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<!-- xbrl,ns --> <div style="font-family: 'Times New Roman',Times,serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt"><b>
</b> </div> <div align="left"> </div> <div align="left"
style="font-size: 10pt; margin-top: 0pt"><b></b> </div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>1.
Basis of Presentation and Accounting Policies</b> </div> <div
align="left" style="font-size: 10pt; margin-top: 6pt"><b>Basis of
Presentation</b> </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">     The
accompanying condensed consolidated balance sheet as of June 30,
2009, and the related condensed consolidated statements of income and comprehensive
income for the three and six months ended June 30, 2009 and 2008,
and the condensed consolidated statements of cash flows for the six months
ended June 30, 2009 and 2008, are unaudited. In management’s
opinion, all adjustments comprising normal recurring adjustments necessary
for a fair presentation of such condensed consolidated financial statements
have been made. </div> <div align="left" style="font-size: 10pt;
margin-top: 6pt">     The
accompanying condensed consolidated financial statements and notes in this
Quarterly Report on Form 10-Q for the quarterly period ended June 30,
2009 (“Quarterly Report”) are presented as permitted by
Regulation S-X and do not contain certain information included in
our annual financial statements and notes thereto. Accordingly, the accompanying
condensed consolidated financial information should be read in conjunction
with the consolidated financial statements presented in our Annual Report
on Form 10-K for the year ended December 31, 2008 (“2008
Annual Report”). </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">     Certain
reclassifications and retrospective adjustments have been made to prior period
information to conform to current period presentation. These reclassifications
and retrospective adjustments primarily result from our adoption of Statement
of Financial Accounting Standards (“SFAS”) No. 160,
“Noncontrolling Interests in Consolidated Financial Statements—an
amendment of ARB No. 51,” and Financial Accounting Standards
Board (“FASB”) Staff Position (“FSP”)
No. EITF 03-6-1, “Determining Whether Instruments Granted
in Share-Based Payment Transactions Are Participating Securities,”
respectively, which are discussed more fully below. </div> <div align="left"
style="font-size: 10pt; margin-top: 12pt"><b>Accounting Policies</b>
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Significant
accounting policies, for which no significant changes have occurred in the
six months ended June 30, 2009, are detailed in Note 1 of our 2008
Annual Report. </div> <div align="left" style="font-size: 10pt; margin-top:
6pt">          <i>Subsequent
Events </i>— We evaluate subsequent events through the date
of filing of our interim and annual reports<b>.</b> </div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Accounting
Developments</b> </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">     <b><i>Pronouncements
Implemented</i></b> </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">     In
September 2006, the FASB issued SFAS No. 157, “Fair
Value Measurements,” which establishes a single definition of fair
value and a framework for measuring fair value under accounting principles
generally accepted in the United States (“GAAP”), and
expands disclosures about fair value measurements. SFAS No. 157 applies
under other accounting pronouncements that require or permit fair value measurements;
however, it does not require any new fair value measurements. In February 2008,
the FASB issued Staff Position (“FSP”) No. FAS
157-2, “Effective Date of FASB Statement No. 157,”
which amended SFAS No. 157 by delaying the adoption of SFAS No. 157
for our nonfinancial assets and nonfinancial liabilities, except those items
recognized or disclosed at fair value on an annual or more frequently recurring
basis, until January 1, 2009. Our adoption of FSP No. FAS
157-2, effective January 1, 2009, did not have a material impact
on our consolidated financial condition or results of operations. </div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     In
December 2007, the FASB issued SFAS No. 141(R), “Business
Combinations.” SFAS No. 141(R) establishes principles and
requirements for how the acquirer in a business combination recognizes and
measures identifiable assets acquired, liabilities assumed, noncontrolling
interest in the acquiree and goodwill acquired, and expands disclosures about
business combinations. SFAS No. 141(R) requires the acquirer to recognize
changes in valuation allowances on acquired deferred tax assets in operations.
These changes in deferred tax benefits were previously recognized through
a corresponding reduction to goodwill. With the exception of the provisions
regarding acquired deferred taxes and tax contingencies, which are applicable
to all business combinations, SFAS No. 141(R) applies prospectively to business
combinations for which the acquisition date is on or after the beginning of
the first annual reporting period beginning on or after December 15,
2008. Our adoption of SFAS No. 141(R), effective January 1,
2009 did not have a material impact on our consolidated financial condition
or results of operations. </div> <!-- Folio --> <!-- /Folio
--> </div> <!-- PAGEBREAK --> <div style="font-family: 'Times
New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top:
6pt">     In December 2007,
the FASB issued SFAS No. 160, which establishes accounting and reporting
standards that require: </div> <div style="margin-top: 6pt"> <table
width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size:
10pt; text-align: left"> <tr valign="top" style="font-size: 10pt; color:
#000000; background: transparent"> <td width="2%" style="background:
transparent"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td> <td>the ownership interests
in subsidiaries held by parties other than the parent to be clearly identified,
labeled and presented in the consolidated balance sheet within equity, but
separate from the parent’s equity;</td> </tr> </table>
</div> <div style="margin-top: 6pt"> <table width="100%" border="0"
cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="2%" style="background: transparent"> </td>
<td width="3%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td> <td>the amount of consolidated
net income attributable to the parent and to the noncontrolling interest to
be clearly identified and presented on the face of the consolidated statement
of income;</td> </tr> </table> </div> <div style="margin-top:
6pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0"
style="font-size: 10pt; text-align: left"> <tr valign="top" style="font-size:
10pt; color: #000000; background: transparent"> <td width="2%" style="background:
transparent"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td> <td>changes in a parent’s
ownership interest while the parent retains its controlling financial interest
in its subsidiary to be accounted for consistently;</td> </tr>
</table> </div> <div style="margin-top: 6pt"> <table
width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size:
10pt; text-align: left"> <tr valign="top" style="font-size: 10pt; color:
#000000; background: transparent"> <td width="2%" style="background:
transparent"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td> <td>when a subsidiary is
deconsolidated, any retained noncontrolling equity investment in the former
subsidiary to be initially measured at fair value; and</td> </tr>
</table> </div> <div style="margin-top: 6pt"> <table
width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size:
10pt; text-align: left"> <tr valign="top" style="font-size: 10pt; color:
#000000; background: transparent"> <td width="2%" style="background:
transparent"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td> <td>entities to provide sufficient
disclosures that clearly identify and distinguish between the interests of
the parent and the interests of the noncontrolling owners.</td> </tr>
</table> </div> <div align="left" style="font-size: 10pt; margin-top:
6pt">     Our adoption of
SFAS No. 160, effective January 1, 2009, which has been
applied retrospectively for all periods presented, did not have a material
impact on our consolidated financial condition or results of operations. </div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     In
March 2008, the FASB issued SFAS No. 161, “Disclosures
about Derivative Instruments and Hedging Activities — an amendment
of FASB Statement No. 133.” SFAS No. 161 enhances
the disclosure framework in SFAS No. 133, “Accounting for
Derivative Instruments and Hedging Activities,” by requiring entities
to provide detailed disclosures about how and why an entity uses derivative
instruments, how derivative instruments and related hedged items are accounted
for under SFAS No. 133 and its related interpretations and how derivative
instruments and related hedged items affect an entity’s financial
condition, results of operations and cash flows. Our adoption of SFAS No.
161, effective January 1, 2009, did not impact our consolidated financial
condition or results of operations. </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">     In
April 2008, the FASB issued FSP No. FAS 142-3, “Determination
of the Useful Life of Intangible Assets.” FSP No. FAS 142-3
amends the factors that should be considered in developing renewal or extension
assumptions used to determine the useful life of a recognized intangible asset
under SFAS No. 142 “Goodwill and Other Intangible Assets.”
FSP No. FAS 142-3 is intended to improve the consistency between
the useful life of a recognized intangible asset under SFAS No. 142
and the period of expected cash flows used to measure the fair value of the
asset under SFAS No. 141(R) and other GAAP. Our adoption of FSP No. FAS
142-3, effective January 1, 2009 did not impact our consolidated
financial condition or results of operations. </div> <div align="left"
style="font-size: 10pt; margin-top: 6pt">     In
June 2008, the FASB issued FSP No. EITF 03-6-1, which concluded
that all outstanding unvested share-based payment awards that contain rights
to nonforfeitable dividends participate in undistributed earnings with common
shareholders and, therefore, are considered participating securities for purposes
of computing earnings per share. Entities that have participating securities
are required to use the “two-class” method of computing
earnings per share. The two-class method is an earnings allocation formula
that determines earnings per share for each class of common stock and participating
security according to dividends declared (or accumulated) and participation
rights in undistributed earnings. Our adoption of FSP No. EITF 03-6-1,
effective January 1, 2009, which has been applied retrospectively
for all periods presented, did not have a material impact on our consolidated
financial condition or results of operations (see Note 10). </div> <div
align="left" style="font-size: 10pt; margin-top: 6pt">     In
April 2009, the FASB issued FSP No. FAS 141(R)-1, “Accounting
for Assets Acquired and Liabilities Assumed in a Business Combination That
Arise from Contingencies.” FSP No. FAS 141(R)-1 amends
and clarifies SFAS No. 141(R) to address application on initial recognition
and measurement, subsequent measurement and accounting and disclosure of assets
and liabilities arising from contingencies in a business combination. FSP
No. FAS 141(R)-1 applies prospectively to business combinations for
which the acquisition date is on or after the beginning of the first annual
reporting period beginning on or after December 15, 2008. Our adoption
of FSP No. FAS 141(R)-1, effective January 1, 2009, did
not have a material impact our consolidated financial condition or results
of operations. </div> <div align="left" style="font-size: 10pt; margin-top:
6pt">     In April 2009,
the FASB issued FSP No. FAS 107-1 and APB 28-1, “Interim
Disclosures about Fair Value of Financial Instruments.” FSP No. FAS
107-1 and APB 28-1 amend SFAS No. 107, “Disclosures about
Fair Value of Financial Instruments”, to require disclosures about
fair value of financial instruments for interim reporting periods of publicly-traded
companies, as well as in annual financial statements. Our adoption of FSP
No. FAS 107-1 and APB 28-1, effective April 1, 2009, did
not impact our consolidated financial condition or results of operations (see
Note 6). </div> <!-- Folio --> <!-- /Folio --> </div>
<!-- PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 6pt">     In
April 2009, the FASB issued FSP No. FAS 115-2 and FAS 124-2,
“Recognition and Presentation of Other-Than-Temporary Impairments.”
FSP No. FAS 115-2 and FAS 124-2 amends the other-than-temporary impairment
guidance in GAAP for debt securities to make the guidance more operational
and to improve the presentation and disclosure of other-than-temporary impairments
of debt and equity securities in the financial statements. This FSP does not
amend existing recognition and measurement guidance related to other-than-temporary
impairments of equity securities. Our adoption of FSP No. FAS 115-2
and FAS 124-2, effective April 1, 2009, did not have a material impact
on our consolidated financial condition or results of operations. </div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     In
May 2009, the FASB issued SFAS No. 165, “Subsequent
Events.” SFAS No. 165 establishes the period after the
balance sheet date during which management of a reporting entity should evaluate
events or transactions that may occur for potential recognition or disclosure
in the financial statements, the circumstances under which an entity should
recognize events or transactions occurring after the balance sheet date in
its financial statements, and the disclosures that an entity should make about
events or transactions that occurred after the balance sheet date. Our adoption
of SFAS No. 165, effective April 1, 2009, did not have a
material impact on our consolidated financial condition or results of operations.
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     <b><i>Pronouncements
Not Yet Implemented</i></b> </div> <div align="left"
style="font-size: 10pt; margin-top: 6pt">     In
December 2008, the FASB issued FSP No. FAS 132(R)-1, “Employers’
Disclosures about Postretirement Benefit Plan Assets.” FSP No. FAS
132(R)-1 amends SFAS No. 132 (R), “Employers’
Disclosures about Pensions and Other Postretirement Benefits,” to
provide guidance on an employer’s disclosures about plan assets
of a defined benefit pension or other postretirement plan. The disclosure
requirements of FSP No. FAS 132(R)-1 are effective for fiscal years
ending after December 15, 2009. Our adoption of FSP No. FAS
132(R)-1 will not have a material impact on our consolidated financial condition
or results of operations. </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">     In
June 2009, the FASB issued SFAS No. 166, “Accounting
for Transfers of Financial Assets—an amendment of FASB Statement
No. 140.” SFAS No. 166 removes the concept of
a qualifying special-purpose entity (“QSPE”) and clarifies
the determination of whether a transferor and all of the entities included
in the transferor’s financial statements being presented have surrendered
control over transferred financial assets. It also defines the term “participating
interest” to establish specific conditions for reporting a transfer
of a portion of a financial asset as a sale and removes special provisions
for guaranteed mortgage securitizations. SFAS No. 166 requires that
a transferor recognize and initially measure at fair value all assets obtained
(including a transferor’s beneficial interest) and liabilities incurred
as a result of a transfer of financial assets accounted for as a sale. Enhanced
disclosures are required to provide financial statement users with greater
transparency about transfers of financial assets and a transferor’s
continuing involvement with transferred financial assets. The requirements
of SFAS No. 166 are effective for fiscal years beginning after November 15,
2009. We do not expect our adoption of SFAS No. 166 to have a material
impact on our consolidated financial condition or results of operations. </div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     In
June 2009, the FASB issued SFAS No. 167, “Amendments
to FASB Interpretation No. 46(R).” SFAS No. 167
amends FASB Interpretation (“FIN”) No. 46(R),
“Consolidation of Variable Interest Entities (revised December 2003)
— an interpretation of ARPB No. 51,” to eliminate
the exclusion of QSPEs from consideration for consolidation and revises the
determination of the primary beneficiary of a variable interest entity (“VIE”)
to require a qualitative assessment of whether a company has a controlling
financial interest through (1) the power to direct the activities
that most significantly impact the VIE’s economic performance and
(2) the right to receive benefits from or obligation to absorb losses
of the VIE that could potentially be significant to the VIE. The determination
of the primary beneficiary must be reconsidered on an ongoing basis. The requirements
of SFAS No. 167 are effective for fiscal years beginning after January 1,
2010. We do not expect our adoption of SFAS No. 167 to have a material
impact on our consolidated financial condition or results of operations. </div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     In
June 2009, the FASB issued SFAS No. 168, “The
FASB Accounting Standards Codification and the Hierarchy of Generally Accepted
Accounting Principles.” SFAS No. 168 identifies the sources
of accounting principles and the framework for selecting the principles used
in the preparation of financial statements that are presented in conformity
with GAAP. SFAS No. 168 is effective for financial statements issued
for interim and annual periods ending after September 15, 2009. Our
adoption of SFAS No. 168 will not have a material impact on our consolidated
financial condition or results of operations. </div> </div> </body>
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Tagged Note 2 - us-gaap:BusinessCombinationDisclosureTextBlock--> <div
style="font-family: 'Times New Roman',Times,serif"> <div align="left"
style="font-size: 10pt; margin-top: 12pt"><b>2. Acquisition</b>
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Effective
April 21, 2009, Flowserve Pump Division acquired Calder AG, a private
Swiss company and a supplier of energy recovery technology for use in the
global desalination market, for up to $44.1 million, net of cash
acquired. Of the total purchase price, $28.4 million was paid at
closing and $2.4 million was paid after the valuation of the working
capital was completed in early July 2009. The remaining $13.3 million
of the total purchase price is contingent upon Calder AG achieving certain
performance metrics after closing, and, to the extent achieved, is expected
to be paid in cash within 12 months of the acquisition date. We recognized
a liability of $4.4 million as an estimate of the acquisition date
fair value of the contingent consideration, which is based on the weighted
probability of achievement of the performance metrics as of the date of the
acquisition. Failure to meet the performance metrics would reduce this liability
to $0, while complete achievement would increase this liability to the full
remaining purchase price of $13.3 million. Any change in the fair
value of the acquisition-related contingent consideration subsequent to the
acquisition date will be recognized in earnings in the period the estimated
fair value changes. The purchase price was allocated to the assets acquired
and liabilities assumed based on estimates of fair values at the date of acquisition.
The preliminary allocation of the purchase price is summarized below: </div>
<div align="center"> <table style="font-size: 10pt; text-align: left"
cellspacing="0" border="0" cellpadding="0" width="100%"> <!-- Begin
Table Head --> <tr valign="bottom"> <td width="88%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td align="left">(amounts
in millions)</td> <td> </td> <td> </td>
<td> </td> <td> </td> </tr>
<!-- End Table Head --> <!-- Begin Table Body --> <tr valign="bottom"
style="background: #cceeff"> <td> <div style="margin-left:15px;
text-indent:-15px">Purchase price, net of cash acquired </div></td>
<td> </td> <td align="left">$</td> <td
align="right">30.8</td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Fair
value of contingent consideration (recorded as a liability) </div></td>
<td> </td> <td> </td> <td align="right">4.4</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Total
expected purchase price at date of acquisition </div></td> <td> </td>
<td align="left">$</td> <td align="right">35.2</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> </tr> <tr valign="bottom"><!--
Blank Space --> <td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td> </td>
<td> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Current
assets </div></td> <td> </td> <td align="left">$</td>
<td align="right">4.7</td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:15px; text-indent:-15px">Intangible assets (expected
useful life of approximately 10 years) </div></td> <td> </td>
<td> </td> <td align="right">10.5</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:15px;
text-indent:-15px">Property, plant and equipment </div></td>
<td> </td> <td> </td> <td align="right">0.1</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Current
liabilities </div></td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(4.2</td>
<td nowrap="nowrap">)</td> </tr> <tr valign="bottom">
<td> <div style="margin-left:15px; text-indent:-15px">Noncurrent
liabilities </div></td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(1.1</td>
<td nowrap="nowrap">)</td> </tr> <tr style="font-size:
1px"> <td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Net
tangible and intangible assets </div></td> <td> </td>
<td> </td> <td align="right">10.0</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:15px;
text-indent:-15px">Goodwill </div></td> <td> </td>
<td> </td> <td align="right">25.2</td> <td> </td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:15px; text-indent:-15px">  </div></td>
<td> </td> <td align="left">$</td> <td
align="right">35.2</td> <td> </td> </tr>
<tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> </tr>
<!-- End Table Body --> </table> </div> <div align="left"
style="font-size: 10pt; margin-top: 6pt">     The
excess of the acquisition date fair value of the total purchase price over
the estimated fair value of the net tangible and intangible assets was recorded
as goodwill. No pro forma information has been provided due to immateriality.
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Flowserve
Pump Division acquired the remaining 50% interest in Niigata Worthington Company,
Ltd. (“Niigata”), a Japanese manufacturer of pumps and
other rotating equipment, effective March 1, 2008, for $2.4 million
in cash. The incremental interest acquired was accounted for as a step acquisition
and Niigata’s results of operations have been consolidated since
the date of acquisition. Prior to this transaction, our 50% interest in Niigata
was recorded using the equity method of accounting. The purchase price was
allocated to the assets acquired and liabilities assumed based on estimates
of fair values at the date of the acquisition. The estimate of the fair value
of the net assets acquired exceeded the cash paid and, accordingly, no goodwill
was recognized. This acquisition was accounted for as a bargain purchase,
resulting in a gain of $3.4 million recorded in the first quarter of 2008,
which was reduced by $0.6 million to $2.8 million in the
fourth quarter of 2008 when the purchase accounting was finalized. This gain
is included in other income, net in the consolidated statement of income due
to immateriality. No pro forma information has been provided due to immateriality.
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<div style="font-family: 'Times New Roman',Times,serif"> <div align="left"
style="font-size: 10pt; margin-top: 12pt"><b>3. Stock-Based Compensation
Plans</b> </div> <div align="left" style="font-size: 10pt;
margin-top: 6pt">     The
Flowserve Corporation 2004 Stock Compensation Plan (the “2004 Plan”),
which was established on April 21, 2004, authorized the issuance
of up to 3,500,000 shares of common stock through grants of stock options,
restricted shares and other equity-based awards. Of the 3,500,000 shares of
common stock that have been authorized under the 2004 Plan, 663,165 shares
remain available for issuance as of June 30, 2009. We recorded stock-based
compensation as follows: </div> <div align="center"> <table
style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0"
width="100%"> <!-- Begin Table Head --> <tr valign="bottom">
<td width="28%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> </tr> <tr style="font-size:
8pt" valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="22" style="border-bottom: 1px
solid #000000"><b>Three Months Ended June 30,</b></td>
<td> </td> </tr> <tr style="font-size: 8pt"
valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="10" style="border-bottom: 1px
solid #000000"><b>2009</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="10"
style="border-bottom: 1px solid #000000"><b>2008</b></td>
<td> </td> </tr> <tr style="font-size: 8pt"
valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Stock</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Restricted</b></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Stock</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Restricted</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"> </td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap"
align="left" style="border-bottom: 0px solid #000000">(Amounts in millions)</td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000"><b>Options</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Shares</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Total</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Options</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Shares</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Total</b></td>
<td> </td> </tr> <!-- End Table Head -->
<!-- Begin Table Body --> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Stock-based
compensation expense </div></td> <td> </td>
<td align="left">$</td> <td align="right">—</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">11.4</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">11.4</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">0.4</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">9.1</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">9.5</td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Related
income tax benefit </div></td> <td> </td>
<td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(3.5</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(3.5</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(2.7</td> <td nowrap="nowrap">)</td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(2.7</td> <td nowrap="nowrap">)</td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:15px; text-indent:-15px">Net stock-based compensation
expense </div></td> <td> </td> <td align="left">$</td>
<td align="right">—</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">7.9</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">7.9</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">0.4</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">6.4</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">6.8</td> <td> </td> </tr>
<tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> </tr>
<!-- End Table Body --> </table> </div> <div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0"
cellpadding="0" width="100%"> <!-- Begin Table Head --> <tr valign="bottom">
<td width="28%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> </tr> <tr style="font-size:
8pt" valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="22" style="border-bottom: 1px
solid #000000"><b>Six Months Ended June 30,</b></td>
<td> </td> </tr> <tr style="font-size: 8pt"
valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="10" style="border-bottom: 1px
solid #000000"><b>2009</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="10"
style="border-bottom: 1px solid #000000"><b>2008</b></td>
<td> </td> </tr> <tr style="font-size: 8pt"
valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Stock</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Restricted</b></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Stock</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Restricted</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"> </td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap"
align="left" style="border-bottom: 0px solid #000000">(Amounts in millions)</td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000"><b>Options</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Shares</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Total</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Options</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Shares</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Total</b></td>
<td> </td> </tr> <!-- End Table Head -->
<!-- Begin Table Body --> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Stock-based
compensation expense </div></td> <td> </td>
<td align="left">$</td> <td align="right">0.2</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">21.3</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">21.5</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">0.9</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">15.5</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">16.4</td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Related
income tax benefit </div></td> <td> </td>
<td nowrap="nowrap" align="left"> </td> <td align="right">(0.1</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(6.5</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(6.6</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(0.2</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(4.7</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(4.9</td>
<td nowrap="nowrap">)</td> </tr> <tr style="font-size:
1px"> <td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Net
stock-based compensation expense </div></td> <td> </td>
<td align="left">$</td> <td align="right">0.1</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">14.8</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">14.9</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">0.7</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">10.8</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">11.5</td> <td> </td> </tr>
<tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> </tr>
<!-- End Table Body --> </table> </div> <!-- Folio -->
<!-- /Folio --> </div> <!-- PAGEBREAK --> <div style="font-family:
'Times New Roman',Times,serif"> <div align="left" style="font-size:
10pt; margin-top: 6pt">     <i>Stock
Options — </i>Information related to stock options issued
to officers, other employees and directors under all plans described in Note
7 to our consolidated financial statements included in our 2008 Annual Report
is presented in the following table: </div> <div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0"
cellpadding="0" width="100%"> <!-- Begin Table Head --> <tr valign="bottom">
<td width="50%"> </td> <td width="7%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> </tr> <tr style="font-size:
8pt" valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="14" style="border-bottom: 1px
solid #000000"><b>Six Months Ended June 30,</b></td>
<td> </td> </tr> <tr style="font-size: 8pt"
valign="bottom"> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Weighted
Average</b></td> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Remaining Contractual</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Aggregate Intrinsic</b></td>
<td> </td> </tr> <tr style="font-size: 8pt"
valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px
solid #000000"><b>Shares</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000"><b>Exercise Price</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Life
(in years)</b></td> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px
solid #000000"><b>Value (in millions)</b></td> <td> </td>
</tr> <!-- End Table Head --> <!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:15px; text-indent:-15px">Number of shares under option:
</div></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Outstanding
— January 1, 2009 </div></td> <td> </td>
<td> </td> <td align="right">303,100</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">39.58</td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Exercised
</div></td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(28,134</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">26.84</td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:15px;
text-indent:-15px">Outstanding — June 30, 2009 </div></td>
<td> </td> <td> </td> <td align="right">274,966</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">40.89</td> <td> </td> <td> </td>
<td> </td> <td align="right">6.0</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">8.0</td> <td> </td> </tr>
<tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Exercisable
— June 30, 2009 </div></td> <td> </td>
<td> </td> <td align="right">241,133</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">39.28</td> <td> </td> <td> </td>
<td> </td> <td align="right">5.8</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">7.4</td> <td> </td> </tr>
<tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> </tr> <!-- End Table Body -->
</table> </div> <div align="left" style="font-size: 10pt; margin-top:
6pt">     No options were
granted during the six months ended June 30, 2009 or 2008. The total
fair value of stock options vested during the three months ended June 30,
2009 and 2008 was $0.3 million and $0.5 million, respectively.
The total fair value of stock options vested during the six months ended June 30,
2009 and 2008 was $1.9 million and $2.6 million, respectively.
The fair value of each option award was estimated on the date of grant using
the Black-Scholes option pricing model. </div> <div align="left"
style="font-size: 10pt; margin-top: 6pt">     As
of June 30, 2009, we had $0.1 million of unrecognized compensation
cost related to outstanding unvested stock option awards, which is expected
to be recognized over a weighted-average period of less than 1 year.
The total intrinsic value of stock options exercised during the three months
ended June 30, 2009 and 2008 was $0.9 million and $5.3 million,
respectively. The total intrinsic value of stock options exercised during
the six months ended June 30, 2009 and 2008 was $1.2 million
and $22.2 million, respectively. </div> <div align="left"
style="font-size: 10pt; margin-top: 6pt">     <i>Restricted
Shares — </i>Awards of restricted shares are valued at the
closing market price of our common stock on the date of grant. The unearned
compensation is amortized to compensation expense over the vesting period
of the restricted shares. We had unearned compensation of $53.8 million
and $34.1 million at June 30, 2009 and December 31,
2008, respectively, which is expected to be recognized over a weighted-average
period of approximately 2 years. These amounts will be recognized
into net earnings in prospective periods as the awards vest. The total fair
value of restricted shares vested during the three months ended June 30,
2009 and 2008 was $1.3 million and $1.5 million, respectively.
The total fair value of restricted shares vested during the six months ended
June 30, 2009 and 2008 was $14.8 million and $10.8 million,
respectively. </div> <div align="left" style="font-size: 10pt; margin-top:
6pt">     The following table
summarizes information regarding restricted share activity: </div> <div
align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0"
border="0" cellpadding="0" width="100%"> <!-- Begin Table Head -->
<tr valign="bottom"> <td width="76%"> </td> <td
width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="6"
style="border-bottom: 1px solid #000000"><b>Six Months Ended June
30, 2009</b></td> <td> </td> </tr>
<tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Weighted Average</b></td>
<td> </td> </tr> <tr style="font-size: 8pt"
valign="bottom"> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Grant-Date
Fair</b></td> <td> </td> </tr> <tr
style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000"><b>Shares</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Value</b></td>
<td> </td> </tr> <!-- End Table Head -->
<!-- Begin Table Body --> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Number
of unvested shares: </div></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:30px; text-indent:-15px">Outstanding —
January 1, 2009 </div></td> <td> </td>
<td> </td> <td align="right">1,080,237</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">71.11</td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:30px; text-indent:-15px">Granted </div></td>
<td> </td> <td> </td> <td align="right">800,491</td>
<td> </td> <td> </td> <td> </td>
<td align="right">54.56</td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Vested
</div></td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(229,508</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">64.68</td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:30px; text-indent:-15px">Cancelled </div></td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(53,936</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td align="right">69.94</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:30px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Unvested restricted
shares — June 30, 2009 </div></td> <td> </td>
<td> </td> <td align="right">1,597,284</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">63.78</td> <td> </td> </tr>
<tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> </tr>
<!-- End Table Body --> </table> </div> <div align="left"
style="font-size: 10pt; margin-top: 6pt">     Unvested
restricted shares outstanding as of June 30, 2009, includes a total
of 540,000 shares granted in three annual grants since January 1,
2007 with performance-based vesting provisions. Performance-based restricted
shares vest upon the achievement of pre- defined performance targets, and
are issuable in common stock. Our performance targets are based on our average
annual return on net assets over a rolling three-year period as compared with
the same measure for a defined peer group for the same period. Compensation
expense is recognized over a 36-month cliff vesting period based on the fair
market value of our common stock on the date of grant, as adjusted for anticipated
forfeitures. During the performance period, earned and unearned compensation
expense is adjusted based on changes in the expected achievement of the performance
targets. Vesting provisions range from 0 to 1,030,000 shares based on performance
targets. As of June 30, 2009, we estimate vesting of 1,030,000 shares
based on expected achievement of performance targets. </div> <!--
Folio --> <!-- /Folio --> </div> <!-- PAGEBREAK --> <div
style="font-family: 'Times New Roman',Times,serif"> </div> </body>
</html>
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Tagged Note 4 - us-gaap:DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif"> <div align="left"
style="font-size: 10pt; margin-top: 12pt"><b>4. Derivative Instruments
and Hedges</b> </div> <div align="left" style="font-size: 10pt;
margin-top: 6pt">     Our
risk management and derivatives policy specifies the conditions under which
we may enter into derivative contracts. See Notes 1 and 8 to our consolidated
financial statements included in our 2008 Annual Report and Note 5 of this
Quarterly Report for additional information on our purpose for entering into
derivatives not designated as hedging instruments and our overall risk management
strategies. We enter into forward exchange contracts to hedge our risks associated
with transactions denominated in currencies other than the local currency
of the operation engaging in the transaction. At June 30, 2009 and
December 31, 2008, we had $566.4 million and $555.7 million,
respectively, of notional amount in outstanding forward exchange contracts
with third parties. At June 30, 2009, the length of forward exchange
contracts currently in place ranged from 1 day to 20 months.
Also as part of our risk management program, we enter into interest rate swap
agreements to hedge exposure to floating interest rates on certain portions
of our debt. At both June 30, 2009 and December 31, 2008,
we had $385.0 million of notional amount in outstanding interest
rate swaps with third parties. All interest rate swaps are 100% effective.
At June 30, 2009, the maximum remaining length of any interest rate
swap contract in place was approximately 24 months. </div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     We
are exposed to risk from credit-related losses resulting from nonperformance
by counterparties to our financial instruments. We perform credit evaluations
of our counterparties under forward contracts and interest rate swap agreements
and expect all counterparties to meet their obligations. If material, we would
adjust the values of our derivative contracts for our or our counterparties’
credit risks. We have not experienced credit losses from our counterparties.
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The
fair value of forward exchange contracts not designated as hedging instruments
are summarized below: </div> <div align="center"> <table style="font-size:
10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --> <tr valign="bottom"> <td width="76%"> </td>
<td width="5%"> </td> <td width="3%"> </td>
<td width="1%"> </td> <td width="3%"> </td>
<td width="5%"> </td> <td width="3%"> </td>
<td width="1%"> </td> <td width="3%"> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>June
30,</b></td> <td> </td> <td nowrap="nowrap"
align="center" colspan="3"><b>December 31,</b></td> </tr>
<tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left"
style="border-bottom: 0px solid #000000">(Amounts in thousands)</td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"
style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"
style="border-bottom: 1px solid #000000"><b>2008</b></td>
</tr> <!-- End Table Head --> <!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:15px; text-indent:-15px">Current derivative assets </div></td>
<td> </td> <td align="right">$</td> <td
align="right">9,922</td> <td> </td> <td> </td>
<td align="right">$</td> <td align="right">12,172</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Noncurrent derivative
assets </div></td> <td> </td> <td> </td>
<td align="right">86</td> <td> </td> <td> </td>
<td> </td> <td align="right">264</td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:15px; text-indent:-15px">Current derivative
liabilities </div></td> <td> </td> <td> </td>
<td align="right">4,004</td> <td> </td> <td> </td>
<td> </td> <td align="right">15,350</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Noncurrent derivative
liabilities </div></td> <td> </td> <td> </td>
<td align="right">125</td> <td> </td> <td> </td>
<td> </td> <td align="right">314</td> <td> </td>
</tr> <!-- End Table Body --> </table> </div> <div
align="left" style="font-size: 10pt; margin-top: 6pt">     The
fair value of interest rate swaps in cash flow hedging relationships are summarized
below: </div> <div align="center"> <table style="font-size:
10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --> <tr valign="bottom"> <td width="76%"> </td>
<td width="5%"> </td> <td width="3%"> </td>
<td width="1%"> </td> <td width="3%"> </td>
<td width="5%"> </td> <td width="3%"> </td>
<td width="1%"> </td> <td width="3%"> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>June
30,</b></td> <td> </td> <td nowrap="nowrap"
align="center" colspan="3"><b>December 31,</b></td> </tr>
<tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left"
style="border-bottom: 0px solid #000000">(Amounts in thousands)</td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"
style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"
style="border-bottom: 1px solid #000000"><b>2008</b></td>
</tr> <!-- End Table Head --> <!-- Begin Table Body -->
<tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Current
derivative liabilities </div></td> <td> </td>
<td align="right">$</td> <td align="right">7,371</td>
<td> </td> <td> </td> <td align="right">$</td>
<td align="right">8,213</td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Noncurrent
derivative liabilities </div></td> <td> </td>
<td> </td> <td align="right">490</td> <td> </td>
<td> </td> <td> </td> <td align="right">2,407</td>
<td> </td> </tr> <!-- End Table Body -->
</table> </div> <div align="left" style="font-size: 10pt; margin-top:
6pt">     Current and noncurrent
derivative assets are reported in our condensed consolidated balance sheets
in prepaid expenses and other and other assets, net, respectively. Current
and noncurrent derivative liabilities are reported in our condensed consolidated
balance sheets in accrued liabilities and retirement obligations and other
liabilities, respectively. </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">     The
impact of net changes in the fair values of forward exchange contracts not
designated as hedging instruments are summarized below: </div> <div
align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0"
border="0" cellpadding="0" width="100%"> <!-- Begin Table Head -->
<tr valign="bottom"> <td width="49%"> </td> <td
width="5%"> </td> <td width="3%"> </td>
<td width="1%"> </td> <td width="3%"> </td>
<td width="5%"> </td> <td width="3%"> </td>
<td width="1%"> </td> <td width="3%"> </td>
<td width="8%"> </td> <td width="3%"> </td>
<td width="1%"> </td> <td width="3%"> </td>
<td width="5%"> </td> <td width="3%"> </td>
<td width="1%"> </td> <td width="3%"> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="7"
style="border-bottom: 1px solid #000000"><b>Three Months Ended June
30,</b></td> <td> </td> <td nowrap="nowrap"
align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>Six
Months Ended June 30,</b></td> </tr> <tr style="font-size:
8pt" valign="bottom"> <td nowrap="nowrap" align="left" style="border-bottom:
0px solid #000000">(Amounts in thousands)</td> <td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px
solid #000000"><b>2009</b></td> <td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px
solid #000000"><b>2008</b></td> <td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px
solid #000000"><b>2009</b></td> <td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px
solid #000000"><b>2008</b></td> </tr> <!-- End
Table Head --> <!-- Begin Table Body --> <tr valign="bottom">
<td> <div style="margin-left:15px; text-indent:-15px">Gain recognized
in income </div></td> <td> </td> <td> </td>
<td align="right">10,544</td> <td> </td>
<td> </td> <td> </td> <td align="right">735</td>
<td> </td> <td> </td> <td> </td>
<td align="right">2,206</td> <td> </td> <td> </td>
<td> </td> <td align="right">18,650</td>
<td> </td> </tr> <!-- End Table Body -->
</table> </div> <div align="left" style="font-size: 10pt; margin-top:
6pt">     The impact of net
changes in the fair values of interest rate swaps in SFAS No. 133
cash flow hedging relationships are summarized below: </div> <div
align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0"
border="0" cellpadding="0" width="100%"> <!-- Begin Table Head -->
<tr valign="bottom"> <td width="49%"> </td> <td
width="5%"> </td> <td width="3%"> </td>
<td width="1%"> </td> <td width="3%"> </td>
<td width="5%"> </td> <td width="3%"> </td>
<td width="1%"> </td> <td width="3%"> </td>
<td width="8%"> </td> <td width="3%"> </td>
<td width="1%"> </td> <td width="3%"> </td>
<td width="5%"> </td> <td width="3%"> </td>
<td width="1%"> </td> <td width="3%"> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="7"
style="border-bottom: 1px solid #000000"><b>Three Months Ended June
30,</b></td> <td> </td> <td nowrap="nowrap"
align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>Six
Months Ended June 30,</b></td> </tr> <tr style="font-size:
8pt" valign="bottom"> <td nowrap="nowrap" align="left" style="border-bottom:
0px solid #000000">(Amounts in thousands)</td> <td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px
solid #000000"><b>2009</b></td> <td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px
solid #000000"><b>2008</b></td> <td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px
solid #000000"><b>2009</b></td> <td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px
solid #000000"><b>2008</b></td> </tr> <!-- End
Table Head --> <!-- Begin Table Body --> <tr valign="bottom">
<td> <div style="margin-left:15px; text-indent:-15px">(Loss) gain
reclassified from accumulated other comprehensive income into income for settlements,
net of tax </div></td> <td> </td> <td
nowrap="nowrap" align="right"> </td> <td align="right">(1,399</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">1,283</td> <td> </td> <td> </td>
<td nowrap="nowrap" align="right"> </td> <td align="right">(2,667</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">1,256</td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">(Loss)
gain recognized in other comprehensive income, net of tax </div></td>
<td> </td> <td nowrap="nowrap" align="right"> </td>
<td align="right">(446</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td align="right">4,136</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="right"> </td> <td align="right">(830</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">737</td> <td> </td> </tr>
<!-- End Table Body --> </table> </div> <div align="left"
style="font-size: 10pt; margin-top: 6pt">     Gains
and losses recognized in our condensed consolidated statements of income for
forward exchange contracts and interest rate swaps are classified as other
income (expense), net, and interest expense, respectively. </div> <!--
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style="font-family: 'Times New Roman',Times,serif"> </div> </body>
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Tagged Note 5 - us-gaap:FairValueDisclosuresTextBlock--> <div style="font-family:
'Times New Roman',Times,serif"> <div align="left" style="font-size:
10pt; margin-top: 12pt"><b>5. Fair Value</b> </div> <div
align="left" style="font-size: 10pt; margin-top: 6pt">     Our
financial instruments are presented at fair value in our condensed consolidated
balance sheets. Fair value is defined as the price that would be received
to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. Where available, fair
value is based on observable market prices or parameters or derived from such
prices or parameters. Where observable prices or inputs are not available,
valuation models may be applied. Assets and liabilities recorded at fair value
in our condensed consolidated balance sheets are categorized based upon the
level of judgment associated with the inputs used to measure their fair values.
Hierarchical levels are directly related to the amount of subjectivity associated
with the inputs to fair valuation of these assets and liabilities. Recurring
fair value measurements are limited to investments in derivative instruments
and some equity securities. The fair value measurements of our derivative
instruments are determined using models that maximize the use of the observable
market inputs including interest rate curves and both forward and spot prices
for currencies, and are classified as Level II under the fair value hierarchy.
The fair values of our derivatives are included above in Note 4. The fair
value measurements of our investments in equity securities are determined
using quoted market prices. The fair values of our investments in equity securities,
and changes thereto, are immaterial to our condensed consolidated financial
position and results of operations. </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">     As
discussed in Note 2 above, a liability of $4.4 million was recognized
as an estimate of the acquisition date fair value of the contingent consideration.
This liability is classified as Level III under the fair value hierarchy as
it is based on the weighted probability as of the date of the acquisition
of achievement of performance metrics, which is not observable in the market.
As of June 30, 2009, there has been no material change in this liability.
</div> </div> </body> </html>
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XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"
--> <html> <head></head> <body> <!-- Begin Block
Tagged Note 6 - us-gaap:DebtDisclosureTextBlock--> <div style="font-family:
'Times New Roman',Times,serif"> <div align="left" style="font-size:
10pt; margin-top: 12pt"><b>6. Debt</b> </div> <div
align="left" style="font-size: 10pt; margin-top: 6pt">     Debt,
including capital lease obligations, consisted of: </div> <div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0"
cellpadding="0" width="100%"> <!-- Begin Table Head --> <tr valign="bottom">
<td width="76%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> </tr> <tr style="font-size:
8pt" valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>June 30,</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>December 31,</b></td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap"
align="left" style="border-bottom: 0px solid #000000">(Amounts in thousands)</td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2008</b></td>
<td> </td> </tr> <!-- End Table Head -->
<!-- Begin Table Body --> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Term
Loan, interest rate of 2.12% in 2009 and 2.99% in 2008 </div></td>
<td> </td> <td align="left">$</td> <td
align="right">546,857</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">549,697</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Capital lease obligations
and other </div></td> <td> </td> <td> </td>
<td align="right">24,121</td> <td> </td>
<td> </td> <td> </td> <td align="right">23,651</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom"><!--
Blank Space --> <td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:15px; text-indent:-15px">Debt and capital lease
obligations </div></td> <td> </td> <td> </td>
<td align="right">570,978</td> <td> </td>
<td> </td> <td> </td> <td align="right">573,348</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Less amounts due within
one year </div></td> <td> </td> <td> </td>
<td align="right">28,344</td> <td> </td>
<td> </td> <td> </td> <td align="right">27,731</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Total
debt due after one year </div></td> <td> </td>
<td align="left">$</td> <td align="right">542,634</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">545,617</td> <td> </td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> </tr>
<!-- End Table Body --> </table> </div> <div align="left"
style="font-size: 10pt; margin-top: 12pt"><b>Credit Facilities</b>
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Our
credit facilities, as amended, are comprised of a $600.0 million
term loan expiring on August 10, 2012 and a $400.0 million
revolving line of credit, which can be utilized to provide up to $300.0 million
in letters of credit, expiring on August 10, 2012. We hereinafter
refer to these credit facilities collectively as our Credit Facilities. At
both June 30, 2009 and December 31, 2008, we had no amounts
outstanding under the revolving line of credit. We had outstanding letters
of credit of $112.1 million and $104.2 million at June 30,
2009 and December 31, 2008, respectively, which reduced borrowing
capacity to $287.9 million and $295.8 million, respectively.
The interbank market for our Term Loan implied a fair value of approximately
$525 million at June 30, 2009 and $495 million at December 31,
2008, as compared with a carrying value of $546.9 million and $549.7 million
at June 30, 2009 and December 31, 2008, respectively. </div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Borrowings
under our Credit Facilities bear interest at a rate equal to, at our option,
either (1) the base rate (which is based on the greater of the prime
rate most recently announced by the administrative agent under our Credit
Facilities or the Federal Funds rate plus 0.50%) or (2) London Interbank Offered
Rate (“LIBOR”) plus an applicable margin determined by
reference to the ratio of our total debt to consolidated Earnings Before Interest,
Taxes, Depreciation and Amortization (“EBITDA”), which
as of June 30, 2009 was 0.875% and 1.50% for borrowings under our
revolving line of credit and term loan, respectively. </div> <div
align="left" style="font-size: 10pt; margin-top: 6pt">     We
may prepay loans under our Credit Facilities in whole or in part, without
premium or penalty. During the three and six months ended June 30,
2009, we made scheduled repayments under our Credit Facilities of $1.4 million
and $2.8 million, respectively. We have scheduled repayments under
our Credit Facilities of $1.4 million due in each of the next four
quarters. </div> <!-- Folio --> <!-- /Folio --> </div>
<!-- PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>European
Letter of Credit Facility</b> </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">     On
September 14, 2007, we entered into a 364-day unsecured European
Letter of Credit Facility (“European LOC Facility”), to
issue letters of credit in an aggregate face amount not to exceed <font
face="'Times New Roman',times,serif">€</font>150.0 million
at any time. The initial commitment of <font face="'Times New Roman',times,serif">€</font>80.0 million
was increased to <font face="'Times New Roman',times,serif">€</font>110.0 million
upon renewal in September 2008. The aggregate commitment of the European
LOC Facility may be increased up to <font face="'Times New Roman',times,serif">€</font>150.0 million
as may be agreed among the parties, and may be decreased by us at our option
without any premium, fee or penalty. The European LOC Facility is used for
contingent obligations solely in respect of surety and performance bonds,
bank guarantees and similar obligations. We had outstanding letters of credit
drawn on the European LOC Facility of <font face="'Times New Roman',times,serif">€</font>82.9 million
($116.3 million) and <font face="'Times New Roman',times,serif">€</font>104.0 million
($145.2 million) as of June 30, 2009 and December 31,
2008, respectively. We pay certain fees for the letters of credit written
against the European LOC Facility based upon the ratio of our total debt to
consolidated EBITDA. As of June 30, 2009, the annual fees equaled 0.875% plus
a fronting fee of 0.1%. </div> </div> </body> </html>
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XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"
--> <html> <head></head> <body> <!-- Begin Block
Tagged Note 7 - us-gaap:RestructuringAndRelatedActivitiesDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif"> <div align="left"
style="font-size: 10pt; margin-top: 12pt"><b>7. Realignment Program</b>
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     In
February 2009, we announced our plan to incur up to $40 million
in realignment costs to reduce and optimize certain non-strategic manufacturing
facilities and our overall cost structure by improving our operating efficiency,
reducing redundancies, maximizing global consistency and driving improved
financial performance (the “Realignment Program”). The
Realignment Program consists of both restructuring and non-restructuring costs.
Restructuring charges represent charges associated with the relocation of
certain business activities, outsourcing of some business activities and facility
closures. Non-restructuring charges, which represent the majority of the Realignment
Program, are charges incurred to improve operating efficiency and reduce redundancies
and primarily represent employee severance. All expenses under the Realignment
Program are expected to be recognized during 2009. Expenses are reported in
cost of sales (“COS”) or selling, general and administrative
expense (“SG&A”), as applicable, in our condensed
consolidated statement of income. </div> <div align="left" style="font-size:
10pt; margin-top: 12pt"><b>Restructuring Charges</b> </div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Restructuring
charges include costs related to employee severance at closed facilities,
contract termination costs, asset write-downs and other exit costs. Severance
costs primarily include costs associated with involuntary termination benefits.
Contract termination costs include costs related to termination of operating
leases or other contract termination costs. Asset write-downs include accelerated
depreciation of fixed assets, accelerated amortization of intangible assets
and inventory write-downs. Other includes costs related to employee relocation,
asset relocation, vacant facility costs (i.e., taxes and insurance) and other
charges. </div> <!-- Folio --> <!-- /Folio --> </div>
<!-- PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Restructuring
charges incurred for the three and six months ended June 30, 2009
and total restructuring charges expected to be incurred are as follows: </div>
<div align="center"> <table style="font-size: 10pt; text-align: left"
cellspacing="0" border="0" cellpadding="0" width="100%"> <!-- Begin
Table Head --> <tr valign="bottom"> <td width="40%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Contract</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Asset</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"> </td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td> </tr> <tr style="font-size: 8pt"
valign="bottom"> <td nowrap="nowrap" align="left" style="border-bottom:
0px solid #000000">(Amounts in thousands)</td> <td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px
solid #000000"><b>Severance</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000"><b>termination</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>write-downs</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Other</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Total</b></td>
<td> </td> </tr> <!-- End Table Head -->
<!-- Begin Table Body --> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Three
Months ended June 30, 2009</b> </div></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">COS </div></td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:30px; text-indent:-15px">Flowserve Pump Division </div></td>
<td> </td> <td align="left">$</td> <td
align="right">1,826</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">—</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">4,281</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">333</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">6,440</td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Flow
Control Division </div></td> <td> </td> <td> </td>
<td align="right">122</td> <td> </td> <td> </td>
<td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">360</td> <td> </td> <td> </td>
<td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">482</td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:30px; text-indent:-15px">Flow Solutions Division </div></td>
<td> </td> <td> </td> <td align="right">575</td>
<td> </td> <td> </td> <td> </td>
<td align="right">33</td> <td> </td> <td> </td>
<td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">42</td> <td> </td> <td> </td>
<td> </td> <td align="right">650</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:15px;
text-indent:-15px">SG&A </div></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Flowserve
Pump Division </div></td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:30px;
text-indent:-15px">Flow Control Division </div></td> <td> </td>
<td> </td> <td align="right">152</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">152</td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:30px; text-indent:-15px">Flow Solutions Division </div></td>
<td> </td> <td> </td> <td align="right">127</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">127</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:30px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:45px; text-indent:-15px">Total </div></td>
<td> </td> <td align="left">$</td> <td
align="right">2,802</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">33</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">4,641</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">375</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">7,851</td> <td> </td> </tr>
<tr style="font-size: 1px"> <td> <div style="margin-left:30px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> </tr>
<tr valign="bottom"><!-- Blank Space --> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Six
Months ended June 30, 2009 (1)</b> </div></td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">COS
</div></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:30px; text-indent:-15px">Flowserve Pump Division
</div></td> <td> </td> <td align="left">$</td>
<td align="right">3,489</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">—</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">4,400</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">333</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">8,222</td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Flow
Control Division </div></td> <td> </td> <td> </td>
<td align="right">122</td> <td> </td> <td> </td>
<td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">360</td> <td> </td> <td> </td>
<td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">482</td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:30px; text-indent:-15px">Flow Solutions Division </div></td>
<td> </td> <td> </td> <td align="right">575</td>
<td> </td> <td> </td> <td> </td>
<td align="right">33</td> <td> </td> <td> </td>
<td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">42</td> <td> </td> <td> </td>
<td> </td> <td align="right">650</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:15px;
text-indent:-15px">SG&A </div></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Flowserve
Pump Division </div></td> <td> </td> <td> </td>
<td align="right">215</td> <td> </td> <td> </td>
<td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">215</td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Flow
Control Division </div></td> <td> </td> <td> </td>
<td align="right">152</td> <td> </td> <td> </td>
<td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">152</td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:30px; text-indent:-15px">Flow Solutions Division </div></td>
<td> </td> <td> </td> <td align="right">127</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">127</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:30px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:45px; text-indent:-15px">Total </div></td>
<td> </td> <td align="left">$</td> <td
align="right">4,680</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">33</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">4,760</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">375</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">9,848</td> <td> </td> </tr>
<tr style="font-size: 1px"> <td> <div style="margin-left:30px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> </tr>
<tr valign="bottom"><!-- Blank Space --> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Total
Expected Restructuring Charges for 2009</b> </div></td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">COS
</div></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:30px; text-indent:-15px">Flowserve Pump Division
</div></td> <td> </td> <td align="left">$</td>
<td align="right">3,521</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">842</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">5,825</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">4,173</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">14,361</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:30px;
text-indent:-15px">Flow Control Division </div></td> <td> </td>
<td> </td> <td align="right">122</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">360</td> <td> </td> <td> </td>
<td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">482</td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:30px; text-indent:-15px">Flow Solutions Division </div></td>
<td> </td> <td> </td> <td align="right">576</td>
<td> </td> <td> </td> <td> </td>
<td align="right">197</td> <td> </td> <td> </td>
<td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">414</td> <td> </td> <td> </td>
<td> </td> <td align="right">1,187</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:15px;
text-indent:-15px">SG&A </div></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Flowserve
Pump Division </div></td> <td> </td> <td> </td>
<td align="right">215</td> <td> </td> <td> </td>
<td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">215</td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Flow
Control Division </div></td> <td> </td> <td> </td>
<td align="right">152</td> <td> </td> <td> </td>
<td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">152</td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:30px; text-indent:-15px">Flow Solutions Division </div></td>
<td> </td> <td> </td> <td align="right">127</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">127</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:30px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:45px; text-indent:-15px">Total </div></td>
<td> </td> <td align="left">$</td> <td
align="right">4,713</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">1,039</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">6,185</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">4,587</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">16,524</td> <td> </td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:30px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> </tr>
<!-- End Table Body --> </table> </div> <div align="left">
<div style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px
solid #000000">  </div> </div> <table width="100%"
border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align:
left"> <tr> <td width="3%"></td> <td width="1%"></td>
<td width="96"></td> </tr> <tr valign="top"> <td
nowrap="nowrap" align="left">(1)</td> <td> </td>
<td>Charges for the six months ended June 30, 2009 are equal
to charges incurred from inception of the program as the program began in
2009.</td> </tr> </table> <div align="left" style="font-size:
10pt; margin-top: 6pt">     The
following represents the activity related to the restructuring reserve: </div>
<div align="center"> <table style="font-size: 10pt; text-align: left"
cellspacing="0" border="0" cellpadding="0" width="100%"> <!-- Begin
Table Head --> <tr valign="bottom"> <td width="52%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Contract</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"> </td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap"
align="left" style="border-bottom: 0px solid #000000">(Amounts in thousands)</td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000"><b>Severance</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Termination</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Other</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Total</b></td>
<td> </td> </tr> <!-- End Table Head -->
<!-- Begin Table Body --> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Balance
at December 31, 2008 </div></td> <td> </td>
<td align="left">$</td> <td align="right">—</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">—</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">—</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">—</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:30px; text-indent:-15px">Charges </div></td>
<td> </td> <td> </td> <td align="right">1,878</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">1,878</td> <td> </td> </tr>
<tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:15px; text-indent:-15px">Balance at March 31,
2009 </div></td> <td> </td> <td align="left"></td>
<td align="right">1,878</td> <td> </td> <td> </td>
<td align="left"></td> <td align="right">—</td>
<td> </td> <td> </td> <td align="left"></td>
<td align="right">—</td> <td> </td>
<td> </td> <td align="left"></td> <td
align="right">1,878</td> <td> </td> </tr>
<tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom"><!-- Blank Space --> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:30px;
text-indent:-15px">Charges </div></td> <td> </td>
<td> </td> <td align="right">2,802</td> <td> </td>
<td> </td> <td> </td> <td align="right">33</td>
<td> </td> <td> </td> <td> </td>
<td align="right">375</td> <td> </td> <td> </td>
<td> </td> <td align="right">3,210</td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:30px; text-indent:-15px">Cash Expenditures </div></td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(1,067</td> <td nowrap="nowrap">)</td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(33</td> <td nowrap="nowrap">)</td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(289</td> <td nowrap="nowrap">)</td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(1,389</td> <td nowrap="nowrap">)</td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Balance
at June 30, 2009 </div></td> <td> </td>
<td align="left">$</td> <td align="right">3,613</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">—</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">86</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">3,699</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> </tr> <!-- End Table Body -->
</table> </div> <!-- Folio --> <!-- /Folio --> </div>
<!-- PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Total
Realignment Program Charges</b> </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">     The
following is a summary of total charges incurred related to the Realignment
Program: </div> <div align="left" style="font-size: 10pt; margin-top:
12pt"><b>Three Months Ended June 30, 2009</b> </div>
<div align="center"> <table style="font-size: 10pt; text-align: left"
cellspacing="0" border="0" cellpadding="0" width="100%"> <!-- Begin
Table Head --> <tr valign="bottom"> <td width="28%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Subtotal
—</b></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td> </tr> <tr style="font-size: 8pt"
valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Flowserve</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Flow</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Flow</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Reportable</b></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Consolidated</b></td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap"
align="left" style="border-bottom: 0px solid #000000">(Amounts in millions)</td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000"><b>Pump</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Control</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Solutions</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Segments</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>All
Other</b></td> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px
solid #000000"><b>Total</b></td> <td> </td>
</tr> <!-- End Table Head --> <!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:15px; text-indent:-15px"><b>Restructuring Charges</b>
</div></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:30px; text-indent:-15px">COS </div></td>
<td> </td> <td align="left">$</td> <td
align="right">6.4</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">0.5</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">0.7</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">7.6</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">—</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">7.6</td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:30px; text-indent:-15px">SG&A </div></td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">0.2</td> <td> </td> <td> </td>
<td> </td> <td align="right">0.1</td> <td> </td>
<td> </td> <td> </td> <td align="right">0.3</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">0.3</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:30px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">  </div></td>
<td> </td> <td align="left">$</td> <td
align="right">6.4</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">0.7</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">0.8</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">7.9</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">—</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">7.9</td> <td> </td> </tr>
<tr style="font-size: 1px"> <td> <div style="margin-left:30px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> </tr>
<tr valign="bottom"><!-- Blank Space --> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:15px; text-indent:-15px"><b>Non-Restructuring
Charges</b> </div></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">COS
</div></td> <td> </td> <td align="left">$</td>
<td align="right">1.1</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">2.9</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">0.6</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">4.6</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">—</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">4.6</td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:30px; text-indent:-15px">SG&A </div></td>
<td> </td> <td> </td> <td align="right">2.1</td>
<td> </td> <td> </td> <td> </td>
<td align="right">3.5</td> <td> </td> <td> </td>
<td> </td> <td align="right">1.4</td> <td> </td>
<td> </td> <td> </td> <td align="right">7.0</td>
<td> </td> <td> </td> <td> </td>
<td align="right">0.1</td> <td> </td> <td> </td>
<td> </td> <td align="right">7.1</td> <td> </td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:30px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td align="left">$</td>
<td align="right">3.2</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">6.4</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">2.0</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">11.6</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">0.1</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">11.7</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:30px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> </tr> <tr valign="bottom"><!--
Blank Space --> <td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Total
Realignment Program Charges</b> </div></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">COS
</div></td> <td> </td> <td align="left">$</td>
<td align="right">7.5</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">3.4</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">1.3</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">12.2</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">—</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">12.2</td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:30px; text-indent:-15px">SG&A </div></td>
<td> </td> <td> </td> <td align="right">2.1</td>
<td> </td> <td> </td> <td> </td>
<td align="right">3.7</td> <td> </td> <td> </td>
<td> </td> <td align="right">1.5</td> <td> </td>
<td> </td> <td> </td> <td align="right">7.3</td>
<td> </td> <td> </td> <td> </td>
<td align="right">0.1</td> <td> </td> <td> </td>
<td> </td> <td align="right">7.4</td> <td> </td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:30px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td align="left">$</td>
<td align="right">9.6</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">7.1</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">2.8</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">19.5</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">0.1</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">19.6</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:30px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> </tr> <!-- End Table Body -->
</table> </div> <div align="left" style="font-size: 10pt; margin-top:
12pt"><b>Six Months Ended June 30, 2009</b> </div>
<div align="center"> <table style="font-size: 10pt; text-align: left"
cellspacing="0" border="0" cellpadding="0" width="100%"> <!-- Begin
Table Head --> <tr valign="bottom"> <td width="28%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Subtotal
—</b></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td> </tr> <tr style="font-size: 8pt"
valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Flowserve</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Flow</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Flow</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Reportable</b></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Consolidated</b></td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap"
align="left" style="border-bottom: 0px solid #000000">(Amounts in millions)</td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000"><b>Pump</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Control</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Solutions</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Segments</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>All
Other</b></td> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px
solid #000000"><b>Total</b></td> <td> </td>
</tr> <!-- End Table Head --> <!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:15px; text-indent:-15px"><b>Restructuring Charges</b>
</div></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:30px; text-indent:-15px">COS </div></td>
<td> </td> <td align="left">$</td> <td
align="right">8.2</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">0.5</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">0.7</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">9.4</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">—</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">9.4</td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:30px; text-indent:-15px">SG&A </div></td>
<td> </td> <td> </td> <td align="right">0.2</td>
<td> </td> <td> </td> <td> </td>
<td align="right">0.2</td> <td> </td> <td> </td>
<td> </td> <td align="right">0.1</td> <td> </td>
<td> </td> <td> </td> <td align="right">0.5</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">0.5</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:30px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">  </div></td>
<td> </td> <td align="left">$</td> <td
align="right">8.4</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">0.7</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">0.8</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">9.9</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">—</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">9.9</td> <td> </td> </tr>
<tr style="font-size: 1px"> <td> <div style="margin-left:30px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> </tr>
<tr valign="bottom"><!-- Blank Space --> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:15px; text-indent:-15px"><b>Non-Restructuring
Charges</b> </div></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">COS
</div></td> <td> </td> <td align="left">$</td>
<td align="right">2.0</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">3.2</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">3.7</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">8.9</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">—</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">8.9</td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:30px; text-indent:-15px">SG&A </div></td>
<td> </td> <td> </td> <td align="right">2.6</td>
<td> </td> <td> </td> <td> </td>
<td align="right">3.8</td> <td> </td> <td> </td>
<td> </td> <td align="right">4.1</td> <td> </td>
<td> </td> <td> </td> <td align="right">10.5</td>
<td> </td> <td> </td> <td> </td>
<td align="right">0.3</td> <td> </td> <td> </td>
<td> </td> <td align="right">10.8</td> <td> </td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:30px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td align="left">$</td>
<td align="right">4.6</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">7.0</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">7.8</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">19.4</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">0.3</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">19.7</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:30px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> </tr> <tr valign="bottom"><!--
Blank Space --> <td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Total
Realignment Program Charges</b> </div></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">COS
</div></td> <td> </td> <td align="left">$</td>
<td align="right">10.2</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">3.7</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">4.4</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">18.3</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">—</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">18.3</td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:30px; text-indent:-15px">SG&A </div></td>
<td> </td> <td> </td> <td align="right">2.8</td>
<td> </td> <td> </td> <td> </td>
<td align="right">4.0</td> <td> </td> <td> </td>
<td> </td> <td align="right">4.2</td> <td> </td>
<td> </td> <td> </td> <td align="right">11.0</td>
<td> </td> <td> </td> <td> </td>
<td align="right">0.3</td> <td> </td> <td> </td>
<td> </td> <td align="right">11.3</td> <td> </td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:30px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td align="left">$</td>
<td align="right">13.0</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">7.7</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">8.6</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">29.3</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">0.3</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">29.6</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:30px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> </tr> <!-- End Table Body -->
</table> </div> <!-- Folio --> <!-- /Folio --> </div>
<!-- PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The
following is a summary of total charges expected to be incurred related to
the Realignment Program: </div> <div align="left" style="font-size:
10pt; margin-top: 12pt"><b>Total Expected Charges for 2009</b>
</div> <div align="center"> <table style="font-size: 10pt;
text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --> <tr valign="bottom"> <td width="30%"> </td>
<td width="3%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Subtotal
—</b></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td> </tr> <tr style="font-size: 8pt"
valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Flowserve</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Flow</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Flow</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Reportable</b></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Consolidated</b></td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap"
align="left" style="border-bottom: 0px solid #000000">(Amounts in millions)</td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000"><b>Pump</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Control</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Solutions</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Segments</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>All
Other</b></td> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px
solid #000000"><b>Total</b></td> <td> </td>
</tr> <!-- End Table Head --> <!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:15px; text-indent:-15px"><b>Total Expected Restructuring
Charges</b> </div></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">COS
</div></td> <td> </td> <td align="left">$</td>
<td align="right">14.4</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">0.5</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">1.2</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">16.1</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">—</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">16.1</td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:30px; text-indent:-15px">SG&A </div></td>
<td> </td> <td> </td> <td align="right">0.2</td>
<td> </td> <td> </td> <td> </td>
<td align="right">0.2</td> <td> </td> <td> </td>
<td> </td> <td align="right">0.1</td> <td> </td>
<td> </td> <td> </td> <td align="right">0.5</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">0.5</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:30px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">  </div></td>
<td> </td> <td align="left">$</td> <td
align="right">14.6</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">0.7</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">1.3</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">16.6</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">—</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">16.6</td> <td> </td> </tr>
<tr style="font-size: 1px"> <td> <div style="margin-left:30px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> </tr>
<tr valign="bottom"><!-- Blank Space --> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:15px; text-indent:-15px"><b>Total Expected Non-restructuring
Charges</b> </div></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">COS
</div></td> <td> </td> <td align="left">$</td>
<td align="right">3.3</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">4.2</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">4.5</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">12.0</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">0.1</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">12.1</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">SG&A
</div></td> <td> </td> <td> </td>
<td align="right">2.6</td> <td> </td> <td> </td>
<td> </td> <td align="right">3.9</td> <td> </td>
<td> </td> <td> </td> <td align="right">4.1</td>
<td> </td> <td> </td> <td> </td>
<td align="right">10.6</td> <td> </td> <td> </td>
<td> </td> <td align="right">0.3</td> <td> </td>
<td> </td> <td> </td> <td align="right">10.9</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:30px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">  </div></td>
<td> </td> <td align="left">$</td> <td
align="right">5.9</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">8.1</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">8.6</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">22.6</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">0.4</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">23.0</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:30px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> </tr> <tr valign="bottom"><!--
Blank Space --> <td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Expected
Total Realignment Program Charges</b> </div></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">COS
</div></td> <td> </td> <td align="left">$</td>
<td align="right">17.7</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">4.7</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">5.7</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">28.1</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">0.1</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">28.2</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">SG&A
</div></td> <td> </td> <td> </td>
<td align="right">2.8</td> <td> </td> <td> </td>
<td> </td> <td align="right">4.1</td> <td> </td>
<td> </td> <td> </td> <td align="right">4.2</td>
<td> </td> <td> </td> <td> </td>
<td align="right">11.1</td> <td> </td> <td> </td>
<td> </td> <td align="right">0.3</td> <td> </td>
<td> </td> <td> </td> <td align="right">11.4</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:30px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">  </div></td>
<td> </td> <td align="left">$</td> <td
align="right">20.5</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">8.8</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">9.9</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">39.2</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">0.4</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">39.6</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:30px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> </tr> <!-- End Table Body -->
</table> </div> </div> </body> </html>
<!--DOCTYPE html PUBLIC "-//W3C//DTD
XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"
--> <html> <head></head> <body> <!-- Begin Block
Tagged Note 8 - us-gaap:InventoryDisclosureTextBlock--> <div style="font-family:
'Times New Roman',Times,serif"> <div align="left" style="font-size:
10pt; margin-top: 12pt"><b>8. Inventories</b> </div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Inventories
are stated at lower of cost or market. Cost is determined by the first-in,
first-out method. Inventories, net consisted of the following: </div>
<div align="center"> <table style="font-size: 10pt; text-align: left"
cellspacing="0" border="0" cellpadding="0" width="100%"> <!-- Begin
Table Head --> <tr valign="bottom"> <td width="76%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>June
30,</b></td> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>December 31,</b></td>
<td> </td> </tr> <tr style="font-size: 8pt"
valign="bottom"> <td nowrap="nowrap" align="left" style="border-bottom:
0px solid #000000">(Amounts in thousands)</td> <td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px
solid #000000"><b>2009</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000"><b>2008</b></td>
<td> </td> </tr> <!-- End Table Head -->
<!-- Begin Table Body --> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Raw
materials </div></td> <td> </td> <td align="left">$</td>
<td align="right">270,623</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">241,953</td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Work
in process </div></td> <td> </td> <td> </td>
<td align="right">757,956</td> <td> </td>
<td> </td> <td> </td> <td align="right">635,490</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Finished
goods </div></td> <td> </td> <td> </td>
<td align="right">261,860</td> <td> </td>
<td> </td> <td> </td> <td align="right">264,746</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Less: Progress billings
</div></td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(336,361</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(250,289</td>
<td nowrap="nowrap">)</td> </tr> <tr valign="bottom"
style="background: #cceeff"> <td> <div style="margin-left:15px;
text-indent:-15px">Less: Excess and obsolete reserve </div></td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(62,468</td> <td nowrap="nowrap">)</td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(57,288</td> <td nowrap="nowrap">)</td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Inventories,
net </div></td> <td> </td> <td align="left">$</td>
<td align="right">891,610</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">834,612</td> <td> </td> </tr>
<tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> </tr>
<!-- End Table Body --> </table> </div> </div> </body>
</html>
<!--DOCTYPE html PUBLIC "-//W3C//DTD
XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"
--> <html> <head></head> <body> <!-- Begin Block
Tagged Note 9 - us-gaap:EquityMethodInvestmentsDisclosureTextBlock--> <div
style="font-family: 'Times New Roman',Times,serif"> <div align="left"
style="font-size: 10pt; margin-top: 12pt"><b>9. Equity Method Investments</b>
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     As
of June 30, 2009, we had investments in seven joint ventures (one
located in each of China, Japan, Korea, Saudi Arabia and the United Arab Emirates
and two located in India) that were accounted for using the equity method.
Summarized below is combined income statement information, based on the most
recent financial information, for those investments: </div> <div
align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0"
border="0" cellpadding="0" width="100%"> <!-- Begin Table Head -->
<tr valign="bottom"> <td width="76%"> </td> <td
width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="6"
style="border-bottom: 1px solid #000000"><b>Three Months Ended June
30,</b></td> <td> </td> </tr> <tr
style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left"
style="border-bottom: 0px solid #000000">(Amounts in thousands)</td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2008</b></td>
<td> </td> </tr> <!-- End Table Head -->
<!-- Begin Table Body --> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Revenues
</div></td> <td> </td> <td align="left">$</td>
<td align="right">52,255</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">84,595</td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Gross
profit </div></td> <td> </td> <td> </td>
<td align="right">17,988</td> <td> </td>
<td> </td> <td> </td> <td align="right">23,682</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Income
before provision for income taxes </div></td> <td> </td>
<td> </td> <td align="right">12,729</td>
<td> </td> <td> </td> <td> </td>
<td align="right">17,042</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:15px;
text-indent:-15px">Provision for income taxes </div></td> <td> </td>
<td nowrap="nowrap" align="left"> </td> <td align="right">(3,961</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(5,074</td>
<td nowrap="nowrap">)</td> </tr> <tr style="font-size:
1px"> <td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Net
income </div></td> <td> </td> <td align="left">$</td>
<td align="right">8,768</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">11,968</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> </tr> <!-- End Table Body -->
</table> </div> <!-- Folio --> <!-- /Folio --> </div>
<!-- PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif">
<div align="center"> <table style="font-size: 10pt; text-align: left"
cellspacing="0" border="0" cellpadding="0" width="100%"> <!-- Begin
Table Head --> <tr valign="bottom"> <td width="76%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="6"
style="border-bottom: 1px solid #000000"><b>Six Months Ended June
30,</b></td> <td> </td> </tr> <tr
style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left"
style="border-bottom: 0px solid #000000">(Amounts in thousands)</td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2008
(1)</b></td> <td> </td> </tr> <!--
End Table Head --> <!-- Begin Table Body --> <tr valign="bottom"
style="background: #cceeff"> <td> <div style="margin-left:15px;
text-indent:-15px">Revenues </div></td> <td> </td>
<td align="left">$</td> <td align="right">113,022</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">187,822</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:15px;
text-indent:-15px">Gross profit </div></td> <td> </td>
<td> </td> <td align="right">41,116</td>
<td> </td> <td> </td> <td> </td>
<td align="right">53,702</td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:15px; text-indent:-15px">Income before provision
for income taxes </div></td> <td> </td> <td> </td>
<td align="right">29,155</td> <td> </td>
<td> </td> <td> </td> <td align="right">38,307</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Provision for income
taxes </div></td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(9,177</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(11,675</td>
<td nowrap="nowrap">)</td> </tr> <tr style="font-size:
1px"> <td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Net
income </div></td> <td> </td> <td align="left">$</td>
<td align="right">19,978</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">26,632</td> <td> </td> </tr>
<tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> </tr>
<!-- End Table Body --> </table> </div> <div align="left">
<div style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px
solid #000000">  </div> </div> <table width="100%"
border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align:
left"> <tr> <td width="3%"></td> <td width="1%"></td>
<td width="96"></td> </tr> <tr valign="top"> <td
nowrap="nowrap" align="left">(1)</td> <td> </td>
<td>As discussed in Note 2, effective March 1, 2008, we purchased
the remaining 50% interest in Niigata, resulting in the full consolidation
of Niigata as of that date. Prior to this transaction, our 50% interest was
recorded using the equity method of accounting. As a result, Niigata’s
income statement information presented herein includes only the first two
months of 2008.</td> </tr> </table> <div align="left"
style="font-size: 10pt; margin-top: 6pt">     The
provision for income taxes is based on the tax laws and rates in the countries
in which our investees operate. The tax jurisdictions vary not only by their
nominal rates, but also by the allowability of deductions, credits and other
benefits. Our share of net income is reflected in our condensed consolidated
statements of income. </div> </div> </body> </html>
<!--DOCTYPE html PUBLIC "-//W3C//DTD
XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"
--> <html> <head></head> <body> <!-- Begin Block
Tagged Note 10 - us-gaap:EarningsPerShareTextBlock--> <div style="font-family:
'Times New Roman',Times,serif"> <div align="left" style="font-size:
10pt; margin-top: 12pt"><b>10. Earnings Per Share</b> </div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     As
discussed in Note 1, effective January 1, 2009, we adopted FSP No. EITF
03-6-1. We have retrospectively adjusted earnings per common share for all
prior periods presented. We now use the “two-class” method
of computing earnings per share. The “two-class” method
is an earnings allocation formula that determines earnings per share for each
class of common stock and participating security as if all earnings for the
period had been distributed. Unvested restricted share awards that earn non-forfeitable
dividend rights qualify as participating securities and, accordingly, are
now included in the basic computation as such. Our unvested restricted shares
participate on an equal basis with common shares; therefore, there is no difference
in undistributed earnings allocated to each participating security. Accordingly,
the presentation below is prepared on a combined basis and is presented as
earnings per common share. Previously, such unvested restricted shares were
not included as outstanding within basic earnings per common share and were
included in diluted earnings per common share pursuant to the treasury stock
method. The following is a reconciliation of net earnings of Flowserve Corporation
and weighted average shares for calculating basic net earnings per common
share. </div> <div align="left" style="font-size: 10pt; margin-top:
6pt">     Earnings per weighted
average common share outstanding was calculated as follows: </div> <div
align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0"
border="0" cellpadding="0" width="100%"> <!-- Begin Table Head -->
<tr valign="bottom"> <td width="76%"> </td> <td
width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="6"
style="border-bottom: 1px solid #000000"><b>Three Months Ended June
30,</b></td> <td> </td> </tr> <tr
style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left"
style="border-bottom: 0px solid #000000">(Amounts in thousands, except
per share data)</td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2008</b></td>
<td> </td> </tr> <!-- End Table Head -->
<!-- Begin Table Body --> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Net
earnings of Flowserve Corporation </div></td> <td> </td>
<td align="left">$</td> <td align="right">108,218</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">122,864</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:15px;
text-indent:-15px">Dividends on restricted shares not expected to vest
</div></td> <td> </td> <td> </td>
<td align="right">5</td> <td> </td> <td> </td>
<td> </td> <td align="right">7</td> <td> </td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:15px; text-indent:-15px">Earnings attributable to common
and participating shareholders </div></td> <td> </td>
<td align="left">$</td> <td align="right">108,223</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">122,871</td> <td> </td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> </tr>
<tr valign="bottom"><!-- Blank Space --> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Weighted average shares:
</div></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:30px; text-indent:-15px">Common stock </div></td>
<td> </td> <td> </td> <td align="right">55,460</td>
<td> </td> <td> </td> <td> </td>
<td align="right">56,962</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:30px;
text-indent:-15px">Participating securities </div></td> <td> </td>
<td> </td> <td align="right">442</td> <td> </td>
<td> </td> <td> </td> <td align="right">551</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:45px; text-indent:-15px">Denominator
for basic earnings per common share </div></td> <td> </td>
<td> </td> <td align="right">55,902</td>
<td> </td> <td> </td> <td> </td>
<td align="right">57,513</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:30px;
text-indent:-15px">Effect of potentially dilutive securities </div></td>
<td> </td> <td> </td> <td align="right">496</td>
<td> </td> <td> </td> <td> </td>
<td align="right">329</td> <td> </td> </tr>
<tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:45px; text-indent:-15px">Denominator for diluted earnings
per common share </div></td> <td> </td> <td> </td>
<td align="right">56,398</td> <td> </td>
<td> </td> <td> </td> <td align="right">57,842</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> </tr> <tr valign="bottom"><!--
Blank Space --> <td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:15px;
text-indent:-15px">Earnings per common share: </div></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Basic
</div></td> <td> </td> <td align="left">$</td>
<td align="right">1.94</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">2.14</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:30px; text-indent:-15px">Diluted </div></td>
<td> </td> <td> </td> <td align="right">1.92</td>
<td> </td> <td> </td> <td> </td>
<td align="right">2.12</td> <td> </td> </tr>
<!-- End Table Body --> </table> </div> <!-- Folio -->
<!-- /Folio --> </div> <!-- PAGEBREAK --> <div style="font-family:
'Times New Roman',Times,serif"> <div align="center"> <table style="font-size:
10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --> <tr valign="bottom"> <td width="76%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="6"
style="border-bottom: 1px solid #000000"><b>Six Months Ended June
30,</b></td> <td> </td> </tr> <tr
style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left"
style="border-bottom: 0px solid #000000">(Amounts in thousands, except
per share data)</td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2008</b></td>
<td> </td> </tr> <!-- End Table Head -->
<!-- Begin Table Body --> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Net
earnings of Flowserve Corporation </div></td> <td> </td>
<td align="left">$</td> <td align="right">200,525</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">210,931</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:15px;
text-indent:-15px">Dividends on restricted shares not expected to vest
</div></td> <td> </td> <td> </td>
<td align="right">13</td> <td> </td> <td> </td>
<td> </td> <td align="right">18</td> <td> </td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:15px; text-indent:-15px">Earnings attributable to common
and participating shareholders </div></td> <td> </td>
<td align="left">$</td> <td align="right">200,538</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">210,949</td> <td> </td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> </tr>
<tr valign="bottom"><!-- Blank Space --> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Weighted average shares:
</div></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:30px; text-indent:-15px">Common stock </div></td>
<td> </td> <td> </td> <td align="right">55,489</td>
<td> </td> <td> </td> <td> </td>
<td align="right">56,926</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:30px;
text-indent:-15px">Participating securities </div></td> <td> </td>
<td> </td> <td align="right">443</td> <td> </td>
<td> </td> <td> </td> <td align="right">568</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:45px; text-indent:-15px">Denominator
for basic earnings per common share </div></td> <td> </td>
<td> </td> <td align="right">55,932</td>
<td> </td> <td> </td> <td> </td>
<td align="right">57,494</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:30px;
text-indent:-15px">Effect of potentially dilutive securities </div></td>
<td> </td> <td> </td> <td align="right">429</td>
<td> </td> <td> </td> <td> </td>
<td align="right">365</td> <td> </td> </tr>
<tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:45px; text-indent:-15px">Denominator for diluted earnings
per common share </div></td> <td> </td> <td> </td>
<td align="right">56,361</td> <td> </td>
<td> </td> <td> </td> <td align="right">57,859</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> </tr> <tr valign="bottom"><!--
Blank Space --> <td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:15px;
text-indent:-15px">Earnings per common share: </div></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Basic
</div></td> <td> </td> <td align="left">$</td>
<td align="right">3.59</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">3.67</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:30px; text-indent:-15px">Diluted </div></td>
<td> </td> <td> </td> <td align="right">3.56</td>
<td> </td> <td> </td> <td> </td>
<td align="right">3.65</td> <td> </td> </tr>
<!-- End Table Body --> </table> </div> <div align="left"
style="font-size: 10pt; margin-top: 6pt">     Diluted
earnings per share above is based upon the weighted average number of shares
as determined for basic earnings per share plus shares potentially issuable
in conjunction with stock options, restricted share units and performance
share units. </div> <div align="left" style="font-size: 10pt; margin-top:
6pt">     For the three and
six months ended both June 30, 2009 and 2008, we had no options to
purchase common stock that were excluded from the computation of potentially
dilutive securities. </div> <div align="left" style="font-size: 10pt;
margin-top: 6pt">     We have
retrospectively adjusted the prior period to reflect the results that would
have been reported had we applied the provisions of FSP No. EITF
03-6-1 for computing earnings per common share for all periods presented.
The effects of the change as it relates to our earnings per common share are
as follows: </div> <div align="center"> <table style="font-size:
10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --> <tr valign="bottom"> <td width="76%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="6"
style="border-bottom: 1px solid #000000"><b>Three Months Ended June
30, 2008</b></td> <td> </td> </tr>
<tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000"><b>Basic</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Diluted</b></td>
<td> </td> </tr> <!-- End Table Head -->
<!-- Begin Table Body --> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">As
previously reported </div></td> <td> </td>
<td align="left">$</td> <td align="right">2.16</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">2.13</td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Effect
of adoption of FSP No. EITF 03-6-1 </div></td> <td> </td>
<td nowrap="nowrap" align="left"> </td> <td align="right">(0.02</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(0.01</td>
<td nowrap="nowrap">)</td> </tr> <tr style="font-size:
1px"> <td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">As
retrospectively adjusted </div></td> <td> </td>
<td align="left">$</td> <td align="right">2.14</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">2.12</td> <td> </td> </tr>
<tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> </tr>
<tr valign="top"><!-- Blank Space --> <td> <div style="margin-left:0px;
text-indent:-0px">  </div></td> </tr> <tr
style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="6"
style="border-bottom: 1px solid #000000"><b>Six Months Ended June
30, 2008</b></td> <td> </td> </tr>
<tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000"><b>Basic</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Diluted</b></td>
<td> </td> </tr> <!-- End Table Head -->
<!-- Begin Table Body --> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">As
previously reported </div></td> <td> </td>
<td align="left">$</td> <td align="right">3.71</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">3.66</td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Effect
of adoption of FSP No. EITF 03-6-1 </div></td> <td> </td>
<td nowrap="nowrap" align="left"> </td> <td align="right">(0.04</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(0.01</td>
<td nowrap="nowrap">)</td> </tr> <tr style="font-size:
1px"> <td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">As
retrospectively adjusted </div></td> <td> </td>
<td align="left">$</td> <td align="right">3.67</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">3.65</td> <td> </td> </tr>
<tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> </tr>
<!-- End Table Body --> </table> </div> </div> </body>
</html>
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XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"
--> <html> <head></head> <body> <!-- Begin Block
Tagged Note 11 - us-gaap:CommitmentsAndContingenciesDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif"> <div align="left"
style="font-size: 10pt; margin-top: 12pt"><b>11. Legal Matters and
Contingencies</b> </div> <div align="left" style="font-size:
10pt; margin-top: 6pt"><b>Asbestos-Related Claims</b> </div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     We
are a defendant in a number of pending lawsuits (which include, in many cases,
multiple claimants) that seek to recover damages for personal injury allegedly
caused by exposure to asbestos-containing products manufactured and/or distributed
by us in the past. While the overall number of asbestos-related claims has
generally declined in recent years, there can be no assurance that this trend
will continue, or that the average cost per claim will not increase. Asbestos-containing
materials incorporated into any such products were primarily encapsulated
and used as components of process equipment, and we do not believe that any
significant emission of asbestos-containing fibers occurred during the use
of this equipment. We believe that a high percentage of the claims are covered
by applicable insurance or indemnities from other companies. </div>
<!-- Folio --> <!-- /Folio --> </div> <!-- PAGEBREAK
--> <div style="font-family: 'Times New Roman',Times,serif"> <div
align="left" style="font-size: 10pt; margin-top: 12pt"><b>Shareholder
Litigation</b> </div> <div align="left" style="font-size: 10pt;
margin-top: 6pt">     In 2003,
related lawsuits were filed in federal court in the Northern District of Texas,
alleging that we violated federal securities laws. After these cases were
consolidated, the lead plaintiff amended its complaint several times. The
lead plaintiff’s last pleading was the fifth consolidated amended
complaint (the “Complaint”). The Complaint alleged that
federal securities violations occurred between February 6, 2001 and
September 27, 2002 and named as defendants our company, C. Scott
Greer, our former Chairman, President and Chief Executive Officer, Renee J.
Hornbaker, our former Vice President and Chief Financial Officer, PricewaterhouseCoopers
LLP, our independent registered public accounting firm, and Banc of America
Securities LLC and Credit Suisse First Boston LLC, which served as underwriters
for our two public stock offerings during the relevant period. The Complaint
asserted claims under Sections 10(b) and 20(a) of the Securities Exchange
Act of 1934 (the “Exchange Act”), and Rule 10b-5
thereunder, and Sections 11 and 15 of the Securities Act of 1933
(the “Securities Act”). The lead plaintiff sought unspecified
compensatory damages, forfeiture by Mr. Greer and Ms. Hornbaker
of unspecified incentive-based or equity-based compensation and profits from
any stock sales and recovery of costs. By orders dated November 13,
2007 and January 4, 2008, the District Court denied the plaintiffs’
motion for class certification and granted summary judgment in favor of the
defendants on all claims. The plaintiffs appealed both rulings to the federal
Fifth Circuit Court of Appeals (“Court of Appeals”), and
on June 19, 2009, the Court of Appeals issued an opinion vacating
the District Court’s denial of class certification, reversing in
part and vacating in part the District Court’s entry of summary
judgment, and remanding the case to the District Court for further proceedings
consistent with the Court of Appeals’ opinion. As a result of the
Court of Appeals’ opinion, the case will be returned to the District
Court for further consideration of certain issues, including whether the plaintiffs
can demonstrate that the case should be certified as a class action. We continue
to believe we have valid defenses to the claims asserted, and we will continue
to vigorously defend this case. </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">     In
2005, a shareholder derivative lawsuit was filed purportedly on our behalf
in the 193rd Judicial District of Dallas County, Texas. The lawsuit originally
named as defendants Mr. Greer, Ms. Hornbaker, and former
and current board members Hugh K. Coble, George T. Haymaker, Jr., William
C. Rusnack, Michael F. Johnston, Charles M. Rampacek, Kevin E. Sheehan, Diane
C. Harris, James O. Rollans and Christopher A. Bartlett. We were named as
a nominal defendant. Based primarily on the purported misstatements alleged
in the above-described federal securities case, the original lawsuit in this
action asserted claims against the defendants for breach of fiduciary duty,
abuse of control, gross mismanagement, waste of corporate assets and unjust
enrichment. The plaintiff alleged that these purported violations of state
law occurred between April 2000 and the date of suit. The plaintiff
sought on our behalf an unspecified amount of damages, injunctive relief and/or
the imposition of a constructive trust on defendants’ assets, disgorgement
of compensation, profits or other benefits received by the defendants from
us and recovery of attorneys’ fees and costs. We filed a motion
seeking dismissal of the case, and the court thereafter ordered the plaintiffs
to replead. On October 11, 2007, the plaintiffs filed an amended
petition adding new claims against the following additional defendants: Kathy
Giddings, our former Vice-President and Corporate Controller; Bernard G. Rethore,
our former Chairman and Chief Executive Officer; Banc of America Securities,
LLC and Credit Suisse First Boston, LLC, which served as underwriters for
our public stock offerings in November 2001 and April 2002,
and PricewaterhouseCoopers, LLP, our independent registered public accounting
firm. On April 2, 2008, the lawsuit was dismissed by the court without
prejudice at the plaintiffs’ request. </div> <div align="left"
style="font-size: 10pt; margin-top: 6pt">     On
March 14, 2006, a shareholder derivative lawsuit was filed purportedly
on our behalf in federal court in the Northern District of Texas. The lawsuit
named as defendants Mr. Greer, Ms. Hornbaker, and former
and current board members Mr. Coble, Mr. Haymaker, Mr. Lewis
M. Kling, Mr. Rusnack, Mr. Johnston, Mr. Rampacek,
Mr. Sheehan, Ms. Harris, Mr. Rollans and Mr. Bartlett.
We were named as a nominal defendant. Based primarily on certain of the purported
misstatements alleged in the above-described federal securities case, the
plaintiff asserted claims against the defendants for breaches of fiduciary
duty that purportedly occurred between 2000 and 2004. The plaintiff sought
on our behalf an unspecified amount of damages, disgorgement by Mr. Greer
and Ms. Hornbaker of salaries, bonuses, restricted stock and stock
options and recovery of attorneys’ fees and costs. Pursuant to a
motion filed by us, the federal court dismissed that case on March 14,
2007, primarily on the basis that the case was not properly filed in federal
court. On or about March 27, 2007, the same plaintiff re-filed essentially
the same lawsuit naming the same defendants in the Supreme Court of the State
of New York. We believed that this new lawsuit was improperly filed in the
Supreme Court of the State of New York and filed a motion seeking dismissal
of the case. On January 2, 2008, the court entered an order granting
our motion to dismiss all claims and allowed the plaintiffs an opportunity
to replead. A notice of entry of the dismissal order was served on the plaintiff
on January 15, 2008. To date, the plaintiff has neither filed an
amended complaint nor appealed the dismissal order. </div> <div align="left"
style="font-size: 10pt; margin-top: 12pt"><b>United Nations Oil-for-Food
Program</b> </div> <div align="left" style="font-size: 10pt;
margin-top: 6pt">     We have
entered into and disclosed previously in our SEC filings the material details
of settlements with the SEC, the Department of Justice (the “DOJ”)
and the Dutch authorities relating to products that two of our foreign subsidiaries
delivered to Iraq from 1996 through 2003 under the United Nations Oil-for-Food
Program. We believe that a confidential French investigation may still be
ongoing, and, accordingly, we cannot predict the outcome of the French investigation
at this time. We currently do not expect to incur additional case resolution
costs of a material amount in this matter; however, if the French authorities
take enforcement action against us regarding its investigation, we may be
subject to additional monetary and non-monetary penalties. </div> <div
align="left" style="font-size: 10pt; margin-top: 6pt">     In
addition to the settlements and governmental investigation referenced above,
on June 27, 2008, the Republic of Iraq filed a civil suit in federal
court in New York against 93 participants in the United Nations Oil-for-Food
Program, including Flowserve and our two foreign subsidiaries that participated
in the program. We intend to vigorously contest the suit, and we believe that
we have valid defenses to the claims asserted. However, we cannot predict
the outcome of the suit at the present time or whether the resolution of this
suit will have a material adverse financial impact on our company. </div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Export
Compliance</b> </div> <div align="left" style="font-size: 10pt;
margin-top: 6pt">     In March 2006,
we initiated a voluntary process to determine our compliance posture with
respect to U.S. export control and economic sanctions laws and regulations.
Upon initial investigation, it appeared that some product transactions and
technology transfers were not handled in full compliance with U.S. export
control laws and regulations. As a result, in conjunction with outside counsel,
we conducted a voluntary systematic process to further review, validate and
voluntarily disclose export violations discovered as part of this review process.
We completed our comprehensive disclosures to the appropriate U.S. government
regulatory authorities at the end of 2008, although these disclosures may
be refined or supplemented. Based on our review of the data collected, during
the self-disclosure period of October 1, 2002 through October 1,
2007, a number of process pumps, valves, mechanical seals and parts related
thereto were exported, in limited circumstances, without required export or
reexport licenses or without full compliance with all applicable rules and
regulations to a number of different countries throughout the world, including
certain U.S. sanctioned countries. The foregoing information is subject to
revision as we further review this submittal with applicable U.S. regulatory
authorities. </div> <div align="left" style="font-size: 10pt; margin-top:
6pt">     We have taken a
number of actions to increase the effectiveness of our global export compliance
program. This has included increasing the personnel and resources dedicated
to export compliance, providing additional export compliance tools to employees,
improving our export transaction screening processes and enhancing the content
and frequency of our export compliance training programs. </div> <div
align="left" style="font-size: 10pt; margin-top: 6pt">     Any
self-reported violations of U.S. export control laws and regulations may result
in civil or criminal penalties, including fines and/or other penalties. We
are currently unable to definitively determine the full extent or nature or
total amount of penalties to which we might be subject as a result of any
such self-reported violations of the U.S. export control laws and regulations.
However, based on our current information and analysis, which remains subject
to change pending further developments, we presently believe that this matter
will be resolved without material adverse impact on our company. </div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Other</b>
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     We
are currently involved as a potentially responsible party at three former
public waste disposal sites that may be subject to remediation under pending
government procedures. The sites are in various stages of evaluation by federal
and state environmental authorities. The projected cost of remediation at
these sites, as well as our alleged “fair share” allocation,
will remain uncertain until all studies have been completed and the parties
have either negotiated an amicable resolution or the matter has been judicially
resolved. At each site, there are many other parties who have similarly been
identified, and the identification and location of additional parties is continuing
under applicable federal or state law. Many of the other parties identified
are financially strong and solvent companies that appear able to pay their
share of the remediation costs. Based on our information about the waste disposal
practices at these sites and the environmental regulatory process in general,
we believe that it is likely that ultimate remediation liability costs for
each site will be apportioned among all liable parties, including site owners
and waste transporters, according to the volumes and/or toxicity of the wastes
shown to have been disposed of at the sites. We believe that our exposure
for existing disposal sites will not be material. </div> <div align="left"
style="font-size: 10pt; margin-top: 6pt">     We
are also a defendant in a number of other lawsuits, including product liability
claims, that are insured, subject to the applicable deductibles, arising in
the ordinary course of business, and we are also involved in ordinary routine
litigation incidental to our business, none of which, either individually
or in the aggregate, we believe to be material to our business, operations
or overall financial condition. However, litigation is inherently unpredictable,
and resolutions or dispositions of claims or lawsuits by settlement or otherwise
could have an adverse impact on our financial position, results of operations
or cash flows for the reporting period in which any such resolution or disposition
occurs. </div> <div align="left" style="font-size: 10pt; margin-top:
6pt">     Although none of
the aforementioned potential liabilities can be quantified with absolute certainty
except as otherwise indicated above, we have established reserves covering
exposures relating to contingencies, to the extent believed to be reasonably
estimable and probable based on past experience and available facts. While
additional exposures beyond these reserves could exist, they currently cannot
be estimated. We will continue to evaluate these potential contingent loss
exposures and, if they develop, recognize expense as soon as such losses become
probable and can be reasonably estimated. </div> <!-- Folio -->
<!-- /Folio --> </div> <!-- PAGEBREAK --> <div style="font-family:
'Times New Roman',Times,serif"> </div> </body> </html>
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--> <html> <head></head> <body> <!-- Begin Block
Tagged Note 12 - us-gaap:PostemploymentBenefitsDisclosureTextBlock--> <div
style="font-family: 'Times New Roman',Times,serif"> <div align="left"
style="font-size: 10pt; margin-top: 12pt"><b>12. Retirement and Postretirement
Benefits</b> </div> <div align="left" style="font-size: 10pt;
margin-top: 6pt">     Components
of the net periodic cost for retirement and postretirement benefits for the
three months ended June 30, 2009 and 2008 were as follows: </div>
<div align="center"> <table style="font-size: 10pt; text-align: left"
cellspacing="0" border="0" cellpadding="0" width="100%"> <!-- Begin
Table Head --> <tr valign="bottom"> <td width="32%"> </td>
<td width="1%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="6"><b>U.S.</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="6"><b>Non-U.S.</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="6"><b>Postretirement</b></td>
<td> </td> </tr> <tr style="font-size: 8pt"
valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px
solid #000000"><b>Defined Benefit Plans</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="6"
style="border-bottom: 1px solid #000000"><b>Defined Benefit Plans</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Medical
Benefits</b></td> <td> </td> </tr>
<tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left"
style="border-bottom: 0px solid #000000">(Amounts in millions)</td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2008</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2008</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2008</b></td>
<td> </td> </tr> <!-- End Table Head -->
<!-- Begin Table Body --> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Service
cost </div></td> <td> </td> <td align="left">$</td>
<td align="right">5.0</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">4.2</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">0.9</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">0.9</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">—</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">—</td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Interest
cost </div></td> <td> </td> <td> </td>
<td align="right">4.7</td> <td> </td> <td> </td>
<td> </td> <td align="right">4.5</td> <td> </td>
<td> </td> <td> </td> <td align="right">2.9</td>
<td> </td> <td> </td> <td> </td>
<td align="right">3.4</td> <td> </td> <td> </td>
<td> </td> <td align="right">0.5</td> <td> </td>
<td> </td> <td> </td> <td align="right">1.1</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Expected
return on plan assets </div></td> <td> </td>
<td nowrap="nowrap" align="left"> </td> <td align="right">(5.4</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(5.4</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(1.0</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(1.5</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Amortization of unrecognized
net loss (gain) </div></td> <td> </td> <td> </td>
<td align="right">1.6</td> <td> </td> <td> </td>
<td> </td> <td align="right">1.1</td> <td> </td>
<td> </td> <td> </td> <td align="right">0.6</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(0.1</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(0.9</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">0.1</td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:15px; text-indent:-15px">Amortization of prior service
benefit </div></td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(0.3</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(0.4</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">0.2</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(0.4</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(0.7</td>
<td nowrap="nowrap">)</td> </tr> <tr style="font-size:
1px"> <td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:30px; text-indent:-15px">Net periodic cost (gain)
recognized </div></td> <td> </td> <td
align="left">$</td> <td align="right">5.6</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">4.0</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">3.4</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">2.9</td> <td> </td> <td> </td>
<td nowrap="nowrap" align="left">$</td> <td align="right">(0.8</td>
<td nowrap="nowrap">)</td> <td> </td> <td
align="left">$</td> <td align="right">0.5</td> <td> </td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> </tr>
<!-- End Table Body --> </table> </div> <div align="left"
style="font-size: 10pt; margin-top: 6pt">     Components
of the net periodic cost for retirement and postretirement benefits for the
six months ended June 30, 2009 and 2008 were as follows: </div>
<div align="center"> <table style="font-size: 10pt; text-align: left"
cellspacing="0" border="0" cellpadding="0" width="100%"> <!-- Begin
Table Head --> <tr valign="bottom"> <td width="28%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="6"><b>U.S.</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="6"><b>Non-U.S.</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="6"><b>Postretirement</b></td>
<td> </td> </tr> <tr style="font-size: 8pt"
valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px
solid #000000"><b>Defined Benefit Plans</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="6"
style="border-bottom: 1px solid #000000"><b>Defined Benefit Plans</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Medical
Benefits</b></td> <td> </td> </tr>
<tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left"
style="border-bottom: 0px solid #000000">(Amounts in millions)</td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2008</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2008</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2008</b></td>
<td> </td> </tr> <!-- End Table Head -->
<!-- Begin Table Body --> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Service
cost </div></td> <td> </td> <td align="left">$</td>
<td align="right">9.2</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">8.6</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">1.9</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">1.8</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">—</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">—</td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Interest
cost </div></td> <td> </td> <td> </td>
<td align="right">9.6</td> <td> </td> <td> </td>
<td> </td> <td align="right">8.9</td> <td> </td>
<td> </td> <td> </td> <td align="right">5.8</td>
<td> </td> <td> </td> <td> </td>
<td align="right">6.9</td> <td> </td> <td> </td>
<td> </td> <td align="right">1.2</td> <td> </td>
<td> </td> <td> </td> <td align="right">2.0</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Expected
return on plan assets </div></td> <td> </td>
<td nowrap="nowrap" align="left"> </td> <td align="right">(11.1</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(10.1</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(2.1</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(2.9</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Amortization of unrecognized
net loss </div></td> <td> </td> <td> </td>
<td align="right">3.3</td> <td> </td> <td> </td>
<td> </td> <td align="right">2.2</td> <td> </td>
<td> </td> <td> </td> <td align="right">1.2</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(1.5</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td align="right">0.1</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Amortization
of prior service benefit </div></td> <td> </td>
<td nowrap="nowrap" align="left"> </td> <td align="right">(0.6</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(0.7</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">0.2</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(0.9</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(1.3</td>
<td nowrap="nowrap">)</td> </tr> <tr style="font-size:
1px"> <td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:30px; text-indent:-15px">Net periodic cost recognized
</div></td> <td> </td> <td align="left">$</td>
<td align="right">10.4</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">8.9</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">6.8</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">6.0</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="left">$</td> <td align="right">(1.2</td> <td
nowrap="nowrap">)</td> <td> </td> <td align="left">$</td>
<td align="right">0.8</td> <td> </td> </tr>
<tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> </tr>
<!-- End Table Body --> </table> </div> <div align="left"
style="font-size: 10pt; margin-top: 6pt">     See
additional discussion of our retirement and postretirement benefits in Note
13 to our consolidated financial statements included in our 2008 Annual Report.
</div> </div> </body> </html>
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XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"
--> <html> <head></head> <body> <!-- Begin Block
Tagged Note 13 - us-gaap:StockholdersEquityNoteDisclosureTextBlock--> <div
style="font-family: 'Times New Roman',Times,serif"> <div align="left"
style="font-size: 10pt; margin-top: 12pt"><b>13. Shareholders’
Equity</b> </div> <div align="left" style="font-size: 10pt;
margin-top: 6pt">     On February 23,
2009, our Board of Directors authorized an increase in our quarterly cash
dividend to $0.27 per share from $0.25 per share, effective for the first
quarter of 2009. Generally, our dividend date-of-record is in the last month
of the quarter, and the dividend is paid the following month. </div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     On
February 26, 2008 our Board of Directors authorized a program to
repurchase up to $300.0 million of our outstanding common stock over an unspecified
time period. The program commenced in the second quarter of 2008, and we repurchased
131,500 shares for $9.1 million and 281,500 shares for $16.2 million
during the three and six months ended June 30, 2009, respectively.
To date, we have repurchased a total of 2.0 million shares for $181.2 million
under this program. </div> </div> </body> </html>
<!--DOCTYPE html PUBLIC "-//W3C//DTD
XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"
--> <html> <head></head> <body> <!-- Begin Block
Tagged Note 14 - us-gaap:IncomeTaxDisclosureTextBlock--> <div style="font-family:
'Times New Roman',Times,serif"> <div align="left" style="font-size:
10pt; margin-top: 12pt"><b>14. Income Taxes</b> </div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     For
the three months ended June 30, 2009, we earned $149.2 million
before taxes and provided for income taxes of $40.6 million, resulting
in an effective tax rate of 27.2%. For the six months ended June 30,
2009, we earned $278.0 million before taxes and provided for income
taxes of $76.6 million, resulting in an effective tax rate of 27.5%. The effective
tax rate varied from the U.S. federal statutory rate for both the three and
six months ended June 30, 2009 primarily due to the net impact of
foreign operations. </div> <div align="left" style="font-size: 10pt;
margin-top: 6pt">     For
the three months ended June 30, 2008, we earned $161.8 million
before taxes and provided for income taxes of $38.2 million, resulting
in an effective tax rate of 23.6%. The effective tax rate varied from the
U.S. federal statutory rate for the three months ended June, 2008 primarily
due to the net favorable impact of foreign operations, a favorable tax ruling
in Luxembourg of $2.7 million and net changes in uncertain tax positions of
$6.3 million. For the six months ended June 30, 2008, we earned $287.6 million
before taxes and provided for income taxes of $75.3 million, resulting
in an effective tax rate of 26.2%. The effective tax rate varied from the
U.S. federal statutory rate for the six months ended June 30, 2008
primarily due to the net favorable impact of foreign operations, a favorable
tax ruling in Luxembourg of $2.7 million and net changes in uncertain
tax positions of $6.3 million. </div> <!-- Folio -->
<!-- /Folio --> </div> <!-- PAGEBREAK --> <div style="font-family:
'Times New Roman',Times,serif"> <div align="left" style="font-size:
10pt; margin-top: 6pt">     As
of June 30, 2009, the amount of unrecognized tax benefits has increased
by $5.3 million from December 31, 2008, due primarily to
interest on prior year positions and currency translation adjustments. With
limited exception, we are no longer subject to U.S. federal, state and local
income tax audits for years through 2004 or non-U.S. income tax audits for
years through 2003. We are currently under examination for various years in
Argentina, France, Germany, India, Italy, Japan, the United States and Venezuela.
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     It
is reasonably possible that within the next 12 months the effective
tax rate will be impacted by the resolution of some or all of the matters
audited by various taxing authorities. It is also reasonably possible that
we will have the statute of limitations close in various taxing jurisdictions
within the next 12 months. As such, we estimate we could record a
reduction in our tax expense of up to approximately $14.2 million.
</div> </div> </body> </html>
<!--DOCTYPE html PUBLIC "-//W3C//DTD
XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"
--> <html> <head></head> <body> <!-- Begin Block
Tagged Note 15 - us-gaap:SegmentReportingDisclosureTextBlock--> <div
style="font-family: 'Times New Roman',Times,serif"> <div align="left"
style="font-size: 10pt; margin-top: 12pt"><b>15. Segment Information</b>
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     We
are principally engaged in the worldwide design, manufacture, distribution
and service of industrial flow management equipment. We provide pumps, valves
and mechanical seals primarily for oil and gas, chemical, power generation,
water management and other industries requiring flow management products.
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     We
have the following three divisions, each of which constitutes a business segment:
</div> <div style="margin-top: 6pt"> <table width="100%" border="0"
cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="2%" style="background: transparent"> </td>
<td width="3%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td> <td>Flowserve Pump Division
(“FPD”);</td> </tr> <tr> <td style="font-size:
6pt"> </td> </tr> <tr valign="top" style="font-size:
10pt; color: #000000; background: transparent"> <td width="2%" style="background:
transparent"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td> <td>Flow Control Division
(“FCD”); and</td> </tr> <tr> <td
style="font-size: 6pt"> </td> </tr> <tr valign="top"
style="font-size: 10pt; color: #000000; background: transparent"> <td
width="2%" style="background: transparent"> </td> <td
width="3%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td> <td>Flow Solutions Division
(“FSD”).</td> </tr> </table> </div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Each
division manufactures different products and is defined by the type of products
and services provided. Each division has a President, who reports directly
to our Chief Executive Officer, and a Division Vice President —
Finance, who reports directly to our Chief Accounting Officer. For decision-making
purposes, our Chief Executive Officer and other members of senior executive
management use financial information generated and reported at the division
level. Our corporate headquarters does not constitute a separate division
or business segment. </div> <div align="left" style="font-size: 10pt;
margin-top: 6pt">     We evaluate
segment performance and allocate resources based on each segment’s
operating income. Amounts classified as “All Other” include
corporate headquarters costs and other minor entities that do not constitute
separate segments. Intersegment sales and transfers are recorded at cost plus
a profit margin, with the margin on such sales eliminated in consolidation.
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The
following is a summary of the financial information of the reportable segments
reconciled to the amounts reported in the condensed consolidated financial
statements. </div> <div align="left" style="font-size: 10pt; margin-top:
12pt"><b>Three Months Ended June 30, 2009</b> </div>
<div align="center"> <table style="font-size: 10pt; text-align: left"
cellspacing="0" border="0" cellpadding="0" width="100%"> <!-- Begin
Table Head --> <tr valign="bottom"> <td width="76%"> </td>
<td width="5%"> </td> <td width="3%"> </td>
<td width="1%"> </td> <td width="3%"> </td>
<td width="5%"> </td> <td width="3%"> </td>
<td width="1%"> </td> <td width="3%"> </td>
<td width="5%"> </td> <td width="3%"> </td>
<td width="1%"> </td> <td width="3%"> </td>
<td width="5%"> </td> <td width="3%"> </td>
<td width="1%"> </td> <td width="3%"> </td>
<td width="5%"> </td> <td width="3%"> </td>
<td width="1%"> </td> <td width="3%"> </td>
<td width="5%"> </td> <td width="3%"> </td>
<td width="1%"> </td> <td width="3%"> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Subtotal
—</b></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="3"> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Flowserve</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Flow</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Flow</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Reportable</b></td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="3"><b>Consolidated</b></td> </tr>
<tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left"
style="border-bottom: 0px solid #000000">(Amounts in thousands)</td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"
style="border-bottom: 1px solid #000000"><b>Pump</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"
style="border-bottom: 1px solid #000000"><b>Control</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"
style="border-bottom: 1px solid #000000"><b>Solutions</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"
style="border-bottom: 1px solid #000000"><b>Segments</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"
style="border-bottom: 1px solid #000000"><b>All Other</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"
style="border-bottom: 1px solid #000000"><b>Total</b></td>
</tr> <!-- End Table Head --> <!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:15px; text-indent:-15px">Sales to external customers
</div></td> <td> </td> <td align="right">$</td>
<td align="right">659,278</td> <td> </td>
<td> </td> <td align="right">$</td> <td
align="right">300,904</td> <td> </td> <td> </td>
<td align="right">$</td> <td align="right">129,387</td>
<td> </td> <td> </td> <td align="right">$</td>
<td align="right">1,089,569</td> <td> </td>
<td> </td> <td align="right">$</td> <td
align="right">830</td> <td> </td> <td> </td>
<td align="right">$</td> <td align="right">1,090,399</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Intersegment sales
</div></td> <td> </td> <td> </td>
<td align="right">569</td> <td> </td> <td> </td>
<td> </td> <td align="right">1,584</td> <td> </td>
<td> </td> <td> </td> <td align="right">15,334</td>
<td> </td> <td> </td> <td> </td>
<td align="right">17,487</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="right"> </td>
<td align="right">(17,487</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Segment
operating income </div></td> <td> </td> <td> </td>
<td align="right">113,756</td> <td> </td>
<td> </td> <td> </td> <td align="right">46,777</td>
<td> </td> <td> </td> <td> </td>
<td align="right">28,519</td> <td> </td>
<td> </td> <td> </td> <td align="right">189,052</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="right"> </td> <td align="right">(30,299</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">158,753</td> <td> </td>
</tr> <!-- End Table Body --> </table> </div> <div
align="left" style="font-size: 10pt; margin-top: 12pt"><b>Three Months
Ended June 30, 2008</b> </div> <div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0"
cellpadding="0" width="100%"> <!-- Begin Table Head --> <tr valign="bottom">
<td width="76%"> </td> <td width="5%"> </td>
<td width="3%"> </td> <td width="1%"> </td>
<td width="3%"> </td> <td width="5%"> </td>
<td width="3%"> </td> <td width="1%"> </td>
<td width="3%"> </td> <td width="5%"> </td>
<td width="3%"> </td> <td width="1%"> </td>
<td width="3%"> </td> <td width="5%"> </td>
<td width="3%"> </td> <td width="1%"> </td>
<td width="3%"> </td> <td width="5%"> </td>
<td width="3%"> </td> <td width="1%"> </td>
<td width="3%"> </td> <td width="5%"> </td>
<td width="3%"> </td> <td width="1%"> </td>
<td width="3%"> </td> </tr> <tr style="font-size:
8pt" valign="bottom"> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Subtotal —</b></td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="3"> </td> </tr> <tr style="font-size:
8pt" valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Flowserve</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Flow</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Flow</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Reportable</b></td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="3"><b>Consolidated</b></td> </tr>
<tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left"
style="border-bottom: 0px solid #000000">(Amounts in thousands)</td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"
style="border-bottom: 1px solid #000000"><b>Pump</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"
style="border-bottom: 1px solid #000000"><b>Control</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"
style="border-bottom: 1px solid #000000"><b>Solutions</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"
style="border-bottom: 1px solid #000000"><b>Segments</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"
style="border-bottom: 1px solid #000000"><b>All Other</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"
style="border-bottom: 1px solid #000000"><b>Total</b></td>
</tr> <!-- End Table Head --> <!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:15px; text-indent:-15px">Sales to external customers
</div></td> <td> </td> <td align="right">$</td>
<td align="right">632,634</td> <td> </td>
<td> </td> <td align="right">$</td> <td
align="right">368,593</td> <td> </td> <td> </td>
<td align="right">$</td> <td align="right">155,115</td>
<td> </td> <td> </td> <td align="right">$</td>
<td align="right">1,156,342</td> <td> </td>
<td> </td> <td align="right">$</td> <td
align="right">1,263</td> <td> </td> <td> </td>
<td align="right">$</td> <td align="right">1,157,605</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Intersegment sales
</div></td> <td> </td> <td> </td>
<td align="right">590</td> <td> </td> <td> </td>
<td> </td> <td align="right">1,635</td> <td> </td>
<td> </td> <td> </td> <td align="right">18,915</td>
<td> </td> <td> </td> <td> </td>
<td align="right">21,140</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="right"> </td>
<td align="right">(21,140</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Segment
operating income </div></td> <td> </td> <td> </td>
<td align="right">103,683</td> <td> </td>
<td> </td> <td> </td> <td align="right">62,878</td>
<td> </td> <td> </td> <td> </td>
<td align="right">37,906</td> <td> </td>
<td> </td> <td> </td> <td align="right">204,467</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="right"> </td> <td align="right">(32,137</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">172,330</td> <td> </td>
</tr> <!-- End Table Body --> </table> </div> <!--
Folio --> <!-- /Folio --> </div> <!-- PAGEBREAK --> <div
style="font-family: 'Times New Roman',Times,serif"> <div align="left"
style="font-size: 10pt; margin-top: 12pt"><b>Six Months Ended June 30,
2009</b> </div> <div align="center"> <table style="font-size:
10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --> <tr valign="bottom"> <td width="76%"> </td>
<td width="5%"> </td> <td width="3%"> </td>
<td width="1%"> </td> <td width="3%"> </td>
<td width="5%"> </td> <td width="3%"> </td>
<td width="1%"> </td> <td width="3%"> </td>
<td width="5%"> </td> <td width="3%"> </td>
<td width="1%"> </td> <td width="3%"> </td>
<td width="5%"> </td> <td width="3%"> </td>
<td width="1%"> </td> <td width="3%"> </td>
<td width="5%"> </td> <td width="3%"> </td>
<td width="1%"> </td> <td width="3%"> </td>
<td width="5%"> </td> <td width="3%"> </td>
<td width="1%"> </td> <td width="3%"> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Subtotal
—</b></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="3"> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Flowserve</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Flow</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Flow</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Reportable</b></td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="3"><b>Consolidated</b></td> </tr>
<tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left"
style="border-bottom: 0px solid #000000">(Amounts in thousands)</td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"
style="border-bottom: 1px solid #000000"><b>Pump</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"
style="border-bottom: 1px solid #000000"><b>Control</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"
style="border-bottom: 1px solid #000000"><b>Solutions</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"
style="border-bottom: 1px solid #000000"><b>Segments</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"
style="border-bottom: 1px solid #000000"><b>All Other</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"
style="border-bottom: 1px solid #000000"><b>Total</b></td>
</tr> <!-- End Table Head --> <!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:15px; text-indent:-15px">Sales to external customers
</div></td> <td> </td> <td align="right">$</td>
<td align="right">1,258,161</td> <td> </td>
<td> </td> <td align="right">$</td> <td
align="right">596,912</td> <td> </td> <td> </td>
<td align="right">$</td> <td align="right">257,799</td>
<td> </td> <td> </td> <td align="right">$</td>
<td align="right">2,112,872</td> <td> </td>
<td> </td> <td align="right">$</td> <td
align="right">2,253</td> <td> </td> <td> </td>
<td align="right">$</td> <td align="right">2,115,125</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Intersegment sales
</div></td> <td> </td> <td> </td>
<td align="right">1,287</td> <td> </td> <td> </td>
<td> </td> <td align="right">2,730</td> <td> </td>
<td> </td> <td> </td> <td align="right">30,648</td>
<td> </td> <td> </td> <td> </td>
<td align="right">34,665</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="right"> </td>
<td align="right">(34,665</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Segment
operating income </div></td> <td> </td> <td> </td>
<td align="right">217,333</td> <td> </td>
<td> </td> <td> </td> <td align="right">94,360</td>
<td> </td> <td> </td> <td> </td>
<td align="right">49,219</td> <td> </td>
<td> </td> <td> </td> <td align="right">360,912</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="right"> </td> <td align="right">(55,022</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">305,890</td> <td> </td>
</tr> <!-- End Table Body --> </table> </div> <div
align="left" style="font-size: 10pt; margin-top: 12pt"><b>Six Months
Ended June 30, 2008</b> </div> <div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0"
cellpadding="0" width="100%"> <!-- Begin Table Head --> <tr valign="bottom">
<td width="76%"> </td> <td width="5%"> </td>
<td width="3%"> </td> <td width="1%"> </td>
<td width="3%"> </td> <td width="5%"> </td>
<td width="3%"> </td> <td width="1%"> </td>
<td width="3%"> </td> <td width="5%"> </td>
<td width="3%"> </td> <td width="1%"> </td>
<td width="3%"> </td> <td width="5%"> </td>
<td width="3%"> </td> <td width="1%"> </td>
<td width="3%"> </td> <td width="5%"> </td>
<td width="3%"> </td> <td width="1%"> </td>
<td width="3%"> </td> <td width="5%"> </td>
<td width="3%"> </td> <td width="1%"> </td>
<td width="3%"> </td> </tr> <tr style="font-size:
8pt" valign="bottom"> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Subtotal —</b></td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="3"> </td> </tr> <tr style="font-size:
8pt" valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Flowserve</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Flow</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Flow</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Reportable</b></td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="3"><b>Consolidated</b></td> </tr>
<tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left"
style="border-bottom: 0px solid #000000">(Amounts in thousands)</td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"
style="border-bottom: 1px solid #000000"><b>Pump</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"
style="border-bottom: 1px solid #000000"><b>Control</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"
style="border-bottom: 1px solid #000000"><b>Solutions</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"
style="border-bottom: 1px solid #000000"><b>Segments</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"
style="border-bottom: 1px solid #000000"><b>All Other</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"
style="border-bottom: 1px solid #000000"><b>Total</b></td>
</tr> <!-- End Table Head --> <!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:15px; text-indent:-15px">Sales to external customers
</div></td> <td> </td> <td align="right">$</td>
<td align="right">1,193,169</td> <td> </td>
<td> </td> <td align="right">$</td> <td
align="right">667,394</td> <td> </td> <td> </td>
<td align="right">$</td> <td align="right">287,719</td>
<td> </td> <td> </td> <td align="right">$</td>
<td align="right">2,148,282</td> <td> </td>
<td> </td> <td align="right">$</td> <td
align="right">2,642</td> <td> </td> <td> </td>
<td align="right">$</td> <td align="right">2,150,924</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Intersegment sales
</div></td> <td> </td> <td> </td>
<td align="right">1,165</td> <td> </td> <td> </td>
<td> </td> <td align="right">3,152</td> <td> </td>
<td> </td> <td> </td> <td align="right">36,905</td>
<td> </td> <td> </td> <td> </td>
<td align="right">41,222</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="right"> </td>
<td align="right">(41,222</td> <td nowrap="nowrap">)</td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Segment
operating income </div></td> <td> </td> <td> </td>
<td align="right">182,168</td> <td> </td>
<td> </td> <td> </td> <td align="right">106,007</td>
<td> </td> <td> </td> <td> </td>
<td align="right">64,829</td> <td> </td>
<td> </td> <td> </td> <td align="right">353,004</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="right"> </td> <td align="right">(61,359</td>
<td nowrap="nowrap">)</td> <td> </td> <td> </td>
<td align="right">291,645</td> <td> </td>
</tr> <!-- End Table Body --> </table> </div> </div>
</body> </html>
n/a false --12-31
2009-06-30
10-Q
0000030625
55926750
Yes
Large Accelerated
Filer 6345000000
FLOWSERVE
CORPORATION No Yes
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