☒
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
For the fiscal year ended
|
December 31, 2019
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
For the transition period from to
|
Oregon
|
|
93-0708501
|
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
|
|
|
|
|
27700 SW Parkway Avenue,
|
|
97070
|
|
Wilsonville,
|
Oregon
|
|
|
(Address of principal executive offices)
|
|
(Zip code)
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Title of Each Class
|
Trading Symbols(s)
|
Name of Each Exchange on Which Registered
|
|
Common Stock, $0.01 par value
|
FLIR
|
NASDAQ
|
Global Select Market
|
Large accelerated filer
|
☒
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☐
|
Smaller reporting company
|
☐
|
|
|
Emerging growth company
|
☐
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PART I
|
||
Item 1
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||
Item 1A
|
||
Item 1B
|
||
Item 2
|
||
Item 3
|
||
Item 4
|
||
PART II
|
||
Item 5
|
||
Item 6
|
||
Item 7
|
||
Item 7A
|
||
Item 8
|
||
Item 9
|
||
Item 9A
|
||
Item 9B
|
||
PART III
|
||
Item 10
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||
Item 11
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||
Item 12
|
||
Item 13
|
||
Item 14
|
||
PART IV
|
||
Item 15
|
||
Item 16
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||
ITEM 1.
|
BUSINESS
|
ITEM 1A.
|
RISK FACTORS
|
•
|
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 any applicable changes in regulation prohibiting the sale of certain of our products to certain end users without a license;
|
•
|
international trade restrictions, such as imposition of bans on sales of goods or services to one or more of our significant foreign customers;
|
•
|
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 prior 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 costs and penalties from violations of such laws and related regulations, including the costs associated with required remedial and other increased compliance activity;
|
•
|
difficulties in staffing and managing international operations;
|
•
|
instability in economic or political conditions, inflation, recession, actual or anticipated military or political conflicts, and potential impact due to the exit of the United Kingdom (the "U.K.") from the European Union (the "EU"), colloquially referred to as "Brexit"; and
|
•
|
complications due to natural, nuclear or other disasters, such as outbreak of coronavirus.
|
•
|
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 3.
|
LEGAL PROCEEDINGS
|
ITEM 5.
|
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
||||||||||||
FLIR Systems, Inc.
|
|
$
|
100.00
|
|
|
$
|
88.12
|
|
|
$
|
115.36
|
|
|
$
|
150.90
|
|
|
$
|
142.69
|
|
|
$
|
172.95
|
|
S&P 500 Index
|
|
100.00
|
|
|
101.38
|
|
|
113.51
|
|
|
138.29
|
|
|
132.23
|
|
|
173.86
|
|
||||||
S&P 500 Electronic Equipment Instruments &
Components Index
|
|
100.00
|
|
|
93.20
|
|
|
115.92
|
|
|
156.95
|
|
|
137.34
|
|
|
177.18
|
|
Period
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1)
|
|
Maximum Number of Shares that May Yet Be Purchased at December 31, 2019 Under the Plans or Programs(1)
|
|||||
February 1 to February 28, 2019
|
95,581
|
|
|
$
|
52.31
|
|
|
95,581
|
|
|
|
|
March 1 to March 31, 2019
|
403,088
|
|
|
$
|
49.61
|
|
|
403,088
|
|
|
|
|
May 1 to May 31, 2019
|
488,445
|
|
|
$
|
51.18
|
|
|
488,445
|
|
|
|
|
July 1 to July 31, 2019
|
147,908
|
|
|
$
|
50.71
|
|
|
147,908
|
|
|
|
|
August 1 to August 31, 2019
|
1,413,415
|
|
|
$
|
47.76
|
|
|
1,413,415
|
|
|
|
|
November 1 to November 30, 2019
|
44
|
|
|
$
|
44.20
|
|
|
44
|
|
|
|
|
Total
|
2,548,481
|
|
|
$
|
49.05
|
|
|
2,548,481
|
|
|
12,451,519
|
|
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
Year Ended December 31,(1)
|
|||||||
|
2019
|
|
2018
|
|
2017
|
|||
Revenue
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of goods sold
|
50.7
|
|
|
49.3
|
|
|
52.3
|
|
Gross margin
|
49.3
|
|
|
50.7
|
|
|
47.7
|
|
Operating expenses:
|
|
|
|
|
|
|||
Research and development
|
10.8
|
|
|
9.9
|
|
|
9.5
|
|
Selling, general and administrative
|
23.4
|
|
|
21.8
|
|
|
20.8
|
|
Restructuring expenses
|
0.5
|
|
|
0.3
|
|
|
—
|
|
Loss on sale of business
|
—
|
|
|
0.8
|
|
|
1.3
|
|
Total operating expenses
|
34.8
|
|
|
32.8
|
|
|
31.6
|
|
Earnings from operations
|
14.5
|
|
|
17.9
|
|
|
16.1
|
|
Interest expense
|
1.5
|
|
|
0.9
|
|
|
0.9
|
|
Interest income
|
(0.1
|
)
|
|
(0.2
|
)
|
|
(0.1
|
)
|
Other expense (income), net
|
0.3
|
|
|
—
|
|
|
(0.2
|
)
|
Earnings before income taxes
|
12.8
|
|
|
17.3
|
|
|
15.5
|
|
Income tax provision
|
3.7
|
|
|
1.4
|
|
|
9.5
|
|
Net earnings
|
9.1
|
%
|
|
15.9
|
%
|
|
6.0
|
%
|
(1)
|
Totals may not recompute due to rounding.
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Revenue
|
$
|
737.7
|
|
|
$
|
717.9
|
|
|
$
|
672.1
|
|
Earnings from operations
|
240.8
|
|
|
216.9
|
|
|
199.9
|
|
|||
Operating margin
|
32.7
|
%
|
|
30.2
|
%
|
|
29.7
|
%
|
|||
Backlog
|
$
|
189.0
|
|
|
$
|
164.5
|
|
|
$
|
191.5
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Revenue
|
$
|
794.9
|
|
|
$
|
663.4
|
|
|
$
|
629.1
|
|
Earnings from operations
|
207.4
|
|
|
199.7
|
|
|
179.2
|
|
|||
Operating margin
|
26.1
|
%
|
|
30.1
|
%
|
|
28.5
|
%
|
|||
Backlog
|
$
|
434.6
|
|
|
$
|
391.1
|
|
|
$
|
394.5
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Revenue
|
$
|
354.4
|
|
|
$
|
394.4
|
|
|
$
|
499.2
|
|
Earnings from operations
|
45.7
|
|
|
57.4
|
|
|
56.1
|
|
|||
Operating margin
|
12.9
|
%
|
|
14.6
|
%
|
|
11.2
|
%
|
|||
Backlog
|
$
|
48.9
|
|
|
$
|
46.7
|
|
|
$
|
65.8
|
|
|
Payments Due by Period
|
||||||||||||||||||
|
Total
|
|
Less than
1 Year
|
|
1 – 3
Years
|
|
3 – 5
Years
|
|
More than
5 Years
|
||||||||||
Long-term debt, including interest
|
$
|
713,794
|
|
|
$
|
33,338
|
|
|
$
|
469,448
|
|
|
$
|
211,008
|
|
|
$
|
—
|
|
Operating leases
|
43,539
|
|
|
11,812
|
|
|
17,629
|
|
|
6,526
|
|
|
7,572
|
|
|||||
Post-retirement obligations
|
2,377
|
|
|
280
|
|
|
532
|
|
|
504
|
|
|
1,061
|
|
|||||
Other obligations
|
1,125
|
|
|
130
|
|
|
260
|
|
|
260
|
|
|
475
|
|
|||||
|
$
|
760,835
|
|
|
$
|
45,560
|
|
|
$
|
487,869
|
|
|
$
|
218,298
|
|
|
$
|
9,108
|
|
ITEM 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
Statement
|
Page
|
–
|
Inspecting management prepared tax positions and external tax opinion documentation and comparing it to interpretation of tax law;
|
–
|
Inspecting other relevant cases and evaluating impact to the Company’s positions;
|
–
|
Performing independent evaluation of tax positions and assumptions and comparing the results to the Company’s position, which includes assessing the need for an uncertain tax position liability and disclosure; and
|
–
|
Inquiring with external counsel through meetings on the current status and facts of matters which may impact the probability of the outcome of uncertain tax positions.
|
–
|
Evaluating the royalty rate by comparing to a set of comparable licensing agreements and implying what royalty rate could be supported based on a projected margin of the acquired companies;
|
–
|
Evaluating the WACC by developing an independent calculation using publicly available market data and comparing the result to the Company’s WACC; and
|
–
|
Evaluating the discount rates by independently developing an internal rate of return (IRR) and weighted average cost of capital (WACC), and reconciling the results to the weighted average return on assets (WARA) calculation.
|
FLIR SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
|
|||||||||||
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Revenue
|
$
|
1,887,026
|
|
|
$
|
1,775,686
|
|
|
$
|
1,800,434
|
|
Cost of goods sold
|
957,523
|
|
|
875,368
|
|
|
941,658
|
|
|||
Gross profit
|
929,503
|
|
|
900,318
|
|
|
858,776
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Research and development
|
204,207
|
|
|
176,281
|
|
|
170,735
|
|
|||
Selling, general and administrative
|
441,937
|
|
|
386,869
|
|
|
373,867
|
|
|||
Restructuring expenses
|
10,099
|
|
|
4,854
|
|
|
625
|
|
|||
Loss on sale of business
|
—
|
|
|
13,708
|
|
|
23,588
|
|
|||
Total operating expenses
|
656,243
|
|
|
581,712
|
|
|
568,815
|
|
|||
Earnings from operations
|
273,260
|
|
|
318,606
|
|
|
289,961
|
|
|||
Interest expense
|
27,711
|
|
|
16,147
|
|
|
16,804
|
|
|||
Interest income
|
(2,651
|
)
|
|
(3,901
|
)
|
|
(1,764
|
)
|
|||
Other expense (income), net
|
6,284
|
|
|
(743
|
)
|
|
(4,144
|
)
|
|||
Earnings before income taxes
|
241,916
|
|
|
307,103
|
|
|
279,065
|
|
|||
Income tax provision
|
70,319
|
|
|
24,678
|
|
|
171,842
|
|
|||
Net earnings
|
$
|
171,597
|
|
|
$
|
282,425
|
|
|
$
|
107,223
|
|
|
|
|
|
|
|
||||||
Net earnings per share:
|
|
|
|
|
|
||||||
Basic earnings per share
|
$
|
1.27
|
|
|
$
|
2.05
|
|
|
$
|
0.78
|
|
Diluted earnings per share
|
$
|
1.26
|
|
|
$
|
2.01
|
|
|
$
|
0.77
|
|
FLIR SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
|
|||||||||||
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
|
|
||||||
Net earnings
|
$
|
171,597
|
|
|
$
|
282,425
|
|
|
$
|
107,223
|
|
Other comprehensive (loss) income, net of tax:
|
|
|
|
|
|
||||||
Change in minimum liability for pension plans, net of tax effects of ($24), ($138) and $477, respectively
|
(58
|
)
|
|
(338
|
)
|
|
1,271
|
|
|||
Fair value adjustment in interest rate swap contracts, net of tax effects of $265, $0 and $1, respectively
|
(796
|
)
|
|
—
|
|
|
187
|
|
|||
Realized gain on interest rate swap contracts reclassified to earnings, net of tax effect of ($121)
|
—
|
|
|
—
|
|
|
(494
|
)
|
|||
Unrealized gain (loss) on available-for-sale investments
|
4
|
|
|
—
|
|
|
(4
|
)
|
|||
Foreign currency translation adjustments
|
(16,003
|
)
|
|
(35,394
|
)
|
|
51,631
|
|
|||
Total other comprehensive (loss) income
|
(16,853
|
)
|
|
(35,732
|
)
|
|
52,591
|
|
|||
Comprehensive income
|
$
|
154,744
|
|
|
$
|
246,693
|
|
|
$
|
159,814
|
|
FLIR SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except for par value)
|
|||||||
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
284,592
|
|
|
$
|
512,144
|
|
Accounts receivable, net
|
318,652
|
|
|
323,746
|
|
||
Inventories
|
388,762
|
|
|
352,107
|
|
||
Prepaid expenses and other current assets
|
116,728
|
|
|
104,650
|
|
||
Total current assets
|
1,108,734
|
|
|
1,292,647
|
|
||
Property and equipment, net
|
255,905
|
|
|
247,407
|
|
||
Deferred income taxes, net
|
39,983
|
|
|
100,620
|
|
||
Goodwill
|
1,364,596
|
|
|
904,571
|
|
||
Intangible assets, net
|
247,514
|
|
|
146,845
|
|
||
Other assets
|
120,809
|
|
|
89,152
|
|
||
Total assets
|
$
|
3,137,541
|
|
|
$
|
2,781,242
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
158,033
|
|
|
$
|
95,496
|
|
Deferred revenue
|
28,587
|
|
|
32,703
|
|
||
Accrued payroll and related liabilities
|
72,476
|
|
|
81,118
|
|
||
Accrued product warranties
|
14,611
|
|
|
15,204
|
|
||
Advance payments from customers
|
28,005
|
|
|
19,691
|
|
||
Accrued expenses
|
40,815
|
|
|
41,761
|
|
||
Accrued income taxes
|
14,735
|
|
|
13,855
|
|
||
Other current liabilities
|
27,349
|
|
|
16,186
|
|
||
Credit facility
|
16,000
|
|
|
—
|
|
||
Long-term debt, current portion
|
12,444
|
|
|
—
|
|
||
Total current liabilities
|
413,055
|
|
|
316,014
|
|
||
Long-term debt, net of current portion
|
648,419
|
|
|
421,948
|
|
||
Deferred income taxes
|
53,544
|
|
|
22,927
|
|
||
Accrued income taxes
|
55,514
|
|
|
76,435
|
|
||
Other long-term liabilities
|
95,576
|
|
|
67,132
|
|
||
Commitments and contingencies (Notes 14 and 15)
|
|
|
|
|
|
||
Shareholders’ equity:
|
|
|
|
||||
Preferred stock, $0.01 par value, 10,000 shares authorized; no shares issued at December 31, 2019 or 2018
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value, 500,000 shares authorized, 134,394 and 135,516 shares issued at December 31, 2019 and 2018, respectively, and additional paid-in capital
|
16,692
|
|
|
1,355
|
|
||
Retained earnings
|
2,020,686
|
|
|
2,024,523
|
|
||
Accumulated other comprehensive loss
|
(165,945
|
)
|
|
(149,092
|
)
|
||
Total shareholders’ equity
|
1,871,433
|
|
|
1,876,786
|
|
||
Total liabilities and shareholders' equity
|
$
|
3,137,541
|
|
|
$
|
2,781,242
|
|
FLIR SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(in thousands)
|
||||||||||||||||||
|
Common Stock and
Additional
Paid-in Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Earnings
(Loss)
|
|
Total
Shareholders'
Equity
|
|||||||||||
|
Shares
|
|
Amount
|
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance, December 31, 2016
|
136,334
|
|
|
$
|
12,139
|
|
|
$
|
1,832,138
|
|
|
$
|
(165,951
|
)
|
|
$
|
1,678,326
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Net earnings
|
—
|
|
|
—
|
|
|
107,223
|
|
|
—
|
|
|
107,223
|
|
||||
Common stock issued pursuant to stock-based compensation plans, net of shares withheld for taxes
|
2,535
|
|
|
47,510
|
|
|
—
|
|
|
—
|
|
|
47,510
|
|
||||
Stock-based compensation
|
—
|
|
|
31,513
|
|
|
—
|
|
|
—
|
|
|
31,513
|
|
||||
Dividends paid
|
—
|
|
|
—
|
|
|
(82,605
|
)
|
|
—
|
|
|
(82,605
|
)
|
||||
Other comprehensive earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
52,591
|
|
|
52,591
|
|
||||
Balance, December 31, 2017
|
138,869
|
|
|
91,162
|
|
|
1,856,756
|
|
|
(113,360
|
)
|
|
1,834,558
|
|
||||
|
|
|
|
|
|
|
|
|
|
|||||||||
Adoption of ASC 606 and ASU 2016-16(1)
|
—
|
|
|
—
|
|
|
80,280
|
|
|
—
|
|
|
80,280
|
|
||||
Net earnings
|
—
|
|
|
—
|
|
|
282,425
|
|
|
—
|
|
|
282,425
|
|
||||
Repurchase of common stock
|
(4,986
|
)
|
|
(136,891
|
)
|
|
(106,815
|
)
|
|
—
|
|
|
(243,706
|
)
|
||||
Common stock issued pursuant to stock-based compensation plans, net of shares withheld for taxes
|
1,633
|
|
|
12,896
|
|
|
—
|
|
|
—
|
|
|
12,896
|
|
||||
Stock-based compensation
|
—
|
|
|
34,188
|
|
|
—
|
|
|
—
|
|
|
34,188
|
|
||||
Dividends paid
|
—
|
|
|
—
|
|
|
(88,123
|
)
|
|
—
|
|
|
(88,123
|
)
|
||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(35,732
|
)
|
|
(35,732
|
)
|
||||
Balance, December 31, 2018
|
135,516
|
|
|
1,355
|
|
|
2,024,523
|
|
|
(149,092
|
)
|
|
1,876,786
|
|
||||
|
|
|
|
|
|
|
|
|
|
|||||||||
Adjustment of DTA under ASU 2016-16(2)
|
—
|
|
|
—
|
|
|
3,439
|
|
|
—
|
|
|
3,439
|
|
||||
Net earnings
|
—
|
|
|
—
|
|
|
171,597
|
|
|
—
|
|
|
171,597
|
|
||||
Repurchase of common stock
|
(2,549
|
)
|
|
(37,819
|
)
|
|
(87,179
|
)
|
|
—
|
|
|
(124,998
|
)
|
||||
Common stock issued pursuant to stock-based compensation plans, net of shares withheld for taxes
|
1,427
|
|
|
16,425
|
|
|
—
|
|
|
—
|
|
|
16,425
|
|
||||
Stock-based compensation
|
—
|
|
|
36,731
|
|
|
—
|
|
|
—
|
|
|
36,731
|
|
||||
Dividends paid
|
—
|
|
|
—
|
|
|
(91,694
|
)
|
|
—
|
|
|
(91,694
|
)
|
||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(16,853
|
)
|
|
(16,853
|
)
|
||||
Balance, December 31, 2019
|
134,394
|
|
|
$
|
16,692
|
|
|
$
|
2,020,686
|
|
|
$
|
(165,945
|
)
|
|
$
|
1,871,433
|
|
FLIR SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
|
|||||||||||
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
CASH PROVIDED BY OPERATING ACTIVITIES:
|
|
|
|
|
|
||||||
Net earnings
|
$
|
171,597
|
|
|
$
|
282,425
|
|
|
$
|
107,223
|
|
Adjustments to reconcile net earnings to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
103,132
|
|
|
66,462
|
|
|
71,010
|
|
|||
Stock-based compensation
|
36,689
|
|
|
34,170
|
|
|
31,018
|
|
|||
Asset impairment charges
|
13,666
|
|
|
3,349
|
|
|
—
|
|
|||
Loss on net assets held for sale
|
—
|
|
|
—
|
|
|
23,588
|
|
|||
Deferred income taxes
|
44,934
|
|
|
14,604
|
|
|
25,968
|
|
|||
Other, net
|
4,123
|
|
|
(3,832
|
)
|
|
(31,256
|
)
|
|||
Increase (decrease) in cash, net of acquisitions, resulting from changes in:
|
|
|
|
|
|
||||||
Accounts receivable
|
19,372
|
|
|
29,057
|
|
|
(7,758
|
)
|
|||
Inventories
|
(24,360
|
)
|
|
17,425
|
|
|
(32,961
|
)
|
|||
Prepaid expenses and other current assets
|
(1,744
|
)
|
|
(3,427
|
)
|
|
1,217
|
|
|||
Other assets
|
1,099
|
|
|
2,663
|
|
|
12,027
|
|
|||
Accounts payable
|
51,752
|
|
|
(22,449
|
)
|
|
21,558
|
|
|||
Deferred revenue
|
(6,187
|
)
|
|
8,081
|
|
|
(9,220
|
)
|
|||
Accrued payroll and other liabilities
|
(8,339
|
)
|
|
6,599
|
|
|
17,076
|
|
|||
Accrued income taxes
|
(24,723
|
)
|
|
(74,888
|
)
|
|
84,352
|
|
|||
Other long-term liabilities
|
(10,639
|
)
|
|
13,918
|
|
|
(5,590
|
)
|
|||
Net cash provided by operating activities
|
370,372
|
|
|
374,157
|
|
|
308,252
|
|
|||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
||||||
Additions to property and equipment, net
|
(44,794
|
)
|
|
(30,773
|
)
|
|
(42,109
|
)
|
|||
Business acquisitions, net of cash acquired
|
(601,927
|
)
|
|
(26,764
|
)
|
|
—
|
|
|||
Proceeds from sale of assets
|
6,365
|
|
|
3,017
|
|
|
3,686
|
|
|||
Proceeds from sale of business
|
—
|
|
|
25,920
|
|
|
—
|
|
|||
Minority interest and other investments
|
(11,030
|
)
|
|
(15,500
|
)
|
|
—
|
|
|||
Net cash used by investing activities
|
(651,386
|
)
|
|
(44,100
|
)
|
|
(38,423
|
)
|
|||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
||||||
Net proceeds from credit facility and long-term debt, including current portion
|
723,054
|
|
|
—
|
|
|
—
|
|
|||
Repayment of credit facility and long-term debt
|
(468,224
|
)
|
|
—
|
|
|
(97,500
|
)
|
|||
Repurchase of common stock
|
(124,998
|
)
|
|
(243,706
|
)
|
|
—
|
|
|||
Dividends paid
|
(91,694
|
)
|
|
(88,123
|
)
|
|
(82,605
|
)
|
|||
Proceeds from shares issued pursuant to stock-based compensation plans
|
28,418
|
|
|
29,124
|
|
|
58,241
|
|
|||
Tax paid for net share exercises and issuance of vested restricted stock units
|
(11,993
|
)
|
|
(16,228
|
)
|
|
(10,731
|
)
|
|||
Other financing activities
|
(523
|
)
|
|
(11
|
)
|
|
(17
|
)
|
|||
Net cash provided (used) by financing activities
|
54,040
|
|
|
(318,944
|
)
|
|
(132,612
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
(578
|
)
|
|
(18,059
|
)
|
|
20,524
|
|
|||
Net (decrease) increase in cash and cash equivalents
|
(227,552
|
)
|
|
(6,946
|
)
|
|
157,741
|
|
|||
Cash and cash equivalents, beginning of year
|
512,144
|
|
|
519,090
|
|
|
361,349
|
|
|||
Cash and cash equivalents, end of year
|
$
|
284,592
|
|
|
$
|
512,144
|
|
|
$
|
519,090
|
|
Note 1.
|
Nature of Business and Significant Accounting Policies
|
Note 1.
|
Nature of Business and Significant Accounting Policies - (Continued)
|
Note 1.
|
Nature of Business and Significant Accounting Policies - (Continued)
|
Note 1.
|
Nature of Business and Significant Accounting Policies - (Continued)
|
Note 1.
|
Nature of Business and Significant Accounting Policies - (Continued)
|
Note 1.
|
Nature of Business and Significant Accounting Policies - (Continued)
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Numerator for earnings per share:
|
|
|
|
|
|
||||||
Net earnings for basic and diluted earnings per share
|
$
|
171,597
|
|
|
$
|
282,425
|
|
|
$
|
107,223
|
|
Denominator for earnings per share:
|
|
|
|
|
|
||||||
Weighted average number of common shares outstanding
|
135,016
|
|
|
137,815
|
|
|
137,456
|
|
|||
Assumed exercise of stock options and vesting of restricted stock awards, net of shares assumed reacquired under the treasury stock method
|
1,621
|
|
|
2,394
|
|
|
2,190
|
|
|||
Diluted shares outstanding
|
136,637
|
|
|
140,209
|
|
|
139,646
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Cash paid for:
|
|
|
|
|
|
||||||
Interest
|
$
|
21,544
|
|
|
$
|
14,183
|
|
|
$
|
15,394
|
|
Taxes
|
$
|
52,146
|
|
|
$
|
83,259
|
|
|
$
|
72,340
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Cost of goods sold
|
$
|
3,704
|
|
|
$
|
3,157
|
|
|
$
|
2,665
|
|
Research and development
|
6,595
|
|
|
6,697
|
|
|
5,068
|
|
|||
Selling, general and administrative
|
26,390
|
|
|
24,316
|
|
|
23,285
|
|
|||
Stock-based compensation expense before income taxes
|
$
|
36,689
|
|
|
$
|
34,170
|
|
|
$
|
31,018
|
|
Note 1.
|
Nature of Business and Significant Accounting Policies - (Continued)
|
|
December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Capitalized in inventory
|
$
|
1,122
|
|
|
$
|
1,080
|
|
|
$
|
1,062
|
|
|
2019
|
|
2018
|
|
2017
|
|||
Stock option awards:
|
|
|
|
|
|
|||
Risk-free interest rate
|
—
|
|
|
—
|
|
|
1.8
|
%
|
Expected dividend yield
|
—
|
|
|
—
|
|
|
1.6
|
%
|
Expected term
|
—
|
|
|
—
|
|
|
6.0 years
|
|
Expected volatility
|
—
|
|
|
—
|
|
|
26.6
|
%
|
Performance-based restricted stock awards:
|
|
|
|
|
|
|||
Expected dividend yield
|
1.3
|
%
|
|
1.2
|
%
|
|
1.6
|
%
|
Employee stock purchase plan:
|
|
|
|
|
|
|||
Risk-free interest rate
|
2.0
|
%
|
|
2.3
|
%
|
|
1.0
|
%
|
Expected dividend yield
|
1.3
|
%
|
|
1.3
|
%
|
|
1.6
|
%
|
Expected term
|
6 months
|
|
|
6 months
|
|
|
6 months
|
|
Expected volatility
|
25.0
|
%
|
|
26.4
|
%
|
|
20.9
|
%
|
Discount for illiquidity
|
—
|
|
|
10.5
|
%
|
|
10.5
|
%
|
Note 1.
|
Nature of Business and Significant Accounting Policies - (Continued)
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Stock option awards:
|
|
|
|
|
|
||||||
Weighted average grant date fair value per share
|
—
|
|
|
$
|
—
|
|
|
$
|
8.55
|
|
|
Total fair value of awards granted
|
—
|
|
|
$
|
—
|
|
|
$
|
2,824
|
|
|
Total fair value of awards vested
|
$
|
1,340
|
|
|
$
|
2,529
|
|
|
$
|
4,203
|
|
Total intrinsic value of options exercised
|
$
|
16,124
|
|
|
$
|
24,652
|
|
|
$
|
20,631
|
|
Restricted stock unit awards:
|
|
|
|
|
|
||||||
Weighted average grant date fair value per share
|
$
|
50.31
|
|
|
$
|
52.79
|
|
|
$
|
35.90
|
|
Total fair value of awards granted
|
$
|
51,578
|
|
|
$
|
40,675
|
|
|
$
|
37,906
|
|
Total fair value of awards vested
|
$
|
39,287
|
|
|
$
|
48,705
|
|
|
$
|
27,489
|
|
Employee stock purchase plan:
|
|
|
|
|
|
||||||
Weighted average grant date fair value per share
|
$
|
11.72
|
|
|
$
|
10.01
|
|
|
$
|
7.66
|
|
Total fair value of shares estimated to be issued
|
$
|
2,399
|
|
|
$
|
1,330
|
|
|
$
|
1,087
|
|
Note 1.
|
Nature of Business and Significant Accounting Policies - (Continued)
|
|
|
Pension Plans
Items
|
|
Interest Rate Swap Contracts
|
|
Available-For-Sale Items
|
|
Foreign
Currency
Items
|
|
Total
|
||||||||||
Balance, December 31, 2018
|
|
$
|
(682
|
)
|
|
$
|
—
|
|
|
$
|
(4
|
)
|
|
$
|
(148,406
|
)
|
|
$
|
(149,092
|
)
|
Other comprehensive loss before reclassifications, net of tax
|
|
(58
|
)
|
|
(796
|
)
|
|
4
|
|
|
(16,003
|
)
|
|
(16,853
|
)
|
|||||
Balance, December 31, 2019
|
|
$
|
(740
|
)
|
|
$
|
(796
|
)
|
|
$
|
—
|
|
|
$
|
(164,409
|
)
|
|
$
|
(165,945
|
)
|
Note 1.
|
Nature of Business and Significant Accounting Policies - (Continued)
|
Note 1.
|
Nature of Business and Significant Accounting Policies - (Continued)
|
Note 2.
|
Revenue
|
Note 3.
|
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.
|
|
December 31, 2019
|
|
December 31, 2018
|
||||
Derivative instruments designated as cash flow hedges:
|
|
|
|
||||
Interest Rate Swap
|
$
|
143,302
|
|
|
$
|
—
|
|
Derivative instruments designated as fair value hedges:
|
|
|
|
||||
Currency Forward Contracts
|
340,000
|
|
|
—
|
|
||
Derivative instruments not formally designated as hedges:
|
|
|
|
||||
Currency Forward Contracts
|
104,835
|
|
|
95,896
|
|
||
|
|
|
|
|
|
|
|
December 31,
|
||||||
|
|
Classification
|
|
2019
|
|
2018
|
||||
Derivative instruments designated as cash flow hedges:
|
|
|
|
|
||||||
Derivative instruments in asset positions:
|
|
|
|
|
||||||
Interest Rate Swap
|
|
Prepaid expense and other current assets
|
|
$
|
404
|
|
|
$
|
—
|
|
Derivative instruments in liability positions:
|
|
|
|
|
|
|
||||
Interest Rate Swap
|
|
Other current liabilities
|
|
453
|
|
|
—
|
|
||
Interest Rate Swap
|
|
Other long-term liabilities
|
|
1,012
|
|
|
—
|
|
||
|
|
|
|
|
|
|
||||
Derivative instruments designated as fair value hedges:
|
|
|
|
|
||||||
Derivative instruments in liability positions:
|
|
|
|
|
|
|
||||
Currency forward contracts
|
|
Other current liabilities
|
|
454
|
|
|
—
|
|
||
Currency forward contracts
|
|
Other long-term liabilities
|
|
1,189
|
|
|
—
|
|
||
|
|
|
|
|
|
|
||||
Derivative instruments not formally designated as hedges:
|
|
|
|
|
||||||
Derivative instruments in asset positions:
|
|
|
|
|
|
|
||||
Currency forward contracts
|
|
Prepaid expenses and other current assets
|
|
3,010
|
|
|
431
|
|
||
Derivative instruments in liability positions:
|
|
|
|
|
|
|
||||
Currency forward contracts
|
|
Other current liabilities
|
|
391
|
|
|
951
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||
|
Prepaid Expenses and Other Current Assets
|
|
Other Current Liabilities
|
|
Prepaid Expenses and Other Current Assets
|
|
Other Current Liabilities
|
||||||||
Foreign exchange contracts
|
$
|
3,010
|
|
|
$
|
391
|
|
|
$
|
431
|
|
|
$
|
951
|
|
Note 5.
|
Accounts Receivable
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Allowance for doubtful accounts, beginning of year
|
$
|
4,284
|
|
|
$
|
7,630
|
|
|
$
|
6,457
|
|
Charges to costs and expenses
|
3,136
|
|
|
879
|
|
|
2,303
|
|
|||
Write-offs of uncollectible accounts, net of recoveries
|
(1,293
|
)
|
|
(3,985
|
)
|
|
(1,505
|
)
|
|||
Business disposals
|
—
|
|
|
(593
|
)
|
|
—
|
|
|||
Currency translation adjustments
|
(15
|
)
|
|
353
|
|
|
375
|
|
|||
Allowance for doubtful accounts, end of year
|
$
|
6,112
|
|
|
$
|
4,284
|
|
|
$
|
7,630
|
|
Note 6.
|
Inventories
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Raw material and subassemblies
|
$
|
224,239
|
|
|
$
|
214,164
|
|
Work-in-progress
|
44,344
|
|
|
43,096
|
|
||
Finished goods
|
120,179
|
|
|
94,847
|
|
||
|
$
|
388,762
|
|
|
$
|
352,107
|
|
Note 7.
|
Leases
|
|
Year Ended
|
||
|
December 31, 2019
|
||
Operating lease expense
|
$
|
11,925
|
|
Short-term lease expense
|
963
|
|
|
Variable lease expense
|
1,586
|
|
|
Total lease expense
|
$
|
14,474
|
|
|
Year Ended
|
||
|
December 31, 2019
|
||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
||
Operating cash flows from operating leases
|
$
|
11,244
|
|
Right-of-use assets obtained in exchange for lease obligations:
|
|
||
Operating leases
|
$
|
12,210
|
|
|
December 31, 2019
|
||
Operating lease right-of-use assets
|
$
|
35,479
|
|
Operating lease liabilities
|
$
|
39,291
|
|
Note 7.
|
Leases - (Continued)
|
2020
|
$
|
11,812
|
|
2021
|
10,606
|
|
|
2022
|
7,023
|
|
|
2023
|
4,132
|
|
|
2024
|
2,394
|
|
|
Thereafter
|
7,572
|
|
|
Total lease payments
|
43,539
|
|
|
Less: imputed interest
|
(4,248
|
)
|
|
Present value of lease liabilities
|
$
|
39,291
|
|
|
Net
Operating
Leases
|
||
2019
|
$
|
10,561
|
|
2020
|
8,270
|
|
|
2021
|
7,283
|
|
|
2022
|
4,894
|
|
|
2023
|
2,934
|
|
|
Thereafter
|
5,911
|
|
|
Total minimum payments
|
$
|
39,853
|
|
|
Estimated
Useful Life
|
|
December 31,
|
|||||||
|
2019
|
|
2018
|
|||||||
Land
|
—
|
|
|
$
|
21,511
|
|
|
$
|
21,595
|
|
Buildings
|
30 years
|
|
|
167,852
|
|
|
171,406
|
|
||
Machinery and equipment
|
3 to 7 years
|
|
|
307,530
|
|
|
287,596
|
|
||
Office equipment and other
|
3 to 10 years
|
|
|
129,127
|
|
|
100,210
|
|
||
|
|
|
626,020
|
|
|
580,807
|
|
|||
Less accumulated depreciation
|
|
|
(370,115
|
)
|
|
(333,400
|
)
|
|||
|
|
|
$
|
255,905
|
|
|
$
|
247,407
|
|
Note 9.
|
Goodwill
|
Balance, December 31, 2017
|
$
|
909,811
|
|
|
Goodwill from acquisitions
|
9,228
|
|
||
Currency translation adjustments
|
(14,468
|
)
|
||
Balance, December 31, 2018
|
904,571
|
|
||
Goodwill from acquisitions
|
469,446
|
|
||
Goodwill impairment
|
(6,543
|
)
|
||
Currency translation adjustments
|
(2,878
|
)
|
||
Balance, December 31, 2019
|
$
|
1,364,596
|
|
|
Weighted
Average
Estimated
Useful Life
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||||
Product technology
|
8 years
|
|
$
|
207,511
|
|
|
$
|
117,563
|
|
Customer relationships
|
11 years
|
|
67,274
|
|
|
73,260
|
|
||
Trademarks and trade name portfolios
|
8 years
|
|
18,557
|
|
|
7,220
|
|
||
Trade name portfolio not subject to amortization
|
indefinite
|
|
32,076
|
|
|
32,076
|
|
||
In-process research and development
|
8 years
|
|
34,698
|
|
|
1,638
|
|
||
Other
|
8 years
|
|
10,756
|
|
|
6,272
|
|
||
Acquired identifiable intangibles
|
|
|
370,872
|
|
|
238,029
|
|
||
Less accumulated amortization
|
|
|
(124,411
|
)
|
|
(93,154
|
)
|
||
Net acquired identifiable intangibles
|
|
|
246,461
|
|
|
144,875
|
|
||
Patents
|
7 years
|
|
6,075
|
|
|
6,086
|
|
||
Less accumulated amortization
|
|
|
(5,109
|
)
|
|
(4,253
|
)
|
||
Net patents
|
|
|
966
|
|
|
1,833
|
|
||
Acquired in-place leases and other
|
10 years
|
|
441
|
|
|
446
|
|
||
Less accumulated amortization
|
|
|
(354
|
)
|
|
(309
|
)
|
||
Net acquired in-place leases and other
|
|
|
87
|
|
|
137
|
|
||
|
|
|
$
|
247,514
|
|
|
$
|
146,845
|
|
2020
|
$
|
47,647
|
|
2021
|
45,589
|
|
|
2022
|
43,674
|
|
|
2023
|
40,481
|
|
|
2024
|
18,961
|
|
Note 11.
|
Credit Agreement
|
Note 12.
|
Accrued Product Warranties
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Accrued product warranties, beginning of year
|
$
|
18,583
|
|
|
$
|
18,052
|
|
|
$
|
20,845
|
|
Amounts paid for warranty services
|
(14,925
|
)
|
|
(17,347
|
)
|
|
(16,764
|
)
|
|||
Warranty provisions for products sold
|
14,616
|
|
|
17,888
|
|
|
14,422
|
|
|||
Business acquisition
|
899
|
|
|
8
|
|
|
—
|
|
|||
Currency translation adjustments and other
|
(29
|
)
|
|
(18
|
)
|
|
(451
|
)
|
|||
Accrued product warranties, end of year
|
$
|
19,144
|
|
|
$
|
18,583
|
|
|
$
|
18,052
|
|
|
|
|
|
|
|
||||||
Current accrued product warranties, end of year
|
$
|
14,611
|
|
|
$
|
15,204
|
|
|
$
|
15,024
|
|
Long-term accrued product warranties, end of year
|
$
|
4,533
|
|
|
$
|
3,379
|
|
|
$
|
3,028
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Unsecured notes
|
$
|
425,000
|
|
|
$
|
425,000
|
|
Credit Agreement
|
239,552
|
|
|
—
|
|
||
Unamortized discounts and issuance costs
|
(3,689
|
)
|
|
(3,052
|
)
|
||
|
$
|
660,863
|
|
|
$
|
421,948
|
|
|
|
|
|
||||
Current portion, long-term debt
|
12,444
|
|
|
—
|
|
||
Long-term debt
|
$
|
648,419
|
|
|
$
|
421,948
|
|
Note 14.
|
Commitments
|
Note 15.
|
Contingencies
|
Note 15.
|
Contingencies - (Continued)
|
Note 16.
|
Income Taxes
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
United States
|
$
|
81,695
|
|
|
$
|
165,719
|
|
|
$
|
143,924
|
|
Foreign
|
160,221
|
|
|
141,384
|
|
|
135,141
|
|
|||
|
$
|
241,916
|
|
|
$
|
307,103
|
|
|
$
|
279,065
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Current tax expense (benefit):
|
|
|
|
|
|
||||||
Federal
|
$
|
5,791
|
|
|
$
|
17,900
|
|
|
$
|
112,673
|
|
State
|
5,895
|
|
|
5,980
|
|
|
5,035
|
|
|||
Foreign
|
9,061
|
|
|
(16,008
|
)
|
|
19,689
|
|
|||
|
20,747
|
|
|
7,872
|
|
|
137,397
|
|
|||
Deferred tax expense (benefit):
|
|
|
|
|
|
||||||
Federal
|
11,459
|
|
|
1,273
|
|
|
34,857
|
|
|||
State
|
(719
|
)
|
|
235
|
|
|
473
|
|
|||
Foreign
|
38,832
|
|
|
15,298
|
|
|
(885
|
)
|
|||
|
49,572
|
|
|
16,806
|
|
|
34,445
|
|
|||
Total income tax provision
|
$
|
70,319
|
|
|
$
|
24,678
|
|
|
$
|
171,842
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Deferred tax assets, non-current
|
$
|
39,983
|
|
|
$
|
100,620
|
|
Deferred tax liabilities, non-current
|
(53,544
|
)
|
|
(22,927
|
)
|
||
Net deferred tax assets
|
$
|
(13,561
|
)
|
|
$
|
77,693
|
|
Note 16.
|
Income Taxes - (Continued)
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Deferred tax assets:
|
|
|
|
||||
Accrued liabilities and allowances
|
$
|
17,850
|
|
|
$
|
19,783
|
|
Tax credit and loss carry-forwards
|
19,471
|
|
|
30,831
|
|
||
Stock-based compensation
|
10,660
|
|
|
12,461
|
|
||
Inventory basis differences
|
11,306
|
|
|
10,749
|
|
||
Deferred revenue
|
2,869
|
|
|
2,900
|
|
||
Intangible assets
|
—
|
|
|
20,882
|
|
||
Unremitted earnings of foreign subsidiaries
|
—
|
|
|
2,121
|
|
||
Other assets
|
265
|
|
|
1,156
|
|
||
Gross deferred tax assets
|
62,421
|
|
|
100,883
|
|
||
Valuation allowance
|
(2,787
|
)
|
|
(3,196
|
)
|
||
Total deferred tax assets, net
|
59,634
|
|
|
97,687
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Intangible assets
|
(38,209
|
)
|
|
—
|
|
||
Property and equipment
|
(16,536
|
)
|
|
(14,070
|
)
|
||
Unremitted earnings of foreign subsidiaries
|
(13,225
|
)
|
|
—
|
|
||
Other liabilities
|
(5,225
|
)
|
|
(5,924
|
)
|
||
Total deferred tax liabilities
|
(73,195
|
)
|
|
(19,994
|
)
|
||
Net deferred tax assets
|
$
|
(13,561
|
)
|
|
$
|
77,693
|
|
Note 16.
|
Income Taxes - (Continued)
|
|
Year Ended December 31,
|
|||||||
|
2019
|
|
2018
|
|
2017
|
|||
Statutory federal tax rate
|
21.0
|
%
|
|
21.0
|
%
|
|
35.0
|
%
|
(Decrease) increase in rates resulting from:
|
|
|
|
|
|
|||
State taxes
|
2.6
|
|
|
2.5
|
|
|
1.8
|
|
Difference between statutory rate and foreign effective rate
|
2.7
|
|
|
(0.2
|
)
|
|
(10.7
|
)
|
Foreign, federal and state income tax credits
|
(3.3
|
)
|
|
(1.5
|
)
|
|
(2.0
|
)
|
European Union state aid matter
|
—
|
|
|
(10.8
|
)
|
|
0.1
|
|
United States transition tax
|
—
|
|
|
(2.6
|
)
|
|
23.8
|
|
Tax rate change on deferred items
|
1.0
|
|
|
—
|
|
|
5.1
|
|
Unremitted earnings of foreign subsidiaries
|
2.3
|
|
|
(0.8
|
)
|
|
5.4
|
|
Audit settlements
|
6.7
|
|
|
—
|
|
|
—
|
|
Other
|
(3.9
|
)
|
|
0.4
|
|
|
3.1
|
|
Effective tax rate
|
29.1
|
%
|
|
8.0
|
%
|
|
61.6
|
%
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Balance, beginning of year
|
$
|
33,205
|
|
|
$
|
77,275
|
|
|
$
|
51,851
|
|
Increases related to current year tax positions
|
2,602
|
|
|
—
|
|
|
17,264
|
|
|||
Increases related to prior year tax positions
|
2,719
|
|
|
2,229
|
|
|
5,022
|
|
|||
Lapse of statute of limitations
|
(13,371
|
)
|
|
(1,558
|
)
|
|
(1,260
|
)
|
|||
Settlements
|
(4,402
|
)
|
|
(40,514
|
)
|
|
(986
|
)
|
|||
Change due to currency translation
|
—
|
|
|
(4,227
|
)
|
|
5,384
|
|
|||
Balance, end of year
|
$
|
20,753
|
|
|
$
|
33,205
|
|
|
$
|
77,275
|
|
Note 17.
|
Stock-based Compensation
|
|
Shares
(in thousands)
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual
Term
|
|
Aggregate
Intrinsic
Value
(in thousands)
|
|||||
Outstanding at December 31, 2018
|
2,156
|
|
|
$
|
29.67
|
|
|
4.7
|
|
|
||
Granted
|
—
|
|
|
—
|
|
|
|
|
|
|||
Exercised
|
(763
|
)
|
|
30.72
|
|
|
|
|
|
|||
Forfeited
|
(4
|
)
|
|
36.73
|
|
|
|
|
|
|||
Outstanding at December 31, 2019
|
1,389
|
|
|
$
|
29.08
|
|
|
3.9
|
|
$
|
31,947
|
|
Exercisable at December 31, 2019
|
1,348
|
|
|
$
|
28.87
|
|
|
3.8
|
|
$
|
31,287
|
|
Vested and expected to vest at December 31, 2019
|
1,387
|
|
|
$
|
29.07
|
|
|
3.9
|
|
$
|
31,914
|
|
|
Shares
(in thousands)
|
|
Weighted
Average Grant
Date Fair Value
|
|||
Outstanding at December 31, 2018
|
1,751
|
|
|
$
|
40.77
|
|
Granted
|
1,028
|
|
|
50.32
|
|
|
Vested
|
(772
|
)
|
|
37.24
|
|
|
Forfeited
|
(131
|
)
|
|
45.92
|
|
|
Outstanding at December 31, 2019
|
1,876
|
|
|
$
|
47.08
|
|
Note 17.
|
Stock-based Compensation - (Continued)
|
2020
|
$
|
280
|
|
2021
|
274
|
|
|
2022
|
258
|
|
|
2023
|
254
|
|
|
2024
|
250
|
|
|
Five years thereafter
|
1,061
|
|
|
|
$
|
2,377
|
|
Note 18.
|
Other Employee Benefit Plans - (Continued)
|
Note 19.
|
Operating Segments and Related Information - (Continued)
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Revenue—External Customers:
|
|
|
|
|
|
||||||
Industrial
|
$
|
737,656
|
|
|
$
|
717,882
|
|
|
$
|
672,120
|
|
Government and Defense
|
794,941
|
|
|
663,436
|
|
|
629,147
|
|
|||
Commercial
|
354,429
|
|
|
394,368
|
|
|
499,167
|
|
|||
|
$
|
1,887,026
|
|
|
$
|
1,775,686
|
|
|
$
|
1,800,434
|
|
Revenue—Intersegments:
|
|
|
|
|
|
||||||
Industrial
|
$
|
16,510
|
|
|
$
|
19,482
|
|
|
$
|
21,747
|
|
Government and Defense
|
5,507
|
|
|
11,409
|
|
|
11,283
|
|
|||
Commercial
|
19,177
|
|
|
20,056
|
|
|
14,942
|
|
|||
Eliminations
|
(41,194
|
)
|
|
(50,947
|
)
|
|
(47,972
|
)
|
|||
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Segment operating income:
|
|
|
|
|
|
||||||
Industrial
|
$
|
240,847
|
|
|
$
|
216,880
|
|
|
$
|
199,903
|
|
Government and Defense
|
207,430
|
|
|
199,702
|
|
|
179,160
|
|
|||
Commercial
|
45,679
|
|
|
57,399
|
|
|
56,066
|
|
|||
|
$
|
493,956
|
|
|
$
|
473,981
|
|
|
$
|
435,129
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Consolidated segment operating income
|
$
|
493,956
|
|
|
$
|
473,981
|
|
|
$
|
435,129
|
|
Unallocated corporate expenses
|
(139,555
|
)
|
|
(108,940
|
)
|
|
(93,564
|
)
|
|||
Amortization of purchased intangible assets
|
(57,376
|
)
|
|
(24,524
|
)
|
|
(27,391
|
)
|
|||
Asset impairment charges
|
(13,666
|
)
|
|
(3,349
|
)
|
|
—
|
|
|||
Restructuring expenses
|
(10,099
|
)
|
|
(4,854
|
)
|
|
(625
|
)
|
|||
Loss on sale of business
|
—
|
|
|
(13,708
|
)
|
|
(23,588
|
)
|
|||
Consolidated earnings from operations
|
273,260
|
|
|
318,606
|
|
|
289,961
|
|
|||
Interest and non-operating expense, net
|
(31,344
|
)
|
|
(11,503
|
)
|
|
(10,896
|
)
|
|||
Consolidated earnings before income taxes
|
$
|
241,916
|
|
|
$
|
307,103
|
|
|
$
|
279,065
|
|
Note 19.
|
Operating Segments and Related Information - (Continued)
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Operating segment assets:
|
|
|
|
||||
Net accounts receivable, inventories and demonstration assets:
|
|
|
|
||||
Industrial
|
$
|
279,352
|
|
|
$
|
266,457
|
|
Government and Defense
|
332,639
|
|
|
307,041
|
|
||
Commercial
|
125,814
|
|
|
137,560
|
|
||
|
$
|
737,805
|
|
|
$
|
711,058
|
|
Goodwill:
|
|
|
|
||||
Industrial
|
404,476
|
|
|
391,603
|
|
||
Government and Defense
|
728,697
|
|
|
284,188
|
|
||
Commercial
|
231,423
|
|
|
228,780
|
|
||
|
$
|
1,364,596
|
|
|
$
|
904,571
|
|
Total operating segment assets
|
$
|
2,102,401
|
|
|
$
|
1,615,629
|
|
|
|
|
|
||||
Assets not allocated:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
284,592
|
|
|
$
|
512,144
|
|
Prepaid expenses and other current assets
|
86,337
|
|
|
69,445
|
|
||
Property and equipment, net
|
255,905
|
|
|
247,407
|
|
||
Deferred income taxes
|
39,983
|
|
|
100,620
|
|
||
Intangible assets, net
|
247,514
|
|
|
146,845
|
|
||
Other assets
|
$
|
120,809
|
|
|
$
|
89,152
|
|
Total assets
|
$
|
3,137,541
|
|
|
$
|
2,781,242
|
|
|
Year Ended December 31,
|
||||||||||||||||||||||||||||||
|
2019
|
|
2018
|
||||||||||||||||||||||||||||
|
Industrial
|
|
Government and Defense
|
|
Commercial
|
|
Total
|
|
Industrial
|
|
Government and Defense
|
|
Commercial
|
|
Total
|
||||||||||||||||
United States
|
$
|
392,510
|
|
|
$
|
513,428
|
|
|
$
|
131,256
|
|
|
$
|
1,037,194
|
|
|
$
|
364,443
|
|
|
$
|
420,032
|
|
|
$
|
150,052
|
|
|
$
|
934,527
|
|
Europe
|
130,060
|
|
|
118,301
|
|
|
150,124
|
|
|
398,485
|
|
|
130,901
|
|
|
89,725
|
|
|
156,227
|
|
|
376,853
|
|
||||||||
Asia
|
157,819
|
|
|
63,717
|
|
|
35,618
|
|
|
257,154
|
|
|
159,150
|
|
|
55,160
|
|
|
40,850
|
|
|
255,160
|
|
||||||||
Middle East/Africa
|
14,799
|
|
|
90,110
|
|
|
17,843
|
|
|
122,752
|
|
|
18,089
|
|
|
85,726
|
|
|
27,240
|
|
|
131,055
|
|
||||||||
Canada/Latin America
|
42,468
|
|
|
9,385
|
|
|
19,588
|
|
|
71,441
|
|
|
45,299
|
|
|
12,793
|
|
|
19,999
|
|
|
78,091
|
|
||||||||
|
$
|
737,656
|
|
|
$
|
794,941
|
|
|
$
|
354,429
|
|
|
$
|
1,887,026
|
|
|
$
|
717,882
|
|
|
$
|
663,436
|
|
|
$
|
394,368
|
|
|
$
|
1,775,686
|
|
Note 19.
|
Operating Segments and Related Information - (Continued)
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
United States
|
$
|
1,137,375
|
|
|
$
|
720,885
|
|
Europe
|
435,024
|
|
|
446,704
|
|
||
Other foreign
|
416,425
|
|
|
220,386
|
|
||
|
$
|
1,988,824
|
|
|
$
|
1,387,975
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
United States government
|
$
|
603,769
|
|
|
$
|
511,094
|
|
|
$
|
466,304
|
|
Note 20.
|
Business Acquisitions and Divestitures
|
Note 20.
|
Business Acquisitions and Divestitures - (continued)
|
Cash acquired
|
|
$
|
5,145
|
|
Other tangible assets and liabilities
|
|
6,097
|
|
|
Net deferred taxes
|
|
(11,130
|
)
|
|
Identified intangible assets
|
|
44,292
|
|
|
Goodwill
|
|
161,518
|
|
|
Total purchase price
|
|
$
|
205,922
|
|
|
Estimated
Useful Life |
|
Amount
|
||
Developed technology
|
5.0 years
|
|
$
|
32,300
|
|
In-process research and development
|
7.0 years
|
|
4,100
|
|
|
Trademarks and trade name
|
8.0 years
|
|
4,050
|
|
|
Backlog
|
1.0 year
|
|
2,842
|
|
|
Other technology
|
3.0 years
|
|
1,000
|
|
|
|
|
|
$
|
44,292
|
|
Note 20.
|
Business Acquisitions and Divestitures - (continued)
|
Cash acquired
|
|
$
|
6,687
|
|
Other tangible assets and liabilities
|
|
14,915
|
|
|
Net deferred taxes
|
|
(22,394
|
)
|
|
Identified intangible assets
|
|
102,740
|
|
|
Goodwill
|
|
283,983
|
|
|
Total purchase price
|
|
$
|
385,931
|
|
|
Estimated
Useful Life |
|
Amount
|
||
Developed technology
|
5.0 years
|
|
$
|
60,400
|
|
In-process research and development
|
9.0 years
|
|
28,000
|
|
|
Trademarks and trade name
|
4.5 years
|
|
9,990
|
|
|
Backlog
|
1.0 year
|
|
3,850
|
|
|
Customer contracts
|
1.0 year
|
|
500
|
|
|
|
|
|
$
|
102,740
|
|
Note 20.
|
Business Acquisitions and Divestitures - (continued)
|
Cash acquired
|
|
$
|
15
|
|
Other tangible assets and liabilities
|
|
1,479
|
|
|
Identified intangible assets
|
|
6,400
|
|
|
Goodwill
|
|
13,987
|
|
|
Total purchase price
|
|
$
|
21,881
|
|
|
Estimated
Useful Life |
|
Amount
|
||
Know how
|
10.0 years
|
|
$
|
3,900
|
|
Customer relationship
|
4.0 years
|
|
2,500
|
|
|
|
|
|
$
|
6,400
|
|
Note 21.
|
Shareholders' Equity
|
Note 22.
|
Restructuring
|
Note 23.
|
Subsequent Events
|
QUARTERLY FINANCIAL DATA (UNAUDITED)
FLIR SYSTEMS, INC.
(In thousands, except per share data)
|
|||||||||||||||
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
||||||||
2019
|
|
|
|
|
|
|
|
||||||||
Revenue
|
$
|
444,736
|
|
|
$
|
481,998
|
|
|
$
|
471,248
|
|
|
$
|
489,044
|
|
Gross profit
|
233,659
|
|
|
233,620
|
|
|
229,587
|
|
|
232,637
|
|
||||
Net earnings(1)
|
61,748
|
|
|
46,118
|
|
|
62,047
|
|
|
1,684
|
|
||||
Earnings per share:
|
|
|
|
|
|
|
|
||||||||
Basic earnings per share
|
$
|
0.46
|
|
|
$
|
0.34
|
|
|
$
|
0.46
|
|
|
$
|
0.01
|
|
Diluted earnings per share
|
$
|
0.45
|
|
|
$
|
0.34
|
|
|
$
|
0.46
|
|
|
$
|
0.01
|
|
|
|
|
|
|
|
|
|
||||||||
2018
|
|
|
|
|
|
|
|
||||||||
Revenue
|
$
|
439,618
|
|
|
$
|
452,707
|
|
|
$
|
434,898
|
|
|
$
|
448,463
|
|
Gross profit
|
217,914
|
|
|
232,551
|
|
|
222,074
|
|
|
227,779
|
|
||||
Net earnings(2)
|
39,195
|
|
|
71,563
|
|
|
73,151
|
|
|
98,516
|
|
||||
Earnings per share:
|
|
|
|
|
|
|
|
||||||||
Basic earnings (loss) per share
|
$
|
0.28
|
|
|
$
|
0.52
|
|
|
$
|
0.53
|
|
|
$
|
0.72
|
|
Diluted earnings (loss) per share
|
$
|
0.28
|
|
|
$
|
0.51
|
|
|
$
|
0.52
|
|
|
$
|
0.71
|
|
(1)
|
Net earnings for the fourth quarter of 2019 includes discrete tax expense of $23.2 million and $13.7 million of asset impairment charges associated with the Company's restructuring of the OTS business.
|
(2)
|
Net earnings for the fourth quarter of 2018 includes $15.0 million for the costs of a regulatory settlement and a discrete tax benefit of $33.1 million for the cancellation of Belgium tax assessments issued as part of the European Commission's decision regarding state aid.
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
ITEM 9A.
|
CONTROLS AND PROCEDURES
|
ITEM 9B.
|
OTHER INFORMATION
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
ITEM 11.
|
EXECUTIVE COMPENSATION
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
ITEM 14.
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
ITEM 15.
|
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|
Number
|
Description
|
2.1
|
|
3.1
|
|
3.2
|
|
3.3
|
|
3.4
|
|
4.1
|
|
4.2
|
|
4.3
|
|
4.4
|
|
4.5
|
|
4.6
|
|
4.7
|
|
10.1
|
|
10.2
|
|
10.3
|
10.4
|
|
10.5
|
|
10.6
|
|
10.7
|
|
10.8
|
|
10.9
|
|
10.11
|
|
10.12
|
|
10.13
|
|
10.14
|
|
10.15
|
|
10.16
|
|
10.17
|
|
10.18
|
|
10.19
|
|
10.20
|
|
10.21
|
|
10.22
|
|
10.23
|
|
21.0
|
23.0
|
|
31.1
|
|
31.2
|
|
32.1
|
|
32.2
|
|
101.INS
|
Inline XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
|
101.SCH
|
Inline XBRL Taxonomy Extension Schema Document
|
101.CAL
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
Inline XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
Inline XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document
|
104
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
|
(1)
|
This exhibit constitutes a management contract or compensatory plan or arrangement.
|
|
FLIR SYSTEMS, INC.
|
||
|
(Registrant)
|
||
|
|
|
|
|
By:
|
|
/s/ CAROL P. LOWE
|
|
|
|
Carol P. Lowe
Executive Vice President and Chief Financial Officer
|
Signature
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Title
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/S/ JAMES J. CANNON
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President, Chief Executive Officer and Director
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James J. Cannon
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/S/ CAROL P. LOWE
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Executive Vice President and Chief Financial Officer
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Carol P. Lowe
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(Principal Financial Officer)
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/S/ TRAVIS B. JOHNSON
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Vice President and Corporate Controller
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Travis B. Johnson
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(Principal Accounting Officer)
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/S/ EARL R. LEWIS
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Chairman of the Board of Directors
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Earl R. Lewis
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/S/ JOHN D. CARTER
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Director
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John D. Carter
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/S/ WILLIAM W. CROUCH
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Director
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William W. Crouch
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/S/ CATHERINE A. HALLIGAN
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Director
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Catherine A. Halligan
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/S/ ANGUS L. MACDONALD
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Director
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Angus L. Macdonald
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/S/ MICHAEL T. SMITH
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Director
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Michael T. Smith
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/S/ CATHY A. STAUFFER
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Director
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Cathy A. Stauffer
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/s/ ROBERT S. TYRER
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Director
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Robert S. Tyrer
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/S/ JOHN W. WOOD, JR.
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Director
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John W. Wood, Jr.
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/S/ STEVEN E. WYNNE
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Director
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Steven E. Wynne
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•
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Hostile Takeovers. Under the Oregon Control Share Act (the “OCSA”), a person who acquires “control shares” acquires the voting rights with respect to the control shares only to the extent granted by a majority of the preexisting, disinterested shareholders of the corporation. “Control shares” are shares acquired in an acquisition that would, when added to all other shares held by the acquiring person, bring such person’s total voting power
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Interested Shareholder Transactions. The OBCA, in specified circumstances, prohibits a person who is an “interested shareholder” (defined generally as a person with 15% or more of a corporation’s outstanding voting stock) of a corporation listed on a national securities exchange from engaging in a “business combination” (defined generally as a merger, consolidation, or other transaction, including a sale, lease, or other disposition of assets with an aggregate market value equal to 10% or more of the aggregate market value of the corporation) with the corporation for a three-year period following the time the shareholder became an “interested shareholder”. In addition, a corporation’s articles of incorporation or bylaws may exclude a corporation from these restrictions. We have not elected to opt out of these business combination provisions of the OBCA.
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Board of Directors’ Criteria for Evaluating Business Combinations. Under the OBCA, members of the board of directors of a corporation are authorized to consider certain factors in determining the best interests of the corporation when evaluating any (i) offer of another party to make a tender or exchange offer, (ii) merger or consolidation proposal, or (iii) offer of another party to purchase or otherwise acquire all or substantially all of the assets of the corporation. These factors include the social, legal and economic effects on employees, customers and suppliers of the corporation and on the communities and geographical areas in which the corporation and its subsidiaries operate, the economy of the state and the nation, the long-term and short-term interests of the corporation and its shareholders, including the possibility that these interests may be best served by the continued independence of the corporation, and other relevant factors.
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(a)
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If a dividend with respect to the Shares is payable in cash, then, as of the applicable dividend payment date, you shall be credited with that number of Dividend Equivalent Units (rounded to the nearest whole unit) equal to (i) the amount of the cash dividend payable with respect to a Share, multiplied by (ii) the number of Shares subject to this Agreement that are outstanding as of the record date of such dividend, divided by (iii) the closing price of a Share on the dividend payment date.
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(b)
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If a dividend with respect to the Shares is payable in Shares, then, as of the dividend payment date, you shall be credited with that number of Dividend Equivalent Units (rounded to the nearest whole unit) equal to (i) the number of Shares distributed in the dividend with respect to a Share, multiplied by (ii) the number of Shares subject to this Agreement that are outstanding as of the record date of such dividend.
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(a)
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The value of the Shares withheld or transferred must equal (or exceed by at most a fractional Share) the minimum withholding obligation.
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(b)
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The value of the Shares withheld or transferred shall be the Fair Market Value determined as of the vesting date.
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•
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FLIR Commercial Systems, Inc., a California, USA Corporation
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FLIR Government Systems, Inc., a Delaware, USA Corporation
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FLIR Detection, Inc., a Delaware, USA Corporation
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FLIR Surveillance, Inc., a Delaware, USA Corporation
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FLIR Unmanned Ground Systems Inc., a Delaware, USA Corporation
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FLIR Unmanned Aerial Systems ULC, a Canadian Corporation
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FLIR Integrated Imaging Solutions, a Canadian Corporation
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FSI Holdings CV, a Netherlands Corporation
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FLIR Systems BV, a Netherlands Corporation
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FLIR Systems Holding AB, a Sweden Corporation
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FLIR Systems AB, a Sweden Corporation
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FLIR Systems Trading Belgium BVBA, a Belgium Corporation
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RIHL Ltd., a United Kingdom Corporation
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Raymarine UK Ltd., a United Kingdom Corporation
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1.
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I have reviewed this annual report on Form 10-K of FLIR Systems, Inc.;
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2.
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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;
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3.
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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;
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4.
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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:
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a)
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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;
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b)
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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;
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c)
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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
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d)
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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
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5.
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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):
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a)
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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
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b)
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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.
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Date February 27, 2020
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/S/ JAMES J. CANNON
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James J. Cannon
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President and Chief Executive Officer
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1.
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I have reviewed this annual report on Form 10-K of FLIR Systems, Inc.;
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2.
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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;
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3.
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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;
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4.
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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:
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a)
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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;
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b)
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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;
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c)
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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
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d)
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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
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5.
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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):
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a)
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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
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b)
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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.
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Date February 27, 2020
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/S/ CAROL P. LOWE
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Carol P. Lowe
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Executive Vice President and Chief Financial Officer
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Date February 27, 2020
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/S/ JAMES J. CANNON
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James J. Cannon
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President and Chief Executive Officer
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Date February 27, 2020
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/S/ CAROL P. LOWE
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Carol P. Lowe
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Chief Financial Officer
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