In conjunction with our close process for the third quarter of 2020, we identified accounting errors related to the recognition of a liability for unasserted asbestos claims. The adjustments primarily relate to an incurred but not reported (“IBNR”) liability associated with unasserted asbestos claims, but also include adjustments related to the associated receivables for expected insurance proceeds for asbestos settlement and defense costs from insurance coverage and the recognition as an expense the related legal fees that were previously estimated to be recoverable from insurance carriers for which coverage is not currently sufficient following the recognition of the IBNR and to correct certain other previously identified immaterial misstatements. Prior periods not presented herein will be revised, as applicable, in future filings.

The following table presents the impact of correcting the errors previously discussed on the affected line items of our consolidated balance sheet as of December 31, 2019:


	December 31, 2019
(Amounts in thousands)	As Reported		Adjustments		As Revised







Prepaid expenses and other	105,101		1,377		106,478
Total current assets	2,505,370		1,377		2,506,747
Property, plant and equipment, net of accumulated depreciation (1)	572,175		(8,611)		563,564




Other assets, net of allowance for expected credit losses (2)	227,185		25,869		253,054
Total assets	4,919,642		18,635		4,938,277




Contract liabilities (3)	216,541		4,554		221,095



Total current liabilities	1,112,888		4,554		1,117,442


Retirement obligations and other liabilities (4)	473,295		57,699		530,994






Retained earnings (5)	3,695,862		(43,618)		3,652,244



Total Flowserve Corporation shareholders’ equity	1,790,357		(43,618)		1,746,739

Total equity	1,815,959		(43,618)		1,772,341
Total liabilities and equity	$	4,919,642	$	18,635	$	4,938,277

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(1) Adjustment related to the misclassification of Software as a Service arrangements as property, plant and equipment rather than other assets, net, as prescribed by ASU 2018-15.

(5) The adjustments to retained earnings represents the cumulative effect of the immaterial errors that were corrected in periods prior to and through December 31, 2019.

The following table presents the impact of correcting the errors previously discussed on the affected line items of our consolidated statement of income for the year ended December 31, 2019:


(Amounts in thousands)	Year Ended December 31, 2019
	As Reported		Adjustments			As Revised
Sales (1)	$	3,944,850	$	(5,153)		$	3,939,697
Cost of sales	(2,649,480)		(874)			(2,650,354)
Gross profit	1,295,370		(6,027)		—	1,289,343
Selling, general and administrative expense (2)	(899,813)		(13,390)			(913,203)


Operating income	406,040		(19,417)			386,623




Earnings before income taxes	341,850		(19,417)			322,433
Provision for income taxes (3)	(80,070)		4,577			(75,493)
Net earnings, including noncontrolling interests	261,780		(14,840)			246,940

Net earnings attributable to Flowserve Corporation	$	253,668	$	(14,840)		$	238,828
Net earnings per share attributable to Flowserve Corporation common shareholders:
Basic	$	1.94	$	(0.12)		$	1.82
Diluted	1.93		(0.12)			1.81

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The following table presents the impact of correcting the errors previously discussed on the affected line items of our consolidated statement of income for the year ended December 31, 2018:


(Amounts in thousands)	Year Ended December 31, 2018
	As Reported		Adjustments			As Revised
Sales (1)	$	3,832,666	$	3,033		$	3,835,699

Gross profit	1,187,836		3,033		—	1,190,869
Selling, general and administrative expense (2)	(943,714)		(22,870)			(966,584)


Operating income	247,538		(19,837)			227,701



Earnings before income taxes	176,274		(19,837)			156,437
Provision for income taxes (3)	(51,224)		4,674			(46,550)
Net earnings, including noncontrolling interests	125,050		(15,163)			109,887

Net earnings attributable to Flowserve Corporation	$	119,671	$	(15,163)		$	104,508
Net earnings per share attributable to Flowserve Corporation common shareholders:
Basic	$	0.91	$	(0.11)		$	0.80
Diluted	0.91		(0.11)			0.80

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(2) Adjustment primarily related to asbestos settlement and defense costs from insurance coverage and expense for related legal fees and broad-based annual incentive compensation.

The consolidated statements of shareholders' equity and the consolidated statements of comprehensive income for the periods ending December 31, 2020, 2019 and 2018 have also been revised to reflect the impacts to net earnings. The impact of errors arising in periods commencing prior to January 1, 2018 has been reflected as a reduction to opening retained earnings in the amount of $28.8 million in the consolidated statement of shareholders' equity.

Except for as described below in (1), the effect of the adjustments to the consolidated statements of cash flows for the period ended December 31, 2019 primarily related to net earnings, including noncontrolling interests, for the change in net earnings in the table above and were offset primarily by impacts to changes in operating assets and liabilities. The following table presents the impact of correcting the errors previously discussed on the affected line items of our consolidated statement of cash flows for the years ended December 31, 2019 and 2018:


	Year Ended December 31, 2019
(Amounts in thousands)	As Reported		Adjustments		As Revised
Net cash flows provided (used) by operating activities (1)	$	312,741	$	11,356	$	324,097
Net cash flows provided (used) by investing activities (1)	(23,837)		(9,546)		(33,383)
Net cash flows provided (used) by financing activities	(229,654)		(1,810)		(231,464)
Cash and cash equivalents at end of period (1)	670,980		—		670,980

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(1) Primarily related to adjustments resulting from the misclassification of Software as a Service arrangements as property, plant and equipment rather than other assets, net, as prescribed by ASU 2018-15, and adjustments related to our international operations’ exposure to fluctuations in foreign currency exchange rates, resulting from our Argentinian subsidiary's change in using the U.S. dollar as our functional currency in Argentina.

The effects of the prior period revisions on the consolidated statements of cash flows for the year ended December 31, 2018 were primarily to the change in net earnings, as well as the changes in net cash flows provided (used) by operating activities, limited to prepaid expenses and other assets, net, accounts payable, accrued liabilities and income taxes payable, retirement obligations and other and deferred tax movements. Accordingly, there were no changes to any subtotals within the 2018 consolidated statement of cash flows.