ROBBINS & MYERS INC - 10-Q Quarterly Report

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended May 31, 2003 File Number 0-288

Robbins & Myers, Inc

(Exact name of registrant as specified in its charter)


Ohio (State or other jurisdiction of incorporation or organization)		31-0424220 (I.R.S. Employer Identification No.)


1400 Kettering Tower, Dayton, Ohio (Address of Principal executive offices)		45423 (Zip Code)

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

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 X NO

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

Common shares, without par value, outstanding as of May 31, 2003: 14,378,600

TABLE OF CONTENTS


	CONSOLIDATED CONDENSED BALANCE SHEET
	NOTE 1—Preparation of Financial Statements
	NOTE 2—New Accounting Standards
	NOTE 3—Acquisition
	NOTE 4—Goodwill and Other Intangible Assets
	NOTE 5—Net Income per Share
	NOTE 6—Product Warranties
	NOTE 7—Long-Term Debt
	NOTE 8—Income Taxes
	NOTE 9—Stock-Based Compensation
	NOTE 10—Comprehensive Income
	NOTE 11—Business Segments
Part I—Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 4. Controls and Procedures
Part II—Other Information
	Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
CERTIFICATIONS
EX-99.1 CERTIFICATION OF CEO
EX-99.2 CERTIFICATION OF CFO

ROBBINS & MYERS, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEET
(In thousands)


				May 31,			August 31,
				2003			2002

ASSETS				(Unaudited)




Current Assets




	Cash and cash equivalents			$	9,196		$	10,534




	Accounts receivable				113,089			113,711




	Inventories:




		Finished products			28,116			29,000




		Work in process			35,792			22,487




		Raw materials			40,760			40,959

					104,668			92,446




	Other current assets				10,933			12,318




	Deferred taxes				13,607			14,071

			Total Current Assets		251,493			243,080




Goodwill					302,021			271,948




Other Intangible Assets					17,535			17,604




Other Assets					6,991			6,201




Property, Plant and Equipment					286,168			261,926




	Less accumulated depreciation				(138,975	)		(118,067	)

					147,193			143,859

				$	725,233		$	682,692

LIABILITIES AND SHAREHOLDERS’ EQUITY




Current Liabilities




	Accounts payable			$	48,464		$	41,964




	Accrued expenses				85,810			83,871




	Current portion of long-term debt				7,346			4,526

			Total Current Liabilities		141,620			130,631




Long-Term Debt—Less Current Portion					192,658			203,920




Deferred Taxes					8,827			8,708




Other Long-Term Liabilities					79,275			70,863




Minority Interest					9,116			8,347




Shareholders’ Equity




	Common stock				104,306			103,923




	Retained earnings				183,702			176,627




	Accumulated other comprehensive loss				5,729			(20,057	)

					293,737			260,493

				$	725,233		$	682,692

See Notes to Consolidated Condensed Financial Statements

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


		Three Months Ended				Nine Months Ended
		May 31,				May 31,

		2003		2002		2003		2002

Net sales		$	144,921	$	124,812	$	403,904	$	394,201




Cost of sales			95,782		83,419		267,970		262,342

Gross profit			49,139		41,393		135,934		131,859




SG&A expenses			37,146		31,640		106,938		97,073




Amortization expense			554		388		1,664		1,569




Other			0		0		0		0

Income before interest and income taxes			11,439		9,365		27,332		33,217




Interest expense			4,000		4,909		11,710		13,528

Income before income taxes and minority interest			7,439		4,456		15,622		19,689




Income tax expense			2,488		1,490		5,230		6,590




Minority interest			540		270		948		792

Net income		$	4,411	$	2,696	$	9,444	$	12,307

Net income per share:




	Basic	$	0.31	$	0.23	$	0.66	$	1.04

	Diluted	$	0.30	$	0.23	$	0.66	$	0.99

Dividends per share:




	Declared	$	0.055	$	0.055	$	0.165	$	0.165

	Paid	$	0.055	$	0.055	$	0.165	$	0.165

See Notes to Consolidated Condensed Financial Statements

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


					Nine Months Ended
					May 31,

					2003			2002

Operating Activities:




		Net income			$	9,444		$	12,307




		Adjustments to reconcile net income to net cash and cash equivalents provided by operating activities:




			Depreciation			15,588			15,286




			Amortization			1,664			1,569




			Deferred taxes			345			(423	)




			Performance stock awards			0			(126	)




			Changes in operating assets and liabilities:




				Accounts receivable		12,365			3,204




				Inventories		(809	)		15,071




				Accounts payable		1,638			(5,189	)




				Accrued expenses		(6,210	)		(7,722	)




				Other		(69	)		(3,238	)

Net Cash and Cash Equivalents Provided by Operating Activities						33,956			30,739




Investing Activities:




	Capital expenditures, net of nominal disposals					(4,397	)		(12,648	)




	Purchase of Tarby					(12,478	)		0




	Proceeds from sale of equipment					0			4,905




	Amended credit agreement fees					0			(1,871	)




	Romaco earnout payment and acquisition costs					0			(19,794	)

Net Cash and Cash Equivalents Used by Investing Activities						(16,875	)		(29,408	)




Financing Activities:




	Proceeds from debt borrowings					49,731			31,083




	Payments of long-term debt					(66,164	)		(43,274	)




	Proceeds from sale of common stock					383			3,755




	Dividends paid					(2,369	)		(1,951	)

Net Cash and Cash Equivalents Used by Financing Activities						(18,419	)		(10,387	)

Decrease in Cash and Cash Equivalents						(1,338	)		(9,056	)




Cash and Cash Equivalents at Beginning of Period						10,534			16,122

Cash and Cash Equivalents at End of Period					$	9,196		$	7,066

See Notes to Consolidated Condensed Financial Statements

ROBBINS & MYERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
May 31, 2003
(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, 2003, and August 31, 2002, the results of our operations for the three and nine month periods ended May 31, 2003 and 2002, and our cash flows for the nine month periods ended May 31, 2003 and 2002. 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, 2002. A summary of our significant accounting policies is presented therein on page 34. There have been no material changes in the accounting policies followed by us during fiscal year 2003.

NOTE 2—New Accounting Standards

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

In December 2002, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 148 (SFAS 148), Accounting for Stock-Based Compensation – Transition and Disclosure. This Statement amends FASB Statement No. 123, Accounting for Stock-Based Compensation, to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, this Statement amends the disclosures in both annual and interim financial statements regarding the method of accounting for stock-based employee compensation and the effect of the method used on reported results. We continue to apply Accounting Principles Board Opinion No. 25 for the method used to account for stock-based employee compensation arrangements, where applicable, but have adopted the new disclosure requirements of SFAS 148 (see Note 9).

NOTE 3—Acquisition

On November 15, 2002, we purchased the stock of Tarby, Inc. (“Tarby”) for $12,478,000. Tarby is a manufacturer and marketer of progressing cavity pumps and components for the general industrial and municipal wastewater markets with annual sales of approximately $6,000,000.

NOTE 4—Goodwill and Other Intangible Assets

Changes in the carrying amount of goodwill for the nine month period ended May 31, 2003, by operating segment, are as follows:


	Pharmaceutical		Energy		Industrial
	Segment		Segment		Segment		Total

			(In thousands)




Balance as of September 1, 2002	$	161,138	$	68,098	$	42,712	$	271,948




Goodwill acquired during the period		0		0		8,384		8,384




Translation adjustments and other		19,823		1,588		278		21,689

Balance as of May 31, 2003	$	180,961	$	69,686	$	51,374	$	302,021

Information regarding our other intangible assets is as follows:


	As of May 31, 2003							As of August 31, 2002

	Carrying		Accumulated				Carrying		Accumulated
	Amount		Amortization		Net		Amount		Amortization		Net

	(In thousands)




Patents and Trademarks		8,117	$	1,626	$	6,491	$	7,260	$	1,103	$	6,157




Non-compete Agreements		10,752		8,199		2,553		10,752		7,823		2,929




Financing Costs		7,366		4,068		3,298		6,668		3,363		3,305




Pension Intangible		4,564		0		4,564		4,564		0		4,564




Other		2,078		1,449		629		2,038		1,389		649

Total	$	32,877	$	15,342	$	17,535	$	31,282	$	13,678	$	17,604

NOTE 5—Net Income per Share


				Three Months Ended				Nine Months Ended
				May 31,				May 31,

				2003		2002		2003		2002

				(In thousands, except per share amounts)
Numerator:




	Basic:




		Net income		$	4,411	$	2,696	$	9,444	$	12,307




		Effect of dilutive securities:




			Convertible debt interest		575		582		1,757		1,746

	Income attributable to diluted shares			$	4,986	$	3,278	$	11,201	$	14,053

Denominator:




	Basic:




		Weighted average shares			14,373		11,894		14,358		11,833




		Effect of dilutive securities:




			Convertible debt		2,135		2,191		2,194		2,191




			Dilutive options and restricted shares		26		118		29		138

	Diluted shares				16,534

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