Flowserve Reports Increased Bookings, Stable Backlog, Debt Repayment in Second Quarter; Provides Other Updates

Second Quarter Bookings Increase, Backlog Stable

Second quarter 2005 consolidated bookings increased 8 percent,including positive currency effects of 2 percent, to approximately$723 million compared with approximately $670 million in the secondquarter of 2004. For the first six months of 2005, bookings increased8 percent, including positive currency effects of 3 percent, toapproximately $1.4 billion compared with approximately $1.3 billion inthe first six months of the prior year. Second quarter 2005 backlogdecreased 1 percent, including positive currency effects of less than1 percent, to approximately $866 million compared with approximately$873 million at the end of the second quarter of the prior year.

"This increase in bookings is broad-based across all three of ouroperating divisions and most of our key end-markets," saidInterim-Chairman, President and Chief Executive Officer Kevin E.Sheehan. "Our operational excellence initiatives are also showingsolid evidence of increasing our operating efficiencies across thecompany. These developments should bode very well for our futureresults. However, as we have previously said, our results willcontinue to be affected by the significant costs of Sarbanes-Oxleycompliance, professional fees arising from our comprehensive review ofour internal financial processes, the 2004 audits of our financialstatements and internal controls, the restatement and our ongoing workto address internal controls issues."

Debt Repayment

In the second quarter of 2005, the company repaid $23.5 million ofdebt, including a $4.5 million reduction in its asset securitizationfacility, in addition to paying $9 million in professional feesrelated to compliance issues and the restatement and making a planned$8 million pension contribution. The company, which previouslyannounced an initiative to complete a major refinancing of up to $1billion, expects to have a lower blended interest rate for debt ifthis refinancing is completed as planned. "We are continuing togenerate cash flow from operations and still expect to further reducetotal debt levels in 2005," said Chief Financial Officer Mark A.Blinn.

2004 Financial Results Announcement Timing

The company expects to announce its 2004 financial results in anews release to be issued late in the third quarter of 2005. Thecompany now expects to file its 2004 Form 10-K report in Octoberinstead of September, as previously planned, due to the ongoingrestatement work and audit process. As previously announced, Flowserveis restating annual financial results for 2000 through 2003 andquarterly results for the first quarter of 2004. The company alsoanticipates, as previously announced, that it will report that it hadmaterial weaknesses in internal controls as of Dec. 31, 2004, whichare being actively addressed. The company's analysis of its internalcontrols is ongoing and additional material weaknesses could beidentified. The company is also continuing to work with the IRS toaddress its previously announced potential liabilities from thepending audit of its 1999 - 2001 tax returns, which remains open.Excluding any of the tax audit's potential impact, which is stillbeing analyzed by amount and affected period, the company continues toexpect that the cumulative net reduction in net income, which is stillbeing finalized, should be less than $20 million for the periods beingrestated.

CEO Search Moving Forward

The board of directors' Transition Committee is continuing to moveforward productively in its search for a new CEO. "We are very pleasedwith our progress and expect to complete the search soon," Sheehansaid.

General Services Divestiture Progress

The company is conducting negotiations with several potentialbuyers of its General Services operations of its Flow ControlDivision. As previously announced, the company's 2005 financialstatements will reflect General Services as a discontinued operation.

Flowserve Corp. is one of the world's leading providers of fluidmotion and control products and services. Operating in 56 countries,the company produces engineered and industrial pumps, seals and valvesas well as a range of related flow management services.

SAFE HARBOR STATEMENT: This news release contains variousforward-looking statements and includes assumptions about Flowserve'sfuture financial and market conditions, operations and results. Insome cases forward-looking statements can be identified by terms suchas "may," "will," "should," "expect," "forecast," "plans," "projects,""seeks," "anticipate," "believe," "estimate," "predicts," "potential,""continue," "intends," or other comparable terminology. Thesestatements are based on current expectations and are subject tosignificant risks and uncertainties. They are made pursuant to safeharbor provisions of the Private Securities Litigation Reform Act of1995. Among the many factors that could cause actual results to differmaterially from the forward-looking statements are: changes in thefinancial markets and the availability of capital; changes in thealready competitive environment for the company's products orcompetitors' responses to Flowserve's strategies; the company'sability to integrate past and future acquisitions into its currentoperations; political risks, military actions or trade embargoesaffecting customer markets, including the continuing conflict in Iraqand its potential impact on Middle Eastern markets and globalpetroleum producers; the health of the petroleum, chemical, power andwater industries; economic conditions and the extent of economicgrowth in areas inside and outside the U.S.; unanticipateddifficulties or costs associated with the implementation of systems,including software; the company's relative geographical profitabilityand its impact on the company's utilization of foreign tax credits;the recognition of significant expenses associated with realigning thecompany's combined operations with acquired companies; the company'sability to meet the financial covenants and other requirements in itsfinancing agreements; the threat of future terrorist attacks and theresponse of the U.S. to those attacks; technological developments inthe company's products as compared with those of its competitors;changes in prevailing interest rates and the effective interest coststhat the company bears; adverse changes in the regulatory climate andother legal obligations imposed upon the company; delays in meetingthe deadline for the report of management and the independent auditoron the company's internal controls over financial reporting andrelated certification; the possibility of continuing delays in filingits periodic public reports; the possibility of adverse consequencesof governmental tax audits of company tax returns, including a pendingIRS audit of the company's U.S. tax returns for the years 1999-2001;and the company's ability to convert bookings, which are not subjectto nor computed in accordance with generally accepted accountingprinciples, into revenues with profit margins, since such profitmargins cannot be assured nor be necessarily assumed to followhistorical trends. Flowserve undertakes no obligation to, but maychoose to, publicly update or revise any forward-looking statements asa result of new information, future events or otherwise.