##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
      Form 10-K
      þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal
    year ended April 30,
    2010ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file number 01-34443
      FLOW INTERNATIONAL
    CORPORATION
      Washington

91-1104842(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)   23500  64th Avenue South
    Kent, Washington 98032(253) 850-3500
      Securities registered pursuant to Section 12(b) of the
    Act:
 Common Stock, $.01 Par Value
 Common Share Purchase Rights
     
      o þ
  o þ
  þ o
  Regulation S-T o o
  Regulation S-K Form 10-K Form 10-K. þ
  12b-2
  Large
    accelerated
    filer o
    Accelerated
    filer þ
    Non-accelerated
    filer o
    Smaller
    reporting
    company o   Rule 12b-2 o þ
          DOCUMENTS
    INCORPORATED BY REFERENCE
  Form 10-K. Form 10-K Form 10-K.




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##### 





Table of
    Contents:
   
 PagePART I:Item 1


Business


4Item 1A


Risk Factors


9Item 1B


Unresolved Staff Comments


15Item 2


Properties


15Item 3


Legal Proceedings


15Item 4


(Removed and Reserved)


15PART II:Item 5


Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


15Item 6


Selected Financial Data


18Item 7


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


19Item 7A


Quantitative and Qualitative Disclosures About
    Market Risk


39Item 8


Financial Statements and Supplementary Data


40Item 9


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


80Item 9A


Controls and Procedures


80Item 9B


Other Information


81PART III:Item 10


Directors, Executive Officers and Corporate
    Governance


81Item 11


Executive Compensation


82Item 12


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


82Item 13


Certain Relationships and Related Transactions,
    and Director Independence


82Item 14


Principal Accountant Fees and Services


82PART IV:Item 15


Exhibits and Financial Statement Schedules


82EX-21.1EX-23.1EX-31.1EX-31.2EX-32.1EX-99.1   2




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##### Table of Contents



Forward-Looking
    Statements
  Forward-looking statements in this report, including without
    limitation, statements relating to the Companys plans,
    strategies, objectives, expectations, intentions, and adequacy
    of resources, are made pursuant to the safe harbor provisions of
    the Private Securities Litigation Reform Act of 1995. The words
    may, expect, believe,
    anticipate, estimate, plan
    and similar expressions are intended to identify forward-looking
    statements. These statements are no guarantee of future
    performance and involve certain risks, assumptions, and
    uncertainties that are difficult to predict. Therefore, actual
    outcome and results may differ materially from what is expressed
    or forecasted in such forward-looking statements.
  We make forward-looking statements of our expectations which
    include but are not limited to:
  
    statements regarding the successful execution of our
    strategic initiatives, including introduction of new products
    and realignment of our existing product line;
    statements regarding our ability to respond to a decline in
    the near-term demand for our products by cutting costs;
    statements regarding our belief that the diversity of our
    markets will enable us to absorb the economic downturn with less
    impact than conventional machine tool manufacturers;
    statements regarding our ability to solidify our position as
    we exit the recession by introducing new products, repositioning
    our products, expanding our indirect sales channel of
    distribution, realigning our manufacturing footprint and
    ensuring that we have the appropriate capital structure to
    facilitate growth and investments;
    statements regarding our expectation that expanding our
    indirect sales channel will help us capture a leading market
    share globally;
    statements regarding the realization of backlog in the
    Advanced segment;
    statements regarding the use of cash, cash needs and ability
    to raise capital
    and/or use
    our Senior Credit Facility;
    statements regarding our belief that our existing cash and
    cash equivalents, along with the expected proceeds from our
    operations and available amounts under our Senior Credit
    Facility, will provide adequate liquidity to fund our operations
    through at least the next twelve months;
    statements regarding our ability to meet our debt covenants
    in future periods;
    statements regarding our technological leadership
    position;
    statements regarding our ability to effectively manage our
    sales force and indirect sales channel;
    statements regarding anticipated results of potential or
    actual litigation;
    statements regarding the realizability of our deferred tax
    assets and our expectation that our unrecognized tax benefits
    will not change significantly within the next twelve months.  There may be other factors not mentioned above or included in
    our SEC filings that may cause our actual results to differ
    materially from those in any forward-looking statement. You
    should not place undue reliance on these forward-looking
    statements. We assume no obligation to update any
    forward-looking statements as a result of new information,
    future events or developments, except as required by federal
    securities laws.
 3




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##### Table of Contents



PART I  Item 1.
    Description
    of the Business  Business
    Overview
    Form 10-K Form 10-K
  Our
    History
      
    invented the abrasive waterjet; and
    led the waterjet industry in the use of pure waterjet cutting
    for disposable diapers and tissue paper.    
    developed the first 55,000 psi direct drive pumps;
    developed the first 60,000 psi intensifier and the first 87,000
    psi intensifier;
    introduced
    WindowsR-based

    intelligent waterjet control software 
    FlowMastertm 

    to the industry for abrasive waterjet flat stock cutting machine
    tools;
    developed the first fully integrated cutting machine tool with
    all functions and diagnostic sensors centralized at the operator
    control station;
    invented the UltraPierce accessory for the piercing of
    composites, stone, glass, ceramics without delaminating or
    breakage of material during the drilling process; and
    developed the first multi-process
    3-dimensional
    cutting large envelope machines for trimming and drilling of
    composite aerospace wings and structures using abrasive
    waterjet, routers, and inspection    
    invented Dynamic
    Waterjet®

    with Active Tolerance Control to produce parts two to four times
    faster and with tolerances down to one to three thousandths of
    an inch;
    invented the first collision and height sensor, the Dynamic
    Contour Follower, for Dynamic
    Waterjet®

    applications;
    developed the first 94,000 psi rated intensifier pump for
    commercial cutting applications;
    developed the first extremely high speed pure waterjet machine,
    the Sonic, for gasket and foam production; and
    introduced Dynamic Waterjet XD, a
    3-dimentional
    waterjet cutting technology that uses
    SmartStreamtm. 4




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Our
    Business Strategy
      Risk Factors
  Products
    and Services
        Waterjet Cutting. 2-dimensionally 3-dimensionally.
   5




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##### Table of Contents



Surface Preparation and Industrial Cleaning
    Products.
  Parts and Services.
  Marketing
    and Customers
          Competition
    in Our Markets
   6




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##### Table of Contents



Business
    Segments
    Business Segments and Geographic
    Information Financial Statements and
    Supplementary Data
  Sales
    Outside the United States
    
    $33.1 million of exports from the United States;
    $31.5 million of sales from Europe; and
    $38.1 million of sales from our other foreign locations  Raw
    Materials
   7




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Intellectual
    Property
    Product
    Development
    Backlog
    and/or
  Working
    Capital Practices
   8




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Employees
    Available
    Information
  1-800-SEC-0330. www.sec.gov
  Form 10-K, Form 10-Q, Form 8-K www.flowcorp.com 
  Item 1A.
    Risk
    Factors      Risks
    Related to our Business
  Our
    results of operations and financial condition could be
    materially affected by changes in product mix or
    pricing.
    Failure
    to effectively manage our indirect sales channel could adversely
    affect our results of operations and financial
    condition.
    Foreign
    currency exchange rates and commodity prices may adversely
    affect our results of operations and financial
    condition.
   9




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If we
    fail to obtain sufficient quantities of materials, components
    and equipment required for our manufacturing activities at
    competitive prices and quality and on a timely basis or fail to
    effectively adapt out cost structure to changing market
    conditions our business and financial results will
    suffer.
    Our
    operations may be impaired as a result of disasters, business
    interruptions or similar events.
    The
    recent economic recession and its impact on the credit markets
    could adversely affect our results of operations and access to
    capital.
      
    adversely affect our ability to access credit markets or raise
    capital on terms acceptable to us;
    limit our capital expenditures for repair or replacement of
    existing facilities or equipment;
    adversely affect our ability to be in compliance with covenants
    under existing credit agreements;
    have an adverse effect on our customers and suppliers and their
    ability to purchase our products; and
    reduce our ability to take advantage of growth and expansion
    opportunities. 10




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We may
    not be able to comply with the financial tests or ratios
    required to comply with our covenant requirements under our Line
    of Credit which may impact our ability to draw funds and may
    result in the acceleration of the maturity of, and/or the
    termination of the Line of Credit.
    
    draw down on our existing line of credit or incur more debt;
    make certain investments and payments;
    fund additional letters of credit;
    pay cash dividends; and
    transfer or sell assets.  and/or
  We may
    need to raise additional funds to finance our future capital
    and/or operating needs.
  and/or
  If we
    fail to technologically advance our products through continued
    research and development, our financial results may be adversely
    affected.
  and/or and/or
  We
    might fail to adequately protect our intellectual property
    rights or third parties might assert that our technologies
    infringe on their intellectual property.
   11




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and/or
  Changes
    in our income tax rates or exposure to additional income tax
    liabilities could affect our profitability. In addition, audits
    by tax authorities could result in additional tax payments for
    prior periods.
  non-U.S. tax
  Unexpected
    losses in future reporting periods may require the Company to
    adjust the valuation allowance against its deferred tax
    assets.
    International
    economic, political, legal and business factors could negatively
    affect our results of operations, cash flows and financial
    condition.
  non-U.S. operations,
  
    interruption in the transportation of materials to us and
    finished goods to our customers;
    changes in a specific countrys or regions political
    or economic conditions;
    trade protection measures;
    import or export licensing requirements;
    unexpected changes in laws or licensing and regulatory
    requirements, including negative consequences from changes in
    tax laws;
    limitations on ownership and on repatriation of earnings; 12




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
    difficulty in staffing and managing widespread operations;
    differing labor regulations;
    differing protection of intellectual property; and
    terrorist activities and the U.S. and international
    response thereto.    If we
    are unable to complete the upgrades to our information
    technology systems that are currently in process, or our
    upgrades are unsuccessfully implemented, our future success may
    be negatively impacted.
    We may
    incur net losses in the future, and we may not be able to regain
    or sustain profitability on a quarterly or annual
    basis.
    Our
    stock price has been and is likely to continue to be highly
    volatile.
    
    actual or anticipated fluctuations in our operating results
    or our competitors operating results;
    announcements by us or our competitors of new products,
    capacity changes, significant contracts, acquisitions or
    strategic investments;
    our growth rate and our competitors growth rates;
    changes in stock market analyst recommendations regarding us,
    our competitors or our industry generally ,or lack of analyst
    coverage of our common stock;
    sales of our common stock by our executive officers,
    directors and significant stockholders or sales of substantial
    amounts of common stock; and
    changes in accounting principles.    If we
    are unable to hire, retain and motivate highly qualified
    employees, including our key employees, we may not be able to
    successfully manage our business.
   13




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and/or
    We
    have unresolved claims with the purchaser of
    Avure.
    Risks
    Related to the Industries in Which We Operate
  Intense
    competition in our markets could prevent us from increasing
    distribution of our products in those markets or cause us to
    lose market share.
    Cyclical
    economic conditions may adversely affect our financial condition
    and results of operations or our growth rate could decline if
    the markets into which we sell our products decline or do not
    grow as anticipated.
   14




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Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties      Owned


Leased(In square feet)Standard


15,800



283,500Advanced


40,200



22,200Total


56,000



305,700     
    Standard Kent, Washington, which is our
    headquarters and the primary ultrahigh-pressure pump
    manufacturing facility; Jeffersonville, Indiana, a manufacturing
    facility for some components of our Standard systems; Yokohama
    and Nagoya, Japan; Shanghai, Guangzhou and Beijing, China;
    Hsinchu, Taiwan; Bretten, Germany; Birmingham, England; Milan,
    Italy; Madrid, Spain; Lyon, France; Brno, Czech Republic; Sao
    Paulo, Brazil; and Buenos Aires; Argentina;
    Advanced Jeffersonville, Indiana, the primary
    manufacturing facility for our Advanced systems.    Item 3.
    Legal
    Proceedings  Commitments and
    Contingencies
  Item 4.
    (Removed
    and Reserved) PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities  Market
    Information
    Fiscal Year 2010

Fiscal Year 2009Low

High

Low

HighFirst Quarter

$
1.70


$
2.87


$
5.05


$
11.40Second Quarter


1.96



2.91



2.86



10.19Third Quarter


2.32



4.08



1.21



4.10Fourth Quarter


2.74



4.00



1.05



1.98  15




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Holders
    of the Companys Common Stock
    Dividends
  Long-Term
    Obligations and Notes Payable Financial Statements and
    Supplementary Data,
  Issuer
    Purchases of Equity Securities
    Securities
    Authorized for Issuance Under Equity Compensation
    Plans
    Number of Securities

Weighted Averageto be Issued Upon

Exercise Price of

Number of SecuritiesExercise of

Outstanding

Remaining AvailableOutstanding Options

Options

for Future IssuanceEquity Compensation Plans approved by security holders


628,082


$
10.48



4,173,211Equity Compensation Plans not approved by security holders










Total


628,082


$
10.48



4,173,211   Stock-based Compensation Financial Statements and
    Supplementary Data
 16




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Comparison
    of Five-Year Cumulative Total Shareholder Return*
  5-year
  COMPARISON
    OF 5 YEAR CUMULATIVE TOTAL RETURN*
    Among Flow International Corporation, The S&P Smallcap 600
    Index.
    The NASDAQ Composite Index And The Dow Jones US Industrial
    Machinery Index
  
  4/05


4/06


4/07


4/08


4/09


4/10Flow International Corporation



100.00




228.38




196.62




169.43




30.74




53.38S&P Smallcap 600



100.00




131.39




141.45




128.65




89.99




132.99NASDAQ Composite



100.00




121.25




134.58




127.40




89.92




129.99Dow Jones US Industrial Machinery



100.00




84.87




88.46




100.13




59.62




97.30   *
    
    The stock price performance included in this graph is not
    necessarily indicative of future stock price performance.  Performance
    Graph Assumptions
  
    Assumes a $100.00 investment in our common stock and in each
    index in April 30, 2005 and tracks it through to
    April 30, 2010.
    Total return assumes all dividends are reinvested.
    Measurement dates are the last trading day of the fiscal year
    shown.  Recent
    Sales of Unregistered Securities
   17




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##### Table of Contents



Item 6.
    Selected
    Financial Data  Form 10-K.
  Year Ended April 30,2010

2009

2008

2007(1)

2006(1)(In thousands, except per share amounts)Statement of Operations Data:Sales

$
173,749


$
210,103


$
244,259


$
213,435


$
202,658Income (Loss) From Continuing Operations


(7,389
)


(23,086
)


21,911



4,022



7,047Net Income (Loss)


(8,484
)


(23,819
)


22,354



3,755



6,677Basic Income (Loss) Per Share From Continuing Operations


(0.17
)


(0.61
)


0.59



0.11



0.20Basic Net Income (Loss) Per Share


(0.19
)


(0.63
)


0.60



0.10



0.19Diluted Income (Loss) Per Share From Continuing Operations


(0.17
)


(0.61
)


0.58



0.11



0.19Diluted Net Income (Loss) Per Share


(0.19
)


(0.63
)


0.59



0.10



0.18   April 30,2010

2009

2008

2007

2006(In thousands)Balance Sheet Data:Working Capital

$
31,913


$
27,923


$
56,126


$
43,108


$
41,857Total Assets


131,209



144,960



151,155



123,172



119,301Short-Term Obligations


411



16,593



2,095



7,188



3,247Long-Term Obligations, net(2)


7,972



1,937



2,333



2,779



3,774Shareholders Equity


75,624



62,711



86,064



61,224



56,557     (1)
    
    Our consolidated statements of operations for fiscal years 2007
    and 2006 have been recast to reflect the results of operations
    of our CIS Technical Solutions division as discontinued
    operations.(2)
    
    Fiscal year 2010 long-term obligations includes
    $8.0 million related to subordinated notes issued to OMAX
    pursuant to the terms of the amended Merger Agreement and the
    Settlement and Cross Licensing Agreement which is discussed in
    Note 18  Provision for Patent Litigation and
    Termination of OMAX Merger Agreementto the Consolidated
    Financial Statements included in Item 8, Financial
    Statements and Supplementary Data. 18




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Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations    
    Factors which might affect our business;
    Our earnings and costs in the periods presented;
    Changes in earnings and costs between periods;
    Impact of these factors on our overall financial condition;
    Expected future expenditures for capital projects; and
    Expected sources of cash for future operations and capital
    expenditures.  Financial Statements and
    Supplementary Data
  
    Executive Summary, including overview, and business strategy;
    Significant events that are important to understanding the
    results of our operations and financial condition;
    Results of operations beginning with an overview of our results,
    followed by a detailed review of those results by reporting
    segment;
    Financial condition addressing liquidity position, sources and
    uses of cash, capital resources and requirements, commitments,
    and off-balance sheet arrangements; and
    Critical accounting policies which require managements
    most difficult, subjective or complex judgment.  Risk Factors
  Executive
    Summary
  Overview
    and Outlook
      
    Repositioning our existing product offerings and introducing new
    products to address customer needs;
    Expanding our indirect sales channel of distribution; 19




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
    Focusing on cost reduction initiatives across the organization
    through the resizing and realignment of our manufacturing
    operations and organizational structure; and
    Ensuring that we have the appropriate capital structure to
    facilitate growth and investments.    Repositioning
    our Products, Investing in New Products, and Enhancing Global
    Customer Access through Indirect Sales Channel
  
    Launched a new Mach Series of waterjet cutting equipment which
    feature the next generation of waterjet technology in fiscal
    year 2010. Our new Mach Series consists of three distinct
    product lines: the Mach 4, Mach 3, and Mach 2, all of which
    offer complete systems solutions to address a full array of
    customer needs while delivering the widest range of
    capabilities, technologies and price in the industry;
    Introduced Dynamic Waterjet XD, a
    3-dimentional
    waterjet cutting technology that uses
    SmartStreamtm

    technology; and
    Added a full second channel of distribution by adding 41
    distributors in 33 countries since the beginning of calendar
    year 2009. This indirect sales channel will augment our existing
    direct sales force and primarily focus on selling mid to lower
    priced products.  Cost
    Reduction Initiatives and Manufacturing Realignment
  
    Reduced our fixed-cost structure compared to fiscal year 2009 by
    approximately $6 million through the elimination of
    30 full-time positions globally and the culmination of the
    plan to consolidate our manufacturing operations to two
    factories by completing the shutdown of our Taiwan manufacturing
    plant;
    Temporarily reduced wages for majority of our salaried employees
    and suspended certain employee benefits rather than instituting
    mass layoffs to ensure that we can effectively address growth in
    the future. While these temporary wage reductions and benefit
    suspensions helped us to weather the storm in a turbulent time,
    they did not fit into our long-term strategy of attracting and
    retaining skilled and knowledgeable people. We therefore began
    reinstating some of these wages and employee benefits, that had
    been temporarily suspended in the third quarter of fiscal year
    2010, following the second sequential quarter of revenue growth
    since the recession began. We will continue to carefully monitor
    our sales volume and other economic indicators and review our
    ability to reinstate the remaining temporary cost reductions on
    a phased-in approach.  Appropriate
    Capital Structure and Use of Funds to Invest in the
    Business
  
    Reduced our near-term and long-term debt obligations, including
    amounts outstanding under our Senior Credit Facility, through
    the sale of our manufacturing facility in Taiwan for
    $4.7 million following the consolidation of our
    manufacturing footprint and through a public offering of
    8,998,750 common shares at an offering price of $2.10 per share,
    which included 1,173,750 shares issued as a result of the
    underwriter fully exercising its over-allotment option. This
    offering, which was completed in September 2009, generated net
    proceeds of approximately $17.2 million after deducting
    underwriting commissions and estimated offering expenses;
    Amended our Senior Credit Facility in August 2009. This
    amendment revised the financial covenants that we are required
    to maintain, providing us with more financial flexibility to
    operate our business in a challenging economic environment;
    Continued to invest in our new Enterprise Resource Planning
    system and information technology infrastructure which we
    believe will provide a means to improve business intelligence
    and the distribution of information across the
    organization; and
    Leveraged lean manufacturing initiatives to increase our
    capacity utilization and productivity. 20




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Matters
    Affecting Comparability
    Restructuring
    and Other Operating Charges
    Business Combinations,
  Provision
    for Patent Litigation and Termination of OMAX Merger
    Agreement.
      
    A non-refundable cash payment of $8 million to OMAX in
    March 2009 as part of the execution of the Agreement;
    A cash payment of $6 million in March 2009 paid directly to
    an existing escrow account with OMAX, increasing the escrow
    amount from $9 million to a total of $15 million as
    part of the execution of the Agreement; and
    In the event the merger would have been consummated by
    August 15, 2009, the entire amount would have been applied
    towards the $75 million purchase price. However, in the
    event the merger would not have been consummated by
    August 15, 2009, the $15 million held in escrow was to
    be released to OMAX on August 16, 2009 and we were to issue
    a promissory note in the principal amount of $6 million to
    OMAX for the remaining balance on the $29 million
    settlement amount.    
    A non-refundable cash payment of $2 million to OMAX for the
    extension of the closing of the merger from March 31, 2009
    to August 15, 2009  with closing at our
    option; and
    In the event the merger would have been consummated by
    August 15, 2009, the $2 million would be applied
    towards the $75 million purchase price. However, in the
    event the merger would not have been consummated by
    August 15, 2009, the $2 million was to be forfeited
    and we were to issue a promissory note in the principal amount
    of $4 million to OMAX.     21




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Goodwill
    Impairment Charges
    Discontinued
    Operations
     22




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##### Table of Contents



Results
    of Operations
  Consolidated
  2010 vs. 2009

2009 vs. 2008Year Ended April 30,

Increase (Decrease)

Increase (Decrease)2010

2009

2008

$

%

$

%(In thousands)Sales

$
173,749


$
210,103


$
244,259


$
(36,354
)


(17)
%

$
(34,156
)


(14
)%Gross Margin


67,767



88,328



101,710



(20,561
)


(23)
%


(13,382
)


(13
)%Selling, General and Administrative Expenses


70,545



79,320



84,931



(8,775
)


(11)
%


(5,611
)


(7
)%Provision for Patent Litigation






29,000







(29,000
)


NM



29,000



NMMerger Termination Charge


3,219











3,219



NM







NMOMAX Direct Transaction Fees






3,767







(3,767
)


NM



3,767



NMGoodwill Impairment Charge






2,764







(2,764
)


NM



2,764



NMRestructuring and Other Charges


1,003



3,111







(2,108
)


(68)
%


3,111



NMOperating Income (Loss)


(7,000
)


(29,634
)


16,779



22,634



76
%


(46,413
)


NMExpressed as a % of Sales:Gross Margin


39
%


42
%


42
%






(300) bpts







Provision for Patent Litigation






14
%










NM







NMMerger Termination Charge


2
%














200 bpts







NMGoodwill Impairment Charge






1
%










(100) bpts







NMRestructuring and Other Charges


1
%


1
%


















100 bptsOperating Income (Loss)


(4
)%


(14
)%


7
%






NM







NM         2010 vs. 2009

2009 vs. 2008Year Ended April 30,

Increase (Decrease)

Increase (Decrease)2010

2009

2008

$

%

$

%(In thousands)Systems Sales

$
116,132


$
145,944


$
176,755


$
(29,812
)


(20
)%

$
(30,811
)


(17
)%Consumable Parts Sales


57,617



64,159



67,504



(6,542
)


(10
)%


(3,345
)


(5
)%Total Sales


173,749



210,103



244,259



(36,354
)


(17
)%


(34,156
)


(14
)%       Fiscal
    year 2010 compared to fiscal year 2009
   23




---



##### Table of Contents



Matters Affecting Comparability
  Fiscal
    year 2009 compared to fiscal year 2008
          Matters Affecting Comparability Business Combinations,
 24




---



##### Table of Contents



Segment
    Results of Operations
    Segments and Geographic
    Information Financial Statements and
    Supplementary Data
  Standard
    Segment
  2010 vs. 2009

2009 vs. 2008Year Ended April 30,

Increase (Decrease)

Increase (Decrease)2010

2009

2008

$

%

$

%(In thousands)Sales

$
137,514


$
181,132


$
216,063


$
(43,618
)


(24)
%

$
(34,931
)


(16)
%% of total company sales


79
%


86
%


88
%Gross Margin


56,097



79,869



96,765



(23,772
)


(30)
%


(16,896
)


(17)
%Gross Margin as a % of Sales


41
%


44
%


45
%






(300) bpts







(100) bpts       Fiscal
    year 2010 compared to fiscal year 2009
      Fiscal
    year 2009 compared to fiscal year 2008
   25




---



##### Table of Contents



Advanced
    Segment
    2010 vs. 2009


2009 vs. 2008Year Ended April 30,


Increase (Decrease)


Increase (Decrease)2010


2009


2008


$


%


$


%(In thousands)Sales

$
36,235


$
28,971


$
28,196


$
7,264



25
%

$
775



3
%% of total company sales


21
%


14
%


12
%Gross Margin


11,670



8,459



4,944



3,211



38
%


3,515



71
%Gross Margin as a % of Sales


32
%


29
%


18
%






300 bpts







1100 bpts       Fiscal
    year 2010 compared to fiscal year 2009
        Fiscal
    year 2009 compared to fiscal year 2008
     26




---



##### Table of Contents



Selling,
    General and Administrative Expenses
  2010 vs. 2009


2009 vs. 2008Year Ended April 30,


Increase (Decrease)


Increase (Decrease)2010


2009


2008


$


%


$


%(In thousands)Sales and Marketing

$
37,259


$
41,170


$
42,272


$
(3,911
)


(9
)%

$
(1,102
)


(3
)%Research and Engineering


8,104



8,644



8,771



(540
)


(6
)%


(127
)


(1
)%General and Administrative


25,182



29,506



33,888



(4,324
)


(15
)%


(4,382
)


(13
)%Total Operating Expenses


70,545



79,320



84,931



(8,775
)


(11
)%


(5,611
)


(7
)%   Fiscal
    year 2010 compared to fiscal year 2009
    
    the successful implementation of cost cutting initiatives
    including reduction in staffing levels and temporary wage
    reductions and benefit suspension for part of fiscal year 2010;
    lower commission expense based on lower sales volume;
    timing of investments for new product development;
    lower professional fees for consulting based on the deferral of
    miscellaneous projects during the current fiscal year.      Fiscal
    year 2009 compared to fiscal year 2008
    
    the successful implementation of cost cutting initiatives
    including reduction in staffing levels in fiscal year 2009;
    lower commission expense based on lower sales volume offset by
    $0.8 million of expenses associated with our attendance at
    the bi-annual International Manufacturing Technology Show (IMTS)
    in fiscal year 2009; and
    lower performance award expenses in fiscal year 2009. Further,
    the prior year amount also included $2.9 million of
    compensation expenses to amend our former CEOs contract. 27




---



##### Table of Contents



Other
    (Income) Expense
  Interest
    Income and Interest Expense
  2010 vs. 2009

2009 vs. 2008Year Ended April 30,

Increase (Decrease)

Increase (Decrease)2010

2009

2008

$

%

$

%(In thousands)Interest Income

$
252


$
494


$
780


$
(242
)


(49
)%

$
(286
)


(37
)%Interest Expense


(2,374
)


(1,562
)


(419
)


(812
)


(52
)%


(1,143
)


NM             
    write-off of $654,000 of deferred financing fees upon the
    execution of an amendment to our Line of Credit Agreement in
    March 2009 which reduced our available borrowing capacity from
    $100 million to $40 million;
    amortization of deferred financing fees over the life of the
    Line of Credit availability which amortization began in June
    2008 upon the execution of the original Line of Credit Agreement
    with our Senior Lenders  there was no similar expense
    in fiscal year 2008; and
    an increase in interest charged on outstanding standby letters
    of credit which increased from $2.2 million at the end of
    fiscal year 2008 to $7.1 million by the end of fiscal year
    2009 as a result of the timing of milestone payments from
    customers in our Advanced segment.  Other
    Income (Expense), Net
    2010 vs. 2009


2009 vs. 2008Year Ended April 30,


Increase (Decrease)


Increase (Decrease)2010


2009


2008


$


%


$


%(In thousands)Realized Foreign Exchange Gains (Losses), net

$
(1,215
)

$
74


$
1,759


$
(1,289
)


NM


$
(1,685
)


(96
)%Unrealized Foreign Exchange (Losses), net


66



(1,571
)


(2,904
)


1,637



NM



1,333



46
%Miscellaneous Income (Expense)


38



883



(72
)


(845
)


(96
)%


955



NMPremium on Repurchase of Warrants










(629
)






NM



629



NMTotal


(1,111
)


(614
)


(1,846
)


(497
)


(81
)%


1,232



67
%      28




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##### Table of Contents



Income
    Taxes
    2010 vs. 2009

2009 vs. 2008Year Ended April 30,

Increase (Decrease)

Increase (Decrease)2010

2009

2008

$

%

$

%(In thousands)Current Tax Expense

$
1,206


$
1,470


$
4,475


$
(264
)


(18
)%

$
(3,005
)


(67
)%Deferred Tax (Benefit) Expense


(4,050
)


(9,700
)


(11,092
)

$
(5,650
)


(58
)%

$
(1,392
)


(13
)%    29




---



##### Table of Contents



non-U.S. subsidiaries
      Liquidity
    and Capital Resources
  Sources
    of Cash
    Cash
    Generated by Operating Activities
    Available
    Cash and Cash Equivalents
    Form S-3
 30




---



##### Table of Contents



Risk Factors
  Credit
    Facilities and Debt
    Shareholders Equity Financial Statements and
    Supplementary Data
  Maximum Consolidated

Minimum Fixed ChargeLeverage Ratio(i)

Coverage Ratio(ii)First Quarter

3.25x

2.0xSecond Quarter

3.35x

1.2xThird Quarter

3.50x

1.2xFourth Quarter

3.35x

1.2x     Maximum Consolidated

Minimum Fixed ChargeLeverage Ratio(i)

Coverage Ratio(ii)First Quarter

2.75x

2.0xThereafter

2.50x

2.0x     (i)
    
    Defined as the ratio of consolidated indebtedness, excluding the
    subordinated notes issued to OMAX, to consolidated adjusted
    EBITDA for the most recent four fiscal quarters.(ii)
    
    Defined as the ratio of consolidated adjusted EBITDA, less
    income taxes and maintenance capital expenditures, during the
    most recent four quarters to the sum of interest charges during
    the most recent four quarters and scheduled debt repayments in
    the next four quarters.      Form 10-K.
   31




---



##### Table of Contents



Risk Factors
          Other
    Sources of Cash
      Uses
    of Cash
  Capital
    Expenditures
    Other
    Strategic Investments
   32




---



##### Table of Contents



Provision for Patent
    Litigation and Termination of OMAX Merger Agreement Financial Statements and
    Supplementary Data
  Repayment
    of Debt and Notes Payable
    Repurchase
    of Warrants
    Disclosures
    about Contractual Obligations and Commercial
    Commitments
   Long-term Obligations and Notes Payable Commitments and Contingencies Financial Statements and Supplementary Data
  Maturity by Fiscal Year2011


2012


2013


2014


2015


Thereafter


Total(In thousands)Operating Leases

$
3,031


$
1,933


$
968


$
19


$
8


$
8


$
5,967Long-term Debt, Notes Payable & Capital Leases


411



18



















429Interest on Long-term Debt and Notes Payable


18



2



















20Purchase Commitments(1)


12,038























12,038Subordinated Notes(2)














10,824











10,824License Agreements


29























29Consulting Agreements


324























324Liabilities related to Unrecognized Tax benefits, including
    Interest and Penalties(3)






















9,232



9,232Total

$
15,851


$
1,953


$
968


$
10,843


$
8


$
9,240


$
38,863  33




---



##### Table of Contents



(1)
    
    Purchase commitments include agreements to purchase goods or
    services that are enforceable, are legally binding and specify
    all significant terms, including fixed or minimum quantities to
    be purchased; fixed, minimum or variable price provisions; and
    the approximate timing of the transaction. Purchase obligations
    do not include agreements that are cancelable without penalty.
    Additionally, although they are not legally binding agreements,
    open purchase orders for inventory purchases are included in the
    table above. Substantially all open purchase orders are
    fulfilled within 30 days. We expect to fund these
    commitments with existing cash and our cash flows from
    operations in future periods.(2)
    
    Subordinated promissory notes with an aggregate face value of
    $10 million issued to OMAX in fiscal year 2010. Refer to
    Note 3  Restructuring Activities and Otherof the Notes to the Consolidated Financial Statements
    included in Item 8, Financial Statements and
    Supplementary Datafor further detail.(3)
    
    We have unrecognized tax benefits of $9.2 million
    associated with uncertain tax positions as of April 30,
    2010. This potential liability may result in cash payments to
    tax authorities. The timing of payments related to these
    obligations is uncertain; however, none of this amount is
    expected to be paid within the next twelve months.  Off-Balance
    Sheet Arrangements
    Critical
    Accounting Estimates
   34




---



##### Table of Contents



The Company and
    Summary of Significant Accounting Policies Financial Statements and Supplementary Data and/or
  Accounting Policy



Judgments/Uncertainties Affecting ApplicationImpairment of Long Lived Assets



Judgment about triggering events

Recoverability of investments through future operations

Estimated useful lives of assets

Estimates of future cash flowsValuation of Deferred Tax Assets and Uncertain
    Tax Positions



Ability of tax authority decisions to withstand legal challenges
    and appeals

Anticipated future decisions of tax authorities

Application of tax statutes and regulations to transactions

Ability to utilize tax benefits through carrybacks to prior
    periods and carryforwards to future periodsContingencies



Judgment about likelihood of event(s) occurring

Estimated financial impact of event(s)

Regulatory and political environments and requirementsRevenue Recognition



Judgment regarding fair value in multiple element arrangements

Estimates about anticipated contract costs and progress made
    towards the completion of projectsInventory Reserves



Judgment regarding inventory aging, forecasted consumer demand,
    the promotional environment and technological obsolescence

Application of judgment regarding historical results and current
    inventory loss trendsCost Method Investments



Judgment about fair value

Recoverability of investments   Impairment
    of Long Lived Assets
   35




---



##### Table of Contents



Valuation
    of Deferred Tax Assets and Uncertain Tax Positions
     36




---



##### Table of Contents



Legal
    Contingencies
  Commitments and Contingencies Financial Statements and
    Supplementary Data
    Revenue
    Recognition
   37




---



##### Table of Contents



Revenue
    Recognition tm Software
        cost-to-cost
    Valuation
    of Obsolete/Excess Inventory
   38




---



##### Table of Contents



Valuation
    of Cost Method Investments
  Cost Method
    Investments other-than-temporary. other-than-temporary,
  Recently
    Issued Accounting Pronouncements
  Recently Issued Accounting
    Pronouncements Financial Statements and
    Supplementary Data,
  Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk    Interest
    Rate Risk
  Long-term Obligations and Notes
    Payable Financial Statements and
    Supplementary Data,
  Foreign
    Currency Exchange Rate Risk
  non-U.S. operations
 39




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data    Page in thisIndex to Consolidated Financial Statements

ReportReport of Independent Registered Public
    Accounting Firm


41Consolidated Balance Sheets as of April 30,
    2010 and 2009


43Consolidated Statements of Operations for each of
    the three years ended April 30, 2010, 2009, and 2008


44Consolidated Statements of Cash Flows for each of
    the three years ended April 30, 2010, 2009, and 2008


45Consolidated Statements of Shareholders
    Equity and Comprehensive Income (Loss) for each of the three
    years ended April 30, 2010, 2009, and 2008


46Notes to Consolidated Financial Statements


47Financial Statement ScheduleSchedule II Valuation and Qualifying
    Accounts


79  40




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM      Internal Control  Integrated
    Framework
       41




---



##### Table of Contents



Internal Control  Integrated Framework
  DELOITTE &
    TOUCHE LLP
    42




---



##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  CONSOLIDATED
    BALANCE SHEETS
  April 30,2010


2009(In thousands, except share amounts)ASSETS:Current Assets:Cash and Cash Equivalents

$
6,367


$
10,117Restricted Cash


639



220Receivables, net


35,749



32,103Inventories, net


22,503



21,480Deferred Income Taxes, net


2,486



8,686Deferred Acquisition Costs






17,093Other Current Assets


6,351



5,544Total Current Assets


74,095



95,243Property and Equipment, net


21,769



22,983Intangible Assets, net


4,504



4,456Deferred Income Taxes, net


26,330



17,480Other Long-Term Assets


4,511



4,798$
131,209


$
144,960LIABILITIES AND SHAREHOLDERS EQUITY:Current Liabilities:Notes Payable (Note 11)

$
350


$
15,226Current Portion of Long-Term Obligations


61



1,367Accounts Payable


15,306



10,215Accrued Payroll and Related Liabilities


5,938



5,406Taxes Payable and Other Accrued Taxes


1,329



2,276Deferred Income Taxes


1,086



651Deferred Revenue


4,049



4,649Customer Deposits


6,097



3,322Reserve for Patent Litigation






15,000Other Accrued Liabilities


7,966



9,208Total Current Liabilities


42,182



67,320Long-Term Obligations, net


18



1,937Deferred Income Taxes


3,856



5,498Subordinated Notes (Note 18)


7,954



6,000Other Long-Term Liabilities


1,575



1,49455,585



82,249Commitments and Contingencies (Note 13)Shareholders Equity:Series A 8% Convertible Preferred Stock 
    $.01 par value, 1,000,000 shares authorized, none
    issued






Common Stock  $.01 par value,
    84,000,000 shares authorized, 46,926,661 and
    37,704,684 shares issued and outstanding at April 30,
    2010 and 2009, respectively


465



372Capital in Excess of Par


159,605



140,634Accumulated Deficit


(79,887
)


(71,403
)Accumulated Other Comprehensive Income (Loss):Defined Benefit Plan Obligation, net of income tax of $31 and $37


9



(80
)Cumulative Translation Adjustment, net of income tax of $698 and
    $508


(4,568
)


(6,812
)Total Shareholders Equity


75,624



62,711$
131,209


$
144,960    43




---



##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  CONSOLIDATED STATEMENTS OF
    OPERATIONS
  Year Ended April 30,2010


2009


2008(In thousands, except per share amounts)Sales

$
173,749


$
210,103


$
244,259Cost of Sales


105,982



121,775



142,549Gross Margin


67,767



88,328



101,710Operating Expenses:Sales and Marketing


37,259



41,170



42,272Research and Engineering


8,104



8,644



8,771General and Administrative


25,182



29,506



33,888Provision for Patent Litigation






29,000



Goodwill Impairment






2,764



Restructuring and Other Operating Charges, net


4,222



6,878



74,767



117,962



84,931Operating Income (Loss)


(7,000
)


(29,634
)


16,779Interest Income


252



494



780Interest Expense


(2,374
)


(1,562
)


(419
)Other (Expense), net


(1,111
)


(614
)


(1,846
)Income (Loss) Before Benefit for Income Taxes


(10,233
)


(31,316
)


15,294Benefit for Income Taxes


2,844



8,230



6,617Income (Loss) from Continuing Operations


(7,389
)


(23,086
)


21,911Income (Loss) from Operations of Discontinued Operations, Net of
    Income Tax of $0, $0, and $230


(1,095
)


(733
)


443Net Income (Loss)

$
(8,484
)

$
(23,819
)

$
22,354Basic Income (Loss) Per Share:Income (Loss) from Continuing Operations

$
(0.17
)

$
(0.61
)

$
0.59Income (Loss) from Discontinued Operations


(0.02
)


(0.02
)


0.01Net Income (Loss)

$
(0.19
)

$
(0.63
)

$
0.60Diluted Income (Loss) Per Share:Income (Loss) from Continuing Operations

$
(0.17
)

$
(0.61
)

$
0.58Income (Loss) from Discontinued Operations


(0.02
)


(0.02
)


0.01Net Income (Loss)

$
(0.19
)

$
(0.63
)

$
0.59    44




---



##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  Year Ended April 30,2010


2009


2008(In thousands)Cash Flows from Operating Activities:Net Income (Loss)

$
(8,484
)

$
(23,819
)

$
22,354Adjustments to reconcile Net Income (Loss) to Cash Provided by
    (Used In) Operating Activities:Depreciation and Amortization


5,725



4,343



3,974Deferred Income Taxes


(4,131
)


(9,264
)


(10,931
)Provision for Slow Moving and Obsolete Inventory


733



675



1,307Bad Debt Expense


813



1,225



1,805Warranty Expense


3,367



3,415



3,589Incentive Stock Compensation Expense


1,911



1,724



695Unrealized Foreign Exchange Currency Losses (Gains)


(66
)


1,571



2,904Provision for Patent Litigation






29,000



OMAX Termination Charge


3,219







Goodwill Impairment






2,764



Indemnification Charge


1,175







Interest Accretion on Subordinated Notes


735







Realized Foreign Exchange Loss on Liquidation of Dormant Foreign
    Entities


1,277







Write-off and Amortization of Debt Issuance Costs


253



879



Write-off of Previously Deferred Direct Transaction Fees






3,767



Excess Tax Benefits from Exercise of Stock Options










(291
)Premium on Warrant Repurchase










629Other


112



539



738Changes in Operating Assets and Liabilities:Receivables


(3,547
)


(1,392
)


(6,121
)Inventories


(1,702
)


5,044



(2,894
)Other Operating Assets


(1,713
)


(316
)


2,066Accounts Payable


6,816



(10,494
)


790Accrued Payroll and Related Liabilities


389



(2,655
)


2,027Deferred Revenue


(628
)


(107
)


(389
)Customer Deposits


2,644



(784
)


(1,671
)Release of Funds from Escrow


17,000







Payment for OMAX Termination


(2,000
)






Payment for Patent Litigation Settlement


(15,000
)


(8,000
)


Other Operating Liabilities


(5,071
)


(4,579
)


(6,610
)Cash Provided by (Used in) Operating Activities


3,827



(6,464
)


13,971Cash Flows From Investing Activities:Expenditures for Property and Equipment


(9,196
)


(8,150
)


(5,748
)Expenditures for Intangible Assets


(773
)


(782
)


(555
)Proceeds from Sale of Short-term Investments










773Proceeds from Sale of Property and Equipment


4,685



195



254Payments for Contemplated OMAX Acquisition






(13,336
)


(7,430
)Payments for Dardi Investment






(3,604
)


(78
)Restricted Cash


(403
)


(78
)


(142
)Other






217



Cash Used in Investing Activities


(5,687
)


(25,538
)


(12,926
)Cash Flows from Financing Activities:Repayments on Senior Credit Agreement


(32,091
)


(2,000
)


Borrowings on Senior Credit Agreement


19,441



15,000



Repayments Under Notes Payable










(6,616
)Borrowings Under Notes Payable






1,264



1,106Repayments Under Other Financing Arrangements


(1,398
)


(487
)


(101
)Borrowings Under Other Financing Arrangements






1,497



319Payments of Long-Term Obligations


(4,214
)


(781
)


(785
)Proceeds from Exercise of Stock Options










1,198Excess Tax Benefits from Exercise of Stock Options










291Proceeds from Issuance of Common Stock, net of Issuance Costs


17,199







Payments for Debt Issuance Costs


(607
)


(1,364
)


Payments for Warrants Repurchase










(3,010
)Cash Provided by (Used in) Financing Activities


(1,670
)


13,129



(7,598
)Effect of Changes in Exchange Rates


(220
)


(109
)


(2,636
)Increase (Decrease) in Cash And Cash Equivalents


(3,750
)


(18,982
)


(9,189
)Cash and Cash Equivalents at Beginning of Year


10,117



29,099



38,288Cash and Cash Equivalents at End of Year

$
6,367


$
10,117


$
29,099Supplemental Disclosures of Cash Flow InformationCash Paid During the Year for:Interest

$
1,142


$
1,419


$
341Income Taxes


1,160



2,557



6,961Supplemental Disclosures of Noncash Investing and Financing
    ActivitiesAccounts Payable incurred to acquire Property and Equipment, and
    Intangible Assets


516



2,352



745Accrued Liabilities incurred for Pending Acquisition










445    45




---



##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  CONSOLIDATED
    STATEMENTS OF SHAREHOLDERS EQUITY
 AND
    COMPREHENSIVE INCOME (LOSS)
  AccumulatedCommon Stock


Capital in





Other


TotalPar


Excess


(Accumulated


Comprehensive


ShareholdersShares


Value


of Par


Deficit)


Income (Loss)


Equity(In thousands)Balances, May 1, 2007


37,268


$
367


$
139,207


$
(69,395
)

$
(8,955
)

$
61,224Cumulative effect upon adoption of FIN 48














(543
)






(543
)Components of Comprehensive Income in 2008:Net Income














22,354







22,354Defined Benefit Pension Plan Adjustment, net of Income Tax of $25


















(80
)


(80
)Cumulative Translation Adjustment, net of Income Tax of $764


















3,305



3,305Total Comprehensive Income






















25,579Exercise of Options


252



3



1,195











1,198Tax Benefit from Exercise of Stock Options










291











291Repurchase of Warrants










(2,380
)










(2,380
)Stock Compensation


70



1



694











695Balances, April 30, 2008


37,590


$
371


$
139,007


$
(47,584
)

$
(5,730
)

$
86,064Components of Comprehensive Income in 2009:Net Loss














(23,819
)






(23,819
)Defined Benefit Pension Plan Adjustment, net of Income Tax
    Benefit of $(56)


















200



200Cumulative Translation Adjustment, net of Income Tax Benefit of
    ($256)


















(1,362
)


(1,362
)Total Comprehensive Income






















(24,981
)Stock Compensation


115



1



1,627











1,628Balances, April 30, 2009


37,705


$
372


$
140,634


$
(71,403
)

$
(6,892
)

$
62,711Components of Comprehensive Loss:Net Loss














(8,484
)






(8,484
)Defined Benefit Pension Plan Adjustment, net of Income Tax of $6


















89



89Realization of Foreign Currency Translation Losses from the
    Liquidation of Dormant Entities


















1,277



1,277Cumulative Translation Adjustment, net of Income Tax of $190


















967



967Total Comprehensive Loss






















(6,151
)Sale of Common stock at $2.10 per share, net of Stock Issuance
    Costs of $1.7 million


8,999



90



17,109











17,199Stock Compensation


223



3



1,862











1,865Balances, April 30, 2010


46,927


$
465


$
159,605


$
(79,887
)

$
(4,559
)

$
75,624    46




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##### Table of Contents



FLOW
    INTERNATIONAL CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    For the three-year period ended April 30, 2010
    (All tabular dollar amounts in thousands except per share and
    option amounts)
  Note 1 
    The
    Company and Summary of Significant Accounting
    Policies:  Reporting
    Policies
  Principles
    of Consolidation
    Operations
    and Segments
      Business Segments and
    Geographic Information
  Foreign
    Currency Translation
      Year Ended April 30,2010

2009

2008Net Realized Foreign Exchange Gains (Losses)

$
(1,215
)

$
74


$
1,759Net Unrealized Foreign Exchange Gains (Losses)


66



(1,571
)


(2,904
)  47




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##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Use of
    Estimates
    
    reported amounts of assets, liabilities and equity;
    disclosure of contingent assets and liabilities at the date of
    the financial statements; and
    reported amounts of revenues and expenses during the reporting
    periods.    Accounting
    Changes Implemented in Fiscal Year 2010
  Accounting Standards Codification tm Form 10-Q
  Business Combinations
  Noncontrolling Interests
  Fair Value and
    Other-Than-Temporary
    Impairments
 48




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##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  other-than-temporary other-than-temporary Fair Value of Financial
    Instruments
  Subsequent Events
    Accounting
    for Certain Key Items
    
    capital investments;
    financing its business; and
    operations  Policies
    related to Capital Investments
  Valuation
    of Cost Method Investments
  Cost
    Method Investments other-than-temporary.
 49




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##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  other-than-temporary,
  Intangible
    Assets
    Impairment
    of Long-Lived Assets
         50




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##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Internally
    Developed Software
    Policies
    related to Financing the Companys Business
  Financial
    Instruments
    Derivative
    Financial Instruments
  mark-to-market Fair Value of Financial
    Instruments
  Cash and
    Cash Equivalents
    Policies
    related to Operations
  Revenue
    Recognition
   51




---



##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
            cost-to-cost
 52




---



##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Cost of
    Sales
    Advertising
    Expense
    Inventories
  first-in,
  Income
    Taxes
       53




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##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Concentration
    of Credit Risk
  and/or
      Warranty
    Liability
    Product
    Liability
  Commitments and Contingencies
  Health
    Benefits
       54




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##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Research
    and Engineering
    Stock
    Based Compensation
  Stock-Based Compensation
  Related
    Parties
          Note 2 
    Recently
    Issued Accounting Pronouncements    
    provides principles and application guidance on whether a
    revenue arrangement contains multiple deliverables, how the
    arrangement should be separated, and how the arrangement
    consideration should be allocated;
    requires an entity to allocate revenue in a multiple-deliverable
    arrangement using estimated selling prices of the deliverables
    if a vendor does not have vendor-specific objective evidence or
    third-party evidence of selling price;
    eliminates the use of the residual method and, instead, requires
    an entity to allocate revenue using the relative selling price
    method; and
    expands disclosure requirements with respect to
    multiple-deliverable revenue arrangements.   55




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##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Note 3 
    Restructuring
    Activities and Other  Property and Equipment
  Provision for Patent Litigation and
    Termination of OMAX Merger Agreement
  Business
    Combinations,
    Year Ended April 30,2010


2009Severance and termination benefits

$
1,604


$
2,339Lease termination costs and long-lived assets impairment charge






187Inventory write-down






144Gain on sale of building


(601
)


Merger termination charge


3,219



OMAX direct transaction fees






3,767$
4,222


$
6,437  56




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##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    ConsolidatedBalance, May 1, 2008

$
Restructuring Charges


2,670Cash Payments


(2,344
)Other


(144
)Balance, April 30, 2009

$
182Restructuring Charges


1,604Cash Payments


(1,631
)Balance, April 30, 2010

$
155   Note 4 
    Discontinued
    Operations  Commitments and Contingencies.
        Year Ended April 30,2009


2008Sales

$
1,605


$
4,107Income (Loss) before provision for income taxes


(733
)


673(Provision) for income taxes






(230
)Income (Loss) from operations of discontinued operations

$
(733
)


443   Note 5 
    Basic and
    Diluted Income (Loss) per Share   57




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##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Year Ended April 30,2010


2009


2008Numerator:Income (Loss) from continuing operations

$
(7,389
)

$
(23,086
)

$
21,911Denominator:Denominator for basic income (loss) per share 
    weighted average shares


43,567



37,627



37,421Dilutive potential common shares from employee stock options










147Dilutive potential common shares from stock compensation plans










325Denominator for diluted income (loss) per share 
    weighted average shares and assumed conversions


43,567



37,627



37,893Basic income (loss) per share from continuing operations

$
(0.17
)

$
(0.61
)

$
0.59Diluted income (loss) per share from continuing operations

$
(0.17
)

$
(0.61
)

$
0.58     Note 6 
    Receivables    April 30,2010


2009Trade Accounts Receivable

$
23,717


$
25,304Unbilled Revenues


13,184



9,03336,901



34,337Less Allowance for Doubtful Accounts


(1,152
)


(2,234
)Receivables, net

$
35,749


$
32,103      58




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##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 7 
    Inventories    April 30,2010


2009Raw Materials and Parts

$
11,895


$
11,806Work in Process


2,188



1,762Finished Goods


8,420



7,912Inventories, net

$
22,503


$
21,480   Note 8 
    Property
    and Equipment        April 30,Range of Lives


2010


2009Land


N/A


$
468


$
468Buildings and Leasehold Improvements


19-30



5,083



10,266Machinery and Equipment


3-11



25,116



24,014Furniture and Fixtures


3-9



2,833



2,667Enterprise Resource Planning System


5



10,625



Construction in Progress(i)






1,710



6,71045,835



44,125Less Accumulated Depreciation and Amortization






(24,066
)


(21,142
)Property and Equipment, net





$
21,769


$
22,983     (i)
    
    Included in the Companys Construction in Progress balance
    for the respective years ended April 30, 2010 and 2009, was
    $1.3 million and $6.2 million related to its ERP
    system. The Company placed $10.6 million of its ERP system
    into service in October 2009 when it was implemented in one of
    the Companys geographic locations. 59




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##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Note 9 
    Intangible
    Assets      April 30,2010


2009Patents

$
5,408


$
5,849Less Accumulated Amortization


(1,774
)


(2,146
)Patents, net

$
3,634


$
3,703       April 30,2010

2009Trademarks

$
870


$
753     Note 10 
    Pension
    and Other Post Retirement Benefits       60




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##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year EndedApril 30,2010


2009Changes in the Projected Benefit ObligationProjected Benefit Obligation  beginning balance

$
1,492


$
1,815Service Cost


28



37Interest Cost


35



60Actuarial (Gain)/Loss


(121
)


(249
)Benefits Paid


(184
)


Foreign Exchange Adjustment


103



(171
)Projected Benefit Obligation  ending balance

$
1,353


$
1,492   Year EndedApril 30,2010


2009Changes in the Value of Plan AssetsFair Value of Plan Assets  beginning balance

$
1,188


$
1,237Actual Return on Plan Assets


19



27Employer Contribution


28



47Benefits Paid


(184
)


Foreign Exchange Adjustment


84



(123
)Fair Value of Plan Assets  ending balance

$
1,135


$
1,188     Year EndedApril 30,2010


2009Discount rate


2.00
%


2.25
%Expected rate of return on assets


2.00
%


1.50
%Salary increase rate


3.00
%


3.00
%   Note 11 
    Long-Term
    Obligations and Notes Payable    April 30,


April 30,2010


2009Long-term loan

$



$
1,879Other financing arrangements


79



1,42579



3,304Less current maturities


(61
)


(1,367
)Long-term obligations

$
18


$
1,937  61




---



##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        April 30, 2010


April 30, 2009Senior Credit Facility

$
350


$
13,000Revolving credit facilities in Taiwan






2,226$
350


$
15,226   Senior
    Credit Facility
    Shareholders
    Equity
  Maximum Consolidated

Minimum Fixed ChargeLeverage Ratio(i)

Coverage Ratio(ii)Fiscal Year 2010First Quarter


3.25
x


2.0
xSecond Quarter


3.35
x


1.2
xThird Quarter


3.50
x


1.2
xFourth Quarter


3.35
x


1.2
x     Maximum Consolidated

Minimum Fixed ChargeLeverage Ratio(i)

Coverage Ratio(ii)Fiscal Year 2011First Quarter


2.75
x


2.0
xThereafter


2.50
x


2.0
x     (i)
    
    Defined as the ratio of consolidated indebtedness, excluding the
    subordinated notes issued to OMAX, to consolidated adjusted
    EBITDA for the most recent four fiscal quarters.(ii)
    
    Defined as the ratio of consolidated adjusted EBITDA, less
    income taxes and maintenance capital expenditures, during the
    most recent four quarters to the sum of interest charges during
    the most recent four quarters and scheduled debt repayments in
    the next four quarters. 62




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##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
           Revolving
    Credit Facility in Taiwan
    Note 12 
    Fair
    Value of Financial Instruments    Level 1:
  Level 2:
  Level 3:
  Assets
    and Liabilities Measured at Fair Value on a Recurring
    Basis
  mark-to-market
 63




---



##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    The Effect of Derivative Instruments on the Statement of
    OperationsLocation of Gain orDerivatives Not Designated as Hedging

(Loss) Recognized in

April 30,Instruments Under Statement 133

Income on Derivative

2010

2009

2008Foreign exchange forward contracts


Other Income (Expense
)

$



$
1,232


$
113     Assets
    and Liabilities Measured at Fair Value on a Nonrecurring
    Basis
    Cost
    Method Investment
  other-than-temporary
    Subordinated
    Notes
   64




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##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Note 13 
    Commitments
    and Contingencies    
    Lease commitments;
    Warranty obligations;
    Product liability claims; and
    Legal proceedings.  Lease
    Commitments
      2011

$
3,0312012


1,9332013


9682014


192015


82016 and thereafter


8$
5,967   Warranty
    Obligations
   65




---



##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Accrued warranty balance as of May 1, 2008

$
3,101Accruals for warranties of fiscal year 2009 sales


3,415Warranty costs incurred in fiscal year 2009


(4,093
)Accrued warranty balance as of April 30, 2009


2,423Accruals for warranties of fiscal year 2010 sales


3,367Warranty costs incurred in fiscal year 2010


(3,257
)Accrued warranty balance as of April 30, 2010

$
2,533   Product
    Liability
      Legal
    Proceedings
        Other Legal Proceedings
 66




---



##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Other
    Claims or Assessments
    Note 14 
    Shareholders
    Equity  Sale
    of Common Stock
    Change
    to Authorized Stock
  Articles of Amendment
  Common
    Share Rights Purchase Plan
  Rights
    Agent Right Purchase
    Price
   67




---



##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Distribution Date Final Expiration
    Date
  Warrant
    Repurchase
    Note 15 
    Stock-based
    Compensation    Stock
    Options
  and/or
 68




---



##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Weighted-





Weighted-AverageAverage


Aggregate


RemainingNumber of


Exercise


Intrinsic


ContractualOptions


Price


Value


Term (Years)Outstanding at May 1, 2009


798,810


$
10.49


$




5.16Granted during the period






Exercised during the period






Expired or forfeited during the period


(170,728
)


10.52Outstanding at April 30, 2010


628,082


$
10.48


$




4.97Exercisable at April 30, 2010


390,622


$
10.50


$




3.33Vested at April 30, 2010


390,622



10.50







3.33   Year Ended April 30,2010

2009

2008Total intrinsic value of options exercised

$



$



$
1,262Total fair value of options vested


345



345



Cash received from exercise of share options










1,198Tax benefit realized from stock options exercised










291     April 30,2009

2008Options granted


236,210



200,000Weighted average grant-date fair value of stock options granted

$
5.67


$
6.90Assumptions:Weighted average expected volatility


60.00
%


62.02
%Risk-free interest rate


3.09
%


4.98
%Weighted average expected term (in years)


6



6Expected dividend yield






    69




---



##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Service-Based
    Stock Awards
      Weighted-AverageNumber of


Grant-DateShares


Fair ValueNonvested at May 1, 2008


325,449



8.06Granted during the period


192,143



9.77Forfeited during the period


(38,386
)


8.74Vested during the period


(76,651
)


8.54Nonvested at April 30, 2009


402,555



8.78Granted during the period


1,068,610



2.23Forfeited during the period


(134,915
)


4.65Vested during the period


(98,291
)


8.91Nonvested at April 30, 2010


1,237,959


$
3.57     Performance-Based
    Stock Awards
   70




---



##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Weighted-AverageNumber of


Grant-DateShares


Fair ValueNonvested at May 1, 2008


74,500


$
13.50Granted during the period






Cancelled during the period






Forfeited during the period


(74,500
)


13.50Vested during the period






Nonvested at April 30, 2009





$
   Note 16 
    Income
    Taxes:    Year Ended April 30,2010


2009


2008Income (Loss) from Continuing Operations Before Provision
    (Benefit) for Income Taxes:United States

$
(3,478
)

$
(26,708
)

$
11,546Foreign


(6,755
)


(4,608
)


3,748Total

$
(10,233
)

$
(31,316
)

$
15,294     Year Ended April 30,2010


2009


2008Federal

$
321


$
(72
)

$
298State


34



89



124Foreign


851



1,453



4,053Current Tax Expense (after NOL Benefit of $1,136, $868, and
    $6,312)


1,206



1,470



4,475Federal


(1,969
)


(8,105
)


(9,347
)State


70



(743
)


(2,376
)Foreign


(2,151
)


(852
)


631Deferred Tax Expense (Benefit) (Net of Change in Valuation
    Allowance of $(182), $1,372, and $(17,453)


(4,050
)


(9,700
)


(11,092
)Total Tax Provision (Benefit)

$
(2,844
)

$
(8,230
)

$
(6,617
)  71




---



##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended April 30,2010


2009


2008Income tax provision (benefit) at federal statutory rate


(34.0
)%


(34.0
)%


34.0
%State and local taxes net of federal tax benefit


0.7



(1.4
)


3.1Foreign tax rate differential


5.7



0.4



(4.4
)Change in valuation allowance


(1.7
)


7.9



(113.1
)Non deductible/nontaxable items


5.7



2.1



3.3Foreign earnings not previously subject to U. S. tax


(0.7
)


0.3



6.1Foreign withholding taxes


0.7



1.9



8.9Foreign income taxes










0.1Alternative minimum taxes










2.0Stock based compensation


0.7



0.3



0.8Tax credits


(0.4
)


(0.5
)


2.8Statutory to U.S. GAAP adjustments






(3.0
)


9.9Prior year reconciled amounts


(6.4
)






Other, net


1.8



(0.2
)


3.2Income tax provision (benefit)


(27.9
)%


(26.2
)%


(43.3
)%       April 30, 2010


April 30, 2009Current deferred tax assets/(liabilities):Accrued settlement

$



$
5,585Deferred acquisition costs






1,402Deposits on future sales


(786
)


(547
)Net operating loss carryforwards


709



705Other current assets


3,265



2,877Other current liabilities


(301
)


(105
)Current Deferred Tax Assets


2,887



9,917Valuation allowance


(1,502
)


(1,883
)Total Current Deferred Tax Assets


1,385



8,034 72




---



##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  April 30, 2010


April 30, 2009Long-Term:Net operating loss carryforwards


24,664



16,233Accrued settlement


2,536



2,234Capital loss carryforwards


1,976



1,615Goodwill


1,246



1,572Fixed assets


1,079



1,300Stock-based compensation


1,146



758Intercompany accounts receivable allowances


(1,364
)


(4,558
)Foreign unrealized exchange gain/loss


(2,605
)


(802
)Other long-term assets


3,437



3,470Other long-term liabilities


(1,061
)


(1,458
)Long-Term Deferred Tax Assets


31,054



20,364Valuation allowance


(8,581
)


(8,382
)Total Long-Term Deferred Tax Assets


22,473



11,982Net Deferred Tax Assets

$
23,858


$
20,016      73




---



##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  non-U.S. subsidiaries
    
    $192,000, net of tax of $38,000 from one foreign subsidiary in
    fiscal year 2010;
    $1.6 million, net of tax of $329,000 from three foreign
    subsidiaries in fiscal 2009; and
    $9.8 million, net of tax of $885,000 from three foreign
    subsidiaries in fiscal year 2008.          Balance as of May 1, 2008

$
9,190Gross increases  tax positions in prior periods


Gross decreases  tax positions in prior periods


Gross increases in tax positions due to currency fluctuations


(511
)Gross decreases  due to tax rate changes


Settlements


Lapse of statute of limitations


Balance as April 30, 2009


8,679Gross increases  tax positions in prior periods


432Gross decreases  tax positions in prior periods


Gross decreases in tax positions due to currency fluctuations


136Gross decreases  due to tax rate changes


Settlements


Lapse of statute of limitations


Balance as April 30, 2010

$
9,247    74




---



##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 17 
    Business
    Segments and Geographic Information    Discontinued Operations
    Inter-SegmentStandard(i)


Advanced


Eliminations(ii)


TotalFiscal Year 2010External sales

$
137,514


$
36,235


$



$
173,749Inter-segment sales


1,774







(1,774
)


Gross Margin


56,097



11,670







67,767Fiscal Year 2009External sales

$
181,132


$
28,971


$



$
210,103Inter-segment sales


2,549







(2,549
)


Gross Margin


79,869



8,459







88,328Fiscal Year 2008External sales

$
216,063


$
28,196


$



$
244,259Inter-segment sales


3,836







(3,836
)


Gross Margin


96,765



4,945







101,710     (i)
    
    During fiscal year 2010, the Company began reporting its profit
    or loss within the Standard segment to include inventory
    adjustments previously reflected as Intersegment Eliminations,
    in order to reflect how the chief operating decision maker now
    views and manages its business. This change had no impact on
    consolidated gross margins. The Company has reclassified prior
    period comparable results for the respective years ended
    April 30, 2009 and 2008 to reflect this refinement in
    reporting.(ii)
    
    Inter-segment sales represent products between the
    Companys geographic areas, including between operations
    within the United States and between the Companys U.S.
    operations and foreign subsidiaries, based on the Companys
    transfer pricing policy. Cumulative profit or loss in inventory
    and investment in subsidiaries have been eliminated in
    consolidation. 75




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##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     United








OtherStates


Europe


Asia


Foreign


Eliminations


ConsolidatedFiscal Year 2010Sales:Customers(1)

$
104,032


$
31,555


$
25,365


$
12,797


$



$
173,749Inter-area(2)


51,396



830



897







(53,123
)


Total sales

$
155,428


$
32,385


$
26,262


$
12,797


$
(53,123
)

$
173,749Long-Lived Assets

$
47,715


$
7,050


$
2,080


$
269


$



$
57,114Fiscal Year 2009Sales:Customers(1)

$
112,458


$
48,515


$
31,750


$
17,380


$



$
210,103Inter-area(2)


59,668



101



1,520



695



(61,985
)


Total Sales

$
172,126


$
48,616


$
33,270


$
18,076


$
(61,985
)

$
210,103Long-Lived Assets

$
38,661


$
4,974


$
5,633


$
264


$
185


$
49,717Fiscal Year 2008Sales:Customers(1)

$
130,556


$
56,422


$
30,739


$
26,542


$



$
244,259Inter-area(2)


69,992



166



1,358



892



(72,408
)


Total Sales

$
200,548


$
56,588


$
32,097


$
27,434


$
(72,408
)

$
244,259Long-Lived Assets

$
29,525


$
4,265


$
6,703


$
966


$
185


$
41,644     (1)
    
    U.S. sales to unaffiliated customers in foreign countries were
    $33.1 million, $24.0 million and $19.6 million in
    fiscal years 2010, 2009, and 2008, respectively.(2)
    
    Inter-area sales represent products that were transferred
    between geographic areas at negotiated prices. These amounts
    have been eliminated in the consolidation.  Note 18 
    Provision
    for Patent Litigation and Termination of OMAX Merger
    Agreement      
    A non-refundable cash payment of $8 million to OMAX in
    March 2009 as part of the execution of the Agreement;
    A cash payment of $6 million in March 2009 paid directly to
    an existing escrow account with OMAX, increasing the escrow
    amount from $9 million to a total of $15 million as
    part of the execution of the Agreement; and
    In the event the merger would have been consummated by
    August 15, 2009, the entire amount would have been applied
    towards the $75 million purchase price. However, in the
    event the merger 76




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##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  would not have been consummated by August 15, 2009, the
    $15 million held in escrow was to be released to OMAX on
    August 16, 2009 and the Company was to issue a promissory
    note in the principal amount of $6 million to OMAX for the
    remaining balance on the $29 million settlement amount.    
    A non-refundable cash payment of $2 million to OMAX for the
    extension of the closing of the merger from March 31, 2009
    to August 15, 2009  with closing at the
    Companys option; and
    In the event the merger would have been consummated by
    August 15, 2009, the $2 million would be applied
    towards the $75 million purchase price. However, in the
    event the merger would not have been consummated by
    August 15, 2009, the $2 million was to be forfeited
    and the Company was to issue a promissory note in the principal
    amount of $4 million to OMAX.      Note 19 
    Selected
    Quarterly Financial Information (unaudited)      Year Ended April 30, 2010First(i)

Second

Third

Fourth

TotalSales

$
37,752


$
42,037


$
45,356


$
48,604


$
173,749Gross Margin


13,976



16,632



18,223



18,936



67,767Income (Loss) from Continuing Operations


(7,398
)


689



(798
)


118



(7,389
)Net Income (Loss)


(8,546
)


697



(747
)


112



(8,484
)Basic and Diluted Income (Loss) Per Share:Income (Loss) from Continuing Operations

$
(0.20
)

$
0.02


$
(0.02
)

$
0.00


$
(0.17
)Net Income (Loss)

$
(0.23
)

$
0.02


$
(0.02
)

$
0.00


$
(0.19
)   77




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##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Year Ended April 30, 2009First

Second

Third(ii)

Fourth(iii)

TotalSales

$
57,065


$
60,578


$
48,711


$
43,749


$
210,103Gross Margin


26,131



25,639



19,146



17,412



88,328Income (Loss) from Continuing Operations


1,533



396



(20,677
)


(4,338
)


(23,086
)Net Income (Loss)


1,603



412



(21,363
)


(4,471
)


(23,819
)Basic and Diluted Income (Loss) Per Share:Income (Loss) from Continuing Operations

$
0.04


$
0.01


$
(0.55
)

$
(0.12
)

$
(0.61
)Net Income (Loss)

$
0.04


$
0.01


$
(0.57
)

$
(0.12
)

$
(0.63
)     (i)
    
    Included in fiscal year 2010 first quarter results was a charge
    of $6 million, net of a $2.8 million discount, for two
    subordinated notes issued to OMAX pursuant to the terms of the
    amended Merger Agreement and the Settlement and Cross Licensing
    Agreement which is discussed in Note 18 
    Provision for Patent Litigation and Termination of OMAX
    Merger Agreement.(ii)
    
    Included in fiscal year 2009 third quarter results was a charge
    of $29 million related to the patent litigation with OMAX
    pursuant to a Settlement and Cross Licensing Agreement.(iii)
    
    Included in fiscal year 2009 fourth quarter results was a charge
    of $3.8 million related to previously deferred direct
    transaction costs which had been capitalized as part of the
    contemplated acquisition cost of OMAX as it was deemed probable
    that the contemplated merger with OMAX would not close prior to
    the adoption of new guidance under ASC 805 on May 1,
    2009. 78




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##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
 SCHEDULE II



VALUATION
    AND QUALIFYING ACCOUNTS Balance at

Charged toBeginning of

Costs and





Balance atClassification

Period

Expenses

Other

Deductions*

End of Period(In thousands)Year Ended April 30:Allowance for Doubtful Accounts2010

$
2,234


$
813


$
144


$
(2,039
)

$
1,1522009

$
3,367


$
1,225


$
(319
)

$
(2,039
)

$
2,2342008

$
2,915


$
1,805


$
110


$
(1,463
)

$
3,367     *
    
    Write-offs of uncollectible accounts  Balance atBeginning of



Balance atClassification

Period

Net Change

End of PeriodYear Ended April 30Valuation Allowance on Deferred Tax Assets2010

$
10,265


$
182


$
10,0832009

$
8,894


$
1,371


$
10,2652008

$
26,013


$
(17,119
)

$
8,894  79




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##### Table of Contents



Item 9.
    Changes
    In and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Disclosure
    Controls and Procedures
  Rule 13a-15(b) Rule 13a-15(e)
         80




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##### Table of Contents



Changes
    in Internal Controls
  Rule 13a-15
  Managements
    Report on Internal Control Over Financial Reporting
  Rule 13a-15(f)
    Internal Control  Integrated Framework
    Report of
    the Independent Registered Public Accounting Firm
  Form 10-K.
  Item 9B.
    Other
    Information   PART III  Item 10.
    Directors,
    Executive Officers and Corporate Governance   81




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##### Table of Contents



Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters    Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence    Item 14.
    Principal
    Accountant Fees and Services   PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules                ExhibitNumber3
.1

Restated Articles of Incorporation, filed with the state of
    Washington April 26, 2005. (Incorporated by reference to
    Exhibit 3.1 to the registrants Current Report on
    Form 8-K
    dated May 3, 2005.)3
.1(b)

Articles of Amendment or Restated Articles of Incorporation,
    field with the state of Washington on September 10, 2009.
    (Incorporated by reference to Exhibit 3.1(b) to the
    registrants 8-K dated September 10, 2009)3
.2

By-Laws of Flow International Corporation. (Incorporated by
    reference to Exhibit 3.1 to the registrants
    Form 8-K
    dated June 25, 2009.)10
.1

Flow International Corporation 1987 Stock Option Plan for
    Nonemployee Directors, as amended. (Incorporated by reference to
    Exhibit 10.5 to the registrants Annual Report on
    Form 10-K
    for the year ended April 30, 1994.)10
.2

Flow International Corporation 1995 Long-Term Incentive Plan.
    (Incorporated by reference to Exhibit 10.2 to the
    registrants Annual Report on
    Form 10-K
    for the year ended April 30, 2000.)10
.3

Flow International Corporation Voluntary Pension and Salary
    Deferral Plan and Trust Agreement, as amended and restated
    effective January 1, 2002. (Incorporated by reference to
    Exhibit 10.3 to the registrants Annual Report on
    Form 10-K
    for the year ended April 30, 2003.)10
.4

Form of Long Term Incentive Plan (Incorporated by reference to
    Exhibit 10.3 to the Current Report on
    Form 8-K
    filed September 27, 2005). 82




---



##### Table of Contents



ExhibitNumber10
.6

Lease dated January 30, 2003 between Flow International and
    Property Reserve, Inc. (Incorporated by reference to
    Exhibit 10.11 to the registrants Annual Report on
    Form 10-K
    for the year ended April 30, 2003.)10
.7

Credit Agreement dated as of June 10, 2009 among Flow
    International Corporation, Bank of America, N.A. and U.S. Bank
    National Association. (Incorporated by reference to
    Exhibit 10.1 to the registrants
    Form 8-K
    dated June 11, 2009.)10
.9

Employment Agreement dated July 3, 2007 between Flow
    International Corporation and Charles M. Brown. (Incorporated by
    reference to Exhibit 99.2 to the registrants
    Form 8-K
    dated July 3, 2007.)10
.10

First Amendment to Employment Agreement dated May 15, 2008
    between Flow International Corporation and Charles M. Brown.
    (Incorporated by reference to Exhibit 99.1 to the
    registrants Form 8-K dated May 19, 2008.)10
.11

Second Amended and Restated Credit Agreement dated June 10,
    2009 (Incorporated by reference to Exhibit 10.1 to the
    registrants Form 8-K dated June 11, 2009)10
.12

First Amendment dated August 28, 2009 to the Second Amended
    and Restated Credit Agreement (Incorporated by reference to
    Exhibit 10.1 to the registrants Form 8-K dated
    September 1, 2009)10
.13

Settlement Agreement Including Cross-Licensing Agreement dated
    March 12, 2009 (Incorporated by reference to
    Exhibit 10.3 to the registrants
    Form 8-K
    dated March 12, 2009)10
.14

Flow International Corporation 2005 Equity Incentive Plan, as
    amended and restated September 10, 2009 (Incorporated by
    reference to Exhibit 10.1 to the registrants
    8-K dated
    September 11, 2009)21
.1

Subsidiaries of the Registrant*23
.1

Consent of Deloitte & Touche LLP, Independent
    Registered Public Accounting Firm*31
.1

Certification Pursuant to
    Rule 13a-14(a),
    as Adopted Pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002.*31
.2

Certification Pursuant to
    Rule 13a-14(a),
    as Adopted Pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002.*32
.1

Certification Pursuant to the 18 U.S.C. Section 1350,
    as Adopted Pursuant to Section 906 of the Sarbanes-Oxley
    Act of 2002.*99
.1

Debt Covenant Compliance as of April 30, 2010*     *
    
    Filed herewith. 83




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##### Table of Contents



SIGNATURES
  Pursuant to the requirements of Section 13 or 15(d) of
    the Securities Exchange Act of 1934, the registrant has duly
    caused this
    Form 10-K
    to be signed on its behalf by the undersigned, thereunto duly
    authorized.
    
  Charles M. Brown
 President and Chief Executive Officer
 (Principle Executive Officer)
  Pursuant to the requirements of the Securities Exchange Act
    of 1934, this
    Form 10-K
    has been signed below by the following persons on behalf of the
    registrant and in the capacities on this
    1st day of July 2010.
  Signature

Title/s/  Charles
    M. BrownCharles
    M. Brown

President and Chief Executive Officer
    (Principal Executive Officer)/s/  Allen
    M. HsiehAllen
    M. Hsieh

Vice President and Chief Financial Officer
    (Principal Financial Officer)/s/  Kathryn
    L. MunroKathryn
    L. Munro

Chairman/s/  Richard
    P. FoxRichard
    P. Fox

Director/s/  Larry
    A. KringLarry
    A. Kring

Director/s/  Arlen
    I. PrenticeArlen
    I. Prentice

Director/s/  J.
    Michael RibaudoJ.
    Michael Ribaudo

Director/s/  Lorenzo
    C. LamadridLorenzo
    C. Lamadrid

Director/s/  Jerry
    L. CalhounJerry
    L. Calhoun

Director/s/  Patrick
    J. ByrnePatrick
    J. Byrne

Director/s/  Bradley
    D. TildenBradley
    D. Tilden

Director  84