FLOWSERVE CORPORATION

CONDENSED CONSOLIDATING STATEMENTS OF INCOME AND COMPREHENSIVE INCOME



	Three Months Ended September 30, 2013
	Parent (Issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated Total
(Amounts in thousands)
Sales	$	—		$	483,039		$	842,426		$	(96,408	)	$	1,229,057
Cost of sales	—			(311,255		)	(591,471		)	96,408			(806,318		)
Gross profit	—			171,784			250,955			—			422,739
Selling, general and administrative expense	(457		)	(114,511		)	(116,601		)	—			(231,569		)
Net earnings from affiliates	—			565			1,653			—			2,218
Net earnings from consolidated subsidiaries, net of tax	131,425			93,959			—			(225,384		)	—
Operating income	130,968			151,797			136,007			(225,384		)	193,388
Interest expense, net	(7,253		)	(3,026		)	(2,442		)	—			(12,721		)
Other (expense) income, net	—			(1,822		)	3,555			—			1,733
Earnings before income taxes	123,715			146,949			137,120			(225,384		)	182,400
Provision for income taxes	2,556			(15,524		)	(42,902		)	—			(55,870		)
Net earnings, including noncontrolling interests	126,271			131,425			94,218			(225,384		)	126,530
Less: Net earnings attributable to noncontrolling interests	—			—			(259		)	—			(259		)
Net earnings attributable to Flowserve Corporation	$	126,271		$	131,425		$	93,959		$	(225,384	)	$	126,271
Comprehensive income attributable to Flowserve Corporation	$	164,861		$	169,865		$	129,539		$	(299,404	)	$	164,861



	Three Months Ended September 30, 2012
	Parent (Issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated Total
(Amounts in thousands)
Sales	$	—		$	444,206		$	807,668		$	(85,951	)	$	1,165,923
Cost of sales	—			(290,892		)	(571,378		)	85,951			(776,319		)
Gross profit	—			153,314			236,290			—			389,604
Selling, general and administrative expense	325			(95,054		)	(133,068		)	—			(227,797		)
Net earnings from affiliates	—			1,199			2,700			—			3,899
Net earnings from consolidated subsidiaries, net of tax	109,165			60,848			—			(170,013		)	—
Operating income	109,490			120,307			105,922			(170,013		)	165,706
Interest expense, net	(4,428		)	(4,958		)	(2,550		)	—			(11,936		)
Other expense, net	—			(1,176		)	(7,991		)	—			(9,167		)
Earnings before income taxes	105,062			114,173			95,381			(170,013		)	144,603
Provision for income taxes	1,234			(5,008		)	(33,995		)	—			(37,769		)
Net earnings, including noncontrolling interests	106,296			109,165			61,386			(170,013		)	106,834
Less: Net earnings attributable to noncontrolling interests	—			—			(538		)	—			(538		)
Net earnings attributable to Flowserve Corporation	$	106,296		$	109,165		$	60,848		$	(170,013	)	$	106,296
Comprehensive income attributable to Flowserve Corporation	$	138,170		$	140,824		$	90,871		$	(231,695	)	$	138,170



	Nine Months Ended September 30, 2013
	Parent (Issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated Total
(Amounts in thousands)
Sales	$	—		$	1,423,260		$	2,415,936		$	(274,017	)	$	3,565,179
Cost of sales	—			(921,473		)	(1,700,099		)	274,017			(2,347,555		)
Gross profit	—			501,787			715,837			—			1,217,624
Selling, general and administrative expense	(2,520		)	(277,228		)	(426,530		)	—			(706,278		)
Net earnings from affiliates	—			966			35,077			—			36,043
Net earnings from consolidated subsidiaries, net of tax	360,756			219,391			—			(580,147		)	—
Operating income	358,236			444,916			324,384			(580,147		)	547,389
Interest expense, net	(20,987		)	(8,785		)	(7,613		)	—			(37,385		)
Other expense, net	—			(5,203		)	(3,476		)	—			(8,679		)
Earnings before income taxes	337,249			430,928			313,295			(580,147		)	501,325
Provision for income taxes	7,200			(70,172		)	(92,026		)	—			(154,998		)
Net earnings, including noncontrolling interests	344,449			360,756			221,269			(580,147		)	346,327
Less: Net earnings attributable to noncontrolling interests	—			—			(1,878		)	—			(1,878		)
Net earnings attributable to Flowserve Corporation	$	344,449		$	360,756		$	219,391		$	(580,147	)	$	344,449
Comprehensive income attributable to Flowserve Corporation	$	325,981		$	341,344		$	196,768		$	(538,112	)	$	325,981



	Nine Months Ended September 30, 2012
	Parent (Issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated Total
(Amounts in thousands)
Sales	$	—		$	1,337,117		$	2,343,241		$	(257,230	)	$	3,423,128
Cost of sales	—			(880,848		)	(1,666,121		)	257,230			(2,289,739		)
Gross profit	—			456,269			677,120			—			1,133,389
Selling, general and administrative expense	(2,655		)	(290,428		)	(380,495		)	—			(673,578		)
Net earnings from affiliates	—			3,154			10,060			—			13,214
Net earnings from consolidated subsidiaries, net of tax	312,681			195,451			—			(508,132		)	—
Operating income	310,026			364,446			306,685			(508,132		)	473,025
Interest expense, net	(5,776		)	(14,334		)	(9,039		)	—			(29,149		)
Other income (expense), net	—			673			(22,824		)	—			(22,151		)
Earnings before income taxes	304,250			350,785			274,822			(508,132		)	421,725
Provision for income taxes	2,487			(38,104		)	(77,247		)	—			(112,864		)
Net earnings, including noncontrolling interests	306,737			312,681			197,575			(508,132		)	308,861
Less: Net earnings attributable to noncontrolling interests	—			—			(2,124		)	—			(2,124		)
Net earnings attributable to Flowserve Corporation	$	306,737		$	312,681		$	195,451		$	(508,132	)	$	306,737
Comprehensive income attributable to Flowserve Corporation	$	317,407		$	323,427		$	202,268		$	(525,695	)	$	317,407

FLOWSERVE CORPORATION

CONDENSED CONSOLIDATING BALANCE SHEETS



	September 30, 2013
	Parent (Issuer)		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated Total
(Amounts in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	1,386	$	—	$	112,365	$	—		$	113,751
Accounts receivable, net	—		238,870		850,878		—			1,089,748
Intercompany receivables	6,705		146,233		51,796		(204,734		)	—
Inventories, net	—		405,711		778,477		—			1,184,188
Other current assets, net	1,701		123,259		114,004		—			238,964
Total current assets	9,792		914,073		1,907,520		(204,734		)	2,626,651
Property, plant and equipment, net	—		203,338		475,596		—			678,934
Goodwill	—		671,858		386,944		—			1,058,802
Intercompany receivables	462,500		9,503		202,495		(674,498		)	—
Investment in consolidated subsidiaries	2,409,231		1,736,471		—		(4,145,702		)	—
Other assets, net	12,603		178,996		140,208		—			331,807
Total assets	$	2,894,126	$	3,714,239	$	3,112,763	$	(5,024,934	)	$	4,696,194

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	—	$	143,513	$	351,782	$	—		$	495,295
Intercompany payables	69		58,432		146,233		(204,734		)	—
Accrued liabilities	6,999		229,263		586,152		—			822,414
Debt due within one year	236,000		10		32,924		—			268,934
Deferred taxes	—		—		7,606		—			7,606
Total current liabilities	243,068		431,218		1,124,697		(204,734		)	1,594,249
Long-term debt due after one year	838,247		—		977		—			839,224
Intercompany payables	1,144		663,850		9,504		(674,498		)	—
Retirement obligations and other liabilities	7,010		209,940		235,304		—			452,254
Total liabilities	1,089,469		1,305,008		1,370,482		(879,232		)	2,885,727
Total Flowserve Corporation shareholders’ equity	1,804,657		2,409,231		1,736,471		(4,145,702		)	1,804,657
Noncontrolling interest	—		—		5,810		—			5,810
Total equity	1,804,657		2,409,231		1,742,281		(4,145,702		)	1,810,467
Total liabilities and equity	$	2,894,126	$	3,714,239	$	3,112,763	$	(5,024,934	)	$	4,696,194



	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



	Nine Months Ended September 30, 2013
	Parent (Issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated Total
(Amounts in thousands)
Net cash flows provided (used) by operating activities	$	245,150		$	138,849		$	(26,091	)	$	(249,020	)	$	108,888
Cash flows — Investing activities:
Capital expenditures	—			(27,827		)	(66,875		)	—			(94,702		)
Payments for acquisitions, net of cash acquired	—			—			(10,143		)	—			(10,143		)
Intercompany loan proceeds	—			911			56,333			(57,244		)	—
Intercompany loan payments	—			(52		)	(173,511		)	173,563			—
Proceeds from disposition of assets	—			93			876			—			969
Affiliate investment activity, net	—			—			46,240			—			46,240
Net cash flows used by investing activities	—			(26,875		)	(147,080		)	116,319			(57,636		)
Cash flows — Financing activities:
Excess tax benefits from stock-based payment arrangements	—			8,265			1,839			—			10,104
Payments on long-term debt	(15,000		)	—			—			—			(15,000		)
Short-term financing, net	196,000			—			—			—			196,000
Borrowings under other financing arrangements, net	—			(15		)	(556		)	—			(571		)
Repurchases of common shares	(370,127		)	—			—			—			(370,127		)
Payments of dividends	(57,337		)	—			—			—			(57,337		)
Intercompany loan proceeds	—			173,511			52			(173,563		)	—
Intercompany loan payments	—			(56,333		)	(911		)	57,244			—
Intercompany dividends	—			(237,402		)	(11,618		)	249,020			—
All other financing, net	91			—			(169		)	—			(78		)
Net cash flows used by financing activities	(246,373		)	(111,974		)	(11,363		)	132,701			(237,009		)
Effect of exchange rate changes on cash	—			—			(4,744		)	—			(4,744		)
Net change in cash and cash equivalents	(1,223		)	—			(189,278		)	—			(190,501		)
Cash and cash equivalents at beginning of period	2,609			—			301,643			—			304,252
Cash and cash equivalents at end of period	$	1,386		$	—		$	112,365		$	—		$	113,751



	Nine Months Ended September 30, 2012
	Parent (Issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated Total
(Amounts in thousands)
Net cash flows provided by operating activities	$	49,256		$	74,283		$	50,767		$	(51,742	)	$	122,564
Cash flows — Investing activities:
Capital expenditures	—			(25,366		)	(58,814		)	—			(84,180		)
Payments for acquisitions, net of cash acquired	—			—			(3,996		)	—			(3,996		)
Intercompany loan proceeds	—			7,869			—			(7,869		)	—
Intercompany loan payments	—			(26,648		)	—			26,648			—
Intercompany return of capital	—			1,982			—			(1,982		)	—
Intercompany capital contribution	—			(483		)	—			483			—
Proceeds from disposition of assets	—			87			11,386			—			11,473
Affiliate investment activity, net	—			—			(3,825		)	—			(3,825		)
Net cash flows used by investing activities	—			(42,559		)	(55,249		)	17,280			(80,528		)
Cash flows — Financing activities:
Excess tax benefits from stock-based payment arrangements	—			8,837			2,219			—			11,056
Payments on long-term debt	(475,000		)	—			—			—			(475,000		)
Proceeds from issuance of senior notes	498,075			—			—			—			498,075
Proceeds from issuance of long-term debt	400,000			—			—			—			400,000
Borrowings under other financing arrangements, net	9			171			114			—			294
Repurchases of common shares	(533,864		)	—			—			—			(533,864		)
Payments of dividends	(55,569		)	—			—			—			(55,569		)
Payment of deferred loan costs	(9,657		)	—			—			—			(9,657		)
Intercompany loan proceeds	—			—			26,648			(26,648		)	—
Intercompany loan payments	—			—			(7,869		)	7,869			—
Intercompany distributions of capital	—			—			(1,982		)	1,982			—
Intercompany capital contribution	—			—			483			(483		)	—
Intercompany dividends	—			(40,732		)	(11,010		)	51,742			—
All other financing, net	250			—			(498		)	—			(248		)
Net cash flows (used) provided by financing activities	(175,756		)	(31,724		)	8,105			34,462			(164,913		)
Effect of exchange rate changes on cash	—			—			2,941			—			2,941
Net change in cash and cash equivalents	(126,500		)	—			6,564			—			(119,936		)
Cash and cash equivalents at beginning of period	150,308			—			187,048			—			337,356
Cash and cash equivalents at end of period	$	23,808		$	—		$	193,612		$	—		$	217,420