##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20459


FORM 10-K

|      |  |                                                                                    
|----- |  | -----------------------------------------------------------------------------------
|[ X ] |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES
EXCHANGE ACT OF 1934
|      |  | For the fiscal year ended August 31, 2003                                          

OR

|     |  |                                                                                         
|---- |  | ----------------------------------------------------------------------------------------
|[  ] |  | 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.

(Exact name of Registrant as specified in its charter)


|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|Ohio                                                           |  | 31-0424220                             
|                                                               |  |                                        
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. employer
identification number)

|                                                                            |  |                 
|--------------------------------------------------------------------------- |  | ----------------
|1400 Kettering Tower, Dayton, Ohio
(Address of principal executive offices) |  | 45423
(Zip Code)

(937) 222-2610

Registrants telephone number, including area code


Securities registered pursuant to Section 12(b) of the Act:

|                                                       |  |                         
|------------------------------------------------------ |  | ------------------------
|                                                       |  | Name of each exchange on
|Title 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 [  ]

1



---



##### Table of Contents



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 [  ]

|                                                                                                                                                                                     |  |  |             
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  |  | ------------
|Number of Common Shares, without par value, outstanding
at October 17, 2003                                                                                                          |  |  | 14,443,774  
|                                                                                                                                                                                     |  |  |             
|Aggregate market value of Common Shares, without par
value, held by non-affiliates of the Company at February 28, 2003
(the last business day of the Companys second fiscal
quarter |  |  | $169,565,014

DOCUMENT INCORPORATED BY REFERENCE

Robbins & Myers, Inc., Proxy Statement, dated November 6, 2003, for its
Annual Meeting of Shareholders on December 10, 2003, 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.

2



---

TABLE OF CONTENTS



|                                                   |                                                                                                         |  |  |  |  |  |  | 
|-------------------------------------------------- | ------------------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|                                                   | ITEM 1. BUSINESS                                                                                       
|                                                   | ITEM 2. PROPERTIES                                                                                     
|                                                   | ITEM 3. LEGAL PROCEEDINGS                                                                              
|                                                   | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                            
|PART II                                           
|                                                   | ITEM 5. MARKET FOR THE REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                      
|                                                   | ITEM 6. SELECTED FINANCIAL DATA                                                                        
|                                                   | ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS          
|                                                   | ITEM 7A. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK                                    
|                                                   | ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                                    
|                                                   | ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE           
|                                                   | ITEM 9A CONTROLS AND PROCEDURES                                                                        
|PART III                                          
|                                                   | ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                                            
|                                                   | ITEM 11. EXECUTIVE COMPENSATION                                                                        
|                                                   | ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|                                                   | ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                                
|                                                   | ITEM 14. PRINICPAL ACCOUNTANT FEES AND SERVICES                                                        
|PART IV                                           
|                                                   | ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K                              
|SIGNATURES                                        
|                                                   | Report of Independent Auditors                                                                         
|                                                   | SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS                                                        
|INDEX TO EXHIBITS                                 
|EX-4.1 THIRD AMENDMENT TO RESTATED CREDIT AGREEMNT
|EX-4.2 AMENDED RESTATED PLEDGE & SECURITY AGREMENT
|EX-14.1 CODE OF BUSINESS CONDUCT                  
|EX-21.1 SUBSIDIARIES OF ROBBINS & MYERS           
|EX-23.1 CONSENT OF ERNST & YOUNG                  
|EX-24.1 POWER OF ATTORNEY                         
|EX-31.1 CERTIFICATION OF CHEIF EXECUTIVE OFFICER  
|EX-31.2 CERTIFICATION OF CHIEF FINANCIAL OFFICER  
|EX-32.1 906 CERTIFICATION OF CHIEF EXECUTIVE OFCR 
|EX-32.2 906 CERTIFICATION OF CHIEF FINANCIAL OFFCR



---



##### 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 2003 sales were approximately $561 million, and no one
customer accounted for more than 5% of these sales.

Our strategy has been to increase our focus on higher-growth markets, such
as pharmaceutical and energy, and to broaden our international presence. In
furtherance to this strategy, on August 31, 2001, we acquired Romaco, a
European-based manufacturer of processing, dosing, filling, printing and
security equipment for the pharmaceutical and healthcare industries. Our
acquisition of Romaco, which had sales of approximately $142 million in our
fiscal 2001, expands the breadth of our pharmaceutical capabilities and
positions us as a leading supplier of primary and secondary processing
equipment to the growing pharmaceutical market. The addition of Romaco also
increased our international sales from 45% of our fiscal 2001 sales to 63% of
our fiscal 2003 sales.

In our Industrial business segment, we will pursue strategic acquisitions
if our cost structure can be improved or our 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.

We also maintain focus on internal growth initiatives. New product sales
in fiscal 2003 were 10% of total sales, or $57.0 million compared with 9% of
total sales, or $45.0 million in fiscal 2002. These new product development
initiatives contributed substantially to offset the recessionary decline of
traditional products and enhanced our ability to perform in a stagnant
manufacturing environment. We define new products as prominent additions and/or
extensions to current products which were introduced in the current or prior
four fiscal years.

We are also continually reducing our cost structure. Over the past two
years we have been successful at reducing our overhead and direct manufacturing
costs at many of our business units. The major cost reduction efforts in fiscal
2003 were related to product costs, both in the design of products and in the
sourcing of components. Many of our business units re-evaluated their product
design specifications using a fit for use concept. Additionally, we have
established a corporate wide initiative to procure

3



---



##### Table of Contents



standard components on a global basis. At this time, emphasis is on
India, China, Brazil and Mexico. We have established a procurement function in
India under the direction of the Corporate office, utilizing the infrastructure
of our business unit in that country.

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, Chevron Texaco and National Oilwell.

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, 2003, 2002 and 2001 is set forth
in Note 13 to the Consolidated Financial Statements included at Item 8 and is
incorporated herein by reference.

4



---



##### Table of Contents



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.

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 processing system,
which may be installed at the customers facility or delivered to the customer
as a skid-mounted system. A complete engineered system may include a process
guarantee and range in price from approximately $500,000 to $5 million.
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

5



---



##### Table of Contents



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. We have expanded our aftermarket capabilities to take
advantage of our large installed base of Pfaudler glass-lined vessels and to
better 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

Our acquisition of Romaco on August 31, 2001 represented a key step in our
strategy to expand our equipment and systems offerings to our pharmaceutical
customers and to grow internationally. 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;                        
|- |  | -----------------------------------------------------------------------------------------------------------------
| 
| |  | 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.       

6



---



##### Table of Contents



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 employs more than 150 application engineers who 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 manfacturers
representatives to cover territories that are not effectively covered by our
direct sales network.

Aftermarket Sales.Aftermarket sales of our Romaco business were
approximately $44 million in fiscal 2003, or 26% 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, through our Reactor Systems
customer base and our existing facilities 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

7



---



##### Table of Contents



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 the former Soviet Union
(FSU). 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 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 the FSU and 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 the leading independent
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.

8



---



##### Table of Contents



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, mining, oil, 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.

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.

9



---



##### Table of Contents



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 introduced two new agitation drive systems to compete
more effectively in the small-mixer market. These are the DT small mixers, a
line of fixed mounted, small 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,
Taiwan, 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.

10



---



##### Table of Contents



BACKLOG

Our order backlog was $111.4 million at August 31, 2003 compared with
$125.7 million at August 31, 2002. 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 2003, 2002 or 2001.

RAW MATERIALS

Raw materials are purchased from various vendors that generally are
located in the same country as our facility using the raw materials. The supply
of 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 2003, we spent approximately $6.4 million on research and
development activities compared with $6.2 million in fiscal 2002 and $2.2
million in fiscal 2001. The increase in research and development costs since
2001 was due to the acquisition of Romaco.

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, 2003, we had 3,904 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
expires in March of 2004. The labor agreement with the employees of Pfaudlers
facility in Rochester, New York expires in September 2004. The labor agreement
with the employees of Moynos principal manufacturing facility extends to
February 2005. The Company considers labor relations at each of its locations
to be good.

11



---



##### Table of Contents






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 or                               
|Location                     |  | Footage     |  |        |  | Other Use of Facility                                  
|                             |  |             |  |        |  |                                                        
|North and South America:     |  |             |  |        |  |                                                        
|Rochester, New York          |  | 500,000     |  |        |  | Reactor Systems                                        
|Springfield, Ohio            |  | 275,000     |  |        |  | Industrial Pump Products                               
|Dayton, Ohio                 |  | 160,000     |  |        |  | Industrial Mixers                                      
|Borger, Texas                |  | 115,000     |  |        |  | Wellhead products for Energy Systems                   
|Willis, Texas                |  | 110,000     |  |        |  | Down-hole pumps and power sections for Energy Systems  
|Mexico City, Mexico          |  | 110,000     |  |        |  | Reactor Systems, Industrial Pumps and Industrial Mixers
|Taubate, Brazil              |  | 100,000     |  |        |  | Reactor Systems                                        
|Charleston, West Virginia    |  | 100,000     |  |        |  | Corrosion-Resistant Products                           
|Tomball, Texas               |  | 75,000      |  |        |  | Valves and closures for Energy Systems                 
|Avondale, Pennsylvania       |  | 50,000      |  |        |  | Corrosion-Resistant Products                           
|West Chester, Pennsylvania   |  | 30,000      |  |        |  | Corrosion-Resistant Products                           
|North Andover, Massachusetts |  | 30,000      |  | (1)    |  | Industrial Mixers                                      
|Sao Jose Dos Campos, Brazil  |  | 30,000      |  |        |  | Reactor Systems                                        
|Edmonton, Alberta, Canada    |  | 25,000 to   |  | (2)    |  | Energy Systems, including two service centers          
|2 plants                     |  | 30,000 each |  | (1)    |  |                                                        
|Rochester, New York          |  | 10,000      |  | (1)    |  | Reactor Systems                                        
|Pequannock, New Jersey       |  | 62,000      |  | (1)    |  | Index equipment                                        
|                            
|Europe:                      |  |             |  |        |  |                                                        
|Schwetzingen, Germany        |  | 400,000     |  |        |  | Reactor Systems                                        
|Leven, Scotland              |  | 240,000     |  |        |  | Reactor Systems and Corrosion-Resistant Products       
|Quarto DAltino, Italy       |  | 120,000     |  |        |  | Reactor Systems                                        
|San Donà di Piave, Italy     |  | 90,000      |  |        |  | Reactor Systems                                        
|Bilston, England             |  | 50,000      |  |        |  | Reactor Systems                                        
|Derby, England               |  | 20,000      |  | (1)    |  | Industrial Mixers                                      
|Petit-Rechain, Belgium       |  | 15,000      |  |        |  | Power sections for Energy Systems                      
|Bolton, England              |  | 24,000      |  |        |  | Reactor Systems                                        
|Southampton, England         |  | 10,000      |  | (1)    |  | Industrial Pump Products                               
|Campbridgeshire, England     |  | 8,500       |  |        |  | Distribution Center-Romaco Products                    
|DAgen, France               |  | 15,000      |  | (1)(5) |  | Manufacture of Pharma Modules                          
|Alsbach - Hahnlein, Germany  |  | 21,000      |  |        |  | Laetus equipment                                       
|Remschingen, Germany         |  | 61,000      |  | (1)    |  | Siebler equipment                                      
|Karlsruhe, Germany           |  | 47,000      |  |        |  | Horn & Noack equipment                                 
|Neuenburg, Germany           |  | 70,000      |  |        |  | Frymakoruma equipment                                  
|Bologna, Italy               |  | 44,000      |  | (1)    |  | Macofar equipment                                      
|Bologna, Italy               |  | 11,000      |  | (1)    |  | Promatic equipment                                     

12



---



##### Table of Contents



|                         |  |         |  |     |  |                         
|------------------------ |  | ------- |  | --- |  | ------------------------
|                         |  | Square  |  |     |  | Products Manufactured or
|Location                 |  | Footage |  |     |  | Other Use of Facility   
|                         |  |         |  |     |  |                         
|Milanese, Italy          |  | 15,000  |  |     |  | Unipac equipment        
|Milano, Italy            |  | 52,000  |  |     |  | Zanchetta equipment     
|Volketswil, Switzerland  |  | 50,000  |  | (1) |  | HAPA equipment          
|Rheinfenden, Switzerland |  | 115,000 |  |     |  | Frymakoruma equipment   
|                         |  |         |  |     |  |                         
|Australia                |  |         |  |     |  |                         
|Tingalpa, Brisbane       |  | 24,000  |  | (1) |  | Bosspak equipment       
|                         |  |         |  |     |  |                         
|Asia:                    |  |         |  |     |  |                         
|Gujurat, India           |  | 350,000 |  | (3) |  | Reactor Systems         
|Suzhou, China            |  | 150,000 |  | (4) |  | Reactor Systems         
|Singapore                |  | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

13



---



##### 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 can not 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.

14



---



##### Table of Contents



Executive Officers of the Registrant

Maynard H. Murch IV, age 59, has been our Chairman of the Board since July
1979 and a director since 1977. He is also President and Chief Executive
Officer of Maynard H. Murch Co., Inc. (investments), which is managing general
partner of M.H.M. & Co., Ltd. (investments). Mr. Murch is also Vice President
of Parker/Hunter Incorporated (dealer in securities), a successor firm to Murch
and Co., Inc., a securities firm that Mr. Murch had been associated with since
1968. Mr. Murch is a director of Lumitex, Inc. and Shiloh Industries, Inc.

Gerald L. Connelly, age 62, has been our President and Chief Executive
Officer since January 1999. From April 1996 to January 1999, he was our
Executive Vice President and Chief Operating Officer and, from June 1994 to
April 1996, he was a Vice President and President of our Process Industries
Group. Previously, he served as President of Pulsafeeder, Inc. (metering pumps)
for 10 years.

Kevin J. Brown, age 45, 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.

Milton M. Hernandez, age 47, has been our Group Vice President and
President, Robbins & Myers Europe since September 2001. Previously, he was our
Vice President-Business Development since joining us in April 2000. Prior to
that he was Managing Director-Argentina and Bolivia, Mobil Oil Corporation and
Vice President, Business Development Latin America, Spain and Portugal and he
also held a variety of positions in Corporate Planning and Marketing for Mobil
Chemical as well as Mobil Oil.

Karl H. Bergmann, age 59, has been our President and CEO of our Romaco
Group since March 2003, and Vice President and Vice President Operations of
Robbins & Myers Europe since September 2001. Prior to that he was Senior Vice
President, Reactor Systems Europe since 1998 and President of Pfaudler Werke
GmbH since joining us in 1994.

Hugh E. Becker, age 65, has been our Vice President, Investor Relations
and Human Resources since December 1998. From 1996 to 1998, he was our Senior
Director, Investor Relations and Human Resources. Previously he held various
investor relations and human resource positions for us since 1980.

Albert L. Raiteri, age 62, has been our Treasurer since December 1998. He
has held various positions in finance and accounting for us since 1972.

Thomas J. Schockman, age 39, 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, the
accounting firm of Ernst & Young LLP for ten years.

15



---



##### Table of Contents



Joseph M. Rigot, age 60, 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 10, 2003) or until their respective successors
are elected.

16



---



##### Table of Contents






PART II




ITEM 5.       MARKET FOR THE REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

(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.

|            |  |      |       |     |  |      |       |  |  |           |      | 
|----------- |  | ---- | ----- | --- |  | ---- | ----- |  |  | --------- | ---- | 
|            |  |      |       |     |  |      |       |  |  | Dividends
|            |  | High |       | Low |  | Paid
|            |  |     
|Fiscal
2003 |  |      |       |     |  |      |       |  |  |           |      | 
|1st Quarter |  | $    | 20.05 |     |  | $    | 14.70 |  |  | $         | .055 | 
|2nd Quarter |  |      | 19.64 |     |  |      | 14.80 |  |  |           | .055 | 
|3rd Quarter |  |      | 19.25 |     |  |      | 13.29 |  |  |           | .055 | 
|4th Quarter |  |      | 22.77 |     |  |      | 18.50 |  |  |           | .055 | 
|            |  |      |       |     |  |      |       |  |  |           |      | 
|Fiscal
2002 |  |      |       |     |  |      |       |  |  |           |      | 
|1st Quarter |  | $    | 28.70 |     |  | $    | 22.82 |  |  | $         | .055 | 
|2nd Quarter |  |      | 25.70 |     |  |      | 21.97 |  |  |           | .055 | 
|3rd Quarter |  |      | 29.28 |     |  |      | 23.40 |  |  |           | .055 | 
|4th Quarter |  |      | 26.25 |     |  |      | 18.91 |  |  |           | .055 | 

(B) As of October 17, 2003, we had approximately 545 shareholders of
record. Based on requests from brokers and other nominees, we estimate there
are approximately an additional 2,330 shareholders.

(C) Dividends paid on common shares are presented in the table in Item
5(A). Our credit agreements include 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 2004 are limited to $10,810,000.

17



---



##### Table of Contents



(D)  The following table shows certain information as of August 31, 2003 with
respect to compensation plans under which common shares of the Company are
authorized for issuance:

|                                                           |  |                                      |           |                   |  |                      |       |                  |  |     |         | 
|---------------------------------------------------------- |  | ------------------------------------ | --------- | ----------------- |  | -------------------- | ----- | ---------------- |  | --- | ------- | 
|                                                           |  | Equity Compensation Plan Information
|                                                           |  |                                     
|                                                           |  |                                      |           |                   |  |                      |       |                  |  | (c)
|                                                           |  | (a)                                  |           |                   |  |                      |       | Number of Common
|                                                           |  | Number of                            |           | (b)               |  | Shares remaining    
|                                                           |  | Common Shares                        |           | Weighted-         |  | available for future
|                                                           |  | to be issued upon                    |           | average exercise  |  | issuance under      
|                                                           |  | exercise of                          |           | price of          |  | equity compensation 
|                                                           |  | outstanding                          |           | outstanding       |  | plans (excluding    
|                                                           |  | options, warrants                    |           | options, warrants |  | securities reflected
|                                                           |  | and rights                           |           | and rights        |  | in column (a))      
|                                                           |  |                                      |           |                   |  |                     
|Equity 
compensation
plans approved
by security
holders    |  |                                      | 1,129,301 |                   |  | $                    | 24.00 |                  |  |     | 350,200 | 
|Equity
compensation
plans not
approved by
security holders |  |                                      | 0         |                   |  |                      | 0     |                  |  |     | 0       | 
|                                                           |  |                                      |           |                   |  |                      |       |                  |  |     |         | 
|Total                                                      |  |                                      | 1,129,301 |                   |  | $                    | 24.00 |                  |  |     | 350,200 | 
|                                                           |  |                                      |           |                   |  |                      |       |                  |  |     |         | 

18



---



##### 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 Year Average Growth |      | 2003    |         | 2002 |       | 2001    |         | 2000 |       | 1999    |         | 1998
|                       |                                     |                                |                  |       |     |                       |      |         |         |      |       |         |         |      |       |         |         |     
|Operating Results      |                                     |                                |                  |       |     |                       |      |         |         |      |       |         |         |      |       |         |         |      |       |         |         |      |       |         |         |      |       |        
|                       | Orders                              |                                |                  | 5.6   | %   |                       | $    | 546,357 |         |      | $     | 508,943 |         |      | $     | 427,275 |         |      | $     | 412,948 |         |      | $     | 373,135 |         |      | $     | 416,989 |        
|                       | Ending backlog                      |                                |                  |       |     |                       |      | 111,375 |         |      |       | 125,665 |         |      |       | 143,522 |         |      |       | 80,484  |         |      |       | 74,330  |         |      |       | 96,022  |        
|                       | Sales                               |                                |                  | 5.1   |     |                       |      | 560,775 |         |      |       | 526,373 |         |      |       | 425,902 |         |      |       | 406,714 |         |      |       | 400,142 |         |      |       | 436,474 |        
|                       | Gross profit (2)                    |                                |                  | 3.5   |     |                       |      | 188,816 |         |      |       | 173,764 |         |      |       | 140,734 |         |      |       | 140,234 |         |      |       | 136,166 |         |      |       | 158,713 |        
|                       | EBIT (2, 3, 4)                      |                                |                  | (8.4  | )   |                       |      | 38,709  |         |      |       | 40,947  |         |      |       | 43,236  |         |      |       | 43,572  |         |      |       | 33,288  |         |      |       | 60,142  |        
|                       | Net income (2, 3)                   |                                |                  | (14.4 | )   |                       |      | 14,368  |         |      |       | 14,503  |         |      |       | 19,631  |         |      |       | 18,056  |         |      |       | 11,849  |         |      |       | 31,230  |        
|                       |                                     |                                |                  |       |     |                       |      |         |         |      |       |         |         |      |       |         |         |      |       |         |         |      |       |         |         |      |       |         |        
|Financial Condition    |                                     |                                |                  |       |     |                       |      |         |         |      |       |         |         |      |       |         |         |      |       |         |         |      |       |         |         |      |       |        
|                       | Total assets                        |                                |                  |       |     |                       | $    | 704,456 |         |      | $     | 679,925 |         |      | $     | 660,260 |         |      | $     | 495,679 |         |      | $     | 493,852 |         |      | $     | 501,008 |        
|                       | Total debt                          |                                |                  |       |     |                       |      | 193,603 |         |      |       | 208,446 |         |      |       | 258,894 |         |      |       | 177,864 |         |      |       | 191,272 |         |      |       | 206,242 |        
|                       | Shareholders equity                |                                |                  |       |     |                       |      | 287,006 |         |      |       | 260,493 |         |      |       | 197,902 |         |      |       | 167,182 |         |      |       | 154,226 |         |      |       | 150,763 |        
|                       | Total capitalization                |                                |                  |       |     |                       |      | 480,609 |         |      |       | 468,939 |         |      |       | 456,796 |         |      |       | 345,046 |         |      |       | 345,498 |         |      |       | 357,005 |        
|Performance Statistics |                                     |                                |                  |       |     |                       |      |         |         |      |       |         |         |      |       |         |         |      |       |         |         |      |       |         |         |      |       |        
|                       | Percent of sales:                   |                                |                  |       |     |                       |      |         |         |      |       |         |         |      |       |         |         |      |       |         |         |      |       |         |         |      |       |         |        
|                       |                                     |                                | Gross profit (2) |       |     |                       |      |         |         | 33.7 | %     |         |         | 33.0 | %     |         |         | 33.0 | %     |         |         | 34.5 | %     |         |         | 34.0 | %     |         |         | 36.4 | %    
|                       |                                     |                                | EBIT (2, 3)      |       |     |                       |      |         |         | 6.9  |       |         |         | 7.8  |       |         |         | 10.2 |       |         |         | 10.7 |       |         |         | 8.3  |       |         |         | 13.8 |      
|                       | Debt as a % of total capitalization |                                |                  |       |     |                       |      | 40.3    |         |      |       | 44.5    |         |      |       | 56.7    |         |      |       | 51.5    |         |      |       | 55.4    |         |      |       | 57.8    |        
|                       | EBIT return on average net assets   |                                |                  |       |     |                       |      | 8.0     |         |      |       | 8.9     |         |      |       | 12.4    |         |      |       | 12.6    |         |      |       | 9.3     |         |      |       | 16.7    |        
|                       | Net income return on avg. equity    |                                |                  |       |     |                       |      | 5.2     |         |      |       | 6.7     |         |      |       | 11.2    |         |      |       | 11.2    |         |      |       | 7.8     |         |      |       | 22.7    |        
|Per Share Data         |                                     |                                |                  |       |     |                       |      |         |         |      |       |         |         |      |       |         |         |      |       |         |         |      |       |         |         |      |       |        
|                       | Net income per share, diluted (2,3) |                                |                  | (16.3 | )%  |                       | $    | 1.00    |         |      | $     | 1.15    |         |      | $     | 1.63    |         |      | $     | 1.53    |         |      | $     | 1.06    |         |      | $     | 2.43    |        
|                       | Dividends declared                  |                                |                  | 0.5   |     |                       |      | 0.22    |         |      |       | 0.22    |         |      |       | 0.22    |         |      |       | 0.22    |         |      |       | 0.22    |         |      |       | 0.215   |        
|                       | Market price of common stock:       |                                |                  |       |     |                       |      |         |         |      |       |         |         |      |       |         |         |      |       |         |         |      |       |         |         |      |       |         |        
|                       |                                     |                                |                  | High  |     |                       |      |         |         | $    | 22.77 |         |         | $    | 29.28 |         |         | $    | 29.25 |         |         | $    | 24.50 |         |         | $    | 25.88 |         |         | $    | 40.50 | 
|                       |                                     |                                |                  | Low   |     |                       |      |         |         |      | 13.29 |         |         |      | 18.91 |         |         |      | 21.56 |         |         |      | 15.19 |         |         |      | 15.69 |         |         |      | 23.00 | 
|                       |                                     |                                |                  | Close |     |                       | (0.9 | )%      |         |      | 22.73 |         |         |      | 18.91 |         |         |      | 28.38 |         |         |      | 23.88 |         |         |      | 23.50 |         |         |      | 23.75 | 
|                       | P/E ratio at August 31, diluted     |                                |                  |       |     |                       |      | 22.7    |         |      |       | 16.4    |         |      |       | 17.4    |         |      |       | 15.6    |         |      |       | 22.2    |         |      |       | 9.8     |        
|Other Data             |                                     |                                |                  |       |     |                       |      |         |         |      |       |         |         |      |       |         |         |      |       |         |         |      |       |         |         |      |       |        
|                       |                                     | Cash flow from operations      |                  |       |     |                       |      | $       | 45,636  |      |       | $       | 44,540  |      |       | $       | 30,984  |      |       | $       | 36,040  |      |       | $       | 39,463  |      |       | $       | 48,574  |     
|                       |                                     | Capital expenditures, net      |                  |       |     |                       |      |         | 7,869   |      |       |         | 15,112  |      |       |         | 20,200  |      |       |         | 19,842  |      |       |         | 11,612  |      |       |         | 23,020  |     
|                       |                                     |                                |                  |       |     |                       |      |         |         |      |       |         |         |      |       |         |         |      |       |         |         |      |       |         |         |      |       |        
|                       |                                     | Free cash flow (5)             |                  |       |     |                       |      |         | 37,767  |      |       |         | 29,428  |      |       |         | 10,784  |      |       |         | 16,198  |      |       |         | 27,851  |      |       |         | 25,554  |     
|                       |                                     |                                |                  |       |     |                       |      |         |         |      |       |         |         |      |       |         |         |      |       |         |         |      |       |         |         |      |       |         |        
|                       |                                     | Amortization (3)               |                  |       |     |                       |      | $       | 2,189   |      |       | $       | 2,015   |      |       | $       | 8,187   |      |       | $       | 8,077   |      |       | $       | 7,660   |      |       | $       | 7,670   |     
|                       |                                     | Depreciation                   |                  |       |     |                       |      |         | 20,093  |      |       |         | 20,028  |      |       |         | 16,161  |      |       |         | 16,293  |      |       |         | 16,861  |      |       |         | 15,846  |     
|                       |                                     | Enterprise value (6)           |                  |       | 2.2 | %                     |      |         | 521,483 |      |       |         | 479,483 |      |       |         | 591,650 |      |       |         | 439,493 |      |       |         | 448,386 |      |       |         | 468,015 |     
|                       |                                     | Shares outstanding at year end |                  |       |     |                       |      |         | 14,425  |      |       |         | 14,333  |      |       |         | 11,726  |      |       |         | 10,956  |      |       |         | 10,941  |      |       |         | 11,022  |     
|                       |                                     | Average diluted shares (7)     |                  |       |     |                       |      |         | 16,492  |      |       |         | 14,688  |      |       |         | 13,465  |      |       |         | 13,416  |      |       |         | 13,535  |      |       |         | 13,906  |     
|                       |                                     | Number of shareholders (8)     |                  |       |     |                       |      |         | 2,875   |      |       |         | 2,809   |      |       |         | 2,885   |      |       |         | 2,932   |      |       |         | 3,256   |      |       |         | 3,326   |     
|                       |                                     | Number of employees            |                  |       |     |                       |      |         | 3,904   |      |       |         | 3,921   |      |       |         | 4,334   |      |       |         | 3,284   |      |       |         | 3,244   |      |       |         | 3,071   |     

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. Fiscal 1998 reflected the acquisitions of Flow Control Equipment, Inc. and Technoglass S.p.A                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | 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 $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 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). See Note 5 of Notes to Consolidated Financial Statements.                                                    
|   
|(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 1998 (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; fiscal 1999, $5,439,000; and fiscal 1998,
$4,798,000; and (ii) net income per diluted share in the periods indicated would have been as follows: fiscal 2001, $1.88; fiscal 2000, $1.80; fiscal 1999, $1.32; and fiscal 1998, $2.65.

19



---



##### Table of Contents



|(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.                                                                                          
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(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 as 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 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 and fiscal 1998 reflected an additional 2,385,000
shares related to the convertible notes outstanding.                                                                                                                                                     
|   
|(8) |  | As of September 1, 2003, we had 545 shareholders of record. Based on requests from brokers and other nominees, we estimate there were an additional 2,330 shareholders.                                                                                                                                                                                                                                                                                     

20



---



##### 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.

During the past five years, our strategy has been to increase our focus on
high-growth markets, such as pharmaceutical and energy, and to broaden our
international presence. In furtherance of this strategy, on August 31, 2001, we
acquired Romaco, a European-based manufacturer of processing, dosing, filling,
printing and security equipment for the pharmaceutical and healthcare
industries. Our acquisition of Romaco, which had sales of approximately $142
million in our fiscal 2001, expands the breadth of our pharmaceutical
capabilities and positions us as a leading supplier of primary and secondary
processing equipment to the growing pharmaceutical market. With the addition of
Romaco, our international sales increased to approximately 63% of fiscal 2003
sales from 45% of our fiscal 2001 sales.

The total purchase price of Romaco was $130.1 million. At closing in fiscal
2001, we paid consideration of $95.2 million as follows: $38.7 million in cash,
$2.2 million in a five-year subordinated note, the assumption of net debt of
$38.9 million and 600,000 of our common shares valued at $15.4 million. In the
second quarter of fiscal 2002, we made an additional payment based on Romacos
sales and operating performance for calendar year 2001 of $32.1 million, half
of which was in cash and half of which was in a five-year subordinated note. We
also incurred acquisition costs of $2.8 million in fiscal 2002. We completed
the Romaco acquisition as of the end of fiscal 2001, therefore, the acquisition
had no impact on our results of operations in fiscal 2001. Pro forma result
references throughout this discussion give effect to the Romaco acquisition as
if it were made at the beginning of fiscal 2001.

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.

21



---



##### Table of Contents



Results of Operations

The following tables present components of our consolidated income statement
and segment information.

|              |  |      |       |      |  |      |       |   |  |  |       |  
|------------- |  | ---- | ----- | ---- |  | ---- | ----- | - |  |  | ----- | -
|Consolidated  |  | 2003 |       | 2002 |  | 2001
|              |  |      |       |      |  |     
|Sales         |  |      | 100.0 | %    |  |      | 100.0 | % |  |  | 100.0 | %
|Cost of sales |  |      | 66.3  |      |  |      | 67.0  |   |  |  | 67.0  |  
|              |  |      |       |      |  |      |       |   |  |  |       |  
|Gross profit  |  |      | 33.7  |      |  |      | 33.0  |   |  |  | 33.0  |  
|SG&A expenses |  |      | 26.4  |      |  |      | 24.8  |   |  |  | 20.6  |  
|Amortization  |  |      | 0.4   |      |  |      | 0.4   |   |  |  | 1.9   |  
|Other         |  |      | 0.0   |      |  |      | 0.0   |   |  |  | 0.3   |  
|              |  |      |       |      |  |      |       |   |  |  |       |  
|EBIT          |  |      | 6.9   | %    |  |      | 7.8   | % |  |  | 10.2  | %
|              |  |      |       |      |  |      |       |   |  |  |       |  

|                |        |      |                                 |         |   |      |   |         |   |  |   |         |  
|--------------- | ------ | ---- | ------------------------------- | ------- | - | ---- | - | ------- | - |  | - | ------- | -
|By Segment      |        | 2003 |                                 | 2002    |   | 2001
|                |        |      |                                 |         |   |     
|                |        |      | (In thousands, except percents)
|Pharmaceutical: |        |      |                                 |         |   |      |   |         |   |  |   |        
|                | Sales  |      | $                               | 342,415 |   |      | $ | 319,412 |   |  | $ | 171,403 |  
|                | EBIT   |      |                                 | 21,401  |   |      |   | 27,895  |   |  |   | 17,349  |  
|                | EBIT % |      |                                 | 6.3     | % |      |   | 8.7     | % |  |   | 10.1    | %
|Energy:         |        |      |                                 |         |   |      |   |         |   |  |   |        
|                | Sales  |      | $                               | 95,487  |   |      | $ | 91,381  |   |  | $ | 113,906 |  
|                | EBIT   |      |                                 | 20,941  |   |      |   | 18,773  |   |  |   | 26,078  |  
|                | EBIT % |      |                                 | 21.9    | % |      |   | 20.5    | % |  |   | 22.9    | %
|Industrial:     |        |      |                                 |         |   |      |   |         |   |  |   |        
|                | Sales  |      | $                               | 122,873 |   |      | $ | 115,580 |   |  | $ | 140,593 |  
|                | EBIT   |      |                                 | 8,791   |   |      |   | 5,279   |   |  |   | 8,445   |  
|                | EBIT % |      |                                 | 7.2     | % |      |   | 4.6     | % |  |   | 6.0     | %
|Total:          |        |      |                                 |         |   |      |   |         |   |  |   |        
|                | Sales  |      | $                               | 560,775 |   |      | $ | 526,373 |   |  | $ | 425,902 |  
|                | EBIT   |      |                                 | 38,709  |   |      |   | 40,947  |   |  |   | 43,236  |  
|                | EBIT % |      |                                 | 6.9     | % |      |   | 7.8     | % |  |   | 10.2    | %

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 volume decrease of $16.7
million. 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.

EBIT in fiscal 2003 was $38.7 million compared with $40.9 million in fiscal
2002.

22



---



##### Table of Contents



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 volume decrease 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.

Fiscal Year Ended August 31, 2002 Compared with Fiscal Year Ended August 31,
2001

Sales for fiscal 2002 were $526.4 million compared with $425.9 million in the
same period of the prior year. On a pro forma basis, taking into account the
Romaco acquisition, sales decreased $41.7 million, or 7.3%

The Pharmaceutical segment had sales of $319.4 million in fiscal 2002 compared
with $171.4 million in the same period of fiscal 2001. On a pro forma basis,
the Pharmaceutical segment sales increased $5.8 million, or 1.8%. Overall, this
sales increase was due to the strengthening of the euro against the dollar.
Romacos sales increased by $27.4 million compared with their pro forma fiscal
2001 sales due to the strength of the pharmaceutical and healthcare markets.
However, offsetting this was decreased Reactor Systems sales of $21.6 million.
The decline in Reactor Systems sales was due to the impact of the weak
specialty chemical market and slow industrial economy in the U.S.

The Energy segment had sales of $91.4 million in fiscal 2002 compared with
$113.9 million in the same period of fiscal 2001, a decrease of $22.5 million,
or 19.8%. Lower crude oil and natural gas prices caused a reduction in
exploration and production activities in fiscal 2002 compared with fiscal 2001.

The Industrial segment had sales of $115.6 million in fiscal 2002 compared with
$140.6 million in fiscal 2001, a decrease of $25.0 million, or 17.8%. This
segment was also negatively impacted by the slow industrial economy in the U.S.

EBIT in fiscal 2002 was $40.9 million compared with $43.2 million in fiscal
2001. In the first quarter of fiscal 2002, we adopted Statement of Financial
Accounting Standard (SFAS) No. 142, Goodwill and Other Intangible Assets,
which required that goodwill no longer be amortized. The adoption of SFAS
No.142 resulted in a $5.4 million reduction in amortization in fiscal 2002. In
addition, in the third quarter of fiscal 2001, we consolidated operations in
England, Mexico and the Asia-Pacific region to strengthen our market presence
and achieve more effective channels to market. We also discontinued certain
product offerings in our Chemineer and Moyno businesses to improve our
long-term competitive position through a more cost-effective product focus. We
incurred a charge of $2.3 million, $1.3 million of which related to severance
and other costs associated with the regional consolidations and the balance of
which related to inventory write-downs from discontinued product offerings.
There were additional costs in the third and fourth quarters of fiscal 2001
totalling $0.2 million that we expensed as incurred primarily for equipment

23



---



##### Table of Contents



relocation, marketing and employee training. As of August 31, 2001, we had paid
all costs related to the global reorganization program without any changes in
estimates.

The Pharmaceutical segment had EBIT of $27.9 million in fiscal 2002 compared
with $17.3 million in fiscal 2001. On a pro forma basis, the Pharmaceutical
segment EBIT in fiscal 2002 increased by $1.9 million over the prior year
period. The increase in EBIT in 2002 is due to lower amortization of $1.5
million and global reorganization costs recorded in fiscal 2001 of $.2 million.

The Energy segment had EBIT of $18.8 million in fiscal 2002 compared with $26.1
million in fiscal 2001, a decrease of $7.3 million, or 28.0%. The decline in
Energy segment sales reduced EBIT by $8.5 million. In addition, there were
increased research and development costs and a change in sales mix from
higher-margin exploration products to lower-margin wellhead products.
Offsetting these items was lower amortization in fiscal 2002 of $1.8 million.

The Industrial segment had EBIT of $5.3 million in fiscal 2002 compared with
$8.4 million in fiscal 2001, a reduction of $3.1 million, while sales decreased
by $25.0 million. The Industrial segment had lower amortization in fiscal 2002
of $2.8 million, and global reorganization costs recorded in fiscal 2001 were
$2.2 million. Therefore, the decrease in fiscal 2002 EBIT excluding these items
was $8.1 million. The reduction was due to lower overall sales volumes and
reduced selling prices resulting from the weak markets into which this segment
sells. EBIT was also negatively impacted by the mix of products sold as the
volume of high-margin industrial pump aftermarket products declined
significantly.

Interest expense increased from $12.3 million in fiscal 2001 to $17.6 million
in fiscal 2002. This was due to higher average debt levels resulting from the
acquisition of Romaco. Our effective interest rate was 7.0% in fiscal 2002 and
6.9% in fiscal 2001.

Our effective tax rate was 33.5% in fiscal 2002 compared with 33.1% in fiscal
2001. Net deferred income tax assets of $2.6 million at August 31, 2002
primarily related to U.S. operations.

Net income and net income per diluted share in fiscal 2002 were $14.5 million
and $1.15 compared with $19.6 million and $1.63 in fiscal 2001. The decrease
was due to the weak market conditions and resulting lower sales volumes in the
Energy and Industrial segments in fiscal 2002. Interest costs were also higher
due to debt incurred for the Romaco acquisition; however, overall the Romaco
acquisition was accretive.

Liquidity and Capital Resources

Operating Activities

In fiscal 2003, our cash flow from operations was $45.6 million compared with
$44.5 million in fiscal 2002. The continued strong cash flow from operations
was due to our actions to conserve cash in reaction to the weak economic
environment. Because of these actions, working capital was reduced by $5.4
million in fiscal 2003, excluding the effects of changes in exchange rates.

We expect our fiscal 2004 operating cash flow to be adequate to fund the fiscal
year 2004 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 $7.9 million in fiscal 2003, down from $15.1
million in fiscal 2002. We also paid $13.1 million to purchase the stock of
Tarby in fiscal 2003.

Financing Activities

On February 10, 2003, in a non-cash transaction we exchanged $40.0 million of
existing 6.5% Convertible Subordinated Notes due 2003 for an equal amount of
8.0% Convertible Subordinated Notes due 2008. The 8.0% Convertible Subordinated
Notes are convertible into our common shares at $22.50 per share. On April 16,
2003, we redeemed the remaining $19.7 million of 6.5% Convertible Subordinated

24



---



##### Table of Contents



Notes. The redemption price was 100% of the principal amount. We used proceeds
from our revolving credit loan to pay for the redemption.

On October 7, 2003, we entered into an amended Credit Agreement. Under this
agreement, which provides for borrowings on a revolving credit basis up to a
maximum of $125.0 million, there was $12.6 million in outstanding indebtedness
at October 7, 2003, and of the remaining capacity, $32.0 million was available
for borrowing under the applicable financial covenants.

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. 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 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. 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.
Retirement benefit obligations are affected by a number of estimates made by us
in consultation with independent actuaries, including, the discount rate,
long-term rate of return on plan assets and assumed increases for wage rate and
health care 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.

25



---



##### Table of Contents



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
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.

New Accounting Pronouncements

In November 2002, the FASB issued Financial Interpretation No. 45, Guarantors
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others. This Interpretation elaborates on the
disclosures to be made by a guarantor in its interim and annual financial
statements about its obligations under certain guarantees that it has issued.
It also clarifies that a guarantor is required to recognize, at the inception
of a guarantee, a liability for the fair value of the obligation undertaken in
issuing the guarantee. The recognition and measurement provisions of this
interpretation were applied to guarantees issued or modified after December 31,
2002. Effective December 1, 2002, we adopted Financial Interpretation No. 45
and it did not have a material effect on our financial statements.

In December 2002, the FASB issued Statement of Financial Accounting Standards
No. 148 (SFAS 148), Accounting for Stock-Based Compensation  Transition and
Disclosure. This Statement amends FASB Statement No. 123, Accounting for
Stock-Based Compensation, to provide alternative methods of transition for a
voluntary change to the fair value based method of accounting for stock-based
employee compensation. In addition, this Statement amends the disclosures in
both annual and interim financial statements regarding the method of accounting
for stock-based employee compensation and the effect of the method used on
reported results. We continue to apply Accounting Principles Board Opinion No.
25 for the method used to account for stock-based employee compensation
arrangements, where applicable, but have adopted the new disclosure
requirements of SFAS 148 (see Note 11).

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.

26



---



##### Table of Contents






ITEM 7A.       QUALITATIVE AND QUANTITATIVE 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 2003, 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 2003 would have decreased by $2.1
million and $1.0 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, 2003, we had
$193.6 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. At August 31, 2003, we had 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, 2003, $141.6 million of our outstanding debt was at fixed rates
with a weighted average interest rate of 7.5% and $52.0 million was at variable
rates with a weighted average interest rate of 4.7%. The estimated fair value
of our debt at August 31, 2003 was approximately $191.6 million. The following
table presents the aggregate maturities and related weighted average interest
rates of our debt obligations at August 31, 2003 by maturity dates:

27



---



##### Table of Contents



|              |  |                                 |         |               |  |                 |      |                 |  |        |        |      |  |        |      |      |  |   |        |  |  |  |      |   |  |   |        |  |  |  |      |  
|------------- |  | ------------------------------- | ------- | ------------- |  | --------------- | ---- | --------------- |  | ------ | ------ | ---- |  | ------ | ---- | ---- |  | - | ------ |  |  |  | ---- | - |  | - | ------ |  |  |  | ---- | -
|              |  | U.S. Dollar                     |         | U.S. Dollar   |  | Non-U.S. Dollar |      | Non-U.S. Dollar
|              |  | Fixed Rate                      |         | Variable Rate |  | Fixed Rate      |      | Variable Rate  
|              |  |                                 |         |               |  |                 |      |                
|Maturity Date |  | Amount                          |         | Rate          |  | Amount          |      | Rate            |  | Amount |        | Rate |  | Amount |      | Rate
|              |  |                                 |         |               |  |                 |      |                 |  |        |        |      |  |        |      |     
|              |  | (In
thousands, except percents)
|2004          |  | $                               | 0       |               |  |                 | 0.00 | %               |  | $      | 700    |      |  |        | 4.00 | %    |  | $ | 4,086  |  |  |  | 4.87 | % |  | $ | 2,533  |  |  |  | 5.48 | %
|2005          |  |                                 | 125     |               |  |                 | 6.00 |                 |  |        | 3,900  |      |  |        | 4.62 |      |  |   | 1,439  |  |  |  | 4.36 |   |  |   | 7,628  |  |  |  | 4.94 |  
|2006          |  |                                 | 0       |               |  |                 | 0.00 |                 |  |        | 700    |      |  |        | 4.00 |      |  |   | 23,565 |  |  |  | 9.77 |   |  |   | 3,628  |  |  |  | 3.99 |  
|2007          |  |                                 | 0       |               |  |                 | 0.00 |                 |  |        | 0      |      |  |        | 0.00 |      |  |   | 846    |  |  |  | 3.77 |   |  |   | 1,099  |  |  |  | 2.55 |  
|2008          |  |                                 | 80,000  |               |  |                 | 7.38 |                 |  |        | 30,000 |      |  |        | 4.92 |      |  |   | 825    |  |  |  | 3.71 |   |  |   | 1,099  |  |  |  | 2.55 |  
|Thereafter    |  |                                 | 30,000  |               |  |                 | 6.84 |                 |  |        | 0      |      |  |        | 0.00 |      |  |   | 740    |  |  |  | 2.83 |   |  |   | 690    |  |  |  | 2.55 |  
|              |  |                                 |         |               |  |                 |      |                 |  |        |        |      |  |        |      |      |  |   |        |  |  |  |      |   |  |   |        |  |  |  |      |  
|Total         |  | $                               | 110,125 |               |  |                 | 7.23 | %               |  | $      | 35,300 |      |  |        | 4.85 | %    |  | $ | 31,501 |  |  |  | 8.41 | % |  | $ | 16,677 |  |  |  | 4.40 | %
|              |  |                                 |         |               |  |                 |      |                 |  |        |        |      |  |        |      |      |  |   |        |  |  |  |      |   |  |   |        |  |  |  |      |  
|Fair value    |  | $                               | 108,125 |               |  |                 |      |                 |  | $      | 35,300 |      |  |        |      |      |  | $ | 31,501 |  |  |  |      |   |  | $ | 16,677 |  |  |  |      |  
|              |  |                                 |         |               |  |                 |      |                 |  |        |        |      |  |        |      |      |  |   |        |  |  |  |      |   |  |   |        |  |  |  |      |  

Following is information regarding our long-term contractual obligations and
other commitments outstanding as of August 31, 2003:

|                                   |  |                        |         |         |  |          |        |            |  |         |        |            |  |   |         |  |  |   |        | 
|---------------------------------- |  | ---------------------- | ------- | ------- |  | -------- | ------ | ---------- |  | ------- | ------ | ---------- |  | - | ------- |  |  | - | ------ | 
|                                   |  | Payments Due by Period
|                                   |  |                       
|                                   |  |                        |         |         |  |          |        |            |  | Two to  |        |            |  |   |         |  |  |  
|Long-term contractual              |  |                        |         |         |  | One year |        | three      |  | Four to |        | After five
|obligations                        |  | Total                  |         | or less |  | years    |        | five years |  | years  
|                                   |  |                        |         |         |  |          |        |            |  |        
|                                   |  | (In thousands)        
|Debt obligations                   |  | $                      | 193,603 |         |  | $        | 7,319  |            |  | $       | 40,985 |            |  | $ | 113,869 |  |  | $ | 31,430 | 
|Capital lease obligations          |  |                        | 0       |         |  |          | 0      |            |  |         | 0      |            |  |   | 0       |  |  |   | 0      | 
|Operating leases (1)               |  |                        | 18,665  |         |  |          | 4,763  |            |  |         | 6,948  |            |  |   | 4,535   |  |  |   | 2,419  | 
|Unconditional purchase
obligations |  |                        | 0       |         |  |          | 0      |            |  |         | 0      |            |  |   | 0       |  |  |   | 0      | 
|                                   |  |                        |         |         |  |          |        |            |  |         |        |            |  |   |         |  |  |   |        | 
|Total contractual cash
obligations |  | $                      | 212,268 |         |  | $        | 12,082 |            |  | $       | 47,933 |            |  | $ | 118,404 |  |  | $ | 33,849 | 
|                                   |  |                        |         |         |  |          |        |            |  |         |        |            |  |   |         |  |  |   |        | 

(1)  Operating leases consist primarily of building and equipment leases.

|                               |  |                                            |        |         |  |          |        |            |  |         |     |            |  |   |    |  |  |   |   |  | 
|------------------------------ |  | ------------------------------------------ | ------ | ------- |  | -------- | ------ | ---------- |  | ------- | --- | ---------- |  | - | -- |  |  | - | - |  | 
|                               |  | Amount of Commitment Expiration Per Period |       
|                               |  |                                            |       
|                               |  |                                            |        |         |  |          |        |            |  | Two to  |     |            |  |   |    |  |  |   |  
|Other commercial               |  |                                            |        |         |  | One year |        | three      |  | Four to |     | After five | 
|commitments                    |  | Total                                      |        | or less |  | years    |        | five years |  | years   |    
|                               |  |                                            |        |         |  |          |        |            |  |         |    
|                               |  | (In thousands)                             |       
|Lines of credit                |  | $                                          | 0      |         |  | $        | 0      |            |  | $       | 0   |            |  | $ | 0  |  |  | $ | 0 |  | 
|Standby letters of credit      |  |                                            | 22,187 |         |  |          | 22,187 |            |  |         | 0   |            |  |   | 0  |  |  |   | 0 |  | 
|Guarantees                     |  |                                            | 0      |         |  |          | 0      |            |  |         | 0   |            |  |   | 0  |  |  |   | 0 |  | 
|Standby repurchase
obligations |  |                                            | 0      |         |  |          | 0      |            |  |         | 0   |            |  |   | 0  |  |  |   | 0 |  | 
|Other commercial
commitments   |  |                                            | 1,660  |         |  |          | 675    |            |  |         | 925 |            |  |   | 60 |  |  |   | 0 |  | 
|                               |  |                                            |        |         |  |          |        |            |  |         |     |            |  |   |    |  |  |   |   |  | 
|Total commercial
commitments   |  | $                                          | 23,847 |         |  | $        | 22,862 |            |  | $       | 925 |            |  | $ | 60 |  |  | $ | 0 |  | 
|                               |  |                                            |        |         |  |          |        |            |  |         |     |            |  |   |    |  |  |   |   |  | 

28



---



##### Table of Contents






ITEM 8.       FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

CONSOLIDATED BALANCE SHEET
Robbins & Myers, Inc. and Subsidiaries
(In thousands, except share data)

|                                     |                                         |                                                       |                           |         |         |            |         |         |         |         |         |  
|------------------------------------ | --------------------------------------- | ----------------------------------------------------- | ------------------------- | ------- | ------- | ---------- | ------- | ------- | ------- | ------- | ------- | -
|                                     |                                         |                                                       |                           |         |         | August 31,
|                                     |                                         |                                                       |                           |         |         | 2003       |         | 2002   
|                                     |                                         |                                                       |                           |         |         |            |         |        
|ASSETS                               |                                         |                                                       |                           |         |         |            |         |        
|                                     | Current Assets:                         |                                                       |                           |         |         |            |         |         |        
|                                     |                                         | Cash and cash equivalents                             |                           | $       | 12,347  |            |         | $       | 10,534  |        
|                                     |                                         | Accounts receivable                                   |                           |         | 117,896 |            |         |         | 113,711 |        
|                                     |                                         | Inventories                                           |                           |         | 96,196  |            |         |         | 92,446  |        
|                                     |                                         | Other current assets                                  |                           |         | 10,480  |            |         |         | 12,318  |        
|                                     |                                         | Deferred taxes                                        |                           |         | 7,469   |            |         |         | 11,304  |        
|                                     |                                         |                                                       |                           |         |         |            |         |        
|                                     |                                         |                                                       | Total Current Assets      |         |         | 244,388    |         |         |         | 240,313 |        
|                                     | Goodwill                                |                                                       |                           |         | 294,904 |            |         |         | 271,948 |        
|                                     | Other Intangible Assets                 |                                                       |                           | 15,844  |         |            |         | 17,604  |        
|                                     | Other Assets                            |                                                       |                           |         | 7,357   |            |         |         | 6,201   |        
|                                     | Property, Plant and Equipment           |                                                       |                           | 141,963 |         |            |         | 143,859 |        
|                                     |                                         |                                                       |                           |         |         |            |         |         |         |        
|                                     |                                         | $                                                     | 704,456                   |         |         | $          | 679,925 |        
|                                     |                                         |                                                       |                           |         |         |            |         |        
|LIABILITIES AND SHAREHOLDERS EQUITY |                                         |                                                       |                           |         |         |            |         |        
|                                     | Current Liabilities:                    |                                                       |                           |         |         |            |         |         |        
|                                     |                                         | Accounts payable                                      |                           | $       | 49,588  |            |         | $       | 41,964  |        
|                                     |                                         | Accrued expenses                                      |                           |         | 85,158  |            |         |         | 81,104  |        
|                                     |                                         | Current portion of long-term debt                     |                           |         | 7,319   |            |         |         | 4,526   |        
|                                     |                                         |                                                       |                           |         |         |            |         |        
|                                     |                                         |                                                       | Total Current Liabilities |         |         | 142,065    |         |         |         | 127,594 |        
|                                     | Long-Term Debt  Less Current Portion   |                                                       |                           | 186,284 |         |            |         | 203,920 |        
|                                     | Deferred Taxes                          |                                                       |                           | 7,860   |         |            |         | 8,708   |        
|                                     | Other Long-Term Liabilities             |                                                       |                           | 72,622  |         |            |         | 70,863  |        
|                                     | Minority Interest                       |                                                       |                           | 8,619   |         |            |         | 8,347   |        
|Shareholders Equity:                |                                         |                                                       |                           |         |         |            |         |        
|                                     | Common stock-without par value:         |                                                       |                           |         |         |            |         |         |        
|                                     |                                         | Authorized shares-40,000,000                          |                           |         |         |            |         |         |         |        
|                                     |                                         | Issued shares-14,425,682 in 2003 (14,334,927 in 2002) |                           |         | 104,984 |            |         |         | 103,952 |        
|                                     |                                         | Treasury shares-308 in 2003 (1,429 in 2002)           |                           |         | (10     | )          |         |         | (29     | )      
|                                     | Retained earnings                       |                                                       |                           | 187,845 |         |            |         | 176,627 |        
|                                     | Accumulated other comprehensive (loss): |                                                       |                           |         |         |            |         |         |        
|                                     |                                         | Foreign currency translation                          |                           |         | 5,175   |            |         |         | (9,401  | )      
|                                     |                                         | Minimum pension liability                             |                           |         | (10,988 | )          |         |         | (10,656 | )      
|                                     |                                         |                                                       |                           |         |         |            |         |         |         |        
|                                     |                                         |                                                       |                           | Total   |         |            | (5,813  | )       |         |         | (20,057 | )
|                                     |                                         |                                                       |                           |         |         |            |         |        
|                                     |                                         |                                                       | 287,006                   |         |         |            | 260,493 |        
|                                     |                                         |                                                       |                           |         |         |            |         |         |         |        
|                                     |                                         | $                                                     | 704,456                   |         |         | $          | 679,925 |        
|                                     |                                         |                                                       |                           |         |         |            |         |        

See Notes to Consolidated Financial Statements

29



---



##### Table of Contents



CONSOLIDATED SHAREHOLDERS EQUITY STATEMENT
Robbins & Myers, Inc. and Subsidiaries
(In thousands, except share and per share data)

|                             |                                              |   |         |        |          |   |          |       |               |   |         |        |   |   |             |        |   |   |         |        |  
|---------------------------- | -------------------------------------------- | - | ------- | ------ | -------- | - | -------- | ----- | ------------- | - | ------- | ------ | - | - | ----------- | ------ | - | - | ------- | ------ | -
|                             |                                              |   |         |        |          |   |          |       |               |   |         |        |   |   | Accumulated |        |   |   |        
|                             |                                              |   |         |        |          |   |          |       |               |   |         |        |   |   | Other       |        |   |   |        
|                             |                                              |   | Common  |        | Treasury |   | Retained |       | Comprehensive |   |         |        |  
|                             |                                              |   | Shares  |        | Shares   |   | Earnings |       | (Loss)        |   | Total  
|                             |                                              |   |         |        |          |   |          |       |               |   |        
|Balance at September 1, 2000 |                                              | $ | 33,586  |        |          | $ | (5,792   | )     |               | $ | 147,664 |        |   | $ | (8,276      | )      |   | $ | 167,182 |       
|                             | Net income                                   |   |         |        |          |   |          |       |               |   |         | 19,631 |   |   |             |        |   |   |         | 19,631 |  
|                             | Change in foreign currency translation       |   |         |        |          |   |          |       |               |   |         |        |   |   |             | (2,757 | ) |   |         | (2,757 | )
|                             | Change in minimum pension liability          |   |         |        |          |   |          |       |               |   |         |        |   |   |             | (2,262 | ) |   |         | (2,262 | )
|                             |                                              |   |         |        |          |   |          |       |               |   |         |        |   |   |             |        |   |   |         |       
|                             | Comprehensive income                         |   |         |        |          |   |          |       |               |   |         |        |   |   |             |        |   |   |         | 14,612 |  
|                             | Cash dividends declared, $0.22 per share     |   |         |        |          |   |          |       |               |   |         | (2,431 | ) |   |             |        |   |   |         | (2,431 | )
|                             | Stock options exercised, 130,266 shares      |   |         | (1,473 | )        |   |          | 2,788 |               |   |         |        |   |   |             |        |   |   |         | 1,315  |  
|                             | Proceeds from share sales, 38,958 shares     |   |         | 121    |          |   |          | 854   |               |   |         |        |   |   |             |        |   |   |         | 975    |  
|                             | Stock issued for acquisition, 600,000 shares |   |         | 15,354 |          |   |          |       |               |   |         |        |   |   |             |        |   |   |         | 15,354 |  
|                             | Performance stock award expense              |   |         | 126    |          |   |          |       |               |   |         |        |   |   |             |        |   |   |         | 126    |  
|                             | Tax benefit of stock options exercised       |   |         | 769    |          |   |          |       |               |   |         |        |   |   |             |        |   |   |         | 769    |  
|                             |                                              |   |         |        |          |   |          |       |               |   |         |        |   |   |             |        |   |   |         |       
|Balance at August 31, 2001   |                                              |   | 48,483  |        |          |   | (2,150   | )     |               |   | 164,864 |        |   |   | (13,295     | )      |   |   | 197,902 |       
|                             | Net income                                   |   |         |        |          |   |          |       |               |   |         | 14,503 |   |   |             |        |   |   |         | 14,503 |  
|                             | Change in foreign currency translation       |   |         |        |          |   |          |       |               |   |         |        |   |   |             | 1,501  |   |   |         | 1,501  |  
|                             | Change in minimum pension liability          |   |         |        |          |   |          |       |               |   |         |        |   |   |             | (8,263 | ) |   |         | (8,263 | )
|                             |                                              |   |         |        |          |   |          |       |               |   |         |        |   |   |             |        |   |   |         |       
|                             | Comprehensive income                         |   |         |        |          |   |          |       |               |   |         |        |   |   |             |        |   |   |         | 7,741  |  
|                             | Cash dividends declared, $0.22 per share     |   |         |        |          |   |          |       |               |   |         | (2,740 | ) |   |             |        |   |   |         | (2,740 | )
|                             | Stock options exercised, 167,500 shares      |   |         | 604    |          |   |          | 1,921 |               |   |         |        |   |   |             |        |   |   |         | 2,525  |  
|                             | Proceeds from share sales, 2,440,323
shares  |   |         | 54,267 |          |   |          | 200   |               |   |         |        |   |   |             |        |   |   |         | 54,467 |  
|                             | Performance stock award expense              |   |         | (126   | )        |   |          |       |               |   |         |        |   |   |             |        |   |   |         | (126   | )
|                             | Tax benefit of stock options exercised       |   |         | 724    |          |   |          |       |               |   |         |        |   |   |             |        |   |   |         | 724    |  
|                             |                                              |   |         |        |          |   |          |       |               |   |         |        |   |   |             |        |   |   |         |       
|Balance at August 31, 2002   |                                              |   | 103,952 |        |          |   | (29      | )     |               |   | 176,627 |        |   |   | (20,057     | )      |   |   | 260,493 |       
|                             | Net income                                   |   |         |        |          |   |          |       |               |   |         | 14,368 |   |   |             |        |   |   |         | 14,368 |  
|                             | Change in foreign currency translation       |   |         |        |          |   |          |       |               |   |         |        |   |   |             | 14,576 |   |   |         | 14,576 |  
|                             | Change in minimum pension liability          |   |         |        |          |   |          |       |               |   |         |        |   |   |             | (332   | ) |   |         | (332   | )
|                             |                                              |   |         |        |          |   |          |       |               |   |         |        |   |   |             |        |   |   |         |       
|                             | Comprehensive income                         |   |         |        |          |   |          |       |               |   |         |        |   |   |             |        |   |   |         | 28,612 |  
|                             | Cash dividend declared, $0.22 per share      |   |         |        |          |   |          |       |               |   |         | (3,150 | ) |   |             |        |   |   |         | (3,150 | )
|                             | Stock options exercised, 36,000 shares       |   |         | 357    |          |   |          |       |               |   |         |        |   |   |             |        |   |   |         | 357    |  
|                             | Proceeds from share sales, 55,876 shares     |   |         | 519    |          |   |          | 19    |               |   |         |        |   |   |             |        |   |   |         | 538    |  
|                             | Tax benefit of stock option exercised        |   |         | 156    |          |   |          |       |               |   |         |        |   |   |             |        |   |   |         | 156    |  
|                             |                                              |   |         |        |          |   |          |       |               |   |         |        |   |   |             |        |   |   |         |       
|Balance at August 31, 2003   |                                              | $ | 104,984 |        |          | $ | (10      | )     |               | $ | 187,845 |        |   | $ | (5,813      | )      |   | $ | 287,006 |       
|                             |                                              |   |         |        |          |   |          |       |               |   |         |        |   |   |             |        |   |   |         |       

See Notes to Consolidated Financial Statements

30



---



##### Table of Contents



CONSOLIDATED INCOME STATEMENT
Robbins & Myers, Inc. and Subsidiaries
(In thousands, except per share data)

|                                                 |         |   |                        |      |      |   |         |      |  |   |         |      | 
|------------------------------------------------ | ------- | - | ---------------------- | ---- | ---- | - | ------- | ---- |  | - | ------- | ---- | 
|                                                 |         |   | Years ended August 31,
|                                                 |         |   | 2003                   |      | 2002 |   | 2001   
|                                                 |         |   |                        |      |      |   |        
|Sales                                            |         | $ | 560,775                |      |      | $ | 526,373 |      |  | $ | 425,902 |     
|Cost of sales                                    |         |   | 371,959                |      |      |   | 352,609 |      |  |   | 285,168 |     
|                                                 |         |   |                        |      |      |   |         |      |  |   |         |     
|Gross profit                                     |         |   | 188,816                |      |      |   | 173,764 |      |  |   | 140,734 |     
|Selling, general and administrative expenses     |         |   | 147,918                |      |      |   | 130,802 |      |  |   | 87,844  |     
|Amortization                                     |         |   | 2,189                  |      |      |   | 2,015   |      |  |   | 8,187   |     
|Other                                            |         |   | 0                      |      |      |   | 0       |      |  |   | 1,467   |     
|                                                 |         |   |                        |      |      |   |         |      |  |   |         |     
|Income before interest and income taxes          |         |   | 38,709                 |      |      |   | 40,947  |      |  |   | 43,236  |     
|Interest expense                                 |         |   | 15,628                 |      |      |   | 17,565  |      |  |   | 12,312  |     
|                                                 |         |   |                        |      |      |   |         |      |  |   |         |     
|Income before income taxes and minority interest |         |   | 23,081                 |      |      |   | 23,382  |      |  |   | 30,924  |     
|Income tax expense                               |         |   | 7,729                  |      |      |   | 7,831   |      |  |   | 10,229  |     
|Minority interest                                |         |   | 984                    |      |      |   | 1,048   |      |  |   | 1,064   |     
|                                                 |         |   |                        |      |      |   |         |      |  |   |         |     
|Net income                                       |         | $ | 14,368                 |      |      | $ | 14,503  |      |  | $ | 19,631  |     
|                                                 |         |   |                        |      |      |   |         |      |  |   |         |     
|Net income per share:                            |         |   |                        |      |      |   |         |      |  |   |         |     
|                                                 | Basic   |   | $                      | 1.00 |      |   | $       | 1.17 |  |   | $       | 1.78 | 
|                                                 |         |   |                        |      |      |   |         |      |  |   |         |     
|                                                 | Diluted |   | $                      | 1.00 |      |   | $       | 1.15 |  |   | $       | 1.63 | 
|                                                 |         |   |                        |      |      |   |         |      |  |   |         |     

See Notes to Consolidated Financial Statements

31



---



##### Table of Contents



CONSOLIDATED CASH FLOW STATEMENT
Robbins & Myers, Inc. and Subsidiaries
(In thousands)

|                                                                      |                                                                                                        |                                        |         |                        |        |      |         |          |         |   |         |         |        |  
|--------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------ | -------------------------------------- | ------- | ---------------------- | ------ | ---- | ------- | -------- | ------- | - | ------- | ------- | ------ | -
|                                                                      |                                                                                                        |                                        |         | Years Ended August 31,
|                                                                      |                                                                                                        |                                        |         | 2003                   |        | 2002 |         | 2001    
|                                                                      |                                                                                                        |                                        |         |                        |        |      |         |         
|OPERATING ACTIVITIES                                                  |                                                                                                        |                                        |         |                        |        |      |         |          |         |   |         |        
|                                                                      | Net income                                                                                             |                                        | $       | 14,368                 |        |      | $       | 14,503   |         |   | $       | 19,631  |       
|                                                                      | Adjustments to reconcile net income to net cash
and cash equivalents provided by operating activities: |                                        |         |                        |        |      |         |          |         |   |         |         |       
|                                                                      |                                                                                                        | Depreciation                           |         |                        | 20,093 |      |         |          | 20,028  |   |         |         | 16,161 |  
|                                                                      |                                                                                                        | Amortization                           |         |                        | 2,189  |      |         |          | 2,015   |   |         |         | 8,187  |  
|                                                                      |                                                                                                        | Deferred taxes                         |         |                        | 3,619  |      |         |          | 9,369   |   |         |         | 3,306  |  
|                                                                      |                                                                                                        | Asset impairment charges               |         |                        | 0      |      |         |          | 0       |   |         |         | 1,000  |  
|                                                                      |                                                                                                        | Performance stock awards               |         |                        | 0      |      |         |          | (126    | ) |         |         | 126    |  
|                                                                      | Changes in operating assets and liabilities - excluding
the effects of acquisitions:                   |                                        |         |                        |        |      |         |          |         |   |         |         |       
|                                                                      |                                                                                                        | Accounts receivable                    |         |                        | 3,392  |      |         |          | (3,107  | ) |         |         | (2,390 | )
|                                                                      |                                                                                                        | Inventories                            |         |                        | 2,807  |      |         |          | 22,269  |   |         |         | (6,408 | )
|                                                                      |                                                                                                        | Other current assets                   |         |                        | 2,761  |      |         |          | 1,398   |   |         |         | (220   | )
|                                                                      |                                                                                                        | Other assets                           |         |                        | (4,050 | )    |         |          | (455    | ) |         |         | (207   | )
|                                                                      |                                                                                                        | Accounts payable                       |         |                        | 4,815  |      |         |          | (2,897  | ) |         |         | (3,143 | )
|                                                                      |                                                                                                        | Accrued expenses and other liabilities |         |                        | (4,358 | )    |         |          | (18,457 | ) |         |         | (5,059 | )
|                                                                      |                                                                                                        |                                        |         |                        |        |      |         |          |         |   |         |        
|Net cash and cash equivalents provided by operating activities        |                                                                                                        |                                        | 45,636  |                        |        |      | 44,540  |          |         |   | 30,984  |        
|                                                                      |                                                                                                        |                                        |         |                        |        |      |         |          |         |   |         |        
|INVESTING ACTIVITIES                                                  |                                                                                                        |                                        |         |                        |        |      |         |          |         |   |         |        
|                                                                      | Capital expenditures, net of nominal disposals                                                         |                                        |         | (7,869                 | )      |      |         | (15,112  | )       |   |         | (20,200 | )     
|                                                                      | Purchase of Tarby                                                                                      |                                        |         | (13,146                | )      |      |         | 0        |         |   |         | 0       |       
|                                                                      | Proceeds from sale-leaseback arrangements                                                              |                                        |         | 0                      |        |      |         | 4,905    |         |   |         | 0       |       
|                                                                      | Amended credit agreement fees                                                                          |                                        |         | 0                      |        |      |         | (1,911   | )       |   |         | 0       |       
|                                                                      | Purchase of Romaco, net of cash acquired                                                               |                                        |         | 0                      |        |      |         | (18,823  | )       |   |         | (38,703 | )     
|                                                                      | Purchase of Rodec and ABI                                                                              |                                        |         | 0                      |        |      |         | 0        |         |   |         | (6,008  | )     
|                                                                      | Purchase of Chemineer de Mexico                                                                        |                                        |         | 0                      |        |      |         | 0        |         |   |         | (523    | )     
|                                                                      |                                                                                                        |                                        |         |                        |        |      |         |          |         |   |         |        
|Net cash and cash equivalents used by investing activities            |                                                                                                        |                                        | (21,015 | )                      |        |      | (30,941 | )        |         |   | (65,434 | )      
|                                                                      |                                                                                                        |                                        |         |                        |        |      |         |          |         |   |         |        
|FINANCING ACTIVITIES                                                  |                                                                                                        |                                        |         |                        |        |      |         |          |         |   |         |        
|                                                                      | Proceeds from debt borrowings                                                                          |                                        |         | 72,485                 |        |      |         | 29,836   |         |   |         | 69,828  |       
|                                                                      | Payments of long-term debt                                                                             |                                        |         | (93,038                | )      |      |         | (103,275 | )       |   |         | (30,359 | )     
|                                                                      | Proceeds from sale of common stock                                                                     |                                        |         | 895                    |        |      |         | 56,992   |         |   |         | 2,290   |       
|                                                                      | Dividends paid                                                                                         |                                        |         | (3,150                 | )      |      |         | (2,740   | )       |   |         | (2,431  | )     
|                                                                      |                                                                                                        |                                        |         |                        |        |      |         |          |         |   |         |        
|Net cash and cash equivalents (used) provided by financing
activities |                                                                                                        |                                        | (22,808 | )                      |        |      | (19,187 | )        |         |   | 39,328  |        
|                                                                      |                                                                                                        |                                        |         |                        |        |      |         |          |         |   |         |        
|Increase (decrease) in cash and cash equivalents                      |                                                                                                        |                                        | 1,813   |                        |        |      | (5,588  | )        |         |   | 4,878   |        
|Cash and cash equivalents at beginning of year                        |                                                                                                        |                                        | 10,534  |                        |        |      | 16,122  |          |         |   | 11,244  |        
|                                                                      |                                                                                                        |                                        |         |                        |        |      |         |          |         |   |         |        
|Cash and cash equivalents at end of year                              |                                                                                                        | $                                      | 12,347  |                        |        | $    | 10,534  |          |         | $ | 16,122  |        
|                                                                      |                                                                                                        |                                        |         |                        |        |      |         |          |         |   |         |        

See Notes to Consolidated Financial Statements

32



---



##### 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, our) and its subsidiaries. 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.
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 income statement.

Amortization of other intangible assets is calculated on the
straight-line basis using the following lives:

|                       |  |               
|---------------------- |  | --------------
|Patents and trademarks |  | 14 to 17 years
|Non-compete agreements |  | 3 to 5 years  
|Financing 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 years     
|Buildings               |  | 45 years     
|Machinery and equipment |  | 3 to 15 years

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

33



---



##### Table of Contents



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:

|                                                                        |  |                |        |      |  |   |        |  
|----------------------------------------------------------------------- |  | -------------- | ------ | ---- |  | - | ------ | -
|                                                                        |  | 2003           |        | 2002
|                                                                        |  |                |        |     
|                                                                        |  | (In thousands)
|Balance at beginning of the fiscal year                                 |  | $              | 9,405  |      |  | $ | 10,176 |  
|Warranties issued                                                       |  |                | 1,677  |      |  |   | 2,219  |  
|Settlements made                                                        |  |                | (1,772 | )    |  |   | (2,729 | )
|Changes in liability for pre-existing warranties, including expirations |  |                | 0      |      |  |   | (261   | )
|                                                                        |  |                |        |      |  |   |        |  
|Balance at end of the fiscal year                                       |  | $              | 9,310  |      |  | $ | 9,405  |  
|                                                                        |  |                |        |      |  |   |        |  

Income Statement

Research and development costs are expensed as incurred. Research and
development costs in fiscal 2003, 2002 and 2001 were $6,426,000, $6,214,000 and
$2,183,000, 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. 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 $45,300,000 at August 31, 2003,
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.

34



---



##### 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 $191,603,000 at August 31, 2003 and
$205,464,000 at August 31, 2002. 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 as
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.

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 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 - BUSINESS ACQUISITIONS

On November 15, 2002, we purchased the stock of Tarby, Inc. (Tarby) for
$13,146,000. Tarby is a manufacturer and marketer of progressing cavity pumps
and components for the general industrial and municipal wastewater markets with
annual sales of approximately $6,000,000.

On December 12, 2000, we acquired certain assets of Campbell Industries
Ltd. (DBA Rodec Tubing Rotors) (Rodec) for $2,802,000. Rodec is a Canadian
company that designs, manufactures, and markets oil and gas production
equipment including artificial lift accessories and down-hole tools with annual
sales of $3,000,000.

On June 12, 2001, we acquired certain assets of Alberta Basic Industries
(ABI) for $3,206,000. ABI is also a Canadian manufacturer of down-hole tools
for oil and gas production equipment with annual sales of approximately
$3,000,000.

On August 31, 2001, we purchased the stock of Romaco N.V. and
subsidiaries, a Netherland Antilles corporation (Romaco). Romaco is a leading
supplier of processing and packaging equipment for the pharmaceutical,
healthcare and cosmetics industries with pro forma fiscal year 2001 sales of
$142,217,000. The total purchase price of Romaco was $130,111,000. At closing
in fiscal 2001, we paid consideration of $95,238,000 as follows: $38,703,000 in
cash, $2,235,000 in a five-year subordinated note, the assumption of net debt
of $38,946,000 and 600,000 of our common shares valued at $15,354,000. In
fiscal 2002, we made an additional payment of $32,100,000 based on Romacos
sales and operating performance for calendar year 2001, half of which was in
cash and half of which was in a five-year subordinated note, and we incurred
acquisition costs of $2,773,000. We completed the Romaco acquisition at the end
of fiscal 2001, therefore, the acquisition had no impact on our results of
operations in fiscal 2001.

35



---



##### Table of Contents



The following table summarizes the fair values of the assets acquired and
liabilities assumed of Romaco at the date of acquisition.

|                              |                           |   |                 |         | 
|----------------------------- | ------------------------- | - | --------------- | ------- | 
|                              |                           |   | August 31, 2001
|                              |                           |   |                
|                              |                           |   | (In thousands) 
|Current assets                |                           | $ | 82,212          |        
|Property, plant and equipment |                           |   | 29,772          |        
|Goodwill                      |                           |   | 75,835          |        
|Other assets                  |                           |   | 1,246           |        
|                              |                           |   |                 |        
|                              | Total assets acquired     |   |                 | 189,065 | 
|Current liabilities           |                           |   | 68,488          |        
|Long-term debt                |                           |   | 24,089          |        
|Other liabilities             |                           |   | 3,342           |        
|                              |                           |   |                 |        
|                              | Total liabilities assumed |   |                 | 95,919  | 
|                              |                           |   |                 |        
|                              | Net assets acquired       |   | $               | 93,146  | 
|                              |                           |   |                 |        

Since the Romaco acquisition occurred on August 31, 2001, the results of
their operations were not included in our fiscal 2001 Consolidated Income
Statement. Following are our unaudited pro forma consolidated results of
operations assuming the acquisition of Romaco had occurred at the beginning of
fiscal 2001. In preparing the pro forma data, adjustments were made to the
historical financial information. These were primarily interest costs related
to financing the transaction, adjustments to the corporate costs and income
taxes. There was no amortization of the Romaco goodwill included in the pro
forma amounts.

|                             |  |                       |         | 
|---------------------------- |  | --------------------- | ------- | 
|                             |  | 2001                 
|                             |  |                      
|                             |  | (In thousands, except
|                             |  | per share data)      
|Sales                        |  | $                     | 568,119 | 
|Net income                   |  |                       | 22,693  | 
|Basic net income per share   |  |                       | 1.95    | 
|Diluted net income per share |  |                       | 1.78    | 

On June 30, 1999, we purchased 51% of Chemineer de Mexico, S.A. de C.V.
(Chemineer de Mexico), a Mexican corporation and its licensee in Mexico for
$1,600,000. On December 31, 1999, we purchased an additional 16.3% of Chemineer
de Mexico for $261,000. The remaining 32.7% of Chemineer de Mexico was
purchased in April 2001 for $523,000.

NOTE 3NEW ACCOUNTING PRONOUNCEMENT

In November 2002, the Financial Accounting Standards Board (FASB) issued
Financial Interpretation No. 45, Guarantors Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of
Others. This Interpretation elaborates on the disclosures to be made by a
guarantor in its interim and annual financial statements about its obligations
under certain guarantees that it has issued. It also clarifies that a guarantor
is required to recognize, at the inception of a guarantee, a liability for the
fair value of the obligation undertaken in issuing the guarantee. The
recognition and measurement provisions of this interpretation were applied to
guarantees issued or modified after December 31, 2002. Effective December 1,
2002, we adopted Financial Interpretation No. 45 and it did not have a material
effect on our financial statements.

In December 2002, the FASB issued Statement of Financial Accounting
Standards No. 148 (SFAS 148), Accounting for Stock-Based Compensation 
Transition and Disclosure. This Statement amends FASB Statement No. 123,
Accounting for Stock-Based Compensation, to provide alternative methods of
transition for a voluntary change to the fair value based method of accounting
for stock-based employee compensation. In addition, this Statement amends the
disclosures in both annual and interim financial statements regarding the
method of accounting for stock-based employee compensation and the effect of
the method used on reported results. We continue to apply APB No. 25 for the
method used to account for stock-based employee compensation arrangements,
where applicable, but have adopted the new disclosure requirements of SFAS 148
(see Note 11).

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

36



---



##### Table of Contents



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.

As of September 1, 2001, we adopted SFAS No. 142, Goodwill and Other
Intangible Assets, which addresses the financial accounting and reporting
standards for the acquisition of intangible assets outside of a business
combination and for goodwill and other intangible assets subsequent to their
acquisition. This accounting standard required that goodwill be separately
disclosed from other intangible assets in the consolidated balance sheet, and
no longer be amortized, but tested for impairment on a periodic basis. As
required by SFAS No. 142, the annual impairment test was performed at the end
of our first quarter, and a review was performed at year end with no indicators
of impairment identified.

In accordance with SFAS No. 142, we discontinued the amortization of
goodwill effective September 1, 2001. A reconciliation of previously reported
net income and net income per share to the amounts adjusted for the exclusion
of goodwill amortization, net of the related income tax effect follows:

|                                  |                                   |   |                       |      | 
|--------------------------------- | --------------------------------- | - | --------------------- | ---- | 
|                                  |                                   |   | 2001                 
|                                  |                                   |   |                      
|                                  |                                   |   | (In thousands, except
|                                  |                                   |   | per share data)      
|Reported net income               |                                   | $ | 19,631                |     
|Goodwill amortization, net of tax |                                   |   | 3,404                 |     
|                                  |                                   |   |                       |     
|Adjusted net income               |                                   | $ | 23,035                |     
|                                  |                                   |   |                       |     
|Basic net income per share:       |                                   |   |                       |     
|                                  | Reported net income               |   | $                     | 1.78 | 
|                                  | Goodwill amortization, net of tax |   |                       | 0.31 | 
|                                  |                                   |   |                       |     
|                                  | Adjusted net income               |   | $                     | 2.09 | 
|                                  |                                   |   |                       |     
|Diluted net income per share:     |                                   |   |                       |     
|                                  | Reported net income               |   | $                     | 1.63 | 
|                                  | Goodwill amortization, net of tax |   |                       | 0.25 | 
|                                  |                                   |   |                       |     
|                                  | Adjusted net income               |   | $                     | 1.88 | 
|                                  |                                   |   |                       |     

37



---



##### Table of Contents



NOTE 4  BALANCE SHEET INFORMATION

Accounts receivable


|                                 |  |                |       |      |  |   |       | 
|-------------------------------- |  | -------------- | ----- | ---- |  | - | ----- | 
|                                 |  | 2003           |       | 2002
|                                 |  |                |       |     
|                                 |  |               
|                                 |  | (In thousands)
|                                
|                                
|                                
|                                
|Allowances for doubtful accounts |  | $              | 3,278 |      |  | $ | 2,717 | 
|                                 |  |                |       |      |  |   |       | 

Inventories

|                               |                   |                |         |        |  |   |        |        | 
|------------------------------ | ----------------- | -------------- | ------- | ------ |  | - | ------ | ------ | 
|                               |                   | 2003           |         | 2002  
|                               |                   |                |         |       
|                               |                   |               
|                               |                   | (In thousands)
|                              
|                              
|                              
|                              
|FIFO:                          |                   |                |         |        |  |   |        |       
|                              
|                              
|                              
|                              
|                               | Finished products |                | $       | 36,291 |  |   | $      | 30,928 | 
|                              
|                              
|                              
|                              
|                               | Work in process   |                |         | 24,716 |  |   |        | 23,981 | 
|                              
|                              
|                              
|                              
|                               | Raw materials     |                |         | 41,297 |  |   |        | 43,682 | 
|                               |                   |                |         |        |  |   |        |       
|                               |                   |                | 102,304 |        |  |   | 98,591 |       
|                              
|                              
|                              
|                              
|LIFO reserve, U. S inventories |                   |                | (6,108  | )      |  |   | (6,145 | )     
|                               |                   |                |         |        |  |   |        |       
|                               |                   | $              | 96,196  |        |  | $ | 92,446 |       
|                               |                   |                |         |        |  |   |        |       
|Non-U.S. inventories at FIFO   |                   | $              | 64,000  |        |  | $ | 63,085 |       
|                               |                   |                |         |        |  |   |        |       

Property, plant and equipment

|                              |  |                |         |      |  |   |         | 
|----------------------------- |  | -------------- | ------- | ---- |  | - | ------- | 
|                              |  | 2003           |         | 2002
|                              |  |                |         |     
|                              |  |               
|                              |  | (In thousands)
|                             
|                             
|                             
|                             
|Land and improvements         |  | $              | 16,289  |      |  | $ | 14,153  | 
|                             
|                             
|                             
|                             
|Buildings                     |  |                | 82,576  |      |  |   | 75,492  | 
|                             
|                             
|                             
|                             
|Machinery and equipment       |  |                | 171,677 |      |  |   | 172,281 | 
|                              |  |                |         |      |  |   |         | 
|                              |  |                | 270,542 |      |  |   | 261,926 | 
|                             
|                             
|                             
|                             
|Less accumulated depreciation |  |                | 128,579 |      |  |   | 118,067 | 
|                              |  |                |         |      |  |   |         | 
|                              |  | $              | 141,963 |      |  | $ | 143,859 | 
|                              |  |                |         |      |  |   |         | 

Accrued expenses

|                                   |  |                |        |      |  |   |        | 
|---------------------------------- |  | -------------- | ------ | ---- |  | - | ------ | 
|                                   |  | 2003           |        | 2002
|                                   |  |                |        |     
|                                   |  |               
|                                   |  | (In thousands)
|                                  
|                                  
|                                  
|                                  
|Salaries, wages and payroll taxes  |  | $              | 19,691 |      |  | $ | 13,266 | 
|                                  
|                                  
|                                  
|                                  
|Customer advances                  |  |                | 15,385 |      |  |   | 19,831 | 
|                                  
|                                  
|                                  
|                                  
|Pension benefits                   |  |                | 5,581  |      |  |   | 5,216  | 
|                                  
|                                  
|                                  
|                                  
|U.S. other postretirement benefits |  |                | 2,000  |      |  |   | 2,000  | 
|                                  
|                                  
|                                  
|                                  
|Warranty costs                     |  |                | 9,310  |      |  |   | 9,405  | 
|                                  
|                                  
|                                  
|                                  
|Accrued interest                   |  |                | 4,000  |      |  |   | 4,068  | 
|                                  
|                                  
|                                  
|                                  
|Income taxes                       |  |                | 3,560  |      |  |   | 2,647  | 
|                                  
|                                  
|                                  
|                                  
|Commissions                        |  |                | 2,915  |      |  |   | 3,131  | 
|                                  
|                                  
|                                  
|                                  
|Other                              |  |                | 22,716 |      |  |   | 21,540 | 
|                                   |  |                |        |      |  |   |        | 
|                                   |  | $              | 85,158 |      |  | $ | 81,104 | 
|                                   |  |                |        |      |  |   |        | 

Other long-term liabilities

|                                   |  |                |        |      |  |   |        | 
|---------------------------------- |  | -------------- | ------ | ---- |  | - | ------ | 
|                                   |  | 2003           |        | 2002
|                                   |  |                |        |     
|                                   |  |               
|                                   |  | (In thousands)
|                                  
|                                  
|                                  
|                                  
|German pension liability           |  | $              | 31,492 |      |  | $ | 28,555 | 
|                                  
|                                  
|                                  
|                                  
|U.S. other postretirement benefits |  |                | 12,192 |      |  |   | 12,414 | 
|                                  
|                                  
|                                  
|                                  
|U.S. pension liability             |  |                | 15,045 |      |  |   | 15,139 | 
|                                  
|                                  
|                                  
|                                  
|Italian long-term tax liability    |  |                | 0      |      |  |   | 1,269  | 
|                                  
|                                  
|                                  
|                                  
|Other                              |  |                | 13,893 |      |  |   | 13,486 | 
|                                   |  |                |        |      |  |   |        | 
|                                   |  | $              | 72,622 |      |  | $ | 70,863 | 
|                                   |  |                |        |      |  |   |        | 

38



---



##### Table of Contents



NOTE 5 - INCOME STATEMENT INFORMATIONOther

|                            |  |                |   |      |  |      |   |  |  |   |       |  
|--------------------------- |  | -------------- | - | ---- |  | ---- | - |  |  | - | ----- | -
|                            |  | 2003           |   | 2002 |  | 2001
|                            |  |                |   |      |  |     
|                            |  |               
|                            |  | (In thousands)
|Plant closure costs         |  | $              | 0 |      |  | $    | 0 |  |  | $ | (25   | )
|Global reorganization costs |  |                | 0 |      |  |      | 0 |  |  |   | 1,492 |  
|                            |  |                |   |      |  |      |   |  |  |   |       |  
|                            |  | $              | 0 |      |  | $    | 0 |  |  | $ | 1,467 |  
|                            |  |                |   |      |  |      |   |  |  |   |       |  

In the third quarter of fiscal 2001, we consolidated operations in
England, Mexico and the Asia-Pacific region in order to strengthen our market
presence and achieve more effective channels to market. In addition, we
discontinued selective product offerings in the Chemineer and Moyno businesses
in order to improve long-term competitive positioning through a more
cost-effective product focus. We incurred a charge of $2,300,000 with
approximately $1,300,000 related to severance and other costs associated with
the regional consolidations, and the balance related to inventory write-down
from discontinued product offerings. There were additional costs in the third
and fourth quarter of fiscal 2001 of $192,000 that were expensed as incurred
primarily for equipment relocation, marketing and employee training. All costs
related to the global reorganization program were paid as of August 31, 2001,
with no changes in estimates made.

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, 2003:

|           |  |                |        | 
|---------- |  | -------------- | ------ | 
|           |  | (In thousands)
|           |  |               
|2004       |  | $              | 4,763  | 
|2005       |  |                | 3,892  | 
|2006       |  |                | 3,056  | 
|2007       |  |                | 2,516  | 
|2008       |  |                | 2,019  | 
|Thereafter |  |                | 2,419  | 
|           |  |                |        | 
|           |  | $              | 18,665 | 
|           |  |                |        | 

Rental expense for all operating leases in 2003, 2002 and 2001 was
approximately $5,704,000, $4,740,000 and $2,925,000, respectively.

NOTE 6 - CASH FLOW STATEMENT INFORMATION

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.

In fiscal 2001, we recorded the following non-cash investing and financing
transactions: $15,354,000 of stock issued and $41,181,000 of debt assumed in
connection with the acquisition of Romaco and $769,000 increase in common stock
and decrease in income tax payable related to the tax benefits of stock options
exercised.

39



---



##### Table of Contents



Supplemental cash flow information consisted of the following:

|                            |  |      |        |      |  |                |        |  |  |   |        | 
|--------------------------- |  | ---- | ------ | ---- |  | -------------- | ------ |  |  | - | ------ | 
|                            |  | 2003 |        | 2002 |  | 2001          
|                            |  |      |        |      |  |               
|                            |  |      |        |      |  | (in thousands) |        |  |  |  
|Interest paid               |  | $    | 15,696 |      |  | $              | 17,789 |  |  | $ | 12,428 | 
|Taxes paid  net of refunds |  |      | 3,829  |      |  |                | 1,670  |  |  |   | 15,733 | 

NOTE 7GOODWILL AND OTHER INTANGIBLE ASSETS

Changes in the carrying amount of goodwill, by operating segment, are as
follows:

|                                |                                            |   |                |        |         |   |                |       |       |   |        |       |  |   |         |        | 
|------------------------------- | ------------------------------------------ | - | -------------- | ------ | ------- | - | -------------- | ----- | ----- | - | ------ | ----- |  | - | ------- | ------ | 
|                                |                                            |   | Pharmaceutical |        | Energy  |   | Industrial     |       |       |   |       
|                                |                                            |   | Segment        |        | Segment |   | Segment        |       | Total
|                                |                                            |   |                |        |         |   |                |       |      
|                                |                                            |   |                |        |         |   | (In thousands) |       |       |   |       
|Balance as of September 1, 2001 |                                            | $ | 110,159        |        |         | $ | 68,026         |       |       | $ | 42,463 |       |  | $ | 220,648 |       
|                                | Goodwill acquired during the
period        |   |                | 34,873 |         |   |                | 0     |       |   |        | 0     |  |   |         | 34,873 | 
|                                | Non-cash opening balance sheet
adjustments |   |                | 7,980  |         |   |                | 0     |       |   |        | 0     |  |   |         | 7,980  | 
|                                | Translation adjustments and other          |   |                | 8,126  |         |   |                | 72    |       |   |        | 249   |  |   |         | 8,447  | 
|                                |                                            |   |                |        |         |   |                |       |       |   |        |       |  |   |         |       
|Balance as of August 31, 2002   |                                            |   | 161,138        |        |         |   | 68,098         |       |       |   | 42,712 |       |  |   | 271,948 |       
|                                | Goodwill acquired during the
period        |   |                | 0      |         |   |                | 0     |       |   |        | 9,052 |  |   |         | 9,052  | 
|                                | Translation adjustments and other          |   |                | 12,155 |         |   |                | 1,430 |       |   |        | 319   |  |   |         | 13,904 | 
|                                |                                            |   |                |        |         |   |                |       |       |   |        |       |  |   |         |       
|Balance as of August 31, 2003   |                                            | $ | 173,293        |        |         | $ | 69,528         |       |       | $ | 52,083 |       |  | $ | 294,904 |       
|                                |                                            |   |                |        |         |   |                |       |       |   |        |       |  |   |         |       

Information regarding our other intangible assets is as follows:

|                       |  |          |        |              |  |     |        |        |  |                |        |             |  |   |        |  |  |   |        |  |  |   |        | 
|---------------------- |  | -------- | ------ | ------------ |  | --- | ------ | ------ |  | -------------- | ------ | ----------- |  | - | ------ |  |  | - | ------ |  |  | - | ------ | 
|                       |  | 2003     |        | 2002        
|                       |  |          |        |             
|                       |  | Carrying |        | Accumulated  |  |     |        |        |  | Carrying       |        | Accumulated |  |   |        | 
|                       |  | Amount   |        | Amortization |  | Net |        | Amount |  | Amortization   |        | Net        
|                       |  |          |        |              |  |     |        |        |  |                |        |            
|                       |  |          |        |              |  |     |        |        |  | (In thousands) |        |             |  |   |        |  |  |  
|Patents and
Trademarks |  | $        | 10,927 |              |  | $   | 5,124  |        |  | $              | 5,803  |             |  | $ | 10,052 |  |  | $ | 4,236  |  |  | $ | 5,816  | 
|Non-compete
Agreements |  |          | 10,790 |              |  |     | 8,274  |        |  |                | 2,516  |             |  |   | 10,750 |  |  |   | 7,803  |  |  |   | 2,947  | 
|Financing
Costs        |  |          | 7,453  |              |  |     | 4,376  |        |  |                | 3,077  |             |  |   | 6,936  |  |  |   | 3,353  |  |  |   | 3,583  | 
|Pension
Intangible     |  |          | 3,805  |              |  |     | 0      |        |  |                | 3,805  |             |  |   | 4,564  |  |  |   | 0      |  |  |   | 4,564  | 
|Other                  |  |          | 5,234  |              |  |     | 4,591  |        |  |                | 643    |             |  |   | 3,592  |  |  |   | 2,898  |  |  |   | 694    | 
|                       |  |          |        |              |  |     |        |        |  |                |        |             |  |   |        |  |  |   |        |  |  |   |        | 
|Total                  |  | $        | 38,209 |              |  | $   | 22,365 |        |  | $              | 15,844 |             |  | $ | 35,894 |  |  | $ | 18,290 |  |  | $ | 17,604 | 
|                       |  |          |        |              |  |     |        |        |  |                |        |             |  |   |        |  |  |   |        |  |  |   |        | 

We estimate that amortization expense will be approximately $2,000,000 for
each of the next five years.

40



---



##### Table of Contents



NOTE 8 - LONG-TERM DEBT

|                                     |                       |   |                |         |      |   |         |         | 
|------------------------------------ | --------------------- | - | -------------- | ------- | ---- | - | ------- | ------- | 
|                                     |                       |   | 2003           |         | 2002
|                                     |                       |   |                |         |     
|                                     |                       |   | (in thousands)
|Senior debt:                         |                       |   |                |         |      |   |         |        
|                                     | Revolving credit loan |   | $              | 12,617  |      |   | $       | 10,444  | 
|                                     | Senior notes          |   |                | 100,000 |      |   |         | 100,000 | 
|                                     | Other                 |   |                | 18,297  |      |   |         | 18,024  | 
|6.50% convertible subordinated notes |                       |   | 0              |         |      |   | 59,691  |        
|8.00% convertible subordinated notes |                       |   | 40,000         |         |      |   | 0       |        
|10.00% subordinated notes            |                       |   | 22,689         |         |      |   | 20,287  |        
|                                     |                       |   |                |         |      |   |         |        
|Total debt                           |                       |   | 193,603        |         |      |   | 208,446 |        
|Less current portion                 |                       |   | 7,319          |         |      |   | 4,526   |        
|                                     |                       |   |                |         |      |   |         |        
|                                     |                       | $ | 186,284        |         |      | $ | 203,920 |        
|                                     |                       |   |                |         |      |   |         |        

On October 7, 2003, we amended our Bank Credit Agreement (Agreement).
The 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, 2003, the weighted average interest rate for all amounts outstanding was
4.14%. 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 $112,000,000 of unused borrowing capacity.
However, due to our financial covenants and outstanding standby letters of
credit, we could only incur additional indebtedness of $32,000,000. We have
$22,187,000 of standby letters of credit outstanding at August 31, 2003. 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 $22,689,000 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 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

41



---



##### Table of Contents



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 2008 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, 2003, are as follows:

|                    |  |                |         | 
|------------------- |  | -------------- | ------- | 
|                    |  | (In thousands)
|                    |  |               
|2004                |  | $              | 7,319   | 
|2005                |  |                | 13,092  | 
|2006                |  |                | 27,893  | 
|2007                |  |                | 1,945   | 
|2008                |  |                | 111,924 | 
|2009 and thereafter |  |                | 31,430  | 
|                    |  |                |         | 
|Total               |  | $              | 193,603 | 
|                    |  |                |         | 

NOTE 9 - 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, 2003 and 2002, 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 Benefits
|                                        |  |                 
|                                        |  | 2003             |        | 2002 |  | 2001
|                                        |  |                  |        |      |  |     
|                                        |  |                  |        |     
|                                        |  | (In thousands)   |        |     
|                                       
|                                       
|                                       
|                                       
|Service cost                            |  | $                | 3,905  |      |  | $    | 4,031  |   |  | $ | 3,602  |  
|                                       
|                                       
|                                       
|                                       
|Interest cost                           |  |                  | 8,250  |      |  |      | 7,870  |   |  |   | 7,278  |  
|                                       
|                                       
|                                       
|                                       
|Expected return on plan assets          |  |                  | (6,244 | )    |  |      | (6,752 | ) |  |   | (7,049 | )
|                                       
|                                       
|                                       
|                                       
|Amortization of prior service cost      |  |                  | 752    |      |  |      | 746    |   |  |   | 593    |  
|                                       
|                                       
|                                       
|                                       
|Amortization of transition obligation   |  |                  | (173   | )    |  |      | (212   | ) |  |   | (202   | )
|                                       
|                                       
|                                       
|                                       
|Recognized net actuarial losses (gains) |  |                  | 815    |      |  |      | 67     |   |  |   | (148   | )
|                                        |  |                  |        |      |  |      |        |   |  |   |        |  
|Net periodic benefit cost               |  | $                | 7,305  |      |  | $    | 5,750  |   |  | $ | 4,074  |  
|                                        |  |                  |        |      |  |      |        |   |  |   |        |  
|Defined contribution cost               |  | $                | 1,057  |      |  | $    | 1,077  |   |  | $ | 1,064  |  
|                                        |  |                  |        |      |  |      |        |   |  |   |        |  

|                          |  |                |       |      |  |      |       |  |  |   |       | 
|------------------------- |  | -------------- | ----- | ---- |  | ---- | ----- |  |  | - | ----- | 
|                          |  |                |       |     
|                          |  | Other
Benefits
|                          |  |               
|                          |  | 2003           |       | 2002 |  | 2001
|                          |  |                |       |      |  |     
|                          |  |                |       |     
|                          |  | (In thousands) |       |     
|                         
|                         
|                         
|                         
|Service cost              |  | $              | 249   |      |  | $    | 297   |  |  | $ | 275   | 
|                         
|                         
|                         
|                         
|Interest cost             |  |                | 1,713 |      |  |      | 1,694 |  |  |   | 1,650 | 
|                         
|                         
|                         
|                         
|Net amortization          |  |                | 702   |      |  |      | 609   |  |  |   | 521   | 
|                          |  |                |       |      |  |      |       |  |  |   |       | 
|Net periodic benefit cost |  | $              | 2,664 |      |  | $    | 2,600 |  |  | $ | 2,446 | 
|                          |  |                |       |      |  |      |       |  |  |   |       | 

42



---



##### Table of Contents



The funded status and amounts recorded in the balance sheet are as follows:

|                                                               |  |                  |         |                |  |                |         |      |  |   |         |   |  |   |         |  
|-------------------------------------------------------------- |  | ---------------- | ------- | -------------- |  | -------------- | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                                               |  | Pension Benefits |         | Other Benefits
|                                                               |  |                  |         |               
|                                                               |  | 2003             |         | 2002           |  | 2003           |         | 2002
|                                                               |  |                  |         |                |  |                |         |     
|                                                               |  |                  |         |                |  | (In thousands) |         |      |  |  
|Change in benefit obligation:                                  |  |                  |         |                |  |                |         |      |  |   |         |   |  |   |         |  
|Beginning of year                                              |  | $                | 128,067 |                |  | $              | 116,862 |      |  | $ | 25,343  |   |  | $ | 23,955  |  
|Service cost                                                   |  |                  | 3,905   |                |  |                | 4,031   |      |  |   | 249     |   |  |   | 297     |  
|Interest cost                                                  |  |                  | 8,250   |                |  |                | 7,870   |      |  |   | 1,713   |   |  |   | 1,694   |  
|Plan amendments                                                |  |                  | 346     |                |  |                | 2,128   |      |  |   | 104     |   |  |   | 0       |  
|Currency exchange rate impact                                  |  |                  | 3,993   |                |  |                | 3,110   |      |  |   | 0       |   |  |   | 0       |  
|Actuarial losses                                               |  |                  | 407     |                |  |                | 2,122   |      |  |   | 1,110   |   |  |   | 3,493   |  
|Curtailment                                                    |  |                  | 0       |                |  |                | 0       |      |  |   | (16     | ) |  |   | (1,438  | )
|Benefit payments                                               |  |                  | (8,330  | )              |  |                | (8,056  | )    |  |   | (2,886  | ) |  |   | (2,658  | )
|                                                               |  |                  |         |                |  |                |         |      |  |   |         |   |  |   |         |  
|End of year                                                    |  | $                | 136,638 |                |  | $              | 128,067 |      |  | $ | 25,617  |   |  | $ | 25,343  |  
|                                                               |  |                  |         |                |  |                |         |      |  |   |         |   |  |   |         |  
|Change in plan assets:                                         |  |                  |         |                |  |                |         |      |  |   |         |   |  |   |         |  
|Beginning of year                                              |  | $                | 71,898  |                |  | $              | 79,588  |      |  | $ | 0       |   |  | $ | 0       |  
|Actual return                                                  |  |                  | 4,525   |                |  |                | (6,276  | )    |  |   | 0       |   |  |   | 0       |  
|Company contributions                                          |  |                  | 9,377   |                |  |                | 6,642   |      |  |   | 2,886   |   |  |   | 2,658   |  
|Benefit payments                                               |  |                  | (8,330  | )              |  |                | (8,056  | )    |  |   | (2,886  | ) |  |   | (2,658  | )
|                                                               |  |                  |         |                |  |                |         |      |  |   |         |   |  |   |         |  
|End of year                                                    |  | $                | 77,470  |                |  | $              | 71,898  |      |  | $ | 0       |   |  | $ | 0       |  
|                                                               |  |                  |         |                |  |                |         |      |  |   |         |   |  |   |         |  
|Funded status                                                  |  | $                | (59,168 | )              |  | $              | (56,169 | )    |  | $ | (25,617 | ) |  | $ | (25,343 | )
|Unrecognized net actuarial losses                              |  |                  | 25,770  |                |  |                | 24,081  |      |  |   | 9,154   |   |  |   | 8,545   |  
|Unrecognized transition obligation                             |  |                  | (491    | )              |  |                | (656    | )    |  |   | 0       |   |  |   | 0       |  
|Unamortized prior service cost                                 |  |                  | 3,540   |                |  |                | 3,946   |      |  |   | 2,271   |   |  |   | 2,384   |  
|                                                               |  |                  |         |                |  |                |         |      |  |   |         |   |  |   |         |  
|Amount recognized                                              |  | $                | (30,349 | )              |  | $              | (28,798 | )    |  |   | (14,192 | ) |  | $ | (14,414 | )
|                                                               |  |                  |         |                |  |                |         |      |  |   |         |   |  |   |         |  
|Recorded as follows:                                           |  |                  |         |                |  |                |         |      |  |   |         |   |  |   |         |  
|Accrued expenses                                               |  | $                | (5,581  | )              |  | $              | (5,216  | )    |  | $ | (2,000  | ) |  | $ | (2,000  | )
|Other long-term liabilities                                    |  |                  | (46,537 | )              |  |                | (43,694 | )    |  |   | (12,192 | ) |  |   | (12,414 | )
|Other assets                                                   |  |                  | 1,309   |                |  |                | 0       |      |  |   | 0       |   |  |   | 0       |  
|Intangible assets                                              |  |                  | 3,805   |                |  |                | 4,564   |      |  |   | 0       |   |  |   | 0       |  
|Accumulated other comprehensive loss                           |  |                  | 16,655  |                |  |                | 15,548  |      |  |   | 0       |   |  |   | 0       |  
|                                                               |  |                  |         |                |  |                |         |      |  |   |         |   |  |   |         |  
|                                                               |  | $                | (30,349 | )              |  | $              | (28,798 | )    |  | $ | (14,192 | ) |  | $ | (14,414 | )
|                                                               |  |                  |         |                |  |                |         |      |  |   |         |   |  |   |         |  
|Deferred tax liability on
accumulated other comprehensive
loss |  | $                | (5,667  | )              |  | $              | (4,892  | )    |  | $ | 0       |   |  | $ | 0       |  
|                                                               |  |                  |         |                |  |                |         |      |  |   |         |   |  |   |         |  

Pension plans with accumulated (ABO) and projected (PBO) benefit
obligations in excess of plan assets:

|                               |  |                |         |      |  |   |         | 
|------------------------------ |  | -------------- | ------- | ---- |  | - | ------- | 
|                               |  | 2003           |         | 2002
|                               |  |                |         |     
|                               |  | (In thousands)
|Accumulated benefit obligation |  | $              | 132,018 |      |  | $ | 123,275 | 
|Projected benefit obligation   |  |                | 136,638 |      |  |   | 128,067 | 
|Plan assets                    |  |                | 77,470  |      |  |   | 71,898  | 

In 2003 and 2002, $33,504,000 and $30,287,000, respectively, of the
unfunded ABO and $35,348,000 and $31,837,000, respectively, of the unfunded PBO
related to our pension plan for our German operation. Funding of pension
obligations is not required in Germany.

43



---



##### Table of Contents



Actuarial weighted average assumptions used to determine plan costs and
liabilities are as follows:

|                                |  |                  |      |                |  |      |      |      |  |  |          |   |  |  |           |  
|------------------------------- |  | ---------------- | ---- | -------------- |  | ---- | ---- | ---- |  |  | -------- | - |  |  | --------- | -
|                                |  | Pension Benefits |      | Other Benefits
|                                |  |                  |      |               
|                                |  | 2003             |      | 2002           |  | 2003 |      | 2002
|                                |  |                  |      |                |  |      |      |     
|Weighted average assumptions:   |  |                  |      |                |  |      |      |      |  |  |          |   |  |  |           |  
|Discount rate                   |  |                  | 6.50 | %              |  |      | 7.00 | %    |  |  | 6.50     | % |  |  | 7.00      | %
|Expected return on plan assets  |  |                  | 8.50 |                |  |      | 9.00 |      |  |  | N/A      |   |  |  | N/A       |  
|Rate of compensation increase   |  |                  | 4.50 |                |  |      | 5.50 |      |  |  | N/A      |   |  |  | N/A       |  
|Health 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         |  | $              | 72  |          |  | $ | (68  | )
|Postretirement benefit obligation |  |                | 843 |          |  |   | (808 | )

NOTE 10 - 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.

Deferred tax assets and liabilities

|             |                                                 |  |                |        |      |  |        |        | 
|------------ | ----------------------------------------------- |  | -------------- | ------ | ---- |  | ------ | ------ | 
|             |                                                 |  | 2003           |        | 2002
|             |                                                 |  |                |        |     
|             |                                                 |  | (In thousands)
|Assets:      |                                                 |  |                |        |      |  |        |       
|             | Postretirement benefit obligations              |  | $              | 5,360  |      |  | $      | 5,027  | 
|             | Net operating loss carryforwards                |  |                | 679    |      |  |        | 551    | 
|             | U.S. credit carryforward                        |  |                | 5,071  |      |  |        | 2,236  | 
|             | Other liabilities                               |  |                | 1,430  |      |  |        | 2,260  | 
|             | Inventory allowances                            |  |                | 3,476  |      |  |        | 3,332  | 
|             | Warranty reserve                                |  |                | 2,074  |      |  |        | 2,294  | 
|             | Insurance reserve                               |  |                | 797    |      |  |        | 842    | 
|             | Pension benefits                                |  |                | 6,250  |      |  |        | 6,275  | 
|             | Other items                                     |  |                | 0      |      |  |        | 527    | 
|             |                                                 |  |                |        |      |  |        |       
|             |                                                 |  | 25,137         |        |      |  | 23,344 |       
|             | Less valuation allowance                        |  |                | 726    |      |  |        | 1,271  | 
|             |                                                 |  |                |        |      |  |        |       
|             |                                                 |  | 24,411         |        |      |  | 22,073 |       
|Liabilities: |                                                 |  |                |        |      |  |        |       
|             | Tax depreciation in excess of book depreciation |  |                | 8,373  |      |  |        | 6,438  | 
|             | Goodwill and purchased asset basis differences  |  |                | 15,441 |      |  |        | 12,512 | 
|             | Other items                                     |  |                | 988    |      |  |        | 527    | 
|             |                                                 |  |                |        |      |  |        |       
|             |                                                 |  | 24,802         |        |      |  | 19,477 |       
|             |                                                 |  |                |        |      |  |        |       
|             | Net deferred tax (liability) asset              |  | $              | (391   | )    |  | $      | 2,596  | 
|             |                                                 |  |                |        |      |  |        |       

The valuation allowance was related to the credit carryforwards that begin
to expire in fiscal 2004. The net operating loss carryforwards begin to expire
in fiscal 2006.

44



---



##### Table of Contents



Expense

|                                          |              |   |        |       |      |   |                |        |   |   |        |       | 
|----------------------------------------- | ------------ | - | ------ | ----- | ---- | - | -------------- | ------ | - | - | ------ | ----- | 
|                                          |              |   | 2003   |       | 2002 |   | 2001          
|                                          |              |   |        |       |      |   |               
|                                          |              |   |        |       |      |   | (In thousands) |        |   |   |       
|Current:                                  |              |   |        |       |      |   |                |        |   |   |        |      
|                                          | U.S. federal |   | $      | (627  | )    |   | $              | (6,751 | ) |   | $      | 2,727 | 
|                                          | Non-U.S      |   |        | 4,799 |      |   |                | 5,877  |   |   |        | 3,925 | 
|                                          | U.S. state   |   |        | (62   | )    |   |                | (664   | ) |   |        | 271   | 
|                                          |              |   |        |       |      |   |                |        |   |   |        |      
|                                          |              |   | 4,110  |       |      |   | (1,538         | )      |   |   | 6,923  |      
|Deferred:                                 |              |   |        |       |      |   |                |        |   |   |        |      
|                                          | U.S. federal |   |        | 1,505 |      |   |                | 6,863  |   |   |        | 2,961 | 
|                                          | Non-U.S      |   |        | 1,966 |      |   |                | 1,820  |   |   |        | 49    | 
|                                          | U.S. state   |   |        | 148   |      |   |                | 686    |   |   |        | 296   | 
|                                          |              |   |        |       |      |   |                |        |   |   |        |      
|                                          |              |   | 3,619  |       |      |   | 9,369          |        |   |   | 3,306  |      
|                                          |              |   |        |       |      |   |                |        |   |   |        |      
|                                          |              | $ | 7,729  |       |      | $ | 7,831          |        |   | $ | 10,229 |      
|                                          |              |   |        |       |      |   |                |        |   |   |        |      
|Tax expense included in minority interest |              | $ | 530    |       |      | $ | 395            |        |   | $ | 599    |      
|                                          |              |   |        |       |      |   |                |        |   |   |        |      
|Non U.S. pretax income                    |              | $ | 20,935 |       |      | $ | 23,521         |        |   | $ | 11,270 |      
|                                          |              |   |        |       |      |   |                |        |   |   |        |      

A summary of the differences between the effective income tax rate
attributable to operations and the statutory rate is as follows:

|                                                         |  |      |      |      |  |      |      |   |  |  |      |  
|-------------------------------------------------------- |  | ---- | ---- | ---- |  | ---- | ---- | - |  |  | ---- | -
|                                                         |  | 2003 |      | 2002 |  | 2001
|                                                         |  |      |      |      |  |     
|U.S. statutory rate                                      |  |      | 35.0 | %    |  |      | 35.0 | % |  |  | 35.0 | %
|U.S. state income taxes, net of U.S. federal tax benefit |  |      | 0.2  |      |  |      | 0.0  |   |  |  | 1.2  |  
|Foreign Sales Corporation/ETI                            |  |      | (1.5 | )    |  |      | (1.5 | ) |  |  | (4.2 | )
|Non U.S. taxes higher (lower) than U.S. tax rates        |  |      | 0.6  |      |  |      | (0.8 | ) |  |  | (0.1 | )
|Other items  net                                        |  |      | (0.8 | )    |  |      | 0.8  |   |  |  | 1.2  |  
|                                                         |  |      |      |      |  |      |      |   |  |  |      |  
|                                                         |  |      | 33.5 | %    |  |      | 33.5 | % |  |  | 33.1 | %
|                                                         |  |      |      |      |  |      |      |   |  |  |      |  

NOTE 11 - 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.

45



---



##### 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 
|                                 |                  |  | Options   |          | Price Per Share
|                                 |                  |  |           |          |                
|Outstanding at September 1, 2000 |                  |  | 1,013,900 |          |                 | $ | 19.22     |      
|                                 | Granted          |  |           | 147,000  |                 |   |           | 27.68 | 
|                                 | Exercised        |  |           | (130,266 | )               |   |           | 10.10 | 
|                                 | Canceled         |  |           | (10,500  | )               |   |           | 26.30 | 
|                                 |                  |  |           |          |                 |   |           |      
|Outstanding at August 31, 2001   |                  |  | 1,020,134 |          |                 |   | 23.12     |      
|                                 | Granted          |  |           | 222,500  |                 |   |           | 25.12 | 
|                                 | Exercised        |  |           | (167,500 | )               |   |           | 15.07 | 
|                                 | Canceled         |  |           | (333     | )               |   |           | 20.88 | 
|                                 |                  |  |           |          |                 |   |           |      
|Outstanding at August 31, 2002   |                  |  | 1,074,801 |          |                 |   | 24.78     |      
|                                 | Granted          |  |           | 187,500  |                 |   |           | 19.12 | 
|                                 | Exercised        |  |           | (36,000  | )               |   |           | 9.92  | 
|                                 | Canceled/Expired |  |           | (97,000  | )               |   |           | 28.48 | 
|                                 |                  |  |           |          |                 |   |           |      
|Outstanding at August 31, 2003   |                  |  | 1,129,301 |          |                 | $ | 24.00     |      
|                                 |                  |  |           |          |                 |   |           |      

Exercisable stock options at year-end

|     |  |  |        
|---- |  |  | -------
|2001 |  |  | 730,081
|2002 |  |  | 860,363
|2003 |  |  | 788,159

Shares available for grant at year-end

|     |  |  |        
|---- |  |  | -------
|2001 |  |  | 210,200
|2002 |  |  | 537,700
|2003 |  |  | 350,200

Components of outstanding stock options at August 31, 2003

|         |               |             |  |               |           |                |  |           |      |  |  |   |       | 
|-------- | ------------- | ----------- |  | ------------- | --------- | -------------- |  | --------- | ---- |  |  | - | ----- | 
|         |               |             |  |               |           |                |  | Weighted- |      |  |  |  
|Range of |               |             |  |               |           | Average        |  | Weighted-
|Exercise |               | Number      |  | Contract Life |           | Average       
|Price    |               | Outstanding |  | in Years      |           | Exercise Price
|         |               |             |  |               |           |               
|$        | 7.75 - 23.00  |             |  |               | 452,134   |                |  |           | 7.08 |  |  | $ | 19.20 | 
|         | 23.75 - 39.50 |             |  |               | 677,167   |                |  |           | 6.70 |  |  |   | 27.20 | 
|         |               |             |  |               |           |                |  |           |      |  |  |   |       | 
|$        | 7.75 - 39.50  |             |  |               | 1,129,301 |                |  |           | 6.85 |  |  | $ | 24.00 | 
|         |               |             |  |               |           |                |  |           |      |  |  |   |       | 

Components of exercisable stock options at August 31, 2003

|         |               |             |  |                |         |           |  |   |       | 
|-------- | ------------- | ----------- |  | -------------- | ------- | --------- |  | - | ----- | 
|Range of |               |             |  |                |         | Weighted-
|Exercise |               | Number      |  | Average       
|Price    |               | Exercisable |  | Exercise Price
|         |               |             |  |               
|$        | 7.75 - 23.00  |             |  |                | 276,646 |           |  | $ | 19.23 | 
|         | 23.75 - 39.50 |             |  |                | 511,513 |           |  |   | 27.70 | 
|         |               |             |  |                |         |           |  |   |       | 
|$        | 7.75 - 39.50  |             |  |                | 788,159 |           |  | $ | 24.72 | 
|         |               |             |  |                |         |           |  |   |       | 

46



---



##### Table of Contents



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 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, 2003, no amounts were
earned.

Total after tax compensation expense (income) included in net income for
all stock based awards was zero, $(84,000) and $84,000 for fiscal years 2003,
2002 and 2001, respectively. For purposes of pro forma disclosure as required
by SFAS No. 148, the estimated fair value of options are amortized to expense
over the options vesting period. The after tax compensation expense that would
have been included in net income if the fair value method had been applied to
all awards was $1,193,000, $1,154,000 and $547,000 in fiscal years 2003, 2002
and 2001, respectively. Our pro forma information is as follows:

|                                |         |   |                                       |     |      |   |        |      |  |   |        |      | 
|------------------------------- | ------- | - | ------------------------------------- | --- | ---- | - | ------ | ---- |  | - | ------ | ---- | 
|                                |         |   | 2003                                  |     | 2002 |   | 2001  
|                                |         |   |                                       |     |      |   |       
|                                |         |   | (In thousands, except per share data)
|Pro forma net income            |         | $ | 13,175                                |     |      | $ | 13,349 |      |  | $ | 19,084 |     
|Pro forma net income per share: |         |   |                                       |     |      |   |        |      |  |   |        |     
|                                | Basic   |   |                                       | .92 |      |   |        | 1.08 |  |   |        | 1.73 | 
|                                | Diluted |   |                                       | .92 |      |   |        | 1.07 |  |   |        | 1.59 | 

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:

|                                    |  |      |       |      |  |      |       |     |  |   |       |    
|----------------------------------- |  | ---- | ----- | ---- |  | ---- | ----- | --- |  | - | ----- | ---
|                                    |  | 2003 |       | 2002 |  | 2001
|                                    |  |      |       |      |  |     
|Expected volatility of common stock |  |      | 33.60 | %    |  |      | 33.50 | %   |  |   | 33.20 | %  
|Risk free interest rate             |  |      | 4.60  |      |  |      | 4.55  |     |  |   | 4.72  |    
|Dividend yield                      |  |      | .75   |      |  |      | .75   |     |  |   | .75   |    
|Expected life of option             |  |      | 6.90  | yrs  |  |      | 6.90  | yrs |  |   | 6.90  | yrs
|Fair value at grant date            |  | $    | 16.00 |      |  | $    | 15.80 |     |  | $ | 11.49 |    

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.

47



---



##### Table of Contents



NOTE 12 - NET INCOME PER SHARE

The following table sets forth the computation of basic and diluted net income
per share:

|                                      |                                |                                        |        |                                       |       |      |        |        |       |   |        |        |       | 
|------------------------------------- | ------------------------------ | -------------------------------------- | ------ | ------------------------------------- | ----- | ---- | ------ | ------ | ----- | - | ------ | ------ | ----- | 
|                                      |                                |                                        |        | 2003                                  |       | 2002 |        | 2001  
|                                      |                                |                                        |        |                                       |       |      |        |       
|                                      |                                |                                        |        | (In thousands, except per share data)
|Numerator:                            |                                |                                        |        |                                       |       |      |        |        |       |   |        |       
|Basic:                                |                                |                                        |        |                                       |       |      |        |        |       |   |        |       
|                                      | Net Income                     |                                        | $      | 14,368                                |       |      | $      | 14,503 |       |   | $      | 19,631 |      
|                                      | Effect of dilutive securities: |                                        |        |                                       |       |      |        |        |       |   |        |        |      
|                                      |                                | Convertible debt interest              |        |                                       | 2,238 |      |        |        | 2,328 |   |        |        | 2,328 | 
|                                      |                                |                                        |        |                                       |       |      |        |        |       |   |        |       
|Income attributable to diluted shares |                                | $                                      | 16,606 |                                       |       | $    | 16,831 |        |       | $ | 21,959 |       
|                                      |                                |                                        |        |                                       |       |      |        |        |       |   |        |       
|Denominator:                          |                                |                                        |        |                                       |       |      |        |        |       |   |        |       
|Basic:                                |                                |                                        |        |                                       |       |      |        |        |       |   |        |       
|                                      | Weighted average shares        |                                        |        | 14,368                                |       |      |        | 12,379 |       |   |        | 11,050 |      
|                                      | Effect of dilutive securities: |                                        |        |                                       |       |      |        |        |       |   |        |        |      
|                                      |                                | Convertible debt                       |        |                                       | 2,090 |      |        |        | 2,190 |   |        |        | 2,190 | 
|                                      |                                | Dilutive options and
restricted shares |        |                                       | 34    |      |        |        | 119   |   |        |        | 225   | 
|                                      |                                |                                        |        |                                       |       |      |        |        |       |   |        |       
|Diluted                               |                                |                                        | 16,492 |                                       |       |      | 14,688 |        |       |   | 13,465 |       
|                                      |                                |                                        |        |                                       |       |      |        |        |       |   |        |       
|Net income per share:                 |                                |                                        |        |                                       |       |      |        |        |       |   |        |       
|                                      | Basic:                         |                                        | $      | 1.00                                  |       |      | $      | 1.17   |       |   | $      | 1.78   |      
|                                      | Diluted (reported):            |                                        | $      | 1.00                                  | (a)   |      | $      | 1.15   |       |   | $      | 1.63   |      
|                                      | Diluted (computed):            |                                        | $      | 1.01                                  | (a)   |      |        |        |       |   |        |        |      



|(a) |  | The computed diluted net income per share for fiscal year 2003 is $1.01.
However diluted net income per share may not exceed basic net income per
share. Therefore the reported diluted net income per share for fiscal year
2003 is $1.00.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

NOTE 13 - 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.

48



---



##### Table of Contents



The following tables provide information about our reportable business
segments.

|                               |                            |  |      |         |      |  |                |         |   |  |   |         |     
|------------------------------ | -------------------------- |  | ---- | ------- | ---- |  | -------------- | ------- | - |  | - | ------- | ----
|                               |                            |  | 2003 |         | 2002 |  | 2001          
|                               |                            |  |      |         |      |  |               
|                               |                            |  |      |         |      |  | (In thousands) |         |   |  |  
|Unaffiliated Customer Sales:   |                            |  |      |         |      |  |                |         |   |  |   |        
|                               | Pharmaceutical (2)         |  | $    | 342,415 |      |  | $              | 319,412 |   |  | $ | 171,403 |     
|                               | Energy (3)                 |  |      | 95,487  |      |  |                | 91,381  |   |  |   | 113,906 |     
|                               | Industrial (1)             |  |      | 122,873 |      |  |                | 115,580 |   |  |   | 140,593 |     
|                               |                            |  |      |         |      |  |                |         |   |  |   |        
|                               | Total                      |  | $    | 560,775 |      |  | $              | 526,373 |   |  | $ | 425,902 |     
|                               |                            |  |      |         |      |  |                |         |   |  |   |        
|Intersegment Sales:            |                            |  |      |         |      |  |                |         |   |  |   |        
|                               | Pharmaceutical (2)         |  | $    | 1,136   |      |  | $              | 934     |   |  | $ | 883     |     
|                               | Energy (3)                 |  |      | 0       |      |  |                | 0       |   |  |   | 0       |     
|                               | Industrial (1)             |  |      | 0       |      |  |                | 0       |   |  |   | 0       |     
|                               | Corporate and Eliminations |  |      | (1,136  | )    |  |                | (934    | ) |  |   | (883    | )   
|                               |                            |  |      |         |      |  |                |         |   |  |   |        
|                               | Total                      |  | $    | 0       |      |  | $              | 0       |   |  | $ | 0       |     
|                               |                            |  |      |         |      |  |                |         |   |  |   |        
|Depreciation and Amortization: |                            |  |      |         |      |  |                |         |   |  |   |        
|                               | Pharmaceutical (2)         |  | $    | 10,562  |      |  | $              | 10,194  |   |  | $ | 7,563   |     
|                               | Energy (3)                 |  |      | 5,307   |      |  |                | 5,534   |   |  |   | 7,260   |     
|                               | Industrial (1)             |  |      | 5,065   |      |  |                | 5,366   |   |  |   | 8,641   |     
|                               | Corporate and Eliminations |  |      | 1,348   |      |  |                | 949     |   |  |   | 884     |     
|                               |                            |  |      |         |      |  |                |         |   |  |   |        
|                               | Total                      |  | $    | 22,282  |      |  | $              | 22,043  |   |  | $ | 24,348  |     
|                               |                            |  |      |         |      |  |                |         |   |  |   |        
|EBIT:                          |                            |  |      |         |      |  |                |         |   |  |   |        
|                               | Pharmaceutical (2)         |  | $    | 21,401  |      |  | $              | 27,895  |   |  | $ | 17,349  | (4) 
|                               | Energy (3)                 |  |      | 20,941  |      |  |                | 18,773  |   |  |   | 26,078  |     
|                               | Industrial (1)             |  |      | 8,791   |      |  |                | 5,279   |   |  |   | 8,445   | (5) 
|                               | Corporate and Eliminations |  |      | (12,424 | )    |  |                | (11,000 | ) |  |   | (8,636  | )(6)
|                               |                            |  |      |         |      |  |                |         |   |  |   |        
|                               | Total                      |  | $    | 38,709  |      |  | $              | 40,947  |   |  | $ | 43,236  |     
|                               |                            |  |      |         |      |  |                |         |   |  |   |        
|Identifiable Assets:           |                            |  |      |         |      |  |                |         |   |  |   |        
|                               | Pharmaceutical (2)         |  | $    | 416,215 |      |  | $              | 405,319 |   |  | $ | 352,167 |     
|                               | Energy (3)                 |  |      | 134,167 |      |  |                | 131,374 |   |  |   | 142,674 |     
|                               | Industrial (1)             |  |      | 128,754 |      |  |                | 114,926 |   |  |   | 135,886 |     
|                               | Corporate and Eliminations |  |      | 25,320  |      |  |                | 28,306  |   |  |   | 29,533  |     
|                               |                            |  |      |         |      |  |                |         |   |  |   |        
|                               | Total                      |  | $    | 704,456 |      |  | $              | 679,925 |   |  | $ | 660,260 |     
|                               |                            |  |      |         |      |  |                |         |   |  |   |        
|Capital Expenditures:          |                            |  |      |         |      |  |                |         |   |  |   |        
|                               | Pharmaceutical (2)         |  | $    | 3,666   |      |  | $              | 8,761   |   |  | $ | 7,652   |     
|                               | Energy (3)                 |  |      | 2,253   |      |  |                | 682     |   |  |   | 5,805   |     
|                               | Industrial (1)             |  |      | 1,878   |      |  |                | 5,505   |   |  |   | 6,674   |     
|                               | Corporate and Eliminations |  |      | 72      |      |  |                | 164     |   |  |   | 69      |     
|                               |                            |  |      |         |      |  |                |         |   |  |   |        
|                               | Total                      |  | $    | 7,869   |      |  | $              | 15,112  |   |  | $ | 20,200  |     
|                               |                            |  |      |         |      |  |                |         |   |  |   |        

49



---



##### Table of Contents



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.

|                                 |                     |   |         |         |      |   |                |         |  |   |         |         | 
|-------------------------------- | ------------------- | - | ------- | ------- | ---- | - | -------------- | ------- |  | - | ------- | ------- | 
|                                 |                     |   | 2003    |         | 2002 |   | 2001          
|                                 |                     |   |         |         |      |   |               
|                                 |                     |   |         |         |      |   | (In thousands) |         |  |   |        
|Sales (1) (2) (3):               |                     |   |         |         |      |   |                |         |  |   |         |        
|                                 | United States       |   | $       | 204,982 |      |   | $              | 209,713 |  |   | $       | 234,007 | 
|                                 | Europe              |   |         | 218,442 |      |   |                | 219,949 |  |   |         | 93,358  | 
|                                 | Other North America |   |         | 51,889  |      |   |                | 42,834  |  |   |         | 49,714  | 
|                                 | South America       |   |         | 20,970  |      |   |                | 20,230  |  |   |         | 11,699  | 
|                                 | Asia and Australia  |   |         | 64,492  |      |   |                | 33,647  |  |   |         | 37,124  | 
|                                 |                     |   |         |         |      |   |                |         |  |   |         |        
|                                 |                     | $ | 560,775 |         |      | $ | 526,373        |         |  | $ | 425,902 |        
|                                 |                     |   |         |         |      |   |                |         |  |   |         |        
|Identifiable Assets (1) (2) (3): |                     |   |         |         |      |   |                |         |  |   |         |        
|                                 | United States       |   | $       | 309,243 |      |   | $              | 299,943 |  |   | $       | 326,334 | 
|                                 | Europe              |   |         | 294,659 |      |   |                | 290,220 |  |   |         | 233,191 | 
|                                 | Other North America |   |         | 37,968  |      |   |                | 33,340  |  |   |         | 38,418  | 
|                                 | South America       |   |         | 9,088   |      |   |                | 4,338   |  |   |         | 6,861   | 
|                                 | Asia                |   |         | 28,178  |      |   |                | 23,778  |  |   |         | 25,923  | 
|                                 | Corporate           |   |         | 25,320  |      |   |                | 28,306  |  |   |         | 29,533  | 
|                                 |                     |   |         |         |      |   |                |         |  |   |         |        
|                                 |                     | $ | 704,456 |         |      | $ | 679,925        |         |  | $ | 660,260 |        
|                                 |                     |   |         |         |      |   |                |         |  |   |         |        



|(1) |  | Includes the operations of Tarby from the acquisition date of November
15, 2002.                                                          
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Includes the balance sheet of Romaco on the acquisition date of August
31, 2001 and their operations in fiscal 2002.                      
|   
|(3) |  | Includes the operations of acquisitions from the respective dates of
their acquisition: Rodec - December 12, 2000 and ABI - June 12, 2001.
|   
|(4) |  | Fiscal 2001 included costs of $244,000 related to our global
reorganization program.                                                      
|   
|(5) |  | Fiscal 2001 included costs of $2,148,000 related to our global
reorganization program.                                                    
|   
|(6) |  | Fiscal 2001 included costs of $100,000 for our global reorganization
program.                                                             

50



---



##### Table of Contents



NOTE 14 - QUARTERLY DATA (UNAUDITED)

|                                                 |         |   |               |        |     |   |                                       |        |     |   |         |        |  |   |         |        |  |   |         |        | 
|------------------------------------------------ | ------- | - | ------------- | ------ | --- | - | ------------------------------------- | ------ | --- | - | ------- | ------ |  | - | ------- | ------ |  | - | ------- | ------ | 
|                                                 |         |   | 2003 Quarters |        |     |   |                                      
|                                                 |         |   |               |        |     |   |                                      
|                                                 |         |   | 1st           |        | 2nd |   | 3rd                                   |        | 4th |   | Total  
|                                                 |         |   |               |        |     |   |                                       |        |     |   |        
|                                                 |         |   |               |        |     |   | (In thousands, except per share data) |        |     |   |        
|Sales                                            |         | $ | 124,828       |        |     | $ | 134,155                               |        |     | $ | 144,921 |        |  | $ | 156,871 |        |  | $ | 560,775 |       
|Gross profit                                     |         |   | 41,548        |        |     |   | 45,247                                |        |     |   | 49,139  |        |  |   | 52,882  |        |  |   | 188,816 |       
|EBIT                                             |         |   | 7,043         |        |     |   | 8,850                                 |        |     |   | 11,439  |        |  |   | 11,377  |        |  |   | 38,709  |       
|Income before income taxes and
minority interest |         |   | 3,185         |        |     |   | 4,998                                 |        |     |   | 7,439   |        |  |   | 7,459   |        |  |   | 23,081  |       
|Net income                                       |         |   | 1,990         |        |     |   | 3,043                                 |        |     |   | 4,411   |        |  |   | 4,924   |        |  |   | 14,368  |       
|Net income per share:                            |         |   |               |        |     |   |                                       |        |     |   |         |        |  |   |         |        |  |   |         |       
|                                                 | Basic   |   | $             | 0.14   |     |   | $                                     | 0.21   |     |   | $       | 0.31   |  |   | $       | 0.34   |  |   | $       | 1.00   | 
|                                                 | Diluted |   |               | 0.14   |     |   |                                       | 0.21   |     |   |         | 0.30   |  |   |         | 0.33   |  |   | $       | 1.00   | 
|Weighted average common shares:                  |         |   |               |        |     |   |                                       |        |     |   |         |        |  |   |         |        |  |   |         |       
|                                                 | Basic   |   |               | 14,344 |     |   |                                       | 14,358 |     |   |         | 14,373 |  |   |         | 14,397 |  |   |         | 14,368 | 
|                                                 | Diluted |   |               | 16,568 |     |   |                                       | 16,643 |     |   |         | 16,534 |  |   |         | 16,224 |  |   |         | 16,492 | 

|                                                 |         |   |                                       |        |     |   |         |        |     |   |         |        |  |   |         |        |  |   |         |        | 
|------------------------------------------------ | ------- | - | ------------------------------------- | ------ | --- | - | ------- | ------ | --- | - | ------- | ------ |  | - | ------- | ------ |  | - | ------- | ------ | 
|                                                 |         |   | 2002 Quarters                         |        |     |   |        
|                                                 |         |   |                                       |        |     |   |        
|                                                 |         |   | 1st                                   |        | 2nd |   | 3rd     |        | 4th |   | Total  
|                                                 |         |   |                                       |        |     |   |         |        |     |   |        
|                                                 |         |   | (In thousands, except per share data)
|Sales                                            |         | $ | 139,387                               |        |     | $ | 130,002 |        |     | $ | 124,812 |        |  | $ | 132,172 |        |  | $ | 526,373 |       
|Gross profit                                     |         |   | 46,944                                |        |     |   | 43,522  |        |     |   | 41,393  |        |  |   | 41,905  |        |  |   | 173,764 |       
|EBIT                                             |         |   | 12,625                                |        |     |   | 11,227  |        |     |   | 9,365   |        |  |   | 7,730   |        |  |   | 40,947  |       
|Income before income taxes and
minority interest |         |   | 8,572                                 |        |     |   | 6,661   |        |     |   | 4,456   |        |  |   | 3,693   |        |  |   | 23,382  |       
|Net income                                       |         |   | 5,441                                 |        |     |   | 4,170   |        |     |   | 2,696   |        |  |   | 2,196   |        |  |   | 14,503  |       
|Net income per share:                            |         |   |                                       |        |     |   |         |        |     |   |         |        |  |   |         |        |  |   |         |       
|                                                 | Basic   |   | $                                     | 0.46   |     |   | $       | 0.35   |     |   | $       | 0.23   |  |   | $       | 0.16   |  |   | $       | 1.17   | 
|                                                 | Diluted |   |                                       | 0.43   |     |   |         | 0.34   |     |   |         | 0.23   |  |   |         | 0.16   |  |   |         | 1.15   | 
|Weighted average common shares:                  |         |   |                                       |        |     |   |         |        |     |   |         |        |  |   |         |        |  |   |         |       
|                                                 | Basic   |   |                                       | 11,773 |     |   |         | 11,832 |     |   |         | 11,894 |  |   |         | 14,020 |  |   |         | 12,379 | 
|                                                 | Diluted |   |                                       | 14,120 |     |   |         | 14,115 |     |   |         | 14,203 |  |   |         | 16,275 |  |   |         | 14,688 | 

51



---



##### 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 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 have been no significant changes in
the Companys internal controls or, to the Company's knowledge, in other factors that could significantly
affect such internal controls subsequent to the date the Company carried out its
evaluation.

52



---



##### 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 is incorporated herein by reference to that part of the
information under Election of Directors and Security Ownership in the
Companys Proxy Statement for its Annual Meeting of Shareholders scheduled to
be held on December 10, 2003. 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 filed as Exhibit 14.1 to this Report and 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 10, 2003.




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 10, 2003.

53



---



##### Table of Contents






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 10, 2003.




ITEM 14.       PRINICPAL 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 10, 2003.

54



---



##### Table of Contents






PART IV




ITEM 15.       EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

| |        |  |                                                                                                                    
| | ------ |  | -------------------------------------------------------------------------------------------------------------------
| | (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, 2003 and 2002.                                                             
| |        |  |                                                                                                                    
| |        |  | Consolidated Income Statement - Years ended August 31, 2003, 2002, and 2001.                                       
| |        |  |                                                                                                                    
| |        |  | Consolidated Shareholders Equity Statement - Years ended August 31, 2003, 2002, and 2001.                         
| |        |  |                                                                                                                    
| |        |  | Consolidated Cash Flow Statement - Years ended August 31, 2003, 2002, and 2001.                                    
| |        |  |                                                                                                                    
| |        |  | 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.                                                                                                                                 
| |  |        |  |                                                                                                                                                                  
| |  | (b)    |  | REPORTS ON FORM 8-K. During the quarter ended August 31, 2003, we filed three reports on Form 8-K as follows:                                                    
| |  |        |  |                                                                                                                                                                  
| |  |        |  | 1) A report on Form 8-K was filed on June 26, 2003 to report our third quarter operating results.                                                                
| |  |        |  |                                                                                                                                                                  
| |  |        |  | 2) A report on Form 8-K was filed on July 2, 2003 to reconcile certain non-GAAP financial measures reported in our
2002 Form 10-K to the comparable GAAP measure.
| |  |        |  |                                                                                                                                                                  
| |  |        |  | 3) A report on Form 8-K was filed on July 3, 2003 to report the filing of our shelf registration statement.                                                      

55



---



##### Table of Contents






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
18th day of November, 2003.

| |  |                       |  |                       
| |  | --------------------- |  | ----------------------
| |  | ROBBINS & MYERS, INC.
| |  |                       |  |                       
| |  | BY                    |  | /s/ Gerald L. Connelly
| |  |                       |  |                       
| |  |                       |  | Gerald L. Connelly    
| |  |                       |  | President 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/ Gerald L. Connelly  |  | Director, President and       |  | November 18, 2003
|                        |  | Chief Executive Officer       |  |                  
|Gerald L. Connelly      |  |                               |  |                  
|                        |  |                               |  |                  
|/s/ Kevin J. Brown      |  | Vice President and Chief      |  | November 18,2003 
|                        |  | Financial Officer             |  |                  
|Kevin J. Brown          |  | (Principal Financial Officer) |  |                  
|                        |  |                               |  |                  
|/s/ Thomas J. Schockman |  | Corporate Controller          |  | November 18, 2003
|                        |  | (Principal Accounting         |  |                  
|Thomas J. Schockman     |  | Officer)                      |  |                  
|                        |  |                               |  |                  
|*Maynard H. Murch, IV   |  | Chairman Of Board             |  | November 18, 2003
|*Robert J. Kegerreis    |  | Director                      |  | November 18, 2003
|*Thomas P. Loftis       |  | Director                      |  | November 18, 2003
|*William D. Manning     |  | Director                      |  | November 18, 2003
|*Dale L. Medford        |  | Director                      |  | November 18, 2003
|*Jerome F. Tatar        |  | Director                      |  | November 18, 2003
|*John N. Taylor, Jr.    |  | Director                      |  | November 18, 2003

*The undersigned, by signing his name hereto, executes this Report on Form
10-K for the year ended August 31, 2003 pursuant to powers of attorney executed
by the above-named persons and filed with the Securities and Exchange
Commission.

| |                       
| | ----------------------
| | /s/ Gerald L. Connelly
| |                       
| | Gerald L. Connelly    
| | Their Attorney-in-fact

56



---



##### Table of Contents






Report of Independent Auditors

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, 2003 and 2002, and the related
consolidated statements of income, shareholders equity and cash flows for each
of the three years in the period ended August 31, 2003. 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 auditing standards generally
accepted in the 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, 2003 and 2002, and the consolidated results
of their operations and their cash flows for each of the three years in the
period ended August 31, 2003, in conformity with accounting principles
generally accepted in the United States.
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 7, 2003

57



---



##### Table of Contents






SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

|                            |                                               |                                   |  |                      |        |                   |  |                  |       |              |  |                |        |        |  |   |       |     |  |   |        | 
|--------------------------- | --------------------------------------------- | --------------------------------- |  | -------------------- | ------ | ----------------- |  | ---------------- | ----- | ------------ |  | -------------- | ------ | ------ |  | - | ----- | --- |  | - | ------ | 
|COL. A                      |                                               | COL. B                            |  | COL. C               |        | COL. D            |  | COL. E          
|                            |                                               |                                   |  |                      |        |                   |  |                 
|                            |                                               |                                   |  |                      |        |                   |  | ADDITIONS        |       |              |  |                |        |        |  |  
|                            |                                               |                                   |  |                      |        |                   |  |                  |       |              |  |                |        |        |  |  
|                            |                                               |                                   |  | Balance at Beginning |        | Charged to Costs  |  | Charged to Other |       | Deductions - |  | Balance at End
|DESCRIPTION                 |                                               | of Period                         |  | and Expenses         |        | Accounts-Describe |  | Describe         |       | of Period   
|                            |                                               |                                   |  |                      |        |                   |  |                  |       |             
|Year Ended August 31, 2003: |                                               |                                   |  |                      |        |                   |  |                  |       |              |  |                |        |        |  |   |       |     |  |  
|                            | Allowances and reserves deducted from assets: |                                   |  |                      |        |                   |  |                  |       |              |  |                |        |        |  |   |       |     |  |   |       
|                            |                                               | Uncollectable accounts receivable |  | $                    | 2,717  |                   |  | $                | 807   |              |  | $              | 0      |        |  | $ | 246   | (1) |  | $ | 3,278  | 
|                            |                                               | Inventory obsolescence            |  |                      | 20,875 |                   |  |                  | 4,000 |              |  |                | 0      |        |  |   | 2,539 | (2) |  |   | 22,336 | 
|                            | Other reserves:                               |                                   |  |                      |        |                   |  |                  |       |              |  |                |        |        |  |   |       |     |  |   |       
|                            |                                               | Warranty claims                   |  |                      | 9,405  |                   |  |                  | 1,677 |              |  |                | 0      |        |  |   | 1,772 | (3) |  |   | 9,310  | 
|                            |                                               | Current & L-T insurance reserves  |  |                      | 2,247  |                   |  |                  | 2,619 |              |  |                | 0      |        |  |   | 2,750 | (7) |  |   | 2,116  | 
|                            |                                               |                                   |  |                      |        |                   |  |                  |       |              |  |                |        |        |  |   |       |     |  |  
|Year Ended August 31, 2002: |                                               |                                   |  |                      |        |                   |  |                  |       |              |  |                |        |        |  |   |       |     |  |  
|                            | Allowances and reserves deducted from assets: |                                   |  |                      |        |                   |  |                  |       |              |  |                |        |        |  |   |       |     |  |   |       
|                            |                                               | Uncollectable accounts receivable |  | $                    | 3,332  |                   |  | $                | 826   |              |  | $              | 0      |        |  | $ | 1,441 | (1) |  | $ | 2,717  | 
|                            |                                               | Inventory obsolescence            |  |                      | 19,065 |                   |  |                  | 2,314 |              |  |                | 6,094  | (4)    |  |   | 6,598 | (2) |  |   | 20,875 | 
|                            | Other reserves:                               |                                   |  |                      |        |                   |  |                  |       |              |  |                |        |        |  |   |       |     |  |   |       
|                            |                                               | Warranty claims                   |  |                      | 10,176 |                   |  |                  | 2,219 |              |  |                | 0      |        |  |   | 2,990 | (3) |  |   | 9,405  | 
|                            |                                               | Restructuring liabilities         |  |                      | 155    |                   |  |                  | (155  | )            |  |                | 0      |        |  |   | 0     |     |  |   | 0      | 
|                            |                                               | Current & L-T insurance reserves  |  |                      | 2,484  |                   |  |                  | 2,622 |              |  |                | 0      |        |  |   | 2,859 | (7) |  |   | 2,247  | 
|                            |                                               |                                   |  |                      |        |                   |  |                  |       |              |  |                |        |        |  |   |       |     |  |  
|Year Ended August 31, 2001  |                                               |                                   |  |                      |        |                   |  |                  |       |              |  |                |        |        |  |   |       |     |  |  
|                            | Allowances and reserves deducted from assets: |                                   |  |                      |        |                   |  |                  |       |              |  |                |        |        |  |   |       |     |  |   |       
|                            |                                               | Uncollectable accounts receivable |  | $                    | 1,726  |                   |  | $                | 616   |              |  | $              | 1,840  | (4)    |  | $ | 850   | (1) |  | $ | 3,332  | 
|                            |                                               | Inventory obsolescence            |  |                      | 9,065  |                   |  |                  | 2,112 |              |  |                | 11,229 | (4)    |  |   | 3,341 | (2) |  |   | 19,065 | 
|                            | Other reserves:                               |                                   |  |                      |        |                   |  |                  |       |              |  |                |        |        |  |   |       |     |  |   |       
|                            |                                               | Warranty claims                   |  |                      | 8,332  |                   |  |                  | 1,800 |              |  |                | 2,000  | (4)    |  |   | 1,956 | (3) |  |   | 10,176 | 
|                            |                                               | Restructuring liabilities         |  |                      | 836    |                   |  |                  | 0     |              |  |                | (550   | )  (6) |  |   | 131   | (5) |  |   | 155    | 
|                            |                                               | Current & L-T insurance reserves  |  |                      | 2,798  |                   |  |                  | 2,543 |              |  |                | 0      |        |  |   | 2,857 | (7) |  |   | 2,484  | 

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.
Note (5) Spending against restructing reserve.
Note (6) Reduction in liability due to lower estimated environmental costs.
Note (7) Spending against casualty reserve.

58



---



##### 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 6, 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. |  | F

59



---



##### Table of Contents



| |     |  |                                                                                                                                                     |  |  
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------- |  | -
| | 4.2 |  | Amended and Restated Pledge and Security Agreement between Robbins & Myers, Inc.
and Bank One, Dayton, N.A., dated May 15, 1998                     |  | F
| |     |  |                                                                                                                                                     |  |  
| | 4.3 |  | 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 |  | *
| |     |  |                                                                                                                                                     |  |  
| | 4.4 |  | Robbins & Myers, Inc. 10.00% Subordinated Note Due 2006 in
the principal amount of Euro 2,452,000, dated

August 31, 2001                           |  | R
| |     |  |                                                                                                                                                     |  |  
| | 4.5 |  | 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                               |  | */M
| |      |  |                                                                                                                                                                                                                                        |  |    
| | 10.2 |  | 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                                                          |  | */M
| |      |  |                                                                                                                                                                                                                                        |  |    
| | 10.3 |  | 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 |  | */M
| |      |  |                                                                                                                                                                                                                                        |  |    
| | 10.4 |  | 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                                                             |  | */M

60



---



##### Table of Contents



|      |  |                                                                                                                                                                                                          |  |    
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---
|10.5  |  | 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
|      |  |                                                                                                                                                                                                          |  |    
|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                                              |  | */M
|      |  |                                                                                                                                                                                                          |  |    
|10.7  |  | 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                                            |  | */M
|      |  |                                                                                                                                                                                                          |  |    
|10.8  |  | 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                                         |  | */M
|      |  |                                                                                                                                                                                                          |  |    
|10.9  |  | 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                                                   |  | */M
|      |  |                                                                                                                                                                                                          |  |    
|10.10 |  | Salary Continuation Agreement between Robbins &
Myers, Inc. and Gerald L. Connelly, dated
February 19, 1999 was filed as Exhibit 10.1 to
our Report on Form 10-Q for the
Quarter Ended February 28, 1999 |  | */M
|      |  |                                                                                                                                                                                                          |  |    
|10.11 |  | 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

61



---



##### Table of Contents



(14)     CODE OF CONDUCT

|     |  |                                                |  
|---- |  | ---------------------------------------------- | -
|14.1 |  | Robbins & Myers, Inc. Code of Business Conduct | F

(21)     SUBSIDIARIES OF THE REGISTRANT

|     |  |                                       |  
|---- |  | ------------------------------------- | -
|21.1 |  | Subsidiaries of Robbins & Myers, Inc. | F

(23)     CONSENTS OF EXPERTS AND COUNSEL

|     |  |                              |  
|---- |  | ---------------------------- | -
|23.1 |  | Consent of Ernst & Young LLP | F

(24)     POWER OF ATTORNEY

|     |  |                                                                                                                           |  
|---- |  | ------------------------------------------------------------------------------------------------------------------------- | -
|24.1 |  | 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) CERTIFICATIONS

| |  |  |      |  |  |                                  |  |  
| |  |  | ---- |  |  | -------------------------------- |  | -
| |  |  | 31.1 |  |  | Rule 13a-14(a) CEO Certification |  | F
| |  |  |      |  |  |                                  |  |  
| |  |  | 31.2 |  |  | Rule 13a-14(a) CFO Certification |  | F

(32)    SECTION
1350 CERTIFICATIONS

| |  |  |      |  |  |                                |  |  
| |  |  | ---- |  |  | ------------------------------ |  | -
| |  |  | 32.1 |  |  | Section 1350 CEO Certification |  | F
| |  |  |      |  |  |                                |  |  
| |  |  | 32.2 |  |  | Section 1350 CFO Certification |  | F

|    |  |                                                                                                                                                                                   
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|F |  | 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                                                                                                                         

62