XML 23 R11.htm IDEA: XBRL DOCUMENT v3.21.2
Revenue Recognition
 6 Months Ended
Jun. 30, 2021
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 15% and 22% of total revenue for the three month period ended June 30, 2021 and 2020, respectively, and 16% and 22% for the six month period ended June 30, 2021 and 2020, respectively. 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 85% and 78% of total revenue for the three month period ended June 30, 2021 and 2020, respectively, and 84% and 78% for the six month period ended June 30, 2021 and 2020, respectively. Refer to Note 3 to our consolidated financial statements included in our 2020 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") designs and manufactures 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") designs, manufactures and distributes a broad portfolio of engineered-to-order and configured-to-order isolation valves, control valves, valve automation products and related equipment.
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 tables present our customer revenues disaggregated by revenue source:
Three Months Ended June 30, 2021
(Amounts in thousands)FPDFCDTotal
Original Equipment$220,387 $214,097 $434,484 
Aftermarket397,047 66,647 463,694 
$617,434 $280,744 $898,178 
Three Months Ended June 30, 2020
FPDFCDTotal
Original Equipment$271,465 $191,358 $462,823 
Aftermarket402,089 60,100 462,189 
$673,554 $251,458 $925,012 
Six Months Ended June 30, 2021
(Amounts in thousands)FPDFCDTotal
Original Equipment$434,541 $406,817 $841,358 
Aftermarket785,059 129,069 914,128 
$1,219,600 $535,886 $1,755,486 
Six Months Ended June 30, 2020
FPDFCDTotal
Original Equipment$524,198 $389,977 $914,175 
Aftermarket784,482 119,869 904,351 
$1,308,680 $509,846 $1,818,526 
Our customer sales are diversified geographically. The following tables present our revenues disaggregated by geography, based on the shipping addresses of our customers:
Three Months Ended June 30, 2021
(Amounts in thousands)FPDFCDTotal
North America(1)$243,611 $98,118 $341,729 
Latin America(2)52,219 8,879 61,098 
Middle East and Africa 69,662 26,530 96,192 
Asia Pacific119,375 88,944 208,319 
Europe132,567 58,273 190,840 
$617,434 $280,744 $898,178 
Three Months Ended June 30, 2020
FPDFCDTotal
North America(1)$269,610 $106,737 $376,347 
Latin America(2)46,909 6,905 53,814 
Middle East and Africa96,740 21,687 118,427 
Asia Pacific128,102 64,546 192,648 
Europe132,193 51,583 183,776 
$673,554 $251,458 $925,012 

Six Months Ended June 30, 2021
(Amounts in thousands)FPDFCDTotal
North America(1)$467,582 $188,368 $655,950 
Latin America(2)94,256 15,694 109,950 
Middle East and Africa 152,207 54,226 206,433 
Asia Pacific244,027 167,600 411,627 
Europe261,528 109,998 371,526 
$1,219,600 $535,886 $1,755,486 
Six Months Ended June 30, 2020
FPDFCDTotal
North America(1)$537,135 $229,862 $766,997 
Latin America(2)89,096 12,415 101,511 
Middle East and Africa193,908 48,352 242,260 
Asia Pacific240,557 119,103 359,660 
Europe247,984 100,114 348,098 
$1,308,680 $509,846 $1,818,526 
__________________________________
(1) North America represents the United States and Canada.
(2) Latin America includes Mexico.

On June 30, 2021, the aggregate transaction price allocated to unsatisfied (or partially unsatisfied) performance obligations was approximately $470 million. We estimate recognition of approximately $294 million of this amount as revenue in the remainder of 2021 and an additional $176 million in 2022 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 six months ended June 30, 2021 and 2020:

(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, 2021$277,734 $1,139 $194,227 $822 
Revenue recognized that was included in contract liabilities at the beginning of the period— — (112,835)— 
Revenue recognized in the period in excess of billings321,040 54 — — 
Billings arising during the period in excess of revenue recognized— — 126,591 — 
Amounts transferred from contract assets to receivables(326,634)(28)— — 
Currency effects and other, net(9,909)(86)1,109 (19)
Ending balance, June 30, 2021$262,231 $1,079 $209,092 $803 


(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 $221,095 $1,652 
Revenue recognized that was included in contract liabilities at the beginning of the period— — (138,994)(646)
Revenue recognized in the period in excess of billings386,250 511 — — 
Billings arising during the period in excess of revenue recognized— — 141,156 — 
Amounts transferred from contract assets to receivables(335,505)(93)— — 
Currency effects and other, net(14,463)(6,689)(3,624)(31)
Ending balance, June 30, 2020$309,196 $3,009 $219,633 $975 
_____________________________________
(1) Included in other assets, net.
(2) Included in retirement obligations and other liabilities.