##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended October 31, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 001-34443
 
 FLOW INTERNATIONAL CORPORATION
 
 WASHINGTON
(State or other jurisdiction of 
incorporation or organization)
    
    
    
    91-1104842
(I.R.S. Employer
Identification No.)23500  64th Avenue South
Kent, Washington 98032
(253) 850-3500
 
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
(Do not check if a Smaller reporting company)
    
    Smaller reporting company o
 o þ




---



##### 



FLOW INTERNATIONAL CORPORATION
   
 PagePart I  FINANCIAL INFORMATIONItem 1. Condensed Consolidated Financial Statements (unaudited)Condensed Consolidated Balance Sheets  October 31, 2009 and April 30, 2009
    
    3Condensed Consolidated Statements of Operations  Three and Six Months Ended October 31, 2009 and 2008
    
    4Condensed Consolidated Statements of Cash Flows  Six Months Ended October 31, 2009 and 2008
    
    5Condensed Consolidated Statement of Shareholders Equity and Comprehensive Income (Loss) Six Months
Ended October 31, 2009 and 2008
    
    6Notes to Condensed Consolidated Financial Statements
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    20Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    30Item 4. Controls and Procedures
    
    30Part II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    31Item 1A. Risk Factors
    
    31Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    31Item 3. Defaults Upon Senior Securities
    
    31Item 4. Submission of Matters to a Vote of Security Holders
    
    31Item 5. Other Information
    
    31Item 6. Exhibits
    
    32EX-31.1EX-31.2EX-32.1EX-99.1
  2




---



##### Table of Contents



FLOW INTERNATIONAL CORPORATION
 
   October 31,
    
    
    April 30,2009
    
    
    2009ASSETS:Current Assets:Cash and Cash Equivalents
    
    $
    5,040
    
    
    $
    10,117Restricted Cash
    
    
    322
    
    
    
    220Receivables, net
    
    
    38,994
    
    
    
    32,103Inventories
    
    
    19,772
    
    
    
    21,480Deferred Income Taxes, net
    
    
    2,399
    
    
    
    8,686Deferred Acquisition Costs
    
    
    
    
    
    
    17,093Other Current Assets
    
    
    6,832
    
    
    
    5,544Total Current Assets
    
    
    73,359
    
    
    
    95,243Property and Equipment, net
    
    
    22,175
    
    
    
    22,983Intangible Assets, net
    
    
    4,596
    
    
    
    4,456Deferred Income Taxes, net
    
    
    25,740
    
    
    
    17,480Other Assets
    
    
    4,686
    
    
    
    4,798$
    130,556
    
    
    $
    144,960LIABILITIES AND SHAREHOLDERS EQUITY:Current Liabilities:Notes Payable
    
    $
    200
    
    
    $
    15,226Current Portion of Long-Term Obligations
    
    
    69
    
    
    
    1,367Accounts Payable
    
    
    14,341
    
    
    
    10,215Accrued Payroll and Related Liabilities
    
    
    5,326
    
    
    
    5,406Taxes Payable and Other Accrued Taxes
    
    
    1,358
    
    
    
    2,276Deferred Income Taxes
    
    
    705
    
    
    
    651Deferred Revenue
    
    
    3,769
    
    
    
    4,649Customer Deposits
    
    
    5,262
    
    
    
    3,322Reserve for Patent Litigation (Note 6)
    
    
    
    
    
    
    15,000Other Accrued Liabilities
    
    
    9,539
    
    
    
    9,208Total Current Liabilities
    
    
    40,569
    
    
    
    67,320Long-Term Obligations, net
    
    
    24
    
    
    
    1,937Deferred Income Taxes
    
    
    6,399
    
    
    
    5,498Subordinated Notes (Note 6)
    
    
    7,602
    
    
    
    6,000Other Long-Term Liabilities
    
    
    1,607
    
    
    
    1,49456,201
    
    
    
    82,249Commitments and Contingencies (Note 8)Shareholders Equity:Series A 8% Convertible Preferred Stock$.01 par value, 1,000,000 shares authorized, none issued
    
    
    
    
    
    
    Common Stock$.01 par value, 84,000,000 shares authorized, 46,878,580 and 37,704,684 shares
issued and outstanding at October 31, 2009 and April 30, 2009, respectively
    
    
    465
    
    
    
    372Capital in Excess of Par
    
    
    158,826
    
    
    
    140,634Accumulated Deficit
    
    
    (79,252
    )
    
    
    (71,403
    )Accumulated Other Comprehensive Loss:Defined Benefit Plan Obligation, net of income tax of $42 and $37
    
    
    (85
    )
    
    
    (80
    )Cumulative Translation Adjustment, net of income tax of $715 and $508
    
    
    (5,599
    )
    
    
    (6,812
    )Total Shareholders Equity
    
    
    74,355
    
    
    
    62,711$
    130,556
    
    
    $
    144,960
 
 3




---



##### Table of Contents



FLOW INTERNATIONAL CORPORATION
 
 
 Three Months Ended
    
    
    Six Months EndedOctober 31,
    
    
    October 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Sales
    
    $
    42,037
    
    
    $
    60,578
    
    
    $
    79,789
    
    
    $
    117,643Cost of Sales
    
    
    25,405
    
    
    
    34,939
    
    
    
    49,181
    
    
    
    65,873Gross Margin
    
    
    16,632
    
    
    
    25,639
    
    
    
    30,608
    
    
    
    51,770Operating Expenses:Sales and Marketing
    
    
    8,975
    
    
    
    11,902
    
    
    
    16,891
    
    
    
    21,999Research and Engineering
    
    
    1,850
    
    
    
    2,278
    
    
    
    3,547
    
    
    
    4,528General and Administrative
    
    
    6,071
    
    
    
    7,578
    
    
    
    13,193
    
    
    
    16,169Restructuring and Other Operating Charges, net
    
    
    (601
    )
    
    
    444
    
    
    
    4,222
    
    
    
    1,880Total Operating Expenses
    
    
    16,295
    
    
    
    22,202
    
    
    
    37,853
    
    
    
    44,576Operating Income (Loss)
    
    
    337
    
    
    
    3,437
    
    
    
    (7,245
    )
    
    
    7,194Interest Income
    
    
    53
    
    
    
    124
    
    
    
    93
    
    
    
    303Interest Expense
    
    
    (474
    )
    
    
    (161
    )
    
    
    (1,438
    )
    
    
    (291
    )Other Income (Expense), net
    
    
    (150
    )
    
    
    (842
    )
    
    
    352
    
    
    
    (449
    )Income (Loss) Before Provision for Income Taxes
    
    
    (234
    )
    
    
    2,558
    
    
    
    (8,238
    )
    
    
    6,757(Provision) Benefit for Income Taxes
    
    
    923
    
    
    
    (2,162
    )
    
    
    1,529
    
    
    
    (4,831
    )Income (Loss) from Continuing Operations
    
    
    689
    
    
    
    396
    
    
    
    (6,709
    )
    
    
    1,926Income (Loss) from Discontinued Operations, net of Income Tax of $0, $9, $0, and $46
    
    
    8
    
    
    
    16
    
    
    
    (1,140
    )
    
    
    89Net Income (Loss)
    
    $
    697
    
    
    $
    412
    
    
    $
    (7,849
    )
    
    $
    2,015Basic Income (Loss) Per Share:Income (Loss) from Continuing Operations
    
    $
    0.02
    
    
    $
    0.01
    
    
    $
    (0.17
    )
    
    $
    0.05Discontinued Operations
    
    
    .00
    
    
    
    .00
    
    
    
    (0.02
    )
    
    
    .00Net Income (Loss)
    
    $
    0.02
    
    
    $
    0.01
    
    
    $
    (0.19
    )
    
    $
    0.05Diluted Income (Loss) Per Share:Income (Loss) from Continuing Operations
    
    $
    0.02
    
    
    $
    0.01
    
    
    $
    (0.17
    )
    
    $
    0.05Discontinued Operations
    
    
    .00
    
    
    
    .00
    
    
    
    (0.02
    )
    
    
    .00Net Income (Loss)
    
    $
    0.02
    
    
    $
    0.01
    
    
    $
    (0.19
    )
    
    $
    0.05Weighted Average Shares Used in Computing Basic and Diluted Income (Loss) Per Share:Basic
    
    
    42,841
    
    
    
    37,595
    
    
    
    40,295
    
    
    
    37,593Diluted
    
    
    43,158
    
    
    
    37,595
    
    
    
    40,295
    
    
    
    37,596
 
 4




---



##### Table of Contents



FLOW INTERNATIONAL CORPORATION
 
 
 Six Months EndedOctober 31,2009
    
    
    2008Cash Flows from Operating Activities:Net Income (Loss)
    
    $
    (7,849
    )
    
    $
    2,015Adjustments to Reconcile Net Income (Loss) to Cash Provided by Operating Activities:Depreciation and Amortization
    
    
    2,593
    
    
    
    2,097Deferred Income Taxes
    
    
    (1,207
    )
    
    
    3,461Provision for Slow Moving and Obsolete Inventory
    
    
    292
    
    
    
    121Bad Debt Expense
    
    
    447
    
    
    
    539Warranty Expense
    
    
    1,316
    
    
    
    1,982Stock Compensation Expense
    
    
    987
    
    
    
    952Unrealized Foreign Exchange Currency (Gains) Losses
    
    
    (53
    )
    
    
    942Write-off of Deferred Debt Issuance Costs
    
    
    253
    
    
    
    OMAX Termination Charge
    
    
    3,219
    
    
    
    Indemnification Charge
    
    
    1,219
    
    
    
    Interest Accretion on Subordinated Notes
    
    
    383
    
    
    
    Other
    
    
    (455
    )
    
    
    183Changes in Operating Assets and Liabilities:Receivables
    
    
    (5,973
    )
    
    
    (6,409
    )Inventories
    
    
    2,767
    
    
    
    315Other Operating Assets
    
    
    163
    
    
    
    (2,627
    )Accounts Payable
    
    
    5,887
    
    
    
    1,632Accrued Payroll and Payroll Related Liabilities
    
    
    (523
    )
    
    
    (709
    )Deferred Revenue
    
    
    (960
    )
    
    
    856Customer Deposits
    
    
    1,733
    
    
    
    1,536Release of Funds from Escrow
    
    
    17,000
    
    
    
    Payment for Patent Litigation Settlement
    
    
    (15,000
    )
    
    
    Payment for OMAX Termination
    
    
    (2,000
    )
    
    
    Other Operating Liabilities
    
    
    (3,674
    )
    
    
    (2,357
    )Cash Provided by Operating Activities
    
    
    565
    
    
    
    4,529Cash Flows From Investing Activities:Expenditures for Property and Equipment
    
    
    (7,545
    )
    
    
    (4,538
    )Expenditures for Intangible Assets
    
    
    (412
    )
    
    
    (404
    )Proceeds from Sale of Property and Equipment
    
    
    4,690
    
    
    
    118Payments for Pending Acquisition
    
    
    
    
    
    
    (3,792
    )Restricted Cash
    
    
    (94
    )
    
    
    (364
    )Cash (Used in) Investing Activities
    
    
    (3,361
    )
    
    
    (8,980
    )Cash Flows from Financing Activities:Borrowings under Senior Credit Agreement
    
    
    5,250
    
    
    
    Repayments under Senior Credit Agreement
    
    
    (18,050
    )
    
    
    Borrowings Under Other Financing Arrangements
    
    
    
    
    
    
    850Repayments Under Other Financing Arrangements
    
    
    (1,362
    )
    
    
    (160
    )Repayments of LongTerm Obligations
    
    
    (4,245
    )
    
    
    (407
    )Proceeds from Issuance of Common Stock, net of Issuance Costs
    
    
    17,439
    
    
    
    Debt Issuance Costs
    
    
    (607
    )
    
    
    Cash Provided by (Used in) Financing Activities
    
    
    (1,575
    )
    
    
    283Effect of Changes in Exchange Rates
    
    
    (706
    )
    
    
    (1,784
    )Decrease in Cash And Cash Equivalents
    
    
    (5,077
    )
    
    
    (5,952
    )Cash and Cash Equivalents at Beginning of Period
    
    
    10,117
    
    
    
    29,099Cash and Cash Equivalents at End of Period
    
    $
    5,040
    
    
    $
    23,147Supplemental Disclosures of Cash Flow Information:Cash Paid during the Year for:Interest
    
    
    860
    
    
    
    213Taxes
    
    
    503
    
    
    
    1,532Supplemental Disclosures of Noncash Investing and Financing Activities:Accounts Payable incurred to acquire Property and Equipment, and Intangible Assets
    
    
    274
    
    
    
    959Accrued Liabilities Incurred for Pending Acquisition
    
    
    
    
    
    
    1,412
 
 5




---



##### Table of Contents



FLOW INTERNATIONAL CORPORATION
 
 
 AccumulatedCommon Stock
    
    
    Capital
    
    
    
    
    
    
    Other
    
    
    TotalPar
    
    
    In Excess
    
    
    Accumulated
    
    
    Comprehensive
    
    
    ShareholdersShares
    
    
    Value
    
    
    of Par
    
    
    Deficit
    
    
    Loss
    
    
    EquityBalances, May 1, 2008
    
    
    37,590
    
    
    $
    371
    
    
    $
    139,007
    
    
    $
    (47,584
    )
    
    $
    (5,730
    )
    
    $
    86,064Components of Comprehensive Income:Net Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,015
    
    
    
    
    
    
    
    2,015Cumulative Translation Adjustment, Net of Income Tax of $281
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,767
    )
    
    
    (1,767
    )Total Comprehensive Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    248Stock Compensation
    
    
    8
    
    
    
    0
    
    
    
    797
    
    
    
    
    
    
    
    
    
    
    
    797Balances, October 31, 2008
    
    
    37,598
    
    
    $
    371
    
    
    $
    139,804
    
    
    $
    (45,569
    )
    
    $
    (7,497
    )
    
    $
    87,109Balances, May 1, 2009
    
    
    37,705
    
    
    $
    372
    
    
    $
    140,634
    
    
    $
    (71,403
    )
    
    $
    (6,892
    )
    
    $
    62,711Components of Comprehensive Income (Loss):Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,849
    )
    
    
    
    
    
    
    (7,849
    )Adjustment to Minimum Pension Liability, Net of Income Tax of $5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5
    )
    
    
    (5
    )Cumulative Translation Adjustment, Net of Income Tax of $207
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,213
    
    
    
    1,213Total Comprehensive Income (Loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,641
    )Sale of Common stock at $2.10 per share, net of Stock Issuance
Costs of $1.7 million
    
    
    8,999
    
    
    
    90
    
    
    
    17,117
    
    
    
    
    
    
    
    
    
    
    
    17,207Stock Compensation
    
    
    175
    
    
    
    3
    
    
    
    1,075
    
    
    
    
    
    
    
    
    
    
    
    1,078Balances, October 31, 2009
    
    
    46,879
    
    
    $
    465
    
    
    $
    158,826
    
    
    $
    (79,252
    )
    
    $
    (5,684
    )
    
    $
    74,355
 
 6




---



##### Table of Contents



FLOW INTERNATIONAL CORPORATION
 
  
 Note 1Basis of Presentation
  Note 2Recently Issued Accounting Pronouncements
 Fair Value Measures.
  Fair Value Measures
 7




---



##### Table of Contents



TM
  
    
    provides principles and application guidance on whether a revenue arrangement contains
multiple deliverables, how the arrangement should be separated, and how the arrangement
consideration should be allocated;
    
    requires an entity to allocate revenue in a multiple-deliverable arrangement using
estimated selling prices of the deliverables if a vendor does not have vendor-specific
objective evidence or third-party evidence of selling price;
    
    eliminates the use of the residual method and, instead, requires an entity to allocate
revenue using the relative selling price method; and
    
    expands disclosure requirements with respect to multiple-deliverable revenue
arrangements.
  Note 3Receivables, Net
  October 31,2009
    
    
    April 30, 2009Trade Accounts Receivable
    
    $
    28,545
    
    
    $
    25,304Unbilled Revenues
    
    
    12,740
    
    
    
    9,03341,285
    
    
    
    34,337Less: Allowance for Doubtful Accounts
    
    
    (2,291
    )
    
    
    (2,234
    )$
    38,994
    
    
    $
    32,103
   8




---



##### Table of Contents



Note 4Inventories
  October 31,2009
    
    
    April 30, 2009Raw Materials and Parts
    
    $
    10,946
    
    
    $
    11,806Work in Process
    
    
    2,467
    
    
    
    1,762Finished Goods
    
    
    6,359
    
    
    
    7,912$
    19,772
    
    
    $
    21,480
 Note 5Disposal of Fixed Assets
  Note 6 Other Accrued Liabilities
  Warranty Obligations
   Accrued warranty balance as of May 1, 2009
    
    $
    2,423Accruals for warranties for fiscal year 2010 sales
    
    
    1,316Warranty costs incurred in fiscal year 2010
    
    
    (1,574
    )Change due to currency fluctuations
    
    
    78Accrued warranty balance as of October 31, 2009
    
    $
    2,243
 Restructuring Charges and Other, net
  9




---



##### Table of Contents




    
    a net charge of $3.2 million to record the termination of the Companys option to acquire
OMAX Corporation, which is further discussed below;
    
    a charge of $1.4 million to record severance expenses related to reducing global staffing
levels in response to the continued downturn in the near term demand for its products;
    
    a charge of $237,000 related to the completion of the Companys plan to consolidate its
manufacturing activities from Taiwan to the United States; and
 Disposal of Fixed
Assets
   Three Months




    
    
    Six MonthsEnded October 31,
    
    
    Ended October 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Severance and termination benefits
    
    $
    
    
    
    $
    308
    
    
    $
    1,604
    
    
    $
    1,744Lease termination costs and long-lived assets
impairment charge
    
    
    
    
    
    
    136
    
    
    
    
    
    
    
    136Inventory write-down
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    108Gain on sale of building
    
    
    (601
    )
    
    
    
    
    
    
    (601
    )
    
    
    $
    (601
    )
    
    $
    444
    
    
    $
    1,003
    
    
    $
    1,988
  Standard
    
    
    Advanced
    
    
    All Other
    
    
    TotalBalance, May 1, 2009
    
    $
    59
    
    
    $
    123
    
    
    $
    
    
    
    $
    182Restructuring charges
    
    
    1,300
    
    
    
    69
    
    
    
    235
    
    
    
    1,604Cash payments
    
    
    (826
    )
    
    
    (123
    )
    
    
    (107)
    
    
    
    (1,056
    )Balance, October 31, 2009
    
    $
    533
    
    
    $
    69
    
    
    $
    128
    
    
    $
    730
 Provision for Patent Litigation
   
    
    A non-refundable cash payment of $8 million to OMAX in March 2009 as part of the
execution of the Agreement;
    
    A cash payment of $6 million in March 2009 paid directly to an existing escrow account
with OMAX, increasing the escrow amount from $9 million to a total of $15 million as part of
the execution of the Agreement; and
    
    In the event the merger would have been consummated by August 15, 2009, the entire amount
would have been applied towards the $75 million purchase price. However, in the event the
merger would not have been consummated by August 15,
 10




---



##### Table of Contents



2009, the $15 million held in escrow was to be released to OMAX on August 16, 2009 and the
Company was to issue a promissory note in the principal amount of $6 million to OMAX for the
remaining balance on the $29 million settlement amount.(2) An amendment to the existing Merger Agreement which provided for the following:
 
    
    A non-refundable cash payment of $2 million to OMAX for the extension of the closing of
the merger from March 31, 2009 to August 15, 2009  with closing at the option of the
Company; and
    
    In the event the merger would have been consummated by August 15, 2009, the $2 million
would be applied towards the $75 million purchase price. However, in the event the merger
would not have been consummated by August 15, 2009 the $2 million was to be forfeited and
the Company was to issue a promissory note in the principal amount of $4 million to OMAX.
   Note 7Long-Term Obligations and Notes Payable
  October 31,2009
    
    
    April 30, 2009Long-term loan
    
    $
    
    
    
    $
    1,879Other financing arrangements
    
    
    93
    
    
    
    1,42593
    
    
    
    3,304Less current maturities
    
    
    (69
    )
    
    
    (1,367
    )Long-term obligations
    
    $
    24
    
    
    $
    1,937
    October 31,2009
    
    
    April 30, 2009Senior Credit Facility
    
    $
    200
    
    
    $
    13,000Revolving credit facilities in Taiwan
    
    
    
    
    
    
    2,226$
    200
    
    
    $
    15,226
 Senior Credit Facility
 11




---



##### Table of Contents



Shareholders
Equity
 Maximum Consolidated
    
    Minimum Fixed ChargeLeverage Ratio (i)
    
    Coverage Ratio (ii)Fiscal Year 2010First Quarter
    
    
    3.25x
    
    
    
    2.0xSecond Quarter
    
    
    3.35x
    
    
    
    1.2xThird Quarter
    
    
    3.50x
    
    
    
    1.2xFourth Quarter
    
    
    3.35x
    
    
    
    1.2xFiscal Year 2011First Quarter
    
    
    2.75x
    
    
    
    2.0xThereafter
    
    
    2.50x
    
    
    
    2.0x
 
 (i)
    
    Defined as the ratio of consolidated indebtedness, excluding the subordinated notes issued to
OMAX, to consolidated adjusted EBITDA for the most recent four fiscal quarters.(ii)
    
    Defined as the ratio of consolidated adjusted EBITDA, less income taxes and maintenance
capital expenditures, during the most recent four quarters to the sum of interest charges
during the most recent four quarters and scheduled debt repayments in the next four quarters.     Revolving Credit Facility in Taiwan
  Note 8 Commitments and Contingencies
  12




---



##### Table of Contents



Other Legal Proceedings 
 Note 9  Shareholders Equity
 Sale of Common Stock
  Change to Authorized Stock
 Articles of Amendment
 13




---



##### Table of Contents



The Rights Agreement
 Rights Agent Right Purchase Price
 Distribution Date Final Expiration Date
 Note 10Stock-based Compensation
  Stock Options
   Weighted-Weighted-
    
    
    
    
    
    
    AverageAverage
    
    
    Aggregate
    
    
    RemainingNumber of
    
    
    Exercise
    
    
    Intrinsic
    
    
    ContractualOptions
    
    
    Price
    
    
    Value
    
    
    Term (Years)Outstanding at May 1, 2009
    
    
    798,810
    
    
    $
    10.49
    
    
    $
    
    
    
    
    5.16Granted during the period
    
    
    
    
    
    
    Exercised during the period
    
    
    
    
    
    
    Expired or forfeited during the period
    
    
    (87,728
    )
    
    
    10.25Outstanding at October 31, 2009
    
    
    711,082
    
    
    $
    10.52
    
    
    $
    
    
    
    
    4.95Exercisable at October 31, 2009
    
    
    473,622
    
    
    $
    10.56
    
    
    $
    
    
    
    
    3.33
 14




---



##### Table of Contents



Six Months endedOctober 31, 2008Options granted
    
    
    236,210Weighted average grant-date fair value of stock options granted
    
    $
    5.67Assumptions:Weighted average expected volatility
    
    
    60
    %Risk-free interest rate
    
    
    3.09
    %Weighted average expected term (in years)
    
    
    6Expected dividend yield
    
    
    
   Service-Based Stock Awards
   Weighted-AverageNumber of
    
    
    Grant-dateShares
    
    
    Fair ValueNonvested at May 1, 2009
    
    
    402,555
    
    
    $
    8.78Granted during the period
    
    
    1,068,610
    
    
    
    2.23Forfeited during the period
    
    
    (48,549
    )
    
    
    4.79Vested during the period
    
    
    (121,341
    )
    
    
    10.25Nonvested at October 31, 2009
    
    
    1,301,275
    
    
    $
    3.72
  Note 11Basic and Diluted Income (Loss) per Share
  15




---



##### Table of Contents



Three Months Ended
    
    
    Six Months EndedOctober 31,
    
    
    October 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Numerator:Income (Loss) from continuing operations
    
    $
    689
    
    
    $
    396
    
    
    $
    (6,709
    )
    
    $
    1,926Denominator:Denominator for basic income (loss) per
shareweighted average shares
outstanding
    
    
    42,841
    
    
    
    37,595
    
    
    
    40,295
    
    
    
    37,593Dilutive potential common shares from
employee stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3Dilutive potential common shares from
service and performance based stock
awards
    
    
    317
    
    
    
    
    
    
    
    
    
    
    
    Denominator for diluted income
(loss)weighted average shares
outstanding and assumed conversions
    
    
    43,158
    
    
    
    37,595
    
    
    
    40,295
    
    
    
    37,596Basic and diluted income (loss) from
continuing operations per share
    
    $
    0.02
    
    
    $
    0.01
    
    
    $
    (0.17
    )
    
    $
    0.05
  Note 12Other Income (Expense), Net
   Three Months
    
    
    Six MonthsEnded October 31,
    
    
    Ended October 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Realized Foreign Exchange Gains, net
    
    $
    227
    
    
    $
    134
    
    
    $
    172
    
    
    $
    469Unrealized Foreign Exchange Gains (Losses), net
    
    
    (404
    )
    
    
    (963
    )
    
    
    53
    
    
    
    (942
    )Other
    
    
    27
    
    
    
    (13
    )
    
    
    127
    
    
    
    24$
    (150
    )
    
    $
    (842
    )
    
    $
    352
    
    
    $
    (449
    )
 Note 13Income Taxes
  16




---



##### Table of Contents



Note 14Discontinued Operations
 Commitments and Contingencies
   Three Month Ended
    
    
    Six Months EndedOctober 31, 2008
    
    
    October 31, 2008Sales
    
    $
    647
    
    
    $
    1,412Income before provision for income taxes
    
    
    25
    
    
    
    135Provision for income taxes
    
    
    (9
    )
    
    
    (46
    )Income from operations of discontinued operations
    
    $
    16
    
    
    $
    89
 17




---



##### Table of Contents



Note 15Segment Information
   Inter-segmentStandard (i)
    
    
    Advanced
    
    
    All Other (ii)
    
    
    Eliminations (iii)
    
    
    TotalThree Months Ended October 31, 2009External sales
    
    $
    31,413
    
    
    $
    10,624
    
    
    $
    
    
    
    $
    
    
    
    $
    42,037Inter-segment sales
    
    
    404
    
    
    
    
    
    
    
    
    
    
    
    (404
    )Gross margin
    
    
    13,327
    
    
    
    3,305
    
    
    
    
    
    
    
    
    
    
    
    16,632Operating income (loss)
    
    
    1,590
    
    
    
    2,026
    
    
    
    (3,279
    )
    
    
    
    
    
    
    337Three Months Ended October 31, 2008External sales
    
    $
    56,069
    
    
    $
    4,509
    
    
    $
    
    
    
    $
    
    
    
    $
    60,578Inter-segment sales
    
    
    737
    
    
    
    
    
    
    
    
    
    
    
    (737
    )Gross margin
    
    
    24,811
    
    
    
    828
    
    
    
    
    
    
    
    
    
    
    
    25,639Operating income (loss)
    
    
    8,804
    
    
    
    (1,503
    )
    
    
    (3,864
    )
    
    
    
    
    
    
    3,437Six Months Ended October 31, 2009External sales
    
    $
    59,780
    
    
    $
    20,009
    
    
    $
    
    
    
    $
    
    
    
    $
    79,789Inter-segment sales
    
    
    776
    
    
    
    
    
    
    
    
    
    
    
    (776
    )Gross margin
    
    
    23,920
    
    
    
    6,688
    
    
    
    
    
    
    
    
    
    
    
    30,608Operating income (loss)
    
    
    (1,215
    )
    
    
    3,796
    
    
    
    (9,826
    )
    
    
    
    
    
    
    (7,245
    )Total Assets
    
    
    124,545
    
    
    
    27,629
    
    
    
    11,164
    
    
    
    (32,141
    )
    
    
    131,197Six Months Ended October 31, 2008External sales
    
    $
    108,821
    
    
    $
    8,822
    
    
    $
    
    
    
    $
    
    
    
    $
    117,643Inter-segment sales
    
    
    1,216
    
    
    
    
    
    
    
    
    
    
    
    (1,216
    )Gross margin
    
    
    49,976
    
    
    
    1,794
    
    
    
    
    
    
    
    
    
    
    
    51,770Operating income (loss)
    
    
    19,239
    
    
    
    (3,970
    )
    
    
    (8,075
    )
    
    
    
    
    
    
    7,194Total Assets
    
    
    152,572
    
    
    
    25,337
    
    
    
    8,682
    
    
    
    (34,514
    )
    
    
    152,077
 
 (i)
    
    During the second quarter of fiscal 2010, the Company began reporting its profit or loss
within the Standard segment to include inventory adjustments previously reflected as
Intersegment Eliminations, in order to reflect how the chief operating decision maker now
views and manages its business. This change had no impact on consolidated gross margins or
operating income or loss. The Company has reclassified prior period comparable results for
the respective three and six months ended October 31, 2008 to reflect this refinement in
reporting.(ii)
    
    Includes corporate overhead expenses as well as general and administrative expenses of
inactive subsidiaries that do not constitute segments.(iii)
    
    Inter-segment sales represent products between the Companys geographic areas, including
between operations within the United States and between the Companys U.S. operations and
foreign subsidiaries, based on the Companys transfer pricing policy. These amounts have been
eliminated in consolidation.  Three Months Ended
    
    
    Six Months EndedOctober 31,
    
    
    October 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Operating income
(loss) for reportable
segments
    
    $
    337
    
    
    $
    3,437
    
    
    $
    (7,245
    )
    
    $
    7,194Interest income
    
    
    53
    
    
    
    124
    
    
    
    93
    
    
    
    303Interest expense
    
    
    (474
    )
    
    
    (161
    )
    
    
    (1,438
    )
    
    
    (291
    )Other income (expense), net
    
    
    (150
    )
    
    
    (842
    )
    
    
    352
    
    
    
    (449
    )Income (loss) from
continuing operations
before provision for
income taxes
    
    $
    (234
    )
    
    $
    2,558
    
    
    $
    (8,238
    )
    
    $
    6,757
 18




---



##### Table of Contents



Note 16Fair Value Measures
     Assets and Liabilities Measured at Fair Value on a Recurring Basis
   Location of Gain orDerivatives not designated as hedging
    
    (Loss) Recognized in
    

Three
Months
    

Six
Monthsinstruments under Statement 133
    
    Income on Derivative
    

Ended October 31,
    
    Ended October 31,2009
    
    2008
    
    2009
    
    2008Forward exchange forward contracts
    
    Other Income (Expense)
    
    $
    
    $
    
    $
    
    $
    51
  Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
    19




---



##### Table of Contents



FLOW INTERNATIONAL CORPORATION
 
 
 Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
 Forward-looking Statements
 Forward-looking statements in this report, including without limitation, statements relating
to the Companys plans, strategies, objectives, expectations, intentions, and adequacy of
resources, are made pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. The words may, expect, believe, anticipate, estimate, plan and
similar expressions are intended to identify forward-looking statements. These statements are no
guarantee of future performance and involve certain risks, assumptions, and uncertainties that are
difficult to predict. Therefore, actual outcome and results may differ materially from what is
expressed or forecasted in such forward-looking statements.
 We make forward-looking statements of our expectations which include but are not limited to:
 
    
    statements regarding the successful execution of our strategic initiatives, including
introduction of new products and realignment of our existing product line;
    
    statements regarding our ability to respond to a decline in the near-term demand for our
products by cutting costs and our intention to reinstate suspended
employee benefits, including wage reductions, as our business improves;
    
    statements regarding our belief that the diversity of our markets, along with the
relatively early adoption phase of our technology, and the displacement of more traditional
methods for machining and fabricating, will enable us to absorb the economic downturn with
less impact than conventional machine tool manufacturers;
    
    statements regarding the realization of backlog in the Advanced segment;
    
    statements regarding the use of cash, cash needs and ability to raise capital and/or use
our Senior Credit Facility;
    
    statements regarding our belief that our existing cash and cash equivalents, along with
the expected proceeds from our operations and available amounts under our Senior Credit
Facility, will provide adequate liquidity to fund our operations through at least the next
twelve months;
    
    statements regarding our ability to meet our debt covenants in future periods;
    
    statements regarding our technological leadership position;
    
    statements regarding anticipated results of potential or actual litigation;
    
    statements regarding our expectation that our unrecognized tax benefits will not change
significantly within the next twelve months.
 There may be other factors not mentioned above or included in our SEC filings that may cause
our actual results to differ materially from those in any forward-looking statement. You should not
place undue reliance on these forward-looking statements. We assume no obligation to update any
forward-looking statements as a result of new information, future events or developments, except as
required by federal securities laws.
   20




---



##### Table of Contents




    
    Executive Summary
    
    Results of Operations
    
    Liquidity and Capital Resources
    
    Contractual Obligations
    
    Off Balance Sheet Arrangements
    
    Critical Accounting Policies and Estimates
    
    Recently Issued Accounting Pronouncements
 Executive Summary
   Liquidity
and Capital Resources
   
    
    temporary reduction of wages for the majority of our salaried employees;
    
    temporary suspension of certain employee benefits;
    
    culmination of our plan to exit all manufacturing activities in our Taiwan facility; and
    
    elimination of 30 full-time positions globally.
  21




---



##### Table of Contents




    
    Mach 4 Waterjet Series;
    
    Mach 3 Waterjet Series; and
    
    Mach 2 Waterjet Series
 ®
  Our ability to fully implement our strategies and achieve our objective may be influenced by a
variety of factors, many of which are beyond our control. These risks and uncertainties pertaining
to our business are set forth in Part I, Item 1A of our Annual Report on Form 10-K for the year
ended April 30, 2009.
 Results of Operations
 (Tabular amounts in thousands)
 Summary Consolidated Results for the Three Months ended October 31, 2009 and 2008
 Three Months Ended October 31,
    
    
    Six Months Ended October 31,2009
    
    
    2008
    
    
    %

    
    
    2009
    
    
    2008
    
    
    %Sales
    
    $
    42,037
    
    
    $
    60,578
    
    
    
    (31
    )%
    
    $
    79,789
    
    
    $
    117,643
    
    
    
    (32
    )%Operating Income
    
    
    337
    
    
    
    3,437
    
    
    
    (90
    )%
    
    
    (7,245
    )
    
    
    7,194
    
    
    
    (201
    )%
 Three Months Ended October 31,
    
    
    Six Months Ended October 31,2009
    
    
    2008
    
    
    %
    
    
    2009
    
    
    2008
    
    
    %SalesSystems
    
    $
    27,365
    
    
    $
    43,172
    
    
    
    (37
    )%
    
    $
    51,769
    
    
    $
    82,258
    
    
    
    (37
    )%Consumable parts
    
    
    14,672
    
    
    
    17,406
    
    
    
    (16
    )%
    
    
    28,020
    
    
    
    35,385
    
    
    
    (21
    )%42,037
    
    
    
    60,578
    
    
    
    
    
    
    
    79,789
    
    
    
    117,643
   22




---



##### Table of Contents




    
    lower sales volume and gross margin mix discussed above;
    
    a decline of 564 basis points in gross margin as a result of a greater mix of low margin
systems versus the prior year as well as higher manufacturing overhead costs;
    
    a net charge of $3.2 million to record the termination of our option to acquire OMAX
Corporation, which is further discussed in Note 6  Other Accrued Liabilitiesof the Notes
to the Condensed Consolidated Financial Statements; and
    
    Restructuring and other related expenses of $1.6 million related to the reduction of
global staffing levels and the completion of our Taiwan manufacturing operations shutdown in
the first quarter of fiscal year 2010, offset by a $601,000 gain from the sale of our
building in Hsinchu, Taiwan which was completed in September 2009.
    Segment Results of Operations
  Segment Information
 23




---



##### Table of Contents



Standard Segment
 Three Months Ended October 31,
    
    
    Six Months Ended October 31,2009
    
    
    2008
    
    
    %
    
    
    2009
    
    
    2008
    
    
    %Sales
    
    $
    31,413
    
    
    $
    56,069
    
    
    
    (44
    )%
    
    $
    59,780
    
    
    $
    108,821
    
    
    
    (45
    )%% of total company sales
    
    
    75
    %
    
    
    93
    %
    
    NM
    
    
    75
    %
    
    
    93
    %
    
    NMGross Margin (i)
    
    
    13,327
    
    
    
    24,811
    
    
    
    (46
    )%
    
    
    23,920
    
    
    
    49,976
    
    
    
    (55
    )%Gross Margin as % of sales
    
    
    42
    %
    
    
    44
    %
    
    NM
    
    
    40
    %
    
    
    46
    %
    
    NMOperating Expenses:Sales and Marketing
    
    
    8,292
    
    
    
    11,049
    
    
    
    (25
    )%
    
    
    15,579
    
    
    
    20,632
    
    
    
    (25
    )%Research and Engineering
    
    
    1,623
    
    
    
    1,934
    
    
    
    (16
    )%
    
    
    3,110
    
    
    
    3,771
    
    
    
    (18
    )%General and Administrative
    
    
    2,423
    
    
    
    2,875
    
    
    
    (16
    )%
    
    
    5,747
    
    
    
    6,184
    
    
    
    (7
    )%Restructuring Charges and Other
    
    
    (601
    )
    
    
    149
    
    
    NM
    
    
    699
    
    
    
    149
    
    
    
    369
    %Total Operating Expenses
    
    
    11,737
    
    
    
    16,007
    
    
    
    (27
    )%
    
    
    25,135
    
    
    
    30,737
    
    
    
    (18
    )%Operating Income (Loss) (i)
    
    
    1,590
    
    
    
    8,804
    
    
    
    (82
    )%
    
    
    (1,215
    )
    
    
    19,239
    
    
    NM
 
 NM = Not Meaningful (i)
    
    During the second quarter of fiscal 2010, we began reporting
our profit or loss
within the Standard segment to include inventory adjustments previously reflected as
Intersegment Eliminations, in order to reflect how the chief operating decision maker now
views and manages its business. This change had no impact on consolidated gross margins or
operating income or loss. We have reclassified prior period comparable results for
the respective three and six months ended October 31, 2008 to reflect this refinement in
reporting.
   
    
    Significant standard system sales volume declines in North America and Europe, which are
the markets most affected by the current economic environment. These two regions had a
combined decline in system sales of $19.3 million or 62% and $34.7 million or 60% for the
respective three and six months ended October 31, 2009 over the prior year comparative
periods. Consumable parts revenue for this segment also declined by $2.1 million or 13% and
$6.2 million or 19% for the respective three and six months ended October 31, 2009 over the
prior year comparative periods which was primarily driven by declines in North America and
Europe which had a combined decline of $1.3 million and $4.7 million for the respective
three and six months ended October 31, 2009 over the prior year comparative periods due to
lower system utilization by our customers.
   
    
    A decrease in sales and marketing expenses of $2.8 million or 25%, and $5.1 million or
25% for the respective three and six months ended October 31, 2009, as compared to the prior
year comparative periods, primarily as a result of lower commission expense based on lower
sales volume as, well as reduced headcount related expenses;
    
    A decrease in research and engineering expenses of $311,000 or 16%, and $661,000 or 18%
for the respective three and six months ended October 31, 2009, as compared to the prior
year comparative periods, which was mainly attributable to the timing of investments for new
product development as well as reduced headcount related expenses;
    
    A decrease in general and administrative expenses of $452,000 or 16%, and $437,000 or 7%
for the respective three and six months ended October 31, 2009, as compared to the prior
year comparative periods, primarily as a result of reduced headcount related expenses that
occurred in the first fiscal quarter of 2010; and
 24




---



##### Table of Contents




    
    Restructuring and Other Charges of $699,000 in the Standard segment for the six months
ended October 31, 2009 were related to charges recorded to reduce global staffing levels and
to complete the cessation of manufacturing activity in our Taiwan facility. The expenses
recorded to reduce global staffing levels were net of a $601,000 gain recorded in the three
months ended October 31, 2009 for the sale of our building in Taiwan.
 Advanced Segment
 Three Months Ended October 31,
    
    
    Six Months Ended October 31,2009
    
    
    2008
    
    
    %
    
    
    2009
    
    
    2008
    
    
    %Sales
    
    $
    10,624
    
    
    $
    4,509
    
    
    
    136
    %
    
    $
    20,009
    
    
    $
    8,822
    
    
    
    127
    %% of total company sales
    
    
    25
    %
    
    
    7
    %
    
    NM
    
    
    25
    %
    
    
    7
    %
    
    NMGross Margin
    
    
    3,305
    
    
    
    828
    
    
    
    299
    %
    
    
    6,688
    
    
    
    1,794
    
    
    
    273
    %Gross Margin as % of sales
    
    
    31
    %
    
    
    18
    %
    
    NM
    
    
    33
    %
    
    
    20
    %
    
    NMOperating Expenses:Sales and Marketing
    
    
    683
    
    
    
    853
    
    
    
    (20
    )%
    
    
    1,312
    
    
    
    1,366
    
    
    
    (4
    )%Research and Engineering
    
    
    227
    
    
    
    344
    
    
    
    (34
    )%
    
    
    437
    
    
    
    757
    
    
    
    (42
    )%General and Administrative
    
    
    369
    
    
    
    839
    
    
    
    (56
    )%
    
    
    1,074
    
    
    
    1,910
    
    
    
    (44
    )%Restructuring Charges
and Other
    
    
    0
    
    
    
    295
    
    
    
    (100
    )%
    
    
    69
    
    
    
    1,731
    
    
    
    (96
    )%Total Operating
Expenses
    
    
    1,279
    
    
    
    2,331
    
    
    
    (45
    )%
    
    
    2,892
    
    
    
    5,764
    
    
    
    (50
    )%Operating Income (Loss)
    
    
    2,026
    
    
    
    (1,503
    )
    
    NM
    
    
    3,796
    
    
    
    (3,970
    )
    
    NM
 
 NM = Not Meaningful     
    
    A decrease in sales and marketing expenses of $170,000 or 20%, and $54,000 or 4%; a
decrease in research and engineering expense of $117,000 or 34%, and $320,000 or 42%; and a
decrease in general and administrative expenses of $470,000 or 56%, and $836,000 and 44%
over the prior year comparative periods as a result the impact of savings resulting from the
consolidation of our facilities for our Advanced segment to Jeffersonville, Indiana, which
eliminated a significant amount of overhead associated with maintaining two facilities; and
    
    Restructuring and Other Charges of $69,000 for the six months ended October 31, 2009 were
related to charges recorded to reduce global staffing levels in the first quarter of fiscal
year 2010. The comparative prior period quarter-to-date and year-to-date amounts of $295,000
and $1.7 million were related to severance and termination benefits incurred to close our
Burlington, Ontario Canada manufacturing facility.
 All Other 25




---



##### Table of Contents



Three Months Ended October 31,
    
    
    Six Months Ended October 31,2009
    
    
    2008
    
    
    %
    
    
    2009
    
    
    2008
    
    
    %General and
Administrative
    
    $
    3,279
    
    
    $
    3,864
    
    
    
    (15
    )%
    
    $
    6,372
    
    
    $
    8,075
    
    
    
    (21
    )%Restructuring
Charges and Other
    
    $
    
    
    
    $
    
    
    
    NM
    
    $
    3,454
    
    
    $
    
    
    
    
    100
    %
 
 NM = Not Meaningful  Other Accrued Liabilities
 Interest (Income) Expense
 Interest Income (Expense), net
 Three Months Ended October 31,
    
    
    Six Months Ended October 31,2009
    
    
    2008
    
    
    %
    
    
    2009
    
    
    2008
    
    
    %Interest Income
    
    $
    53
    
    
    $
    124
    
    
    
    (57
    )%
    
    $
    93
    
    
    $
    303
    
    
    
    (69
    )%Interest Expense
    
    
    (474
    )
    
    
    (161
    )
    
    
    194
    %
    
    
    (1,438
    )
    
    
    (291
    )
    
    NMNet Interest
Income (Expense)
    
    
    (421
    )
    
    
    (37
    )
    
    NM
    
    
    (1,345
    )
    
    
    12
    
    
    NM
 
 NM = Not Meaningful   
    
    interest charges of $113,000 and $394,000 for the three and six months ended October 31,
2009, respectively, on the used and unused portion of our Senior Credit Facility as well as
outstanding standby letters of credit;
 26




---



##### Table of Contents




    
    imputed interest of $168,000 and $383,000 for the three and six months ended October 31,
2009, respectively, related to the two subordinated notes issued to OMAX in satisfaction of
our remaining obligation to OMAX pursuant to the Settlement and Cross Licensing Agreement
executed in March 2009 as well as in connection with the termination of the Merger
Agreement;
    
    write-off of $253,000 of deferred financing fees in the first quarter of fiscal year 2009
upon the execution of an amendment to our Senior Credit Facility in June 2009 which reduced
our available borrowing capacity by 50%; and
    
    amortization of $106,000 and $188,000 for the three and six months ended October 31,
2009, respectively for deferred financing fees over the life of the Line of Credit
availability which amortization began in June 2008 upon the execution of the original Senior
Credit Facility.
  Other Income, Net
  Three Months
    
    
    Six MonthsEnded October 31,
    
    
    Ended October 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Realized Foreign Exchange Gains (Losses), net
    
    $
    227
    
    
    $
    134
    
    
    $
    172
    
    
    $
    469Unrealized Foreign Exchange Gains (Losses), net
    
    
    (404
    )
    
    
    (963
    )
    
    
    53
    
    
    
    (942
    )Other
    
    
    27
    
    
    
    (13
    )
    
    
    127
    
    
    
    24$
    (150
    )
    
    $
    (842
    )
    
    $
    352
    
    
    $
    (449
    )
  Income Taxes
  Three Months
    
    
    Six MonthsEnded October 31,
    
    
    Ended October 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Current Tax Expense
    
    $
    576
    
    
    $
    850
    
    
    $
    426
    
    
    $
    1,903Deferred Tax (Benefit) Expense
    
    
    (1,499
    )
    
    
    1,312
    
    
    
    (1,955
    )
    
    
    2,928$
    (923
    )
    
    $
    2,162
    
    
    $
    (1,529
    )
    
    $
    4,831
   27




---



##### Table of Contents



Liquidity and Capital Resources
 Sources of Cash
  Cash Generated by Operating Activities
  Available Cash and Cash Equivalents
   Risk Factors
 Credit Facilities and Debt
  Shareholders Equity
 28




---



##### Table of Contents



Maximum Consolidated
    
    
    Minimum Fixed ChargeLeverage Ratio (i)
    
    
    Coverage Ratio (ii)Fiscal Year 2010First Quarter
    
    
    3.25x
    
    
    
    2.0xSecond Quarter
    
    
    3.35x
    
    
    
    1.2xThird Quarter
    
    
    3.50x
    
    
    
    1.2xFourth Quarter
    
    
    3.35x
    
    
    
    1.2xFiscal Year 2011First Quarter
    
    
    2.75x
    
    
    
    2.0xThereafter
    
    
    2.50x
    
    
    
    2.0x
 
 (i)
    
    Defined as the ratio of consolidated indebtedness to consolidated adjusted EBITDA, excluding
the subordinated notes issued to OMAX, for the most recent four fiscal quarters.(ii)
    
    Defined as the ratio of consolidated adjusted EBITDA, less income taxes and maintenance
capital expenditures, during the most recent four quarters to the sum of interest charges
during the most recent four quarters and scheduled debt repayments in the next four quarters.         Other Sources of Cash
  29




---



##### Table of Contents



Uses of Cash
 Capital Expenditures
  Repayment of Debt, Capital Leases and Notes Payable
  Off-Balance Sheet Arrangements
  Contractual Obligations
  Critical Accounting Estimates and Judgments
 Recently Issued Accounting Pronouncements
 Recently Issued Accounting Pronouncements
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4. Controls and Procedures
   30




---



##### Table of Contents



PART IIOTHER INFORMATION
 
 Item 1. Legal Proceedings
 Commitments and Contingencies
 
 Item 1A. Risk Factors
  Risks related to our Business
 Our operations may be impaired as a result of disasters, business interruptions or similar
events.
  Items 2, 3, and 5 are None and have been omitted.
 
 Item 4. Submission of matters to a Vote of Security Holders.
 31




---



##### Table of Contents



Name
    
    Votes For
    
    
    Votes Withheld
    
    
    AbstentionsRichard P. Fox
    
    
    29,343,919
    
    
    
    3,911,008
    
    
    
    132,415Lorenzo C. Lamadrid
    
    
    29,613,237
    
    
    
    3,640,150
    
    
    
    133,955Arlen I. Prentice
    
    
    19,353,768
    
    
    
    13,892,218
    
    
    
    141,356
   
    
    approved the amendment of our Restated Articles of Incorporation to increase the
authorized number of Flow common shares from 49,000,000 to 84,000,000 with 30,225,713
votes in favor, 3,126,037 votes withheld and 35,592 abstentions; and
    
    approved an amendment to our 2005 Equity Incentive Plan that increased the number of shares authorized for issuance under the
plan by 2,500,000 shares with 24,274,801 votes in favor, 2,630,328 votes withheld and 18,907 abstentions
    
    ratified the appointment of Deloitte & Touche, LLP as our independent registered
public accounting firm for the fiscal year ended April 30, 2010, with 32,488,629 votes
in favor, 811,598 votes withheld and 87,115 abstentions.
 
 Item 6. Exhibits
 
     32




---



##### Table of Contents



FLOW INTERNATIONAL CORPORATIONDate: December 3, 2009
    
    /s/ Charles M. BrownCharles M. BrownPresident and Chief Executive Officer(Principal Executive Officer) Date: December 3, 2009
    
    /s/ Allen M. HsiehAllen M. HsiehVice President and Chief Financial Officer(Principal Financial Officer) 33