XML 22 R10.htm IDEA: XBRL DOCUMENT v3.21.1
Revision to Previously Reported Financial Information
 3 Months Ended
Mar. 31, 2021
Accounting Changes and Error Corrections [Abstract]  
Revision to Previously Reported Financial Information Revision to Previously Reported Financial Information
During the first quarter of 2021, we identified an accounting error involving foreign currency transactions beginning with the first quarter of 2020 though the year ended December 31, 2020. These adjustments increased retirement obligations and other liabilities by approximately $1 million, retained earnings by approximately $14 million and accumulated other comprehensive loss by approximately $15 million as of December 31, 2020.
In 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 IBNR 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.
The following table presents the impact to affected line items for the correction of the accounting error involving foreign currency transactions identified in the first quarter of 2021 on our condensed consolidated balance sheet as of December 31, 2020:

December 31, 2020
(Amounts in thousands)As Reported AdjustmentsAs Revised
Retirement obligations and other liabilities$516,087 $1,479 $517,566 
Retained earnings3,656,449 14,094 3,670,543 
Accumulated other comprehensive loss(594,052)(15,573)(609,625)
Total Flowserve Corporation shareholders’ equity1,732,470 (1,479)1,730,991 
Total equity1,762,800 (1,479)1,761,321 
_______________________________________
The following table presents the impact to affected line items on our condensed consolidated statement of income for the three months ended March 31, 2020, for the correction of the accounting error involving foreign currency transactions identified in the first quarter of 2021 and the accounting errors related to the recognition of a liability for unasserted asbestos claims identified in the third quarter of 2020:

Three Months Ended March 31, 2020
(Amounts in thousands)As ReportedAdjustmentsAs Revised
Sales$894,457 $(944)$893,513 
Cost of sales(628,480)1,426 (627,054)
Gross profit265,977 482 266,459 
Selling, general and administrative expense (1)(243,621)(1,830)(245,451)
Operating income25,552 (1,348)24,204 
Other income (expense), net (2)23,462 14,740 38,202 
Earnings before income taxes37,800 13,392 51,192 
Provision for income taxes (36,310)(659)(36,969)
Net earnings, including noncontrolling interests1,490 12,733 14,223 
Net earnings (loss) attributable to Flowserve Corporation$(610)12,733 $12,123 
Net earnings (loss) per share attributable to Flowserve Corporation common shareholders:  
Basic$— $0.09 $0.09 
Diluted— 0.09 0.09 
_______________________________________
(1) Adjustment primarily relates to asbestos settlement and defense costs for related legal fees.
(2) Adjustment relates to the accounting error involving foreign currency transactions.
The following table presents the impact to affected line items for the correction of the accounting errors on our condensed consolidated statement of comprehensive income (loss) for the three months ended March 31, 2020:

Three Months Ended March 31, 2020
(Amounts in thousands)As ReportedAdjustmentsAs Revised
Net earnings, including noncontrolling interests$1,490 $12,733 $14,223 
Other comprehensive income (loss):
Foreign currency translation adjustments, net of taxes(81,353)(14,708)(96,061)
Other comprehensive income (loss)(74,990)(14,708)(89,698)
Comprehensive income (loss), including noncontrolling interests(73,500)(1,975)(75,475)
Comprehensive income (loss) attributable to Flowserve Corporation$(76,439)$(1,975)$(78,414)
The condensed consolidated statement of shareholders' equity for the period from January 1, 2020 to March 31, 2020 and the condensed consolidated statement of comprehensive income for the three months ended March 31, 2020 have also been revised to reflect the impacts of the above described errors.
Except for as described below in (1) and (2), the effect of the adjustments to the condensed consolidated statements of cash flows for the three months ended March 31, 2020 primarily related to the change in net earnings, including noncontrolling interest, in the table above and were offset primarily by a non-cash adjustment to foreign currency, asset write downs and other non-cash adjustments and impacts to changes in operating assets and liabilities. The following table presents the impact to affected line items for the correction of the errors on our condensed consolidated statement of cash flows for the three months ended March 31, 2020:

Three Months Ended March 31, 2020
(Amounts in thousands)As Reported AdjustmentsAs Revised
Net cash flows provided (used) by operating activities $47,302 $201 $47,503 
Net cash flows provided (used) by investing activities (1)(6,573)1,355 (5,218)
Net cash flows provided (used) by financing activities (2)(63,925)(1,556)(65,481)
Cash and cash equivalents at end of period 622,299 — 622,299 
_______________________________________
(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.
(2) Primarily resulting from the misclassification of non-cash items under proceeds and payments under other financing arrangements in financing activities, rather than other assets, net, in operating activities.
The impacts of the revisions have been reflected throughout the financial statements, including the applicable footnotes, as appropriate.