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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, 2008ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file number 0-12448
      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:
 None
  Securities registered pursuant to Section 12(g) of the
    Act:
 Common Stock $.01 Par Value
 Preferred Stock Purchase Rights
      o þ
  o þ
  þ 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(Do not check if a smaller reporting company)   Rule 12b-2 o þ
          DOCUMENTS
    INCORPORATED BY REFERENCE
  Form 10-K. Form 10-K Form 10-K.




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Explanatory
    Note:
  This
    Form 10-K
    reflects the restatement of the Companys Consolidated
    Financial Statements for the years ended April 30, 2007 and
    April 30, 2006 and the related Selected Financial Data in
    Item 6 herein and Managements Discussion and Analysis
    of Financial Condition and Results of Operations in Item 7
    herein. The restatement is more fully described in Note 20
    to the Consolidated Financial Statements under Item 8,
    Financial Statements and Supplementary Data
    herein.
  In addition, as disclosed in Note 18 to the consolidated
    financial statements, certain restatement adjustments affected
    interim quarterly financial information for 2008 and 2007. Such
    restatement adjustments have been reflected in the unaudited
    selected quarterly financial data appearing herein and, with
    respect to 2008, will be reflected in our 2009 Quarterly Reports
    on
    Form 10-Q
    as they are filed during the fiscal year ending April 30,
    2009.
  We have not amended our previously filed Annual Report on
    Form 10-K
    or our Quarterly Reports on
    Form 10-Q
    for the periods affected by the restatement adjustments, and
    accordingly, the financial statements and related financial
    information contained in such reports should no longer be relied
    upon.
 2




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##### 



Table of
    Contents:
   
 PagePART I:Item 1


Business


5Item 1A


Risk Factors


9Item 1B


Unresolved Staff Comments


14Item 2


Properties


14Item 3


Legal Proceedings


15Item 4


Submission of Matters to a Vote of Security
    Holders


15PART II:Item 5


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


16Item 6


Selected Financial Data


18Item 7


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


18Item 7A


Quantitative and Qualitative Disclosures About
    Market Risk


36Item 8


Financial Statements and Supplementary Data


37Item 9


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


83Item 9A


Controls and Procedures


83Item 9B


Other Information


86PART III:Item 10


Directors, Executive Officers and Corporate
    Governance


86Item 11


Executive Compensation


86Item 12


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


86Item 13


Certain Relationships and Related Transactions,
    and Director Independence


86Item 14


Principal Accountant Fees and Services


86PART IV:Item 15


Exhibits and Financial Statement Schedules


86EXHIBIT 23.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2   3




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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:
  
    our belief that waterjet technology is in the early adoption
    phase of its product life cycle;
    our belief that our on-time delivery and technical service
    combine for the best all-around value for our customers;
    our belief that while competitors generally offer a lower
    price, the quality of our parts, coupled with our service, makes
    us the value leader in spares and consumables;
    our belief that our principal properties are adequate for our
    present needs and that supplemented by planned improvements and
    construction, we expect them to remain adequate for the
    foreseeable future;
    our belief that the strategies and actions we intend to take
    in fiscal year 2009 and beyond, including increasing market
    awareness of waterjet technology to drive increased market
    penetration and improvement of our operational efficiency, will
    help us achieve our long-term goals of compound annual revenue
    growth rate of 10% and operating income annual growth rate of at
    least 20%;
    our belief that we will be able to fund the commitments for
    inventory purchases, including all open purchase orders, with
    existing cash and our cash flows from operations in future
    periods
    our investment in the development of innovative products and
    services to maintain our technological leadership position as
    well as enhancement of our current product lines;
    our intent to continue to make improvements to our system of
    internal controls and to continue to make improvements in the
    documentation and implementation training of our accounting
    policies;
    our ability to absorb cyclical downturns through the
    flexibility of our ultrahigh-pressure technology and market
    diversity;
    our ability to retain a technical lead over our competitors
    through non-patented proprietary trade secrets and know-how in
    ultrahigh-pressure applications;
    our plan to continue capital spending on information
    technology and facilities and our expectation that the funds
    necessary for this will be generated internally;
    our expectation that for matters other than Omax, Crucible,
    and Collins and Aikman, these pending legal proceedings will not
    have a material adverse effect on our consolidated financial
    position;
    our expectation that our credit line will provide us with
    liquidity that could be used to make acquisitions, or fund the
    repurchase of shares;
    our belief that our existing cash, our cash from operations,
    and credit facilities at April 30, 2008 are adequate to
    fund our operations for the next twelve months;
    our expectation that our unrecognized tax benefits will not
    change significantly within the next twelve months.  Additional information on these and other factors that could
    affect our financial results is set forth below. Finally, 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.
 4




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PART I  Item 1.
    Description
    of the Business  Business
    Overview
    Form 10-K Form 10-K
  Our
    History
    
    Invented abrasive waterjet system in 1979
    First to introduce ultrahigh-pressure direct drive pumps up to
    55,000 psi in 2000
    First to introduce
    WindowsR-based
    intelligent waterjet control software 
    FlowMastertm 
    to the industry
    First to introduce a 60,000 psi intensifier pump in 1998
    First to develop advanced motion control waterjet 
    Dynamic
    WaterjetR 
    to increase cut accuracy and speed
    3-Dimensional
    5-Axis
    Waterjet machining capability
    Introduced 87,000 psi Intensifier Pump in 2006  which
    is still unmatched by competition  Business
    Segments
    Business Segments and Geographic Information
  Sales
    Outside the United States
    
    $19.6 million of exports from the United States;
    $56.4 million of sales from Europe; and
    $57.3 million of sales from our other foreign locations 5




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Products
    and Services
      Waterjet Cutting. 1 16
    Industrial Cleaning Products.
  Parts and Services.
  Marketing
    and Customers
   6




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Competition
    in Our Markets
  tm
          Raw
    Materials
   7




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




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Available
    Information
  Form 10-K, Form 10-Q, Form 8-K,
  1-800-SEC-0330. Form 10-K.
  Item 1A.
    Risk
    Factors      Risks
    Related to our Industry and Business
  We are
    experiencing increased competition in our markets, and the
    failure to complete effectively could have an adverse effect on
    our business, financial condition, and results of
    operations.
    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.
    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.
   9




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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;
    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.    Changes
    in our 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
  We may
    not be able to retain or hire key personnel.
    Our
    inability to protect our intellectual property rights, or our
    possible infringement on the proprietary rights of others, and
    related litigation could be time consuming and
    costly.
   10




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Commitments and Contingencies
  Foreign
    currency exchange rates and commodity prices may adversely
    affect our results of operations and financial
    condition.
    If we
    cannot obtain sufficient quantities of materials, components and
    equipment required for our manufacturing activities at
    competitive prices and quality and on a timely basis, or if our
    manufacturing capacity does not meet demand, our business and
    financial results will suffer.
    If we
    cannot develop technological advancements to our products
    through continued research and development, our financial
    results may be adversely affected.
  and/or and/or
  Our
    reputation and our ability to do business may be impaired by
    improper conduct by any of our employees, agents or business
    partners.
  U.S. and/or non-U.S. laws,
 11




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Risks
    Related to Ownership of Our Common Stock
  The
    price of our common stock may be volatile.
    
    fluctuations in general economic conditions;
    demand for ultrahigh-pressure pumps and ultrahigh-pressure
    systems generally;
    fluctuations in the capital budgets of customers; and
    development of superior products and services by our
    competitors.    quarter-to-quarter quarter-to-quarter
  We
    have outstanding options, and restricted stock units that have
    the potential to dilute the return of our existing common
    shareholders and cause the price of our common stock to
    decline.
    Washington
    law and our charter documents may make an acquisition of us more
    difficult.
    
    Establish a classified board of directors so that not all
    members of our board are elected at one time;
    Authorize the issuance of blank check preferred
    stock that could be issued by our board of directors (without
    shareholder approval) to increase the number of outstanding
    shares (including shares with special voting rights), each of
    which could hinder a takeover attempt;
    Provide for a Preferred Share Rights Purchase Plan or
    poison pill;
    Impose restrictions on certain transactions between a
    corporation and certain significant shareholders.
    Provide that directors may be removed only at a special
    meeting of shareholders and provide that only directors may call
    a special meeting;
    Require the affirmative approval of a merger, share exchange
    or sale of substantially all of the Corporations assets by
    2/3
    of the Corporations shares entitled to vote; and
    Provide for 60 day advance notification for shareholder
    proposals and nominations at shareholder meetings. 12




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Risks
    Related to the Pending Omax Transaction
  Our
    proposed merger with Omax Corporation (Omax) may
    fail to close or there could be substantial delays and costs
    before the merger is completed, including the loss of the
    $6 million consideration paid for the exclusive option to
    purchase Omax.
  Hart-Scott-Rodino
  If the
    proposed merger with Omax is not closed, the continuation of the
    litigation could be time consuming and costly.
  No. CV04-2334,
  Our
    proposed merger with Omax may result in dilution to our existing
    shareholders.
    We may
    not be able to successfully integrate Omax into our existing
    business.
   13




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We may
    assume unknown liabilities in the merger with Omax that could
    harm our financial condition and operating
    results.
    We may
    incur significant indebtedness following the merger, which could
    adversely affect our liquidity.
    Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties      Owned


Leased(In square feet)North America Waterjet


51,600



140,000Asia Waterjet


72,521



23,772Other International Waterjet






52,377Applications






53,320Total


124,121



269,469     
    North America Waterjet  Kent, Washington,
    which is our headquarters and the primary ultrahigh-pressure
    pump manufacturing facility and Jeffersonville, Indiana, a
    manufacturing facility;
    Asia Waterjet  Yokohama and Nagoya, Japan;
    Shanghai, QuangChou and Beijing, China; Incheon, Korea; and
    Hsinchu, Taiwan, a manufacturing facility;
    Other International Waterjet  Bretten,
    Germany; Birmingham, England; Milan, Italy; Madrid, Spain; Lyon,
    France; Czech Republic; Sao Paulo, Brazil; and Buenos Aires;
    Argentina;
    Applications  Burlington, Canada, which was
    the principle manufacturing facility of our Application systems
    and which management has made a strategic decision to close in
    fiscal year 2009.   14




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Item 3.
    Legal
    Proceedings    Omax Corporation v.
    Flow International Corporation Case No. CV04-2334, Pending Omax Transaction
      Other Legal Proceedings Commitments and
    Contingencies
  Item 4.
    Submission
    of Matters to a Vote of Security Holders   15




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PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities  Market
    Information
    Fiscal Year 2008


Fiscal Year 2007Low


High


Low


HighFirst Quarter

$
9.23


$
13.34


$
12.53


$
16.74Second Quarter


7.65



9.76



10.60



14.68Third Quarter


7.22



10.05



9.75



12.41Fourth Quarter


7.34



10.45



10.43



12.97   Holders
    of the Companys Common Stock
    Dividends
  Subsequent Events
  Issuer
    Purchases of Equity Securities
  Shareholders Equity
  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


773,500


$
10.53



1,403,154   Stock-based
    Compensation
 16




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Comparison
    of Five-Year Cumulative Total Shareholder Return*
  5-year
  
  4/03


4/04


4/05


4/06


4/07


4/08Flow International Corporation



100.00




217.95




505.98




1155.56




994.87




857.26S&P Smallcap 600



100.00




139.94




154.54




203.05




218.58




198.81NASDAQ Composite



100.00




134.18




134.93




165.79




181.16




173.24Dow Jones US Industrial Machinery



100.00




128.97




137.21




116.45




121.38




137.39   *
    
    The stock price performance included in this graph is not
    necessarily indicative of future stock price performance.  Performance
    Graph Assumptions
  
    Assumes a $100 investment in our common stock and in each index
    in April 30, 2003 and tracks it through to April 30,
    2008.
    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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Item 6.
    Selected
    Financial Data  The Company has restated its previously issued Consolidated
    Financial Statements for the fiscal years ended April 30,
    2007 and 2006 as described in Note 20 to the accompanying
    Consolidated Financial Statements included in Item 8. All
    affected amounts included herein have been restated.
  Form 10-K.
  Year Ended April 30,2007(1)


2006(1)2008


(Restated)


(Restated)


2005(1)(2)


2004(1)(2)(In thousands, except per share amounts)Statement of Operations Data:Sales

$
244,259


$
213,435


$
202,658


$
169,289


$
128,488Income (Loss) From Continuing Operations


21,911



4,022



7,047



(12,772
)


(10,557
)Net Income (Loss)


22,354



3,755



6,677



(21,197
)


(11,274
)Basic Income (Loss) Per Share From Continuing Operations


0.59



0.11



0.20



(0.72
)


(0.68
)Basic Net Income (Loss) Per Share


0.60



0.10



0.19



(1.19
)


(0.73
)Diluted Income (Loss) Per Share From Continuing Operations


0.58



0.11



0.19



(0.72
)


(0.68
)Diluted Net Income (Loss) Per Share


0.59



0.10



0.18



(1.19
)


(0.73
)   April 30,2007


20062008


(Restated)


(Restated)


2005


2004(In thousands)Balance Sheet Data:Working Capital (Deficit)

$
56,126


$
43,108


$
41,857


$
6,154


$
(8,757
)Total Assets


151,155



123,172



119,301



118,467



129,272Short-Term Debt


2,095



7,188



3,247



13,443



48,727Long-Term Obligations, net


2,333



2,779



3,774



5,704



38,081Shareholders Equity (Deficit)


86,064



61,224



56,557



29,464



(8,217
)     (1)
    
    Our consolidated statements of operations for fiscal years 2007
    through 2004 have been recast to reflect the results of
    operations of our CIS Technical Solutions division as
    discontinued operations.(2)
    
    Our consolidated statements of operations for fiscal years 2005
    and 2004 have been recast to give effect to the sale of the
    Avure Business and present the results for the Avure Business as
    discontinued operations.  Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  We have restated our previously issued Consolidated Financial
    Statements for the fiscal years ended April 30, 2007 and
    2006, as described in Note 20 to the accompanying
    Consolidated Financial Statements included in Item 8.
    Note 18 details the impact of the restatement on our
    previously reported unaudited quarterly financial data for
    interim periods in 2008 and 2007. All affected amounts and
    period-to-period comparisons described herein have been restated
    accordingly.
  Form 10-K.
    
    Executive Summary
    Results of Operations 18




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
    Liquidity and Capital Resources
    Contractual Obligations
    Off Balance Sheet Arrangements
    Critical Accounting Policies and Estimates
    Recently Issued Accounting Pronouncements
    Factors Affecting Future Operating Results  Executive
    Summary
    
    expand market share in our current markets;
    continue to identify and penetrate new markets;
    capitalize on the our customer relationships and business
    competencies;
    develop and market innovative products and applications; and
    continue to improve operating margins by focusing on operational
    improvements.  Risk Factors
    Introduction
    of New Products
    tm tm
  Intercompany
    Transfer Pricing Policy
    Allocation
    of Corporate Management Fees
   19




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Exit
    or Disposal Activities
      Results
    of Operations
  Summary
    Consolidated Results for Fiscal Years 2008, 2007, and
    2006
  Year Ended April 30,

% Change 2008

% Change 20072008

2007

2006

Versus 2007

Versus 2006(In thousands, except per share amounts)Sales

$
244,259


$
213,435


$
202,658



14
%


5
%Operating Income


16,779



4,657



20,271



260
%


(77
)%   Year Ended April 30,


% Change 2008


% Change 20072008


2007


2006


Versus 2007


Versus 2006(In thousands, except per share amounts)SalesSystems

$
176,755


$
155,463


$
150,323



14
%


3
%Consumable parts


67,504



57,972



52,335



17
%


11
%Total Sales


244,259



213,435



202,658



14
%


5
%   Fiscal
    year 2008 compared to fiscal year 2007
      tm
 20




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Fiscal
    year 2007 compared to fiscal year 2006
      Segment
    Results of Operations
  Business Segments and
    Geographic Information
  North
    America Waterjet Segment
    Year Ended April 30,


% Change 2008


% Change 20072008


2007


2006


Versus 2007


Versus 2006(In thousands)Sales

$
130,556


$
119,147


$
109,686



10
%


9
%% of total company sales


53
%*


56
%*


54
%*


NM



NMGross Margin


61,250



52,683



54,132



19
%


(3
)%Gross Margin as % of sales


47
%


44
%


50
%


NM



NMOperating ExpensesSales and Marketing


21,978



22,947



18,899



(4
)%


21
%Research and Engineering


7,667



7,955



6,061



(4
)%


31
%Gain on Barton Sale










(2,500
)


NM



NMGeneral and Administrative


21,620



24,702



27,298



(12
)%


(10
)%Total Operating Expenses

$
51,265


$
55,604


$
49,758



(8
)%


12
%Operating Income (Loss)

$
9,985


$
(2,921
)

$
4,374



NM



NM       *
    
    Total sales in our North America Waterjet segment include sales
    to customers who reside outside the United States 21




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Fiscal
    year 2008 compared to fiscal year 2007
      
    Increased market awareness and adoption of waterjet technology
    and the positive market reception to our 87,000 psi high
    pressure pump.
    Strong demand for our spare parts due to increased number of
    systems in service.        
    A reduction in sales and marketing expenses of $969,000 or 4%
    primarily as a result of a lower customer support costs driven
    by lower aerospace sales when compared to the prior year;
    A reduction in research and engineering costs of $288,000 or 4%
    related to the timing of new product launches. The prior year
    comparative period included engineering expenses to support new
    core product development such as
    Stonecraftertm,
    the 87,000 psi pump, and the 55,000 psi pump; and
    A reduction in general and administrative expenses of
    $3.1 million or 12% primarily attributable to lower
    professional fees for legal, audit and Sarbanes Oxley compliance
    costs which were $5.4 million in fiscal year 2008 compared
    to $8.6 million in the prior year.  Fiscal
    year 2007 compared to fiscal year 2006
      
    Increasing demand for our standard shapecutting systems and
    spare parts due to increased awareness of waterjet cutting
    technology and investments in awareness campaign and tradeshows.        
    An increase in sales and marketing expenses of $4 million
    or 21% which stemmed from increased investment in sales and
    marketing staff and higher tradeshow expenses due to our
    attendance at the
    bi-annual
    International Manufacturing Technology Show held in Chicago in
    September 2006;
    An increase of $1.9 million or 31% in research and
    engineering expenses attributable to additional engineering
    resources to support the development of new core products such
    as
    Stonecraftertm,
    the 87,000 psi pump, and the 55,000 psi pump; and 22




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
    A decrease of $2.6 million or 10% in general and
    administrative expenses attributable to lower incentive
    compensation expenses in fiscal year 2007 primarily as a result
    of a $1.2 million reversal of previously accrued
    compensation costs related to our Long-term Incentive Plan
    (LTIP). Additionally, fiscal year 2006 also included costs for
    the termination of the Key Executive Retention Plan of $899,000
    and higher incentive compensation expenses under an annual
    incentive plan in fiscal year 2006.  Asia
    Waterjet Segment
    Year Ended April 30,


% Change 2008


% Change 20072008


2007


2006


Versus 2007


Versus 2006(In thousands)Sales

$
30,739


$
30,845


$
36,264



(0.3
)%


(15
)%% of total company sales


13
%


14
%


18
%


NM



NMGross Margin


13,789



17,497



21,598



(21
)%


(19
)%Gross Margin as % of sales


45
%


57
%


60
%


NM



NMOperating ExpensesSales and Marketing


5,171



4,771



4,478



8
%


7
%Research and Engineering


440



686



585



(36
)%


17
%General and Administrative


4,630



7,239



1,943



(36
)%


273
%Total Operating Expenses

$
10,241


$
12,696


$
7,006



(19
)%


81
%Operating Income

$
3,548


$
4,801


$
14,592



(26
)%


(67
)%       Fiscal
    year 2008 compared to fiscal year 2007
          
    An increase in sales and marketing expenses of $400,000 or 8% as
    a result of increased investment in sales staff;
    A reduction in research and engineering costs of $246,000 or 36%
    due to reduced product development costs related to advanced
    systems; and
    A reduction in general and administrative expenses of
    $2.6 million or 36% attributable to lower legal and
    consulting expenses including a $475,000 benefit from an
    insurance recovery related to the theft in our Korean operation.
    Prior year general and administrative expenses included Asia
    investigation expenses. 23




---



##### Table of Contents



Fiscal
    year 2007 compared to fiscal year 2006
          
    An increase in sales and marketing expenses of $293,000 or 7%
    due to increased staffing;
    An increase in research and engineering expenses of $101,000 or
    17% attributable to increased investment in product
    development; and
    An increase in general and administrative expenses of
    $5.3 million or 273% attributable to legal and consulting
    fees as well as theft losses incurred in relation to the Asia
    investigations in fiscal year 2007 as well as the allocation of
    management fees to this reporting segment.  Other
    International Waterjet
    Year Ended April 30,


% Change 2008


% Change 20072008


2007


2006


Versus 2007


Versus 2006(In thousands)Sales

$
67,804


$
49,674


$
38,653



36
%


29
%% of total company sales


28
%


23
%


19
%


NM



NMGross Margin


24,192



18,992



13,745



27
%


38
%Gross Margin as % of sales


36
%


38
%


36
%


NM



NMOperating ExpensesSales and Marketing


13,047



9,995



9,286



31
%


8
%Research and Engineering


405



440



469



(8
)%


(6
)%General and Administrative


5,055



3,575



2,374



41
%


51
%Total Operating Expenses

$
18,507


$
14,010


$
12,129



32
%


16
%Operating Income

$
5,685


$
4,982


$
1,616



14
%


208
%       Fiscal
    year 2008 compared to fiscal year 2007
       24




---



##### Table of Contents




    An increase in sales and marketing expenses of $3.1 million
    or 31% as a result of increased staffing, higher commissions on
    increased system sales and the impact of a stronger Euro and
    Brazilian Real versus US Dollar;
    A reduction in research and engineering costs of $35,000 or
    8%; and
    An increase in general and administrative expenses of
    $1.5 million or 41% attributable to higher management fee
    allocation in the current year when compared to the prior year.  Fiscal
    year 2007 compared to fiscal year 2006
          
    An increase in sales and marketing expenses of $709,000 or 8%
    due to increased staffing;
    A decrease in research and engineering expenses of $29,000 or
    6%; and
    An increase in general and administrative expenses of
    $1.2 million or 51% attributable to the allocation of
    management fees to this reporting segment.  Applications
    Segment
      Year Ended April 30,


% Change 2008


% Change 20072008


2007


2006


Versus 2007


Versus 2006(In thousands)Sales

$
15,160


$
13,769


$
18,055



10
%


(24
)%% of total company sales


6
%


6
%


9
%


NM



NMGross Margin


1,377



1,736



3,678



(21
)%


(53
)%Gross Margin as % of sales


9
%


13
%


20
%


NM



NMOperating ExpensesSales and Marketing


2,076



1,765



1,010



18
%


75
%Research and Engineering


259



302



175



(14
)%


73
%Restructuring










1,236



NM



NMGeneral and Administrative


2,583



1,739



1,387



49
%


25
%Total Operating Expenses

$
4,918


$
3,806


$
3,808



29
%


0.1
%Operating Loss

$
(3,541
)

$
(2,070
)

$
(130
)


71
%


NMResults of Discontinued Operations, net of Tax of $230, $236,
    and $124

$
443


$
418


$
218



6
%


92
%      25




---



##### Table of Contents



Fiscal
    year 2008 compared to fiscal year 2007
          
    An increase in sales and marketing expenses of $311,000 or 18%
    primarily due to bad debt expenses of $413,000 during the
    current year offset by a decrease in staffing costs during the
    current fiscal year;
    A reduction in research and engineering costs of $43,000 or
    14%; and
    An increase in general and administrative expenses of $844,000
    or 49% attributable to higher management fee allocation in the
    current year when compared to the prior year as well as
    severance expenses incurred during the current fiscal year.
    Additionally, based on our plans to close our Burlington,
    Ontario manufacturing facility in order to establish a single
    facility for designing and building advanced systems in
    Jeffersonville, Indiana, we recorded an impairment charge of
    $97,000 related to the impairment of long-lived assets in
    accordance with Statement of Financial Accounting Standard
    No. 144 (FAS 144), Accounting for
    the Impairment or Disposal of Long-Lived Assets.  Fiscal
    year 2007 compared to fiscal year 2006
        
    An increase in sales and marketing expenses of $755,000 or 75%
    primarily due to bad debt expenses and investment in additional
    staff to focus on non-automotive applications;
    An increase in research and engineering costs of $127,000 or 73%
    as a result of new product development; and
    An increase in general and administrative expenses of $352,000
    or 25% attributable to management fee allocation.  Other
    (Income) Expense
  Interest
    Income and Interest Expense
    
    $780,000 in fiscal year 2008;
    $838,000 in fiscal year 2007; and
    $405,000 in fiscal year 2006 26




---



##### Table of Contents




    $419,000 in fiscal year 2008;
    $409,000 in fiscal year 2007; and
    $1.7 million in fiscal year 2006    Other
    Income (Expense), Net
    Year Ended April 30,2008


2007


2006Net Realized Foreign Exchange Gains

$
1,759


$
213


$
19Net Unrealized Foreign Exchange Gains (Losses)


(2,904
)


1,827



55Premium on Repurchase of Warrants


(629
)






Hedging Costs






(206
)


Other


(72
)


88



236Total

$
(1,846
)

$
1,922


$
310     Income
    Taxes
    
    $(6.6) million in fiscal year 2008
    $3.0 million in fiscal year 2007
    $5.4 million in fiscal year 2006  Accounting for Income
    Taxes
 27




---



##### Table of Contents



Fourth
    Quarter Highlights
  Summary
  Three Months Ended April 30,2008


2007


Difference


%(In thousands except per share amounts)Sales

$
63,274


$
52,256


$
11,018



21
%Income (Loss) from Continuing Operations


13,310



(3,371
)


16,681



NMBasic Income (Loss) per Share from Continuing Operations

$
0.35


$
(0.09
)


NM



NMDiluted Income (Loss) per Share from Continuing Operations

$
0.35


$
(0.09
)


NM



NM      
    Sales in the fourth quarter of fiscal year 2008 increased by
    $11 million or 21% when compared to the prior year same
    period
    Income from continuing operations was $13.3 million or $.35
    per basic and dilutive income per share for the quarter ended
    April 30, 2008 compared to a loss from continuing
    operations of $3.4 million or $.09 per basic and dilutive
    share in the prior year comparative period.     28




---



##### Table of Contents



Liquidity
    and Capital Resources
  Cash
    Flow Summary
    Year Ended April 30,2008


2007


2006Net Income

$
22,354


$
3,755


$
6,677Noncash charges (credits) to income


4,419



6,349



15,891Changes in working capital


(12,802
)


(5,906
)


(1,825
)Net cash provided by operating activities


13,971



4,198



20,743Net cash provided by (used in) investing activities


(12,926
)


(7,679
)


10,889Net cash provided by (used in) financing activities


(7,598
)


5,723



(6,662
)Effect of foreign exchange rate changes on cash andcash equivalents


(2,636
)


(128
)


(1,772
)Net increase (decrease) in cash and cash equivalents


(9,189
)


2,114



23,198Cash and cash equivalents at beginning of period


38,288



36,174



12,976Ending cash balance

$
29,099


$
38,288


$
36,174   Operating
    Activities
     29




---



##### Table of Contents



Investing
    Activities
  Pending Omax Transaction
  Financing
    Activities
    Debt
      Warrant
    Repurchase
  Shareholders Equity
  Sources
    of Liquidity
   30




---



##### Table of Contents



Subsequent Events
      Disclosures
    about Contractual Obligations and Commercial
    Commitments
  Note 7:
    Long-term Obligations Note 9: Commitments and
    Contingencies
  Maturity by Fiscal Year2009


2010


2011


2012


2013


Thereafter


Total(In thousands)Operating Leases

$
2,821


$
2,480


$
2,249


$
1,719


$
1,078


$
588


$
10,935Long-term Debt, Notes Payable & Capital Leases(1)


2,094



984



930



418











4,426Purchase Commitments(2)


17,771



6,522



6,000















30,293License Agreements


352



352



















704Consulting Agreements


123



4



















127Liabilities related to Unrecognized Tax benefits, including
    Interest and Penalties(3)






















9,190



9,190Total

$
23,161


$
10,342


$
9,179


$
2,137


$
1,078


$
9,778


$
55,675     (1)
    
    Long-term debt obligations are exclusive of interest.(2)
    
    Purchase obligations 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 are included in the table above.
    Substantially all open purchase 31




---



##### Table of Contents



orders are fulfilled within 30 days. The amount presented
    above as inventory purchases include all open purchase orders.
    We expect to fund these commitments with existing cash and our
    cash flows from operations in future periods.(3)
    
    We have unrecognized tax benefits of $9.2 million
    associated with uncertain tax positions as of April 30,
    2008. 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
    The Company and Summary of Significant
    Accounting Policies
  Revenue
    Recognition
  No. 00-21 (EITF 00-21), tm 97-2 (SOP 97-2),
     32




---



##### Table of Contents



81-1 (SOP 81-1),
      Valuation
    of Obsolete/Excess Inventory
    Valuation
    of Deferred Tax Assets and Uncertain Tax Positions
   33




---



##### Table of Contents



Long-lived
    Assets and Goodwill
        Stock-based
    compensation
  The Company and Summary of Significant
    Accounting Policies
 34




---



##### Table of Contents



Stock-based Compensation
    Legal
    Contingencies
  Commitments
    and Contingencies
    Recently
    Issued Accounting Pronouncements
  Note 2: Recently Issued Accounting Pronouncements
  Factors
    Affecting Future Operating Results
       35




---



##### Table of Contents



Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk    Interest Rate Exposure  Long-term
    Obligations and Notes Payable
  Foreign Currency Exchange Rate Risk non-U.S. operations
 36




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data    Index to Consolidated Financial Statements

Page in this ReportReport of Independent Registered Public
    Accounting Firm

38Consolidated Balance Sheets as of April 30,
    2008 and 2007 (restated)

39Consolidated Statements of Operations for each of
    the three years ended April 30, 2008, 2007 (restated), and
    2006 (restated)

40Consolidated Statements of Cash Flows for each of
    the three years ended April 30, 2008, 2007 (restated), and
    2006 (restated)

41Consolidated Statements of Shareholders
    Equity (Deficit) and Comprehensive Income (Loss) for each of the
    three years ended April 30, 2008, 2007 (restated), and 2006
    (restated)

43Notes to Consolidated Financial Statements

44Financial Statement ScheduleSchedule II Valuation and Qualifying
    Accounts

82  37




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Board of Directors and Stockholders of

Flow International Corporation

Kent, Washington



We have audited the accompanying consolidated balance sheets of
    Flow International Corporation and subsidiaries (the
    Company) as of April 30, 2008 and 2007, and the
    related consolidated statements of operations,
    stockholders equity (deficit) and comprehensive income
    (loss), and cash flows for each of the three years in the period
    ended April 30, 2008. Our audits also included the
    financial statement schedule listed in the index at
    Item 15. These consolidated financial statements and
    financial statement schedule are the responsibility of the
    Companys management. Our responsibility is to express an
    opinion on the consolidated financial statements and financial
    statement schedule based on our audits.



We conducted our audits in accordance with the standards of the
    Public Company Accounting Oversight Board (United States). Those
    standards require that we plan and perform the audit to obtain
    reasonable assurance about whether the financial statements are
    free of material misstatement. An audit includes examining, on a
    test basis, evidence supporting the amounts and disclosures in
    the financial statements. An audit also includes assessing the
    accounting principles used and significant estimates made by
    management, as well as evaluating the overall financial
    statement presentation. We believe that our audits provide a
    reasonable basis for our opinion.



In our opinion, such consolidated financial statements present
    fairly, in all material respects, the financial position of the
    Company as of April 30, 2008 and 2007, and the results of
    its operations and its cash flows for each of the three years in
    the period ended April 30, 2008, in conformity with
    accounting principles generally accepted in the United States of
    America. Also, in our opinion, such financial statement schedule
    when considered in relation to the basic consolidated financial
    statements taken as a whole, presents fairly, in all material
    respects, the information set forth therein.



As described in Note 1 to the consolidated financial
    statements, the Company adopted the provisions of Financial
    Accounting Standards Board Statement No. 123(R),
    Share-Based Payment, effective May 1, 2006.



As discussed in Note 20, the accompanying 2006 and 2007
    consolidated financial statements have been restated.



We have also audited, in accordance with the standards of the
    Public Company Accounting Oversight Board (United States), the
    Companys internal control over financial reporting as of
    April 30, 2008, based on the criteria established in
    Internal Control  Integrated Frameworkissued
    by the Committee of Sponsoring Organizations of the Treadway
    Commission, and our report dated July 10, 2008, expressed
    an unqualified opinion on the Companys internal control
    over financial reporting.



/s/ Deloitte & Touche LLP

Seattle, Washington

July 10, 2008

38




---



##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  CONSOLIDATED BALANCE SHEETS
  April 30,2007(Restated, See2008


Note 20)(In thousands,except share amounts)ASSETS:Current Assets:Cash and Cash Equivalents

$
29,099


$
38,288Restricted Cash


142



Short-term Investments






750Receivables, net


33,632



27,329Inventories


29,339



26,593Deferred Income Taxes, net


2,889



44Deferred Acquisition Costs


7,953



Other Current Assets


6,456



7,191Total Current Assets


109,510



100,195Property and Equipment, net


18,790



15,459Intangible Assets, net


4,062



3,767Goodwill


2,764



2,764Deferred Income Taxes, net


15,535



305Other Assets


494



682$
151,155


$
123,172LIABILITIES AND SHAREHOLDERS EQUITY:Current Liabilities:Notes Payable

$
1,118


$
6,366Current Portion of Long-Term Obligations


977



822Accounts Payable


19,516



17,715Accrued Payroll and Related Liabilities


8,189



6,239Taxes Payable and Other Accrued Taxes


3,617



2,542Deferred Income Taxes


686



257Deferred Revenue


4,980



5,136Customer Deposits


4,549



5,791Other Accrued Liabilities


9,753



12,219Total Current Liabilities


53,385



57,087Long-Term Obligations, net


2,333



2,779Deferred Income Taxes


7,787



1,371Other Long-Term Liabilities


1,586



71165,091



61,948Commitments and Contingencies (Note 9)Shareholders Equity:Series A 8% Convertible Preferred Stock 
    $.01 par value, 1,000,000 shares authorized, none
    issued






Common Stock  $.01 par value,
    49,000,000 shares authorized, 37,589,787 and
    37,268,037 shares issued and outstanding at April 30,
    2008 and 2007, respectively


371



367Capital in Excess of Par


139,007



139,207Accumulated Deficit


(47,584
)


(69,395
)Accumulated Other Comprehensive Loss:Defined Benefit Plan Obligation, net of income tax of $93 and $67


(280
)


(201
)Cumulative Translation Adjustment, net of income tax of $764 and
    $0


(5,450
)


(8,754
)Total Shareholders Equity


86,064



61,224$
151,155


$
123,172    39




---



##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  CONSOLIDATED STATEMENTS OF OPERATIONS
  Year Ended April 30,2007


2006(Restated,


(Restated,2008


See Note 20)


See Note 20)(In thousands, except per share amounts)Sales

$
244,259


$
213,435


$
202,658Cost of Sales


142,549



122,662



109,686Gross Margin


101,710



90,773



92,972Operating Expenses:Sales and Marketing


42,272



39,478



33,673Research and Engineering


8,771



9,383



7,290General and Administrative


33,888



37,255



33,002Restructuring










1,236Gain on Barton Sale










(2,500
)84,931



86,116



72,701Operating Income


16,779



4,657



20,271Interest Income


780



838



405Interest Expense


(419
)


(409
)


(1,673
)Fair Value Adjustment on Warrants Issued










(6,915
)Other Income (Expense), net


(1,846
)


1,922



310Income Before Provision for Income Taxes


15,294



7,008



12,398Benefit (Provision) for Income Taxes


6,617



(2,986
)


(5,351
)Income from Continuing Operations


21,911



4,022



7,047Income from Operations of Discontinued Operations, Net of Income
    Tax of $230, $236, and $612


443



418



772Loss on Sale of Discontinued Operations, Net of Income Tax of
    $0, $0 and $334






(685
)


(1,142
)Net Income

$
22,354


$
3,755


$
6,677Income (Loss) Per ShareBasicIncome from Continuing Operations

$
.59


$
.11


$
.20Discontinued Operations, Net of Income Tax


.01



(.01
)


(.01
)Net Income

$
.60


$
.10


$
.19DilutedIncome from Continuing Operations

$
.58


$
.11


$
.19Discontinued Operations, Net of Income Tax


01



(.01
)


(.01
)Net Income

$
.59


$
.10


$
.18    40




---



##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  CONSOLIDATED STATEMENTS OF CASH FLOWS
  Year Ended April 30,2007


2006(Restated,


(Restated,2008


See Note 20)


See Note 20)(In thousands)Cash Flows from Operating Activities:Net Income

$
22,354


$
3,755


$
6,677Adjustments to reconcile Net Income to Cash Provided by
    Operating Activities:Depreciation and Amortization


3,974



2,981



3,373Deferred Income Taxes


(10,931
)


(970
)


1,119Excess Tax Benefits from Exercise of Stock Options


(291
)






Premium on Warrant Repurchase


629







Fair Value Adjustment on Warrants Issued










6,915Provision for Slow Moving and Obsolete Inventory


1,307



46



620Bad Debt Expense


1,805



1,143



104Warranty Expense


3,589



4,306



1,691Incentive Stock Compensation Expense


695



769



4,800Loss on Sale of Discontinued Operations






685



1,142Unrealized Foreign Currency Losses (Gains), net


2,904



(1,827
)


(1,939
)Gain on Barton Sale










(2,500
)Other


746



(784
)


566Changes in Operating Assets and Liabilities:Receivables


(6,121
)


6,803



(4,668
)Inventories


(2,894
)


(3,727
)


(7,640
)Other Operating Assets


2,066



(344
)


825Accounts Payable


790



(3,972
)


2,829Accrued Payroll and Related Liabilities


2,027



(1,046
)


677Deferred Revenue


(389
)


(1,162
)


1,794Customer Deposits


(1,671
)


(1,779
)


2,704Other Operating Liabilities


(6,610
)


(679
)


1,654Cash Provided by Operating Activities


(13,971
)


4,198



20,743Cash Flows From Investing Activities:Expenditures for Property and Equipment and Intangible Assets


(6,303
)


(6,944
)


(2,549
)Cash Received in Sale of Business, Net of Cash Sold






995



10,119Settlement on Sale of Avure Business






(985
)


Purchase of Short-term Investments






(750
)


Proceeds from Sale of Short-term Investments


773







Payments for Pending Acquisition


(7,508
)






Proceeds from Sale of Customer List










2,500Proceeds from Sale of Property and Equipment


254



5



175Restricted Cash


(142
)






496Other










148Cash Provided by (Used in) Investing Activities


(12,926
)


(7,679
)


10,889 41




---



##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  CONSOLIDATED STATEMENTS OF CASH
    FLOWS  (Continued)
  Year Ended April 30,2007


2006(Restated,


(Restated,2008


See Note 20)


See Note 20)(In thousands)Cash Flows from Financing Activities:Repayments of Notes Payable


(6,616
)


(1,614
)


(2,274
)Borrowings Under Notes Payable


1,106



5,823



1,729Payments on Senior Credit Agreement










(59,294
)Borrowings on Senior Credit Agreement










49,599Payments of Long-Term Obligations


(785
)


(931
)


(116
)Borrowings under Capital Lease Obligations


319







49Payments of Capital Lease Obligations


(101
)


(49
)


Proceeds from Exercise of Warrants and Stock Options


1,198



2,494



4,634Excess Tax Benefits from Exercise of Stock Options


291







Payments for Warrants Repurchase


(3,010
)






Dividends Paid to Joint Venture Partner










(989
)Cash Provided by (Used in) Financing Activities


(7,598
)


5,723



(6,662
)Effect of Changes in Exchange Rates


(2,636
)


(128
)


(1,772
)Increase (Decrease) in Cash And Cash Equivalents


(9,189
)


2,114



23,198Cash and Cash Equivalents at Beginning of Period


38,288



36,174



12,976Cash and Cash Equivalents at End of Period

$
29,099


$
38,288


$
36,174Supplemental Disclosures of Cash Flow InformationCash Paid during the Year for:Interest

$
341


$
229


$
903Income Taxes


6,961



6,495



1,674Supplemental Disclosures of Noncash Investing and Financing
    ActivitiesNonmonetary exchange of assets






250



Issuance of compensatory common stock on executive incentive
    compensation plan






884



799Note received in sale of Avure Business










1,313Classification of PIPE warrants to additional paid-in capital










13,611Accounts Payable incurred to acquire Property and Equipment, and
    Intangible Assets


745



961



Accounts Receivable for Warrants and options exercised










1,086Accrued Liabilities incurred for Pending Acquisition


445







    42




---



##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  CONSOLIDATED STATEMENTS OF SHAREHOLDERS
    EQUITY (DEFICIT)
 AND COMPREHENSIVE INCOME (LOSS)
  Retained


Accumulated


TotalCommon Stock


Capital


Earnings


Other


ShareholdersPar


in Excess


(Accumulated


Comprehensive


EquityShares


Value


of Par


Deficit)


Income (Loss)


(Deficit)(In thousands)Balances, April 30, 2005


33,495



335



112,512



(79,827
)


(3,556
)


29,464Components of Comprehensive Income:Net Income (restated, see Note 20)














6,677







6,677Unrealized Loss on Cash Flow Hedges, net of Income Tax of $0


















(715
)


(715
)Reclassification Adjustment for Settlement of Cash Flow Hedges,
    net of income tax of $0


















492
*


492
*Reclassification of Avure Business Cumulative Translation
    Adjustment to Income, net of Income Tax of $0


















(3,053
)


(3,053
)Cumulative Translation Adjustment, net of Income Tax of $0


















(1,167
)


(1,167
)Total Comprehensive Income






















2,234Exercise of Warrants & Options


2,925



24



5,695











5,719Reclass Warrant Liability to Capital In Excess of Par










13,611











13,611Stock Compensation (restated, see Note 20)


523



5



5,519











5,524Balances, April 30, 2006 (restated, see Note 20)


36,943


$
364


$
137,337


$
(73,150
)

$
(7,999
)

$
56,552Cumulative effect of the adoption of 123R (Note 11)










(313
)










(313
)Components of Comprehensive Income:Net Income (restated, see Note 20)














3,755







3,755Reclassification Adjustment for Settlement of Cash Flow Hedges,
    net of income tax of $0


















273



273Cumulative Translation Adjustment, net of Income Tax of $0


















(1,028
)


(1,028
)Comprehensive Income






















3,000Cumulative effect of the adoption of FAS 158 (Note 12)


















(201
)


(201
)Exercise of Warrants & Options


168



2



1,408











1,410Stock Compensation (restated, see Note 20)


157



1



775











776Balances, April 30, 2007 (restated, see Note 20)


37,268


$
367


$
139,207


$
(69,395
)

$
(8,955
)

$
61,224Cumulative effect of the adoption of FIN 48 (Note 13)














(543
)






(543
)Components of Comprehensive Income: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 (Note 10)










(2,380
)










(2,380
)Stock Compensation


70



1



694











695Balances, April 30, 2008


37,590


$
371


$
139,007


$
(47,584
)

$
(5,730
)

$
86,064     *
    
    The amount includes $448 related to the discontinued operations
    and was transferred to the purchaser of Avure Business on
    October 31, 2005 (see Note 15).   43




---



##### Table of Contents



FLOW
    INTERNATIONAL CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTSFor the three years ended April 30, 2008
    (All tabular dollar amounts in thousands, except per share and
    option amounts)
  Note 1  The
    Company and Summary of Significant Accounting
    Policies:
  Operations
    and Segments
    Business Segments and Geographical Information
  Principles
    of Consolidation
    Foreign
    Currency Translation
    Use of
    Estimates
    Goodwill
    and Intangible Assets
   44




---



##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Long-Lived
    Assets
    Asset
    Retirement Obligations
    Long-term
  Fair
    Value of Financial Instruments
   45




---



##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Derivative
    Financial Instruments
          Revenue
    Recognition
  No. 00-21 (EITF 00-21), tm 97-2 (SOP 97-2),
     46




---



##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    81-1 (SOP 81-1),
    Cost
    of Sales
    Advertising
    Expense
    Cash
    and Cash Equivalents
    Short-term
    Investments
    Inventories
  first-in,
 47




---



##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Property
    and Equipment
    Income
    Taxes
        Accounting for Uncertainty in Income Taxes,
    Concentration
    of Credit Risk
  and/or
 48




---



##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Warranty
    Liability
    Product
    Liability
    Health
    Benefits
    Research
    and Engineering
   49




---



##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Other
    Income (Expense), net
    Year Ended April 30,2008


2007


2006Net Realized Foreign Exchange Gains

$
1,759


$
213


$
19Net Unrealized Foreign Exchange Gains (Losses)


(2,904
)


1,827



55Premium on Repurchase of Warrants


(629
)






Hedging Costs






(206
)


Other


(72
)


88



236Total

$
(1,846
)

$
1,922


$
310   Basic
    and Diluted Income per Share
      Year Ended April 30,2008


2007


2006Numerator:Income from continuing operations

$
21,911


$
4,022


$
7,047Denominator:Denominator for basic income per share  weighted
    average shares


37,421



37,192



34,676Dilutive potential common shares from employee stock options


147



333



230Dilutive potential common shares from warrants






270



1,371Dilutive potential common shares from stock compensation plans


325



73



374Denominator for diluted income per share  weighted
    average shares and assumed conversions


37,893



37,868



36,651Basic income per share from continuing operations

$
.59


$
.11


$
.20Diluted income per share from continuing operations

$
.58


$
.11


$
.19     Stock
    Based Compensation
   50




---



##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    stock-based grant-date stock-based Stock-based
    Compensation
    2006Net income, as reported

$
6,677Add: Employee stock-based compensation under APB 25 included in
    net income


5,524Deduct: Total employee stock-based compensation expense under
    fair value based method for all awards


(2,736
)Pro forma net income

$
9,465Net income per share  basic:As reported

$
.19Pro forma  basic

$
.27Net income per share  diluted:As reported

$
.18Pro forma  diluted

$
.26    51




---



##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Note 2  Recently
    Issued Accounting Pronouncements
  No. 48-1, FIN 48-1) FIN 48-1 Income Taxes
  FSP 157-2 (FSP 157-2). FSP 157-2
     52




---



##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Note 3  Receivables
    April 30,2008


2007Trade Accounts Receivable

$
32,410


$
28,097Unbilled Revenues


4,589



2,14736,999



30,244Less Allowance for Doubtful Accounts


(3,367
)


(2,915
)$
33,632


$
27,329      53




---



##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 4  Inventories
    April 30,2008


2007Raw Materials and Parts

$
19,671


$
16,871Work in Process


3,215



2,765Finished Goods


6,453



6,957$
29,339


$
26,593   Note 5  Property
    and Equipment
    April 30,2008


2007Land and Buildings

$
8,745


$
7,426Machinery and Equipment


27,192



22,504Furniture and Fixtures


4,015



2,746Leasehold Improvements


6,261



6,004Construction in Progress


2,109



4,24548,322



42,925Less Accumulated Depreciation and Amortization


(29,532
)


(27,466
)$
18,790


$
15,459     Note 6  Intangible
    Assets
      April 30,2008

2007Patents

$
5,202


$
4,808Less Accumulated Depreciation and Amortization


(1,816
)


(1,548
)Patents, net

$
3,386


$
3,260    54




---



##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    April 30, 2008


April 30, 2007Trademarks

$
676


$
507     Note 7  Accrued
    Liabilities
    Warranty
    Obligations
        Accrued warranty balance as of April 30, 2006

$
1,699Accruals for warranties of 2007 sales


4,306Warranty costs incurred in fiscal 2007


(3,600
)Accrued warranty balance as of April 30, 2007

$
2,405Accruals for warranties of fiscal 2008 sales


3,589Warranty costs incurred in fiscal 2008


(2,893
)Accrued warranty balance as of April 30, 2008

$
3,101   Restructuring
    Charges
     55




---



##### Table of Contents



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


OtherAmerica


International


Applications


ConsolidatedFacility


Facility


Facility


Total FacilityExit


Exit


Exit


ExitCosts


Costs


Costs


CostsBalance, April 30 2006

$
67


$
164


$
684


$
915Cash payments


(36
)


(28
)


(364
)


(428
)Balance, April 30 2007

$
31


$
136


$
320


$
487Cash payments


(31
)


(28
)


(320
)


(379
)Other






(108
)






(108
)Balance, April 30 2008

$



$



$



$
   Note 8  Long-Term
    Obligations and Notes Payable
    April 30, 2008


April 30, 2007Long-term loan

$
2,914


$
3,422Capital lease obligations


396



1793,310



3,601Less current maturities


(977
)


(822
)Long-term obligations

$
2,333


$
2,779     Year Ending April 30,2009

$
8322010


8322011


8322012


4182013


2014 and thereafter


$
2,914       April 30, 2008

April 30, 2007Revolving credit facilities in Taiwan

$
1,118


$
6,366  56




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##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Amendment
    to Credit Agreement
    New
    Senior Credit Facility
  Subsequent Events
  Note 9  Commitments
    and Contingencies
  Lease
    Commitments
      Year Ending April 30,2009

$
2,8212010


2,4802011


2,2492012


1,7192013


1,0782014 and thereafter


588$
10,935  57




---



##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Product
    Liability
      Legal
    Proceedings
    No. CV04-2334, Pending Omax Transaction
   58




---



##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Other Legal Proceedings 
  Other Commitments 
  Note 10  Shareholders
    Equity
  Preferred
    Share Rights Purchase Plan
    Warrant
    Repurchase
   59




---



##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  No. 85-6,
  Form S-1
  Note 11  Stock-based
    Compensation
    Share-Based Payment,
  Stock
    Options
  and/or
 60




---



##### 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 April 30, 2007


1,063,404


$
8.99


$
2,819,601



3.61Granted during the period


200,000



11.40Exercised during the period


(252,054
)


4.75Expired or forfeited during the period


(237,850
)


10.49Outstanding at April 30, 2008


773,500


$
10.53


$
195,801



3.98Exercisable at April 30, 2008


573,500


$
10.23


$
195,801



2.15Vested or expected to vest at April 30, 2008


573,500



10.23



195,801



2.15   Year Ended April 30,2008


2007


2006Total intrinsic value of options exercised

$
1,262


$
776


$
1,138Total fair value of options vested






211



76Cash received from exercise of share options


1,198



1,518



2,003Tax benefit realized from stock options exercised


291







     April 30,2008


2007Options granted


200,000



21,250Weighted average grant-date fair value of stock options granted

$
6.90


$
4.76Assumptions:Weighted average expected volatility


62.02
%


61.86
%Risk-free interest rate


4.98
%


4.97
%Weighted average expected term (in years)


6



2Expected dividend yield






      61




---



##### Table of Contents



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


Grant-dateShares


Fair ValueNonvested at April 30, 2006


87,890


$
4.86Granted during the period


51,750



11.75Forfeited during the period


(19,609
)


3.38Vested during the period


(47,498
)


6.16Nonvested at April 30, 2007


72,533



9.33Granted during the period


296,773



7.86Forfeited during the period


(6,650
)


13.05Vested during the period


(37,207
)


7.87Nonvested at April 30, 2008


325,449


$
8.06     Performance-Based
    Stock Awards
   62




---



##### Table of Contents



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


Grant-dateShares


Fair ValueNonvested at April 30, 2006


279,000


$
7.81Granted during the period


172,500



13.50Forfeited during the period


(270,000
)


9.50Vested during the period






Nonvested at April 30, 2007


181,500


$
10.71Granted during the period






Cancelled during the period


(69,000
)


7.81Forfeited during the period


(38,000
)


10.51Vested during the period






Nonvested at April 30, 2008


74,500


$
13.50     and/or
    Note 12 
    Pension
    and Other Post Retirement Benefits     63




---



##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          Year Ended April 30,2008


2007Changes in the Projected Benefit ObligationProjected Benefit Obligation  beginning balance

$
1,456


$
1,627Service Cost


34



57Interest Cost


56



68Actuarial (Gain)/Loss


118



(323
)Benefits Paid






(123
)Foreign Exchange Adjustment


151



150Projected Benefit Obligation  ending balance

$
1,815


$
1,456   Year Ended April 30,2008


2007Changes in the Value of Plan AssetsFair Value of Plan Assets  beginning balance

$
1,044


$
1,130Actual Return (Loss) on Plan Assets


38



28Employer Contribution


51



55Benefits Paid






(123
)Foreign Exchange Adjustment


104



(46
)Fair Value of Plan Assets  ending balance

$
1,237


$
1,044  64




---



##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended April 30,2008

2007Discount rate


3.50
%


3.75
%Expected rate of return on assets


2.75
%


2.75
%Salary increase rate


3.00
%


3.00
%   Note 13 
    Income
    Taxes:    Year Ended April 30,2008


2007


2006Income (Loss) from Continuing Operations Before Provision
    (Benefit) for Income Taxes:United States

$
11,546


$
(3,557
)

$
(5,368
)Foreign


3,748



10,565



17,766Total

$
15,294


$
7,008


$
12,398     Year Ended April 30,2008


2007


2006Federal

$
298


$
103


$
State


124



52



46Foreign


4,053



2,637



4,545Current Tax Expense (after NOL Benefit of $6,312, $3,147, and
    $1,583)


4,475



2,792



4,591Federal


(9,347
)






State


(2,376
)






Foreign


631



194



760Deferred Tax Expense (Benefit) (Net of Valuation Allowance of
    $17,453, $0, and $0)


(11,092
)


194



760Total Tax Provision (Benefit)

$
(6,617
)

$
2,986


$
5,351  65




---



##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended April 30,2008

2007

2006Income tax provision (benefit) at federal statutory rate


34.0
%


34.0
%


34.0
%State and local taxes net of federal tax benefit


3.1







0.2Foreign tax rate differential


(4.4
)


(8.5
)


(7.9
)Change in valuation allowance


(113.1
)


(171.1
)


(61.7
)Non deductible/nontaxable items


3.3



3.4



27.0Foreign earnings not previously subject to U. S. tax


6.1



20.9



39.5Foreign Withholding Taxes


8.9



11.6



Foreign income taxes


0.1







7.9Alternative minimum taxes


2.0



1.5



Stock based compensation


0.8



(6.5
)


Tax credits


2.8



(7.8
)


Statutory to U.S. GAAP adjustments


9.9







Prior year reconciled amounts






174.6



(7.4
)Other, net


3.2



(9.5
)


11.6Income tax provision (benefit)


(43.3
)%


42.6
%


43.2
%  66




---



##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    April 30, 2008


April 30, 2007Current deferred tax assets/(liabilities):Accounts receivable allowances

$
311


$
294Inventory capitalization


173



272Net operating loss carryforward


964



Obsolete inventory


921



746Vacation accrual


322



337Foreign tax liability






(213
)Other


419



25Current Deferred Tax Assets


3,110



1,461Valuation allowance


(906
)


(1,674
)Total Current Deferred Tax Assets/(Liabilities)


2,204



(213
)Long-Term:Fixed assets


1,627



1,534Net operating loss carryforward


16,206



23,151Capital loss


1,602



1,561Goodwill


1,040



1,686Foreign taxes






3,813Foreign withholding tax


(521
)


(1,370
)Deferred compensation


465



495Undistributed foreign earnings


(636
)


(5,402
)AMT credits


889



479Deferred income






(404
)Foreign tax basis differential


110



128Foreign unrealized exchange gain/loss


(6,158
)


(6,696
)Foreign tax asset






304Currency Translation Adjustment


(482
)


269All other


1,594



3,725Long-Term Deferred Tax Assets


15,736



23,273Valuation allowance


(7,988
)


(24,339
)Total Long-Term Deferred Tax Asset


7,748



(1,066
)Net Deferred Tax Asset (Liability)

$
9,952


$
(1,279
)    67




---



##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      non-U.S. subsidiaries
      Stock-based Compensation
    Balance as of May 1, 2007

$
9,094Gross increases  tax positions in prior periods


Gross decreases  tax positions in prior periods


Gross increases in tax positions due to currency fluctuations


365Gross decreases  due to tax rate changes


(269
)Settlements


Lapse of statute of limitations


Balance as April 30, 2008

$
9,190    68




---



##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Note 14 
    Related
    Party Transactions        Note 15 
    Discontinued
    Operations         69




---



##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Year Ended April 30,2008

2007

2006Sales

$
4,107


$
3,664


$
18,875Income before provision for income taxes


673



654



1,384Provision for income taxes


(230
)


(236
)


(612
)Income from operations of discontinued operations


443



418



772   Note 16 
    Business
    Segments and Geographical Information      Discontinued Operations
   70




---



##### Table of Contents



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





Other





EliminationsAmerica


Asia


International





andWaterjet


Waterjet


Waterjet


Applications


Reconciliations*


Total2008External sales

$
130,556


$
30,739


$
67,804


$
15,160


$



$
244,259Inter-segment sales


69,992



1,358



167



891



(72,408
)


Depreciation and amortization


2,765



552



300



357







3,974Operating income


9,985



3,548



5,685



(3,541
)


1,102



16,779Income tax provision (benefit)


(9,682
)


991



2,038



(188
)


224



(6,617
)Goodwill


2,463



301















2,764Total assets


107,532



30,047



35,395



7,133



(28,952
)


151,1552007External sales

$
119,147


$
30,845


$
49,674


$
13,769


$



$
213,435Inter-segment sales


25,629



1,228



158



379



(27,394
)


Depreciation and amortization


2,058



522



157



244







2,981Operating income (loss)


(2,921
)


4,802



4,982



(2,070
)


(136
)


4,657Income tax provision (benefit)


965



1,376



917



(272
)






2,986Goodwill


2,463



301















2,764Total assets


77,929



38,639



25,346



9,441



(28,183
)


123,1722006External sales

$
109,686


$
36,264


$
38,653


$
18,055


$



$
202,658Inter-segment sales


24,999



1,149



2,134



1,023



(29,305
)


Depreciation and amortization


2,423



494



187



269







3,373Operating (loss) income


4,374



14,592



1,616



(130
)


(181
)


20,271Income tax provision (benefit)


1,029



3,875



530



(248
)


165



5,351Goodwill


2,463



301















2,764Total assets


73,297



44,179



21,539



8,621



(28,335
)


119,301     *
    
    The reconciliation includes total assets of minor entities that
    do not constitute separate operating segments. 71




---



##### Table of Contents



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








Other


SegmentStates


Europe


Asia


Foreign


Eliminations


ConsolidatedFiscal 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


$
41,644Fiscal 2007Sales:Customers(1)

$
119,147


$
41,850


$
30,845


$
21,593


$



$
213,435Inter-area(2)


25,629



158



1,228



379



(27,394
)


Total sales

$
144,776


$
42,008


$
32,073


$
21,972


$
(27,394
)

$
213,435Long-Lived Assets

$
15,306


$
436


$
6,149


$
901


$
185


$
22,977Fiscal 2006Sales:Customers(1)

$
109,686


$
33,903


$
36,264


$
22,805


$



$
202,658Inter-area(2)


24,834



2,134



1,149



1,188



(29,305
)


Total sales

$
136,450


$
36,037


$
37,413


$
22,063


$
(29,305
)

$
202,658Long-Lived Assets

$
11,491


$
480


$
6,487


$
680


$
183


$
19,321     (1)
    
    U.S. sales to unaffiliated customers in foreign countries were
    $19.6 million, $18.7 million and $23.2 million in
    fiscal years 2008, 2007, and 2006, 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 17 
    Pending
    Omax Transaction      Hart-Scott-Rodino
 72




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##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    
    At Closing, $66 million plus the funds in the Option Escrow
    to be paid in cash, minus amounts to be paid by the Company at
    Closing in satisfaction of certain litigation fees of Omax, if
    any, and less amounts to be placed into an employee retention
    pool, described below;
    At Closing, 3.75 million shares of Company common stock, or
    if the Closing Share Price (defined as the average daily closing
    price of the Company common stock during the ten trading day
    period prior to Closing) is less than $9.00, such greater number
    as is necessary so that the total value of the shares delivered
    is $33.75 million (the Company may pay cash for any
    additional shares otherwise payable pursuant this paragraph,
    based on the number of additional shares in excess of 3,750,000
    which would otherwise be payable times the Closing Share
    Price); and
    Two years after Closing, up to 1,733,334 additional shares of
    common stock based on the Average Share Price (defined as the
    average closing price for the six months ending twenty four
    months after Closing). Shares will be paid on a straight line
    interpolation, with no shares being delivered if the Average
    Share Price is $13 or less, and 1,733,334 shares being
    delivered if the Average Share Price is $15 or more; provided
    that if the Closing Share Price is less than $9.00, the $13 and
    $15 prices will be reduced by the difference between $9.00 and
    the Closing Share Price. The Company may elect to pay the
    consideration required in this paragraph in cash based upon the
    Average Share Price times the number of shares which would
    otherwise be issued. If the Company elects to pay in cash, the
    total amount paid shall not exceed $26 million and shall be
    paid in full satisfaction of the right to receive additional
    shares.
    The cash consideration at Closing is subject to adjustment based
    on Omax Net Working Capital at Closing. The consideration will
    be adjusted upward or downward on a dollar-for-dollar basis if
    the Net Working Capital is below $7 million or above
    $9 million.  Omax Corporation v Flow
    International Corporation and/or
    
    provide for two separate indemnification escrows in an aggregate
    amount of $13.2 million to be funded at Closing from the
    cash consideration. $7 million will be subject to a General
    Escrow that will end July 31, 2009, to indemnify the
    Company for losses from breaches of representations and
    warranties to the extent that such breach or breaches,
    individually or in the aggregate, result in claims in excess of
    $1,000,000. $6.2 million will be subject to a Special
    Escrow that will end two years after Closing, to indemnify the
    Company for losses with respect to certain potential liabilities
    identified during the course of due diligence. The amount to be
    placed in the Special Escrow is subject to reduction under
    conditions to be specified in the Definitive Agreements. The
    General and Special Escrows will be funded proportionally from
    the cash payments (including the funds in the Option Escrow) and
    the shares of common stock delivered at Closing;
    provide that at Closing the Company will place into escrow a
    portion of the cash consideration as a retention pool for key
    Omax employees that will provide such employees the equivalent
    of three months salary, to be allocated upon the six month
    anniversary of Closing; 73




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##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   
    include mutually acceptable executive officer agreements for
    Drs. John B. Cheung, John H. Olsen and Mr. James M.
    OConnor to become executives of the Company and provide
    that as soon as is commercially reasonable following Closing,
    the Company will expand its Board of Directors and elect
    Dr. Cheung to the vacancy thereby created; and
    provide that Omax stock options that are currently outstanding
    and unvested shall vest immediately prior to Closing and shall
    be exercised or terminated at Closing, or otherwise treated in a
    manner mutually acceptable to the parties.          Commitments and Contingencies
 74




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##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 18 
    Selected
    Quarterly Financial Information (unaudited)  The following table contains selected unaudited statement of
    operations information for each quarter of the years ended
    April 30, 2008 and 2007. The information presented in the
    first and third quarters of fiscal year 2008 and in the first,
    third and fourth quarters of fiscal year 2007 have been restated
    from previous filings. The restatement for the quarters in
    fiscal year 2008 will be reflected when those unaudited
    consolidated financial statements are presented in the
    Companys quarterly filings during fiscal year 2009. Refer
    to Note 20 of the Consolidated Financial Statements for
    further discussion on the restatement.
    Year Ended April 30, 2008As Previously ReportedFirst

Second

ThirdSales

$
58,666


$
59,174


$
66,271Gross Margin


23,600



24,435



27,978Income from Continuing Operations


377



2,295



5,897Net Income


377



2,295



5,897Income Per Share  Basic:Income from Continuing Operations

$
.01


$
.06


$
.16Net Income

$
.01


$
.06


$
.16Income Per Share  Diluted:Income from Continuing Operations

$
.01


$
.06


$
.16Net Income

$
.01


$
.06


$
.16   Year Ended April 30, 2007As Previously ReportedFirst

Second

Third

Fourth**

TotalSales

$
53,410


$
54,404


$
56,038


$
53,427


$
217,279Gross Margin


23,032



23,612



23,744



21,748



92,136Income (Loss) from Continuing Operations


3,768



1,742



2,029



(3,184
)


4,355Net Income (Loss)


3,042



1,742



2,029



(3,143
)


3,670Income (Loss) Per Share  Basic:Income (Loss) from Continuing Operations

$
.10


$
.05


$
.05


$
(.09
)

$
.12Net Income (Loss)

$
.08


$
.05


$
.05


$
(.08
)

$
.10Income (Loss) Per Share  Diluted:Income (Loss) from Continuing Operations

$
.10


$
.05


$
.05


$
(.09
)

$
.12Net Income (Loss)

$
.08


$
.05


$
.05


$
(.08
)

$
.10   75




---



##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Year Ended April 30, 2008RestatedFirst

Second

ThirdSales

$
58,858


$
59,174


$
66,271Gross Margin


23,632



24,520



28,090Income from Continuing Operations


435



2,295



6,289Net Income


435



2,295



6,289Income Per Share  Basic:Income from Continuing Operations

$
.01


$
.06


$
.17Net Income

$
.01


$
.06


$
.17Income Per Share  Diluted:Income from Continuing Operations

$
.01


$
.06


$
.17Net Income

$
.01


$
.06


$
.17   Year Ended April 30, 2007RestatedFirst

Second

Third

Fourth**

TotalSales

$
53,421


$
54,404


$
56,038


$
53,235


$
217,098Gross Margin


22,915



23,612



23,744



21,686



91,957Income (Loss) from Continuing Operations


3,682



1,742



2,260



(3,244
)


4,440Net Income (Loss)


2,956



1,742



2,260



(3,203
)


3,755Income (Loss) Per Share  Basic:Income (Loss) from Continuing Operations

$
.10


$
.05


$
.06


$
(.09
)

$
.12Net Income (Loss)

$
.08


$
.05


$
.06


$
(.09
)

$
.10Income (Loss) Per Share  Diluted:Income (Loss) from Continuing Operations

$
.10


$
.05


$
.06


$
(.09
)

$
.12Net Income (Loss)

$
.08


$
.05


$
.06


$
(.09
)

$
.10   Year Ended April 30, 2008As Restated and Reclassified for Discontinued OperationsFirst*

Second*

Third*

Fourth*

Total*Sales

$
57,860


$
57,757


$
65,369


$
63,273


$
244,259Gross Margin


23,384



23,962



27,882



26,482



101,710Income from Continuing Operations


348



2,019



6,234



13,310



21,911Net Income


435



2,295



6,289



13,335



22,354Income Per Share  Basic:Income from Continuing Operations

$
.01


$
.05


$
.17


$
.35


$
.59Net Income

$
.01


$
.06


$
.17


$
.35


$
.60Income Per Share  Diluted:Income from Continuing Operations

$
.01


$
.05


$
.17


$
.35


$
.58Net Income

$
.01


$
.06


$
.17


$
.35


$
.59   76




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##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Year Ended April 30, 2007As Restated and Reclassified for Discontinued OperationsFirst*

Second*

Third*

Fourth**

Total*Sales

$
52,692


$
53,428


$
55,059


$
52,256


$
213,435Gross Margin


22,713



23,298



23,453



21,309



90,773Income (Loss) from Continuing Operations


3,641



1,591



2,161



(3,371
)


4,022Net Income (Loss)


2,956



1,742



2,260



(3,203
)


3,755Income (Loss) Per Share  Basic:Income (Loss) from Continuing Operations

$
.10


$
.04


$
.06


$
(.09
)

$
.11Net Income (Loss)

$
.08


$
.05


$
.06


$
(.09
)

$
.10Income (Loss) Per Share  Diluted:Income (Loss) from Continuing Operations

$
.10


$
.04


$
.06


$
(.09
)

$
.11Net Income (Loss)

$
.08


$
.05


$
.06


$
(.09
)

$
.10     *
    
    In April 2008, the Company decided to sell its CIS Technical
    Solutions division (CIS division), which was
    previously reported as part of our Applications segment.
    Accordingly, all periods have been recast to reflect the results
    of operations related to this division in discontinued
    operations.**
    
    During the fourth quarter of 2007, $1.2 million of
    compensation expense recognized in fiscal year 2006 related to
    the LTIP was reversed  Note 19 
    Subsequent
    Events       77




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##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Note 20 
    Restatement of Prior Period Financial Statements
    Form 10-K
        Year EndedApril 30, 2007As PreviouslyReported


RestatedCash

$
38,146


$
38,288Receivables, net


26,618



27,329Inventories


26,635



26,593Other Current Assets***


6,950



7,191Total Current Assets


99,143



100,195Property and Equipment, net


15,479



15,459Total Assets


122,140



123,172Accounts Payable


17,545



17,715Accrued Payroll and Related Liabilities


6,291



6,239 78




---



##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Year EndedApril 30, 2007As PreviouslyReported


RestatedTaxes Payable and Other Accrued Taxes


2,066



2,542Deferred Revenue


3,559



5,136Customer Deposits


6,499



5,791Other Accrued Liabilities


12,233



12,219Deferred Income Tax Liability  Current


1,627



257Total Current Liabilities


57,008



57,087Deferred Income Tax Liability  Long-term






1,371Other Long-term Liabilities


573



711Total Liabilities


60,360



61,948Capital in Excess of Par


139,115



139,207Accumulated Deficit


(68,747
)


(69,395
)Total Shareholders Equity


61,780



61,224Total Liabilities and Shareholders Equity


122,140



123,172   Year Ended April 30, 2006As Restated andReclassifiedAs Previously





for DiscontinuedReported


Restated


Operations*Sales

$
205,432


$
205,421


$
202,658Cost of Sales


111,276



111,478



109,686Gross Margin


94,156



93,943



92,972Sales and Marketing Expenses


33,919



33,892



33,673General & Administrative Expenses


33,166



33,412



33,002Total Operating Expenses


73,111



73,330



72,701Operating Income


21,045



20,613



20,271Interest Expense


1,664



1,673



1,673Income Before Provision for Income Taxes


13,181



12,740



12,398Provision for Income Taxes


(5,183
)


(5,475
)


(5,351
)Income from Continuing Operations


7,998



7,265



7,047Income from Operations of Discontinued Operations


966



554



772Loss on Sale of Discontinued Operations


(1,554
)


(1,142
)


(1,142
)Net Income


7,410



6,677



6,677Basic Income Per Share:Income from Continuing Operations

$
0.23


$
0.20


$
0.20Net Income


0.21



0.19



0.19Dilutive Income (Loss) per Share Income (Loss) from Continuing
    Operations

$
0.22


$
0.19


$
0.19Net Income (Loss)


0.20



0.18



0.18   79




---



##### Table of Contents



FLOW
    INTERNATIONAL CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Year Ended April 30, 2007As Restated andReclassifiedAs Previously





for DiscontinuedReported


Restated


Operations*Sales

$
217,279


$
217,098


$
213,435Cost of Sales


125,143



125,141



122,662Gross Margin


92,136



91,957



90,773Sales and Marketing Expenses


39,810



39,733



39,478General & Administrative Expenses


37,792



37,530



37,255Total Operating Expenses


86,985



86,646



86,116Operating Income


5,151



5,311



4,657Interest Expense


418



409



409Other Income (Expense)


1,821



1,922



1,922Income Before Provision for Income Taxes


7,392



7,662



7,008Provision for Income Taxes


(3,037
)


(3,222
)


(2,986
)Income from Continuing Operations


4,355



4,440



4,022Income from Operations of Discontinued Operations










418Loss on Sale of Discontinued Operations


(685
)


(685
)


(685
)Net Income


3,670



3,755



3,755Basic Income Per Share:Income from Continuing Operations

$
0.12


$
0.12


$
0.11Net Income


0.10



0.10



0.10Dilutive Income (Loss) per Share Income (Loss) from Continuing
    Operations

$
0.12


$
0.12


$
0.11Net Income (Loss)


0.10



0.10



0.10   Year Ended April 30, 2006


Year Ended April 30, 2007As Previously





As PreviouslyReported


Restated


Reported


RestatedNet Income

$
7,410


$
6,677


$
3,670


$
3,755Adjustments to Reconcile Net Income to Cash Provided by
    Operating Activities:Depreciation and Amortization


3,327



3,373



2,920



2,981Deferred Income Taxes


1,112



1,119



**



**Provision for Slow Moving Inventory


554



620







46Bad Debt Expense


***



104



***



1,143Warranty Expense


***



1,691



***



4,306Incentive Stock Compensation Expense


4,736



4,800



708



769Loss on Sale of Discontinued Operations


1,554



1,142



**



**Other


369



566



276



(784
) 80




---



##### Table of Contents



Year Ended April 30, 2006


Year Ended April 30, 2007As Previously





As PreviouslyReported


Restated


Reported


RestatedChanges in Operating Assets and Liabilities:Receivables


(4,733
)


(4,668
)


7,610



6,803Inventories


(7,634
)


(7,640
)


(3,663
)


(3,727
)Other Operating Assets ***


901



825



(179
)


(344
)Accounts Payable


2,874



2,829



(4,187
)


(3,972
)Accrued Payroll and Related Liabilities


656



677



(1,054
)


(1,046
)Deferred Revenue


1,869



1,794



(2,813
)


(1,162
)Customer Deposits


2,649



2,704



(1,016
)


(1,779
)Other Operating Liabilities ***


2,492



1,654



3,886



(679
)Cash Provided by Operating Activities


20,612



20,743



4,046



4,198Cash Flows from Investing Activities:Expenditures for Property and Equipment and Intangible Assets


(2,357
)


(2,549
)


(6,995
)


(6,944
)Cash Provided by (Used In) Investing Activities


11,081



10,889



(7,730
)


(7,679
)Cash Flows from Financing Activities:Repayments of Notes Payable


(545
)


(2,274
)






(1,614
)Borrowings under Notes Payable






1,729



4,209



5,823Borrowings under Capital Leases






49



**



**Payments of Capital Lease Obligations


**



**







(49
)Cash Provided by (Used In) Financing Activities


(6,711
)


(6,662
)


5,772



5,723Increase (Decrease) in Cash and Cash Equivalents


23,210



23,198



1,960



2,114Cash and Cash Equivalents at Beginning of Period


**



**



36,186



36,174Cash and Cash Equivalents at End of Period


36,186



36,174



38,146



38,288     *
    
    The Companys consolidated statements of operations for
    fiscal years 2006 and 2007 have been reclassified to reflect the
    results of operations of its CIS Technical Solutions division as
    discontinued operations.**
    
    The restatement described above did not result in a restatement
    of this line item in this fiscal year from the Companys
    previously reported financial statements.***
    
    Prior year amounts have been conformed to current year
    presentation in the Consolidated Financial Statements. 81




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##### Table of Contents



FLOW
    INTERNATIONAL CORPORATIONSCHEDULE II
    VALUATION AND QUALIFYING ACCOUNTS(In Thousands)
  Balance at

Charged to





BalanceBeginning

Costs and





at EndClassification

of Period

Expenses

Other*

Deductions**

of PeriodYear Ended April 30:Allowance for Doubtful Accounts2008

$
2,915


$
1,805


$
110


$
(1,463
)

$
3,3672007 (restated, see Note 20)

$
2,867


$
1,142


$
(24
)

$
(1,070
)

$
2,9152006

$
3,859


$
104


$
(293
)

$
(803
)

$
2,867     *
    
    Fiscal year 2006 includes $241 related to Discontinued Operations**
    
    Write-offs of uncollectible accounts  Balance atBeginning



Balance atClassification

of Period

Net Change

End of PeriodYear Ended April 30Valuation Allowance on Deferred Tax Assets2008

$
26,013


$
(17,119
)

$
8,8942007 (restated, see Note 20)

$
38,613


$
(12,600
)

$
26,0132006 (restated, see Note 20)

$
34,846


$
3,767


$
38,613  82




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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)
         83




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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
     84




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
      Internal Control 
    Integrated Framework
        Internal Control  Integrated Framework
       85




---



##### Table of Contents



Item 9B.
    Other
    Information   PART III  Item 10.
    Directors,
    Executive Officers and Corporate Governance    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
.2

By-Laws of Flow International Corporation. (Incorporated by
    reference to Exhibit 3.1 to the registrants
    Form S-1
    filed May 20, 2005.)4
.1

Certificate of Designation of Series B Junior Participating
    Preferred Stock. (Incorporated by reference to Exhibit 4.1
    to the registrants Registration Statement on
    Form S-1
    filed May 20, 2005.) 86




---



##### Table of Contents



ExhibitNumber10
.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).10
.5

Employment Agreement dated February 1, 2007 between Stephen
    R. Light and Flow International Corporation. (Incorporated by
    reference to Exhibit 99.2 to the registrants Current
    Report on
    Form 8-K
    dated February 1, 2007)10
.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 9, 2008 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 17, 2008.)10
.8

Amendment to Employment Agreement dated September 21, 2005
    between Flow International Corporation and Stephen Light
    (Incorporated by reference to Exhibit 10.8 to the
    registrants Annual Report on
    Form 10-K
    for the year ended April 30, 2006.)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.)21
.1

Subsidiaries of the Registrant. (Incorporated by reference to
    Exhibit 21.1 to the registrants Annual Report on
    Form 10-K
    for the year ended April 30, 2006.)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.*32
.2

Certification Pursuant to the 18 U.S.C. Section 1350,
    as Adopted Pursuant to Section 906 of the Sarbanes-Oxley
    Act of 2002.*     *
    
    Filed herewith. 87




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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 10th day of July
    2008.
  Signature

Title/s/  CHARLES
    M. BROWNCharles
    M. Brown

President and Chief Executive Officer(Principal Executive
    Officer)/s/  DOUGLAS
    P. FLETCHERDouglas
    P. Fletcher

Chief Financial Officer(Principal Financial Officer)/s/  KATHRYN
    L. MUNROKathryn
    L. Munro

Chairman/s/  RICHARD
    P. FOXRichard
    P. Fox

Director/s/  ARLEN
    I. PRENTICEArlen
    I. Prentice

Director/s/  J.
    MICHAEL RIBAUDOJ.
    Michael Ribaudo

Director/s/  JAN
    K. VER HAGENJan
    K. Ver Hagen

Director/s/  LORENZO
    C. LAMADRIDLorenzo
    C. Lamadrid

Director/s/  JERRY
    L. CALHOUNJerry
    L. Calhoun

Director/s/  LARRY
    KRINGLarry
    Kring

Director  88