XML 37 R25.htm IDEA: XBRL DOCUMENT v3.20.2

Realignment and Transformation Programs

9 Months Ended

Sep. 30, 2020

Restructuring and Related Activities [Abstract]

Realignment and Transformation Programs

Realignment and Transformation Programs In the second quarter of 2020, we identified and initiated certain realignment activities resulting from our Flowserve 2.0 Transformation Program (defined below) to right-size our organizational operations based on the current business environment, with the overall objective to reduce our workforce costs, including manufacturing optimization through the consolidation of certain facilities ("2020 Realignment Program"). The realignment activities consist of restructuring and non-restructuring charges. Restructuring charges represent costs associated with the relocation of certain business activities and facility closures and include related severance costs. Non-restructuring charges are primarily employee severance associated with the workforce reductions. Expenses are primarily reported in cost of sales ("COS") or selling, general and administrative ("SG&A"), as applicable, in our condensed consolidated statements of income. We anticipate a total investment in these activities of approximately $75 million and that the majority of the charges will be incurred in 2020. There are certain other realignment activities that are currently being evaluated, but have not yet been finalized. The realignment programs initiated in 2015 ("2015

Realignment Programs"), which consisted of both restructuring and non-restructuring charges, were substantially complete as of March 31, 2020, resulting in $362.4 million of total charges incurred through the completion of the programs.

In the second quarter of 2018, we launched and committed resources to our Flowserve 2.0 Transformation ("Flowserve 2.0 Transformation"), a program designed to transform our business model to drive operational excellence, reduce complexity, accelerate growth, improve organizational health and better leverage our existing global platform. The Flowserve 2.0 Transformation expenses incurred primarily consist of professional services, project management and related travel costs recorded in SG&A expenses.

Generally, the aforementioned charges will be paid in cash, except for asset write-downs, which are non-cash charges. The following is a summary of total charges, net of adjustments, related to our realignment activities and Flowserve 2.0 Transformation charges. Realignment charges incurred in 2020 related to our 2020 Realignment Program and realignment charges incurred in 2019 related to our 2015 Realignment Programs:

			Three Months Ended September 30, 2020
(Amounts in thousands)			FPD						FCD						Subtotal–Reportable Segments						All Other						Consolidated Total
Realignment Charges
Restructuring Charges
COS			$	5,469					$	590					$	6,059					$	—					$	6,059
SG&A			(10)						(2)						(12)						—						(12)
			$	5,459					$	588					$	6,047					$	—					$	6,047
Non-Restructuring Charges
COS			$	1,210					$	(1,366)					$	(156)					$	(245)					$	(401)
SG&A			1,097						75						1,172						613						1,785
			$	2,307					$	(1,291)					$	1,016					$	368					$	1,384
Total Realignment Charges
COS			$	6,679					$	(776)					$	5,903					$	(245)					$	5,658
SG&A			1,087						73						1,160						613						$	1,773
Total			$	7,766					$	(703)					$	7,063					$	368					$	7,431
Transformation Charges
SG&A			$	—					$	—					$	—					$	4,746					$	4,746
			$	—					$	—					$	—					$	4,746					$	4,746
Total Realignment and Transformation Charges
COS			$	6,679					$	(776)					$	5,903					$	(245)					$	5,658
SG&A			1,087						73						1,160						5,359						6,519
Total			$	7,766					$	(703)					$	7,063					$	5,114					$	12,177

			Three Months Ended September 30, 2019
(Amounts in thousands)			FPD						FCD						Subtotal–Reportable Segments						All Other						Consolidated Total
Realignment Charges
Restructuring Charges
COS			$	197					$	811					$	1,008					$	—					$	1,008
SG&A			37						—						37						—						37
			$	234					$	811					$	1,045					$	—					$	1,045
Non-Restructuring Charges
COS			$	2,409					$	3					$	2,412					$	—					$	2,412
SG&A			343						—						343						994						1,337
			$	2,752					$	3					$	2,755					$	994					$	3,749
Total Realignment Charges
COS			$	2,606					$	814					$	3,420					$	—					$	3,420
SG&A			380						—						380						994						$	1,374
Total			$	2,986					$	814					$	3,800					$	994					$	4,794
Transformation Charges
SG&A			$	—					$	—					$	—					$	5,058					$	5,058
			$	—					$	—					$	—					$	5,058					$	5,058
Total Realignment and Transformation Charges
COS			$	2,606					$	814					$	3,420					$	—					$	3,420
SG&A			380						$	—					380						6,052						6,432
Total			$	2,986					$	814					$	3,800					$	6,052					$	9,852

			Nine Months Ended September 30, 2020
(Amounts in thousands)			FPD						FCD						Subtotal–Reportable Segments						All Other						Consolidated Total
Realignment Charges
Restructuring Charges
COS			$	18,800					$	318					$	19,118					$	—					$	19,118
SG&A			221						(5)						216						—						216
			$	19,021					$	313					$	19,334					$	—					$	19,334
Non-Restructuring Charges
COS			$	13,339					$	7,876					$	21,215					$	303					$	21,518
SG&A			10,899						4,459						15,358						16,107						31,465
			$	24,238					$	12,335					$	36,573					$	16,410					$	52,983
Total Realignment Charges
COS			$	32,139					$	8,194					$	40,333					$	303					$	40,636
SG&A			11,120						4,454						15,574						16,107						31,681
Total			$	43,259					$	12,648					$	55,907					$	16,410					$	72,317
Transformation Charges
SG&A			—						—						—						16,007						16,007
			$	—					$	—					$	—					$	16,007					$	16,007
Total Realignment and Transformation Charges
COS			$	32,139					$	8,194					$	40,333					$	303					$	40,636
SG&A			11,120						4,454						15,574						32,114						47,688
Total			$	43,259					$	12,648					$	55,907					$	32,417					$	88,324

			Nine Months Ended September 30, 2019
(Amounts in thousands)			FPD						FCD						Subtotal–Reportable Segments						All Other						Consolidated Total
Restructuring Charges
COS			$	1,892					$	1,291					$	3,183					$	—					$	3,183
SG&A(1)			(17,072)						413						(16,659)						—						(16,659)
			$	(15,180)					$	1,704					$	(13,476)					$	—					$	(13,476)
Non-Restructuring Charges
COS			$	9,531					$	72					$	9,603					$	—					$	9,603
SG&A			770						34						804						2,237						3,041
			$	10,301					$	106					$	10,407					$	2,237					$	12,644
Total Realignment Charges
COS			$	11,423					$	1,363					$	12,786					$	—					$	12,786
SG&A			(16,302)						447						(15,855)						2,237						(13,618)
Total			$	(4,879)					$	1,810					$	(3,069)					$	2,237					$	(832)
Transformation Charges
SG&A			—						—						—						21,044						21,044
			$	—					$	—					$	—					$	21,044					$	21,044
Total Realignment and Transformation Charges
COS			$	11,423					$	1,363					$	12,786					$	—					$	12,786
SG&A			(16,302)						447						(15,855)						23,281						7,426
Total			$	(4,879)					$	1,810					$	(3,069)					$	23,281					$	20,212

_______________________________

(1) Primarily consists of gains from the sales of non-strategic manufacturing facilities that were included in our 2015 Realignment Programs.

The following is a summary of total inception to date charges, net of adjustments, related to the 2020 Realignment Program initiated in 2020:

			Inception to Date
(Amounts in thousands)			FPD						FCD						Subtotal–Reportable Segments						All Other						Consolidated Total
Realignment Charges
Restructuring Charges
COS			$	17,119					$	423					$	17,542					$	—					$	17,542
SG&A			116						22						138						—						138
			$	17,235					$	445					$	17,680					$	—					$	17,680
Non-Restructuring Charges
COS			$	13,213					$	1,551					$	14,764					$	303					$	15,067
SG&A			10,413						4,387						14,800						15,465						30,265
			$	23,626					$	5,938					$	29,564					$	15,768					$	45,332
Total Realignment Charges
COS			$	30,332					$	1,974					$	32,306					$	303					$	32,609
SG&A			10,529						4,409						14,938						15,465						30,403
Total			$	40,861					$	6,383					$	47,244					$	15,768					$	63,012

Restructuring charges represent costs associated with the relocation or reorganization of certain business activities and facility closures and include costs related to employee severance at closed facilities, contract termination costs, asset write-downs and other costs. Severance costs primarily include costs associated with involuntary termination benefits. Contract termination costs include costs related to the termination of operating leases or other contract termination costs. Asset write-downs include accelerated depreciation of fixed assets, accelerated amortization of intangible assets, divestiture of certain non-strategic assets and inventory write-downs. Other costs generally include costs related to employee relocation, asset relocation, vacant facility costs (i.e., taxes and insurance) and other charges.

The following is a summary of restructuring charges, net of adjustments, for our restructuring activities. Restructuring charges incurred in 2020 related to our 2020 Realignment Program and restructuring charges incurred in 2019 related to our 2015 Realignment Programs:

			Three Months Ended September 30, 2020
(Amounts in thousands)			Severance						Contract Termination						Asset Write-Downs						Other						Total
COS			$	4,704					$	—					$	331					$	1,024					$	6,059
SG&A			(16)						—						3						1						(12)
Total			$	4,688					$	—					$	334					$	1,025					$	6,047

			Three Months Ended September 30, 2019
(Amounts in thousands)			Severance						Contract Termination						Asset Write-Downs						Other						Total
COS			$	(729)					$	3					$	19					$	1,715					$	1,008
SG&A			(9)						—						5						41						37
Total			$	(738)					$	3					$	24					$	1,756					$	1,045

			Nine Months Ended September 30, 2020
(Amounts in thousands)			Severance						Contract Termination						Asset Write-Downs						Other						Total
COS			$	16,959					$	—					$	1,322					$	837					$	19,118
SG&A			228												25						(37)						216
Total			$	17,187					$	—					$	1,347					$	800					$	19,334

			Nine Months Ended September 30, 2019
(Amounts in thousands)			Severance						Contract Termination						Asset Write-Downs/ (Gains)						Other						Total
COS			$	1,099					$	51					$	(799)					$	2,832					$	3,183
SG&A(1)			1,609						—						(18,496)						228						(16,659)
Total			$	2,708					$	51					$	(19,295)					$	3,060					$	(13,476)

_______________________________

(1) Primarily consists of gains from the sales of non-strategic manufacturing facilities that were included in our 2015 Realignment Programs.

The following is a summary of total inception to date restructuring charges, net of adjustments, related to our 2020 Realignment Program initiated in 2020:

			Inception to Date
(Amounts in thousands)			Severance						Contract Termination						Asset Write-Downs						Other						Total
COS			$	15,276					$	—					$	1,325					$	941					$	17,542
SG&A			110						—						27						1						138
Total			$	15,386					$	—					$	1,352					$	942					$	17,680

The following represents the activity, primarily severance charges from reductions in force, related to the restructuring reserves for the nine months ended September 30, 2020 and 2019:

(Amounts in thousands)			2020						2019
Balance at January 1			$	6,703					$	11,927
Charges, net of adjustments			17,986						5,817
Cash expenditures			(4,772)						(8,196)
Other non-cash adjustments, including currency			425						(461)
Balance at September 30			$	20,342					$	9,087

X

- References

No definition available.

+ Details

Name:	us-gaap_RestructuringAndRelatedActivitiesAbstract
Namespace Prefix:	us-gaap_
Data Type:	xbrli:stringItemType
Balance Type:	na
Period Type:	duration

X

- Definition

The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 420
-URI http://asc.fasb.org/topic&trid=2175745

+ Details

Name:	us-gaap_RestructuringAndRelatedActivitiesDisclosureTextBlock
Namespace Prefix:	us-gaap_
Data Type:	nonnum:textBlockItemType
Balance Type:	na
Period Type:	duration