ROBBINS & MYERS INC, 424B1, 1996-09-20

ROBBINS & MYERS INC
424B1, 1996-09-20
PUMPS & PUMPING EQUIPMENT

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<PAGE> 1
Filed Pursuant to Rule 424(b)(1);
Registration Statements No. 333-10619
and 33-12271

$60,000,000

LOGO ROBBINS & MYERS, INC.

6 1/2% Convertible Subordinated Notes Due 2003
Interest Payable on March 1 and September 1

The Notes offered hereby are convertible into Common Shares, without par
value (the "Common Shares"), of Robbins & Myers, Inc. (the "Company") at any
time prior to maturity, unless previously redeemed, at a conversion price of
$27.25 per share, subject to adjustment in certain events. The Common Shares are
traded on The Nasdaq Stock Market's National Market (the "Nasdaq National
Market") under the symbol "ROBN." On September 18, 1996, the last reported sale
price of the Common Shares on the Nasdaq National Market was $22.375 per share.
See "Price Range of Common Shares and Dividends."

The Notes will mature on September 1, 2003. The Notes are redeemable, in
whole or in part, at the option of the Company at any time on or after September
1, 1999, at the redemption prices set forth herein, plus accrued and unpaid
interest. Upon a Change in Control (as defined), each holder of Notes will have
the right, subject to certain conditions and restrictions, to require the
Company to repurchase any or all outstanding Notes owned by such holder at 100%
of the principal amount thereof, plus accrued and unpaid interest.

The Notes will be unsecured and subordinated to all present and future
Senior Indebtedness (as defined) of the Company. At September 18, 1996, after
giving effect to this offering and the application of the net proceeds
therefrom, Senior Indebtedness would have been approximately $17,606,000. See
"Use of Proceeds." At August 31, 1996, liabilities (including trade payables but
excluding inter-company liabilities) of the Company's subsidiaries, to which the
Notes are effectively subordinated, were approximately $93,856,000. See
"Description of the Notes."

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<CAPTION>
===============================================================================================
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(3)
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note......................... 100.0% 3.0% 97.0%
- -----------------------------------------------------------------------------------------------
Total(4)......................... $60,000,000 $1,800,000 $58,200,000
===============================================================================================
<FN>
(1) Plus accrued interest, if any, from September 24, 1996.

(2) See "Underwriting" for indemnification arrangements.

(3) Before deducting estimated expenses of $250,000 payable by the Company.

(4) The Company has granted to the Underwriters a 30-day option to purchase up
to an additional $5,000,000 principal amount of Notes solely to cover
over-allotments. If this option is exercised in full, total Price to Public,
Underwriting Discounts and Commissions and Proceeds to Company will be
$65,000,000, $1,950,000 and $63,050,000, respectively. See "Underwriting."
</TABLE>
The Notes offered hereby are being offered by the Underwriters, subject to
prior sale and acceptance by the Underwriters and subject to their right to
reject any order in whole or part. It is expected that the Notes, in temporary
or definitive registered form, will be available for delivery on or about
September 24, 1996 at the offices of Schroder Wertheim & Co. Incorporated, New
York, New York. If temporary Notes are delivered, definitive Notes will be
available for exchange as soon as practicable after that date.

SCHRODER WERTHEIM & CO. ROBERT W. BAIRD & CO.
INCORPORATED

FIRST ANALYSIS SECURITIES
CORPORATION

September 19, 1996
<PAGE> 2

GLOBAL PRESENCE

[MAP OF INDICATED GEOGRAPHIC AREAS]

<TABLE>
<CAPTION>
NORTH & SOUTH AMERICA EUROPE ASIA
<S> <C> <C> <C> <C> <C>
- - U.S.A. - Mexico - England - Belgium - India - China
- Brazil - Scotland - Germany - Singapore - Taiwan
</TABLE>

SALES BY REGION

NORTH AMERICA (70%)
EUROPE (25%) [PIE CHART]
ASIA (2%)
SOUTH AMERICA (3%)

SALES BY MARKET

PHARMACEUTICALS (25%)
OIL & GAS RECOVERY (13%)
OTHER (5%) [PIE CHART]
PULP & PAPER (5%)
FOOD & BEVERAGE (4%)
WASTEWATER TREATMENT (8%)
SPECIALTY CHEMICALS (40%)

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE NOTES AND THE
COMMON SHARES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.

2
<PAGE> 3

ROBBINS & MYERS PRODUCTS AND APPLICATIONS

Moyno(R)
Power
Section [PRODUCT PICTURE]
for
Directional
Drilling

Moyno(R) Sanitary Pump for Food Products [PRODUCT PICTURE]

Pfaudler(R)
Glass-Lined
Reactor Vessel [PRODUCT PICTURE]
for the Specialty
Chemical
Industry

Pfaudler(R) Glass-Lined
Stainless Steel
Reactor Vessel for [PRODUCT PICTURE]
the Pharmaceutical
Industry

Pfaudler(R) Multipurpose Resin Pilot Plant [PRODUCT PICTURE]
<PAGE> 4

ROBBINS & MYERS PRODUCTS AND APPLICATIONS

Moyno(R) Diesel Driven
Progressing Cavity Pump [PRODUCT PICTURE]
for Transfer of Petroleum
Products

Chemineer(R)
Turbine
Agitator
in Section [PRODUCT PICTURE]
View
(Shown Below
in Water
Treatment
Plant)

Prochem(R) Side-Entry Mixer for the
Pulp and Paper Industry [PRODUCT PICTURE]

Chemineer(R) Turbine Agitator [PRODUCT PICTURE]
in Water Treatment Plant

Chemineer(R) Customer Test Center [PRODUCT PICTURE]
<PAGE> 5

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by reference to the more
detailed information and financial statements, including the notes thereto,
appearing elsewhere, or incorporated by reference, in this Prospectus. Fiscal
year references refer to years ending August 31. Unless otherwise indicated, or
the context otherwise requires, all information in this Prospectus (i) is based
on the assumption that the Underwriters' over-allotment option is not exercised,
and (ii) gives effect to the 2-for-1 Common Share stock split effective July 31,
1996 (the "Stock Split").

THE COMPANY

The Company designs, manufactures and markets on a global basis
high-performance, specialized fluids management products for the process
industries. The Company's four product lines consist of glass-lined storage and
reactor vessels (38% of fiscal 1995 sales), progressing cavity products (30%),
mixing and turbine agitation equipment (22%), and related products such as
engineered systems, fluoropolymer products and valves (10%). The Company's
customers include the specialty chemicals, pharmaceuticals, oil and gas
recovery, wastewater treatment, pulp and paper, and food and beverage
industries.

The Company has achieved leading market shares in each of its main product
lines: the Company believes that it is first worldwide in glass-lined storage
and reactor vessels, first in North America in progressing cavity products and
second worldwide in mixing and turbine agitation equipment. The Company also
believes that its principal brand names--Pfaudler(R), Moyno(R), and
Chemineer(R)--are well-recognized in the marketplace and are associated with
high performance, innovation and quality as well as with extensive customer
support, including product application engineering, state-of-the-art customer
test facilities and strong aftermarket capabilities.

Since February 1992, the Company has completed eight acquisitions as part
of a strategy to leverage its fluids management expertise, its leadership in
progressing cavity technology, and its operating capabilities into a portfolio
of highly-engineered, fluids management products and services. The most
significant of these acquisitions occurred in June 1994 when the Company
acquired its Pfaudler(R), Chemineer(R) and Edlon(R) business units. These
acquisitions more than tripled the sales of the Company and provided leading
worldwide positions in two core product lines.

The Company seeks to balance its mix of products and services and maintain
overall stability in its operating results principally through increased levels
of higher margin aftermarket sales, increased international presence with
manufacturing facilities in ten countries and end market diversification. In
fiscal 1995, aftermarket sales to the Company's customers as well as customers
of its competitors accounted for approximately 38% of total sales, international
sales accounted for approximately 45% of total sales and at least 5% of total
sales were derived from each of its five primary end markets.

The Company has used its competitive strengths to achieve substantial
growth over the past several years. From fiscal 1991 through fiscal 1995, the
Company's sales and income before interest and taxes increased at a compound
annual rate of 40.1% and 31.6%, respectively, and for the nine months ended May
31, 1996, the Company's sales and income before interest and taxes increased
16.3% and 33.2%, respectively, as compared to the nine months ended May 31, 1995
(comparative figures are before the write-off of the Company's investment in
Hazleton Environmental in the third quarter of fiscal 1995).

The Company seeks to continue to grow by (i) capitalizing on the inherent
growth of its end markets, particularly high-growth markets such as oil and gas
recovery, pharmaceuticals and food additives and supplements, which collectively
account for over 40% of the Company's sales; (ii) exploiting opportunities for
industry consolidation within existing markets, specifically the highly
fragmented positive displacement pump and industrial mixer industries; (iii)
expanding geographically, both internally and through acquisitions, into
high-growth emerging markets such as Asia/Pacific Rim and South America; and
(iv) establishing new product lines through acquisitions of related fluids
management businesses such as valves, filters and grinders.

3
<PAGE> 6

THE OFFERING

<TABLE>
<S> <C>
Securities Offered........................... $60,000,000 aggregate principal amount of
6 1/2% Convertible Subordinated Notes Due 2003
(the "Notes").

Interest Payment Dates....................... March 1 and September 1, commencing March 1,
1997.

Maturity Date................................ September 1, 2003.

Conversion................................... The Notes are convertible at the option of the
holder, in whole or in part, at any time prior
to maturity, unless previously redeemed, into
Common Shares at $27.25 per share, subject to
adjustment under certain conditions.

Optional Redemption.......................... The Notes are redeemable, in whole or in part,
at the option of the Company, at any time on
or after September 1, 1999, at the redemption
prices set forth herein, plus accrued and
unpaid interest.

Subordination................................ The Notes will be subordinated to all present
and future Senior Indebtedness (as defined) of
the Company.

Change in Control............................ Upon a Change in Control (as defined), each
holder of the Notes will have the right,
subject to certain conditions and
restrictions, to require the Company to
repurchase any or all outstanding Notes
submitted by such holder at 100% of the
principal amount, plus accrued and unpaid
interest.

Use of Proceeds.............................. To repay certain bank indebtedness, including
indebtedness incurred to repurchase certain
senior subordinated indebtedness and stock
appreciation rights.
</TABLE>

4
<PAGE> 7

SUMMARY FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED AUGUST 31, MAY 31,
------------------------------------------------------------- ----------------------
1991 1992 1993 1994(1) 1995(1) 1995 1996
------- ------- ------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales..................... $78,662 $75,588 $85,057 $121,647 $302,952 $219,475 $255,272
Gross profit.................. 29,247 30,080 32,761 44,981 101,304 73,368 84,936
Income before interest and
income taxes(2)............. 9,309 8,512 8,400 12,102 26,320 19,246 27,783
Income before income taxes.... 9,711 9,832 9,746 10,645 19,033 13,694 22,479
Net income (loss)(3).......... 5,012 7,873 (1,840) 6,355 13,157 9,591 14,162
Net income (loss) per share,
fully diluted(3)............ $ .48 $ .75 $ (.17) $ .61 $ 1.21 $ .90 $ 1.28
Dividends declared per
share....................... .07 .09 .12 .14 .15 .11 .13
OTHER DATA:
EBITDA(4)..................... $11,281 $10,953 $11,198 $ 16,482 $ 37,576 $ 27,745 $ 38,042
Ratio of earnings to fixed
charges(5).................. 30.6x 28.9x 25.6x 7.1x 3.4x 3.2x 4.8x
Capital expenditures.......... $ 4,240 $ 4,749 $ 2,579 $ 6,798 $ 10,133 $ 6,350 $ 9,277
Backlog at period-end......... 17,762 12,210 20,248 73,944 107,423 98,747 113,724
Return on average common
equity(6)................... 18.5% 14.9% 11.4% 11.6% 18.6% 17.7% 24.5%
</TABLE>

<TABLE>
<CAPTION>
MAY 31, 1996
----------------------------
ACTUAL AS ADJUSTED(7)
-------- --------------
(UNAUDITED)
<S> <C> <C>
BALANCE SHEET DATA:
Total assets...................................................................... $295,417 $297,467
Long-term debt.................................................................... 79,285 83,109
Total debt........................................................................ 81,233 85,057
Shareholders' equity.............................................................. 83,988 83,988
Long-term debt to capitalization(8)............................................... 48.6% 49.7%
<FN>
- ---------------

(1) Results for Pfaudler(R), Chemineer(R), and Edlon(R), which were acquired on
June 30, 1994, are included for two months in fiscal 1994 and 12 months in
fiscal 1995.

(2) Includes restructuring charges of $950 in 1993 and $2,551 in 1994 and the
write-off of the Company's investment in Hazleton Environmental of $1,612 in
1995 and in the nine months ended May 31, 1995. See "Selected Consolidated
Financial Data."

(3) Includes after-tax (charges) of $(3,658), $(.36) per share, in 1991 for
discontinued operations and $(8,018), $(.76) per share, in 1993 for
cumulative effect of accounting changes and an after-tax gain of $1,332,
$.12 per share, in 1995 and of $1,332, $.13 per share, in the nine months
ended May 31, 1995 for early extinguishment of debt.

(4) EBITDA represents earnings before interest income and interest expense,
income taxes, depreciation and amortization (including amortization of debt
discount). EBITDA is presented because it may be used as one indicator of a
company's ability to service debt. The Company believes that EBITDA, while
providing useful information, should not be considered in isolation or as a
substitute for net income as an indicator of operating performance or as an
alternative to cash flow as a measure of liquidity, in each case determined
in accordance with generally accepted accounting principles.

(5) The ratio of earnings to fixed charges has been computed by dividing income
from continuing operations before income taxes plus fixed charges (excluding
capitalized interest expense) by fixed charges. Fixed charges consist of
interest and debt expense and an appropriate portion of rentals.

(6) Calculated by dividing income before special items by average shareholders'
equity and annualized for the nine month periods.

(7) Gives effect to the repurchase of the Repurchased Obligations, the issuance
and sale of the Notes by the Company and the anticipated use of the
estimated net proceeds therefrom as described in "Use of Proceeds."

(8) Capitalization consists of long-term debt and shareholders' equity.

</TABLE>

5
<PAGE> 8

USE OF PROCEEDS

The net proceeds to the Company from the sale of the Notes are estimated to
be approximately $57.95 million after deducting underwriting discounts and
commissions and estimated expenses of the offering ($62.80 million if the
Underwriters' over-allotment option is exercised in full). The Company intends
to use such net proceeds to repay certain outstanding bank indebtedness,
including indebtedness which the Company drew under its revolving credit
facility in August 1996 in order to repurchase for approximately $24.1 million
and $.8 million, respectively, the remaining $25 million in principal amount of
senior subordinated notes and remaining stock appreciation rights (collectively,
the "Repurchased Obligations") which were issued by the Company in 1994 in
connection with the acquisition by the Company of its Pfaudler(R), Chemineer(R)
and Edlon(R) business units.

At September 18, 1996, the outstanding indebtedness under the Company's
bank credit agreement was comprised of a $34.3 million term loan and $36.0
million under its revolving credit facility. The principal of the term loan is
payable in quarterly installments commencing September 1, 1997 and continuing
through 2001. Interest rates on both the term loan and revolving credit facility
are, at the Company's option, based upon either prime rates or a formula tied to
LIBOR rates. The effective annual interest rate on the loans was 7.68% at
September 18, 1996.

CAPITALIZATION

The following table sets forth the capitalization of the Company at May 31,
1996 and as adjusted to reflect the repurchase of the Repurchased Obligations,
the issuance and sale of the Notes by the Company and the application of the
estimated net proceeds therefrom (assuming that the Underwriters' over-allotment
option is not exercised).

<TABLE>
<CAPTION>
MAY 31, 1996
-------------------------
ACTUAL AS ADJUSTED
-------- -----------
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<S> <C> <C>
Short-term debt:
Current portion of long-term debt........................ $ 1,948 $ 1,948
========= ==========
Long-term debt (less current portion):
Senior debt.............................................. $ 52,250 $ 19,200
Senior subordinated debt................................. 27,035 3,909(1)
6 1/2% Convertible Subordinated Notes Due 2003........ -- 60,000
-------- -----------
Total long-term debt.................................. 79,285 83,109
Shareholders' equity:
Common Shares(2)
Authorized shares -- 25,000,000
Outstanding shares -- 10,467,284...................... 22,213 22,213
Retained earnings........................................ 62,099 62,099
Equity adjustment for foreign currency translation....... 450 450
Equity adjustment to recognize minimum pension
liability............................................. (774) (774)
-------- -----------
Total shareholders' equity............................ 83,988 83,988
-------- -----------
Capitalization(3)................................... $163,273 $ 167,097
========= ==========
<FN>
- ---------------
(1) Reflects the repurchase in August 1996 of $25 million in principal amount
(with a book value of $23.1 million) of senior subordinated notes for
approximately $24.1 million.

(2) Does not include 136,441 Common Shares (net of 35,818 repurchased treasury
shares) issued after May 31, 1996 (other than in the Stock Split) and
678,700 Common Shares issuable upon exercise of options granted under
employee benefit plans, with an average exercise price of $8.99 per share.

(3) Capitalization consists of long-term debt and shareholders' equity.
</TABLE>

6
<PAGE> 9

PRICE RANGE OF COMMON SHARES AND DIVIDENDS

The Common Shares of the Company are traded on the Nasdaq National Market
under the symbol "ROBN." The following table sets forth, for the periods
presented, the high and low sale prices of the Common Shares, as reported on the
Nasdaq National Market, and dividends paid per share (giving effect to the Stock
Split).

<TABLE>
<CAPTION>
DIVIDENDS
HIGH LOW PER SHARE
------- ------- ---------
<S> <C> <C> <C>
Fiscal 1994
First Quarter................................... $10.375 $7.750 $.03125
Second Quarter.................................. 9.500 7.750 .03750
Third Quarter................................... 10.250 8.500 .03750
Fourth Quarter.................................. 10.125 9.000 .03750
Fiscal 1995
First Quarter................................... 10.250 8.375 .03750
Second Quarter.................................. 11.375 8.250 .03750
Third Quarter................................... 14.250 10.375 .03750
Fourth Quarter.................................. 14.375 12.500 .03750
Fiscal 1996
First Quarter................................... 17.500 13.625 .03750
Second Quarter.................................. 16.500 13.625 .04375
Third Quarter................................... 23.500 14.750 .04375
Fourth Quarter.................................. 26.500 21.000 .04375
Fiscal 1997
First Quarter (through September 18, 1996)...... 23.500 21.000 --
</TABLE>

The last reported sale price of the Common Shares on the Nasdaq National
Market as of September 18, 1996 was $22.375.

The Company has paid cash dividends in every quarter since May 31, 1989.
Payment of dividends in the future will be made at the discretion of the Board
of Directors out of funds legally available for that purpose taking into
account, among other things, the Company's earnings, capital requirements,
financial condition, commitments for the use by the Company of available funds
and other factors considered relevant by the Board of Directors. The ability of
the Company to pay dividends is subject to certain contractual restrictions set
forth in the Company's bank credit facility, under which approximately $4
million of retained earnings was available for the payment of dividends as of
May 31, 1996.

7
<PAGE> 10

SELECTED CONSOLIDATED FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

The following table presents selected consolidated financial data of the
Company for each of the fiscal years in the five-year period ended August 31,
1995, and for the nine-month periods ended May 31, 1995 and 1996. The selected
consolidated financial data for the full year periods has been derived from
audited consolidated financial statements of the Company. Such selected
financial data should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the consolidated
financial statements of the Company and the notes thereto included herein. The
information with respect to the nine months ended May 31, 1995 and 1996 is
unaudited but, in the opinion of management, includes all adjustments,
consisting only of normal recurring adjustments necessary for a fair
presentation of such information.

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED AUGUST 31, MAY 31,
--------------------------------------------------------- ---------------------
1991 1992 1993 1994(1) 1995(1) 1995 1996
------- ------- ------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales............................ $78,662 $75,588 $85,057 $121,647 $302,952 $219,475 $255,272
Cost of sales........................ 49,415 45,508 52,296 76,666 201,648 146,107 170,336
------- ------- ------- -------- -------- -------- --------
Gross profit......................... 29,247 30,080 32,761 44,981 101,304 73,368 84,936
Engineering and development, selling
and administrative expenses........ 18,332 19,365 22,171 28,733 74,234 53,375 58,180
Other expense (income)(2)............ 1,606 2,203 2,190 4,146 750 747 (1,027)
------- ------- ------- -------- -------- -------- --------
Income before interest and income
taxes.............................. 9,309 8,512 8,400 12,102 26,320 19,246 27,783
Interest (income).................... (490) (1,380) (1,462) 0 0 0 0
Interest expense..................... 88 60 116 1,457 7,287 5,552 5,304
------- ------- ------- -------- -------- -------- --------
Income before income taxes........... 9,711 9,832 9,746 10,645 19,033 13,694 22,479
Income taxes......................... 1,041 1,959 3,568 4,290 7,208 5,435 8,317
------- ------- ------- -------- -------- -------- --------
Income before special items.......... 8,670 7,873 6,178 6,355 11,825 8,259 14,162
Special items, net of tax(3)......... (3,658) -- (8,018) -- 1,332 1,332 --
------- ------- ------- -------- -------- -------- --------
Net income (loss).................... $ 5,012 $ 7,873 $(1,840) $ 6,355 $ 13,157 $ 9,591 $ 14,162
======== ======== ======== ========= ========= ========= =========
Income per share, fully diluted,
before special items............... $ .83 $ .75 $ .59 $ .61 $ 1.09 $ .77 $ 1.28
Special items, net of tax, per share,
fully diluted(3)................... (.35) -- (.76) -- .12 .13 --
------- ------- ------- -------- -------- -------- --------
Net income (loss) per share, fully
diluted............................ $ .48 $ .75 $ (.17) $ .61 $ 1.21 $ .90 $ 1.28
======== ======== ======== ========= ========= ========= =========
Dividends declared per share......... $ .07 $ .09 $ .12 $ .14 $ .15 $ .11 $ .13
Weighted average number of common
shares outstanding, fully diluted
(in thousands)..................... 10,442 10,498 10,514 10,504 10,874 10,716 11,084
OTHER DATA:
EBITDA(4)............................ $11,281 $10,953 $11,198 $ 16,482 $ 37,576 $ 27,745 $ 38,042
Ratio of earnings to fixed
charges(5)......................... 30.6x 28.9x 25.6x 7.1x 3.4x 3.2x 4.8x
Capital expenditures................. $ 4,240 $ 4,749 $ 2,579 $ 6,798 $ 10,133 $ 6,350 $ 9,277
Backlog at period-end................ 17,762 12,210 20,248 73,944 107,423 98,747 113,724
Return on average common equity(6)... 18.5% 14.9% 11.4% 11.6% 18.6% 17.7% 24.5%
</TABLE>

<TABLE>
<CAPTION>
AUGUST 31, MAY 31,
--------------------------------------------------------- ---------------------
1991 1992 1993 1994 1995 1995 1996
------- ------- ------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets......................... $69,258 $74,318 $84,636 $258,130 $270,407 $275,428 $295,417
Long-term debt....................... 879 906 0 80,290 61,834 72,553 79,285
Total debt........................... 1,094 939 971 83,790 67,901 77,520 81,233
Shareholders' equity................. 49,232 56,310 52,342 57,039 69,939 67,200 83,988
Long-term debt to
capitalization(7).................. 1.8% 1.6% 0.0% 58.5% 46.9% 51.9% 48.6%
<FN>
- ---------------

(1) Results of Pfaudler(R), Chemineer(R), and Edlon(R), which were acquired on
June 30, 1994, are included for two months in 1994 and 12 months in 1995.

(3) Special items are: 1991 -- discontinued operations, 1993 -- cumulative
effect of accounting changes, and 1995 and the nine months ended May 31,
1995 -- extraordinary gain on debt extinguishment.

(6) Calculated by dividing income before special items by average shareholders'
equity and annualized for the nine month periods.

(7) Capitalization consists of long-term debt and shareholders' equity.

</TABLE>

8
<PAGE> 11

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

Since May 31, 1994, the Company has completed six acquisitions that have
significantly changed its business and financial profile. As a result of the
acquisitions, critical elements of the Company's strategy to expand its
capabilities to serve the fluids management needs of its customers on a global
basis were accomplished. The results of the most significant of the acquired
companies -- Pfaudler(R), Chemineer(R) and Edlon(R)-- are included in the
Company's results for twelve months in 1995 and for two months in 1994, which
significantly impact year to year comparisons. The nine month periods ended May
31, 1995 and 1996 include comparable operations.

The acquisitions of Pfaudler(R), Chemineer(R) and Edlon(R) more than
tripled the Company's total sales and increased its international sales to
approximately 45% of consolidated sales. Profitability of the non-U.S. business
units of the Company was less than domestic business units both before and after
the acquisitions. Operating margins for the international businesses increased
to 9.7% for the nine months ended May 31, 1996 from 7.4% for the nine months
ended May 31, 1995. The improvements were the result of improved market
conditions and implementation by the Company of ongoing cost reduction programs
in its international operations.

The Company seeks to balance its mix of products and services and maintain
overall stability in its operating results principally through increased levels
of aftermarket sales, increased international sales and end market
diversification. In fiscal 1995, aftermarket sales accounted for approximately
38% of total sales, international sales accounted for approximately 45% of total
sales and at least 5% of total sales were derived from each of the specialty
chemicals, pharmaceuticals, oil and gas recovery, wastewater treatment and pulp
and paper industries.

RESULTS OF OPERATIONS

The following table presents, for the periods indicated, the components of
the Company's statement of operations as a percentage of net sales:

<TABLE>
<CAPTION>
NINE MONTHS ENDED
MAY 31,
YEAR ENDED ------------------
AUGUST 31, 1995 1995 1996
--------------- ----- -----
<S> <C> <C> <C>
Net sales........................................... 100.0% 100.0% 100.0%
Cost of sales....................................... 66.6 66.6 66.7
----- ----- -----
Gross profit........................................ 33.4 33.4 33.3
Engineering and development, selling and
administrative expenses........................... 24.5 24.3 22.8
Other expense (income).............................. 0.2 0.3 (0.4)
----- ----- -----
Income before interest and income taxes............. 8.7 8.8 10.9
Interest expense.................................... 2.4 2.5 2.1
----- ----- -----
Income before income taxes.......................... 6.3 6.3 8.8
Income taxes........................................ 2.4 2.5 3.3
----- ----- -----
Income before special items......................... 3.9 3.8 5.5
Special items, net of tax........................... 0.4 0.6 --
----- ----- -----
Net income.......................................... 4.3% 4.4% 5.5%
===== ===== =====
</TABLE>

NINE MONTHS ENDED MAY 31, 1996. Net income of $14.2 million was 47.7%
higher than in the first nine months of 1995. Earnings per share of $1.28, fully
diluted, increased 42.2% from the first nine months of 1995. These increases
were primarily the result of higher volume and profit improvement programs.

9
<PAGE> 12

Net sales for the first nine months of 1996 were $255.3 million, an
increase of 16.3% over the same period of the prior year. This increase was
primarily the result of strong market demand for the Company's mixing and
turbine agitation equipment, glass-lined storage and reactor vessels and
oilfield products. These products are primarily sold to the pharmaceuticals, oil
and gas recovery and specialty chemicals markets. In addition, the Company
expanded its aftermarket business from the prior year, resulting in increased
sales. Company backlog was $114 million at May 31, 1996, $6 million higher than
at August 31, 1995 and $15 million higher than at May 31, 1995.

Despite higher sales levels in 1996, the gross profit percentage of 33.3%
for the first nine months of 1996 was relatively consistent with 33.4% for the
first nine months of 1995, because the gross margins for the products with the
greatest sales increases, industrial mixers and reactor vessels, are
traditionally lower than the Company's other products. Margins for industrial
mixers and reactor vessels, however, have improved over the prior year as a
result of higher volume and profitability improvement measures, including
restructuring, implemented by the Company.

Engineering and development, selling and administrative expenses decreased
as a percentage of sales from 24.3% in the first nine months of 1995 to 22.8% in
the first nine months of 1996. This decrease resulted from the higher sales
volume and the fixed nature of certain of these expenses.

Other (income) expense for the first nine months of 1995 includes a
one-time write-off of $1.6 million of the Company's investment in Hazleton
Environmental. The Company has no ongoing exposure to further losses related to
this investment.

Interest expense decreased to $5.3 million in the first nine months of 1996
from $5.6 million in the same period of the prior year as a result of slightly
lower interest rates in 1996.

The estimated annual effective tax rate was 37.0% in the first nine months
of 1996 compared to 39.7% in the first nine months of 1995. The tax rate for the
first nine months of 1995 reflects the effect of the nondeductibility of a
portion of the write-off of the investment in Hazleton Environmental. The
Company believes that the 1996 tax rate is more reflective of the Company's
ongoing operations.

During the first nine months of 1995, the Company realized an extraordinary
gain of $1.3 million, net of tax, related to the early extinguishment of certain
debt.

FISCAL 1995. Net sales reached $303.0 million and net income rose to $13.2
million or $1.21 per share, fully-diluted. This compares to net sales of $121.6
million and net income of $6.4 million or $.61 per share for 1994. The increase
in both sales and net income is due primarily to the acquired companies.
However, it should be noted that the Company's existing businesses also
experienced growth with net sales of such operations reaching $102.5 million, an
11% increase over 1994. Operating income of these businesses, which excludes
corporate, interest and amortization expense, reached $19.4 million, a 10%
increase over 1994.

The rate of profitability, as measured by the ratio of operating income to
sales, declined for domestic operations in both 1994 and 1995 because the rate
of profitability for the acquired businesses was lower than that of the
Company's historic businesses.

Profitability in 1995 was further impacted by the fact that the Company's
foreign businesses were less profitable than its domestic businesses. In 1995,
the European businesses were affected primarily by the German operation which
accounted for 52% of European sales but was only nominally profitable. A program
for changing the way the Company conducted business in Germany and the related
cost structure was commenced in fiscal 1995. The lower rate of profitability for
the other foreign businesses was due in part to their being start-up operations.

Operating income also includes a pre-tax write-off of $1.6 million
representing the value of the Company's investment in Hazleton Environmental.

The Company in May 1995 repurchased $25 million of subordinated debt issued
as a part of the consideration for the acquired companies. The transaction
generated an after-tax extraordinary gain of $1.3 million.

10
<PAGE> 13

FISCAL 1994. The acquisitions and related restructure transactions had a
significant impact on 1994 operating results. Aided by the inclusion of the
acquired businesses for July and August, net sales increased to $121.6 million,
or 43% greater than net sales for 1993 and net income increased to $6.4 million,
or 3% greater than income before cumulative effect of accounting changes earned
for 1993. For the period owned, the acquired businesses accounted for $29.3
million of net sales and provided sufficient income before tax to cover the
additional interest and amortization expense incurred as a result of the
transaction.

The Company's existing businesses also grew in 1994. Net sales increased
8.5% and net income, before considering the restructure provision for the year,
increased 28% over 1993 levels. Improved sales were seen in products for the
oilfield and industrial mixer markets. In addition, improved operating results
were seen in Europe related to the restructuring process that took place there
during the year. Orders improved for all existing products, with year-end
backlog having increased 5% over that of the prior year.

The Pfaudler(R) business unit had been in the process of restructuring its
operations prior to being acquired by the Company. The provisions were primarily
for employee termination costs and related to the operations in Rochester, N.Y.,
Mexico and Germany. The actions in Rochester, N.Y. and the curtailment of new
product manufacturing operations in Mexico were completed as planned in 1995.

LIQUIDITY AND CAPITAL RESOURCES

During the first nine months of 1996, 3.7 million outstanding stock
appreciation rights were retired for $18 million. Also during this period, $9
million was used for capital expenditures and $8 million for working capital.
These cash requirements, aggregating $35 million, were funded from operations
and net borrowings of $11 million under the Company's bank credit facility.

The Company is investing $16 million in capital expenditures in 1996 and
anticipates capital expenditures of $21 million in 1997, including approximately
$5 million for a new Houston, Texas facility and equipment for the Moyno
oilfield equipment business.

In the first nine months of 1995, the significant uses of cash were capital
expenditures and acquisitions of $17 million and net debt payments of $5
million. These requirements were funded by cash generated from operations of $19
million. The net result was a decrease of $4.3 million in cash balances for the
first nine months of 1995.

The Company expects operating cash flow to be adequate for operating needs,
including scheduled debt service, capital expenditure plans and shareholder
dividend requirements, during the fiscal years 1996 and 1997.

The Company's current bank credit agreement is secured by all domestic
assets except land and buildings and contains certain restrictive covenants
which include, among other things, requirements relating to tangible net worth,
working capital, additional debt, indebtedness ratios, debt service coverage and
payment of cash dividends. The Company may not, without the consent of the
banks, incur additional borrowings except for borrowings under such bank credit
facility. The banks have consented to the offering and sale of the Notes.

At May 31, 1996, the Company had approximately $30 million available under
its current bank credit facility. Primarily as a result of borrowings in August
1996 to repurchase the Repurchased Obligations for approximately $25 million
plus accrued interest, the amount available to the Company under such bank
credit facility was reduced to $13 million at September 18, 1996. As discussed
in "Use of Proceeds," the Company will repay certain of its bank indebtedness
with the net proceeds from the sale of the Notes. Assuming the Company had
received and applied such net proceeds on September 18, 1996, the amount
available under the Company's bank credit facility at September 18, 1996 would
have been approximately $57 million.

The Company has entered into negotiations with respect to a replacement
bank facility which would provide certain more favorable terms than the existing
facility and would add up to $50 million of additional availability for purposes
of financing future acquisitions.

11
<PAGE> 14

BUSINESS

The Company designs, manufactures and markets high-performance, specialized
fluids management products for the process industries on a global basis. The
Company's four product lines are glass-lined reactor and storage vessels (38% of
fiscal 1995 sales), progressing cavity products (30%), mixing and turbine
agitation equipment (22%), and related products, such as engineered systems,
fluoropolymer products, and valves (10%).

The Company has achieved leading market shares in each of its main product
lines: the Company believes that it is first worldwide in glass-lined storage
and reactor vessels, first in North America in progressing cavity products, and
second worldwide in mixing and turbine agitation equipment. The Company also
believes that its principal brand names -- Pfaudler(R), Moyno(R), and
Chemineer(R) -- are well-known in the marketplace and are associated with
quality products and extensive customer support, including product application
engineering, state-of-the-art customer test facilities, and strong aftermarket
service and support.

The Company markets its products to the process industries -- industries in
which the pumping, mixing, treatment, chemical processing, measurement, and
containment of fluids and particulates are important elements in their
production processes. The principal sectors of the process industries served by
the Company are specialty chemicals, pharmaceuticals, oil and gas recovery,
wastewater treatment, food and beverage, and pulp and paper.

An important element of the Company's strategy has been to develop a
balanced group of businesses serving diverse markets. In fiscal 1995,
international sales represented approximately 45% of total Company sales,
aftermarket sales represented approximately 38% of total Company sales and at
least 5% of total Company sales were derived from each of its five primary end
markets.

COMPETITIVE STRENGTHS

In 1992, the Company identified specific areas of the fluids management
industry in which it believed significant growth opportunities were available
and embarked on a strategy with the primary objective of becoming a global
fluids management company and a leader in its chosen markets. Through a series
of acquisitions and internal actions, the Company believes that it has developed
significant competitive strengths which enable it to realize more effectively
its goal of providing customers with comprehensive and innovative solutions to
their fluids management needs while sustaining significant levels of profitable
growth.

The Company believes that its success is attributable to:

A Record of Successful Acquisitions. Since 1992, the Company has completed
and integrated eight acquisitions in the fluids management industry. These
acquisitions have more than tripled the sales of the Company and have helped the
Company to better serve the requirements of many of its customers by offering a
more diverse product line. Several of the businesses acquired by the Company
were unprofitable or marginally profitable at the time at which they were
acquired. The Company has demonstrated an ability to improve the operating
performance of all of its acquisitions, including that of Pfaudler(R),
Chemineer(R) and Edlon(R), which, on a combined basis, improved from an
operating margin of 8.7% for the nine month period ended May 31, 1995 to 11.0%
for the nine month period ended May 31, 1996.

Global Presence. The Company has responded to the globalization of the
process industries by establishing manufacturing, sales and service capabilities
in numerous international markets (which markets accounted for approximately 45%
of sales in fiscal 1995). The Company maintains facilities in emerging markets
such as Mexico, Brazil, India, Singapore and China, as well as in established
markets such as England, Germany, Scotland and Belgium. By implementing a
network of local manufacturing and service facilities, the Company believes that
it can better respond to the global sourcing requirements of its multinational
customer base while realizing substantial market penetration and cost savings
associated with operating within local markets.

12
<PAGE> 15

Fluids Management Applications Expertise. The Company brings to its
customers a broad knowledge of the component products of fluids management
systems and a commitment to understanding the application engineering
requirements of its customers. As a result, the Company is able to meet its
customers' expectations of innovative and cost-effective solutions to their
requirements. In addition, in each of its businesses, the Company maintains
state-of-the-art test facilities which the Company and customer engineers use
jointly to test and develop particular equipment and system configurations.

Aftermarket Support. The Company believes that the ability to serve
customers globally requires strong aftermarket service and support. In 1995, the
Company augmented its aftermarket business with the acquisition of Pharaoh and
Cannon, which it integrated with its existing aftermarket operations to form
dedicated aftermarket subsidiaries in the United States and the United Kingdom.
Through these subsidiaries, the Company provides aftermarket service and support
to its own customers, as well as to customers of the Company's competitors
which, along with the substantial growth of the Company's installed base of
products, provides a stable source of higher margin aftermarket business. The
Company believes that its dedication to aftermarket support reinforces its image
of dependability with its customers, leading to increased business
opportunities.

Recognized Technologies and Brand Names. The Company believes that it is
recognized within its markets as a leader in certain core technologies which are
fundamental to its success and that its Moyno(R), Pfaudler(R) and Chemineer(R)
brand names are associated throughout the process industries with high
performance, innovation and quality. The Company's core technologies are
pressure vessel construction and glass coating of metal substrates
(Pfaudler(R)), fluid dynamics engineering (Chemineer(R)), progressing cavity
technology (Moyno(R)) and fluoropolymer coating (Edlon(R)). The Company
believes that its established brand names and core technologies offer its
existing customers assurances of dependability and product support while
affording the Company competitive advantages in gaining new business.

GROWTH STRATEGY

The Company has used its competitive strengths to achieve substantial
growth over the past several years. From fiscal 1991 through fiscal 1995, the
Company's sales and income before interest and taxes increased at a compound
annual rate of 40.1% and 31.6%, respectively, and for the nine months ended May
31, 1996 the Company's sales and income before interest and taxes increased
16.3% and 33.2%, respectively, as compared to the nine months ended May 31, 1995
(comparative figures are before the write-off of the Company's investment in
Hazleton Environmental in the third quarter of fiscal 1995). The sales growth
from 1991 through 1995 primarily was driven by eight acquisitions completed
since February 1992 at an aggregate purchase price of approximately $160
million:

<TABLE>
<CAPTION>
FISCAL YEAR PURCHASE PRICE
ACQUIRED BUSINESS PRINCIPAL PRODUCTS (MILLIONS)
- ------------- -------------------------------------- ----------------------------- --------------
<C> <S> <C> <C>
1992 Prochem Mixing Equipment, Inc. Large industrial mixers $ 8.0
1993 JWI Mixer Line Portable industrial mixers 2.2
1994 Chemineer, Inc. Large industrial mixers 78.4
1994 Pfaudler, Inc. Glass-lined vessels 50.3
1994 Edlon, Inc. Fluoropolymer coatings 5.5
1995 Pharaoh Corporation Glass-lined vessel parts and 2.1
aftermarket services
1995 Cannon Process Equipment Co., Ltd. Glass-lined vessels 5.4
1995 Universal Glasteel Equipment Reconditioned glass-lined 7.0
reactor and storage vessels
</TABLE>

13
<PAGE> 16

The Company seeks to continue to grow by (i) capitalizing on the inherent
growth of its end markets; (ii) exploiting opportunities for industry
consolidation within existing markets; (iii) expanding geographically, both
internally and through acquisitions; and (iv) establishing new product lines
through acquisitions.

Capitalize on Market Growth Opportunities. Over 40% of the Company's sales
are derived from high-growth markets such as oil and gas recovery,
pharmaceuticals and food additives and supplements, with the remainder derived
from other process industries such as specialty chemicals, wastewater treatment
and pulp and paper. The Company maintains leading positions in each of its
primary product lines and believes that it will benefit substantially from any
inherent growth in its end markets. Additionally, the Company seeks to expand
upon the inherent growth of its end markets by identifying and responding to new
technology trends with value-added products and by applying its existing
products to new market niches.

Exploit Industry Consolidation. The Company believes that it will benefit
from the trends among its customers to limit their supplier base, to favor
global suppliers and to require a higher level of application engineering
expertise from their suppliers, which is leading to consolidation among the
manufacturers of fluids management equipment. Both positive displacement pumps
and industrial mixers, which collectively account for over 50% of the Company's
sales, are highly fragmented industries and should offer the Company significant
acquisition opportunities. The Company believes that the greatest opportunities
for consolidation are in the positive displacement pump industry, which the
Company estimates has combined domestic annual sales of $700 million. In
addition, the Company believes that there are consolidation opportunities in the
domestic industrial mixer industry, which includes a number of smaller
manufacturers with combined domestic sales of approximately $100 million.

Expand Geographically. The Company believes that it successfully can
increase the rate of penetration of its products in high-growth, emerging
markets--Asia/Pacific Rim and South America--by leveraging the Company's strong
brand name recognition and its relationships with multinational customers. In
addition, the Company believes that there are opportunities for it to utilize
its existing presence in certain emerging markets to introduce other product
lines currently offered by the Company. The Company seeks other opportunities to
expand geographically, including acquisitions of existing businesses and the
formation of joint ventures/alliances, each of which the Company believes are
low risk and effective methods of entering new geographic markets. By taking
advantage of opportunities to expand geographically, the Company seeks to grow
at a rate which exceeds that of its end markets, while meeting its customers'
global sourcing needs.

Acquire New Product Lines. The process industries utilize a number of
fluids management products which the Company does not manufacture or which
currently represent an insignificant portion of the Company's sales. The Company
considers and evaluates on an ongoing basis acquisition opportunities in several
of these product areas, including valves, filters and grinders, and may, in the
future, acquire one or more such businesses. It is unlikely, however, that the
Company would acquire a related product line unless it were able by such
acquisitions to establish a major market position.

MARKETS SERVED

The Company markets its fluids management products and services to the
process industries -- industries in which the pumping, mixing, treatment,
chemical processing, measurement and containment of fluids and particulates are
important elements in their manufacturing or production processes. The principal
sectors of the process industries served by the Company are oil and gas
recovery, pharmaceuticals, specialty chemicals, food and beverage, pulp and
paper and wastewater treatment.

14
<PAGE> 17

COMPANY SALES BY MARKET -- FISCAL 1995
[PIE CHART]

Specialty Chemicals 40%
Pharmaceuticals 25%
Food & Beverage 4%
Other 5%
Pulp & Paper 5%
Wastewater Treatment 8%
Oil & Gas Recovery 13%

The companies included in these sectors of the process industries tend to
be large, often with global operations. Capital expenditures for equipment in
each sector are driven by a variety of factors, such as market growth rates, new
product introduction, globalization and cost control. Economic cycles tend to
differ among sectors, and the Company believes that general economic downturns
have less of an impact on capital expenditures in the pharmaceuticals, oil and
gas recovery and food and beverage industries.

Oil and Gas Recovery. The Company's sales to the oil and gas recovery
market include (i) progressing cavity down-hole pumps used in lifting oil to the
surface and dewatering of gas wells; (ii) progressing cavity power sections used
to drive the drilling element in directional drilling operations; and (iii)
aftermarket products and services such as replacement power sections, relining
of down-hole pump stators and replacement of rotors. For the last five fiscal
years, the Company's sales of oil and gas recovery products have grown at an
annual rate of 19%. The Company believes its growth prospects primarily are
driven by the trend in the industry to adopt the latest oil and gas
technologies, including 3-D seismic analysis which, in conjunction with
directional drilling methods and versatile down-hole pumps, facilitates recovery
of oil and gas from difficult to reach formations. In addition, changing
geopolitics have resulted in more countries opening their borders to
privatization in the exploration and development of their oil and gas
properties. In response to increased demand within the oil and gas recovery
market and to maintain its technological advantages, the Company currently is
developing a facility in Houston, Texas dedicated to the production of down-hole
pumps and power drilling sections which is scheduled to begin operation in
fiscal 1997.

Pharmaceuticals. The Company's products perform critical functions in the
production of pharmaceuticals by providing temperature, agitation and
pressure-controlled environments for complex chemical reactions which require
exact formulations, repeatability and high levels of purity. In addition, the
Company's products are reconditioned on a regular basis because of the severe
operating conditions to which the Company's products are exposed and the need to
maintain a pure processing environment. The Company believes that it will
benefit from the long-term trend of high levels of capital expenditures within
the pharmaceuticals industry. This trend is driven by the

15
<PAGE> 18

significant industry growth rates resulting from globalization of manufacturing
facilities to serve emerging markets and development of innovative drugs which
often require new process facilities or retrofit of existing facilities.

Specialty Chemicals. Substantially all of the Company's products sold to
the chemical industry consist of specialized equipment and aftermarket products
and services for use in the batch processing of specialty chemicals rather than
for use in the continuous processing of commodity chemicals. Unlike commodity
chemicals, such as basic petrochemicals and inorganic commodities, specialty
chemicals are downstream products, such as intermediate products directed to the
pharmaceuticals industry, which are more highly processed and refined. The
Company believes that, because producers of specialty chemicals are value-added,
strategic suppliers to their customers, pricing pressure and volatility are less
severe than in other segments of the chemical industry.

Other Markets. The Company's industrial mixer and pump products also serve
the food and beverage, pulp and paper and wastewater treatment industries.
Long-term growth in these markets should approximate the growth in general
economic activity, with certain segments such as food additives and supplements
and international markets growing faster than the overall domestic market.

PRODUCTS

Glass-Lined Storage and Reactor Vessels. The Company's Pfaudler(R) unit
manufactures and sells glass-lined reactor and storage vessels and related
equipment for use in the pharmaceuticals and specialty chemicals industries.
Reactor vessels perform critical functions in the production process by
providing a temperature, agitation and pressure controlled environment for often
complex chemical reactions.

The Pfaudler(R) unit fabricates steel vessels and bonds glass to the
interior of vessels to form a fused composite, referred to as Glasteel(R), which
provides a vessel in which materials can be processed or stored in an inert,
nonsticking, corrosion-resistant, pressure-controlled environment. Reactor
vessels range in capacities from one to 15,000 gallons, are generally
custom-ordered and designed and can be equipped with various accessories, such
as agitators, instrumentation and baffles. Storage vessels have capacities of up
to 25,000 gallons.

Aftermarket products and services consist of reconditioning and reglassing
reactor vessels, replacement of vessel parts and accessories and field service.

<TABLE>
<CAPTION>
PRODUCTS PRIMARY MARKETS SERVED
- ------------------------------------------------- ---------------------------------
<S> <C>
Glasteel(R) Reactor and Storage Vessels Pharmaceuticals
Glasteel(R) pH Measurement Systems Specialty Chemicals
Cryo-Lock(R) Mixing Systems
Pfaudler(R) Mixer Drives
Pfaudler(R) Conical Dryers and Blenders
</TABLE>

Progressing Cavity Products. Progressing cavity technology is used in
down-hole pumps and power sections for the oil and gas recovery industry, as
well as in other process industries such as specialty chemicals, food and
beverage, pulp and paper and wastewater treatment. A progressing cavity pump
consists of a high-strength, single helix steel rod (called the rotor) which
rotates in a double helix elastomer-lined steel tube (called the stator). The
rotor generates positive displacement in the stator to deliver uniform fluid
flow, at rates proportional to the rotational speed of the rotor.

For the oil and gas recovery industry, the Company manufactures and sells
down-hole pumps and power sections used to drive the drilling element in the
drilling of wells. The ability of progressing cavity technology to be used in
severe pumping applications and also as a hydraulic

16
<PAGE> 19

motor has enabled the Company to become a leader in the development of pumping
and directional drilling products. Moyno(R) down-hole pumps are used primarily
to pump heavy crude oil to the surface and for dewatering gas wells. Moyno(R)
down-hole power sections utilize progressing cavity technology to drive the
drilling element in oil and gas well drilling.

For other process industries, the Company markets a wide range of
progressing cavity pumps under the brand names Moyno(R) and R&M(R). Progressing
cavity pumps are versatile as they can be positioned at any angle and can
deliver flow in either direction, without modification or accessories. These
pumps are able to handle fluids ranging from high pressure water and
shear-sensitive materials to heavy, viscous, abrasive, solid-laden slurries and
sludges.

Aftermarket products and services consist of replacement power sections,
relining of the elastomer component of down-hole pump stators and replacement of
rotors.

<TABLE>
<CAPTION>
PRODUCTS PRIMARY MARKETS SERVED
- ------------------------------------------------- ---------------------------------
<S> <C>
Moyno(R) Down-Hole Pumps Oil and Gas Recovery
Moyno(R) Power Sections for Down-Hole Motors Oil and Gas Recovery
R&M(R) Positive Displacement Pumps Food and Beverage
Moyno(R) Progressing Cavity Pumps Pulp and Paper
Specialty Chemicals
Wastewater Treatment
</TABLE>

Mixing and Turbine Agitation Equipment. The Company's industrial mixers
and turbine agitation equipment are used in a variety of applications, ranging
from simple storage tank agitation to critical applications in polymerization
and fermentation processes. Industrial mixers are sold under the Chemineer(R),
Prochem(R), and Kenics(R) brand names.

Chemineer(R) products include a line of high-quality turbine agitators.
These gear-driven agitators are available in various sizes, a wide selection of
mounting methods, and drive ranges from one to 1,000 horsepower. The
Chemineer(R) line also includes top-entry turbine agitators with drive ranges
from one-half to five horsepower, designed for less demanding applications, and
a line of portable gear-driven and direct drive mixers which can be
clamp-mounted to tanks to handle batch mixing needs. The principal markets for
Chemineer(R) products are the specialty chemicals, pharmaceuticals, food and
beverage and wastewater treatment industries.

Prochem(R) industrial mixers are principally belt-driven, side-entry mixers
used primarily in the pulp and paper, mining, and mineral processing industries.
Kenics(R) mixers are continuous mixing and processing devices, with no moving
parts, which are used in specialized static mixing and heat transfer
applications.

Aftermarket products and services consist of replacement parts, such as
impellers and gear boxes, as well as field service.

<TABLE>
<CAPTION>
PRODUCTS PRIMARY MARKETS SERVED
- ----------------------------------------- -----------------------
<S> <C>
Chemineer(R) Top-and-Side Entry Mixers Specialty Chemicals
Chemineer(R) Portable Mixers Wastewater Treatment
Valchem(R) Portable Mixers Food and Beverage
Kenics(R) Static Mixers & Heat Exchangers Pharmaceuticals
Prochem(R) Top- and Side-Entry Mixers Pulp and Paper
Prochem(R) Specialty Mixers
</TABLE>

Related Products. The Company also manufactures and markets to the process
industries several products which complement its principal products. These
related products include engineered systems, fluoropolymer products, and valves.

The Company's engineered systems group designs and sells fluid
heating/cooling systems used with reactor vessels to control fluid temperature
in the manufacture and processing of pharmaceuticals and specialty chemicals.
The engineered systems group also designs and sells

17
<PAGE> 20

fluid separators, known as wiped film evaporators. The Company maintains a
computer controlled pilot plant test facility for use by engineers from the
Company and its customers to determine and evaluate operating parameters in the
production and processing of pharmaceuticals, specialty chemicals, and other
products.

The Company's Edlon(R) unit manufactures and markets fluoropolymer roll
covers and liners for process equipment, isostatically molded liners for pipe
and flowmeters, and vessel and piping accessories. Edlon's(R) products
principally are used in the speciality chemicals industry to provide
corrosion-resistant environments and in the paper industry for release
applications.

<TABLE>
<CAPTION>
PRODUCTS PRIMARY MARKETS SERVED
- ----------------------------------- -----------------------
<S> <C>
Pfaudler(R) Engineered Systems Pharmaceuticals
Pfaudler(R) Wiped Film Evaporators Specialty Chemicals
Edlon(R) Custom Linings & Coatings Pulp and Paper
Edlon(R) Roll Covering Products Wastewater Treatment
Edlon(R) Fluoropolymer Products
RKL(R) Pinch Valves
RKL(R) Pressure Sensors
</TABLE>

SALES AND MARKETING

The marketing and sales function in each of the Company's businesses
generally involves outside sales efforts supported by numerous internal sales
personnel, application engineers and, in many cases, the joint utilization of
the Company's test and development facilities by Company and customer engineers.
Distributors and manufacturers' representatives are supported by Company-
maintained regional offices and educational and training programs. The
specialized nature of the Company's products requires multiple methods of
distribution, depending upon product line and end-use application.

Pfaudler(R) glass-lined reactor and storage vessels and accessories are
sold directly to end-users by a Company-employed direct sales force of
approximately 30 persons, approximately 20 of whom are based outside the United
States. Pfaudler(R) is particularly focused on continuing to develop preferred
supplier relationships with major pharmaceuticals companies as they continue to
expand their production operations in emerging markets.

Chemineer(R) industrial mixers and agitation equipment are sold directly
through regional sales offices and through a network of approximately 125
domestic and 30 international manufacturers' representatives. The Company
maintains regional sales offices for such equipment in Dayton, Ohio, Houston,
Texas, Toronto, Canada, Singapore, Taiwan, and China.

Moyno(R) progressing cavity pumps (other than for oil and gas recovery
applications) are sold worldwide through approximately 55 domestic and 30
international distributors and 40 domestic and 15 international manufacturers'
representatives. The Company maintains 11 regional sales offices for this
equipment.

Sales efforts for Moyno(R) down-hole pumps are directed by Company product
managers who work closely with the Company's principal domestic distributor,
which maintains approximately 90 outlets capable of handling pump sales. Outside
the U.S., down-hole pumps are directly sold by the Company, except in Canada
where the Company employs a national distributor. Additional distributor
relationships are currently being established for these products in South
America, the former Soviet Union, and the Pacific Rim. Moyno(R) power sections
for use in down-hole drilling are sold directly to motor manufacturers and
oilfield service companies.

18
<PAGE> 21

FACILITIES

The Company's executive offices are located in Dayton, Ohio. Set forth
below is certain information relating to the Company's principal facilities.

<TABLE>
<CAPTION>
SQUARE PRODUCTS MANUFACTURED
LOCATION FOOTAGE OR OTHER USE OF FACILITY
- ----------------------------- ------- ------------------------------------------------
<S> <C> <C>
NORTH AND SOUTH AMERICA:
Rochester, New York 500,000 Glass-lined vessels
Springfield, Ohio 272,800 Progressing cavity pumps and pinch valves
Dayton, Ohio 160,000(1) Turbine agitators and mixers
Houston, Texas 110,000 Down-hole pumps and power sections
Mexico City, Mexico 110,000 Glass-lined vessels
Taubate, Brazil 100,000 Glass-lined vessels
Fairfield, California 60,000 Progressing cavity pumps and power sections
Avondale, Pennsylvania 50,000 Fluoropolymer products
North Andover, Massachusetts 30,000(1) Static mixers and heat exchangers
Sao Jose Dos Campos, Brazil 30,000 Air handlers
Rochester, New York 10,000(1) Parts and field service for glass-lined vessels
EUROPE:
Schwetzingen, Germany 400,000 Glass-lined vessels
Leven, Scotland 240,000 Glass-lined vessels, roll covers and liners
Bilston, England 50,000 Parts and reglassing for glass-lined vessels
Derby, England 20,000(1) Turbine agitators and mixers
Petit-Rechain, Belgium 15,000 Progressing cavity products
Kearsley, England 14,000 Parts and field service for glass-lined vessels
Bolton, England 10,000 Gaskets for glass-lined vessels
Southampton, England 10,000(1) Assembly operation for progressing cavity pumps
ASIA:
Gujurat, India 350,000(2) Glass-lined vessels
Suzhou, China 150,000(3) Glass-lined vessels
Singapore 5,000(1) Assembly operation for progressing cavity pumps
</TABLE>

- ---------------

(1) Leased facility.

(2) Facility of a 40%-owned affiliate.

(3) Facility of a 60%-owned subsidiary.

19
<PAGE> 22

MANAGEMENT, DIRECTORS AND PRINCIPAL SHAREHOLDER

The executive officers and directors of the Company and their ages as of
August 15, 1996 are:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------ --- ------------------------------------------------
<S> <C> <C>
Maynard H. Murch IV 52 Chairman of the Board
Daniel W. Duval 60 President, Chief Executive Officer and Director
Gerald L. Connelly 55 Executive Vice President and Chief Operating
Officer
George M. Walker 59 Vice President and Chief Financial Officer
Howard O. Royer 57 Treasurer
Kevin J. Brown 38 Corporate Controller
Joseph M. Rigot 52 Secretary and General Counsel
Robert J. Kegerreis 75 Director
Thomas P. Loftis 52 Director
William D. Manning, Jr. 62 Director
John N. Taylor, Jr. 61 Director
Jerome F. Tatar 49 Director
</TABLE>

MAYNARD H. MURCH IV has been Chairman of the Board of the Company since
July, 1979 and a director of the Company since 1977. Mr. Murch also is President
and Chief Executive Officer of Maynard H. Murch Co., Inc. (investments), which
is managing general partner of M.H.M. & Co., Ltd. (investments). Mr. Murch also
is Vice President (since June, 1976) of Parker/Hunter Incorporated (dealer in
securities), a successor firm to Murch and Co., Inc., a securities firm which
Mr. Murch had been associated with since 1968.

DANIEL W. DUVAL is President and Chief Executive Officer of the Company
and a director of the Company. He was elected to this position on December 3,
1986. Prior to joining the Company, he was President and Chief Operating Officer
of Midland-Ross Corporation (a manufacturer of electrical, electronic and
aerospace products and thermal systems) having held various positions with that
company since 1960.

GERALD L. CONNELLY is Executive Vice President and Chief Operating Officer
of the Company, having been elected to that position on May 1, 1996. He also is
President of Pfaudler, Inc. From June 1994 until May 1, 1996, he was Vice
President of the Company. He was President of the Process Industries Group of
Eagle Industries, Inc. from 1993 until joining the Company in June, 1994.
Previously, he served as President of Pulsafeeder, Inc. (metering pumps) for ten
years.

GEORGE M. WALKER is Vice President and Chief Financial Officer of the
Company, having been elected to that position in 1972. From 1968 to 1972, he
held various positions with the Company in the areas of finance and accounting,
including the position of Controller. Prior to 1968, he was employed by the
accounting firm of Ernst & Young LLP for eight years.

HOWARD O. ROYER is Treasurer of the Company, having been elected to that
position on June 28, 1995. He had previously been employed by the Company from
1975 to 1985, serving as Treasurer at the time of his departure. Prior to
rejoining the Company, he was employed by Nissan Motor Corp., USA, most recently
holding the position of Vice President, Finance and Information Systems.

KEVIN J. BROWN is Corporate Controller of the Company, having been elected
to that position on December 12, 1995 after joining the Company on October 10,
1995. Prior to joining the Company he was employed by the accounting firm of
Ernst & Young LLP for fifteen years.

20
<PAGE> 23

JOSEPH M. RIGOT is Secretary and General Counsel of the Company, having
been elected to that position in 1990. He has been a partner with the law firm
of Thompson Hine & Flory P.L.L., Dayton, Ohio, for more than five years.

ROBERT J. KEGERREIS served as President of Wright State University from
July 1973 to June 1985. He is currently a management consultant and has served
as Executive Director of the Arts Center Foundation, Dayton, Ohio, since 1989.
Dr. Kegerreis is a director of The Elder-Beerman Stores Corporation and Energy
Innovations Inc.

THOMAS P. LOFTIS has been engaged in commercial real estate development,
brokerage and consulting with Midland Properties, Inc. since 1980. Mr. Loftis
has been a general partner of M.H.M. & Co., Ltd. (investments) since 1986.

WILLIAM D. MANNING, JR. was Senior Vice President of The Lubrizol
Corporation (industrial chemicals) from 1985 to his retirement in April 1994. He
currently is a management consultant.

JOHN N. TAYLOR, JR. has been Chairman and Chief Executive Officer since
August 1986 and was President from October 1974 until August 1986 of Kurz-Kasch,
Inc. (a manufacturer of custom thermoset plastics). He was also Chairman and
Chief Executive Officer of Component Technology Corp. (a manufacturer of
plastic-based assemblies) from 1982 to June 1989. Mr. Taylor is a director of
LSI Industries, Inc.

JEROME F. TATAR has been President and Chief Operating Officer and a
director of The Mead Corporation (forest products) since April 1996. From July
1994 to April 1996 he was Vice President-Operating Officer of The Mead
Corporation, and from November 1986 to July 1994, he was President of the Mead
Fine Paper Division of The Mead Corporation.

PRINCIPAL SHAREHOLDER

At August 31, 1996, M.H.M. & Co. Ltd. owned 2,994,254 Common Shares
representing 28.3% of the outstanding Common Shares as of that date. M.H.M. &
Co., Ltd. is an Ohio limited partnership of which Maynard H. Murch Co., Inc. is
the managing general partner and Thomas P. Loftis, a director of the Company, is
the other general partner. Partnership decisions with respect to the voting and
disposition of Common Shares are determined by Maynard H. Murch Co., Inc., the
board of directors of which is comprised of Maynard H. Murch IV, Chairman of the
Board of the Company, and Robert B. Murch, who are brothers, and Creighton B.
Murch, who is their first cousin. M.H.M. & Co. Ltd. is the only person known to
the Company to be the beneficial owner of more than 10% of its outstanding
Common Shares.

DESCRIPTION OF NOTES

The Notes are to be issued under an Indenture, dated as of September 18,
1996 (the "Indenture"), between the Company and Star Bank, N.A., as Trustee (the
"Trustee"). A draft of the Indenture has been filed as an exhibit to the
Registration Statement referred to below under "Available Information". The
following summarizes the material provisions of the Indenture and is subject to,
and qualified in its entirety by reference to, all the provisions of the
Indenture, including the definition therein of certain terms. Wherever
particular articles, sections or defined terms of the Indenture are referred to,
it is intended that such articles, sections or defined terms shall be
incorporated herein by reference.

GENERAL

The Notes will be limited to $60,000,000 aggregate principal amount (or
$65,000,000 aggregate principal amount assuming exercise in full of the
Underwriters' over-allotment option), will be unsecured subordinated obligations
of the Company, and will mature on September 1, 2003. The

21
<PAGE> 24

Notes will bear interest from September 24, 1996 at the rate per annum shown on
the cover page of this Prospectus. Interest will be payable semiannually on
March 1 and September 1 of each year ("Interest Payment Dates"), subject to
certain exceptions, commencing March 1, 1997, to the persons in whose names the
Notes are registered at the close of business on the 15th day of February or
August, as the case may be ("Regular Record Date"), next preceding such Interest
Payment Date. Principal of, premium, if any, and interest on the Notes will be
payable, and the Notes will be convertible and exchangeable and transfers
thereof will be registrable, at the office of the Trustee or the office or
agency of the Company maintained for such purpose in The City of New York and at
any other office or agency maintained by the Company for such purpose, provided
that at the option of the Company, payment of interest may be made by check
mailed to the address of the person entitled thereto as it appears in the Note
Register. All payments of interest and principal will be made in United States
Dollars. (Sections 3.1, 3.5, 3.7, 10.2, 12.2 and 13.1)

The Notes will be issued only in registered form without coupons in
denominations of $1,000 or any integral multiple thereof. (Section 3.2) No
service charge will be made for any registration of transfer or exchange of
Notes, but the Company may require payment of a sum sufficient to cover any tax
or other governmental charge payable in connection therewith. (Section 3.5)

CONVERSION RIGHTS

The Notes will be convertible into Common Shares at any time prior to
redemption (except as set forth in the following sentence) or maturity,
initially at the conversion price stated on the cover page hereof. The right to
convert Notes called for redemption will terminate at the close of business on
the Business Day immediately preceding a Redemption Date and will be lost if not
exercised prior to that time. (Section 12.1) See "Optional Redemption."

Notes surrendered for conversion during the period from the close of
business on any Regular Record Date next preceding any Interest Payment Date to
the opening of business on such Interest Payment Date (except Notes called for
redemption on a Redemption Date within such period) must be accompanied by
payment of an amount equal to the interest thereon which the registered Holder
is to receive on such Interest Payment Date. No other adjustment for interest or
dividends is to be made upon conversion. (Sections 3.7 and 12.2) Fractional
Common Shares will not be issued upon conversion, but in lieu thereof, the
Company will pay a cash adjustment based upon market price. (Section 12.3)

The Conversion Price is subject to adjustment (under the formula set forth
in the Indenture) under certain circumstances, including: (i) the issuance of
Common Shares as a dividend or distribution on Common Shares; (ii) the issuance
to all holders of Common Shares of rights or warrants entitling them to
subscribe for or purchase Common Shares at a price per share less than the
Current Market Price; (iii) certain subdivisions and combinations of Common
Shares; (iv) the issuance as a dividend or distribution to all holders of Common
Shares of capital shares of the Company (other than Common Shares) or evidences
of its indebtedness, cash or other assets (including securities, but excluding
those rights, warrants, dividends and distributions referred to above and
dividends and distributions paid exclusively in cash and excluding any capital
shares, evidences of indebtedness, cash or assets distributed upon a
consolidation or merger to which the provision described in the last sentence of
this paragraph applies); (v) dividends or other distributions consisting
exclusively of cash (excluding any cash that is distributed upon a merger or
consolidation to which the provision described in the last sentence of this
paragraph applies and any cash portion of distributions referred to in clause
(iv)) to all holders of Common Shares to the extent such distributions, combined
with (A) all such cash distributions made within the preceding 12 months in
respect of which no adjustment has been made, plus (B) any cash and the fair
market value of other consideration payable in respect of any tender offer by
the Company or any of its subsidiaries for Common Shares concluded within the
preceding 12 months in respect of which no adjustment has been made, exceeds 10%
of the Company's market capitalization (being the product of the then current
market price of the Common Shares times the number of Common

22
<PAGE> 25

Shares then outstanding) on the record date for such distribution; and (vi) the
purchase of Common Shares pursuant to a tender offer made by the Company or any
of its subsidiaries to the extent that the aggregate consideration, together
with (X) any cash and the fair market value of any other consideration payable
in any other such tender offers expiring within the 12 months preceding such
tender offer in respect of which no adjustment has been made, plus (Y) the
aggregate amount of any such all-cash distributions referred to in clause (v)
above to all holders of Common Shares within the 12 months preceding the
expiration of such tender offer in respect of which no adjustments have been
made, exceeds 10% of the Company's market capitalization on the expiration of
such tender offer. The foregoing provisions for adjustment are subject to
certain exceptions, as set forth in the Indenture. (Section 12.4) In the case of
certain consolidations or mergers to which the Company is a party or the
conveyance or transfer of the properties and assets of the Company substantially
as an entirety, each Note then outstanding shall, without the consent of any
Holders of Notes, become convertible only into the kind and amount of
securities, cash and other property receivable upon such consolidation, merger,
conveyance or transfer by a holder of the number of Common Shares into which the
Note might have been converted immediately prior to such consolidation, merger,
conveyance or transfer, assuming such holder of Common Shares failed to exercise
his rights of election, if any, as to the kind or amount of securities, cash and
other property receivable upon such consolidation, merger, conveyance or
transfer (provided that if the kind or amount of securities, cash and other
property so receivable is not the same for each non-electing share, then the
kind and amount of securities, cash and other property so receivable by each
non-electing share shall be deemed to be the kind and amount so receivable per
share by a plurality of the non-electing shares). (Section 12.10)

SUBORDINATION OF NOTES

The Notes will be subordinated and subject, to the extent and in the manner
set forth in the Indenture, to the prior payment in full of all Senior
Indebtedness. (Section 13.1) Senior Indebtedness is defined to include the
principal of, and premium, if any, and interest on and other amounts due on any
indebtedness, whether now outstanding or hereafter created, incurred, assumed or
guaranteed by the Company, for money borrowed from others (including obligations
under capitalized leases or purchase money indebtedness) or in connection with
the acquisition by the Company or a Subsidiary of any other business or entity,
or in respect of letters of credit or bid, performance or surety bonds issued
for the account or on the credit of the Company or a Subsidiary, and, in each
case, all renewals, extensions and refundings thereof, other than (i) any such
indebtedness as to which, in the instrument creating or evidencing the same, it
is provided that such indebtedness is not superior in right of payment to the
Notes, (ii) indebtedness of the Company to any Affiliate and (iii) the Notes.
(Section 1.1) At September 18, 1996, the Company had approximately $75,507,000
of outstanding indebtedness that would have constituted Senior Indebtedness
under the Indenture. The Indenture does not limit the amount of Senior
Indebtedness or other indebtedness that the Company or its Subsidiaries may
incur.

No payments of principal of, premium, if any, or interest on the Notes may
be made and no Notes may be redeemed, retired or purchased if the Company is
then in default in the payment of any Senior Indebtedness or if at the time any
other Event of Default under the terms of any Senior Indebtedness exists
permitting acceleration thereof. Upon any payment or distribution of assets of
the Company in the event of any insolvency, reorganization, liquidation or
similar proceeding, all Senior Indebtedness must be repaid in full (including
any interest thereon accruing after the commencement of any such proceeding)
before the Holders of the Notes will be entitled to receive or retain any
payment. If the Notes are declared due and payable before their Stated Maturity
because of the occurrence of an Event of Default, no payment may be made in
respect of the Notes unless and until all Senior Indebtedness shall have been
paid in full or such declaration and its consequences shall have been rescinded
and all such defaults shall have been remedied or waived. (Section 13.2)

23
<PAGE> 26

By reason of such subordination, in the event of insolvency, creditors of
the Company who are holders of Senior Indebtedness may recover more, ratably,
than Holders, and creditors of the Company who are neither holders of Senior
Indebtedness nor Holders may recover less, ratably, than holders of Senior
Indebtedness and may recover more, ratably, than Holders.

The Notes are structurally subordinated in right of payment to all
liabilities (including trade payables) of the Company's Subsidiaries. The
Company's Subsidiaries had approximately $93,856,000 of liabilities (including
trade payables but excluding inter-company liabilities) outstanding at August
31, 1996.

OPTIONAL REDEMPTION

The Notes will be redeemable upon not less than 30 nor more than 60 days'
notice by mail at any time on or after September 1, 1999, as a whole or in part,
at the election of the Company, at a Redemption Price equal to the percentage of
the principal amount set forth below if redeemed in the 12-month period
beginning September 1 of the years indicated:

<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
- ----- ----------
<S> <C>
1999 103.25%
2000 102.17%
2001 101.09%
</TABLE>

and thereafter at a Redemption Price equal to 100% of the principal amount,
together in each case with accrued and unpaid interest to the Redemption Date
(subject to the right of Holders of record on Regular Record Dates to receive
interest due on an Interest Payment Date), provided that the Company may not
redeem any Notes prior to September 1, 1999. (Sections 2.3, 11.1, 11.4, 11.5 and
11.6)

CERTAIN RIGHTS TO REQUIRE REPURCHASE OF NOTES BY THE COMPANY

In the event of any Change in Control (as defined below) of the Company
occurring after the date of issuance of the Notes and on or prior to Maturity,
each Holder of Notes will have the right, at such Holder's option, to require
the Company to repurchase all or any part of such Holder's Notes on the date
(the "Repurchase Date") that is 75 days after the date the Company gives notice
of the Change in Control (as described below) at a price (the "Repurchase
Price") equal to 100% of the principal amount thereof, together with accrued and
unpaid interest to the Repurchase Date. (Section 14.1) On or prior to the
Repurchase Date, the Company is required to deposit with the Trustee or a Paying
Agent an amount of money sufficient to pay the Repurchase Price of the Notes
which are to be repaid on the Repurchase Date. (Section 14.3) Neither the Board
of Directors of the Company nor the Trustee, acting alone or together, can
modify or waive this required repurchase of the Notes.

Failure by the Company to repurchase the Notes when required under the
preceding paragraph will result in an Event of Default under the Indenture
whether or not such repurchase is permitted by the subordination provisions of
the Indenture. (Section 5.1)

On or before the 15th day after the occurrence of a Change in Control, the
Company is obligated to mail to all Holders a notice of the event constituting
and the date of such Change in Control, the Repurchase Date, the date by which
the repurchase right must be exercised, the Repurchase Price for Notes, and the
procedures which a Holder must follow to exercise a repurchase right. To
exercise the repurchase right, a Holder of a Note must deliver, on or before the
10th day prior to the Repurchase Date, written notice to the Company (or an
agent designated by the Company for such purpose) and to the Trustee of the
Holder's exercise of such right, together with the certificates evidencing the
Notes with respect to which the right is being duly exercised, duly endorsed for
transfer. (Section 14.2)

24
<PAGE> 27

A "Change in Control" will occur when: (i) all or substantially all of the
Company's assets are sold as an entirety to any person or related group of
persons; (ii) there shall be consummated any consolidation or merger of the
Company (A) in which the Company is not the continuing or surviving corporation
(other than a consolidation or merger with a wholly-owned subsidiary of the
Company in which all Common Shares outstanding immediately prior to the
effectiveness thereof are changed into or exchanged for the same consideration)
or (B) pursuant to which the Common Shares are converted into cash, securities
or other property, in each case other than a consolidation or merger of the
Company in which the holders of the Common Shares immediately prior to the
consolidation or merger have, directly or indirectly, at least a majority of the
common shares of the continuing or surviving corporation immediately after such
consolidation or merger; or (iii) any person, or any persons acting together
which would constitute a "group" for purposes of Section 13(d) of the Exchange
Act, together with any Affiliates thereof, acquires beneficial ownership (as
defined in Rule 13d-3 under the Exchange Act) of at least 50% of the total
voting power of all classes of capital shares of the Company entitled to vote
generally in the election of directors of the Company. Notwithstanding clause
(iii) of the foregoing definition, a Change in Control will not be deemed to
have occurred solely by virtue of the Company, any Subsidiary, any employee
share purchase plan, share option plan or other share incentive plan or program,
retirement plan or automatic dividend reinvestment plan or any substantially
similar plan of the Company or any Subsidiary or any person holding securities
of the Company for or pursuant to the terms of any such employee benefit plan,
filing or becoming obligated to file a report under or in response to Schedule
13D or Schedule 14D-1 (or any successor schedule, form or report) under the
Exchange Act disclosing beneficial ownership by it of shares or securities of
the Company, whether at least 50% of the total voting power referred to in
clause (iii) of the foregoing definition or otherwise. (Section 14.5) A
recapitalization or a leveraged buyout or similar transaction involving members
of management or their Affiliates will constitute a Change in Control if it
meets the foregoing definition.

Notwithstanding the foregoing, a Change in Control as described above will
not be deemed to have occurred if (i) the Current Market Price of the Common
Shares on the date of a Change in Control is at least equal to 105% of the
conversion price of the Notes in effect immediately preceding the time of such
Change in Control, or (ii) all of the consideration (excluding cash payments for
fractional shares) in the transaction giving rise to such Change in Control to
the holders of Common Shares consists of common shares that are, or immediately
upon issuance will be, listed on a national securities exchange or quoted on the
Nasdaq National Market, and as a result of such transaction the Notes will
become convertible solely into such common shares, or (iii) the consideration in
the transaction giving rise to such Change in Control to the holders of Common
Shares consists of cash or securities that are, or immediately upon issuance
will be, listed on a national securities exchange or quoted on the Nasdaq
National Market, or a combination of cash and such securities, and the aggregate
fair market value of such consideration (which, in the case of such securities,
will be equal to the average of the daily Closing Prices of such securities
during the 10 consecutive trading days commencing with the sixth trading day
following consummation of such transaction) is at least 105% of the conversion
price of the Notes in effect on the date immediately preceding the closing date
of such transaction. (Section 14.5)

There is no definition of the phrase "all or substantially all" as applied
to the Company's assets and used in the definition of Change in Control in the
Indenture, and there is no clear definition of the phrase under applicable law.
As a result of the uncertainty of the meaning of this phrase, in the event the
Company were to sell a significant amount of its assets, the Holders and the
Company may disagree over whether the sale gave rise to the right of Holders to
require the Company to repurchase the Notes. In such event, the Holders would
likely not be able to require the Company to repurchase unless and until the
disagreement were resolved in favor of the Holders.

The right to require the Company to repurchase Notes as a result of a
Change in Control could create an Event of Default under Senior Indebtedness, as
a result of which any repurchase could,

25
<PAGE> 28

absent a waiver, be blocked by the subordination provisions of the Notes. See
"Subordination of Notes." The Company's ability to pay cash to the Holders upon
a repurchase may also be limited by certain financial covenants contained in the
Company's Senior Indebtedness.

In the event a Change in Control occurs and the Holders exercise their
rights to require the Company to repurchase Notes, the Company intends to comply
with applicable tender offer rules under the Exchange Act, including Rules 13e-4
and 14e-1, as then in effect, with respect to any such purchase. The Change of
Control purchase feature of the Notes may in certain circumstances make more
difficult or discourage a takeover of the Company and, thus, the removal of
incumbent management. The Change in Control purchase feature, however, is not
the result of management's knowledge of any specific effort to accumulate Common
Shares or to obtain control of the Company by means of a merger, tender offer,
solicitation or otherwise, or part of a plan by management to adopt a series of
anti-takeover provisions. Instead, the Change in Control purchase feature is a
standard term contained in other similar debt offerings and the specific terms
of this feature resulted from negotiations between the Company and the
Underwriters. Management has no present intention to engage in a transaction
involving a Change in Control.

The foregoing provisions would not necessarily afford Holders protection in
the event of highly leveraged or other transactions involving the Company that
may adversely affect Holders.

SINKING FUND

There will be no sinking fund established for the retirement of the Notes.

MODIFICATION OF THE INDENTURE

Modifications and amendments of the Indenture may be made by the Company
and the Trustee with the consent of the Holders of two-thirds in principal
amount of the Outstanding Notes; provided that no such modification or amendment
may, without the consent of the Holder of each Outstanding Note affected
thereby, (i) change the stated maturity date of the principal of, or any
installment of interest on, any Note, (ii) reduce the principal amount of, the
rate of interest thereon, or any premium payable on, any Notes, (iii) change the
place of payment where, or the coin or currency in which, any Note or any
payment or the interest thereon is payable, (iv) impair the right to institute
suit for the enforcement of any such payment when due, (v) adversely affect the
conversion rights of the Holders, (vi) modify the provisions of the Indenture
with respect to the subordination of the Notes in a manner adverse to the
Holders, (vii) adversely affect the right to require the Company to repurchase
Notes, or (viii) reduce the percentage in principal amount of Notes the consent
of whose Holders is required for modification or amendment of the Indenture or
for waiver of compliance with certain provisions of the Indenture or for waiver
of certain defaults. (Section 9.2)

EVENTS OF DEFAULT, NOTICE AND WAIVER

The following are Events of Default: (i) default in the payment of any
interest on the Notes which continues for 30 days; (ii) default in the payment
of principal or premium, if any, when due; (iii) default in the payment of the
Repurchase Price in respect of any Note on the Repurchase Date; (iv) default in
the performance of any other covenant continued for 60 days after written notice
to the Company as provided in the Indenture; (v) default in respect of
indebtedness of the Company for money borrowed which results in acceleration of
the maturity of $10.0 million or more of indebtedness, if such acceleration is
not rescinded or indebtedness discharged within 30 days after written notice to
the Company as provided in the Indenture; and (vi) certain events in bankruptcy,
insolvency or reorganization. (Section 5.1) If any Event of Default shall happen
and be continuing, the Trustee or the Holders of not less than 25% in principal
amount of the Outstanding Notes may declare the principal of all the Notes due
and payable immediately. (Section 5.2) At any time after a declaration of
acceleration with respect to the Notes has been made, but before a judgment or
decree based on acceleration has been obtained, the Holders of a majority in
principal amount of the

26
<PAGE> 29

Outstanding Notes may, under certain circumstances, rescind and annul such
acceleration. (Section 5.2)

No Holder will have any right to institute any proceeding with respect to
the Indenture or for any remedy under the Indenture unless (i) the Holder
previously has given to the Trustee written notice of a continuing Event of
Default, (ii) the Holders of not less than 25% in principal amount of the
Outstanding Notes have made written request, and offered reasonable indemnity,
to the Trustee to institute proceedings as Trustee, and (iii) within 60 days
after such request, the Trustee has neither instituted such proceedings nor
received from the Holders of a majority in aggregate principal amount of the
Outstanding Notes a direction inconsistent with the request. (Section 5.7)

The Indenture provides that the Trustee will be under no obligation,
subject to the duty of the Trustee during default to act with the required
standard of care, to exercise any of its rights or powers under the Indenture at
the request or direction of any of the Holders, unless such Holders shall have
offered to the Trustee reasonable indemnification. (Section 6.3) Subject to the
requirement that the Trustee be indemnified, the Holders of a majority in
principal amount of the Outstanding Notes will have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee or exercising any trust or power conferred on the Trustee. (Section
5.12)

The Holders of a majority in principal amount of the Outstanding Notes may
on behalf of the Holders of all Notes waive compliance by the Company with
certain covenants in the Indenture. (Section 10.7) The Holders of a majority in
principal amount of the Outstanding Notes may on behalf of the Holders of all
Notes waive certain past defaults except a default in payment of the principal
of, or premium, if any, or interest on any Note or in respect of a covenant or
provision which under the Indenture cannot be modified or amended without the
consent of the Holder of each Outstanding Note affected. (Section 5.13)

The Company is required to furnish to the Trustee annually a certificate as
to the Company's compliance with the Indenture and specifying each default and
the nature thereof. (Section 7.4(d))

CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER

The Indenture provides that the Company shall not consolidate with or merge
into any other corporation or convey or transfer its properties and assets
substantially as an entirety to any person, unless (i) any such successor
assumes the Company's obligations under the Notes and the Indenture, (ii) after
giving effect thereto, no Event of Default or event which with notice and/or
lapse of time would become an Event of Default shall have occurred and be
continuing and (iii) certain other conditions under the Indenture are met.
(Section 8.1) Upon any such consolidation or merger, or any such conveyance or
transfer of the properties and assets of the Company substantially as an
entirety, the successor corporation formed by such consolidation, or into which
the Company is merged, or to which such conveyance or transfer is made, will
succeed to, and be substituted for, and may exercise every right and power of,
the Company under the Indenture with the same effect as if such successor
corporation had been named as the Company, and thereupon the Company as the
predecessor corporation will be relieved of all obligations and covenants under
the Indenture and the Notes. (Section 8.2)

GOVERNING LAW

The Notes will be governed by, and construed in accordance with, the laws
of the State of Ohio, without giving effect to applicable principles of
conflicts of law.

THE TRUSTEE

Star Bank, N.A. will be the Trustee under the Indenture.

27
<PAGE> 30

DESCRIPTION OF CAPITAL SHARES

The Common Shares are the only class of capital shares of the Company. The
Company is authorized to issue 25,000,000 Common Shares, and at August 31, 1996,
there were 10,597,392 Common Shares outstanding. All of the outstanding Common
Shares are, and any Common Shares issued by the Company upon conversion of the
Notes will be upon issuance, fully paid and non-assessable. Shareholders do not
have pre-emptive rights to purchase any securities of the Company.

Holders of Common Shares are entitled to receive such dividends as may be
declared from time to time by the Board of Directors out of funds legally
available therefor. The ability of the Company to pay dividends is subject to
certain contractual limitations in its credit agreements. Upon liquidation,
holders of Common Shares are entitled to receive a pro rata share of all assets
available to shareholders.

KeyCorp Shareholder Services, Inc. is transfer agent and registrar of the
Common Shares.

Holders of Common Shares are entitled to one vote per share upon all
matters presented to shareholders. Shareholders do, however, have cumulative
voting rights in the election of directors.

Article II of the Company's Code of Regulations divides the Board of
Directors of the Company into two classes, one class comprised of four directors
and one class of three directors. One class of directors is elected each year to
serve for a two-year term. Directors may not be removed from office without the
affirmative vote of the holders of at least two-thirds of the outstanding voting
power of the Company. Article II of the Code of Regulations provides that only
persons who are nominated in accordance with a specified procedure are eligible
for election as directors. The procedure requires that notice of the nomination,
together with the specified information concerning the nominee, must be given to
the Company not less than 50 nor more than 75 days prior to the meeting at which
directors are to be elected. Article II may not be amended or repealed without
the affirmative vote of the holders of at least two-thirds of the voting power
of the Company.

CERTAIN OHIO LEGISLATION

Ohio's "Control Share Acquisition Act" generally requires shareholder
approval of any acquisition of shares of an Ohio corporation which would result
in the acquiring person first reaching or exceeding ownership of one-fifth,
one-third or a majority of the total voting power of the corporation. Any such
control share acquisition cannot be consummated unless authorized by the holders
of: (i) a majority of the voting power of the corporation present at a meeting
of shareholders, and (ii) a majority of such voting power other than shares held
by the acquiring person or an officer or an employee who is a director of the
corporation, and other than shares acquired by a person or group after
announcement of the proposed control share acquisition if the amount so acquired
exceeds 1/2% of the outstanding voting shares or was acquired for a
consideration exceeding $250,000.

Ohio's "Merger Moratorium Act" prohibits an Ohio corporation from engaging
in specified transactions such as mergers, certain asset sales, certain
issuances of shares, a liquidation or the like with a beneficial owner of 10% or
more of the outstanding voting power of the corporation during the three-year
period following the date the person became the owner of the 10% interest,
unless prior to such date the transaction or the acquisition of shares was
approved by the directors of the corporation. After the three-year period, such
transactions may be entered into if approved by the holders of at least
two-thirds of the voting power of the corporation (including by the holders of
at least a majority of the shares held by persons other than an interested
person, as defined in the statute) or if the consideration to be paid in the
transaction is at least equal to certain specified amounts.

28
<PAGE> 31

UNDERWRITING

The Underwriters named below have severally agreed, subject to certain
conditions, to purchase from the Company the principal amounts of Notes set
forth opposite their respective names:

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
UNDERWRITERS NOTES
---------------------------------------------------------------------- -----------
<S> <C>
Schroder Wertheim & Co. Incorporated.................................. $28,800,000
Robert W. Baird & Co. Incorporated.................................... 28,800,000
First Analysis Securities Corporation................................. 2,400,000
-----------
Total....................................................... $60,000,000
===========
</TABLE>

The Underwriting Agreement provides that the several Underwriters are
obligated to purchase all of the Notes offered hereby, if any are purchased. The
several Underwriters have advised the Company that the Underwriters propose to
offer the Notes to the public initially at the offering price set forth on the
cover page of this Prospectus; that the Underwriters propose initially to allow
a concession of not in excess of 1.80% of the principal amount of the Notes to
certain dealers, including the Underwriters; that the Underwriters and such
dealers may initially allow a discount of not in excess of .25% of the principal
amount of the Notes to other dealers; and that the public offering price and
concession and discount to dealers may be changed by the Underwriters after the
initial public offering.

The Company has granted to the Underwriters an option, expiring at the
close of business on the 30th day after the date of the Underwriting Agreement,
to purchase up to an additional $5,000,000 aggregate principal amount of Notes
at the public offering price less underwriting discounts and commissions, all as
set forth on the cover page of this Prospectus. The Underwriters may exercise
the option only to cover over-allotments, if any, in the sale of Notes in this
offering. To the extent that the Underwriters exercise the option, each
Underwriter will be committed, subject to certain conditions, to purchase Notes
in an aggregate principal amount proportionate to such Underwriter's initial
commitment.

The Notes are a new issue of securities with no established trading market.
The Company has been advised by the Underwriters that they intend to make a
market in the Notes, but they are not obligated to do so and may discontinue any
market making at any time without notice. No assurance can be given as to the
liquidity of the trading market for the Notes.

The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended
(the "Securities Act").

The Company has agreed that without the written consent of Schroder
Wertheim & Co. Incorporated, it will not offer, sell, contract to sell or
otherwise dispose of any Common Shares, or any securities convertible or
exchangeable therefor, for a period of 90 days from the date of this Prospectus,
subject to limited exceptions.

M.H.M. & Co., Ltd. and the Company's directors and executive officers, who
collectively held as of August 31, 1996 an aggregate of 3,438,344 Common Shares,
have agreed that without the consent of Schroder Wertheim & Co. Incorporated
they will not offer, sell, contract to sell or otherwise dispose of any Common
Shares, or any securities convertible or exchangeable therefor, for a period of
90 days from the date of this Prospectus.

From time to time, certain of the Underwriters or their affiliates have
provided, and may continue to provide, investment banking or other financial
services to the Company.

29
<PAGE> 32

LEGAL MATTERS

The validity of the issuance of the Notes being offered hereby will be
passed upon for the Company by Thompson Hine & Flory P.L.L., Dayton, Ohio,
counsel for the Company. Certain legal matters in connection with the issuance
of the Notes will be passed upon for the Underwriters by Simpson Thacher &
Bartlett (a partnership which includes professional corporations), New York, New
York. Joseph M. Rigot, a member of the firm of Thompson Hine & Flory P.L.L.,
also serves as the Secretary and General Counsel of the Company. At August 31,
1996, members of the firm of Thompson Hine & Flory P.L.L. owned beneficially
2,500 Common Shares.

EXPERTS

The consolidated financial statements of the Company as of August 31, 1995
and 1994 and for each of the three fiscal years in the period ended August 31,
1995 in the Prospectus have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report with respect thereto and are included
herein in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy and information statements and other information
with the Securities and Exchange Commission (the "Commission"). Reports, proxy
statements and other information filed by the Company with the Commission
pursuant to the Exchange Act may be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's regional offices located at
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661,
and Seven World Trade Center, 13th Floor, New York, New York 10048. Copies of
such materials also can be obtained from the Public Reference Branch of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
The Registration Statement has been, and amendments thereto will be, filed with
the Commission through the Electronic Data Gathering, Analysis and Retrieval
("EDGAR") system. Registration statements and other documents filed through the
EDGAR system are publicly available through the Commission's WEB site
(http://www.sec.gov).

The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act. This Prospectus does not
contain all the information set forth in the Registration Statement, certain
parts of which have been omitted in accordance with the rules and regulations of
the Commission. For further information, reference is hereby made to the
Registration Statement.

INFORMATION INCORPORATED BY REFERENCE

The following documents filed by the Company with the Commission (File No.
0-288) pursuant to the Exchange Act are incorporated herein by reference:

1. The Company's Annual Report on Form 10-K for the fiscal year ended
August 31, 1995 filed pursuant to Section 13 of the Exchange Act.

2. The Company's Quarterly Reports on Form 10-Q for the quarter ended
November 30, 1995, as amended by Form 10-Q/A-1, the quarter ended February
28, 1996 and the quarter ended May 31, 1996, filed pursuant to Section 13
of the Exchange Act.

30
<PAGE> 33

3. The description of the Company's Common Shares contained in its
Registration Statement on Form 10 filed with the Commission on April 19,
1965, as amended by Form 10/A-2, filed on December 13, 1995.

4. All reports and other documents filed by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of
this Prospectus and prior to the termination of this offering.

Any statement incorporated herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein, in a supplement to this Prospectus or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of the Registration Statement or this Prospectus.

The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon the written or oral
request of such person, a copy of any and all of the documents which are
incorporated herein by reference (other than exhibits to such documents, unless
such exhibits are specifically incorporated by reference into such document).
Requests for such documents should be directed to the principal executive
offices of Robbins & Myers, Inc., 1400 Kettering Tower, Dayton, Ohio 45423,
(513) 222-2610.

31
<PAGE> 34

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Auditors........................................................ F-2
Consolidated Balance Sheets as of August 31, 1994 and 1995 and May 31, 1996........... F-3
Statement of Consolidated Operations and Retained Earnings for the fiscal years ended
August 31, 1993, 1994 and 1995 and for the nine months ended May 31, 1995 and 1996.. F-4
Statement of Consolidated Cash Flows for the fiscal years ended August 31, 1993, 1994
and 1995 and the nine months ended May 31, 1995 and 1996............................ F-5
Notes to Consolidated Financial Statements............................................ F-6
</TABLE>

F-1
<PAGE> 35

REPORT OF INDEPENDENT AUDITORS

SHAREHOLDERS AND BOARD OF DIRECTORS
ROBBINS & MYERS, INC. AND SUBSIDIARIES

We have audited the accompanying consolidated balance sheet of Robbins &
Myers, Inc. and Subsidiaries as of August 31, 1995 and 1994, and the related
statements of consolidated operations and retained earnings and cash flows for
each of the three years in the period ended August 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Robbins &
Myers, Inc. and Subsidiaries at August 31, 1995 and 1994, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended August 31, 1995, in conformity with generally accepted
accounting principles.

As discussed in the Summary of Accounting Policies note to the Consolidated
Financial Statements, in 1993 the Company changed its method of accounting for
postretirement benefits other than pensions and accounting for income taxes.

/S/ ERNST & YOUNG LLP

Dayton, Ohio
October 3, 1995,
except for SAR Redemption and Stock Split notes, as to which the dates are
October 24, 1995, and July 31, 1996, respectively

F-2
<PAGE> 36

ROBBINS & MYERS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
AUGUST 31, AUGUST 31, MAY 31,
1994 1995 1996
---------- ---------- -----------
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents........................ $ 16,079 $ 10,210 $ 8,836
Accounts receivable, less allowances............. 41,388 49,415 51,811
Inventories...................................... 39,926 43,176 46,824
Other current assets............................. 2,828 2,492 1,884
Deferred taxes................................... 3,632 4,539 5,644
---------- ---------- -----------
Total current assets........................ 103,853 109,832 114,999
Goodwill............................................ 68,210 73,497 92,098
Other intangible assets............................. 9,267 13,573 12,691
Deferred taxes...................................... 7,802 4,522 3,421
Other assets........................................ 6,836 4,378 5,948
Property, plant and equipment, net.................. 62,162 64,605 66,260
---------- ---------- -----------
Total Assets.......................................... $ 258,130 $ 270,407 $ 295,417
========= ========= ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable................................. $ 16,164 $ 22,442 $ 21,174
Accrued expenses................................. 38,842 49,190 48,223
Current portion long-term debt................... 3,500 6,067 1,948
---------- ---------- -----------
Total current liabilities................... 58,506 77,699 71,345
Long-term debt-less current portion................. 80,290 61,834 79,285
Other long-term liabilities......................... 62,295 60,935 60,799
Shareholders' equity
Common stock-without par value:
Authorized shares -- 25,000,000
Outstanding shares -- 10,405,088 in 1995 and
10,285,634 in 1994 after deducting shares in
treasury of 271,610 in 1995 and 294,010 in
1994, at stated amount......................... 19,573 20,682 22,213
Retained earnings................................ 37,656 49,254 62,099
Equity adjustment for foreign currency
translation.................................... 211 777 450
Equity adjustment to recognize minimum pension
liability...................................... (401) (774) (774)
---------- ---------- -----------
Total shareholders' equity............................ 57,039 69,939 83,988
---------- ---------- -----------
Total liabilities and shareholders' equity............ $ 258,130 $ 270,407 $ 295,417
========= ========= ==========
</TABLE>

See Notes to Consolidated Financial Statements

F-3
<PAGE> 37

ROBBINS & MYERS, INC. AND SUBSIDIARIES

STATEMENT OF CONSOLIDATED OPERATIONS AND RETAINED EARNINGS

<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED AUGUST 31, ENDED MAY 31,
------------------------------ -------------------
1993 1994 1995 1995 1996
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net sales.......................................... $ 85,057 $121,647 $302,952 $219,475 $255,272
Less:
Cost of sales.................................. 52,296 76,666 201,648 146,107 170,336
Engineering and development, selling and
administrative expenses...................... 22,171 28,733 74,234 53,375 58,180
Interest expense............................... 116 1,457 7,287 5,552 5,304
Other deductions (income):
Provision for business restructure........... 950 2,551 -- -- --
Other items -- net........................... 1,240 1,595 750 747 (1,027)
-------- -------- -------- -------- --------
8,284 10,645 19,033 13,694 22,479
Investment income.................................. 1,462 -- -- -- --
-------- -------- -------- -------- --------
Income before income taxes......................... 9,746 10,645 19,033 13,694 22,479
Income taxes....................................... 3,568 4,290 7,208 5,435 8,317
-------- -------- -------- -------- --------
Income before extraordinary gain and
cumulative effect of accounting changes.......... 6,178 6,355 11,825 8,259 14,162
Extraordinary gain from early extinguishment of
debt, net of income taxes........................ -- -- 1,332 1,332 --
Cumulative effect of accounting changes,
net of income taxes.............................. (8,018) -- -- -- --
-------- -------- -------- -------- --------
Net income (loss).................................. (1,840) 6,355 13,157 9,591 14,162
Retained earnings at beginning of year............. 35,826 32,776 37,656 37,656 49,254
Deduct dividends declared on common stock.......... (1,210) (1,475) (1,559) (1,168) (1,317)
-------- -------- -------- -------- --------
Retained earnings at end of year................... $ 32,776 $ 37,656 $ 49,254 $ 46,079 $ 62,099
======== ======== ======== ======== ========
Income (loss) per share
Primary:
Income before extraordinary gain and
cumulative effect of accounting changes...... $ .59 $ .61 $1.09 $ .78 $1.29
Extraordinary gain from early extinguishment of
debt, net of income taxes.................... -- -- .13 .13 --
Cumulative effect of accounting changes,
net of income taxes.......................... (.76) -- -- -- --
-------- -------- -------- -------- --------
$(.17) $ .61 $1.22 $ .91 $1.29
======== ======== ======== ======== ========
Assuming full dilution:
Income before extraordinary gain and
cumulative effect of accounting changes...... $ .59 $ .61 $1.09 $ .77 $1.28
Extraordinary gain from early extinguishment of
debt, net of income taxes.................... -- -- .12 .13 --
Cumulative effect of accounting changes,
net of income taxes.......................... (.76) -- -- -- --
-------- -------- -------- -------- --------
$(.17) $ .61 $1.21 $ .90 $1.28
======== ======== ======== ======== ========
</TABLE>

See Notes to Consolidated Financial Statements

F-4
<PAGE> 38

ROBBINS & MYERS, INC. AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED CASH FLOWS

<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED AUGUST 31, ENDED MAY 31,
--------------------------- -----------------
1993 1994 1995 1995 1996
------- ------- ------- ------- -------
(IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss)..................................... ($1,840) $ 6,355 $13,157 $ 9,591 $14,162
Equity adjustment for foreign currency translation.... (1,069) (81) 566 1,370 (327)
Adjustments required to reconcile net income (loss) to
net cash and cash equivalents provided by operating
activities:
Depreciation...................................... 2,637 3,761 8,549 6,543 7,622
Amortization...................................... 161 833 3,852 2,815 3,288
Deferred taxes.................................... 742 (523) (800) 644 (4)
Equity income from unconsolidated investments..... -- (80) (944) (560) (1,500)
Gain on extinguishment of debt.................... -- -- (2,183) (2,183) --
Other............................................. -- -- 575 -- 869
Cumulative effect of accounting changes........... 8,018 -- -- -- --
Changes in operating assets and
liabilities -- excluding the effects of the purchase
of Pharaoh Corp. and Cannon Process Equipment, Ltd.,
Pfaudler, Chemineer, Edlon and the JWI Mixer Line:
Accounts receivable, less allowances.............. (2,020) 129 (7,487) (9,243) (2,396)
Inventories....................................... 2,029 2,476 (1,854) (2,852) (3,648)
Other current assets.............................. 233 (1,436) 2,236 2,484 608
Other assets...................................... (1,843) 1,729 659 1,267 (70)
Accounts payable.................................. 863 (128) 5,273 1,898 (1,268)
Accrued expenses.................................. (942) 549 9,605 3,692 (967)
Other long-term liabilities....................... 564 1,017 1,813 3,437 (136)
------- ------- ------- ------- -------
Net cash and cash equivalents provided by operating
activities............................................ 7,533 14,601 33,017 18,903 16,233
INVESTING ACTIVITIES
Capital expenditures, net of nominal disposals........ (2,579) (6,798) (10,133) (6,350) (9,277)
Purchase of marketable securities..................... (32,533) (29,796) -- -- --
Proceeds from sale of marketable securities........... 31,566 52,860 -- -- --
Purchase of JWI Mixer Line............................ (2,188) -- -- -- --
Purchase of Pfaudler, Chemineer and Edlon Business
Units............................................... -- (96,725) -- -- --
Purchase of Pharaoh Corp. and Cannon Process
Equipment, Ltd...................................... -- -- (12,898) (11,088) --
Investment in Hazelton Environmental.................. (1,081) (700) -- -- --
------- ------- ------- ------- -------
Net cash and cash equivalents used by investing
activities............................................ (6,815) (81,159) (23,031) (17,438) (9,277)
FINANCING ACTIVITIES
Proceeds from debt borrowings......................... 17,800 113,805 67,375 55,449 50,870
Payments of long-term debt............................ (17,769) (31,200) (82,205) (60,455) (39,812)
Proceeds from sale of common stock.................... 338 580 534 368 662
Retirement of stock appreciation rights and
acquisition Costs Incurred.......................... -- -- -- -- (18,733)
Purchase of common stock.............................. (452) (495) -- -- --
Dividends paid........................................ (1,210) (1,475) (1,559) (1,168) (1,317)
------- ------- ------- ------- -------
Net cash and cash equivalents (used) provided by
financing activities.................................. (1,293) 81,215 (15,855) (5,806) (8,330)
------- ------- ------- ------- -------
(Decrease) Increase in cash and cash equivalents........ (575) 14,657 (5,869) (4,341) (1,374)
Cash and cash equivalents at beginning of year.......... 1,997 1,422 16,079 16,079 10,210
------- ------- ------- ------- -------
Cash and cash equivalents at end of year................ $ 1,422 $16,079 $10,210 $11,738 $ 8,836
======= ======= ======= ======= =======
</TABLE>

See Notes to Consolidated Financial Statements

F-5
<PAGE> 39

ROBBINS & MYERS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(INFORMATION PERTAINING TO MAY 31, 1996 AND FOR THE NINE MONTHS ENDED
MAY 31, 1996 IS UNAUDITED)

SUMMARY OF ACCOUNTING POLICIES

CONSOLIDATION

The consolidated financial statements include accounts of the Company and
its wholly-owned subsidiaries. All significant inter-company accounts and
transactions have been eliminated upon consolidation. All of the Company's
operations are conducted in the fluids management industry.

INCOME TAXES

Income taxes are provided for all items included in the Statement of
Consolidated Operations and Retained Earnings regardless of the period when such
items are reported for income tax purposes. Deferred income taxes reflect the
net effects of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for income tax
purposes.

PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment are stated at cost. Depreciation expense is
recorded over the estimated useful life of the asset on the straight-line method
using the following lives:

<TABLE>
<S> <C>
Land improvements............................................ 20 years
Buildings.................................................... 40 years
Machinery & equipment........................................ 3 to 15 years
</TABLE>

The Company's normal policy is to charge repairs and improvements made to
capital assets to expense as incurred. In limited circumstances, major building
repairs are capitalized and amortized over the estimated life of the new asset
and any remaining value of the old asset is written off. Repairs to machinery
and equipment must result in an addition to the useful life of the asset before
the costs are capitalized.

"Property, Plant and Equipment, Net" consisted of the following:

<TABLE>
<CAPTION>
AUGUST 31,
-------------------- MAY 31,
1994 1995 1996
------- ------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Land and improvements................... $ 9,366 $ 9,732 $ 9,851
Buildings............................... 21,658 20,182 20,892
Machinery & equipment................... 58,876 69,255 74,880
------- ------- -----------
89,900 99,169 105,623
Less accumulated depreciation........... 27,738 34,564 39,363
------- ------- -----------
$62,162 $64,605 $66,260
======== ======== ==========
</TABLE>

INVENTORIES

Domestic inventories are stated at the lower of cost or market determined
by the last-in, first-out (LIFO) method. At August 31, 1995 and 1994, the
difference between estimated current replacement cost and the stated LIFO value
was approximately $7,436,000 and $7,312,000, respectively.

F-6
<PAGE> 40

ROBBINS & MYERS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION PERTAINING TO MAY 31, 1996 AND FOR THE NINE MONTHS ENDED
MAY 31, 1996 IS UNAUDITED)

Foreign inventories are reported on the first-in, first-out (FIFO) method
and amounted to $23,226,000 and $21,995,000 at August 31, 1995 and 1994,
respectively.

"Inventories" consisted of the following:

<TABLE>
<CAPTION>
AUGUST 31,
-------------------- MAY 31,
1994 1995 1996
------- ------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Finished products..................... $12,491 $13,743 $12,566
Work in process....................... 13,913 15,149 20,412
Raw materials......................... 13,522 14,284 13,846
------- ------- -----------
$39,926 $43,176 $46,824
======== ======== ==========
</TABLE>

GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill is the excess of the purchase price paid over the value of net assets
of businesses acquired. Amortization of goodwill is calculated on a
straight-line basis over 40 years. The carrying value of goodwill is reviewed
quarterly if the facts and circumstances suggest that it may be permanently
impaired. If the review indicates that goodwill will not be recoverable, as
determined by the undiscounted cash flow method, the asset will be reduced to
its estimated recoverable value. Accumulated amortization of goodwill and other
intangible assets totaled $3,904,000 and $1,176,000 at August 31, 1994 and 1995,
respectively.

At August 31, "Other Intangible Assets" consisted of the following:

<TABLE>
<CAPTION>
1994 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
Patents............................................. $ 1,098 $ 1,019
Non-compete agreements.............................. 1,028 5,401
Financing costs..................................... 393 396
Acquisition costs................................... 3,040 3,515
Pension intangible.................................. 3,708 3,242
------- -------
$ 9,267 $13,573
======== ========
</TABLE>

Amortization is calculated on the straight-line basis using the following
lives:

<TABLE>
<S> <C>
Patents..................................................... 14 to 17 years
Non-compete agreements...................................... 3 to 5 years
Financing costs............................................. 5 years
Goodwill.................................................... 40 years
</TABLE>

INCOME PER SHARE

All income per share amounts are based on the weighted average number of
shares outstanding during the year plus the dilutive effect of common stock
equivalents. The stock appreciation rights granted in connection with the prior
year acquisitions of Pfaudler, Chemineer and Edlon have been excluded from the
calculation of income per share. See the Common Stock note for additional
information.

F-7
<PAGE> 41

ROBBINS & MYERS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION PERTAINING TO MAY 31, 1996 AND FOR THE NINE MONTHS ENDED
MAY 31, 1996 IS UNAUDITED)

RESEARCH AND DEVELOPMENT

Research and development expenditures are expensed as incurred and amounted
to approximately $2,403,000, $1,363,000 and $1,260,000 for the years ended
August 31, 1995, 1994 and 1993, respectively.

ACCOUNTS RECEIVABLE

Accounts receivable are stated net of allowances for doubtful accounts
totaling $1,260,000 and $952,000 at August 31, 1995 and 1994, respectively.
Accounts receivable relate primarily to customers located in North America and
Western Europe and are concentrated in the specialty chemicals, pharmaceuticals
and oil and gas recovery industries. To reduce credit risk, the Company performs
credit investigations prior to accepting an order and when necessary, requires
advance payments and letters of credit to insure payment.

STATEMENT OF CONSOLIDATED CASH FLOWS

Cash and cash equivalents consist of working cash balances and temporary
investments having an original maturity of 90 days or less.

CHANGES IN ACCOUNTING POLICIES

In 1993, the Company adopted Statement of Financial Accounting Standards
No. 106, "Employers Accounting for Postretirement Benefits Other Than Pensions"
and No. 109, "Accounting for Income Taxes."

Statement No. 106 generally requires the accrual of the expected costs of
postretirement benefits by the date the employees become eligible for benefits.
Previously, the expense for these benefits was recognized as claims were paid. A
charge of $8,812,000, net of income taxes of $5,239,000, was recognized as the
cumulative effect for the adoption of Statement No. 106.

Statement No. 109 replaces Statement No. 96 and the Company will continue
using the liability method of computing deferred income taxes. A credit of
$794,000 was recognized as the cumulative effect for the adoption of Statement
No. 109.

EQUITY INVESTMENTS

The Company owns 40% of Gujarat Machinery Manufacturers, Ltd. (GMM). GMM is
located in India and manufactures and markets glass-lined reactor and storage
vessels, parts and services, primarily for the Indian market. In addition, the
Company owns 50% of Universal Glasteel Equipment (UGE) located in Robbinsville,
New Jersey. UGE is a supplier of used and reconditioned glass-lined storage and
reactor vessels. The Company uses the equity method of accounting for the
investments, totaling approximately $2,980,000, which are included in "Other
Assets" in the Consolidated Balance Sheet.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used by the Company in
estimating the fair value of financial instruments:

F-8
<PAGE> 42

ROBBINS & MYERS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION PERTAINING TO MAY 31, 1996 AND FOR THE NINE MONTHS ENDED
MAY 31, 1996 IS UNAUDITED)

Current portion long-term debt and equity investments. -- The amounts
reported approximate the market value of similar instruments.

Long-term debt. -- The amounts reported are consistent with the terms,
interest rates and maturities currently available to the Company for
similar debt instruments.

Interest swap agreements. -- The amounts reported are consistent with
values at which they could be settled, based upon dealer estimates.

Foreign exchange contracts. -- The amounts reported are estimated
using quoted market prices for similar instruments.

FOREIGN CURRENCY ACCOUNTING

Gains and losses resulting from the settlement of a transaction in a
currency different from that used to record the transaction are charged or
credited to operations when incurred. Adjustments resulting from the translation
of foreign financial statements into U.S. dollars are recognized as a separate
component of shareholders' equity for all foreign units except those located in
Brazil. The U.S. dollar is the functional currency for the Brazilian units. As a
result, translation gains and losses for these operations are reflected in net
income.

RECOGNITION OF REVENUE

Revenue is primarily recognized as products are shipped to customers except
for infrequent long-term contracts for which revenue is recognized under the
percentage of completion method. At August 31, 1995, 1994 and 1993 there were no
such contracts in process.

PRODUCT WARRANTY

Provision for product warranty is recognized as a liability at the time of
sale based on the historical relationship of warranty expense to sales. Actual
payments of warranty claims are charged against the liability as incurred. The
liability is reviewed quarterly and adjusted as necessary.

COMMON STOCK

The Company's stock option plans provide for the granting of options to
directors, officers and other key employees. Under the plans, the option price
per share may not be less than the fair market value as of the date of grant and
the options become exercisable on a vesting schedule determined by the
Compensation Committee of the Board of Directors. Most currently outstanding
grants become exercisable over a three or four year period. Proceeds from the
sale of stock issued under option arrangements are credited to common stock. The
Company makes no charges or credits against earnings with respect to options.

At August 31, 1995 and 1994, 882,500 and 2,800,000 shares, respectively,
were reserved for future grants.

F-9
<PAGE> 43

ROBBINS & MYERS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION PERTAINING TO MAY 31, 1996 AND FOR THE NINE MONTHS ENDED
MAY 31, 1996 IS UNAUDITED)

<TABLE>
<CAPTION>
1994 1995
------- -------
<S> <C> <C>
Options granted..................................... 166,000 153,500
Options expired..................................... 4,800 86,600
Options exercised: option price $2.07-$8.50......... 110,400 92,200
Options outstanding: option price $1.94-$13.50...... 832,400 807,100
Options which became exercisable:
option price $8.13-$10.13......................... 85,900 103,160
Options exercisable: option price $1.94-$13.50...... 494,240 501,200
</TABLE>

The Company also sponsors a long-term incentive stock plan for senior
executives. Under the program, participants earn performance shares based on a
three year measurement of how favorably the total return on Company shares
compares to the total shareholder return of the Russell 2000 Company Group. No
performance shares are earned unless the total return on Company shares is at
least equal to the median return for companies included in the Russell 2000.
Performance shares earned under the program are issued to the participants at
the end of the three year measurement period and are subject to forfeit if the
participant leaves the employment of the Company within the next two years.

At August 31, 1995, 73,000 units had been awarded under the program. The
Company has estimated the total value of shares that could be earned under the
program and has chosen to recognize the cost ratably over a five year period.
The amount charged to expense for this program is $562,000 as of August 31,
1995.

During 1994, in connection with the acquisition of Pfaudler, Chemineer and
Edlon, the Company issued to the seller stock appreciation rights on 4,000,000
shares of its common stock. The stock appreciation rights entitle the holder to
receive a payment equal to the increase in market value of the Company's common
stock above $11.50 per share to a maximum market value of $20 per share. The
stock appreciation rights are exercisable by the holder during the period
January 1, 1995 through June 30, 2000. At the Company's option, payment may be
made in cash or common stock of the Company. It is the Company's intention to
make any payment for stock appreciation rights in cash and therefore the payment
will result in additional goodwill at the time of the transaction. See SAR
Redemption note for additional information.

The net changes in common shares outstanding during 1995, 1994 and 1993
were increases of 119,454, 89,140 and 9,994 shares, respectively. Activity for
all years was limited to employee transactions.

RETIREMENT PLANS

The Company sponsors three defined contribution plans covering most
salaried employees and certain domestic hourly employees. Company contributions
are made to the plans based on a percentage of eligible amounts contributed by
participating employees.

The Company also has several defined benefit plans covering all domestic
employees and certain foreign employees. Plans covering salaried employees
provide benefits based on years of service and employees' compensation. Plans
covering hourly employees generally provide benefits of stated amounts for each
year of service. The Company's funding policy is consistent with the funding
requirements of applicable federal regulations. At August 31, 1995 and 1994
pension assets were invested in short and long-term interest bearing obligations
and equity securities, including 238,000 shares of the Company's common stock.

F-10
<PAGE> 44

ROBBINS & MYERS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION PERTAINING TO MAY 31, 1996 AND FOR THE NINE MONTHS ENDED
MAY 31, 1996 IS UNAUDITED)

During 1995, the Company adjusted its minimum pension liability to
$4,016,000 from $4,109,000 in the prior year. This liability is required for
defined benefit plans whose accumulated benefits exceed assets. The transaction,
which had no effect on income, was recorded by adjusting an intangible asset to
the amount of $3,242,000 from $3,708,000 in 1994 and adjusting equity by
$373,000 for a total equity adjustment of $774,000 at August 31, 1995.

Retirement plan costs for the above plans include the following components:

<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
------------------------------
1993 1994 1995
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Defined benefit plans:
Service cost -- benefits earned during the
period................................. $ 854 $1,128 $2,134
Interest cost on projected benefit
obligation............................. 2,594 2,875 3,460
Actual return on assets................... (5,617) (1,167) (5,242)
Net amortization and deferral............. 3,098 (1,865) 2,167
------ ------ ------
Total..................................... 929 971 2,519
Defined contribution plans.................. 222 327 477
------ ------ ------
$1,151 $1,298 $2,996
====== ====== ======
</TABLE>

The increase in 1995 costs over the previous year is due primarily to the
inclusion in 1995 of a full year's expense for Pfaudler, Chemineer and Edlon
compared with two months in 1994.

The funded status of domestic defined benefit plans at August 31, 1995 and
1994 was as follows:

<TABLE>
<CAPTION>
ASSETS EXCEED ACCUMULATED
ACCUMULATED BENEFITS
BENEFITS EXCEED ASSETS
1995 1995
------------- -------------
(IN THOUSANDS)
<S> <C> <C>
Actuarial present value of:
Vested benefit obligation................................. $15,207 $31,109
Accumulated benefit obligation............................ 15,849 33,824
Projected benefit obligation.............................. 19,177 33,830
Plan assets at fair market value............................ 16,456 25,589
------------- -------------
Plan assets less than projected benefit obligation.......... (2,721) (8,241)
Unrecognized net loss....................................... 2,273 65
Unrecognized prior service cost............................. 1,169 2,826
Unrecognized net (asset) obligation at August 31............ (432) 416
Adjustment to recognize minimum liability................... -- (4,016)
------------- -------------
Net pension asset (liability) recognized in the Consolidated
Balance Sheet............................................. $ 289 $(8,950)
============ ============
</TABLE>

F-11
<PAGE> 45

ROBBINS & MYERS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION PERTAINING TO MAY 31, 1996 AND FOR THE NINE MONTHS ENDED
MAY 31, 1996 IS UNAUDITED)

<TABLE>
<CAPTION>
ASSETS EXCEED ACCUMULATED
ACCUMULATED BENEFITS
BENEFITS EXCEED ASSETS
1994 1994
------------- -------------
(IN THOUSANDS)
<S> <C> <C>
Actuarial present value of:
Vested benefit obligation................................. $13,819 $ 30,687
Accumulated benefit obligation............................ 14,353 30,862
Projected benefit obligation.............................. 17,504 31,915
Plan assets at fair market value............................ 15,942 24,133
------------- -------------
Plan assets less than projected
benefit obligation........................................ (1,562) (7,782)
Unrecognized net loss....................................... 1,091 401
Unrecognized prior service cost............................. 1,528 3,208
Unrecognized net (asset) obligation at August 31............ (492) 500
Adjustment to recognize minimum liability................... -- (4,109)
------------- -------------
Net pension asset (liability) recognized in the Consolidated
Balance Sheet............................................. $ 565 $ (7,782)
============ ============
</TABLE>

The projected benefit obligation was determined using a discount rate of 7%
in 1995 (7 1/2% in 1994) and weighted average pay increases of 6 3/4%. The
assumed long-term rate of return on plan assets is 9 1/2% in 1995, 10% in 1994
and 10 1/2% in 1993. The effect of the change in the discount rate on the above
plans is an increase in the projected benefit obligation of approximately
$3,011,000.

The following tables describe the amount recognized in the Consolidated
Financial Statements relating to Pfaudler's unfunded German pension plan as of
the actuarial valuation dates at August 31, 1995 and June 30, 1994.

Net pension cost for this plan includes the following components at August
31,:

<TABLE>
<CAPTION>
1994 1995
----- -------
(IN THOUSANDS)
<S> <C> <C>
Service cost.............................................. $ 79 $ 550
Interest cost............................................. 315 2,231
---- ------
Net pension cost.......................................... $ 394 $ 2,781
==== ======
</TABLE>

The increase in pension cost during 1995 is primarily the result of the
inclusion of twelve months of expense in 1995 and two months of expense in 1994
of the Pfaudler, Chemineer and Edlon

F-12
<PAGE> 46

ROBBINS & MYERS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION PERTAINING TO MAY 31, 1996 AND FOR THE NINE MONTHS ENDED
MAY 31, 1996 IS UNAUDITED)

acquired businesses. The status of this plan at the actuarial valuation dates of
August 31, 1995 and June 30, 1994 was as follows:

<TABLE>
<CAPTION>
1994 1995
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Actuarial present value of:
Accumulated benefit obligation.................... $ 26,052 $ 28,636
Vested benefit obligation......................... 25,699 28,231
Projected benefit obligation...................... 29,014 31,746
Plan assets at fair market value*................... -- --
------- -------
Plan assets less than projected benefit
obligation........................................ (29,014) (31,746)
Unrecognized net actuarial gain..................... -- (966)
------- -------
Pension liability recognized in the Consolidated
Balance Sheet..................................... $ (29,014) $ (32,712)
======= =======
<FN>
- ---------------

*Funding of pension obligations is not permitted in Germany.
</TABLE>

The projected benefit obligation for this plan was determined using a
discount rate of 7 1/4% and weighted average pay increases of 4%. Pension
payments are paid from funds generated by operations as Germany does not permit
funding of pension obligations.