation of the Public Reference Room is available by calling the
SEC at 1-800-SEC-0300. Information that we file with the SEC is also available
at the SECs web site at www.sec.gov. We also post on our web site the following corporate governance documents:
Corporate Governance Guidelines, Code of Business Conduct, and the Charters of
our Audit, Compensation, and Nominating and Governance Committees. Copies of
the foregoing documents are also available in print to any shareholder who
requests it by writing our Corporate Secretary, Robbins & Myers, Inc., 1400
Kettering Tower, Dayton, Ohio 45423. 6




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ITEM 2. PROPERTIES Facilities Our executive offices are located in Dayton, Ohio. The executive offices are
leased and occupy approximately 10,000 square feet. Set forth below is certain
information relating to our principal operating facilities. Square
    
    Products Manufactured orLocation
    
    Footage
    
    Other Use of FacilityNorth and South America:Rochester, New York
    
    
    500,000
    
    
    
    
    
    
    Reactor SystemsSpringfield, Ohio
    
    
    275,000
    
    
    
    
    
    
    Industrial Pump ProductsDayton, Ohio
    
    
    160,000
    
    
    
    
    
    
    Industrial MixersBorger, Texas
    
    
    115,000
    
    
    
    
    
    
    Wellhead products for Energy SystemsWillis, Texas
    
    
    110,000
    
    
    
    
    
    
    Down-hole pumps and power sections for Energy SystemsMexico City, Mexico
    
    
    110,000
    
    
    
    
    
    
    Reactor Systems, Industrial Pumps and Industrial MixersTaubate, Brazil
    
    
    100,000
    
    
    
    
    
    
    Reactor SystemsCharleston, West Virginia
    
    
    100,000
    
    
    
    
    
    
    Corrosion-Resistant ProductsTomball, Texas
    
    
    75,000
    
    
    
    
    
    
    Valves and closures for Energy SystemsAvondale, Pennsylvania
    
    
    50,000
    
    
    
    
    
    
    Corrosion-Resistant ProductsWest Chester, Pennsylvania
    
    
    30,000
    
    
    
    
    
    
    Corrosion-Resistant ProductsNorth Andover, Massachusetts
    
    
    30,000
    
    
    
    (1
    )
    
    Industrial MixersSao Jose Dos Campos, Brazil
    
    
    30,000
    
    
    
    
    
    
    Reactor SystemsEdmonton, Alberta, Canada
    
    
    25,000 to
    
    
    
    (2
    )
    
    Energy Systems, including two service centers2 plants
    
    
    30,000 each
    
    
    
    (1
    )Pequannock, New Jersey
    
    
    62,000
    
    
    
    (1
    )
    
    Index equipmentEurope:Schwetzingen, Germany
    
    
    400,000
    
    
    
    
    
    
    Reactor SystemsLeven, Scotland
    
    
    240,000
    
    
    
    
    
    
    Reactor Systems and Corrosion-Resistant ProductsQuarto DAltino, Italy
    
    
    120,000
    
    
    
    
    
    
    Reactor SystemsSan Donà di Piave, Italy
    
    
    90,000
    
    
    
    
    
    
    Reactor SystemsDerby, England
    
    
    20,000
    
    
    
    (1
    )
    
    Industrial MixersPetit-Rechain, Belgium
    
    
    15,000
    
    
    
    
    
    
    Power sections for Energy SystemsBolton, England
    
    
    24,000
    
    
    
    
    
    
    Reactor SystemsSouthampton, England
    
    
    10,000
    
    
    
    (1
    )
    
    Industrial Pump ProductsCampbridgeshire, England
    
    
    8,500
    
    
    
    
    
    
    Distribution Center-Romaco ProductsDAgen, France
    
    
    15,000
    
    
    
    (1
    )(5)
    
    Manufacture of Pharma ModulesAlsbach - Hahnlein, Germany
    
    
    21,000
    
    
    
    
    
    
    Laetus equipmentRemschingen, Germany
    
    
    61,000
    
    
    
    (1
    )
    
    Siebler equipmentKarlsruhe, Germany
    
    
    47,000
    
    
    
    
    
    
    Horn & Noack equipmentNeuenburg, Germany
    
    
    70,000
    
    
    
    
    
    
    Frymakoruma equipmentBologna, Italy
    
    
    44,000
    
    
    
    (1
    )
    
    Macofar equipmentBologna, Italy
    
    
    11,000
    
    
    
    (1
    )
    
    Promatic equipmentMilano, Italy
    
    
    15,000
    
    
    
    
    
    
    Unipac equipmentLucca, Italy
    
    
    52,000
    
    
    
    
    
    
    Zanchetta equipmentVolketswil, Switzerland
    
    
    50,000
    
    
    
    (1
    )
    
    HAPA equipmentRheinfelden, Switzerland
    
    
    115,000
    
    
    
    
    
    
    Frymakoruma equipment
 7




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##### Table of Contents



Square
    
    Products Manufactured orLocation
    
    Footage
    
    Other Use of FacilityAustraliaTingalpa, Brisbane
    
    
    24,000
    
    
    
    (1
    )
    
    Bosspak equipmentAsia:Gujurat, India
    
    
    350,000
    
    
    
    (3
    )
    
    Reactor SystemsSuzhou, China
    
    
    150,000
    
    
    
    (4
    )
    
    Reactor SystemsSingapore
    
    
    5,000
    
    
    
    (1
    )
    
    Industrial Pump Products
  (1)
    
    Leased facility.  (2)
    
    R&M Energy Systems also operates an additional 13 (7 U.S., 6 Canada)
Service Centers, primarily in leased facilities between 5,000 and 10,000
square feet each. These locations are in the oil producing regions of the
U.S. and Canada and manufacture rod guides and distribute other of the
Companys Energy Systems products. Locations are: Bakersfield,
California, Oklahoma City, Oklahoma, Odessa, Texas, Casper, Wyoming, Mt.
Pleasant, Michigan, Williston, North Dakota, Wooster, Ohio and in Alberta,
Canada  Brooks, Elk Point, Provost, Maidstone, Sedgewick and Taber.  (3)
    
    Facility of a 51%-owned subsidiary.  (4)
    
    Facility of a 76%-owned subsidiary.  (5)
    
    Facility of a 50% owned subsidiary. 8




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##### Table of Contents



ITEM 3. LEGAL PROCEEDINGS There are claims, suits and complaints arising in the ordinary course of
business filed or pending against us. Although we cannot predict the outcome of
such claims, suits and complaints with certainty, we do not believe that the
disposition of these matters will have a material adverse effect on our
financial position, results of operations or cash flows. 
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. 9




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##### Table of Contents



Executive Officers of the Registrant Peter C. Wallace, age 50, has been President and Chief Executive Officer of the
Company since July 12, 2004. From October 2001 to July 2004, Mr. Wallace was
President and CEO of IMI Norgren Group (sophisticated motion and fluid control
systems for original equipment manufacturers). He was employed by Rexnord
Corporation (power transmission and conveying components) for 25 years serving
as President and Group Chief Executive from 1998 until October 2001 and holding
a variety of senior sales, marketing, and international positions prior
thereto. Kevin J. Brown, age 46, has been our Vice President and Chief Financial Officer
since January 2000. Previously, he was our Controller and Chief Accounting
Officer since December 1995. Prior to joining us, he was employed by the
accounting firm of Ernst & Young LLP for 15 years. Saeid Rahimian, age 46, has been a Group Vice President and President of our
Reactor Systems business since May 2004. He has also been President of our R&M
Energy Systems business since 1998. John R. Beatty, age 52, has been our Vice President, Human Resources since
March 2004. From 1996 to 2004, he was Vice President, Human Resources for DT
Industries, Inc., and prior to 1996, he was Director of Human Resources for
Rockwell Software Inc., a subsidiary of Rockwell Inc. Albert L. Raiteri, age 63, has been our Treasurer since December 1998. He has
held various positions in finance and accounting for us since 1972. Thomas J. Schockman, age 40, has been our Corporate Controller and Chief
Accounting Officer since March 2000. Prior to joining us, he was employed as
Controller at Spinnaker Coating, Inc. for three years and, prior to that, with
the accounting firm of Ernst & Young LLP for ten years. Joseph M. Rigot, age 61, has been our Secretary and General Counsel since 1990.
He has been a partner with the law firm of Thompson Hine LLP, Dayton, Ohio for
over 10 years. The term of office of our executive officers is until the next Annual Meeting
of Directors (December 8, 2004) or until their respective successors are
elected. 10




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##### Table of Contents



PART II 
 ITEM 5. MARKET FOR THE REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES (A) Our common shares trade on the New York Stock Exchange under the symbol
RBN. The prices presented in the following table are the high and low closing
prices for the common shares for the periods presented. DividendsHigh
    
    Low
    
    PaidFiscal 20041st Quarter
    
    $
    23.38
    
    
    $
    20.49
    
    
    $
    0.0552nd Quarter
    
    
    22.45
    
    
    
    18.70
    
    
    
    0.0553rd Quarter
    
    
    22.95
    
    
    
    19.55
    
    
    
    0.0554th Quarter
    
    
    22.55
    
    
    
    17.32
    
    
    
    0.055Fiscal 20031st Quarter
    
    $
    20.05
    
    
    $
    14.70
    
    
    $
    0.0552nd Quarter
    
    
    19.64
    
    
    
    14.80
    
    
    
    0.0553rd Quarter
    
    
    19.25
    
    
    
    13.29
    
    
    
    0.0554th Quarter
    
    
    22.77
    
    
    
    18.50
    
    
    
    0.055
 (B) As of October 15, 2004, we had approximately 549 shareholders of record.
Based on requests from brokers and other nominees, we estimate there are
approximately an additional 2,340 shareholders. (C) Dividends paid on common shares are presented in the table in Item 5(A).
Our credit agreement includes certain covenants which restrict our payment of
dividends. The amount of cash dividends plus stock repurchases we may incur in
each fiscal year is restricted to the greater of $3,500,000 or 50% of our net
income for the immediately preceding fiscal year, plus a portion of any unused
amounts from the preceding fiscal year. For purposes of this test, stock
repurchases related to stock option exercises or in connection with withholding
taxes due under any stock plan in which employees or directors participate are
not included. Under this formula, such cash dividends and treasury stock
purchases in fiscal 2005 are limited to $8,477,000. 11




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##### Table of Contents



ITEM 6. SELECTED FINANCIAL DATA Selected Financial Data (1)
Robbins & Myers, Inc. and Subsidiaries
(In thousands, except percents, per share, shareholder and employee data) 5 YearAverageGrowth
    
    2004
    
    2003
    
    2002
    
    2001
    
    2000
    
    1999Operating ResultsOrders
    
    
    9.5
    %
    
    $
    586,948
    
    
    $
    546,357
    
    
    $
    508,943
    
    
    $
    427,275
    
    
    $
    412,948
    
    
    $
    373,135Ending backlog
    
    
    
    
    
    
    114,267
    
    
    
    111,375
    
    
    
    125,665
    
    
    
    143,522

    
    
    
    80,484
    
    
    
    74,330Sales
    
    
    7.9
    
    
    
    585,758
    
    
    
    560,775
    
    
    
    526,373
    
    
    
    425,902
    
    
    
    406,714
    
    
    
    400,142Gross profit (2)
    
    
    7.2
    
    
    
    193,004
    
    
    
    188,816
    
    
    
    173,764
    
    
    
    140,734
    
    
    
    140,234
    
    
    
    136,166EBIT (2,3,4)
    
    
    (1.9
    )
    
    
    30,317
    
    
    
    38,709
    
    
    
    40,947
    
    
    
    43,236
    
    
    
    43,572
    
    
    
    33,288Net income (2,3)
    
    
    (3.8
    )
    
    
    9,770
    
    
    
    14,368
    
    
    
    14,503
    
    
    
    19,631
    
    
    
    18,056
    
    
    
    11,849Financial ConditionTotal assets
    
    
    
    
    
    $
    733,242
    
    
    $
    704,456
    
    
    $
    679,925
    
    
    $
    660,260
    
    
    $
    495,679
    
    
    $
    493,852Total debt
    
    
    
    
    
    
    181,702
    
    
    
    193,603
    
    
    
    208,446
    
    
    
    258,894
    
    
    
    177,864
    
    
    
    191,272Shareholders equity
    
    
    
    
    
    
    303,112
    
    
    
    287,006
    
    
    
    260,493
    
    
    
    197,902
    
    
    
    167,182
    
    
    
    154,226Total capitalization
    
    
    
    
    
    
    484,814
    
    
    
    480,609
    
    
    
    468,939
    
    
    
    456,796
    
    
    
    345,046
    
    
    
    345,498Performance StatisticsPercent of sales:Gross profit (2)
    
    
    
    
    
    
    32.9
    %
    
    
    33.7
    %
    
    
    33.0
    %
    
    
    33.0
    %
    
    
    34.5
    %
    
    
    34.0
    %EBIT (2,3,4)
    
    
    
    
    
    
    5.2
    
    
    
    6.9
    
    
    
    7.8
    
    
    
    10.2
    
    
    
    10.7
    
    
    
    8.3Debt as a % of total capitalization
    
    
    
    
    
    
    37.5
    
    
    
    40.3
    
    
    
    44.5
    
    
    
    56.7
    
    
    
    51.5
    
    
    
    55.4EBIT return on average net assets (9)
    
    
    
    
    
    
    6.0
    
    
    
    8.0
    
    
    
    8.9
    
    
    
    12.4
    
    
    
    12.6
    
    
    
    9.3Net income return on avg. equity
    
    
    
    
    
    
    3.2
    
    
    
    5.2
    
    
    
    6.7
    
    
    
    11.2
    
    
    
    11.2
    
    
    
    7.8Per Share DataNet income per share, diluted (2,3)
    
    
    (8.8
    )%
    
    $
    0.67
    
    
    $
    1.00
    
    
    $
    1.15
    
    
    $
    1.63
    
    
    $
    1.53
    
    
    $
    1.06Dividends declared
    
    
    0.0
    
    
    
    0.22
    
    
    
    0.22
    
    
    
    0.22
    
    
    
    0.22
    
    
    
    0.22
    
    
    
    0.22Market price of common stock:High
    
    
    
    
    
    $
    23.38
    
    
    $
    22.77
    
    
    $
    29.28
    
    
    $
    29.25
    
    
    $
    24.50
    
    
    $
    25.88Low
    
    
    
    
    
    
    17.32
    
    
    
    13.29
    
    
    
    18.91
    
    
    
    21.56
    
    
    
    15.19
    
    
    
    15.69Close
    
    
    (4.1
    )%
    
    
    19.10
    
    
    
    22.73
    
    
    
    18.91
    
    
    
    28.38
    
    
    
    23.88
    
    
    
    23.50P/E ratio at August 31, diluted
    
    
    
    
    
    
    28.51
    
    
    
    22.73
    
    
    
    16.44
    
    
    
    17.41
    
    
    
    15.61
    
    
    
    22.17Other DataCash flow from operations
    
    
    
    
    
    $
    26,353
    
    
    $
    45,636
    
    
    $
    44,540
    
    
    $
    30,984
    
    
    $
    36,040
    
    
    $
    39,463Capital expenditures, net
    
    
    
    
    
    
    9,884
    
    
    
    7,869
    
    
    
    15,112
    
    
    
    20,200
    
    
    
    19,842
    
    
    
    11,612Free cash flow (5)
    
    
    
    
    
    
    16,469
    
    
    
    37,767
    
    
    
    29,428
    
    
    
    10,784
    
    
    
    16,198
    
    
    
    27,851Amortization (3)
    
    
    
    
    
    $
    2,738
    
    
    $
    2,189
    
    
    $
    2,015
    
    
    $
    8,187
    
    
    $
    8,077
    
    
    $
    7,660Depreciation
    
    
    
    
    
    
    18,639
    
    
    
    20,093
    
    
    
    20,028
    
    
    
    16,161
    
    
    
    16,293
    
    
    
    16,861Enterprise value (6)
    
    
    0.5
    %
    
    
    459,168
    
    
    
    521,483
    
    
    
    479,483
    
    
    
    591,650
    
    
    
    439,493
    
    
    
    448,386Shares outstanding at year end
    
    
    
    
    
    
    14,527
    
    
    
    14,425
    
    
    
    14,333
    
    
    
    11,726
    
    
    
    10,956
    
    
    
    10,941Average diluted shares (7)
    
    
    
    
    
    
    16,285
    
    
    
    16,492
    
    
    
    14,688
    
    
    
    13,465
    
    
    
    13,416
    
    
    
    13,535Number of shareholders (8)
    
    
    
    
    
    
    2,889
    
    
    
    2,875
    
    
    
    2,809
    
    
    
    2,885
    
    
    
    2,932
    
    
    
    3,256Number of employees
    
    
    
    
    
    
    3,824
    
    
    
    3,904
    
    
    
    3,921
    
    
    
    4,334
    
    
    
    3,284
    
    
    
    3,244
 Notes to Selected Financial Data  1.
    
    Fiscal 2003 reflected the acquisition of Tarby on November 15, 2002.
Fiscal 2001 reflected the acquisition of Romaco on August 31, 2001. The
August 31, 2001 consolidated balance sheet data included Romaco, but the
fiscal 2001 consolidated income statement data did not include Romaco.2.
    
    Fiscal 2004 included charges of $1,378,000 related to the retirement
of our former President & CEO and severance costs of $761,000 related to
the consolidation of our Reactor Systems business in Italy. See Note 4
of Notes to Consolidated Financial Statements. Fiscal 2001 included
charges of $2,492,000 related to our global reorganization program,
including inventory write-downs of $1,000,000 that are included in gross
profit. Fiscal 2000 included charges of $409,000 relating to the closure
of our Fairfield, California manufacturing facility, a gain of $918,000
related to the sale of our Fairfield facility and a charge of $500,000
related to Universal Glasteel Equipment, Inc. Fiscal 1999 included
charges of 12




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##### Table of Contents



$4,769,000 primarily for the closure of our Fairfield
facility and severance and early retirement costs of
$1,600,000. These special items decreased fiscal 2004 net income by
$1,390,000 ($.10 per diluted share), decreased fiscal 2001 net income by
$1,670,000 ($0.12 per diluted share), increased fiscal 2000 net income by
$6,000 ($0.00 per diluted share) and decreased fiscal 1999 net income by
$4,204,000 ($0.31 per diluted share).3.
    
    In July 2001, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard (SFAS) No. 142, Goodwill
and Other Intangible Assets. SFAS No. 142 established accounting and
reporting standards for intangible assets and goodwill. It required that
goodwill and certain intangible assets no longer be amortized to
earnings, but instead be reviewed periodically for impairment. We
adopted this pronouncement as of the beginning of fiscal 2002. Had the
new pronouncement been adopted at the beginning of fiscal 1999 (i)
goodwill amortization in the following amounts would not have been
recorded in the periods indicated: fiscal 2001, $5,420,000; fiscal 2000,
$5,541,000; and fiscal 1999, $5,439,000; and (ii) net income per diluted
share in the periods indicated would have been as follows: fiscal 2001,
$1.88; fiscal 2000, $1.80; and fiscal 1999, $1.32.4.
    
    EBIT represents income before interest and income taxes and is
reconciled to net income on our Consolidated Income Statement. EBIT is
not 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.
We evaluate performance of our business segments and allocate resources
based on EBIT.5.
    
    Free Cash Flow represents net cash and cash equivalents provided by
operating activities, less capital expenditures. Free Cash Flow is used
as a measure of cash generated for acquisitions and financing
activities. Free Cash Flow is not a measure of performance calculated in
accordance with accounting principles generally accepted in the United
States, and should not be considered an alternative to cash flow as a
measure of our liquidity.6.
    
    Market capitalization of shares outstanding at year end plus total
debt.7.
    
    Fiscal 2004 reflected an additional 1,778,000 shares, fiscal 2003
reflected an additional 2,090,000 shares, fiscal 2002 and fiscal 2001
reflected an additional 2,190,000 shares, fiscal 2000 reflected an
additional 2,297,000 shares and fiscal 1999 reflected an additional
2,385,000 shares related to the convertible notes outstanding.8.
    
    As of September 1, 2004, we had 549 shareholders of record. Based on
requests from brokers and other nominees, we estimate there were an
additional 2,340 shareholders.9.
    
    EBIT return on average net assets is not 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 return on average equity. EBIT return on average net assets
is computed as EBIT divided by the summation of total assets less
accounts payable, accrued liabilities, deferred tax liabilities, other
long-term liabilities and minority interest. This measure is used to
evaluate the return on the assets employed by our business segments. 13




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##### Table of Contents



ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS Overview We are a leading designer, manufacturer and marketer of highly engineered,
application-critical equipment and systems for the pharmaceutical, energy and
industrial markets worldwide. In our estimation our principal brand names 
Pfaudler®, Moyno®, Chemineer®, Laetus®, FrymaKoruma®, Siebler®, Hapa® and
Hercules®  hold the number one or two market share position in the niche
markets they serve. We operate with three market focused business segments:
Pharmaceutical, Energy and Industrial. Pharmaceutical. Our Pharmaceutical business segment includes our Reactor
Systems and Romaco businesses and is focused primarily on the pharmaceutical
and healthcare industries. Our Reactor Systems business designs, manufacturers
and markets primary processing equipment and engineered systems and we believe
has the leading worldwide position in glass-lined reactors and storage vessels.
Our Romaco business designs, manufacturers and markets secondary processing,
dosing, filling, printing and security equipment. Several of our Romaco brands
hold the number one or two worldwide position in the niche markets they serve.
Major customers of our pharmaceutical segment include Bayer, GlaxoSmithKline,
Merck, Novartis and Pfizer. Energy. Our Energy business segment designs, manufactures and markets equipment
and systems used in oil and gas exploration and recovery. Our equipment and
systems include hydraulic drilling power sections, down-hole pumps and a broad
line of ancillary equipment, such as rod guides, rod and tubing rotators,
wellhead systems, pipeline closure products and valves. These products and
systems are used at the wellhead and in subsurface drilling and production.
Several of our energy products, including hydraulic drilling power sections and
down-hole pumps, hold the number one or two worldwide position in their
respective markets. Major customers of our energy segment include Schlumberger
and Chevron Texaco. Industrial. Our Industrial business segment is comprised of our Moyno, Tarby,
Chemineer and Edlon businesses, which design, manufacture and market products
that are used in specialty chemical, wastewater treatment and a variety of
other industrial applications. Our Moyno and Tarby businesses manufacture pumps
that utilize progressing cavity technology to provide fluids-handling solutions
for a wide range of applications involving the flow of viscous, abrasive and
solid-laden slurries and sludges. Our Chemineer business manufactures
high-quality standard and customized fluid-agitation equipment and systems. Our
Edlon business manufactures customized fluoropolymer-lined pipe, fittings,
vessels and accessories. Our industrial segment has a highly diversified
customer base and sells its products to over 3,500 customers worldwide. Acquisition In our Industrial Segment, we will pursue strategic acquisitions if cost
structure can be improved or market share protected. On November 15, 2002, we
purchased the stock of Tarby, Inc (Tarby) for $13.1 million. Tarby is a
manufacturer and marketer of progressive cavity pumps and components for the
general industrial and municipal wastewater markets. Included in our fiscal
2003 operating results are sales of $6.2 million and EBIT of $1.5 million from
Tarby since the date of acquisition. Safe Harbor Statement In addition to historical information, this Form 10-K contains forward-looking
statements, identified by use of words such as expects, anticipates,
estimates, and similar expressions. These statements reflect the Companys
expectations at the time this Form 10-K was filed. Actual events and results
may differ materially from those described in the forward-looking statements.
Among the factors that could cause material differences are a significant
decline in capital expenditures in specialty chemical and pharmaceutical
industries, a major decline in oil and natural gas prices, foreign exchange
rate fluctuations, the impacts of Sarbanes-Oxley section 404 procedures, work
stoppages related to union negotiations, customer order cancellations, the
ability of the Company to comply with the financial covenants and other
provisions of its financing arrangements, the ability of the Company to realize
the benefits of its restructuring program in its Pharmaceutical Segment and
general economic conditions that can affect demand in the process industries.
The Company undertakes no obligation to update or revise any forward-looking
statement. 14




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##### Table of Contents



Results of Operations The following tables present components of our consolidated income statement
and segment information. 2004
    
    2003
    
    2002ConsolidatedSales
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of sales
    
    
    67.1
    
    
    
    66.3
    
    
    
    67.0Gross profit
    
    
    32.9
    
    
    
    33.7
    
    
    
    33.0SG&A expenses
    
    
    26.9
    
    
    
    26.4
    
    
    
    24.8Amortization
    
    
    0.5
    
    
    
    0.4
    
    
    
    0.4Other
    
    
    0.3
    
    
    
    0.0
    
    
    
    0.0EBIT
    
    
    5.2
    %
    
    
    6.9
    %
    
    
    7.8
    %
 2004
    
    2003
    
    2002(In thousands, except percents)By
SegmentPharmaceutical:Sales
    
    $
    343,047
    
    
    $
    342,415
    
    
    $
    319,412EBIT
    
    
    10,317
    
    
    
    21,401
    
    
    
    27,895EBIT %
    
    
    3.0
    %
    
    
    6.3
    %
    
    
    8.7
    %Energy:Sales
    
    $
    115,884
    
    
    $
    95,487
    
    
    $
    91,381EBIT
    
    
    27,424
    
    
    
    20,941
    
    
    
    18,773EBIT %
    
    
    23.7
    %
    
    
    21.9
    %
    
    
    20.5
    %Industrial:Sales
    
    $
    126,827
    
    
    $
    122,873
    
    
    $
    115,580EBIT
    
    
    8,349
    
    
    
    8,791
    
    
    
    5,279EBIT %
    
    
    6.6
    %
    
    
    7.2
    %
    
    
    4.6
    %Total:Sales
    
    $
    585,758
    
    
    $
    560,775
    
    
    $
    526,373EBIT
    
    
    30,317
    
    
    
    38,709
    
    
    
    40,947EBIT %
    
    
    5.2
    %
    
    
    6.9
    %
    
    
    7.8
    %
 Fiscal Year Ended August 31, 2004 Compared with Fiscal Year Ended August 31,
2003 Sales for the fiscal year ended August 31, 2004 were $585.8 million compared
with $560.8 million in fiscal 2003. Foreign currency translation caused an
increase in sales of $36.9 million resulting in a sales decline of $11.9
million on a constant dollar basis. The decline in sales is a result of lower
sales in our Pharmaceutical segment offset by strengthening sales in our Energy
and Industrial segments. The Pharmaceutical segment had sales of $343.0 million in fiscal 2004 compared
with $342.4 million in the same period of fiscal 2003. The impact of exchange
rates increased sales by $33.4 million resulting in a sales decline of $32.8
million on a constant dollar basis. The decline in sales volumes is a result of
continued weak economic conditions in Europe, which represents approximately
75% of this segments sales volume. Our sales were negatively affected by
reduced capital spending by pharmaceutical companies due to general weakness in
the capital goods markets in Europe and the business consolidations within the
pharmaceutical industry. The consolidation of pharmaceutical companies has
resulted in excess capacity as product lines are rationalized among facilities.
The excess capacity as a result of the consolidations is viewed as a
short-term issue because normal wear and tear on equipment will eventually lead
to replacement and the consumption of pharmaceutical products is expected to
continue to grow. The Energy segment had sales of $115.9 million in fiscal 2004 compared with
$95.5 million in the same period of fiscal 2003, an increase of $20.4 million,
or 21.4%. The impact of exchange rates increased sales by $3.1 million
resulting in a sales increase of $17.3 million on a constant dollar basis.
Higher oil and natural gas prices and accelerated global demand are being
reflected in higher rig count and capital equipment spending in this industry.
It is anticipated that these trends should continue through our fiscal 2005. 15




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The Industrial segment had sales of $126.8 million in fiscal 2004 compared with
$122.9 million in fiscal 2003, an increase of $3.9 million, or 3.2%. This
modest increase in sales is attributed to some improvement in the U.S.
industrial economy offset by lower spending for wastewater treatment projects
by local municipalities. EBIT in fiscal 2004 was $30.3 million compared with $38.7 million in fiscal
2003. In fiscal 2004, we recorded costs of $1.4 million related to the
retirement of our former President and CEO and $0.8 million for severance costs
related to the closure of a Reactor Systems facility in Italy. The sales
volume decline in constant dollars of $11.9 had a negative impact on EBIT of
$4.1 million. The remaining decline in EBIT is a result of price pressures in
our Pharmaceutical segment ($1.0 million), higher health care costs ($1.0
million) and a shift in sales mix as aftermarket sales in our Industrial
Segment were a lower percentage of 2004 sales relative to fiscal 2003. The Pharmaceutical segment had EBIT of $10.3 million in fiscal 2004 compared
with $21.4 million in fiscal 2003, a decline of $11.1 million. The severance
costs of $0.8 million related to the closure of a Reactor Systems facility in
Italy were reflected in this segment. The sales decline of $32.8 million on a
constant dollar basis reduced EBIT by $10.5 million, while price pressures in
Europe negatively impacted EBIT by another $1.0 million. These items were
partially offset by our efforts to reduce both material and overhead costs in
response to the lower sales volumes. The Energy segment had EBIT of $27.4 million in fiscal 2004 compared with $20.9
million in fiscal 2003, an increase of $6.5 million, or 31.1%. The higher
sales volumes caused EBIT to increase by $7.0 million. This was partially
offset by new product development costs and costs to establish operations in
new markets such as Kazakhstan and Indonesia. The Industrial segment had EBIT of $8.3 million in fiscal 2004 compared with
$8.8 million in fiscal 2003, a decrease of $0.5 million. The aforementioned
$3.9 million increase in sales volumes only increased EBIT by $0.5 million
because of a change in sales mix as the aftermarket business was a smaller
percentage of fiscal 2004 sales. In addition, higher health care costs of
approximately $1.0 million negatively impacted EBIT in this segment. Interest expense decreased from $15.6 million in fiscal 2003 to $14.4 million
in fiscal 2004. This was due to lower average debt levels resulting from cash
flow generated in fiscal 2004. In addition, fiscal 2004 includes the full year
interest savings from our interest rate swap instrument, whereas the interest
rate swap was only in effect for approximately one quarter of fiscal 2003. Our
effective interest rate was 7.1% in fiscal 2004 and 7.3% in fiscal 2003. Net income and net income per diluted share in fiscal 2004 were $9.8 million
and $0.67 compared with $14.4 million and $1.00 in fiscal 2003. The lower net
income is a result of the items mentioned above. Fiscal Year Ended August 31, 2003 Compared with Fiscal Year Ended August 31,
2002 Sales for the fiscal year ended August 31, 2003 were $560.8 million, an
increase of $34.4 million or 6.5% over the prior fiscal year. The impact of
exchange rates, the translation of sales from non-U.S. operations into U.S.
dollars, accounted for $39.1 million of sales. The Pharmaceutical segment had sales of $342.4 million in fiscal 2003 compared
with $319.4 million in the same period of fiscal 2002. The impact of exchange
rates increased sales by $39.7 million resulting in a decrease of $16.7 million
on a constant dollar basis. The decline in sales volumes is in both our Romaco
and Reactor Systems units and is due to weak market conditions in Europe. The Energy segment had sales of $95.5 million in fiscal 2003 compared with
$91.4 million in the same period of fiscal 2002, an increase of $4.1 million,
or 4.5%. Most of this increase in sales has occurred in the last quarter of our
fiscal year and is due to higher rig counts as a result of higher crude oil and
natural gas prices and increased sales in Venezuela. The Industrial segment had sales of $122.9 million in fiscal 2003 compared with
$115.6 million in fiscal 2002, an increase of $7.3 million, or 6.3%. Our
acquisition of Tarby on November 15, 2002, accounted for $6.2 million of this
increase. The remaining increase is a result of an improving industrial
economic environment in North America in the latter part of our fiscal year. 16




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EBIT in fiscal 2003 was $38.7 million compared with $40.9 million in fiscal
2002. The Pharmaceutical segment had EBIT of $21.4 million in fiscal 2003 compared
with $27.9 million in fiscal 2002, a decline of $6.5 million. Of this
decrease, $5.5 million related to the aforementioned sales decrease in constant
dollars of $16.7 million, excluding the impact of exchange rates, with the
remainder of the decline due to lower pricing in Europe for glass-lined reactor
vessels. The Energy segment had EBIT of $20.9 million in fiscal 2003 compared with $18.8
million in fiscal 2002, an increase of $2.1 million, or 11.2%. Two thirds of
this increased EBIT is a result of higher sales volumes, with the remaining
increase coming from cost reduction programs implemented in fiscal 2002 that
were fully realized in fiscal 2003. The Industrial segment had EBIT of $8.8 million in fiscal 2003 compared with
$5.3 million in fiscal 2002, an increase of $3.5 million. The Tarby
acquisition accounted for $1.5 million of this increase. The remaining
increase in EBIT is due to slightly higher sales volumes and cost saving
measures undertaken in fiscal 2002 that were realized in fiscal 2003. Interest expense decreased from $17.6 million in fiscal 2002 to $15.6 million
in fiscal 2003. This was due to lower average debt levels resulting from cash
flow generated in fiscal 2003 and our secondary stock offering in June of
fiscal 2002 that raised net proceeds of $53.2 million. Our effective interest
rate was 7.3% in fiscal 2003 and 7.0% in fiscal 2002. Net income and net income per diluted share in fiscal 2003 were $14.4 million
and $1.00 compared with $14.5 million and $1.15 in fiscal 2002. The lower net
income is a result of the items mentioned above, and the relatively larger
decline in net income per share is a result of having 1.8 million more average
common shares outstanding as a result of the secondary stock offering in June
of fiscal 2002. Restructuring We have announced a restructuring plan of our Pharmaceutical segment. The
restructuring plan is being initiated to improve the profitability of the
Pharmaceutical segment in light of the current worldwide economic conditions
that are affecting this segment. The restructuring activities will include the
following:  
    
    Plant closures (one of two Reactor Systems facilities in Italy, a
Reactor Systems facility in Mexico and the Unipac facility of Romaco in
Italy).
    
    Headcount reductions to support the Reactor Systems business
reorganization and to bring the personnel costs in line with the current
level of business.
    
    Headcount reductions at Romaco with the Unipac integration into the
Macofar facility and removal of duplicate administrative costs at other
locations. As a result of the restructuring plan, we will record expenses of approximately
$7.0 million in the first half of our fiscal year ending August 31, 2005.
Approximately $5.5 to $6.0 million of the costs relate to termination benefits
as we reduce our workforce by approximately 225 people. The remaining costs
primarily relate to the write-down of inventory of discontinued products. The
total cash outlays in connection with the restructuring plan are estimated to
be between $5.5 and $6.0 million. We estimate that the restructuring plan will
be substantially completed by the second quarter of fiscal 2005. The facilities that are being closed are currently owned by us and will be
sold. We expect the facility sales to generate approximately $8.0 to $10.0
million of cash proceeds which exceeds the recorded book value of these
facilities by approximately $3.0 to $5.0 million. The facilities are in
excellent condition and are believed to be readily marketable, but we are
unable to predict the specific timing of the sale of any one or all of the
facilities. 17




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Liquidity and Capital Resources Operating Activities In fiscal 2004, our cash flow from operations was $26.4 million compared with
$45.6 million in fiscal 2003. The lower cash flow from operations is a result
of higher working capital because of higher orders and sales in the latter half
of fiscal 2004. We expect our fiscal 2005 operating cash flow to be adequate to fund the fiscal
year 2005 operating needs, scheduled debt services, shareholder dividend
requirements and planned capital expenditures of approximately $20.0 million.
Our planned capital expenditures are related to additional production capacity,
cost reductions and replacement items. Investing Activities Our capital expenditures were $9.9 million in fiscal 2004, up from $7.9 million
in fiscal 2003. The majority of our capital expenditures were for replacement
of equipment. Financing Activities We paid $1.1 million to amend and extend our credit agreement in October 2003. Credit Agreement Our Bank Credit Agreement (Agreement) provides that we may borrow on a
revolving credit basis up to a maximum of $125.0 million. All outstanding
amounts under the Agreement are due and payable on October 7, 2006. Interest is
variable based upon formulas tied to LIBOR or prime, at our option, and is
payable at least quarterly. At August 31, 2004, the weighted average interest
rate for all amounts outstanding was 4.07%. Indebtedness under the Agreement is
unsecured, except for guarantees by our U.S. subsidiaries, the pledge of the
stock of our U.S. subsidiaries and the pledge of the stock of certain non-U.S.
subsidiaries. Under this Agreement and other lines of credit, we have $120.0
million of unused borrowing capacity. However, due to our financial covenants
and outstanding standby letters of credit, we could only incur additional
indebtedness of $11.6 million. We have $23.5 million of standby letters of
credit outstanding at August 31, 2004. These standby letters of credit are used
as security for advance payments received from customers and future payments to
our vendors. We are currently in negotiations with our lenders to increase our
borrowing capacity in light of the restructuring programs in process in our
Pharmaceutical segment. Critical Accounting Policies and Estimates This Managements Discussion and Analysis is based on our consolidated
financial statements and the related notes. The more critical accounting
policies used in the preparation of our consolidated financial statements are
discussed below. Revenue Recognition We recognize revenue at the time of title passage to our customer. In instances
where we have equipment installation obligations, the revenue related to the
installation service is deferred until installation is complete. We recognize
revenue for certain longer-term contracts based on the percentage of completion
method. The percentage of completion method requires estimates of total
expected contract revenue and costs. We follow this method since we can make
reasonably dependable estimates of the revenue and cost applicable to various
stages of the contract. Revisions in profit estimates are reflected in the
period in which the facts that gave rise to the revision become known. Use of Estimates The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires us to make
estimates and assumptions that affect the amounts reported in the consolidated
financial statements and the related notes. Significant estimates made by us
include the allowance for doubtful 18




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accounts, inventory valuation, deferred tax asset valuation allowance, warranty
accruals, litigation, product liability, environmental accruals and retirement
benefit obligations. Our estimate for uncollectible accounts receivable is based upon an analysis of
our prior collection experience, specific customer creditworthiness and current
economic trends within the industries we serve. In circumstances where we are
aware of a specific customers inability to meet its financial obligation to us
(e.g., bankruptcy filings or substantial downgrading of credit ratings), we
record a specific reserve to reduce the receivable to the amount we reasonably
believe will be collected. For all other customers, we recognize reserves for
bad debts based on the length of time that the receivables are past due. Inventory valuation reserves are determined based on our assessment of the
market conditions for our products and the on hand quantities of inventory in
relation to historical usage. As of August 31, 2004 we have inventory
valuation reserves of $20.7 million. The inventory upon which this reserve
relates to is still on hand and will be sold or disposed of in the future. The
expected selling price of this inventory approximates its net book value,
therefore there is no significant impact on gross margin when it is sold. We have recorded valuation allowances to reflect the estimated amount of
deferred tax assets that may not be realized based upon our analysis of
estimated future taxable income and establishment of tax strategies. Future
taxable income, the results of tax strategies and changes in tax laws could
impact these estimates. 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. We record litigation, product liability and environmental reserves based
upon a case-by-case analysis of the facts, circumstances and estimated costs. These estimates form the basis for making judgments about the carrying value of
our assets and liabilities and are based on the best available information at
the time we prepare our financial statements. These estimates are subject to
change as conditions within and beyond our control change, including but not
limited to economic conditions, the availability of additional information and
actual experience rates different from those used in our estimates.
Accordingly, actual results may differ from these estimates. Goodwill As of September 1, 2001, we adopted two new accounting standards issued by the
Financial Accounting Standards Board (FASB). SFAS No. 141, Business
Combinations, eliminated the pooling method of accounting for all business
combinations initiated after June 30, 2001, and addressed the initial
recognition and measurement of goodwill and intangible assets acquired in a
business combination. Accordingly, we applied the provisions of SFAS No. 141 to
all business combinations initiated after June 30, 2001. We also adopted SFAS
No. 142, Goodwill and Other Intangible Assets, effective September 1, 2001.
Goodwill amortization ceased upon adoption of the standard, and the required
impairment tests were performed. Results of these impairment tests have not
generated any impairment loss to date. Goodwill is tested on an annual basis, or more frequently as impairment
indicators arise. Impairment tests, which involve the use of estimates related
to the fair market values of the business operations with which goodwill is
associated, are performed at the end of our first quarter. Losses, if any,
resulting from impairment tests will be reflected in operating income in our
Consolidated Income Statement. Foreign Currency Accounting Gains and losses resulting from the settlement of a transaction in a currency
different from that used to record the transaction are charged or credited to
net income when incurred. Adjustments resulting from the translation of
non-U.S. financial statements into U.S. dollars are recognized in accumulated
other comprehensive income or loss for all non-U.S. units. We use permanently invested intercompany loans as a source of capital to reduce
the exposure to foreign currency fluctuations in our foreign subsidiaries.
These loans are treated as analogous to equity for accounting purposes.
Therefore, we record foreign exchange gains or losses on these intercompany
loans in accumulated other comprehensive income or loss. 19




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Pensions We maintain defined benefit and defined contribution pension plans that provide
retirement benefits to substantially all U.S. employees and certain non-U.S.
employees. Pension expense for fiscal 2005 and beyond is dependent on a number
of factors including returns on plan assets and changes in the plans discount
rate and therefore cannot be predicted with certainty at this time. The
following paragraphs discuss the significant factors that affect the amount of
recorded pension expense. A significant factor in determining the amount of expense recorded for the
funded pension plan is the expected long-term rate of return on plan assets. We
develop the long-term rate of return assumption based on the current mix of
equity and debt securities included in the plans assets and on the historical
returns on those types of investments, judgmentally adjusted to reflect current
expectations of future returns. In addition to the expected rate of return on plan assets, recorded pension
expense includes the effects of service cost  the actuarial cost of benefits
earned during a period  and interest on the plans liabilities to
participants. These amounts are determined actuarially based on current
discount rates and assumptions regarding matters such as future salary
increases and mortality. Differences in actual experience in relation to these
assumptions are generally not recognized immediately but rather are deferred
together with asset-related gains or losses. When cumulative asset-related and
liability-related gains or losses exceed the greater of 10% of total
liabilities or the calculated value of plan assets, the excess is amortized and
included in pension income or expense. At August 31, 2004 the discount rate
used to value the liabilities of the principal U.S. plan was 6.0%. We determine
our discount rate based on the Moodys Aa Corporate Bond Index and an actuarial
yield curve applied to the payments we expect to make out of our retirement
plans. Additional changes in the key assumptions discussed above would affect the
amount of pension expense currently expected to be recorded for years
subsequent to 2004. Specifically, a one-half percent decrease in the rate of
return on assets assumption would have the effect of increasing pension expense
by approximately $0.3 million. A comparable increase in this assumption would
have the opposite effect. In addition, a one-half percent increase or decrease
in the discount rate would decrease or increase expense by approximately $0.1
million. New Accounting Pronouncements In May 2004, the Financial Accounting Standards Board issued Staff Position
106-2 (FAS 106-2) providing final guidance on accounting for the Medicare
Prescription Drug, Improvement and Modernization Act of 2003 (the Act). We
adopted the provisions of FAS 106-2 during the year ended August 31, 2004. This
resulted in a reduction in our accumulated postretirement benefit obligations
(APBO) for the subsidy related to benefits attributed to past services of
$3.5 million. The subsidy resulted in a reduction in our current period net
periodic postretirement benefit costs for the year ended August 31, 2004 of
$0.2 million. We have not incurred a reduction in current gross benefit
payments and expect to receive subsidy payments beginning in fiscal year ended
August 31, 2006. In January 2003, the FASB issued Financial Interpretation No. 46,
Consolidation of Variable Interest Entities, an Interpretation of Accounting
Research Bulletin No. 51. The Interpretation requires the consolidation of
entities in which an enterprise absorbs a majority of the entitys expected
losses, receives a majority of the entitys expected residual returns, or both,
as a result of ownership, contractual or other financial interest in the
entity. Currently, entities are generally consolidated by an enterprise when it
has a controlling financial interest through ownership of a majority voting
interest in the entity. The adoption of Financial Interpretation No. 46 had no
effect on our financial statements. 20




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##### Table of Contents



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We maintain operations in the U.S. and over 20 foreign countries. We have
market risk exposure to foreign exchange rates in the normal course of our
business operations. Our significant non-U.S. operations have their local
currencies as their functional currency and primarily buy and sell using that
same currency. We manage our exposure to net assets and cash flows in
currencies other than U.S. dollars by minimizing our non-U.S. dollar net asset
positions. We also enter into hedging transactions, primarily currency swaps,
under established policies and guidelines that enable us to mitigate the
potential adverse impact of foreign exchange rate risk. We do not engage in
trading or other speculative activities with these transactions as established
policies require that these hedging transactions relate to specific currency
exposures. Our main foreign exchange rate exposures relate to assets, liabilities and cash
flows denominated in British pounds, euros and Canadian dollars and the general
economic exposure that fluctuations in these currencies could have on the U.S.
dollar value of future non-U.S. cash flows. To illustrate the potential impact
of changes in foreign currency exchange rates on us for fiscal 2004, the net
unhedged exposures in each currency were remeasured assuming a 10% decrease in
foreign exchange rates compared with the U.S. dollar. Using this method, our
EBIT and cash flow from operations for fiscal 2004 would have decreased by $1.5
million and $0.7 million, respectively. This calculation assumed that each
exchange rate would change in the same direction relative to the U.S. dollar.
In addition to the direct effects of changes in exchange rates, these changes
may also affect the volume of sales or the foreign currency sales prices as
competitors products become more or less attractive. Our sensitivity analysis
of the effects of changes in foreign currency exchange rates does not include
any effects of potential changes in sales levels or local currency prices. We also have market risk exposure to interest rates. At August 31, 2004, we had
$181.7 million in interest-bearing debt obligations subject to market risk
exposure due to changes in interest rates. To manage our exposure to changes in
interest rates, we attempt to maintain a balance between fixed and variable
rate debt. We expect this balance in the debt profile to moderate our financing
cost over time. We are limited in our ability to refinance our fixed rate debt.
However, we have the ability to change the characteristics of our fixed rate
debt to variable rate debt through interest rate swaps to achieve our objective
of balance. We have entered into an interest rate swap agreement that
effectively modifies a portion of our fixed rate debt to floating rate debt.
This agreement involves the receipt of fixed rate amounts in exchange for
floating rate interest payments over the life of the agreement without an
exchange of underlying principal amounts. The mark-to-market values of both the
fair value hedging instrument and the underlying debt obligation were equal and
recorded as offsetting gains and losses in current period earnings. The fair
value hedge qualifies for treatment under the short-cut method of measuring
effectiveness. As a result, there was no impact on earnings due to hedge
ineffectiveness. The interest rate swap agreement totals $30.0 million, expires
in 2008 and allows us to receive an effective interest rate of 6.76% and pay an
interest rate based on LIBOR. At August 31, 2004, $141.3 million of our outstanding debt was at fixed rates
with a weighted average interest rate of 7.6% and $40.4 million was at variable
rates with a weighted average interest rate of 5.2%. The estimated fair value
of our debt at August 31, 2004 was approximately $182.0 million. The following
table presents the aggregate maturities and related weighted average interest
rates of our debt obligations at August 31, 2004 by maturity dates: 21




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##### Table of Contents



U.S. Dollar
    
    U.S. Dollar
    
    Non-U.S. Dollar
    
    Non-U.S. DollarFixed Rate
    
    Variable Rate
    
    Fixed Rate
    
    Variable RateMaturity Date
    
    Amount
    
    Rate
    
    Amount
    
    Rate
    
    Amount
    
    Rate
    
    Amount
    
    Rate(In thousands, except percents)2005
    
    $
    0
    
    
    
    0.00
    %
    
    $
    700
    
    
    
    4.25
    %
    
    $
    3,357
    
    
    
    4.57
    %
    
    $
    4,276
    
    
    
    4.13
    %2006
    
    
    0
    
    
    
    0.00
    
    
    
    700
    
    
    
    4.25
    
    
    
    27,215
    
    
    
    9.71
    
    
    
    1,204
    
    
    
    3.462007
    
    
    0
    
    
    
    0.00
    
    
    
    3,500
    
    
    
    4.75
    
    
    
    202
    
    
    
    3.97
    
    
    
    0
    
    
    
    0.002008
    
    
    80,000
    
    
    
    7.38
    
    
    
    30,000
    
    
    
    5.50
    
    
    
    208
    
    
    
    3.69
    
    
    
    0
    
    
    
    0.002009
    
    
    0
    
    
    
    0.00
    
    
    
    0
    
    
    
    0.00
    
    

    
    133
    
    
    
    2.00
    
    
    
    0
    
    
    
    0.00Thereafter
    
    
    30,000
    
    
    
    6.84
    
    
    
    0
    
    
    
    0.00
    
    
    
    207
    
    
    
    2.00
    
    
    
    0
    
    
    
    0.00Total
    
    $
    110,000
    
    
    
    7.23
    %
    
    $
    34,900
    
    
    
    5.37
    %
    
    $
    31,322
    
    
    
    9.00
    %
    
    $
    5,480
    
    
    
    3.98
    %Fair value
    
    $
    110,300
    
    
    
    
    
    
    $
    34,900
    
    
    
    
    
    
    $
    31,322
    
    
    
    
    
    
    $
    5,480
 Following is information regarding our long-term contractual obligations and
other commitments outstanding as of August 31, 2004: Payments Due by PeriodTwo toLong-term contractual
    
    
    
    
    
    One year
    
    three
    
    Four to
    
    After fiveobligations
    
    Total
    
    or less
    
    years
    
    five years
    
    years(In thousands)Debt obligations
    
    $
    181,702
    
    
    $
    8,333
    
    
    $
    32,821
    
    
    $
    110,341
    
    
    $
    30,207Capital lease obligations
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Operating leases (1)
    
    
    20,342
    
    
    
    4,476
    
    
    
    6,845
    
    
    
    3,392
    
    
    
    5,629Unconditional purchase
obligations
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Total contractual cash
obligations
    
    $
    202,044
    
    
    $
    12,809
    
    
    $
    39,666
    
    
    $
    113,733
    
    
    $
    35,836
  (1)
    
    Operating leases consist primarily of building and equipment leases. Amount of Commitment Expiration Per PeriodTwo toOther commercial
    
    
    
    
    
    One year
    
    three
    
    Four to
    
    After fivecommitments
    
    Total
    
    or less
    
    years
    
    five years
    
    years(In thousands)Lines of credit
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0Standby letters of credit
    
    
    23,459
    
    
    
    23,459
    
    
    
    0
    
    
    
    0
    
    
    
    0Guarantees
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Standby repurchase obligations
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Other commercial commitments
    
    
    696
    
    
    
    484
    
    
    
    212
    
    
    
    0
    
    
    
    0Total commercial commitments
    
    $
    24,155
    
    
    $
    23,943
    
    
    $
    212
    
    
    $
    0
    
    
    $
    0
 22




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##### Table of Contents



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Report of Management The management of Robbins & Myers, Inc. has the responsibility for preparing
the accompanying financial statements and for their integrity and objectivity.
Management believes that the financial statements have been prepared in
conformity with accounting principles generally accepted in the United States,
appropriate in the circumstances, and that other information in this annual
report is consistent with these financial statements. In preparing the
financial statements, management makes informed judgments and estimates where
necessary to reflect expected effects of events and transactions that have not
been resolved. In fulfilling this responsibility, management maintains accounting system and
related controls. These controls provide reasonable assurance, at appropriate
costs, that assets are safeguarded against losses and that financial records
are reliable for use in preparing financial statements. These systems are
enhanced by written policies, an organization structure providing division of
responsibilities, careful selection and training of qualified people and a
program of financial, operational and systems review coordinated by management. Our financial statements have been audited by Ernst & Young LLP, independent
registered public accounting firm. Management has made available to Ernst &
Young LLP all of our financial records and related data, as well as the minutes
of shareholders and directors meetings. Furthermore, management believes that
all representations made to Ernst & Young LLP during their audit are valid and
appropriate. The Audit Committee of the Board of Directors, composed solely of outside
directors, meets with the independent registered public accounting firm and
management periodically to review their work and ensure that they are properly
discharging their responsibilities. The independent registered public
accounting firm has free access to this committee, without management present,
to discuss the results of their audit work and their opinion on the adequacy of
internal financial controls and the quality of financial reporting. /s/ Peter C. WallacePeter C. WallacePresident and Chief Executive Officer/s/ Kevin J. BrownKevin J. BrownVice President and Chief Financial Officer
 23




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##### Table of Contents



Report of Independent Registered Public Accounting Firm Shareholders and Board of Directors
Robbins & Myers, Inc. and Subsidiaries We have audited the accompanying consolidated balance sheets of Robbins &
Myers, Inc. and Subsidiaries as of August 31, 2004 and 2003, and the related
consolidated statements of income, shareholders equity and cash flows for each
of the three years in the period ended August 31, 2004. Our audits also
included the financial statement schedule listed in the Index at Item 15(a).
These financial statements and schedule are the responsibility of the Company.
Our responsibility is to express an opinion on these financial statements and
schedule based on our audits. We conducted our audits in accordance with the Standards of the Public
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Robbins & Myers,
Inc. and Subsidiaries at August 31, 2004 and 2003, and the consolidated results
of their operations and their cash flows for each of the three years in the
period ended August 31, 2004, in conformity with U.S. generally accepted
accounting principles. Also, in our opinion, the related financial statement
schedule, when considered in relation to the basic financial statements taken
as a whole, presents fairly in all material respects the information set forth
therein. /s/ Ernst & Young LLP
Dayton, Ohio
October 5, 2004 24




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##### Table of Contents



CONSOLIDATED BALANCE SHEET
Robbins & Myers, Inc. and Subsidiaries
(In thousands, except share data) August 31,2004
    
    2003ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    8,640
    
    
    $
    12,347Accounts receivable
    
    
    128,571
    
    
    
    117,896Inventories
    
    
    107,478
    
    
    
    96,196Other current assets
    
    
    7,794
    
    
    
    8,180Deferred taxes
    
    
    7,901
    
    
    
    7,469Total Current Assets
    
    
    260,384
    
    
    
    242,088Goodwill
    
    
    307,166
    
    
    
    294,904Other Intangible Assets
    
    
    15,769
    
    
    
    15,844Other Assets
    
    
    10,216
    
    
    
    9,657Property, Plant and Equipment
    
    
    139,707
    
    
    
    141,963$
    733,242
    
    
    $
    704,456LIABILITIES AND SHAREHOLDERS EQUITYCurrent Liabilities:Accounts payable
    
    $
    61,540
    
    
    $
    49,588Accrued expenses
    
    
    93,035
    
    
    
    85,158Current portion of long-term debt
    
    
    8,333
    
    
    
    7,319Total Current Liabilities
    
    
    162,908
    
    
    
    142,065Long-Term Debt - Less Current Portion
    
    
    173,369
    
    
    
    186,284Deferred Taxes
    
    
    4,329
    
    
    
    7,860Other Long-Term Liabilities
    
    
    80,298
    
    
    
    72,622Minority Interest
    
    
    9,226
    
    
    
    8,619Shareholders Equity:Common stock-without par value:Authorized shares-40,000,000Issued shares-14,526,860 in 2004
(14,425,682 in 2003)
    
    
    106,985
    
    
    
    104,984Treasury shares-308 in 2004 and 2003
    
    
    (10
    )
    
    
    (10
    )Retained earnings
    
    
    194,530
    
    
    
    187,845Accumulated other comprehensive income (loss):Foreign currency translation
    
    
    17,149
    
    
    
    5,175Minimum pension liability
    
    
    (15,542
    )
    
    
    (10,988
    )Total
    
    
    1,607
    
    
    
    (5,813
    )303,112
    
    
    
    287,006$
    733,242
    
    
    $
    704,456
 See Notes to Consolidated Financial Statements 25




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##### Table of Contents



CONSOLIDATED SHAREHOLDERS EQUITY STATEMENT
Robbins & Myers Inc. and Subsidiaries
(In thousands, except share and per share data) AccumulatedOtherComprehensiveCommon
    
    Treasury
    
    Retained
    
    IncomeShares
    
    Shares
    
    Earnings
    
    (Loss)
    
    TotalBalance at September 1, 2001
    
    $
    48,483
    
    
    $
    (2,150
    )
    
    $
    164,864
    
    
    $
    (13,295
    )
    
    $
    197,902Net income
    
    
    
    
    
    
    
    
    
    
    14,503
    
    
    
    
    
    
    
    14,503Change in foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,501
    
    
    
    1,501Change in minimum pension liability
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,263
    )
    
    
    (8,263
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,741Cash dividends declared, $0.22 per share
    
    
    
    
    
    
    
    
    
    
    (2,740
    )
    
    
    
    
    
    
    (2,740
    )Stock options exercised, 167,500 shares
    
    
    604
    
    
    
    1,921
    
    
    
    
    
    
    
    
    
    
    
    2,525Proceeds from share sales, 2,440,323 shares
    
    
    54,267
    
    
    
    200
    
    
    
    
    
    
    
    
    
    
    
    54,467Performance stock award expense
    
    
    (126
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (126
    )Tax benefit of stock options exercised
    
    
    724
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    724Balance at August 31, 2002
    
    
    103,952
    
    
    
    (29
    )
    
    
    176,627
    
    
    
    (20,057
    )
    
    
    260,493Net income
    
    
    
    
    
    
    
    
    
    
    14,368
    
    
    
    
    
    
    
    14,368Change in foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,576
    
    
    
    14,576Change in minimum pension liability
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (332
    )
    
    
    (332
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28,612Cash dividend declared, $0.22 per share
    
    
    
    
    
    
    
    
    
    
    (3,150
    )
    
    
    
    
    
    
    (3,150
    )Stock options exercised, 36,000 shares
    
    
    357
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    357Proceeds from share sales, 55,876 shares
    
    
    519
    
    
    
    19
    
    
    
    
    
    
    
    
    
    
    
    538Tax benefit of stock option exercised
    
    
    156
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    156Balance at August 31, 2003
    
    
    104,984
    
    
    
    (10
    )
    
    
    187,845
    
    
    
    (5,813
    )
    
    
    287,006Net income
    
    
    
    
    
    
    
    
    
    
    9,770
    
    
    
    
    
    
    
    9,770Change in foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,974
    
    
    
    11,974Change in minimum pension liability
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,554
    )
    
    
    (4,554
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,190Cash dividend declared, $0.22 per share
    
    
    
    
    
    
    
    
    
    
    (3,085
    )
    
    
    
    
    
    
    (3,085
    )Stock options exercised, 51,000 shares
    
    
    618
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    618Proceeds from share sales, 50,178 shares
    
    
    895
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    895Stock compensation
    
    
    312
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    312Tax benefit of stock option exercised
    
    
    176
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    176Balance at August 31, 2004
    
    $
    106,985
    
    
    $
    (10
    )
    
    $
    194,530
    
    
    $
    1,607
    
    
    $
    303,112
 See Notes to Consolidated Financial Statements 26




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##### Table of Contents



CONSOLIDATED INCOME STATEMENT
Robbins & Myers, Inc. and Subsidiaries
(In thousands, except per share data) Years ended August 31,2004
    
    2003
    
    2002Sales
    
    $
    585,758
    
    
    $
    560,775
    
    
    $
    526,373Cost of sales
    
    
    392,754
    

    
    
    371,959
    
    
    
    352,609Gross profit
    
    
    193,004
    
    
    
    188,816
    
    
    
    173,764Selling, general and administrative expenses
    
    
    157,810
    
    
    
    147,918
    
    
    
    130,802Amortization
    
    
    2,738
    
    
    
    2,189
    
    
    
    2,015Other
    
    
    2,139
    
    
    
    0
    
    
    
    0Income before interest and income taxes
    
    
    30,317
    
    
    
    38,709
    
    
    
    40,947Interest expense
    
    
    14,427
    
    
    
    15,628
    
    
    
    17,565Income before income taxes and minority interest
    
    
    15,890
    
    
    
    23,081
    
    
    
    23,382Income tax expense
    
    
    5,563
    
    
    
    7,729
    
    
    
    7,831Minority interest
    
    
    557
    
    
    
    984
    
    
    
    1,048Net income
    
    $
    9,770
    
    
    $
    14,368
    
    
    $
    14,503Net income per shareBasic
    
    $
    0.67
    
    
    $
    1.00
    
    
    $
    1.17Diluted
    
    $
    0.67
    
    
    $
    1.00
    
    
    $
    1.15
 See Notes to Consolidated Financial Statements 27




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##### Table of Contents



CONSOLIDATED CASH FLOW STATEMENT
Robbins & Myers, Inc. and Subsidiaries
(In thousands) Years Ended August 31,2004
    
    2003
    
    2002OPERATING ACTIVITIESNet income
    
    $
    9,770
    
    
    $
    14,368
    
    
    $
    14,503Adjustments to reconcile net income to net cash
and cash equivalents provided by operating activities:Depreciation
    
    
    18,639
    
    
    
    20,093
    
    
    
    20,028Amortization
    
    
    2,738
    
    
    
    2,189
    
    
    
    2,015Deferred taxes
    
    
    (1,512
    )
    
    
    3,619
    
    
    
    9,369Stock compensation
    
    
    312
    
    
    
    0
    
    
    
    (126
    )Changes in operating assets and liabilities - excluding
the effect of acquisitions:Accounts receivable
    
    
    (3,524
    )
    
    
    3,392
    
    
    
    (3,107
    )Inventories
    
    
    (6,018
    )
    
    
    2,807
    
    
    
    22,269Other current assets
    
    
    725
    
    
    
    2,761
    
    
    
    1,398Other assets
    
    
    (3,637
    )
    
    
    (4,050
    )
    
    
    (455
    )Accounts payable
    
    
    8,755
    
    
    
    4,815
    
    
    
    (2,897
    )Accrued expenses and other liabilities
    
    
    105
    
    
    
    (4,358
    )
    
    
    (18,457
    )Net cash and cash equivalents provided by operating activities
    
    
    26,353
    
    
    
    45,636
    
    
    
    44,540INVESTING ACTIVITIESCapital expenditures, net of nominal disposals
    
    
    (9,884
    )
    
    
    (7,869
    )
    
    
    (15,112
    )Purchase of Tarby
    
    
    0
    
    
    
    (13,146
    )
    
    
    0Proceeds from sales-leaseback arrangements
    
    
    0
    
    
    
    0
    
    
    
    4,905Purchase of Romaco, net of cash acquired
    
    
    0
    
    
    
    0
    
    
    
    (18,823
    )Net cash and cash equivalents used by investing activities
    
    
    (9,884
    )
    
    
    (21,015
    )
    
    
    (29,030
    )FINANCING ACTIVITIESProcees from debt borrowings
    
    
    82,658
    
    
    
    72,485
    
    
    
    29,836Payments of long-term debt
    
    
    (100,184
    )
    
    
    (93,038
    )
    
    
    (103,275
    )Amended credit agreement fees
    
    
    (1,078
    )
    
    
    0
    
    
    
    (1,911
    )Proceeds from sale of common stock
    
    
    1,513
    
    
    
    895
    
    
    
    56,992Dividend paid
    
    
    (3,085
    )
    
    
    (3,150
    )
    
    
    (2,740
    )Net cash and cash equivalents used by financing activities
    
    
    (20,176
    )
    
    
    (22,808
    )
    
    
    (21,098
    )(Decrease) increase in cash and cash equivalents
    
    
    (3,707
    )
    
    
    1,813
    
    
    
    (5,588
    )Cash and cash equivalents at beginning of year
    
    
    12,347
    
    
    
    10,534
    
    
    
    16,122Cash and cash equivalents at end of year
    
    $
    8,640
    
    
    $
    12,347
    
    
    $
    10,534
 See Notes to Consolidated Financial Statements 28




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##### Table of Contents



NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
Robbins & Myers, Inc. and Subsidiaries NOTE 1  SUMMARY OF
ACCOUNTING POLICIES

Consolidation The consolidated financial statements include the accounts of Robbins & Myers,
Inc. (we, us, our) and all of its subsidiaries in which a controlling
interest is maintained. Controlling interest is determined by majority
ownership interest and the absence of substantive third-party participation
rights. For these consolidated subsidiaries where our ownership is less than
100%, the other shareholders interest are shown as Minority Interest. All
significant intercompany accounts and transactions have been eliminated upon
consolidation. All of our operations are conducted in producing and selling
original and used equipment and aftermarket parts in the pharmaceutical and
healthcare, general industrial and oil and gas exploration and recovery
industries. Use of Estimates The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires us to make
estimates and assumptions that affect the amounts reported in the consolidated
financial statements and accompanying notes. Actual results could differ from
those estimates. Accounts Receivable Accounts receivable relate primarily to customers located in North America and
Western Europe and are concentrated in the pharmaceutical, specialty chemical
and oil and gas markets. To reduce credit risk, we perform credit
investigations prior to accepting an order and, when necessary, require letters
of credit to insure payment. Our estimate for uncollectible accounts receivable is based upon an analysis of
our prior collection experience, specific customer creditworthiness and current
economic trends within the industries we serve. In circumstances where we are
aware of a specific customers inability to meet its financial obligation to us
(e.g., bankruptcy filings or substantial downgrading of credit ratings), we
record a specific reserve to reduce the receivable to the amount we reasonably
believe will be collected. For all other customers, we recognize reserves for
bad debts based on the length of time that the receivables are past due. Inventories Inventories are stated at the lower of cost or market determined by the
last-in, first-out (LIFO) method in the U.S. and the first-in, first-out
(FIFO) method outside the U.S. Inventory valuation reserves are determined
based on our assessment of the market conditions for our products. Goodwill and Other Intangible Assets Goodwill is the excess of the purchase price paid over the value of net assets
of businesses acquired. Goodwill is not amortized, but is tested for impairment
on an annual basis, or more frequently as impairment indicators arise using a
fair market value approach, at the reporting unit level. A reporting unit is
the operating segment level. We recognize an impairment charge for any amount
by which the carrying amount of an operating segments goodwill exceeds its
fair value. Impairment tests are performed at the end of our first quarter.
Losses, if any, resulting from impairment tests will be reflected in operating
income in our income statement. Amortization of other intangible assets is calculated on the straight-line
basis using the following
lives: Patents and trademarks
    
    14 to 17 yearsNon-compete agreements
    
    3 to 5 yearsFinancing costs
    
    5 years
 Property, Plant and Equipment Property, plant and equipment are stated at cost. Depreciation expense is
recorded over the estimated useful life of the asset on the straight-line
method using the following lives: Land improvements
    
    20 yearsBuildings
    
    45 yearsMachinery and equipment
    
    3 to 15 years
 29




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Our normal policy is to expense repairs and improvements made to capital assets
as incurred. In limited circumstances, betterments are capitalized and
amortized over the estimated life of the new asset and any
remaining value of the old asset is written off. Repairs to machinery and
equipment must result in an addition to the useful life of the asset before the
costs are capitalized. Foreign Currency Accounting Gains and losses resulting from the settlement of a transaction in a currency
different from that used to record the transaction are charged or credited to
net income when incurred. Adjustments resulting from the translation of
non-U.S. financial statements into U.S. dollars are recognized in accumulated
other comprehensive income or loss for all non-U.S. units. 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 year are as follows: 2004
    
    2003(In thousands)Balance at beginning of the fiscal year
    
    $
    9,310
    
    
    $
    9,405Warranties issued
    
    
    1,613
    
    
    
    1,677Settlements made
    
    
    (2,593
    )
    
    
    (1,772
    )Balance at end of the fiscal year
    
    $
    8,330
    
    
    $
    9,310
 Consolidated Income Statement Research and development costs are expensed as incurred. Research and
development costs in fiscal 2004, 2003 and 2002 were $6,688,000, $6,426,000 and
$6,214,000, respectively. Shipping and handling costs are included in cost of
sales. Revenue Recognition We recognize revenue at the time of title passage to our customer. In instances
where we have equipment installation obligations, the revenue related to the
installation service is deferred until installation is complete. We recognize
revenue for certain longer-term contracts based on the percentage of completion
method. The percentage of completion method requires estimates of total
expected contract revenue and costs. We follow this method since we can make
reasonably dependable estimates of the revenue and cost applicable to various
stages of the contract. Revisions in profit estimates are reflected in the
period in which the facts that gave rise to the revision become known. Income Taxes Income taxes are provided for all items included in the Consolidated Income
Statement regardless of the period when such items are reported for income tax
purposes. Deferred income taxes reflect the net effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes. We
have recorded valuation allowances to reflect the estimated amount of deferred
tax assets that may not be realized based upon our analysis of estimated future
taxable income and establishment of tax strategies. Future taxable income, the
results of tax strategies and changes in tax laws could impact these estimates. Our policy is to provide U.S. income taxes on non-U.S. income when remitted to
the U.S. We do not provide U.S. income taxes on the remaining undistributed
non-U.S. income, which aggregated $53,700,000 and $45,300,000 at August 31,
2004 and 2003, respectively, as it is our intention to maintain our investments
in these operations. Consolidated Cash Flow Statement Cash and cash equivalents consist of cash balances and temporary investments
having an original maturity of 90 days or less. 30




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##### Table of Contents



Fair Value of Financial Instruments The following methods and assumptions were used by us in estimating the fair
value of financial instruments: Cash and cash equivalents  The amounts reported approximate market value. Long-term debt  The market value of our debt is $182,002,000 at August
31, 2004 and $191,603,000 at August 31, 2003. These amounts are based
on the terms, interest rates and maturities currently available to us
for similar debt instruments. Foreign exchange contracts  The amounts reported are estimated using
quoted market prices for similar instruments. Common Stock Plans Common stock plans involving the issuance of stock options are accounted for
using the intrinsic method in accordance with APB Opinion No. 25 (APB No. 25)
Accounting for Stock Issued to Employees and Related Interpretations. Common
stock plans involving the issuance of a variable number of shares based on
performance are accounted for as compensatory plans. The following table
illustrates the effect on net income and earnings per share as if the fair
value based method had been applied to all outstanding and unvested awards in
each period. 2004
    
    2003
    
    2002Net income, as reported
    
    $
    9,770
    
    
    $
    14,368
    
    
    $
    14,503Deduct: Total Stock-based employee
compensation expense determined under
fair value based method for all awards, net
of related tax effects
    
    
    1,150
    
    
    
    1,193
    
    
    
    1,154Pro forma net income
    
    $
    8,620
    
    
    $
    13,175
    
    
    $
    13,349Earnings per share:Basic  as reported
    
    $
    0.67
    
    
    $
    1.00
    
    
    $
    1.17Basic  pro forma
    
    $
    0.60
    
    
    $
    0.92
    
    
    $
    1.08Diluted  as reported
    
    $
    0.67
    
    
    $
    1.00
    
    
    $
    1.15Diluted  pro forma
    
    $
    0.60
    
    
    $
    0.92
    
    
    $
    1.07
 Pro forma information regarding net income and net income per share is required
by SFAS No. 148, and has been determined as if we had accounted for stock
options granted subsequent to August 31, 1995 under the fair value method of
FASB Statement No. 123. The fair value for these options was estimated at the
date of grant using a Black-Scholes model with the following weighted-average
assumptions: 2004
    
    2003
    
    2002Expected volatility of common stock
    
    
    32.50
    %
    
    
    33.60
    %
    
    
    33.50
    %Risk free interest rate
    
    
    4.70
    
    
    
    4.60
    
    
    
    4.55Dividend yield
    
    
    .75
    
    
    
    .75
    
    
    
    .75Expected life of option
    
    
    6.90
    yrs
    
    
    6.90
    yrs
    
    
    6.90
    yrsFair value at grant date
    
    $
    8.85
    
    
    $
    7.80
    
    
    $
    10.15
 Option valuation models, such as the Black-Scholes model, were developed for
use in estimating the fair value of traded options which have no vesting
restrictions and are freely transferable. In addition, option valuation models
require the input of highly subjective assumptions including the expected stock
price volatility. Because our options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in our
opinion, existing models do not provide a reliable single measure of the fair
value of our stock options. Derivatives and Hedging Activities We account for derivative instruments in accordance with Statement of Financial
Accounting Standards (SFAS) No. 133, Accounting for Derivatives and Hedging
Activities, as amended. This standard requires the recognition of all
derivatives on the balance sheet at fair value and recognition of the resulting
gains or losses as adjustments 31




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to earnings or other comprehensive income. We formally document all relationships
between hedging instruments and hedged items, as well as our risk management objective
and strategy for undertaking various hedge transactions. Our hedging activities are
transacted only with a highly-rated institution, reducing the exposure to
credit risk in the event of nonperformance. We use derivatives for fair value
hedging purposes. For derivative instruments that hedge the exposure to changes
in the fair value of certain fixed rate debt, designated as fair value hedges,
the effective portion of the net gain or loss on the derivative instrument, as
well as the offsetting gain or loss on the fixed rate debt attributable to the
hedged risk, are recorded in current period earnings. We use swap agreements to
convert a portion of fixed rate debt to a floating rate basis, thus hedging for
changes in the fair value of the fixed rate debt being hedged. We have
determined that this interest rate swap, designated as a fair value hedge,
qualifies for treatment under the short-cut method of measuring effectiveness.
Under the provisions of SFAS No. 133, this hedge is determined to be perfectly
effective and there is no requirement to periodically evaluate effectiveness. Reclassifications Certain prior year amounts are reclassified to conform with the current year
presentation. NOTE 2NEW ACCOUNTING PRONOUNCEMENTS In January 2003, the FASB issued Financial Interpretation No. 46,
Consolidation of Variable Interest Entities, an Interpretation of Accounting
Research Bulletin No. 51. The Interpretation requires the consolidation of
entities in which an enterprise absorbs a majority of the entitys expected
losses, receives a majority of the entitys expected residual returns, or both,
as a result of ownership, contractual or other financial interest in the
entity. Currently, entities are generally consolidated by an enterprise when it
has a controlling financial interest through ownership of a majority voting
interest in the entity. The adoption of Financial Interpretation No. 46 had no
effect on our financial statements. In May 2004, the Financial Accounting Standards Board issued Staff Position
106-2 (FAS 106-2) providing final guidance on accounting for the Medicare
Prescription Drug, Improvement and Modernization Act of 2003 (the Act). We
adopted the provisions of FAS 106-2 during the year ended August 31, 2004. This
resulted in a reduction in our accumulated postretirement benefit obligations
(APBO) for the subsidy related to benefits attributed to past services of
$3,500,000. The subsidy resulted in a reduction in our current period net
periodic postretirement benefit costs for the year ended August 31, 2004 of
$200,000. We have not incurred a reduction in current gross benefit payments
and expect to receive subsidy payments beginning in fiscal year ended August
31, 2006. 32




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##### Table of Contents



NOTE 3  BALANCE SHEET INFORMATION 2004
    
    2003(In thousands)Accounts receivableAllowances for doubtful accounts
    
    $
    4,018
    
    
    $
    3,278InventoriesFIFO:Finished products
    
    $
    29,958
    
    
    $
    36,291Work in process
    
    
    37,072
    
    
    
    24,716Raw materials
    
    
    47,521
    
    
    
    41,297114,551
    
    
    
    102,304LIFO reserve, U.S. inventories
    
    
    (7,073
    )
    
    
    (6,108
    )$
    107,478
    
    
    $
    96,196Non-U.S. inventories at FIFO
    
    $
    73,960
    
    
    $
    64,000Property, plant and equipmentLand and improvements
    
    $
    18,528
    
    
    $
    16,289Buildings
    
    
    90,439
    
    
    
    82,576Machinery and equipment
    
    
    169,537
    
    
    
    171,677278,504
    
    
    
    270,542Less accumulated depreciation
    
    
    138,797
    
    
    
    128,579$
    139,707
    
    
    $
    141,963Accrued expensesSalaries, wages and payroll taxes
    
    $
    21,919
    
    
    $
    19,691Customer advances
    
    
    18,894
    
    
    
    15,385Pension benefits
    
    
    6,956
    
    
    
    5,581U.S. and other postretirement benefits
    
    
    2,000
    
    
    
    2,000Warranty costs
    
    
    8,330
    
    
    
    9,310Accrued interest
    
    
    4,222
    
    
    
    4,000Income taxes
    
    
    4,620
    
    
    
    3,560Commissions
    
    
    3,640
    
    
    
    2,915Other
    
    
    22,454
    
    
    
    22,716$
    93,035
    
    
    $
    85,158Other long-term liabilitiesGerman pension liability
    
    $
    34,142
    
    
    $
    31,492U.S. other postretirement benefits
    
    
    11,634
    
    
    
    12,192U.S. pension liability
    
    
    21,189
    
    
    
    15,045Other
    
    
    13,333
    
    
    
    13,893$
    80,298
    
    
    $
    72,622
 33




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##### Table of Contents



NOTE 4  INCOME
STATEMENT INFORMATION

Other 2004
    
    2003
    
    2002(In thousands)Plant closure costs
    
    $
    761
    
    
    $
    0
    
    
    $
    0CEO retirement costs
    
    
    1,378
    
    
    
    0
    
    
    
    0$
    2,139
    
    
    $
    0
    
    
    $
    0
 In the second quarter of fiscal 2004, we recorded $1,378,000 of costs
associated with the retirement of our former President and CEO. The components
of the charge were as follows: (In thousands)Liability for retirement payments
    
    $
    603FAS 88 expense for previously unrecognized losses
    
    
    153Impact of stock option modifications
    
    
    312Liability for new CEO search fees
    
    
    310Total
    
    $
    1,378
 There have been no changes to the estimates made. The liability for the new
CEO search fees has been paid as of August 31, 2004. The liability for
retirement payments as of August 31, 2004 is as follows: (In thousands)Liability originally recorded
    
    $
    603Payments made
    
    
    (390
    )Change in estimate
    
    
    0Liability at August 31, 2004
    
    $
    213
 In the fourth quarter of fiscal 2004 we recorded $761,000 of severance cost for
approximately 20 people related to the closure of one of the Reactor Systems
facilities in Italy. Actual severance payments made in our fourth quarter were
$94,000; therefore, the liability for severance payments as of August 31, 2004
is $667,000. Minimum lease payments Future minimum payments, by year and in the aggregate, under non-cancellable
operating leases with initial or remaining terms of one year or more consisted
of the following at August 31, 2004: (In thousands)2005
    
    $
    4,4762006
    
    
    3,8482007
    
    
    2,9972008
    
    
    1,8902009
    
    
    1,502Thereafter
    
    
    5,629$
    20,342
 Rental expense for all operating leases in 2004, 2003 and 2002 was
approximately $4,721,000, $5,704,000 and $4,740,000, respectively. NOTE 5  CASH FLOW STATEMENT INFORMATION In fiscal 2004, we recorded the following non-cash investing and financing
transactions: $2,450,000 increase in deferred tax assets, $7,842,000 increase
in long-term liabilities, $838,000 increase in pension intangible asset and
$4,554,000 increase in the minimum pension liability related to our pension
plans; 34




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and $176,000 increase in common stock and decrease in income tax payable
related to the tax benefits of stock options exercised. In fiscal 2003, we recorded the following non-cash investing and financing
transactions: exchange of $40,000,000 of existing 6.50% convertible
subordinated notes for $40,000,000 of 8.00% convertible subordinated notes;
$632,000 increase in deferred tax assets, $1,723,000 increase in long-term
liabilities, $759,000 increase in pension intangible asset and $332,000
increase in the minimum pension liability related to our pension plans; and
$156,000 increase in common stock and decrease in income tax payable related to
the tax benefits of stock options exercised. In fiscal 2002, we recorded the following non-cash investing and financing
transactions: $16,050,000 of debt issued in connection with the acquisition of
Romaco; $3,724,000 increase in deferred tax assets, $11,987,000 increase in
long-term liabilities and $8,263,000 increase in the minimum pension liability
related to our pension plans; and $724,000 increase in common stock and
decrease in income tax payable related to the tax benefits of stock options
exercised. Supplemental cash flow information consisted of the following: 2004
    
    2003
    
    2002(in thousands)Interest paid
    
    $
    14,205
    
    
    $
    15,696
    
    
    $
    17,789Taxes paid  net of refunds

    
    
    6,015
    
    
    
    3,829
    
    
    
    1,670
 NOTE 6GOODWILL AND OTHER INTANGIBLE ASSETS Changes in the carrying amount of goodwill, by operating segment, are as
follows: Segment
    
    Pharmaceutical
    
    Energy
    
    Industrial
    
    Total(In thousands)Balance as of September 1, 2002
    
    $
    161,138
    
    
    $
    68,098
    
    
    $
    42,712
    
    
    $
    271,948Goodwill acquired during the period
    
    
    0
    
    
    
    0
    
    
    
    9,052
    
    
    
    9,052Translation adjustments and other
    
    
    12,155
    
    
    
    1,430
    
    
    
    319
    
    
    
    13,904Balance as of August 31, 2003
    
    
    173,293
    
    
    
    69,528
    
    
    
    52,083
    
    
    
    294,904Goodwill acquired during the period
    
    
    0
    
    
    
    0
    
    
    
    202
    
    
    
    202Translation adjustments and other
    
    
    11,350
    
    
    
    710
    
    
    
    0
    
    
    
    12,060Balance as of August 31, 2004
    
    $
    184,643
    
    
    $
    70,238
    
    
    $
    52,285
    
    
    $
    307,166
 Information regarding our other intangible assets is as follows: 2004
    
    2003Carrying
    
    Accumulated
    
    
    
    
    
    Carrying
    
    AccumulatedAmount
    
    Amortization
    
    Net
    
    Amount
    
    Amortization
    
    Net(In thousands)Patents and Trademarks
    
    $
    8,921
    
    
    $
    5,492
    
    
    $
    3,429
    
    
    $
    10,927
    
    
    $
    5,124
    
    
    $
    5,803Non-compete Agreements
    
    
    8,750
    
    
    
    5,327
    
    
    
    3,423
    
    
    
    10,790
    
    
    
    8,274
    
    
    
    2,516Financing Costs
    
    
    8,592
    
    
    
    5,629
    
    
    
    2,963
    
    
    
    7,453
    
    
    
    4,376
    
    
    
    3,077Pension Intangible
    
    
    4,643
    
    
    
    0
    
    
    
    4,643
    
    
    
    3,805
    
    
    
    0
    
    
    
    3,805Other
    
    
    6,131
    
    
    
    4,820
    
    
    
    1,311
    
    
    
    5,234
    
    
    
    4,591
    
    
    
    643$
    37,037
    
    
    $
    21,268
    
    
    $
    15,769
    
    
    $
    38,209
    
    
    $
    22,365
    
    
    $
    15,844
 We estimate that amortization expense will be approximately $2,500,000 for each
of the next five years. 35




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NOTE 7  LONG-TERM DEBT 2004
    
    2003(in thousands)Senior debt:Revolving credit loan
    
    $
    5,052
    
    
    $
    12,617Senior notes
    
    
    100,000
    
    
    
    100,000Other
    
    
    11,652
    
    
    
    18,2978.00% convertible subordinated notes
    
    
    40,000
    
    
    
    40,00010.00% subordinated notes
    
    
    24,998
    
    
    
    22,689Total debt
    
    
    181,702
    
    
    
    193,603Less current portion
    
    
    8,333
    
    
    
    7,319Long-term debt
    
    $
    173,369
    
    
    $
    186,284
 Our Bank Credit Agreement (Agreement) provides that we may borrow on a
revolving credit basis up to a maximum of $125,000,000. All outstanding amounts
under the Agreement are due and payable on October 7, 2006. Interest is
variable based upon formulas tied to LIBOR or prime, at our option, and is
payable at least quarterly. At August 31, 2004, the weighted average interest
rate for all amounts outstanding was 4.07%. Indebtedness under the Agreement is
unsecured, except for guarantees by our U.S. subsidiaries, the pledge of the
stock of our U.S. subsidiaries and the pledge of the stock of certain non-U.S.
subsidiaries. Under this Agreement and other lines of credit, we have
$120,000,000 of unused borrowing capacity. However, due to our financial
covenants and outstanding standby letters of credit, we could only incur
additional indebtedness of $11,600,000. We have $23,459,000 of standby letters
of credit outstanding at August 31, 2004. These standby letters of credit are
used as security for advance payments received from customers and future
payments to our vendors. We have $100,000,000 of Senior Notes (Senior Notes) issued in two series.
Series A in the principal amount of $70,000,000 has an interest rate of 6.76%
and is due May 1, 2008, and Series B in the principal amount of $30,000,000 has
an interest rate of 6.84% and is due May 1, 2010. Interest is payable
semi-annually on May 1 and November 1. The above agreements have certain restrictive covenants including limitations
on cash dividends, treasury stock purchases and capital expenditures and
thresholds for interest coverage and leverage ratios. The amount of cash
dividends and treasury stock purchases, other than in relation to stock option
exercises, we may incur in each fiscal year is restricted to the greater of
$3,500,000 or 50% of our consolidated net income for the immediately preceding
fiscal year, plus a portion of any unused amounts from the preceding fiscal
year. We have $24,998,000 of 10.00% Subordinated Notes (Subordinated Notes)
denominated in euro with the former owner of Romaco. The Subordinated Notes are
due in 2006 and interest is payable quarterly. We have $40,000,000 of 8.00% Convertible Subordinated Notes Due 2008 (8.00%
Convertible Subordinated Notes). The 8.00% Convertible Subordinated Notes are
due on January 31, 2008, bear interest at 8.00%, payable semi-annually on March
1 and September 1 and are convertible into common stock at a rate of $22.50 per
share. Holders may convert at any time until maturity. The 8.00% Convertible
Subordinated Notes are redeemable at our option at any time on or after March
1, 2004, at a redemption price (a) prior to or on March 1, 2005, equal to 102%
of the principal amount, and (b) after March 1, 2005, equal to 100% of the
principal amount. Our other debt primarily consists of unsecured non-U.S. bank lines of credit
with interest rates ranging from 4.00% to 8.00%. We have entered into an interest rate swap agreement. The interest rate swap
agreement utilized by us effectively modifies our exposure to interest rate
risk by converting our fixed rate debt to floating rate debt. This agreement
involves the receipt of fixed rate amounts in exchange for floating rate
interest payments 36




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##### Table of Contents



over the life of the agreement without an exchange of underlying principal
amounts. The mark-to-market values of both the fair value hedging instrument
and the underlying debt obligation were equal and recorded as offsetting gains
and losses in current period earnings. The fair value hedge qualifies for
treatment under the short-cut method of measuring effectiveness. As a result,
there is no impact on earnings due to hedge ineffectiveness. The interest rate
swap agreement totals $30,000,000, expires in 2004 and allows us to receive an
interest rate of 6.76% and pay an interest rate based on LIBOR. Aggregate principal payments of long-term debt, for the five years subsequent
to August 31, 2004, are as follows: (In thousands)2005
    
    $
    8,3332006
    
    
    29,1192007
    
    
    3,7022008
    
    
    110,2082009
    
    
    1332010 and thereafter
    
    
    30,207Total
    
    $
    181,702
 NOTE 8  RETIREMENT BENEFITS We sponsor two defined contribution plans covering most U.S. salaried employees
and certain U.S. hourly employees. Contributions are made to the plans based on
a percentage of eligible amounts contributed by participating employees. We
also sponsor several defined benefit plans covering all U.S. employees and
certain non-U.S. employees. Benefits are based on years of service and
employees compensation or stated amounts for each year of service. Our funding
policy is consistent with the funding requirements of applicable regulations.
At August 31, 2004 and 2003, pension investments included 311,700 shares of our
common stock. In addition to pension benefits, we provide health care and life insurance
benefits for certain of our retired U.S. employees. Our policy is to fund the
cost of these benefits as claims are paid. Retirement and other post-retirement plan costs are as follows: Pension Benefits2004
    
    2003
    
    2002(In thousands)Service costs
    
    $
    3,825
    
    
    $
    3,905
    
    
    $
    3,602Interest cost
    
    
    8,341
    
    
    
    8,250
    
    
    
    7,278Expected return on plan assets
    
    
    (6,535
    )
    
    
    (6,244
    )
    
    
    (7,049
    )Amortization of prior service cost
    
    
    388
    
    
    
    752
    
    
    
    593Amortization of transition obligation
    
    
    (186
    )
    
    
    (173
    )
    
    
    (202
    )Recognized net actuarial losses (gains)
    
    
    1,266
    
    
    
    815
    
    
    
    (148
    )Net periodic benefit cost
    
    $
    7,099
    
    
    $
    7,305
    
    
    $
    4,074Defined contribution cost
    
    $
    1,120
    
    
    $
    1,057
    
    
    $
    1,064
 Other Benefits2004
    
    2003
    
    2002(In thousands)Service cost
    
    $
    310
    
    
    $
    249
    
    
    $
    297Interest cost
    
    
    1,546
    
    
    
    1,713
    
    
    
    1,694Net amortization
    
    
    813
    
    
    
    702
    
    
    
    609Net peridoc benefit cost
    
    $
    2,669
    
    
    $
    2,664
    
    
    $
    2,600
 37




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##### Table of Contents



The benefit obligation, funded status and amounts recorded in the balance sheet
at August 31, (measurement date) are as follows: Pension Benefits
    
    Other Benefits2004
    
    2003
    
    2004
    
    2003(In thousands)Change in benefit obligation:Beginning of year
    
    $
    136,638
    
    
    $
    128,067
    
    
    $
    25,617
    
    
    $
    25,343Service cost
    
    
    3,825
    
    
    
    3,905
    
    
    
    310
    
    
    
    249Interest cost
    
    
    8,341
    
    
    
    8,250
    
    
    
    1,546
    
    
    
    1,713Plan amendments
    
    
    164
    
    
    
    346
    
    
    
    0
    
    
    
    104Currency exchange rate impact
    
    
    6,040
    
    
    
    3,993
    
    
    
    0
    
    
    
    0Actuarial losses
    
    
    4,677
    
    
    
    407
    
    
    
    1,718
    
    
    
    1,110Curtailment
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    (16
    )Benefit payments
    
    
    (9,003
    )
    
    
    (8,330
    )
    
    
    (3,227
    )
    
    
    (2,886
    )End of year
    
    $
    150,682
    
    
    $
    136,638
    
    
    $
    25,964
    
    
    $
    25,617Change in plan assets:Beginning of year
    
    $
    77,470
    
    
    $
    71,898
    
    
    $
    0
    
    
    $
    0Currency exchange rate impact
    
    
    2,107
    
    
    
    226
    
    
    
    0
    
    
    
    0Actual return
    
    
    2,758
    
    
    
    4,299
    
    
    
    0
    
    
    
    0Company contributions
    
    
    8,204
    
    
    
    9,377
    
    
    
    3,227
    
    
    
    2,886Benefit payments
    
    
    (9,003
    )
    
    
    (8,330
    )
    
    
    (3,227
    )
    
    
    (2,886
    )End of year
    
    $
    81,536
    
    
    $
    77,470
    
    
    $
    0
    
    
    $
    0Funded status
    
    $
    (69,146
    )
    
    $
    (59,168
    )
    
    $
    (25,964
    )
    
    $
    (25,617
    )Unrecognized net actuarial losses
    
    
    33,555
    
    
    
    25,770
    
    
    
    10,271
    
    
    
    9,154Unrecognized transition obligation
    
    
    (373
    )
    
    
    (491
    )
    
    
    0
    
    
    
    0Unamortized prior service cost
    
    
    3,250
    
    
    
    3,540
    
    
    
    2,059
    
    
    
    2,271Amount recognized
    
    $
    (32,714
    )
    
    $
    (30,349
    )
    
    $
    (13,634
    )
    
    $
    (14,192
    )Recorded as follows:Accrued expenses
    
    $
    (6,956
    )
    
    $
    (5,581
    )
    
    $
    (2,000
    )
    
    $
    (2,000
    )Other long-term liabilities
    
    
    (55,331
    )
    
    
    (46,537
    )
    
    
    (11,634
    )
    
    
    (12,192
    )Other assets
    
    
    1,413
    
    
    
    1,309
    
    
    
    0
    
    
    
    0Intangible assets
    
    
    4,643
    
    
    
    3,805
    
    
    
    0
    
    
    
    0Accumulated other comprehensive loss
    
    
    23,517
    
    
    
    16,655
    
    
    
    0
    
    
    
    0$
    (32,714
    )
    
    $
    (30,349
    )
    
    $
    (13,634
    )
    
    $
    (14,192
    )Deferred tax liability on accumulated other comprehensive loss
    
    $
    (7,975
    )
    
    $
    (5,667
    )
    
    $
    0
    
    
    $
    0
 Pension plans with accumulated (ABO) and projected (PBO) benefit
obligations in excess of plan assets: 2004
    
    2003(In thousands)Accumulated benefit obligation
    
    $
    147,351
    
    
    $
    132,018Projected benefit obligation
    
    
    150,682
    
    
    
    136,638Plan assets
    
    
    81,536
    
    
    
    77,470
 38




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##### Table of Contents



In 2004 and 2003, $36,444,000 and $33,504,000, respectively, of the unfunded
ABO and $38,189,000 and $35,348,000, respectively, of the unfunded PBO related
to our pension plan for our German operation. Funding of pension obligations is
not required in Germany. The weighted allocations of pension plan assets at August 31, 2004 and 2003 are
shown in the following table. 2004
    
    2003Equity securities
    
    
    48
    %
    
    
    47
    %Debt securities
    
    
    46
    
    
    
    51Cash and cash equivalents
    
    
    6
    
    
    
    2100
    %
    
    
    100
    %
 At August 31, 2004, our target allocation percentages for plan assets were
approximately 60% equity securities and 40% debt securities. The targets may be
adjusted periodically to reflect current market conditions and trends as well
as inflation levels, interest rates and the trend thereof, and economic and
monetary policy. The objective underlying this allocation is to achieve a
long-term rate of return of inflation plus 6%. The expected long-term rates of return on plan assets for purposes of
determining pension expense were 8.5% in 2004 and 2003 and 9.0% in 2002. We
will use an 8.25% rate in 2005. Expected rates of return are developed based on
the target allocation of debt and equity securities and on the historical
returns on these types of investments judgmentally adjusted to reflect current
expectations based on historical experience of the plans investment managers.
In evaluating future returns on equity securities, the existing portfolio is
stratified to separately consider large and small capitalization investments as
well as international and other types of securities. We expect to make future cash contributions to our benefit plans as follows: Pension Benefits
    
    Other Benefits(In thousands)2005
    
    $
    10,500
    
    
    $
    2,6002006
    
    
    10,500
    
    
    
    2,5002007
    
    
    10,400
    
    
    
    2,4002008
    
    
    10,500
    
    
    
    2,5002009
    
    
    10,500
    
    
    
    2,5002010-2014
    
    $
    54,015
    
    
    $
    11,500
 39




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The actuarial weighted average assumptions used to determine plan liabilities
at August 31, are as follows: Pension Benefits
    
    Other Benefits2004
    
    2003
    
    2004
    
    2003Weighted average assumptions:Discount rate
    
    
    6.00
    %
    
    
    6.50
    %
    
    
    6.00
    %
    
    
    6.50
    %Expected return on plan assets
    
    
    8.25
    
    
    
    8.50
    
    
    
    N/A
    
    
    
    N/ARate of compensation increase
    
    
    4.50
    
    
    
    4.50
    
    
    
    N/A
    
    
    
    N/AHealth care cost increase
    
    
    N/A
    
    
    
    N/A
    
    
    
    11.0 - 5.0
    %
    
    
    9.0 - 5.0
    %Health care cost grading period
    
    
    N/A
    
    
    
    N/A
    
    
    12 years
    
    4 years
 The actuarial weighted average assumptions used to determine plan costs are as
follows: Pension Benefits
    
    Other Benefits2004
    
    2003
    
    2004
    
    2003Discount rate
    
    
    6.50
    %
    
    
    6.50
    %
    
    
    6.50
    %

    
    
    6.50
    %Expected return on plan assets
    
    
    8.50
    
    
    
    8.50
    
    
    
    N/A
    
    
    
    N/ARate of compensation increase
    
    
    4.50
    
    
    
    4.50
    
    
    
    N/A
    
    
    
    N/AHealth care cost increase
    
    
    N/A
    
    
    
    N/A
    
    
    
    9.0 - 5.0
    %
    
    
    10.0 - 5.0
    %Health care cost grading period
    
    
    N/A
    
    

    
    N/A
    
    
    4 years
    
    5 years
 The assumed health care trend rate has a significant effect on the amounts
reported for health care benefits. A one-percentage point change in assumed
health care rate would have the following effects: Increase
    
    Decrease(In thousands)Service and interest cost
    
    $
    70
    
    
    $
    (66
    )Postretirement benefit obligation
    
    
    2,241
    
    
    
    (2,019
    )
 40




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##### Table of Contents



NOTE 9  INCOME TAXES Deferred income taxes reflect the net effects of temporary differences between
the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for income tax purposes. 2004
    
    2003(In thousands)Deferred tax assets and liabilitiesAssets:Postretirement benefit obligations
    
    $
    5,177
    
    
    $
    5,360Net operating loss carryforwards
    
    
    0
    
    
    
    679U.S. credit carryforward
    
    
    4,901
    
    
    
    5,071Other liabilities
    
    
    2,147
    
    
    
    1,430Inventory allowances
    
    
    3,080
    
    
    
    3,476Warranty reserve
    
    
    1,580
    
    
    
    2,074Insurance reserve
    
    
    913
    
    
    
    797Customer advance payments
    
    
    1,259
    
    
    
    0Research and development costs
    
    
    1,126
    
    
    
    0Pension benefits
    
    
    9,662
    
    
    
    6,250Other items
    
    
    486
    
    
    
    030,331
    
    
    
    25,137Less valuation allowances
    
    
    0
    
    
    
    72630,331
    
    
    
    24,411Liabilities:Tax depreciation in excess of book depreciation
    
    
    6,444
    
    
    
    8,373Goodwill and purchased asset basis differences
    
    
    19,880
    
    
    
    15,441Other items
    
    
    435
    
    
    
    98826,759
    
    
    
    24,802Net deferred tax asset (liability)
    
    $
    3,572
    
    
    $
    (391
    )
 The credit carryforwards begin to expire in fiscal 2007. The reduction in the
deferred tax asset valuation allowance in fiscal 2004 is a result of credit
carryforwards utilized in fiscal 2004. 41




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##### Table of Contents



Expense 2004
    
    2003
    
    2002(In thousands)Current:U.S. federal
    
    $
    445
    
    
    $
    (627
    )
    
    $
    (6,751
    )Non-U.S.
    
    
    6,589
    
    
    
    4,799
    
    
    
    5,877U.S. state
    
    
    41
    
    
    
    (62
    )
    
    
    (664
    )7,075
    
    
    
    4,110
    
    
    
    (1,538
    )Deferred:U.S. federal
    
    
    (1,211
    )
    
    
    1,505
    
    
    
    6,863Non-U.S.
    
    
    (188
    )
    
    
    1,966
    
    
    
    1,820U.S. state
    
    
    (113
    )
    
    
    148
    
    
    
    686(1,512
    )
    
    
    3,619
    
    
    
    9,369$
    5,563
    
    
    $
    7,729
    
    
    $
    7,831Tax expense included in minority interest
    
    $
    300
    
    
    $
    530
    
    
    $
    395Non-U.S. pretax income
    
    $
    13,668
    
    
    $
    20,935
    
    
    $
    23,521
 A summary of the differences between the effective income tax rate attributable
to operations and the statutory rate is as follows: 2004
    
    2003
    
    2002U.S. statutory rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %U.S. state income taxes, net of U.S. federal tax benefit
    
    
    (0.2
    )
    
    
    0.2
    
    
    
    0.0Extraterritorial income deduction
    
    
    0.0
    
    
    
    (1.5
    )
    
    
    (1.5
    )Non-U.S. tax higher (lower) than U.S. tax rates
    
    
    1.4
    
    
    
    0.6
    
    
    
    (0.8
    )Other items  net
    
    
    (1.2
    )
    
    
    (0.8
    )
    
    
    0.835.0
    %
    
    
    33.5
    %
    
    
    33.5
    %
 NOTE 10  COMMON STOCK We sponsor a long-term incentive stock plan to provide for the granting of
stock-based compensation to officers and other key employees. In addition, we
sponsor stock option and stock compensation plans for non-employee directors.
Under the plans, the stock option price per share may not be less than the fair
market value per share as of the date of grant. For officers and other key
employees, outstanding grants become exercisable over a three-year period,
while options for non-employee directors are immediately exercisable. Proceeds
from the sale of stock issued under option arrangements are credited to common
stock. We make no charges or credits against earnings with respect to these
options. 42




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##### Table of Contents



Summaries of amounts issued under the stock option plans are presented in the
following tables. Stock option activity Weighted-Stock
    
    Average Option PriceOptions
    
    Per ShareOutstanding at September 1, 2001
    
    
    1,020,134
    
    
    $
    23.12Granted
    
    
    222,500
    
    
    
    25.12Exercised
    
    
    (167,500
    )
    
    
    15.07Canceled
    
    
    (333
    )
    
    
    20.88Outstanding at August 31, 2002
    
    
    1,074,801
    
    
    
    24.78Granted
    
    
    187,500
    
    
    
    19.12Exercised
    
    
    (36,000
    )
    
    
    9.92Canceled
    
    
    (97,000
    )
    
    
    28.48Outstanding at August 31, 2003
    
    
    1,129,301
    
    
    
    24.00Granted
    
    
    209,000
    
    
    
    21.76Exercised
    
    
    (51,000
    )
    
    
    12.03Canceled/Expired
    
    
    (8,800
    )
    
    
    24.12Outstanding at August 31, 2004
    
    
    1,278,501
    
    
    $
    24.11Exercisable stock options at year-end2002
    
    
    
    
    
    
    860,3632003
    
    
    
    
    
    
    788,1592004
    
    
    
    
    
    
    914,926Shares available for grant at year-end2002
    
    
    
    
    
    
    537,7002003
    
    
    
    
    
    
    350,2002004
    
    
    
    
    
    
    141,200
 Components of outstanding stock options at August 31, 2004 Weighted-Range of
    
    
    
    
    
    Average
    
    Weighted-Exercise
    
    Number
    
    Contract Life
    
    AveragePrice
    
    Outstanding
    
    in Years
    
    Exercise Price$
    7.7523.00
    
    
    608,334
    
    
    
    7.83
    
    
    $
    13.1923.75  39.50
    
    
    670,167
    
    
    
    5.68
    
    
    
    27.23$
    7.7539.50
    
    
    1,278,501
    
    
    
    6.70
    
    
    $
    24.11
 Components of exercisable stock options at August 31, 2004 Range of
    
    
    
    
    
    Weighted-Exercise
    
    Number
    
    AveragePrice
    
    Exercisable
    
    Exercise Price$
    7.7523.00
    
    
    301,092
    
    
    $
    20.5323.75  39.50
    
    
    613,834
    
    
    
    27.42$
    7.7539.50
    
    
    914,926
    
    
    $
    25.15$
 We also sponsor a long-term incentive stock plan. Under this plan, selected
participants receive performance units which convert into a variable number of
restricted shares based on a three year measurement of how favorably the total
return on our shares compares to the total shareholder return of selected peer
companies (Group). The restricted shares earned range from 75% to 200% of the 43




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##### Table of Contents



performance units awarded. The 75% threshold is earned when our return is at
the 50th percentile of total shareholder return of the Group and 200% is earned
when our return is at the 80th percentile or greater. No restricted shares are
earned if our return is less than the median return of the Group. Restricted
shares earned under the program are issued to the participants at the end of
the three-year measurement period and are subject to forfeit if the participant
leaves our employment within the following two years. For the performance
period ended August 31, 2004, no amounts were earned. Total after tax compensation expense (income) included in net income for all
stock based awards was 216,000, zero and ($84,000) for fiscal years 2004, 2003
and 2002, respectively. NOTE 11  NET INCOME PER SHARE The following table sets forth the computation of basic and diluted net income
per share: 2004
    
    2003
    
    2002(In thousands, except per share data)Numerator:Basic:Net Income
    
    $
    9,770
    
    
    $
    14,368
    
    
    $
    14,503Effect of dilutive securities:Convertible debt interest
    
    
    1,920
    
    
    
    2,238
    
    
    
    2,328Income attributable to diluted shares
    
    $
    11,690
    
    
    $
    16,606
    
    
    $
    16,831Denominator:Basic:Weighted average shares
    
    
    14,478
    
    
    
    14,368
    
    
    
    12,379Effect of dilutive securities:Convertible debt
    
    
    1,778
    
    
    
    2,090
    
    
    
    2,190Dilutive options and
restricted shares
    
    
    29
    
    
    
    34
    
    
    
    119Diluted
    
    
    16,285
    
    
    
    16,492
    
    
    
    14,688Net income per share:Basic:
    
    $
    0.67
    
    
    $
    1.00
    
    
    $
    1.17Diluted:
    
    $
    0.67
    
    
    $
    1.00
    
    
    $
    1.15
 NOTE 12  BUSINESS SEGMENTS AND GEOGRAPHIC INFORMATION Our operations are aggregated into three reportable business segments:
Pharmaceutical, Energy and Industrial. Our Pharmaceutical segment includes our
Reactor Systems and Romaco businesses and is primarily focused on the
pharmaceutical and healthcare industries. Our Reactor Systems business designs,
manufactures and markets primary processing equipment including glass-lined
reactors and storage vessels. Our Romaco business designs, manufactures and
markets secondary processing, dosing, filling, printing and security equipment.
Our Energy segment designs, manufactures and markets equipment and systems used
in oil and gas exploration and recovery. Our equipment and systems include
hydraulic drilling power sections, down-hole pumps and a broad line of
ancillary equipment, such as rod guides, rod and tubing rotators, wellhead
systems, pipeline closure products and valves. Our Industrial segment is
comprised of our Moyno, Tarby, Chemineer and Edlon businesses, which design,
manufacture and market products that are used in specialty chemical, wastewater
treatment and a variety of other industrial applications. The primary products
are progressing cavity pump products, mixing and turbine agitation equipment,
and fluoropolymer-lined products and accessories. We evaluate performance and allocate resources based on Income before Interest
and Taxes (EBIT). Identifiable assets by business segment include all assets
directly identified with those operations. Corporate assets consist mostly of
cash and intangible assets. The accounting policies of the reportable segments
are the same as those described in the summary of significant accounting
policies except that we account for U.S. inventory on a FIFO basis at the
segment level compared to a LIFO basis at the consolidated level. 44




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The following tables provide information about our reportable business
segments. 2004
    
    2003
    
    2002(In thousands)Unaffiliated Customer Sales:Pharmaceutical
    
    $
    343,047
    
    
    $
    342,415
    
    
    $
    319,412Energy
    
    
    115,884
    
    
    
    95,487
    
    
    
    91,381Industrial (1)
    
    
    126,827
    
    
    
    122,873
    
    
    
    115,580Total
    
    $
    585,758
    
    
    $
    560,775
    
    
    $
    526,373Intersegment Sales:Pharmaceutical
    
    $
    805
    
    
    $
    1,136
    
    
    $
    934Energy
    
    
    0
    
    
    
    0
    
    
    
    0Industrial (1)
    
    
    0
    
    
    
    0
    
    
    
    0Corporate and Eliminations
    
    
    (805
    )
    
    
    (1,136
    )
    
    
    (934
    )Total
    
    $
    0
    
    
    $
    0
    
    
    $
    0Depreciation and Amortization:Pharmaceutical
    
    $
    9,573
    
    
    $
    10,562
    
    
    $
    10,194Energy
    
    
    5,493
    
    
    
    5,307
    
    
    
    5,534Industrial (1)
    
    
    4,536
    
    
    
    5,065
    
    
    
    5,366Corporate and Eliminations
    
    
    1,775
    
    
    
    1,348
    
    
    
    949Total
    
    $
    21,377
    
    
    $
    22,282
    
    
    $
    22,043EBIT:Pharmaceutical
    
    $
    10,317
    (3)
    
    $
    21,401
    
    
    $
    27,895Energy
    
    
    27,424
    
    
    
    20,941
    
    
    
    18,773Industrial (1)
    
    
    8,349
    
    
    
    8,791
    
    
    
    5,279Corporate and Eliminations
    
    
    (15,773
    ) (2)
    
    
    (12,424
    )
    
    
    (11,000
    )Total
    
    $
    30,317
    
    
    $
    38,709
    
    
    $
    40,947Identifiable Assets:Pharmaceutical
    
    $
    437,602
    
    
    $
    416,215
    
    
    $
    405,319Energy
    
    
    138,815
    
    
    
    134,167
    
    
    
    131,374Industrial (1)
    
    
    132,441
    
    
    
    128,754
    
    
    
    114,926Corporate and Eliminations
    
    
    24,384
    
    
    
    25,320
    
    
    
    28,306Total
    
    $
    733,242
    
    
    $
    704,456
    
    
    $
    679,925Capital Expenditures:Pharmaceutical
    
    $
    2,536
    
    
    $
    3,666
    
    
    $
    8,761Energy
    
    
    3,805
    
    
    
    2,253
    
    
    
    682Industrial (1)
    
    
    3,506
    
    
    
    1,878
    
    
    
    5,505Corporate and Eliminations
    
    
    37
    
    
    
    72
    
    
    
    164Total
    
    $
    9,884
    
    
    $
    7,869
    
    
    $
    15,112
 45




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Information about our operations in different geographical regions is presented
below. Our primary operations are in the U.S. and Europe. Sales are attributed
to countries based on the location of the customer. 2004
    
    2003
    
    2002(In thousands)Sales (1)United States
    
    $
    218,407
    
    
    $
    204,982
    
    
    $
    209,713Europe
    
    
    206,033
    
    
    
    218,442
    
    
    
    219,949Other North America
    
    
    54,046
    
    
    
    51,889
    
    
    
    42,834South America
    

    
    22,730
    
    
    
    20,970
    
    
    
    20,230Asia and Australia
    
    
    84,542
    
    
    
    64,492
    
    
    
    33,647$
    585,758
    
    
    $
    560,775
    
    
    $
    526,373Identifiable Assets (1)United States
    
    $
    308,118
    
    
    $
    309,243
    
    
    $
    299,943Europe
    
    
    318,844
    
    
    
    294,659
    
    
    
    290,220Other North America
    
    
    40,169
    
    
    
    37,968
    
    
    
    33,340South America
    
    
    9,462
    
    
    
    9,088
    
    
    
    4,338Asia
    
    
    32,265
    
    
    
    28,178
    
    
    
    23,778Corporate
    
    
    24,384
    
    
    
    25,320
    
    
    
    28,306$
    733,242
    
    
    $
    704,456
    
    
    $
    679,925
  (1)
    
    Includes the operations of Tarby from the acquisition date of November
15, 2002.(2)
    
    Fiscal 2004 includes costs of $1,378,000 related to the retirement of our
former President and CEO.(3)
    
    Fiscal 2004 includes severance costs of $761,000 related to the
consolation of our Reactor Systems business in Italy. 46




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NOTE 13  QUARTERLY DATA (UNAUDITED) 2004 Quarters1st
    
    2nd
    
    3rd
    
    4th
    
    Total(In thousands, except per share data)Sales
    
    $
    132,482
    
    
    $
    142,217
    
    
    $
    152,464
    
    
    $
    158,595
    
    
    $
    585,758Gross profit
    
    
    43,466
    
    
    
    45,081
    
    
    
    50,935
    
    
    
    53,522
    
    
    
    193,004EBIT
    
    
    7,185
    
    
    
    4,658
    
    
    
    9,405
    
    
    
    9,069
    
    
    
    30,317Income before income taxes and minority interest
    
    
    3,487
    
    
    
    1,016
    
    
    
    5,884
    
    
    
    5,503
    
    
    
    15,890Net income
    
    
    2,139
    
    
    
    320
    
    
    
    3,814
    
    
    
    3,497
    
    
    
    9,770Net income per share:Basic
    
    $
    0.15
    
    
    $
    0.02
    
    
    $
    0.26
    
    
    $
    0.24
    
    
    $
    0.67Diluted
    
    
    0.15
    
    
    
    0.02
    
    
    
    0.26
    
    
    
    0.24
    
    
    
    0.67Weighted average common shares:Basic
    
    
    14,441
    
    
    
    14,457
    
    
    
    14,496
    
    
    
    14,519
    
    
    
    14,478Diluted
    
    
    16,272
    
    
    
    16,260
    
    
    
    16,309
    
    
    
    16,308
    
    
    
    16,285
 2003 Quarters1st
    
    2nd
    
    3rd
    
    4th
    
    Total(In thousands, except per share data)Sales
    
    $
    124,828
    
    
    $
    134,155
    
    
    $
    144,921
    
    
    $
    156,871
    
    
    $
    560,775Gross profit
    
    
    41,548
    
    
    
    45,247
    
    
    
    49,139
    
    
    
    52,882
    
    
    
    188,816EBIT
    
    
    7,043
    
    
    
    8,850
    
    
    
    11,439
    
    
    
    11,377
    
    
    
    38,709Income before income taxes and minority interest
    
    
    3,185
    
    
    
    4,998
    
    
    
    7,439
    
    
    
    7,459
    
    
    
    23,081Net income
    
    
    1,990
    
    
    
    3,043
    
    
    
    4,411
    
    
    
    4,924
    
    
    
    14,368Net income per share:Basic
    
    $
    0.14
    
    
    $
    0.21
    
    
    $
    0.31
    
    
    $
    0.34
    
    
    $
    1.00Diluted
    
    
    0.14
    
    
    
    0.21
    
    
    
    0.30
    
    
    
    0.33
    
    
    
    1.00Weighted average common shares:Basic
    
    
    14,344
    
    
    
    14,358
    
    
    
    14,373
    
    
    
    14,397
    
    
    
    14,368Diluted
    
    
    16,568
    
    
    
    16,643
    
    
    
    16,534
    
    
    
    16,224
    
    
    
    16,492
 47




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##### Table of Contents



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. 
 ITEM 9A. CONTROLS AND PROCEDURES Based on a recent evaluation as of the end of the period covered by this Annual
Report on Form 10-K, the Companys Chief Executive Officer and the Chief
Financial Officer have concluded that the Companys disclosure controls and
procedures (as defined in the Exchange Act Rules 13a-15(e) and 15d-15(e)) are
effective in timely alerting them to material information relating to the
Company (including its consolidated subsidiaries) required to be disclosed by
the Company in the reports that it files or submits under the Exchange Act.
There were no changes in our internal control over financial reporting that
occurred during the last fiscal quarter of our year ended August 31, 2004 that
have materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting except that we identified at one of
our business units significant weaknesses in the internal controls relating to
the estimation of inventory reserves and calculation of certain accrued
liabilities that could have lead to a material misstatement of our financial
statements. After review, the estimation and calculation were appropriately
revised. Our management discussed with the audit committee of our board of
directors and our independent auditors these internal control weaknesses and
the resulting impact these revisions had on our August 31, 2004 financial
statements. We have determined that the revisions had no material impact on
our August 31, 2004 financial statements. 
 ITEM 9B. OTHER INFORMATION None. 48




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##### Table of Contents



PART III 
 ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Information Concerning Directors and Executive Officers The information required by this item relating to directors and executive
officers of the Company, the Companys Audit Committee and Section 16(a)
Compliance is incorporated herein by reference to that part of the information
under Election of Directors, Security Ownership and Section 16 Beneficial
Ownership Reporting Compliance in the Companys Proxy Statement for its Annual
Meeting of Shareholders scheduled to be held on December 8, 2004. Certain
information concerning executive officers of the Company appears under
Executive Officers of the Registrant at Part 1 of this Report. Code of Ethics The Company has a Code of Business Conduct (the Code) that applies to all
employees, executive officers and directors of the Company. A copy of the Code
is posted on the Companys website. The Code also serves as a code of ethics
for the Companys chief executive officer, principal financial officer,
principal accounting officer, controller, or any person performing similar
functions (the Senior Officers). Any waiver of any provision of the Code
granted to a Senior Officer may only be granted by the full Board of Directors
or its Audit Committee. If a waiver is granted, information concerning the
waiver will be posted on the Companys website www.robbinsmyers.com for a
period of 12 months. Audit Committee Financial Expert The Companys Board of Directors has determined that at least one person
serving on its audit committee is an audit committee financial expert as
defined under Item 401(h) of Regulation S-K. Mr. Dale L. Medford, a member of
the audit committee, is an audit committee financial expert and is independent
as that term is used in the Item 7(d) (3) (iv) of the Schedule 14A under the
Exchange Act. 
 ITEM 11. EXECUTIVE COMPENSATION The information required by this Item 11 is incorporated herein by reference to
the Proxy Statement for our Annual Meeting of Shareholders on December 8, 2004. 
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The information required by this Item 12 is incorporated herein by reference to
the Proxy Statement for our Annual Meeting of Shareholders on December 8, 2004. 
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required by this Item 13 is incorporated herein by reference to
the Proxy Statement for our Annual Meeting of Shareholders on December 8, 2004. 
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The information required by this Item 14 is incorporated herein by reference to
the Proxy Statement for our Annual Meeting of Shareholders on December 8, 2004. 49




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PART IV 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) (1) FINANCIAL STATEMENTS The following consolidated financial statements of
Robbins & Myers, Inc. and its subsidiaries are at Item 8
hereof. Consolidated Balance Sheet  August 31, 2004 and 2003. Consolidated Income Statement -
Years ended August 31, 2004, 2003, and 2002. Consolidated Shareholders Equity Statement -
Years ended August 31, 2004, 2003, and 2002. Consolidated Cash Flow Statement -
Years ended August 31, 2004, 2003, and 2002. Notes to Consolidated Financial Statements. (a) (2) FINANCIAL STATEMENT SCHEDULE Schedule II    Valuation and Qualifying Accounts All other schedules are omitted because they are not applicable, or not
required, or because the required information is included in the consolidated
financial statements or notes thereto. (a) (3) EXHIBITS. See INDEX to EXHIBITS. 50




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SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, Robbins & Myers, Inc. has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on this 4th day of
November, 2004. ROBBINS & MYERS, INC.BY  /s/ Peter C. WallacePeter C. WallacePresident and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of Robbins &
Myers, Inc. and in the capacities and on the date indicated: NAME
    
    TITLE
    
    DATE/s/ Peter C. Wallace
Peter C. Wallace
    
    Director, President and
Chief Executive Officer
    
    November 4, 2004/s/ Kevin J. Brown
Kevin J. Brown
    
    Vice President and Chief
Financial Officer
(Principal Financial Officer)
    
    November 4, 2004/s/ Thomas J. Schockman
Thomas J. Schockman
    
    Corporate Controller
(Principal Accounting Officer)
    
    November 4, 2004*Thomas P. Loftis
    
    Chairman Of Board
    
    November 4, 2004*Daniel W. Duval
    
    Director
    
    November 4, 2004*David T. Gibbons
    
    Director
    
    November 4, 2004*Robert J. Kegerreis
    
    Director
    
    November 4, 2004*William D. Manning
    
    Director
    
    November 4, 2004*Dale L. Medford
    
    Director
    
    November 4, 2004*Jerome F. Tatar
    
    Director
    
    November 4, 2004
 *The undersigned, by signing his name hereto, executes this Report on Form 10-K
for the year ended August 31, 2004 pursuant to powers of attorney executed by
the above-named persons and filed with the Securities and Exchange Commission. /s/ Peter C. WallacePeter C. WallaceTheir Attorney-in-fact 51




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##### Table of Contents



SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS AdditionsCharged
    
    ChargedBalance at
    
    to Costs
    
    to Other
    
    
    
    
    
    Balance atBeginning
    
    and
    
    Accounts-
    
    Deductions-
    
    End ofDescription
    
    of Period
    
    Expenses
    
    Describe
    
    Describe
    
    PeriodYear Ended August 31, 2004Allowances and reserves deducted from assets:Uncollectible and reserves deducted from assets
    
    $
    3,278
    
    
    $
    1,099
    
    
    $
    0
    
    
    $
    359
    (1)
    
    $
    4,018Inventory obsolescence
    
    
    22,336
    
    
    
    1,664
    
    
    
    0
    
    
    
    3,349
    (2)
    
    
    20,651Other reserves:Warranty claims
    
    
    9,310
    
    
    
    1,613
    
    
    
    0
    
    
    
    2,593
    (3)
    
    
    8,330Current & L-T insurance reserves
    
    
    2,116
    
    
    
    762
    
    
    
    0
    
    
    
    675
    (5)
    
    
    2,203Restructure reserves
    
    
    0
    
    
    
    761
    
    
    
    0
    
    
    
    94
    (6)
    
    
    667Year Ended August 31, 2003Allowances and reserves deducted from assets:Uncollectible and reserves deducted from assets
    
    $
    2,717
    
    
    $
    807
    
    
    $
    0
    
    
    $
    246
    (1)
    
    $
    3,278Inventory obsolescence
    
    
    20,875
    
    
    
    4,000
    
    
    
    0
    
    
    
    2,539
    (2)
    
    
    22,336Other reserves:Warranty claims
    
    
    9,405
    
    
    
    1,677
    
    
    
    0
    
    
    
    1,772
    (3)
    
    
    9,310Current & L-T insurance reserves
    
    
    2,247
    
    
    
    2,619
    
    
    
    0
    
    
    
    2,750
    (5)
    
    
    2,116Year Ended August 31, 2002Allowances and reserves deducted from assets:Uncollectible and reserves deducted from assets
    
    $
    3,332
    
    
    $
    826
    
    
    $
    0
    
    
    $
    1,441
    (1)
    
    $
    2,717Inventory obsolescence
    
    
    19,065
    
    
    
    2,314
    
    
    
    6,094
    (4)
    
    
    6,598
    (2)
    
    
    20,875Other reserves:Warranty claims
    
    
    10,176
    
    
    
    2,219
    
    
    
    0
    
    
    
    2,990
    (3)
    
    
    9,405Restructuring liabilities
    
    
    155
    
    
    
    (155
    )
    
    
    0
    
    
    
    0
    
    
    
    0Current & L-T insurance reserves
    
    
    2,484
    
    
    
    2,622
    
    
    
    0
    
    
    
    2,859
    (5)
    
    
    2,247
 Note (1)
    
    Represents accounts receivable written off against the reserve.Note (2)
    
    Inventory items scrapped and written off against the reserve.Note (3)
    
    Warranty cost incurred applied against the reserve.Note (4)
    
    Amount due to acquisition of Romaco. This amount reduced the opening inventory balance at Romaco to net
realization value less a reasonable profit margin for our selling efforts.Note (5)
    
    Spending against casualty reserve.Note (6)
    
    Spending against restructure reserve.
 52




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##### Table of Contents



INDEX TO EXHIBITS (3)
    
    ARTICLES OF INCORPORATION AND BY-LAWS:3.1 Amended Articles of Incorporation of
Robbins & Myers, Inc. were filed as
Exhibit 3.1 to our Report on Form 10-Q for
the quarter ended February 28, 1998
    
    *3.2 Code of Regulations of Robbins &
Myers, Inc. was filed as Exhibit 3.2 to
our Annual Report on Form 10-K for the
year ended August 31, 2001
    
    *(4)
    
    INSTRUMENTS DEFINING THE RIGHTS OF SECURITY
HOLDERS, INCLUDING INDENTURES:4.1 Third Amended and Restated Credit
Agreement dated October 7, 2003 among
Robbins & Myers, Inc., the Lenders named
therein, Bank One, N.A. as Administrative
Agent and Issuing Bank, Harris Trust and
Savings Bank, as Co-Syndication Agent,
National City Bank, as Co-Syndication
Agent, Wachovia Bank, N.A., as
Co-Documentation Agent and The Bank of
Nova Scotia, as Co-Documentation Agent and
Issuing Bank, was filed as Exhibit 4.1 to
our Annual Report on Form 10-K for the
year Ended August 31, 2003
    
    *4.2 Amendment No.1 dated April 21, 2004 to
the Third Amended and Restated Credit
Agreement dated as of October 7, 2003, by
and among Robbins & Myers Inc., Robbins &
Myers Finance B.V., and Bank One, N.A.,
individually and as administrative agent,
and the other financial institutions named
therein was filed as exhibit 10.1 to our
Report on Form 10-Q for the quarter ended
May 31, 2004.
    
    C
 53




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##### Table of Contents



4.3 Amended and Restated Pledge and
Security Agreement between Robbins &
Myers, Inc. and Bank One, Dayton, N.A.,
dated May 15, 1998 was filed as Exhibit
4.2 to our Report on Form 10-K for the
year ended August 31, 2003.
    
    *4.4 Form of $100 million senior note
agreement dated May 1, 1998 was filed as
Exhibit 4.1 to our Report on Form 10-Q for
the quarter ended May 31, 1998
    
    *4.5 Robbins & Myers, Inc. 10.00%
Subordinated Note Due 2006 in the
principal amount of Euro 2,452,000, dated
August 31, 2001
    
    R4.6 Robbins & Myers, Inc. 10.00%
Subordinated Notes Due 2007 in the
principal amount of Euro 18,190,662, dated
February 28, 2002
    
    R(10)
    
    MATERIAL CONTRACTS:10.1 Robbins & Myers, Inc. Cash Balance
Pension Plan (As Amended and Restated
Effective as of October 1, 1999) was filed
as Exhibit 10.1 to our Annual Report on
Form 10-K for the year ended August 31,
2001
    
    */M10.2 Robbins & Myers, Inc. Employee
Savings Plan as amended through August 31,
2000 was filed as Exhibit 10.4 to our
Annual Report on Form 10-K for the year
ended August 31, 2000
    
    */M10.3 Robbins & Myers, Inc. Executive
Supplemental Retirement Plan adopted
February 2000 and Amendment No. 1 to such
Plan adopted August 2000 was filed as
Exhibit 10.5 to our Annual Report on Form
10-K for the year ended August 31, 2000
    
    */M10.4 Robbins & Myers, Inc. Executive
Supplemental Pension Plan adopted July
2000 was filed as Exhibit 10.6 to our
Annual Report on Form 10-K for the year
ended August 31, 2000
    
    */M10.5 Form of Indemnification Agreement
between Robbins & Myers, Inc., and each
director was filed as Exhibit 10.5 to our
Annual Report on Form 10-K for the year
ended August 31, 2001
    
    */M
 54




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##### Table of Contents



10.6 Robbins & Myers, Inc. 1994 Directors
Stock Compensation Plan was filed as
Exhibit 10.6 to our Annual Report on Form
10-K for the year ended August 31, 2001
    
    */M10.7 Robbins & Myers, Inc. 1994 Long-Term
Incentive Stock Plan as amended was filed
as Exhibit 10.11 to our Report on Form
10-K for the year ended August 31, 1996
    
    */M10.8 Robbins & Myers, Inc. 1995 Stock
Option Plan for Non-Employee Directors was
filed as Exhibit 10.12 to our Report on
Form 10-K for the year ended August 31,
1996
    
    */M10.9 Robbins & Myers, Inc. Senior
Executive Annual Cash Bonus Plan was filed
as Exhibit 10.13 to our Report on Form
10-K for the year ended August 31, 1996
    
    */M10.10 Salary Continuation Agreement
between Robbins & Myers, Inc. and Peter C.
Wallace, dated May 21, 2004 was filed as
Exhibit 10.2 to our Report on Form 10-Q
for the quarter Ended May 31, 2004
    
    */M10.11 Robbins & Myers, Inc. 1999 Long-Term
Incentive Stock Plan was filed as Exhibit
4.3 to our Registration Statement on Form
S-8 (No. 333-35856)
    
    */M
 55




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##### Table of Contents



(14)
    
    CODE OF CONDUCT14.1 Robbins & Myers, Inc. Code of
Business Conduct was Filed as Exhibit 14.1
to our Annual Report on Form 10-K for the
year ended August 31, 2003
    
    *(21)
    
    SUBSIDIARIES OF THE REGISTRANT21.1 Subsidiaries of Robbins & Myers, Inc.
    
    F(23)
    
    CONSENTS OF EXPERTS AND COUNSEL23.1 Consent of Ernst & Young LLP
    
    F(24)
    
    POWER OF ATTORNEY24.1 Powers of Attorney of any person who
signed this Report on Form 10-K on behalf
of another pursuant to a Power of attorney
    
    F(31)
    
    RULE 13A-14(A) CERTIFICATIONS31.1 Rule 13a-14(a) CEO Certification
    
    F31.2 Rule 13a-14(a) CFO Certification
    
    F(32)
    
    SECTION 1350 CERTIFICATIONS32.1 Section 1350 CEO Certification
    
    F32.2 Section
1350 CFO Certification
    
    F
  F
    
    Indicates Exhibit is being filed with this Report.*
    
    Indicates that Exhibit is incorporated by reference in
this Report from a previous filing with the
Commission.R
    
    Instrument with respect to indebtedness that does not
exceed 10% of the Companys total assets which is not
being filed, but will be furnished to the Commission
upon its request.M
    
    Indicates management contract or compensatory
arrangement.C
    
    Confidential treatment requested as to certain
portions, which have been filed separately with the
Securities and Exchange Commission. 56