Fourth quarter Highlights:

Fourth quarter sales declined $70 million, or 14%, compared with the prior year fourth quarter to $432 million; fourth quarter consolidated core sales contracted by 10%; fourth quarter sales were also unfavorably impacted by foreign currency translation (3%) and divestitures (1%).

Power Transmission fourth quarter sales declined $61 million, or 16%, compared with the prior year fourth quarter to $312 million; Power Transmission core sales contracted 11% from the fourth quarter of 2008.

Water Management fourth quarter sales declined $9 million, or 7%, compared with the prior year fourth quarter to $120 million; Water Management core sales in the fourth quarter contracted 9% from the prior year quarter.

Fourth quarter income from operations was $16 million, or 3.6% of sales, which included a $21 million restructuring charge and a $20 million intangible asset impairment charge. During the fourth quarter of 2009, as a result of the continued deterioration in the macroeconomic environment and its impact on our order rates, we reviewed the carrying value of our intangible assets for potential impairment. As a result of this analysis, we recorded the $20 million pre-tax impairment charge related to certain trademarks and tradenames. Excluding the restructuring and impairment charges, fourth quarter income from operations was $56 million, or 13% of sales. Prior year fourth quarter income from operations was $56 million, or 11.2% of sales, which included an $11 million net loss on divestiture of a business. Excluding this loss, 2008 fourth quarter income from operations was $67 million, or 13.4% of sales.

Fourth quarter Adjusted EBITDA was $87 million, or 20.2% of sales, compared to $101 million, or 20.0% of sales, in the fourth quarter of 2008.

Power Transmission fourth quarter Adjusted EBITDA was $69 million, or 22.0% of sales, compared to $80 million or 21.5% of sales, in the 2008 fourth quarter.

Water Management fourth quarter Adjusted EBITDA was $17 million, or 14.1% of sales, compared to $25 million, or 19.1% of sales, in the prior year fourth quarter.

Leverage ratio (debt to Adjusted EBITDA, pro forma for the Fontaine acquisition) was 5.8x at the end of fiscal year 2009, compared to 5.3x at the end of fiscal year 2008; net debt (debt less cash) declined by $19.6 million during fiscal year 2009; net debt leverage ratio (net debt to Adjusted EBITDA, pro forma for the Fontaine acquisition) at March 31, 2009 was 5.0x compared to 4.9x at March 31, 2008 and 6.8x at the time of the Apollo acquisition in July 2006. Total liquidity (cash plus available borrowings) at March 31, 2009 was $373.7 million compared to $360.9 million at March 31, 2008.

Fiscal 2009 Highlights:

Power Transmission fiscal 2009 sales were $1,322 million, a decrease of $21 million, or 2%, from fiscal 2008. Power Transmission core sales were flat year-over-year with the 2% decline being driven by divestitures.

Water Management fiscal 2009 sales were $560 million, an increase of $49 million, or 10%, from fiscal 2008. Water Management core sales growth contracted 3% in the fiscal year while acquisitions added 13% of growth in fiscal 2009.

Fiscal 2009 loss from operations was $207 million, or 11.0% of sales, which included $422 million of intangible asset and goodwill impairment charges and $25 million in restructuring charges. Excluding these charges, fiscal 2009 income from operations was $240 million, or 12.7% of sales. Fiscal 2008 income from operations was $259 million, or 14.0% of sales, which included a $29 million net gain related to the Canal Street accident and an $11 million loss on divestiture related to the sale of a French subsidiary, Rexnord SAS. Excluding these items, fiscal 2008 income from operations was $241 million, or 13.0% of sales.

Fiscal 2009 Adjusted EBITDA was $366 million, or 19.4% of sales, compared to $374 million, or 20.2% of sales, in fiscal 2008, which included $11 million, or 0.6% of sales, of out-of-period business interruption insurance proceeds related to the Canal Street accident.

Power Transmission fiscal 2009 Adjusted EBITDA was $267 million, or 20.2% of sales, compared to $278 million, or 20.7% of sales, in fiscal 2008, which included the $11 million, or 0.8% of sales, of out-of-period business interruption insurance proceeds noted above.

Water Management fiscal 2009 Adjusted EBITDA was $102 million, or 18.2% of sales, compared to $108 million, or 21.1% of sales, in fiscal 2008.

Robert Hitt, Rexnord’s president and chief executive officer, said, “Considering the impact of the unprecedented global economic downturn on the second half of our fiscal year, I am pleased with our overall performance for fiscal 2009. We responded to the quick and sudden slow-down of order volume with aggressive cost reduction actions starting in our third quarter. Since October 1, 2008, we have reduced our headcount by approximately 1,300 employees, or nearly 18% of the employee base we had at that time. In addition to headcount actions, we are reducing costs in all areas of our business, including a focus on material cost reduction. The benefits of these actions are evident in our fourth quarter performance as we expanded our Adjusted EBITDA margin by 20 basis points from the prior year fourth quarter to 20.2%, despite a 10% decline in our core sales.” Hitt continued, “In addition to the cost reduction actions, we focused on working capital and capital expenditure management and generated $117 million of free cash flow in fiscal 2009, of which $94 million came in the second half of our fiscal year, driven by a $42 million reduction in inventories from the end of our second quarter.” Hitt added, “We were able to use a portion of this cash flow to invest in growing our business as we expanded our presence in the water and wastewater markets of our Water Management platform with the acquisition of Fontaine-Alliance in February 2009; a great complement to our January 2008 acquisition of GA Industries.”

Hitt concluded, “Looking forward, we expect fiscal 2010 to be a challenging year, particularly the first half of the year. Our backlog is down from a year ago and order rates during the fourth quarter were soft; a trend we anticipate will continue for the near term. Despite the difficult to predict economic conditions, we feel the proactive cost structure actions we have taken and will continue to take, as necessary, along with a strong emphasis on working capital management, puts us in a position to continue to outperform our competitors and peer group over the coming year.”

Fourth quarter – Core sales decline by 10.1%; Adjusted EBITDA as a percentage of sales increases 20 basis points to 20.2%

Sales in the fourth quarter of fiscal 2009 were $432.2 million, a decrease of $70.1 million, or 14%, from the prior year fourth quarter. Power Transmission sales in the fourth quarter of fiscal 2009 were $311.9 million, a decrease of $60.7 million, or 16.3%, from the prior year fourth quarter, which included $5.4 million of sales related to the Rexnord SAS business that was sold on March 28, 2008. Power Transmission core sales contracted 10.6% from the prior year fourth quarter. Modest fourth quarter sales growth in the mining end-markets as a result of our backlog was more than offset by sales declines in the majority of the other Power Transmission end-markets. Order rates across all Power Transmission end-markets declined during the quarter when compared to the prior year quarter as our customers continued to reduce their inventory levels in an effort to better align their stocking levels with anticipated demand. Water Management sales in the fourth quarter of fiscal 2009 decreased $9.4 million, or 7.2%, to $120.3 million, from the prior year fourth quarter.