FLOWSERVE CORPORATION

CONDENSED CONSOLIDATING STATEMENTS OF INCOME



	Three Months Ended March 31, 2013
	Parent (Issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated Total
(Amounts in thousands)
Sales	$	—		$	447,577		$	731,386		$	(82,367	)	$	1,096,596
Cost of sales	—			(288,964		)	(516,691		)	82,367			(723,288		)
Gross profit	—			158,613			214,695			—			373,308
Selling, general and administrative expense	(338		)	(92,788		)	(141,383		)	—			(234,509		)
Net earnings from affiliates	—			225			31,455			—			31,680
Net earnings from consolidated subsidiaries, net of tax	102,555			60,274			—			(162,829		)	—
Operating income	102,217			126,324			104,767			(162,829		)	170,479
Interest expense, net	(6,500		)	(2,780		)	(2,538		)	—			(11,818		)
Other expense, net	—			(1,673		)	(9,355		)	—			(11,028		)
Earnings before income taxes	95,717			121,871			92,874			(162,829		)	147,633
Provision for income taxes	2,072			(19,316		)	(31,489		)	—			(48,733		)
Net earnings, including noncontrolling interests	97,789			102,555			61,385			(162,829		)	98,900
Less: Net earnings attributable to noncontrolling interests	—			—			(1,111		)	—			(1,111		)
Net earnings attributable to Flowserve Corporation	$	97,789		$	102,555		$	60,274		$	(162,829	)	$	97,789
Comprehensive income attributable to Flowserve Corporation	$	66,868		$	71,077		$	26,916		$	(97,993	)	$	66,868



	Three Months Ended March 31, 2012
	Parent (Issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated Total
(Amounts in thousands)
Sales	$	—		$	435,746		$	720,021		$	(80,787	)	$	1,074,980
Cost of sales	—			(286,150		)	(510,434		)	80,787			(715,797		)
Gross profit	—			149,596			209,587			—			359,183
Selling, general and administrative expense	(1,120		)	(100,229		)	(120,540		)	—			(221,889		)
Net earnings from affiliates	—			1,320			3,909			—			5,229
Net earnings from consolidated subsidiaries, net of tax	94,350			59,610			—			(153,960		)	—
Operating income	93,230			110,297			92,956			(153,960		)	142,523
Interest expense, net	(601		)	(4,458		)	(3,468		)	—			(8,527		)
Other expense, net	—			664			(5,603		)	—			(4,939		)
Earnings before income taxes	92,629			106,503			83,885			(153,960		)	129,057
Provision for income taxes	496			(12,153		)	(23,858		)	—			(35,515		)
Net earnings, including noncontrolling interests	93,125			94,350			60,027			(153,960		)	93,542
Less: Net earnings attributable to noncontrolling interests	—			—			(417		)	—			(417		)
Net earnings attributable to Flowserve Corporation	$	93,125		$	94,350		$	59,610		$	(153,960	)	$	93,125
Comprehensive income attributable to Flowserve Corporation	$	127,883		$	129,488		$	93,463		$	(222,951	)	$	127,883

FLOWSERVE CORPORATION

CONDENSED CONSOLIDATING BALANCE SHEETS



	March 31, 2013
	Parent (Issuer)		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated Total
(Amounts in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	1,144	$	—	$	168,293	$	—		$	169,437
Accounts receivable, net	—		262,381		793,940		—			1,056,321
Intercompany receivables	2,235		140,962		41,441		(184,638		)	—
Inventories, net	—		410,006		745,767		—			1,155,773
Other current assets, net	1,860		125,202		125,245		—			252,307
Total current assets	5,239		938,551		1,874,686		(184,638		)	2,633,838
Property, plant and equipment, net	—		202,295		464,127		—			666,422
Goodwill	—		671,858		370,883		—			1,042,741
Intercompany receivables	462,500		9,462		162,075		(634,037		)	—
Investment in consolidated subsidiaries	2,353,745		1,634,833		—		(3,988,578		)	—
Other assets, net	14,093		175,815		135,385		—			325,293
Total assets	$	2,835,577	$	3,632,814	$	3,007,156	$	(4,807,253	)	$	4,668,294

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	—	$	149,120	$	364,947	$	—		$	514,067
Intercompany payables	212		43,464		140,962		(184,638		)	—
Accrued liabilities	6,523		254,946		570,417		—			831,886
Debt due within one year	180,000		20		30,345		—			210,365
Deferred taxes	—		—		6,808		—			6,808
Total current liabilities	186,735		447,550		1,113,479		(184,638		)	1,563,126
Long-term debt due after one year	858,165		—		1,124		—			859,289
Intercompany payables	1,143		623,430		9,464		(634,037		)	—
Retirement obligations and other liabilities	7,207		208,089		242,823		—			458,119
Total liabilities	1,053,250		1,279,069		1,366,890		(818,675		)	2,880,534
Total Flowserve Corporation shareholders’ equity	1,782,327		2,353,745		1,634,833		(3,988,578		)	1,782,327
Noncontrolling interest	—		—		5,433		—			5,433
Total equity	1,782,327		2,353,745		1,640,266		(3,988,578		)	1,787,760
Total liabilities and equity	$	2,835,577	$	3,632,814	$	3,007,156	$	(4,807,253	)	$	4,668,294



	December 31, 2012
	Parent (Issuer)		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated Total
(Amounts in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	2,609	$	—	$	301,643	$	—		$	304,252
Accounts receivable, net	—		255,164		848,560		—			1,103,724
Intercompany receivables	—		157,447		42,836		(200,283		)	—
Inventories, net	—		382,360		704,303		—			1,086,663
Other current assets, net	1,967		123,152		120,458		—			245,577
Total current assets	4,576		918,123		2,017,800		(200,283		)	2,740,216
Property, plant and equipment, net	—		204,032		450,147		—			654,179
Goodwill	—		671,858		381,994		—			1,053,852
Intercompany receivables	462,500		10,363		85,316		(558,179		)	—
Investment in consolidated subsidiaries	2,321,597		1,604,462		—		(3,926,059		)	—
Other assets, net	14,879		175,771		172,061		—			362,711
Total assets	$	2,803,552	$	3,584,609	$	3,107,318	$	(4,684,521	)	$	4,810,958

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	—	$	158,028	$	458,872	$	—		$	616,900
Intercompany payables	35		42,801		157,447		(200,283		)	—
Accrued liabilities	11,610		314,162		580,821		—			906,593
Debt due within one year	25,000		5		34,473		—			59,478
Deferred taxes	—		—		7,654		—			7,654
Total current liabilities	36,645		514,996		1,239,267		(200,283		)	1,590,625
Long-term debt due after one year	868,124		20		972		—			869,116
Intercompany payables	1,144		546,672		10,363		(558,179		)	—
Retirement obligations and other liabilities	7,420		201,324		247,998		—			456,742
Total liabilities	913,333		1,263,012		1,498,600		(758,462		)	2,916,483
Total Flowserve Corporation shareholders’ equity	1,890,219		2,321,597		1,604,462		(3,926,059		)	1,890,219
Noncontrolling interest	—		—		4,256		—			4,256
Total equity	1,890,219		2,321,597		1,608,718		(3,926,059		)	1,894,475
Total liabilities and equity	$	2,803,552	$	3,584,609	$	3,107,318	$	(4,684,521	)	$	4,810,958

FLOWSERVE CORPORATION

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS



	Three Months Ended March 31, 2013
	Parent (Issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated Total
(Amounts in thousands)
Net cash flows provided (used) by operating activities	$	26,554		$	(42,173	)	$	(58,918	)	$	(33,533	)	$	(108,070	)
Cash flows — Investing activities:
Capital expenditures	—			(8,783		)	(25,475		)	—			(34,258		)
Payments for acquisitions, net of cash acquired	—			—			(10,143		)	—			(10,143		)
Intercompany loan proceeds	—			901			—			(901		)	—
Intercompany loan payments	—			—			(76,759		)	76,759			—
Proceeds from disposition of assets	—			25			187			—			212
Proceeds from equity investments in affiliates	—			—			46,240			—			46,240
Net cash flows (used) provided by investing activities	—			(7,857		)	(65,950		)	75,858			2,051
Cash flows — Financing activities:
Excess tax benefits from stock-based payment arrangements	—			5,038			1,780			—			6,818
Payments on long-term debt	(5,000		)	—			—			—			(5,000		)
Proceeds from short-term financing	150,000			—			—			—			150,000
Payments under other financing arrangements, net	—			(5		)	(4,008		)	—			(4,013		)
Repurchases of common shares	(155,552		)	—			—			—			(155,552		)
Payments of dividends	(17,514		)	—			—			—			(17,514		)
Intercompany loan proceeds	—			76,759			—			(76,759		)	—
Intercompany loan payments	—			—			(901		)	901			—
Intercompany dividends	—			(31,762		)	(1,771		)	33,533			—
All other financing, net	47			—			(168		)	—			(121		)
Net cash flows (used) provided by financing activities	(28,019		)	50,030			(5,068		)	(42,325		)	(25,382		)
Effect of exchange rate changes on cash	—			—			(3,414		)	—			(3,414		)
Net change in cash and cash equivalents	(1,465		)	—			(133,350		)	—			(134,815		)
Cash and cash equivalents at beginning of period	2,609			—			301,643			—			304,252
Cash and cash equivalents at end of period	$	1,144		$	—		$	168,293		$	—		$	169,437



	Three Months Ended March 31, 2012
	Parent (Issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated Total
(Amounts in thousands)
Net cash flows (used) provided by operating activities	$	(89,319	)	$	54,959		$	(68,220	)	$	(5,311	)	$	(107,891	)
Cash flows — Investing activities:
Capital expenditures	—			(8,160		)	(20,526		)	—			(28,686		)
Payments for acquisitions, net of cash acquired	—			—			(3,996		)	—			(3,996		)
Intercompany loan payments	—			(55,469		)	—			55,469			—
Proceeds from disposition of assets				18			7,770			—			7,788
Affiliate investment activity, net	—			—			(1,620		)	—			(1,620		)
Net cash flows used by investing activities	—			(63,611		)	(18,372		)	55,469			(26,514		)
Cash flows — Financing activities:
Excess tax benefits from stock-based payment arrangements	—			8,657			2,232			—			10,889
Payments on long-term debt	(6,250		)	—			—			—			(6,250		)
(Payments) borrowings under other financing arrangements, net	—			(5		)	445			—			440
Repurchases of common shares	(22,050		)	—			—			—			(22,050		)
Payments of dividends	(17,410		)	—			—			—			(17,410		)
Intercompany loan proceeds	—			—			55,469			(55,469		)	—
Intercompany dividends	—			—			(5,311		)	5,311			—
All other financing, net	27			—			(212		)	—			(185		)
Net cash flows (used) provided by financing activities	(45,683		)	8,652			52,623			(50,158		)	(34,566		)
Effect of exchange rate changes on cash	—			—			4,309						4,309
Net change in cash and cash equivalents	(135,002		)	—			(29,660		)	—			(164,662		)
Cash and cash equivalents at beginning of period	150,308			—			187,048			—			337,356
Cash and cash equivalents at end of period	$	15,306		$	—		$	157,388		$	—		$	172,694