John Bean Technologies CORP - Quarter Report: 2008 September (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

For the quarterly period ended September 30, 2008

or

For the transition period from              to             

Commission File Number 1-34036

John Bean Technologies Corporation

(Exact name of registrant as specified in its charter)

(312) 861-5900

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

PART I—FINANCIAL INFORMATION

John Bean Technologies Corporation

Condensed Consolidated Statements of Income (Unaudited)

(In millions, except per share data)

The accompanying notes are an integral part of the condensed consolidated financial statements.

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John Bean Technologies Corporation

Condensed Consolidated Balance Sheets

(In millions, except per share data and number of shares)

The accompanying notes are an integral part of the condensed consolidated financial statements.

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John Bean Technologies Corporation

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In millions)

The accompanying notes are an integral part of the condensed consolidated financial statements.

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John Bean Technologies Corporation

Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)

(In millions)

The accompanying notes are an integral part of the condensed consolidated financial statements.

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John Bean Technologies Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 1: Background and Basis of Presentation

Background—On October 29, 2007, FMC Technologies, Inc. (“FMC Technologies”) announced an intention to separate into two independent publicly-traded companies through the spin-off and distribution of 100% of the FoodTech and Airport Systems businesses. On July 31, 2008, FMC Technologies effected the spin-off of these businesses by distributing all of its holdings of the common stock of John Bean Technologies Corporation (“JBT Corporation,” the “Company or “we”) on a pro rata basis to its stockholders. JBT Corporation is now an independent public company traded on the New York Stock Exchange (symbol “JBT”). Prior to the spin-off, FMC Technologies received necessary regulatory approvals including a favorable private letter ruling on the tax-free nature of the transaction from the Internal Revenue Service, as well as a declaration of effectiveness for JBT Corporation’s Registration Statement on Form 10, as amended (“Form 10”), as filed with the Securities and Exchange Commission (“SEC”). Distribution of the JBT Corporation common stock to the stockholders of FMC Technologies occurred on July 31, 2008, at a ratio of .216 of a share of JBT Corporation common stock for every share of FMC Technologies common stock held by each such holder on the record date of July 22, 2008.

Description of Business—JBT Corporation designs, manufactures and services sophisticated machinery and systems for, and provides services to, customers in the food processing and air transportation industries. We have manufacturing operations worldwide and are strategically located to facilitate delivery of our products and services to our customers. We report our results through two business segments—JBT FoodTech and JBT AeroTech.

Basis of Presentation—The following (a) condensed balance sheet as of December 31, 2007, which has been derived from audited financial statements, and (b) unaudited interim condensed financial statements, and notes thereto (the “statements”), of JBT Corporation have been prepared pursuant to the rules and regulations of the SEC. As permitted under those rules, certain footnotes or other financial information that are normally required by United States generally accepted accounting principles (“U.S. GAAP”) can be condensed or omitted. Therefore, these statements should be read in conjunction with our audited annual combined financial statements and notes thereto included in our Form 10.

In the opinion of management, the statements reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of our financial condition and operating results as of and for the periods presented. Revenue, expenses, assets and liabilities can vary during each quarter of the year. Therefore, the results and trends in these statements may not be representative of those for the full year or any future period.

Our financial statements for the periods prior to July 31, 2008 have been prepared in accordance with U.S. GAAP on a carve-out basis from the consolidated financial statements of FMC Technologies using the historical results of operations and bases of the assets and liabilities of the transferred businesses and including allocations from FMC Technologies. This presentation incorporates the same principles used when preparing consolidated financial statements, including elimination of intercompany transactions. Allocated expenses include general and administrative services such as accounting, treasury, tax, legal, human resources, information technology and other corporate and infrastructure services. Many assets, liabilities and expenses could be specifically identified with JBT Corporation businesses or personnel and were directly allocated. To the extent amounts could not be specifically identified and allocated, we primarily used JBT Corporation’s proportion of total FMC Technologies’ revenue as a reasonable allocation method. Allocations have been determined on the basis of assumptions and estimates that management believes to be a reasonable reflection of JBT Corporation’s utilization of those services. These allocations and estimates, however, are not necessarily indicative of the assets, liabilities and expenses that would have resulted if JBT Corporation had operated as a separate entity in the past, or that may result in the future.

Upon separation, effective July 31, 2008, JBT Corporation significantly changed its capital structure. The financial statements prior to the separation do not reflect the debt or interest expense JBT Corporation might have incurred if we were a stand-alone entity. In addition, the financial statements may not be indicative of our consolidated financial position, operating results or cash flows in the future or what our financial position, operating results and cash flows would have been had JBT Corporation been a separate, stand-alone entity during the periods presented.

Prior to the July 31, 2008 separation, the Company’s total invested equity represented FMC Technologies’ interest in the recorded net assets of the Company. The net investment balance represented the cumulative net investment by FMC Technologies in the Company through July 31, 2008, including any prior net income or loss attributed to the Company.

Recently issued accounting pronouncements— In December 2007, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 141 (revised 2007), Business Combinations (“SFAS 141R”), replacing SFAS No. 141. SFAS 141R changes and clarifies the acquisition method of accounting for acquired contingencies, transaction costs, step acquisitions, restructuring costs and other major areas affecting how the acquirer recognizes and measures the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree. In addition, this pronouncement amends previous interpretations of intangible asset accounting by requiring the capitalization of in-process research and development and proscribing impacts to current income tax expense (rather than a reduction to goodwill) for changes in deferred tax benefits related to a business combination. SFAS 141R will be applied prospectively for business combinations occurring after December 31, 2008.

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In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133 (“SFAS 161”). SFAS 161 requires enhanced disclosures about derivative instruments and hedging activities. SFAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, and is effective for us beginning January 1, 2009.

Note 2: Inventories

Inventories consisted of the following:

Note 3: Long-term debt

Long-term debt consisted of the following:

On July 31, 2008, the Company issued 6.66% senior unsecured notes and entered into a $225 million, 5-year revolving credit facility. The senior unsecured notes are due on July 31, 2015 and require the Company to make semiannual interest payments. The note purchase agreement contains customary covenants including leverage and interest coverage ratios. The revolving credit facility similarly contains certain customary covenants including leverage and interest coverage ratios and also limits the annual amounts JBT Corporation may spend on dividends and capital expenditures. Borrowings under the revolving credit facility bear interest, at the Company’s option, of LIBOR or an alternative base rate, which is the greater of JPMorgan Chase Bank, N.A.’s Prime Rate and Federal Funds Rate plus 50 basis points, plus a margin dependent on the Company’s leverage ratio as defined in the credit agreement. The Company is required to make periodic interest payments on the borrowed amounts and pay an annual facility fee ranging from 17.5 to 35 basis points, depending on its leverage ratio. Borrowings on the revolving credit facility are shown as a long-term obligation on the condensed consolidated balance sheets because we have both the ability and intent to refinance these obligations on a long-term basis under the credit agreement. At September 30, 2008, there was $65 million outstanding and an additional $147 million available on the revolving credit facility.

The Company has an interest rate swap related to interest payments on $50 million of its variable rate borrowings from July 31, 2008 to January 29, 2010 and $25 million of its variable rate borrowings from January 30, 2010 to January 31, 2011 on its $225 million revolving credit facility. The effect of the interest rate swap, which was acquired on June 30, 2008, is to fix the effective annual interest rate of these variable rate borrowings at 5.125%. The swap was designated as a hedge of the interest payments. The swap is accounted for as a cash flow hedge and is included at its fair value of $0.3 million in other liabilities on the consolidated balance sheet at September 30, 2008.

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Note 4: Pension and Other Postretirement Benefits

Effective June 30, 2008, the Company established U.S. qualified and nonqualified pension plans and U.S. postretirement health care and life insurance benefit plans that together cover substantially all of its U.S. employees. In connection with the spin-off of the Company, FMC Technologies legally separated its pension and other postretirement benefit plans that contained participants of both JBT Corporation and FMC Technologies. The projected benefit obligations of the plans were remeasured, and FMC Technologies distributed to us the projected benefit obligations related to the Company’s employees and retirees. The U.S. qualified pension plan is funded while the other benefit plans are unfunded. As such, an estimate of plan assets of the U.S. qualified plan expected to be distributed, based on the ERISA prescribed calculation, was used to account for the transfer of assets to the Company. The amount of assets transferred to the Company will be finalized during the fourth quarter of 2008. The remeasurement resulted in (a) an increase of $40.8 million in accrued pension and other postretirement benefits, $26.4 million of which was related to the under funded status of the U.S. qualified pension plan and $14.4 million of which was related to the unfunded benefit plans; (b) an increase of $15.0 million in deferred income tax assets; (c) an increase of $25.5 million in unrealized pension losses, a component of stockholders’ equity; and (d) a decrease of $0.3 million in excess capital. The increase of $40.8 million in accrued pension and other postretirement benefits includes $10.5 million that was recorded in other current liabilities.

Components of net periodic benefit cost were as follows:

Note 5: Stock-based compensation

Stock-based compensation expense was $2.1 million and $2.3 million for the three months ended September 30, 2008 and 2007, respectively, and $6.4 million for each of the nine months ended September 30, 2008 and 2007. Stock-based compensation expense includes awards for JBT Corporation and FMC Technologies nonvested stock units (also known as restricted stock units), and an allocation of the expense from awards granted to FMC Technologies’ corporate staff and directors prior to the Company’s separation from FMC Technologies. The components of stock-based compensation expense are presented below:

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Equity Awards Converted from Previously Issued FMC Technologies Awards

Prior to the Company’s separation from FMC Technologies all employee incentive equity awards were granted by FMC Technologies. At the time of separation, restricted stock awards held by employees of the Company were converted into new restricted stock awards with the number of shares adjusted to preserve the intrinsic value of the award as immediately prior to the separation. The awards were converted into restricted stock awards convertible into 697,177 shares of the Company’s common stock and 233,536 shares of FMC Technologies’ common stock. All stock option awards held by employees of the Company were converted into JBT Corporation stock options with the number of shares and the exercise price adjusted to preserve the intrinsic value of the award as immediately prior to the separation. A summary of the restricted stock awards granted since the Company’s separation from FMC Technologies and stock options held by employees of the Company is provided in the Restricted Stock and Stock Options sections below.

Incentive Compensation and Stock Plan

Prior to the separation, the Company adopted the John Bean Technologies Corporation Incentive Compensation and Stock Plan (“JBT Corporation Plan”). The JBT Corporation Plan provides certain incentives and awards to officers, employees, directors and consultants of FMC Technologies or its affiliates. The JBT Corporation Plan allows the Board of Directors of JBT Corporation (the “Board”) to make various types of awards to non-employee directors and the Compensation Committee (the “Committee”) of the Board to make various types of awards to other eligible individuals. Awards that may be issued include common stock, stock options, stock appreciation rights, restricted stock and stock units.

Grants of common stock options may be incentive and/or nonqualified stock options. Under the JBT Corporation Plan, the exercise price for options cannot be less than the market value of JBT Corporation common stock at the date of grant. Options vest in accordance with the terms of the award as determined by the Committee, which is generally after three years of service, and expire not later than 10 years after the grant date. Restricted stock grants specify any applicable performance goals, the time and rate of vesting and such other provisions as determined by the Committee. Restricted stock grants generally vest after three to four years of service. Additionally, most awards vest immediately upon a change of control as defined in the JBT Corporation Plan agreement. A change of control is deemed to have occurred if (i) an individual or group acquires ownership of stock of the Company that constitutes more than 50% of the total fair market value of the Company, (ii) an individual or group acquires ownership of stock of the Company possessing 30% or more of the total voting power or the stock of the Company, (iii) an individual or group acquires assets from the Company that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or (iv) a majority of the Board is replaced by means of an appointment or election not endorsed by a majority of the members of the Board.

An aggregate of 3.7 million shares of the Company’s common stock were authorized for awards under the JBT Corporation Plan for employees of the Company.

Restricted Stock—Since the separation from FMC Technologies, we granted the following restricted stock awards to employees of the Company:

We granted time-based restricted stock awards that vest after three years. The fair value of these time-based awards was determined using the market value of the Company’s common stock on the grant date. Compensation cost is recognized over the lesser of the stated vesting period or the period until the employee reaches age 62, the retirement eligible age under the plan. We also granted restricted stock awards with performance-based conditions. The vesting period for these awards is three years.

For current year performance-based awards, actual payouts may vary from zero to 387,964 shares and will be dependent upon our performance relative to prior year with respect to earnings growth and return on investment for the year ending December 31, 2008. Compensation cost is measured based on the current expected outcome of the performance conditions and may be adjusted until the performance period ends.

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Stock Options—The Company has not granted any stock options. Outstanding options held by employees prior to the Company’s separation from FMC Technologies are still outstanding and are all exercisable. A summary of the stock options held by employees of the Company as of September 30, 2008 is presented below:

The aggregate intrinsic value reflects the value to the option holders, or the difference between the market price as of September 30, 2008 and the exercise price of the option, which would have been received by the option holders had all options been exercised as of that date. While the intrinsic value is representative of the value to be gained by the option holders, this value is not indicative of our compensation expense. Compensation expense on stock options was calculated on the date of grant using the fair value of the options, as determined by a Black-Scholes option pricing model and the number of options granted, reduced by estimated forfeitures.

As of September 30, 2008, there was $10.0 million of unrecognized stock-based compensation expense for outstanding awards expected to be recognized over a weighted average of 1.9 years.

Note 6: Warranty Obligations

We provide warranties of various lengths and terms to certain of our customers based on standard terms and conditions and negotiated agreements. We provide for the estimated cost of warranties at the time revenue is recognized for products where reliable, historical experience of warranty claims and costs exists. We also provide warranty liability when additional specific obligations are identified. The obligation reflected in other current liabilities in the condensed consolidated balance sheets is based on historical experience by product and considers failure rates and the related costs in correcting a product failure. Warranty cost and accrual information is as follows:

Note 7: Earnings per share

Basic earnings per share (“EPS”) is computed by dividing income from continuing operations by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the assumed conversion of all dilutive securities.

As discussed in Note 1, in connection with the separation from FMC Technologies on July 31, 2008, the Company distributed to FMC Technologies shareholders 27.5 million shares of common stock of the Company. This share amount is being utilized for the calculation of basic and diluted EPS for all periods presented prior to the date of the distribution.

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The following table sets forth the computation of basic and diluted EPS utilizing the income from continuing operations for the respective periods and the Company’s basic and dilutive shares outstanding:

Note 8: Derivative Financial Instruments

The following table lists outstanding derivative instruments at fair value using available information and commonly accepted valuation methodologies. Accordingly, the estimates presented may not be indicative of the amounts that the Company would realize in a current market and do not represent gains or losses on these agreements.

The gains and losses, net of foreign currency transaction gains and losses, recorded in the consolidated statements of income for instruments not designated as hedging instruments were a loss of $4.3 million and a gain of $0.3 million for the three months ended September 30, 2008 and 2007, respectively, and losses of $2.5 million and $2.8 million for the nine months ended September 30, 2008 and 2007, respectively. The classification of gains and losses on non-hedge derivative instruments on the consolidated statements of income is consistent with the classification of gains and losses recognized on the related foreign currency exposure. Gains and losses on derivative instruments, and related remeasurement of assets and liabilities, are classified as other expense, net in the reconciliation of segment operating profit to income before income taxes.

Note 9: Other Comprehensive Income

Other comprehensive income consisted of the following:

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Note 10: Fair Value of Financial Instruments

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (“SFAS 157”), which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. In February 2008, the FASB issued FASB Staff Position No. FAS 157-2, Effective Date of FASB Statement No. 157, which provides a one year deferral of the effective date of SFAS 157 for non-financial assets and non-financial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). We adopted SFAS 157 on January 1, 2008 with respect to financial assets and financial liabilities that are measured at fair value within the condensed consolidated financial statements and deferred the adoption for non-financial assets and non-financial liabilities until January 1, 2009. Accordingly, the provisions of SFAS 157 were not applied to long-lived assets, assets and liabilities held for sale, goodwill and other intangible assets measured for impairment testing purposes.

The fair value framework requires the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows:

Financial assets and financial liabilities measured at fair value on a recurring basis are as follows:

Investments are valued based on quoted prices in active markets for identical assets or liabilities that we have the ability to access. Investments are included in other assets in the consolidated balance sheets. We use the income approach as the valuation technique to measure the fair value of derivative instruments on a recurring basis. This approach calculates the present value of the future cash flow by measuring the change from the derivative contract rate and the published market indicative currency and interest rates, multiplied by the contract notional values, and includes a factor of credit risk.

Note 11: Related Party Transactions

In connection with the Company’s separation from FMC Technologies, JBT Corporation entered into a Separation and Distribution Agreement (“Separation Agreement”) and several ancillary agreements to complete the separation of our businesses from FMC Technologies. These agreements govern the relationship between us and FMC Technologies after the distribution and provide for the allocation of employee benefits, taxes and other liabilities and obligations attributable to periods prior to the distribution.

Prior to the separation, FMC Technologies has allocated to us, among other things, $2.2 million and $5.5 million for the three months ended September 30, 2008 and 2007, respectively, and $12.6 million and $19.4 million for the nine months ended September 30, 2008 and 2007, respectively, of expenses incurred by FMC Technologies for providing us with the following services: legal, tax, general accounting, communications, corporate development, benefits and human resources, information systems, payroll services, web hosting services and other public company costs.

Upon the separation, the Company paid FMC Technologies $150.5 million and as of September 30, 2008 accrued an additional $38.9 million to be paid to FMC Technologies based on the provisions of the Separation Agreement. The Company paid FMC Technologies $38.9 million on October 14, 2008.

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Note 12: Contingent Liabilities

Contingent liabilities associated with guarantees—In the ordinary course of business with customers, vendors and others, we issue standby letters of credit, performance bonds, surety bonds and other guarantees. These financial instruments represent guarantees of our future performance. We also have provided approximately $2.9 million of bank guarantees and letters of credit to secure a portion of our existing financial obligations. The majority of these financial instruments expire within two years; we expect to replace them through the issuance of new or the extension of existing letters of credit and surety bonds.

Under the Separation Agreement with FMC Technologies, we have assumed an indemnification and guarantee for an Industrial Development Revenue Bond payable to Franklin County, Ohio. Our former parent was primarily liable for the Industrial Development Revenue Bond until the property securing the bond was sold and the obligations under the bond were assigned to a third party in 1979. At September 30, 2008, the maximum potential amount of undiscounted future payments that we could be required to make under this bond was $1.8 million through final maturity in October 2009. In October 2008, we were required to pay $0.9 million under the bond after the assignee failed to make the annual principal payment due in October 2008. We have recorded this amount in other current liabilities on our condensed consolidated balance sheet along with a receivable from the assignee, recorded in other assets. This receivable is recoverable either by payment from the assignee or from proceeds from the sale of the property, which we may recover from the current owner and sell. Management believes that proceeds from the sale of the property would satisfy our existing receivable and cover any potential future payments required.

Management believes that the ultimate resolution of our known contingencies will not materially affect our financial position or results of operations.

Contingent liabilities associated with legal matters—Under the Separation Agreement with FMC Technologies, we have assumed liabilities related to specified legal proceedings arising from our business prior to separation. As a result, although FMC Technologies will remain the named defendant, we will manage the litigation and indemnify FMC Technologies for costs, expenses and judgments arising from this existing litigation. We do not believe that any existing litigation we have assumed will have a material effect on our results of operations, financial condition or liquidity.

We are involved in legal proceedings arising in the ordinary course of business. Although the results of litigation cannot be predicted with certainty, we do not believe that the resolution of the proceedings that we are involved in, either individually or taken as a whole will have a material adverse effect on our business, results of operations or financial condition.

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Note 13: Business Segment Information

Segment operating profit is defined as total segment revenue less segment operating expenses. The following items have been excluded in computing segment operating profit: corporate staff expense, foreign currency related gains and losses, LIFO provisions, certain employee benefit expenses, interest income and expense associated with corporate investments and income taxes. During the three-month period ended September 30, 2008, the Company changed its method used to measure segment operating profit by excluding gains and losses on derivatives related to foreign currency exposure. As a result, all prior year measurements of segment operating profit have been restated for comparative purposes.

Note 14: Subsequent Events

On October 22, 2008, the Board of Directors approved a quarterly cash dividend of $0.07 per share of outstanding common stock. The dividend will be paid on November 21, 2008 to stockholders of record at the close of business on October 31, 2008.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Form 10-Q, Form 10 and other materials filed or to be filed by JBT Corporation, as well as information in oral statements or other written statements made or to be made by us, contain statements that are, or may be considered to be, forward-looking statements. All statements that are not historical facts, including statements about our beliefs or expectations, are forward-looking statements. You can identify these forward-looking statements by the use of forward-looking words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates,” “foresees” or the negative version of those words or other comparable words and phrases. Any forward-looking statements contained in this Form 10-Q are based upon our historical performance and on current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved.

We believe that the factors that could cause our actual results to differ materially include but are not limited to the factors we describe in our Form 10, including under “Risk Factors,” “The Spin-off” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” If one or more of those or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary materially from what we projected. Consequently, actual events and results may vary significantly from those included in or contemplated or implied by our forward-looking statements. The forward-looking statements included in this Form 10-Q are made only as of the date hereof, and we undertake no obligation to publicly update or review any forward-looking statement made by us or on our behalf, whether as a result of new information, future developments, subsequent events or circumstances or otherwise.

EXECUTIVE OVERVIEW

On October 29, 2007, FMC Technologies announced an intention to separate into two independent publicly-traded companies through the spin-off and distribution of 100% of the FoodTech and Airport Systems businesses. On July 31, 2008, FMC Technologies effected the spin-off of these businesses. The spin-off was accomplished through a dividend of all outstanding shares of JBT Corporation. We are now an independent public company traded on the New York Stock Exchange (symbol JBT). Distribution of the JBT Corporation common stock to the stockholders of FMC Technologies occurred on July 31, 2008, at a ratio of .216 of a share of JBT Corporation common stock for every share of FMC Technologies common stock held on the record date of July 22, 2008 (the “Distribution”).

We provide customized solutions that are engineered for the food processing and air transportation industries. We design, manufacture, test and service technologically sophisticated systems and products for customers through our JBT FoodTech and JBT AeroTech segments. We have established a large installed base of food processing equipment as well as airport equipment and have built a strong global presence with manufacturing, sourcing, sales and service organizations located on six continents to support our equipment that has been delivered to more than 100 countries.

We have developed close working relationships with our customers, which we believe enhances our competitive advantage, strengthens our market positions and improves our results. We serve customers from around the world. During the first nine months of 2008, approximately half of our total sales were to locations outside of the United States. We evaluate international markets and pursue opportunities that fit our technological capabilities and strategies.

The food processing and air transportation industries in which we operate are susceptible to significant changes in the strength of the global or regional economies and the economic health of companies who make capital commitments for our products and services. We focus on economic and industry-specific drivers and key risk factors affecting each of our businesses as we formulate our strategic plans and make decisions related to allocating capital and human resources. These factors include risks associated with the global economic outlook, product obsolescence, and the competitive environment.

As part of our core mission of being a leading supplier of customized solutions to the food processing and air transportation industries, we address these business related risks through our focus on the four critical strategies of extending our technology leadership; leveraging our installed base; capturing international growth opportunities; and growing through acquisitions.

As we evaluate our operating results, we consider performance indicators like segment revenue and operating profit in addition to the level of inbound orders and order backlog.

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CONSOLIDATED RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007