☒
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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.
|
Delaware
|
|
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)
|
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(Zip Code)
|
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.
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Financial Statements
|
|
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||
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||
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||
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||
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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 June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Revenue
|
$
|
482,015
|
|
|
$
|
481,998
|
|
|
$
|
932,938
|
|
|
$
|
926,734
|
|
Cost of goods sold
|
229,815
|
|
|
248,590
|
|
|
461,370
|
|
|
459,465
|
|
||||
Gross profit
|
252,200
|
|
|
233,408
|
|
|
471,568
|
|
|
467,269
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Research and development
|
56,012
|
|
|
52,957
|
|
|
109,859
|
|
|
100,637
|
|
||||
Selling, general and administrative
|
88,676
|
|
|
113,713
|
|
|
204,918
|
|
|
218,203
|
|
||||
Restructuring expenses
|
7,702
|
|
|
3,001
|
|
|
28,486
|
|
|
3,610
|
|
||||
Total operating expenses
|
152,390
|
|
|
169,671
|
|
|
343,263
|
|
|
322,450
|
|
||||
Earnings from operations
|
99,810
|
|
|
63,737
|
|
|
128,305
|
|
|
144,819
|
|
||||
Interest expense
|
6,962
|
|
|
7,272
|
|
|
13,923
|
|
|
12,788
|
|
||||
Interest income
|
(127
|
)
|
|
(438
|
)
|
|
(476
|
)
|
|
(1,495
|
)
|
||||
Other expense (income), net
|
11,081
|
|
|
(1,220
|
)
|
|
9,766
|
|
|
646
|
|
||||
Earnings before income taxes
|
81,894
|
|
|
58,123
|
|
|
105,092
|
|
|
132,880
|
|
||||
Income tax provision
|
20,637
|
|
|
12,005
|
|
|
28,411
|
|
|
25,014
|
|
||||
Net earnings
|
$
|
61,257
|
|
|
$
|
46,118
|
|
|
$
|
76,681
|
|
|
$
|
107,866
|
|
|
|
|
|
|
|
|
|
||||||||
Net earnings per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.47
|
|
|
$
|
0.34
|
|
|
$
|
0.58
|
|
|
$
|
0.80
|
|
Diluted
|
$
|
0.47
|
|
|
$
|
0.34
|
|
|
$
|
0.57
|
|
|
$
|
0.79
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
130,831
|
|
|
135,519
|
|
|
132,213
|
|
|
135,530
|
|
||||
Diluted
|
131,687
|
|
|
137,084
|
|
|
133,389
|
|
|
137,105
|
|
FLIR SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands)
(Unaudited)
|
|||||||||||||||
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Net earnings
|
$
|
61,257
|
|
|
$
|
46,118
|
|
|
$
|
76,681
|
|
|
$
|
107,866
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
||||||||
Fair value adjustment on derivatives instruments designated as hedges (1)
|
408
|
|
|
(779
|
)
|
|
3,161
|
|
|
(1,586
|
)
|
||||
Unrealized gain on available-for-sale investments
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
||||
Foreign currency translation adjustments
|
(2,740
|
)
|
|
4,664
|
|
|
(23,025
|
)
|
|
(2,776
|
)
|
||||
Total other comprehensive income (loss)
|
(2,332
|
)
|
|
3,889
|
|
|
(19,864
|
)
|
|
(4,358
|
)
|
||||
Comprehensive income
|
$
|
58,925
|
|
|
$
|
50,007
|
|
|
$
|
56,817
|
|
|
$
|
103,508
|
|
FLIR SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except for par value)
(Unaudited)
|
|||||||
|
June 30,
|
|
December 31,
|
||||
|
2020
|
|
2019
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
332,958
|
|
|
$
|
284,592
|
|
Accounts receivable, net
|
304,981
|
|
|
318,652
|
|
||
Inventories
|
433,908
|
|
|
388,762
|
|
||
Prepaid expenses and other current assets
|
114,429
|
|
|
116,728
|
|
||
Total current assets
|
1,186,276
|
|
|
1,108,734
|
|
||
Property and equipment, net
|
255,770
|
|
|
255,905
|
|
||
Deferred income taxes, net
|
41,393
|
|
|
39,983
|
|
||
Goodwill
|
1,340,989
|
|
|
1,364,596
|
|
||
Intangible assets, net
|
222,123
|
|
|
247,514
|
|
||
Other assets
|
110,746
|
|
|
120,809
|
|
||
Total assets
|
$
|
3,157,297
|
|
|
$
|
3,137,541
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
147,487
|
|
|
$
|
158,033
|
|
Deferred revenue
|
30,319
|
|
|
28,587
|
|
||
Accrued payroll and related liabilities
|
79,981
|
|
|
72,476
|
|
||
Accrued product warranties
|
15,887
|
|
|
14,611
|
|
||
Advance payments from customers
|
14,142
|
|
|
28,005
|
|
||
Accrued expenses
|
32,892
|
|
|
40,815
|
|
||
Accrued income taxes
|
24,273
|
|
|
14,735
|
|
||
Other current liabilities
|
34,721
|
|
|
27,349
|
|
||
Credit facility
|
191,000
|
|
|
16,000
|
|
||
Long-term debt, current portion
|
12,465
|
|
|
12,444
|
|
||
Total current liabilities
|
583,167
|
|
|
413,055
|
|
||
Long-term debt, net of current portion
|
643,265
|
|
|
648,419
|
|
||
Deferred income taxes
|
40,405
|
|
|
53,544
|
|
||
Accrued income taxes
|
57,243
|
|
|
55,514
|
|
||
Other long-term liabilities
|
82,516
|
|
|
95,576
|
|
||
Shareholders’ equity:
|
|
|
|
||||
Preferred stock, $0.01 par value, 10,000 shares authorized; no shares issued at June 30, 2020, and December 31, 2019
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value, 500,000 shares authorized, 131,106 and 134,394 shares issued at June 30, 2020, and December 31, 2019, respectively, and additional paid-in capital
|
10,778
|
|
|
16,692
|
|
||
Retained earnings
|
1,925,732
|
|
|
2,020,686
|
|
||
Accumulated other comprehensive loss
|
(185,809
|
)
|
|
(165,945
|
)
|
||
Total shareholders’ equity
|
1,750,701
|
|
|
1,871,433
|
|
||
Total liabilities and shareholders' equity
|
$
|
3,157,297
|
|
|
$
|
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 of $0.17 per share
|
|
—
|
|
|
(22,728
|
)
|
|
—
|
|
|
(22,728
|
)
|
||||
Other comprehensive loss, net of taxes
|
|
—
|
|
|
—
|
|
|
(17,532
|
)
|
|
(17,532
|
)
|
||||
Balance, March 31, 2020
|
|
1,304
|
|
|
1,886,753
|
|
|
(183,477
|
)
|
|
1,704,580
|
|
||||
Net earnings
|
|
—
|
|
|
61,257
|
|
|
—
|
|
|
61,257
|
|
||||
Common stock issued pursuant to stock-based compensation plans, net of shares withheld for taxes
|
|
(3,341
|
)
|
|
—
|
|
|
—
|
|
|
(3,341
|
)
|
||||
Stock-based compensation
|
|
12,815
|
|
|
—
|
|
|
—
|
|
|
12,815
|
|
||||
Dividends paid of $0.17 per share
|
|
—
|
|
|
(22,278
|
)
|
|
—
|
|
|
(22,278
|
)
|
||||
Other comprehensive loss, net of taxes
|
|
—
|
|
|
—
|
|
|
(2,332
|
)
|
|
(2,332
|
)
|
||||
Balance, June 30, 2020
|
|
$
|
10,778
|
|
|
$
|
1,925,732
|
|
|
$
|
(185,809
|
)
|
|
$
|
1,750,701
|
|
|
|
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
|
|
8,709
|
|
|
—
|
|
|
—
|
|
|
8,709
|
|
||||
Stock-based compensation
|
|
8,289
|
|
|
—
|
|
|
—
|
|
|
8,289
|
|
||||
Dividends paid of $0.17 per share
|
|
—
|
|
|
(23,031
|
)
|
|
—
|
|
|
(23,031
|
)
|
||||
Other comprehensive loss, net of taxes
|
|
—
|
|
|
—
|
|
|
(8,247
|
)
|
|
(8,247
|
)
|
||||
Balance, March 31, 2019
|
|
1,354
|
|
|
2,058,680
|
|
|
(157,339
|
)
|
|
1,902,695
|
|
||||
Net earnings
|
|
—
|
|
|
46,118
|
|
|
—
|
|
|
46,118
|
|
||||
Repurchase of common stock
|
|
(7,218
|
)
|
|
(17,780
|
)
|
|
—
|
|
|
(24,998
|
)
|
||||
Common stock issued pursuant to stock-based compensation plans, net of shares withheld for taxes
|
|
(1,704
|
)
|
|
—
|
|
|
—
|
|
|
(1,704
|
)
|
||||
Stock-based compensation
|
|
8,924
|
|
|
—
|
|
|
—
|
|
|
8,924
|
|
||||
Dividends paid of $0.17 per share
|
|
—
|
|
|
(23,033
|
)
|
|
—
|
|
|
(23,033
|
)
|
||||
Other comprehensive income, net of taxes
|
|
—
|
|
|
—
|
|
|
3,889
|
|
|
3,889
|
|
||||
Balance, June 30, 2019
|
|
$
|
1,356
|
|
|
$
|
2,063,985
|
|
|
$
|
(153,450
|
)
|
|
$
|
1,911,891
|
|
FLIR SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
|
|||||||
|
Six Months Ended June 30,
|
||||||
|
2020
|
|
2019
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
||||
Net earnings
|
$
|
76,681
|
|
|
$
|
107,866
|
|
Adjustments to reconcile net earnings to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
47,750
|
|
|
48,915
|
|
||
Stock-based compensation
|
20,887
|
|
|
17,278
|
|
||
Loss on disposal of assets
|
3,585
|
|
|
—
|
|
||
Minority interest impairment charges
|
4,803
|
|
|
—
|
|
||
Deferred income taxes
|
(513
|
)
|
|
2,187
|
|
||
Other, net
|
3,218
|
|
|
(3,620
|
)
|
||
Increase (decrease) in cash, net of acquisitions, resulting from changes in:
|
|
|
|
||||
Accounts receivable
|
11,263
|
|
|
(19,128
|
)
|
||
Inventories
|
(46,764
|
)
|
|
(23,604
|
)
|
||
Prepaid expenses and other current assets
|
1,596
|
|
|
(11,487
|
)
|
||
Other assets
|
5,679
|
|
|
3,612
|
|
||
Accounts payable
|
(10,480
|
)
|
|
26,446
|
|
||
Deferred revenue
|
1,898
|
|
|
1,863
|
|
||
Accrued payroll and other liabilities
|
(8,207
|
)
|
|
(13,273
|
)
|
||
Accrued income taxes
|
12,116
|
|
|
(7,885
|
)
|
||
Other long-term liabilities
|
(9,497
|
)
|
|
(5,869
|
)
|
||
Net cash provided by operating activities
|
114,015
|
|
|
123,301
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
||||
Additions to property and equipment, net
|
(27,242
|
)
|
|
(17,781
|
)
|
||
Proceeds from sale of assets
|
—
|
|
|
2,973
|
|
||
Business acquisitions, net of cash acquired
|
—
|
|
|
(602,456
|
)
|
||
Minority interest and other investments
|
304
|
|
|
(5,000
|
)
|
||
Net cash used in investing activities
|
(26,938
|
)
|
|
(622,264
|
)
|
||
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
|
(6,135
|
)
|
|
(378,095
|
)
|
||
Repurchase of common stock
|
(150,000
|
)
|
|
(49,996
|
)
|
||
Dividends paid
|
(45,006
|
)
|
|
(46,064
|
)
|
||
Proceeds from shares issued pursuant to stock-based compensation plans
|
7,309
|
|
|
17,350
|
|
||
Tax paid for net share exercises and issuance of vested restricted stock units
|
(10,071
|
)
|
|
(10,346
|
)
|
||
Other financing activities
|
—
|
|
|
(522
|
)
|
||
Net cash (used in) provided by financing activities
|
(28,903
|
)
|
|
255,381
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(9,808
|
)
|
|
323
|
|
||
Net increase (decrease) in cash and cash equivalents
|
48,366
|
|
|
(243,259
|
)
|
||
Cash and cash equivalents, beginning of year
|
284,592
|
|
|
512,144
|
|
||
Cash and cash equivalents, end of period
|
$
|
332,958
|
|
|
$
|
268,885
|
|
Note 1.
|
Basis of Presentation and Accounting Standards Updates
|
Note 2.
|
Revenue
|
Note 3.
|
Stock-based Compensation
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Cost of goods sold
|
$
|
1,668
|
|
|
$
|
709
|
|
|
$
|
2,735
|
|
|
$
|
1,556
|
|
Research and development
|
2,277
|
|
|
1,951
|
|
|
3,954
|
|
|
3,631
|
|
||||
Selling, general and administrative
|
9,296
|
|
|
6,528
|
|
|
14,198
|
|
|
12,091
|
|
||||
Stock-based compensation expense before income taxes
|
$
|
13,241
|
|
|
$
|
9,188
|
|
|
$
|
20,887
|
|
|
$
|
17,278
|
|
|
June 30,
|
||||||
|
2020
|
|
2019
|
||||
Capitalized in inventory
|
$
|
453
|
|
|
$
|
1,016
|
|
Note 4.
|
Net Earnings Per Share
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Numerator for earnings per share:
|
|
|
|
|
|
|
|
||||||||
Net earnings for basic and diluted earnings per share
|
$
|
61,257
|
|
|
$
|
46,118
|
|
|
$
|
76,681
|
|
|
$
|
107,866
|
|
Denominator for earnings per share:
|
|
|
|
|
|
|
|
||||||||
Weighted average number of common shares outstanding
|
130,831
|
|
|
135,519
|
|
|
132,213
|
|
|
135,530
|
|
||||
Assumed exercise of stock options and vesting of restricted stock awards, net of shares assumed reacquired under the treasury stock method
|
856
|
|
|
1,565
|
|
|
1,176
|
|
|
1,575
|
|
||||
Diluted shares outstanding
|
131,687
|
|
|
137,084
|
|
|
133,389
|
|
|
137,105
|
|
Note 5.
|
Fair Value of Financial Instruments
|
|
June 30, 2020
|
|
December 31, 2019
|
||||
Derivative instruments designated as cash flow hedges:
|
|
|
|
||||
Interest Rate Swap
|
$
|
139,971
|
|
|
$
|
143,302
|
|
Derivative instruments designated as fair value hedges:
|
|
|
|
||||
Currency Forward Contracts
|
283,333
|
|
|
340,000
|
|
||
Derivative instruments not formally designated as hedges:
|
|
|
|
||||
Currency Forward Contracts
|
188,968
|
|
|
104,835
|
|
||
|
|
|
|
|
|
|
|
June 30,
|
|
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
|
|
$
|
740
|
|
|
$
|
404
|
|
Derivative instruments in liability positions:
|
|
|
|
|
||||||
Interest Rate Swap
|
|
Other current liabilities
|
|
818
|
|
|
453
|
|
||
Interest Rate Swap
|
|
Other long-term liabilities
|
|
1,851
|
|
|
1,012
|
|
||
Derivative instruments designated as fair value hedges:
|
|
|
|
|
||||||
Derivative instruments in asset positions:
|
|
|
|
|
||||||
Currency forward contracts
|
|
Prepaid expenses and other current assets
|
|
926
|
|
|
—
|
|
||
Currency forward contracts
|
|
Other assets
|
|
3,298
|
|
|
—
|
|
||
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
|
|
1,734
|
|
|
3,010
|
|
||
Derivative instruments in liability positions:
|
|
|
|
|
||||||
Currency forward contracts
|
|
Other current liabilities
|
|
430
|
|
|
391
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
Classification
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Derivative instruments designated as cash flow hedges:
|
|
|
|
|
|
|
|
|
||||||||||
Loss recognized in other comprehensive (income) loss, net of tax
|
|
Accumulated other comprehensive loss
|
|
$
|
329
|
|
|
$
|
779
|
|
|
$
|
650
|
|
|
$
|
1,586
|
|
Loss reclassified from other comprehensive (income) loss to earnings for the effective portion
|
|
Interest expense
|
|
104
|
|
|
220
|
|
|
275
|
|
|
220
|
|
||||
Derivative instruments designated as fair value hedges:
|
|
|
|
|
|
|
|
|
||||||||||
Loss recognized in earnings for effective portion
|
|
Other expense (income), net
|
|
23,325
|
|
|
—
|
|
|
559
|
|
|
—
|
|
||||
Gain recognized in income for amount excluded from effectiveness testing
|
|
Other expense (income), net
|
|
(1,049
|
)
|
|
—
|
|
|
(2,188
|
)
|
|
—
|
|
||||
Loss (gain) recognized in other comprehensive (income) loss, net of tax
|
|
Accumulated other comprehensive loss (income)
|
|
59
|
|
|
—
|
|
|
(3,811
|
)
|
|
—
|
|
||||
Derivative instruments not formally designated as hedges:
|
|
|
|
|
|
|
|
|
||||||||||
Loss (gain) recognized in earnings
|
|
Other expense (income), net
|
|
6,113
|
|
|
(583
|
)
|
|
(6,777
|
)
|
|
(292
|
)
|
Note 7.
|
Accounts Receivable
|
Note 8.
|
Inventories
|
|
June 30,
|
|
December 31,
|
||||
|
2020
|
|
2019
|
||||
Raw material and subassemblies
|
$
|
239,092
|
|
|
$
|
224,239
|
|
Work-in-progress
|
62,108
|
|
|
44,344
|
|
||
Finished goods
|
132,708
|
|
|
120,179
|
|
||
|
$
|
433,908
|
|
|
$
|
388,762
|
|
Note 9.
|
Leases
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Operating lease expense
|
$
|
3,045
|
|
|
$
|
2,837
|
|
|
$
|
6,067
|
|
|
$
|
5,472
|
|
Short-term lease expense
|
26
|
|
|
327
|
|
|
53
|
|
|
573
|
|
||||
Variable lease expense
|
546
|
|
|
602
|
|
|
1,116
|
|
|
1,116
|
|
||||
Total lease expense
|
$
|
3,617
|
|
|
$
|
3,766
|
|
|
$
|
7,236
|
|
|
$
|
7,161
|
|
|
June 30, 2020
|
December 31, 2019
|
||||
Operating lease right-of-use assets
|
$
|
30,341
|
|
$
|
35,479
|
|
Operating lease liabilities
|
$
|
34,016
|
|
$
|
39,291
|
|
Note 11.
|
Goodwill
|
Note 11.
|
Goodwill - (Continued)
|
|
|
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
|
|
(2,478
|
)
|
|
(8,512
|
)
|
|
(10,990
|
)
|
|||
Balance, June 30, 2020
|
|
$
|
633,421
|
|
|
$
|
707,568
|
|
|
$
|
1,340,989
|
|
Note 13.
|
Debt
|
|
June 30,
|
|
December 31,
|
||||
|
2020
|
|
2019
|
||||
Unsecured notes
|
$
|
425,000
|
|
|
$
|
425,000
|
|
Credit Agreement (term loans)
|
233,721
|
|
|
239,552
|
|
||
Credit Agreement (revolving credit facility)
|
191,000
|
|
|
16,000
|
|
||
Unamortized discounts and issuance costs
|
(2,991
|
)
|
|
(3,689
|
)
|
||
Total debt
|
$
|
846,730
|
|
|
$
|
676,863
|
|
Less: Credit facility
|
191,000
|
|
|
16,000
|
|
||
Less: Long-term debt, current portion
|
12,465
|
|
|
12,444
|
|
||
Long-term debt, net of current portion
|
$
|
643,265
|
|
|
$
|
648,419
|
|
Note 14.
|
Accrued Product Warranties
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Accrued product warranties, beginning of period
|
$
|
19,809
|
|
|
$
|
19,058
|
|
|
$
|
19,143
|
|
|
$
|
18,583
|
|
Amounts paid for warranty services
|
(1,803
|
)
|
|
(4,354
|
)
|
|
(3,806
|
)
|
|
(7,130
|
)
|
||||
Warranty provisions for products sold
|
2,229
|
|
|
3,793
|
|
|
5,089
|
|
|
6,207
|
|
||||
Business acquisition
|
—
|
|
|
25
|
|
|
—
|
|
|
899
|
|
||||
Currency translation adjustments and other
|
113
|
|
|
19
|
|
|
(78
|
)
|
|
(18
|
)
|
||||
Accrued product warranties, end of period
|
$
|
20,348
|
|
|
$
|
18,541
|
|
|
$
|
20,348
|
|
|
$
|
18,541
|
|
|
|
|
|
|
|
|
|
||||||||
Current accrued product warranties, end of period
|
|
|
|
|
$
|
15,887
|
|
|
$
|
14,478
|
|
||||
Long-term accrued product warranties, end of period
|
|
|
|
|
$
|
4,461
|
|
|
$
|
4,063
|
|
Note 15.
|
Contingencies
|
Note 16.
|
Income Taxes
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Income tax provision
|
$
|
20,637
|
|
|
$
|
12,005
|
|
|
$
|
28,411
|
|
|
$
|
25,014
|
|
Effective tax rate
|
25.2
|
%
|
|
20.7
|
%
|
|
27.0
|
%
|
|
18.8
|
%
|
|
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 June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Revenue—External Customers:
|
|
|
|
|
|
|
|
||||||||
Industrial Technologies
|
$
|
300,198
|
|
|
$
|
284,489
|
|
|
$
|
576,613
|
|
|
$
|
555,875
|
|
Defense Technologies
|
181,817
|
|
|
197,509
|
|
|
356,325
|
|
|
370,859
|
|
||||
|
$
|
482,015
|
|
|
$
|
481,998
|
|
|
$
|
932,938
|
|
|
$
|
926,734
|
|
Revenue—Intersegments:
|
|
|
|
|
|
|
|
||||||||
Industrial Technologies
|
$
|
3,927
|
|
|
$
|
3,876
|
|
|
$
|
6,629
|
|
|
$
|
8,462
|
|
Defense Technologies
|
1,438
|
|
|
1,436
|
|
|
3,273
|
|
|
2,947
|
|
||||
Eliminations
|
(5,365
|
)
|
|
(5,312
|
)
|
|
(9,902
|
)
|
|
(11,409
|
)
|
||||
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Segment operating income:
|
|
|
|
|
|
|
|
||||||||
Industrial Technologies
|
$
|
107,137
|
|
|
$
|
71,633
|
|
|
$
|
171,402
|
|
|
$
|
140,652
|
|
Defense Technologies
|
41,155
|
|
|
45,786
|
|
|
74,309
|
|
|
92,676
|
|
||||
|
$
|
148,292
|
|
|
$
|
117,419
|
|
|
$
|
245,711
|
|
|
$
|
233,328
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Consolidated segment operating income
|
$
|
148,292
|
|
|
$
|
117,419
|
|
|
$
|
245,711
|
|
|
$
|
233,328
|
|
Unallocated corporate expenses
|
(29,026
|
)
|
|
(29,635
|
)
|
|
(65,270
|
)
|
|
(57,925
|
)
|
||||
Amortization of purchased intangible assets
|
(11,754
|
)
|
|
(21,046
|
)
|
|
(23,650
|
)
|
|
(26,974
|
)
|
||||
Restructuring expenses
|
(7,702
|
)
|
|
(3,001
|
)
|
|
(28,486
|
)
|
|
(3,610
|
)
|
||||
Consolidated earnings from operations
|
99,810
|
|
|
63,737
|
|
|
128,305
|
|
|
144,819
|
|
||||
Interest and non-operating expenses, net
|
(17,916
|
)
|
|
(5,614
|
)
|
|
(23,213
|
)
|
|
(11,939
|
)
|
||||
Consolidated earnings before income taxes
|
$
|
81,894
|
|
|
$
|
58,123
|
|
|
$
|
105,092
|
|
|
$
|
132,880
|
|
|
June 30,
|
|
December 31,
|
||||
|
2020
|
|
2019
|
||||
Operating segment assets:
|
|
|
|
||||
Net accounts receivable, inventories and demonstration assets:
|
|
|
|
||||
Industrial Technologies
|
$
|
402,454
|
|
|
$
|
405,166
|
|
Defense Technologies
|
366,786
|
|
|
332,639
|
|
||
|
$
|
769,240
|
|
|
$
|
737,805
|
|
Goodwill:
|
|
|
|
||||
Industrial Technologies
|
633,421
|
|
|
635,899
|
|
||
Defense Technologies
|
707,568
|
|
|
728,697
|
|
||
|
$
|
1,340,989
|
|
|
$
|
1,364,596
|
|
Total operating segment assets
|
$
|
2,110,229
|
|
|
$
|
2,102,401
|
|
|
|
|
|
||||
Assets not allocated:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
332,958
|
|
|
$
|
284,592
|
|
Prepaid expenses and other current assets
|
84,078
|
|
|
86,337
|
|
||
Property and equipment, net
|
255,770
|
|
|
255,905
|
|
||
Deferred income taxes
|
41,393
|
|
|
39,983
|
|
||
Intangible assets, net
|
222,123
|
|
|
247,514
|
|
||
Other assets
|
110,746
|
|
|
120,809
|
|
||
Total assets
|
$
|
3,157,297
|
|
|
$
|
3,137,541
|
|
|
Three Months Ended June 30, 2020
|
|
Six Months Ended June 30, 2020
|
||||||||||||||||||||
|
Industrial Technologies
|
|
Defense Technologies
|
|
Total
|
|
Industrial Technologies
|
|
Defense Technologies
|
|
Total
|
||||||||||||
United States
|
$
|
131,301
|
|
|
$
|
111,700
|
|
|
$
|
243,001
|
|
|
$
|
234,638
|
|
|
$
|
227,647
|
|
|
$
|
462,285
|
|
Europe
|
77,831
|
|
|
25,945
|
|
|
$
|
103,776
|
|
|
143,166
|
|
|
45,421
|
|
|
$
|
188,587
|
|
||||
Asia
|
60,951
|
|
|
16,214
|
|
|
$
|
77,165
|
|
|
134,338
|
|
|
28,078
|
|
|
$
|
162,416
|
|
||||
Middle East/Africa
|
14,788
|
|
|
25,094
|
|
|
$
|
39,882
|
|
|
32,815
|
|
|
50,222
|
|
|
$
|
83,037
|
|
||||
Canada/Latin America
|
15,327
|
|
|
2,864
|
|
|
$
|
18,191
|
|
|
31,656
|
|
|
4,957
|
|
|
$
|
36,613
|
|
||||
|
$
|
300,198
|
|
|
$
|
181,817
|
|
|
$
|
482,015
|
|
|
$
|
576,613
|
|
|
$
|
356,325
|
|
|
$
|
932,938
|
|
|
Three Months Ended June 30, 2019
|
|
Six Months Ended June 30, 2019
|
||||||||||||||||||||
|
Industrial Technologies
|
|
Defense Technologies
|
|
Total
|
|
Industrial Technologies
|
|
Defense Technologies
|
|
Total
|
||||||||||||
United States
|
$
|
134,656
|
|
|
$
|
134,216
|
|
|
$
|
268,872
|
|
|
$
|
268,079
|
|
|
$
|
243,519
|
|
|
$
|
511,598
|
|
Europe
|
74,439
|
|
|
25,000
|
|
|
99,439
|
|
|
148,303
|
|
|
51,596
|
|
|
199,899
|
|
||||||
Asia
|
53,622
|
|
|
17,548
|
|
|
71,170
|
|
|
95,014
|
|
|
34,934
|
|
|
129,948
|
|
||||||
Middle East/Africa
|
5,786
|
|
|
18,815
|
|
|
24,601
|
|
|
15,651
|
|
|
36,222
|
|
|
51,873
|
|
||||||
Canada/Latin America
|
15,986
|
|
|
1,930
|
|
|
17,916
|
|
|
28,828
|
|
|
4,588
|
|
|
33,416
|
|
||||||
|
$
|
284,489
|
|
|
$
|
197,509
|
|
|
$
|
481,998
|
|
|
$
|
555,875
|
|
|
$
|
370,859
|
|
|
$
|
926,734
|
|
|
June 30,
|
|
December 31,
|
||||
|
2020
|
|
2019
|
||||
United States
|
$
|
1,104,883
|
|
|
$
|
1,137,375
|
|
Europe
|
416,394
|
|
|
435,024
|
|
||
Other foreign
|
408,351
|
|
|
416,425
|
|
||
|
$
|
1,929,628
|
|
|
$
|
1,988,824
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
United States government
|
$
|
130,047
|
|
|
$
|
156,161
|
|
|
$
|
262,196
|
|
|
$
|
293,654
|
|
Note 18.
|
Business Acquisitions
|
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
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Employee separation costs
|
$
|
6,888
|
|
|
$
|
—
|
|
|
$
|
17,353
|
|
|
$
|
—
|
|
Lease consolidation expenses
|
—
|
|
|
—
|
|
|
204
|
|
|
—
|
|
||||
Third party and other costs
|
814
|
|
|
—
|
|
|
10,929
|
|
|
—
|
|
||||
Total Restructuring Program Expenses
|
$
|
7,702
|
|
|
$
|
—
|
|
|
$
|
28,486
|
|
|
$
|
—
|
|
|
Employee separation costs
|
|
Third party and other costs
|
|
Total
|
||||||
Balance at December 31, 2019
|
$
|
1,343
|
|
|
$
|
2,780
|
|
|
$
|
4,123
|
|
Accrual and accrual adjustments
|
17,353
|
|
|
11,133
|
|
|
28,486
|
|
|||
Cash payments
|
(7,603
|
)
|
|
(13,079
|
)
|
|
(20,682
|
)
|
|||
Balance at June 30, 2020
|
$
|
11,093
|
|
|
$
|
834
|
|
|
$
|
11,927
|
|
Note 20.
|
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 June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Revenue
|
$
|
300.2
|
|
|
$
|
284.5
|
|
|
$
|
576.6
|
|
|
$
|
555.9
|
|
Segment operating income
|
107.1
|
|
|
71.6
|
|
|
171.4
|
|
|
140.7
|
|
||||
Segment operating margin
|
35.7
|
%
|
|
25.2
|
%
|
|
29.7
|
%
|
|
25.3
|
%
|
||||
Total backlog, end of period
|
|
|
|
|
$
|
350.7
|
|
|
$
|
236.8
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Revenue
|
$
|
181.8
|
|
|
$
|
197.5
|
|
|
$
|
356.3
|
|
|
$
|
370.9
|
|
Segment operating income
|
41.2
|
|
|
45.8
|
|
|
74.3
|
|
|
92.7
|
|
||||
Segment operating margin
|
22.6
|
%
|
|
23.2
|
%
|
|
20.9
|
%
|
|
25.0
|
%
|
||||
Total backlog, end of period
|
|
|
|
|
$
|
562.1
|
|
|
$
|
572.6
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Net cash provided by operating activities
|
$
|
63,149
|
|
|
$
|
67,790
|
|
|
$
|
114,015
|
|
|
$
|
123,301
|
|
Net cash used in investing activities
|
(14,221
|
)
|
|
(31,541
|
)
|
|
(26,938
|
)
|
|
(622,264
|
)
|
||||
Net cash (used in) provided by financing activities
|
(28,734
|
)
|
|
(52,933
|
)
|
|
(28,903
|
)
|
|
255,381
|
|
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. The Defense Technologies segment has and may continue to experience delays in orders from United States and foreign government agencies, and the Industrial Technologies segment has and may continue to experience a decline in demand for industrial and consumer products that are deemed non-essential. 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.
|
ITEM 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
ITEM 5.
|
OTHER INFORMATION
|
ITEM 6.
|
EXHIBITS
|
|
|
FLIR SYSTEMS, INC.
|
|
|
|
Date August 6, 2020
|
|
/s/ Carol P. Lowe
|
|
|
Carol P. Lowe
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
(Duly Authorized and Principal Financial Officer)
|
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 August 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 August 6, 2020
|
|
/s/ Carol P. Lowe
|
|
|
Carol P. Lowe
|
|
|
Chief Financial Officer
|
Date August 6, 2020
|
|
/s/ James J. Cannon
|
|
|
James J. Cannon
|
|
|
President and Chief Executive Officer
|
Date August 6, 2020
|
|
/s/ Carol P. Lowe
|
|
|
Carol P. Lowe
|
|
|
Chief Financial Officer
|