The following tables present the components of our consolidated statement of operations and segment information for the three and nine month periods of fiscal 2008 and 2007.

                                      Three Months Ended         Nine Months Ended
                                           May 31,                    May 31,
                                       2008         2007         2008         2007
          Net Sales                    100.0 %      100.0 %       100.0 %     100.0 %
          Cost of sales                 61.8         64.2          63.2        65.2

          Gross profit                  38.2         35.8          36.8        34.8
          SG&A expenses                 21.0         22.2          22.0        23.3
          Other (income) expense        (2.8 )        0.2          (1.2 )      (0.4 )

          EBIT                          20.0         13.4          16.0        11.9
          Interest expense, net          0.2          0.9           0.3         0.9
          Income tax expense             6.3          4.6           5.2         4.3
          Minority interest              0.3          0.2           0.3         0.2

          Net income                    13.2 %        7.7 %        10.2 %       6.5 %




                                   Three Months Ended          Nine Months Ended
                                        May 31,                     May 31,
                                   2008          2007         2008           2007
                                             (In thousands, except %'s)
           Segment
           Fluid Management:
           Sales                 $ 83,505     $ 74,418     $ 232,369     $ 208,236
           EBIT                    25,230       20,585        64,648        53,010
           EBIT %                    30.2 %       27.7 %        27.8 %        25.5 %

           Process Solutions:
           Sales                 $ 80,782     $ 66,442     $ 226,583     $ 194,311
           EBIT                    10,184        5,261        25,614        21,413
           EBIT %                    12.6 %        7.9 %        11.3 %        11.0 %

           Romaco:
           Sales                 $ 36,659     $ 30,568     $ 100,462     $  85,812
           EBIT                     7,906        1,163        11,557        (4,109 )
           EBIT %                    21.6 %        3.8 %        11.5 %        (4.8 )%

The Company's operating performance is evaluated using several measures. One of those measures, EBIT, is income before interest and income taxes and is reconciled to net income on our Consolidated Condensed Statement of Income. We evaluate performance of our business segments and allocate resources based on EBIT. EBIT is not, however, a measure of performance calculated in accordance with accounting principles generally accepted in the United States and should not be considered as an alternative to net income as a measure of our operating results. EBIT is not a measure of cash available for use by management. Impact of Other Charges
Unless otherwise noted, the financial impact of the matters mentioned below in this note were included on the "Other (income) expense" line of our Consolidated Condensed Statement of Income in the period indicated.
During the fiscal 2008 and 2007 three and nine month periods, we sold facilities and incurred gains and costs related to a restructuring program announced in fiscal 2005. The restructuring plan was initiated to improve our profitability and included plant closures, sales of excess facilities, personnel reductions, product line sales and other activities. The restructuring program was completed in fiscal 2007. Fiscal 2008 activity relates to product lines previously disposed as part of this restructuring program.

In the third quarter of fiscal 2008 we recognized a gain of $5.7 million, related to the sale of two of our Romaco product lines sold in fiscal 2006. As part of that transaction, funds were paid into an escrow account to serve as collateral for potential claims by the purchaser under the terms of the Asset and Share Purchase Agreement ("Agreement"). The substantive financial guarantees in this Agreement contractually lapsed on March 31, 2008, resulting in the gain and the release of the escrow funds to us.
In the second quarter of fiscal 2008 we sold a facility related to a previously disposed product line for $4.0 million, with a resulting gain of $1.1 million. The product line had been part of our Romaco segment, and the property was leased to the acquirer of that product line.
In the second quarter of fiscal 2007 we sold a product line and a sales organization which was part of our Romaco segment. We received minimal proceeds and recorded a loss on the sale of $1.1 million. Third quarter fiscal 2007 and fiscal 2007 year to date restructuring costs in Romaco were $0.4 million and $2.9 million, respectively, including the loss from the previously mentioned sale.
In the first quarter of fiscal 2007 we sold a facility within our Process Solutions segment for $6.0 million and recorded a $5.0 million gain, which is included in the financial results for the nine month period of fiscal 2007.

Three months ended May 31, 2008
Net Sales
Consolidated net sales for the third quarter of fiscal 2008 were $200.9 million, $29.5 million higher than net sales for the third quarter of fiscal 2007. Excluding the impact of currency translation and acquisitions and dispositions, sales increased by $15.5 million, or 9%.
The Fluid Management segment had sales of $83.5 million in the third quarter of fiscal 2008 compared with $74.4 million in the third quarter of fiscal 2007. Currency translation accounted for $2.3 million of the increase, and the remaining $6.8 million increase, 9%, was primarily from increased demand for oilfield equipment products due to high levels of oil and gas exploration and recovery activity. Orders for this segment were $86.9 million in the third quarter of fiscal 2008 compared with $75.1 million in the prior year period. Ending backlog of $54.5 million is 17% higher than in the prior year. The Process Solutions segment had sales of $80.8 million in the third quarter of fiscal 2008 compared with $66.4 million in the third quarter of fiscal 2007. Excluding the impact of currency translation and acquisitions, sales increased $7.8 million, or 12%, over the prior year period. This increase is largely attributable to a stronger global chemical market and increased Asian region sales. Excluding currency translation and acquisition impacts, orders decreased marginally by 1% to $84.3 million. Ending backlog of $141.7 million is 32% above prior year levels.
The Romaco segment had sales of $36.7 million in the third quarter of fiscal 2008 compared with $30.6 million in the third quarter of fiscal 2007. Excluding the impact of currency translation, sales increased $0.9 million or 3% over the prior year period. Adjusting for changes in currency exchange rates, orders decreased 15% from last year's third quarter mainly due to the timing of certain large orders. Ending backlog of $71.8 million is $13.3 million higher than prior year levels. The organic increase in sales and backlog reflect favorable conditions in the pharmaceutical packaging market and our increased expansion into developing areas of the world.
Earnings Before Interest and Income Taxes (EBIT) Consolidated EBIT for the third quarter of fiscal 2008 was $40.2 million, an increase of $17.2 million from the third quarter of fiscal 2007. Third quarter 2008 results included other income of $5.7 million resulting from the gain on the sale of product lines in a prior period, while third quarter 2007 results included other expense of $0.4 million from restructuring charges in the Romaco segment. After the net change in the other (income) expense, EBIT increased $11.0 million, primarily due to increased sales, better pricing, favorable product mix and exchange rate benefits.
The Fluid Management segment had EBIT of $25.2 million in the third quarter of fiscal 2008 compared with $20.6 million in the third quarter of fiscal 2007. The increase in EBIT is primarily due to the sales increase described above, a favorable product mix and currency benefits.
The Process Solutions segment had EBIT of $10.2 million in the third quarter of fiscal 2008 compared with $5.3 million in the third quarter of fiscal 2007, an increase of $4.9 million. The increase in EBIT is due principally to the sales increase described above, coupled with better pricing.
The Romaco segment had EBIT of $7.9 million in the third quarter of fiscal 2008, an increase of $6.7 million over the third quarter of fiscal 2007. Other income (expense), as described in the Impact of Other Charges section above, contributed $6.1 million of this change. The remaining $0.6 million increase in profitability was due to benefits from restructuring activities completed in the prior year and the increased sales volume described above.

Interest Expense
Net interest expense was $0.3 million in the third quarter of fiscal 2008 and $1.5 million in the same period of fiscal 2007. The decrease resulted from higher levels of interest income due to increased cash and cash equivalent balances in fiscal 2008, as well as lower debt levels due to the repayment of $70 million of our Senior Notes on May 1, 2008. Income Taxes
The effective tax rate was 31.9% for the third quarter of fiscal 2008 compared to 36.9% in the prior year period. The lower effective rate was due to favorable tax rates for the previously mentioned product line sale gain recognized in fiscal 2008, while the prior year rate included additional tax expense related to tax losses in tax jurisdictions for which no benefit was recorded.

Nine months ended May 31, 2008
Net Sales
Consolidated net sales for the first nine months of fiscal 2008 were $559.4 million, $71.1 million higher than net sales for the same period of fiscal 2007. Excluding the impact of currency translation and acquisitions and dispositions, sales increased by $36.7 million, or 8%.
The Fluid Management segment had sales of $232.4 million in the first nine months of fiscal 2008 compared with $208.2 million in the same period of fiscal 2007. Currency translation accounted for $7.8 million of the increase, and the remaining $16.4 million increase, or 8%, was from increased demand for oilfield equipment products due to high levels of oil and gas exploration and recovery activity. Orders for this segment were $243.9 million in the first nine months of fiscal 2008 compared to $221.5 million in the same prior year period. Ending backlog of $54.5 million is 17% higher than at the end of the prior year third quarter.
The Process Solutions segment had sales of $226.6 million in the first nine months of fiscal 2008 compared with $194.3 million in the same period of fiscal 2007. Excluding the impact of currency translation and acquisitions, sales increased $13.8 million, or 7%, over the prior year period. This increase is largely attributable to a stronger global chemical market and increased Asia region sales. Excluding currency and acquisition impacts, orders increased 9% to $255.7 million, primarily driven by projects in the chemical market and activity in the Asian region. Ending backlog of $141.7 million is 32% above prior year levels.
The Romaco segment had sales of $100.5 million in the first nine months of fiscal 2008 compared with $85.8 million in the same period of fiscal 2007. Excluding the impact of currency translation and disposed product lines, sales increased $6.5 million, or 8%, over the prior year period. Orders increased 10% or $9.1 million over last year's comparable period after adjusting for currency and disposed product lines. Ending backlog of $71.8 million is $13.3 million higher than prior year levels. The organic increase in sales, orders and backlog reflects favorable conditions in the pharmaceutical packaging market and increased expansion into developing areas of the world. Earnings Before Interest and Income Taxes (EBIT) Consolidated EBIT for the first nine months of fiscal 2008 was $89.6 million, an increase of $31.6 million from the same period of the prior year. Results for the first nine months of 2008 included other income of $6.8 million from gains on product line/facility sales, while fiscal 2007 nine month results included other income of $2.2 million resulting from a $5.0 million property sale gain, partially offset by restructuring costs in the Romaco segment of $2.8 million. After the net change in the other income, EBIT increased $27.0 million, primarily due to increased sales, completed restructuring activities in the Romaco segment and improved pricing.
The Fluid Management segment had EBIT of $64.6 million in the first nine months of fiscal 2008 compared with $53.0 million in the same prior year period. The increase in EBIT is due to the sales increase described above and to favorable product mix and improved pricing.
The Process Solutions segment had EBIT of $25.6 million in the first nine months of fiscal 2008 compared with $21.4 million in the comparable period of fiscal 2007. The prior year period included a $5.0 gain on the sale of a facility. Excluding the impact of this facility gain, nine month EBIT increased $9.2 million. This increase is due principally to the sales volume increase described above, coupled with better pricing.
The Romaco segment had EBIT of $11.6 million in the first nine months of fiscal 2008, an increase of $15.7 million over the same period of the prior year. Other income (expense) contributed $9.7 million of this change, as described in the Impact of Other Charges section above. The remaining $6.0 million increase in profitability was due to $1.5 million of benefits from restructuring activities completed in the prior year and the increased sales volume described above.

Interest Expense
Net interest expense was $1.8 million in the first nine months of fiscal 2008 and $4.4 million in the same period of fiscal 2007. The decrease resulted from higher levels of interest income due to increased cash equivalent balances in fiscal 2008, as well as lower debt levels due to the repayment of $70 million of our Senior Notes on May 1, 2008.
Income Taxes
The effective tax rate was 33.3% for the first nine months of fiscal 2008 compared with 39.0% in the comparable prior year period. The lower effective rate was due to the current year rate benefit from the product line sale gain being taxed at favorable rates , while the prior year rate included additional tax expense related to tax losses in tax jurisdictions for which no benefit was recorded.

Liquidity and Capital Resources
Operating Activities
In the first nine months of fiscal 2008, our cash flow provided by operations was $48.8 million, $39.8 million better than in the same period of the prior year. The significant improvement over the prior year resulted primarily from higher net income and cash generated from accounts receivable due to better cash collections. We have used cash to build inventory in each period to support higher backlogs in each respective period.
We expect our fiscal 2008 operating cash flow to be adequate to fund fiscal year 2008 operating needs, shareholder dividend requirements and planned capital expenditures. Our planned capital expenditures are related to capacity expansion in Fluid Management, information system upgrades, support for new product launches and cost reduction initiatives, and replacement items. Investing Activities
Our capital expenditures were $12.8 million in the first nine months of fiscal 2008 compared with $11.4 million in the first nine months of fiscal 2007. Our capital expenditures were primarily for information technology systems and capacity expansion in the Fluid Management and Process Solutions segments. Cash generated from facility/product line sales in fiscal 2008 were $7.2 million compared with $11.4 million in the prior year. We made an acquisition in our Process Solutions segment in 2008 for total consideration of $5.1 million. Credit Agreement
Our Bank Credit Agreement ("Agreement") provides that we may borrow on a revolving credit basis up to a maximum of $150 million and includes a $100 million expansion feature. All outstanding amounts under the Agreement are due and payable on December 19, 2011. Interest is variable based upon formulas tied to LIBOR or an alternative base rate defined in the Agreement, at our option, and is payable at least quarterly. Indebtedness under the Agreement is unsecured except for the pledge of the stock of our U.S. subsidiaries and two-thirds of the stock of certain non-U.S. subsidiaries. While no amounts are outstanding under the Agreement at May 31, 2008, we have $32.2 million of standby letters of credit outstanding at May 31, 2008. Accordingly, under the Agreement we have $117.8 million of unused borrowing capacity. These standby letters of credit are used as security for advance payments received from customers, and future payments to our vendors.
From available cash balances, we repaid $70 million of our Senior Notes on the May 1, 2008 due date.
Following is information regarding our long-term contractual obligations and other commitments outstanding as of May 31, 2008:

                                                                       Payments Due by Period
                                                                              Two to             Four to
Long-term contractual                                    One year              three               five           After five
obligations                              Total           or less               years              years             years
                                                                          (In thousands)
Long-term debt                          $ 33,020        $    2,478        $        30,542        $      0        $          0
Operating leases (1)                      10,000             3,000                  4,500           2,000                 500

Total contractual cash obligations      $ 43,020        $    5,478        $        35,042        $  2,000        $        500

(1) Operating leases are estimated as of May 31, 2008, and consist primarily of building and equipment leases.

The only other commercial commitments outstanding were standby letters of credit of $32.2 million, which are substantially due within one year.

Critical Accounting Policies
In preparing our consolidated financial statements, we follow accounting principles generally accepted in the United States of America, which in many cases require us to make assumptions, estimates and judgments that affect the amounts reported. Many of these policies are straightforward. There are, however, some policies that are critical because they are important in determining the financial condition and results of operations and some may involve management judgments due to the sensitivity of the methods, assumptions and estimates necessary in determining the related income statement, asset and/or liability amounts. These policies are described under "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Report on Form 10-K for the year ended August 31, 2007. Other than the adoption of FIN No. 48, as discussed in Note 8, there have been no material changes in the accounting policies followed by us during fiscal 2008. Safe Harbor Statement
In addition to historical information, this report contains forward-looking statements identified by use of words such as "expects," "anticipates," "believes," and similar expressions. These statements reflect management's current expectations and involve known and unknown risks, uncertainties, contingencies and other factors that could cause actual results, performance or achievements to differ materially from those stated. The most significant of these risks and uncertainties include, but are not limited to: a significant decline in capital expenditures in the specialty chemical and pharmaceutical industries; a major decline in oil and natural gas prices; foreign exchange rate fluctuations; work stoppages related to union negotiations; customer order cancellations; business disruptions caused by the implementation of business computer systems; our ability to comply with the financial covenants and other provisions of our financing arrangements; events or circumstances which result in an impairment of assets; the potential impact of U.S. and foreign legislation, government regulations, and other governmental action, including those relating to export and import of products and materials, and changes in the interpretation and application of such laws and regulations; the outcome of audit, compliance, administrative or investigatory reviews; and general economic conditions that can affect demand in the process industries. Except as otherwise required by law, we do not undertake any obligation to publicly update or revise these forward-looking statements to reflect events or circumstances after the date hereof.