Flowserve
FLS
#1973
Rank
$10.22 B
Marketcap
$78.15
Share price
-0.62%
Change (1 day)
25.83%
Change (1 year)

Flowserve - 10-Q quarterly report FY


Text size:
1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

----------------------------------

FORM 10-Q

Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934

----------------------------------


For Quarter Ended September 30, 1997 Commission File Number 1-13179
------------------ --------

FLOWSERVE CORPORATION
---------------------
(Exact name of Registrant as specified in its charter)

New York
--------
(State or other jurisdiction of incorporation or organization)

31-0267900
----------
(I.R.S. Employer Identification Number)

3100 Research Boulevard, Dayton, Ohio 45420
------------------------------------- -----
(Address of principal executive offices) (Zip Code)

(Registrant's telephone number, including area code) (937) 476-6100
-------------


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

YES X NO
--- ---

Shares of Common Stock, $1.25 par value,
outstanding as of September 30, 1997 40,573,941
2








PART I: Financial Information
3


FLOWSERVE CORPORATION
Consolidated Statement of Income
Quarters Ended September 30, 1997 and 1996
(dollars in thousands except per share data)
(Unaudited)




<TABLE>
<CAPTION>
1997 1996
--------- ---------

<S> <C> <C>
Net sales $ 281,805 $ 271,023

Cost of sales 174,395 165,134
--------- ---------

Gross profit 107,410 105,889

Selling and administrative expense 71,199 67,680
Research, engineering and development expense 5,647 4,817
Other income (deductions) (699) (1,886)
Merger transaction expense (footnote 2) 10,200 --
Interest expense 2,697 3,259
--------- ---------

Income before income taxes 16,968 28,247

Provision for income taxes 9,918 10,019
--------- ---------

Net income 7,050 18,228
========= =========


Net income per share $ 0.17 $ 0.44
========= =========
</TABLE>
















(See accompanying notes)
4


FLOWSERVE CORPORATION
Consolidated Statement of Income
Nine Months Ended September 30, 1997 and 1996
(dollars in thousands except per share data)
(Unaudited)




<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Net sales $ 844,974 $ 812,990

Cost of sales 512,205 490,966
--------- ---------

Gross profit 332,769 322,024

Selling and administrative expense 210,885 206,040
Research, engineering and development expense 16,946 15,751
Other income (deductions) (2,053) (5,694)
Merger transaction expense (footnote 2) 10,200 --
Restructuring expense -- 5,778
Interest expense 9,612 9,866
--------- ---------

Income before income taxes 83,073 78,895

Provision for income taxes 34,343 28,572
--------- ---------

Net income 48,730 50,323
========= =========


Net income per share $ 1.19 $ 1.21
========= =========
</TABLE>
















(See accompanying notes)
5


FLOWSERVE CORPORATION
Consolidated Balance Sheet
(dollars in thousands except per share data)
(Unaudited)





<TABLE>
<CAPTION>
September 30, December 31,
ASSETS 1997 1996
------------- ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 32,140 $ 38,932
Accounts receivable 224,216 223,274
Inventories 206,387 182,423
Prepaid expenses 23,984 24,405
-------- --------

Total current assets 486,727 469,034

Property, plant and equipment, at cost 465,325 455,050
Less accumulated depreciation and amortization 254,403 243,311
-------- --------

Net property, plant and equipment 210,922 211,739

Intangibles and other assets 153,675 149,003
-------- --------

Total assets $851,324 $829,776
======== ========
</TABLE>



















(See accompanying notes)
6


FLOWSERVE CORPORATION
Consolidated Balance Sheet
(dollars in thousands except per share data)
(Unaudited)





<TABLE>
<CAPTION>
September 30, December 31,
LIABILITIES AND SHAREHOLDERS' EQUITY 1997 1996
------------- ------------
<S> <C> <C>
Current liabilities:
Accounts payable $ 71,217 $ 68,011
Notes payable 14,985 14,871
Income taxes 6,265 4,961
Accrued liabilities 100,405 93,695
Long-term debt due within one year 5,278 7,525
--------- ---------

Total current liabilities 198,150 189,063

Long-term debt due after one year 144,850 143,962

Postretirement benefits and other deferred items 105,648 108,127

Shareholders' equity:
Serial preferred stock, $1.00 par value,
no shares issued -- --
Common stock, $1.25 par value, 41,484,300
shares issued ( 41,482,400 in 1996) 51,856 51,853
Capital in excess of par value 71,353 72,629
Retained earnings 329,528 298,563
--------- ---------

452,737 423,045

Treasury stock, 910,400 shares at cost (1,081,000 in 1996) (23,823) (27,455)
Foreign currency and other equity adjustments (26,238) (6,966)
--------- ---------

Total shareholders' equity 402,676 388,624
--------- ---------

Total liabilities and shareholders' equity $ 851,324 $ 829,776
========= =========
</TABLE>









(See accompanying notes)
7


FLOWSERVE CORPORATION
Consolidated Statement of Cash Flows
Nine Months Ended September 30, 1997 and 1996
(dollars in thousands)
(Unaudited)


<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Cash flows provided by operating activities
before merger transaction expenses $ 58,095 $ 41,537

Merger transaction expenses (10,200) --
-------- --------

Cash flows provided by operating activities 47,895 41,537

Cash flows from investing activities:
Capital expenditures (28,979) (23,487)
Acquisitions and dispositions, net (9,000) 390
Other 171 (3,374)
-------- --------

Net cash used in investing activities (37,808) (26,471)

Cash flows from financing activities:
Net borrowings under lines-of-credit 1,010 17,286
Payments on long-term debt (36,476) (12,375)
Proceeds from long-term debt 38,833 27,355
Proceeds from common stock transactions 2,306 2,245
Repurchases of common stock -- (27,850)
Dividends paid (20,435) (17,572)
Other (170) --
-------- --------

Net cash flows used in financing activities (14,932) (10,911)

Effect of exchange rate changes (1,947) (2,027)
-------- --------

Net (decrease) increase in cash and cash equivalents (6,792) 2,128

Cash and cash equivalents at beginning of year 38,932 28,596
-------- --------

Cash and cash equivalents at end of period $ 32,140 $ 30,724
======== ========

Supplemental disclosures of cash flow information:

Cash paid during period for:
Interest $ 8,344 $ 8,017
Income taxes $ 26,914 $ 24,922
</TABLE>


(See accompanying notes)
8



FLOWSERVE CORPORATION
Notes to Consolidated Financial Statements



1. Accounting Policies - Basis of Presentation

The interim consolidated financial statements include the accounts of
Flowserve Corporation (the Company) and its subsidiaries. As described
in Note 2, on July 22, 1997 the shareholders of Durco International
Inc. and BW/IP Inc. voted to approve a merger between a wholly owned
subsidiary of Durco International Inc. and BW/IP Inc. in a
stock-for-stock merger of equals that was accounted for as a
pooling-of-interests transaction. As part of the merger agreement, the
Company changed its name from Durco International Inc. to Flowserve
Corporation.

These consolidated financial statements reflect the combined balance
sheets, statements of income, and cash flows of Durco International
Inc. and BW/IP Inc. as if they had been combined for all periods
presented. Certain amounts have been reclassified to conform with the
current year presentation.

The accompanying consolidated balance sheet as of September 30, 1997
and the related consolidated statements of income and cash flows for
the three months and nine months ended September 30, 1997 and 1996 are
unaudited. In management's opinion, all adjustments, consisting of
normal recurring adjustments, necessary for a fair presentation of such
financial statements have been made. The accompanying consolidated
financial statements and notes in this Form 10-Q are presented as
permitted by Regulation S-X and do not contain certain information
included in the Companys' annual financial statements and notes.
Accordingly, the accompanying consolidated financial information should
be read in conjunction with the respective Companys' 1996 Annual
Reports to Stockholders. Interim results are not necessarily indicative
of results to be expected for a full year and are subject to audit and
adjustments at the end of the year.

2. Merger of Durco International Inc. and BW/IP International Inc.

On July 22, 1997, shareholders of Durco International Inc. and BW/IP
Inc. voted to approve a merger between a wholly owned subsidiary of
Durco International and BW/IP Inc. in a stock-for-stock merger of
equals that was accounted for as a pooling-of-interests transaction. As
part of the merger agreement, the Company changed its name from Durco
International to Flowserve Corporation. On July 23, 1997, the Company's
common stock began trading on the New York Stock Exchange under the
symbol "FLS". The Company issued approximately 16.9 million shares of
common stock in connection with the merger. BW/IP shareholders received
.6968 shares of the Company's common stock for each previously owned
share of BW/IP stock.
9



In connection with the merger, the Company recorded a one-time charge
of $10.2 million for merger related expenses in the third quarter of
1997. These expenses include investment banking fees, legal fees, and
other costs related to the merger, which are non-deductible for tax
purposes.

The consolidated financial statements have been restated for all
periods prior to the merger to include the financial position, results
of operations, and cash flows of BW/IP Inc. and Durco International
Inc. The following reflects certain unaudited financial information of
the individual entities for the period prior to the merger as follows:


<TABLE>
<CAPTION>
(dollars in thousands)
Six Months Six Months
ended ended
June 30, 1997 June 30, 1996
------------- --------------
<S> <C> <C>
Net sales

BW/IP Inc. $252,701 $241,702
Durco International Inc. 310,468 300,265
-------- --------
Total $563,169 $541,967
======== ========


Net income

BW/IP Inc. $ 15,062 $ 13,067
Durco International Inc. 26,618 19,029
-------- --------
Total $ 41,680 $ 32,096
======== ========
</TABLE>
10



3. Inventories.

Inventories for the Company are stated at the lower of cost or market,
using the last-in, first-out (LIFO) method or the first-in, first-out
(FIFO) method.

The amount of inventories and the method of determining costs for the
quarter ended September 30, 1997 and the year ended December 31, 1996
were as follows:

<TABLE>
<CAPTION>
(dollars in thousands)
Inventories Inventories Total
(FIFO) (LIFO) inventories
--------- --------- ------------
<S> <C> <C> <C>
September 30, 1997
Raw materials $ 18,278 $ 4,583 $ 22,861
Work in process and
finished goods 144,682 55,814 200,496
--------- --------- ---------
Less: Progress billings (16,970) -- (16,970)
--------- --------- ---------
$ 145,990 $ 60,397 $ 206,387
========= ========= =========


December 31, 1996
Raw materials $ 12,811 $ 2,285 $ 15,096
Work in process and
finished goods 121,921 52,613 174,534
--------- --------- ---------
Less: Progress billings (7,207) -- (7,207)
--------- --------- ---------
$ 127,525 $ 54,898 $ 182,423
========= ========= =========
</TABLE>


LIFO inventories at current cost are $39,125,000 and $38,039,000 higher
than reported at September 30, 1997 and December 31, 1996,
respectively.
11



4. Dividends.

Dividends paid during the quarters ended September 30, 1997 and 1996
were based on 40,574,000 and 41,471,200 respectively, common shares
outstanding on the applicable dates of record.

5. Earnings per share.

Earnings per share for the nine months ended September 30, 1997 and
1996 were based on average common shares and common share equivalents
outstanding of 40,873,000 and 41,616,000 respectively.

6. Contingencies.

As of September 30, 1997, the Company was involved as a "potentially
responsible party" at five former public waste disposal sites which may
be subject to remediation under pending government procedures. The
sites are in various stages of evaluation by federal and state
environmental authorities. The projected cost of remediating these
sites, as well as the Company's alleged "fair share" allocation, is
uncertain and speculative until all studies have been completed and the
parties have either negotiated an amicable resolution or the matter has
been judicially resolved. At each site, there are many other parties
who have similarly been identified, and the identification and location
of additional parties is continuing under applicable federal or state
law. Many of the other parties identified are financially strong and
solvent companies which appear able to pay their share of the
remediation costs. Based on the Company's preliminary information about
the waste disposal practices at these sites and the environmental
regulatory process in general, the Company believes that it is likely
that ultimate remediation liability costs for each site will be
apportioned among all liable parties, including site owners and waste
transporters, according to the volumes and/or toxicity of the wastes
shown to have been disposed of at the sites.

The Company is a defendant in numerous pending lawsuits (which include,
in many cases, multiple claimants) which seek to recover damages for
alleged personal injury allegedly resulting from exposure to
asbestos-containing products formerly manufactured and distributed by
the Company. All such products were used within self-contained process
equipment, and management does not believe that there was any emission
of ambient asbestos fiber during the use of this equipment. The Company
continues to have a substantial amount of available insurance for these
claims.

The Company is also a defendant in several other products liability
lawsuits which are insured, subject to the applicable deductibles, and
certain other non-insured lawsuits received in the ordinary course of
business. Management believes that the Company has adequately accrued
estimated losses for such lawsuits. No insurance recovery has been
projected for any of the insured claims because management currently
believes that all
12


will be resolved within applicable deductibles. The Company is also a
party to other non-insured litigation which is incidental to its
business and which, in management's opinion, will be resolved without a
material impact on the Company's financial statements.

On July 22, 1997, the Company completed a merger with BW/IP Inc. and
effectively assumed certain contingent liabilities of BW/IP as a result
thereof. Management does not now believe that any such newly assumed
contingent liabilities will either individually nor in the aggregate be
resolved in a way that has a material impact on the Company's financial
statements.

Although none of the aforementioned gives rise to any additional
liability that can now be reasonably estimated, it is possible that the
Company could incur additional costs in the range of $250,000 to
$1,000,000 over the upcoming five years to fully resolve these matters.
Although the Company has accrued the minimum end of this range as a
precaution, management has no current reason to believe that any such
additional costs are probable or quantifiable. The Company will
continue to evaluate these contingent loss exposures and, if they
develop, recognize expense as soon as such losses can be reasonably
estimated.

7. Impact of Recently Issued Accounting Standards

In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, Earnings Per Share, which is required to be adopted
on December 31, 1997. At that time, the Company will be required to
change the method currently used to compute earnings per share and to
restate all prior periods. Under the new requirements for calculating
earnings per share, the dilutive effect of stock options would be
excluded. The impact of Statement 128 on the calculation of earnings
per share is not material for the periods presented.

8. Subsequent event

On October 27, 1997, the Company announced a merger integration program
of approximately $85 million. The program includes investments of
approximately $25 million in capital and approximately $60 million in
integration expenses. Of this $60 million, $25 million is expected to
be recognized as a one-time restructuring charge in the fourth quarter
of this year. The remaining $35 million will be recognized as incurred
over the three-year life of the plan, as required by current accounting
rules. The Company program includes facility rationalizations in North
America and Europe, organizational realignments at the corporate and
division levels, procurement initiatives, investments in training, and
support for the service and repair operations. The Company believes the
program will produce benefits that exceed the earlier announced merger
synergy estimates of $35-$45 million in additional annual operating
income at the end of three years. Most of this income is expected to be
produced by eliminating cost redundancies and the balance by
procurement savings and earnings increases from sales synergies.

---------------------------------------------
13





MANAGEMENT'S DISCUSSION AND ANALYSIS

RESULTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 1997
- -------------------------------------------------------------

The interim consolidated financial statements include the accounts of Flowserve
Corporation (the Company) and its subsidiaries. On July 22, 1997 the
shareholders of Durco International Inc. and BW/IP International Inc. voted to
approve a merger between a wholly owned subsidiary of Durco International Inc.
and BW/IP Inc. in a stock-for-stock merger of equals that was accounted for as a
pooling-of-interests transaction. As part of the merger agreement, the Company
changed its name from Durco International Inc. to Flowserve Corporation. These
consolidated financial statements reflect the combined balance sheets,
statements of income, and cash flows of Durco International Inc. and BW/IP Inc.
as if they had been combined for all periods presented.

Excluding merger transaction expenses of $10.2 million, net income was $17.3
million, or $.42 per share, for the three months ended September 30, 1997,
compared with $18.2 million, or $.44 per share, for the corresponding period in
1996. Including merger transaction expenses, net income was $7.1 million, or
$.17 per share, for the third quarter of 1997 compared to net income of $18.2
million, or $.44 per share, for the third quarter of 1996. Merger transaction
costs were primarily related to investment banking fees, legal fees, and other
costs related to the merger, which are non-deductible for tax purposes.

Bookings, an indicator of future sales, were $279.6 million for the third
quarter of 1997. This compares to $267.3 million in the third quarter of 1996.
Reported bookings for the quarter were adversely affected by translating foreign
currencies into U.S. dollars.

Backlog at September 30, 1997 was $296.8 million, compared with a backlog of
$287.1 million at December 31, 1996. Increased backlog in 1997 is due to
acquisitions and overall strong original equipment bookings.

Net sales for the three months ended September 30, 1997 were $281.8 million,
compared to net sales of $271.0 million for the same period in 1996. The 4%
increase in net sales reflects increased shipments from the Flow Control
Division, significant shipments of Rotating Equipment Division original
equipment orders, and additional sales from recently acquired entities.
Partially offsetting the increase in sales was the impact of the strengthening
of the U.S. dollar against foreign currencies. International contributions to
consolidated net sales were 41% for both of the three month periods ended
September 30, 1997 and 1996. Total net sales to international customers,
including export sales from the U.S., were 53% for both of the respective
periods.

The gross profit margin was 38% for the three months ended September 30, 1997.
This compares to 39% for the same period in 1996. The decrease in the margin
reflects the impact of lower-margin pump original equipment shipments in the
third quarter. Selling and administrative expenses as a percentage of net sales
were 25% for both of the three month periods ended September 30, 1997 and 1996.
14


The effective tax rate for the third quarter of 1997, including merger
transaction expenses, was 58%, compared with 36% in 1996. Excluding the tax
impact of the merger transaction expenses, which are not deductible, the tax
rate for the third quarter of 1997 was 36%.

On October 27, 1997, the Company announced an approximately $85 million merger
integration program. The program includes investments of approximately $25
million in capital and approximately $60 million in integration expenses. Of
this $60 million, $25 million is expected to be recognized as a one-time
restructuring charge in the fourth quarter of this year. The remaining $35
million will be recognized as incurred over the three-year life of the plan, as
required by current accounting rules. The Company program includes facility
rationalizations in North America and Europe, organizational realignments at the
corporate and division levels, procurement initiatives, investments in training,
and support for the service and repair operations. The Company believes the
program will produce benefits that exceed the earlier announced merger synergy
estimates of $35-$45 million in additional annual operating income at the end of
three years. Most of this income is expected to be produced by eliminating cost
redundancies and the balance by procurement savings and earnings increases from
sales synergies.



RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 1997
- ------------------------------------------------------------

Excluding merger transaction expenses of $10.2 million, net income was $58.9
million, or $1.44 per share, for the nine months ended September 30, 1997,
compared with $53.9 million, or $1.30 per share, for the corresponding period in
1996. Including merger transaction expenses, net income was $48.7 million, or
$1.19 per share, for the first nine months of 1997 compared to net income,
including restructuring charges, of $50.3 million, or $1.21 per share, for the
corresponding period of 1996.

Bookings increased to $869.6 million for the first nine months of 1997, compared
to $851.3 million in 1996's first nine months. Bookings increased despite
strengthening of the U.S. dollar against the European currencies, which
negatively impacted total Company bookings by approximately $35 million or 4%.

Net sales for the nine months ended September 30, 1997 were $845.0 million,
compared to net sales of $813.0 million for the same period in 1996. The 4%
increase in net sales reflects increased shipments from the Flow Control
Division, significant shipments of Rotating Equipment Division original
equipment orders, and additional sales from recently acquired entities.
Partially offsetting the increase in sales was the impact of the strengthening
of the U.S. dollar against foreign currencies, which negatively impacted net
sales by approximately $35 million. International contributions to consolidated
net sales were 40% for both of the nine month periods ended September 30, 1997
and 1996. Total net sales to international customers including export sales from
the U.S. were 51% and 53%, respectively. The reduction in international
contributions reflects the currency translation impact of the weaker European
currencies.
15


The gross profit margin was 39% for the nine months ended September 30, 1997
compared to 40% for the same period in 1996. Selling and administrative expenses
as a percentage of net sales were 25% for both of the nine month periods ended
September 30, 1997 and 1996.

The effective tax rate for the nine months ended September 30, 1997, including
merger transaction expenses, was 41%, compared with 36% in 1996. Excluding the
tax impact of the merger transaction expenses, which are non-deductible, the tax
rate for the nine months ended September 30, 1997 was 37%.

During 1996, the Company recognized a restructuring charge in the former Durco
units of $5.8 million, before income taxes, to consolidate former Durco
operations in Europe and Australia. Through September 30, 1997, essentially all
termination fees and exit costs were incurred with no changes in estimate from
the original accrual.


CAPITAL RESOURCES AND LIQUIDITY
- -------------------------------


The Company's capital structure, consisting of long-term debt, deferred items
and shareholders' equity, continues to enable the Company to finance short and
long-range business objectives. At September 30, 1997, long-term debt was 22% of
the Company's capital structure, compared to 23% at December 31, 1996. Based
upon annualized 1997 results, the interest coverage ratio of the Company's
indebtedness was 9.6 at September 30, 1997, compared with 9.9 for the twelve
months ended December 31, 1996.

The return on average net assets based on annualized results at September 30,
1997, excluding the impact of merger transaction expenses, was 13%, compared to
14% at December 31, 1996. Excluding the impact of merger transaction expenses,
annualized return on average shareholders' equity was 20% at September 30, 1997,
compared to 19% at December 31, 1996.

The Company's liquidity position is reflected in a current ratio of 2.5 to 1 at
September 30, 1997, unchanged from December 31, 1996. Cash in excess of current
requirements was invested in high-grade, short-term securities. The Company
believes that cash flow generated by operations and amounts available under
borrowing arrangements will be adequate to fund operating needs, the integration
plans, and capital expenditures through the remainder of the year.

SAFE HARBOR STATEMENT: This document contains various forward-looking statements
and includes assumptions about the Company's future market conditions,
operations, and results. These statements are based on current expectations and
are subject to significant risks and uncertainties. They are made pursuant to
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Among the many factors that could cause actual results to differ materially from
the forward-looking statements are: further changes in the already competitive
environment for the Company's products or competitor's responses to the
Company's strategies, political risks or trade embargoes affecting important
country markets, unanticipated expenses or unfavorable market reaction to the
merger of the Company and BW/IP Inc., unanticipated difficulties or costs
associated with integrating
16


the management and operations of the Company and BW/IP Inc. following the
merger, and recognition of significant expenses associated with adjustments to
realign the combined company's facilities and other capabilities with its
strategies.

Net earnings for future quarters of 1997 and thereafter are uncertain and
dependent on general worldwide economic conditions in the Company's major
markets and their strong impact on the level of bookings activity.
17







SIGNATURE

Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.






FLOWSERVE CORPORATION
(Registrant)




/s/Bruce E. Hines
----------------------------
Bruce E. Hines
Senior Vice President
Chief Financial Officer





Date: November 14, 1997
- -----------------------
18


PART II
OTHER INFORMATION


ITEM 1 Not Applicable During Reporting Period

ITEM 2 Not Applicable During Reporting Period

ITEM 3 Not Applicable During Reporting Period

ITEM 4 See Special Meeting of Stockholders Summary located after
Index to Exhibits

ITEM 5 Not Applicable During Reporting Period

ITEM 6 Exhibits and Reports on Form 10-K

(a) The following Exhibits are attached hereto:

4.12 Guaranty, dated August 1, 1997, between
Flowserve Corporation and ABN-AMRO Bank N.V.

10.38 BW/IP International, Inc. Retirement Plan
(as amended and restated as of August 1,
1996)

10.39 Amendment Number One to the BW/IP
International, Inc. Retirement Plan

10.53 Employment Agreement, effective July 22,
1997 between Durco International Inc. and
Bernard G. Rethore

10.54 Employment Agreement, effective July 22,
1997 between Durco International Inc. and
William M. Jordan

27.1 Financial Data Schedule

All other Exhibits are incorporated by reference

(b) A Report on Form 8-K dated July 22, 1997, was filed
with respect to Item 5, "Other Events" for completion
of the merger of the Company and BW/IP Inc. on July
22, 1997.
19



INDEX TO EXHIBITS



<TABLE>
<CAPTION>
FOOTNOTE
REFERENCE
---------

<S> <C> <C>
(3) ARTICLES OF INCORPORATION AND BY-LAWS:

2.1 Agreement and Plan of Merger dated as of May 6, 1997, among
the Company, Bruin Acquisition Corp. and BW/IP, Inc.
"BW/IP" was filed as Annex I to the Joint Proxy Statement/
Prospectus which is part of the Registration Statement on
Form S-4, dated June 19, 1997......................... *

2.2 Durco Stock Option Agreement dated as of May 6, 1997,
between the Company, as issuer, and BW/IP, Inc. as grantee,
was filed as Annex II to the Joint Proxy Statement/
Prospectus which is part of the Registration Statement on
Form S-4, dated June 19, 1997............................ *

2.3 BW/IP Stock Option Agreement dated as of May 6, 1997,
between BW/IP Inc., as issuer, and the Company, as grantee,
was filed as Annex III to the Joint Proxy Statement/
Prospectus which is part of the Registration Statement on
Form S-4, dated June 19, 1997............................. *

3.1 1988 Restated Certificate of Incorporation of The
Duriron Company, Inc. was filed as Exhibit 3.1 to
the Company's Annual Report on Form 10-K for
the year ended December 31, 1988...................... *

3.2 1989 Amendment to Certificate of Incorporation
was filed as Exhibit 3.2 to the Company's
Annual Report on Form 10-K for the year ended
December 31, 1989............................................. *

3.3 By-Laws of The Duriron Company, Inc.
(as restated) were filed with the Commission as Exhibit
3.2 to The Company's Annual Report on Form 10-K for the
year ended December 31,
1987.......................................................... *
</TABLE>
20



<TABLE>
<S> <C> <C>
3.4 1996 Certificate of Amendment of Certificate of
Incorporation was filed as Exhibit 3.4 to the Company's
Annual Report on Form 10-K for the year ended
December 31, 1995............................................ *

3.5 Amendment No. 1 to Restated Bylaws was filed as
Exhibit 3.5 to the Company's Annual Report on
Form 10-K for the year ended December 31,
1995.................................................................. *

3.6 July 1997 Certificate of Amendment of Certificate
of Incorporation was filed as Exhibit 3.6 to the
Company's Quarterly Report on Form 10-Q, for the
Quarter ended June 30, 1997................................... *


(4) INSTRUMENTS DEFINING THE RIGHTS OF
SECURITY HOLDERS, INCLUDING INDENTURES:

4.1 Lease agreement, indenture of mortgage and deed of trust, and
guarantee agreement, all executed on June 1, 1978 in
connection with 9-1/8% Industrial Development Revenue Bonds,
Series A, City of Cookeville, Tennessee.............. +

4.2 Lease agreement, indenture of trust, and guaranty agreement,
all executed on June 1, 1978 in connection with 7-3/8%
Industrial Development Revenue Bonds, Series B, City of
Cookeville, Tennessee........................................ +

4.3 Lease agreement and indenture, dated as of January 1, 1995 and
bond purchase agreement dated January 27, 1995, in connection
with an 8% Taxable Industrial Development Revenue Bond, City
of
Albaquerque, New Mexico.................................. +


4.4 Form of Rights Agreement dated as of August 1,
1986 was filed as an Exhibit to the
Company's Form 8-A dated August 13, 1986....... *

4.5 Amendment to Rights Agreement dated August 1, 1996 was filed
as Exhibit 4.5 to the Company's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1996.......... *
</TABLE>
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4.6 Interest Rate and Currency Exchange Agreement between the
Company and Barclays Bank dated November 17, 1992 PLC in the
amount of $25,000,000 was filed as Exhibit 4.9 to Company's
Report of Form 10-K for year ended
December 31, 1992............................................. *

4.7 Loan Agreement in the amount of $25,000,000 between the
Company and Metropolitan Life Insurance Company dated November
12, 1992 was filed as Exhibit 4.10 to the Company's Annual
Report on Form 10-K for the year ended
December 31, 1992 ............................................ *

4.8 Revolving Credit Agreement between the Company and First of
America Bank - Michigan, N.A. in the amount of $20,000,000 and
dated August 22, 1995 was filed as Exhibit 4.11 to the
Company's Report on Form 10-K for the year ended
December 31, 1995................................................ +

4.9 Credit Facility between the Company in the amount of
$100,000,000 and National City Bank, as Agent, dated December
3, 1996 was filed as Exhibit 4.8 to the Company's Report on
Form 10-K for the year
ended December 31, 1996..................................... *

4.10 Rate Swap Agreement in the amount of $25,000,000 between the
Company and National City Bank dated November 14, 1996 was
filed as Exhibit 4.9 to the Company's Report on Form 10-K for
the year ended
December 31, 1996................................................. *

4.11 Rate Swap Agreement in the amount of $25,000,000 between the
Company and Key Bank National Association dated October 28,
1996 was filed as Exhibit 4.10 to the Company's Report on Form
10-K for the year ended December 31, 1996..................... *
</TABLE>
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4.12 Guaranty, dated August 1, 1997 between Flowserve
Corporation and ABN-AMRO Bank N.V..................... (filed herewith)

4.13 Credit Agreement, dated as of September 10, 1993, between BW/IP
International B.V. and ABN/AMRO was filed as Exhibit 10.dd to
BWIP's Annual Report on Form
10-K for the year ended December 31, 1993...................... *

4.14 Note Agreement, dated as of November 15, 1996, between
BW/IP International, Inc. and the Note Purchasers named
therein, with respect to $30,000,000 principal amount of
7.14% Senior Notes, Series A, due November 15, 2006, and
$20,000,000 principal amount of 7.17% Senior Notes, Series
B, due March 31, 2007, was filed as Exhibit 4.l to BW/IP's
Registration Statement on Form S-8
(Registration No. 333-21637) as filed February 12, 1997....... *

4.15 Note Agreement, dated as of April 15, 1992, between BW/IP
International, Inc. and the Note Purchasers named therein, with
respect to $50,000,000 principal amount of 7.92% Senior Notes
due May 15, 1999, filed as Exhibit 4.a to BW/IP's Quarterly
Report on Form 10-Q for the quarter ended
June 30, 1992.................................................... *

(10) MATERIAL CONTRACTS: (See Footnote "a")

10.1 The Duriron Company, Inc. Incentive Compensation Plan (the
"Incentive Plan") for Senior Executives, as amended and
restated effective January 1, 1994, was filed as Exhibit 10.1
to the Company's Annual Report on Form 10-K for the year ended
December 31,
1993........................................................... *

10.2 Amendment No. 1 to the Incentive Plan was filed as
Exhibit 10.2 to the Company's Annual Report on Form
10-K for the year ended December 31, 1995....... *

10.3 The Duriron Company, Inc. Supplemental Pension
Plan for Salaried Employees was filed with the
Commission as Exhibit 10.4 to the Company's
Annual Report on Form 10-K for the year ended
December 31, 1987............................................. *
</TABLE>
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10.4 The Duriron Company, Inc. amended and
restated Director Deferral Plan was filed as Attachment A to
the Company's definitive 1996 Proxy Statement filed with the
Commission
on March 10, 1996............................................. *

10.5 Change in Control Agreement ("CIC") between
The Duriron Company, Inc. and William M. Jordan,
Chairman, President and CEO was filed as Exhibit
10.5 to the Company's Report on Form 10-K for
the year ended December 31, 1996........................... *

10.6 Form of CIC Agreement between all other executive officers of
the Company was filed as Exhibit 10.6 to the Company's Report
on Form 10-K for the
year ended December 31, 1996................................ *

10.7 The Duriron Company, Inc. First Master Benefit
Trust Agreement dated October 1, 1987 was filed
as Exhibit 10.24 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1987... *

10.8 Amendment #1 to the first Master Benefit Trust Agreement dated
October 1, 1987 was filed as Exhibit 10.24 to the Company's
Annual Report on Form 10-K for the year ended December 31,
1993........................................................... *

10.9 Amendment #2 to First Master Benefit Trust Agreement was filed
as Exhibit 10.25 to the Company's Annual Report on Form 10-K
for the
year ended December 31, 1993........................... *

10.10 The Duriron Company, Inc. Second Master Benefit
Trust Agreement dated October 1, 1987 was filed
as Exhibit 10.12 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1987.... *

10.11 First Amendment to Second Master Benefit Trust Agreement was
filed as Exhibit 10.26 to the Company's Annual Report on Form
10-K for the
year ended December 31, 1993........................... *
</TABLE>
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10.12 The Duriron Company, Inc. Long-Term Incentive Plan (the
"Long-Term Plan"), as amended and restated effective November
1, 1993 was filed as Exhibit 10.8 to the Company's Annual
Report on
Form 10-K for the year ended December 31, 1993.. *

10.13 Amendment No. 1 to the Long-Term Plan was filed
as Exhibit 10.13 to the Company's Annual Report
on Form 10-K for the year ended December 31,
1995............................................................ *

10.14 The Duriron Company, Inc. 1989 Stock Option Plan as amended
and restated effective January 1, 1997 was filed as Exhibit
10.14 to the Company's Report on Form 10-K for the year ended
December 31,
1996............................................................ *

10.15 The Duriron Company, Inc. 1989 Restricted Stock Plan (the
"Restricted Stock Plan") as amended and restated effective
January 1, 1997 was filed as Exhibit 10.15 to the Company's
Report on Form
10-K for the year ended December 31, 1996............ *

10.16 The Duriron Company, Inc. Retirement
Compensation Plan for Directors ("Director
Retirement Plan") was filed as Exhibit 10.15 on
the Company's Annual Report to Form 10-K for
the year ended December 31, 1988....................... *

10.17 Amendment No. 1 to Director Retirement Plan
was filed as Exhibit 10.21 to the Company's
Annual Report on Form 10-K for the year ended
December 31, 1995............................................... *
</TABLE>
25



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10.18 The Company's Benefit Equalization Pension
Plan ("Equalization Plan") was filed as Exhibit
10.16 to the Company's Annual Report on Form
10-K for the year ended December 31, 1989....... *

10.19 Amendment #1 dated December 15, 1992 to the Equalization Plan
was filed as Exhibit 10.18 to the Company's Annual Report on
Form 10-K for the
year ended December 31, 1992........................... *

10.20 The Company's Equity Incentive Plan as amended and restated
effective July 21, 1995 was filed as Exhibit 10.25 to the
Company's Annual Report on
Form 10-K for the year ended December 31, 1995.. *

10.21 Supplemental Pension Agreement between the Company and William
M. Jordan dated January 18, 1993 was filed as Exhibit 10.15 to
the Company's Annual Report on Form 10-K
for the year ended December 31, 1992................ *

10.22 1979 Stock Option Plan, as amended and restated April 23,
1991, and Amendment #1 thereto dated December 15, 1992, was
filed as Exhibit 10.17 to the Company's Annual Report on Form
10-K for the year ended
December 31, 1992 ............................................ *

10.23 Deferred Compensation Plan for Executives was filed as Exhibit
10.19 to the Company's Annual Report on Form 10-K for the year
ended December 31, 1992 ............................................ *

10.24 Executive Life Insurance Plan of The Duriron
Company, Inc. was filed as Exhibit 10.29 to the
Company's Annual Report on Form 10-K for the
year ended December 31, 1995............................ *

10.25 Executive Long-Term Disability Plan of The
Duriron Company, Inc. was filed as Exhibit 10.30
to the Company's Annual Report on Form 10-K for
the year ended December 31, 1995........................ *
</TABLE>
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10.26 Consulting Agreement between James S. Ware and Durametallic
Corporation dated April 21, 1991 was filed as Exhibit 10.31 to
the Company's Annual Report on Form 10-K for the year ended
December 31, 1995................................................ *

10.27 Senior Executive Death Benefit Agreement between James S. Ware
and Durametallic dated April 12, 1991 was filed as Exhibit
10.32 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1995........................ *

10.28 Executive Severance Agreement between James S. Ware and
Durametallic Corporation dated January 6, 1994 was filed as
Exhibit 10.33 to the Company's Annual Report on Form 10-K for
the
year ended December 31, 1995.............................. *

10.29 Agreement between James S. Ware and the Company dated
September 11, 1995 was filed as Exhibit 10.34 to the Company's
Annual Report on Form 10-K for the
year ended December 31, 1995....................................... *

10.30 Agreement and Plan of Merger Among The Duriron Company, Inc.,
Wolverine Acquisition Corporation and Durametallic
Corporation, dated as of September 11, 1995 was filed as Annex
A on the Form S-4 Registration Statement filed by the Company
on September 11, 1995....................................................... *

10.31 Split-Dollar Life Insurance Agreement between the Company and
James S. and Sheila D. Ware Irrevocable Trust II signed March
6, 1996 was filed as Exhibit 10.36 to the Company's quarterly
report on Form 10-Q for the quarter ended
March 31, 1996.................................................................... *

10.32 Employee Protection Plan, as revised effective March 1, 1997
(which provides certain severance benefits to employees upon a
change of control of the Company) was filed as Exhibit 10.32
to the Company's Report on Form 10-K for the year
ended December 31, 1996..................................................... *

10.33 1997 Stock Option Plan was included as Exhibit A to the
Company's 1997 Proxy Statement which was filed with
the Commission on March 17, 1997...................................... *
</TABLE>
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10.34 BW/IP International, Inc. 1992 Long-Term Incentive Plan
was filed as Appendix A to BW/IP's Proxy Statement for the 1992
Annual Meeting of Stockholders, dated April 17, 1992............... *

10.35 BW/IP, Inc. 1996 Long-Term Incentive Plan was filed as
Appendix A to BW/IP's Proxy Statement for the 1996 Annual
Meeting of Stockholders, dated April 9, 1996.......................... *

10.36 First Amendment to the BW/IP, Inc. 1996 Long-Term Incentive
Plan was filed as Exhibit 99.d to BW/IP's Registration
Statement on Form S-8 (Registration No. 333-21637) as filed
February 12, 1997......................................................... *

10.37 Supplemental Executive Retirement Plan was filed as Exhibit
10.rrrr to BW/IP's Registration Statement on Form S-1
(Registration No. 33-45165) as filed February 18, 1992......... *

10.38 BW/IP International, Inc. Retirement Plan (as amended and
restated as of August 1, 1996)........................................ (filed herewith)

10.39 Amendment Number One to the BW/IP International, Inc.
Retirement Plan......................................................... (filed herewith)

10.40 Amendment Number One to the Supplemental Executive Retirement
Plan was filed as Exhibit 10.ee to BW/IP's Annual
Report on 10-K for the year ended December 31, 1993........ *

10.41 BWIP Holding, Inc. Non Employee Directors Stock Option
Plan, filed as Appendix A to BW/IP's Proxy Statement
for the 1993 Annual Meeting of Stockholders, dated
April 16, 1993.......................................................... *

10.42 BW/IP, Inc. 1996 Directors Stock and Deferred Compensation
Plan was filed as Appendix B to BW/IP's Proxy Statement for the
1996 Annual Meeting of Stockholders dated April 9, 1996....... *

10.43 First Amendment to the BW/IP Inc. 1996 Directors Stock and
Deferred Compensation Plan was filed as Exhibit 99.f to BW/IP's
Registration Statement on Form S-8 (Registration No. 333-21637)
dated February 12, 1997.................................................. *

10.44 Amended and Restated BW/IP International, Inc. Retiree Health
Care Plan was filed as Exhibit 10.jj to BW/IP's Annual Report
on Form 10-K for the year ended December 31, 1993.............. *
</TABLE>
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10.45 Amendment to the BW/IP International Inc. Retiree Health Care
Plan was filed as Exhibit 10.mm to BW/IP's Annual Report on
Form 10-K for the year ended December 31, 1994................. *

10.46 Amendment to the BW/IP International, Inc. Retiree Health Care
Plan was filed as Exhibit 10.x to BW/IP's Annual Report on Form
10-K for the year ended December 31, 1995.......................... *

10.47 Amendment to the BW/IP International, Inc. Supplemental
Executive Retirement Plan was filed as Exhibit 10.nn to
BW/IP's Annual Report on Form 10-K for the year ended
December 31, 1994................................................. *

10.48 Amendment to the BW/IP International, Inc. Supplemental Executive
Retirement Plan was filed as Exhibit 10.z to BW/IP's Annual Report
on Form 10-K for the year ended December 31, 1995................ *

10.49 Employment Agreement, dated October 19, 1995 between BW/IP, Inc.
and Bernard G. Rethore was filed as Exhibit 10.bb to BW/IP's Annual
Report on Form 10-K for the year ended December 31, 1995......... *

10.50 Employment Continuation Agreement, dated December 14, 1995,
between BW/IP, Inc. and Bernard G. Rethore was filed as
Exhibit 10.cc to BW/IP's Annual Report on Form 10-K for the
year ended
December 31, 1995............................................................... *

10.51 1995 Stock Option Agreements, dated as of October 19, 1995,
between BW/IP, Inc. and Bernard G. Rethore were filed as
Exhibit 10.dd to BW/IP's Annual Report on Form 10-K for the
year ended
December 31, 1995................................................................ *

10.52 BW/IP International, Inc. 1997 Management Incentive Plan was
filed as Exhibit 10.kk to BW/IP's Annual Report on Form 10-K
for the
year ended December 31, 1996.................................................. *

10.53 Employment Agreement, effective July 22, 1997, between Durco
International Inc. and Bernard G. Rethore................................... (filed herewith)

10.54 Employment Agreement, effective July 22, 1997, between Durco
International Inc. and William M. Jordan.................................... (filed herewith)
</TABLE>
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(27) FINANCIAL DATA SCHEDULE

27.1 Financial Data Schedule (submitted for the SEC's
information).............................................. (filed herewith)
<FN>
- --------------

"*" Indicates that the exhibit is incorporated by reference into
this Quarterly Report on Form 10-Q from a previous filing with
the Commission. The Company's file number with the Commission
is "1-13179" (previous file number "0-325")

"+" Indicates that the document relates to a class of indebtedness
that does not exceed 10% of the total assets of the Company
and subsidiaries and that the Company will furnish a copy of
the document to the Commission upon request.

"a" The documents identified under Item 10 include all management
contracts and compensatory plans and arrangements required to
be filed as exhibits.
</TABLE>
30
Item 4 Submission of Matters to a Vote of Security Holders

(a) A Special Meeting of Stockholders of the Company was held
on July 22, 1997.

(c) The following matters were submitted to a vote of
the stockholders:
(I) A proposal to approve issuance of shares of
Company common stock in accordance with the
terms of the Agreement and Plan of Merger,
dated May 6, 1997, among Durco International
Inc. ("Durco"), Bruin Acquisition Corp., a
wholly owned subsidiary of Durco ("Sub") and
BW/IP, Inc. (BW/IP) which provided for the
merger of Sub with and into BW/IP, with
BW/IP surviving as a wholly owned subsidiary
of Durco. The proposal was approved with
18,251,793 votes cast for the proposal,
186,960 votes cast against the proposal and
an aggregate of 44,955 abstentions and
broker non-votes.

(II) A proposal to amend the Company's Restated
Certificate of Incorporation to change the
corporate name from Durco International Inc.
to Flowserve Corporation. The proposal was
approved with 19,039,619 votes cast for the
proposal, 958,782 votes cast against the
propsal and an aggregate of 87,982
abstentions and broker non-votes.

(III) A proposal to increase the authorized
number of shares of Durco common stock from
60,000,000 to 120,000,000. The proposal was
approved with 18,955,103 votes cast for the
proposal, 1,056,832 votes against the
proposal and an aggregate of 74,449
abstentions and broker non-votes.