FLOWSERVE CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS See accompanying notes to consolidated financial statements. 56 Year Ended December 31, 2019 2018 2017 (Amounts in thousands) Cash flows — Operating activities: Net earnings, including noncontrolling interests $ 261,780 $ 125,050 $ 4,328 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation 90,619 95,820 101,438 Amortization of intangible and other assets 13,862 16,653 17,016 Loss (gain) on disposition of businesses — 7,727 (141,317) Stock-based compensation 23,882 19,912 22,820 Provision for U.S. Tax Cuts and Jobs Act of 2017 — (5,654) 115,320 Foreign currency, asset impairment and other non-cash adjustments (11,224 ) 36,052 33,087 Change in assets and liabilities: Accounts receivable, net 2,883 (25,448 ) 60,216 Inventories, net (31,058) (29,314) 48,642 Contract assets, net (45,939 ) (23,693 ) — Prepaid expenses and other assets, net 13,289 (7,869) 32,935 Contract liabilities 14,390 33,710 — Accounts payable 22,870 (4,823) 12,403 Accrued liabilities and income taxes payable 4,184 (18,248 ) (3,383 ) Retirement obligations and other (39,881) (44,314) (43,431) Net deferred taxes (6,916 ) 15,270 50,992 Net cash flows provided (used) by operating activities 312,741 190,831 311,066 Cash flows — Investing activities: Capital expenditures (66,170) (83,993) (61,602) Proceeds from disposal of assets 42,333 6,190 5,435 (Payments for) proceeds from disposition of businesses — (3,663) 232,767 Net cash flows provided (used) by investing activities (23,837 ) (81,466 ) 176,600 Cash flows — Financing activities: Payments on long-term debt (105,000 ) (60,000 ) (60,000 ) Payments of deferred loan costs — — (1,503) Proceeds from short-term financing 75,000 — — Payments on short-term financing (75,000) — — Proceeds under other financing arrangements 4,639 3,377 7,359 Payments under other financing arrangements (9,281) (9,853) (19,030) Payments related to tax withholding for stock-based compensation (3,900 ) (3,061 ) (6,238 ) Repurchases of common shares (15,000) — — Payments of dividends (99,557 ) (99,416 ) (99,233 ) Other (1,555) (4,331) (6,708) Net cash flows provided (used) by financing activities (229,654 ) (173,284 ) (185,353 ) Effect of exchange rate changes on cash (7,953) (19,843) 33,970 Net change in cash and cash equivalents 51,297 (83,762 ) 336,283 Cash and cash equivalents at beginning of year 619,683 703,445 367,162 Cash and cash equivalents at end of year $ 670,980 $ 619,683 $ 703,445 Income taxes paid (net of refunds) $ 66,372 $ 87,009 $ 59,409 Interest paid 53,607 54,576 56,808