##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20459
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended August 31, 2006
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
 For the transition period from  to
 Commission File Number 0-288
 ROBBINS & MYERS, INC.
  Ohio
    
    31-0424220(State or other jurisdiction of 
incorporation)
    
    (I.R.S. employer
identification number)1400 Kettering Tower, Dayton, Ohio
    
    45423(Address of principal executive offices)
    
    (Zip Code)
  Registrants telephone number, including area code
  Title of each class
    
    Name of each exchange on
which registeredCommon Shares, without par value
    
    New York
  o þ
 o þ
 þ o
 þ o
  o þ o
 o þ
 Aggregate market value of Common Shares, without par
value, held by non-affiliates of the Company at February 28, 2006
(the last business day of the Companys second fiscal quarter)
    
    $
    238,044,493Number of Common Shares, without par value, outstanding
at October 16,
2006
    
    
    16,785,718
 DOCUMENT INCORPORATED BY REFERENCE




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##### 



Table of Contents
 PagePart 1Item 1
    
    BusinessItem 1A
    
    Risk FactorsItem 1B
    
    Unresolved Staff commentsItem 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 DataItem 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 SchedulesEX-14.1 Code of ConductEX-21.1 Subsidiaries of Robbins & Myers, Inc.EX-23.1 Consent of Independent Registered Public Acct. FirmEX-24.1 Robbins & Myers, Inc. Limited Power of AttorneyEX-31.1 CEO CertificationEX-31.2 CFO CertificationEX-32.1 CEO CertificationEX-32.2 CFO Certification




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##### Table of Contents



ITEM 1. BUSINESS
 Important Information Regarding Forward-Looking Statements
      Fluid Management Segment
  Sales, Marketing and Distribution.
 Aftermarket Sales
 Markets and Competition.
 1




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Process Solutions Business Segment
  Sales, Marketing and Distribution.
 Aftermarket Sales.
 Markets and Competition.
 Romaco Business Segment
  Sales, Marketing and Distribution.
 Aftermarket Sales
 Markets and Competition.
 2




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Other Consolidated Information
                 3




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##### Table of Contents



ITEM 1A. RISK FACTORS
  Some of our end-markets are cyclical, which may cause fluctuations in our sales and operating
results.
   Our businesses are adversely affected by economic downturns.
  Approximately 60% of our sales are to customers outside the United States, and we are subject to
special economic and political risks associated with international operations.
  We must comply with a variety of import and export laws and regulations, and the cost of compliance
as well as the consequences to properly comply with such laws could adversely affect our business.
  4




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Competition in our markets could cause our sales to decrease.
  The nature of our products creates the possibility of product liability lawsuits, which could harm
our business.
  The results of operations could vary based on the availability and cost of our raw materials.
   Our results of operations could vary as a result of the methods, estimates and judgments we use in
applying our accounting policies.
  Any impairment in the value of our intangible assets, including goodwill, would negatively affect
our operating results and total capitalization.
  5




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Other risks that may effect our business.
 
    
    Failure to realize the benefits of our restructuring program in our Process Solutions
and Romaco segments, including the receipt of cash proceeds from the sale of excess
facilities.
    
    Work stoppages related to union negotiations.
    
    Customer order cancellations.
    
    The impact of Sarbanes-Oxley Section 404 procedures.
 
 ITEM 1B UNRESOLVED STAFF COMMENTS
  6




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##### Table of Contents



ITEM 2 PROPERTIES
   SquareLocation
    
    Footage
    
    
    
    Segment and Use of FacilityNorth and South America:Rochester, New York
    
    500,000
    
    
    
    Process Solutions manufacturingSpringfield, Ohio
    
    275,000
    
    
    
    Fluid Management manufacturingDayton, Ohio
    
    160,000
    
    
    
    Process Solutions manufacturingBorger, Texas
    
    115,000
    
    
    
    Fluid Management manufacturingWillis, Texas
    
    110,000
    
    
    
    Fluid Management manufacturingClaremore, Oklahoma
    
    42,000
    
    
    
    Fluid Management manufacturingMexico City, Mexico
    
    15,000
    
    
    
    Process Solutions manufacturingTaubate, Brazil
    
    100,000
    
    
    
    Process Solutions manufacturingTomball, Texas
    
    75,000
    
    
    
    Fluid Management manufacturingAvondale, Pennsylvania
    
    50,000
    
    
    
    Process Solutions manufacturingNorth Andover, Massachusetts
    
    30,000
    
    (1)
    
    Process Solutions manufacturingEdmonton, Alberta, Canada
    
    25,000 to
    
    (2)
    
    Fluid Management manufacturing, including two service2 plants
    
    30,000 each
    
    (1)
    
    centersMaracaibo, Venezuela
    
    10,000
    
    
    
    Fluid Management manufacturing and service centerEl Tigre, Venezuela
    
    10,000
    
    
    
    Fluid Management manufacturing and service centerEurope:Schwetzingen, Germany
    
    400,000
    
    
    
    Process Solutions manufacturingLeven, Scotland
    
    240,000
    
    
    
    Process Solutions manufacturingSan Donà di Piave, Italy
    
    90,000
    
    
    
    Process Solutions manufacturingDerby, England
    
    20,000
    
    (1)
    
    Process Solutions manufacturingPetit-Rechain, Belgium
    
    15,000
    
    
    
    Fluid Management manufacturingBolton, England
    
    24,000
    
    
    
    Process Solutions and Fluid Management manufacturingCampbridgeshire, England
    
    8,500
    
    
    
    Romaco service and distributionDAgen, France
    
    15,000
    
    (1)
    
    Romaco manufacturingKarlsruhe, Germany
    
    99,000
    
    
    
    Romaco manufacturingNeuenburg, Germany
    
    70,000
    
    
    
    Romaco manufacturingBologna, Italy
    
    44,000
    
    (1)
    
    Romaco manufacturingBologna, Italy
    
    11,000
    
    (1)
    
    Romaco manufacturingLucca, Italy
    
    52,000
    
    
    
    Romaco manufacturingRheinfelden, Switzerland
    
    115,000
    
    
    
    Romaco manufacturingAustralia:Tingalpa, Brisbane
    
    24,000
    
    (1)
    
    Romaco manufacturingAsia:Dalian, China
    
    50,000
    
    (5)
    
    Fluid Management manufacturingGujurat, India
    
    350,000
    
    (3)
    
    Process Solutions manufacturingSuzhou, China
    
    167,000
    
    (4)
    
    Process Solutions manufacturing
 7




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(1)
    
    Leased facility.(2)
    
    The Fluid Management segment also operates an additional 13 (8 U.S., 5 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 (2); Oklahoma City, Oklahoma; Odessa, Texas; Casper, Wyoming; Williston, North
Dakota; Wooster, Ohio; Trinidad, Colorado and in Alberta, Canada  Brooks, Elk Point, Provost,
Hardisty and Lloydminster.(3)
    
    Facility of a 51% owned subsidiary.(4)
    
    Facility of a 76% owned subsidiary.(5)
    
    Facility of a 60% owned subsidiary. 8




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ITEM 3. LEGAL PROCEEDINGS
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  9




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Executive Officers of the Registrant
         10




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PART II
 
 ITEM 5. MARKET FOR THE REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
  DividendsHigh
    
    
    Low
    
    
    Paid per ShareFiscal 20061st Quarter ended Nov. 30, 2005
    
    $
    23.06
    
    
    $
    19.98
    
    
    $
    0.0552nd Quarter ended Feb. 28, 2006
    
    
    23.58
    
    
    
    20.21
    
    
    
    0.0553rd Quarter ended May 31, 2006
    
    
    25.37
    
    
    
    20.12
    
    
    
    0.0554th Quarter ended Aug. 31, 2006
    
    
    29.03
    
    
    
    22.61
    
    
    
    0.055Fiscal 20051st Quarter ended Nov. 30, 2004
    
    $
    24.42
    
    
    $
    18.98
    
    
    $
    0.0552nd Quarter ended Feb. 28, 2005
    
    
    24.47
    
    
    
    21.69
    
    
    
    0.0553rd Quarter ended May 31, 2005
    
    
    24.00
    
    
    
    21.13
    
    
    
    0.0554th Quarter ended Aug. 31, 2005
    
    
    24.40
    
    
    
    21.14
    
    
    
    0.055
    11




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ITEM 6. SELECTED FINANCIAL DATA
 Selected Financial Data (1)
  2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002Operating ResultsOrders
    
    $
    688,822
    
    
    $
    607,210
    
    
    $
    586,948
    
    
    $
    546,357
    
    
    $
    508,943Ending backlog
    
    
    174,447
    
    
    
    116,491
    
    
    
    114,267
    
    
    
    111,375
    
    
    
    125,665Sales
    
    
    625,389
    
    
    
    604,773
    
    
    
    585,758
    
    
    
    560,775
    
    
    
    526,373EBIT (2,3)
    
    
    7,508
    
    
    
    21,451
    
    
    
    30,317
    
    
    
    38,709
    
    
    
    40,947Net (loss) income (2,3)
    
    
    (19,587
    )
    
    
    (262
    )
    
    
    11,648
    
    
    
    14,623
    
    
    
    14,630Net (loss) income per share, diluted (2,3)
    
    $
    (1.31
    )
    
    $
    (0.02
    )
    
    $
    0.80
    
    
    $
    1.02
    
    
    $
    1.15Financial ConditionTotal assets
    
    $
    698,323
    
    
    $
    740,193
    
    
    $
    736,078
    
    
    $
    705,491
    
    
    $
    680,705Total debt
    
    
    105,531
    
    
    
    175,408
    
    
    
    181,702
    
    
    
    193,603
    
    
    
    208,446Shareholders equity
    
    
    338,379
    
    
    
    300,703
    
    
    
    305,398
    
    
    
    286,916
    
    
    
    261,273Total capitalization
    
    
    443,910
    
    
    
    476,111
    
    
    
    487,100
    
    
    
    480,519
    
    
    
    469,719Other DataCash flow from operations
    
    $
    40,501
    
    
    $
    26,815
    
    
    $
    26,353
    
    
    $
    45,636
    
    
    $
    44,540Capital expenditures, net
    
    
    13,660
    
    
    
    20,263
    
    
    
    9,884
    
    
    
    7,869
    
    
    
    15,112Free cash flow (4)
    
    
    26,841
    
    
    
    6,552
    
    
    
    16,469
    
    
    
    37,767
    
    
    
    29,428Amortization
    
    $
    2,343
    
    
    $
    2,519
    
    
    $
    2,738
    
    
    $
    2,189
    
    
    $
    2,015Depreciation
    
    
    16,235
    
    
    
    17,874
    
    
    
    18,639
    
    
    
    20,093
    
    
    
    20,028Number of employees
    
    
    3,271
    
    
    
    3,585
    
    
    
    3,824
    
    
    
    3,904
    
    
    
    3,921
 12




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##### Table of Contents



1.
    
    Fiscal 2006 reflected the sale of our Hapa and Laetus product lines on March 31, 2006.
Fiscal 2005 reflected the sale of the lined-pipe and fitting product line that occurred on
August 31, 2005. Fiscal 2003 reflected the acquisition of Tarby on November 15, 2002.2.
    
    Fiscal 2006 includes costs of $7,296,000 related to the restructuring of our Process
Solutions and Romaco segments, which included inventory write-downs of $1,127,000 that are
included in gross profit. Fiscal 2006 also included a gain of $7,955,000 on the disposition
of product lines and facilities. Lastly, fiscal 2006 included a $39,174,000 goodwill
impairment charge. Fiscal 2005 included costs of $7,963,000 related to the restructuring of
our Process Solutions and Romaco segments, including inventory write-downs of $1,130,000
that are included in gross profit. Fiscal 2005 also included a loss of $2,053,000 related
to asset dispositions in our Process Solutions segment. 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 Process Solutions business in Italy. These
special items increased fiscal 2006 net loss by $36,941,000 ($2.46 per diluted share),
decreased fiscal 2005 net income by $6,310,000 ($0.52 per diluted share) and decreased
fiscal 2004 net income by $1,390,000 ($.10 per diluted share). See Note 3 of Notes to
Consolidated Financial Statements.3.
    
    EBIT represents income before interest and income taxes and is reconciled to net income
on our Consolidated Statement of Operations. 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.4.
    
    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.
 13




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ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
 Overview
      
    
    Plant closures (one of two Process Solutions facilities in Italy, a Process Solutions
facility in Mexico and a Romaco facility in Italy).
    
    Headcount reductions within the Process Solutions and Romaco segments.
    
    Reorganization of Romacos distribution network.
    
    Disposition of two Romaco (Hapa and Laetus) and one Process Solutions (Edlon lined-pipe
and fittings) product lines.
    
    Sales of excess facilities.
   14




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Results of Operations
  Consolidated
    
    2006
    
    
    2005
    
    
    2004Sales
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of sales
    
    
    65.6
    
    
    
    68.0
    
    
    
    67.1Gross profit
    
    
    34.4
    
    
    
    32.0
    
    
    
    32.9SG&A expenses
    
    
    26.8
    
    
    
    26.6
    
    
    
    26.9Amortization
    
    
    0.4
    
    
    
    0.4
    
    
    
    0.5Goodwill impairment charge
    
    
    6.3
    
    
    
    0
    
    
    
    0Other
    
    
    (.3
    )
    
    
    1.5
    
    
    
    0.3EBIT
    
    
    1.2
    %
    
    
    3.5
    %
    
    
    5.2
    %
 By Segment
    
    2006
    
    
    2005
    
    
    2004(In millions, except percents)Fluid Management:Sales
    
    $
    245.2
    
    
    $
    198.7
    
    
    $
    179.0EBIT
    
    
    56.5
    
    
    
    39.7
    
    
    
    35.1EBIT %
    
    
    23.0
    %
    
    
    20.0
    %
    
    
    19.6
    %Process Solutions:Sales
    
    $
    231.0
    
    
    $
    238.7
    
    
    $
    231.6EBIT
    
    
    8.9
    
    
    
    4.7
    
    
    
    9.3EBIT %
    
    
    3.9
    %
    
    
    2.0
    %
    
    
    4.0
    %Romaco:Sales
    
    $
    149.2
    
    
    $
    167.4
    
    
    $
    175.1EBIT
    
    
    (38.2
    )
    
    
    (7.9
    )
    
    
    1.8EBIT %
    
    
    (25.6
    )%
    
    
    (4.7
    )%
    
    
    1.0
    %Total:Sales
    
    $
    625.4
    
    
    $
    604.8
    
    
    $
    585.8EBIT
    
    
    7.5
    
    
    
    21.5
    
    
    
    30.3EBIT %
    
    
    1.2
    %
    
    
    3.6
    %
    
    
    5.2
    %
 15




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Fiscal Year Ended August 31, 2006 Compared with Fiscal Year Ended August 31, 2005
 Net Sales
     Earnings Before Interest and Income Taxes (EBIT)
      16




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Interest expense
  Income taxes
  Net loss
  17




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Fiscal Year Ended August 31, 2005 Compared with Fiscal Year Ended August 31, 2004
 Net Sales
     Earnings Before Interest and Income Taxes (EBIT)
     Interest expense
  18




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Income taxes
  Net loss
  19




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Liquidity and Capital Resources
 Operating Activities
   Investing Activities
   Financing Activities
  Credit Agreement
  20




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Critical Accounting Policies and Estimates
  Revenue Recognition
  Use of Estimates
       Goodwill
  21




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Foreign Currency Accounting
   Pensions
     New Accounting Pronouncement
  22




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23




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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
     24




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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)2007
    
    $
    0
    
    
    
    0.00
    %
    
    $
    0
    
    
    
    0
    %
    
    $
    386
    
    
    
    4.90
    %
    
    $
    358
    
    
    
    5.00
    %2008
    
    
    40,000
    
    
    
    6.76
    
    
    
    30,000
    
    
    
    6.50
    
    
    
    218
    
    
    
    4.22
    
    
    
    607
    
    
    
    4.072009
    
    
    0
    
    
    
    0.00
    
    
    
    0
    
    
    
    0
    
    
    
    145
    
    
    
    2.17
    
    
    
    450
    
    
    
    3.752010
    
    
    30,000
    
    
    
    6.84
    
    
    
    0
    
    
    
    0.00
    
    
    
    218
    
    
    
    2.00
    
    
    
    450
    
    
    
    3.752011
    
    
    0
    
    
    
    0.00
    
    
    
    0
    
    
    
    0.00
    
    
    
    0
    
    
    
    0.00
    
    
    
    450
    
    
    
    3.75Thereafter
    
    
    0
    
    
    
    0.00
    
    
    
    0
    
    
    
    0.00
    
    
    
    0
    
    
    
    0.00
    
    
    
    2,249
    
    
    
    3.75Total
    
    $
    70,000
    
    
    
    6.79
    %
    
    $
    30,000
    
    
    
    6.50
    %
    
    $
    967
    
    
    
    3.68
    %
    
    $
    4,564
    
    
    
    3.89
    %Fair value
    
    $
    73,500
    
    
    
    
    
    
    $
    30,000
    
    
    
    
    
    
    $
    967
    
    
    
    
    
    
    $
    4,564
  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
    
    $
    105,531
    
    
    $
    744
    
    
    $
    71,420
    
    
    $
    31,118
    
    
    $
    2,249Capital lease obligations
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Operating leases (1)
    
    
    17,573
    
    
    
    4,946
    
    
    
    6,560
    
    
    
    5,463
    
    
    
    604Unconditional purchase
obligations
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Total contractual cash
obligations
    
    $
    123,104
    
    
    $
    5,690
    
    
    $
    77,980
    
    
    $
    36,581
    
    
    $
    2,853
 
 (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
    
    
    21,080
    
    
    
    21,080
    
    
    
    0
    
    
    
    0
    
    
    
    0Guarantees
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Standby repurchase
obligations
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Other commercial
commitments
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Total commercial
commitments
    
    $
    21,080
    
    
    $
    21,080
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
 25




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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 Report of Independent Registered Public Accounting Firm
 
       
 26




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Report of Independent Registered Public Accounting Firm
 
     
 27




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CONSOLIDATED BALANCE SHEET
 August 31,2006
    
    
    2005ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    48,365
    
    
    $
    23,043Accounts receivable
    
    
    124,569
    
    
    
    128,676Inventories
    
    
    94,990
    
    
    
    102,652Other current assets
    
    
    6,260
    
    
    
    7,121Deferred taxes
    
    
    9,937
    
    
    
    10,216Total Current Assets
    
    
    284,121
    
    
    
    271,708Goodwill
    
    
    262,327
    
    
    
    309,281Other Intangible Assets
    
    
    11,507
    
    
    
    14,927Other Assets
    
    
    13,338
    
    
    
    13,665Property, Plant and Equipment
    
    
    127,030
    
    
    
    130,612$
    698,323
    
    
    $
    740,193LIABILITIES AND SHAREHOLDERS EQUITYCurrent Liabilities:Accounts payable
    
    $
    62,749
    
    
    $
    67,183Accrued expenses
    
    
    102,327
    
    
    
    97,090Current portion of long-term debt
    
    
    744
    
    
    
    8,616Total Current Liabilities
    
    
    165,820
    
    
    
    172,889Long-Term Debt  Less Current Portion
    
    
    104,787
    
    
    
    166,792Deferred Taxes
    
    
    2,320
    
    
    
    3,721Other Long-Term Liabilities
    
    
    75,324
    
    
    
    86,149Minority Interest
    
    
    11,693
    
    
    
    9,939Shareholders Equity:Common stock-without par value:Authorized shares-40,000,000Issued shares-16,708,286 in 2006 (14,668,487 in 2005)
    
    
    158,487
    
    
    
    110,291Treasury shares-308 in 2006 and 2005
    
    
    (10
    )
    
    
    (10
    )Unearned Compensation on Restricted Stock Grants
    
    
    (959
    )
    
    
    (142
    )Retained earnings
    
    
    171,096
    
    
    
    193,968Accumulated other comprehensive income (loss):Foreign currency translation
    
    
    25,874
    
    
    
    17,824Fair value of interest rate swap
    
    
    (1,043
    )
    
    
    (943
    )Minimum pension liability
    
    
    (15,066
    )
    
    
    (20,285
    )Total
    
    
    9,765
    
    
    
    (3,404
    )338,379
    
    
    
    300,703$
    698,323
    
    
    $
    740,193
  28




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##### Table of Contents



CONSOLIDATED SHAREHOLDERS EQUITY STATEMENT
 Unearned
    
    
    
    
    
    
    AccumulatedCompensation
    
    
    
    
    
    
    Otheron Restricted
    
    
    
    
    
    
    ComprehensiveCommon
    
    
    Treasury
    
    
    Stock
    
    
    Retained
    
    
    IncomeShares
    
    
    Shares
    
    
    Grants
    
    
    Earnings
    
    
    (Loss)
    
    
    TotalBalance at September 1, 2003
    
    $
    104,984
    
    
    $
    (10
    )
    
    $
    0
    
    
    $
    188,880
    
    
    $
    (6,938
    )
    
    $
    286,916Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,648
    
    
    
    
    
    
    
    11,648Change in foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,974
    
    
    
    11,974Change in fair value of interest rate swap
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    498
    
    
    
    498Change in minimum pension liability
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,554
    )
    
    
    (4,554
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,566Cash 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 option expense
    
    
    312
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    312Tax benefit
of stock options exercised
    
    
    176
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    176Balance at August 31, 2004
    
    
    106,985
    
    
    
    (10
    )
    
    
    0
    
    
    
    197,443
    
    
    
    980
    
    
    
    305,398Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (262
    )
    
    
    
    
    
    
    (262
    )Change in foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    675
    
    
    
    675Change in fair value of interest rate swap
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (316
    )
    
    
    (316
    )Change in minimum pension liability
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,743
    )
    
    
    (4,743
    )Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,646
    )Restricted stock grants, 20,922 shares
    
    
    452
    
    
    
    
    
    
    
    (452
    )
    
    
    
    
    
    
    
    
    
    
    0Amortization of restricted stock grants
    
    
    
    
    
    
    
    
    
    
    310
    
    
    
    
    
    
    
    
    
    
    
    310Cash dividend declared, $0.22 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,213
    )
    
    
    
    
    
    
    (3,213
    )Stock options exercised, 73,000 shares
    
    
    1,440
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,440Proceeds from share sales, 47,705 shares
    
    
    1,052
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,052Performance stock award expense
    
    
    250
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    250Tax benefit
of stock options exercised
    
    
    112
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    112Balance at August 31, 2005
    
    
    110,291
    
    
    
    (10
    )
    
    
    (142
    )
    
    
    193,968
    
    
    
    (3,404
    )
    
    
    300,703Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,587
    )
    
    
    
    
    
    
    (19,587
    )Change in foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,050
    
    
    
    8,050Change in fair value of interest rate swap
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (100
    )
    
    
    (100
    )Change in minimum pension liability
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,219
    
    
    
    5,219Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,418
    )Restricted stock grants, 58,576 shares
    
    
    1,302
    
    
    
    
    
    
    
    (1,302
    )
    
    
    
    
    
    
    
    
    
    
    0Amortization of restricted stock grants
    
    
    
    
    
    
    
    
    
    
    485
    
    
    
    
    
    
    
    
    
    
    
    485Cash dividend declared, $0.22 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,285
    )
    
    
    
    
    
    
    (3,285
    )Stock options exercised, 207,069 shares
    
    
    4,658
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,658Proceeds from share sales, 44,630 shares
    
    
    1,009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,009Stock option expense
    
    
    837
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    837Performance stock award expense
    
    
    445
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    445Conversion
of bonds to stock, 1,729,524 shares
    
    
    38,914
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38,914Convertible bonds interest adjustment,
net of tax of $508
    
    
    828
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    828Tax benefit
of stock options exercised
    
    
    203
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    203Balance at August 31, 2006
    
    $
    158,487
    
    
    $
    (10
    )
    
    $
    (959
    )
    
    $
    171,096
    
    
    $
    9,765
    
    
    $
    338,379
  29




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##### Table of Contents



CONSOLIDATED STATEMENT OF OPERATIONS
 Years ended August 31,2006
    
    
    2005
    
    
    2004Sales
    
    $
    625,389
    
    
    $
    604,773
    
    
    $
    585,758Cost of sales
    
    
    410,473
    
    
    
    408,808
    
    
    
    392,754Gross profit
    
    
    214,916
    
    
    
    195,965
    
    
    
    193,004Selling, general and administrative expenses
    
    
    167,677
    
    
    
    163,109
    
    
    
    157,810Amortization
    
    
    2,343
    
    
    
    2,519
    
    
    
    2,738Goodwill impairment charge
    
    
    39,174
    
    
    
    0
    
    
    
    0Other (income) expense
    
    
    (1,786
    )
    
    
    8,886
    
    
    
    2,139Income before interest and income taxes
    
    
    7,508
    
    
    
    21,451
    
    
    
    30,317Interest expense
    
    
    12,946
    
    
    
    14,433
    
    
    
    14,427(Loss) income before income taxes and minority interest
    
    
    (5,438
    )
    
    
    7,018
    
    
    
    15,890Income tax expense
    
    
    12,589
    
    
    
    5,840
    
    
    
    3,685Minority interest
    
    
    1,560
    
    
    
    1,440
    
    
    
    557Net (loss) income
    
    $
    (19,587
    )
    
    $
    (262
    )
    
    $
    11,648Net (loss) income per shareBasic
    
    $
    (1.31
    )
    
    $
    (0.02
    )
    
    $
    0.80Diluted
    
    $
    (1.31
    )
    
    $
    (0.02
    )
    
    $
    0.80
  30




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##### Table of Contents



CONSOLIDATED CASH FLOW STATEMENT
 Years Ended August 31,2006
    
    
    2005
    
    
    2004OPERATING ACTIVITIESNet (loss) income
    
    $
    (19,587
    )
    
    $
    (262
    )
    
    $
    11,648Adjustments to reconcile net (loss) income to net cash
and cash equivalents provided by operating activities:Depreciation
    
    
    16,235
    
    
    
    17,874
    
    
    
    18,639Amortization
    
    
    2,343
    
    
    
    2,519
    
    
    
    2,738Deferred taxes
    
    
    (2,887
    )
    
    
    1,234
    
    
    
    (2,750
    )Stock compensation
    
    
    1,767
    
    
    
    702
    
    
    
    312Goodwill impairment charge
    
    
    39,174
    
    
    
    0
    
    
    
    0(Gain) loss on sale of business/facilities
    
    
    (7,955
    )
    
    
    2,053
    
    
    
    0Changes in operating assets and liabilities  excluding
the effect of dispositions:Accounts receivable
    
    
    6,125
    
    
    
    3,380
    
    
    
    (3,524
    )Inventories
    
    
    2,905
    
    
    
    1,819
    
    
    
    (6,018
    )Other assets
    
    
    1,933
    
    
    
    (3,948
    )
    
    
    (2,967
    )Accounts payable
    
    
    (5,468
    )
    
    
    4,978
    
    
    
    8,755Accrued expenses and other liabilities
    
    
    5,916
    
    
    
    (3,534
    )
    
    
    (480
    )Net cash and cash equivalents provided by operating activities
    
    
    40,501
    
    
    
    26,815
    
    
    
    26,353INVESTING ACTIVITIESCapital expenditures, net of nominal disposals
    
    
    (13,660
    )
    
    
    (20,263
    )
    
    
    (9,884
    )Proceeds from sale of business/facilities
    
    
    27,833
    
    
    
    15,798
    
    
    
    0Net cash and cash equivalents provided (used) by investing activities
    
    
    14,173
    
    
    
    (4,465
    )
    
    
    (9,884
    )FINANCING ACTIVITIESProceeds from debt borrowings
    
    
    35,747
    
    
    
    104,876
    
    
    
    82,658Payments of long-term debt
    
    
    (66,953
    )
    
    
    (111,840
    )
    
    
    (100,184
    )Amended credit agreement fees
    
    
    (528
    )
    
    
    (262
    )
    
    
    (1,078
    )Proceeds from sale of common stock
    
    
    5,667
    
    
    
    2,492
    
    
    
    1,513Dividend paid
    
    
    (3,285
    )
    
    
    (3,213
    )
    
    
    (3,085
    )Net cash and cash equivalents used by financing activities
    
    
    (29,352
    )
    
    
    (7,947
    )
    
    
    (20,176
    )Increase (decrease) in cash and cash equivalents
    
    
    25,322
    
    
    
    14,403
    
    
    
    (3,707
    )Cash and cash equivalents at beginning of year
    
    
    23,043
    
    
    
    8,640
    
    
    
    12,347Cash and cash equivalents at end of year
    
    $
    48,365
    
    
    $
    23,043
    
    
    $
    8,640
  31




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 1  SUMMARY OF ACCOUNTING POLICIES
 Consolidation
  Use of Estimates
  Accounts Receivable
   Inventories
  Goodwill and Other Intangible Assets
   Patents and trademarks
    
    
    14 to 17 yearsNon-compete agreements
    
    
    3 to 5 yearsFinancing costs
    
    
    3 to 5 years
 Property, Plant and Equipment
  Buildings
    
    
    45 yearsMachinery and equipment
    
    
    3 to 15 years
 32




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##### Table of Contents



Foreign Currency Accounting
  Product Warranties
   2006
    
    
    2005(In thousands)Balance at beginning of the fiscal year
    
    $
    9,176
    
    
    $
    8,330Warranty expense
    
    
    3,134
    
    
    
    3,348Deductions
    
    
    (3,734
    )
    
    
    (2,502
    )Impact of business dispositions
    
    
    (971
    )
    
    
    0Balance at end of the fiscal year
    
    $
    7,605
    
    
    $
    9,176
 Consolidated Statement of Operations
  Revenue Recognition
  Income Taxes
  Accounting for Income Taxes
 Consolidated Cash Flow Statement
  33




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##### Table of Contents



Fair Value of Financial Instruments
     Common Stock Plans
 Accounting for Stock Issued to Employees Accounting for
Stock-Based Compensation Share-Based Payments
   2006Expected volatility of common stock
    
    
    32.70
    %Risk free interest rate
    
    
    4.29Dividend yield
    
    
    0.76Expected life of option
    
    7.0
    Yrs.Fair value at grant date
    
    $
    22.26
 34




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##### Table of Contents



Year EndedAugust 31,2005
    
    
    2004(In thousands, exceptper share amounts)Net (loss) income, as reported
    
    $
    (262
    )
    
    $
    11,648Deduct: Total Stock-based employee compensation expense determined
under fair value based method for all awards, net of related tax effects
    
    
    1,005
    
    
    
    1,089Pro-forma net (loss) income
    
    $
    (1,267
    )
    
    $
    10,559(Loss) income per share:Basicas reported
    
    $
    (0.02
    )
    
    $
    0.80Basicpro-forma
    
    $
    (0.09
    )
    
    $
    0.73Dilutedas reported
    
    $
    (0.02
    )
    
    $
    0.80Dilutedpro-forma
    
    $
    (0.09
    )
    
    $
    0.73
  2004Expected volatility of common stock
    
    
    32.50
    %Risk free interest rate
    
    
    4.70Dividend yield
    
    
    .75Expected life of option
    
    6.90
    yrsFair value at grant date
    
    $
    8.85
 Derivatives and Hedging Activities
  New Accounting Pronouncement
  35




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##### Table of Contents



Reclassifications
  NOTE 2  BALANCE SHEET INFORMATION
 2006
    
    
    2005(In thousands)Accounts receivableAllowances for doubtful accounts
    
    $
    6,860
    
    
    $
    4,632InventoriesFIFO:Finished products
    
    $
    30,501
    
    
    $
    38,363Work in process
    
    
    34,326
    
    
    
    32,602Raw materials
    
    
    37,549
    
    
    
    39,847102,376
    
    
    
    110,812LIFO reserve, U.S. inventories
    
    
    (7,386
    )
    
    
    (8,160
    )$
    94,990
    
    
    $
    102,652Non-U.S. inventories at FIFO
    
    $
    68,372
    
    
    $
    70,866Property, plant and equipmentLand
    
    $
    17,395
    
    
    $
    17,610Buildings
    
    
    93,212
    
    
    
    89,064Machinery and equipment
    
    
    160,423
    
    
    
    167,765271,030
    
    
    
    274,439Less accumulated depreciation
    
    
    144,000
    
    
    
    143,827$
    127,030
    
    
    $
    130,612Accrued expensesSalaries, wages and payroll taxes
    
    $
    21,089
    
    
    $
    20,638Customer advances
    
    
    24,583
    
    
    
    15,843Pension benefits
    
    
    7,894
    
    
    
    6,763U.S. other postretirement benefits
    
    
    2,472
    
    
    
    2,000Warranty costs
    
    
    7,605
    
    
    
    9,176Accrued interest
    
    
    2,935
    
    
    
    4,403Income taxes
    
    
    7,436
    
    
    
    8,991Commissions
    
    
    2,844
    
    
    
    3,793Other
    
    
    25,469
    
    
    
    25,483$
    102,327
    
    
    $
    97,090Other long-term liabilitiesGerman pension liability
    
    $
    38,368
    
    
    $
    37,597U.S. other postretirement benefits
    
    
    11,641
    
    
    
    11,962U.S. pension liability
    
    
    13,539
    
    
    
    23,930Other
    
    
    11,776
    
    
    
    12,660$
    75,324
    
    
    $
    86,149
 36




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##### Table of Contents



NOTE 3  STATEMENT OF OPERATIONS INFORMATION
 2006
    
    
    2005
    
    
    2004In thousandsProcess Solutions segment restructuring costs
    
    $
    2,541
    
    
    $
    3,684
    
    
    $
    761Romaco Segment restructuring costs
    
    
    4,755
    
    
    
    4,279
    
    
    
    0(Gain) loss on disposition of product lines/facilities
    
    
    (7,955
    )
    
    
    2,053
    
    
    
    0CEO retirement cost
    
    
    0
    
    
    
    0
    
    
    
    1,378Total restructuring and other costs
    
    
    (659
    )
    
    
    10,016
    
    
    
    2,139Less inventory write-down included in cost of sales
    
    
    (1,127
    )
    
    
    (1,130
    )
    
    
    0Other (income) expense
    
    $
    (1,786
    )
    
    $
    8,886
    
    
    $
    2,139
     
    
    Plant closures (one of two Process Solutions facilities in Italy, a Process Solutions
facility in Mexico and the Unipac facility of Romaco in Italy).
    
    Headcount reductions within the Process Solutions and Romaco segments.
    
    Reorganization of Romacos distribution network.
    
    Disposition of two of Romaco (Hapa and Laetus) and one Process Solutions (Edlon
lined-pipe and fittings) product lines.
    
    Sale of excess facilities.
 37




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##### Table of Contents



(In thousands)Liability as of August 31, 2005
    
    $
    1,074Payments made
    
    
    (5,238
    )Costs incurred
    
    
    5,919Change in estimate
    
    
    0Liability at August 31, 2006
    
    $
    1,755
  Minimum lease payments
  (In thousands)2007
    
    $
    4,9462008
    
    
    3,6932009
    
    
    2,8672010
    
    
    3,8152011
    
    
    1,648Thereafter
    
    
    604$
    17,573
  38




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##### Table of Contents



NOTE 4  PRODUCT LINE DISPOSITIONS
   NOTE 5  CASH FLOW STATEMENT INFORMATION
     2006
    
    
    2005
    
    
    2004(in thousands)Interest paid
    
    $
    13,078
    
    
    $
    14,252
    
    
    $
    14,205Taxes paid  net of refunds
    
    
    13,399
    
    
    
    7,811
    
    
    
    8,345
 39




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##### Table of Contents



NOTE 6GOODWILL AND OTHER INTANGIBLE ASSETS
  Process
    
    
    FluidSolutions
    
    
    Management
    
    
    RomacoSegment
    
    
    Segment
    
    
    Segment
    
    
    Total(In thousands)Balance as of September 1, 2004
    
    $
    141,797
    
    
    $
    103,172
    
    
    $
    61,251
    
    
    $
    306,220Goodwill acquired during the period
    
    
    0
    
    
    
    49
    
    
    
    0
    
    
    
    49Translation adjustments and other
    
    
    173
    
    
    
    1,432
    
    
    
    1,407
    
    
    
    3,012Balance as of August 31, 2005
    
    
    141,970
    
    
    
    104,653
    
    
    
    62,658
    
    
    
    309,281Goodwill reduction from utilizing
purchased tax loss carryforwards and
deferred tax assets
    
    
    0
    
    
    
    0
    
    
    
    (1,859
    )
    
    
    (1,859
    )Goodwill reduction from change in
opening balance sheet tax accrual
    
    
    0
    
    
    
    0
    
    
    
    (3,632
    )
    
    
    (3,632
    )Goodwill reduction due to business
dispositions
    
    
    0
    
    
    
    0
    
    
    
    (7,165
    )
    
    
    (7,165
    )Goodwill written off during the period
    
    
    0
    
    
    
    0
    
    
    
    (39,174
    )
    
    
    (39,174
    )Translation adjustments and other
    
    
    3,105
    
    
    
    1,634
    
    
    
    137
    
    
    
    4,876Balance as of August 31, 2006
    
    $
    145,075
    
    
    $
    106,287
    
    
    $
    10,965
    
    
    $
    262,327
   2006
    
    
    2005Carrying
    
    
    Accumulated
    
    
    
    
    
    
    Carrying
    
    
    AccumulatedAmount
    
    
    Amortization
    
    
    Net
    
    
    Amount
    
    
    Amortization
    
    
    Net(In thousands)Patents and trademarks
    
    $
    10,176
    
    
    $
    6,767
    
    
    $
    3,409
    
    
    $
    9,678
    
    
    $
    6,027
    
    
    $
    3,651Non-compete agreements
    
    
    8,832
    
    
    
    6,667
    
    
    
    2,165
    
    
    
    8,800
    
    
    
    5,739
    
    
    
    3,061Financing costs
    
    
    9,195
    
    
    
    7,783
    
    
    
    1,412
    
    
    
    8,855
    
    
    
    6,495
    
    
    
    2,360Pension intangible
    
    
    4,361
    
    
    
    0
    
    
    
    4,361
    
    
    
    5,148
    
    
    
    0
    
    
    
    5,148Other
    
    
    5,160
    
    
    
    5,000
    
    
    
    160
    
    
    
    5,939
    
    
    
    5,232
    
    
    
    707$
    37,724
    
    
    $
    26,217
    
    
    $
    11,507
    
    
    $
    38,420
    
    
    $
    23,493
    
    
    $
    14,927
  40




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##### Table of Contents



NOTE 7  LONG-TERM DEBT
 2006
    
    
    2005(in thousands)Senior debt:Revolving credit loan
    
    $
    0
    
    
    $
    0Senior notes
    
    
    100,000
    
    
    
    100,000Other
    
    
    5,531
    
    
    
    13,2198.00% convertible subordinated notes
    
    
    0
    
    
    
    40,00010.00% subordinated notes
    
    
    0
    
    
    
    22,189Total debt
    
    
    105,531
    
    
    
    175,408Less current portion
    
    
    744
    
    
    
    8,616Long-term debt
    
    $
    104,787
    
    
    $
    166,792
      41




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##### Table of Contents



(In thousands)2007
    
    $
    7442008
    
    
    70,8252009
    
    
    5952010
    
    
    30,6682011
    
    
    4502012 and thereafter
    
    
    2,249Total
    
    $
    105,531
 NOTE 8  RETIREMENT BENEFITS
    Pension Benefits2006
    
    
    2005
    
    
    2004(In thousands)Service costs
    
    $
    2,855
    
    
    $
    4,116
    
    
    $
    3,825Interest cost
    
    
    8,246
    
    
    
    8,402
    
    
    
    8,341Expected return on plan assets
    
    
    (7,340
    )
    
    
    (6,648
    )
    
    
    (6,535
    )FAS 88 curtailment cost
    
    
    (220
    )
    
    
    0
    
    
    
    0Amortization of prior service cost
    
    
    798
    
    
    
    755
    
    
    
    388Amortization of transition obligation
    
    
    (198
    )
    
    
    (186
    )
    
    
    (186
    )Recognized net actuarial losses
    
    
    2,100
    
    
    
    1,770
    
    
    
    1,266Net periodic benefit cost
    
    $
    6,241
    
    
    $
    8,209
    
    
    $
    7,099Defined contribution cost
    
    $
    1,982
    
    
    $
    1,181
    
    
    $
    1,120
 Other Benefits2006
    
    
    2005
    
    
    2004(In thousands)Service cost
    
    $
    367
    
    
    $
    352
    
    
    $
    310Interest cost
    
    
    1,271
    
    
    
    1,484
    
    
    
    1,546Net amortization
    
    
    920
    
    
    
    979
    
    
    
    813Net peridoc benefit cost
    
    $
    2,558
    
    
    $
    2,815
    
    
    $
    2,669
 42




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##### Table of Contents



Pension Benefits
    
    
    Other Benefits2006
    
    
    2005
    
    
    2006
    
    
    2005(In thousands)Change in benefit obligation:Beginning of year
    
    $
    168,913
    
    
    $
    150,682
    
    
    $
    26,848
    
    
    $
    25,964Service cost
    
    
    2,855
    
    
    
    4,116
    
    
    
    367
    
    
    
    352Interest cost
    
    
    8,246
    
    
    
    8,402
    
    
    
    1,271
    
    
    
    1,484Plan amendments
    
    
    0
    
    
    
    2,450
    
    
    
    0
    
    
    
    0Curtailment
    
    
    (2,031
    )
    
    
    0
    
    
    
    0
    
    
    
    0Currency exchange rate impact
    
    
    3,973
    
    
    
    193
    
    
    
    0
    
    
    
    0Actuarial (gains) losses
    
    
    (2,540
    )
    
    
    12,358
    
    
    
    (2,835
    )
    
    
    1,535Benefit payments
    
    
    (15,463
    )
    
    
    (9,288
    )
    
    
    (2,407
    )
    
    
    (2,487
    )End of year
    
    $
    163,953
    
    
    $
    168,913
    
    
    $
    23,244
    
    
    $
    26,848Change in plan assets:Beginning of year
    
    $
    93,110
    
    
    $
    81,536
    
    
    $
    0
    
    
    $
    0Currency exchange rate impact
    
    
    1,442
    
    
    
    (67
    )
    
    
    0
    
    
    
    0Actual return
    
    
    7,792
    
    
    
    10,298
    
    
    
    0
    
    
    
    0Company contributions
    
    
    9,028
    
    
    
    10,631
    
    
    
    2,407
    
    
    
    2,487Benefit payments
    
    
    (15,463
    )
    
    
    (9,288
    )
    
    
    (2,407
    )
    
    
    (2,487
    )End of year
    
    $
    95,909
    
    
    $
    93,110
    
    
    $
    0
    
    
    $
    0Funded status
    
    $
    (68,044
    )
    
    $
    (75,803
    )
    
    $
    (23,244
    )
    
    $
    (26,848
    )Unrecognized net actuarial losses
    
    
    34,769
    
    
    
    41,534
    
    
    
    7,475
    
    
    
    11,030Unrecognized transition obligation
    
    
    0
    
    
    
    (184
    )
    
    
    0
    
    
    
    0Unamortized prior service cost
    
    
    3,303
    
    
    
    3,806
    
    
    
    1,656
    
    
    
    1,856Amount recognized
    
    $
    (29,972
    )
    
    $
    (30,647
    )
    
    $
    (14,113
    )
    
    $
    (13,962
    )Recorded as follows:Accrued expenses
    
    $
    (7,894
    )
    
    $
    (6,763
    )
    
    $
    (2,472
    )
    
    $
    (2,000
    )Other long-term liabilities
    
    
    (51,907
    )
    
    
    (61,527
    )
    
    
    (11,641
    )
    
    
    (11,962
    )Other assets
    
    
    1,653
    
    
    
    1,406
    
    
    
    0
    
    
    
    0Intangible assets
    
    
    4,370
    
    
    
    5,148
    
    
    
    0
    
    
    
    0Accumulated other comprehensive loss
    
    
    23,806
    
    
    
    31,089
    
    
    
    0
    
    
    
    0$
    (29,972
    )
    
    $
    (30,647
    )
    
    $
    (14,113
    )
    
    $
    (13,962
    )Deferred tax liability on
accumulated other comprehensive
loss
    
    $
    (9,030
    )
    
    $
    (10,804
    )
    
    $
    0
    
    
    $
    0
  2006
    
    
    2005(In thousands)Accumulated benefit obligation
    
    $
    161,466
    
    
    $
    165,310Projected benefit obligation
    
    
    163,953
    
    
    
    168,913Plan assets
    
    
    95,909
    
    
    
    93,110
 43




---



##### Table of Contents



2006
    
    
    2005Equity securities
    
    
    70
    %
    
    
    58
    %Debt securities
    
    
    26
    
    
    
    41Cash and cash equivalents
    
    
    4
    
    
    
    1100
    %
    
    
    100
    %
    Pension Benefits
    
    Other Benefits(In thousands)2007
    
    
    11,700
    
    
    
    2,3002008
    
    
    11,100
    
    
    
    2,3002009
    
    
    10,900
    
    
    
    2,3002010
    
    
    10,700
    
    
    
    2,2002011
    
    
    10,500
    
    
    
    2,1002012-2015
    
    
    51,200
    
    
    
    9,600
 44




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##### Table of Contents



Pension Benefits
    
    
    Other Benefits2006
    
    
    2005
    
    
    2006
    
    
    2005Weighted average assumptions:Discount rate
    
    
    6.00
    %
    
    
    5.25
    %
    
    
    6.00
    %
    
    
    5.25
    %Expected return on plan assets
    
    
    8.00
    
    
    
    8.00
    
    
    
    N/A
    
    
    
    N/ARate of compensation increase
    
    
    4.50
    
    
    
    4.50
    
    
    
    N/A
    
    
    
    N/AHealth care cost increase
    
    
    N/A
    
    
    
    N/A
    
    
    
    10.0  5.0
    %
    
    
    10.5  5.0
    %Health care cost grading period
    
    
    N/A
    
    
    
    N/A
    
    
    10 years
    
    11 years
  Pension Benefits
    
    
    Other Benefits2006
    
    
    2005
    
    
    2006
    
    
    2005Discount rate
    
    
    5.25
    %
    
    
    6.00
    %
    
    
    5.25
    %
    
    
    6.00
    %Expected return on plan assets
    
    
    8.00
    
    
    
    8.25
    
    
    
    N/A
    
    
    
    N/ARate of compensation increase
    
    
    4.50
    
    
    
    4.50
    
    
    
    N/A
    
    
    
    N/AHealth care cost increase
    
    
    N/A
    
    
    
    N/A
    
    
    
    10.5  5.0
    %
    
    
    11.0  5.0
    %Health care cost grading period
    
    
    N/A
    
    
    
    N/A
    
    
    11 years
    
    12 years
  Increase
    
    Decrease(In thousands)Service and interest cost
    
    $
    60
    
    
    $
    (56
    )Postretirement benefit obligation
    
    
    571
    
    
    
    (554
    )
 45




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##### Table of Contents



NOTE 9  INCOME TAXES
  2006
    
    
    2005(In thousands)Deferred tax assets and liabilitiesAssets:Postretirement benefit obligations
    
    $
    5,368
    
    
    $
    5,417Net operating loss carryforwards
    
    
    22,330
    
    
    
    20,243Tax credit carryforward
    
    
    12,305
    
    
    
    7,626Other liabilities
    
    
    3,423
    
    
    
    3,339Inventory allowances
    
    
    2,439
    
    
    
    3,313Warranty reserve
    
    
    2,202
    
    
    
    2,610Customer advance payments and prepaid expenses
    
    
    1,400
    
    
    
    2,160Research and development costs
    
    
    2,650
    
    
    
    1,915Pension benefits
    
    
    12,947
    
    
    
    13,932Other items
    
    
    1,774
    
    
    
    1,93966,838
    
    
    
    62,494Less valuation allowances
    
    
    23,151
    
    
    
    23,29643,687
    
    
    
    39,198Liabilities:Tax depreciation in excess of book depreciation
    
    
    5,675
    
    
    
    6,218Goodwill and purchased asset basis differences
    
    
    29,635
    
    
    
    25,372Other items
    
    
    760
    
    
    
    1,11336,070
    
    
    
    32,703Net deferred tax asset
    
    $
    7,617
    
    
    $
    6,495
  46




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##### Table of Contents



Expense (in thousands)
 2006
    
    
    2005
    
    
    2004Current:U.S. federal
    
    $
    273
    
    
    $
    228
    
    
    $
    394Non-U.S.
    
    
    15,037
    
    
    
    4,357
    
    
    
    6,004U.S. state
    
    
    166
    
    
    
    21
    
    
    
    3715,476
    
    
    
    4,606
    
    
    
    6,435Deferred:U.S. federal
    
    
    (3,018
    )
    
    
    2,795
    
    
    
    (2,342
    )Non-U.S.
    
    
    390
    
    
    
    (1,823
    )
    
    
    (188
    )U.S. state
    
    
    (259
    )
    
    
    262
    
    
    
    (220
    )(2,887
    )
    
    
    1,234
    
    
    
    (2,750
    )$
    12,589
    
    
    $
    5,840
    
    
    $
    3,685Tax expense included in minority interest
    
    $
    916
    
    
    $
    846
    
    
    $
    300Non-U.S. pretax (loss) income
    
    $
    (6,284
    )
    
    $
    2,494
    
    
    $
    16,713
  2006
    
    
    2005
    
    
    2004(in thousands)Tax (benefit) expense at U.S. statutory rate
    
    $
    (1,903
    )
    
    $
    2,456
    
    
    $
    5,562Impact of change in valuation allowances on non-U.S. losses
    
    
    1,201
    
    
    
    3,804
    
    
    
    (779
    )Impact on U.S. taxes from repatriation of foreign earnings
    
    
    (44
    )
    
    
    533
    
    
    
    (1,128
    )Extraterritorial income deduction
    
    
    (517
    )
    
    
    (526
    )
    
    
    0Impact from nondeductible goodwill write-off
    
    
    15,421
    
    
    
    0
    
    
    
    0Impact from other nondeductible expenses
    
    
    834
    
    
    
    0
    
    
    
    0Non-U.S. tax (lower) higher than U.S. tax rates
    
    
    (2,550
    )
    
    
    (175
    )
    
    
    222Other items  net
    
    
    147
    
    
    
    (252
    )
    
    
    (192
    )$
    12,589
    
    
    $
    5,840
    
    
    $
    3,685
 NOTE 10  COMMON STOCK
  47




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##### Table of Contents



Stock option activity
 Weighted-Stock
    
    
    Average OptionOptions
    
    
    Price Per ShareOutstanding at September 1, 2003
    
    
    1,129,301
    
    
    $
    24.00Granted
    
    
    194,000
    
    
    
    21.59Exercised
    
    
    (51,000
    )
    
    
    12.03Canceled
    
    
    (8,800
    )
    
    
    24.12Outstanding at August 31, 2004
    
    
    1,263,501
    
    
    
    24.13Exercised
    
    
    (73,000
    )
    
    
    19.73Canceled
    
    
    (156,500
    )
    
    
    23.95Outstanding at August 31, 2005
    
    
    1,034,001
    
    
    
    24.44Granted
    
    
    80,000
    
    
    
    22.26Exercised
    
    
    (207,069
    )
    
    
    22.48Canceled
    
    
    (191,998
    )
    
    
    25.65Outstanding at August 31, 2006
    
    
    714,934
    
    
    $
    24.44Exercisable stock options at year-end2004
    
    
    
    
    
    
    914,9262005
    
    
    
    
    
    
    879,6482006
    
    
    
    
    
    
    591,982Shares available for grant at year-end2004
    
    
    
    
    
    
    141,2002005
    
    
    
    
    
    
    1,200,0002006
    
    
    
    
    
    
    1,120,000
 Components of outstanding stock options at August 31, 2006
 Weighted-Range of
    
    
    
    
    
    
    Average
    
    
    Weighted-Exercise
    
    
    Number
    
    
    Contract Life
    
    
    AveragePrice
    
    
    Outstanding
    
    
    in Years
    
    
    Exercise Price$
    15.38  23.00
    
    
    
    345,933
    
    
    
    7.01
    
    
    $
    20.5624.22  39.50
    
    
    
    369,001
    
    
    
    3.81
    
    
    
    27.72$
    15.38  39.50
    
    
    
    714,934
    
    
    
    5.36
    
    
    $
    24.44
 Components of exercisable stock options at August 31, 2006
 Range of
    
    
    
    
    
    
    Weighted-Exercise
    
    
    Number
    
    
    AveragePrice
    
    
    Exercisable
    
    
    Exercise Price$
    15.38  23.00
    
    
    
    235,481
    
    
    $
    20.6724.22  39.50
    
    
    
    356,501
    
    
    
    27.76$
    15.38  39.50
    
    
    
    591,982
    
    
    $
    24.94
  48




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##### Table of Contents



NOTE 11  NET INCOME PER SHARE
  2006
    
    
    2005
    
    
    2004(In thousands, except per share data)Numerator:Basic:Net (loss) Income
    
    $
    (19,587
    )
    
    $
    (262
    )
    
    $
    11,648Effect of dilutive securities:Convertible debt interest
    
    
    1,784
    
    
    
    1,920
    
    
    
    1,920(Loss) income attributable to diluted shares
    
    $
    (17,803
    )
    
    $
    1,658
    
    
    $
    13,568Denominator:Basic:Weighted average shares
    
    
    14,898
    
    
    
    14,608
    
    
    
    14,478Effect of dilutive securities:Convertible debt
    
    
    1,651
    
    
    
    1,778
    
    
    
    1,778Dilutive options and
restricted shares
    
    
    26
    
    
    
    37
    
    
    
    29Diluted
    
    
    16,575
    
    
    
    16,423
    
    
    
    16,285Net (loss) income per share:Basic:
    
    $
    (1.31
    )
    
    $
    (0.02
    )
    
    $
    0.80Diluted:
    
    $
    (1.31
    )
    
    $
    (0.02
    )
    
    $
    0.80
 NOTE 12  BUSINESS SEGMENTS AND GEOGRAPHIC INFORMATION
  Fluid Management ® ® ®
 Process Solutions ® ® ® ®
 49




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##### Table of Contents



Romaco ® ® ®
   2006
    
    
    2005
    
    
    2004(In thousands)Unaffiliated Customer Sales:Fluid Management
    
    $
    245,180
    
    
    $
    198,700
    
    
    $
    179,011Process Solutions
    
    
    231,009
    
    
    
    238,698
    
    
    
    231,609Romaco
    
    
    149,200
    
    
    
    167,375
    
    
    
    175,138Total
    
    $
    625,389
    
    
    $
    604,773
    
    
    $
    585,758Intersegment Sales:Fluid Management
    
    $
    0
    
    
    $
    0
    
    
    $
    0Process Solutions
    
    
    441
    
    
    
    752
    
    
    
    805Romaco
    
    
    0
    
    
    
    0
    
    
    
    0Corporate and Eliminations
    
    
    (441
    )
    
    
    (752
    )
    
    
    (805
    )Total
    
    $
    0
    
    
    $
    0
    
    
    $
    0Depreciation and Amortization:Fluid Management
    
    $
    7,491
    
    
    $
    7,772
    
    
    $
    7,981Process Solutions
    
    
    6,496
    
    
    
    7,497
    
    
    
    7,312Romaco
    
    
    2,991
    
    
    
    3,550
    
    
    
    4,309Corporate and Eliminations
    
    
    1,600
    
    
    
    1,574
    
    
    
    1,775Total
    
    $
    18,578
    
    
    $
    20,393
    
    
    $
    21,377EBIT:Fluid Management
    
    $
    56,522
    
    
    $
    39,731
    
    
    $
    35,073Process Solutions
    
    
    8,867
    (1)
    
    
    4,739
    (1)
    
    
    9,250
    (1)Romaco
    
    
    (38,189
    ) (2)
    
    
    (7,905
    ) (2)
    
    
    1,767Corporate and Eliminations
    
    
    (19,692
    )
    
    
    (15,114
    )
    
    
    (15,773
    ) (3)Total
    
    $
    7,508
    
    
    $
    21,451
    
    
    $
    30,317Identifiable Assets:Fluid Management
    
    $
    230,058
    
    
    $
    215,176
    
    
    $
    203,784Process Solutions
    
    
    322,164
    
    
    
    326,707
    
    
    
    328,696Romaco
    
    
    108,435
    
    
    
    186,464
    
    
    
    183,688Corporate and Eliminations
    
    
    37,666
    
    
    
    11,846
    
    
    
    19,910Total
    
    $
    698,323
    
    
    $
    740,193
    
    
    $
    736,078Capital Expenditures:Fluid Management
    
    $
    7,882
    
    
    $
    6,757
    
    
    $
    5,425Process Solutions
    
    
    2,046
    
    
    
    9,053
    
    
    
    3,367Romaco
    
    
    3,436
    
    
    
    3,823
    
    
    
    1,055Corporate and Eliminations
    
    
    296
    
    
    
    630
    
    
    
    37Total
    
    $
    13,660
    
    
    $
    20,263
    
    
    $
    9,884
 50




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##### Table of Contents



2006
    
    
    2005
    
    
    2004(In thousands)SalesUnited States
    
    $
    253,818
    
    
    $
    225,798
    
    
    $
    218,407Europe
    
    
    176,695
    
    
    
    193,190
    
    
    
    206,033Other North America
    
    
    71,535
    
    
    
    68,052
    
    
    
    54,046Asia
    
    
    79,481
    
    
    
    82,357
    
    
    
    72,013South America
    
    
    33,225
    
    
    
    26,675
    
    
    
    22,730Africa and Australia
    
    
    10,635
    
    
    
    8,701
    
    
    
    12,529$
    625,389
    
    
    $
    604,773
    
    
    $
    585,758Identifiable AssetsUnited States
    
    $
    261,214
    
    
    $
    271,493
    
    
    $
    273,496Europe
    
    
    243,446
    
    
    
    315,625
    
    
    
    314,754Other North America
    
    
    52,750
    
    
    
    51,817
    
    
    
    46,382South America
    
    
    26,628
    
    
    
    22,776
    
    
    
    20,179Asia
    
    
    76,619
    
    
    
    66,636
    
    
    
    61,357Corporate
    
    
    37,666
    
    
    
    11,846
    
    
    
    19,910$
    698,323
    
    
    $
    740,193
    
    
    $
    736,078
 
 (1)
    
    Includes cost of $2,541,000, $3,684,000 and $761,000 in fiscal years 2006, 2005 and 2004,
respectively, related to the restructuring of our Process Solutions segment. Fiscal 2006 also
includes losses of $189,000 and fiscal 2005 includes losses of $2,053,000 related to the
disposition of facilities and businesses.(2)
    
    Includes costs of $4,755,000 and $4,279,000 in fiscal years 2006 and 2005, respectively,
related to the restructuring of our Romaco segment. Fiscal 2006 also includes a gain of
$8,144,000 on the disposition of businesses. Fiscal 2006 also includes a $39,174,000 goodwill
impairment charge.(3)
    
    Fiscal 2004 includes costs of $1,378,000 related to the retirement of our former President
and CEO. 51




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##### Table of Contents



NOTE 13  QUARTERLY DATA (UNAUDITED)
 2006 Quarters1st
    
    
    2nd
    
    
    3rd
    
    
    4th
    
    
    Total(In thousands, except per share data)Sales
    
    $
    138,959
    
    
    $
    149,997
    
    
    $
    153,243
    
    
    $
    183,190
    
    
    $
    625,389Gross profit
    
    
    46,742
    
    
    
    49,459
    
    
    
    52,805
    
    
    
    65,910
    
    
    
    214,916EBIT
    
    
    (25,259
    )
    
    
    7,510
    
    
    
    6,174
    
    
    
    19,083
    
    
    
    7,508(Loss) income before
income taxes and minority interest
    
    
    (28,782
    )
    
    
    3,834
    
    
    
    3,049
    
    
    
    16,461
    
    
    
    (5,438
    )Net (loss) income
    
    
    (29,734
    )
    
    
    1,202
    
    
    
    (75
    )
    
    
    9,020
    
    
    
    (19,587
    )Net (loss) income per share:Basic
    
    $
    (2.02
    )
    
    $
    0.08
    
    
    $
    (0.01
    )
    
    $
    0.59
    
    
    $
    (1.31
    )Diluted
    
    
    (2.02
    )
    
    
    0.08
    
    
    
    (0.01
    )
    
    
    0.56
    
    
    
    (1.31
    )Weighted average common shares:Basic
    
    
    14,700
    
    
    
    14,744
    
    
    
    14,784
    
    
    
    15,363
    
    
    
    14,898Diluted
    
    
    16,499
    
    
    
    16,537
    
    
    
    16,592
    
    
    
    16,713
    
    
    
    16,575
 2005 Quarters1st
    
    
    2nd
    
    
    3rd
    
    
    4th
    
    
    Total(In thousands, except per share data)Sales
    
    $
    132,455
    
    
    $
    145,630
    
    
    $
    157,584
    
    
    $
    169,104
    
    
    $
    604,773Gross profit
    
    
    43,007
    
    
    
    46,665
    
    
    
    51,636
    
    
    
    54,657
    
    
    
    195,965EBIT
    
    
    (83
    )
    
    
    5,863
    
    
    
    7,691
    
    
    
    7,980
    
    
    
    21,451(Loss) income before
income taxes and minority interest
    
    
    (3,622
    )
    
    
    2,174
    
    
    
    4,092
    
    
    
    4,374
    
    
    
    7,018Net (loss) income
    
    
    (871
    )
    
    
    51
    
    
    
    223
    
    
    
    335
    
    
    
    (262
    )Net (loss) income per share:Basic
    
    $
    (0.06
    )
    
    $
    0.00
    
    
    $
    0.02
    
    
    $
    0.02
    
    
    $
    (0.02
    )Diluted
    
    
    (0.06
    )
    
    
    0.00
    
    
    
    0.02
    
    
    
    0.02
    
    
    
    (0.02
    )Weighted average common shares:Basic
    
    
    14,532
    
    
    
    14,589
    
    
    
    14,650
    
    
    
    14,662
    
    
    
    14,608Diluted
    
    
    16,338
    
    
    
    16,432
    
    
    
    16,472
    
    
    
    16,469
    
    
    
    16,423
 52




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##### Table of Contents



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 9A. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
   Management Report on Internal Control Over Financial Reporting
  
    
    Pertain to the maintenance of records that in reasonable detail accurately and fairly
reflect the transactions and dispositions of the assets of the Company;
    
    Provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the Company are being made only in
accordance with authorizations of management and directors of the Company; and
    
    Provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the Companys assets that could have a material effect
on the financial statements.
  53




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##### Table of Contents



Changes in Internal Control over Financial Reporting
  
 ITEM 9B OTHER INFORMATION
  54




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##### Table of Contents



PART III
 
 ITEM
10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
 Information Concerning Directors and Executive Officers
  Code of Ethics
 www.robn.com
 Audit Committee Financial Expert
  
 ITEM 11 EXECUTIVE COMPENSATION
  55




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##### Table of Contents



ITEM 12.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
  Equity Compensation Plan Information
 (c)Number of Common(a)
    
    
    
    
    
    Shares remainingNumber of Common
    
    (b)
    
    available for futureShares to be issued
    
    Weighted-average
    
    issuance under equityupon exercise of
    
    exercise price of
    
    compensation plansoutstanding options,
    
    outstanding options,
    
    (excluding securitieswarrants and rights
    
    warrants and rights
    
    reflected in column (a))Equity compensation
plans approved by
security holders
    
    
    714,934
    
    
    $
    24.44
    
    
    
    1,120,000Equity compensation
plans not approved
by security holders
    
    
    0
    
    
    
    0
    
    
    
    0Total
    
    
    714,934
    
    
    $
    24.44
    
    
    
    1,120,000
  
 ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
  
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  56




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##### Table of Contents



PART IV
 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 (a)(1) FINANCIAL STATEMENTSThe following consolidated financial statements of Robbins & Myers, Inc. and its subsidiaries are at Item 8 hereof.Consolidated Balance Sheet  August 31, 2006 and 2005.Consolidated Statement of Operations  Years ended August 31, 2006, 2005, and 2004.Consolidated Shareholders Equity Statement  Years ended August 31, 2006, 2005, and 2004.Consolidated Cash Flow Statement  Years ended August 31, 2006, 2005, and 2004.Notes to Consolidated Financial Statements.(a)(2) FINANCIAL STATEMENT SCHEDULESchedule II    Valuation and Qualifying Accounts
   57




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##### Table of Contents



ROBBINS & MYERS, INC.BY

    /s/ Peter C. WallacePeter C. WallacePresident and Chief Executive Officer  NAME
    
    TITLE
    
    DATE/s/ Peter C. Wallace

Peter C. Wallace
    
    Director, President and
Chief Executive Officer
    
    November 14, 2006/s/ Christopher M. Hix

Christopher M. Hix
    
    Vice President and Chief
Financial Officer
(Principal Financial Officer)
    
    November 14, 2006/s/ Kevin J. Brown

Kevin J. Brown
    
    Corporate Controller
(Principal Accounting Officer)
    
    November 14, 2006*Thomas P. Loftis
    
    Chairman Of Board
    
    November 14, 2006*Daniel W. Duval
    
    Director
    
    November 14, 2006*David T. Gibbons
    
    Director
    
    November 14, 2006*Stephen F. Kirk
    
    Director
    
    November 14, 2006*William D. Manning
    
    Director
    
    November 14, 2006*Dale L. Medford
    
    Director
    
    November 14, 2006*Jerome F. Tatar
    
    Director
    
    November 14, 2006
 
  /s/ Peter C. WallacePeter C. WallaceTheir Attorney-in-fact 58




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##### Table of Contents



AdditionsCharged toBalance at
    
    
    Charged to
    
    
    Other
    
    
    
    
    
    
    
    Balance atBeginning of
    
    
    Costs and
    
    
    Accounts-
    
    
    Deductions-
    
    
    
    End ofDescription
    
    Period
    
    
    Expenses
    
    
    Describe
    
    
    Describe
    
    
    
    Period(in thousands)Year Ended August 31, 2006Allowances and reserves deducted from assets:Uncollectible and reserves deducted from assets
    
    $
    4,632
    
    
    $
    2,828
    
    
    $
    0
    
    
    $
    600
    
    (1)
    
    $
    6,860Inventory obsolescence
    
    
    21,351
    
    
    
    2,347
    
    
    
    0
    
    
    
    6,115
    
    (2)
    
    
    17,583Other reserves:Warranty claims
    
    
    9,176
    
    
    
    3,134
    
    
    
    0
    
    
    
    4,705
    
    (3)
    
    
    7,605Current & L-T insurance reserves
    
    
    2,098
    
    
    
    1,294
    
    
    
    0
    
    
    
    1,651
    
    (4)
    
    
    1,741Restructuring reserves
    
    
    1,074
    
    
    
    5,738
    
    
    
    0
    
    
    
    5,057
    
    (5)
    
    
    1,755Year Ended August 31, 2005Allowances and reserves deducted from assets:Uncollectible and reserves deducted from assets
    
    $
    4,018
    
    
    $
    1,088
    
    
    $
    0
    
    
    $
    474
    
    (1)
    
    $
    4,632Inventory obsolescence
    
    
    20,651
    
    
    
    3,425
    
    
    
    0
    
    
    
    2,725
    
    (2)
    
    
    21,351Other reserves:Warranty claims
    
    
    8,330
    
    
    
    3,348
    
    
    
    0
    
    
    
    2,502
    
    (3)
    
    
    9,176Current & L-T insurance reserves
    
    
    2,203
    
    
    
    1,680
    
    
    
    0
    
    
    
    1,785
    
    (4)
    
    
    2,098Restructure reserves
    
    
    667
    
    
    
    5,677
    
    
    
    0
    
    
    
    5,270
    
    (5)
    
    
    1,074Year 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
    
    (4)
    
    
    2,203Restructure reserves
    
    
    0
    
    
    
    761
    
    
    
    0
    
    
    
    94
    
    (5)
    
    
    667
 
 Note (1) Represents accounts receivable
written off against the reserve, and impact from dispositions of
$200,000 in fiscal 2006.Note (2) Inventory items scrapped and
written off against the reserve, and impact from dispositions of $2,800,000 in fiscal 2006.Note (3) Warranty cost incurred applied against the reserve, and impact from dispositions of $970,000 in fiscal 2006.Note (4) Spending against casualty reserve.Note (5) Spending against restructure reserve. 59




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##### Table of Contents



(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
    
    *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
    
    
    Fourth Amended and Restated Credit Agreement, dated
December 23, 2005, among Robbins & Myers, Inc.,
Robbins & Myers Finance Europe B.V., the Lenders
named in the Amended Agreement and JPMorgan
Chase Bank, N.A., as Administrative Agent and an
Issuing Bank was filed as an Exhibit to our Current
Report on Form 8-K filed on December 28, 2005
    
    *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
    
    *
 60




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##### Table of Contents



(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
    
    
    Third Amendment to the Robbins & Myers, Inc. Cash Balance
Pension Plan, dated October 31, 2005 was filed as an Exhibit to our
Current Report on Form 8-K filed on November 4, 2005
    
    */M10.3
    
    
    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
    
    */M10.4
    
    
    Robbins & Myers, Inc. Executive Supplemental Retirement Plan
adopted February 2000 and Amendment No. 1 to such Plan
adopted August 2000 were filed as Exhibit 10.5 to our Annual
Report on Form 10-K for the year ended August 31, 2000
    
    */M10.5
    
    
    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
    
    */M10.6
    
    
    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
    
    */M10.7
    
    
    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
    
    */M10.8
    
    
    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
    
    */M10.9
    
    
    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
    
    */M10.10
    
    
    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
    
    */M10.11
    
    
    Robbins & Myers, Inc. 1999 Long-Term Incentive Stock Plan
was filed as Exhibit 4.3 to our Registration Statement on
Form S-8 (File No. 333-35856)
    
    */M
 61




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##### Table of Contents



10.12
    
    
    Letter Agreement between Robbins & Myers, Inc. and
Christopher M. Hix, dated July 17, 2006 was filed as an
Exhibit to our Current Report on Form 8-K filed on
July 17, 2006
    
    */M10.13
    
    
    Employment Agreement between Robbins & Myers, Inc. and
Peter C. Wallace, dated June 28, 2006 was filed as an
Exhibit to our Current Report on Form 8-K filed on
June 29, 2006
    
    */M10.14
    
    
    Form of Executive Officer Change of Control Agreement
approved June 28, 2006 entered into with each of
John R. Beatty, Gary S. Brewer, Kevin J. Brown,
Christopher M Hix, and Saeid Rahimian was filed as
an Exhibit to our Current Report on Form 8-K filed on
June 29, 2006
    
    */M10.15
    
    
    Executive Supplemental Retirement Plan, effective August 31, 2006,
was filed as an Exhibit to our Current Report on Form 8-K filed on
June 29, 2006
    
    */M10.16
    
    
    Asset and Share Purchase Agreement, dated February 28, 2006,
among Robbins & Myers, Inc., Romaco International B.V.,
and Romaco Pharmatechnik GmbH and Coesia, S.p.A. was
filed as an Exhibit to our Current Report on Form 8-K filed on
March 3, 2006
    
    *10.17
    
    
    Form of Option Award Agreement under Robbins & Myers, Inc.
2004 Stock Incentive Plan approved by the Compensation
Committee of Board of Directors of Robbins & Myers, Inc. on
October 6, 2005 was filed as an Exhibit to our Current Report
on Form 8-K filed on October 11, 2005
    
    */M10.18
    
    
    Form of Award Agreement for Restricted Share Award under
Robbins & Myers, Inc. 2004 Stock Incentive Plan approved
by the Compensation Committee of Board of Directors of
Robbins & Myers, Inc. on October 6, 2005 was filed as an
Exhibit to our Current Report on Form 8-K filed on
October 11, 2005
    
    */M10.19
    
    
    Award Agreement for Special Restricted Share Award to
Peter C. Wallace under Robbins & Myers, Inc. 2004
Stock Incentive Plan approved by the Compensation
Committee of Board of Directors of Robbins & Myers, Inc.
on October 6, 2005 was filed as an Exhibit to our Current
Report on Form 8-K filed on October 11, 2005
    
    */M10.20
    
    
    Award Agreement for Special Restricted Share Award to Saeid
Rahimian under Robbins & Myers, Inc. 2004 Stock Incentive
Plan approved by the Compensation Committee of Board of
Directors of Robbins & Myers, Inc. on October 6, 2005 was
filed as an Exhibit to our Current Report on Form 8-K filed
on October 11, 2005
    
    */M
 62




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##### Table of Contents



10.21
    
    
    Award Agreement for Performance Share Award to Peter C.
Wallace under Robbins & Myers, Inc. 2004 Stock Incentive
Plan approved by the Compensation Committee of Board of
Directors of Robbins & Myers, Inc. on October 6, 2005 was
filed as an Exhibit to our Current Report on Form 8-K filed on
October 11, 2005
    
    */M(14)
    
    CODE OF CONDUCT14.1
    
    
    Robbins & Myers, Inc. Code of Business Conduct
    
    F(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. Unless otherwise indicated, all
incorporated items are
incorporated from SEC File No. 000-288.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 granted as to certain portions, which have been
filed separately with the Securities and Exchange Commission.
 63