SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION

Our Senior Notes are fully and unconditionally and jointly and severally guaranteed by certain of our 100% owned domestic subsidiaries. The following condensed consolidating financial statements present the financial position, results of operations and cash flows of Flowserve Corporation (referred to as “Parent” for the purpose of this note only) on a Parent−only (Issuer) basis, the combined guarantor subsidiaries on a guarantor−only basis, the combined non-guarantor subsidiaries on a non-guarantor-only basis and elimination adjustments necessary to arrive at the information for the Parent, guarantor subsidiaries and non-guarantor subsidiaries on a condensed consolidated basis. Investments in subsidiaries have been accounted for using the equity method for this presentation.

CONDENSED CONSOLIDATING BALANCE SHEETS



	December 31, 2014
	Parent (Issuer)		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated Total
(Amounts in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	51,200	$	—	$	399,150	$	—		$	450,350
Accounts receivable, net	—		258,386		824,061		—			1,082,447
Intercompany receivables	—		138,524		50,086		(188,610		)	—
Inventories, net	—		353,894		641,670		—			995,564
Other current assets	1,112		150,934		113,756		—			265,802
Total current assets	52,312		901,738		2,028,723		(188,610		)	2,794,163
Property, plant and equipment, net	—		240,204		453,677		—			693,881
Goodwill	—		709,239		358,016		—			1,067,255
Intercompany receivables	392,500		134,704		42,970		(570,174		)	—
Investment in consolidated subsidiaries	2,622,193		1,608,997		—		(4,231,190		)	—
Other assets, net	12,498		186,013		214,210		—			412,721
Total assets	$	3,079,503	$	3,780,895	$	3,097,596	$	(4,989,974	)	$	4,968,020

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	—	$	167,624	$	444,091	$	—		$	611,715
Intercompany payables	126		49,960		138,524		(188,610		)	—
Accrued liabilities	13,026		291,193		489,853		—			794,072
Debt due within one year	45,000		—		8,131		—			53,131
Deferred taxes	—		—		12,957		—			12,957
Total current liabilities	58,152		508,777		1,093,556		(188,610		)	1,471,875
Long-term debt due after one year	1,082,191		—		19,600		—			1,101,791
Intercompany payables	1,144		434,326		134,704		(570,174		)	—
Retirement obligations and other liabilities	6,454		215,599		230,458		—			452,511
Total liabilities	1,147,941		1,158,702		1,478,318		(758,784		)	3,026,177
Total Flowserve Corporation shareholders’ equity	1,931,562		2,622,193		1,608,997		(4,231,190		)	1,931,562
Noncontrolling interests	—		—		10,281		—			10,281
Total equity	1,931,562		2,622,193		1,619,278		(4,231,190		)	1,941,843
Total liabilities and equity	$	3,079,503	$	3,780,895	$	3,097,596	$	(4,989,974	)	$	4,968,020



	December 31, 2013
	Parent (Issuer)		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated Total
(Amounts in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	29,086	$	—	$	334,718	$	—		$	363,804
Accounts receivable, net	—		263,594		891,733		—			1,155,327
Intercompany receivables	—		155,422		74,089		(229,511		)	—
Inventories, net	—		371,172		689,498		—			1,060,670
Other current assets, net	1,879		144,551		121,151		—			267,581
Total current assets	30,965		934,739		2,111,189		(229,511		)	2,847,382
Property, plant and equipment, net	—		220,072		496,217		—			716,289
Goodwill	—		715,722		391,829		—			1,107,551
Intercompany receivables	432,500		9,520		186,789		(628,809		)	—
Investment in consolidated subsidiaries	2,579,701		1,850,998		—		(4,430,699		)	—
Other assets, net	15,486		211,755		138,270		—			365,511
Total assets	$	3,058,652	$	3,942,806	$	3,324,294	$	(5,289,019	)	$	5,036,733

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	—	$	163,254	$	448,838	$	—		$	612,092
Intercompany payables	81		74,008		155,422		(229,511		)	—
Accrued liabilities	12,874		293,012		555,124		—			861,010
Debt due within one year	40,000		5		32,673		—			72,678
Deferred taxes	—		—		12,319		—			12,319
Total current liabilities	52,955		530,279		1,204,376		(229,511		)	1,558,099
Long-term debt due after one year	1,126,904		—		715		—			1,127,619
Intercompany payables	1,144		618,145		9,520		(628,809		)	—
Retirement obligations and other liabilities	7,270		214,681		251,943		—			473,894
Total liabilities	1,188,273		1,363,105		1,466,554		(858,320		)	3,159,612
Total Flowserve Corporation shareholders’ equity	1,870,379		2,579,701		1,850,998		(4,430,699		)	1,870,379
Noncontrolling interests	—		—		6,742		—			6,742
Total equity	1,870,379		2,579,701		1,857,740		(4,430,699		)	1,877,121
Total liabilities and equity	$	3,058,652	$	3,942,806	$	3,324,294	$	(5,289,019	)	$	5,036,733

CONDENSED CONSOLIDATING STATEMENTS OF INCOME AND COMPREHENSIVE INCOME



	Year Ended December 31, 2014
	Parent (Issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated Total
(Amounts in thousands)
Sales	$	—		$	1,944,086		$	3,284,577		$	(350,778	)	$	4,877,885
Cost of sales	—			(1,261,913		)	(2,252,133		)	350,778			(3,163,268		)
Gross profit	—			682,173			1,032,444			—			1,714,617
Selling, general and administrative expense	(2,725		)	(395,650		)	(538,525		)	—			(936,900		)
Net earnings from affiliates	—			1,079			11,036			—			12,115
Net earnings from consolidated subsidiaries, net of tax	542,391			372,848			—			(915,239		)	—
Operating income	539,666			660,450			504,955			(915,239		)	789,832
Interest expense, net	(35,731		)	(10,824		)	(12,087		)	—			(58,642		)
Other income (expense), net	45			(11,697		)	13,652			—			2,000
Earnings before income taxes	503,980			637,929			506,520			(915,239		)	733,190
Provision for income taxes	14,844			(95,538		)	(127,611		)	—			(208,305		)
Net earnings, including noncontrolling interests	518,824			542,391			378,909			(915,239		)	524,885
Less: Net earnings attributable to noncontrolling interests	—			—			(6,061		)	—			(6,061		)
Net earnings attributable to Flowserve Corporation	$	518,824		$	542,391		$	372,848		$	(915,239	)	$	518,824
Comprehensive income attributable to Flowserve Corporation	$	359,895		$	383,198		$	184,648		$	(567,846	)	$	359,895



	Year Ended December 31, 2013
	Parent (Issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated Total
(Amounts in thousands)
Sales	$	—		$	1,952,235		$	3,388,258		$	(385,874	)	$	4,954,619
Cost of sales	—			(1,281,035		)	(2,371,363		)	385,874			(3,266,524		)
Gross profit	—			671,200			1,016,895			—			1,688,095
Selling, general and administrative expense	(3,079		)	(400,609		)	(563,141		)	—			(966,829		)
Net earnings from affiliates	—			1,175			37,842			—			39,017
Net earnings from consolidated subsidiaries, net of tax	505,764			345,465			—			(851,229		)	—
Operating income	502,685			617,231			491,596			(851,229		)	760,283
Interest expense, net	(29,729		)	(11,685		)	(11,568		)	—			(52,982		)
Other expense, net	—			(767		)	(13,513		)	—			(14,280		)
Earnings before income taxes	472,956			604,779			466,515			(851,229		)	693,021
Provision for income taxes	12,574			(99,015		)	(118,260		)	—			(204,701		)
Net earnings, including noncontrolling interests	485,530			505,764			348,255			(851,229		)	488,320
Less: Net earnings attributable to noncontrolling interests	—			—			(2,790		)	—			(2,790		)
Net earnings attributable to Flowserve Corporation	$	485,530		$	505,764		$	345,465		$	(851,229	)	$	485,530
Comprehensive income attributable to Flowserve Corporation	$	488,363		$	508,929		$	316,484		$	(825,413	)	$	488,363



	Year Ended December 31, 2012
	Parent (Issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated Total
(Amounts in thousands)
Sales	$	—		$	1,833,613		$	3,272,519		$	(354,793	)	$	4,751,339
Cost of sales	—			(1,190,206		)	(2,334,975		)	354,793			(3,170,388		)
Gross profit	—			643,407			937,544			—			1,580,951
Selling, general and administrative expense	(3,571		)	(390,713		)	(527,841		)	—			(922,125		)
Net earnings from affiliates	—			3,855			13,097			—			16,952
Net earnings from consolidated subsidiaries, net of tax	456,740			309,223			—			(765,963		)	—
Operating income	453,169			565,772			422,800			(765,963		)	675,778
Interest expense, net	(9,881		)	(19,347		)	(13,338		)	—			(42,566		)
Other expense income, net	—			(683		)	(20,964		)	—			(21,647		)
Earnings before income taxes	443,288			545,742			388,498			(765,963		)	611,565
Provision for income taxes	5,051			(89,002		)	(76,815		)	—			(160,766		)
Net earnings, including noncontrolling interests	448,339			456,740			311,683			(765,963		)	450,799
Less: Net earnings attributable to noncontrolling interests	—			—			(2,460		)	—			(2,460		)
Net earnings attributable to Flowserve Corporation	$	448,339		$	456,740		$	309,223		$	(765,963	)	$	448,339
Comprehensive income attributable to Flowserve Corporation	$	440,127		$	446,536		$	292,167		$	(738,703	)	$	440,127

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS



	Year Ended December 31, 2014
	Parent (Issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated Total
(Amounts in thousands)
Net cash flows provided by operating activities	$	353,736		$	611,190		$	524,113		$	(918,077	)	$	570,962
Cash flows — Investing activities:
Capital expenditures	—			(57,125		)	(75,494		)	—			(132,619		)
Proceeds from sale of business, net of cash divested	—			—			46,805			—			46,805
Intercompany short-term financing, net	—			—			1,429			(1,429		)	—
Intercompany loan proceeds	40,000			126			143,820			(183,946		)	—
Intercompany loan payments	—			(11,172		)	—			11,172			—
Intercompany return of capital	—			1,965			—			(1,965		)	—
Proceeds from disposal of assets	—			162			1,569			—			1,731
Net cash flows provided (used) by investing activities	40,000			(66,044		)	118,129			(176,168		)	(84,083		)
Cash flows — Financing activities:
Excess tax benefits from stock-based payment arrangements	—			6,579			2,008			—			8,587
Payments on long-term debt	(40,000		)	—			—			—			(40,000		)
Proceeds under other financing arrangements	—			—			18,483			—			18,483
Payments under other financing arrangements	—			(5		)	(20,497		)	—			(20,502		)
Repurchases of common shares	(246,504		)	—			—			—			(246,504		)
Payments of dividends	(85,118		)	—			—			—			(85,118		)
Intercompany short-term financing, net	—			(1,429		)	—			1,429			—
Intercompany loan proceeds	—			—			11,172			(11,172		)	—
Intercompany loan payments	—			(183,819		)	(126		)	183,945			—
Intercompany distributions of capital	—			—			(1,965		)	1,965			—
Intercompany dividends	—			(366,472		)	(551,606		)	918,078			—
All other financing, net	—			—			(2,604		)	—			(2,604		)
Net cash flows used by financing activities	(371,622		)	(545,146		)	(545,135		)	1,094,245			(367,658		)
Effect of exchange rate changes on cash	—			—			(32,675		)	—			(32,675		)
Net change in cash and cash equivalents	22,114			—			64,432			—			86,546
Cash and cash equivalents at beginning of year	29,086			—			334,718			—			363,804
Cash and cash equivalents at end of year	$	51,200		$	—		$	399,150		$	—		$	450,350



	Year Ended December 31, 2013
	Parent (Issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated Total
(Amounts in thousands)
Net cash flows provided by operating activities	$	261,741		$	279,594		$	214,066		$	(267,642	)	$	487,759
Cash flows — Investing activities:
Capital expenditures	—			(44,380		)	(94,710		)	—			(139,090		)
Payments for acquisitions, net of cash acquired	—			(66,658		)	(10,143		)	—			(76,801		)
Intercompany loan proceeds	30,000			911			72,037			(102,948		)	—
Intercompany loan payments	—			(68		)	(173,510		)	173,578			—
Proceeds from disposal of assets	—			110			1,543			—			1,653
Proceeds from equity investment in affiliates	—			—			46,240			—			46,240
Net cash flows provided (used) by investing activities	30,000			(110,085		)	(158,543		)	70,630			(167,998		)
Cash flows — Financing activities:
Excess tax benefits from stock-based payment arrangements	—			8,266			1,845			—			10,111
Payments on long-term debt	(25,000		)	—			—			—			(25,000		)
Proceeds from issuance of senior notes	298,596			—			—			—			298,596
Proceeds under other financing arrangements	—			—			10,674			—			10,674
Payments under other financing arrangements	—			(20		)	(11,055		)	—			(11,075		)
Repurchases of common shares	(458,310		)	—			—			—			(458,310		)
Payments of dividends	(76,897		)	—			—			—			(76,897		)
Payment of deferred loan costs	(3,744		)	—			—			—			(3,744		)
Intercompany loan proceeds	—			173,510			68			(173,578		)	—
Intercompany loan payments	—			(102,037		)	(911		)	102,948			—
Intercompany dividends	—			(249,228		)	(18,414		)	267,642			—
All other financing, net	91			—			(270		)	—			(179		)
Net cash flows used by financing activities	(265,264		)	(169,509		)	(18,063		)	197,012			(255,824		)
Effect of exchange rate changes on cash	—			—			(4,385		)	—			(4,385		)
Net change in cash and cash equivalents	26,477			—			33,075			—			59,552
Cash and cash equivalents at beginning of year	2,609			—			301,643			—			304,252
Cash and cash equivalents at end of year	$	29,086		$	—		$	334,718		$	—		$	363,804



	Year Ended December 31, 2012
	Parent (Issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated Total
(Amounts in thousands)
Net cash flows provided by operating activities	$	277,076		$	193,819		$	298,616		$	(252,381	)	$	517,130
Cash flows — Investing activities:
Capital expenditures	—			(43,600		)	(91,939		)	—			(135,539		)
Payments for acquisitions, net of cash acquired	—			—			(3,996		)	—			(3,996		)
Intercompany loan proceeds	12,499			32,705			54,746			(99,950		)	—
Intercompany loan payments	—			(28,372		)	(138,918		)	167,290			—
Intercompany capital contribution	—			(483		)	—			483			—
Proceeds from disposal of assets	—			2,268			14,665			—			16,933
Affiliate investment activity, net	—			—			(3,825		)	—			(3,825		)
Net cash flows provided (used) by investing activities	12,499			(37,482		)	(169,267		)	67,823			(126,427		)
Cash flows — Financing activities:
Excess tax benefits from stock-based payment arrangements	—			8,985			2,222			—			11,207
Payments on long-term debt	(480,000		)	—			—			—			(480,000		)
Proceeds from issuance of senior notes	498,075			—			—			—			498,075
Proceeds from issuance of long-term debt	400,000			—			—			—			400,000
Proceeds under other financing arrangements	—			—			15,886			—			15,886
Payments under other financing arrangements	9			(20		)	(10,068		)	—			(10,079		)
Repurchase of common shares	(771,942		)	—			—			—			(771,942		)
Payment of dividends	(73,765		)	—			—			—			(73,765		)
Payment of deferred loan costs	(9,901		)	—			—			—			(9,901		)
Intercompany loan proceeds	—			138,918			28,372			(167,290		)	—
Intercompany loan payments	—			(67,245		)	(32,705		)	99,950			—
Intercompany capital contribution	—			—			483			(483		)	—
Intercompany dividends	—			(236,975		)	(15,406		)	252,381			—
All other financing, net	250			—			(8,653		)	—			(8,403		)
Net cash flows used by financing activities	(437,274		)	(156,337		)	(19,869		)	184,558			(428,922		)
Effect of exchange rate changes on cash	—			—			5,115			—			5,115
Net change in cash and cash equivalents	(147,699		)	—			114,595			—			(33,104		)
Cash and cash equivalents at beginning of year	150,308			—			187,048			—			337,356
Cash and cash equivalents at end of year	$	2,609		$	—		$	301,643		$	—		$	304,252