BALA CYNWYD, Pa., August 7, 2003 (PRIMEZONE) -- The following statement was issued today by the law firm of Schiffrin & Barroway, LLP:
Notice is hereby given that a class action lawsuit was filed in the United States District Court for the Northern District of Texas on behalf of all purchasers of the common stock of Flowserve Corporation (NYSE:FLS) ("Flowserve" or the "Company") from October 23, 2001 through September 27, 2002, inclusive (the "Class Period").
If you wish to discuss this action or have any questions concerning this notice or your rights or interests with respect to these matters, please contact Schiffrin & Barroway, LLP (Marc A. Topaz, Esq. or Stuart L. Berman, Esq.) toll free at 1-888-299-7706 or 1-610-667-7706, or via e-mail at info@sbclasslaw.com.
The Complaint alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between October 23, 2001 and September 27, 2002, thereby artificially inflating the price of Flowserve securities. During the Class Period, as alleged in the complaint, the Company issued statements that failed to disclose and/or misrepresented the following adverse facts, among others: (a) that the Company's declining revenues and earnings during 2001 and 2002 would have caused the Company to violate its loan covenants but for its public stock offerings, which enabled the Company to reduce its debt, obtain favorable interest rates and debt refinancings from lenders, and enable Flowserve to fund the acquisition of the Flow Control Division ("IFC") of Invensys plc, among other things; (b) that demand for the Company's products had materially declined, especially its aftermarket sales or "quick-turnaround business" resulting in revenue and earnings shortfalls; (c) that the Company's recent acquisitions, including Ingersoll-Dresser Pump Co. ("IDP") and IFC, had not materially altered the Company's dependence on revenue streams from the Chemical industry, or further stabilized its aftermarket revenue streams for its pump and valve business through significant cross-selling opportunities, among other things; (d) that the Company's reorganizations, downsizing and facility closures, following its acquisition of Innovative Valve Technologies, Inc. ("Invatec"), IDP and IFC had failed to eliminate excess manufacturing capacity resulting in the material erosion of the Company's gross margins and earnings; (e) that the Company had severe and continuing integration problems following the acquisition of Invatec, resulting in a disruption of the Company's service and maintenance operations and contributing to the decline in Flowserve's high margin service revenues, eventually necessitating the reorganization of the Company's service business segment; and (f) based on the foregoing, defendants' opinions, projections and forecasts concerning the Company and its operations were lacking in a reasonable basis at all times.
On September 27, 2002, the Company warned of a 21% earnings shortfall for the quarter ending September 30, 2002, and cut its full year 2002 earnings guidance by over 60%, to $1.45 per share, from the $2.30 per share earnings guidance shared with investors during roadshow presentations promoting Flowserve's public offerings less than six months prior.
Market reaction to the Company's announcement was swift and severe. Flowserve shares fell over 38% to close at $8.70 on September 27, 2002, a decline of more than 75% from the Class Period high of $34.90 reached on May 2, 2002.
Prior to the disclosure of the true facts, Flowserve completed two public offerings of its common stock, thereby raising more than $433.9 million, and Flowserve insiders sold their personally-held Flowserve common stock, generating millions in proceeds.
Plaintiff seeks to recover damages on behalf of class members and is represented by the law firm of Schiffrin & Barroway, which prosecutes class actions in both state and federal courts throughout the country. Schiffrin & Barroway is a driving force behind corporate governance reform, and has recovered in excess of a billion dollars on behalf of institutional and high net worth individual investors. For more information about Schiffrin & Barroway, or to sign up to participate in this action online, please visit http://www.sbclasslaw.com/currentcases.cfm.
If you are a member of the class described above, you may, not later than October 6, 2003, move the Court to serve as lead plaintiff of the class, if you so choose. In order to serve as lead plaintiff, however, you must meet certain legal requirements.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca