Flowserve Reports Record First Quarter EPS of $1.64, up 8%, Including Realignment Charges of $0.13

Also Reports Record First Quarter Sales of $1.02 Billion, up 3.2%

Record First Quarter Operating Income of $147 million, up 23%

Reaches Operating Margin of 14.4%, or 15.3% Excluding Realignment Charges of $10
Million

Reaffirms 2009 Full Year EPS Target Range Forecast of between $6.75 and $7.50,
Including up to $40 Million, or Approximately $0.50 Per Share, in Realignment
Charges

DALLAS--(Business Wire)--
Flowserve Corp. (NYSE:FLS), a global leader in the fluid motion and control
industry, announced today record first quarter results in earnings per share
(EPS), sales and operating income in its Form 10-Q report for the first quarter
of 2009 filed with the Securities and Exchange Commission. The company announced
that first quarter fully diluted EPS and operating income growth were up 8% and
23%, respectively, over the first quarter of 2008. This growth significantly
outpaced quarterly sales growth of 3%, compared to the same quarter of 2008.
Record first quarter sales increased to $1.02 billion, up 3%, or 13% excluding
negative currency effects of $101 million. Flowserve also posted a quarterly
operating margin of 14.4%, including realignment charges, or 15.3% excluding
realignment charges. Bookings for the first quarter were $968 million, down 32%,
or 21% excluding negative currency effects of $102 million and the impact of a
2008 large project order of $74 million for specialty thrusters used to position
offshore oil platforms.

Additionally, the company reaffirmed its 2009 full year EPS target range
forecast of between $6.75 and $7.50, including up to $40 million, or
approximately $0.50 per share, in realignment charges.

Highlights

First Quarter of 2009 (all comparisons versus the first quarter of 2008 unless
otherwise noted):

* Record first quarter fully diluted EPS of $1.64, up 8%, including $10 million
or $0.13 of realignment charges
* Bookings of $968 million, down 32%, or 21% excluding negative currency effects
of $102 million and the impact of a 2008 large project order for thrusters of
$74 million
* Record first quarter sales of $1.02 billion, up 3%, or 13% excluding negative
currency effects of $101 million
* Significant gross margin improvement of 110 basis points to 35.9%
* Strong Selling, General & Administrative (SG&A) improvement as a percentage of
sales, down 140 basis points to 22.0%
* Record first quarter operating income of $147 million, up $28 million or 23%
* Substantial operating margin improvement of 240 basis points to 14.4%,
including realignment charges of $10 million, 15.3% excluding realignment
charges
* Continued strong backlog of $2.67 billion, including negative currency effects
of $79 million, compared to $2.83 billion in backlog at December 31, 2008

"Although our first quarter bookings were affected by some uncertainty in our
end-markets for projects and aftermarket business, our bidding opportunities
have remained very active, our pipeline of large project opportunities is good
and our aftermarket bookings are stable," said Lewis Kling, Flowserve President
and Chief Executive Officer. "And, we are remaining cautiously optimistic about
bookings for the rest of 2009 as we saw pump bookings begin to strengthen in
March, when compared to the first two months of the year."

Kling added, "We are proud that we finished the first quarter with a continued
strong backlog, as our 'book-to-bill' ratio (the relationship between new orders
and sales) for the period was 0.95. Further, while our bookings were down from
the all-time record first quarter of 2008 results, they were approximately at
the quarterly booking levels during all of 2007. Given the productivity and
efficiency improvements that we have made to our operating platform since 2007,
we are confident of our 2009 earnings power, especially given the significant
increase in our backlog since 2007."

Discussion and analysis of the first quarter of 2009 financial results (all
comparisons versus the first quarter of 2008 unless otherwise noted)

Fully diluted first quarter 2009 EPS increased to a first quarter record $1.64
per share, up 8%. EPS was higher primarily due to an increase in sales of 3%
along with successful operational excellence practices, that drove an
improvement in gross margin of 110 basis points and a reduction of 140 basis
points for SG&A expenses as a percentage of sales, which increased operating
income by 23%.

EPS includes the negative impact of a relatively stronger U.S. Dollar in the
current quarter compared to stronger foreign currencies in the comparable
quarter. This exchange rate volatility drove $10 million in expenses from
foreign currency compared with a net gain of $12 million in 2008.

"As previously announced, we have undertaken a realignment initiative aimed at
reducing non-strategic assets, eliminating redundant manufacturing and improving
our overall cost structure, thereby improving operating efficiency. These
activities should better position our business for future success and represents
another step in our ongoing efforts in SG&A reduction as percentage of sales,"
said Mark Blinn, Flowserve Senior Vice President, Chief Financial Officer and
Latin America Operations. "As we continue to execute on our realignment
strategies, we are confident that we will begin to see early returns on our
initiatives in the second half of 2009."

Bookings for the first quarter were $968 million, down 32%, or 21% excluding
negative currency effects of $102 million and the impact of a 2008 large project
order for thrusters of $74 million. The decrease is primarily related to the oil
and gas and general industries markets, and reflects customers` responses to
concerns regarding ongoing disruptions in the credit and capital markets, global
economic conditions, recent uncertainty in oil and gas prices and the
re-evaluation of customer budget assumptions for certain projects, thereby
delaying certain expected orders. The decrease in bookings for the oil and gas
industry is partially attributable to $74 million of a large project order for
thrusters for offshore platforms recorded in the first quarter of 2008 that
decreased to a nominal amount in the first quarter of 2009.

Backlog decreased only 5% to $2.67 billion from $2.83 billion at December 31,
2008. The decrease includes negative currency effects of approximately $79
million and cancellations of only $15 million related to orders booked in 2008.

Sales grew to $1.02 billion, up $31 million, an increase of 3%, or 13% excluding
negative currency effects of approximately $101 million. The increase is largely
attributable to higher sales by the Flowserve Pump Division (FPD) arising from
its strong backlog. On a company-wide basis, original equipment sales increased
approximately 5%, while aftermarket sales were comparable to the same period in
2008.

Gross profit increased to $368 million, up $22 million or 6%. Gross margin
increased by 110 basis points to 35.9%. The increase reflected higher sales
volumes, which positively impacted fixed cost absorption, improved pricing on
orders booked during 2008 and cost savings from operational excellence programs,
partially offset by $6 million of realignment charges.

SG&A expenses as a percentage of sales decreased 140 basis points to 22.0%. The
improvement was primarily attributable to leverage from higher sales and cost
containment initiatives. SG&A expenses, in total, decreased to $225 million,
down $7 million or 3%. The SG&A decrease is attributable to the impact of
currency benefits of approximately $18 million, partially offset by $4 million
of realignment charges.

Operating income increased significantly to $147 million, up $28 million or 23%.
The operating income increase includes negative currency effects of
approximately $24 million. Operating income benefited from higher sales,
significantly improved gross profit and leverage of SG&A expenses, partially
offset by $10 million in realignment charges. Operating margin increased 240
basis points from 12.0% to 14.4%, including realignment charges, or 15.3%
excluding realignment charges.

"Other expense" decreased by $26 million to a net expense of $9 million, as
compared with income of $17 million for the same period in 2008. The decrease
was primarily due to $10 million of foreign currency expenses in 2009 as
compared to a net gain of $12 million in 2008, reflecting volatility in foreign
exchange rates.

"Our continued focus on operational efficiencies and cost reductions translated
into an operating margin improvement of 240 basis points to 14.4%, or 15.3%
excluding realignment charges," said Kling. "By managing our operational
excellence initiatives and running our business more efficiently, we continue to
strengthen our operating platform, driving improved margins and strong earnings
to our shareholders, which in this economic climate is a testament to our global
business model and the overall commitment of our workforce."

Flowserve Pump Division

FPD bookings for the first quarter 2009 were $550 million, a decrease of $340
million, down 38%, or 32% excluding the impact of negative currency effects of
approximately $58 million. Bookings of original equipment decreased 51%, which
represents most of the total decrease. The original equipment decrease was
driven by a decline across all industries, but primarily the oil and gas and
general industries markets, including $74 million of thruster orders for the oil
and gas industry recorded in the first quarter of 2008. Aftermarket bookings
decreased 13%, including a $13 million decrease in commissioning (start-up)
spares for major projects. Aftermarket bookings rebounded to a higher level in
March than the first two months of the year. On a year-over-year basis,
excluding the negative currency effects and large thruster orders in the first
quarter of 2008, the overall decrease would be 25.0%.

FPD sales for the first quarter of 2009 were $600 million, an increase of $39
million, up 7%, or 16% excluding negative currency effects of approximately $53
million, partially offset by incremental sales provided by Niigata Worthington
of $15 million, which was acquired on March 1, 2008. Sales of original equipment
increased 14%, while aftermarket sales were comparable to the same period in
2008. Original equipment sales growth reflects execution in successfully
shipping a portion of the strong order backlog growth in the oil and gas and
power markets of FPD in 2008. FPD gross profit increased to $199 million, up $24
million or 14% including incremental gross profit from Niigata of $4 million.
Gross margin for the first quarter of 2009 increased 200 basis points to 33.1%,
reflecting improved absorption of fixed costs, improved pricing and cost savings
from continuous improvement process (CIP) initiatives. These gains were
partially offset by $3 million of realignment charges and an original equipment
mix shift to 61% from 57% in the prior year.

Operating income for the first quarter of 2009 increased to $104 million, up $25
million or 32% including negative currency effects of approximately $14 million.
The significant increase was primarily attributable to the $24 million increase
in gross profit, combined with a $1 million decrease in divisional SG&A expense,
including approximately $8 million of currency benefits. Operating margin
improved substantially from 14.0% to 17.3%.

Flow Control Division

FCD Bookings for the first quarter of 2009 were $303 million, a decrease of $87
million, down 22%, or 14% excluding negative currency effects of approximately
$32 million. The decrease was generally attributable to weakness in the chemical
and general industries markets in North America and Europe, Middle East and
Africa (EMA).

FCD sales for the first quarter of 2009 were $297 million, a decrease of $3
million, down 1%. Excluding negative currency effects of approximately $34
million, sales increased by 10.3%. Sales in Europe and North America fell due to
softness in general industries. These decreases were partially offset by sales
growth in Asia Pacific, related to strength in the petrochemical, power and oil
and gas markets in China, as well as other increases in Canada, the Middle East
and Latin America.

FCD gross profit increased to $107 million, up $1 million or 1%. Gross margin
improved 70 basis points to 36.1%. Gross margin improvement reflected material
cost savings, favorable product mix, manufacturing efficiencies and improved
utilization of sourcing and production from low cost regions.

Operating income increased to $48 million, up $5 million or 10% including
negative currency effects of approximately $7 million. The increase was
primarily due to $1 million improvement in gross profit and reduced SG&A, which
decreased $5 million, including $7 million of currency benefits. Operating
margin improved 160 basis points from 14.4% to 16.0%.

Flow Solutions Division

FSD bookings for the first quarter of 2009 were $133 million, a decrease of $38
million, down 22%, or 15% excluding negative currency effects of approximately
$12 million. The decrease was primarily attributable to decreased original
equipment bookings across all regions, partially offset by increased aftermarket
bookings in Asia Pacific and Latin America.

FSD sales were $144 million, a decrease of $7 million, down 5%. Decreased sales
of original equipment in EMA and North America were partially offset by
increased original equipment and aftermarket sales in Latin America and Asia
Pacific. Excluding negative currency effects of approximately $14 million, sales
increased 5% over the prior period.

FSD gross profit was $62 million, down $4 million or 6%. Gross margin for the
first quarter of 2009 decreased 40 basis points to 43.4%. The decrease was
principally the result of $3 million in realignment charges, partially offset by
a sales mix shift to higher margin aftermarket business.

Operating income for the first quarter of 2009 decreased to $21 million, down $6
million or 23% including negative currency effects of approximately $3 million.
FSD operating margin declined 350 basis points to 14.4%, driven primarily by $6
million in realignment charges.

2009 Outlook

"Despite the uncertainty in the global markets, our solid first quarter
performance increases our confidence in our ability to meet our 2009 EPS target
range of between $6.75 and $7.50, including up to $0.50 per share in realignment
charges," said Kling. "And, we believe that those realignment expenditures
should reduce our annual on-going cost structure by an equivalent amount in 2010
and beyond. Given the strength of our established product portfolio and global
platform for our infrastructure markets, our recent acquisition of the Calder
business for the desalination market and our new products for emerging
alternative energy technologies, our future continues to look bright."

Conference Call

The conference call will take place on Thursday, April 30 at 11:00 AM Eastern.

Lewis Kling, President and Chief Executive Officer and Mark Blinn, Senior Vice
President, Chief Financial Officer and Latin America Operations, will be
presenting.

The call can be accessed at Flowserve`s website at www.flowserve.com under the
Investor Relations section.

About Flowserve Corp.

Flowserve Corp. is one of the world`s leading providers of fluid motion and
control products and services. Operating in more than 55 countries, the company
produces engineered and industrial pumps, seals and valves as well as a range of
related flow management services. More information about Flowserve can be
obtained by visiting the company`s Web site at www.flowserve.com.

SAFE HARBOR STATEMENT: This news release includes forward-looking statements.
Forward-looking statements are all statements that are not statements of
historical facts and include, without limitation, earnings forecasts, statements
relating to our business strategy and statements of expectations, beliefs,
future plans and strategies and anticipated developments concerning our
industry, business, operations and financial performance and condition. The
words "believe," "seek," "anticipate," "plan," "target," "estimate," "expect,"
"intend," "project," "forecast," "predict," "potential," "continue," "will,"
"may," "could," "should," and other words of similar meaning are intended to
identify forward-looking statements. The forward-looking statements made in this
news release are made pursuant to safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. These forward-looking statements
involve known and unknown risks, uncertainties and other factors that, in some
cases, are beyond our control. These risks, uncertainties and factors may cause
our actual results, performance and achievements, or industry results and market
trends, to be materially different from any future results, performance,
achievements or trends expressed or implied by such forward-looking statements.
Important risks, uncertainties and other factors that could cause actual results
to differ from these forward-looking statements include, but are not limited to,
the following: inherent limitations of the effectiveness of our internal control
over financial reporting; potential adverse consequences resulting from
securities class action litigation and other litigation, including
asbestos-containing product claims; the possibility of adverse consequences
related to foreign government actions regarding our participation in the United
Nations Oil-for-Food Program; the possibility of adverse consequences of
governmental tax audits of our tax returns; our ability to convert bookings,
which are neither subject to nor computed in accordance with generally accepted
accounting principles, into revenues at acceptable, if any, profit margins,
since such profit margins cannot be assured or assumed to follow historical
trends; changes in the financial markets and the availability of capital;
changes in the already competitive environment for our products or competitors'
responses to our strategies; our inability to continue to expand our market
presence through acquisitions, and unforeseen integration difficulties or costs
resulting from acquisitions; economic, political and other risks associated with
our international operations, including military actions or trade embargoes that
could affect customer markets, including the continuing conflict in Iraq,
uncertainties in certain Middle Eastern countries such as Iran, and their
potential impact on Middle Eastern markets and global petroleum producers; our
ability to comply with the laws and regulations affecting our international
operations, including the U.S. export laws, and the effect of any noncompliance;
the potential adverse impact of a significant downturn in petroleum, chemical,
power and water industries; changes in economic conditions and the extent of
economic growth in the U.S. and other countries and regions; unanticipated
higher costs associated with environmental compliance and liabilities; our
relative geographical profitability and its impact on our utilization of
deferred tax assets, including foreign tax credits; the potential impact of our
indebtedness on cash flows and our ability to meet the financial covenants and
other requirements in our debt agreements; any terrorist attacks; adverse
changes in the regulatory climate and other legal obligations imposed on us; and
other factors described from time to time in our filings with the Securities and
Exchange Commission. It is not possible to foresee or identify all the factors
that may affect our future performance or any forward-looking information, and
new risk factors can emerge from time to time. Given these risks and
uncertainties, you should not place undue reliance on forward-looking statements
as a prediction of actual results. All forward-looking statements included in
this news release are based on information available to us on the date of this
news release. We undertake no obligation to revise or update any forward-looking
statement or disclose any facts, events or circumstances that occur after the
date hereof that may affect the accuracy of any forward-looking statement.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Amounts in thousands, except per share data) Three Months Ended March 31,
2009 2008

Sales $ 1,024,726 $ 993,319
Cost of sales (656,953 ) (647,473 )
Gross profit 367,773 345,846
Selling, general and administrative expense (225,311 ) (232,501 )
Net earnings from affiliates 4,675 5,972
Operating income 147,137 119,317
Interest expense (10,109 ) (12,858 )
Interest income 1,075 2,855
Other (expense) income, net (9,295 ) 16,477
Earnings before income taxes 128,808 125,791
Provision for income taxes (35,983 ) (37,099 )
Net earnings, including noncontrolling interests 92,825 88,692
Less: Net earnings attributable to noncontrolling interests (520 ) (627 )
Net earnings of Flowserve Corporation $ 92,305 $ 88,065

Net earnings per share of Flowserve Corporation common shareholders:
Basic $ 1.65 $ 1.53
Diluted 1.64 1.52

Cash dividends declared per share $ 0.27 $ 0.25

CONDENSED CONSOLIDATED BALANCE SHEETS

March 31, December 31,
(Amounts in thousands, except per share data) 2009 2008

ASSETS
Current assets:
Cash and cash equivalents $ 201,539 $ 472,056
Accounts receivable, net of allowance for doubtful accounts of $23,606 and $23,667, 828,445 808,522
respectively
Inventories, net 884,033 834,612
Deferred taxes 119,126 126,890
Prepaid expenses and other 92,137 90,345
Total current assets 2,125,280 2,332,425
Property, plant and equipment, net of accumulated depreciation of $595,175 and 533,784 547,235
$594,991, respectively
Goodwill 824,526 828,395
Deferred taxes 31,427 32,561
Other intangible assets, net 118,605 121,919
Other assets, net 160,040 161,159
Total assets $ 3,793,662 $ 4,023,694

LIABILITIES AND SHAREHOLDERS` EQUITY
Current liabilities:
Accounts payable $ 445,414 $ 598,498
Accrued liabilities 854,781 967,099
Debt due within one year 25,178 27,731
Deferred taxes 15,491 14,668
Total current liabilities 1,340,864 1,607,996
Long-term debt due after one year 544,101 545,617
Retirement obligations and other liabilities 495,210 495,883
Shareholders` equity:
Common shares, $1.25 par value 73,547 73,477
Shares authorized - 120,000
Shares issued - 58,838 and 58,781, respectively
Capital in excess of par value 583,924 586,371
Retained earnings 1,236,723 1,159,634
1,894,194 1,819,482
Treasury shares, at cost - 3,596 and 3,566 shares, respectively (245,880 ) (248,073 )
Deferred compensation obligation 7,588 7,678
Accumulated other comprehensive loss (249,570 ) (211,320 )
Noncontrolling interest 7,155 6,431
Total shareholders` equity 1,413,487 1,374,198
Total liabilities and shareholders` equity $ 3,793,662 $ 4,023,694

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands) Three Months Ended March 31,
2009 2008

Cash flows - Operating activities:
Net earnings of Flowserve Corporation $ 92,305 $ 88,065
Adjustments to reconcile net earnings to net cash used by operating activities:
Depreciation 18,145 18,134
Amortization of intangible and other assets 2,430 2,503
Amortization of deferred loan costs 397 454
Net loss (gain) on disposition of assets 270 (666 )
Gain on bargain purchase - (3,400 )
Excess tax benefits from stock-based compensation arrangements (290 ) (8,278 )
Stock-based compensation 10,070 6,972
Net earnings from affiliates, net of dividends received (2,914 ) (4,690 )
Change in assets and liabilities:
Accounts receivable, net (43,979 ) (80,937 )
Inventories, net (75,700 ) (108,882 )
Prepaid expenses and other (10,571 ) (8,772 )
Other assets, net 6,509 (8,991 )
Accounts payable (107,975 ) (58,320 )
Accrued liabilities and income taxes payable (93,693 ) (15,557 )
Retirement obligations and other liabilities 9,455 10,659
Net deferred taxes 15,434 (725 )
Net cash flows used by operating activities (180,107 ) (172,431 )

Cash flows - Investing activities:
Capital expenditures (44,251 ) (14,256 )
Net cash flows used by investing activities (44,251 ) (14,256 )

Cash flows - Financing activities:
Excess tax benefits from stock-based compensation arrangements 290 8,278
Payments on long-term debt (1,420 ) (1,420 )
Borrowings (payments) under other financing arrangements (2,264 ) 612
Repurchase of common shares (7,071 ) -
Payments of dividends (13,970 ) (8,592 )
Proceeds from stock option activity 202 8,232
Net cash flows (used) provided by financing activities (24,233 ) 7,110
Effect of exchange rate changes on cash (21,926 ) 5,733
Net change in cash and cash equivalents (270,517 ) (173,844 )
Cash and cash equivalents at beginning of year 472,056 373,238
Cash and cash equivalents at end of period $ 201,539 $ 199,394

SEGMENT INFORMATION

FLOWSERVE PUMP DIVISION Three Months Ended March 31,
(Amounts in millions) 2009 2008
Bookings $ 550.3 $ 890.2
Sales 599.6 561.1
Gross profit 198.7 174.6
Gross profit margin 33.1 % 31.1 %
Operating income 103.6 78.5
Operating margin 17.3 % 14.0 %

FLOW CONTROL DIVISION Three Months Ended March 31,
(Amounts in millions) 2009 2008
Bookings $ 302.8 $ 389.8
Sales 297.2 300.3
Gross profit 107.2 106.2
Gross profit margin 36.1 % 35.4 %
Operating income 47.6 43.1
Operating margin 16.0 % 14.4 %

FLOW SOLUTIONS DIVISION Three Months Ended March 31,
(Amounts in millions) 2009 2008
Bookings $ 133.2 $ 171.3
Sales 143.7 150.6
Gross profit 62.3 66.0
Gross profit margin 43.4 % 43.8 %
Operating income 20.7 26.9
Operating margin 14.4 % 17.9 %

Flowserve Corp.
Investor Contact:
Paul Fehlman, 972-443-6517
Treasurer and Vice President - Investor Relations
or
Media Contact:
Lars Rosene, 469-420-3264
Chief Sustainability Officer and Vice President Public Affairs

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