Flowserve Delays 2004 Form 10-K Filing And Restatement Completion, Cites Review Of Non-Cash Foreign Deferred Tax Accounting

The company said that apart from determining the effect of thisremaining technical tax matter, it has completed finalizing itsrestatement and preparing its 2004 Form 10-K filing. The delay,therefore, is expected to be brief.

This deferred tax accounting action has a non-cash effect duringthe restatement period. This decision does not affect any actual taxpayments or future cash liabilities to the IRS, state or foreign taxauthorities, the company said. Further, this deferred tax accountingcalculation has no applicability to the previously announcedresolution of its IRS tax audit for the years 1999 through 2001, nordoes it have any applicability to the company's potential cashliabilities regarding any future or ongoing federal, state or foreigntax audit. This deferred tax accounting calculation should have noimpact on the company's normal business operations going forward.

The company is still calculating the impact of this non-cashdeferred tax adjustment on its financial statements to be included inits 2004 Form 10-K filing, which may increase the cumulative reductionin net income from the restatement. However, it will have no impact onthe company's pretax earnings during this period.

This review of deferred tax accounting arises from the technicalrequirements of Accounting Principles Board Opinion 23. Thisaccounting principle permits companies to exclude unremitted earningsfrom foreign operations from its calculation of U.S. deferred taxes ifcertain specified technical criteria are met. If not, companies mustcalculate their financial statement tax provision for unremittedforeign earnings at the U.S. rate. The company, after carefulconsultation with its independent auditors over an extended period,late last week reconsidered its earlier view that the company had metin all material respects the APB 23 requirements in 2001, and,accordingly, is determining the appropriate deferred tax adjustmentrequired at that date and later periods.

The company also said it has postponed today's planned conferencecall so that the rescheduled call can fully address all aspects of the2004 Form 10-K filing, restatement and related matters. Details of therescheduled conference call will be announced in the next few days.

Flowserve Corp. is one of the world's leading providers of fluidmotion and control products and services. Operating in 56 countries,the company produces engineered and industrial pumps, seals and valvesas well as a range of related flow management services.

SAFE HARBOR STATEMENT: This presentation includes forward-lookingstatements. Forward looking statements are all statements that are notstatements of historical facts and include, without limitation,statements relating to our business strategy and statements ofexpectations, beliefs, future plans and strategies and anticipateddevelopments concerning our industry, business, operations andfinancial performance and condition. The words "believe," "seek,""anticipate," "plan," "estimate," "expect," "intend," "project,""forecast," "predict," "potential," "continue," "will," "may,""could," "should," and other words of similar meaning are intended toidentify forward-looking statements. The forward-looking statementsmade in this presentation are made pursuant to safe harbor provisionsof the Private Securities Litigation Reform Act of 1995. Theseforward-looking statements involve known and unknown risks,uncertainties and other factors that, in some cases, are beyond ourcontrol. These risks, uncertainties and factors may cause our actualresults, performance and achievements, or industry results and markettrends, to be materially different from any future results,performance, achievements or trends expressed or implied by suchforward-looking statements. Important risks, uncertainties and otherfactors that could cause actual results to differ from theseforward-looking statements include, but are not limited to, thefollowing: further delays in the report of the Company's management onthe Company's internal control over financial reporting and relatedcertification; further delays in the Company's filing of its periodicpublic reports and any SEC, NYSE or debt rating agencies' actionsresulting therefrom; the possibility of adverse consequences of thepending securities litigation and SEC investigation; the possibilityof adverse consequences of governmental tax audits of the Company'stax returns, including the upcoming IRS audit of the company's U.S.tax returns for the years 2002 through 2004; the Company's ability toconvert bookings, which are not subject to nor computed in accordancewith generally accepted accounting principles, into revenues atacceptable, if any, profit margins, since such profit margins cannotbe assured nor be necessarily assumed to follow historical trends;changes in the financial markets and the availability of capital;changes in the already competitive environment for the Company'sproducts or competitors' responses to the Company's strategies; theCompany's ability to integrate acquisitions into its management andoperations; political risks, military actions or trade embargoesaffecting customer markets, including the continuing conflict in Iraqand its potential impact on Middle Eastern markets and globalpetroleum producers; the Company's ability to comply with the laws andregulations affecting its international operations, including the U.S.export laws, and the effect of any noncompliance; the health of thepetroleum, chemical, power and water industries; economic conditionsand the extent of economic growth in the U.S. and other countries andregions; unanticipated difficulties or costs associated with theimplementation of systems, including software; the Company's relativegeographical profitability and its impact on the Company's utilizationof foreign tax credits; the recognition of significant expensesassociated with realigning operations of acquired companies with thoseof Flowserve; the Company's ability to meet the financial covenantsand other requirements in its debt agreements; any terrorist attacksand the response of the U.S. to such attacks or to the threat of suchattacks; technological developments in the Company's products ascompared with those of its competitors; changes in prevailing interestrates and the Company's effective interest costs; and adverse changesin the regulatory climate and other legal obligations imposed on theCompany. It is not possible to foresee or identify all the factorsthat may affect our future performance or any forward-lookinginformation, and new risk factors can emerge from time to time. Giventhese risks and uncertainties, you should not place undue reliance onforward-looking statements as a prediction of actual results. Allforward-looking statements included in this presentation are based oninformation available to us on the date of this presentation. Weundertake no obligation to revise or update any forward-lookingstatement or disclose any facts, events or circumstances that occurafter the date hereof that may affect the accuracy of anyforward-looking statement.