x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
|
Oregon
|
|
93-0708501
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
|
|
27700 SW Parkway Avenue,
Wilsonville, Oregon
|
|
97070
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Large accelerated filer
|
x
|
|
Accelerated filer
|
¨
|
Non-accelerated filer
|
¨
|
|
Smaller reporting company
|
¨
|
|
|
|
Emerging growth company
|
¨
|
PART I. FINANCIAL INFORMATION
|
||
Item 1.
|
Financial Statements
|
|
|
||
|
||
|
||
|
||
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
PART II. OTHER INFORMATION
|
||
Item 1.
|
||
Item 1A.
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
Item 5.
|
||
Item 6.
|
||
FLIR SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(Unaudited)
|
|||||||||||||||
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Revenue
|
$
|
464,712
|
|
|
$
|
405,228
|
|
|
$
|
1,305,650
|
|
|
$
|
1,187,429
|
|
Cost of goods sold
|
241,821
|
|
|
213,852
|
|
|
684,706
|
|
|
635,041
|
|
||||
Gross profit
|
222,891
|
|
|
191,376
|
|
|
620,944
|
|
|
552,388
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Research and development
|
42,873
|
|
|
33,839
|
|
|
127,902
|
|
|
109,327
|
|
||||
Selling, general and administrative
|
92,932
|
|
|
76,688
|
|
|
280,240
|
|
|
239,623
|
|
||||
Total operating expenses
|
135,805
|
|
|
110,527
|
|
|
408,142
|
|
|
348,950
|
|
||||
Earnings from operations
|
87,086
|
|
|
80,849
|
|
|
212,802
|
|
|
203,438
|
|
||||
Interest expense
|
3,819
|
|
|
5,736
|
|
|
12,744
|
|
|
13,543
|
|
||||
Interest income
|
(488
|
)
|
|
(336
|
)
|
|
(1,114
|
)
|
|
(924
|
)
|
||||
Other (income) expense, net
|
(778
|
)
|
|
241
|
|
|
(2,465
|
)
|
|
138
|
|
||||
Earnings before income taxes
|
84,533
|
|
|
75,208
|
|
|
203,637
|
|
|
190,681
|
|
||||
Income tax provision
|
21,004
|
|
|
16,575
|
|
|
46,124
|
|
|
85,555
|
|
||||
Net earnings
|
$
|
63,529
|
|
|
$
|
58,633
|
|
|
$
|
157,513
|
|
|
$
|
105,126
|
|
|
|
|
|
|
|
|
|
||||||||
Net earnings per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.46
|
|
|
$
|
0.43
|
|
|
$
|
1.15
|
|
|
$
|
0.76
|
|
Diluted
|
$
|
0.46
|
|
|
$
|
0.43
|
|
|
$
|
1.13
|
|
|
$
|
0.76
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
137,849
|
|
|
136,963
|
|
|
137,030
|
|
|
137,438
|
|
||||
Diluted
|
139,419
|
|
|
137,938
|
|
|
138,853
|
|
|
138,594
|
|
FLIR SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(Unaudited)
|
|||||||||||||||
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net earnings
|
$
|
63,529
|
|
|
$
|
58,633
|
|
|
$
|
157,513
|
|
|
$
|
105,126
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
||||||||
Interest rate swap contracts:
|
|
|
|
|
|
|
|
||||||||
Fair value adjustment on interest rate swap contracts
|
—
|
|
|
292
|
|
|
187
|
|
|
(573
|
)
|
||||
Realized gain reclassified to earnings
|
(494
|
)
|
|
—
|
|
|
(494
|
)
|
|
—
|
|
||||
Unrealized gain on available-for-sale investments
|
(3
|
)
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
||||
Foreign currency translation adjustments
|
19,993
|
|
|
(7,724
|
)
|
|
55,788
|
|
|
(9,250
|
)
|
||||
Total other comprehensive income (loss)
|
19,496
|
|
|
(7,432
|
)
|
|
55,477
|
|
|
(9,823
|
)
|
||||
Comprehensive income
|
$
|
83,025
|
|
|
$
|
51,201
|
|
|
$
|
212,990
|
|
|
$
|
95,303
|
|
FLIR SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except for par value)
(Unaudited)
|
|||||||
|
September 30,
|
|
December 31,
|
||||
|
2017
|
|
2016
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
436,961
|
|
|
$
|
361,349
|
|
Accounts receivable, net
|
345,542
|
|
|
352,020
|
|
||
Inventories
|
413,005
|
|
|
371,371
|
|
||
Prepaid expenses and other current assets
|
86,570
|
|
|
79,917
|
|
||
Total current assets
|
1,282,078
|
|
|
1,164,657
|
|
||
Property and equipment, net
|
270,023
|
|
|
271,785
|
|
||
Deferred income taxes, net
|
51,179
|
|
|
45,243
|
|
||
Goodwill
|
930,846
|
|
|
801,406
|
|
||
Intangible assets, net
|
183,677
|
|
|
168,460
|
|
||
Other assets
|
48,472
|
|
|
168,155
|
|
||
Total assets
|
$
|
2,766,275
|
|
|
$
|
2,619,706
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
127,420
|
|
|
$
|
114,225
|
|
Deferred revenue
|
29,015
|
|
|
34,420
|
|
||
Accrued payroll and related liabilities
|
67,759
|
|
|
52,874
|
|
||
Accrued product warranties
|
16,193
|
|
|
17,476
|
|
||
Advance payments from customers
|
19,260
|
|
|
26,019
|
|
||
Accrued expenses
|
47,528
|
|
|
34,022
|
|
||
Accrued income taxes
|
46,175
|
|
|
51,017
|
|
||
Other current liabilities
|
14,588
|
|
|
16,659
|
|
||
Current portion, long-term debt
|
—
|
|
|
15,000
|
|
||
Total current liabilities
|
367,938
|
|
|
361,712
|
|
||
Long-term debt
|
420,369
|
|
|
501,921
|
|
||
Deferred income taxes
|
14,569
|
|
|
2,331
|
|
||
Accrued income taxes
|
14,054
|
|
|
9,643
|
|
||
Pension and other long-term liabilities
|
59,827
|
|
|
65,773
|
|
||
Commitments and contingencies
|
|
|
|
||||
Shareholders’ equity:
|
|
|
|
||||
Preferred stock, $0.01 par value, 10,000 shares authorized; no shares issued at September 30, 2017, and December 31, 2016
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value, 500,000 shares authorized, 138,414 and 136,334 shares issued at September 30, 2017, and December 31, 2016, respectively, and additional paid-in capital
|
72,117
|
|
|
12,139
|
|
||
Retained earnings
|
1,927,875
|
|
|
1,832,138
|
|
||
Accumulated other comprehensive loss
|
(110,474
|
)
|
|
(165,951
|
)
|
||
Total shareholders’ equity
|
1,889,518
|
|
|
1,678,326
|
|
||
Total liabilities and shareholders' equity
|
$
|
2,766,275
|
|
|
$
|
2,619,706
|
|
FLIR SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
|
|||||||
|
Nine Months Ended September 30,
|
||||||
|
2017
|
|
2016
|
||||
CASH PROVIDED BY OPERATING ACTIVITIES:
|
|
|
|
||||
Net earnings
|
$
|
157,513
|
|
|
$
|
105,126
|
|
Adjustments to reconcile net earnings to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
53,426
|
|
|
41,857
|
|
||
Deferred income taxes
|
(2,337
|
)
|
|
(200
|
)
|
||
Stock-based compensation arrangements
|
24,745
|
|
|
21,253
|
|
||
Other, net
|
(28,007
|
)
|
|
19,830
|
|
||
Increase (decrease) in cash, net of acquisitions, resulting from changes in:
|
|
|
|
||||
Accounts receivable
|
13,047
|
|
|
19,951
|
|
||
Inventories
|
(30,589
|
)
|
|
20,211
|
|
||
Prepaid expenses
|
(4,863
|
)
|
|
(3,129
|
)
|
||
Other assets
|
20,391
|
|
|
(18,861
|
)
|
||
Accounts payable
|
11,370
|
|
|
(35,507
|
)
|
||
Deferred revenue
|
(5,792
|
)
|
|
4,859
|
|
||
Accrued payroll and other liabilities
|
13,712
|
|
|
(7,839
|
)
|
||
Accrued income taxes
|
(6,647
|
)
|
|
53,461
|
|
||
Pension and other long-term liabilities
|
(6,633
|
)
|
|
1,595
|
|
||
Net cash provided by operating activities
|
209,336
|
|
|
222,607
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
||||
Additions to property and equipment
|
(31,861
|
)
|
|
(27,682
|
)
|
||
Proceeds from sale of assets
|
2,886
|
|
|
6,986
|
|
||
Business acquisitions, net of cash acquired
|
—
|
|
|
(42,445
|
)
|
||
Net cash used by investing activities
|
(28,975
|
)
|
|
(63,141
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
||||
Net proceeds of long-term debt, including current portion
|
—
|
|
|
524,826
|
|
||
Repayment of long-term debt
|
(97,500
|
)
|
|
(367,435
|
)
|
||
Repurchase of common stock
|
—
|
|
|
(66,057
|
)
|
||
Dividends paid
|
(61,776
|
)
|
|
(49,564
|
)
|
||
Proceeds from shares issued pursuant to stock-based compensation plans
|
44,231
|
|
|
7,347
|
|
||
Tax paid for net share exercises and issuance of vested restricted stock units
|
(9,505
|
)
|
|
(5,775
|
)
|
||
Other financing activities
|
(13
|
)
|
|
10
|
|
||
Net cash (used) provided by financing activities
|
(124,563
|
)
|
|
43,352
|
|
||
Effect of exchange rate changes on cash
|
19,814
|
|
|
2,085
|
|
||
Net increase in cash and cash equivalents
|
75,612
|
|
|
204,903
|
|
||
Cash and cash equivalents, beginning of year
|
361,349
|
|
|
472,785
|
|
||
Cash and cash equivalents, end of year
|
$
|
436,961
|
|
|
$
|
677,688
|
|
Note 1.
|
Basis of Presentation
|
Note 2.
|
Stock-based Compensation
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Cost of goods sold
|
$
|
788
|
|
|
$
|
881
|
|
|
$
|
1,820
|
|
|
$
|
2,351
|
|
Research and development
|
1,329
|
|
|
1,225
|
|
|
3,805
|
|
|
3,639
|
|
||||
Selling, general and administrative
|
7,774
|
|
|
4,766
|
|
|
19,120
|
|
|
15,263
|
|
||||
Stock-based compensation expense before income taxes
|
$
|
9,891
|
|
|
$
|
6,872
|
|
|
$
|
24,745
|
|
|
$
|
21,253
|
|
|
September 30,
|
||||||
|
2017
|
|
2016
|
||||
Capitalized in inventory
|
$
|
1,074
|
|
|
$
|
585
|
|
Note 3.
|
Net Earnings Per Share
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Numerator for earnings per share:
|
|
|
|
|
|
|
|
||||||||
Net earnings for basic and diluted earnings per share
|
$
|
63,529
|
|
|
$
|
58,633
|
|
|
$
|
157,513
|
|
|
$
|
105,126
|
|
Denominator for earnings per share:
|
|
|
|
|
|
|
|
||||||||
Weighted average number of common shares outstanding
|
137,849
|
|
|
136,963
|
|
|
137,030
|
|
|
137,438
|
|
||||
Assumed exercise of stock options and vesting of restricted stock awards, net of shares assumed reacquired under the treasury stock method
|
1,570
|
|
|
975
|
|
|
1,823
|
|
|
1,156
|
|
||||
Diluted shares outstanding
|
139,419
|
|
|
137,938
|
|
|
138,853
|
|
|
138,594
|
|
Note 4.
|
Fair Value of Financial Instruments
|
Level 1 – quoted prices in active markets for identical securities as of the reporting date;
|
Level 2 – other significant directly or indirectly observable inputs, including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, and observable market prices for identical instruments that are traded in less active markets; and
|
Level 3 – significant inputs that are generally less observable than objective sources, including our own assumptions in determining fair value.
|
|
September 30,
|
|
December 31,
|
||||
|
2017
|
|
2016
|
||||
European euro
|
$
|
129,730
|
|
|
$
|
156,352
|
|
Swedish kroner
|
75,879
|
|
|
48,555
|
|
||
Canadian dollar
|
46,374
|
|
|
15,645
|
|
||
British pound sterling
|
24,954
|
|
|
33,862
|
|
||
Brazilian real
|
10,386
|
|
|
2,747
|
|
||
Australian dollar
|
1,960
|
|
|
1,653
|
|
||
Japanese yen
|
898
|
|
|
3,251
|
|
||
Other
|
896
|
|
|
—
|
|
||
|
$
|
291,077
|
|
|
$
|
262,065
|
|
|
September 30, 2017
|
|
December 31, 2016
|
||||||||||||
|
Prepaid Expenses and Other Current Assets
|
|
Other Current Liabilities
|
|
Prepaid Expenses and Other Current Assets
|
|
Other Current Liabilities
|
||||||||
Foreign exchange contracts
|
$
|
2,269
|
|
|
$
|
2,737
|
|
|
$
|
2,369
|
|
|
$
|
75
|
|
Note 6.
|
Accounts Receivable
|
Note 7.
|
Inventories
|
|
September 30,
|
|
December 31,
|
||||
|
2017
|
|
2016
|
||||
Raw material and subassemblies
|
$
|
223,817
|
|
|
$
|
200,640
|
|
Work-in-progress
|
52,287
|
|
|
43,430
|
|
||
Finished goods
|
136,901
|
|
|
127,301
|
|
||
|
$
|
413,005
|
|
|
$
|
371,371
|
|
Note 9.
|
Goodwill
|
Balance, December 31, 2016
|
$
|
801,406
|
|
|
Goodwill from acquisitions
|
100,022
|
|
||
Currency translation adjustments
|
29,418
|
|
||
Balance, September 30, 2017
|
$
|
930,846
|
|
Note 11.
|
Credit Agreement
|
Note 12.
|
Accrued Product Warranties
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Accrued product warranties, beginning of period
|
$
|
19,530
|
|
|
$
|
17,492
|
|
|
$
|
20,845
|
|
|
$
|
16,514
|
|
Amounts paid for warranty services
|
(3,790
|
)
|
|
(3,624
|
)
|
|
(12,781
|
)
|
|
(13,221
|
)
|
||||
Warranty provisions for products sold
|
3,294
|
|
|
5,099
|
|
|
10,785
|
|
|
15,658
|
|
||||
Currency translation adjustments and other
|
90
|
|
|
1,025
|
|
|
275
|
|
|
1,041
|
|
||||
Accrued product warranties, end of period
|
$
|
19,124
|
|
|
$
|
19,992
|
|
|
$
|
19,124
|
|
|
$
|
19,992
|
|
|
|
|
|
|
|
|
|
||||||||
Current accrued product warranties, end of period
|
|
|
|
|
$
|
16,193
|
|
|
$
|
16,759
|
|
||||
Long-term accrued product warranties, end of period
|
|
|
|
|
$
|
2,931
|
|
|
$
|
3,233
|
|
|
September 30,
|
|
December 31,
|
||||
|
2017
|
|
2016
|
||||
Unsecured notes
|
$
|
425,000
|
|
|
$
|
425,000
|
|
Credit Agreement
|
—
|
|
|
97,500
|
|
||
Unamortized discounts and issuance costs of unsecured notes
|
(4,631
|
)
|
|
(5,579
|
)
|
||
|
$
|
420,369
|
|
|
$
|
516,921
|
|
Current portion, long-term debt
|
$
|
—
|
|
|
$
|
15,000
|
|
Long-term debt
|
$
|
420,369
|
|
|
$
|
501,921
|
|
Note 14.
|
Shareholders’ Equity
|
Common stock and additional paid-in capital, December 31, 2016
|
$
|
12,139
|
|
Common stock issued pursuant to stock-based compensation plans, net
|
34,726
|
|
|
Stock-based compensation
|
25,252
|
|
|
Common stock and additional paid-in capital, September 30, 2017
|
$
|
72,117
|
|
Note 14.
|
Shareholders’ Equity - (Continued)
|
Note 15.
|
Contingencies
|
Note 15.
|
Contingencies - (Continued)
|
Note 16.
|
Income Taxes
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Income tax provision
|
$
|
21,004
|
|
|
$
|
16,575
|
|
|
$
|
46,124
|
|
|
$
|
85,555
|
|
Effective tax rate
|
24.8
|
%
|
|
22.0
|
%
|
|
22.6
|
%
|
|
44.9
|
%
|
|
Tax Years:
|
United States Federal
|
2013 - 2015
|
State of California
|
2013 - 2015
|
State of Massachusetts
|
2013 - 2015
|
State of Oregon
|
2013 - 2015
|
Sweden
|
2012 - 2015
|
United Kingdom
|
2012 - 2015
|
Belgium
|
2011 - 2016
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Revenue—External Customers:
|
|
|
|
|
|
|
|
||||||||
Surveillance
|
$
|
146,805
|
|
|
$
|
136,402
|
|
|
$
|
394,742
|
|
|
$
|
373,993
|
|
Instruments
|
91,429
|
|
|
82,673
|
|
|
255,253
|
|
|
240,160
|
|
||||
Security
|
65,660
|
|
|
56,431
|
|
|
160,447
|
|
|
166,872
|
|
||||
OEM & Emerging Markets
|
87,206
|
|
|
62,719
|
|
|
259,418
|
|
|
167,544
|
|
||||
Maritime
|
42,256
|
|
|
40,586
|
|
|
145,909
|
|
|
147,469
|
|
||||
Detection
|
31,356
|
|
26,417
|
|
89,881
|
|
91,391
|
||||||||
|
$
|
464,712
|
|
|
$
|
405,228
|
|
|
$
|
1,305,650
|
|
|
$
|
1,187,429
|
|
Revenue—Intersegments:
|
|
|
|
|
|
|
|
||||||||
Surveillance
|
$
|
10,115
|
|
|
$
|
5,001
|
|
|
$
|
18,203
|
|
|
$
|
13,980
|
|
Instruments
|
929
|
|
|
709
|
|
|
2,916
|
|
|
3,498
|
|
||||
Security
|
2,931
|
|
|
4,267
|
|
|
9,697
|
|
|
10,575
|
|
||||
OEM & Emerging Markets
|
11,456
|
|
|
7,518
|
|
|
29,986
|
|
|
24,528
|
|
||||
Maritime
|
567
|
|
|
656
|
|
|
1,865
|
|
|
2,728
|
|
||||
Detection
|
2
|
|
|
—
|
|
|
3
|
|
|
31
|
|
||||
Eliminations
|
(26,000
|
)
|
|
(18,151
|
)
|
|
(62,670
|
)
|
|
(55,340
|
)
|
||||
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Segment operating income:
|
|
|
|
|
|
|
|
||||||||
Surveillance
|
$
|
44,941
|
|
|
$
|
41,428
|
|
|
$
|
104,313
|
|
|
$
|
103,888
|
|
Instruments
|
29,603
|
|
|
27,578
|
|
|
74,376
|
|
|
67,254
|
|
||||
Security
|
6,486
|
|
|
4,784
|
|
|
8,090
|
|
|
7,025
|
|
||||
OEM & Emerging Markets
|
26,931
|
|
|
20,658
|
|
|
77,628
|
|
|
48,100
|
|
||||
Maritime
|
4,466
|
|
|
3,155
|
|
|
19,060
|
|
|
16,482
|
|
||||
Detection
|
8,883
|
|
|
6,999
|
|
|
24,644
|
|
|
25,556
|
|
||||
|
$
|
121,310
|
|
|
$
|
104,602
|
|
|
$
|
308,111
|
|
|
$
|
268,305
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Consolidated segment operating income
|
$
|
121,310
|
|
|
$
|
104,602
|
|
|
$
|
308,111
|
|
|
$
|
268,305
|
|
Unallocated corporate expenses
|
(25,492
|
)
|
|
(16,514
|
)
|
|
(68,733
|
)
|
|
(49,186
|
)
|
||||
Amortization of purchased intangible assets
|
(7,102
|
)
|
|
(4,329
|
)
|
|
(20,854
|
)
|
|
(12,464
|
)
|
||||
Amortization of acquisition-related inventory step-up
|
—
|
|
|
—
|
|
|
(1,992
|
)
|
|
—
|
|
||||
SkyWatch product quality accrual
|
(1,088
|
)
|
|
(2,000
|
)
|
|
(3,088
|
)
|
|
(2,000
|
)
|
||||
Restructuring charges
|
(542
|
)
|
|
(910
|
)
|
|
(642
|
)
|
|
(1,217
|
)
|
||||
Consolidated earnings from operations
|
87,086
|
|
|
80,849
|
|
|
212,802
|
|
|
203,438
|
|
||||
Interest and non-operating expense, net
|
(2,553
|
)
|
|
(5,641
|
)
|
|
(9,165
|
)
|
|
(12,757
|
)
|
||||
Consolidated earnings before income taxes
|
$
|
84,533
|
|
|
$
|
75,208
|
|
|
$
|
203,637
|
|
|
$
|
190,681
|
|
|
September 30,
|
|
December 31,
|
||||
|
2017
|
|
2016
|
||||
Segment assets (accounts receivable, net and inventories):
|
|
|
|
||||
Surveillance
|
$
|
290,353
|
|
|
$
|
283,324
|
|
Instruments
|
132,642
|
|
|
114,681
|
|
||
Security
|
95,063
|
|
|
93,174
|
|
||
OEM & Emerging Markets
|
141,212
|
|
|
144,862
|
|
||
Maritime
|
65,276
|
|
|
61,494
|
|
||
Detection
|
34,001
|
|
|
25,856
|
|
||
|
$
|
758,547
|
|
|
$
|
723,391
|
|
|
September 30,
|
|
December 31,
|
||||
|
2017
|
|
2016
|
||||
Segment goodwill:
|
|
|
|
||||
Surveillance
|
$
|
259,400
|
|
|
$
|
152,383
|
|
Instruments
|
153,677
|
|
|
147,595
|
|
||
Security
|
111,883
|
|
|
102,983
|
|
||
OEM & Emerging Markets
|
255,490
|
|
|
252,647
|
|
||
Maritime
|
102,384
|
|
|
97,860
|
|
||
Detection
|
48,012
|
|
|
47,938
|
|
||
|
$
|
930,846
|
|
|
$
|
801,406
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
United States
|
$
|
250,755
|
|
|
$
|
229,350
|
|
|
$
|
696,612
|
|
|
$
|
647,938
|
|
Europe
|
91,529
|
|
|
71,949
|
|
|
265,842
|
|
|
240,656
|
|
||||
Asia
|
56,416
|
|
|
42,639
|
|
|
170,061
|
|
|
133,877
|
|
||||
Middle East/Africa
|
26,437
|
|
|
41,889
|
|
|
86,826
|
|
|
98,231
|
|
||||
Canada/Latin America
|
39,575
|
|
|
19,401
|
|
|
86,309
|
|
|
66,727
|
|
||||
|
$
|
464,712
|
|
|
$
|
405,228
|
|
|
$
|
1,305,650
|
|
|
$
|
1,187,429
|
|
|
|
|
December 31, 2016
|
||||
|
September 30, 2017
|
|
(as reclassified)
|
||||
United States
|
$
|
686,191
|
|
|
$
|
676,007
|
|
Europe
|
485,216
|
|
|
490,089
|
|
||
Canada/Latin America
|
253,051
|
|
|
235,921
|
|
||
Other foreign
|
8,560
|
|
|
7,789
|
|
||
|
$
|
1,433,018
|
|
|
$
|
1,409,806
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
United States government
|
$
|
117,797
|
|
|
$
|
112,735
|
|
|
$
|
345,856
|
|
|
$
|
298,476
|
|
Note 18.
|
Business Acquisitions
|
Cash acquired
|
$
|
2,994
|
|
Other tangible assets and liabilities, net
|
35,064
|
|
|
Net deferred taxes
|
(2,438
|
)
|
|
Identifiable intangible assets
|
39,800
|
|
|
Goodwill
|
183,741
|
|
|
Total purchase price
|
$
|
259,161
|
|
|
Estimated
Useful Life |
|
Amount
|
||
Developed technology
|
10 years
|
|
$
|
23,100
|
|
Customer relationships
|
7 years
|
|
13,200
|
|
|
Backlog
|
1 year
|
|
2,300
|
|
|
Non-Competition Agreements
|
5 years
|
|
1,000
|
|
|
Other
|
n/a
|
|
200
|
|
|
|
|
|
$
|
39,800
|
|
Cash acquired
|
$
|
11,706
|
|
Other tangible assets and liabilities, net
|
(900
|
)
|
|
Net deferred taxes
|
(7,387
|
)
|
|
Identifiable intangible assets
|
31,400
|
|
|
Goodwill
|
99,269
|
|
|
Total purchase price
|
$
|
134,088
|
|
|
Estimated
Useful Life |
|
Amount
|
||
Developed technology
|
8 years
|
|
$
|
23,400
|
|
Customer relationships
|
7 years
|
|
3,500
|
|
|
Patents
|
8 years
|
|
3,100
|
|
|
Trade name
|
8 years
|
|
1,400
|
|
|
|
|
|
$
|
31,400
|
|
Note 19.
|
Subsequent Events
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Revenue
|
$
|
146.8
|
|
|
$
|
136.4
|
|
|
$
|
394.7
|
|
|
$
|
374.0
|
|
Earnings from operations
|
44.9
|
|
|
41.4
|
|
|
104.3
|
|
|
103.9
|
|
||||
Operating margin
|
30.6
|
%
|
|
30.4
|
%
|
|
26.4
|
%
|
|
27.8
|
%
|
||||
Backlog
|
|
|
|
|
395
|
|
|
363
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Revenue
|
$
|
91.4
|
|
|
$
|
82.7
|
|
|
$
|
255.3
|
|
|
$
|
240.2
|
|
Earnings from operations
|
29.6
|
|
|
27.6
|
|
|
74.4
|
|
|
67.3
|
|
||||
Operating margin
|
32.4
|
%
|
|
33.4
|
%
|
|
29.1
|
%
|
|
28.0
|
%
|
||||
Backlog
|
|
|
|
|
34
|
|
|
27
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Revenue
|
$
|
65.7
|
|
|
$
|
56.4
|
|
|
$
|
160.4
|
|
|
$
|
166.9
|
|
Earnings from operations
|
6.5
|
|
|
4.8
|
|
|
8.1
|
|
|
7.0
|
|
||||
Operating margin
|
9.9
|
%
|
|
8.5
|
%
|
|
5.0
|
%
|
|
4.2
|
%
|
||||
Backlog
|
|
|
|
|
24
|
|
|
23
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Revenue
|
$
|
87.2
|
|
|
$
|
62.7
|
|
|
$
|
259.4
|
|
|
$
|
167.5
|
|
Earnings from operations
|
26.9
|
|
|
20.7
|
|
|
77.6
|
|
|
48.1
|
|
||||
Operating margin
|
30.9
|
%
|
|
32.9
|
%
|
|
29.9
|
%
|
|
28.7
|
%
|
||||
Backlog
|
|
|
|
|
162
|
|
|
139
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Revenue
|
$
|
42.3
|
|
|
$
|
40.6
|
|
|
$
|
145.9
|
|
|
$
|
147.5
|
|
Earnings from operations
|
4.5
|
|
|
3.2
|
|
|
19.1
|
|
|
16.5
|
|
||||
Operating margin
|
10.6
|
%
|
|
7.8
|
%
|
|
13.1
|
%
|
|
11.2
|
%
|
||||
Backlog
|
|
|
|
|
16
|
|
|
24
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Revenue
|
$
|
31.4
|
|
|
$
|
26.4
|
|
|
$
|
89.9
|
|
|
$
|
91.4
|
|
Earnings from operations
|
8.9
|
|
|
7.0
|
|
|
24.6
|
|
|
25.6
|
|
||||
Operating margin
|
28.3
|
%
|
|
26.5
|
%
|
|
27.4
|
%
|
|
28.0
|
%
|
||||
Backlog
|
|
|
|
|
78
|
|
|
68
|
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
•
|
the imposition of and changes to governmental licensing restrictions and controls impacting our technology and products;
|
•
|
restrictions and prohibitions on the export of technology and products, including recent changes in regulation prohibiting the sale of certain of our products to certain end users without a license;
|
•
|
international trade restrictions;
|
•
|
difficulty in collecting receivables and governmental restrictions with respect to currency;
|
•
|
inadequate protection of intellectual property;
|
•
|
labor union activities;
|
•
|
changes in tariffs and taxes;
|
•
|
restrictions on repatriation of earnings;
|
•
|
restriction on the importation and exportation of goods and services;
|
•
|
risks, costs, impacts and obligations associated with the United States Foreign Corrupt Practices Act ("FCPA"), and other anti-bribery and anti-corruption laws applicable to us, and laws applicable to global trade and United States exports and
|
•
|
difficulties in staffing and managing international operations; and
|
•
|
political and economic instability.
|
•
|
the timing, number and size of orders from, and shipments to, our customers, as well as the relative mix of those orders;
|
•
|
variations in the volume of orders for a particular product or product line in a particular fiscal quarter;
|
•
|
the size and timing of new contract awards;
|
•
|
the timing of the release of government funds for procurement of our products; and
|
•
|
the timing of orders and shipments within a given fiscal quarter.
|
•
|
the seasonal pattern of contracting by the United States government and certain foreign governments;
|
•
|
the desire of customers to take delivery of equipment prior to fiscal year ends due to funding considerations; and
|
•
|
the tendency of commercial enterprises to utilize fully annual capital budgets prior to expiration.
|
•
|
the jurisdictions in which profits are determined to be earned and taxed;
|
•
|
the resolution of issues arising from tax audits with various tax authorities;
|
•
|
changes in the valuation of our deferred tax assets and liabilities;
|
•
|
adjustments to estimated taxes upon finalization of various tax returns;
|
•
|
increases in expenses not deductible for tax purposes;
|
•
|
changes in available tax credits;
|
•
|
changes in share-based compensation expense;
|
•
|
changes in tax laws or the interpretation of such tax laws and changes in generally accepted accounting principles;
|
•
|
changes in foreign tax rates or agreed upon foreign taxable base; and/or
|
•
|
the repatriation of earnings from outside the United States for which we have not previously provided for United States taxes.
|
ITEM 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
ITEM 5.
|
OTHER INFORMATION
|
ITEM 6.
|
EXHIBITS
|
Number
|
Description
|
10.1
|
|
10.2
|
|
10.3
|
|
10.4
|
|
10.5
|
|
31.1
|
|
31.2
|
|
32.1
|
|
32.2
|
|
101.INS
|
XBRL Instance Document
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
FLIR SYSTEMS, INC.
|
|
|
|
Date October 27, 2017
|
|
/s/ Shane R. Harrison
|
|
|
Shane R. Harrison
|
|
|
Sr. Vice President, Corporate Development & Strategy and Interim Chief Financial Officer
|
|
|
(Duly Authorized and Principal Financial Officer)
|
(b)
|
Employee has been represented in the preparation, negotiation, and execution of this Agreement by legal counsel of Employee’s own choice or has elected not to retain legal counsel;
|
(c)
|
Employee understands the terms and consequences of this Agreement and of the releases it contains;
|
(d)
|
Employee is fully aware of the legal and binding effect of this Agreement; and
|
(e)
|
Employee has not relied upon any representations or statements made by the Company that are not specifically set forth in this Agreement.
|
Grant Type
|
Grant Date
|
Unvested Options & RSUs to Vest in Full
|
Option Strike Price
|
Option
|
4/28/2015
|
28,872
|
$31.15
|
Option
|
4/28/2016
|
69,334
|
$30.75
|
Option
|
4/28/2017
|
43,605
|
$36.73
|
RSU
|
4/28/2015
|
6,213
|
|
RSU
|
4/28/2016
|
13,800
|
|
RSU
|
4/28/2017
|
10,548
|
|
To:
|
Tom Surran
|
From:
|
Paul Zaninovich – Vice President Global Human Resources
|
Date:
|
April 24, 2017
|
Re:
|
Severance Plan – Executive Officer
|
Name of Plan:
|
FLIR Systems, Inc. Severance Plan
|
Name, Address and Phone Number
|
FLIR Systems, Inc.
|
of Plan Sponsor:
|
27700 SW Parkway Avenue
|
of Plan Administrator:
|
Attention: Chairman Compensation Committee
|
Agent for Service of
|
Legal process may be served on the General Counsel of
|
Legal Process:
|
FLIR Systems, Inc. (acting on behalf of the Plan Administrator), at the address shown above for the Plan Administrator.
|
•
|
Examine, without charge, at the Administrator’s office and at other specified locations (such as worksites), all documents governing the Plan, including a copy of the latest annual report (Form 5500 Series), if any, filed by the Plan with the U.S. Department of Labor and available at the Public Disclosure Room of the Employee Benefits Security Administration; and
|
•
|
Obtain, upon written request to the Administrator, copies of documents governing the operation of the Plan, including copies of the latest annual report (Form 5500 Series), if any, and an updated summary plan description. The Administrator may assign a reasonable charge for the copies.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of FLIR Systems, Inc.;
|
2.
|
Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluations; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control of financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date October 27, 2017
|
|
/s/ James J. Cannon
|
|
|
James J. Cannon
|
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of FLIR Systems, Inc.;
|
2.
|
Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluations; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control of financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date October 27, 2017
|
|
/s/ Shane R. Harrison
|
|
|
Shane R. Harrison
|
|
|
Interim Chief Financial Officer
|
Date October 27, 2017
|
|
/s/ James J. Cannon
|
|
|
James J. Cannon
|
|
|
President and Chief Executive Officer
|
Date October 27, 2017
|
|
/s/ Shane R. Harrison
|
|
|
Shane R. Harrison
|
|
|
Interim Chief Financial Officer
|