Flowserve Completes Sale of General Services Group
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DALLAS--Jan. 3, 2006--Flowserve Corp. (NYSE:FLS) today announced that it has sold assets of its General Services Group (GSG) to Furmanite Worldwide Inc., a unit of Dallas-based Xanser Corp. (NYSE:XNR), for approximately $16 million in gross cash proceeds, while retaining approximately $12 million of net accounts receivable. The final purchase price is subject to certain post-close adjustments. Net cash proceeds will be used to repay debt.
"An analysis of our business portfolio indicated that GSG's focus on non-Flowserve products did not align with Flowserve's long-term strategy," said Lewis M. Kling, Flowserve president and chief executive officer. "Our strategic priorities are focused on end-user strategies that allow the company to capture the full life cycle of Flowserve products and enhance our support for them. I believe that GSG can now better realize its potential through its sale to Furmanite, while permitting Flowserve to increase its focus on its growing core businesses."
Chief Financial Officer Mark A. Blinn added, "This divestiture comprises 36 sites and approximately eight ERP systems worldwide and is a step toward simplifying our systems infrastructure."
The GSG businesses that were sold include pressurized on-line repair services at customer sites and general valve repair services at local service centers. The company retained its valve service centers that focus on servicing and repairing Flowserve-manufactured valves, plus its global valve manufacturing operations.
Flowserve announced earlier in 2005 that it was seeking a buyer for GSG, which was part of Flowserve's Flow Control Division. The GSG business was subsequently reclassified as a discontinued operation in the first quarter of 2005. The company expects GSG to have 2004 revenues greater than $100 million and to incur an operating loss.
Flowserve estimates it will recognize in its 2005 financial results a loss related to impairment charges and the ultimate sale totaling approximately $34 million, subject to any post-closing adjustments, plus transaction expenses and related employee retention costs.
The transaction closed on Dec. 31, 2005.
About Flowserve
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 news release 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 news release 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 and outside auditors 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 news release are based on information available to us on the date of this news release. 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.
Contacts
Flowserve Corp.
Michael E. Conley, 972-443-6557 (Investor Contact)
Lars E. Rosene, 469-420-3264 (Media)
