10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________________

FORM 10-Q

______________________________________

(Mark one)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended June 30, 2017

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from             to             

Commission file number 0-21918

______________________________________

FLIR Systems, Inc.

(Exact name of Registrant as specified in its charter)

______________________________________

Oregon	93-0708501
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
27700 SW Parkway Avenue, Wilsonville, Oregon	97070
(Address of principal executive offices)	(Zip Code)

(503) 498-3547

(Registrant’s telephone number, including area code)

______________________________________

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one)

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	¨
		Emerging growth company	¨

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    Yes  ¨    No  ¨

As of July 19, 2017, there were 137,195,504 shares of the registrant’s common stock, $0.01 par value, outstanding.

INDEX

PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Statements of Income - Three and Six Months Ended June 30, 2017 and 2016 (unaudited)	1
	Consolidated Statements of Comprehensive Income - Three and Six Months Ended June 30, 2017 and 2016 (unaudited)	2
	Consolidated Balance Sheets - June 30, 2017 and December 31, 2016 (unaudited)	3
	Consolidated Statements of Cash Flows - Six Months Ended June 30, 2017 and 2016 (unaudited)	4
	Notes to the Consolidated Financial Statements (unaudited)	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	28
Item 4.	Controls and Procedures	29
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 3.	Defaults Upon Senior Securities	38
Item 4.	Mine Safety Disclosures	38
Item 5.	Other Information	38
Item 6.	Exhibits	38
Signature		39

PART I. FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

FLIR SYSTEMS, INC. CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share amounts) (Unaudited)
	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Revenue	$	434,124		$	402,729		$	840,938		$	782,201
Cost of goods sold	227,392			219,407			442,885			421,189
Gross profit	206,732			183,322			398,053			361,012
Operating expenses:
Research and development	43,046			38,208			85,029			75,488
Selling, general and administrative	97,056			79,902			187,308			162,935
Total operating expenses	140,102			118,110			272,337			238,423
Earnings from operations	66,630			65,212			125,716			122,589
Interest expense	4,472			4,360			8,925			7,807
Interest income	(355		)	(328		)	(626		)	(588		)
Other (income) expense, net	(1,027		)	1,327			(1,687		)	(103		)
Earnings before income taxes	63,540			59,853			119,104			115,473
Income tax provision	12,127			14,485			25,120			68,980
Net earnings	$	51,413		$	45,368		$	93,984		$	46,493
Net earnings per share:
Basic	$	0.38		$	0.33		$	0.69		$	0.34
Diluted	$	0.37		$	0.33		$	0.68		$	0.33
Weighted average shares outstanding:
Basic	136,865			137,861			136,613			137,686
Diluted	138,449			138,993			138,266			138,832

The accompanying notes are an integral part of these consolidated financial statements.

1

FLIR SYSTEMS, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands) (Unaudited)
	Three Months Ended June 30,					Six Months Ended June 30,
	2017		2016			2017			2016
Net earnings	$	51,413	$	45,368		$	93,984		$	46,493
Other comprehensive income (loss), net of tax:
Fair value adjustment on interest rate swap contracts	—		(196		)	187			(865		)
Unrealized gain on available-for-sale investments	—		—			(1		)	—
Foreign currency translation adjustments	22,593		(24,888		)	35,795			(1,526		)
Total other comprehensive income	22,593		(25,084		)	35,981			(2,391		)
Comprehensive income	$	74,006	$	20,284		$	129,965		$	44,102

The accompanying notes are an integral part of these consolidated financial statements.

2

FLIR SYSTEMS, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except for par value) (Unaudited)
	June 30,			December 31,
	2017			2016
ASSETS
Current assets:
Cash and cash equivalents	$	403,591		$	361,349
Accounts receivable, net	332,009			352,020
Inventories	405,328			371,371
Prepaid expenses and other current assets	83,175			79,917
Total current assets	1,224,103			1,164,657
Property and equipment, net	272,391			271,785
Deferred income taxes, net	48,821			45,243
Goodwill	920,364			801,406
Intangible assets, net	190,058			168,460
Other assets	47,767			168,155
Total assets	$	2,703,504		$	2,619,706
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	113,957		$	114,225
Deferred revenue	31,385			34,420
Accrued payroll and related liabilities	54,820			52,874
Accrued product warranties	16,262			17,476
Advance payments from customers	30,818			26,019
Accrued expenses	39,359			34,022
Accrued income taxes	36,573			51,017
Other current liabilities	11,450			16,659
Current portion, long-term debt	15,000			15,000
Total current liabilities	349,624			361,712
Long-term debt	491,303			501,921
Deferred income taxes	14,020			2,331
Accrued income taxes	9,773			9,643
Pension and other long-term liabilities	58,153			65,773
Commitments and contingencies
Shareholders’ equity:
Preferred stock, $0.01 par value, 10,000 shares authorized; no shares issued at June 30, 2017, and December 31, 2016	—			—
Common stock, $0.01 par value, 500,000 shares authorized, 137,142 and 136,334 shares issued at June 30, 2017, and December 31, 2016, respectively, and additional paid-in capital	25,492			12,139
Retained earnings	1,885,109			1,832,138
Accumulated other comprehensive loss	(129,970		)	(165,951		)
Total shareholders’ equity	1,780,631			1,678,326
Total liabilities and shareholders' equity	$	2,703,504		$	2,619,706

The accompanying notes are an integral part of these consolidated financial statements.

3

FLIR SYSTEMS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited)
	Six Months Ended June 30,
	2017			2016
CASH PROVIDED BY OPERATING ACTIVITIES:
Net earnings	$	93,984		$	46,493
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	35,008			27,778
Deferred income taxes	(150		)	(372		)
Stock-based compensation arrangements	14,854			14,381
Other, net	(19,211		)	15,451
Increase (decrease) in cash, net of acquisitions, resulting from changes in:
Accounts receivable	24,525			50,711
Inventories	(26,935		)	14,995
Prepaid expenses	(3,108		)	(1,634		)
Other assets	15,322			(8,613		)
Accounts payable	(1,937		)	(44,165		)
Deferred revenue	(3,304		)	(1,052		)
Accrued payroll and other liabilities	2,938			(28,918		)
Accrued income taxes	(18,642		)	48,196
Pension and other long-term liabilities	(8,090		)	565
Net cash provided by operating activities	105,254			133,816
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment	(23,653		)	(20,876		)
Proceeds from sale of assets	2,885			4,875
Business acquisitions, net of cash acquired	—			(42,445		)
Net cash used by investing activities	(20,768		)	(58,446		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds of long-term debt, including current portion	—			525,766
Repayment of long-term debt	(11,250		)	(112,500		)
Repurchase of common stock	—			(29,747		)
Dividends paid	(41,013		)	(33,090		)
Proceeds from shares issued pursuant to stock-based compensation plans	7,035			6,541
Tax paid for net share exercises and issuance of vested restricted stock units	(9,022		)	(5,616		)
Other financing activities	(4		)	10
Net cash (used) provided by financing activities	(54,254		)	351,364
Effect of exchange rate changes on cash	12,010			3,660
Net increase in cash and cash equivalents	42,242			430,394
Cash and cash equivalents, beginning of year	361,349			472,785
Cash and cash equivalents, end of year	$	403,591		$	903,179

The accompanying notes are an integral part of these consolidated financial statements.

4

FLIR SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Basis of Presentation

The accompanying consolidated financial statements of FLIR Systems, Inc. and its consolidated subsidiaries (the “Company”) are unaudited and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, these statements have been prepared on the same basis as the audited consolidated financial statements and include all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of the Company’s consolidated financial position and results of operations for the interim periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations. These consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016.

The accompanying consolidated financial statements include the accounts of FLIR Systems, Inc. and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. The results of operations for the interim periods presented are not necessarily indicative of the operating results to be expected for any subsequent interim period or for the year ending December 31, 2017.

Recently Adopted Accounting Pronouncements

Effective January 1, 2017, the Company adopted the Financial Accounting Standards Board ("FASB") Accounting Standards Update 2016-09, "Improvements to Employee Share-Based Payment Accounting" ("ASU 2016-09"). The standard update simplifies several aspects of the accounting for employee share-based payment transactions, including accounting for income taxes, forfeitures, and statutory withholding requirements, as well as classification in the Consolidated Statements of Cash Flows. As a result of the adoption, on a prospective basis, the Company recognized $2.9 million and $3.7 million of excess tax benefits from stock-based compensation as a discrete item in income tax provision for the three and six months ended June 30, 2017, respectively. Historically, these amounts were recorded as additional paid-in capital. Upon adoption, the Company elected to apply the change retrospectively to the Consolidated Statement of Cash Flows which resulted in a reclassification of excess tax benefits from stock-based compensation of $1.6 million from cash flows from financing activities to cash flows from operating activities for the six months ended June 30, 2016. Additionally, $5.6 million paid in cash to satisfy withholding requirements for net settlement of restricted stock unit shares vested and stock options exercised has been reclassified from cash flows from operating activities to cash flows from financing activities to conform to the presentation required by the new standard in the Consolidated Statement of Cash Flows for the six months ended June 30, 2016. ASU 2016-09 also requires excess tax benefits and deficiencies to be excluded from the assumed future proceeds in the calculation of diluted shares. This change resulted in an increase in diluted weighted average shares outstanding of 179,000 shares and 195,000 shares for the three and six months ended June 30, 2017, respectively. The Company elected not to change its policy on accounting for forfeitures and will continue to estimate a requisite forfeiture rate. Additional amendments to the accounting for income taxes and minimum statutory withholding requirements had no impact on the Company's results of operations.

Reclassifications

The Company made certain reclassifications to the prior years' financial statements and notes to the consolidated financial statements to conform them to the presentation as of and for the three and six months ended June 30, 2017. These reclassifications had no effect on consolidated financial position, net earnings, shareholders' equity, or net cash flows for any of the periods presented.

Note 2. Stock-based Compensation

Stock Incentive Plans

The Company has a stock-based compensation program that provides equity incentives for employees, consultants and directors. This program includes incentive and non-statutory stock options and non-vested stock awards (referred to as restricted stock unit awards) granted under two plans: the FLIR Systems, Inc. 2002 Stock Incentive Plan (the “2002 Plan”) and the FLIR Systems, Inc. 2011 Stock Incentive Plan (the “2011 Plan”). The Company has discontinued issuing awards out of the 2002 Plan but previously-granted awards under the 2002 Plan remain outstanding.

5

FLIR SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Note 2. Stock-based Compensation - (Continued)

Stock Incentive Plans - (Continued)

The Company has granted time-based options, time-based restricted stock unit awards, market-based restricted stock unit awards and performance-based restricted stock unit awards. Options generally expire ten years from the grant date. Time-based options and restricted stock unit awards generally vest over a three-year period. Market-based restricted stock unit awards may be earned based upon the Company's total shareholder return compared to the total shareholder return of the component company at the 60th percentile level in the S&P 500 Index over a three-year period. Performance-based restricted stock unit awards may be earned based upon certain profitability metrics as approved by the compensation committee of the Company's board of directors, including return on invested capital or income from operations over the relevant three-year periods. Shares vested under the performance-based restricted stock unit awards and the market-based restricted stock unit awards must generally be held by the participant for a period of one year from the vest date.

Employee Stock Purchase Plan

The Company has an Employee Stock Purchase Plan (the “ESPP”) which allows employees to purchase shares of the Company’s common stock at 85 percent of the fair market value at the lower of either the date of enrollment or the purchase date. The ESPP provides for six-month offerings commencing on May 1 and November 1 of each year with purchases on April 30 and October 31 of each year. Shares purchased under the ESPP must be held by employees for a period of at least 18 months after the date of purchase.

The following table sets forth the stock-based compensation expense recognized in the Consolidated Statements of Income (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Cost of goods sold	$	631	$	855	$	1,032	$	1,470
Research and development	1,299		1,233		2,476		2,414
Selling, general and administrative	6,678		6,205		11,346		10,497
Stock-based compensation expense before income taxes	$	8,608	$	8,293	$	14,854	$	14,381

Stock-based compensation expense capitalized in the Consolidated Balance Sheets is as follows (in thousands):

	June 30,
	2017		2016
Capitalized in inventory	$	1,053	$	685

As of June 30, 2017, the Company had approximately $62.0 million of total unrecognized stock-based compensation costs, net of estimated forfeitures, to be recognized over a weighted average period of 2.29 years.

6

FLIR SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Note 3. Net Earnings Per Share

The following table sets forth the reconciliation of the numerator and denominator utilized in the computation of basic and diluted earnings per share (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Numerator for earnings per share:
Net earnings for basic and diluted earnings per share	$	51,413	$	45,368	$	93,984	$	46,493
Denominator for earnings per share:
Weighted average number of common shares outstanding	136,865		137,861		136,613		137,686
Assumed exercise of stock options and vesting of restricted stock awards, net of shares assumed reacquired under the treasury stock method	1,584		1,132		1,653		1,146
Diluted shares outstanding	138,449		138,993		138,266		138,832

The effect of stock-based compensation awards for the three and six months ended June 30, 2017, which in aggregate consisted of 162,000 and 265,000 shares, respectively; and for the three and six months ended June 30, 2016, which in the aggregate consisted of 295,000 and 440,000 shares, respectively, have been excluded for purposes of diluted earnings per share since the effect of their inclusion would have been anti-dilutive.

Note 4. Fair Value of Financial Instruments

Factors used in determining the fair value of financial assets and liabilities are summarized into three broad categories in accordance with FASB ASC Topic 820, “Fair Value Measurements”:

Level 1 – quoted prices in active markets for identical securities as of the reporting date;

Level 2 – other significant directly or indirectly observable inputs, including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, and observable market prices for identical instruments that are traded in less active markets; and

Level 3 – significant inputs that are generally less observable than objective sources, including our own assumptions in determining fair value.

The factors or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

The Company had $70.9 million and $8.3 million of cash equivalents at June 30, 2017 and December 31, 2016, respectively, which were primarily investments in money market funds and overnight deposits. The Company has categorized its cash equivalents as a Level 1 financial asset, measured at fair value based on quoted prices in active markets of identical assets. All cash equivalents are comprised of instruments that are convertible to cash daily. The fair value of the Company’s foreign currency contracts and interest rate swap contracts as of June 30, 2017 and December 31, 2016, are disclosed in Note 5, "Derivative Financial Instruments," and are based on Level 2 inputs. The fair value of the Company’s senior unsecured notes as described in Note 13, "Long-Term Debt," is approximately $429.4 million at June 30, 2017 and is categorized as Level 2 based on observable prices for the identical instrument in a less active market. The fair value of the Company's credit facility and related borrowings, also described in Note 13, approximates the carrying value due to the variable market rate used to calculate interest payments. The Company does not have any other significant financial assets or liabilities that are measured at fair value.

7

FLIR SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Note 5.        Derivative Financial Instruments

Foreign Currency Exchange Rate Risk

The Company enters into foreign currency forward contracts not formally designated as hedges to manage the consolidated exchange rate risk associated with the remeasurement of non-functional currency denominated monetary assets and liabilities.  Changes in fair value of foreign currency forward contracts are recognized in income at the end of each reporting period based on the difference between the contract rate and the spot rate. In general, these gains and losses are offset in the Consolidated Statements of Income by the reciprocal gains and losses from cash settlement of the underlying assets or liabilities which originally gave rise to the exposure. The net amount of the gains and losses related to derivative instruments recorded in other (income) expense, net for the three and six months ended June 30, 2017 were net losses of $3.4 million and $7.7 million, respectively. The net losses for the three and six months ended June 30, 2016 were $9.1 million and $2.1 million, respectively.

The table below presents the net notional amounts of the Company’s outstanding foreign currency forward contracts by currency (in thousands):

	June 30,		December 31,
	2017		2016
European euro	$	190,451	$	156,352
Swedish kroner	74,191		48,555
Canadian dollar	56,475		15,645
Brazilian real	9,562		2,747
Japanese yen	2,985		3,251
Australian dollar	2,129		1,653
British pound sterling	668		33,862
Other	485		—
	$	336,946	$	262,065

At June 30, 2017, the Company’s foreign currency forward contracts, in general, had maturities of three months or less.

The carrying amount of the foreign exchange contracts included in the Consolidated Balance Sheets are as follows (in thousands):

	June 30, 2017				December 31, 2016
	Prepaid Expenses and Other Current Assets		Other Current Liabilities		Prepaid Expenses and Other Current Assets		Other Current Liabilities
Foreign exchange contracts	$	3,853	$	1,768	$	2,369	$	75

Interest Rate Swap Contracts

At June 30, 2017, the effective interest rate on the borrowings made from the Company's revolving credit facility was 2.37 percent. As of June 30, 2017, the following interest rate swaps were outstanding:

Contract Date	Notional Amount (in millions)		Fixed Rate		Effective Date	Maturity Date
March 15, 2013	$	43.1	1.02	%	April 5, 2013	March 31, 2019
March 29, 2013	$	43.1	0.97	%	April 5, 2013	March 31, 2019

The net fair value carrying amount of the Company's interest rate swaps was $0.6 million, of which $0.3 million has been recorded to prepaid expenses and other current assets and $0.3 million has been recorded to other assets in the Consolidated Balance Sheet as of June 30, 2017.

8

FLIR SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Note 6. Accounts Receivable

Accounts receivable are net of an allowance for doubtful accounts of $6.2 million and $6.5 million at June 30, 2017 and December 31, 2016, respectively.

Note 7. Inventories

Inventories consist of the following (in thousands):

	June 30,		December 31,
	2017		2016
Raw material and subassemblies	$	217,113	$	200,640
Work-in-progress	58,533		43,430
Finished goods	129,682		127,301
	$	405,328	$	371,371

Note 8.        Property and Equipment

Property and equipment are net of accumulated depreciation of $300.3 million and $275.1 million at June 30, 2017 and December 31, 2016, respectively.

Note 9. Goodwill

The carrying value of goodwill and the activity for the six months ended June 30, 2017 are as follows (in thousands):

Balance, December 31, 2016	$	801,406
Goodwill from acquisitions	100,022
Currency translation adjustments	18,936
Balance, June 30, 2017	$	920,364

See Note 17, "Operating Segments and Related Information - Operating Segments," of the Notes to the Consolidated Financial Statements for additional information on the carrying value of goodwill by operating segment at June 30, 2017.

See Note 18, "Business Acquisitions," of the Notes to the Consolidated Financial Statements for additional information on the addition of goodwill from acquisitions.

Note 10.        Intangible Assets

Intangible assets are net of accumulated amortization of $93.2 million and $77.8 million at June 30, 2017 and December 31, 2016, respectively.

Note 11. Credit Agreement

On February 8, 2011, the Company entered into a credit agreement with Bank of America, N.A., U.S. Bank National Association, JPMorgan Chase Bank N.A. and other lenders, as amended on April 5, 2013, October 27, 2015 and May 31, 2016 (the "Credit Agreement") which provides for a $500 million revolving line of credit. At June 30, 2017, the Company had $86.3 million outstanding under its revolving credit facility pursuant to the Credit Agreement and had $18.2 million of letters of credit outstanding, which reduces the total available revolving credit under the Credit Agreement to $395.5 million.

9

FLIR SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Note 12. Accrued Product Warranties

The following table summarizes the Company’s warranty liability and activity (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Accrued product warranties, beginning of period	$	19,971		$	17,227		$	20,845		$	16,514
Amounts paid for warranty services	(4,362		)	(5,458		)	(8,991		)	(9,598		)
Warranty provisions for products sold	3,782			5,826			7,491			10,560
Currency translation adjustments and other	139			(103		)	185			16
Accrued product warranties, end of period	$	19,530		$	17,492		$	19,530		$	17,492
Current accrued product warranties, end of period							$	16,262		$	14,661
Long-term accrued product warranties, end of period							$	3,268		$	2,831

Note 13.        Long-Term Debt

Long-term debt consists of the following (in thousands):

	June 30,			December 31,
	2017			2016
Unsecured notes	$	425,000		$	425,000
Credit Agreement	86,250			97,500
Unamortized discounts and issuance costs of unsecured notes	(4,947		)	(5,579		)
	$	506,303		$	516,921
Current portion, long-term debt	$	15,000		$	15,000
Long-term debt	$	491,303		$	501,921

In June 2016, the Company issued $425 million aggregate principal amount of its 3.125 percent senior unsecured notes due June 15, 2021 (the “2016 Notes”). The net proceeds from the issuance of the 2016 Notes were approximately $421.0 million, after deducting underwriting discounts and offering expenses, which are being amortized over a period of five years. Interest on the 2016 Notes is payable semiannually in arrears on December 15 and June 15. The proceeds from the 2016 Notes were used to repay the principal amount of the notes issued in August 2011 and outstanding in July 2016 and are being used for general corporate purposes, including working capital and capital expenditure needs, business acquisitions and repurchases of the Company’s common stock.

On May 31, 2016, the Company repaid its term loan and drew down $105.0 million under the revolving credit facility. Interest on amounts outstanding under the revolving credit facility accrues at the one-month LIBOR rate plus the applicable margin for the amount outstanding and is paid monthly in arrears. See Note 5, "Derivative Financial Instruments - Interest Rate Swap Contracts," of the Notes to the Consolidated Financial Statements for additional information on the effective interest rate on the revolving credit facility at June 30, 2017.

10

FLIR SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Note 14. Shareholders’ Equity

The following table summarizes the common stock and additional paid-in capital activity during the six months ended June 30, 2017 (in thousands):

Common stock and additional paid-in capital, December 31, 2016	$	12,139
Common stock issued pursuant to stock-based compensation plans, net	(1,987		)
Stock-based compensation	15,340
Common stock and additional paid-in capital, June 30, 2017	$	25,492

On June 9, 2017, the Company paid a dividend of $0.15 per share on its outstanding common stock to the shareholders of record as of the close of business on May 26, 2017. The total cash payments for dividends during the six months ended June 30, 2017 were $41.0 million.

Note 15. Contingencies

Raytheon Litigation

FLIR Systems, Inc. and its subsidiary, FLIR Commercial Systems, Inc. (formerly known as Indigo Systems Corporation) (together, the “FLIR Parties”), were named in a lawsuit filed by Raytheon Company (“Raytheon”) on March 2, 2007, in the United States District Court for the Eastern District of Texas. Raytheon's complaint, as amended, asserted claims for tortious interference, patent infringement, trade secret misappropriation, unfair competition, breach of contract, and fraudulent concealment. The FLIR Parties filed an answer to the complaint on September 2, 2008, in which they denied all material allegations. On October 27, 2010, the FLIR Parties and Raytheon entered into a settlement agreement that resolved the patent infringement claims (the "Patent Claims") pursuant to which the FLIR Parties paid $3 million to Raytheon and entitles the FLIR Parties to certain license rights in the patents that were the subject of the Patent Claims. On October 28, 2014, a four-week trial began with respect to Raytheon's remaining claims of misappropriations of trade secrets and claims related to 31 alleged trade secrets. On November 24, 2014, a jury in the United States District Court for the Eastern District of Texas rejected Raytheon’s claims and determined that 27 of the alleged trade secrets were not in fact trade secrets and that neither of the FLIR Parties infringed any of the trade secrets claimed and awarded Raytheon no damages. On March 31, 2016, the United States District Court for the Eastern District of Texas issued a Final Judgment denying Raytheon’s claims and awarding FLIR court costs and denying each of Raytheon’s and FLIR’s Renewed Motions for Judgment as a Matter of Law and denying FLIR’s Amended Rule 54(d) Motion for Attorneys’ Fees and Costs Under the Texas Theft Liability Act.

On April 29, 2016, Raytheon filed a Notice of Appeal to the United States Court of Appeals for the Federal Circuit of the denial by the United States District Court for the Eastern District of Texas of Raytheon’s Renewed Motion for Judgment as a Matter of Law, or in the Alternative, Motion for New Trial. On May 11, 2016, the FLIR Parties filed a Notice of Appeal to the United States Court of Appeals for the Federal Circuit of the Order of the United States District Court for the Eastern District of Texas Denying the FLIR Parties’ Amended Rule 54(d) Motion for Attorneys’ Fees and Costs under the Texas Theft Liability Act, the Order Denying the FLIR Parties’ Renewed Motion For Judgment as a Matter Of Law, and the Final Judgment to the extent it denied the FLIR Parties Attorneys’ Fees and Costs under the Texas Theft Liability Act. The matter remains ongoing and is subject to appeal and the Company is unable to estimate the amount or range of potential loss or recovery, if any, which might result if the final determination of this matter is favorable or unfavorable, but an adverse ruling on the merits of the original claims against the FLIR Parties, while remote, could be material.

11

FLIR SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Note 15. Contingencies - (Continued)

Matters Involving the United States Department of State and Department of Commerce

On October 22, 2014, the Company initially contacted the United States Department of State Office of Defense Trade Controls Compliance (“DTCC”), pursuant to International Traffic in Arms Regulation (“ITAR”) § 127.12(c), regarding the unauthorized export of technical data and defense services to dual and third country nationals in at least four facilities of the Company.  On April 27, 2015, the Company submitted its initial report to DTCC regarding the details of the issues raised in the October 22, 2014, submission.  DTCC subsequently notified the Company that it was considering administrative proceedings under Part 128 of ITAR and requested a tolling agreement, which the Company executed on June 16, 2015 and reference certain Company disclosures in addition to the submissions made in conjunction with the October 24, 2014 initial notification. On June 6, 2016, the Company executed a subsequent tolling agreement extending the tolling period for matters to be potentially included in an administrative proceeding for an additional 18 months until the end of December 2017. DTCC continues its review of the Company’s activities and the Company continues to engage actively with the United States government on these matters.

In May 2017, the Company submitted an initial notification to DTCC regarding potential violations related to certain export classifications obtained through the commodity jurisdiction process. DTCC acknowledged the notification and at the request of DTCC, the Company executed a tolling agreement for this matter, suspending the statute of limitations for a twelve (12) month period.

In June 2017, the United States Department of Commerce Bureau of Industry and Security informed the Company of additional export licensing requirements that restrict the Company’s ability to sell 9hz thermal products without a license to customers in China not identified on a list maintained by the United States Department of Commerce. This action was precipitated by concerns of potential diversion of some of the Company's products to prohibited end users and to countries subject to economic and other sanctions implemented by the United States. If the Company is found to have violated applicable rules and regulations with respect to customers and limitations on the end use of the Company’s products, the Company could be subject to substantial fines and penalties, suspension of existing licenses or other authorizations and/or loss or suspension of export privileges.

The Company is unable to reasonably estimate the time it may take to resolve these matters or the amount or range of potential loss, penalty or other government action, if any, that may be incurred in connection with these matters. However, an unfavorable outcome could result in substantial fines and penalties or loss or suspension of export privileges or of particular authorizations that could be material to the Company’s financial position, results of operations or cash flows in and following the period in which such an outcome becomes estimable or known.

SkyWatch Product Quality Matters

In March 2016, the Company learned of potential quality concerns with respect to as many as 312 Level III and Level IV SkyWatch Surveillance Towers sold by FLIR and companies acquired by FLIR from 2002 through 2014. The Company notified customers who purchased the affected SkyWatch Towers of the potential concerns and, as a precautionary measure, also temporarily suspended production of all Level III and Level IV SkyWatch Towers pending the completion of its review and the implementation of any necessary remedial measures. During the quarter ended September 30, 2016, the Company identified the cause of these quality issues and began testing certain remedial solutions to repair the affected SkyWatch Towers. Testing of the remedial solution for certain of the product variations affected was completed during the quarter ended June 30, 2017. During the quarter ended June 30, 2017, customers who purchased the product configurations for which a remedial solution has been identified and tested were notified of their options to request modifications to their fielded units. While there still remains uncertainty related to estimating the costs associated with a potential remedy and number of units which may require such remedy, the Company currently estimates the range of potential loss to be between $4.5 million and $15 million. As no single amount within the range is a better estimate than any other amount within the range, the Company has recorded a liability of $4.5 million as of June 30, 2017. Factors underlying this estimated range of loss may change from time to time, and actual results may vary significantly from this estimate.

12

FLIR SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Note 15. Contingencies - (Continued)

Other Matters

The Company is also subject to other legal and administrative proceedings, investigations, claims and litigation arising in the ordinary course of business not specifically identified above. In these identified matters and others not specifically identified, the Company records a liability with respect to a matter when management believes it is both probable that a liability has been incurred and the Company can reasonably estimate the amount of the loss. The Company believes it has recorded adequate provisions for any probable and estimable losses for matters in existence on the date hereof. The Company reviews these provisions to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular matter. While the outcome of each of these matters is currently not determinable, the Company does not expect that the ultimate resolution of any such matter will individually have a material adverse effect on the Company’s financial position, results of operations or cash flows. The costs to resolve all such matters may in the aggregate have a material adverse effect on the Company’s financial position, results of operations or cash flows.

Note 16. Income Taxes

The provision for income taxes was as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Income tax provision	$	12,127		$	14,485		$	25,120		$	68,980
Effective tax rate	19.1		%	24.2		%	21.1		%	59.7		%

The effective tax rate for the three and six months ended June 30, 2017, is lower than the United States Federal tax rate of 35 percent mainly due to the mix of lower foreign jurisdiction tax rates, the effect of federal, foreign and state tax credits, excess tax benefits from stock compensation, and other discrete adjustments.

As of June 30, 2017, the Company had approximately $58.5 million of unrecognized tax benefits, all of which would affect the Company’s effective tax rate if recognized. The Company anticipates approximately $43.4 million of its net unrecognized tax benefits will be recognized within 12 months as the result of settlements or effective settlements with various tax authorities, the closure of certain audits and the lapse of the applicable statute of limitations.

The Company classifies interest and penalties related to unrecognized tax benefits in the income tax provision. As of June 30, 2017, the Company had $2.8 million of accrued interest and penalties related to unrecognized tax benefits that are recorded as current and non-current accrued income taxes on the Consolidated Balance Sheet.

The Company currently has the following tax years open to examination by major taxing jurisdictions:

	Tax Years:
United States Federal	2013 - 2015
State of California	2013 - 2015
State of Massachusetts	2013 - 2015
State of Oregon	2013 - 2015
Sweden	2012 - 2015
United Kingdom	2012 - 2015
Belgium	2011 - 2015

13

FLIR SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Note 17.        Operating Segments and Related Information

Operating Segments

The Company has six reportable operating segments as follows:

Surveillance

The Surveillance segment develops and manufactures enhanced imaging and recognition solutions for a wide variety of military, law enforcement, public safety, and other government customers around the world for the protection of borders, troops, and public welfare. Offerings include airborne, land, maritime, and man-portable multi-spectrum imaging systems, radars, lasers, imaging components, integrated multi-sensor system platforms, and services related to these systems.

Instruments

The Instruments segment develops and manufactures devices that image, measure, and assess thermal energy, gases, and other environmental elements for industrial, commercial, and scientific applications. Products include thermal imaging cameras, gas detection cameras, firefighting cameras, process automation cameras, and environmental test and measurement devices.

Security

The Security segment develops and manufactures cameras, video recording systems, and video management systems for use in commercial, critical infrastructure, and home security applications. Products include thermal and visible-spectrum cameras, digital and networkedvideo recorders, and related software and accessories that enable the efficient and effective safeguarding of assets at all hours of the day and through adverse weather conditions.

OEM & Emerging Markets

The OEM & Emerging Markets segment develops and manufactures thermal and visible-spectrum imaging camera cores and components that are utilized by third parties to create thermal, industrial, and other types of imaging systems. The segment also develops and manufactures intelligent traffic monitoring and signal control systems, imaging payloads for Unmanned Aerial Systems ("UAS"), and thermal imaging solutions for use by consumers in the smartphone and mobile devices markets.

Maritime

The Maritime segment develops and manufactures electronics and imaging instruments for the recreational and commercial maritime market. The segment provides a full suite of networked electronic systems including multi-function helm displays, navigational instruments, autopilots, radars, sonar systems, thermal and visible imaging systems, and communications equipment for boats of all sizes.

Detection

The Detection segment develops and manufactures sensor instruments and integrated platform solutions for the detection, identification, and suppression of chemical, biological, radiological, nuclear, and explosives ("CBRNE") threats for military force protection, homeland security, and commercial applications.

The Company’s chief operating decision maker ("CODM"), its Chief Executive Officer, evaluates each of its segment’s performance and allocates resources based on revenue and segment operating income. Intersegment revenues are recorded at cost and are eliminated in consolidation. The Company and each of its segments employ consistent accounting policies.

The following tables present revenue, operating income, and assets for the six segments. Operating income as reviewed by the CODM is revenue less cost of goods sold and operating expense, excluding general corporate expenses, acquisition costs, amortization of purchased intangible assets, amortization of acquisition-related inventory step-up, costs associated with the SkyWatch product remediation, restructuring charges, and executive transition costs. Accounts receivable and inventories for operating segments are regularly reviewed by management and are reported below as segment assets. All remaining assets, liabilities, capital expenditures, and depreciation are managed on a Company-wide basis.

14

FLIR SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Note 17.        Operating Segments and Related Information - (Continued)

Operating Segments - (Continued)

Operating segment information is as follows (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Revenue—External Customers:
Surveillance	$	129,209		$	113,440		$	247,938		$	237,591
Instruments	85,969			78,068			163,824			157,487
Security	49,709			63,380			94,786			110,441
OEM & Emerging Markets	87,447			56,980			172,212			104,825
Maritime	55,102			55,163			103,653			106,883
Detection	26,688			35,698			58,525			64,974
	$	434,124		$	402,729		$	840,938		$	782,201
Revenue—Intersegments:
Surveillance	$	3,331		$	4,755		$	8,087		$	8,979
Instruments	7,325			1,213			13,114			2,788
Security	3,640			3,836			6,765			6,308
OEM & Emerging Markets	9,361			8,833			18,530			17,010
Maritime	621			1,458			1,298			2,072
Detection	1			31			1			31
Eliminations	(24,279		)	(20,126		)	(47,795		)	(37,188		)
	$	—		$	—		$	—		$	—
Segment operating income:
Surveillance	$	33,007		$	26,595		$	59,372		$	62,460
Instruments	23,627			19,695			44,773			39,676
Security	1,288			4,410			1,603			2,241
OEM & Emerging Markets	26,340			16,757			50,697			27,443
Maritime	9,390			7,521			14,594			13,328
Detection	7,024			10,320			15,761			18,557
	$	100,676		$	85,298		$	186,800		$	163,705

A reconciliation of the Company's consolidated segment operating income to consolidated earnings before income taxes is as follows (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Consolidated segment operating income	$	100,676		$	85,298		$	186,800		$	163,705
Unallocated corporate expenses	(25,017		)	(16,049		)	(43,240		)	(32,674		)
Amortization of purchased intangible assets	(7,016		)	(3,927		)	(13,751		)	(8,134		)
Amortization of acquisition-related inventory step-up	—			—			(1,992		)	—
SkyWatch product quality accrual	(2,000		)	—			(2,000		)	—
Restructuring charges	(13		)	(110		)	(101		)	(308		)
Consolidated earnings from operations	66,630			65,212			125,716			122,589
Interest and non-operating expense, net	(3,090		)	(5,359		)	(6,612		)	(7,116		)
Consolidated earnings before income taxes	$	63,540		$	59,853		$	119,104		$	115,473

Unallocated corporate expenses include general corporate expenses, acquisition related costs and executive transition costs.

15

FLIR SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Note 17.        Operating Segments and Related Information - (Continued)

Operating Segments - (Continued)

	June 30,		December 31,
	2017		2016
Segment assets (accounts receivable, net and inventories):
Surveillance	$	278,535	$	283,324
Instruments	125,942		114,681
Security	83,493		93,174
OEM & Emerging Markets	141,568		144,862
Maritime	73,963		61,494
Detection	33,836		25,856
	$	737,337	$	723,391

	June 30,		December 31,
	2017		2016
Segment goodwill:
Surveillance	$	258,480	$	152,383
Instruments	151,799		147,595
Security	106,785		102,983
OEM & Emerging Markets	254,592		252,647
Maritime	100,724		97,860
Detection	47,984		47,938
	$	920,364	$	801,406

Revenue and Long-Lived Assets by Geographic Area

Information related to revenue by significant geographical location, determined by the end customer, is as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
United States	$	224,025	$	224,305	$	445,856	$	418,589
Europe	91,041		84,297		174,313		168,707
Asia	59,721		47,413		113,645		91,237
Middle East/Africa	35,248		28,629		60,390		56,341
Canada/Latin America	24,089		18,085		46,734		47,327
	$	434,124	$	402,729	$	840,938	$	782,201

Long-lived assets by significant geographic locations are as follows (in thousands):

			December 31, 2016
	June 30, 2017		(as reclassified)
United States	$	689,044	$	676,007
Europe	508,272		490,089
Canada/Latin America	225,100		235,921
Other foreign	8,164		7,789
	$	1,430,580	$	1,409,806

16

FLIR SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Note 17.        Operating Segments and Related Information - (Continued)

Operating Segments - (Continued)

Major Customers

Revenue derived from major customers is as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
United States government	$	111,824	$	100,106	$	228,059	$	185,742

Note 18. Business Acquisitions

Point Grey Research, Inc.

On November 4, 2016, the Company completed the acquisition of the assets of Point Grey Research Inc. (“Point Grey”), a global leader in the development of advanced visible imaging cameras and solutions that are used in industrial automation systems, medical diagnostic equipment, people counting systems, intelligent traffic systems, military and defense products, and advanced mapping systems, for approximately $259.2 million in cash, subject to customary post-closing adjustments. The Company has performed a preliminary purchase price allocation which resulted in an allocation of $39.8 million to identifiable intangible assets and $183.7 million to goodwill which has been recorded in the Company’s OEM & Emerging Markets segment.

The preliminary allocation of the purchase price for Point Grey is as follows (in thousands):

Cash acquired	$	2,994
Other tangible assets and liabilities, net	35,064
Net deferred taxes	(2,438		)
Identifiable intangible assets	39,800
Goodwill	183,741
Total purchase price	$	259,161

The allocation of the purchase price related to this acquisition is preliminary and is based on management’s judgments after evaluating several factors, including preliminary valuation assessments of tangible and intangible assets, and preliminary estimates of the fair value of liabilities assumed. The primary areas of the preliminary purchase price allocation that are not yet finalized relate to the valuation of the identifiable intangible assets, property and equipment, and certain other tangible assets and liabilities. The preliminary goodwill of $183.7 million represents future economic benefits expected to arise from synergies from combining operations and the ability of Point Grey to provide the Company domain knowledge and distribution channels in adjacent markets.

In connection with the preliminary allocation of purchase price to the assets acquired and liabilities assumed, the Company identified certain intangible assets. The following table presents the acquired intangible assets, their preliminary estimated fair values, and preliminary estimated useful lives (in thousands, except years):

	Estimated Useful Life	Amount
Developed technology	10 years	$	23,100
Customer relationships	7 years	13,200
Backlog	1 year	2,300
Non-Competition Agreements	5 years	1,000
Other	n/a	200
		$	39,800

17

FLIR SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Note 18.        Business Acquisitions - (Continued)

Acquisition-date identifiable intangible assets primarily consist of intangibles derived from developed technology, customer relationships, backlog, and non-competition agreements. Developed technology represents the economic advantage of having certain technologies in place that lower manufacturing and operating costs and drive higher margins. Customer relationships represents the relationships Point Grey has established in the OEM and people counting markets as of the date of the acquisition. Backlog represents “pre-sold” business at the date of acquisition, which provides positive earning streams post acquisition that exceed what is required to provide a return on the other assets employed. Non-competition agreements represent the economic benefit of having agreements with certain current and former employees and shareholders of Point Grey that restrict their ability to compete directly with the Company.

The developed technology was valued using the income approach and relief from royalty method. Customer relationships and backlog were valued using the income approach and multi-period excess earnings method. Non-competition agreements were valued using the income approach and the with-and-without method.

Prox Dynamics, AS

On November 30, 2016, the Company acquired 100% of the outstanding stock of Prox Dynamics AS (“Prox Dynamics”), a leading developer and manufacturer of nano-class UASs for military and para-military intelligence, surveillance, and reconnaissance applications, for approximately $134.1 million in cash, subject to customary post-close adjustments. At December 31, 2016, the Company reported the net tangible assets of $11.3 million in the respective balance sheet accounts and the excess purchase price of $122.8 million in other long-term assets.

During the three months ended March 31, 2017, the Company performed a preliminary purchase price allocation which resulted in an allocation of $31.4 million of identifiable intangible assets and $91.9 million of goodwill in conjunction with the Prox Dynamics acquisition, which has been recorded in the Company’s Surveillance business segment.

During the three months ended June 30, 2017, the Company finalized the purchase price allocation, resulting in a $7.4 million decrease to net deferred taxes, and a corresponding $7.4 million increase in goodwill. The goodwill of $99.3 million represents future economic benefits expected to arise from synergies from combining operations the ability of Prox Dynamics to provide the Company domain knowledge and distribution channels in adjacent markets.

The allocation of the purchase price for Prox Dynamics is as follows (in thousands):

Cash acquired	$	11,706
Other tangible assets and liabilities, net	(900		)
Net deferred taxes	(7,387		)
Identifiable intangible assets	31,400
Goodwill	99,269
Total purchase price	$	134,088

In connection with the allocation of purchase price to the assets acquired and liabilities assumed, the Company identified certain intangible assets. The following table presents the acquired intangible assets, their estimated fair values, and estimated useful lives (in thousands, except years):

	Estimated Useful Life	Amount
Developed technology	8 years	$	23,400
Customer relationships	7 years	3,500
Patents	8 years	3,100
Trade name	8 years	1,400
		$	31,400

Acquisition-date identifiable intangible assets primarily consist of intangibles derived from developed technology, customer relationships, patents, and trade name. Developed technology and patents represent the economic advantage of having certain technologies in place that lower manufacturing and operating costs and drive higher margins. Customer relationships represents the relationships Prox Dynamics has established in the military and defense ministries of countries throughout the world. Trade name represents the "Black Hornet" name, which is well recognized within the industry and is known as a leading product within the nano-class UAS segment.

18

FLIR SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Note 18.        Business Acquisitions - (Continued)

The developed technology and customer relationships were valued using the income approach and multi-period excess earnings method. Patents and trade name were valued using the income approach and relief from royalty method.

The acquisitions of Point Grey and Prox Dynamics are not significant as defined in Regulation S-X under the Securities Exchange Act of 1934, nor are they significant compared to the Company's overall results of operations. Consequently, no pro forma financial information is provided.

Note 19. Subsequent Events

On July 20, 2017, the Company’s Board of Directors declared a quarterly dividend of $0.15 per share on its common stock, payable on September 8, 2017, to shareholders of record as of the close of business on August 25, 2017. The total cash payment of this dividend will be approximately $20.6 million.

19

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This Quarterly Report on Form 10-Q (the “Report”), including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part I, Item 2, contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding future events and the future results of FLIR Systems, Inc. and its consolidated subsidiaries (“FLIR” or the “Company”) that are based on management’s current expectations, estimates, projections and assumptions about the Company’s business. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “sees,” “estimates” and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors including, but not limited to, those discussed in “Risk Factors” section in Part II, Item 1A of this Report, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part I, Item 2, and elsewhere in this Report as well as those discussed from time to time in the Company’s other Securities and Exchange Commission filings and reports. In addition, such statements could be affected by general industry, economic, and market conditions. Such forward-looking statements speak only as of the date of this Report or, in the case of any document incorporated by reference, the date of that document, and the Company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this Report, or for changes made to this document by wire services or Internet service providers. If the Company updates or corrects one or more forward-looking statements, investors and others should not conclude that the Company will make additional updates or corrections with respect to other forward-looking statements.

Consolidated Operating Results

The following discussion of operating results provides an overview of our operations by addressing key elements in our Consolidated Statements of Income. The “Segment Operating Results” section that follows describes the contributions of each of our business segments to our consolidated revenue and earnings from operations. Our six operating segments are: Surveillance, Instruments, Security, OEM & Emerging Markets, Maritime, and Detection. Given the nature of our business, we believe revenue and earnings from operations (including operating margin percentage) are most relevant to an understanding of our performance at a segment level. Additionally, at the segment level we disclose backlog, which represents orders received for products or services for which a sales agreement is in place and delivery is expected within twelve months. See Note 17, "Operating Segments and Related Information," of the Notes to the Consolidated Financial Statements for additional information on the six operating segments.

Revenue. Consolidated revenue for the three months ended June 30, 2017, increased by 7.8 percent year over year, from $402.7 million in the second quarter of 2016 to $434.1 million in the second quarter of 2017. Consolidated revenue for the six months ended June 30, 2017, increased by 7.5 percent year over year, from $782.2 million in the first six months of 2016 to $840.9 million in the first six months of 2017. Increases in revenues for the three month period in our OEM & Emerging Markets, Surveillance, and Instruments segments were partially offset by declines in revenues in our Security and Detection segments. Increases in revenues for the six month period in our Surveillance, Instruments, and OEM & Emerging Markets segments were partially offset by declines in revenues in our Security, Maritime, and Detection segments. The acquisitions of Armasight, Prox Dynamics, and Point Grey were the primary drivers in revenue growth for the three and six month periods ended June 30, 2017, compared to the same periods ended June 30, 2016.

The timing of orders, scheduling of backlog, and fluctuations in demand in various regions of the world can give rise to quarter to quarter and year over year fluctuations in the mix of revenue. Consequently, year over year comparisons for any given quarter may not be indicative of comparisons using longer time periods. While we currently expect total annual revenue for 2017 to be higher than 2016 revenue, unexpected changes in economic conditions from key customer markets or other major unanticipated events may cause total revenue, and the mix of revenue between our segments, to vary from quarter to quarter during the year.

International sales accounted for 48.4 percent and 44.3 percent of total revenue for the quarters ended June 30, 2017 and 2016, respectively. The proportion of our international revenue compared to total revenue will fluctuate from quarter to quarter

20

due to normal variation in order activity across various regions as well as specific factors that may affect one region and not another. Overall, we anticipate that revenue from international sales will continue to comprise a significant percentage of total revenue.

Cost of goods sold. Cost of goods sold for the three and six months periods ended June 30, 2017 were $227.4 million and $442.9 million, respectively compared to cost of goods sold for the three and six months ended June 30, 2016 of $219.4 million and $421.2 million, respectively. The year over year increase in cost of goods sold is primarily related to higher revenues in 2017.

Gross profit. Gross profit for the quarter ended June 30, 2017, was $206.7 million compared to $183.3 million for the same quarter last year. Gross profit for the six months ended June 30, 2017 was $398.1 million compared to $361.0 million for the six month period ended June 30, 2016. Gross margin, defined as gross profit divided by revenue, increased from 45.5 percent in the second quarter of 2016 to 47.6 percent in the second quarter of 2017 and increased from 46.2 percent for the six months ended June 30, 2016, to 47.3 percent during the six months ended June 30, 2017. The increase in gross margin for the three and six month periods was primarily due to the acquisitions and favorable product mix, partially offset by changes in currency exchange rates, particularly in our Instruments and Maritime segments, which are more heavily exposed to foreign currency fluctuations than our other segments.

Research and development expenses. Research and development expenses for the second quarter of 2017 totaled $43.0 million, compared to $38.2 million in the second quarter of 2016. Research and development expenses in the first six months of 2017 were $85.0 million compared to $75.5 million for the first six months of 2016. The increase in research and development expenses year over year for the three and six month periods was primarily related to the inclusion of companies acquired in the last 12 months. Research and development expenses as a percentage of revenue were 9.9 percent for the three months ended June 30, 2017 and 9.5 percent for the three months ended June 30, 2016. Research and development expenses as a percentage of revenue for the first six months of 2017 were 10.1 percent compared to 9.7 percent during the first six months of 2016. We have, and will continue to have, fluctuations in quarterly spending depending on product development needs and overall business spending priorities and believe that annual spending levels are most indicative of our commitment to research and development. Over the past five annual periods through December 31, 2016, our annual research and development expenses have varied between 8.5 percent and 9.9 percent of revenue, and we currently expect these expenses to remain within that range, on an annual basis, for the foreseeable future.

Selling, general, and administrative expenses. Selling, general, and administrative expenses were $97.1 million and $79.9 million for the quarters ended June 30, 2017 and 2016, respectively. Selling, general and administrative expenses were $187.3 million and $162.9 million for the six months ended June 30, 2017 and 2016, respectively. The increase in selling, general, and administrative expenses year over year for the three and six month periods was primarily related to the inclusion of selling, general, and administrative expenses of companies acquired in the last 12 months. Selling, general, and administrative expenses as a percentage of revenue were 22.4 percent and 19.8 percent for the quarters ended June 30, 2017 and 2016, respectively. Selling, general and administrative expenses as a percentage of revenue were 22.3 percent and 20.8 percent for the six month periods ended June 30, 2017 and 2016, respectively. Over the past five annual periods through December 31, 2016, our annual selling, general and administrative expenses have varied between 19.4 percent and 21.7 percent of revenue, and we currently expect these expenses to remain within that range, on an annual basis, for the foreseeable future.

Interest expense. Interest expense for the three months ended June 30, 2017, was $4.5 million, compared to $4.4 million for the same period of 2016. Interest expense for the six months ended June 30, 2017, was $8.9 million, compared to $7.8 million for the six months ended June 30, 2016. Interest expense in 2017 was primarily associated with the $425 million aggregate principal amount of our 3.125 percent senior unsecured notes and amounts drawn under our credit facility. Interest expense in 2016 was primarily associated with the $250 million aggregate principal amount of our 3.75 percent senior unsecured notes and our term loan that was drawn upon under our credit agreement.

Income taxes. Our income tax provision of $12.1 million and $25.1 million for the three and six month periods ended June 30, 2017, represents an effective tax rate of 19.1 percent and 21.1 percent, respectively. This compares favorably to our income tax provision of $14.5 million and $69.0 million for the three and six month periods ended June 30, 2016, which represented an effective tax rate of 24.2 percent and 59.7 percent, respectively. The effective tax rate for the three and six months ended June 30, 2017 is lower than the United States Federal tax rate of 35 percent mainly due to the mix of lower foreign jurisdiction tax rates, the effect of federal, foreign and state tax credits, excess tax benefits for stock compensation, and other discrete adjustments. The first quarter of 2016 included discrete tax charges totaling $39.6 million related to the January 11, 2016, announcement from the European Commission of a decision concluding that certain rules under Belgian tax legislation are deemed to be incompatible

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with European Union regulations on state aid. As a result of this decision, the European Commission has directed the Belgian Government to recover past taxes from certain entities, reflective of disallowed state aid, which impacts one of the Company’s international subsidiaries. The Belgian Government announced they have appealed this decision and filed action for an annulment in the General Court of the European Union, and in July 2016 the Company filed a separate appeal with the General Court of the European Union. In accordance with FASB ASC Topic 740, “Income Taxes,” the Company recorded discrete tax expense of $39.6 million during 2016, related to this matter and on January 10, 2017, received tax assessments from the Belgium government for a similar amount, which the Company has classified as current taxes payable on the Consolidated Balance Sheet as of June 30, 2017. The Company has filed a complaint against the Belgian tax assessments, and the result of this complaint, the appeal with the General Court of the European Union, new information received from the Belgian Government, or other future events may cause the income tax provision associated with the decision to be entirely or partially reversed.

Segment Operating Results

Surveillance

Surveillance operating results are as follows (in millions, except percentages):

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Revenue	$	129.2		$	113.4		$	247.9		$	237.6
Earnings from operations	33.0			26.6			59.4			62.5
Operating margin	25.5		%	23.4		%	23.9		%	26.3		%
Backlog							327			341

Surveillance revenue for the quarter ended June 30, 2017, increased by 13.9 percent compared to the same period of 2016. Surveillance revenue for the six months ended June 30, 2017, increased by 4.4 percent compared to the same period of 2016. The increase in revenue for the quarter ended June 30, 2017, compared to the same period of 2016 was driven by increase in sales in Airborne and Weapon Sights markets and the addition of the Armasight business, which was acquired in June 2016, partially offset by lower Integrated Systems sales. The increase in revenue for the six months ended June 30, 2017, compared to the same period of 2016 was predominately due to the addition of Armasight as well as the Prox Dynamics business, which was acquired in November 2016. The increase in earnings from operations for the three month period ended June 30, 2017, compared to the same period in 2016 was primarily due to higher revenues and favorable product mix. The decrease in earnings from operations for the six month period ended June 30, 2017, compared to the same period of 2016, was due to the inclusion of Armasight and Prox Dynamics, as well as higher operating expenses.

Instruments

Instruments operating results are as follows (in millions, except percentages):

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Revenue	$	86.0		$	78.1		$	163.8		$	157.5
Earnings from operations	23.6			19.7			44.8			39.7
Operating margin	27.5		%	25.2		%	27.3		%	25.2		%
Backlog							35			30

Instruments segment revenue for the quarter ended June 30, 2017, increased by 10.1 percent compared to the same period of 2016. Instruments revenue for the six months ended June 30, 2017, increased by 4.0 percent compared to the same period of 2016. The increase in revenue for the three and six month periods was predominately attributable strength in the Premium and Volume

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Handheld product lines driven by product refreshes, supplemented by growth in Optical Gas products. The increase in earnings from operations for the three and six months ended June 30, 2017, compared to the same periods of 2016, was primarily due to the higher revenue base while operating expenses remained consistent.

Security

Security operating results are as follows (in millions, except percentages):

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Revenue	$	49.7		$	63.4		$	94.8		$	110.4
Earnings from operations	1.3			4.4			1.6			2.2
Operating margin	2.6		%	7.0		%	1.7		%	2.0		%
Backlog							23			21

Security segment revenue for the quarter ended June 30, 2017, decreased by 21.6 percent compared to the same period of 2016. Security revenue for the six months ended June 30, 2017, decreased by 14.2 percent compared to the same period of 2016. The decrease in revenue was primarily due to a reduction in sales for consumer-grade security products in retail channels partially offset by increased consumer-grade sales through our e-commerce channel. The decrease in earnings from operations for the three and six months ended June 30, 2017, compared to the same periods of 2016, was primarily due to lower revenues.

OEM & Emerging Markets

OEM & Emerging Markets operating results are as follows (in millions, except percentages):

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Revenue	$	87.4		$	57.0		$	172.2		$	104.8
Earnings from operations	26.3			16.8			50.7			27.4
Operating margin	30.1		%	29.4		%	29.4		%	26.2		%
Backlog							159			139

OEM & Emerging Markets segment revenue for the quarter ended June 30, 2017, increased by 53.5 percent compared to the same period of 2016. OEM & Emerging Markets revenue for the six months ended June 30, 2017, increased by 64.3 percent compared to the same period of 2016. The increase in revenue was primarily due to the acquisition of Point Grey in November 2016, as well as higher deliveries of cores and components and intelligent traffic system products. The increase in earnings from operations for the three and six months ended June 30, 2017, compared to the same periods of 2016, was primarily due to higher revenues.

Maritime

Maritime operating results are as follows (in millions, except percentages):

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Revenue	$	55.1		$	55.2		$	103.7		$	106.9
Earnings from operations	9.4			7.5			14.6			13.3
Operating margin	17.0		%	13.6		%	14.1		%	12.5		%
Backlog							15			24

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Maritime segment revenue for the quarter ended June 30, 2017, decreased by 0.1 percent compared to the same period of 2016. Maritime revenue for the six months ended June 30, 2017, decreased by 3.0 percent. The decrease in revenue for the three and six month periods of 2017 compared to the same period of the prior year was driven by a decline in Thermal camera sales, partially offset by increased Raymarine sales driven by the new Axiom line of multi-function displays which began shipping during the second quarter of 2017. Foreign currency headwinds compared to the same periods in the prior year partially offset the increase in Raymarine sales. The increase in operating income for the three and six month periods ended June 30, 2017 compared to the same periods of 2016 was driven by stronger margins on shipments of new products introduced in 2017.

Detection

Detection operating results are as follows (in millions, except percentages):

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Revenue	$	26.7		$	35.7		$	58.5		$	65.0
Earnings from operations	7.0			10.3			15.8			18.6
Operating margin	26.3		%	28.9		%	26.9		%	28.6		%
Backlog							86			74

Detection segment revenue for the quarter ended June 30, 2017, decreased by 25.2 percent compared to same period of 2016. Detection revenue for the six months ended June 30, 2017, decreased by 9.9 percent. The decrease in revenue for the three and six month periods ending June 30, 2017, compared to the same periods of 2016 were primarily due to lower shipments of our CBRNE threat response systems to United States government customers. These shipments account for a significant portion of Detection revenues, and timing of delivery schedules impacts periodic results. The decrease in earnings from operations for the three and six month periods ended June 30, 2017, compared to the same period of 2016 was due to the lower revenues on the CBRNE threat response systems.

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Liquidity and Capital Resources

At June 30, 2017, we had a total of $403.6 million in cash and cash equivalents, $111.4 million of which resided in the United States and $292.2 million at our foreign subsidiaries, compared to cash and cash equivalents at December 31, 2016, of $361.3 million, of which $98.3 million resided in the United States and $263.0 million at our foreign subsidiaries. The increase in cash and cash equivalents during the six months ended June 30, 2017, was primarily due to cash provided from operations of $105.3 million, partially offset by capital expenditures of $23.7 million and dividend payments of $41.0 million.

Cash provided by operating activities during the six months ended June 30, 2017, totaled $105.3 million, which primarily consisted of net earnings, adjusted for depreciation and amortization, stock-based compensation, other non-cash items and changes in working capital.

Cash used for investing activities for the three months ended June 30, 2017, totaled $20.8 million, which primarily consisted of capital expenditures in the ordinary course of business.

Cash used by financing activities for the three months ended June 30, 2017, totaled $54.3 million, which primarily consisted of the payment of dividends and the repayment of borrowings under our revolving credit facility.

On February 8, 2011, we entered into a Credit Agreement (“Credit Agreement”) with Bank of America, N.A., U.S. Bank National Association, JPMorgan Chase Bank N.A. and other Lenders. The Credit Agreement provides for a $200 million, five-year revolving line of credit. On April 5, 2013, the Credit Agreement was amended to extend the maturity of the revolving credit facility from April 8, 2016 to April 5, 2018, in addition to incorporating a $150 million term loan facility maturing April 5, 2019. On May 31, 2016, the Credit Agreement was further amended to increase the borrowing capacity to $500 million and to extend the maturity of the revolving credit facility from April 5, 2018 to May 31, 2021. The amendment also incorporated a revised schedule of fees and interest rate spreads. We have the right, subject to certain conditions, including approval of additional commitments by qualified lenders, to increase the revolving line of credit under the Credit Agreement by an additional $200 million until May 31, 2021. The Credit Agreement allows us and certain designated subsidiaries to borrow in United States dollars, European euros, Swedish kronor, British pound sterling, Japanese yen, Canadian dollars, Australian dollars, and other agreed upon currencies. Interest rates under the Credit Agreement are determined based on the type of borrowing. Interest associated with borrowings can be based on either the prime lending rate of Bank of America, N.A. or the published Eurocurrency rate (i.e. LIBOR). The borrowings have an applicable margin that ranges from 0.125 percent to 2.125 percent depending on the applicable base rate and our consolidated total leverage ratio. Including the respective spreads and ignoring the effects of hedging, the one-month Eurocurrency-based borrowing rate was 2.601 percent per annum and the prime lending-based borrowing rate was 4.625 percent per annum at June 30, 2017. The Credit Agreement requires us to pay a commitment fee on the amount of unused revolving commitments at a rate, based on our total leverage ratio, which ranges from 0.150 percent to 0.300 percent of unused revolving commitments. The Credit Agreement contains two financial covenants that require the maintenance of a total leverage ratio and an interest coverage ratio, with which the Company was in compliance at June 30, 2017. The credit facilities available under the Credit Agreement are unsecured.

On May 31, 2016, we drew down $105 million under the revolving credit facility and repaid the term loan facility in full. Interest is accrued at the one-month LIBOR rate plus the scheduled spread and paid monthly. By entering into interest rate swap agreements, we have effectively fixed the basis for calculating the interest rate on the revolving credit facility. The effective interest rate paid for the revolving credit facility is equal to the median fixed rate in the swap agreements plus the credit spread then in effect. At June 30, 2017, the effective interest rate on the revolving credit facility was 2.37 percent. Principal payments of $3.75 million, at our option, will continue to be made in quarterly installments through December 31, 2018, with the final maturity payment including any accrued interest due on April 5, 2019.

In June 2016, we issued $425 million aggregate principal amount of our 3.125 percent senior unsecured notes due June 15, 2021 (the “Notes”). The net proceeds from the issuance of the Notes were approximately $421.0 million, after deducting underwriting discounts and offering expenses, which are being amortized over a period of five years. Interest on the Notes is payable semiannually in arrears on December 15 and June 15. The proceeds from the Notes were used to repay our 3.75 percent senior unsecured notes that were due September 1, 2016, and are being used for general corporate purposes, which include working capital and capital expenditure needs, business acquisitions, and repurchases of our common stock.

At June 30, 2017, we had $86.3 million outstanding under the Credit Agreement and the commitment fee on the amount of unused revolving credit was 0.175 percent per annum. We had $18.2 million of letters of credit outstanding under the Credit Agreement at June 30, 2017, which reduced the total available revolving credit under the Credit Agreement.

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On February 5, 2015, our Board of Directors authorized the repurchase of up to 15.0 million shares of our outstanding common stock. An aggregate of 6.3 million shares had been repurchased under this authorization, which expired on February 5, 2017. On February 8, 2017, our Board of Directors authorized the repurchase of up to 15.0 million shares of our outstanding common stock. This authorization will expire on February 8, 2019. As of June 30, 2017, no shares have been repurchased under the February 8, 2017 authorization.

United States income taxes have not been provided for accumulated earnings of certain subsidiaries outside of the United States as we currently intend to reinvest the earnings in operations and other activities outside the United States indefinitely. Should we subsequently elect to repatriate such foreign earnings, we would need to accrue and pay United States income taxes, thereby reducing the amount of our cash.

We believe that our existing cash combined with the cash we anticipate generating from operating activities, and our available credit facilities and financing available from other sources will be sufficient to meet our cash requirements for the next twelve months. We do not have any significant commitments nor are we aware of any significant events or conditions that are likely to have a material impact on our liquidity or capital resources.

Off-Balance Sheet Arrangements

As of June 30, 2017, we leased our non-owned facilities under operating lease agreements. We also leased certain operating machinery and equipment and office equipment under operating lease agreements. Except for these operating lease agreements, we do not have any off-balance sheet arrangements that have or are likely to have a material current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources.

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Recent Accounting Pronouncements

Recently Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update No. 2014-09, "Revenue from Contracts with Customers" ("ASU 2014-09"), which establishes new guidance under which companies will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASU 2014-09 also provides for additional disclosure requirements. The FASB has recently issued several amendments to the new standard, including clarification on accounting for licenses of intellectual property and identifying performance obligations. The amendments include ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606)-Principal versus Agent Considerations, which was issued in March 2016, and clarifies the implementation guidance for principal versus agent considerations in ASU 2014-09, and ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606)-Identifying Performance Obligations and Licensing, which was issued in April 2016, and amends the guidance in ASU No. 2014-09 related to identifying performance obligations and accounting for licenses of intellectual property.

The new standard permits adoption either by using (i) a full retrospective approach for all periods presented in the period of adoption or (ii) a modified retrospective approach with the cumulative effect of initially applying the new standard recognized at the date of initial application and providing certain additional disclosures. While ASU 2014-09 was to be effective for annual periods and interim periods beginning after December 15, 2016, on July 9, 2015, the FASB approved the deferral of the effective date to periods beginning on or after December 15, 2017. Accordingly, the Company currently intends to adopt ASU 2014-09 on January 1, 2018. The Company currently plans to adopt using the modified retrospective approach. However, a final decision regarding the adoption method has not been finalized at this time. The final determination will depend on a number of factors, such as the significance of the impact of the new standard on its financial results, system readiness, and the ability to accumulate and analyze the information necessary to assess the impact on prior period financial statements, as necessary.

The Company has made progress toward completing the evaluation of the potential changes from adopting the new standard on its financial reporting and disclosures. The Company has evaluated the impact of the standard on all of its revenue streams and most of its significant contracts. The Company has completed the assessment of the impact on its business processes, controls and systems. The Company expects to complete the design of any changes to our business processes, controls and systems in the third quarter of 2017 and implement the changes in the fourth quarter of 2017. The Company has also began quantifying the impact of the adoption of the standard on retained earnings as of January 1, 2017. However, the impact to retained earnings is not known at this time, as it will be dependent on the number, size, and complexity of contracts that have not been substantially completed as of December 31, 2017.

In February 2016, the FASB issued Accounting Standards Update No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). The amendments in this update require the identification of arrangements that should be accounted for as leases by lessees. In general, for lease arrangements exceeding a twelve-month term, these arrangements must now be recognized as assets and liabilities on the balance sheet of the lessee. ASU 2016-02 requires the use of the modified retrospective method, which will require adjustment to all comparative periods presented in the consolidated financial statements. ASU 2016-02 is effective for interim and annual reporting periods beginning after December 15, 2018, with early adoption permitted, and the Company currently intends to adopt ASU 2016-02 on January 1, 2019. The Company is assessing the impact ASU 2016-02 will have on its consolidated financial statements and expects that the primary impact upon adoption will be the recognition, on a discounted basis, of its minimum commitments under noncancelable operating leases on its consolidated balance sheets resulting in the recording of right of use assets and lease obligations.

In October 2016, the FASB issued Accounting Standards Update No. 2016-16, “Intra-Entity Transfers of Assets Other Than Inventory” ("ASU 2016-16"). The amendments in this update eliminate the exception of recognizing, at the time of transfer, current and deferred income taxes for intra-entity asset transfers other than inventory. ASU 2016-16 is effective for interim and annual reporting periods beginning after December 15, 2017, and should be applied on a modified retrospective transition basis. The Company is currently planning to adopt ASU 2016-16 on January 1, 2018. The Company has estimated that there will be a remaining deferred tax benefit of $6.5 million recorded in prepaid expenses and other current assets and other assets as of December 31, 2017, which represents the tax benefit that was deferred in accordance with current GAAP. At adoption, the Company will recognize this amount through a cumulative-effect adjustment to retained earnings.

In January 2017, the FASB issued Accounting Standards Update No. 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of a Business" ("ASU 2017-01"). The amendments in this update clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or

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disposals) of assets or businesses. ASU 2017-01 is effective for interim and annual reporting periods beginning after December 15, 2017. The Company currently intends to adopt ASU 2017-01 on January 1, 2018, and does not expect the adoption of ASU 2017-01 to have a material impact on its consolidated financial statements.

In January 2017, the FASB issued Accounting Standards Updated No. 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”). The amendments in this update simplify the subsequent measurement of goodwill by removing the second step of the two-step impairment test. The amendment requires an entity to perform its annual, or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit's fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The amendment should be applied on a prospective basis. ASU 2017-04 is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The amendments in ASU 2017-04 are to be applied on a prospective basis and are not expected to have a material impact on the Company’s consolidated financial statements.

Critical Accounting Policies and Estimates

The Company reaffirms the critical accounting policies and its use of estimates as reported in its Form 10-K for the fiscal year ended December 31, 2016, as described in Note 1, "Nature of Business and Significant Accounting Policies," of the Notes to the Consolidated Financial Statements included in the Form 10-K for the fiscal year ended December 31, 2016.

Contractual Obligations

There were no material changes to the Company's contractual obligations outside the ordinary course of its business during the quarter ended June 30, 2017.

Contingencies

See Note 15, "Contingencies," of the Notes to the Consolidated Financial Statements for a description of an ongoing lawsuit filed by Raytheon Company against FLIR Systems, Inc. and its subsidiary, FLIR Commercial Systems, Inc., the disclosure of certain matters by the Company to the United States Department of State Office of Defense Trade Controls Compliance, and the Company's current estimates of the range of potential loss associated with quality concerns identified by the Company regarding certain SkyWatch Surveillance Towers.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As of June 30, 2017, the Company has not experienced any changes in market risk exposure that would materially affect the quantitative and qualitative disclosures about market risk presented in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016.

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ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of June 30, 2017, the Company completed an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and the Company’s Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on the evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports it files or submits under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

Changes in Internal Control Over Financial Reporting

There was no change in the Company’s internal control over financial reporting that occurred during the Company’s fiscal quarter ended June 30, 2017, that has materially affected, or is reasonably likely to materially affect, such internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is subject to legal proceedings, claims and litigation arising in the ordinary course of its business. See Note 15, “Contingencies,” and Note 16, "Income Taxes," of the Notes to the Consolidated Financial Statements for additional information on the Company’s legal proceedings.

ITEM 1A.    RISK FACTORS

The following are important factors that could cause actual results or events to differ materially from those contained in any forward-looking statements made by or on behalf of the Company. If we are unable to adequately respond to these risks and uncertainties, our business, financial condition and results of operations could be materially adversely affected. Additionally, we cannot be certain or give any assurance that any actions taken to reduce known risks and uncertainties will be effective.

Risks, Uncertainties and Other Factors Related to Our Business

We depend on the United States government for a material portion of our business and changes in government spending could adversely affect our business

We derive significant revenue from contracts or subcontracts funded by United States government agencies. A significant reduction in the purchase of our products by these agencies or contractors for these agencies would have a material adverse effect on our business. For the fiscal years ended December 31, 2016, 2015 and 2014, approximately 25 percent, 21 percent and 20 percent, respectively, of our revenues were derived directly or indirectly from sales to the United States government and its agencies. The funding of contracts awarded to us depends on the overall United States government budget and appropriations process, which is beyond our control. In addition, at its discretion, the United States government may change its spending priorities and/or terminate, reduce or modify contracts.

Substantial uncertainty exists in the spending levels and priorities of the United States government, particularly with respect to military expenditures. Continued and further reductions in military spending could have a material adverse effect on our results from operations.

As a United States government supplier, we are subject to a number of procurement rules and regulations

Government contractors must comply with specific procurement regulations and other requirements and are subject to routine audits and investigations by United States government agencies. In addition, violations of these regulations or other unrelated laws and statutes can lead to debarment and other penalties. If we fail to comply with procurement rules and regulations and other laws and statutes, the results could include: reductions in the value of contracts; contract modifications or termination; the assessment of penalties and fines; and/or suspension or debarment from United States government contracting or subcontracting for a period of time or permanently. An adverse action by the United States government could also result in lost sales to non-governmental customers who might disqualify us as a result of such adverse action. The impairment or loss of our government contracts could have a material adverse effect on our business.

Operating margins may be negatively impacted by reduction in sales or by a change in the mix of products sold

Our expense levels are based, in part, on our expectations regarding future sales and these expenses are largely fixed in the short term. Some expenses, such as those related to research and development activities, would likely be maintained in the event of a sales downturn in order to maintain and enhance the long-term competitiveness of the Company. We maintain inventories of finished goods, components and raw materials at levels we believe are necessary to meet anticipated sales. Accordingly, we may not be able to reduce our costs in a timely manner to compensate for any unexpected shortfall between forecasted and actual sales. Any significant shortfall of sales may result in us carrying higher levels of inventories of finished goods, components and raw materials thereby increasing our risk of inventory obsolescence and corresponding inventory write-downs and write-offs. Our fixed costs, including facilities and information technology costs, compliance and public company costs, and depreciation and amortization related to previous acquisitions and capital expenditures, are significant and are difficult to reduce in the short term.

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Our operating margins vary by product and substantial changes in the mix of products sold could also have a negative impact on our operating margins.

We may experience impairment in the value of our tangible and intangible assets

Our industry is subject to rapid changes in technology, which may result in unexpected obsolescence or impairment of our assets. Our intangible assets, including goodwill, represent a significant portion of our total assets. Most of these intangibles are the result of acquisitions in which the purchase price exceeded the value of the tangible assets acquired. We amortize certain of these intangibles over their anticipated useful life and review goodwill and indefinite-lived intangible assets for impairment annually or more frequently if warranted by events. To date we have not experienced any impairment of our intangible assets, but there can be no assurance that we will not experience such impairment in the future. In addition, certain of our tangible assets such as inventory and machinery and equipment may experience impairment in their value as a result of such events as the introduction of new products, changes in technology or changes in customer demand patterns. We depreciate our machinery and equipment at levels we believe are adequate; however, there can be no assurance that there will not be a future impairment that may have a material impact on our business, financial condition and results of operations.

Unfavorable results of legal proceedings could materially adversely affect us

We are subject to various legal proceedings and claims that have arisen out of the ordinary conduct of our business and are not yet resolved, and additional claims may arise in the future. Results of legal proceedings cannot be predicted with certainty. Regardless of merit, litigation may be both time-consuming and disruptive to our operations and could cause significant expense and diversion of management attention. From time to time, we are involved in lawsuits concerning intellectual property, torts, contracts, shareholder litigation, administrative and regulatory proceedings and other matters, as well as governmental inquiries and investigations, the outcomes of which may be significant to our results of operations and may limit our ability to engage in our business activities. In recognition of these considerations, we have and may in the future enter into material settlements to avoid ongoing costs and efforts in defending or pursuing a matter. Should we fail to prevail in certain matters, or should several of these matters be resolved against us in the same reporting period, we may be faced with significant monetary damages or injunctive relief against us that could adversely affect our business, financial condition, operating results and cash flows. While we have insurance related to our business operations, it may not apply to or fully cover liabilities we incur as a result of these lawsuits. We record accruals for liabilities where we believe a loss to be probable and reasonably estimable. However, our actual costs may differ materially from these estimates.

We face risks from international sales and business activities

We market and sell our products worldwide and international sales have accounted for, and are expected to continue to account for, a significant portion of our revenue. For the years ended December 31, 2016, 2015 and 2014, international sales accounted for 46 percent, 47 percent and 49 percent, respectively, of our total revenue. We also manufacture certain products and subassemblies in Europe and we have several contract manufacturing agreements with third parties in Europe and in Asia. Certain of these products, particularly our thermal and infrared products, are subject to substantial government regulation and licensing and end use restrictions throughout the world. Our international business activities are subject to a number of risks, including:

• the imposition of and changes to governmental licensing restrictions and controls impacting our technology and products;

• restrictions and prohibitions on the export of technology and products, including recent changes in regulation prohibiting the sale of certain of our products to certain end users without a license;

• international trade restrictions;

• difficulty in collecting receivables and governmental restrictions with respect to currency;

• inadequate protection of intellectual property;

• labor union activities;

• changes in tariffs and taxes;

• restrictions on repatriation of earnings;

• restriction on the importation and exportation of goods and services;

• risks, costs, impacts and obligations associated with the United States Foreign Corrupt Practices Act ("FCPA"), and other anti-bribery and anti-corruption laws applicable to us, and laws applicable to global trade and United States export and

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costs and penalties from violations of such laws and related regulations, including the costs associated with required remedial and other increased compliance activity;

• difficulties in staffing and managing international operations; and

• political and economic instability.

Some of these factors recently have had an adverse impact on our sales and operations and increased the Company’s cost of doing business and subjected the business to additional rules, policies and procedures that impacted the operation of the Company. No assurance can be given that these factors will not have a material adverse effect on our future international sales and operations and, consequently, on our business, financial condition and results of operations. Furthermore, compliance with complex foreign and U.S. laws and regulations that apply to our international operations increases our cost of doing business both in the United States and in international jurisdictions. These regulations include import and export laws, anti-competition laws, anti-corruption laws, such as the FCPA and the U.K. Bribery Act, and other local laws prohibiting corrupt payments to governmental officials, data privacy requirements, tax laws, and accounting, internal control and disclosure requirements. For example, on April 8, 2015, the Company and the Securities and Exchange Commission (“SEC”) entered into an agreement through entry of an Order Instituting Cease-and-Desist Proceedings Pursuant to Section 21C of the Securities and Exchange Act of 1934, Making Findings, and Imposing a Cease-and-Desist Order (the “SEC Order”). The SEC Order settled charges under the FCPA with respect to incidents of improper travel and gifts involving FLIR’s Middle East operation. Pursuant to the SEC Order, the Company is obligated to “cease and desist” from committing any future violations of the Securities Exchange Act of 1934, as amended. Violations of these laws and regulations could result in civil and criminal fines, penalties and sanctions against us, our officers or our employees, prohibitions on the conduct of our business and on our ability to offer our products and services in one or more countries, and could also materially affect our reputation, business and results of operations. In certain foreign jurisdictions, there is a higher risk of fraud or corruption and greater difficulty in maintaining effective internal controls and compliance programs. Further, although we have implemented and continue to implement policies and procedures designed to promote compliance with applicable laws and regulations, there can be no assurance that our employees, contractors or agents will not violate our policies or applicable laws and regulations. In addition, our international contracts may include industrial cooperation agreements requiring specific in-country purchases, investments, manufacturing agreements or other financial obligations, known as offset obligations, and may provide for penalties if we fail to meet such requirements. The impact of these factors is difficult to predict, but one or more of them could have a material adverse effect on our financial position, results of operations, or cash flows.

We face risks from currency fluctuations

Historically, currency fluctuations have affected our operating results. Changes in the value of foreign currencies in which our sales or costs incurred are denominated have in the past caused, and could in the future cause, fluctuations in our operating results. We seek to reduce our exposure to currency fluctuations by denominating, where possible, our international sales in United States dollars, by balancing expenses and revenues in various currencies and by undertaking limited hedging of forecasted currency exposures. With respect to international sales denominated in United States dollars, a decrease in the value of foreign currencies relative to the United States dollar could make our products less price competitive.

We may not be successful in obtaining the necessary export licenses to conduct operations abroad and the United States government may prevent proposed sales to foreign governments and customers

Export licenses and other authorizations are required from United States government agencies under the ITAR, the Export Administration Regulation (“EAR”), the Foreign Assets Control Regulations (“OFAC”), the Trading with the Enemy Act of 1917, the International Emergency Economic Powers Act (“IEEPA”), the Arms Export Control Act of 1976 (“AECA”), and other similar laws and regulations for the sale, use and export of many of our products and related data and services. Thermal and infrared products and technical data have been subject to the ITAR and EAR, historically under United States Munitions List (“USML”) Category XII and Commerce Control List (“CCL”) Category 6. Recently, the United States Government’s export reform effort resulted in the transition of various Company products from the USML to the CCL, shifting the licensing requirements and restrictions for products regulated by the Department of Commerce under the EAR. This transition has increased the licensing requirements and restrictions on some products and reduced the requirements and restrictions on others. We can give no assurance that we will be successful in obtaining the necessary licenses from the United States Department of State or Department of Commerce required to conduct our business as presently or historically conducted.

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The United States export licensing environment has been affected by a number of factors, including but not limited to, the aftermath of 9/11, the rise of terrorism and the changing geopolitical environment, heightened tensions with other countries (which shift and evolve over time), and the United States reliance on the tactical advantage of the night-time war fighter. Some of these factors have affected the thermal imaging and infrared technology industry overall while others have impacted the Company directly. In addition, the Company’s 2014 submission to the United States Department of State Office of Defense Trade Controls Compliance (“DTCC”) pursuant to ITAR § 127.12(c), regarding the unauthorized export of technical data and defense services to dual and third country nationals in at least four facilities of the Company, have led to heightened scrutiny of export licenses for products in our markets and in some cases, has resulted in lengthened drafting and review periods for our license applications, including in countries where we have historically made significant sales. Subsequent engagement with the DTCC as part of the Company’s 2014 and related submissions and other communications concerning the Company’s licensing posture overall, highlight DTCC’s focus on the manner in which the Company handles exports of its products, technical data and services subject to the ITAR. In addition, concerns with respect to potential diversion of certain of the Company's products to prohibited end users and countries subject to economic and other sanctions implemented by the United States government has caused the United States Department of Commerce Bureau of Industry and Security to recently restrict the Company’s ability to sell 9hz thermal products without a license to customers in China not identified on a list maintained by the United States Department of Commerce.

Although we have taken actions and continue to take additional actions necessary to implement policies and procedures to promote an improved compliance culture and programs, there is no guarantee that our actions will be effective or that government agencies will not view our actions and programs with heightened scrutiny, including as a result of events outside the Company’s control. As a result, we may receive more restrictive provisos or limitations on new license requests, wholesale denials of our license requests, suspensions or terminations of our existing licenses, or delays in receiving new licenses resulting from requests for follow-up information, due diligence requests or additional limitations on our sale to third parties. We can give no assurance that we will be successful in obtaining necessary licenses required to facilitate our international business. Failures to obtain or delays in obtaining licenses may prevent or limit our ability to market, sell, export, or transfer our products outside the United States and has had and could continue to have a material adverse effect on our business and its operating results.

General economic conditions may adversely affect our business, operating results and financial condition

Our operations and performance depend significantly on worldwide economic conditions and their impact on levels of capital investment and consumer spending. Economic factors that could adversely influence demand for the Company’s products include uncertainty about global economic conditions leading to reduced levels of investment, changes in government spending levels and/or priorities, the size and availability of government budgets, customers’ and suppliers’ access to credit, consumer confidence and other macroeconomic factors affecting government, industrial or consumer spending behavior.

In recent years, our performance has been negatively impacted by reduced spending by United States government agencies, global economic weakness, and the Eurozone crisis. Continuation of the conditions that led to reduced spending and potential further reductions in spending globally by either consumers or government agencies could have a material adverse effect on our business, financial condition and results of operations.

Our primary markets are volatile and unpredictable

Our business depends on the demand for our products and solutions in a variety of commercial, industrial and government markets. In the past, the demand for our products in these markets has fluctuated due to a variety of factors, some of which are beyond our control, including:

• the timing, number and size of orders from, and shipments to, our customers, as well as the relative mix of those orders;

• variations in the volume of orders for a particular product or product line in a particular fiscal quarter;

• the size and timing of new contract awards;

• the timing of the release of government funds for procurement of our products; and

• the timing of orders and shipments within a given fiscal quarter.

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Seasonal fluctuations in our operating results result from:

• the seasonal pattern of contracting by the United States government and certain foreign governments;

• the desire of customers to take delivery of equipment prior to fiscal year ends due to funding considerations; and

• the tendency of commercial enterprises to fully utilize annual capital budgets prior to expiration.

Competition in our markets is intense and our failure to compete effectively could adversely affect our business

Competition in the markets for our products is intense. The speed with which companies can identify new applications for thermal imaging, develop products to meet those needs and supply commercial quantities at low prices to the market are important competitive factors. We believe the principal competitive factors in our markets are product performance, price, customer service and training, product reputation, and effective marketing and sales efforts. Many of our competitors have greater financial, technical, research and development, and marketing resources than we do. All of these factors, as well as the potential for increased competition from new market entrants, require us to continue to invest in, and focus on, research and development and new product innovation. No assurance can be given that we will be able to compete effectively in the future and a failure to do so could have a material adverse effect on our business, financial condition and results of operations.

Our products may suffer from defects or errors leading to substantial product liability, damage or warranty claims

We include complex system designs and components in our products that may contain errors or defects, particularly when we incorporate new technology into our products or release new versions. If any of our products are defective, we might be required to redesign or recall those products or pay substantial damages or warranty claims. Such an event could result in significant expenses including expenses arising from product liability and warranty claims, disrupt sales and affect our reputation and that of our products, which could have a material adverse effect on our business, financial condition and results of operations. As we expand our presence into new markets, we may face increased exposure to product liability claims. We maintain product liability insurance but cannot be certain that it will be sufficient or will continue to be available on acceptable terms.

Risks, Uncertainties and Other Factors Related to Our Technology and Intellectual Property

Our inability to protect our intellectual property and proprietary rights and avoid infringing the rights of others could harm our competitive position and our business

Our ability to compete successfully and achieve future revenue growth depends, in part, on our ability to protect our proprietary technology and operate without infringing the rights of others. To accomplish this, we rely on a combination of patent, trademark, copyright and trade secret laws, confidentiality agreements and contractual provisions to protect our proprietary rights. Many of our proprietary rights are held in confidence as trade secrets and are not covered by patents, making them more difficult to protect. Although we currently hold worldwide patents covering certain aspects of our technologies and products, and we are actively pursuing additional patents, we cannot be certain that we will obtain additional patents or trademarks on our technology, products and trade names. Furthermore, we cannot be certain that our patents or trademarks will not be challenged or circumvented by our competitors or that measures taken by us to protect our proprietary rights will adequately deter their misappropriation or disclosure. Any failure by us to meaningfully protect our intellectual property could have a material adverse effect on our business, financial condition and results of operations. Moreover, because intellectual property does not necessarily prevent our competitors from entering the markets we serve, there can be no assurance that we will be able to maintain our competitive advantage or that our competitors will not develop capabilities equal or superior to ours.

Litigation over patents and other intellectual property is common in our industry. We have been the subject of patent and other intellectual property litigation in the past and cannot be sure that we will not be subject to such litigation in the future. Similarly, there exists the possibility we will assert claims in litigation to protect our intellectual property. Lawsuits defending or prosecuting intellectual property claims and related legal and administrative proceedings could result in substantial expense to us and significant diversion of effort of our personnel. An adverse determination in a patent suit or in any other proceeding in which we are a party could subject us to significant liabilities, result in the loss of intellectual property rights we claim or impact our competitive position. Additionally, an adverse determination could require us to seek licenses from third parties. If such licenses are not available on commercially reasonable terms or at all, our business, financial condition and results of operations could be adversely affected.

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Our future success will depend on our ability to respond to the rapid technological change in the markets in which we compete, our ability to introduce new or enhanced products and enter into new markets

The markets in which we compete are characterized by rapid technological developments and frequent new product introductions, enhancements and modifications. Our ability to develop new products and technologies that anticipate changing customer requirements, reduce costs and otherwise retain or enhance our competitive position in existing and new markets will be an important factor in our future results from operations. We will continue to make substantial capital expenditures and incur significant research and development costs to improve our manufacturing capability, reduce costs, and develop and introduce new products and enhancements. If we fail to develop and introduce new products and technologies in a timely manner, our business, financial condition and results of operations would be adversely affected. In addition, we cannot be certain that our new products and technologies will be successful or that customers will accept any of our new products.

Our business could be negatively impacted by cybersecurity threats and other security threats and technology disruptions

We face certain security threats and technology disruptions, including threats to our information technology infrastructure, attempts to gain access to our or our customers’ proprietary or classified information, threats to the physical security of our facilities and employees, threats of terrorism events, and failures of our technology tools and systems. We are subject to laws and rules issued by various agencies concerning safeguarding and maintaining infrastructure and physical security and information confidentiality. Our information technology networks and related systems are critical to the operation of our business and essential to our ability to successfully perform day-to-day operations. We are also involved with information technology systems for certain customers and other third parties, for which we face similar security threats as for our own. In particular, cybersecurity threats-which include, but are not limited to, computer viruses, spyware and malware, attempts to access information, denial of service attacks and other electronic security breaches-are persistent and evolve quickly. Such threats have increased in frequency, scope and potential impact in recent years. Further, a variety of technological tools and systems, including both company-owned information technology and technological services provided by outside parties, support our critical functions. These technologies, as well as our products, are subject to failure and the user’s inability to have such technologies properly supported, updated, expanded or integrated into other technologies and may contain open source and third party software which may unbeknownst to us contain defects or viruses that pose unintended risks to our customers. These risks if not effectively mitigated or controlled could materially harm our business or reputation. While we believe that we have implemented appropriate measures and controls, there can be no assurance that such actions will be sufficient to prevent disruptions to critical systems, unauthorized release of confidential information or corruption of data.

We require user names and passwords in order to access our information technology systems. We use encryption and authentication technologies designed to secure the transmission and storage of data and prevent access to our data or accounts. These security measures are subject to third-party security breaches, employee error, malfeasance, faulty password management or other irregularities. For example, third parties may attempt to fraudulently induce employees or customers into disclosing user names, passwords or other sensitive information, which may in turn be used to access our information technology systems. These security systems cannot provide absolute security. To the extent we were to experience a breach of our systems and were unable to protect sensitive data, such a breach could materially damage business partner and customer relationships, and curtail or otherwise impact the use of our information technology systems. Moreover, if a security breach of our information technology system affects our computer systems or results in the release of personally identifiable or other sensitive information of customers, business partners, employees and other third parties, our reputation and brand could be materially damaged, use of our products and services could decrease, and we could be exposed to a risk of loss, litigation and potential liability.

Although we have in the past and continue to be subject to cybersecurity threats and other security threats and technology disruptions, to date none has had a material impact on our business, financial condition or results of operations. Nonetheless, in the future, these types of events could disrupt our operations and customer and other third party information technology systems. They also could require significant management attention and resources, negatively impact our reputation among our customers and the public and challenge our eligibility for future work on sensitive or classified systems, which could have a material adverse effect on our business, financial condition and results of operations.

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Risks, Uncertainties and Other Factors Related to Our Corporate Structure and Organization

Our future success depends in part on attracting and retaining key senior management and qualified technical, sales and other personnel

Our future success depends in part on the efforts and continued services of our key executives and our ability to attract and retain qualified technical, sales and other personnel. Significant competition exists for such personnel and we cannot assure the retention of our key executives, technical and sales personnel or our ability to attract, integrate and retain other such personnel that may be required in the future. We cannot assure that employees will not leave and subsequently compete against us. If we are unable to attract and retain key personnel, our business, financial condition and results of operations could be adversely affected.

We must successfully manage a complex global organization

As we have grown, the size and scope of our worldwide operations have also increased substantially. We currently design, manufacture and market numerous product lines in locations worldwide. Significant management time and effort is required to effectively manage the increased complexity of the business and our failure to successfully do so could have a material adverse effect on our business, financial condition and results of operations. Our inability to continue to manufacture our products at one or more of our facilities as a result of, for example, a prolonged power outage, earthquake, fire or other natural disaster, or labor or political unrest, could prevent us from supplying products to our customers and could have a material adverse effect on our business, financial condition and results of operations.

We may be unable to successfully integrate recent or future acquisitions into our operations, thereby disrupting our business and harming our financial condition and results of operations

We have made twelve acquisitions of various sizes in the past five years. The integration of businesses, personnel, product lines and technologies can be difficult, time consuming and subject to significant risks. For example, we could lose key personnel from companies that we acquire, incur unanticipated costs, lose major sources of revenue, fail to integrate critical technologies, suffer business disruptions, fail to capture anticipated synergies, fail to establish satisfactory internal controls, or incur unanticipated liabilities. Any of these difficulties could disrupt our ongoing business, distract our management and employees, increase our expenses and decrease our revenue.

We frequently evaluate strategic opportunities available to us and it is likely that we will make additional acquisitions in the future. Such acquisitions may vary in size and complexity. Any future acquisitions are subject to the risks described above. Furthermore, we might assume or incur additional debt or issue additional equity securities to pay for future acquisitions. Additional debt may negatively impact our results and increase our financial risk, and the issuance of any additional equity securities could dilute our then existing shareholders’ ownership. No assurance can be given that we will realize anticipated benefits of any future acquisitions, or that any such acquisition or investment will not have a material adverse effect on our business, financial condition and results of operations.

We have indebtedness as a result of the issuance of our 3.125 percent senior unsecured notes (the “Notes”) and borrowings against our unsecured credit facility, and we are subject to certain restrictive covenants under our unsecured credit facility and the indenture governing the Notes which may limit our operational and financial flexibility

Our ability to meet our debt service obligations and comply with the financial covenants under our credit facility will be dependent upon our future performance, which will be subject to financial, business and other factors affecting our operations, many of which are beyond our control. Our inability to meet our debt service obligations or comply with the required covenants could result in a default under the credit facility or indenture. In the event of any such default, under the credit facility, the lenders thereunder could elect to declare all outstanding debt, accrued interest and fees under the facility to be due and immediately payable. In the event of any such default under our indenture, either the trustee or the holders of at least 25 percent of the outstanding principal amount of the Notes could declare the principal amount of all of the Notes to be due and payable immediately.

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We may not be able to refinance our indebtedness on favorable terms, if at all. Our inability to refinance our indebtedness could materially and adversely affect our liquidity and our ongoing results of operations.

Our ability to refinance indebtedness, including the Notes, will depend in part on our operating and financial performance, which, in turn, is subject to prevailing economic conditions and to financial, business, legislative, regulatory and other factors beyond our control. In addition, prevailing interest rates or other factors at the time of refinancing could increase our interest expense. A refinancing of our indebtedness, including the Notes, could also require us to comply with more onerous covenants and further restrict our business operations. Our inability to refinance our indebtedness or to do so upon attractive terms could materially and adversely affect our business, results of operations, financial condition and cash flows, and make us vulnerable to adverse industry and general economic conditions.

Changes in our effective income tax rate may have an adverse effect on our results of operations

We are subject to taxes in the United States and numerous foreign jurisdictions, including Belgium, where a number of our subsidiaries are organized. Due to economic and political conditions, tax rates in various jurisdictions may be subject to significant change. Our future effective tax rate could be affected by changes in the mix of earnings in countries with different statutory tax rates, changes in the valuation of deferred tax assets and liabilities, changes in the enforcement environment, and changes in tax laws or their interpretations, including in the United States and in foreign jurisdictions. For example, in January 2016, the European Commission announced a decision concluding that certain rules under Belgian tax legislation are deemed to be incompatible with European Union regulations on state aid. As a result of this decision, the European Commission has directed the Belgian Government to recover past taxes from certain entities, reflective of disallowed state aid, which impacts one of the Company’s international subsidiaries.  The Belgian Government announced they have appealed this decision and filed action for an annulment in the General Count of the European Union, and in July 2016 the Company filed a separate appeal with the General Court of the European Union.   The Company recorded discrete tax expense of $39.6 million during 2016 related to this matter and on January 10, 2017, received tax assessments from the Belgium government for a similar amount.   The Company has filed a complaint against the Belgian tax assessments, and the result of this complaint, the appeal with the General Court of the European Union, new information received from the Belgian Government, or other future events may cause the income tax provision associated with the decision to be entirely or partially reversed.

Our future effective tax rate may be adversely affected by a number of additional factors including:

• 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.

Any significant increase in our future effective tax rates could adversely impact net income for future periods. In addition, the United States Internal Revenue Service (“IRS”) and other tax authorities regularly examine our income tax returns. Our financial condition and results of operations could be adversely impacted if any assessments resulting from the examination of our income tax returns by the IRS or other taxing authorities are not resolved in our favor.

State of Oregon law and our charter documents contain provisions that could discourage or prevent a potential takeover, even if the transaction would benefit our shareholders

Other companies may seek to acquire or merge with us. An acquisition or merger of our Company could result in benefits to our shareholders, including an increase in the value of our common stock. Some provisions of our Articles of Incorporation and Bylaws, including our ability to issue preferred stock without further action by our shareholders, as well as provisions of the State of Oregon law, may discourage, delay or prevent a merger or acquisition that a shareholder may consider favorable.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3.    DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.    MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Number	Description
10.1	Executive Employment Agreement between FLIR Systems, Inc. and James J. Cannon dated as of June 19, 2017 (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed on May 23, 2017).(1)
10.2	Change of Control Agreement between FLIR Systems, Inc. and James J. Cannon dated as of June 19, 2017 (incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K filed on May 23, 2017).(1)
10.3	Separation and Transition Agreement between FLIR Systems, Inc. and Andrew C. Teich dated June 18, 2017 (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed on June 21, 2017).(1)
31.1	Principal Executive Officer Certification Pursuant to Sarbanes-Oxley Act of 2002, Section 302.
31.2	Principal Financial Officer Certification Pursuant to Sarbanes-Oxley Act of 2002, Section 302.
32.1	Certification by the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification by the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

____________

(1) This exhibit constitutes a management contract or compensatory plan or arrangement.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	FLIR SYSTEMS, INC.
Date July 28, 2017	/s/ AMIT SINGHI
	Amit Singhi
	Sr. Vice President, Finance and Chief Financial Officer
	(Duly Authorized and Principal Financial Officer)

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EX-31.1

Exhibit 31.1

I, James J. Cannon, certify that:

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 July 28, 2017	/s/ James J. Cannon
	James J. Cannon
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

I, Amit Singhi, certify that:

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 July 28, 2017	/s/ Amit Singhi
	Amit Singhi
	Sr. Vice President, Finance and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of FLIR Systems, Inc. (the “Company”) on Form 10-Q for the quarter ending June 30, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, James J. Cannon, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date July 28, 2017	/s/ James J. Cannon
	James J. Cannon
	President and Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of FLIR Systems, Inc. (the “Company”) on Form 10-Q for the quarter ending June 30, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Amit Singhi, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date July 28, 2017	/s/ Amit Singhi
	Amit Singhi
	Chief Financial Officer

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Document and Entity Information - USD ($)	6 Months Ended
	Jun. 30, 2017	Jul. 19, 2017	Jun. 30, 2016
Document And Entity Information [Abstract]
Entity Registrant Name	FLIR SYSTEMS INC
Entity Central Index Key	0000354908
Trading Symbol	FLIR
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Jun. 30, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Common Stock, Shares Outstanding		137,195,504
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Public Float			$ 4,212,638,793

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CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Income Statement [Abstract]
Revenue	$ 434,124	$ 402,729	$ 840,938	$ 782,201
Cost of goods sold	227,392	219,407	442,885	421,189
Gross profit	206,732	183,322	398,053	361,012
Operating expenses:
Research and development	43,046	38,208	85,029	75,488
Selling, general and administrative	97,056	79,902	187,308	162,935
Total operating expenses	140,102	118,110	272,337	238,423
Earnings from operations	66,630	65,212	125,716	122,589
Interest expense	4,472	4,360	8,925	7,807
Interest income	(355)	(328)	(626)	(588)
Other income (expense), net	(1,027)	1,327	(1,687)	(103)
Earnings before income taxes	63,540	59,853	119,104	115,473
Income tax provision	12,127	14,485	25,120	68,980
Net earnings	$ 51,413	$ 45,368	$ 93,984	$ 46,493
Net earnings per share:
Basic earnings per share (in dollars per share)	$ 0.38	$ 0.33	$ 0.69	$ 0.34
Diluted earnings per share (in dollars per share)	$ 0.37	$ 0.33	$ 0.68	$ 0.33
Weighted Average Number of Shares Outstanding, Basic	136,865	137,861	136,613	137,686
Weighted Average Number of Shares Outstanding, Diluted	138,449	138,993	138,266	138,832

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Statement of Comprehensive Income [Abstract]
Net earnings	$ 51,413	$ 45,368	$ 93,984	$ 46,493
Other comprehensive income (loss), net of tax:
Fair value adjustment on interest rate swap contracts	0	(196)	187	(865)
Unealized gain on available-for-sale investments	0	0	(1)	0
Foreign currency translation adjustments	22,593	(24,888)	35,795	(1,526)
Total other comprehensive income	22,593	(25,084)	35,981	(2,391)
Comprehensive income	$ 74,006	$ 20,284	$ 129,965	$ 44,102

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CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 403,591	$ 361,349
Accounts receivable, net	332,009	352,020
Inventories	405,328	371,371
Prepaid expenses and other current assets	83,175	79,917
Total current assets	1,224,103	1,164,657
Property and equipment, net	272,391	271,785
Deferred income taxes, net	48,821	45,243
Goodwill	920,364	801,406
Intangible assets, net	190,058	168,460
Other assets	47,767	168,155
Total assets	2,703,504	2,619,706
Current liabilities:
Accounts payable	113,957	114,225
Deferred revenue	31,385	34,420
Accrued payroll and related liabilities	54,820	52,874
Accrued product warranties	16,262	17,476
Advance payments from customers	30,818	26,019
Accrued expenses	39,359	34,022
Accrued income taxes	36,573	51,017
Other current liabilities	11,450	16,659
Current portion, long-term debt	15,000	15,000
Total current liabilities	349,624	361,712
Long-term debt	491,303	501,921
Deferred income taxes	14,020	2,331
Accrued income taxes	9,773	9,643
Pension and other long-term liabilities	58,153	65,773
Commitments and contingencies
Shareholders’ equity:
Preferred stock, $0.01 par value, 10,000 shares authorized; no shares issued at June 30, 2017, and December 31, 2016	0	0
Common stock, $0.01 par value, 500,000 shares authorized, 137,142 and 136,334 shares issued at June 30, 2017, and December 31, 2016, respectively, and additional paid-in capital	25,492	12,139
Retained earnings	1,885,109	1,832,138
Accumulated other comprehensive loss	(129,970)	(165,951)
Total shareholders’ equity	1,780,631	1,678,326
Total liabilities and shareholders' equity	$ 2,703,504	$ 2,619,706

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CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Thousands	Jun. 30, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	10,000	10,000
Preferred stock, shares issued	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	500,000	500,000
Common stock, shares issued	137,142	136,334

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
CASH PROVIDED BY OPERATING ACTIVITIES:
Net earnings	$ 93,984	$ 46,493
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	35,008	27,778
Deferred income taxes	(150)	(372)
Stock-based compensation arrangements	14,854	14,381
Other, net	(19,211)	15,451
Increase (decrease) in cash, net of acquisitions, resulting from changes in:
Accounts receivable	24,525	50,711
Inventories	(26,935)	14,995
Prepaid expenses	(3,108)	(1,634)
Other assets	15,322	(8,613)
Accounts payable	(1,937)	(44,165)
Deferred revenue	(3,304)	(1,052)
Accrued payroll and other liabilities	2,938	(28,918)
Accrued income taxes	(18,642)	48,196
Pension & other long term liabilities	(8,090)	565
Net cash provided by operating activities	105,254	133,816
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment	(23,653)	(20,876)
Business acquisitions, net of cash acquired	2,885	4,875
Proceeds from sale of assets	0	(42,445)
Payments for (Proceeds from) Other Investing Activities		0
Net cash used by investing activities	(20,768)	(58,446)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds of long-term debt, including current portion	0	525,766
Repayment of long-term debt	(11,250)	(112,500)
Repurchase of common stock	0	(29,747)
Dividends paid	(41,013)	(33,090)
Proceeds from shares issued pursuant to stock-based compensation plans	7,035	6,541
Tax paid for net share exercises and issuance of vested restricted stock units	(9,022)	(5,616)
Other financing activities	(4)	10
Net cash used by financing activities	(54,254)	351,364
Effect of exchange rate changes on cash	12,010	3,660
Net increase in cash and cash equivalents	42,242	430,394
Cash and cash equivalents, beginning of year	361,349	472,785
Cash and cash equivalents, end of year	$ 403,591	$ 903,179

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Basis of Presentation and Significant Accounting Policies

6 Months Ended

Jun. 30, 2017

Accounting Policies [Abstract]

Nature of Business and Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements of FLIR Systems, Inc. and its consolidated subsidiaries (the “Company”) are unaudited and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, these statements have been prepared on the same basis as the audited consolidated financial statements and include all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of the Company’s consolidated financial position and results of operations for the interim periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations. These consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016.

The accompanying consolidated financial statements include the accounts of FLIR Systems, Inc. and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. The results of operations for the interim periods presented are not necessarily indicative of the operating results to be expected for any subsequent interim period or for the year ending December 31, 2017.

Recently Adopted Accounting Pronouncements

Effective January 1, 2017, the Company adopted the Financial Accounting Standards Board ("FASB") Accounting Standards Update 2016-09, "Improvements to Employee Share-Based Payment Accounting" ("ASU 2016-09"). The standard update simplifies several aspects of the accounting for employee share-based payment transactions, including accounting for income taxes, forfeitures, and statutory withholding requirements, as well as classification in the Consolidated Statements of Cash Flows. As a result of the adoption, on a prospective basis, the Company recognized $2.9 million and $3.7 million of excess tax benefits from stock-based compensation as a discrete item in income tax provision for the three and six months ended June 30, 2017, respectively. Historically, these amounts were recorded as additional paid-in capital. Upon adoption, the Company elected to apply the change retrospectively to the Consolidated Statement of Cash Flows which resulted in a reclassification of excess tax benefits from stock-based compensation of $1.6 million from cash flows from financing activities to cash flows from operating activities for the six months ended June 30, 2016. Additionally, $5.6 million paid in cash to satisfy withholding requirements for net settlement of restricted stock unit shares vested and stock options exercised has been reclassified from cash flows from operating activities to cash flows from financing activities to conform to the presentation required by the new standard in the Consolidated Statement of Cash Flows for the six months ended June 30, 2016. ASU 2016-09 also requires excess tax benefits and deficiencies to be excluded from the assumed future proceeds in the calculation of diluted shares. This change resulted in an increase in diluted weighted average shares outstanding of 179,000 shares and 195,000 shares for the three and six months ended June 30, 2017, respectively. The Company elected not to change its policy on accounting for forfeitures and will continue to estimate a requisite forfeiture rate. Additional amendments to the accounting for income taxes and minimum statutory withholding requirements had no impact on the Company's results of operations.

Reclassifications

The Company made certain reclassifications to the prior years' financial statements and notes to the consolidated financial statements to conform them to the presentation as of and for the three and six months ended June 30, 2017. These reclassifications had no effect on consolidated financial position, net earnings, shareholders' equity, or net cash flows for any of the periods presented.

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Stock-based compensation

6 Months Ended

Jun. 30, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-based Compensation

Stock-based Compensation

Stock Incentive Plans

The Company has a stock-based compensation program that provides equity incentives for employees, consultants and directors. This program includes incentive and non-statutory stock options and non-vested stock awards (referred to as restricted stock unit awards) granted under two plans: the FLIR Systems, Inc. 2002 Stock Incentive Plan (the “2002 Plan”) and the FLIR Systems, Inc. 2011 Stock Incentive Plan (the “2011 Plan”). The Company has discontinued issuing awards out of the 2002 Plan but previously-granted awards under the 2002 Plan remain outstanding.

Note 2. Stock-based Compensation - (Continued)

Stock Incentive Plans - (Continued)

The Company has granted time-based options, time-based restricted stock unit awards, market-based restricted stock unit awards and performance-based restricted stock unit awards. Options generally expire ten years from the grant date. Time-based options and restricted stock unit awards generally vest over a three-year period. Market-based restricted stock unit awards may be earned based upon the Company's total shareholder return compared to the total shareholder return of the component company at the 60th percentile level in the S&P 500 Index over a three-year period. Performance-based restricted stock unit awards may be earned based upon certain profitability metrics as approved by the compensation committee of the Company's board of directors, including return on invested capital or income from operations over the relevant three-year periods. Shares vested under the performance-based restricted stock unit awards and the market-based restricted stock unit awards must generally be held by the participant for a period of one year from the vest date.

Employee Stock Purchase Plan

The Company has an Employee Stock Purchase Plan (the “ESPP”) which allows employees to purchase shares of the Company’s common stock at 85 percent of the fair market value at the lower of either the date of enrollment or the purchase date. The ESPP provides for six-month offerings commencing on May 1 and November 1 of each year with purchases on April 30 and October 31 of each year. Shares purchased under the ESPP must be held by employees for a period of at least 18 months after the date of purchase.

The following table sets forth the stock-based compensation expense recognized in the Consolidated Statements of Income (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Cost of goods sold	$	631	$	855	$	1,032	$	1,470
Research and development	1,299		1,233		2,476		2,414
Selling, general and administrative	6,678		6,205		11,346		10,497
Stock-based compensation expense before income taxes	$	8,608	$	8,293	$	14,854	$	14,381

Stock-based compensation expense capitalized in the Consolidated Balance Sheets is as follows (in thousands):

	June 30,
	2017		2016
Capitalized in inventory	$	1,053	$	685

As of June 30, 2017, the Company had approximately $62.0 million of total unrecognized stock-based compensation costs, net of estimated forfeitures, to be recognized over a weighted average period of 2.29 years.

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Net Earnings Per Share Net Earnings Per Share

6 Months Ended

Jun. 30, 2017

Earnings Per Share [Abstract]

Earnings Per Share [Text Block]

Net Earnings Per Share

The following table sets forth the reconciliation of the numerator and denominator utilized in the computation of basic and diluted earnings per share (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Numerator for earnings per share:
Net earnings for basic and diluted earnings per share	$	51,413	$	45,368	$	93,984	$	46,493
Denominator for earnings per share:
Weighted average number of common shares outstanding	136,865		137,861		136,613		137,686
Assumed exercise of stock options and vesting of restricted stock awards, net of shares assumed reacquired under the treasury stock method	1,584		1,132		1,653		1,146
Diluted shares outstanding	138,449		138,993		138,266		138,832

The effect of stock-based compensation awards for the three and six months ended June 30, 2017, which in aggregate consisted of 162,000 and 265,000 shares, respectively; and for the three and six months ended June 30, 2016, which in the aggregate consisted of 295,000 and 440,000 shares, respectively, have been excluded for purposes of diluted earnings per share since the effect of their inclusion would have been anti-dilutive.

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Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2017

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Fair Value of Financial Instruments

Factors used in determining the fair value of financial assets and liabilities are summarized into three broad categories in accordance with FASB ASC Topic 820, “Fair Value Measurements”:

Level 1 – quoted prices in active markets for identical securities as of the reporting date;

Level 2 – other significant directly or indirectly observable inputs, including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, and observable market prices for identical instruments that are traded in less active markets; and

Level 3 – significant inputs that are generally less observable than objective sources, including our own assumptions in determining fair value.

The factors or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

The Company had $70.9 million and $8.3 million of cash equivalents at June 30, 2017 and December 31, 2016, respectively, which were primarily investments in money market funds and overnight deposits. The Company has categorized its cash equivalents as a Level 1 financial asset, measured at fair value based on quoted prices in active markets of identical assets. All cash equivalents are comprised of instruments that are convertible to cash daily. The fair value of the Company’s foreign currency contracts and interest rate swap contracts as of June 30, 2017 and December 31, 2016, are disclosed in Note 5, "Derivative Financial Instruments," and are based on Level 2 inputs. The fair value of the Company’s senior unsecured notes as described in Note 13, "Long-Term Debt," is approximately $429.4 million at June 30, 2017 and is categorized as Level 2 based on observable prices for the identical instrument in a less active market. The fair value of the Company's credit facility and related borrowings, also described in Note 13, approximates the carrying value due to the variable market rate used to calculate interest payments. The Company does not have any other significant financial assets or liabilities that are measured at fair value.

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Derivative Financial Instruments

6 Months Ended

Jun. 30, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Derivative Financial Instruments

Foreign Currency Exchange Rate Risk

The Company enters into foreign currency forward contracts not formally designated as hedges to manage the consolidated exchange rate risk associated with the remeasurement of non-functional currency denominated monetary assets and liabilities.  Changes in fair value of foreign currency forward contracts are recognized in income at the end of each reporting period based on the difference between the contract rate and the spot rate. In general, these gains and losses are offset in the Consolidated Statements of Income by the reciprocal gains and losses from cash settlement of the underlying assets or liabilities which originally gave rise to the exposure. The net amount of the gains and losses related to derivative instruments recorded in other (income) expense, net for the three and six months ended June 30, 2017 were net losses of $3.4 million and $7.7 million, respectively. The net losses for the three and six months ended June 30, 2016 were $9.1 million and $2.1 million, respectively.

The table below presents the net notional amounts of the Company’s outstanding foreign currency forward contracts by currency (in thousands):

	June 30,		December 31,
	2017		2016
European euro	$	190,451	$	156,352
Swedish kroner	74,191		48,555
Canadian dollar	56,475		15,645
Brazilian real	9,562		2,747
Japanese yen	2,985		3,251
Australian dollar	2,129		1,653
British pound sterling	668		33,862
Other	485		—
	$	336,946	$	262,065

At June 30, 2017, the Company’s foreign currency forward contracts, in general, had maturities of three months or less.

The carrying amount of the foreign exchange contracts included in the Consolidated Balance Sheets are as follows (in thousands):

	June 30, 2017				December 31, 2016
	Prepaid Expenses and Other Current Assets		Other Current Liabilities		Prepaid Expenses and Other Current Assets		Other Current Liabilities
Foreign exchange contracts	$	3,853	$	1,768	$	2,369	$	75

Interest Rate Swap Contracts

At June 30, 2017, the effective interest rate on the borrowings made from the Company's revolving credit facility was 2.37 percent. As of June 30, 2017, the following interest rate swaps were outstanding:

Contract Date	Notional Amount (in millions)		Fixed Rate		Effective Date	Maturity Date
March 15, 2013	$	43.1	1.02	%	April 5, 2013	March 31, 2019
March 29, 2013	$	43.1	0.97	%	April 5, 2013	March 31, 2019

The net fair value carrying amount of the Company's interest rate swaps was $0.6 million, of which $0.3 million has been recorded to prepaid expenses and other current assets and $0.3 million has been recorded to other assets in the Consolidated Balance Sheet as of June 30, 2017.

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Accounts Receivable

6 Months Ended

Jun. 30, 2017

Receivables [Abstract]

Accounts Receivable

Accounts Receivable

Accounts receivable are net of an allowance for doubtful accounts of $6.2 million and $6.5 million at June 30, 2017 and December 31, 2016, respectively.

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Inventories

6 Months Ended

Jun. 30, 2017

Inventory Disclosure [Abstract]

Inventories

Inventories

Inventories consist of the following (in thousands):

	June 30,		December 31,
	2017		2016
Raw material and subassemblies	$	217,113	$	200,640
Work-in-progress	58,533		43,430
Finished goods	129,682		127,301
	$	405,328	$	371,371

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Property and Equipment

6 Months Ended

Jun. 30, 2017

Property, Plant and Equipment [Abstract]

Property and Equipment

Property and Equipment

Property and equipment are net of accumulated depreciation of $300.3 million and $275.1 million at June 30, 2017 and December 31, 2016, respectively.

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Goodwill

6 Months Ended

Jun. 30, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

Goodwill

The carrying value of goodwill and the activity for the six months ended June 30, 2017 are as follows (in thousands):

Balance, December 31, 2016	$	801,406
Goodwill from acquisitions	100,022
Currency translation adjustments	18,936
Balance, June 30, 2017	$	920,364

See Note 17, "Operating Segments and Related Information - Operating Segments," of the Notes to the Consolidated Financial Statements for additional information on the carrying value of goodwill by operating segment at June 30, 2017.

See Note 18, "Business Acquisitions," of the Notes to the Consolidated Financial Statements for additional information on the addition of goodwill from acquisitions.

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Intangible Assets

6 Months Ended

Jun. 30, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

Intangible Assets

Intangible assets are net of accumulated amortization of $93.2 million and $77.8 million at June 30, 2017 and December 31, 2016, respectively.

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Credit Agreement

6 Months Ended

Jun. 30, 2017

Debt Disclosure [Abstract]

Credit Agreements

Credit Agreement

On February 8, 2011, the Company entered into a credit agreement with Bank of America, N.A., U.S. Bank National Association, JPMorgan Chase Bank N.A. and other lenders, as amended on April 5, 2013, October 27, 2015 and May 31, 2016 (the "Credit Agreement") which provides for a $500 million revolving line of credit. At June 30, 2017, the Company had $86.3 million outstanding under its revolving credit facility pursuant to the Credit Agreement and had $18.2 million of letters of credit outstanding, which reduces the total available revolving credit under the Credit Agreement to $395.5 million.

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Accrued Product Warranties

6 Months Ended

Jun. 30, 2017

Product Warranties Disclosures [Abstract]

Accrued Product Warranties

Accrued Product Warranties

The following table summarizes the Company’s warranty liability and activity (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Accrued product warranties, beginning of period	$	19,971		$	17,227		$	20,845		$	16,514
Amounts paid for warranty services	(4,362		)	(5,458		)	(8,991		)	(9,598		)
Warranty provisions for products sold	3,782			5,826			7,491			10,560
Currency translation adjustments and other	139			(103		)	185			16
Accrued product warranties, end of period	$	19,530		$	17,492		$	19,530		$	17,492
Current accrued product warranties, end of period							$	16,262		$	14,661
Long-term accrued product warranties, end of period							$	3,268		$	2,831

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Long-Term Debt

6 Months Ended

Jun. 30, 2017

Debt Disclosure [Abstract]

Long-Term Debt

Long-Term Debt

Long-term debt consists of the following (in thousands):

	June 30,			December 31,
	2017			2016
Unsecured notes	$	425,000		$	425,000
Credit Agreement	86,250			97,500
Unamortized discounts and issuance costs of unsecured notes	(4,947		)	(5,579		)
	$	506,303		$	516,921
Current portion, long-term debt	$	15,000		$	15,000
Long-term debt	$	491,303		$	501,921

In June 2016, the Company issued $425 million aggregate principal amount of its 3.125 percent senior unsecured notes due June 15, 2021 (the “2016 Notes”). The net proceeds from the issuance of the 2016 Notes were approximately $421.0 million, after deducting underwriting discounts and offering expenses, which are being amortized over a period of five years. Interest on the 2016 Notes is payable semiannually in arrears on December 15 and June 15. The proceeds from the 2016 Notes were used to repay the principal amount of the notes issued in August 2011 and outstanding in July 2016 and are being used for general corporate purposes, including working capital and capital expenditure needs, business acquisitions and repurchases of the Company’s common stock.

On May 31, 2016, the Company repaid its term loan and drew down $105.0 million under the revolving credit facility. Interest on amounts outstanding under the revolving credit facility accrues at the one-month LIBOR rate plus the applicable margin for the amount outstanding and is paid monthly in arrears. See Note 5, "Derivative Financial Instruments - Interest Rate Swap Contracts," of the Notes to the Consolidated Financial Statements for additional information on the effective interest rate on the revolving credit facility at June 30, 2017.

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Shareholders' Equity (Notes)

6 Months Ended

Jun. 30, 2017

Statement of Stockholders' Equity [Abstract]

Stockholders' Equity

Shareholders’ Equity

The following table summarizes the common stock and additional paid-in capital activity during the six months ended June 30, 2017 (in thousands):

Common stock and additional paid-in capital, December 31, 2016	$	12,139
Common stock issued pursuant to stock-based compensation plans, net	(1,987		)
Stock-based compensation	15,340
Common stock and additional paid-in capital, June 30, 2017	$	25,492

On June 9, 2017, the Company paid a dividend of $0.15 per share on its outstanding common stock to the shareholders of record as of the close of business on May 26, 2017. The total cash payments for dividends during the six months ended June 30, 2017 were $41.0 million.

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Contingencies

6 Months Ended

Jun. 30, 2017

Commitments and Contingencies Disclosure [Abstract]

Contingencies

Contingencies

Raytheon Litigation

FLIR Systems, Inc. and its subsidiary, FLIR Commercial Systems, Inc. (formerly known as Indigo Systems Corporation) (together, the “FLIR Parties”), were named in a lawsuit filed by Raytheon Company (“Raytheon”) on March 2, 2007, in the United States District Court for the Eastern District of Texas. Raytheon's complaint, as amended, asserted claims for tortious interference, patent infringement, trade secret misappropriation, unfair competition, breach of contract, and fraudulent concealment. The FLIR Parties filed an answer to the complaint on September 2, 2008, in which they denied all material allegations. On October 27, 2010, the FLIR Parties and Raytheon entered into a settlement agreement that resolved the patent infringement claims (the "Patent Claims") pursuant to which the FLIR Parties paid $3 million to Raytheon and entitles the FLIR Parties to certain license rights in the patents that were the subject of the Patent Claims. On October 28, 2014, a four-week trial began with respect to Raytheon's remaining claims of misappropriations of trade secrets and claims related to 31 alleged trade secrets. On November 24, 2014, a jury in the United States District Court for the Eastern District of Texas rejected Raytheon’s claims and determined that 27 of the alleged trade secrets were not in fact trade secrets and that neither of the FLIR Parties infringed any of the trade secrets claimed and awarded Raytheon no damages. On March 31, 2016, the United States District Court for the Eastern District of Texas issued a Final Judgment denying Raytheon’s claims and awarding FLIR court costs and denying each of Raytheon’s and FLIR’s Renewed Motions for Judgment as a Matter of Law and denying FLIR’s Amended Rule 54(d) Motion for Attorneys’ Fees and Costs Under the Texas Theft Liability Act.

On April 29, 2016, Raytheon filed a Notice of Appeal to the United States Court of Appeals for the Federal Circuit of the denial by the United States District Court for the Eastern District of Texas of Raytheon’s Renewed Motion for Judgment as a Matter of Law, or in the Alternative, Motion for New Trial. On May 11, 2016, the FLIR Parties filed a Notice of Appeal to the United States Court of Appeals for the Federal Circuit of the Order of the United States District Court for the Eastern District of Texas Denying the FLIR Parties’ Amended Rule 54(d) Motion for Attorneys’ Fees and Costs under the Texas Theft Liability Act, the Order Denying the FLIR Parties’ Renewed Motion For Judgment as a Matter Of Law, and the Final Judgment to the extent it denied the FLIR Parties Attorneys’ Fees and Costs under the Texas Theft Liability Act. The matter remains ongoing and is subject to appeal and the Company is unable to estimate the amount or range of potential loss or recovery, if any, which might result if the final determination of this matter is favorable or unfavorable, but an adverse ruling on the merits of the original claims against the FLIR Parties, while remote, could be material.

Note 15. Contingencies - (Continued)

Matters Involving the United States Department of State and Department of Commerce

On October 22, 2014, the Company initially contacted the United States Department of State Office of Defense Trade Controls Compliance (“DTCC”), pursuant to International Traffic in Arms Regulation (“ITAR”) § 127.12(c), regarding the unauthorized export of technical data and defense services to dual and third country nationals in at least four facilities of the Company.  On April 27, 2015, the Company submitted its initial report to DTCC regarding the details of the issues raised in the October 22, 2014, submission.  DTCC subsequently notified the Company that it was considering administrative proceedings under Part 128 of ITAR and requested a tolling agreement, which the Company executed on June 16, 2015 and reference certain Company disclosures in addition to the submissions made in conjunction with the October 24, 2014 initial notification. On June 6, 2016, the Company executed a subsequent tolling agreement extending the tolling period for matters to be potentially included in an administrative proceeding for an additional 18 months until the end of December 2017. DTCC continues its review of the Company’s activities and the Company continues to engage actively with the United States government on these matters.

In May 2017, the Company submitted an initial notification to DTCC regarding potential violations related to certain export classifications obtained through the commodity jurisdiction process. DTCC acknowledged the notification and at the request of DTCC, the Company executed a tolling agreement for this matter, suspending the statute of limitations for a twelve (12) month period.

In June 2017, the United States Department of Commerce Bureau of Industry and Security informed the Company of additional export licensing requirements that restrict the Company’s ability to sell 9hz thermal products without a license to customers in China not identified on a list maintained by the United States Department of Commerce. This action was precipitated by concerns of potential diversion of some of the Company's products to prohibited end users and to countries subject to economic and other sanctions implemented by the United States. If the Company is found to have violated applicable rules and regulations with respect to customers and limitations on the end use of the Company’s products, the Company could be subject to substantial fines and penalties, suspension of existing licenses or other authorizations and/or loss or suspension of export privileges.

The Company is unable to reasonably estimate the time it may take to resolve these matters or the amount or range of potential loss, penalty or other government action, if any, that may be incurred in connection with these matters. However, an unfavorable outcome could result in substantial fines and penalties or loss or suspension of export privileges or of particular authorizations that could be material to the Company’s financial position, results of operations or cash flows in and following the period in which such an outcome becomes estimable or known.

SkyWatch Product Quality Matters

In March 2016, the Company learned of potential quality concerns with respect to as many as 312 Level III and Level IV SkyWatch Surveillance Towers sold by FLIR and companies acquired by FLIR from 2002 through 2014. The Company notified customers who purchased the affected SkyWatch Towers of the potential concerns and, as a precautionary measure, also temporarily suspended production of all Level III and Level IV SkyWatch Towers pending the completion of its review and the implementation of any necessary remedial measures. During the quarter ended September 30, 2016, the Company identified the cause of these quality issues and began testing certain remedial solutions to repair the affected SkyWatch Towers. Testing of the remedial solution for certain of the product variations affected was completed during the quarter ended June 30, 2017. During the quarter ended June 30, 2017, customers who purchased the product configurations for which a remedial solution has been identified and tested were notified of their options to request modifications to their fielded units. While there still remains uncertainty related to estimating the costs associated with a potential remedy and number of units which may require such remedy, the Company currently estimates the range of potential loss to be between $4.5 million and $15 million. As no single amount within the range is a better estimate than any other amount within the range, the Company has recorded a liability of $4.5 million as of June 30, 2017. Factors underlying this estimated range of loss may change from time to time, and actual results may vary significantly from this estimate.

Note 15. Contingencies - (Continued)

Other Matters

The Company is also subject to other legal and administrative proceedings, investigations, claims and litigation arising in the ordinary course of business not specifically identified above. In these identified matters and others not specifically identified, the Company records a liability with respect to a matter when management believes it is both probable that a liability has been incurred and the Company can reasonably estimate the amount of the loss. The Company believes it has recorded adequate provisions for any probable and estimable losses for matters in existence on the date hereof. The Company reviews these provisions to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular matter. While the outcome of each of these matters is currently not determinable, the Company does not expect that the ultimate resolution of any such matter will individually have a material adverse effect on the Company’s financial position, results of operations or cash flows. The costs to resolve all such matters may in the aggregate have a material adverse effect on the Company’s financial position, results of operations or cash flows.

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Income Taxes

6 Months Ended

Jun. 30, 2017

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

Income Taxes

The provision for income taxes was as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Income tax provision	$	12,127		$	14,485		$	25,120		$	68,980
Effective tax rate	19.1		%	24.2		%	21.1		%	59.7		%

The effective tax rate for the three and six months ended June 30, 2017, is lower than the United States Federal tax rate of 35 percent mainly due to the mix of lower foreign jurisdiction tax rates, the effect of federal, foreign and state tax credits, excess tax benefits from stock compensation, and other discrete adjustments.

As of June 30, 2017, the Company had approximately $58.5 million of unrecognized tax benefits, all of which would affect the Company’s effective tax rate if recognized. The Company anticipates approximately $43.4 million of its net unrecognized tax benefits will be recognized within 12 months as the result of settlements or effective settlements with various tax authorities, the closure of certain audits and the lapse of the applicable statute of limitations.

The Company classifies interest and penalties related to unrecognized tax benefits in the income tax provision. As of June 30, 2017, the Company had $2.8 million of accrued interest and penalties related to unrecognized tax benefits that are recorded as current and non-current accrued income taxes on the Consolidated Balance Sheet.

The Company currently has the following tax years open to examination by major taxing jurisdictions:

	Tax Years:
United States Federal	2013 - 2015
State of California	2013 - 2015
State of Massachusetts	2013 - 2015
State of Oregon	2013 - 2015
Sweden	2012 - 2015
United Kingdom	2012 - 2015
Belgium	2011 - 2015

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Operating Segments and Related Information

6 Months Ended

Jun. 30, 2017

Segment Reporting [Abstract]

Operating Segments and Related Information

Operating Segments and Related Information

Operating Segments

The Company has six reportable operating segments as follows:

Surveillance

The Surveillance segment develops and manufactures enhanced imaging and recognition solutions for a wide variety of military, law enforcement, public safety, and other government customers around the world for the protection of borders, troops, and public welfare. Offerings include airborne, land, maritime, and man-portable multi-spectrum imaging systems, radars, lasers, imaging components, integrated multi-sensor system platforms, and services related to these systems.

Instruments

The Instruments segment develops and manufactures devices that image, measure, and assess thermal energy, gases, and other environmental elements for industrial, commercial, and scientific applications. Products include thermal imaging cameras, gas detection cameras, firefighting cameras, process automation cameras, and environmental test and measurement devices.

Security

The Security segment develops and manufactures cameras, video recording systems, and video management systems for use in commercial, critical infrastructure, and home security applications. Products include thermal and visible-spectrum cameras, digital and networkedvideo recorders, and related software and accessories that enable the efficient and effective safeguarding of assets at all hours of the day and through adverse weather conditions.

OEM & Emerging Markets

The OEM & Emerging Markets segment develops and manufactures thermal and visible-spectrum imaging camera cores and components that are utilized by third parties to create thermal, industrial, and other types of imaging systems. The segment also develops and manufactures intelligent traffic monitoring and signal control systems, imaging payloads for Unmanned Aerial Systems ("UAS"), and thermal imaging solutions for use by consumers in the smartphone and mobile devices markets.

Maritime

The Maritime segment develops and manufactures electronics and imaging instruments for the recreational and commercial maritime market. The segment provides a full suite of networked electronic systems including multi-function helm displays, navigational instruments, autopilots, radars, sonar systems, thermal and visible imaging systems, and communications equipment for boats of all sizes.

Detection

The Detection segment develops and manufactures sensor instruments and integrated platform solutions for the detection, identification, and suppression of chemical, biological, radiological, nuclear, and explosives ("CBRNE") threats for military force protection, homeland security, and commercial applications.

The Company’s chief operating decision maker ("CODM"), its Chief Executive Officer, evaluates each of its segment’s performance and allocates resources based on revenue and segment operating income. Intersegment revenues are recorded at cost and are eliminated in consolidation. The Company and each of its segments employ consistent accounting policies.

The following tables present revenue, operating income, and assets for the six segments. Operating income as reviewed by the CODM is revenue less cost of goods sold and operating expense, excluding general corporate expenses, acquisition costs, amortization of purchased intangible assets, amortization of acquisition-related inventory step-up, costs associated with the SkyWatch product remediation, restructuring charges, and executive transition costs. Accounts receivable and inventories for operating segments are regularly reviewed by management and are reported below as segment assets. All remaining assets, liabilities, capital expenditures, and depreciation are managed on a Company-wide basis.

Note 17.        Operating Segments and Related Information - (Continued)

Operating Segments - (Continued)

Operating segment information is as follows (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Revenue—External Customers:
Surveillance	$	129,209		$	113,440		$	247,938		$	237,591
Instruments	85,969			78,068			163,824			157,487
Security	49,709			63,380			94,786			110,441
OEM & Emerging Markets	87,447			56,980			172,212			104,825
Maritime	55,102			55,163			103,653			106,883
Detection	26,688			35,698			58,525			64,974
	$	434,124		$	402,729		$	840,938		$	782,201
Revenue—Intersegments:
Surveillance	$	3,331		$	4,755		$	8,087		$	8,979
Instruments	7,325			1,213			13,114			2,788
Security	3,640			3,836			6,765			6,308
OEM & Emerging Markets	9,361			8,833			18,530			17,010
Maritime	621			1,458			1,298			2,072
Detection	1			31			1			31
Eliminations	(24,279		)	(20,126		)	(47,795		)	(37,188		)
	$	—		$	—		$	—		$	—
Segment operating income:
Surveillance	$	33,007		$	26,595		$	59,372		$	62,460
Instruments	23,627			19,695			44,773			39,676
Security	1,288			4,410			1,603			2,241
OEM & Emerging Markets	26,340			16,757			50,697			27,443
Maritime	9,390			7,521			14,594			13,328
Detection	7,024			10,320			15,761			18,557
	$	100,676		$	85,298		$	186,800		$	163,705

A reconciliation of the Company's consolidated segment operating income to consolidated earnings before income taxes is as follows (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Consolidated segment operating income	$	100,676		$	85,298		$	186,800		$	163,705
Unallocated corporate expenses	(25,017		)	(16,049		)	(43,240		)	(32,674		)
Amortization of purchased intangible assets	(7,016		)	(3,927		)	(13,751		)	(8,134		)
Amortization of acquisition-related inventory step-up	—			—			(1,992		)	—
SkyWatch product quality accrual	(2,000		)	—			(2,000		)	—
Restructuring charges	(13		)	(110		)	(101		)	(308		)
Consolidated earnings from operations	66,630			65,212			125,716			122,589
Interest and non-operating expense, net	(3,090		)	(5,359		)	(6,612		)	(7,116		)
Consolidated earnings before income taxes	$	63,540		$	59,853		$	119,104		$	115,473

Unallocated corporate expenses include general corporate expenses, acquisition related costs and executive transition costs.

Note 17.        Operating Segments and Related Information - (Continued)

Operating Segments - (Continued)

	June 30,		December 31,
	2017		2016
Segment assets (accounts receivable, net and inventories):
Surveillance	$	278,535	$	283,324
Instruments	125,942		114,681
Security	83,493		93,174
OEM & Emerging Markets	141,568		144,862
Maritime	73,963		61,494
Detection	33,836		25,856
	$	737,337	$	723,391

	June 30,		December 31,
	2017		2016
Segment goodwill:
Surveillance	$	258,480	$	152,383
Instruments	151,799		147,595
Security	106,785		102,983
OEM & Emerging Markets	254,592		252,647
Maritime	100,724		97,860
Detection	47,984		47,938
	$	920,364	$	801,406

Revenue and Long-Lived Assets by Geographic Area

Information related to revenue by significant geographical location, determined by the end customer, is as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
United States	$	224,025	$	224,305	$	445,856	$	418,589
Europe	91,041		84,297		174,313		168,707
Asia	59,721		47,413		113,645		91,237
Middle East/Africa	35,248		28,629		60,390		56,341
Canada/Latin America	24,089		18,085		46,734		47,327
	$	434,124	$	402,729	$	840,938	$	782,201

Long-lived assets by significant geographic locations are as follows (in thousands):

			December 31, 2016
	June 30, 2017		(as reclassified)
United States	$	689,044	$	676,007
Europe	508,272		490,089
Canada/Latin America	225,100		235,921
Other foreign	8,164		7,789
	$	1,430,580	$	1,409,806

Note 17.        Operating Segments and Related Information - (Continued)

Operating Segments - (Continued)

Major Customers

Revenue derived from major customers is as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
United States government	$	111,824	$	100,106	$	228,059	$	185,742

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Business Acquisitions

6 Months Ended

Jun. 30, 2017

Business Combinations [Abstract]

Business Acquisition

Business Acquisitions

Point Grey Research, Inc.

On November 4, 2016, the Company completed the acquisition of the assets of Point Grey Research Inc. (“Point Grey”), a global leader in the development of advanced visible imaging cameras and solutions that are used in industrial automation systems, medical diagnostic equipment, people counting systems, intelligent traffic systems, military and defense products, and advanced mapping systems, for approximately $259.2 million in cash, subject to customary post-closing adjustments. The Company has performed a preliminary purchase price allocation which resulted in an allocation of $39.8 million to identifiable intangible assets and $183.7 million to goodwill which has been recorded in the Company’s OEM & Emerging Markets segment.

The preliminary allocation of the purchase price for Point Grey is as follows (in thousands):

Cash acquired	$	2,994
Other tangible assets and liabilities, net	35,064
Net deferred taxes	(2,438		)
Identifiable intangible assets	39,800
Goodwill	183,741
Total purchase price	$	259,161

The allocation of the purchase price related to this acquisition is preliminary and is based on management’s judgments after evaluating several factors, including preliminary valuation assessments of tangible and intangible assets, and preliminary estimates of the fair value of liabilities assumed. The primary areas of the preliminary purchase price allocation that are not yet finalized relate to the valuation of the identifiable intangible assets, property and equipment, and certain other tangible assets and liabilities. The preliminary goodwill of $183.7 million represents future economic benefits expected to arise from synergies from combining operations and the ability of Point Grey to provide the Company domain knowledge and distribution channels in adjacent markets.

In connection with the preliminary allocation of purchase price to the assets acquired and liabilities assumed, the Company identified certain intangible assets. The following table presents the acquired intangible assets, their preliminary estimated fair values, and preliminary estimated useful lives (in thousands, except years):

	Estimated Useful Life	Amount
Developed technology	10 years	$	23,100
Customer relationships	7 years	13,200
Backlog	1 year	2,300
Non-Competition Agreements	5 years	1,000
Other	n/a	200
		$	39,800

Note 18.        Business Acquisitions - (Continued)

Acquisition-date identifiable intangible assets primarily consist of intangibles derived from developed technology, customer relationships, backlog, and non-competition agreements. Developed technology represents the economic advantage of having certain technologies in place that lower manufacturing and operating costs and drive higher margins. Customer relationships represents the relationships Point Grey has established in the OEM and people counting markets as of the date of the acquisition. Backlog represents “pre-sold” business at the date of acquisition, which provides positive earning streams post acquisition that exceed what is required to provide a return on the other assets employed. Non-competition agreements represent the economic benefit of having agreements with certain current and former employees and shareholders of Point Grey that restrict their ability to compete directly with the Company.

The developed technology was valued using the income approach and relief from royalty method. Customer relationships and backlog were valued using the income approach and multi-period excess earnings method. Non-competition agreements were valued using the income approach and the with-and-without method.

Prox Dynamics, AS

On November 30, 2016, the Company acquired 100% of the outstanding stock of Prox Dynamics AS (“Prox Dynamics”), a leading developer and manufacturer of nano-class UASs for military and para-military intelligence, surveillance, and reconnaissance applications, for approximately $134.1 million in cash, subject to customary post-close adjustments. At December 31, 2016, the Company reported the net tangible assets of $11.3 million in the respective balance sheet accounts and the excess purchase price of $122.8 million in other long-term assets.

During the three months ended March 31, 2017, the Company performed a preliminary purchase price allocation which resulted in an allocation of $31.4 million of identifiable intangible assets and $91.9 million of goodwill in conjunction with the Prox Dynamics acquisition, which has been recorded in the Company’s Surveillance business segment.

During the three months ended June 30, 2017, the Company finalized the purchase price allocation, resulting in a $7.4 million decrease to net deferred taxes, and a corresponding $7.4 million increase in goodwill. The goodwill of $99.3 million represents future economic benefits expected to arise from synergies from combining operations the ability of Prox Dynamics to provide the Company domain knowledge and distribution channels in adjacent markets.

The allocation of the purchase price for Prox Dynamics is as follows (in thousands):

Cash acquired	$	11,706
Other tangible assets and liabilities, net	(900		)
Net deferred taxes	(7,387		)
Identifiable intangible assets	31,400
Goodwill	99,269
Total purchase price	$	134,088

In connection with the allocation of purchase price to the assets acquired and liabilities assumed, the Company identified certain intangible assets. The following table presents the acquired intangible assets, their estimated fair values, and estimated useful lives (in thousands, except years):

	Estimated Useful Life	Amount
Developed technology	8 years	$	23,400
Customer relationships	7 years	3,500
Patents	8 years	3,100
Trade name	8 years	1,400
		$	31,400

Acquisition-date identifiable intangible assets primarily consist of intangibles derived from developed technology, customer relationships, patents, and trade name. Developed technology and patents represent the economic advantage of having certain technologies in place that lower manufacturing and operating costs and drive higher margins. Customer relationships represents the relationships Prox Dynamics has established in the military and defense ministries of countries throughout the world. Trade name represents the "Black Hornet" name, which is well recognized within the industry and is known as a leading product within the nano-class UAS segment.

Note 18.        Business Acquisitions - (Continued)

The developed technology and customer relationships were valued using the income approach and multi-period excess earnings method. Patents and trade name were valued using the income approach and relief from royalty method.

The acquisitions of Point Grey and Prox Dynamics are not significant as defined in Regulation S-X under the Securities Exchange Act of 1934, nor are they significant compared to the Company's overall results of operations. Consequently, no pro forma financial information is provided.

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Subsequent Events

6 Months Ended

Jun. 30, 2017

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

On July 20, 2017, the Company’s Board of Directors declared a quarterly dividend of $0.15 per share on its common stock, payable on September 8, 2017, to shareholders of record as of the close of business on August 25, 2017. The total cash payment of this dividend will be approximately $20.6 million.

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Basis of Presentation and Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2017

Accounting Policies [Abstract]

New Accounting Pronouncements, Policy [Policy Text Block]

Recently Adopted Accounting Pronouncements

Effective January 1, 2017, the Company adopted the Financial Accounting Standards Board ("FASB") Accounting Standards Update 2016-09, "Improvements to Employee Share-Based Payment Accounting" ("ASU 2016-09"). The standard update simplifies several aspects of the accounting for employee share-based payment transactions, including accounting for income taxes, forfeitures, and statutory withholding requirements, as well as classification in the Consolidated Statements of Cash Flows. As a result of the adoption, on a prospective basis, the Company recognized $2.9 million and $3.7 million of excess tax benefits from stock-based compensation as a discrete item in income tax provision for the three and six months ended June 30, 2017, respectively. Historically, these amounts were recorded as additional paid-in capital. Upon adoption, the Company elected to apply the change retrospectively to the Consolidated Statement of Cash Flows which resulted in a reclassification of excess tax benefits from stock-based compensation of $1.6 million from cash flows from financing activities to cash flows from operating activities for the six months ended June 30, 2016. Additionally, $5.6 million paid in cash to satisfy withholding requirements for net settlement of restricted stock unit shares vested and stock options exercised has been reclassified from cash flows from operating activities to cash flows from financing activities to conform to the presentation required by the new standard in the Consolidated Statement of Cash Flows for the six months ended June 30, 2016. ASU 2016-09 also requires excess tax benefits and deficiencies to be excluded from the assumed future proceeds in the calculation of diluted shares. This change resulted in an increase in diluted weighted average shares outstanding of 179,000 shares and 195,000 shares for the three and six months ended June 30, 2017, respectively. The Company elected not to change its policy on accounting for forfeitures and will continue to estimate a requisite forfeiture rate. Additional amendments to the accounting for income taxes and minimum statutory withholding requirements had no impact on the Company's results of operations.

Reclassification

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Stock-based compensation (Tables)

6 Months Ended

Jun. 30, 2017

Share-based Compensation [Abstract]

Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Table Text Block]

The following table sets forth the stock-based compensation expense recognized in the Consolidated Statements of Income (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Cost of goods sold	$	631	$	855	$	1,032	$	1,470
Research and development	1,299		1,233		2,476		2,414
Selling, general and administrative	6,678		6,205		11,346		10,497
Stock-based compensation expense before income taxes	$	8,608	$	8,293	$	14,854	$	14,381

Stock-based compensation expense capitalized in the Consolidated Balance Sheets is as follows (in thousands):

	June 30,
	2017		2016
Capitalized in inventory	$	1,053	$	685

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Stock-based Compensation (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expense	$ 8,608	$ 8,293	$ 14,854	$ 14,381
Cost of Goods Sold [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expese	631	855	1,032	1,470
Research and Development Expense [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expese	1,299	1,233	2,476	2,414
Selling, General and Administrative Expenses [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expese	$ 6,678	$ 6,205	$ 11,346	$ 10,497

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Net Earnings Per Share Net Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2017

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

Net Earnings Per Share

The following table sets forth the reconciliation of the numerator and denominator utilized in the computation of basic and diluted earnings per share (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Numerator for earnings per share:
Net earnings for basic and diluted earnings per share	$	51,413	$	45,368	$	93,984	$	46,493
Denominator for earnings per share:
Weighted average number of common shares outstanding	136,865		137,861		136,613		137,686
Assumed exercise of stock options and vesting of restricted stock awards, net of shares assumed reacquired under the treasury stock method	1,584		1,132		1,653		1,146
Diluted shares outstanding	138,449		138,993		138,266		138,832

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Derivative Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Notional amounts of outstanding foreign currency forward contracts by currency

As of June 30, 2017, the following interest rate swaps were outstanding:

Contract Date	Notional Amount (in millions)		Fixed Rate		Effective Date	Maturity Date
March 15, 2013	$	43.1	1.02	%	April 5, 2013	March 31, 2019
March 29, 2013	$	43.1	0.97	%	April 5, 2013	March 31, 2019

The carrying amount of the foreign exchange contracts included in the Consolidated Balance Sheets are as follows (in thousands):

	June 30, 2017				December 31, 2016
	Prepaid Expenses and Other Current Assets		Other Current Liabilities		Prepaid Expenses and Other Current Assets		Other Current Liabilities
Foreign exchange contracts	$	3,853	$	1,768	$	2,369	$	75

The table below presents the net notional amounts of the Company’s outstanding foreign currency forward contracts by currency (in thousands):

	June 30,		December 31,
	2017		2016
European euro	$	190,451	$	156,352
Swedish kroner	74,191		48,555
Canadian dollar	56,475		15,645
Brazilian real	9,562		2,747
Japanese yen	2,985		3,251
Australian dollar	2,129		1,653
British pound sterling	668		33,862
Other	485		—
	$	336,946	$	262,065

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Inventories (Tables)

6 Months Ended

Jun. 30, 2017

Inventory Disclosure [Abstract]

Inventories

Inventories consist of the following (in thousands):

	June 30,		December 31,
	2017		2016
Raw material and subassemblies	$	217,113	$	200,640
Work-in-progress	58,533		43,430
Finished goods	129,682		127,301
	$	405,328	$	371,371

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Goodwill (Tables)

6 Months Ended

Jun. 30, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Carrying value of goodwill by reporting segment and the activity

The carrying value of goodwill and the activity for the six months ended June 30, 2017 are as follows (in thousands):

Balance, December 31, 2016	$	801,406
Goodwill from acquisitions	100,022
Currency translation adjustments	18,936
Balance, June 30, 2017	$	920,364

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Accrued Product Warranties (Tables)

6 Months Ended

Jun. 30, 2017

Product Warranties Disclosures [Abstract]

Summary of Warranty Liability and Activity

The following table summarizes the Company’s warranty liability and activity (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Accrued product warranties, beginning of period	$	19,971		$	17,227		$	20,845		$	16,514
Amounts paid for warranty services	(4,362		)	(5,458		)	(8,991		)	(9,598		)
Warranty provisions for products sold	3,782			5,826			7,491			10,560
Currency translation adjustments and other	139			(103		)	185			16
Accrued product warranties, end of period	$	19,530		$	17,492		$	19,530		$	17,492
Current accrued product warranties, end of period							$	16,262		$	14,661
Long-term accrued product warranties, end of period							$	3,268		$	2,831

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Long-Term Debt Long-Term Debt (Tables)

6 Months Ended

Jun. 30, 2017

Debt Disclosure [Abstract]

Long-term debt

Long-term debt consists of the following (in thousands):

	June 30,			December 31,
	2017			2016
Unsecured notes	$	425,000		$	425,000
Credit Agreement	86,250			97,500
Unamortized discounts and issuance costs of unsecured notes	(4,947		)	(5,579		)
	$	506,303		$	516,921
Current portion, long-term debt	$	15,000		$	15,000
Long-term debt	$	491,303		$	501,921

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Shareholders' Equity (Tables)

6 Months Ended

Jun. 30, 2017

Statement of Stockholders' Equity [Abstract]

Common stock and additional paid-in capital activity

The following table summarizes the common stock and additional paid-in capital activity during the six months ended June 30, 2017 (in thousands):

Common stock and additional paid-in capital, December 31, 2016	$	12,139
Common stock issued pursuant to stock-based compensation plans, net	(1,987		)
Stock-based compensation	15,340
Common stock and additional paid-in capital, June 30, 2017	$	25,492

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Income Taxes (Tables)

6 Months Ended

Jun. 30, 2017

Income Tax Disclosure [Abstract]

Tax years open to examination by major taxing jurisdictions

The Company currently has the following tax years open to examination by major taxing jurisdictions:

	Tax Years:
United States Federal	2013 - 2015
State of California	2013 - 2015
State of Massachusetts	2013 - 2015
State of Oregon	2013 - 2015
Sweden	2012 - 2015
United Kingdom	2012 - 2015
Belgium	2011 - 2015

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Income Taxes Income Taxes (table 2)

6 Months Ended

Jun. 30, 2017

Income Tax Disclosure [Abstract]

Schedule of Components of Income Tax Expense (Benefit) [Table Text Block]

The provision for income taxes was as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Income tax provision	$	12,127		$	14,485		$	25,120		$	68,980
Effective tax rate	19.1		%	24.2		%	21.1		%	59.7		%

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Operating Segments and Related Information (Tables)

6 Months Ended

Jun. 30, 2017

Segment Reporting [Abstract]

Operating Segment Information

Operating segment information is as follows (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Revenue—External Customers:
Surveillance	$	129,209		$	113,440		$	247,938		$	237,591
Instruments	85,969			78,068			163,824			157,487
Security	49,709			63,380			94,786			110,441
OEM & Emerging Markets	87,447			56,980			172,212			104,825
Maritime	55,102			55,163			103,653			106,883
Detection	26,688			35,698			58,525			64,974
	$	434,124		$	402,729		$	840,938		$	782,201
Revenue—Intersegments:
Surveillance	$	3,331		$	4,755		$	8,087		$	8,979
Instruments	7,325			1,213			13,114			2,788
Security	3,640			3,836			6,765			6,308
OEM & Emerging Markets	9,361			8,833			18,530			17,010
Maritime	621			1,458			1,298			2,072
Detection	1			31			1			31
Eliminations	(24,279		)	(20,126		)	(47,795		)	(37,188		)
	$	—		$	—		$	—		$	—
Segment operating income:
Surveillance	$	33,007		$	26,595		$	59,372		$	62,460
Instruments	23,627			19,695			44,773			39,676
Security	1,288			4,410			1,603			2,241
OEM & Emerging Markets	26,340			16,757			50,697			27,443
Maritime	9,390			7,521			14,594			13,328
Detection	7,024			10,320			15,761			18,557
	$	100,676		$	85,298		$	186,800		$	163,705

A reconciliation of the Company's consolidated segment operating income to consolidated earnings before income taxes is as follows (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Consolidated segment operating income	$	100,676		$	85,298		$	186,800		$	163,705
Unallocated corporate expenses	(25,017		)	(16,049		)	(43,240		)	(32,674		)
Amortization of purchased intangible assets	(7,016		)	(3,927		)	(13,751		)	(8,134		)
Amortization of acquisition-related inventory step-up	—			—			(1,992		)	—
SkyWatch product quality accrual	(2,000		)	—			(2,000		)	—
Restructuring charges	(13		)	(110		)	(101		)	(308		)
Consolidated earnings from operations	66,630			65,212			125,716			122,589
Interest and non-operating expense, net	(3,090		)	(5,359		)	(6,612		)	(7,116		)
Consolidated earnings before income taxes	$	63,540		$	59,853		$	119,104		$	115,473

Unallocated corporate expenses include general corporate expenses, acquisition related costs and executive transition costs.

Note 17.        Operating Segments and Related Information - (Continued)

Operating Segments - (Continued)

	June 30,		December 31,
	2017		2016
Segment assets (accounts receivable, net and inventories):
Surveillance	$	278,535	$	283,324
Instruments	125,942		114,681
Security	83,493		93,174
OEM & Emerging Markets	141,568		144,862
Maritime	73,963		61,494
Detection	33,836		25,856
	$	737,337	$	723,391

	June 30,		December 31,
	2017		2016
Segment goodwill:
Surveillance	$	258,480	$	152,383
Instruments	151,799		147,595
Security	106,785		102,983
OEM & Emerging Markets	254,592		252,647
Maritime	100,724		97,860
Detection	47,984		47,938
	$	920,364	$	801,406

Reconciliation of Operating Profit (Loss) from Segments to Consolidated

A reconciliation of the Company's consolidated segment operating income to consolidated earnings before income taxes is as follows (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Consolidated segment operating income	$	100,676		$	85,298		$	186,800		$	163,705
Unallocated corporate expenses	(25,017		)	(16,049		)	(43,240		)	(32,674		)
Amortization of purchased intangible assets	(7,016		)	(3,927		)	(13,751		)	(8,134		)
Amortization of acquisition-related inventory step-up	—			—			(1,992		)	—
SkyWatch product quality accrual	(2,000		)	—			(2,000		)	—
Restructuring charges	(13		)	(110		)	(101		)	(308		)
Consolidated earnings from operations	66,630			65,212			125,716			122,589
Interest and non-operating expense, net	(3,090		)	(5,359		)	(6,612		)	(7,116		)
Consolidated earnings before income taxes	$	63,540		$	59,853		$	119,104		$	115,473

Unallocated corporate expenses include general corporate expenses, acquisition related costs and executive transition costs.

By Significant Geographical Location

Revenue and Long-Lived Assets by Geographic Area

Information related to revenue by significant geographical location, determined by the end customer, is as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
United States	$	224,025	$	224,305	$	445,856	$	418,589
Europe	91,041		84,297		174,313		168,707
Asia	59,721		47,413		113,645		91,237
Middle East/Africa	35,248		28,629		60,390		56,341
Canada/Latin America	24,089		18,085		46,734		47,327
	$	434,124	$	402,729	$	840,938	$	782,201

Long-lived assets by significant geographic locations are as follows (in thousands):

			December 31, 2016
	June 30, 2017		(as reclassified)
United States	$	689,044	$	676,007
Europe	508,272		490,089
Canada/Latin America	225,100		235,921
Other foreign	8,164		7,789
	$	1,430,580	$	1,409,806

Revenue Derived from Major Customers

Major Customers

Revenue derived from major customers is as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
United States government	$	111,824	$	100,106	$	228,059	$	185,742

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Business Acquisitions (Tables)

6 Months Ended

Jun. 30, 2017

Point Grey Research, Inc. [Member]

Business Acquisition [Line Items]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]

The preliminary allocation of the purchase price for Point Grey is as follows (in thousands):

Cash acquired	$	2,994
Other tangible assets and liabilities, net	35,064
Net deferred taxes	(2,438		)
Identifiable intangible assets	39,800
Goodwill	183,741
Total purchase price	$	259,161

Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination [Table Text Block]

The following table presents the acquired intangible assets, their preliminary estimated fair values, and preliminary estimated useful lives (in thousands, except years):

	Estimated Useful Life	Amount
Developed technology	10 years	$	23,100
Customer relationships	7 years	13,200
Backlog	1 year	2,300
Non-Competition Agreements	5 years	1,000
Other	n/a	200
		$	39,800

Prox Dynamics, AS [Member]

Business Acquisition [Line Items]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]

The allocation of the purchase price for Prox Dynamics is as follows (in thousands):

Cash acquired	$	11,706
Other tangible assets and liabilities, net	(900		)
Net deferred taxes	(7,387		)
Identifiable intangible assets	31,400
Goodwill	99,269
Total purchase price	$	134,088

Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination [Table Text Block]

The following table presents the acquired intangible assets, their estimated fair values, and estimated useful lives (in thousands, except years):

	Estimated Useful Life	Amount
Developed technology	8 years	$	23,400
Customer relationships	7 years	3,500
Patents	8 years	3,100
Trade name	8 years	1,400
		$	31,400

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Basis of Presentation and Significant Accounting Policies (Details) - USD ($) shares in Thousands, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Accounting Policies [Abstract]
Employee Service Share-based Compensation, Tax Benefit from Compensation Expense	$ 2.9		$ 3.7
Tax paid for net share exercises and issuance of vested restricted stock units				$ 1.6
Payments Related to Tax Withholding for Share-based Compensation				$ 5.6
Weighted Average Number Diluted Shares Outstanding Adjustment		179	195

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Stock-based compensation Stock-based Compensation (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Share-based Compensation, Allocation and Classification in Financial Statements [Abstract]
Capitalized in inventory	$ 1,053	$ 685

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Stock-based Compensation (Detail textual) $ in Millions	3 Months Ended
	Jun. 30, 2017 USD ($)
Share-based Compensation [Abstract]
Unrecognized stock-based compensation costs, net of estimated forfeiture	$ 62.0
Weighted average period of unrecognized stock-based compensation costs, net of estimated forfeiture	2 years 3 months 15 days

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Net Earnings Per Share Net Earnings Per Share (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Earnings Per Share [Abstract]
Net Income (loss) Available to Common Stockholders, Basic	$ 51,413	$ 45,368	$ 93,984	$ 46,493
Weighted Average Number of Shares Outstanding, Basic	136,865	137,861	136,613	137,686
Incremental Common Shares Attributable to Dilutive Effect of Share-based Payment Arrangements	1,584	1,000	2,000	1,000
Weighted Average Number of Shares Outstanding, Diluted	138,449	138,993	138,266	138,832

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Net Earnings Per Share Net Earnings Per Share (Detail textual) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Earnings Per Share [Abstract]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	162,000	295,000	265,000	440,000

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Fair Value of Financial Instruments (Details) - USD ($) $ in Millions	Jun. 30, 2017	Dec. 31, 2016
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents at fair value	$ 70.9	$ 8.3
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of senior unsecured notes	$ 429.4

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Derivative Financial Instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Derivative [Line Items]
Notional amounts of foreign currency forward contracts	$ 336,946	$ 262,065
Swedish Kronor
Derivative [Line Items]
Notional amounts of foreign currency forward contracts	74,191	48,555
Canadian Dollar
Derivative [Line Items]
Notional amounts of foreign currency forward contracts	56,475	15,645
Brazil, Brazil Real
Derivative [Line Items]
Notional amounts of foreign currency forward contracts	9,562	2,747
Australian Dollar
Derivative [Line Items]
Notional amounts of foreign currency forward contracts	2,129	1,653
United Kingdom, Pounds
Derivative [Line Items]
Notional amounts of foreign currency forward contracts	668	33,862
Euro
Derivative [Line Items]
Notional amounts of foreign currency forward contracts	190,451	156,352
Japanese Yen
Derivative [Line Items]
Notional amounts of foreign currency forward contracts	2,985	3,251
Other
Derivative [Line Items]
Notional amounts of foreign currency forward contracts	$ 485	$ 0

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Derivative Financial Instruments (Details 2) - Foreign exchange contracts - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Other Current Assets
Derivatives [Line Items]
Carrying amount of derivative asset	$ 3,853	$ 2,369
Other Current Liabilities
Derivatives [Line Items]
Carrying amount of derivative liability	$ 1,768	$ 75

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Derivative Financial Instruments (Details 3) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Derivative [Line Items]
Notional Amount	$ 336,946	$ 262,065
March 15, 2013 Interest Rate Swap
Derivative [Line Items]
Contract Date	Mar. 15, 2013
Notional Amount	$ 43,100
Fixed Rate	1.02%
Effective Date	Apr. 05, 2013
Maturity Date	Mar. 31, 2019
March 29, 2013 Interest Rate Swap
Derivative [Line Items]
Contract Date	Mar. 29, 2013
Notional Amount	$ 43,100
Fixed Rate	0.97%
Effective Date	Apr. 05, 2013
Maturity Date	Mar. 31, 2019

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Derivative Financial Instruments (Details 4) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Derivative [Line Items]
Net gain (loss)	$ (3.4)	$ (9.1)	$ (7.7)	$ (2.1)
Term loan, effective interest rate	2.37%		2.37%
Derivative Asset, Current	$ 0.3		$ 0.3
Derivative Asset, Noncurrent	0.3		0.3
Level 2 | Interest Rate Swap [Member]
Derivative [Line Items]
Derivative Asset, Fair Value, Amount Not Offset Against Collateral	$ 0.6		$ 0.6

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Accounts Receivable (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Allowance for Doubtful Accounts [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for Doubtful Accounts Receivable	$ 6,173	$ 6,457

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Inventories (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Inventory Disclosure [Abstract]
Raw material and subassemblies	$ 217,113	$ 200,640
Work-in-progress	58,533	43,430
Finished goods	129,682	127,301
Total inventories	$ 405,328	$ 371,371

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Property and Equipment (Details Textual) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Property, Plant and Equipment [Abstract]
Accrumulated Depreciation	$ (300,254)	$ (275,063)

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Goodwill (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2017 USD ($)
Goodwill [Roll Forward]
Beginning Balance	$ 801,406
Goodwill, Acquired During Period	100,022
Goodwill, Translation Adjustments	18,936
Ending Balance	$ 920,364

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Intangible Assets Intangible Assets (Details) - USD ($) $ in Millions	Jun. 30, 2017	Dec. 31, 2016
Intangible Assets [Abstract]
Finite-Lived Intangible Assets, Accumulated Amortization	$ 93.2	$ 77.8

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Credit Agreement (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Line of Credit Facility [Line Items]
Available revolving credit	395514
Bank Of America February Two Thousand Eleven New Credit Agreement
Line of Credit Facility [Line Items]
Line of Credit Facility, Fair Value of Amount Outstanding	$ 18,200
Long-term Debt
Line of Credit Facility [Line Items]
Long-term Debt, Gross	$ 86,250	$ 97,500

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Accrued Product Warranties (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Movement in Standard Product Warranty Accrual [Roll Forward]
Accrued product warranties, beginning of year	$ 19,971	$ 17,227	$ 20,845	$ 16,514
Amounts paid for warranty services	(4,362)	(5,458)	8,991	9,598
Warranty provisions for products sold	3,782	5,826	7,491	10,560
Business acquisitions and disposals	0	0	0	0
Currency translation adjustments and other	139	(103)	185	16
Accrued product warranties, end of year	19,530	17,492	19,530	17,492
Current accrued product warranties, end of year	16,262	14,661	16,262	14,661	$ 17,476
Long-term accrued product warranties, end of ear	$ 3,268	$ 2,831	$ 3,268	$ 2,831

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Long-Term Debt (Details) - USD ($) $ in Thousands		1 Months Ended	3 Months Ended
	Jun. 15, 2021	Jun. 30, 2016	Sep. 30, 2016	Jun. 30, 2017	Dec. 31, 2016
Debt Instrument [Line Items]
Debt Instrument, Unamortized Discount (Premium) and Debt Issuance Costs, Net				$ 4,947	$ 5,579
Long-term Debt				506,303	516,921
Current portion, long-term debt				15,000	15,000
Long-term Debt, Excluding Current Maturities				491,303	501,921
Senior unsecured notes, maturity date	Jun. 15, 2021
Line of Credit Assumed			$ 105,000
Unsecured notes
Debt Instrument [Line Items]
Long-term Debt, Gross				425,000	425,000
Long-term Debt
Debt Instrument [Line Items]
Long-term Debt, Gross				$ 86,250	$ 97,500
Three Point One Two Five Percent Senior Unsecured Notes Due June Fifteenth Twenty Twenty Five [Domain]
Debt Instrument [Line Items]
Senior unsecured notes, issued amount		$ 425,000
Senior unsecured notes, interest rate		3.125%
Senior unsecured notes, proceeds			$ 421,000
Term of agreement		5 years

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Shareholders' Equity Shareholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Statement of Stockholders' Equity [Abstract]
Common Stocks, Including Additional Paid in Capital	$ 25,492	$ 12,139
Stock Issued During Period, Value, Share-based Compensation, Net of Forfeitures	(1,987)
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition	$ 15,340
Common Stock, Dividends, Per Share, Cash Paid	$ 0.15
Dividends, Common Stock, Cash	$ 41,000

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Contingencies (Details) $ in Millions	Jun. 30, 2017 USD ($)
Loss Contingencies [Line Items]
Loss contingency accrual	$ 4.5
Minimum
Loss Contingencies [Line Items]
Loss contingency, estimate of possible loss	4.5
Maximum
Loss Contingencies [Line Items]
Loss contingency, estimate of possible loss	$ 15.0

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Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Current tax expense (benefit):
Income tax provision	$ 12,127	$ 14,485	$ 25,120	$ 68,980
Current income tax expense (benefit)			$ 43,400
Effective tax rate	19.10%	24.20%	21.10%	59.70%
Deferred tax expense (benefit):
Deferred income taxes			$ (150)	$ (372)
Deferred Income Tax Expense (Benefit), Excluding Discontinued Operations			$ 58,500
Effective tax rate	19.10%	24.20%	21.10%	59.70%

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Income Taxes (Details 3) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Income Tax Disclosure [Abstract]
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued	$ 2.8		$ 2.8
Effective tax rate	19.10%	24.20%	21.10%	59.70%

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Operating Segments and Related Information (Details)	6 Months Ended
	Jun. 30, 2017 segment
Segment Reporting [Abstract]
Number of operating segments	6

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Operating Segments and Related Information (Details 2) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenue	$ 434,124	$ 402,729	$ 840,938	$ 782,201
Intersegment revenue	0	0	0	0
Earnings from operations	66,630	65,212	125,716	122,589
Surveillance
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenue	129,209	113,440	247,938	237,591
Intersegment revenue	(3,331)	(4,755)	(8,087)	(8,979)
Earnings from operations	33,007	26,595	59,372	62,460
Instruments
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenue	85,969	78,068	163,824	157,487
Intersegment revenue	(7,325)	(1,213)	(13,114)	(2,788)
Earnings from operations	23,627	19,695	44,773	39,676
Security
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenue	49,709	63,380	94,786	110,441
Intersegment revenue	(3,640)	(3,836)	(6,765)	(6,308)
Earnings from operations	1,288	4,410	1,603	2,241
OEM & Emerging Markets
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenue	87,447	56,980	172,212	104,825
Intersegment revenue	(9,361)	(8,833)	(18,530)	(17,010)
Earnings from operations	26,340	16,757	50,697	27,443
Maritime
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenue	55,102	55,163	103,653	106,883
Intersegment revenue	(621)	(1,458)	(1,298)	(2,072)
Earnings from operations	9,390	7,521	14,594	13,328
Detection
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenue	26,688	35,698	58,525	64,974
Intersegment revenue	(1)	(31)	(1)	(31)
Earnings from operations	7,024	10,320	15,761	18,557
Eliminations
Segment Reporting, Revenue Reconciling Item [Line Items]
Intersegment revenue	(24,279)	(20,126)	(47,795)	(37,188)
Total Segments
Segment Reporting, Revenue Reconciling Item [Line Items]
Earnings from operations	$ 100,676	$ 85,298	$ 186,800	$ 163,705

XML

Operating Segments and Related Information Operating Segments and related information (Details 3) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Segment Reporting, Revenue Reconciling Item [Line Items]
Unallocated corporate expense	$ (25,017)	$ (16,049)	$ (43,240)	$ (32,674)
Amortization of purchased Intangible Assets	(7,016)	(3,927)	(13,751)	(8,134)
Amortization of acquisition-related inventory step-up	0	0	(1,992)	0
Restructuring Charges	$ (13)	$ (110)	$ (101)	$ (308)
Product Liability Contingency, Accrual, Assumptions	-2000	0	-2000	0
Consolidated earnings from operations	$ 66,630	$ 65,212	$ 125,716	$ 122,589
Other Nonoperating Expense	(3,090)	(5,359)	(6,612)	(7,116)
Consolidated earnings before income taxes	63,540	59,853	119,104	115,473
Total Segments [Member]
Segment Reporting, Revenue Reconciling Item [Line Items]
Consolidated segment operating income	100,676	85,298	186,800	163,705
Consolidated earnings from operations	$ 100,676	$ 85,298	$ 186,800	$ 163,705

XML

Operating Segments and Related Information (Details 4) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Segment Reporting, Asset Reconciling Item [Line Items]
Segment assets (accounts receivable, net and inventories)	$ 737,337	$ 723,391
Segment Reporting Information goodwill	920,364	801,406
Surveillance
Segment Reporting, Asset Reconciling Item [Line Items]
Segment assets (accounts receivable, net and inventories)	278,535	283,324
Segment Reporting Information goodwill	258,480	152,383
Instruments
Segment Reporting, Asset Reconciling Item [Line Items]
Segment assets (accounts receivable, net and inventories)	125,942	114,681
Segment Reporting Information goodwill	151,799	147,595
Security
Segment Reporting, Asset Reconciling Item [Line Items]
Segment assets (accounts receivable, net and inventories)	83,493	93,174
Segment Reporting Information goodwill	106,785	102,983
OEM & Emerging Markets [Member]
Segment Reporting, Asset Reconciling Item [Line Items]
Segment assets (accounts receivable, net and inventories)	141,568	144,862
Segment Reporting Information goodwill	254,592	252,647
Maritime [Member]
Segment Reporting, Asset Reconciling Item [Line Items]
Segment assets (accounts receivable, net and inventories)	73,963	61,494
Segment Reporting Information goodwill	100,724	97,860
Detection
Segment Reporting, Asset Reconciling Item [Line Items]
Segment assets (accounts receivable, net and inventories)	33,836	25,856
Segment Reporting Information goodwill	$ 47,984	$ 47,938

XML

Operating Segments and Related Information (Details 5) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenue	$ 434,124	$ 402,729	$ 840,938	$ 782,201
United States
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenue	224,025	224,305	445,856	418,589
Europe [Member]
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenue	91,041	84,297	174,313	168,707
Asia [Member]
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenue	59,721	47,413	113,645	91,237
Mid_East/Africa [Member]
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenue	35,248	28,629	60,390	56,341
Canada/Latin_America [Member]
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenue	$ 24,089	$ 18,085	$ 46,734	$ 47,327

XML

Operating Segments and Related Information (Details 6) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Segment Reporting, Asset Reconciling Item [Line Items]
Long-lived assets	$ 1,430,580	$ 1,409,806
United States
Segment Reporting, Asset Reconciling Item [Line Items]
Long-lived assets	689,044	676,007
Europe [Member]
Segment Reporting, Asset Reconciling Item [Line Items]
Long-lived assets	508,272	490,089
Canada/Latin_America [Member]
Segment Reporting, Asset Reconciling Item [Line Items]
Long-lived assets	225,100	235,921
Other Geographic Region [Member]
Segment Reporting, Asset Reconciling Item [Line Items]
Long-lived assets	$ 8,164	$ 7,789

XML

Operating Segments and Related Information (Details 7) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Revenue, Major Customer [Line Items]
Revenue	$ 434,124	$ 402,729	$ 840,938	$ 782,201
United States government
Revenue, Major Customer [Line Items]
Revenue	$ 111,824	$ 100,106	$ 228,059	$ 185,742

XML

Business Acquisitions (Detail) - USD ($) $ in Thousands	Nov. 30, 2016	Nov. 04, 2016	Jun. 30, 2017	Dec. 31, 2016
Business Acquisition [Line Items]
Goodwill			$ 920,364	$ 801,406
Point Grey Research, Inc. [Member]
Business Acquisition [Line Items]
Cash acquired		$ 2,994
Other tangible assets and liabilities, net		35,064
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Deferred Tax Liabilities Noncurrent		2,438
Identifiable intangible assets		39,800
Goodwill		183,741
Total purchase price		$ 259,161
Prox Dynamics, AS [Member]
Business Acquisition [Line Items]
Cash acquired			11,706
Other tangible assets and liabilities, net			(900)
Identifiable intangible assets	$ 31,400		31,400
Goodwill	91,900
Total purchase price	134,088
Prox Dynamics [Member]
Business Acquisition [Line Items]
Net deferred taxes			(7,400)
Goodwill			$ 99,300
Total purchase price	$ 134,088

XML

Business Acquisitions (Details 1) - USD ($) $ in Thousands	Nov. 30, 2016	Nov. 04, 2016
Business Acquisition [Line Items]
Finite-lived intangible assets acquired		$ 200
Prox Dynamics, AS [Member]
Business Acquisition [Line Items]
Business Combination, Consideration Transferred	$ 134,088
Prox Dynamics, AS [Member] | Product Technology [Member]
Business Acquisition [Line Items]
Estimated Useful Life	8 years
Prox Dynamics, AS [Member] | Patented Technology [Member]
Business Acquisition [Line Items]
Estimated Useful Life	8 years
Finite-lived intangible assets acquired	$ 3,100
Prox Dynamics, AS [Member] | Trade name
Business Acquisition [Line Items]
Estimated Useful Life	7 years
Finite-lived intangible assets acquired	$ 3,500
Prox Dynamics, AS [Member] | Trade Names [Member]
Business Acquisition [Line Items]
Estimated Useful Life	8 years
Finite-lived intangible assets acquired	$ 1,400
Prox Dynamics, AS [Member] | Developed technology
Business Acquisition [Line Items]
Indefinite-lived intangible assets acquired	23,400
Point Grey Research, Inc. [Member]
Business Acquisition [Line Items]
Business Combination, Consideration Transferred		259,161
Intangible assets acquired		$ 39,800
Point Grey Research, Inc. [Member] | Product Technology [Member]
Business Acquisition [Line Items]
Estimated Useful Life		10 years
Point Grey Research, Inc. [Member] | Trade name
Business Acquisition [Line Items]
Estimated Useful Life		7 years
Finite-lived intangible assets acquired		$ 13,200
Point Grey Research, Inc. [Member] | Backlog
Business Acquisition [Line Items]
Estimated Useful Life		1 year
Finite-lived intangible assets acquired		$ 2,300
Point Grey Research, Inc. [Member] | Non-Competition Agreements
Business Acquisition [Line Items]
Estimated Useful Life		5 years
Finite-lived intangible assets acquired		$ 1,000
Point Grey Research, Inc. [Member] | Developed technology
Business Acquisition [Line Items]
Indefinite-lived intangible assets acquired		$ 23,100
Prox Dynamics [Member]
Business Acquisition [Line Items]
Business Combination, Consideration Transferred	134,088
Intangible assets acquired	$ 31,400

XML

Business Acquisitions (Details textual) - USD ($)		6 Months Ended
	Nov. 30, 2016	Jun. 30, 2017	Dec. 31, 2016
Business Acquisition [Line Items]
Goodwill		$ 920,364,000	$ 801,406,000
Goodwill, Acquired During Period		100,022,000
Prox Dynamics, AS [Member]
Business Acquisition [Line Items]
Cash acquired		11,706,000
Goodwill	$ 91,900,000
Total purchase price	134,088,000
Identifiable intangible assets	31,400,000	31,400,000
Prox Dynamics [Member]
Business Acquisition [Line Items]
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net	11.3
Goodwill		$ 99,300,000
Total purchase price	134,088,000
Intangible assets including goodwill	$ 122.8

XML

Restructuring Costs (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Restructuring Cost and Reserve [Line Items]
Restructuring expenses	$ (13)	$ (110)	$ (101)	$ (308)

XML

Restructuring Costs (Details 2) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Restructuring Cost and Reserve [Line Items]
Restructuring expenses	$ (13)	$ (110)	$ (101)	$ (308)

XML

Restructuring Costs (Details 3) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Restructuring Cost and Reserve [Line Items]
Restructuring expenses	$ (13)	$ (110)	$ (101)	$ (308)

XML

Subsequent Events (Details) - Dividends [Domain] - USD ($) $ / shares in Units, $ in Millions	Mar. 10, 2017	Feb. 24, 2017	Feb. 09, 2017
Subsequent Event [Line Items]
Dividends Payable, Date Declared			Jul. 20, 2017
Quarterly dividend, value per share			$ 0.15
Quarterly dividend, date to be paid	Sep. 08, 2017
Quarterly dividend, date of record		Aug. 25, 2017
Quarterly dividend, amount declared	$ 20.6

XML

Quarterly Financial Data (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Condensed Financial Statements, Captions [Line Items]
Restructuring expenses	$ (13)	$ (110)	$ (101)	$ (308)
Revenue	434,124	402,729	840,938	782,201
Gross profit	206,732	183,322	398,053	361,012
Net earnings	$ 51,413	$ 45,368	$ 93,984	$ 46,493
Basic earnings per share:
Basic earnings per share (in dollars per share)	$ 0.38	$ 0.33	$ 0.69	$ 0.34
Diluted earnings per share:
Diluted earnings per share (in dollars per share)	$ 0.37	$ 0.33	$ 0.68	$ 0.33