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Flowserve Delays 2004 Form 10-K Filing And Restatement Completion, Cites Review Of Non-Cash Foreign Deferred Tax Accounting.

DALLAS -- Following an extensive review with its independent auditors of its non-cash foreign deferred tax accounting, Flowserve Corp. (NYSE: FLS) today announced that it will delay its planned filing date for its 2004 Form 10-K with the Securities and Exchange Commission, and its planned announcements today, including 2005 bookings, 2004 earnings, and its restatement of its financial statements for 2000 through the first quarter of 2004.

The company said that apart from determining the effect of this remaining technical tax matter, it has completed finalizing its restatement and preparing its 2004 Form 10-K filing. The delay, therefore, is expected to be brief.

This deferred tax accounting action has a non-cash effect during the restatement period. This decision does not affect any actual tax payments or future cash liabilities to the IRS, state or foreign tax authorities, the company said. Further, this deferred tax accounting calculation has no applicability to the previously announced resolution of its IRS tax audit for the years 1999 through 2001, nor does it have any applicability to the company's potential cash liabilities regarding any future or ongoing federal, state or foreign tax audit. This deferred tax accounting calculation should have no impact on the company's normal business operations going forward.

The company is still calculating the impact of this non-cash deferred tax adjustment on its financial statements to be included in its 2004 Form 10-K filing, which may increase the cumulative reduction in net income from the restatement. However, it will have no impact on the company's pretax earnings during this period.

This review of deferred tax accounting arises from the technical requirements of Accounting Principles Board Opinion 23. This accounting principle permits companies to exclude unremitted earnings from foreign operations from its calculation of U.S. deferred taxes if certain specified technical criteria are met. If not, companies must calculate their financial statement tax provision for unremitted foreign earnings at the U.S. rate. The company, after careful consultation with its independent auditors over an extended period, late last week reconsidered its earlier view that the company had met in all material respects the APB 23 requirements in 2001, and, accordingly, is determining the appropriate deferred tax adjustment required at that date and later periods.

The company also said it has postponed today's planned conference call so that the rescheduled call can fully address all aspects of the 2004 Form 10-K filing, restatement and related matters. Details of the rescheduled conference call will be announced in the next few days.

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

SAFE HARBOR STATEMENT: This presentation includes forward-looking statements. Forward looking statements are all statements that are not statements of historical facts and include, without limitation, statements relating to our business strategy and statements of expectations, beliefs, future plans and strategies and anticipated developments concerning our industry, business, operations and financial performance and condition. The words "believe," "seek," "anticipate," "plan," "estimate," "expect," "intend," "project," "forecast," "predict," "potential," "continue," "will," "may," "could," "should," and other words of similar meaning are intended to identify forward-looking statements. The forward-looking statements made in this presentation are made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, uncertainties and other factors that, in some cases, are beyond our control. These risks, uncertainties and factors may cause our actual results, performance and achievements, or industry results and market trends, to be materially different from any future results, performance, achievements or trends expressed or implied by such forward-looking statements. Important risks, uncertainties and other factors that could cause actual results to differ from these forward-looking statements include, but are not limited to, the following: further delays in the report of the Company's management on the Company's internal control over financial reporting and related certification; further delays in the Company's filing of its periodic public reports and any SEC, NYSE or debt rating agencies' actions resulting therefrom; the possibility of adverse consequences of the pending securities litigation and SEC investigation; the possibility of adverse consequences of governmental tax audits of the Company's tax returns, including the upcoming IRS audit of the company's U.S. tax returns for the years 2002 through 2004; the Company's ability to convert bookings, which are not subject to nor computed in accordance with generally accepted accounting principles, into revenues at acceptable, if any, profit margins, since such profit margins cannot be assured nor be necessarily assumed to follow historical trends; changes in the financial markets and the availability of capital; changes in the already competitive environment for the Company's products or competitors' responses to the Company's strategies; the Company's ability to integrate acquisitions into its management and operations; political risks, military actions or trade embargoes affecting customer markets, including the continuing conflict in Iraq and its potential impact on Middle Eastern markets and global petroleum producers; the Company's ability to comply with the laws and regulations affecting its international operations, including the U.S. export laws, and the effect of any noncompliance; the health of the petroleum, chemical, power and water industries; economic conditions and the extent of economic growth in the U.S. and other countries and regions; unanticipated difficulties or costs associated with the implementation of systems, including software; the Company's relative geographical profitability and its impact on the Company's utilization of foreign tax credits; the recognition of significant expenses associated with realigning operations of acquired companies with those of Flowserve; the Company's ability to meet the financial covenants and other requirements in its debt agreements; any terrorist attacks and the response of the U.S. to such attacks or to the threat of such attacks; technological developments in the Company's products as compared with those of its competitors; changes in prevailing interest rates and the Company's effective interest costs; and adverse changes in the regulatory climate and other legal obligations imposed on the Company. It is not possible to foresee or identify all the factors that may affect our future performance or any forward-looking information, and new risk factors can emerge from time to time. Given these risks and uncertainties, you should not place undue reliance on forward-looking statements as a prediction of actual results. All forward-looking statements included in this presentation are based on information available to us on the date of this presentation. We undertake no obligation to revise or update any forward-looking statement or disclose any facts, events or circumstances that occur after the date hereof that may affect the accuracy of any forward-looking statement.
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