Attached files
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EX-31.2 - EX-31.2 - ROBBINS & MYERS, INC. | l42299exv31w2.htm |
EX-31.1 - EX-31.1 - ROBBINS & MYERS, INC. | l42299exv31w1.htm |
EX-32.1 - EX-32.1 - ROBBINS & MYERS, INC. | l42299exv32w1.htm |
EX-32.2 - EX-32.2 - ROBBINS & MYERS, INC. | l42299exv32w2.htm |
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended February 28, 2011
or
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number: 001-13651
Robbins & Myers, Inc.
Ohio | 31-0424220 | |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
|
51 Plum Street, Suite 260, Dayton, Ohio | 45440 | |
(Address of principal executive offices) | (Zip Code) |
(937) 458-6600
None
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. YES þ NO o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files).
YES o NO o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated
filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
Large accelerated filer o | Accelerated filer þ | Non-accelerated filer o | Smaller reporting company o | |||
(Do not check if a smaller reporting company) |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). YES o NO þ
Common shares, without par value, outstanding as of February 28, 2011: 45,474,499
TABLE OF CONTENTS
Table of Contents
Part IFinancial Information
Item 1. Financial Statements
ROBBINS & MYERS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
(In thousands)
CONSOLIDATED CONDENSED BALANCE SHEET
(In thousands)
February 28, | August 31, | |||||||
2011 | 2010 | |||||||
(Unaudited) | ||||||||
ASSETS |
||||||||
Current Assets: |
||||||||
Cash and cash equivalents |
$ | 50,781 | $ | 149,213 | ||||
Accounts receivable |
174,919 | 115,387 | ||||||
Inventories: |
||||||||
Finished products |
80,554 | 32,488 | ||||||
Work in process |
56,830 | 36,163 | ||||||
Raw materials |
39,514 | 29,288 | ||||||
176,898 | 97,939 | |||||||
Other current assets |
14,469 | 7,589 | ||||||
Deferred taxes |
17,388 | 14,164 | ||||||
Total Current Assets |
434,455 | 384,292 | ||||||
Goodwill |
610,652 | 260,332 | ||||||
Other Intangible Assets |
201,716 | 3,774 | ||||||
Deferred Taxes |
34,095 | 33,932 | ||||||
Other Assets |
15,422 | 10,091 | ||||||
Property, Plant and Equipment |
374,068 | 302,941 | ||||||
Less accumulated depreciation |
(190,007 | ) | (178,341 | ) | ||||
184,061 | 124,600 | |||||||
TOTAL ASSETS |
$ | 1,480,401 | $ | 817,021 | ||||
LIABILITIES AND EQUITY |
||||||||
Current Liabilities: |
||||||||
Accounts payable |
$ | 84,299 | $ | 66,562 | ||||
Accrued expenses |
100,883 | 90,345 | ||||||
Current portion of long-term debt |
1,900 | 192 | ||||||
Total Current Liabilities |
187,082 | 157,099 | ||||||
Long-Term DebtLess Current Portion |
23 | 93 | ||||||
Deferred Taxes |
110,416 | 42,568 | ||||||
Other Long-Term Liabilities |
124,790 | 126,237 | ||||||
Robbins & Myers, Inc. Shareholders Equity: |
||||||||
Common stock |
684,206 | 153,185 | ||||||
Retained earnings |
396,391 | 372,198 | ||||||
Accumulated other comprehensive loss |
(38,418 | ) | (49,319 | ) | ||||
Total Robbins & Myers, Inc. Shareholders Equity |
1,042,179 | 476,064 | ||||||
Noncontrolling Interest |
15,911 | 14,960 | ||||||
Total Equity |
1,058,090 | 491,024 | ||||||
TOTAL LIABILITIES AND EQUITY |
$ | 1,480,401 | $ | 817,021 | ||||
See Notes to Consolidated Condensed Financial Statements
2
Table of Contents
ROBBINS & MYERS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED INCOME STATEMENT
(In thousands, except per share data)
(Unaudited)
CONSOLIDATED CONDENSED INCOME STATEMENT
(In thousands, except per share data)
(Unaudited)
Three Months Ended | Six Months Ended | |||||||||||||||
February 28, | February 28, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Net sales |
$ | 214,918 | $ | 129,919 | $ | 378,867 | $ | 259,332 | ||||||||
Cost of sales |
138,566 | 87,989 | 240,344 | 174,368 | ||||||||||||
Gross profit |
76,352 | 41,930 | 138,523 | 84,964 | ||||||||||||
Selling, general and administrative expenses |
44,781 | 35,384 | 82,756 | 68,682 | ||||||||||||
Other expense |
13,312 | | 13,312 | | ||||||||||||
Income before interest and income taxes (EBIT) |
18,259 | 6,546 | 42,455 | 16,282 | ||||||||||||
Interest expense (income), net |
8 | 161 | (17 | ) | 304 | |||||||||||
Income before income taxes |
18,251 | 6,385 | 42,472 | 15,978 | ||||||||||||
Income tax expense |
5,189 | 1,932 | 14,318 | 5,299 | ||||||||||||
Net income including noncontrolling interest |
13,062 | 4,453 | 28,154 | 10,679 | ||||||||||||
Less: Net income attributable to noncontrolling
interest |
125 | 260 | 521 | 456 | ||||||||||||
Net income attributable to Robbins & Myers, Inc. |
$ | 12,937 | $ | 4,193 | $ | 27,633 | $ | 10,223 | ||||||||
Net income per share: |
||||||||||||||||
Basic |
$ | 0.33 | $ | 0.13 | $ | 0.76 | $ | 0.31 | ||||||||
Diluted |
$ | 0.32 | $ | 0.13 | $ | 0.75 | $ | 0.31 | ||||||||
Weighted average common shares outstanding: |
||||||||||||||||
Basic |
39,695 | 32,927 | 36,315 | 32,899 | ||||||||||||
Diluted |
40,095 | 32,966 | 36,668 | 32,949 | ||||||||||||
Dividends per share: |
||||||||||||||||
Declared |
$ | 0.0450 | $ | 0.0425 | $ | 0.0875 | $ | 0.0825 | ||||||||
Paid |
$ | 0.0450 | $ | 0.0425 | $ | 0.0875 | $ | 0.0825 | ||||||||
See Notes to Consolidated Condensed Financial Statements
3
Table of Contents
ROBBINS & MYERS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended | ||||||||
February 28, | ||||||||
2011 | 2010 | |||||||
Operating Activities: |
||||||||
Net income including noncontrolling interest |
$ | 28,154 | $ | 10,679 | ||||
Adjustments to reconcile net income to net cash and
cash equivalents (used) provided by operating activities: |
||||||||
Depreciation |
8,204 | 7,884 | ||||||
Amortization |
6,531 | 341 | ||||||
Net gain on asset sales |
| (547 | ) | |||||
Stock compensation expense |
3,331 | 1,451 | ||||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable |
(15,414 | ) | 8,759 | |||||
Inventories |
(16,499 | ) | 876 | |||||
Accounts payable |
(10,330 | ) | (8,969 | ) | ||||
Accrued expenses |
(13,620 | ) | 8,070 | |||||
Other |
(3,189 | ) | 959 | |||||
Net Cash and Cash Equivalents (Used) Provided by Operating Activities |
(12,832 | ) | 29,503 | |||||
Investing Activities: |
||||||||
Business acquisition, net of cash acquired |
(90,410 | ) | | |||||
Capital expenditures, net of nominal disposals |
(7,197 | ) | (3,447 | ) | ||||
Proceeds from asset sales |
| 1,094 | ||||||
Net Cash and Cash Equivalents Used by Investing Activities |
(97,607 | ) | (2,353 | ) | ||||
Financing Activities: |
||||||||
Proceeds from debt borrowings |
5,157 | 4,200 | ||||||
Repayments of debt |
(7,526 | ) | (3,630 | ) | ||||
Net proceeds from issuance of common stock, including stock option tax impact |
15,586 | 366 | ||||||
Cash dividends paid |
(3,440 | ) | (2,713 | ) | ||||
Net Cash and Cash Equivalents Provided (Used) by Financing Activities |
9,777 | (1,777 | ) | |||||
Exchange Rate Impact on Cash |
2,230 | (1,122 | ) | |||||
(Decrease) Increase in Cash and Cash Equivalents |
(98,432 | ) | 24,251 | |||||
Cash and Cash Equivalents at Beginning of Period |
149,213 | 108,169 | ||||||
Cash and Cash Equivalents at End of Period |
$ | 50,781 | $ | 132,420 | ||||
See Notes to Consolidated Condensed Financial Statements
4
Table of Contents
ROBBINS & MYERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
February 28, 2011
(Unaudited)
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
February 28, 2011
(Unaudited)
NOTE 1Preparation of Financial Statements
In the opinion of management, the accompanying unaudited consolidated condensed financial
statements of Robbins & Myers, Inc. and subsidiaries (Company, R&M, we, our or us)
contain all adjustments, consisting of normally recurring items, necessary to present fairly our
financial condition as of February 28, 2011 and August 31, 2010, and the results of our operations
for the three and six month periods ended February 28, 2011 and 2010, and cash flows for the six
month periods ended February 28, 2011 and 2010. The results of operations for any interim period
are not necessarily indicative of results for the full year. All intercompany transactions have
been eliminated.
On January 10, 2011 (the acquisition date), we completed our acquisition of T-3 Energy Services,
Inc. (T-3), by means of a merger, such that T-3 became a wholly-owned subsidiary of R&M. The
operating results of T-3 are included in our consolidated condensed financial statements only since
the acquisition date within our Fluid Management Group. See Note 2. The merger was accounted for
under the acquisition method of accounting in accordance with Accounting Standards Codification
(ASC) 805, Business Combinations. Accordingly, we made an initial allocation of the purchase
price at the acquisition date based upon our understanding of the fair value of the acquired assets
and assumed liabilities obtained during our due diligence process and through other sources. As we
obtain additional information about these assets and liabilities, including through tangible and
intangible asset appraisals and by learning more about T-3s business and processes, we will refine
the provisional estimates of fair value and the purchase price allocation. Only items identified as
of the acquisition date will be considered for subsequent adjustment. Adjustments will be made
prior to the completion of the measurement period (up to one year from acquisition date) as
required. Additionally, as required by ASC 805, all integration-related costs, including
professional fees and severance, are expensed as incurred.
While we believe that the disclosures are adequately presented, it is suggested that these
consolidated condensed financial statements be read in conjunction with the consolidated financial
statements and notes included in our most recent Annual Report on Form 10-K/A for the fiscal year
ended August 31, 2010 filed with the Securities and Exchange Commission (SEC), the joint proxy
statement/prospectus filed with the SEC on November 29, 2010, our Quarterly Report on Form 10-Q for
the quarter ended November 30, 2010 filed with the SEC on January 7, 2011 and other reports filed
from time to time with the SEC. There have been no material changes in the accounting policies
followed by us during fiscal year 2011 (fiscal 2011) from fiscal year 2010 (fiscal 2010).
Certain amounts presented in the prior period financial statements have been reclassified to
conform to our current year presentation. These reclassifications had no material impact on our
financial position, earnings, or cash flows.
Our Company has a Venezuelan subsidiary with net sales, operating income and total assets
representing approximately one percent of our consolidated financial statement amounts in fiscal
2011 and 2010. In early January 2010, the Venezuelan government devalued its currency. Our
subsidiary operated under a rate of 4.30 bolivars to the U.S. dollar, as compared with the previous
rate of 2.15, and our fiscal 2010 year-end financial statements reflected this new rate. In
addition, the financial statements of our Venezuelan subsidiary were consolidated and reported
under highly inflationary accounting rules beginning in the second quarter of fiscal 2010,
resulting in an income statement exchange loss of $0.6 million in the three and six month periods
ended February 28, 2010. The fiscal 2010 devaluation did not have a material impact on our
consolidated financial statements in the three and six month periods ended February 28, 2011.
5
Table of Contents
NOTE 2Acquisition
As noted above, on January 10, 2011, we acquired 100% of the outstanding common stock and voting
interest of T-3. T-3 designs, manufactures, repairs and services
products used in the drilling, completion and production of new oil and gas wells, the workover of existing wells, and the production and
transportation of oil and gas. Its products are used in both onshore and offshore applications
throughout the world. We believe the acquisition will significantly expand and complement our
energy business within our Fluid Management Group and create a stronger strategic platform with
better scale to support our future growth.
The purchase price for acquiring all of the outstanding common stock of T-3 was approximately
$618.4 million, which consisted of approximately $106.3 million in cash paid, $492.1 million as the
fair value of R&M common shares issued and $20.0 million as the fair value of R&M options and
warrants issued to replace T-3 grants for pre-merger services and warrants, based on the weighted
average Black-Scholes valuation of $20.41 per R&M share. The fair value of R&M common shares issued
of $41.18 per common share was based on the closing price of R&M shares on the New York Stock
Exchange (NYSE) on January 7, 2011 (opening price on January 10, 2011). We funded the cash
portion of the purchase price from our available cash on hand. We issued approximately 12.0 million
shares as part of the purchase price to T-3 stockholders. T-3 had annual revenues of approximately
$206.7 million (unaudited) for its last completed fiscal year ended December 31, 2010.
The following table summarizes the estimated fair values of the assets acquired and liabilities
assumed at the acquisition date. We are in the process of obtaining third party valuations of
certain non-monetary tangible assets, intangible assets and contingencies; thus the provisional
measurements of non-monetary tangible assets, intangible assets, contingencies, goodwill and
deferred income tax assets are subject to change.
At January 10, 2011 (in thousands):
Cash |
$ | 15,863 | ||
Accounts receivable |
41,618 | |||
Inventories |
59,960 | |||
Other current assets |
13,541 | |||
Property, plant and equipment, net |
54,392 | |||
Other long-term assets |
6,044 | |||
Intangible assets |
204,220 | |||
Total identifiable assets acquired excluding goodwill |
395,638 | |||
Current liabilities |
44,341 | |||
Long-term liabilities |
74,684 | |||
Total liabilities assumed |
119,025 | |||
Net identifiable assets acquired excluding goodwill |
276,613 | |||
Goodwill |
341,783 | |||
Net assets acquired |
$ | 618,396 | ||
The preliminary purchase price allocations resulted in the recognition of $341.8 million in
goodwill (approximately $25.0 million of which is deductible for tax purposes) and $204.2 million
of definite-lived intangible assets with no residual value, including $146.4 million of customer
relationships, $18.9 million of trademarks and trade names, $31.7 million of technology and $7.2
million of backlog. The amounts assigned to customer relationships, trademarks and trade names,
technology and backlog are amortized over the estimated useful life of 10-20 years, 7 years, 15
years and up to 1 year, respectively. The weighted average life over which these acquired
intangibles will be amortized is approximately 18 years. The purchase price allocation for the
acquisition reflects various preliminary fair value estimates and analyses, which are subject to
change within the measurement period as valuations are finalized. Measurement period adjustments
that we determine to be material will be applied retrospectively to the period of acquisition in
our consolidated financial statements and, depending on the nature of the adjustments, other
periods subsequent to the period of acquisition could also be affected.
6
Table of Contents
Net customer sales and negative EBIT of T-3 included in our operating results from the acquisition
date were $35.5 million and $4.6 million, respectively. During the three and six month periods
ended February 28, 2011, the Company incurred acquisition related costs of $13.3 million, primarily
for amortization of intangible assets related to customer backlog at the time of acquisition,
professional fees, severance costs and accelerated stock-based compensation expense (see Note 10),
which are included in the Other expense line in our consolidated condensed income statement and
$4.1 million of expense related to the inventory write-up values in cost of sales. Transaction
expenses were funded with available cash of the Company.
The unaudited pro forma information for the periods set below gives effect to the acquisition as if
it had occurred at the beginning of each respective fiscal year. These amounts have been calculated
after applying our accounting policies and adjusting the results of T-3 to reflect the additional
cost of sales, depreciation and amortization that would have been charged assuming the fair value
of adjustments to inventory, property, plant and equipment and intangible assets had been applied
as at the beginning of each respective year, together with the consequential tax effects, as
applicable. The pro forma information is presented for informational purposes only and is not
necessarily indicative of the results of operations that actually would have been achieved had the
acquisition been consummated as of that time:
Three Months Ended | Six Months Ended | |||||||||||||||
February 28, | February 28, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(In thousands, except per share data) | ||||||||||||||||
Net sales: |
||||||||||||||||
As reported |
$ | 214,918 | $ | 129,919 | $ | 378,867 | $ | 259,332 | ||||||||
Pro forma |
239,540 | 173,550 | 458,337 | 353,051 | ||||||||||||
Net income attributable to
Robbins & Myers, Inc.: |
||||||||||||||||
As reported |
$ | 12,937 | $ | 4,193 | $ | 27,633 | $ | 10,223 | ||||||||
Pro forma |
16,620 | 3,979 | 24,449 | 1,138 | ||||||||||||
Basic net income per share: |
||||||||||||||||
As reported |
$ | 0.33 | $ | 0.13 | $ | 0.76 | $ | 0.31 | ||||||||
Pro forma |
0.36 | 0.08 | 0.53 | 0.01 | ||||||||||||
Diluted net income per share: |
||||||||||||||||
As reported |
$ | 0.32 | $ | 0.13 | $ | 0.75 | $ | 0.31 | ||||||||
Pro forma |
0.36 | 0.08 | 0.53 | 0.01 |
Each six month pro forma period reflects the expense due to the inventory write-up values and
amortization of backlog of $16.7 million ($10.8 million after tax and $0.24 per share) which had
lives of 3 months. Therefore, these assets were fully amortized in the first 3 months of each
respective year.
7
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NOTE 3Goodwill and Other Intangible Assets
Changes in the carrying amount of goodwill for the six month period ended February 28, 2011, by
reportable segment, are as follows:
Process Solutions | Fluid Mgmt. | Romaco | ||||||||||||||
Segment | Segment | Segment | Total | |||||||||||||
(In thousands) | ||||||||||||||||
Balance as of September 1, 2010 |
$ | 100,278 | $ | 149,463 | $ | 10,591 | $ | 260,332 | ||||||||
Goodwill related to T-3 acquisition |
| 341,783 | | 341,783 | ||||||||||||
Translation adjustment impact |
6,426 | 1,199 | 912 | 8,537 | ||||||||||||
Balance as of February 28, 2011 |
$ | 106,704 | $ | 492,445 | $ | 11,503 | $ | 610,652 | ||||||||
Goodwill arises from the excess of the purchase price for acquired businesses over the fair value
of net identifiable assets acquired. Pursuant to ASC 805, we may record goodwill adjustments for
the T-3 acquisition due to refinement in purchase price allocation within the measurement period.
Information regarding our other intangible assets is as follows:
As of February 28, 2011 | As of August 31, 2010 | |||||||||||||||||||||||
Carrying | Accumulated | Carrying | Accumulated | |||||||||||||||||||||
Amount | Amortization | Net | Amount | Amortization | Net | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Customer
Relationships |
$ | 146,400 | $ | 1,130 | $ | 145,270 | $ | | $ | | $ | | ||||||||||||
Technology |
31,700 | 318 | 31,382 | | | | ||||||||||||||||||
Patents,
Trademarks and
Trade names |
28,574 | 8,120 | 20,454 | 9,434 | 7,465 | 1,969 | ||||||||||||||||||
Non-compete
Agreements |
8,875 | 7,559 | 1,316 | 8,680 | 7,359 | 1,321 | ||||||||||||||||||
Financing
Costs |
9,696 | 9,216 | 480 | 9,536 | 9,052 | 484 | ||||||||||||||||||
Other |
12,413 | 9,599 | 2,814 | 5,120 | 5,120 | | ||||||||||||||||||
Total |
$ | 237,658 | $ | 35,942 | $ | 201,716 | $ | 32,770 | $ | 28,996 | $ | 3,774 | ||||||||||||
During the first six months of fiscal 2011, the Company recorded approximately $204.2 million
of purchased intangible assets related to the T-3 acquisition based on its preliminary purchase
price allocations. The amortization expense for the three and six month periods ended February 28,
2011 was $6.4 million and $6.5 million, respectively. We estimate that the amortization expense
will be approximately $9.2 million for the remainder of fiscal 2011 and $12.9 million for each of
the next five years beginning fiscal 2012. The expected amortization expense is an estimate. Actual
amounts of amortization expense may differ from the estimated amounts due to changes in foreign
currency exchange rates, impairment of intangible assets, intangible asset additions and their fair
value adjustments in the measurement period, accelerated amortization of intangible
assets and other events.
8
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NOTE 4Net Income per Share
Three Months Ended | Six Months Ended | |||||||||||||||
February 28, | February 28, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(In thousands, except per share data) | ||||||||||||||||
Numerator: |
||||||||||||||||
Net income attributable to Robbins & Myers, Inc. |
$ | 12,937 | $ | 4,193 | $ | 27,633 | $ | 10,223 | ||||||||
Denominator: |
||||||||||||||||
Basic weighted average shares |
39,695 | 32,927 | 36,315 | 32,899 | ||||||||||||
Effect of dilutive options and restricted
shares/units |
400 | 39 | 353 | 50 | ||||||||||||
Diluted weighted average shares |
40,095 | 32,966 | 36,668 | 32,949 | ||||||||||||
Basic net income per share |
$ | 0.33 | $ | 0.13 | $ | 0.76 | $ | 0.31 | ||||||||
Diluted net income per share |
$ | 0.32 | $ | 0.13 | $ | 0.75 | $ | 0.31 | ||||||||
In connection with the acquisition of T-3 on January 10, 2011, we issued approximately 12.0 million
shares to T-3 stockholders as part of the purchase price consideration, which have been included in
our computation of basic and diluted net income per share for the three and six month periods ended
February 28, 2011. In addition, as part of the merger consideration, we issued approximately 1.0
million options to replace T-3 grants for pre-merger services which have also been included in the
computation above. The net loss of T-3 from the acquisition date that is included in our
consolidated condensed financial statements for the three and six month periods ended February 28,
2011 was approximately $3.0 million which included pre-tax expense of $11.5 million ($7.5 million
after tax) related to amortization of intangible assets for opening customer backlog, expense due
to inventory write-up values and severance costs.
For the three and six month periods ended February 28, 2011, 0.2 million and 0.4 million,
respectively of stock options outstanding were antidilutive and excluded from the computation of
diluted net income per share. The antidilutive stock options for the prior year three and six month
periods were 0.4 million for both respective periods.
NOTE 5Product Warranties
We estimate our warranty accrual based on specific product failures that are known to us plus an
additional amount based on the historical relationship of warranty claims to sales.
Changes in our product warranty liability during the period are as follows:
Six Months Ended | ||||
February 28, 2011 | ||||
(In thousands) | ||||
Balance at beginning of the period |
$ | 6,292 | ||
Warranty expense |
1,267 | |||
Deductions/payments |
(1,647 | ) | ||
Warranty accrual related to T-3 acquisition |
370 | |||
Translation adjustment impact |
82 | |||
Balance at end of the period |
$ | 6,364 | ||
9
Table of Contents
NOTE 6Long-Term Debt
February 28, 2011 | ||||
(In thousands) | ||||
Senior debt: |
||||
Revolving credit loan |
$ | | ||
Other |
1,923 | |||
Total debt |
1,923 | |||
Less current portion |
1,900 | |||
Long-term debt |
$ | 23 | ||
Our Bank Credit Agreement (Agreement) provides that we may borrow on a revolving credit basis up
to a maximum of $150.0 million and includes a $100.0 million expansion feature. All outstanding
amounts under the Agreement are due and payable on December 19, 2011. Interest is variable based
upon formulas tied to LIBOR or an alternative base rate defined in the Agreement, at our option,
and is payable quarterly. Indebtedness under the Agreement is unsecured except for the pledge of
the stock of our U.S. subsidiaries and approximately two-thirds of the stock of certain non-U.S.
subsidiaries. While no amounts are outstanding under the Agreement at February 28, 2011, we have
$35.6 million of standby letters of credit outstanding at February 28, 2011. These standby letters
of credit are used as security for advance payments received from customers and for future payments
to our vendors. Accordingly, under the Agreement, we have $114.4 million of unused borrowing
capacity.
The Agreement contains certain restrictive covenants including limitations on indebtedness,
acquisitions, asset sales, sales and lease backs, and cash dividends as well as financial covenants
relating to interest coverage, leverage and net worth. As of February 28, 2011, we are in
compliance with these covenants.
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NOTE 7Retirement Benefits
Pension and other postretirement plan costs are as follows:
Pension Benefits
Three Months Ended | Six Months Ended | |||||||||||||||
February 28, | February 28, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(In thousands) | (In thousands) | |||||||||||||||
Service cost |
$ | 516 | $ | 520 | $ | 1,080 | $ | 1,051 | ||||||||
Interest cost |
2,204 | 2,429 | 4,410 | 4,899 | ||||||||||||
Expected return on plan assets |
(1,749 | ) | (1,678 | ) | (3,494 | ) | (3,370 | ) | ||||||||
Amortization of transition asset |
(9 | ) | (8 | ) | (18 | ) | (17 | ) | ||||||||
Amortization of prior service cost |
59 | 183 | 118 | 365 | ||||||||||||
Amortization of unrecognized losses |
1,014 | 799 | 2,029 | 1,596 | ||||||||||||
Settlement/curtailment expense |
215 | 161 | 1,633 | 322 | ||||||||||||
Net periodic benefit cost |
$ | 2,250 | $ | 2,406 | $ | 5,758 | $ | 4,846 | ||||||||
We entered into a new labor agreement at one of our U.S. facilities in the first quarter of fiscal
2011. As a result, we incurred curtailment expense of approximately $1.2 million in the first
quarter of fiscal 2011. Curtailment of the pension plan is expected to reduce pension costs in
future years.
Other Postretirement Benefits
Three Months Ended | Six Months Ended | |||||||||||||||
February 28, | February 28, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(In thousands) | (In thousands) | |||||||||||||||
Service cost |
$ | 140 | $ | 155 | $ | 280 | $ | 310 | ||||||||
Interest cost |
332 | 345 | 664 | 690 | ||||||||||||
Amortization of prior service cost |
53 | 53 | 106 | 106 | ||||||||||||
Amortization of unrecognized losses |
150 | 72 | 300 | 144 | ||||||||||||
Net periodic benefit cost |
$ | 675 | $ | 625 | $ | 1,350 | $ | 1,250 | ||||||||
NOTE 8Income Taxes
In determining our quarterly provision for income taxes, we use an estimated annual effective tax
rate, which is based on various factors, including expected annual income, statutory tax rates, tax
planning opportunities in the various jurisdictions in which we operate, permanent items, state tax
rates and our ability to utilize various tax credits and net operating loss carryforwards.
Subsequent recognition, derecognition and measurement of a tax position taken in a previous period
are separately recognized in the quarter in which they occur and can be a source of variability in
effective tax rates from quarter-to-quarter.
The effective tax rate was 28.4% for the second quarter and 33.7% for the six month year-to-date
period of fiscal 2011. The second quarter fiscal 2011 rate was lower than the U.S. federal
statutory income tax rate and the prior year rate primarily due to finalizing certain tax estimates
and U.S. tax credits in the second quarter of fiscal 2011 with the filing of the Companys U.S.
federal tax return of approximately $1.3 million and changes in
U.S. tax law extending the research
and development credit.
The effective tax rate was 30.3% for the second quarter and 33.2% for the year to date period of
fiscal 2010. The second quarter fiscal 2010 effective tax rate was lower than the statutory tax
rate primarily due to statute lapses and audit settlements for items previously reserved of
approximately $0.8 million.
The balance of unrecognized tax benefits, including interest and penalties, as of February 28, 2011
and August
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31, 2010 was $5.4 million and $4.2 million, respectively, all of which would affect the
effective tax rate if recognized in future periods. The balance of unrecognized tax benefits at
February 28, 2011 includes $0.9 million recorded in the T-3 opening balance sheet.
NOTE 9Comprehensive Income (Loss)
The following table sets forth the reconciliation of net income to comprehensive income (loss):
Three Months Ended | Six Months Ended | |||||||||||||||
February 28, | February 28, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(In thousands) | (In thousands) | |||||||||||||||
Net income including noncontrolling interest |
$ | 13,062 | $ | 4,453 | $ | 28,154 | $ | 10,679 | ||||||||
Other comprehensive income (loss): |
||||||||||||||||
Foreign currency translation |
5,752 | (15,054 | ) | 9,953 | (5,545 | ) | ||||||||||
Minimum pension liability
adjustment, net of tax |
1,583 | (675 | ) | 1,583 | (675 | ) | ||||||||||
Comprehensive income (loss) |
20,397 | (11,276 | ) | 39,690 | 4,459 | |||||||||||
Comprehensive (income) loss attributable to
noncontrolling interest |
(514 | ) | 48 | (1,156 | ) | (492 | ) | |||||||||
Comprehensive income (loss) attributable to
Robbins & Myers, Inc. |
$ | 19,883 | $ | (11,228 | ) | $ | 38,534 | $ | 3,967 | |||||||
The net loss of T-3 from the acquisition date that is included in our consolidated condensed
financial statements for the three and six month periods ended February 28, 2011 was approximately
$3.0 million which included pre-tax expense of $11.5 million ($7.5 million after tax) related to
amortization of intangible assets for opening customer backlog, expense due to inventory write-up
values and severance costs.
NOTE 10Stock Compensation
We sponsor a long-term incentive stock plan to provide for the granting of stock-based compensation
to certain officers and other key employees. Under the plan, the stock option price per share may
not be less than the fair market value per share as of the date of grant. Outstanding grants
generally become exercisable over a three-year period. As part of the merger consideration, in the
second quarter of fiscal 2011, we issued approximately 1.0 million fully vested options to replace
T-3 grants for pre-merger services. In addition, we sponsor a long term incentive plan for selected
participants who earn performance share awards on varying target levels, based on earnings per
share and return on net assets. As of February 28, 2011, we had $3.3 million of compensation
expense not yet recognized related to nonvested stock awards. The weighted average period that
this compensation cost will be recognized is 2.6 years. There were approximately 0.5 million stock
options exercised in the first six months of fiscal 2011. There were no stock options exercised in
the first six months of fiscal 2010.
Total stock compensation expense for all stock based awards for the first six months of fiscal
2011 and 2010 was $3.3 million ($2.2 million after tax) and $1.5 million ($0.9 million after tax),
respectively. The second quarter of fiscal 2011 included approximately $2.0 million of stock
compensation expense which resulted from accelerated vesting of certain stock awards upon the
acquisition of T-3 pursuant to the terms of those awards.
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NOTE 11Business Segments
The following tables present information about our reportable business segments. Our three
reporting segments are Fluid Management, Process Solutions and Romaco. The results of T-3s
operations have been included in our consolidated condensed financial statements since the
acquisition date of January 10, 2011 within our Fluid Management Group. The customer sales and
negative EBIT of T-3 included in our operating results from the acquisition date were $35.5 million
and $4.6 million, respectively. Identifiable assets of T-3 as of February 28, 2011, as a result of
the acquisition, were $712.8 million, including goodwill of $341.8 million. Inter-segment sales
were not material and were eliminated at the consolidated level.
Three Months Ended | Six Months Ended | |||||||||||||||
February 28, | February 28, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(In thousands) | (In thousands) | |||||||||||||||
Unaffiliated Customer Sales: |
||||||||||||||||
Fluid Management |
$ | 134,786 | $ | 66,970 | $ | 226,122 | $ | 135,158 | ||||||||
Process Solutions |
49,028 | 39,867 | 98,462 | 83,400 | ||||||||||||
Romaco |
31,104 | 23,082 | 54,283 | 40,774 | ||||||||||||
Total |
$ | 214,918 | $ | 129,919 | $ | 378,867 | $ | 259,332 | ||||||||
Income Before Interest and Income Taxes (EBIT): |
||||||||||||||||
Fluid Management |
$ | 26,796 | (1) | $ | 13,633 | $ | 54,961 | (1) | $ | 30,367 | ||||||
Process Solutions |
506 | (2,538 | ) | 1,625 | (4,189 | ) | ||||||||||
Romaco |
2,109 | 340 | 2,201 | (418 | ) | |||||||||||
Corporate and
Eliminations |
(11,152) | (2) | (4,889 | ) | (16,332) | (2) | (9,478 | ) | ||||||||
Total |
$ | 18,259 | $ | 6,546 | $ | 42,455 | $ | 16,282 | ||||||||
February 28, | August 31, | |||||||
2011 | 2010 | |||||||
(In thousands) | ||||||||
Identifiable Assets: |
||||||||
Fluid Management |
$ | 1,050,809 | $ | 323,053 | ||||
Process Solutions |
266,001 | 242,942 | ||||||
Romaco |
103,636 | 81,631 | ||||||
Corporate and Eliminations |
59,955 | 169,395 | ||||||
Total |
$ | 1,480,401 | $ | 817,021 | ||||
(1) | Includes costs of $3.0 million due to merger-related severance costs, $4.4 million related to T-3 backlog amortization costs and $4.1 million of expense due to inventory write-up values recorded in cost of sales. | |
(2) | Includes costs of $5.9 million due to merger-related professional fees and accelerated stock compensation expense. |
In addition to the impact of changes in foreign currency exchange rates due to translation of the
non-U.S. dollar denominated subsidiary results into U.S. dollars, comparability of segment data is
impacted by our acquisition of T-3 in the second quarter of fiscal 2011, as well as general
economic conditions in the end markets we serve.
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NOTE 12Share Repurchase Program
On October 27, 2008, we announced that our Board of Directors authorized the repurchase of up to
3.0 million of our currently outstanding common shares (the Program). Prior to fiscal 2010, we
acquired approximately 2.0 million shares, leaving approximately 1.0 million shares available to be
repurchased under this Program. Repurchases under the Program have and will generally be made in
the open market or in privately negotiated transactions not exceeding prevailing market prices,
subject to regulatory considerations and market conditions, and have and will be funded from the
Companys available cash and credit facilities. There were no shares repurchased under the Program
in fiscal 2010 or in the six month period ended February 28, 2011.
NOTE 13New Accounting Pronouncements
In December 2007, the Financial Accounting Standards Board (FASB) issued and, in April 2009,
amended a new business combination standard codified within ASC 805, which changed the accounting
for business acquisitions. Accounting for business combinations under this standard requires the
acquiring entity in a business combination to recognize all (and only) the assets acquired and
liabilities assumed in the transaction and establishes the acquisition date fair value as the
measurement objective for all assets acquired and liabilities assumed in a business combination and
requires the acquirer to disclose the information needed to evaluate and understand the nature and
effect of the business combination. Certain provisions of this standard prescribe, among other
things, the determination of acquisition date fair value of consideration paid in a business
combination and the exclusion of transaction and acquisition related costs from acquisition
accounting. This standard was effective for us on September 1, 2009. Provisions of this standard
were applied to the Companys business acquisition of T-3 completed in fiscal 2011. See Note 2.
In October 2009, the FASB issued Accounting Standard Update (ASU) No. 2009-13,
Multiple-Deliverable Revenue Arrangements- a consensus of the FASB Emerging Issues Task Force,
that amends existing guidance on revenue recognition for arrangements with multiple deliverables.
This standard will allow companies to allocate consideration received for qualified separate
deliverables using estimated selling price for both delivered and undelivered items when
vendor-specific objective evidence or third-party evidence is unavailable. Additional disclosures
discussing the nature of multiple element arrangements, the types of deliverables under the
arrangements, the general timing of their delivery, and significant factors and estimates used to
determine estimated selling prices are required. The adoption of this standard did not have a
material impact on our consolidated financial statements.
In January 2010, the FASB issued ASU No. 2010-06, Improving Disclosures about Fair Value
Measurements, that amends existing disclosure requirements under ASC 820, by adding required
disclosures about items transferring into and out of levels 1 and 2 in the fair value hierarchy;
adding separate disclosures about purchase, sales, issuances, and settlements relative to level 3
measurements; and clarifying, among other things, the existing fair value disclosures about the
level of disaggregation. This ASU was effective for us in the fourth quarter of fiscal 2010, except
for the requirement to provide level 3 activity of purchases, sales, issuances, and settlements on
a gross basis, which is effective beginning in our fiscal 2012. The adoption of this standard that
was applicable for fiscal 2010 did not have a material impact on our consolidated financial
statements. We do not expect the remaining adoption of this standard in fiscal 2012 for level 3
activity disclosure to have a material impact on our consolidated financial statements.
In December 2010, the FASB issued ASU No. 2010-29, Disclosure of Supplementary Pro Forma
Information for Business Combinations, that addresses diversity in practice about the
interpretation of the pro forma revenue and earnings disclosure requirements for business
combinations. The amendments in this standard specify that if a public entity presents comparative
financial statements, the entity should disclose revenue and earnings of the combined entity as
though the business combination(s) that occurred during the current year had occurred as of the
beginning of the comparable prior reporting period only. This standard also expands the
supplemental pro forma disclosures under ASC 805 to include a description of the nature and amount
of material, nonrecurring pro forma adjustments directly attributable to the business combination
included in the reported pro forma revenue and earnings. The amendments in this ASU are effective
prospectively for business combinations for which the acquisition date is on or after the beginning
of the first annual reporting period beginning on or after December 15, 2010, with early adoption
permitted. This standard will be effective for us beginning in our fiscal 2012, depending on future
acquisitions. We do not expect the pro forma disclosure requirements under this standard to have a
material impact on our
consolidated financial statements.
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NOTE 14Fair Value Measurements
The following table summarizes the bases used to measure certain financial assets at fair value on
a recurring basis as of February 28, 2011 (in thousands):
Quoted Prices | Significant | |||||||||||||||
in Active | Other | Significant | ||||||||||||||
Fair Value at | Markets for | Observable | Unobservable | |||||||||||||
February 28, | Identical Assets | Inputs | Inputs | |||||||||||||
2011 | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
Cash and cash equivalents (1) |
$ | 50,781 | $ | 50,781 | $ | | $ | | ||||||||
Total assets at fair value |
$ | 50,781 | $ | 50,781 | $ | | $ | | ||||||||
(1) | Our cash and cash equivalents primarily consist of cash in banks, commercial paper and overnight investments in highly rated financial institutions. |
Non-Financial Assets and Liabilities at Fair value on a Nonrecurring Basis
Certain assets and liabilities are measured at fair value on a nonrecurring basis; that is, the
assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair
value adjustments in certain circumstances (e.g., when there is evidence of impairment). At
February 28, 2011, no fair value adjustments or fair value measurements were required for
nonfinancial assets or liabilities.
Fair Value of Financial Instruments
The Companys financial instruments include cash and cash equivalents, accounts receivable,
accounts payable, accrued expenses and debt. The fair values of cash and cash equivalents, accounts
receivable, accounts payable, accrued expenses and short-term debt approximate their carrying
values because of the short-term nature of these instruments. The fair value of long-term debt
equals its carrying value as it is predominantly at a variable rate.
NOTE 15Subsequent Event
On March 28, 2011, the Company reached an agreement to sell our Romaco business segment through a
series of stock sales for approximately 65 million
($92 million at the March 31, 2011 exchange rate), subject to certain working
capital adjustments. At February 28, 2011, the net assets of the Romaco business segment were
approximately 36 million ($51 million at the March 31, 2011 exchange rate). For tax purposes, the gain is expected to be minimal.
15
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Item 2Managements Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations
Overview
We are a leading designer, manufacturer and marketer of highly engineered, application-critical
equipment and systems for the energy, industrial, chemical and pharmaceutical markets worldwide.
With our acquisition of T-3 Energy Services, Inc. (T-3) on January 10, 2011 (the acquisition
date), we are expanding and complementing our energy business in our Fluid Management Group, and
creating a stronger strategic platform with better scale to support our future growth. We attribute
our success to our close and continuing interaction with customers, our manufacturing, sourcing and
application engineering expertise and our ability to serve customers globally. We attempt to
continually develop initiatives to improve our performance in these key areas. World-wide economic
conditions deteriorated in our fiscal year 2009, to which we responded by cutting costs, initiating
restructuring programs to reduce manufacturing capacity while increasing utilization, standardizing
product offerings to allow greater utilization of our lower cost manufacturing facilities,
leveraging functional resources, and further integrating our business activities. We expect to
continue our restructuring and streamlining efforts in certain businesses and pursue our organic
and strategic growth initiatives to improve our competitiveness, financial results, long-term
profitability and shareholder value.
Our fiscal 2011 Company-wide focus areas include successfully integrating T-3 and obtaining related
cost savings and synergies; further improving our cost structure and our competitive advantage;
developing sales, marketing and product management capabilities to increase sales and margins;
driving performance with strategy deployment and new product commercialization in order to achieve
our agenda of profitable growth, improved operating efficiency and organizational effectiveness.
While differences exist among the Companys businesses and geographical locations, on an overall
basis, demand for the Companys products increased in the first six months of fiscal 2011 as
compared with the comparable period of fiscal 2010, resulting in aggregate year-over-year sales
growth and improved margins. We are cautiously optimistic that the continued worldwide economic
recovery and recent market trends, primarily in our emerging markets and for certain product lines,
especially serving oil and gas markets, will continue to gain strength and provide positive
momentum in fiscal 2011, following six quarters of sequential growth in consolidated orders and an
increase in consolidated backlog throughout fiscal 2010 and into fiscal 2011.
Our Company has a Venezuelan subsidiary with net sales, operating income and total assets
representing approximately one percent of our consolidated financial statement amounts in fiscal
2011 and 2010. In early January 2010, the Venezuelan government devalued its currency. Our
subsidiary operated under a rate of 4.30 bolivars to the U.S. dollar, as compared with the previous
rate of 2.15, and our fiscal 2010 year-end financial statements reflected this new rate. In
addition, the financial statements of our Venezuelan subsidiary were consolidated and reported
under highly inflationary accounting rules under U.S. generally accepted accounting principles
(GAAP) beginning in the second quarter of fiscal 2010, resulting in an income statement exchange
loss of $0.6 million in the three and six month periods ended February 28, 2010. The fiscal 2010
devaluation did not have a material impact on our consolidated financial statements in the three
and six month periods ended February 28, 2011.
With approximately 40% of our sales outside the United States, we can be affected by changes in
currency exchange rates between the U.S. dollar and the currencies in non-U.S. countries in which
we operate. The impact on net income, sales and orders due to foreign exchange changes was
immaterial for the first half of fiscal 2011 compared with the same period of prior year.
Additionally, the assets and liabilities of our foreign operations are translated at the exchange
rates in effect at the balance sheet date, with related gains or losses reported as a separate
component of our shareholders equity, except for Venezuela, which is reported following highly
inflationary accounting rules under U.S. GAAP, as mentioned above. The marginal strengthening of
most foreign currencies against the U.S. dollar in the first half of fiscal 2011 did
not materially impact our financial condition at the end of the second quarter as compared with the
end of fiscal 2010.
As mentioned above, on January 10, 2011, we acquired 100% of the outstanding common stock and
voting
16
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interest of T-3. The operating results of T-3 are included in our consolidated condensed
financial statements only since the acquisition date within our Fluid Management Group. T-3
designs, manufactures, repairs and services products used in the drilling, completion and
production of new oil and gas wells, the workover of existing wells, and the production and
transportation of oil and gas. Its products are used in both onshore and offshore applications
throughout the world. We expect to achieve significant synergies and cost reductions by eliminating
redundant processes and facilities. We caution readers that while pre- and post-acquisition
comparisons as well as quantified amounts themselves may provide indications of general trends,
actual cost savings and operating results due to the merger may differ from previous management
estimates.
The purchase price for acquiring all of the outstanding common stock of T-3 was approximately
$618.4 million, which consisted of approximately $106.3 million in cash paid, $492.1 million as the
fair value of R&M common shares issued and $20.0 million as the fair value of R&M options and
warrants issued to replace T-3 grants for pre-merger services and warrants, based on the weighted
average Black-Scholes valuation of $20.41 per R&M share. The fair value of R&M common shares issued
of $41.18 per common share was based on the closing price of R&M shares on the New York Stock
Exchange (NYSE) on January 7, 2011 (opening price on January 10, 2011). As a result of the
merger, T-3 stockholders own approximately 27% of our outstanding common shares. We funded the cash
portion of the purchase price from our available cash on hand. We issued approximately 12.0 million
shares as part of the purchase price to T-3 stockholders. T-3 had annual revenues of approximately
$206.7 million (unaudited) for its last completed fiscal year ended December 31, 2010. Identifiable
assets of T-3 as of February 28, 2011, as a result of the acquisition, were approximately $712.8
million, including goodwill of $341.8 million.
Our business consists of three market focused segments: Fluid Management, which now includes T-3;
Process Solutions and Romaco.
Fluid Management. Order levels from customers served by our Fluid Management segment continued to
show strong year-over-year improvements in the first half of fiscal 2011. Demand for our energy
products remains robust and industrial demand is improving. Our primary objectives for this segment
are to increase our manufacturing capacity to meet current demand, expand our geographic reach,
improve our selling and product management capabilities, commercialize new products in our niche
market sectors, develop new customer relationships, and successfully integrate T-3 and obtain
related cost savings and synergies. Our Fluid Management business segment, which includes T-3,
designs, manufactures, markets and services equipment and systems, including hydraulic drilling
power sections, blow-out preventers, (BOPs), BOP control systems, elastomer products, drilling,
production and well service chokes, manifolds, high pressure premium gate valves, standard and
customized fluid-agitation equipment and systems, down-hole and industrial progressing cavity
pumps, a full range of wellhead systems, grinders, rod guides, tubing rotators, pipeline closure
products and valves. These products are used in oil and gas exploration and recovery, specialty
chemical, wastewater treatment and a variety of other industrial applications.
Process Solutions. Order levels in our Process Solutions segment improved sequentially each
quarter of fiscal 2010, and first half fiscal 2011 orders were much higher than the comparable
period in the prior year. However, pricing has not fully recovered, especially for European
chemical market capital goods. Our primary objectives are to reduce operating costs in developed
regions, increase the capability of production from low cost areas and developing markets and
increase our focus on aftermarket opportunities. Our Process Solutions business segment designs,
manufactures and services glass-lined reactors and storage vessels, customized equipment, systems
and fluoropolymer-lined fittings, vessels and accessories, primarily for the pharmaceutical and
specialty chemical markets.
Romaco. Order levels in our Romaco segment also trended higher in fiscal 2010 and continued to
show strength in the first half of fiscal 2011. The primary target markets for Romaco include
pharmaceutical, healthcare, food and cosmetics. Our primary objectives are to develop engineered
solutions, expand our supply chain initiatives, increase our market presence for certain
applications, further develop our global distribution capabilities and increase our focus on
aftermarket opportunities. Our Romaco business segment designs, manufactures and markets packaging
and secondary processing equipment for the pharmaceutical,
healthcare, nutraceutical, food and cosmetic industries. Packaging applications include blister and
strip packaging for various products including tablets, effervescent tablets and capsules; filling
of both liquid and powder into vials and bottles, capsule and tube filling; tablet counting and
packaging for bottles; customized packaging for drug delivery devices; as well as secondary
processing for liquids and semi-solids.
On March 28, 2011, the Company reached an agreement to sell our Romaco business segment through a
series
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of stock sales for approximately 65 million ($92 million at the March 31, 2011 exchange rate), subject to certain working
capital adjustments. At February 28, 2011, the net assets of the Romaco business segment were
approximately 36 million ($51 million at the March 31, 2011 exchange rate). For tax purposes, the gain is expected to be minimal.
The following tables present the components of our consolidated income statement and segment
information for the three and six month periods of fiscal 2011 and 2010.
Three Months Ended | Six Months Ended | |||||||||||||||
February 28, | February 28, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Net sales |
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
Cost of sales |
64.5 | 67.7 | 63.4 | 67.2 | ||||||||||||
Gross profit |
35.5 | 32.3 | 36.6 | 32.8 | ||||||||||||
Selling, general and administrative expenses |
20.8 | 27.3 | 21.9 | 26.5 | ||||||||||||
Other expense |
6.2 | | 3.5 | | ||||||||||||
EBIT (1) |
8.5 | % | 5.0 | % | 11.2 | % | 6.3 | % | ||||||||
(1) | Includes costs of $13.3 million (6.2% and 3.5% of net sales for the three and six month periods ended February 28, 2011, respectively) due to merger-related severance costs, professional fees, backlog amortization costs and stock compensation expense which are included in Other expense and $4.1 million (1.9% and 1.1% of net sales for the three and six month periods ended February 28, 2011, respectively) of expense due to inventory write-up values recorded in cost of sales. |
Three Months Ended | Six Months Ended | |||||||||||||||
February 28, | February 28, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(In thousands, except percents) | ||||||||||||||||
Segment |
||||||||||||||||
Fluid Management: |
||||||||||||||||
Sales |
$ | 134,786 | $ | 66,970 | $ | 226,122 | $ | 135,158 | ||||||||
EBIT |
26,796 | (1) | 13,633 | 54,961 | (1) | 30,367 | ||||||||||
EBIT % |
19.9 | % | 20.4 | % | 24.3 | % | 22.5 | % | ||||||||
Process Solutions: |
||||||||||||||||
Sales |
$ | 49,028 | $ | 39,867 | $ | 98,462 | $ | 83,400 | ||||||||
EBIT |
506 | (2,538 | ) | 1,625 | (4,189 | ) | ||||||||||
EBIT % |
1.0 | % | (6.4) | % | 1.7 | % | (5.0 | )% | ||||||||
Romaco: |
||||||||||||||||
Sales |
$ | 31,104 | $ | 23,082 | $ | 54,283 | $ | 40,774 | ||||||||
EBIT |
2,109 | 340 | 2,201 | (418 | ) | |||||||||||
EBIT % |
6.8 | % | 1.5 | % | 4.1 | % | (1.0 | )% |
(1) | Includes costs of $3.0 million due to merger-related severance costs, $4.4 million related to T-3 backlog amortization costs and $4.1 million of expense due to inventory write-up values recorded in cost of sales. |
In addition to the impact of changes in foreign currency exchange rates due to translation of the
non-U.S. dollar denominated subsidiary results into U.S. dollars, comparability of segment data is
impacted by our
acquisition of T-3 (included in our Fluid Management Group) on January 10, 2011, as well as general
economic conditions in the end markets we serve.
EBIT (Income before interest and income taxes) is a non-GAAP measure. The Company uses this measure
to evaluate its performance and believes this measure is helpful to investors in assessing its
performance. A reconciliation of this measure to net income is included in our Consolidated
Condensed Income Statement. EBIT is not a measure of cash available for use by the Company.
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Three months ended February 28, 2011 and February 28, 2010
Net Sales
Consolidated net sales for the second quarter of fiscal 2011 were $214.9 million, $85.0 million
higher than net sales for the second quarter of fiscal 2010. Excluding the impacts of currency
translation and the T-3 acquisition, sales increased by $48.5 million, or 37%.
The Fluid Management segment, which includes T-3 results since January 10, 2011, had sales of
$134.8 million in the second quarter of fiscal 2011 compared with $67.0 million in the second
quarter of fiscal 2010, an increase of $67.8 million. Excluding currency translation and
acquisition impacts, sales increased $31.2 million, or 47%. This increase was primarily due to
higher customer demand for oil and gas products resulting from higher oil prices worldwide and
increased expenditure for drilling activity in North American shale formations. Sales also
benefited from higher industrial demand in North America. Orders for this segment were impacted by
the same factors and were $16.0 million, or 20% higher than the comparable period in the prior
year, excluding currency and acquisition impacts. Orders for this segment were $143.4 million in
the second quarter of fiscal 2011 compared with $79.9 million in the prior year period. Ending
backlog at February 28, 2011, including T-3 backlog of $65.1 million, was $131.3 million compared
with $58.1 million at August 31, 2010.
The Process Solutions segment had sales of $49.0 million in the second quarter of fiscal 2011
compared with $39.9 million in the second quarter of fiscal 2010, an increase of 23%. Segment
orders improved $7.1 million, or 16%, from the second quarter of fiscal 2010 levels to $51.9
million, reflecting improved market conditions in certain served end markets outside of Europe. The
foreign currency translation impact was immaterial for the quarter. Ending backlog at February 28,
2011 was $89.7 million compared with $78.7 million at August 31, 2010.
The Romaco segment, which is primarily a European-based business, had sales of $31.1 million in the
second quarter of fiscal 2011 compared with $23.1 million in the second quarter of fiscal 2010, an
increase of $8.0 million, or 35% from the prior year period. Orders increased in the second quarter
of fiscal 2011 and were $35.1 million compared with $30.8 million in the same period of the prior
year. The foreign currency translation impact was immaterial for the quarter. We believe this
increase is an outcome of the global economic recovery combined with our increased focus on market
opportunities and product innovation. Ending backlog at February 28, 2011 was $56.7 million
compared with $38.3 million at August 31, 2010.
Earnings Before Interest and Income Taxes (EBIT)
Consolidated EBIT for the second quarter of fiscal 2011 was $18.3 million, an increase of $11.7
million from the second quarter of fiscal 2010. EBIT increased in the second quarter of fiscal 2011
despite higher T-3 merger-related costs of $17.4 million, primarily due to increased sales volume
described above in all our segments, along with an improved product mix, especially in our Fluid
Management segment.
The Fluid Management segment had EBIT of $26.8 million in the second quarter of fiscal 2011,
compared with $13.6 million in the second quarter of fiscal 2010. Despite a net EBIT loss for T-3
of $4.6 million, which included $11.5 million of higher amortization related to customer backlog,
severance, other merger-related costs and the expense due to inventory write-up values, segment
EBIT increased by $13.2 million. Excluding foreign currency and acquisition impacts, EBIT increased
by $17.4 million, mainly due to the higher sales volume described above and a favorable product
mix.
The Process Solutions segment had EBIT of $0.5 million in the second quarter of fiscal 2011
compared with negative EBIT of $2.5 million in the second quarter of fiscal 2010, an increase of
$3.0 million. Foreign currency had no impact on EBIT in the quarter. This increase in EBIT
resulted from higher sales volume in fiscal 2011.
The Romaco segment had EBIT of $2.1 million in the second quarter of fiscal 2011 compared with $0.3
million in the second quarter of fiscal 2010. Excluding currency impact, EBIT increased by $1.4
million, primarily due to higher sales volume.
Corporate costs in the second quarter of fiscal 2011 were $6.3 million higher than the same period
in the prior year primarily due to $5.9 million of costs relating to the T-3 merger.
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Income Taxes
The effective tax rate was 28.4% for the second quarter of fiscal 2011 compared with 30.3% in the
prior year period. The second quarter fiscal 2011 effective tax rate was lower than the statutory
tax rate and the prior year rate, primarily due to finalizing certain tax estimates and U.S. tax
credits in the second quarter of fiscal 2011 with the filing of the Companys U.S. federal tax
return of approximately $1.3 million and changes in U.S. tax law extending the research and
development credit.
Six months ended February 28, 2011 and February 28, 2010
Net Sales
Consolidated net sales for the first half of fiscal 2011 were $378.9 million; $119.5 million higher
than net sales for the same period of fiscal 2010. Excluding the impacts of currency translation
and the T-3 acquisition, sales increased by $83.8 million, or 32%, due to higher sales in all three
of our segments in fiscal 2011.
The Fluid Management segment had sales of $226.1 million in the first half of fiscal 2011 compared
with $135.2 million in the same period of fiscal 2010. Excluding the impacts of currency and T-3
acquisition, sales for the first half of fiscal 2011 increased by $53.8 million, or 40% compared
with the same period in the prior year. This increase was primarily in our energy markets, due to
strong growth in unconventional drilling, both horizontal and directional rigs, as exploration and
production companies invested to capture oil and gas from shale formations in North America. Orders
for this segment were $245.7 million in the first half of fiscal 2011 compared with $148.0 million
in the same prior year period. Excluding currency and acquisition impacts, orders in the first half
of fiscal 2011 grew $49.4 million, or 33%. Ending backlog, including T-3 backlog of $65.1 million,
at February 28, 2011 was $131.3 million compared with $58.1 million at August 31, 2010.
The Process Solutions segment had sales of $98.5 million in the first half of fiscal 2011, higher
than the $83.4 million recorded in the same period of fiscal 2010, an increase of $15.1 million, or
18%. Segment orders in the first half of fiscal 2011 continued to improve from the second half of
fiscal 2010 to $105.9 million. Orders increased by $19.2 million, or 22% from the same period in
the prior year period due to improved demand in certain served end markets outside of Europe. The
foreign currency translation impact was immaterial for the six month period. Ending backlog at
February 28, 2011 was $89.7 million compared with $78.7 million at August 31, 2010.
The Romaco segment had sales of $54.3 million in the first half of fiscal 2011 compared with $40.8
million in the same period of fiscal 2010, an increase of $13.5 million, or 33%. The foreign
currency translation impact was immaterial for the six month period. Orders in the first half of
fiscal 2011 of $68.6 million were strong compared with $58.0 million for the same period of prior
year, an increase of 18%. We believe this year-over-year order increase, is an outcome of the
improving market conditions in developed global regions, coupled with our increased focus on
worldwide market opportunities and product innovation. Ending backlog at February 28, 2011 was
$56.7 million compared with $38.3 million at August 31, 2010.
Earnings Before Interest and Income Taxes (EBIT)
Consolidated EBIT for the first half of fiscal 2011 was $42.5 million, an increase of $26.2 million
from the same period of the prior year. Excluding the impact of currency translation, EBIT
increased by $24.9 million. This increase, despite higher costs associated with the T-3 acquisition
of $17.4 million, was mainly attributable to the higher sales volume described above in all of our
business platforms and a strong sales mix in our Fluid Management segment.
The Fluid Management segment had EBIT of $55.0 million in the first half of fiscal 2011 as compared
with $30.4 million in the same prior year period, an increase of $24.6 million, or 81%. Excluding
currency and acquisition impacts, EBIT for the first half of the fiscal 2011 increased $28.6
million, or 94%. This increase in EBIT is due principally to the sales increase and favorable
product mix as described above.
The Process Solutions segment had EBIT of $1.6 million in the first half of fiscal 2011 compared
with negative EBIT of $4.2 million in the comparable period of fiscal 2010, an increase of $5.8
million. This increase is due
principally to higher sales activity described above.
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The Romaco segment had EBIT of $2.2 million in the first half of fiscal 2011 and negative EBIT of
$0.4 million in the first half of fiscal 2010. The improvement in EBIT in fiscal 2011 resulted from
higher sales volume.
Corporate costs were $6.9 million higher in the first half of fiscal 2011 compared with the same
period in fiscal 2010, primarily due to $5.9 million of costs relating to the T-3 merger.
Income Taxes
The effective tax rate was 33.7% for the first half of fiscal 2011 compared with 33.2% in the
comparable prior year period. The current year rate is marginally lower than the statutory tax
rate, primarily due to finalizing certain tax estimates and U.S. tax credits in the second quarter
of fiscal 2011 with the filing of the Companys U.S. federal tax return of approximately $1.3
million and changes in U.S. tax law extending the research and development credit.
Liquidity and Capital Resources
Operating Activities
In the first half of fiscal 2011, our cash outflow from operating activities was $12.8 million,
compared with a cash inflow of $29.5 million in the same period of the prior year. This decrease
occurred primarily because of higher working capital to support our sales growth, as well as
payments for restructuring costs accrued in fiscal 2010, pension payments for U.S. plans, and
payments related to accruals in the opening balance sheet of T-3. Our cash flows from operating
activities can fluctuate significantly from period-to-period as working capital needs and the
timing of payments for items such as income taxes, restructuring activities, pension funding and
other items impact reported cash flows.
We expect our available cash, fiscal 2011 operating cash flow and amounts available under our
credit agreement to be adequate to fund fiscal 2011 operating needs, shareholder dividends, capital
expenditures, and additional share repurchases, if any.
Investing Activities
Our cash outflows relating to investing activities for the first half of fiscal 2011 of $97.6
million included $90.4 million of cash used for the T-3 acquisition, net of cash acquired, and
$7.2 million for capital expenditures. In the first half of fiscal 2010, our net cash outflows from
investing activities of $2.4 million consisted of capital expenditures of approximately $3.5
million and asset sale proceeds of $1.1 million. For the full year in fiscal 2011, the Company
expects capital spending to approximate $20.0 million or higher, depending on business conditions
and the timing of certain capital projects.
On March 28, 2011, the Company reached an agreement to sell our Romaco business segment through a
series of stock sales for approximately 65 million
($92 million at the March 31, 2011 exchange rate), subject to certain working
capital adjustments. At February 28, 2011, the net assets of the Romaco business segment were
approximately 36 million ($51 million at the March 31, 2011 exchange rate). For tax purposes, the gain is expected to be minimal.
Financing Activities
There were approximately 0.5 million stock options exercised in the first six months of fiscal
2011, resulting in cash proceeds of approximately $11.5 million.
The quarterly dividend rate per common share was increased in January 2011 from $0.0425 to $0.0450.
On October 27, 2008, we announced that our Board of Directors authorized the repurchase of up to
3.0 million of our currently outstanding common shares. Prior to fiscal 2010, we acquired
approximately 2.0 million of our
outstanding common shares for $39.1 million under the repurchase program. There were no shares
repurchased under the program in fiscal 2010 or in the six month period ended February 28, 2011.
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Credit Agreement
Our Bank Credit Agreement (Agreement) provides that we may borrow on a revolving credit basis up
to a maximum of $150.0 million and includes a $100.0 million expansion feature. All outstanding
amounts under the Agreement are due and payable on December 19, 2011. Interest is variable based
upon formulas tied to LIBOR or an alternative base rate defined in the Agreement, at our option,
and is payable quarterly. Indebtedness under the Agreement is unsecured, except for the pledge of
the stock of our U.S. subsidiaries and approximately two-thirds of the stock of certain non-U.S.
subsidiaries. While no amounts are outstanding under the Agreement at February 28, 2011, we have
$35.6 million of standby letters of credit outstanding at February 28, 2011. These standby letters
of credit are used as security for advance payments received from customers, and for future
payments to our vendors and reduce the amount we may borrow under the Agreement. Accordingly, under
the Agreement, we have $114.4 million of unused borrowing capacity.
The Agreement contains certain restrictive covenants including limitations on indebtedness,
acquisitions, asset sales, sales and lease backs, and cash dividends as well as financial covenants
relating to interest coverage, leverage and net worth. As of February 28, 2011, we are in
compliance with these covenants.
Six banks participate in our revolving credit agreement. We are not dependent on any single bank
for our financing needs.
From available cash balances, we repaid the remaining $30.0 million of Senior Notes on the May 3,
2010 maturity date.
Following is information regarding our long-term contractual obligations and other commitments
outstanding as of February 28, 2011:
Payments Due by Period | ||||||||||||||||||||
Long-term contractual obligations | Total | One year or less | Two to three years | Four to five years | After five years | |||||||||||||||
(In thousands) | ||||||||||||||||||||
Long-term debt |
$ | 1,923 | $ | 1,900 | $ | 23 | $ | | $ | | ||||||||||
Operating leases (1) |
19,000 | 6,000 | 8,000 | 4,000 | 1,000 | |||||||||||||||
Total contractual cash
obligations |
$ | 20,923 | $ | 7,900 | $ | 8,023 | $ | 4,000 | $ | 1,000 | ||||||||||
(1) | Operating leases are estimated as of February 28, 2011, and consist primarily of building and equipment leases. |
Unrecognized tax benefits, including interest and penalties, in the amount of $5.4 million at
February 28, 2011, have been excluded from the table because we are unable to make a reasonably
reliable estimate of the timing of the future payments. The only other commercial commitments
outstanding were standby letters of credit of $35.6 million, which are substantially due within one
year.
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Critical Accounting Policies
In preparing our consolidated financial statements, we follow accounting principles generally
accepted in the United States of America, which in many cases require us to make assumptions,
estimates and judgments that affect the amounts reported. Many of these policies are
straightforward. There are, however, some policies that are critical because they are important in
determining the financial condition and results of operations and some may involve management
judgments due to the sensitivity of the methods, assumptions and estimates necessary in determining
the related income statement, asset and/or liability amounts. These policies are described under
Managements Discussion and Analysis of Financial Condition and Results of Operations in our
Report on Form 10-K/A for the year ended August 31, 2010. There have been no material changes in
the accounting policies followed by us during fiscal 2011.
Safe Harbor Statement
In addition to historical information, this report contains forward-looking statements
identified by use of words such as expects, anticipates, believes, and similar expressions.
These statements reflect managements current expectations and involve known and unknown risks,
uncertainties, contingencies and other factors that could cause actual results, effects and timing
to differ materially from the results predicted or implied by those statements. The most
significant of these risks and uncertainties are described in our Annual Report on Form 10-K/A for
the year ended August 31, 2010, the joint proxy statement/prospectus filed with the Securities and
Exchange Commission (SEC) on November 29, 2010, our Quarterly Report on Form 10-Q for the quarter
ended November 30, 2010 filed with the SEC on January 7, 2011 and other reports filed from time to
time with the SEC and include, but are not limited to: whether or when the sale of the Romaco
businesses will occur (including receipt of regulatory approval); costs and difficulties related to
integration of T-3; the inability to or delay in obtaining cost savings and synergies from the T-3
merger; inability to retain key personnel; changes in the demand for or price of oil and/or natural
gas; a significant decline in capital expenditures within the markets served by the Company; the
ability to realize the benefits of restructuring programs; increases in competition; changes in the
availability and cost of raw materials; foreign exchange rate fluctuations as well as economic or
political instability in international markets and performance in hyperinflationary environments,
such as Venezuela; work stoppages related to union negotiations; customer order cancellations; the
possibility of product liability lawsuits that could harm our businesses; events or circumstances
which result in an impairment of, or valuation against, assets; the potential impact of U.S. and
foreign legislation, government regulations, and other governmental action, including those
relating to export and import of products and materials, and changes in the interpretation and
application of such laws and regulations; the outcome of audit, compliance, administrative or
investigatory reviews; proposed changes in U.S. tax law which could impact our future tax expense
and cash flow and decline in the market value of our pension plans investment portfolios. Except
as otherwise required by law, we do not undertake any obligation to publicly update or revise these
forward-looking statements to reflect events or circumstances after the date hereof.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
In our normal operations we have market risk exposure to foreign currency exchange rates and
interest rates. There has been no significant change in our market risk exposure with respect to
these items during the quarter ended February 28, 2011. For additional information see
Qualitative and Quantitative Disclosures About Market Risk at Item 7A of our Annual Report on
Form 10-K/A for the year ended August 31, 2010.
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Item 4. Controls and Procedures
(A) Evaluation of Disclosure Controls and Procedures
Management, including our Chief Executive Officer (CEO) and Chief Financial Officer (CFO),
conducted an evaluation of the effectiveness of the design and operation of our disclosure
controls and procedures (Disclosure Controls) as of February 28, 2011. Disclosure Controls are
controls and procedures designed to reasonably assure that information required to be disclosed in
our reports filed under the Exchange Act, such as this Form 10-Q, is recorded, processed,
summarized and reported within the time periods specified in the U.S. Securities and Exchange
Commissions (SEC) rules and forms. Disclosure Controls are also designed to reasonably assure
that such information is accumulated and communicated to our management, including the CEO and CFO,
as appropriate to allow timely decisions regarding required disclosure. Our quarterly evaluation of
Disclosure Controls includes an evaluation of some components of our internal control over
financial reporting, and internal control over financial reporting is also separately evaluated on
an annual basis.
Based on this evaluation, management, including our Chief Executive Officer and our Chief Financial
Officer has concluded that our disclosure controls and procedures were effective as of February 28,
2011.
(B) Changes in Internal Control over Financial Reporting
During the quarter ended February 28, 2011, there was no change in the Companys internal control
over financial reporting except for the acquisition of T-3 on January 10, 2011. As a result of this
acquisition, the Company has included T-3 within its system of internal control over financial
reporting.
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Part II Other Information
Item 1. Legal Proceedings
The Company is subject to an ongoing investigation by the U.S. Department of Justice and the
Department of Commerce Bureau of Industry and Security regarding potential export controls
violations arising from shipments to one customer. The Company has cooperated with the
investigation. At this time, we cannot determine the likely outcome of the current investigation or
whether the Company will have any material liability associated with the shipments that are the
subject of the investigation. It is not anticipated as probable that the Company will have a
material liability associated with the shipments.
Item 1A. Risk Factors
For information regarding factors that could affect the Companys operations, financial
condition and liquidity, see the risk factors discussed in Item 1A of our Annual Report on Form
10-K/A for the fiscal year ended August 31, 2010 and the Quarterly Report on Form 10-Q for the
quarter ended November 30, 2010 filed with the SEC.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
UNREGISTERED SALES OF EQUITY SECURITIES
On or about February 2, 2011, the Company issued 699 unregistered common shares upon the exercise
of a warrant that was converted in connection with the acquisition of T-3. The R&M common shares
that were issued upon the exercise of the warrant are not registered and are restricted.
ISSUER PURCHASES OF EQUITY SECURITIES
A summary of the Companys repurchases of its common shares during the quarter ended February 28, 2011 is as follows:
Total Number of | Maximum Number | |||||||||||||||
Shares Purchased as | of Shares that May | |||||||||||||||
Total Number | Average Price | Part of Publicly | Yet Be Purchased | |||||||||||||
of Shares | Paid per | Announced Plans or | Under the Plans or | |||||||||||||
Period | Purchased (a) | Share | Programs (b) | Programs (b) | ||||||||||||
December 1-31, 2010 |
| $ | | | 992,463 | |||||||||||
January 1-31, 2011 |
7,923 | 41.18 | | 992,463 | ||||||||||||
February 1-28, 2011 |
| | | 992,463 | ||||||||||||
Total |
7,923 | | ||||||||||||||
(a) | During the second quarter of fiscal 2011, the Company purchased 7,923 of its common shares in connection with its employee benefit plans, including purchases associated with the vesting of restricted stock awards. These purchases were not made pursuant to a publicly announced repurchase plan or program. | |
(b) | On October 27, 2008, our Board of Directors approved the repurchase of up to 3,000,000 of our outstanding common shares (the Program). In fiscal year 2009, we repurchased an aggregate of 2,007,537 of our outstanding common shares pursuant to the Program. The Program will expire when we have repurchased all the authorized shares under the Program, unless terminated earlier by a Board resolution. |
Item 6. Exhibits
a) | Exhibits see INDEX TO EXHIBITS |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto duly authorized.
ROBBINS & MYERS, INC.
|
||||
DATE: March 31, 2011 | BY | /s/ Christopher M. Hix | ||
Christopher M. Hix | ||||
Vice President and Chief Financial Officer (Principal Financial Officer) |
||||
DATE: March 31, 2011 | BY | /s/ Kevin J. Brown | ||
Kevin J. Brown | ||||
Corporate Controller (Principal Accounting Officer) |
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