30625--2/27/2008--FLOWSERVE

related topics

{customer, product, revenue}

{financial, litigation, operation}

{cost, regulation, environmental}

{cost, operation, labor}

{tax, income, asset}

{condition, economic, financial}

{cost, contract, operation}

{operation, natural, condition}

{property, intellectual, protect}

{debt, indebtedness, cash}

{control, financial, internal}

{operation, international, foreign}

{product, market, service}

{acquisition, growth, future}

{regulation, change, law}

We are subject to examination by various U.S., state and international taxing jurisdictions. The recording of increased deferred tax asset valuation allowances in the future could affect our operating results. Economic, political and other risks associated with international operations could adversely affect our business. Terrorist acts, conflicts and wars may seriously harm our business and revenue, costs and expenses and financial condition and stock price. There are inherent limitations to the effectiveness of internal control over financial reporting. We may be unable to deliver our backlog on time which could affect our future sales and profitability and our relationships with customers. Our business depends on the levels of capital investment and maintenance expenditures by our customers, which in turn are affected by the cyclical nature of their markets and their liquidity. We sell our products in highly competitive markets, which results in pressure on our profit margins and limits our ability to maintain or increase the market share of our products. Environmental compliance costs and liabilities could adversely affect our financial condition, results of operations and cash flows. We are party to asbestos-containing product litigation that could adversely affect our financial condition, results of operations and cash flows. Our business may be adversely impacted by work stoppages and other labor matters. Inability to protect our intellectual property could negatively affect our competitive position. If we are unable to obtain raw materials at favorable prices, our operating margins and results of operations may be adversely affected. Significant changes in pension fund investment performance or assumptions relating to pension costs may have a material effect on the valuation of our obligations under our defined benefit pension plans, the funded status of these plans and our pension expense. We may incur material costs as a result of product liability and warranty claims, which could adversely affect our financial condition, results of operations and cash flows. Our outstanding indebtedness and the restrictive covenants in the agreements governing our indebtedness limit our operating and financial flexibility. We may not be able to continue to expand our market presence through acquisitions, and any future acquisitions may present unforeseen integration difficulties or costs.

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30625--2/27/2008--FLOWSERVE_CORP