XML 44 R10.htm IDEA: XBRL DOCUMENT v3.20.1
Revenue Recognition
 3 Months Ended
Mar. 31, 2020
Revenue from Contract with Customer [Abstract]  
Revenue Recognition Revenue Recognition
The majority of our revenues relate to customer orders that typically contain a single commitment of goods or services which have lead times under a year. Longer lead time, more complex contracts with our customers typically have multiple commitments of goods and services, including any combination of designing, developing, manufacturing, modifying, installing and commissioning of flow management equipment and providing services and parts related to the performance of such products. Control transfers over time when the customer is able to direct the use of and obtain substantially all of the benefits of our work as we perform.
Our primary method for recognizing revenue over time is the percentage of completion ("POC") method. Revenue from products and services transferred to customers over time accounted for approximately 23% of total revenue for the three month period ended March 31, 2020, as compared to 17% for the same period in 2019. If control does not transfer over time, then control transfers at a point in time. We recognize revenue at a point in time at the level of each performance obligation based on the evaluation of certain indicators of control transfer, such as title transfer, risk of loss transfer, customer acceptance and physical possession. Revenue from products and services transferred to customers at a point in time accounted for approximately 77% of total revenue for the three month period ended March 31, 2020, as compared to 83% for the same period in 2019. Refer to Note 2 to our consolidated financial statements included in our 2019 Annual Report for a more comprehensive discussion of our policies and accounting practices of revenue recognition.
Disaggregated Revenue
We conduct our operations through two business segments based on the type of product and how we manage the business:
•Flowserve Pump Division ("FPD") for custom, highly-engineered pumps, pre-configured industrial pumps, pump systems, mechanical seals, auxiliary systems and replacement parts and related services; and
•Flow Control Division ("FCD") for engineered and industrial valves, control valves, actuators and controls and related services.
Our revenue sources are derived from our original equipment manufacturing and our aftermarket sales and services. Our original equipment revenues are generally related to originally designed, manufactured, distributed and installed equipment that can range from pre-configured, short-cycle products to more customized, highly-engineered equipment ("Original Equipment"). Our aftermarket sales and services are derived from sales of replacement equipment, as well as maintenance, advanced diagnostic, repair and retrofitting services ("Aftermarket"). Each of our two business segments generate Original Equipment and Aftermarket revenues.

The following table presents our customer revenues disaggregated by revenue source:

Three Months Ended March 31, 2020
(Amounts in thousands)FPDFCDTotal
Original Equipment$252,732  $199,563  $452,295  
Aftermarket382,394  59,768  442,162  
$635,126  $259,331  $894,457  
Three Months Ended March 31, 2019
FPDFCDTotal
Original Equipment$205,803  $214,047  $419,850  
Aftermarket402,956  67,245  470,201  
$608,759  $281,292  $890,051  
Our customer sales are diversified geographically. The following table presents our revenues disaggregated by geography, based on the shipping addresses of our customers:
:
Three Months Ended March 31, 2020
(Amounts in thousands)FPDFCDTotal
North America(1)$267,524  $123,118  $390,642  
Latin America(1)42,187  5,511  47,698  
Middle East and Africa 97,168  26,663  123,831  
Asia Pacific112,455  55,507  167,962  
Europe115,792  48,532  164,324  
$635,126  $259,331  $894,457  
Three Months Ended March 31, 2019
FPDFCDTotal
North America(1)$247,769  $135,177  $382,946  
Latin America(1)37,601  5,796  43,397  
Middle East and Africa74,366  22,891  97,257  
Asia Pacific113,948  57,192  171,140  
Europe135,075  60,236  195,311  
$608,759  $281,292  $890,051  
__________________________________

(1) North America represents United States and Canada; Latin America includes Mexico.
On March 31, 2020, the aggregate transaction price allocated to unsatisfied (or partially unsatisfied) performance obligations was approximately $660 million. We estimate recognition of approximately $412 million of this amount as revenue in the remainder of 2020 and an additional $248 million in 2021 and thereafter.

Contract Balances
We receive payment from customers based on a contractual billing schedule and specific performance requirements as established in our contracts. We record billings as accounts receivable when an unconditional right to consideration exists. A contract asset represents revenue recognized in advance of our right to receive payment under the terms of a contract. A contract liability represents our right to receive payment in advance of revenue recognized for a contract.
The following tables present beginning and ending balances of contract assets and contract liabilities, current and long-term, for the three months ended March 31, 2020 and 2019:
(Amounts in thousands) Contract Assets, net (Current)Long-term Contract Assets, net(1)Contract Liabilities (Current)Long-term Contract Liabilities(2)
Beginning balance, January 1, 2020$272,914  9,280  $216,541  $1,652  
Revenue recognized that was included in contract liabilities at the beginning of the period—  —  (85,636) (634) 
Revenue recognized in the period in excess of billings203,856  504  —  —  
Billings arising during the period in excess of revenue recognized—  —  100,121  —  
Amounts transferred from contract assets to receivables(185,456) (93) —  —  
Currency effects and other, net(15,387) (7,229) (7,394) (53) 
Ending balance, March 31, 2020$275,927  $2,462  $223,632  $965  
(Amounts in thousands)Contract Assets, net (Current)Long-term Contract Assets, net(1)Contract Liabilities (Current)Long-term Contract Liabilities(2)
Beginning balance, January 1, 2019$228,579  $10,967  $202,458  $1,370  
Revenue recognized that was included in contract liabilities at the beginning of the period—  —  (73,417) —  
Revenue recognized in the period in excess of billings155,444  —  —  —  
Billings arising during the period in excess of revenue recognized—  —  78,078  —  
Amounts transferred from contract assets to receivables(154,817) (2,202) —  —  
Currency effects and other, net(4,356) (19) 623  (12) 
Ending balance, March 31, 2019$224,850  $8,746  $207,742  $1,358  
_____________________________________
(1) Included in other assets, net.
(2) Included in retirement obligations and other liabilities.