S&P: Flowserve unaffected by inquiry

Standard & Poor's said Monday that the announcement by Flowserve Corp. (BB-/stable/--) on Friday that the Securities and Exchange Commission initiated an informal inquiry related to the Feb. 3 announcement that Flowserve would restate its financial statements has no immediate affect on the company's ratings or outlook.

S&P said Flowserve previously announced that it will restate its financial results back to 2000, mostly to correct inventory and related balances, which will result in costs of sales adjustments, stemming from failure by some employees in the valve and pump business to comply with internal control procedures following computer systems implementations.

The total estimated pretax impact of the restatement between the year ended Dec. 31, 2000 and Sept. 30, 2003 is about $11 million.

S&P previously indicated that, based upon available information, it believes the restatements will not weaken the company's liquidity position or reduce access to its bank credit facilities. In addition, there is no impact on previously reported cash flow from operations, although Flowserve will likely incur some additional costs to strengthen internal controls.

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