FLS » Topics » Revenue Recognition

These excerpts taken from the FLS 10-K filed Feb 25, 2009.
Revenue Recognition
 
Revenues for product sales are recognized when the risks and rewards of ownership are transferred to the customers, which is based on the contractual delivery terms agreed to with the customer and fulfillment of all but inconsequential or perfunctory actions. In addition, our policy requires persuasive evidence of an arrangement, a fixed or determinable sales price and reasonable assurance of collectability. For contracts containing multiple elements, each having a determinable fair value, we recognize revenue in an amount equal to the element’s pro rata share of the contract’s fair value in accordance with the contractual delivery terms for each element. Freight charges billed to customers are included in sales and the related shipping costs are included in cost of sales in our consolidated statements of income.
 
Revenues for long-term contracts, which include contracts that exceed certain internal thresholds regarding the size and duration of the project and provide for the receipt of progress billings from the customer, are recorded on the percentage of completion method with progress measured on a cost-to-cost basis. Percentage of completion revenue represents less than 10% of our consolidated sales in 2008.
 
Revenue on service and repair contracts is recognized after services have been agreed to by the customer and rendered. Revenues generated under fixed fee service and repair contracts are recognized on a ratable basis over the term of the contract. These contracts can range in duration, but generally extend for up to five years. Fixed fee service contracts represent less than 1% of our consolidated sales in 2008.
 
In certain instances, we provide guaranteed completion dates under the terms of our contracts. Failure to meet contractual delivery dates can result in late delivery penalties or non-recoverable costs. In instances where the payment of such costs are deemed to be probable, we perform a project profitability analysis accounting for such costs as a reduction of realizable revenues, which could potentially cause estimated total project costs to exceed projected total revenues realized from the project. In such instances, we would record reserves to cover such excesses in the period they are determined, which would adversely affect our results of operations and financial position. In circumstances where the total projected reduced revenues still exceed total projected costs, the incurrence of unrealized incentive fees or non-recoverable costs generally reduces profitability of the project at the time of subsequent revenue recognition. Our reported results would change if different estimates were used for contract costs or if different estimates were used for contractual contingencies.
 
Revenue Recognition
 
Revenues for product sales are recognized when the risks and rewards of ownership are transferred to the customers, which is based on the contractual delivery terms agreed to with the customer and fulfillment of all but inconsequential or perfunctory actions. In addition, our policy requires persuasive evidence of an arrangement, a fixed or determinable sales price and reasonable assurance of collectability. For contracts containing multiple elements, each having a determinable fair value, we recognize revenue in an amount equal to the element’s pro rata share of the contract’s fair value in accordance with the contractual delivery terms for each element. Freight charges billed to customers are included in sales and the related shipping costs are included in cost of sales in our consolidated statements of income.
 
Revenues for long-term contracts, which include contracts that exceed certain internal thresholds regarding the size and duration of the project and provide for the receipt of progress billings from the customer, are recorded on the percentage of completion method with progress measured on a cost-to-cost basis. Percentage of completion revenue represents less than 10% of our consolidated sales in 2008.
 
Revenue on service and repair contracts is recognized after services have been agreed to by the customer and rendered. Revenues generated under fixed fee service and repair contracts are recognized on a ratable basis over the term of the contract. These contracts can range in duration, but generally extend for up to five years. Fixed fee service contracts represent less than 1% of our consolidated sales in 2008.
 
In certain instances, we provide guaranteed completion dates under the terms of our contracts. Failure to meet contractual delivery dates can result in late delivery penalties or non-recoverable costs. In instances where the payment of such costs are deemed to be probable, we perform a project profitability analysis accounting for such costs as a reduction of realizable revenues, which could potentially cause estimated total project costs to exceed projected total revenues realized from the project. In such instances, we would record reserves to cover such excesses in the period they are determined, which would adversely affect our results of operations and financial position. In circumstances where the total projected reduced revenues still exceed total projected costs, the incurrence of unrealized incentive fees or non-recoverable costs generally reduces profitability of the project at the time of subsequent revenue recognition. Our reported results would change if different estimates were used for contract costs or if different estimates were used for contractual contingencies.
 
Revenue
Recognition



 



Revenues for product sales are recognized when the risks and
rewards of ownership are transferred to the customers, which is
based on the contractual delivery terms agreed to with the
customer and fulfillment of all but inconsequential or
perfunctory actions. In addition, our policy requires persuasive
evidence of an arrangement, a fixed or determinable sales price
and reasonable assurance of collectability. For contracts
containing multiple elements, each having a determinable fair
value, we recognize revenue in an amount equal to the
element’s pro rata share of the contract’s fair value
in accordance with the contractual delivery terms for each
element. Freight charges billed to customers are included in
sales and the related shipping costs are included in cost of
sales in our consolidated statements of income.


 



Revenues for long-term contracts, which include contracts that
exceed certain internal thresholds regarding the size and
duration of the project and provide for the receipt of progress
billings from the customer, are recorded on the percentage of
completion method with progress measured on a cost-to-cost
basis. Percentage of completion revenue represents less than 10%
of our consolidated sales in 2008.


 



Revenue on service and repair contracts is recognized after
services have been agreed to by the customer and rendered.
Revenues generated under fixed fee service and repair contracts
are recognized on a ratable basis over the term of the contract.
These contracts can range in duration, but generally extend for
up to five years. Fixed fee service contracts represent less
than 1% of our consolidated sales in 2008.


 



In certain instances, we provide guaranteed completion dates
under the terms of our contracts. Failure to meet contractual
delivery dates can result in late delivery penalties or
non-recoverable costs. In instances where the payment of such
costs are deemed to be probable, we perform a project
profitability analysis accounting for such costs as a reduction
of realizable revenues, which could potentially cause estimated
total project costs to exceed projected total revenues realized
from the project. In such instances, we would record reserves to
cover such excesses in the period they are determined, which
would adversely affect our results of operations and financial
position. In circumstances where the total projected reduced
revenues still exceed total projected costs, the incurrence of
unrealized incentive fees or non-recoverable costs generally
reduces profitability of the project at the time of subsequent
revenue recognition. Our reported results would change if
different estimates were used for contract costs or if different
estimates were used for contractual contingencies.


 




These excerpts taken from the FLS 10-K filed Feb 27, 2008.
Revenue Recognition
 
Revenues for product sales are recognized when the risks and rewards of ownership are transferred to the customers, which is based on the contractual delivery terms agreed to with the customer and fulfillment of all but inconsequential or perfunctory actions. In addition, our policy requires persuasive evidence of an arrangement, a fixed or determinable sales price and reasonable assurance of collectibility. For contracts containing multiple elements, each having a determinable fair value, we recognize revenue in an amount equal to the element’s pro rata share of the contract’s fair value in accordance with the contractual delivery terms for each element. Freight charges billed to customers are included in sales and the related shipping costs are included in cost of sales in our consolidated statements of income.
 
Revenues for long-term contracts, which include contracts that exceed certain internal thresholds regarding the size and duration of the project and provide for the receipt of progress billings from the customer, are recorded on the percentage of completion method with progress measured on a cost-to-cost basis. Percentage of completion revenue represents less than 14% of our consolidated sales in 2007.
 
Revenue on service and repair contracts is recognized after services have been agreed to by the customer and rendered. Revenues generated under fixed fee service and repair contracts are recognized on a ratable basis over the term of the contract. These contracts can range in duration, but generally extend for up to five years. Fixed fee service contracts represent less than 1% of our consolidated sales in 2007.
 
In certain instances, we provide guaranteed completion dates under the terms of our contracts. Failure to meet contractual delivery dates can result in late delivery penalties or non-recoverable costs. In instances where the payment of such costs are deemed to be probable, we perform a project profitability analysis accounting for such costs as a reduction of realizable revenues, which could potentially cause estimated total project costs to exceed projected total revenues realized from the project. In such instances, we would record reserves to cover such excesses in the period they are determined, which would adversely affect our results of operations and financial position. In circumstances where the total projected reduced revenues still exceed total projected costs, the incurrence of unrealized incentive fees or non-recoverable costs generally reduces profitability of the project at the time of subsequent revenue recognition. Our reported results would change if different estimates were used for contract costs or if different estimates were used for contractual contingencies.
 
Revenue
Recognition



 



Revenues for product sales are recognized when the risks and
rewards of ownership are transferred to the customers, which is
based on the contractual delivery terms agreed to with the
customer and fulfillment of all but inconsequential or
perfunctory actions. In addition, our policy requires persuasive
evidence of an arrangement, a fixed or determinable sales price
and reasonable assurance of collectibility. For contracts
containing multiple elements, each having a determinable fair
value, we recognize revenue in an amount equal to the
element’s pro rata share of the contract’s fair value
in accordance with the contractual delivery terms for each
element. Freight charges billed to customers are included in
sales and the related shipping costs are included in cost of
sales in our consolidated statements of income.


 



Revenues for long-term contracts, which include contracts that
exceed certain internal thresholds regarding the size and
duration of the project and provide for the receipt of progress
billings from the customer, are recorded on the percentage of
completion method with progress measured on a
cost-to-cost
basis. Percentage of completion revenue represents less than 14%
of our consolidated sales in 2007.


 



Revenue on service and repair contracts is recognized after
services have been agreed to by the customer and rendered.
Revenues generated under fixed fee service and repair contracts
are recognized on a ratable basis over the term of the contract.
These contracts can range in duration, but generally extend for
up to five years. Fixed fee service contracts represent less
than 1% of our consolidated sales in 2007.


 



In certain instances, we provide guaranteed completion dates
under the terms of our contracts. Failure to meet contractual
delivery dates can result in late delivery penalties or
non-recoverable costs. In instances where the payment of such
costs are deemed to be probable, we perform a project
profitability analysis accounting for such costs as a reduction
of realizable revenues, which could potentially cause estimated
total project costs to exceed projected total revenues realized
from the project. In such instances, we would record reserves to
cover such excesses in the period they are determined, which
would adversely affect our results of operations and financial
position. In circumstances where the total projected reduced
revenues still exceed total projected costs, the incurrence of
unrealized incentive fees or non-recoverable costs generally
reduces profitability of the project at the time of subsequent
revenue recognition. Our reported results would change if
different estimates were used for contract costs or if different
estimates were used for contractual contingencies.


 




This excerpt taken from the FLS 10-K filed Mar 1, 2007.
Revenue Recognition
 
Revenues for product sales are recognized when the risks and rewards of ownership are transferred to the customers, which is based on the contractual delivery terms agreed to with the customer and fulfillment of all but inconsequential or perfunctory actions. In addition, our policy requires persuasive evidence of an arrangement, a fixed or determinable sales price and reasonable assurance of collectibility. For contracts containing multiple


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elements, each having a determinable fair value, we recognize revenue in an amount equal to the elements’ pro rata share of the contract’s fair value in accordance with the contractual delivery terms for each element. If a customer arrangement requires formal acceptance, revenue is not recognized until formal acceptance has been received. Freight charges billed to customers are included in sales and the related shipping costs are included in cost of sales in our consolidated statements of income.
 
Revenues for long-term contracts, which include contracts that exceed certain internal thresholds regarding the size and duration of the project and provide for the receipt of progress billings from the customer, are recorded on the percentage of completion method with progress measured on a cost-to-cost basis. Percentage of completion revenue represents approximately 7% of our consolidated sales in 2006.
 
Revenue on service and repair contracts is recognized after services have been agreed to by the customer and rendered. Revenues generated under fixed fee service and repair contracts are recognized on a ratable basis over the term of the contract. These contracts can range in duration, but generally extend for up to five years. Fixed fee service contracts represent less than 1% of our consolidated sales in 2006.
 
In certain instances, we provide guaranteed completion dates under the terms of our contracts. Failure to meet contractual delivery dates can result in unrealized incentive fees or non-recoverable costs. In instances where the payment of such costs are deemed to be probable, we perform a project profitability analysis accounting for such costs as a reduction of realizable revenues, which could potentially cause estimated total project costs to exceed projected total revenues realized from the project. In such instances, we would record reserves to cover such excesses in the period they are determined, which would adversely affect our results of operations and financial position. In circumstances where the total projected reduced revenues still exceed total projected costs, the incurrence of unrealized incentive fees or non-recoverable costs generally reduces profitability of the project at the time of subsequent revenue recognition. Our reported results would change if different estimates were used for contract costs or if different estimates were used for contractual contingencies.
 
This excerpt taken from the FLS 10-K filed Jun 30, 2006.
Revenue Recognition
 
Revenues for products and short-term projects are recognized based on the shipping terms agreed to with the customer and fulfillment of all but inconsequential or perfunctory actions required, which is generally the point of title transfer. If the customer order requires formal acceptance, revenue is not recognized until formal acceptance has been received. For contracts containing multiple products, each having separable value, we generally recognize revenue on individual product shipments equal to the shipped products’ pro rata share of the contract’s fair value upon the fulfillment of all but inconsequential or perfunctory actions of the individual product shipment. For multiple deliverables under a single contract or arrangement, such as product delivery and installation, we separate the fair value of the product from the installation and recognize revenue on each element independently upon fulfillment of all but inconsequential or perfunctory actions. Our estimates mainly relate to the fair value determination of the underlying services or products. Revenue on service contracts is recognized after the services have been rendered and accepted by the customer. All revenue for products, short-term projects and service contracts require, prior to recognition, the persuasive evidence of an arrangement, a fixed or determinable sales price and reasonable assurance of collectibility.
 
Revenue for certain long-term large contracts is recorded on the percentage of completion method calculated on a cost-to-cost basis, in instances where reliable cost estimates exist. Percentage of completion revenue represents


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less than 5% of our consolidated revenues for each year presented, and is most prevalent in FPD. The percentage of completion method of revenue recognition requires us to prepare estimates of costs to complete contracts in progress, and in doing so we make judgments to evaluate contingencies such as potential variances in scheduled delivery and the cost of materials, labor costs and productivity, the impact of change orders, potential warranty liabilities and liquidated damage claims, contract disputes, and achievement of contractual performance standards. Changes in total estimated contract costs and resultant contract losses, if any, are recognized in the period in which they are determined.
 
Revenue generated under fixed fee service and repair contracts are recognized on a straight-line basis over the term of the contract. These contracts can range in duration, but generally extend for five years. Fixed fee service and repair contracts represent less than 5% of our consolidated revenue for each year presented, and are most prevalent in FSD.
 
In certain instances, we provide guaranteed completion dates under the terms of our contracts. Failure to meet schedule or agreed upon delivery dates can result in unrealized incentive fees or non-recoverable costs. In instances where the payments of such costs are likely, we perform project profitability analysis using such costs to reduce revenues realizable, which could cause estimated project costs to exceed projected revenues realized from the project. In such instances, we would record reserves to cover such excesses in the period they are determined, which would adversely affect our results of operations and financial position. In instances where the reduced revenues still exceed costs, the incurrence of the costs generally reduces profitability of the project at the time of subsequent revenue recognition. Our reported results would change if different estimates were used for contract costs or if different estimates were used for contractual contingencies.
 
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