☒
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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,
|
|
97070
|
|
Wilsonville,
|
Oregon
|
|
|
(Address of principal executive offices)
|
|
(Zip Code)
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Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
|
Common Stock, $0.01 par value
|
FLIR
|
NASDAQ
|
Global Select Stock Market
|
Large accelerated filer
|
☒
|
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☐
|
|
Smaller reporting company
|
☐
|
|
|
|
Emerging growth company
|
☐
|
PART I. FINANCIAL INFORMATION
|
||
Item 1.
|
Financial Statements
|
|
|
||
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||
|
||
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||
|
||
|
||
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 March 31,
|
||||||
|
2020
|
|
2019
|
||||
Revenue
|
$
|
450,923
|
|
|
$
|
444,736
|
|
Cost of goods sold
|
231,555
|
|
|
210,875
|
|
||
Gross profit
|
219,368
|
|
|
233,861
|
|
||
Operating expenses:
|
|
|
|
||||
Research and development
|
53,847
|
|
|
47,680
|
|
||
Selling, general and administrative
|
116,242
|
|
|
104,490
|
|
||
Restructuring expenses
|
20,784
|
|
|
609
|
|
||
Total operating expenses
|
190,873
|
|
|
152,779
|
|
||
Earnings from operations
|
28,495
|
|
|
81,082
|
|
||
Interest expense
|
6,961
|
|
|
5,516
|
|
||
Interest income
|
(349
|
)
|
|
(1,057
|
)
|
||
Other (income) expense, net
|
(1,315
|
)
|
|
1,866
|
|
||
Earnings before income taxes
|
23,198
|
|
|
74,757
|
|
||
Income tax provision
|
7,774
|
|
|
13,009
|
|
||
Net earnings
|
$
|
15,424
|
|
|
$
|
61,748
|
|
|
|
|
|
||||
Net earnings per share:
|
|
|
|
||||
Basic
|
$
|
0.12
|
|
|
$
|
0.46
|
|
Diluted
|
$
|
0.11
|
|
|
$
|
0.45
|
|
|
|
|
|
||||
Weighted average shares outstanding:
|
|
|
|
||||
Basic
|
133,596
|
|
|
135,541
|
|
||
Diluted
|
134,927
|
|
|
137,165
|
|
FLIR SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands)
(Unaudited)
|
|||||||
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Net earnings
|
$
|
15,424
|
|
|
$
|
61,748
|
|
Other comprehensive (loss) income, net of tax:
|
|
|
|
||||
Fair value adjustment on derivatives instruments designated as hedges (net of tax effects of $372 and $269, respectively, for the interest rate swap contracts)
|
2,753
|
|
|
(807
|
)
|
||
Foreign currency translation adjustments
|
(20,285
|
)
|
|
(7,440
|
)
|
||
Total other comprehensive loss
|
(17,532
|
)
|
|
(8,247
|
)
|
||
Comprehensive (loss) income
|
$
|
(2,108
|
)
|
|
$
|
53,501
|
|
FLIR SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except for par value)
(Unaudited)
|
|||||||
|
March 31,
|
|
December 31,
|
||||
|
2020
|
|
2019
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
308,615
|
|
|
$
|
284,592
|
|
Accounts receivable, net
|
301,998
|
|
|
318,652
|
|
||
Inventories
|
397,526
|
|
|
388,762
|
|
||
Prepaid expenses and other current assets
|
122,395
|
|
|
116,728
|
|
||
Total current assets
|
1,130,534
|
|
|
1,108,734
|
|
||
Property and equipment, net
|
251,421
|
|
|
255,905
|
|
||
Deferred income taxes, net
|
39,458
|
|
|
39,983
|
|
||
Goodwill
|
1,328,828
|
|
|
1,364,596
|
|
||
Intangible assets, net
|
231,953
|
|
|
247,514
|
|
||
Other assets
|
140,043
|
|
|
120,809
|
|
||
Total assets
|
$
|
3,122,237
|
|
|
$
|
3,137,541
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
157,971
|
|
|
$
|
158,033
|
|
Deferred revenue
|
30,364
|
|
|
28,587
|
|
||
Accrued payroll and related liabilities
|
76,330
|
|
|
72,476
|
|
||
Accrued product warranties
|
15,018
|
|
|
14,611
|
|
||
Advance payments from customers
|
20,964
|
|
|
28,005
|
|
||
Accrued expenses
|
38,981
|
|
|
40,815
|
|
||
Accrued income taxes
|
7,450
|
|
|
14,735
|
|
||
Other current liabilities
|
39,333
|
|
|
27,349
|
|
||
Credit facility
|
191,000
|
|
|
16,000
|
|
||
Long-term debt, current portion
|
11,923
|
|
|
12,444
|
|
||
Total current liabilities
|
589,334
|
|
|
413,055
|
|
||
Long-term debt, net of current portion
|
636,273
|
|
|
648,419
|
|
||
Deferred income taxes
|
39,961
|
|
|
53,544
|
|
||
Accrued income taxes
|
55,497
|
|
|
55,514
|
|
||
Other long-term liabilities
|
96,592
|
|
|
95,576
|
|
||
Shareholders’ equity:
|
|
|
|
||||
Preferred stock, $0.01 par value, 10,000 shares authorized; no shares issued at March 31, 2020, and December 31, 2019
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value, 500,000 shares authorized, 130,371 and 134,394 shares issued at March 31, 2020, and December 31, 2019, respectively, and additional paid-in capital
|
1,304
|
|
|
16,692
|
|
||
Retained earnings
|
1,886,753
|
|
|
2,020,686
|
|
||
Accumulated other comprehensive loss
|
(183,477
|
)
|
|
(165,945
|
)
|
||
Total shareholders’ equity
|
1,704,580
|
|
|
1,871,433
|
|
||
Total liabilities and shareholders' equity
|
$
|
3,122,237
|
|
|
$
|
3,137,541
|
|
|
|
Common Stock and
Additional Paid-in Capital |
|
Retained
Earnings |
|
Accumulated
Other Comprehensive Earnings (Loss) |
|
Total
Shareholders' Equity |
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Balance, December 31, 2019
|
|
$
|
16,692
|
|
|
$
|
2,020,686
|
|
|
$
|
(165,945
|
)
|
|
$
|
1,871,433
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net earnings
|
|
—
|
|
|
15,424
|
|
|
—
|
|
|
15,424
|
|
||||
Repurchase of common stock
|
|
(23,371
|
)
|
|
(126,629
|
)
|
|
—
|
|
|
(150,000
|
)
|
||||
Common stock issued pursuant to stock-based compensation plans, net of shares withheld for taxes
|
|
580
|
|
|
—
|
|
|
—
|
|
|
580
|
|
||||
Stock-based compensation
|
|
7,403
|
|
|
—
|
|
|
—
|
|
|
7,403
|
|
||||
Dividends paid:
|
|
|
|
|
|
|
|
|
||||||||
Common stock, $0.17/share
|
|
—
|
|
|
(22,728
|
)
|
|
—
|
|
|
(22,728
|
)
|
||||
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
||||||||
Fair value adjustment on interest rate swap contracts
|
|
—
|
|
|
—
|
|
|
2,753
|
|
|
2,753
|
|
||||
Foreign currency translation adjustment
|
|
—
|
|
|
—
|
|
|
(20,285
|
)
|
|
(20,285
|
)
|
||||
Balance, March 31, 2020
|
|
$
|
1,304
|
|
|
$
|
1,886,753
|
|
|
$
|
(183,477
|
)
|
|
$
|
1,704,580
|
|
|
|
Common Stock and
Additional Paid-in Capital |
|
Retained
Earnings |
|
Accumulated
Other Comprehensive Earnings (Loss) |
|
Total
Shareholders' Equity |
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Balance, December 31, 2018
|
|
$
|
1,355
|
|
|
$
|
2,024,523
|
|
|
$
|
(149,092
|
)
|
|
$
|
1,876,786
|
|
|
|
|
|
|
|
|
|
|
||||||||
Adjustment of DTA under ASU 2016-16(1)
|
|
—
|
|
|
3,439
|
|
|
—
|
|
|
3,439
|
|
||||
Net earnings
|
|
—
|
|
|
61,748
|
|
|
—
|
|
|
61,748
|
|
||||
Repurchase of common stock
|
|
(16,999
|
)
|
|
(7,999
|
)
|
|
—
|
|
|
(24,998
|
)
|
||||
Common stock issued pursuant to stock-based compensation plans, net of shares withheld for taxes
|
|
8,708
|
|
|
—
|
|
|
—
|
|
|
8,708
|
|
||||
Stock-based compensation
|
|
8,290
|
|
|
—
|
|
|
—
|
|
|
8,290
|
|
||||
Dividends paid:
|
|
|
|
|
|
|
|
|
||||||||
Common stock, $0.17/share
|
|
—
|
|
|
(23,031
|
)
|
|
—
|
|
|
(23,031
|
)
|
||||
Other comprehensive loss:
|
|
|
|
|
|
|
|
|
||||||||
Fair value adjustment on interest rate swap contracts
|
|
—
|
|
|
—
|
|
|
(807
|
)
|
|
(807
|
)
|
||||
Foreign currency translation adjustment
|
|
—
|
|
|
—
|
|
|
(7,440
|
)
|
|
(7,440
|
)
|
||||
Balance, March 31, 2019
|
|
$
|
1,354
|
|
|
$
|
2,058,680
|
|
|
$
|
(157,339
|
)
|
|
$
|
1,902,695
|
|
FLIR SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
|
|||||||
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
CASH PROVIDED BY OPERATING ACTIVITIES:
|
|
|
|
||||
Net earnings
|
$
|
15,424
|
|
|
$
|
61,748
|
|
Adjustments to reconcile net earnings to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
24,225
|
|
|
16,662
|
|
||
Stock-based compensation
|
7,646
|
|
|
8,090
|
|
||
Loss on disposal of assets
|
2,991
|
|
|
—
|
|
||
Deferred income taxes
|
(165
|
)
|
|
222
|
|
||
Other, net
|
(3,152
|
)
|
|
(1,328
|
)
|
||
Increase (decrease) in cash, net of acquisitions, resulting from changes in:
|
|
|
|
||||
Accounts receivable
|
12,118
|
|
|
(25,771
|
)
|
||
Inventories
|
(14,453
|
)
|
|
(17,472
|
)
|
||
Prepaid expenses and other current assets
|
382
|
|
|
1,944
|
|
||
Other assets
|
(391
|
)
|
|
3,659
|
|
||
Accounts payable
|
1,592
|
|
|
26,019
|
|
||
Deferred revenue
|
2,140
|
|
|
(4,531
|
)
|
||
Accrued payroll and other liabilities
|
11,084
|
|
|
(8,057
|
)
|
||
Accrued income taxes
|
(6,259
|
)
|
|
(1,722
|
)
|
||
Other long-term liabilities
|
(2,316
|
)
|
|
(3,952
|
)
|
||
Net cash provided by operating activities
|
50,866
|
|
|
55,511
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
||||
Additions to property and equipment, net
|
(12,717
|
)
|
|
(9,140
|
)
|
||
Proceeds from sale of assets
|
—
|
|
|
2,973
|
|
||
Business acquisitions, net of cash acquired
|
—
|
|
|
(579,556
|
)
|
||
Minority interest and other investments
|
—
|
|
|
(5,000
|
)
|
||
Net cash used in investing activities
|
(12,717
|
)
|
|
(590,723
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
||||
Net proceeds from credit facility and long-term debt, including current portion
|
175,000
|
|
|
723,054
|
|
||
Repayment of credit facility and long-term debt
|
(3,021
|
)
|
|
(375,000
|
)
|
||
Repurchase of common stock
|
(150,000
|
)
|
|
(24,998
|
)
|
||
Dividends paid
|
(22,728
|
)
|
|
(23,031
|
)
|
||
Proceeds from shares issued pursuant to stock-based compensation plans
|
1,459
|
|
|
9,721
|
|
||
Tax paid for net share exercises and issuance of vested restricted stock units
|
(879
|
)
|
|
(1,013
|
)
|
||
Other financing activities
|
—
|
|
|
(419
|
)
|
||
Net cash (used in) provided by financing activities
|
(169
|
)
|
|
308,314
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(13,957
|
)
|
|
(883
|
)
|
||
Net increase (decrease) in cash and cash equivalents
|
24,023
|
|
|
(227,781
|
)
|
||
Cash and cash equivalents, beginning of year
|
284,592
|
|
|
512,144
|
|
||
Cash and cash equivalents, end of period
|
$
|
308,615
|
|
|
$
|
284,363
|
|
Note 1.
|
Basis of Presentation and Accounting Standards Updates
|
Note 2.
|
Revenue
|
Note 3.
|
Stock-based Compensation
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Cost of goods sold
|
$
|
1,067
|
|
|
$
|
847
|
|
Research and development
|
1,677
|
|
|
1,708
|
|
||
Selling, general and administrative
|
4,902
|
|
|
5,535
|
|
||
Stock-based compensation expense before income taxes
|
$
|
7,646
|
|
|
$
|
8,090
|
|
|
March 31,
|
||||||
|
2020
|
|
2019
|
||||
Capitalized in inventory
|
$
|
879
|
|
|
$
|
1,279
|
|
Note 4.
|
Net Earnings Per Share
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Numerator for earnings per share:
|
|
|
|
||||
Net earnings for basic and diluted earnings per share
|
$
|
15,424
|
|
|
$
|
61,748
|
|
Denominator for earnings per share:
|
|
|
|
||||
Weighted average number of common shares outstanding
|
133,596
|
|
|
135,541
|
|
||
Assumed exercise of stock options and vesting of restricted stock awards, net of shares assumed reacquired under the treasury stock method
|
1,331
|
|
|
1,624
|
|
||
Diluted shares outstanding
|
134,927
|
|
|
137,165
|
|
Note 5.
|
Fair Value of Financial Instruments
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
Derivative instruments designated as cash flow hedges:
|
|
|
|
||||
Interest Rate Swap
|
$
|
131,536
|
|
|
$
|
143,302
|
|
Derivative instruments designated as fair value hedges:
|
|
|
|
||||
Currency Forward Contracts
|
311,667
|
|
|
340,000
|
|
||
Derivative instruments not formally designated as hedges:
|
|
|
|
||||
Currency Forward Contracts
|
119,573
|
|
|
104,835
|
|
||
|
|
|
|
|
|
|
|
March 31,
|
|
December 31,
|
||||
|
|
Classification
|
|
2020
|
|
2019
|
||||
Derivative instruments designated as cash flow hedges:
|
|
|
|
|
||||||
Derivative instruments in asset positions:
|
|
|
|
|
||||||
Interest Rate Swap
|
|
Prepaid expense and other current assets
|
|
$
|
541
|
|
|
$
|
404
|
|
Derivative instruments in liability positions:
|
|
|
|
|
||||||
Interest Rate Swap
|
|
Other current liabilities
|
|
566
|
|
|
453
|
|
||
Interest Rate Swap
|
|
Other long-term liabilities
|
|
1,463
|
|
|
1,012
|
|
||
|
|
|
|
|
|
|
||||
Derivative instruments designated as fair value hedges:
|
|
|
|
|
||||||
Derivative instruments in asset positions:
|
|
|
|
|
||||||
Currency forward contracts
|
|
Prepaid expenses and other current assets
|
|
8,595
|
|
|
—
|
|
||
Currency forward contracts
|
|
Other assets
|
|
17,325
|
|
|
—
|
|
||
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
|
|
812
|
|
|
3,010
|
|
||
Derivative instruments in liability positions:
|
|
|
|
|
||||||
Currency forward contracts
|
|
Other current liabilities
|
|
9,483
|
|
|
391
|
|
Note 7.
|
Accounts Receivable
|
Note 8.
|
Inventories
|
|
March 31,
|
|
December 31,
|
||||
|
2020
|
|
2019
|
||||
Raw material and subassemblies
|
$
|
221,768
|
|
|
$
|
224,239
|
|
Work-in-progress
|
52,271
|
|
|
44,344
|
|
||
Finished goods
|
123,487
|
|
|
120,179
|
|
||
|
$
|
397,526
|
|
|
$
|
388,762
|
|
Note 9.
|
Leases
|
|
Three Months Ended March 31, 2020
|
|
Three Months Ended March 31, 2019
|
||||
|
|
|
|
||||
Operating lease expense
|
$
|
3,022
|
|
|
$
|
2,635
|
|
Short-term lease expense
|
27
|
|
|
246
|
|
||
Variable lease expense
|
570
|
|
|
514
|
|
||
Total lease expense
|
$
|
3,619
|
|
|
$
|
3,395
|
|
|
March 31, 2020
|
December 31, 2019
|
||||
Operating lease right-of-use assets
|
$
|
32,488
|
|
$
|
35,479
|
|
Operating lease liabilities
|
$
|
36,062
|
|
$
|
39,291
|
|
|
Estimated
Useful Life
|
|
March 31,
|
|
December 31,
|
||||
|
2020
|
|
2019
|
||||||
Land
|
—
|
|
$
|
23,837
|
|
|
$
|
21,511
|
|
Buildings
|
30 years
|
|
167,690
|
|
|
167,852
|
|
||
Machinery and equipment
|
3 to 7 years
|
|
306,142
|
|
|
307,530
|
|
||
Office equipment and other
|
3 to 10 years
|
|
127,949
|
|
|
129,127
|
|
||
|
|
|
625,618
|
|
|
626,020
|
|
||
Less accumulated depreciation
|
|
|
(374,197
|
)
|
|
(370,115
|
)
|
||
|
|
|
$
|
251,421
|
|
|
$
|
255,905
|
|
Note 11.
|
Goodwill
|
|
|
Industrial Technologies
|
|
Defense Technologies
|
|
Consolidated
|
||||||
Balance, December 31, 2019
|
|
$
|
635,899
|
|
|
$
|
728,697
|
|
|
$
|
1,364,596
|
|
Goodwill from acquisitions
|
|
—
|
|
|
(12,617
|
)
|
|
(12,617
|
)
|
|||
Currency translation adjustments
|
|
(7,244
|
)
|
|
(15,907
|
)
|
|
(23,151
|
)
|
|||
Balance, March 31, 2020
|
|
$
|
628,655
|
|
|
$
|
700,173
|
|
|
$
|
1,328,828
|
|
Note 13.
|
Debt
|
|
March 31,
|
|
December 31,
|
||||
|
2020
|
|
2019
|
||||
Unsecured notes
|
$
|
425,000
|
|
|
$
|
425,000
|
|
Credit Agreement (term loans)
|
226,536
|
|
|
239,552
|
|
||
Credit Agreement (revolving credit facility)
|
191,000
|
|
|
16,000
|
|
||
Unamortized discounts and issuance costs
|
(3,340
|
)
|
|
(3,689
|
)
|
||
Total debt
|
$
|
839,196
|
|
|
$
|
676,863
|
|
Less: Credit facility
|
191,000
|
|
|
16,000
|
|
||
Less: Long-term debt, current portion
|
11,923
|
|
|
12,444
|
|
||
Long-term debt, net of current portion
|
$
|
636,273
|
|
|
$
|
648,419
|
|
Note 14.
|
Accrued Product Warranties
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Accrued product warranties, beginning of period
|
$
|
19,143
|
|
|
$
|
18,583
|
|
Amounts paid for warranty services
|
(2,003
|
)
|
|
(2,776
|
)
|
||
Warranty provisions for products sold
|
2,860
|
|
|
2,414
|
|
||
Business acquisition
|
—
|
|
|
874
|
|
||
Currency translation adjustments and other
|
(191
|
)
|
|
(37
|
)
|
||
Accrued product warranties, end of period
|
$
|
19,809
|
|
|
$
|
19,058
|
|
|
|
|
|
||||
Current accrued product warranties, end of period
|
$
|
15,018
|
|
|
$
|
15,747
|
|
Long-term accrued product warranties, end of period
|
$
|
4,791
|
|
|
$
|
3,311
|
|
Note 15.
|
Shareholders' Equity
|
Note 16.
|
Contingencies
|
Note 17.
|
Income Taxes
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Income tax provision
|
$
|
7,774
|
|
|
$
|
13,009
|
|
Effective tax rate
|
33.5
|
%
|
|
17.4
|
%
|
|
Tax Years:
|
United States Federal
|
2016-2018
|
State of California
|
2015-2018
|
State of Massachusetts
|
2015-2018
|
State of Oregon
|
2016-2018
|
Sweden
|
2012-2018
|
United Kingdom
|
2015-2018
|
Belgium
|
2012-2018
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Revenue—External Customers:
|
|
|
|
||||
Industrial Technologies
|
$
|
276,415
|
|
|
$
|
271,386
|
|
Defense Technologies
|
174,508
|
|
|
173,350
|
|
||
|
$
|
450,923
|
|
|
$
|
444,736
|
|
Revenue—Intersegments:
|
|
|
|
||||
Industrial Technologies
|
$
|
2,702
|
|
|
$
|
4,586
|
|
Defense Technologies
|
1,834
|
|
|
1,512
|
|
||
Eliminations
|
(4,536
|
)
|
|
(6,098
|
)
|
||
|
$
|
—
|
|
|
$
|
—
|
|
Segment operating income:
|
|
|
|
||||
Industrial Technologies
|
$
|
64,265
|
|
|
$
|
69,019
|
|
Defense Technologies
|
33,154
|
|
|
46,890
|
|
||
|
$
|
97,419
|
|
|
$
|
115,909
|
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Consolidated segment operating income
|
$
|
97,419
|
|
|
$
|
115,909
|
|
Unallocated corporate expenses
|
(36,244
|
)
|
|
(28,290
|
)
|
||
Amortization of purchased intangible assets
|
(11,896
|
)
|
|
(5,928
|
)
|
||
Restructuring expenses
|
(20,784
|
)
|
|
(609
|
)
|
||
Consolidated earnings from operations
|
28,495
|
|
|
81,082
|
|
||
Interest and non-operating expenses, net
|
(5,297
|
)
|
|
(6,325
|
)
|
||
Consolidated earnings before income taxes
|
$
|
23,198
|
|
|
$
|
74,757
|
|
|
March 31,
|
|
December 31,
|
||||
|
2020
|
|
2019
|
||||
Operating segment assets:
|
|
|
|
||||
Net accounts receivable, inventories and demonstration assets:
|
|
|
|
||||
Industrial Technologies
|
$
|
368,199
|
|
|
$
|
405,166
|
|
Defense Technologies
|
360,791
|
|
|
332,639
|
|
||
|
$
|
728,990
|
|
|
$
|
737,805
|
|
Goodwill:
|
|
|
|
||||
Industrial Technologies
|
628,655
|
|
|
635,899
|
|
||
Defense Technologies
|
700,173
|
|
|
728,697
|
|
||
|
$
|
1,328,828
|
|
|
$
|
1,364,596
|
|
Total operating segment assets
|
$
|
2,057,818
|
|
|
$
|
2,102,401
|
|
|
|
|
|
||||
Assets not allocated:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
308,615
|
|
|
$
|
284,592
|
|
Prepaid expenses and other current assets
|
92,929
|
|
|
86,337
|
|
||
Property and equipment, net
|
251,421
|
|
|
255,905
|
|
||
Deferred income taxes
|
39,458
|
|
|
39,983
|
|
||
Intangible assets, net
|
231,953
|
|
|
247,514
|
|
||
Other assets
|
140,043
|
|
|
120,809
|
|
||
Total assets
|
$
|
3,122,237
|
|
|
$
|
3,137,541
|
|
|
Three Months Ended March 31, 2020
|
||||||||||
|
Industrial Technologies
|
|
Defense Technologies
|
|
Total
|
||||||
United States
|
$
|
103,337
|
|
|
$
|
115,947
|
|
|
$
|
219,284
|
|
Europe
|
65,335
|
|
|
19,476
|
|
|
$
|
84,811
|
|
||
Asia
|
73,387
|
|
|
11,864
|
|
|
$
|
85,251
|
|
||
Middle East/Africa
|
18,027
|
|
|
25,128
|
|
|
$
|
43,155
|
|
||
Canada/Latin America
|
16,329
|
|
|
2,093
|
|
|
$
|
18,422
|
|
||
|
$
|
276,415
|
|
|
$
|
174,508
|
|
|
$
|
450,923
|
|
|
Three Months Ended March 31, 2019
|
||||||||||
|
Industrial Technologies
|
|
Defense Technologies
|
|
Total
|
||||||
United States
|
$
|
133,422
|
|
|
$
|
109,304
|
|
|
$
|
242,726
|
|
Europe
|
73,864
|
|
|
26,596
|
|
|
100,460
|
|
|||
Asia
|
41,393
|
|
|
17,386
|
|
|
58,779
|
|
|||
Middle East/Africa
|
9,865
|
|
|
17,407
|
|
|
27,272
|
|
|||
Canada/Latin America
|
12,842
|
|
|
2,657
|
|
|
15,499
|
|
|||
|
$
|
271,386
|
|
|
$
|
173,350
|
|
|
$
|
444,736
|
|
|
March 31,
|
|
December 31,
|
||||
|
2020
|
|
2019
|
||||
United States
|
$
|
1,122,056
|
|
|
$
|
1,137,375
|
|
Europe
|
418,747
|
|
|
435,024
|
|
||
Other foreign
|
411,442
|
|
|
416,425
|
|
||
|
$
|
1,952,245
|
|
|
$
|
1,988,824
|
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
United States government
|
$
|
132,149
|
|
|
$
|
137,493
|
|
Note 19.
|
Business Acquisitions and Divestitures
|
Note 19.
|
Business Acquisitions and Divestitures - (Continued)
|
Cash acquired
|
|
$
|
6,687
|
|
Other tangible assets and liabilities
|
|
14,915
|
|
|
Net deferred taxes
|
|
(9,776
|
)
|
|
Identified intangible assets
|
|
102,740
|
|
|
Goodwill
|
|
271,365
|
|
|
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 19.
|
Business Acquisitions and Divestitures - (Continued)
|
|
March 31,
|
|
March 31,
|
||||
|
2020
|
|
2019
|
||||
Employee separation costs
|
$
|
10,465
|
|
|
$
|
—
|
|
Lease consolidation expenses
|
204
|
|
|
—
|
|
||
Third party and other costs
|
10,115
|
|
|
—
|
|
||
Total Restructuring Program Expenses
|
$
|
20,784
|
|
|
$
|
—
|
|
|
Employee separation costs
|
|
Lease consolidation expenses
|
|
Third party and other costs
|
|
Total
|
||||||||
Balance at December 31, 2019
|
$
|
1,343
|
|
|
$
|
339
|
|
|
$
|
2,441
|
|
|
$
|
4,123
|
|
Accrual and accrual adjustments
|
10,465
|
|
|
204
|
|
|
10,115
|
|
|
20,784
|
|
||||
Cash payments
|
(1,685
|
)
|
|
(119
|
)
|
|
(4,181
|
)
|
|
(5,985
|
)
|
||||
Balance at March 31, 2020
|
$
|
10,123
|
|
|
$
|
424
|
|
|
$
|
8,375
|
|
|
$
|
18,922
|
|
Note 21.
|
Subsequent Events
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
risks related to United States government spending decisions and applicable procurement rules and regulations;
|
•
|
negative impacts to operating margins due to reductions in sales or changes in product mix;
|
•
|
impairments in the value of tangible and intangible assets;
|
•
|
unfavorable results of legal proceedings;
|
•
|
risks associated with international sales and business activities, including the regulation of the export and sale of our products worldwide and our ability to obtain and maintain necessary export licenses, as well as the imposition of significant tariffs or other trade barriers;
|
•
|
risks related to subcontractor and supplier performance and financial viability as well as raw material and component availability and pricing;
|
•
|
risks related to currency fluctuations;
|
•
|
adverse general economic conditions or volatility in our primary markets;
|
•
|
our ability to compete effectively and to respond to technological change;
|
•
|
risks related to product defects or errors;
|
•
|
our ability to protect our intellectual property and proprietary rights;
|
•
|
cybersecurity and other security threats and technology disruptions;
|
•
|
our ability to successfully manage acquisitions, investments and divestiture activities and integrate acquired companies;
|
•
|
our ability to achieve the intended benefits of our strategic restructuring;
|
•
|
our ability to attract and retain key senior management and qualified technical, sales and other personnel;
|
•
|
risks to our supply chain, production facilities or other operations, and changes to general, domestic, and foreign economic conditions, due to the COVID-19 pandemic; and
|
•
|
other risks discussed from time to time in filings and reports filed with the Securities and Exchange Commission.
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Revenue
|
$
|
276.4
|
|
|
$
|
271.4
|
|
Segment operating income
|
$
|
64.3
|
|
|
$
|
69.0
|
|
Segment operating margin
|
23.2
|
%
|
|
25.4
|
%
|
||
Total backlog, end of period
|
$
|
330.0
|
|
|
$
|
257.2
|
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Revenue
|
$
|
174.5
|
|
|
$
|
173.4
|
|
Segment operating income
|
$
|
33.2
|
|
|
$
|
46.9
|
|
Segment operating margin
|
19.0
|
%
|
|
27.0
|
%
|
||
Total backlog, end of period
|
$
|
529.3
|
|
|
$
|
578.8
|
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Net cash provided by operating activities
|
$
|
50,866
|
|
|
$
|
55,511
|
|
Net cash used in investing activities
|
(12,717
|
)
|
|
(590,723
|
)
|
||
Net cash (used in) provided by financing activities
|
(169
|
)
|
|
308,314
|
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
•
|
We have experienced and may continue to experience disruptions in our supply chain from the actions of governments or businesses intended to contain or slow the spread of the virus, such as closing factories or other operations that produce components necessary for our products, quarantining individuals around major commercial hubs, and/or restricting the transportation of goods and services.
|
•
|
We may experience significant workplace disruptions as a result of employees in our production facilities becoming sick or are quarantined as a result of exposure to COVID-19, which could necessitate closing such facilities or significantly reducing their output for an extended period.
|
•
|
Delays in inspection, acceptance and payment by our customers, many of whom are working remotely, could also affect our sales and cash flows. Limitations on government operations can also impact regulatory approvals such as export licenses that are needed for international sales and deliveries. In addition, we could experience delays in international orders, many of which require lines of credit from local banks whose operations may be impacted by the COVID-19 pandemic. As a result of the COVID-19 crisis, there may be changes in our customers’ priorities and practices, as our customers confront competing budget priorities and more limited resources. These changes may impact current and future programs, government payments and other practices, procurements, and funding decisions.
|
•
|
Pursuant to government closure orders intended to contain or slow the spread of the virus, we have been required to close certain of our facilities that perform work that is deemed non-essential. One or more additional facilities could become subject to similar orders, which could further disrupt our operations if the work performed at such facilities cannot be conducted remotely, necessitating the furloughing of some of our employees or a permanent reduction in our workforce.
|
•
|
If we do not respond appropriately to the pandemic, or if customers do not perceive our response to be adequate, we could suffer damage to our reputation and our brands, which could adversely affect our business.
|
•
|
Deterioration of worldwide credit and financial markets could adversely affect our ability to obtain financing on favorable terms and continue to meet our liquidity needs.
|
•
|
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
|
Period
|
Total Number of Shares Purchased(1)
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Maximum Number of Shares that May Yet Be Purchased Under the Plan or Programs
|
|||||
March 1 to March 31, 2020
|
4,114,549
|
|
|
$
|
36.46
|
|
|
4,114,549
|
|
|
|
|
Total
|
4,114,549
|
|
|
$
|
36.46
|
|
|
4,114,549
|
|
|
8,336,970
|
|
ITEM 5.
|
OTHER INFORMATION
|
•
|
The form of RSU agreement for the Company’s directors was amended to, among other things, provide for (i) accrual of dividend equivalents on the RSUs during the vesting period, to be paid if and when the underlying RSUs vest, and (ii) full vesting of awards upon a Change in Control (as such term is defined in the form of RSU grant agreement) if the awards are not assumed in the Change in Control.
|
•
|
The form of PRSU agreement was amended to, among other things, provide for (x) accrual of dividend equivalents on PRSUs during the vesting period, to be paid if and when the underlying PRSUs vest and (y) full vesting of awards upon a termination without Cause within 12 months following a Change in Control (as such terms are defined in the form of PRSU grant agreement), with the PRSUs vesting based on achievement of the target level of performance if the termination occurs prior to the end of the performance period (and the actual level of performance achieved if the termination occurs after the end of the performance period), unless the awards are not assumed in the Change in Control, in which case they will fully vest upon the Change in Control, with the PRSUs vesting based on the achievement of the greater of the target level of performance and the actual level of performance achieved determined as if the applicable performance period ended on the last day of the Company’s calendar quarter immediately preceding the first public announcement of the Change in Control.
|
ITEM 6.
|
EXHIBITS
|
|
|
FLIR SYSTEMS, INC.
|
|
|
|
Date May 6, 2020
|
|
/s/ Carol P. Lowe
|
|
|
Carol P. Lowe
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
(Duly Authorized and Principal Financial Officer)
|
(a)
|
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
|
(b)
|
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.
|
1.
|
Grant. Subject to the terms and conditions of the Plan and this Agreement, the Company grants to you, the Grantee, the right to receive on the vesting date described herein shares of the Company’s common stock (the “Shares”) under the terms hereof.
|
2.
|
No Rights as Shareholder Prior to Issuance and Delivery of Shares. Grantee shall not be deemed for any purpose to be a shareholder of the Company as to any Shares subject to this Agreement, including the right to any dividends issued over the vesting period, until the Shares have been issued and delivered to Grantee in accordance with the Plan and this Agreement.
|
3.
|
Dividend Equivalents. If the Company declares one or more cash or stock dividends on the Shares during the period commencing on the Grant Date and ending on and including the day immediately preceding the day on which the Shares subject to this Agreement are issued to you, then, on the date each such dividend is paid to the holders of Shares, you shall be credited with dividend equivalent units (“Dividend Equivalent Units”) in accordance with the following:
|
(a)
|
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 Target Shares indicated as “Number of Target Shares” set forth above (or, if the dividend payment date occurs after the Committee has determined the number of Shares that are eligible to vest in accordance with Appendix A or Section 10, as applicable, such number of Shares that are eligible to vest), divided by (iii) the closing price of a Share on the dividend payment date.
|
(b)
|
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 Target Shares indicated as “Number of Target Shares” set forth above (or, if the dividend payment date occurs after the Committee has determined the number of Shares that are eligible to vest in accordance with Appendix A or Section 10, as applicable, such number of Shares that are eligible to vest).
|
4.
|
Vesting. The Shares subject to this Agreement shall be eligible to vest as stated in Appendix A based on the achievement of the performance goals set forth therein.
|
5.
|
Payment of Shares. Subject to Section 19 of this Agreement, the number of Shares achieved and vested pursuant to clause (b) in Appendix A and Section 8 shall be issued to Grantee within 2½ months after the Vesting Date (as defined in Appendix A) or, if later, the date on which the Shares are distributable pursuant to the terms of the Company’s Stock Deferral Plan.
|
6.
|
Rights of Grantee with Respect to Shares Delivered. Grantee shall enjoy all shareholder rights with respect to Shares that have been issued and delivered, subject to any restrictions
|
7.
|
Termination of Service. Except as provided in Sections 8 or 9, in the event that, prior to the Vesting Date, Grantee’s employment and consultancy with the Company and its Subsidiaries terminates for any reason, the Shares subject to this Agreement shall immediately expire and no additional Shares or payments shall be issued and delivered or paid to Grantee pursuant to this Agreement. In the event of a dispute as to the date of termination of Grantee’s employment or consultancy for purposes of the Plan, such date shall be determined by the Committee, in its sole discretion, which determination shall be final.
|
8.
|
Death, Qualifying Disability, or Qualifying Retirement.
|
(a)
|
Death/Qualifying Disability. In the event of Grantee’s death or termination of employment or consultancy with the Company and its Subsidiaries as a result of Grantee’s Qualifying Disability, in either case, occurring prior to the Vesting Date, the number of Shares subject to this Agreement that shall vest and become issued to Grantee (or his or her estate or designated beneficiary, as applicable) within 2½ months after the Vesting Date shall equal the Shares (if any) that are achieved pursuant to Appendix A of this Agreement, subject to any delay of issuance as required under Section 19 of this Agreement. Upon such payment, the Agreement shall expire and no additional Shares or payments shall be issued and delivered or paid to Grantee (or his or her estate or designated beneficiary, as applicable) pursuant to this Agreement.
|
(b)
|
Qualifying Retirement. In the event of Grantee’s Qualifying Retirement occurring prior to the Vesting Date, the number of Shares subject to this Agreement that shall vest and become issued to Grantee (or his or her estate or designated beneficiary, as applicable) within 2½ months after the Vesting Date shall equal the total Shares (if any) that are achieved pursuant to Appendix A of this Agreement, prorated to reflect the number of full months in the Performance Period during which Grantee was employed by or engaged to provide consulting services to the Company or its Subsidiaries. The issuance of these vested Shares may be delayed as required under Section 19 of this Agreement. Upon such payment, the Agreement shall expire and
|
9.
|
Termination without Cause following a Change in Control. If, within 12 months following a Change in Control (as defined below) in which the award referenced in this Agreement is assumed or continued, the Grantee’s continuous service as an employee or consultant with the Company and its Subsidiaries is terminated by the Company or the applicable Subsidiary without Cause (as defined below), the Company shall issue to the Grantee the number of Target Shares indicated as “Number of Target Shares” set forth above, without regard to the performance conditions described in Appendix A; provided, however, that if such termination of service occurs after the end of the Performance Period but before the Committee certifies the performance level achieved in accordance with Appendix A, then the Shares subject to this Agreement shall remain outstanding until completion of such certification and the Company shall issue to the Grantee the number of Shares, if any, that are earned as determined in accordance with Appendix A; provided, further, that if such termination of service occurs after the Committee certifies the performance level achieved in accordance with Appendix A but before the Vesting Date, then, to the extent that any Shares became earned in accordance with Appendix A, the Company shall issue to the Grantee such number of earned Shares. The Company shall issue such Shares not later than one calendar month after the date of the Grantee’s termination of service; provided, however, that if such termination occurs after the end of the Performance Period but before the Vesting Date, then the Company shall issue such Shares not later than one calendar month after the later of (i) the date of the Grantee’s termination of service and (ii) date on which the Committee certifies the performance level achieved in accordance with Appendix A. Upon such issuance the Agreement shall expire and no additional Shares or payments shall be issued and delivered to Grantee pursuant to this Agreement. Notwithstanding the foregoing, if the Grantee is a participant in the Company’s Executive Severance Benefit Plan and/or the Company’s Change in Control Severance Plan (collectively, the “Severance Plans”), then the treatment of the Shares subject to this Agreement upon a termination of the Grantee’s employment without Cause shall be governed by the terms and conditions of the applicable Severance Plan in lieu of the terms and conditions of this Agreement.
|
(a)
|
For purposes of this Agreement, the term “Change in Control” shall mean the occurrence of a “change in the ownership,” a “change in the effective control” or a “change in the ownership of a substantial portion of the assets” of the Company.
|
(b)
|
For purposes of this Agreement, the term “Cause” shall mean, with respect to the Grantee, unless otherwise provided in an applicable agreement between the Grantee and the Company or any of its Subsidiaries: (i) any material violation by the Grantee of any law or regulation applicable to the business of the Company; (ii) the Grantee’s conviction for, or plea of no contest to, a felony or a crime involving moral turpitude; (iii) the Grantee’s commission of an act of personal dishonesty that is intended to result in the substantial personal enrichment of the Grantee (excluding inadvertent acts that are promptly cured following notice); (iv) continued material violations by the Grantee of the Grantee’s lawful and reasonable duties of employment (including, but not limited to, compliance with material written policies of the Company and material written agreements with the Company), which violations are demonstrably willful and deliberate on the Grantee’s part, but, if such violation is curable, only after the Company has delivered a written demand for performance to the Grantee that describes the basis for the Company’s belief that the Grantee has not substantially performed the Grantee’s duties and the Grantee has not cured within a period of 15 days following notice; (v) the Grantee’s willful failure (other than due to physical incapacity) to cooperate with an investigation by a governmental authority or the
|
10.
|
Change in Control. In the event a Change in Control in which the award referenced in this Agreement is not being assumed or continued occurs during the Performance Period, and Grantee remains employed by the Company or its Subsidiaries until the date of such Change in Control, the Company shall issue to Grantee the greater of (a) the number of Target Shares indicated as “Number of Target Shares” set forth above, without regard to the performance conditions described in Appendix A, or (b) the number of Shares that would be achieved pursuant to Appendix A if the Performance Period ended on the last day of the Company’s calendar quarter immediately preceding the first public announcement of the Change in Control as if such day were the last day of the Performance Period for purposes of determining the number of Shares achieved in accordance with Appendix A; provided that in lieu of issuing such Shares, the Company may, in the sole discretion of the Committee, make a cash payment to Grantee in an amount equal to the Fair Market Value of such number of vested Shares determined under this paragraph less any applicable withholding taxes. The Company shall issue such Shares or make such payment not later than one calendar month after the date of the Change in Control. Upon such issuance or payment the Agreement shall expire and no additional Shares or payments shall be issued and delivered or paid to Grantee pursuant to this Agreement. For the avoidance of doubt, if a Change in Control occurs after the Performance Period but before the Vesting Date, the number of Shares achieved will be determined pursuant to the terms and conditions set forth in Appendix A.
|
11.
|
Nontransferability of this Agreement. Neither this Agreement nor the Shares subject to this Agreement may be sold, transferred, assigned, pledged, hypothecated, encumbered or otherwise disposed of, other than by will, the laws of descent and distribution or pursuant to beneficiary designation procedures approved by the Company, and any such attempted action shall be void.
|
12.
|
Withholding Taxes. The vesting and issuance of Shares and the payment of cash to Grantee is a taxable event for which the Company is obligated to withhold taxes. Grantee agrees to pay to the Company an amount sufficient to provide for any federal, state, and local withholding taxes, including FICA taxes, in connection with the issuance and delivery of any Shares by the Company to Grantee. Grantee may satisfy this withholding obligation by electing in writing (i) to transfer from Grantee’s Fidelity cash account an amount sufficient to satisfy the withholding obligation, or (ii) to have the Company withhold from the Shares otherwise to be delivered to Grantee that number of Shares that would satisfy the withholding obligation. In the absence of a timely election by Grantee, the Committee will use option (ii).
|
(a)
|
The value of the Shares withheld or transferred must equal (or exceed by at most a fractional Share) the minimum withholding obligation.
|
(b)
|
The value of the Shares withheld or transferred shall be the Fair Market Value determined as of the Vesting Date.
|
13.
|
Exclusion of Shares from Compensation. Shares issued and delivered to Grantee pursuant to the Plan will not constitute compensation to Grantee for purposes of any retirement, life insurance or other employee benefit plan of the Company.
|
14.
|
Termination of Agreement. This Agreement shall terminate when no further Shares may be delivered to Grantee pursuant to this Agreement.
|
15.
|
Governing Law. This Agreement is governed by, and subject to, the laws of the State of Oregon, as provided in the Plan. For purposes of litigating any dispute that arises under this Agreement, the parties hereby submit to and consent to the jurisdiction of the State of Oregon, and agree that such litigation shall be conducted in the appropriate state or federal court of Oregon.
|
16.
|
Electronic Delivery and Participation. The Company may, in its sole discretion, decide to deliver any documents related to the award referenced in this Agreement or to participation in the Plan or to future awards that may be granted under the Plan by electronic means or to request Grantee’s consent to participate in the Plan by electronic means. Grantee hereby consents to receive such documents by electronic delivery and to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.
|
17.
|
Severability. The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.
|
18.
|
Insider Trading Restrictions. Grantee acknowledges that Grantee may be subject to insider trading restrictions, which may affect his or her ability to acquire or dispose of Shares or rights to Shares (e.g., restricted stock units) acquired under the Plan during such times as Grantee is considered to have “inside information” regarding the Company. Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. Grantee is responsible for ensuring compliance with any applicable restrictions and is advised to consult his or her personal legal advisor on this matter.
|
19.
|
Section 409A. Notwithstanding anything in the Plan, this Agreement or any other agreement (whether entered into before, on or after the Grant Date) to the contrary, if the vesting of the balance, or some lesser portion of the balance, of the Shares is accelerated in connection with Grantee’s “separation from service” within the meaning of Section 409A, as determined by the Company, other than due to death, and if (x) Grantee is a U.S. taxpayer and a “specified employee” within the meaning of Section 409A at the time of such separation from service
|
20.
|
Clawback. The Shares issued to Grantee hereunder (including any proceeds, gains or other economic benefit received by the Grantee from a subsequent sale of Shares issued upon vesting) will be subject to any compensation recovery or clawback policy implemented by the Company before the date of this Agreement or any such policy implemented by the Company after the date of the Agreement in order to comply with the requirements of applicable laws.
|
(a)
|
Performance Vesting. Subject to (i) Grantee’s continuous service as an employee or consultant with the Company or its Subsidiaries through [__] (the “Vesting Date”) and (ii) except as provided in Sections 8, 9 or 10 of this Agreement, the certification by the Committee of the performance level achieved in accordance with clause (b) below, Grantee shall become vested in the number of Shares that are achieved pursuant to clauses (a) and (b) of this Appendix A. The number of Adjusted EBITDA Shares that are achieved shall be determined by multiplying the number of Adjusted EBITDA Shares by the Payout percentage amount identified in the table below that corresponds to Company Adjusted EBITDA CAGR performance for the Performance Period determined by the Committee in accordance with clause (b) below. The number of Organic Revenue Shares that are achieved shall be determined by multiplying the number of Organic Revenue Shares by the Payout percentage amount identified in the table below that corresponds to Company Organic Revenue CAGR performance for the Performance Period determined by the Committee in accordance with clause (b) below. The aggregate number of Shares that are achieved, if any, shall be equal to the sum of (i) the number of Adjusted EBITDA Shares that are achieved, if any, and (ii) the number of Organic Revenue Shares that are achieved, if any, in each case as determined in accordance with clauses (a) and (b).
|
Achievement Level
|
Adjusted EBITDA CAGR(1)
(weighted 50%)
|
Organic Revenue CAGR(1)
(weighted 50%)
|
Payout(2)
|
Below Threshold
|
<[__]%
|
<[__]%
|
0%
|
Threshold
|
[__]%
|
[__]%
|
[60]%
|
Target
|
[__]%
|
[__]%
|
[100]%
|
Maximum
|
[__]% or above
|
[__]% or above
|
[200]%
|
a.
|
Award Payout and Determination.
|
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 May 6, 2020
|
|
/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 May 6, 2020
|
|
/s/ Carol P. Lowe
|
|
|
Carol P. Lowe
|
|
|
Chief Financial Officer
|
Date May 6, 2020
|
|
/s/ James J. Cannon
|
|
|
James J. Cannon
|
|
|
President and Chief Executive Officer
|
Date May 6, 2020
|
|
/s/ Carol P. Lowe
|
|
|
Carol P. Lowe
|
|
|
Chief Financial Officer
|