UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

FORM 10-Q

For the Quarterly Period Ended May 31, 2004 File Number 0-288

Robbins & Myers, Inc

Registrant’s telephone number including area code   (937) 222-2610

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 requirements for the past 90 days. YES þ NO o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). YES þ NO o

Common shares, without par value, outstanding as of May 31, 2004:14,509,255

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Table of Contents

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

See Notes to Consolidated Condensed Financial Statements

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ROBBINS & MYERS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED INCOME STATEMENT
(In thousands, except per share data)
(Unaudited)

See Notes to Consolidated Condensed Financial Statements

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

See Notes to Consolidated Condensed Financial Statements

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ROBBINS & MYERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
May 31, 2004
(Unaudited)

NOTE 1—Preparation of Financial Statements

In the opinion of management, the accompanying unaudited consolidated condensed financial statements of Robbins & Myers, Inc. and subsidiaries (“we” “our”) contain all adjustments, consisting of normally recurring items, necessary to present fairly the financial condition as of May 31, 2004 and August 31, 2003, the results of our operations for the three and nine month periods ended May 31, 2004 and 2003 and our cash flows for the nine month periods ended May 31, 2004 and 2003. All intercompany transactions have been eliminated. Certain amounts in the prior period financial statements have been reclassified to conform to the current year presentation.

While we believe that the disclosures are adequately presented, it is suggested that these consolidated condensed financial statements be read in conjunction with the financial statements and notes included in our most recent Annual Report on Form 10-K for the fiscal year ended August 31, 2003. A summary of our significant accounting policies is presented therein on page 33. There have been no material changes in the accounting policies followed by us during fiscal year 2004.

NOTE 2—New Accounting Standards

On January 12, 2004, the FASB issued FASB Staff Position (FSP) FAS106-1, regarding the accounting for the effects of the Medicare Prescription Drug Improvement and Modernization Act of 2003 (MMA). The FSP allows companies an opportunity to assess the effect of MMA on their retirement-related benefit costs and obligations and reflect the effects in their financial statements, pursuant to SFAS 106, Employer’s Accounting for Postretirement Benefits Other Than Pensions. Companies are also allowed to defer accounting for the effects of MMA until authoritative guidance is issued. We have elected to defer accounting for the effects of MMA, in accordance with the FSP. Specific authoritative guidance on the accounting for the federal subsidy, one of the provisions of MMA, is pending and that guidance, when issued, could require us to change previously reported information.

NOTE 3—Goodwill and Other Intangible Assets

Changes in the carrying amount of goodwill for the nine month period ended May 31 2004, by operating segment, are as follows:

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Information regarding our other intangible assets is as follows:

NOTE 4—Other Expense
Other expenses are $1,378,000 in the nine months ended May 31, 2004. These expenses are related to the retirement of our former President and CEO in December of 2003.

NOTE 5—Net Income per Share

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NOTE 6—Product Warranties

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

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

NOTE 7—Long-Term Debt

Our Bank Credit Agreement (“Agreement”) provides that we may borrow on a revolving credit basis up to a maximum of $125,000,000. All outstanding amounts under the Agreement are due and payable on October 7, 2006. Interest is variable based upon formulas tied to LIBOR or prime, at our option, and is payable at least quarterly. At May 31, 2004 the weighted average interest rate for all amounts outstanding was 4.13%. 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.

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 minimum requirements 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. Under this Agreement and other lines of credit, we could incur additional indebtedness of approximately $5,000,000 based on our covenant position.

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 $25,159,000 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

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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.

The 8.00% Convertible Subordinated Notes and the Subordinated Notes are subordinated to all of our other indebtedness.

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. 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.

NOTE 8—Retirement Benefits

Retirement and other postretirement plan costs are as follows:

We estimate that the required employer contributions to our plans in fiscal 2004 will be approximately $11.0 million.

NOTE 9—Income Taxes

The estimated annual effective tax rate was 35.0% for the three and nine month periods of fiscal 2004 and 33.5% for the three and nine month periods of fiscal 2003.

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NOTE 10—Stock-Based Compensation

We apply Accounting Principles Board Opinion No. 25 as the method used to account for stock-based employee compensation arrangements. The following table illustrates the effect on net income and earnings per share as if the fair value based method had been applied to all outstanding and unvested awards in each period.

NOTE 11—Comprehensive Income

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NOTE 12—Business Segments

Sales and Income before Interest and Income Taxes (“EBIT”) by operating segment are presented in the following table.

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Part I—Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

     The following tables present the components of our consolidated income statement and segment information for the three and nine month periods of fiscal 2004 and 2003.

Three months ended May 31, 2004

     Net sales for the third quarter of fiscal 2004 were $152.5 million compared with $144.9 million in the third quarter of fiscal 2003. The change in exchange rates, primarily the strengthening of the euro, increased third quarter of fiscal 2004 sales by $6.8 million compared with the third quarter of fiscal 2003. Excluding the impact of exchange rates, the third quarter of fiscal 2004 sales increased by $0.7 million, or 0.5%

     The Pharmaceutical segment had sales of $89.1 million in the third quarter of fiscal 2004 compared with $88.0 million in the third quarter of fiscal 2003. The change in exchange rates increased the third quarter of fiscal 2004 sales by $6.4 million compared with the third quarter of fiscal 2003. Excluding the impact of exchange rates, the third quarter of fiscal 2004 sales declined by $5.3 million, or 6.0%. Sales are lower as a result of weak economic conditions in Europe. Orders for this segment increased from $81.0 million in the third quarter of fiscal 2003 to $90.5 million in the third quarter of fiscal 2004. The change in exchange rates increased the third quarter of fiscal 2004 orders by $4.1 million. Excluding the impact of exchange rates, the third quarter of fiscal 2004 orders increased by $5.4 million, or 6.7%. The increase in orders was in both the Romaco and Reactor Systems businesses and is attributed to increased order activity in Asia. Backlog in this segment increased to $111.5 million at the end of the third quarter of fiscal 2004 from $86.8 million at August 31, 2003.

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     The Industrial segment had sales of $32.7 million in the third quarter of fiscal 2004 compared with $33.4 million in the third quarter of fiscal 2003. The decrease in sales is a result of lower sales to the wastewater treatment market by our Industrial Pump product platform. Incoming orders in this segment were $34.8 million in the third quarter of fiscal 2004 compared with $33.4 million in the third quarter of fiscal 2003. Backlog in this segment increased to $27.6 million at the end of the third quarter of fiscal 2004 from $22.0 million at August 31, 2003.

     The Energy segment had sales of $30.7 million in the third quarter of fiscal 2004 compared with $23.5 million in the third quarter of fiscal 2003, an increase of $7.2 million, or 30.6%. Due to the higher oil and gas prices, the overall level of crude oil and natural gas exploration and production activities has increased. Incoming orders in this segment increased to $29.2 million in the third quarter of fiscal 2004 compared with $23.4 million in the third quarter of fiscal 2003. Backlog increased to $4.7 million at the end of the third quarter of fiscal 2004 from $2.6 million at August 31, 2003. The increase in backlog is normal given the large increase in orders.

     EBIT for the third quarter of fiscal 2004 was $9.4 million compared with $11.4 million in the third quarter of fiscal 2003. EBIT has declined even though there was a slight increase in sales when the impact of favorable exchange rates is excluded. The decline in EBIT is a result of lower gross margins caused by aggressive pricing in Europe, and lower aftermarket sales in the U.S. In addition, costs for healthcare and insurance are higher in fiscal 2004.

     The Pharmaceutical segment had EBIT of $3.9 million in the third quarter of fiscal 2004 compared with $6.1 million in the third quarter of fiscal 2003. The decline in EBIT is due to the aforementioned decline in sales after considering the impact of exchange rates and the lower selling prices in Europe due to intense competition.

     The Industrial segment had EBIT of $2.3 million in the third quarter of fiscal 2004 compared with $3.1 million in the third quarter of fiscal 2003, a decrease of $0.8 million. The decrease is due to lower sales volumes, higher pension and medical costs and a shift in sales mix as aftermarket activity represented a lower percentage of revenues.

     The Energy segment had EBIT of $7.0 million in the third quarter of fiscal 2004 compared with $4.9 million in the third quarter of fiscal 2003, an increase of $2.1 million or 42.9%. The increase in EBIT is attributable to higher sales volumes.

     Interest expense decreased from $4.0 million in the third quarter of fiscal 2003 to $3.5 million in the third quarter of fiscal 2004. This was due to lower average debt levels.

     The effective tax rate is 35.0% in fiscal 2004 and 33.5% in fiscal 2003.

Nine months ended May 31, 2004

     Net sales for the nine months ended May 31, 2004 were $427.2 million compared with $403.9 million for the same period of the prior year. The change in exchange rates increased the year to date fiscal 2004 sales by $30.7 million compared with the year to date sales of fiscal 2003. Excluding the impact of exchange rates, sales for the first nine months of fiscal 2004 decreased by $7.5 million, or 1.9%.

     The Pharmaceutical segment had sales of $250.7 million for the nine month period ended May 31, 2004 compared with $243.3 million for the same period of fiscal 2003. The change in exchange rates increased the year to date fiscal 2004 sales by $27.5 million compared with the year to date sales of fiscal 2003. Excluding the impact of exchange rates, sales for the first nine months of fiscal 2004 declined by $20.1 million, or 8.3%, compared to the first nine months of fiscal 2003. This decline in sales is due to the sluggish European economies. Year to date orders for this segment increased from $255.5 million in fiscal 2003 to $273.2 million in fiscal 2004. The change in exchange rates increased orders for the nine months ended May 31, 2004 by $29.4 million. Excluding the impact of exchange rates, the orders for the nine months ended May 31, 2004 decreased by $11.7 million, or 4.6%.

     The Industrial segment had sales of $92.3 million for the nine month period ended May 31, 2004 compared with $91.7 million in the same period of fiscal 2003. This segment continues to be negatively

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impacted by the weak specialty chemical market as well as no significant increase in capital equipment spending in the U.S. Year to date incoming orders in this segment were $97.7 compared with year to date orders of $94.9 million in fiscal 2003.

     The Energy segment had sales of $84.2 million for the nine month period ended May 31, 2004 compared with $68.8 million in the same period of fiscal 2003. The change in exchange rates increased the year to date fiscal 2004 sales by $2.9 million compared with the year to date sales of fiscal 2003. Excluding the impact of exchange rates, sales for the nine months of fiscal 2004 increased by $12.5 million, or 18.2%. Crude oil and natural gas exploration and production activities continue to increase due to high oil and gas prices. Incoming orders in this segment increased to $86.5 million in the first nine months of fiscal 2004 compared with $68.7 million in first nine months of fiscal 2003.

     EBIT for the nine months ended May 31, 2004 was $21.2 million compared with $27.3 million for the nine months ended May 31, 2003 EBIT for the nine months ended May 31, 2004 includes costs of $1.4 million related to the retirement of our former CEO. The remaining decline in EBIT is a result of lower sales volumes after considering the impact of exchange rates, lower gross margins as a result of aggressive price competition in Europe; higher medical and insurance costs; and a shift in sales mix as a result of lower aftermarket sales.

     The Pharmaceutical segment had EBIT of $7.5 million in the first nine months of fiscal 2004 compared with $14.3 million in the first nine months of fiscal 2003. The decline in EBIT is due to the aforementioned $20.1 million decline in year to date sales, after considering the impact of exchange rates, and lower margins due to intense competition in Europe.

     The Industrial segment had EBIT of $5.7 million in the first nine months of fiscal 2004 compared with $7.3 million in the first nine months of fiscal 2003, a decrease of $1.6 million while sales increased by $0.6 million. The decrease in EBIT is due to a shift in sales mix as sales of aftermarket products are a lower percentage of revenues and increased pension and medical costs.

     The Energy segment had year to date EBIT of $19.8 million in fiscal 2004 compared with year to date EBIT of $14.4 million in fiscal 2003, an increase of $5.4 million. Excluding the impact of exchange rates, EBIT increased $4.9 million while sales increased $12.4 million. The EBIT flowthrough is slightly higher than normal due to favorable sales mix.

     Year to date interest expense decreased from $11.7 million in fiscal 2003 to $10.9 million in fiscal 2004. This was due to lower average debt levels.

     The effective tax rate is 35.0% in fiscal 2004 and was 33.5% in fiscal 2003.

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Liquidity and Capital Resources

     Cash uses in the first nine months of fiscal 2004 were $9.2 million for semi-annual interest payments due on our Senior Notes and Convertible Subordinated Notes, $2.5 million for variable pay plans, and $7.3 million for capital expenditures. Cash generated from operations funded these cash uses.

     Cash uses in the first nine months of fiscal 2003 were $9.2 million in semi-annual interest payments due on our Senior Notes and Convertible Subordinated Notes, $0.5 million for variable pay plans, $4.4 million for capital expenditures, and $12.5 million for the purchase of Tarby. Cash generated from operations funded these cash uses.

     Following is information regarding our long-term contractual obligations and other commitments outstanding as of May 31, 2004:

     We expect operating cash flow to be adequate for the remainder of fiscal year 2004 to fund operating needs, capital expenditures and shareholder dividend requirements. The major cash requirement for the remainder of fiscal 2004 is planned capital expenditures of approximately $6.0 million. Capital expenditures are related to additional production capacity, cost reductions and replacement items.

Market Risk

     In our normal operations we have market risk exposure to foreign currency exchange rates and interest rates. There has been no significant change in our exposure to these risks since fiscal year-end 2003, which has been previously disclosed.

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Forward-looking Statements

     In addition to historical information, this report contains forward-looking statements identified by use of words such as “expects,” “anticipates,” “estimates,” and similar expressions. These statements reflect our expectations at the time this report was issued. Actual events and results may differ materially from those described in the forward-looking statements. Among the factors that could cause material differences are significant declines in capital expenditures in specialty chemical and pharmaceutical industries, a major decline in oil and natural gas prices, foreign exchange rate fluctuations, continued availability of acceptable acquisition candidates, access to capital and financing and general economic conditions that can affect demand in the process industries. We undertake no obligation to update or publicly revise these forward-looking statements to reflect events or circumstances that arise after the date of this report.

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Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity

     During the quarter ended May 31, 2004, we did not purchase any shares of our outstanding common stock.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

     In our normal operations we have market risk exposure to foreign currency exchange rates and interest rates. There has been no significant change in our market risk exposure with respect to these items during the quarter ended May 31, 2004. For additional information see “Qualitative and Quantitative Disclosures About Market Risk” at Item 7A of our Annual Report on Form 10-K for the year ended August, 31, 2003

Item 4. Controls and Procedures

     Based on a recent evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q, 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 changes in the Company’s internal control over financial reporting that occurred during the quarter ended May 31, 2004 that have materially affected, or are reasonably likely to affect, our internal control over financial reporting.

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Part II—Other Information

Item 6. Exhibits and Reports on Form 8-K

	a)		Exhibits – see INDEX TO EXHIBITS
	b)		Reports on Form 8-K. During the quarter ended May 31, 2004, we filed the following reports on Form 8-K:
			A report on Form 8-K was filed on March 5, 2004 to announce the passing of Maynard H. Murch IV, Chairman of the Board of Robbins & Myers, Inc.
			A report on Form 8-K was filed on March 25, 2004 to report our second quarter and fiscal 2004 year to date financial results.
			A report on Form 8-K was filed on March 26, 2004 to announce the appointment of David T. Gibbons to the Board of Directors of Robbins & Myers, Inc.

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SIGNATURES

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

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INDEX TO EXHIBITS

(10)

MATERIAL CONTRACTS

	10.1		Amendment No. 1 dated April 21, 2004 to the Third Amended and Restated Credit Agreement dated as of October 7, 2003, by and among Robbins & Myers, Inc., Robbins & Myers Finance Europe B.V., Bank One, N.A., individually and as administrative agent, and the other financial institutions name therein.*
	10.2		Salary Continuation Agreement between Robbins & Myers, Inc. and Peter C. Wallace dated May 21, 2004.**

(31)

RULE 13A-14(A) CERTIFICATIONS

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

(32)

SECTION 1350 CERTIFICATIONS

		***   32.1 Section 1350 CEO Certification

		***   32.2 Section 1350 CFO Certification
*		Confidential treatment requested as to certain portions, which portions have been filed separately with the Securities and Exchange Commission.
**		Indicates management contract or compensatory arrangement.
***		A signed original of this written statement required by Section 906 has been furnished to Robbins & Myers, Inc. and will be retained by Robbins & Myers, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

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