10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

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

For the quarterly period ended June 30, 2020

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 000-21918

FLIR SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

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

(503) 498-3547

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	FLIR	NASDAQ	Global Select Stock Market

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  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    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.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

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.    ☐

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

As of July 31, 2020, there were 131,121,965 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, 2020 and 2019 (unaudited)	1
	Consolidated Statements of Comprehensive Income (Loss) - Three and Six Months Ended June 30, 2020 and 2019 (unaudited)	2
	Consolidated Balance Sheets - June 30, 2020 and December 31, 2019 (unaudited)	3
	Consolidated Statements of Shareholders' Equity - Three and Six Months Ended June 30, 2020 and 2019 (unaudited)	4
	Consolidated Statements of Cash Flows - Six Months Ended June 30, 2020 and 2019 (unaudited)	5
	Notes to the Consolidated Financial Statements (unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	31
Item 4.	Controls and Procedures	31
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 3.	Defaults Upon Senior Securities	35
Item 4.	Mine Safety Disclosures	35
Item 5.	Other Information	35
Item 6.	Exhibits	36
Signature		37

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,
	2020			2019			2020			2019
Revenue	$	482,015		$	481,998		$	932,938		$	926,734
Cost of goods sold	229,815			248,590			461,370			459,465
Gross profit	252,200			233,408			471,568			467,269
Operating expenses:
Research and development	56,012			52,957			109,859			100,637
Selling, general and administrative	88,676			113,713			204,918			218,203
Restructuring expenses	7,702			3,001			28,486			3,610
Total operating expenses	152,390			169,671			343,263			322,450
Earnings from operations	99,810			63,737			128,305			144,819
Interest expense	6,962			7,272			13,923			12,788
Interest income	(127		)	(438		)	(476		)	(1,495		)
Other expense (income), net	11,081			(1,220		)	9,766			646
Earnings before income taxes	81,894			58,123			105,092			132,880
Income tax provision	20,637			12,005			28,411			25,014
Net earnings	$	61,257		$	46,118		$	76,681		$	107,866
Net earnings per share:
Basic	$	0.47		$	0.34		$	0.58		$	0.80
Diluted	$	0.47		$	0.34		$	0.57		$	0.79
Weighted average shares outstanding:
Basic	130,831			135,519			132,213			135,530
Diluted	131,687			137,084			133,389			137,105

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

1

FLIR SYSTEMS, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in thousands) (Unaudited)
	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Net earnings	$	61,257		$	46,118		$	76,681		$	107,866
Other comprehensive income (loss), net of tax:
Fair value adjustment on derivatives instruments designated as hedges (1)	408			(779		)	3,161			(1,586		)
Unrealized gain on available-for-sale investments	—			4			—			4
Foreign currency translation adjustments	(2,740		)	4,664			(23,025		)	(2,776		)
Total other comprehensive income (loss)	(2,332		)	3,889			(19,864		)	(4,358		)
Comprehensive income	$	58,925		$	50,007		$	56,817		$	103,508

_________________________

(1) The tax effects on interest rate swap contracts for the three months ended June 30, 2020 and 2019 were $0.1 million and $0.3 million, respectively. The tax effects on interest rate swap contracts for the six months ended June 30, 2020 and 2019 were $0.5 million and $0.5 million, respectively.

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,
	2020			2019
ASSETS
Current assets:
Cash and cash equivalents	$	332,958		$	284,592
Accounts receivable, net	304,981			318,652
Inventories	433,908			388,762
Prepaid expenses and other current assets	114,429			116,728
Total current assets	1,186,276			1,108,734
Property and equipment, net	255,770			255,905
Deferred income taxes, net	41,393			39,983
Goodwill	1,340,989			1,364,596
Intangible assets, net	222,123			247,514
Other assets	110,746			120,809
Total assets	$	3,157,297		$	3,137,541
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	147,487		$	158,033
Deferred revenue	30,319			28,587
Accrued payroll and related liabilities	79,981			72,476
Accrued product warranties	15,887			14,611
Advance payments from customers	14,142			28,005
Accrued expenses	32,892			40,815
Accrued income taxes	24,273			14,735
Other current liabilities	34,721			27,349
Credit facility	191,000			16,000
Long-term debt, current portion	12,465			12,444
Total current liabilities	583,167			413,055
Long-term debt, net of current portion	643,265			648,419
Deferred income taxes	40,405			53,544
Accrued income taxes	57,243			55,514
Other long-term liabilities	82,516			95,576
Shareholders’ equity:
Preferred stock, $0.01 par value, 10,000 shares authorized; no shares issued at June 30, 2020, and December 31, 2019	—			—
Common stock, $0.01 par value, 500,000 shares authorized, 131,106 and 134,394 shares issued at June 30, 2020, and December 31, 2019, respectively, and additional paid-in capital	10,778			16,692
Retained earnings	1,925,732			2,020,686
Accumulated other comprehensive loss	(185,809		)	(165,945		)
Total shareholders’ equity	1,750,701			1,871,433
Total liabilities and shareholders' equity	$	3,157,297		$	3,137,541

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

3

FLIR SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(in thousands, except for per share amounts)

(Unaudited)

	Common Stock and Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Earnings (Loss)			Total Shareholders' Equity
Balance, December 31, 2019	$	16,692		$	2,020,686		$	(165,945	)	$	1,871,433
Net earnings	—			15,424			—			15,424
Repurchase of common stock	(23,371		)	(126,629		)	—			(150,000		)
Common stock issued pursuant to stock-based compensation plans, net of shares withheld for taxes	580			—			—			580
Stock-based compensation	7,403			—			—			7,403
Dividends paid of $0.17 per share	—			(22,728		)	—			(22,728		)
Other comprehensive loss, net of taxes	—			—			(17,532		)	(17,532		)
Balance, March 31, 2020	1,304			1,886,753			(183,477		)	1,704,580
Net earnings	—			61,257			—			61,257
Common stock issued pursuant to stock-based compensation plans, net of shares withheld for taxes	(3,341		)	—			—			(3,341		)
Stock-based compensation	12,815			—			—			12,815
Dividends paid of $0.17 per share	—			(22,278		)	—			(22,278		)
Other comprehensive loss, net of taxes	—			—			(2,332		)	(2,332		)
Balance, June 30, 2020	$	10,778		$	1,925,732		$	(185,809	)	$	1,750,701

	Common Stock and Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Earnings (Loss)			Total Shareholders' Equity
Balance, December 31, 2018	$	1,355		$	2,024,523		$	(149,092	)	$	1,876,786
Adjustment of DTA under ASU 2016-16(1)	—			3,439			—			3,439
Net earnings	—			61,748			—			61,748
Repurchase of common stock	(16,999		)	(7,999		)	—			(24,998		)
Common stock issued pursuant to stock-based compensation plans, net of shares withheld for taxes	8,709			—			—			8,709
Stock-based compensation	8,289			—			—			8,289
Dividends paid of $0.17 per share	—			(23,031		)	—			(23,031		)
Other comprehensive loss, net of taxes	—			—			(8,247		)	(8,247		)
Balance, March 31, 2019	1,354			2,058,680			(157,339		)	1,902,695
Net earnings	—			46,118			—			46,118
Repurchase of common stock	(7,218		)	(17,780		)	—			(24,998		)
Common stock issued pursuant to stock-based compensation plans, net of shares withheld for taxes	(1,704		)	—			—			(1,704		)
Stock-based compensation	8,924			—			—			8,924
Dividends paid of $0.17 per share	—			(23,033		)	—			(23,033		)
Other comprehensive income, net of taxes	—			—			3,889			3,889
Balance, June 30, 2019	$	1,356		$	2,063,985		$	(153,450	)	$	1,911,891

_________________________

(1) The Company recorded an immaterial correction which increased both retained earnings and deferred income taxes related to the Company's adoption of Accounting Standards Update 2016-16 "Intra-Entity Transfers of Assets Other Than Inventory" ("ASU 2016-16").

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

4

FLIR SYSTEMS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited)
	Six Months Ended June 30,
	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$	76,681		$	107,866
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	47,750			48,915
Stock-based compensation	20,887			17,278
Loss on disposal of assets	3,585			—
Minority interest impairment charges	4,803			—
Deferred income taxes	(513		)	2,187
Other, net	3,218			(3,620		)
Increase (decrease) in cash, net of acquisitions, resulting from changes in:
Accounts receivable	11,263			(19,128		)
Inventories	(46,764		)	(23,604		)
Prepaid expenses and other current assets	1,596			(11,487		)
Other assets	5,679			3,612
Accounts payable	(10,480		)	26,446
Deferred revenue	1,898			1,863
Accrued payroll and other liabilities	(8,207		)	(13,273		)
Accrued income taxes	12,116			(7,885		)
Other long-term liabilities	(9,497		)	(5,869		)
Net cash provided by operating activities	114,015			123,301
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment, net	(27,242		)	(17,781		)
Proceeds from sale of assets	—			2,973
Business acquisitions, net of cash acquired	—			(602,456		)
Minority interest and other investments	304			(5,000		)
Net cash used in investing activities	(26,938		)	(622,264		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from credit facility and long-term debt, including current portion	175,000			723,054
Repayment of credit facility and long-term debt	(6,135		)	(378,095		)
Repurchase of common stock	(150,000		)	(49,996		)
Dividends paid	(45,006		)	(46,064		)
Proceeds from shares issued pursuant to stock-based compensation plans	7,309			17,350
Tax paid for net share exercises and issuance of vested restricted stock units	(10,071		)	(10,346		)
Other financing activities	—			(522		)
Net cash (used in) provided by financing activities	(28,903		)	255,381
Effect of exchange rate changes on cash and cash equivalents	(9,808		)	323
Net increase (decrease) in cash and cash equivalents	48,366			(243,259		)
Cash and cash equivalents, beginning of year	284,592			512,144
Cash and cash equivalents, end of period	$	332,958		$	268,885

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

5

FLIR SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Basis of Presentation and Accounting Standards Updates

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, 2019.

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, 2020.

Recently Adopted Accounting Pronouncements

Financial Accounting Standards Board ("FASB") Accounting Standards Update ("ASU") No. 2016-13, "Measurement of Credit Losses on Financial Instruments" ("ASU 2016-13" or "Topic 326"): Effective January 1, 2020, the Company adopted ASU 2016-13 using a modified-retrospective approach. The standard changes the way entities recognize impairment of many financial assets by requiring immediate recognition of estimated credit losses expected to occur over their remaining life. Adoption of the standard did not have a material impact on the Company's consolidated financial statements.

FASB ASU No. 2018-18, "Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606" ("ASU 2018-18"): Effective January 1, 2020, the Company adopted ASU 2018-18. The standard clarifies that certain transactions between collaborative arrangement participants should be accounted for under ASC 606, when one participant is a customer, and specifies that a distinct good or service is the unit of account for evaluating whether the transaction is with a customer. The standard also provides guidance on presentation of transactions not in the scope of ASC 606. Adoption of the standard did not have a material impact on the Company's consolidated financial statements.

Recently Issued Accounting Pronouncements

In December 2019, the FASB issued ASU No. 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes". The standard simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 including recognizing deferred taxes for investments, performing intra-period allocations and calculating taxes in interim periods. The ASU 2019-12 also improves consistent application of and simplifies GAAP for other areas of Topic 740 by clarifying and amending existing guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. The standard is effective for fiscal years beginning after December 15, 2020. Early adoption is permitted. The Company plans to adopt the standard as of January 1, 2021 and is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting”, which temporarily simplifies the accounting for contract modifications, including hedging relationships, due to the transition from LIBOR and other interbank offered rates to alternative reference interest rates. For example, entities can elect not to remeasure the contracts at the modification date or reassess a previous accounting determination if certain conditions are met. Additionally, entities can elect to continue applying hedge accounting for hedging relationships affected by reference rate reform if certain conditions are met. The new standard was effective upon issuance and generally can be applied to applicable contract modifications through December 31, 2022. The Company is currently evaluating the impact of the transition from LIBOR to alternative reference interest rates as well as the impact it may have on its consolidated financial statements.

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, 2020. These reclassifications had no effect on consolidated financial position, net earnings, shareholders' equity, or net cash flows for any of the periods presented.

6

FLIR SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Note 2. Revenue

Revenue Recognition

The Company designs, markets and sells products primarily as commercial, off-the-shelf products. Certain customers request different system configurations, based on standard options or accessories that the Company offers. Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. The Company regularly enters into contracts that can include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations. In such situations, contract values are allocated to each performance obligation based on its relative estimated standalone selling price. The vast majority of the Company's revenues are recognized at a point in time when goods are transferred to a customer. However, for certain contracts that include highly customized components, if performance does not create an asset with an alternative use and termination for convenience clauses provide an enforceable right to payment for performance completed to date, revenue is recognized over time as the performance obligation is satisfied.

Revenue includes certain shipping and handling costs and is stated net of third-party agency fees. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as fulfillment costs and are included in cost of goods sold. Revenue is recognized net of allowances for returns and net of taxes collected from customers which are subsequently remitted to governmental authorities. The Company's products are sold with warranty provisions that require it to remedy deficiencies in quality or performance of the Company's products over a specified period of time, generally twelve to twenty-four months, at no cost to its customers. Warranty liabilities are established at the time that revenue is recognized at levels that represent the Company's estimate of the costs that will be incurred to fulfill those warranty requirements. Provisions for estimated losses on sales or related receivables are recorded when identified. Service revenue is deferred and recognized over the contract period, as is the case for extended warranty contracts, or recognized as services are provided.

See Note 17, "Operating Segments and Related Information - Revenue and Long-Lived Assets by Geographic Area" for information related to the Company’s revenues disaggregated by significant geographical region and operating segment.

Contract Balances

The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables and deferred revenue and advance payments from customers on the Consolidated Balance Sheets. Contract assets and liabilities are reported on a contract-by-contract basis. The Company had no material deferred contract costs recorded on the Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019.

Contract assets: The Company recognizes unbilled receivables as contract assets when the Company has rights to consideration for work completed but has not yet billed at the reporting date. Unbilled receivables are included within accounts receivable, net on the Consolidated Balance Sheets. The balance of unbilled receivables as of June 30, 2020 and December 31, 2019 were $23.3 million and $9.4 million, respectively.

Contract liabilities: The Company records contract liabilities when cash payments are received or due in advance of the Company's performance. Contract liabilities include deferred revenue and advance payments from customers. Contract liabilities are classified as either current or long-term in the Consolidated Balance Sheets based on the timing of when the Company expects to recognize revenue. As of June 30, 2020 and December 31, 2019, contract liability balances totaled $56.6 million and $69.1 million, respectively. These balances included amounts classified as long-term as of June 30, 2020 and December 31, 2019 which were $12.1 million and $12.5 million, respectively, and are included within other long-term liabilities in the accompanying Consolidated Balance Sheets. Approximately $37.8 million of revenue recognized during the six months ended June 30, 2020 was included in the combined contract liability balances as of December 31, 2019.

Remaining Performance Obligations

Remaining performance obligations represent the aggregate transaction price allocated to performance obligations with an original contract term greater than one year which are fully or partially unsatisfied at the end of the period. While the remaining performance obligation disclosure is similar in concept to backlog, the definition of remaining performance obligations excludes contracts that provide the customer with the right to cancel or terminate for convenience with no substantial penalty, even if historical experience indicates the likelihood of cancellation or termination is remote. The Company has elected to exclude contracts with customers with an original term of one year or less from remaining performance obligations while these contracts are included within backlog.

7

FLIR SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Note 2.         Revenue - (Continued)

Remaining Performance Obligations - (Continued)

As of June 30, 2020, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $245.6 million. The Company expects to recognize revenue on approximately 84 percent of the remaining performance obligations over the next twelve months, and the remainder recognized thereafter.

Note 3. 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, as amended (the “2011 Plan”). The Company has discontinued issuing awards out of the 2002 Plan, but previously granted awards under the 2002 Plan remain outstanding.

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. Performance-based restricted stock unit awards granted during the year ended December 31, 2017 were earned based upon the Company's operating margin performance over a three-year period. Performance-based restricted stock unit awards granted during the years ended December 31, 2018 and 2019 may be earned based upon a combination of the Company's revenue and operating performance over a three-year period. Certain shares vested under the performance-based restricted stock unit awards and the market-based restricted stock unit awards must 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.

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,
	2020		2019		2020		2019
Cost of goods sold	$	1,668	$	709	$	2,735	$	1,556
Research and development	2,277		1,951		3,954		3,631
Selling, general and administrative	9,296		6,528		14,198		12,091
Stock-based compensation expense before income taxes	$	13,241	$	9,188	$	20,887	$	17,278

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

	June 30,
	2020		2019
Capitalized in inventory	$	453	$	1,016

As of June 30, 2020, the Company had approximately $70.9 million of total unrecognized stock-based compensation costs, net of estimated forfeitures, to be recognized over a weighted average period of approximately 2.1 years.

8

FLIR SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Note 4. 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,
	2020		2019		2020		2019
Numerator for earnings per share:
Net earnings for basic and diluted earnings per share	$	61,257	$	46,118	$	76,681	$	107,866
Denominator for earnings per share:
Weighted average number of common shares outstanding	130,831		135,519		132,213		135,530
Assumed exercise of stock options and vesting of restricted stock awards, net of shares assumed reacquired under the treasury stock method	856		1,565		1,176		1,575
Diluted shares outstanding	131,687		137,084		133,389		137,105

The effect of stock-based compensation awards for the three and six months ended June 30, 2020 that aggregated approximately 1,082,000 and 570,000 shares, respectively, has been excluded for purposes of diluted earnings per share since the effect of their inclusion would have been anti-dilutive. The effect of stock-based compensation awards for the three and six months ended June 30, 2019 that aggregated approximately 52,000 and 192,000 shares, respectively, has been excluded for purposes of diluted earnings per share since the effect of their inclusion would have been anti-dilutive.

Note 5. Fair Value of Financial Instruments

The Company had approximately $0.7 million of cash equivalents at June 30, 2020 and December 31, 2019, 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 in instruments that are convertible to cash daily. The fair value of the Company’s derivative contracts as of June 30, 2020 and December 31, 2019 are disclosed in Note 6, "Derivative Financial Instruments," and are based on Level 2 inputs. The fair value of the Company's borrowings under the Credit Agreement as described in Note 13, "Debt," as of June 30, 2020 approximates the carrying value. The fair value of the Company’s senior unsecured notes as described in Note 13, "Debt," was $432.3 million and $430.1 million based upon Level 2 inputs at June 30, 2020 and December 31, 2019, respectively. The fair value of observable price changes related to the Company's minority interest equity investments are based on Level 3 inputs. During the three months ended June 30, 2020, the Company recognized impairments of $4.8 million associated with its equity minority investments which are included in other expense (income), net in the Consolidated Statements of Income. The Company does not have any other significant financial assets or liabilities that are measured at fair value.

See the discussion of accounting guidance for fair value measurements and the factors used in determining the fair value of financial assets and liabilities as reported in Note 1, "Nature of Business and Significant Accounting Policies" of the Notes to the Consolidated Financial Statements included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

9

FLIR SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Note 6.        Derivative Financial Instruments

The Company's financial position and results of operations are subject to certain financial market risks. The Company regularly assesses these risks and has established risk management practices designed to mitigate the impact of certain foreign currency exchange rate and interest rate risk exposures. The Company does not engage in speculative trading in any financial market.

Foreign Currency Contracts

The Company uses currency forward contracts, not formally designated as hedges, to manage the consolidated exchange rate risk associated with the remeasurement of certain non-functional currency denominated monetary assets and liabilities primarily by subsidiaries that use U.S. dollars, European euros, Canadian dollars, Swedish kronor, Norwegian kroner, Brazilian real and British pound sterling as their functional currency. Changes in fair value of foreign currency forward contracts are recognized in other (income) expense, net at the end of each reporting period. In general, these gains and losses are offset in the Consolidated Statements of Income by the reciprocal gains and losses from the underlying assets or liabilities which originally gave rise to the exposure. At June 30, 2020, the Company’s foreign currency forward contracts, not formally designated as hedges, had maturities of three months or less.

In addition, the Company manages the risk of changes in the fair value of certain monetary liabilities attributable to changes in exchange rates. The Company manages these risks by using currency forward contracts formally designated and effective as fair value hedges. Hedge effectiveness is generally determined by evaluating the alignment of the hedging instrument's critical terms with the critical terms of the hedged item. The forward points attributable to the hedging instruments are excluded from the assessment of effectiveness and amortized to other expense (income), net using a systematic and rational methodology. Differences between the change in fair value of the excluded component and amounts recognized under the systematic and rational method are recognized in other comprehensive income. The change in fair value of the hedging instruments attributable to the hedged risk is reported in other expense (income), net. The change in fair value of the hedged item attributable to the hedged risk is reported as an adjustment to its carrying value and also included in other expense (income), net. At June 30, 2020, the Company’s foreign currency forward contracts formally designated as fair value hedges had maturities of three years or less.

Interest Rate Swap

The Company's outstanding debt at June 30, 2020 consists of fixed rate notes and an unsecured credit facility consisting of an unsecured revolving loan facility, an unsecured U.S. dollar term loan and an unsecured Swedish kronor term loan, all of which accrue interest at a floating rate. As discussed in Note 13, "Debt," interest expense on the Company's floating rate debt is calculated based on a fixed spread over the applicable Eurocurrency rate (e.g. LIBOR) subject to a floor of zero percent. Therefore, fluctuations in market interest rates will cause interest expense increases or decreases on a given amount of floating rate debt.

The Company is managing its interest rate risk related to certain floating rate debt through an interest rate swap (“swap”) in which the Company receives floating rate payments subject to a floor of zero percent and makes fixed rate payments. The impact of the swap is to fix the floating rate basis for the calculation of interest on the unsecured Swedish kronor term loan at 0.590 percent. The swap is designated and effective as a cash flow hedge with individual swap cash flows recorded as an asset or liability in the Company's Consolidated Balance Sheets at fair value. Hedge effectiveness is generally determined by evaluating the alignment of the hedging instrument's critical terms with the critical terms of the hedged item. Fair value adjustments are recorded as an adjustment to accumulated other comprehensive income. All of the Company's derivative counterparties have investment grade credit ratings. The Company is a party to master netting arrangements that contain features that allow counterparties to net settle amounts arising from multiple separate derivative transactions or net settle in the case of certain triggering events such as a bankruptcy or major default of one of the counterparties to the transaction. The Company has not pledged assets or posted collateral as a requirement for entering into or maintaining derivative positions.

The following table presents the gross notional amounts of outstanding derivative instruments (in thousands):

	June 30, 2020		December 31, 2019
Derivative instruments designated as cash flow hedges:
Interest Rate Swap	$	139,971	$	143,302
Derivative instruments designated as fair value hedges:
Currency Forward Contracts	283,333		340,000
Derivative instruments not formally designated as hedges:
Currency Forward Contracts	188,968		104,835

10

FLIR SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Note 6.        Derivative Financial Instruments - (Continued)

Interest Rate Swap - (Continued)

The following table presents the balance sheet classification and fair value of derivative instruments (in thousands):

		June 30,		December 31,
	Classification	2020		2019
Derivative instruments designated as cash flow hedges:
Derivative instruments in asset positions:
Interest Rate Swap	Prepaid expense and other current assets	$	740	$	404
Derivative instruments in liability positions:
Interest Rate Swap	Other current liabilities	818		453
Interest Rate Swap	Other long-term liabilities	1,851		1,012
Derivative instruments designated as fair value hedges:
Derivative instruments in asset positions:
Currency forward contracts	Prepaid expenses and other current assets	926		—
Currency forward contracts	Other assets	3,298		—
Derivative instruments in liability positions:
Currency forward contracts	Other current liabilities	—		454
Currency forward contracts	Other long-term liabilities	—		1,189
Derivative instruments not formally designated as hedges:
Derivative instruments in asset positions:
Currency forward contracts	Prepaid expenses and other current assets	1,734		3,010
Derivative instruments in liability positions:
Currency forward contracts	Other current liabilities	430		391

The following table presents the statement of income classification of derivative instruments (in thousands):

		Three Months Ended June 30,						Six Months Ended June 30,
	Classification	2020			2019			2020			2019
Derivative instruments designated as cash flow hedges:
Loss recognized in other comprehensive (income) loss, net of tax	Accumulated other comprehensive loss	$	329		$	779		$	650		$	1,586
Loss reclassified from other comprehensive (income) loss to earnings for the effective portion	Interest expense	104			220			275			220
Derivative instruments designated as fair value hedges:
Loss recognized in earnings for effective portion	Other expense (income), net	23,325			—			559			—
Gain recognized in income for amount excluded from effectiveness testing	Other expense (income), net	(1,049		)	—			(2,188		)	—
Loss (gain) recognized in other comprehensive (income) loss, net of tax	Accumulated other comprehensive loss (income)	59			—			(3,811		)	—
Derivative instruments not formally designated as hedges:
Loss (gain) recognized in earnings	Other expense (income), net	6,113			(583		)	(6,777		)	(292		)

11

FLIR SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Note 7. Accounts Receivable

Accounts receivable are net of an allowance for credit losses of $7.4 million and $6.1 million at June 30, 2020 and December 31, 2019, respectively.

Note 8. Inventories

Inventories consist of the following (in thousands):

	June 30,		December 31,
	2020		2019
Raw material and subassemblies	$	239,092	$	224,239
Work-in-progress	62,108		44,344
Finished goods	132,708		120,179
	$	433,908	$	388,762

Note 9. Leases

Operating leases are included in other assets, other current liabilities, and other long-term liabilities on the Consolidated Balance Sheets. The Company does not have any finance leases at June 30, 2020.

Most of the Company’s operating leases are for buildings, warehouses and office space. These leases have remaining lease terms of approximately one year to ten years.

The components of lease expense were as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Operating lease expense	$	3,045	$	2,837	$	6,067	$	5,472
Short-term lease expense	26		327		53		573
Variable lease expense	546		602		1,116		1,116
Total lease expense	$	3,617	$	3,766	$	7,236	$	7,161

Supplemental balance sheet information related to operating leases is as follows (in thousands):

	June 30, 2020		December 31, 2019
Operating lease right-of-use assets	$	30,341	$	35,479
Operating lease liabilities	$	34,016	$	39,291

Note 10.        Property and Equipment

Property and equipment are net of accumulated depreciation of $389.1 million and $370.1 million at June 30, 2020 and December 31, 2019, respectively. Depreciation expense for the three months ended June 30, 2020 and 2019 was $11.2 million and $10.8 million, respectively. Depreciation expense for the six months ended June 30, 2020 and 2019 was $23.0 million and $21.2 million, respectively.

Note 11. Goodwill

In the first quarter of 2020, the Company completed a business reorganization as part of its “Project Be Ready” restructuring plan which resulted in identification of two reportable segments (Industrial Technologies and Defense Technologies). The Company commenced operating and reporting under the new organization structure effective January 1, 2020. See Note 19, “Restructuring” for further information on Project Be Ready and Note 17, "Operating Segments and Related Information" for additional information on the two new reportable operating segments. Goodwill was allocated to identified reporting units using a relative fair value approach. In conjunction with the change in reportable segments, the Company evaluated goodwill for impairment, both before and after the segment change and determined that goodwill was not impaired.

12

FLIR SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Note 11. Goodwill - (Continued)

The following table presents changes in the carrying value of goodwill and the activity by reportable segment for the six months ended June 30, 2020 (in thousands):

	Industrial Technologies			Defense Technologies			Consolidated
Balance, December 31, 2019	$	635,899		$	728,697		$	1,364,596
Goodwill from acquisitions	—			(12,617		)	(12,617		)
Currency translation adjustments	(2,478		)	(8,512		)	(10,990		)
Balance, June 30, 2020	$	633,421		$	707,568		$	1,340,989

The Company reviews its goodwill for impairment annually during the third quarter, or more frequently if events or circumstances indicate that the carrying value of a reporting unit exceeds its fair value.

See Note 18, "Business Acquisitions" for additional information on goodwill from acquisitions.

Note 12.        Intangible Assets

Intangible assets are net of accumulated amortization of $151.0 million and $129.9 million at June 30, 2020 and December 31, 2019, respectively. The aggregate amortization expense for the three months ended June 30, 2020 and 2019 was $11.8 million and $21.1 million, respectively. The aggregate amortization expense for the six months ended June 30, 2020 and 2019 was $23.7 million and $27.0 million, respectively.

Note 13. Debt

The Company's debt consists of the following (in thousands):

	June 30,			December 31,
	2020			2019
Unsecured notes	$	425,000		$	425,000
Credit Agreement (term loans)	233,721			239,552
Credit Agreement (revolving credit facility)	191,000			16,000
Unamortized discounts and issuance costs	(2,991		)	(3,689		)
Total debt	$	846,730		$	676,863
Less: Credit facility	191,000			16,000
Less: Long-term debt, current portion	12,465			12,444
Long-term debt, net of current portion	$	643,265		$	648,419

In June 2016, the Company issued $425.0 million aggregate principal amount of its 3.125 percent senior unsecured notes due June 15, 2021 (the “2021 Notes”). The net proceeds from the issuance of the 2021 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 2021 Notes is payable semiannually in arrears on December 15 and June 15. The proceeds from the 2021 Notes were used for general corporate purposes, including working capital and capital expenditure needs, business acquisitions and repurchases of the Company’s common stock.

On March 29, 2019, the Company entered into a Second Amended and Restated Credit Agreement (“Credit Agreement”) with Bank of America, N.A., JPMorgan Chase Bank, N.A., U.S. Bank National Association, Citibank, N.A., MUFG Union Bank, N.A., and the other lenders party thereto. The Credit Agreement provides for a $650.0 million unsecured revolving credit facility, a $100.0 million unsecured term loan facility available in U.S. dollars amortizing at 5.000 percent per annum, and a $150.0 million unsecured term loan facility available in Swedish kronor amortizing at 5.0 percent per annum. The Credit Agreement has a term of five years and matures on March 29, 2024. In connection with the closing of the Credit Agreement, the Company made an initial borrowing of $100.0 million in revolving loans, $100.0 million in term loans in U.S. dollars, and the equivalent of $150.0 million in term loans in Swedish kronor and repaid all outstanding amounts under its prior credit agreement.

13

FLIR SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Note 13.        Debt - (Continued)

The Company has the right, subject to certain conditions, including approval of additional commitments by qualified lenders, to increase the availability under the revolving credit facility by an additional $200.0 million until March 29, 2024. The Credit Agreement allows the Company 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 from the type and tenor of the borrowing and includes loans based on the published term Eurocurrency rate (e.g. LIBOR) in which the loan is denominated. The Eurocurrency rate loans have a floor of zero percent and an applicable margin that ranges from 1.000 percent to 1.375 percent depending on the Company’s consolidated total leverage ratio. At June 30, 2020, the borrowing rate on the revolving loan was 1.553 percent per annum, the borrowing rate on the U.S. dollar term loan was 1.683 percent per annum and the borrowing rate on the Swedish kronor term loan was 1.444 percent per annum.

The Credit Agreement requires the Company to pay a commitment fee on the amount of unused revolving commitments at a rate, based on our consolidated total leverage ratio, which ranges from 0.125 percent to 0.200 percent of unused revolving commitments. At June 30, 2020, the commitment fee on the amount of unused revolving credit was 0.200 percent per annum. The Credit Agreement contains one financial covenant that requires maintenance of a consolidated total leverage ratio with which the Company was in compliance at June 30, 2020.

The facilities available under the Credit Agreement are unsecured. The Credit Agreement also contains language providing for the adoption of a LIBOR successor rate in anticipation of the possibility of LIBOR benchmark reform, consistent with market practice. The Company is engaged in regular dialogue with its lenders and derivatives counterparties to keep apprised of the proposed successor rates in each of the jurisdictions in which there may have a need to execute a financial transaction. Although progress has been made by the various working groups, the Company believes it is too early to accurately assess any financial impact of the LIBOR benchmark reform.

To manage the interest rate risk arising from the variability in interest expense attributable to amounts drawn under the Swedish kronor term loan facility, the Company entered into a floored interest rate swap with a Swedish kronor notional amount initially equivalent to $150.0 million. The interest rate swap was designated, and effective, as a cash flow hedge.

At June 30, 2020, the Company had $10.8 million of letters of credit outstanding, which reduces the total available revolving credit under the Credit Agreement.

On January 11, 2019, a standby letter of credit, not to exceed Swedish kronor 2.2 billion, was issued under a new bilateral letter of credit reimbursement agreement ("L/C Agreement") to secure a payment guarantee required by the Swedish Tax Authorities in order to grant the original respite from paying the tax reassessment described in Note 16, "Income Taxes." The outstanding amount of the L/C Agreement was equivalent to approximately $238.2 million at June 30, 2020. While outstanding amounts under the L/C Agreement do not reduce the available revolving credit from the Credit Agreement, they are considered indebtedness and influence the incremental debt capacity governed by our Credit Agreement covenants. The standby letter of credit was further amended on April 24, 2020 to reflect the new respite.

Note 14. 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,
	2020			2019			2020			2019
Accrued product warranties, beginning of period	$	19,809		$	19,058		$	19,143		$	18,583
Amounts paid for warranty services	(1,803		)	(4,354		)	(3,806		)	(7,130		)
Warranty provisions for products sold	2,229			3,793			5,089			6,207
Business acquisition	—			25			—			899
Currency translation adjustments and other	113			19			(78		)	(18		)
Accrued product warranties, end of period	$	20,348		$	18,541		$	20,348		$	18,541
Current accrued product warranties, end of period							$	15,887		$	14,478
Long-term accrued product warranties, end of period							$	4,461		$	4,063

14

FLIR SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Note 14.        Accrued Product Warranties - (Continued)

The Company generally provides a twelve to twenty-four-month warranty on its products. A provision for the estimated future costs of warranty, based upon historical cost and product performance experience, is recorded when revenue is recognized. Long-term accrued product warranties are included in other long-term liabilities on the Consolidated Balance Sheets.

Note 15. Contingencies

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

On April 24, 2018, the Company entered into a Consent Agreement with the United States Department of State's Directorate of Defense Trade Controls (“DDTC”) to resolve allegations regarding the unauthorized export of technical data and defense services to dual and third country nationals from certain Company facilities, the failure to properly use and manage export licenses and export authorizations, and failures to report certain payments under 22 CFR Part 130 in potential violation of the International Traffic in Arms Regulation (“ITAR”). The Consent Agreement has a four-year term and provides for: (i) a civil penalty of $30.0 million with $15.0 million of this amount suspended on the condition that the funds have or will be used for Department-approved Consent Agreement remedial compliance measures, (ii) the appointment of an external Special Compliance Official to oversee compliance with the Consent Agreement and the ITAR; (iii) two external audits of the Company’s ITAR compliance program; and (iv) continued implementation of ongoing remedial compliance measures and additional remedial compliance measures related to automated systems and ITAR compliance policies, procedures, and training. During the three-month period ended March 31, 2018, the Company recorded a $15.0 million charge for the portion of the penalty that is not subject to suspension. In April 2018, 2019, and 2020, the Company paid $1.0 million, $3.5 million and $3.5 million, respectively, of the $15.0 million charge and as of June 30, 2020, the remaining amounts payable of $3.5 million and $3.5 million have been recorded in other current liabilities and other long-term liabilities, respectively. The remaining $7.0 million is payable in annual installments of $3.5 million through April 2022. The Company expects recent and future investments in remedial compliance measures will be sufficient to cover the $15.0 million suspension amount.

As part of the Consent Agreement, DDTC acknowledged that the Company voluntarily disclosed certain of the alleged Arms Export Control Act and ITAR violations, which were resolved pursuant to the Consent Agreement, cooperated in the DDTC's review, and instituted a number of compliance program improvements.

In May 2017, the Company submitted an initial notification to DDTC regarding potential violations related to certain export classifications obtained through the commodity jurisdiction process and a final voluntary disclosure in August 2017. The Company also submitted a voluntary self-disclosure regarding the same matter with the United States Department of Commerce Bureau of Industry and Security ("BIS"). This matter remains under review by DDTC, BIS and the Department of Justice ("DOJ"). DDTC and BIS both acknowledged the submissions, and the Company executed tolling agreements for this matter with each of DDTC, BIS and DOJ. The DDTC and DOJ tolling agreements have lapsed; FLIR is in discussion with DOJ on resolving the matter. The Company executed a tolling agreement with BIS, and has extended the agreement, suspending the statute of limitations through September 1, 2020.

In June 2017, BIS informed the Company of additional export licensing requirements that restrict the Company’s ability to sell certain 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 sale without a license or 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. BIS subsequently favorably modified these restrictions to reduce the applicability of the restrictions to sales of FLIR's Tau camera cores (as opposed to finished products containing Tau camera cores) to customers in China not identified on a list maintained by the United States Department of Commerce and persons in a country other than those in the Export Administration Regulations ("EAR") Country Group A:5 (Supplement No. 1 to Part 740 of the EAR). If the Company is found to have violated applicable rules and regulations with respect to customers and limitations on the export and 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.

At this time, based on available information regarding these proceedings, 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.

15

FLIR SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Note 15.        Contingencies - (Continued)

SkyWatch Product Quality Matters

In March 2016, the Company learned of potential quality concerns with respect to as many as 315 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. The Company identified the cause of these quality issues, notified customers of their option to request repair and modification of their in-field units, and has begun in-field repairs of identified affected 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 on remaining units to be between $3.0 million and $9.6 million. As no single amount within the range is a better estimate than any other amount within the range, the Company has recorded an accrual of $3.0 million in other current liabilities as of June 30, 2020. Factors underlying this estimated range of loss may change from time to time, and actual results may vary significantly from this estimate.

Shareholder Derivative Lawsuit

In June 2020, a shareholder filed a derivative lawsuit in the Court of Chancery for the State of Delaware, Case No. 2020-0464, against the Company, as a nominal defendant, and certain current and former directors of the Company. Pointing to the Company’s 2015 settlement with the United States Securities and Exchange Commission of alleged United States Foreign Corrupt Practices Act violations and 2018 settlement with United States Department of State of alleged export control violations, the complaint alleges that the Company’s directors breached their fiduciary duties by failing to ensure that the Company had internal controls in place that would have prevented the alleged underlying misconduct and these settlements. The complaint also asserts claims for, among other matters, corporate waste and unjust enrichment, and seeks unspecified monetary damages from the individual defendants, injunctive relief, disgorgement of director compensation, and attorneys’ fees and costs. Because the complaint is derivative in nature, it does not seek monetary damages from the Company. However, the Company may be required to advance, and ultimately be responsible for, the legal fees and costs incurred by the individual defendants. The Company expects to file a motion to dismiss in the third quarter of 2020.

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 cannot be predicted with certainty, the Company believes the probability is remote that the outcome of each of these matters 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 (in thousands, except percentages):

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Income tax provision	$	20,637		$	12,005		$	28,411		$	25,014
Effective tax rate	25.2		%	20.7		%	27.0		%	18.8		%

The effective tax rate for the three and six months ended June 30, 2020 is higher than the United States Federal tax rate of 21.0 percent mainly due to non-recognition of the tax benefit of current year operating losses of a foreign subsidiary, an increase in unrecognized tax benefits related to positions taken on prior year tax returns, the addition of valuation allowance against deferred tax assets related to minority investments, and state taxes. These amounts were offset partially by benefits related to US export sales and research credits.

16

FLIR SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Note 16.        Income Taxes - (Continued)

As of June 30, 2020 and December 31, 2019, the Company has accrued income tax liabilities of $37.1 million related to the transition tax enacted on December 22, 2017 as part of the Tax Cuts and Jobs Act. Of the amounts accrued, none is expected to be due within one year. The remaining transition tax will not accrue interest and will be paid in annual installments beginning in 2021 through 2024.

The Company has not provided United States, state or foreign income taxes for earnings generated after January 1, 2018 by certain subsidiaries outside the United States as management currently intends to reinvest the earnings in operations and other activities outside of the United States indefinitely. Should the Company subsequently elect to repatriate such foreign earnings, the Company would need to accrue and pay state and foreign income taxes, thereby reducing the amount of our cash. United States taxes would generally not be payable due to changes made by the Tax Cuts and Jobs Act.

As of June 30, 2020, the Company had approximately $23.0 million of unrecognized tax benefits, of which $21.7 million would affect the Company’s effective tax rate if recognized. The Company anticipates approximately $10.9 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, 2020, the Company had $4.6 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 Sheets.

During the three-month period ended December 31, 2018, the Swedish Tax Authority (“STA”) issued a reassessment of tax for the year ending December 31, 2012 to one of the Company's non-operating subsidiaries in Sweden. The reassessment concerns the use of tax credits applied against capital gains pursuant to European Union Council Directive 2009/133/EC, commonly referred to as the EU Merger Directive, and assesses taxes and penalties totaling approximately $322.2 million (Swedish kronor 3.0 billion). On March 26, 2020, the Company received an adverse judgment from the First Instance Court of Sweden (the “Court”) regarding the STA's reassessment. The Company does not agree with the Court’s ruling, continues to believe the STA's arguments in the reassessment are not in accordance with Swedish tax regulations or the treaty for the avoidance of double taxation between Sweden and Belgium, and has appealed the decision to the Administrative Court of Appeal in Stockholm. Consequently, no adjustment to the Company's unrecognized tax benefits has been recorded in relation to this matter. The Company has received a respite from paying the reassessment until after a decision by the Administrative Court of Appeal by putting in place a bank guarantee to secure possible future payment of the tax and interest. There can be no assurance that the Company’s appeal will be successful.

During the three-month period ended September 30, 2019, the European Commission announced the opening of a separate review to assess whether an excess profit tax ruling granted by Belgium to one of the Company's international subsidiaries is in breach of European Union state aid rules. The Company believes all taxes assessed by Belgium have been paid and has not adjusted unrecognized tax benefits in relation to this matter.

Management believes that the Company's recorded tax liabilities are adequate in the aggregate for its income tax exposures.

On March 27, 2020, the President signed the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act), the bipartisan $2.0 trillion economic relief package aimed at helping American workers and businesses impacted by the coronavirus pandemic. The CARES Act, along with earlier issued IRS guidance, has allowed the Company to defer certain tax payments. The CARES Act, among other things, also contains numerous other provisions which may benefit the Company. The Company will continue to assess the effect of the CARES Act and ongoing government guidance related to COVID-19 that may be issued.

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

	Tax Years:
United States Federal	2016-2018
State of California	2015-2018
State of Massachusetts	2015-2018
State of Oregon	2016-2018
Sweden	2012-2018
United Kingdom	2015-2018
Belgium	2012-2018

17

FLIR SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Note 17.        Operating Segments and Related Information

Operating Segments

The Company’s chief operating decision maker ("CODM"), its Chief Executive Officer, evaluates each of its segments’ 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. In the first quarter of 2020, the Company completed a business reorganization as part of its "Project Be Ready" restructuring plan which resulted in identification of two reportable segments (Industrial Technologies and Defense Technologies). The Company commenced operating and reporting under the new organization structure effective January 1, 2020. See Note 19, “Restructuring” for further information on Project Be Ready.

Industrial Technologies Segment. The Industrial Technologies 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, manufactures, and services offerings that image, measure, and analyze thermal energy, gases, and other environmental elements for industrial, commercial, and scientific applications, imaging payloads for Unmanned Aerial Systems ("UAS"), and machine vision cameras. Additionally, the segment develops, manufactures, and services fixed-mounted visible and thermal imaging cameras and related analytics software for perimeter security, critical infrastructure, recreational and commercial maritime, and traffic monitoring and control. Offerings include thermal imaging cameras, analytics software, gas detection cameras, firefighting cameras, process automation cameras, environmental test and measurement devices, security cameras, marine electronics, and traffic cameras.

Defense Technologies Segment. The Defense Technologies 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. The segment also 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. Offerings include airborne, land, maritime, and man-portable multi-spectrum imaging systems, radars, lasers, imaging components, integrated multi-sensor system platforms, CBRNE detectors, nano-class UAS solutions, and services related to these systems. The segment also produces advanced multi-mission unmanned air and ground based systems serving US Department of Defense and Federal government agencies, public safety, and governmental customers in international markets.

The following tables present revenue, segment operating income, and segment assets for the two segments. Segment operating income as reviewed by the CODM is revenue less cost of goods sold and operating expenses, excluding general corporate expenses, separation, transaction, and integration costs, amortization of acquired intangible assets, restructuring expenses and asset impairment charges, and discrete legal and compliance matters. Net accounts receivable, inventories and demonstration assets for the 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.

Segment operating income information is as follows (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Revenue—External Customers:
Industrial Technologies	$	300,198		$	284,489		$	576,613		$	555,875
Defense Technologies	181,817			197,509			356,325			370,859
	$	482,015		$	481,998		$	932,938		$	926,734
Revenue—Intersegments:
Industrial Technologies	$	3,927		$	3,876		$	6,629		$	8,462
Defense Technologies	1,438			1,436			3,273			2,947
Eliminations	(5,365		)	(5,312		)	(9,902		)	(11,409		)
	$	—		$	—		$	—		$	—
Segment operating income:
Industrial Technologies	$	107,137		$	71,633		$	171,402		$	140,652
Defense Technologies	41,155			45,786			74,309			92,676
	$	148,292		$	117,419		$	245,711		$	233,328

18

FLIR SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

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

Operating Segments - (Continued)

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,
	2020			2019			2020			2019
Consolidated segment operating income	$	148,292		$	117,419		$	245,711		$	233,328
Unallocated corporate expenses	(29,026		)	(29,635		)	(65,270		)	(57,925		)
Amortization of purchased intangible assets	(11,754		)	(21,046		)	(23,650		)	(26,974		)
Restructuring expenses	(7,702		)	(3,001		)	(28,486		)	(3,610		)
Consolidated earnings from operations	99,810			63,737			128,305			144,819
Interest and non-operating expenses, net	(17,916		)	(5,614		)	(23,213		)	(11,939		)
Consolidated earnings before income taxes	$	81,894		$	58,123		$	105,092		$	132,880

Unallocated corporate expenses include general corporate expenses, separation, transaction, and integration costs, amortization of acquired intangible assets, restructuring expenses and asset impairment charges, and discrete legal and compliance matters.

A reconciliation of the Company's consolidated segment operating assets to consolidated total assets is as follows (in thousands):

	June 30,		December 31,
	2020		2019
Operating segment assets:
Net accounts receivable, inventories and demonstration assets:
Industrial Technologies	$	402,454	$	405,166
Defense Technologies	366,786		332,639
	$	769,240	$	737,805
Goodwill:
Industrial Technologies	633,421		635,899
Defense Technologies	707,568		728,697
	$	1,340,989	$	1,364,596
Total operating segment assets	$	2,110,229	$	2,102,401
Assets not allocated:
Cash and cash equivalents	$	332,958	$	284,592
Prepaid expenses and other current assets	84,078		86,337
Property and equipment, net	255,770		255,905
Deferred income taxes	41,393		39,983
Intangible assets, net	222,123		247,514
Other assets	110,746		120,809
Total assets	$	3,157,297	$	3,137,541

19

FLIR SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

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

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, 2020						Six Months Ended June 30, 2020
	Industrial Technologies		Defense Technologies		Total		Industrial Technologies		Defense Technologies		Total
United States	$	131,301	$	111,700	$	243,001	$	234,638	$	227,647	$	462,285
Europe	77,831		25,945		$	103,776	143,166		45,421		$	188,587
Asia	60,951		16,214		$	77,165	134,338		28,078		$	162,416
Middle East/Africa	14,788		25,094		$	39,882	32,815		50,222		$	83,037
Canada/Latin America	15,327		2,864		$	18,191	31,656		4,957		$	36,613
	$	300,198	$	181,817	$	482,015	$	576,613	$	356,325	$	932,938

	Three Months Ended June 30, 2019						Six Months Ended June 30, 2019
	Industrial Technologies		Defense Technologies		Total		Industrial Technologies		Defense Technologies		Total
United States	$	134,656	$	134,216	$	268,872	$	268,079	$	243,519	$	511,598
Europe	74,439		25,000		99,439		148,303		51,596		199,899
Asia	53,622		17,548		71,170		95,014		34,934		129,948
Middle East/Africa	5,786		18,815		24,601		15,651		36,222		51,873
Canada/Latin America	15,986		1,930		17,916		28,828		4,588		33,416
	$	284,489	$	197,509	$	481,998	$	555,875	$	370,859	$	926,734

Long-lived assets consist of net property and equipment, net identifiable intangible assets, goodwill and other long-term assets. Long-lived assets by significant geographic locations are as follows (in thousands):

	June 30,		December 31,
	2020		2019
United States	$	1,104,883	$	1,137,375
Europe	416,394		435,024
Other foreign	408,351		416,425
	$	1,929,628	$	1,988,824

Major Customers

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
United States government	$	130,047	$	156,161	$	262,196	$	293,654

20

FLIR SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Note 18. Business Acquisitions

Endeavor Robotics Holdings, Inc. On March 4, 2019, the Company acquired 100% of the outstanding stock of Endeavor Robotics Holdings, Inc. ("Endeavor"), a privately held developer of tactical unmanned ground vehicles for the global military, public safety, and critical infrastructure markets for approximately $385.9 million in cash. The acquisition enhances the Company’s offerings in unmanned ground systems and expands distribution channels in adjacent markets. During the first quarter of 2020, the Company completed the tax assessment for the short–period return that resulted in a goodwill adjustment of $12.6 million. Accordingly, the Company finalized the purchase price allocation and recorded $102.7 million of identified intangible assets and $271.4 million of goodwill in the Defense Technologies segment.

The final allocation of the purchase price for Endeavor is as follows (in thousands):

Cash acquired	$	6,687
Other tangible assets and liabilities	14,915
Net deferred taxes	(9,776		)
Identified intangible assets	102,740
Goodwill	271,365
Total purchase price	$	385,931

The goodwill of $271.4 million represents intellectual capital and the acquired assembled workforce, none of which qualify for recognition as a separate intangible asset. All of the goodwill presented above is not expected to be deductible for tax purposes.

The Company identified $102.7 million of intangible assets. The following table summarizes the acquired intangible assets and their estimated fair values and estimated useful lives (in thousands, except years):

	Estimated Useful Life	Amount
Developed technology	5.0 years	$	60,400
In-process research and development	9.0 years	28,000
Trademarks and trade name	4.5 years	9,990
Backlog	1.0 year	3,850
Customer contracts	1.0 year	500
		$	102,740

Acquisition-date identifiable intangible assets primarily consist of intangibles derived from developed technology, in-process research and development, trademarks and backlog. Developed technology represents the economic advantage of having certain technologies in place that lower manufacturing and operating costs and drive higher margins. In-process research and development consist of proprietary robot technology. Trademarks provide value to the marketing or promotion of an entity and its products or services. 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.

The developed technology and in-process research and development were valued using the income approach and relief from royalty method. The trade names and backlog were valued using an income approach method.

New England Optical Systems, Inc. On May 1, 2019, the Company acquired 100% of the outstanding stock of New England Optical Systems, Inc., a privately-held engineering and manufacturing company engaged in the design and production of infrared optical assemblies. The transaction consideration included a $21.9 million cash payment with up to an additional $12.0 million in deferred compensation payable over a two-year period. During the first quarter of 2020, the Company finalized the purchase price allocation and concluded that there were no changes to the previously recorded $6.4 million of identified intangible assets and $14.0 million of goodwill in the Industrial Technologies segment as presented in Note 20, "Business Acquisitions and Divestitures" of the Notes to the Consolidated Financial Statements included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2019. All of the goodwill is expected to be deductible for tax purposes.

The business acquisitions listed above 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.

21

FLIR SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Note 19.     Restructuring

In the first quarter of 2020, the Company initiated a strategy-driven restructuring plan, Project Be Ready, to simplify the Company’s product portfolio and better align resources with higher growth opportunities while reducing costs. Project Be Ready includes an organizational realignment, targeted workforce reductions, and facility optimization initiatives. All previously approved ongoing restructuring activities that were in process as of January 1, 2020 have been consolidated into Project Be Ready.

The Company expects to incur total costs of approximately $40.0 million to $55.0 million related to Project Be Ready, including approximately $20.0 million to $25.0 million of employee separation costs, approximately $5.0 million to $10.0 million of facility consolidation expenses, and approximately $15.0 million to $20.0 million of third party and other costs. The Company estimates that a majority of the cumulative pretax costs will be cash outlays related to employee separation, facility consolidation, and third-party expenses and that the costs will continue through 2021.

Restructuring expenses related to Project Be Ready were as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Employee separation costs	$	6,888	$	—	$	17,353	$	—
Lease consolidation expenses	—		—		204		—
Third party and other costs	814		—		10,929		—
Total Restructuring Program Expenses	$	7,702	$	—	$	28,486	$	—

During the three and six months ended June 30, 2020, the Company recognized a total of $7.7 million and $28.5 million, respectively, of expense in connection with Project Be Ready which have been recorded in “Restructuring Expenses” on the Consolidated Statements of Income.

The restructuring liability related to Project Be Ready was as follows (in thousands):

	Employee separation costs			Third party and other costs			Total
Balance at December 31, 2019	$	1,343		$	2,780		$	4,123
Accrual and accrual adjustments	17,353			11,133			28,486
Cash payments	(7,603		)	(13,079		)	(20,682		)
Balance at June 30, 2020	$	11,093		$	834		$	11,927

During the three and six months ended June 30, 2019, the Company recognized a total of $3.0 million and $3.6 million, respectively, of expense in connection with other restructuring activities which have been recorded in “Restructuring Expenses” on the Consolidated Statements of Income.

Note 20. Subsequent Events

On August 4, 2020, the Company’s Board of Directors declared a quarterly dividend of $0.17 per share on its common stock, payable on September 4, 2020, to shareholders of record as of the close of business on August 21, 2020. The total cash payment of this dividend will be approximately $22.3 million.

On August 3, 2020, the Company issued and sold $500.0 million in aggregate principal amount of its 2.500 percent unsecured senior notes due 2030 (the “2030 Notes”). The public offering was made pursuant to the Company’s effective shelf registration statement on Form S-3 (Registration No. 333-234452) on file with the Securities and Exchange Commission, including a final prospectus and prospectus supplement filed by the Company on July 22, 2020. The 2030 Notes were issued under a Supplemental Indenture, dated as of August 3, 2020, between FLIR Systems, Inc. and U.S. Bank National Association, as trustee, to an Indenture, dated as of August 3, 2020, between FLIR Systems, Inc. and the trustee.

22

FLIR SYSTEMS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Note 20.        Subsequent Events - (Continued)

The underwritten public offering price of the 2030 Notes equaled 99.807 percent of their aggregate principal amount, yielding an effective rate (including financing fees and other regulatory, legal and processing fees) of approximately 2.650 percent per annum to maturity. Interest on the 2030 Notes is payable semiannually in arrears on February 1 and August 1 of each year beginning on February 1, 2021. The 2030 Notes will mature on August 1, 2030, unless earlier redeemed. The aggregate net proceeds from the offering were approximately $494.0 million after deducting underwriting discounts and commissions and estimated transaction expenses.

The proceeds from the sale of the Notes will be used to redeem FLIR’s $425.0 million in aggregate principal amount of 3.125 percent notes due June 15, 2021 (the “2021 Notes”), and for general corporate purposes, which may include funding for working capital, investments in our subsidiaries, capital expenditures, acquisitions, and stock repurchases. On July 20, 2020, FLIR issued a notice to holders of the 2021 Notes that it intends to redeem the 2021 Notes in full on August 19, 2020.

The Company expects to record a loss on extinguishment of the debt of approximately $9.0 million in the third quarter of 2020.

23

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

Impact of COVID-19

On January 30, 2020, the World Health Organization declared the recent coronavirus disease 2019 (“COVID-19”) outbreak as a global health emergency. On March 11, 2020, the World Health Organization raised the COVID-19 outbreak to “pandemic” status. Early on, the transmission of COVID-19 and efforts to contain its spread resulted in international, national and local border closings and other significant travel restrictions and disruptions, significant disruptions to business operations, supply chains and customer activity, event cancellations and restrictions, service cancellations, reductions and other changes, significant challenges in healthcare service preparation and delivery, quarantines and related government actions and policies, as well as general concern and uncertainty that has negatively affected the U.S. and global economy and financial environments. More recently, state and local jurisdictions started to lift mandatory stay-at-home or shelter-in-place orders and started gradually to ease restrictions. In addition, as cases have resurged in parts of the U.S., including areas in which we maintain large facilities, we have seen governments slow or reverse efforts to reopen or shift into later phases of recovery, with increased risks to our operations.

The health and safety of our employees across the globe remain our top priority during this crisis. We have enacted stringent safety protocols to protect our employees and ensure we continue to service our customers. We initiated a site entry restriction policy for external visitors to our facilities. We have also developed contingency plans for staggered work schedules designed to reduce the number of employees working at a given time. We are regularly deep cleaning our facilities, advising all employees to follow safe hygiene practices, and requiring employees to stay home if they have any of the known symptoms or have come into contact with people who have tested positive for COVID-19. We have also implemented a global employee travel ban and allowed employees to work remotely if they are able to do so.

In aggregate, the outbreak did not have a material impact on our consolidated financial results in the first six months of 2020. While the Industrial Technologies segment has experienced heightened demand for its Elevated Skin Temperature (“EST”) cameras as a result of the COVID-19 pandemic, which are being deployed to help prevent the spread of the virus, this increase has been partially offset by lower volume in commercial end markets such as maritime and security products. The Defense Technologies segment has experienced administrative processing delays impacting the timing of bookings and revenue. These trends are likely to affect the segment’s results in subsequent quarters, although it is not yet possible to estimate the longer-term effects of the pandemic on demand for EST screening technology and other products.

We continue to monitor the rapidly evolving situation related to COVID-19. The extent to which COVID-19 impacts our operations or financial results will further depend on future developments, which are highly uncertain and cannot be predicted, including the status of state and local government reopening plans and any potential recurrence of illness, additional actions taken by governments, businesses and individuals to contain the virus or address its impact, new information which may emerge concerning the severity or treatability of the virus, and the extent of the economic downturn resulting from the response to the virus, among others.

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. Such statements, including management’s expectations regarding the Company’s ability to keep manufacturing facilities operational, the ability of the Company to rely on existing suppliers and vendors in its supply chain and management’s expectations to be able to mitigate future disruptions to the Company’s business operations are based on current expectations, estimates, and projections about FLIR’s business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks and uncertainties 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, as well as the following:

• risks related to United States government spending decisions and applicable procurement rules and regulations;

• negative impacts to operating margins due to reductions in sales or changes in product mix;

• impairments in the value of tangible and intangible assets;

24

• unfavorable results of legal proceedings;

• risks associated with international sales and business activities, including the regulation of the export and sale of our products worldwide and our ability to obtain and maintain necessary export licenses, as well as the imposition of significant tariffs or other trade barriers;

• risks related to subcontractor and supplier performance and financial viability as well as raw material and component availability and pricing;

• risks related to currency fluctuations;

• adverse general economic conditions or volatility in our primary markets;

• our ability to compete effectively and to respond to technological change;

• risks related to product defects or errors;

• our ability to protect our intellectual property and proprietary rights;

• cybersecurity and other security threats and technology disruptions;

• our ability to successfully manage acquisitions, investments and divestiture activities and integrate acquired companies;

• our ability to achieve the intended benefits of our strategic restructuring;

• our ability to attract and retain key senior management and qualified technical, sales and other personnel;

• risks to our supply chain, production facilities or other operations, and changes to general, domestic, and foreign economic conditions, due to the COVID-19 pandemic; and

• other risks discussed from time to time in filings and reports filed with the Securities and Exchange Commission.

COVID-19 may exacerbate one or more of the aforementioned and/or other risks, uncertainties and other factors more fully described in the Company’s reports filed with the SEC. In addition, such statements could be affected by general industry and market conditions and growth rates, and general domestic and international economic conditions. Such forward-looking statements speak only as of the date on which they are made and except as required by law, the Company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release, or for changes made to this document by wire services or internet service providers, whether as a result of new information, future events, or otherwise.

Consolidated Operating Results

The following discussion provides an overview of our operating results 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. Given the nature of our business, we believe revenue and earnings from operations, or operating income, (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 no revenue has been recognized. Backlog is not an absolute indicator of future revenue because a portion of the orders in backlog could be delayed or canceled at the customer's discretion. Further, due to the COVID-19 pandemic, as described above within “Impact of COVID-19,” we are unsure how future results will compare to historic trends in the conversion of backlog to revenue.

Revenue. Consolidated revenue for the three months ended June 30, 2020 and 2019, respectively was consistent at $482.0 million. Consolidated revenue for the six months ended June 30, 2020 totaled $932.9 million, compared to $926.7 million for the six months ended June 30, 2019, reflecting an increase of $6.2 million or 0.7 percent. The revenue increase was primarily attributable to heightened demand for Elevated Skin Temperature ("EST") cameras in Industrial Technologies as a result of the COVID-19 pandemic and contributions of unmanned revenues from the Aeryon Labs and Endeavor Robotics acquisitions in Defense Technologies. These increases were partially offset by lower volume in commercial end markets such as maritime and security products in Industrial Technologies and the completion of certain contracts that contributed to revenue in the prior year in Defense Technologies.

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. We currently expect total annual revenue for 2020 to be

25

higher than 2019 revenue; however, 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 49.6 percent and 44.2 percent of total revenue for the three months ended June 30, 2020 and 2019, respectively. International sales accounted for 50.4 percent and 44.8 percent of total revenue for the six months ended June 30, 2020 and 2019, respectively. The proportion of our international revenue compared to total revenue will fluctuate from quarter to quarter 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 months ended June 30, 2020 was $229.8 million, compared to $248.6 million for the prior year quarter. The decrease was primarily associated with lower revenue volume and intangible asset amortization in Defense Technologies and favorable product mix in Industrial Technologies. Cost of goods sold for the six months ended June 30, 2020 was $461.4 million, compared to $459.5 million for the six months ended June 30, 2019. The slight increase was primarily associated with increases in unmanned revenues from the Aeryon Labs and Endeavor Robotics acquisitions and increased intangible asset amortization in Defense Technologies, partially offset by favorable product mix in Industrial Technologies.

Cost of goods sold includes materials, labor and overhead costs incurred in the manufacturing of products and services sold in the period as well as warranty costs. Material costs include raw materials, purchased components and sub-assemblies, outside processing and inbound freight costs. Labor and overhead costs consist of direct and indirect manufacturing costs, including wages and fringe benefits, operating supplies, depreciation and amortization, occupancy costs, and purchasing, receiving and inspection costs.

Gross profit. Gross profit for the three months ended June 30, 2020 was $252.2 million, compared to $233.4 million for the prior year quarter. Gross profit for the six months ended June 30, 2020 was $471.6 million, compared to $467.3 million for the six months ended June 30, 2019. Gross margin, defined as gross profit divided by revenue, increased to 52.3 percent for the three months ended June 30, 2020 from 48.4 percent in in the prior year quarter, primarily attributable to favorable product mix in Industrial Technologies and lower intangible asset amortization. Gross margin for the six months ended June 30, 2020 and 2019 was consistent at approximately 50.5 percent.

Research and development expenses. Research and development expenses for the three months ended June 30, 2020 totaled $56.0 million, or 11.6 percent of revenue, compared to $53.0 million, or 11.0 percent of revenue for the prior year quarter. Research and development expenses for the six months ended June 30, 2020 totaled $109.9 million, or 11.8 percent of revenue, compared to $100.6 million, or 10.9 percent of revenue for the six months ended June 30, 2019. 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, 2019, our annual research and development expenses have varied between 8.5 percent and 10.8 percent of revenue, and we currently expect these expenses to remain within that approximate range, on an annual basis, for the foreseeable future.

Selling, general, and administrative expenses. Selling, general, and administrative expenses for the three months ended June 30, 2020 were $88.7 million, or 18.4 percent of revenue, compared to $113.7 million, or 23.6 percent of revenue for the prior year quarter. Selling, general, and administrative expenses for the six months ended June 30, 2020 were $204.9 million, or 22.0 percent of revenue, compared to $218.2 million, or 23.5 percent of revenue for the six months ended June 30, 2019. Reductions for both the three and six month periods were primarily attributable to decreases in intangible asset amortization, marketing, travel, and deferred compensation expenses.

Restructuring. In the first quarter of 2020, we initiated a strategy-driven restructuring plan, Project Be Ready, to simplify our product portfolio and better align resources with higher growth opportunities while reducing costs. Project Be Ready includes an organizational realignment, targeted workforce reductions, and facility optimization initiatives. All previously approved ongoing restructuring activities that were in process as of January 1, 2020 have been consolidated into Project Be Ready. We recorded net pre-tax restructuring charges for these programs during the three and six months ended June 30, 2020 of $7.7 million and $28.5 million, respectively, which primarily represent employee separation costs and third party and other costs. During the three and six months ended June 30, 2019, we recorded net pre-tax restructuring charges of $3.0 million and $3.6 million, respectively, in connection with other restructuring activities. Refer to Note 19, "Restructuring" of the Notes to the Consolidated Financial Statements for further discussion.

Interest expense. Interest expense for the three months ended June 30, 2020 was $7.0 million, compared to $7.3 million for the prior year quarter. Interest expense for the six months ended June 30, 2020 was $13.9 million, compared to $12.8 million for the six months ended June 30, 2019. Interest expense for the three and six months ended June 30, 2020 and 2019, respectively,

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was primarily associated with the $425 million aggregate principal amount of our 3.125 percent senior unsecured notes and interest on amounts drawn under our credit facility.

Income taxes. Our income tax provision for the three and six months ended June 30, 2020 was $20.6 million and $28.4 million, respectively, which represents an effective tax rate of 25.2 percent and 27.0 percent. Our income tax provision for the three and six months ended June 30, 2019 was $12.0 million and $25.0 million, respectively, which represented an effective tax rate of 20.7 percent and 18.8 percent. The effective tax rate for the three and six months ended June 30, 2020 is higher than the United States Federal tax rate of 21 percent due to non-recognition of the tax benefit of current year operating losses of a foreign subsidiary, an increase in unrecognized tax benefits related to positions taken on prior year tax returns, the addition of valuation allowance against deferred tax assets related to minority investments, and state taxes. These amounts were offset partially by benefits related to US export sales and research credits. The effective tax rate for the three and six months ended June 30, 2019 is lower than the United States Federal tax rate of 21 percent mainly due to a reduction in previously non-deductible interest expense and excess tax benefits from stock compensation, offset partially by state taxes, higher tax rates applied to income earned in certain foreign jurisdictions, and other discrete items.

During the three-month period ending December 31, 2018, the Swedish Tax Authority (“STA”) issued a reassessment of tax for the year ending December 31, 2012 to one of our non-operating subsidiaries in Sweden. The reassessment concerns the use of tax credits applied against capital gains pursuant to European Union Council Directive 2009/133/EC, commonly referred to as the EU Merger Directive, and assesses taxes and penalties totaling approximately $322.2 million (Swedish kronor 3.0 billion). On March 26, 2020, we received an adverse judgment from the First Instance Court of Sweden (the “Court”) regarding the STA's reassessment. We do not agree with the Court’s ruling, continue to believe the STA's arguments in the reassessment are not in accordance with Swedish tax regulations or the treaty for the avoidance of double taxation between Sweden and Belgium, and have appealed the decision to the Administrative Court of Appeal in Stockholm. Consequently, no adjustment to the unrecognized tax benefits has been recorded in relation to this matter. We received a respite from paying the reassessment until after a decision by the Administrative Court of Appeal by putting in place a bank guarantee to secure possible future payment of the tax and interest. There can be no assurance that the appeal will be successful.

During the three-month period ended September 30, 2019, the European Commission announced the opening of a separate review to assess whether an excess profit tax ruling granted by Belgium to one of our international subsidiaries is in breach of European Union state aid rules. We believe all taxes assessed by Belgium have been paid and has not adjusted unrecognized tax benefits in relation to this matter.

On March 27, 2020, the President signed the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act), the bipartisan $2.0 trillion economic relief package aimed at helping American workers and businesses impacted by the coronavirus pandemic. The CARES Act, along with earlier issued IRS guidance, has allowed us to defer certain tax payments. The CARES Act, among other things, also contains numerous other provisions which may benefit us. We continue to assess the effect of the CARES Act and ongoing government guidance related to COVID-19 that may be issued.

Segment Operating Results

In the first quarter of 2020, we completed a business reorganization as part of its "Project Be Ready" restructuring program which resulted in identification of two reportable segments (Industrial Technologies and Defense Technologies). We commenced operating and reporting under the new organization structure effective January 1, 2020. See Note 17, “Operating Segments and Related Information” of the Notes to the Consolidated Financial Statements for a description of each operating segment, including the types of products and services from which each operating segment derives its revenues. See Note 19, “Restructuring” for further information on Project Be Ready.

Industrial Technologies Segment

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

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Revenue	$	300.2		$	284.5		$	576.6		$	555.9
Segment operating income	107.1			71.6			171.4			140.7
Segment operating margin	35.7		%	25.2		%	29.7		%	25.3		%
Total backlog, end of period							$	350.7		$	236.8

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Industrial Technologies revenues for the three months ended June 30, 2020 of $300.2 million increased by $15.7 million, or 5.5 percent compared to the prior year quarter. Industrial Technologies revenues for the six months ended June 30, 2020 of $576.6 million increased by $20.7 million, or 3.7 percent compared to the six months ended June 30, 2019. The revenue increase for both the three and six month periods was primarily attributable to heightened demand for Elevated Skin Temperature ("EST") cameras as a result of the COVID-19 pandemic, partially offset by lower volume in commercial end markets such as maritime and security products.

Segment operating income for the three months ended June 30, 2020 was $107.1 million, or 35.7 percent of revenue, compared to $71.6 million, or 25.2 percent of revenue in the prior year quarter. Segment operating income for the six months ended June 30, 2020 was $171.4 million, or 29.7 percent of revenue, compared to $140.7 million, or 25.3 percent of revenue for the six months ended June 30, 2019. The segment operating margin increase for both the three and six month periods was primarily attributable to the aforementioned higher revenue and associated gross profit volume, favorable product mix, and lower marketing, travel, and deferred compensation expenses. Total backlog at June 30, 2020 was $350.7 million, reflecting an increase of 48.1 percent from the prior year quarter, primarily as a result of award timing and increased orders for EST cameras.

Defense Technologies Segment

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

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Revenue	$	181.8		$	197.5		$	356.3		$	370.9
Segment operating income	41.2			45.8			74.3			92.7
Segment operating margin	22.6		%	23.2		%	20.9		%	25.0		%
Total backlog, end of period							$	562.1		$	572.6

Defense Technologies revenues for the three months ended June 30, 2020 of $181.8 million decreased by $15.7 million, or 7.9 percent compared to the prior year quarter. Defense Technologies revenues for the six months ended June 30, 2020 of $356.3 million decreased by $14.6 million, or 3.9 percent compared to the six months ended June 30, 2019. The revenue decrease for both the three and six month periods was primarily attributable to the completion of certain contracts that contributed to revenue in the prior year periods partially offset by increased volumes for unmanned revenues from the Aeryon Labs and Endeavor Robotics acquisitions.

Segment operating income for the three months ended June 30, 2020 was $41.2 million, or 22.6 percent of revenue, compared to $45.8 million, or 23.2 percent of revenue in the prior year quarter. The segment operating margin decrease was primarily attributable to the lower revenue and associated gross profit volume. Segment operating income for the six months ended June 30, 2020 was $74.3 million, or 20.9 percent of revenue, compared to $92.7 million, or 25.0 percent of revenue for the six months ended June 30, 2019. The segment operating margin decrease was primarily attributable to the lower revenue and associated gross profit volume, product mix and an increase in research and development expenses. Total backlog at June 30, 2020 was $562.1 million, reflecting a decrease of 1.8 percent from the prior year quarter, primarily as a result of order and subsequent deployment timing for a few major programs.

Liquidity and Capital Resources

Overview

At June 30, 2020, we had a total of $333.0 million in cash and cash equivalents, $106.2 million of which was in the United States and $226.8 million was at our foreign subsidiaries, compared to cash and cash equivalents at December 31, 2019 of $284.6 million, of which $77.8 million was in the United States and $206.8 million at our foreign subsidiaries.

At June 30, 2020 and December 31, 2019, we had outstanding debt of $846.7 million and $676.9 million, respectively, which consists of unsecured term loans and borrowings under the revolving credit facility that we entered into during 2019 (collectively referred to as the Credit Agreement) and our 3.125 percent senior unsecured notes due 2021 (the "2021 Notes"). The Credit Agreement contains one financial covenant that requires maintenance of a consolidated total leverage ratio with which we complied at June 30, 2020. On August 3, 2020, we issued and sold $500.0 million in aggregate principal amount of our 2.500 percent unsecured senior notes due 2030 (the “2030 Notes”). The underwritten public offering price of the 2030 Notes equaled 99.807 percent of their aggregate principal amount, yielding an effective rate (including financing fees and other regulatory, legal and processing fees) of approximately 2.650 percent per annum to maturity. Interest on the 2030 Notes is payable semiannually in

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arrears on February 1 and August 1 of each year beginning on February 1, 2021. The 2030 Notes will mature on August 1, 2030, unless earlier redeemed. The proceeds from the sale of the 2030 Notes will be used to redeem the 2021 Notes in full on August 19, 2020, and for general corporate purposes. On July 20, 2020, FLIR issued a notice to holders of the 2021 Notes that it intends to redeem the 2021 Notes in full on August 19, 2020. We expect to record a loss on extinguishment of the debt of approximately $9.0 million in the third quarter of 2020. See Note 13, "Debt" and Note 20, "Subsequent Events" of the Notes to the Consolidated Financial Statements for more details.

We had $10.8 million of letters of credit outstanding under the Credit Agreement at June 30, 2020, which reduced the total availability under the revolving commitments under the Credit Agreement.

On January 11, 2019, a standby letter of credit not to exceed Swedish kronor 2.2 billion, was issued under a new bilateral letter of credit reimbursement agreement ("L/C Agreement") to secure a payment guarantee required by the Swedish Tax Authorities in order to grant the original respite from paying the tax reassessment described in Note 16, "Income Taxes" of the Notes to the Consolidated Financial Statement. The outstanding amount of the L/C Agreement was equivalent to approximately $238.2 million at June 30, 2020. While outstanding amounts under the L/C Agreement do not reduce the available revolving credit from the Credit Agreement, they are considered indebtedness and influence the incremental debt capacity governed by our Credit Agreement covenants. The standby letter of credit was further amended on April 24, 2020 to reflect the new respite.

We paid dividends of $22.3 million and $45.0 million during the three and six months ended June 30, 2020, respectively, and $23.0 million and $46.1 million during the three and six months ended June 30, 2019, respectively.

For the next 12 months, we anticipate that we will be able to meet our liquidity needs, including servicing our debt, through existing cash on hand, cash generated from operations and, if needed, amounts available on our existing credit facilities or financing available from other sources. However, as the impact of the COVID-19 pandemic on the global economy and our operations evolve, we will continue to assess our liquidity needs. An extended period of global supply chain and economic disruption could materially affect our business, results of operations, access to sources of liquidity and financial condition, and could materially adversely impact our customers or suppliers. In the event of a sustained market deterioration, we may need additional liquidity, which would require us to evaluate available alternatives and take appropriate actions. In addition to the acquisitions and divestiture disclosed elsewhere, we have evaluated and expect to continue to evaluate possible transactions. Such transactions may be material and involve cash, our securities or the assumption or incurrence of additional indebtedness.

Summary of Cash Flows

The following table summarizes cash flow information for the periods presented (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Net cash provided by operating activities	$	63,149		$	67,790		$	114,015		$	123,301
Net cash used in investing activities	(14,221		)	(31,541		)	(26,938		)	(622,264		)
Net cash (used in) provided by financing activities	(28,734		)	(52,933		)	(28,903		)	255,381

Net cash provided by operating activities decreased $4.6 million for the three months ended June 30, 2020, when compared to the prior year quarter, primarily due to less favorable timing of working capital changes partially offset by higher net earnings after adding back non-cash adjustments.

Net cash provided by operating activities decreased $9.3 million for the six months ended June 30, 2020, when compared to the prior year, primarily due to lower net earnings after adding back non-cash adjustments.

Net cash used in investing activities decreased $17.3 million for the three months ended June 30, 2020, when compared to the prior year quarter, primarily due to cash paid for business acquisitions in the prior year quarter.

Net cash used in investing activities decreased $595.3 million for the six months ended June 30, 2020, when compared to the prior year, primarily due to cash paid for business acquisitions in the prior year.

Net cash used in financing activities decreased $24.2 million for the three months ended June 30, 2020, when compared to the prior year quarter, primarily due to repurchases of common stock totaling $25.0 million in the prior year quarter.

Net cash used in financing activities increased $284.3 million for the six months ended June 30, 2020, when compared to the prior year, primarily due to lower net proceeds from our revolving credit facility and long-term debt and an increase in repurchases of common stock.

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Off-Balance Sheet Arrangements

As of June 30, 2020, we did 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.

Recently Issued Accounting Pronouncements

For a discussion of these items, see Note 1, "Basis of Presentation and Accounting Standards Updates" of the Notes to the Consolidated Financial Statements.

Critical Accounting Policies and Estimates

Preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Management believes the most complex and sensitive judgments, because of their significance to the consolidated financial statements, result primarily from the need to make estimates about the effects of matters that are inherently uncertain. See Management's Discussion and Analysis and the discussion of critical accounting policies and use of estimates as reported in Note 1, "Nature of Business and Significant Accounting Policies" and Note 15, "Contingencies" of the Notes to the Consolidated Financial Statements included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2019. Actual results in these areas could differ materially from management's estimates. There have been no significant changes in the Company's assumptions regarding critical accounting estimates during the first six months ended June 30, 2020.

Contractual Obligations

There were no material changes to the Company's contractual obligations outside the ordinary course of its business during the six months ended June 30, 2020. The Company borrowed an additional $175.0 million under the revolving credit facility during the six months ended June 30, 2020.

On August 3, 2020, the Company issued and sold $500.0 million in aggregate principal amount of its 2.500 percent unsecured senior notes due 2030 (the “2030 Notes”). The underwritten public offering price of the 2030 Notes equaled 99.807 percent of their aggregate principal amount, yielding an effective rate (including financing fees and other regulatory, legal and processing fees) of approximately 2.650 percent per annum to maturity. Interest on the 2030 Notes is payable semiannually in arrears on February 1 and August 1 of each year beginning on February 1, 2021. The 2030 Notes will mature on August 1, 2030, unless earlier redeemed. The proceeds from the sale of the 2030 Notes are expected to be used to redeem the 2021 Notes in full on August 19, 2020, and for general corporate purposes. On July 20, 2020, FLIR issued a notice to holders of the 2021 Notes that it intends to redeem the 2021 Notes in full on August 19, 2020. The Company expects to record a loss on extinguishment of the debt of approximately $9.0 million in the third quarter of 2020. See Note 13, "Debt" and Note 20, "Subsequent Events" of the Notes to the Consolidated Financial Statements for more details.

Contingencies

See Note 15, "Contingencies" of the Notes to the Consolidated Financial Statements for the disclosure of certain matters by the Company to the United States Department of State Office of Defense Trade Controls Compliance, communications to the Company from the United States Department of Commerce Bureau of Industry and Security, 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, among other matters.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As of June 30, 2020, 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, 2019, other than the following:

Interest Rate Risk

The Company’s exposure to changes in market interest rates relates primarily to interest paid on the Company’s outstanding floating rate debt. The Company’s outstanding floating rate debt consists of amounts borrowed under our revolving loan facility as well as outstanding term loans. These borrowings bear interest at the respective Eurocurrency rate (e.g. LIBOR) plus a scheduled spread. Fluctuations in market interest rates will cause interest expense increases or decreases on such outstanding debt.

As our risk management objectives include mitigating the risk of changes in cash flows attributable to changes in the designated three-month Eurocurrency rate on the Company’s Swedish kronor term loan, the Company entered into a floored interest rate swap for the aggregate notional amount borrowed changes in the cash flows of the interest rate swap is expected to exactly offset the changes in cash flows attributable to fluctuations in the three-month Eurocurrency-based interest payments. The net effect of the swap is to convert the floating interest rate basis to a fixed rate of 0.59 percent.

It is expected that a number of banks currently reporting information used to set LIBOR will stop doing so after 2021. Such an occurrence could cause LIBOR to stop publication or cause LIBOR to no longer be representative of the underlying market. We are engaged in regular dialogue with our lenders and derivatives counterparties to keep apprised of the proposed successor rates in each of the jurisdictions in which we may have a need to execute a financial transaction. Although progress has been made by the various working groups, we believe it is too early to accurately assess an impact of the LIBOR benchmark reform.

See Note 6, "Derivative Financial Instruments - Interest Rate Swap," Note 13, "Debt," and Note 20, "Subsequent Events" of the Notes to the Consolidated Financial Statements and Item 2 of Part I, "Management's Discussion and Analysis of Financial Condition and Results of Operations," for additional information on the Company's debt and interest rate risk.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of June 30, 2020, 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 have been no changes in the Company’s internal control over financial reporting that occurred during the Company’s three months ended June 30, 2020, that have materially affected, or are reasonably likely to materially affect, the Company's 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” of the Notes to the Consolidated Financial Statements for additional information on the Company’s legal proceedings.

ITEM 1A.    RISK FACTORS

The following updates and supplements the risk factors described in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2019 (the “2019 Form 10-K”) and should be read in conjunction with the risk factors in the 2019 Form 10-K. In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in Part I, Item 1A Risk Factors in the 2019 Form 10-K which could materially affect our business, financial condition or future results. The COVID-19 pandemic has heightened, and in some cases manifested, certain of the risks we normally face in operating our business, including those disclosed in the 2019 Form 10-K, and the risk factor disclosure in the 2019 Form 10-K is qualified by the information relating to COVID-19 that is described in this Quarterly Report on Form 10-Q, including the updated risk factor set forth below. Except as set forth below, there have been no material changes from the risk factors previously disclosed under “Risk Factors” in 2019 Form 10-K.

The effects of the COVID-19 outbreak could adversely affect our business, results of operations, and financial condition

On January 30, 2020, the World Health Organization declared the recent coronavirus disease 2019 (“COVID-19”) outbreak as a global health emergency. On March 11, 2020, the World Health Organization raised the COVID-19 outbreak to “pandemic” status. The transmission of COVID-19 and efforts to contain its spread have resulted in international, national and local border closings and other significant travel restrictions and disruptions, significant disruptions to business operations, supply chains and customer activity, event cancellations and restrictions, service cancellations, reductions and other changes, significant challenges in healthcare service preparation and delivery, quarantines and related government actions and policies, as well as general concern and uncertainty that has negatively affected the U.S. and global economy and financial environments. The ultimate impact of the COVID-19 pandemic on our business, results of operations and financial condition is uncertain and difficult to predict, but the COVID-19 pandemic could cause sudden, significant disruptions in our business operations, including the following:

• We have experienced and may continue to experience disruptions in our supply chain from the actions of governments or businesses intended to contain or slow the spread of the virus, such as closing factories or other operations that produce components necessary for our products, quarantining individuals around major commercial hubs, and/or restricting the transportation of goods and services.

• We may experience significant workplace disruptions as a result of employees in our production facilities becoming sick or are quarantined as a result of exposure to COVID-19, which could necessitate closing such facilities or significantly reducing their output for an extended period.

• Delays in inspection, acceptance and payment by our customers, many of whom are working remotely, could also affect our sales and cash flows. Limitations on government operations can also impact regulatory approvals such as export licenses that are needed for international sales and deliveries. In addition, we could experience delays in international orders, many of which require lines of credit from local banks whose operations may be impacted by the COVID-19 pandemic. The Defense Technologies segment has and may continue to experience delays in orders from United States and foreign government agencies, and the Industrial Technologies segment has and may continue to experience a decline in demand for industrial and consumer products that are deemed non-essential. As a result of the COVID-19 crisis, there may be changes in our customers’ priorities and practices, as our customers confront competing budget priorities and more limited resources. These changes may impact current and future programs, government payments and other practices, procurements, and funding decisions.

• Pursuant to government closure orders intended to contain or slow the spread of the virus, we have been required to close certain of our facilities that perform work that is deemed non-essential. One or more additional facilities could become subject to similar orders, which could further disrupt our operations if the work performed at such facilities cannot be conducted remotely, necessitating the furloughing of some of our employees or a permanent reduction in our workforce.

• If we do not respond appropriately to the pandemic, or if customers do not perceive our response to be adequate, we could suffer damage to our reputation and our brands, which could adversely affect our business.

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• Deterioration of worldwide credit and financial markets could adversely affect our ability to obtain financing on favorable terms and continue to meet our liquidity needs.

In addition, across the globe, the response to the pandemic generally has involved a dramatic, rapid reduction in social and economic activity, which has led to a global recession which could be protracted. Therefore, while we have experienced increased demand for certain products that are used to help prevent the virus’s spread (such as our remote skin temperature sensors), the global economic downturn caused by the pandemic could significantly reduce demand for certain other products and services, particularly those with industrial or consumer applications. Furthermore, the resumption of our normal business operations after COVID-19-related interruptions may be delayed or constrained by lingering effects of COVID-19 on our suppliers, third-party service providers, and/or customers.

We continue to monitor the rapidly evolving situation related to COVID-19. The effects described above, alone or taken together, could have a material adverse effect on our business, results of operations, legal exposure, or financial condition. A sustained or prolonged outbreak could exacerbate the adverse impact of such effects. The extent to which COVID-19 impacts our operations or financial results will further depend on future developments, which are highly uncertain and cannot be predicted, including additional actions taken by governments, businesses and individuals to contain the virus or address its impact, new information which may emerge concerning the severity or treatability of the virus, and the extent of the economic downturn resulting from the response to the virus, among others.

We have indebtedness as a result of the issuance of 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, and changes in the rate at which we can obtain indebtedness, any of 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. Certain of our indebtedness is intrinsically linked to benchmark rates that are the subject of global benchmark rate reform. The phasing out of rates, such as LIBOR, is expected to occur by 2021 and the market will transition to new benchmark rates. While we believe our exposure to market risk associated with the discontinuation of LIBOR is limited because our Notes carry a fixed-rate coupon and our unsecured credit facility agreement includes provisions for a successor rate, the consequences of these developments cannot be entirely predicted or reasonably estimated. If LIBOR is no longer available or if our lenders have increased costs due to changes in LIBOR, it could adversely impact our interest expense, results of operations and cash flows.

State of Delaware law and our governing 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 Certificate of Incorporation and Bylaws, including our ability to issue preferred stock without further action by our shareholders, as well as provisions of the General Corporation Law of the State Delaware (the “DGCL”), may discourage, delay or prevent a merger or acquisition that a shareholder may consider favorable.

Our Bylaws designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our shareholders, which could limit our shareholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or agents

Our Bylaws provide that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be, to the fullest extent permitted by law, the sole and exclusive forum for any shareholder (including any beneficial owner) to bring (i) any derivative action or proceeding brought on behalf of the corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer, other employee or shareholder of the corporation to the corporation or the corporation's shareholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL or as to which the DGCL, our Certificate of Incorporation or the Bylaws or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware, or (iv) any action asserting a claim governed by the internal affairs doctrine. Any person or entity purchasing or otherwise acquiring or holding any interest in shares of our capital stock is deemed to have received notice of and consented to the foregoing provisions. This choice of forum provision may limit a shareholder's ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, employees or agents, which may discourage

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such lawsuits against us and our directors, officers, employees and agents. Alternatively, if a court were to find this choice of forum provision inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business, financial condition or results of operations.

Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. As a result, the exclusive forum provision will not apply to suits brought to enforce any duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. In addition, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. As a result, the exclusive forum provision will not apply to suits brought to enforce any duty or liability created by the Securities Act or any other claim for which the federal and state courts have concurrent jurisdiction.

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

During the three months ended June 30, 2020, the Company did not repurchase shares.

All share repurchases are subject to applicable securities laws and are at times and in amounts as management deems appropriate. The repurchases are through open market transactions under the authorization by our Board of Directors on February 7, 2019 to repurchase of up to 15.0 million shares of our outstanding common stock. This authorization will expire on February 7, 2021 and may be suspended or discontinued at any time.

ITEM 3.    DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.    MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

On August 4, 2020, the Board of Directors of the Company, acting upon the recommendation of its Corporate Governance Committee, approved a form of indemnification agreement for its officers and directors. The form of indemnification agreement requires the Company to indemnify and advance expenses to its directors and officers except to the extent prohibited by applicable law and establishes the procedures by which a director or officer may request and receive indemnification or advancement of expenses. The rights of officers and directors under the form of indemnification agreement are in addition to any other rights to which a director or officer may be entitled under the Company’s certificate of incorporation, bylaws and applicable law. 

The foregoing summary description of the form of indemnification agreement is not intended to be complete and is qualified in its entirety by the full text of the form of indemnification agreement filed as Exhibit 10.1 to this Quarterly Report on Form 10-Q and incorporated herein by reference. This disclosure is intended to satisfy the requirements of Item 1.01 of Form 8-K.

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ITEM 6. EXHIBITS

Number	Description
3.1	Certificate of Incorporation, as filed with the Secretary of State of the State of Delaware on May 14, 2020 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on May 21, 2020 (File Number 000-21918)).
3.2	Bylaws, dated May 20, 2020 (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed on May 21, 2020 (File Number 000-21918)).
4.1	Indenture, dated August 3, 2020, between FLIR Systems, Inc. and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 of the FLIR Systems, Inc. Form 8-K filed on August 4, 2020 (File Number 000-21918)).
4.2	First Supplemental Indenture dated as of August 3, 2020, by and between FLIR Systems, Inc. and U.S. Bank National Association (incorporated by reference to Exhibit 4.2 of the FLIR Systems, Inc. Form 8-K filed on August 4, 2020 (File Number 000-21918)).
4.3	Form of 2.500% Note due August 1, 2030 (included in, and incorporated by reference to, Exhibit 4.2 of the FLIR Systems, Inc. Form 8-K filed on August 4, 2020 (File Number 000-21918)).
10.1	Form of Indemnification Agreement for Directors and Executive Officers. (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.
99.1	Plan of Conversion, dated May 12, 2020 (incorporated by reference to Exhibit 99.1 to the Current Report on Form 8-K filed on May 21, 2020 (File Number 000-21918)).
99.2	Articles of Conversion, as filed with the Secretary of State of the State of Oregon on May 13, 2020 (incorporated by reference to Exhibit 99.2 to the Current Report on Form 8-K filed on May 21, 2020 (File Number 000-21918)).
99.3	Certificate of Conversion, as filed with the Secretary of State of the State of Delaware on May 14, 2020 (incorporated by reference to Exhibit 99.3 to the Current Report on Form 8-K filed on May 21, 2020 (File Number 000-21918)).
101.INS	Inline XBRL Instance Document
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

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

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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 August 6, 2020	/s/ Carol P. Lowe
	Carol P. Lowe
	Executive Vice President and Chief Financial Officer
	(Duly Authorized and Principal Financial Officer)

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EX-10.1

Exhibit 10.1

FLIR Systems, Inc.

INDEMNIFICATION AGREEMENT

THIS INDEMNIFICATION AGREEMENT (the “Agreement”) is entered into, effective as of the [ • ] day of [ • ], 20[ • ], by and between FLIR Systems, Inc., a Delaware corporation (the “Company”), and [ • ] (“Indemnitee”).

WHEREAS, it is essential to the Company to retain and attract as directors and officers the most capable persons available;

WHEREAS, Indemnitee is a director and/or officer of the Company;

WHEREAS, both the Company and Indemnitee recognize the risk of litigation and other claims against directors and officers of corporations;

WHEREAS, the certificate of incorporation of the Company requires the Company to indemnify and advance expenses to its directors and officers to the fullest extent permitted under applicable law, and the Indemnitee will serve as a director and/or officer of the Company in part in reliance on the Company’s certificate of incorporation; and

WHEREAS, in recognition of Indemnitee’s need for (i) substantial protection against personal liability based on Indemnitee’s reliance on the aforesaid certificate of incorporation, (ii) specific contractual assurance that the protection promised by the certificate of incorporation will be available to Indemnitee (regardless of, among other things, any amendment to or revocation of the certificate of incorporation or any change in the composition of the Company’s Board of Directors or acquisition transaction relating to the Company) and (iii) an inducement to provide effective services to the Company as a director and/or officer, the Company wishes to provide for (a) the indemnification of and the advancement of expenses to Indemnitee as provided in this Agreement and, subject to the provisions of this Agreement, except to the extent prohibited by applicable law (whether partial or complete), and (b) to the extent insurance is maintained, the continued coverage of Indemnitee under the Company’s directors’ and officers’ liability insurance policies.

NOW, THEREFORE, in consideration of the above premises and of Indemnitee continuing to serve the Company directly or, at its request, with another enterprise, and intending to be legally bound hereby, the parties agree as follows:

1.Certain Definitions:

(a)“Board” shall mean the Board of Directors of the Company.

(b)“Affiliate” shall mean any corporation or other person or entity that directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with, the person specified, including, without limitation, with respect to the Company, any direct or indirect subsidiary of the Company.

(c)A “Change in Control” means (i) the liquidation, dissolution or winding-up of the Company, (ii) the sale, license or lease of all or substantially all of the assets of the Company, or (iii) a share exchange, reorganization, recapitalization, or merger or consolidation of the Company with or into any other corporation or corporations (or other form of business entity) or of any other corporation or corporations (or other form of business entity) with or into the Company, but excluding any merger effected exclusively for the purpose of changing the domicile of the Company; provided, however, that a Change in Control shall not include any of the aforementioned transactions listed in clauses (i), (ii) and (iii) involving the Company or a Subsidiary Corporation in which the holders of shares of the Company voting stock outstanding immediately prior to such transaction or any Affiliate of such holders continue to hold at least a majority, by voting power, of the capital stock or, by a majority, based on fair market value as determined in good faith by the Board, of the assets, in each case in substantially the same proportion, of (x) the surviving or resulting corporation (or other form of business entity), (y) if the surviving or resulting corporation (or other form of business entity) is a wholly owned subsidiary of another corporation (or other form of business entity) immediately following such transaction, the parent corporation (or other form of business entity) of such surviving or resulting corporation (or other form of business entity) or (z) a successor entity holding a majority of the assets of the Company.

(d)“Disinterested Director” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by the Indemnitee.

(e)“Expenses” shall mean any expense, liability or loss, including reasonable attorneys’ fees, judgments, fines, ERISA excise taxes and penalties, amounts paid or to be paid in settlement, any interest, assessments or other charges imposed thereon, any federal, state, local or foreign taxes imposed as a result of the actual or deemed receipt of any payments under this Agreement and all other costs and obligations, paid or incurred in connection with investigating, defending, resolving, being a witness in, participating in (including on appeal) or preparing for any of the foregoing in, any Proceeding relating to any Indemnifiable Event.

(f)“Indemnifiable Event” shall mean any event or occurrence that takes place either prior to or after the execution of this Agreement, related to the fact that Indemnitee is or was a director or officer of the Company or an Affiliate of the Company, or while a director or officer is or was serving at the request of the Company or an Affiliate of the Company as a director, officer, employee, trustee, agent or fiduciary of another foreign or domestic corporation, partnership, joint venture, employee benefit plan, trust or other enterprise or was a director, officer, employee or agent of a foreign or domestic corporation that was a predecessor corporation of the Company or of another enterprise at the request of such predecessor corporation, or related to anything done or not done by Indemnitee in any such capacity.

(g)“Independent Counsel” shall mean a law firm, or a person admitted to practice law in any State of the United States, that is experienced in matters of corporation law and neither presently is, nor in the past three years has been, retained to represent: (i) the Company or the Indemnitee in any matter material to either such party (other than with respect to serving as Independent Counsel (or similar independent legal counsel position) as to matters concerning the rights of Indemnitee under this Agreement, the rights of other indemnitees under similar

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indemnification agreements or the rights of Indemnitee or other indemnitees to indemnification under the Company’s certificate of incorporation or bylaws) or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, “Independent Counsel” shall not include any law firm or person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or the Indemnitee in an action to determine the Indemnitee’s rights under this Agreement. For the avoidance of doubt, “Independent Counsel” also shall not include any law firm or person who represented or advised any entity or person in connection with a Change in Control of the Company.

(h)“Proceeding” shall mean any threatened, pending or completed action, suit or proceeding or any alternative dispute resolution mechanism (including an action by or in the right of the Company or an Affiliate of the Company) or any inquiry, hearing or investigation, whether conducted by the Company or an Affiliate of the Company or any other party or entity (including a government agency), that Indemnitee in good faith believes might lead to the institution of any such action, suit or proceeding, whether civil, criminal, administrative, investigative or other.

(i) “Voting Securities” shall mean any securities of the Company that vote generally in the election of directors.

2.Agreement to Indemnify.

(a)General Agreement. In the event Indemnitee was, is or becomes a party to or witness or other participant in, or is threatened to be made a party to or witness or other participant in, a Proceeding by reason of (or arising in part out of) an Indemnifiable Event, the Company shall indemnify Indemnitee from and against any and all Expenses except to the extent prohibited by law, as the same exists or may hereafter be amended or interpreted (but in the case of any such amendment or interpretation, only to the extent that such amendment or interpretation permits the Company to provide broader indemnification rights than were permitted prior thereto). The parties hereto intend that this Agreement shall provide for indemnification in excess of that expressly permitted by statute, including, without limitation, any indemnification provided by the Company’s certificate of incorporation, its bylaws, vote of its stockholders or disinterested directors or applicable law.

(b)Initiation of Proceeding. Notwithstanding anything in this Agreement to the contrary, Indemnitee shall not be entitled to indemnification pursuant to this Agreement in connection with any Proceeding initiated by Indemnitee against the Company or any director or officer of the Company unless (i) the Company has joined in or the Board has consented to the initiation of such Proceeding, (ii) the Proceeding is one to enforce rights under this Agreement or (iii) the Proceeding is instituted after a Change in Control (other than a Change in Control approved by a majority of the directors on the Board who were directors immediately prior to such Change in Control) and Independent Counsel has approved its initiation. The prohibition of indemnification contained in this subsection 2(b) shall apply to the defense of any counterclaim (except for a compulsory counterclaim by the Indemnitee against the Company for which the Indemnitee shall have rights to indemnification in accordance with the terms of this Agreement), cross-claim, affirmative defense or like claim of the Company in such Proceeding).

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(c)Expense Advances. Subject to Section 5(b), Indemnitee shall be entitled to select counsel to represent him or her and to select experts and consultants to be used in his or her defense. In selecting counsel, experts and consultants, Indemnitee shall consider whether his or her interests reasonably permit him or her to retain such persons along with other indemnitees; provided, however, that this Agreement shall not require such joint retentions. In the event Indemnitee was, is or becomes a party to or witness or other participant in, or is threatened to be made a party to or witness or other participant in, a Proceeding by reason of (or arising in part out of) an Indemnifiable Event, the Company shall, prior to the final disposition of a Proceeding, advance to Indemnitee any and all Expenses incurred in connection with such Proceeding (an “Expense Advance”) within thirty (30) calendar days after the receipt by the Company of a written request for such advance or advances from time to time. Such written request shall include or be accompanied by a statement or statements reasonably evidencing the Expenses incurred by or on behalf of the Indemnitee and for which advancement is requested. The Indemnitee shall qualify for such Expense Advances upon the execution and delivery to the Company of this Agreement which shall constitute an undertaking providing that the Indemnitee undertakes to repay such Expense Advances if and to the extent that it is ultimately determined by a court of competent jurisdiction in a final judgment, not subject to appeal, that Indemnitee is not entitled to be indemnified by the Company. Indemnitee’s obligation to reimburse the Company for Expense Advances shall be unsecured and no interest shall be charged thereon. This Section 2(c) shall not apply to any claim made by Indemnitee for which indemnity is excluded pursuant to Section 2(b) or 2(f).

(d)Mandatory Indemnification. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee has been successful on the merits or otherwise in defense of any Proceeding relating in whole or in part to an Indemnifiable Event or in defense of any issue or matter therein, Indemnitee shall be indemnified against all Expenses incurred in connection therewith.

(e)Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of Expenses, but not, however, for the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion thereof to which Indemnitee is entitled.

(f)Prohibited Indemnification. No indemnification pursuant to this Agreement shall be paid by the Company on account of any Proceeding in which a final judgment is rendered against Indemnitee or Indemnitee enters into a settlement, in each case (i) for an accounting of profits made from the purchase or sale by Indemnitee of securities of the Company pursuant to the provisions of Section 16(b) of the Exchange Act of 1934, as amended (the “Exchange Act”) or similar provisions of any federal, state or local laws; (ii) for which payment has actually been made to or on behalf of Indemnitee under any insurance policy or other indemnity provision, except with respect to any excess beyond the amount paid under any insurance policy or other indemnity provision; or (iii) for which payment is prohibited by law. Notwithstanding anything to the contrary stated or implied in this Section 2(f), indemnification pursuant to this Agreement relating to any Proceeding against Indemnitee for an accounting of profits made from the purchase or sale by Indemnitee of securities of the Company pursuant to the provisions of Section 16(b) of the Exchange Act or similar provisions of any federal, state or local laws shall not be prohibited if Indemnitee

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ultimately establishes in any Proceeding that no recovery of such profits from Indemnitee is permitted under Section 16(b) of the Exchange Act or similar provisions of any federal, state or local laws. With respect to subpart (ii) of this subparagraph, the Company shall make indemnification payments during the time periods otherwise required by this Agreement if payments by the insurance carrier(s) have not previously been made; and to the extent the carrier(s) later make payments, Indemnitee will transfer or assign those payments to the Company.

3.Indemnification Process and Appeal.

(a)To obtain indemnification under this Agreement, the Indemnitee shall submit to the Company (following the final disposition of the applicable Proceeding) a written request for indemnification, including therein or therewith, except to the extent previously provided to the Company in connection with a request or requests for advancement pursuant to Section 2(c), a statement or statements reasonably evidencing all Expenses incurred or paid by or on behalf of the Indemnitee and for which indemnification is requested. The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board in writing that the Indemnitee has requested indemnification.

(b)Upon written request by the Indemnitee for indemnification pursuant to the first sentence of Section 3(a), if required by applicable law and to the extent not otherwise provided pursuant to the terms of this Agreement, a determination with respect to the Indemnitee’s entitlement to indemnification shall be made in the specific case as follows: (i) if a Change in Control shall have occurred and if so requested in writing by the Indemnitee, by Independent Counsel in a written opinion to the Board; or (ii) if a Change in Control shall not have occurred (or if a Change in Control shall have occurred but the Indemnitee shall not have requested that indemnification be determined by Independent Counsel as provided in clause (i) of this Section 3(b), (A) by a majority vote of the Disinterested Directors, even though less than a quorum of the Board, (B) by a committee of Disinterested Directors designated by majority vote of the Disinterested Directors, even though less than a quorum of the Board, (C) if there are no such Disinterested Directors or, if such Disinterested Directors so direct, by Independent Counsel in a written opinion to the Board or (D) by the Company’s stockholders in accordance with applicable law. Notice in writing of any determination as to the Indemnitee’s entitlement to indemnification shall be delivered to the Indemnitee promptly after such determination is made, and if such determination of entitlement to indemnification has been made by Independent Counsel in a written opinion to the Board, then such notice shall be accompanied by a copy of such written opinion. If it is determined that the Indemnitee is entitled to indemnification, then payment to the Indemnitee of all amounts to which the Indemnitee is determined to be entitled shall be made within twenty (20) calendar days after such determination and, in no event, not later than sixty (60) calendar days after the Indemnitee’s written request for indemnification. If it is determined that the Indemnitee is not entitled to indemnification, then the written notice to the Indemnitee (or, if such determination has been made by Independent Counsel in a written opinion, the copy of such written opinion delivered to the Indemnitee) shall disclose the basis upon which such determination is based. The Indemnitee shall cooperate with the person, persons or entity making the determination with respect to the Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information that is not privileged or otherwise protected from

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disclosure and that is reasonably available to the Indemnitee and reasonably necessary to determine whether and to what extent the Indemnitee is entitled to indemnification.

(c)If the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 3(b), the Independent Counsel shall be selected as provided in this Section 3(c). If a Change in Control shall not have occurred (or if a Change in Control shall have occurred but the Indemnitee shall not have requested that indemnification be determined by Independent Counsel as provided in clause (i) of Section 3(b)), then the Independent Counsel shall be selected by the Board, and the Company shall give written notice to the Indemnitee advising the Indemnitee of the identity of the Independent Counsel so selected. If a Change in Control shall have occurred and the Indemnitee shall have requested that indemnification be determined by Independent Counsel, then the Independent Counsel shall be selected by the Indemnitee (unless the Indemnitee shall request that such selection be made by the Board, in which event the preceding sentence shall apply), and the Indemnitee shall give written notice to the Company advising it of the identity of the Independent Counsel so selected. In either event, the Indemnitee or the Company, as the case may be, may, within ten (10) calendar days after such written notice of selection has been given, deliver to the Company or to the Indemnitee, as the case may be, a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the law firm or person so selected does not meet the requirements of “Independent Counsel” as defined in Section 1, and the objection shall set forth the basis of such assertion. Absent a proper and timely objection, the person so selected shall act as Independent Counsel. If such written objection is so made and substantiated, the law firm or person so selected may not serve as Independent Counsel unless and until such objection is withdrawn or the Delaware Chancery Court or another court of competent jurisdiction in the State of Delaware has determined that such objection is without merit. If the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 3(b) and, following the expiration of twenty (20) calendar days after submission by the Indemnitee of a written request for indemnification pursuant to Section 3(a), Independent Counsel shall not have been selected, or an objection thereto has been made and not withdrawn, then either the Company or the Indemnitee may petition the Delaware Chancery Court or other court of competent jurisdiction in the State of Delaware for resolution of any objection that shall have been made by the Company or the Indemnitee to the other’s selection of Independent Counsel and/or for appointment as Independent Counsel of a law firm or person selected by such court (or selected by such person as the court shall designate), and the law firm or person with respect to whom all objections are so resolved or the law firm or person so appointed shall act as Independent Counsel under Section 3(b). If the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 3(b), then the Company agrees to pay the reasonable fees and expenses of such Independent Counsel and to fully indemnify and hold harmless such Independent Counsel against any and all Expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.

(d)Suit to Enforce Rights. If Indemnitee has not received full indemnification or Expense Advances within sixty (60) or thirty (30) calendar days, respectively, after making a demand in accordance with Section 3(a), or if Indemnitee contends that Company has not performed other obligations required by this Agreement, or if Company has not provided consents on counsel selection, settlement or any other issue as described in this Agreement, Indemnitee may enforce his

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or her rights under this Agreement by commencing litigation in any court in the State of Delaware having subject matter jurisdiction thereof seeking a determination of the issue by the court or challenging any determination by the Company (including by its directors, Independent Counsel or its stockholders) or any aspect thereof. The Company hereby consents to service of process and to appear in any such proceeding. Any determination by the Company (including by its directors, Independent Counsel or its stockholders) not challenged by the Indemnitee shall be binding on the Company and Indemnitee. The Company shall be precluded from asserting in any such proceeding that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court that the Company is bound by all the provisions of this Agreement. The remedy provided for in this Section 3 shall be in addition to any other remedies available to Indemnitee at law or in equity. Company and Indemnitee may, by a written agreement signed by Company and Indemnitee, agree to a different method to resolve any disagreement concerning Indemnitee’s rights, unless resolution by a court is required by law.

(e)Defense to Indemnification, Burden of Proof, and Presumptions. It shall be a defense to any action brought by Indemnitee against the Company to enforce this Agreement (other than an action brought to enforce a claim for Expenses incurred in defending a Proceeding in advance of its final disposition) that it is not permissible under applicable law for the Company to indemnify Indemnitee for the amount claimed. In connection with any such action, or any determination by the Company (including by its directors, Independent Counsel or its stockholders) or otherwise, as to whether Indemnitee is entitled to be indemnified, or is entitled to an Expense Advance, the burden of proving such a defense shall be on the Company and it shall be presumed that the Indemnitee is entitled to indemnification or to an Expense Advance, as the case may be. Neither the failure of the Company (including by its directors, Independent Counsel or its stockholders) to have made a determination prior to the commencement of such action by Indemnitee that indemnification of the claimant is proper under the circumstances because Indemnitee has met the standard of conduct set forth in applicable law, nor an actual determination by the Company (including by its directors, Independent Counsel or its stockholders) that the Indemnitee is not entitled to Indemnification or an Expense Advance or has not met the applicable standard of conduct, shall be a defense to the action or create a presumption that the Indemnitee has not met the applicable standard of conduct. Neither such failure to have made the determination, nor an actual determination that the Indemnitee is not entitled to indemnification or an Expense Advance shall be admissible for any purposes in any such proceeding. For purposes of any determination of good faith under any applicable standard of conduct, Indemnitee shall be deemed to have acted in good faith if Indemnitee relied on the records or books of account of the Company, including financial statements, or on information supplied to Indemnitee by the officers of the Company in the course of their duties, or on the advice of legal counsel for the Company or the Board or counsel selected by any committee of the Board or on information or records given or reports made to the Company by an independent certified public accountant or by an appraiser, investment banker or other expert selected with reasonable care by the Company or the Board or any committee of the Board. The provisions of the preceding sentence shall not be deemed to be exclusive or to limit in any way the other circumstances in which the Indemnitee may be deemed to have met the applicable standard of conduct. The knowledge and/or actions, or failure to act, or any director, officer, agent or employee of the Company shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.

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4.Indemnification for Expenses Incurred in Enforcing Rights. The Company shall, within sixty (60) calendar days of demand therefore, indemnify Indemnitee against any and all reasonable Expenses that are incurred by Indemnitee in connection with any action brought by Indemnitee for: (i) indemnification or Expense Advances under this Agreement or any other agreement or under applicable law or the Company’s certificate of incorporation or bylaws now or hereafter in effect relating to indemnification for Indemnifiable Events, or to enforce any other rights under this Agreement; and/or (ii) recovery under directors’ and officers’ liability insurance policies maintained by the Company; but only in the event that Indemnitee ultimately is determined to be entitled to such indemnification, Expense Advance or other rights, or insurance recovery, as the case may be. In addition, the Company shall, if so requested by Indemnitee, advance the foregoing Expenses to Indemnitee, subject to and in accordance with Section 2(c).

If Company and Indemnitee disagree about whether Expenses described in this Section 4 are reasonable, the issue shall first be presented to Independent Counsel, whose opinion shall be binding on Company. If Indemnitee disagrees with the opinion of Independent Counsel, he or she may file a lawsuit in an appropriate court in Delaware seeking a decision; provided, however, that Indemnitee and Company may agree in writing to an alternative method to resolve the disagreement.

5.Notification and Defense of Proceeding.

(a)Notice. Promptly after receipt by Indemnitee of notice of the commencement of any Proceeding, Indemnitee shall, if a claim in respect thereof is to be made against the Company under this Agreement, notify the Company of the commencement thereof; but the omission so to notify the Company will not relieve the Company from any liability that it may have to Indemnitee, except as provided in Section 5(c).

(b)Defense. With respect to any Proceeding as to which Indemnitee notifies the Company of the commencement thereof, the Company will, if authorized by law and applicable procedural rules, be entitled to participate in the Proceeding at its own expense. Except as otherwise provided below, the Company may assume the defense thereof with counsel reasonably satisfactory to Indemnitee. If requested by Indemnitee, such counsel shall have substantial experience representing people in Indemnitee’s position in Proceedings of the type at issue. After notice from the Company to Indemnitee of its election to assume the defense of any Proceeding, the Company shall not be liable to Indemnitee under this Agreement or otherwise for any Expenses subsequently incurred by Indemnitee for the defense of such Proceeding except as provided below. Indemnitee shall have the right to employ legal counsel in such Proceeding, but all Expenses related thereto incurred after notice from the Company of its assumption of the defense shall be at Indemnitee’s expense unless: (i) the employment of legal counsel by Indemnitee has been authorized by the Company, (ii) Indemnitee has reasonably determined that there may be a conflict of interest between Indemnitee and the Company in the defense of the Proceeding, (iii) after a Change in Control, the employment of counsel by Indemnitee has been approved by the Independent Counsel or (iv) the Company shall not in fact have employed counsel to assume the defense of such Proceeding, in each of which cases all Expenses of the Proceeding shall be borne by the Company. The Company shall not be entitled to assume the defense of any Proceeding brought by or on behalf of the Company,

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or as to which Indemnitee shall have made the determination provided for in (ii) above or under the circumstances provided for in (i) and (i) above.

If the Company assumes the defense, as described above, Indemnitee’s right to indemnification for settlement or liability (as opposed to defense costs) shall be determined by the rules set forth for indemnification in this Agreement. By assuming the defense, the Company does not assume responsibility for indemnification for liability or settlement if such indemnification is not otherwise available.

If Indemnitee and the Company disagree about whether Indemnitee should have his or her own lawyer, expert or consultant, such dispute shall first be presented to the Independent Counsel. The determination of the Independent Counsel shall be binding on the Company; but if Indemnitee disagrees with the determination he or she may commence an action in an appropriate Delaware court to seek a judicial determination of the issue..

(c)    Settlement of Claims. The Company shall not be liable to indemnify Indemnitee under this Agreement or otherwise for any amounts paid in settlement of any Proceeding effected without the Company’s written consent, such consent not to be unreasonably withheld; provided, however, that if a Change in Control has occurred, the Company shall be liable for indemnification of Indemnitee for amounts paid in settlement if the Independent Counsel has approved the settlement. The Company shall not settle any Proceeding in any manner that would impose any penalty or limitation on Indemnitee without Indemnitee’s written consent. The Company shall not be liable to indemnify the Indemnitee under this Agreement with regard to any judicial award if the Company was not given a reasonable and timely opportunity as a result of Indemnitee's failure to provide notice, at its expense, to participate in the defense of such action, and the lack of such notice materially prejudiced the Company’s ability to participate in defense of such action. The Company’s liability hereunder shall not be excused if participation in the Proceeding by the Company was barred by this Agreement.

6.Establishment of Trust. In the event of a Change in Control, the Company shall, upon written request by Indemnitee, create a Trust for the benefit of the Indemnitee and from time to time upon written request of Indemnitee shall fund the Trust in an amount sufficient to satisfy any and all Expenses reasonably anticipated at the time of each such request to be incurred in connection with any Proceeding relating to an Indemnifiable Event. The amount or amounts to be deposited in the Trust pursuant to the foregoing funding obligation shall be determined by the Independent Counsel; provided, however, that if Indemnitee disagrees with the determination of the Independent Counsel, Indemnitee may file a lawsuit in an appropriate Delaware court seeking a determination of the issue, as set forth in Sections 3 and 4 hereof. The terms of the Trust shall provide that (i) the Trust shall not be revoked or the principal thereof invaded without the written consent of the Indemnitee, (ii) the Trustee shall advance, within thirty (30) calendar days of a request by the Indemnitee, any and all Expenses to the Indemnitee (and the Indemnitee hereby agrees to reimburse the Trust under the same circumstances for which the Indemnitee would be required to reimburse the Company under Section 2(c) of this Agreement), (iii) the Trust shall continue to be funded by the Company in accordance with the funding obligation set forth above, (iv) the Trustee shall promptly pay to the Indemnitee all amounts for which the Indemnitee shall be entitled to

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indemnification pursuant to this Agreement or otherwise no later than sixty (60) calendar days after notice pursuant to Section 3 and (v) all unexpended funds in the Trust shall revert to the Company upon a final determination by the Independent Counsel or a court of competent jurisdiction, as the case may be, that the Indemnitee has been fully indemnified under the terms of this Agreement. The Trustee shall be chosen by the Indemnitee. Nothing in this Section 6 shall relieve the Company of any of its obligations under this Agreement. All income earned on the assets held in the Trust shall be reported as income by the Company for federal, state, local and foreign tax purposes. The Company shall pay all costs of establishing and maintaining the Trust and shall indemnify the Trustee against any and all expenses (including attorneys’ fees), claims, liabilities, loss and damages arising out of or relating to this Agreement or the establishment and maintenance of the Trust.

7.Non-Exclusivity. The rights of Indemnitee hereunder shall be in addition to any other rights Indemnitee may have under the Company’s certificate of incorporation, bylaws, applicable law or otherwise; provided, however, that this Agreement shall supersede any prior indemnification agreement between the Company and the Indemnitee. To the extent that a change in applicable law (whether by statute or judicial decision) permits greater indemnification than would be afforded currently under the Company’s certificate of incorporation, applicable law or this Agreement, it is the intent of the parties that Indemnitee enjoy by this Agreement the greater benefits so afforded by such change. The rights of Indemnitee under the Company’s certificate of incorporation as they exist as of the date hereof shall not be reduced or limited by any change therein occurring after the date hereof, unless Indemnitee agrees in writing to such reduction or limitation.

8.Liability Insurance. To the extent the Company maintains an insurance policy or policies providing general and/or directors’ and officers’ liability insurance, Indemnitee shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any Company director or officer. The Company shall use its best efforts to maintain such insurance on substantially the same terms and conditions, including limits of liability, as such exist on the effective date of this Agreement.

9.Period of Limitations. No legal action shall be brought and no cause of action shall be asserted by or on behalf of the Company or any Affiliate of the Company against Indemnitee, Indemnitee’s spouse, heirs, executors or personal or legal representatives after the expiration of three (3) years from the date of accrual of such cause of action or such longer period as may be required by state law under the circumstances. Any claim or cause of action of the Company or its Affiliate shall be extinguished and deemed released unless asserted by the timely filing and notice of a legal action within such period; provided, however, that if any shorter period of limitations is otherwise applicable to any such cause of action, the shorter period shall govern.

10.Amendment of this Agreement. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be binding unless in the form of a writing signed by the party against whom enforcement of the waiver is sought, and no such waiver shall operate as a waiver of any other provisions hereof (whether or not similar), nor shall such waiver constitute a continuing waiver. Except as specifically provided herein, no failure to exercise or any delay in exercising any right or remedy hereunder shall constitute a waiver thereof.

- 10 -

11.Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights. However, if Company pursues an action as subrogee and that action leads to further claims against Indemnitee, this Agreement shall apply to such further claims.

12.No Duplication of Payments. The Company shall not be liable under this Agreement to make any payment in connection with any claim made against Indemnitee to the extent Indemnitee has otherwise received an unconditional and non-recoverable payment (under any insurance policy or otherwise) of the amounts otherwise indemnifiable hereunder.

13.Duration of Agreement. This Agreement shall continue until and terminate upon the later of (a) ten (10) years after the date that Indemnitee shall have ceased to serve as a director or officer of the Company or (b) one (1) year after the final disposition of any Proceeding, including any appeal, then pending in respect of which Indemnitee is granted rights of indemnification or advancement of Expenses hereunder and of any proceeding commenced by Indemnitee pursuant to Section 3(d) of this Agreement relating thereto.

14.Binding Effect. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company), assigns, spouses, heirs and personal and legal representatives. The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all, substantially all or a substantial part, of the business and/or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place. The indemnification provided under this Agreement shall continue as to Indemnitee for any action taken or not taken while serving in an indemnified capacity pertaining to an Indemnifiable Event even though Indemnitee may have ceased to serve in such capacity at the time of any Proceeding.

15.Severability. If any provision (or portion thereof) of this Agreement shall be held by a court of competent jurisdiction to be invalid, void or otherwise unenforceable, (a) the remaining provisions shall remain enforceable to the fullest extent permitted by law; (b) such provision or provisions shall be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of this Agreement containing any provision held to be invalid, void or otherwise unenforceable, that is not itself invalid, void or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, void or unenforceable.

16.Contribution. To the fullest extent permissible under applicable law, whether or not the indemnification provided for in this Agreement is available to Indemnitee for any reason

- 11 -

whatsoever, the Company shall pay all or a portion of the amount that would otherwise be incurred by Indemnitee for Expenses in connection with any claim relating to an Indemnifiable Event, as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relative fault of the Company (and its directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s).

17.Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware applicable to contracts made and to be performed in such State without giving effect to its principles of conflicts of laws. The Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or proceeding arising out of or in connection with this Agreement may be brought in the Delaware Court of Chancery, (ii) consent to submit to the jurisdiction of the Delaware Court of Chancery for purposes of any action or proceeding arising out of or in connection with this Agreement, (iii)waive any objection to the laying of venue of any such action or proceeding in the Delaware Court of Chancery, and (iv) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Delaware Court of Chancery has been brought in an improper or inconvenient forum.

18.Notices. All notices, demands and other communications required or permitted hereunder shall be made in writing and shall be deemed to have been duly given if delivered by hand, against receipt or mailed, postage prepaid, certified or registered mail, return receipt requested and addressed to the Company at:

FLIR Systems, Inc.

1201 S. Joyce Street

Suite C006

Arlington, VA 22202

Attention: SVP General Counsel, Secretary, Chief Ethics & Compliance Officer

and to Indemnitee at the address set forth below Indemnitee’s signature hereto.

Notice of change of address shall be effective only when given in accordance with this Section. All notices complying with this Section shall be deemed to have been received on the date of hand delivery or on the third business day after mailing.

19.Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

* * * * *

- 12 -

IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement as of the day specified above.

FLIR SYSTEMS, INC.

a Delaware corporation

By: ___________________________________

Print Name:

Title: President and CEO

INDEMNITEE,

an individual

By: ____________________________________

Address for notices:

FLIR Systems, Inc.

1201 S. Joyce Street

Suite C006

Arlington, VA 22202

- 13 -

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 August 6, 2020	/s/ James J. Cannon
	James J. Cannon
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

I, Carol P. Lowe, 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 August 6, 2020	/s/ Carol P. Lowe
	Carol P. Lowe
	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, 2020 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 August 6, 2020	/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, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Carol P. Lowe, 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 August 6, 2020	/s/ Carol P. Lowe
	Carol P. Lowe
	Chief Financial Officer

XML

Cover Page - shares	6 Months Ended
	Jun. 30, 2020	Jul. 31, 2020
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2020
Document Transition Report	false
Entity File Number	000-21918
Entity Registrant Name	FLIR SYSTEMS, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	93-0708501
Entity Address, Address Line One	27700 SW Parkway Avenue,
Entity Address, City or Town	Wilsonville,
Entity Address, State or Province	OR
Entity Address, Postal Zip Code	97070
City Area Code	503
Local Phone Number	498-3547
Title of 12(b) Security	Common Stock, $0.01 par value
Trading Symbol	FLIR
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		131,121,965
Current Fiscal Year End Date	--12-31
Entity Central Index Key	0000354908
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q2
Amendment Flag	false

XML

CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Income Statement [Abstract]
Revenue	$ 482,015	$ 481,998	$ 932,938	$ 926,734
Cost of Goods and Services Sold	229,815	248,590	461,370	459,465
Gross profit	252,200	233,408	471,568	467,269
Operating expenses:
Research and development	56,012	52,957	109,859	100,637
Selling, general and administrative	88,676	113,713	204,918	218,203
Restructuring expenses	7,702	3,001	28,486	3,610
Total operating expenses	152,390	169,671	343,263	322,450
Earnings from operations	99,810	63,737	128,305	144,819
Interest expense	6,962	7,272	13,923	12,788
Interest income	(127)	(438)	(476)	(1,495)
Other expense (income), net	11,081	(1,220)	9,766	646
Earnings before income taxes	81,894	58,123	105,092	132,880
Income tax provision	20,637	12,005	28,411	25,014
Net earnings	$ 61,257	$ 46,118	$ 76,681	$ 107,866
Net earnings per share:
Basic earnings per share (in dollars per share)	$ 0.47	$ 0.34	$ 0.58	$ 0.80
Diluted earnings per share (in dollars per share)	$ 0.47	$ 0.34	$ 0.57	$ 0.79
Weighted Average Number of Shares Outstanding, Basic	130,831	135,519	132,213	135,530
Weighted Average Number of Shares Outstanding, Diluted	131,687	137,084	133,389	137,105

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Statement of Comprehensive Income [Abstract]
Net earnings	$ 61,257	$ 46,118	$ 76,681	$ 107,866
Other comprehensive income (loss), net of tax:
Fair value adjustment on derivatives instruments designated as hedges (1)	408	(779)	3,161	(1,586)
Other Comprehensive Income (Loss), Available-for-sale Securities Adjustment, Net of Tax, Portion Attributable to Parent	0	4	0	4
Other Comprehensive Income (Loss), Net of Tax	(2,332)	3,889
Foreign currency translation adjustments	(2,740)	4,664	(23,025)	(2,776)
Total other comprehensive income (loss)	(2,332)	3,889	(19,864)	(4,358)
Comprehensive income	$ 58,925	$ 50,007	$ 56,817	$ 103,508

XML

Consolidated Statements of Comprehensive Income (parenthetical) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Statement of Comprehensive Income [Abstract]
Other Comprehensive Income (Loss), Derivative, Excluded Component, Increase (Decrease), Adjustments, Tax	$ (0.1)	$ (0.3)	$ (0.5)	$ (0.5)

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 332,958	$ 284,592
Accounts receivable, net	304,981	318,652
Inventories	433,908	388,762
Prepaid expenses and other current assets	114,429	116,728
Total current assets	1,186,276	1,108,734
Property and equipment, net	255,770	255,905
Deferred income taxes, net	41,393	39,983
Goodwill	1,340,989	1,364,596
Intangible assets, net	222,123	247,514
Other assets	110,746	120,809
Total assets	3,157,297	3,137,541
Current liabilities:
Accounts payable	147,487	158,033
Deferred revenue	30,319	28,587
Accrued payroll and related liabilities	79,981	72,476
Accrued product warranties	15,887	14,611
Advance payments from customers	14,142	28,005
Accrued expenses	32,892	40,815
Accrued income taxes	24,273	14,735
Other current liabilities	34,721	27,349
Credit facility	191,000	16,000
Long-term debt, current portion	12,465	12,444
Total current liabilities	583,167	413,055
Long-term debt, net of current portion	643,265	648,419
Deferred income taxes	40,405	53,544
Accrued income taxes	57,243	55,514
Other long-term liabilities	82,516	95,576
Shareholders’ equity:
Preferred stock, $0.01 par value, 10,000 shares authorized; no shares issued at June 30, 2020, and December 31, 2019	0	0
Common stock, $0.01 par value, 500,000 shares authorized, 131,106 and 134,394 shares issued at June 30, 2020, and December 31, 2019, respectively, and additional paid-in capital	10,778	16,692
Retained earnings	1,925,732	2,020,686
Accumulated other comprehensive loss	(185,809)	(165,945)
Total shareholders’ equity	1,750,701	1,871,433
Total liabilities and shareholders' equity	$ 3,157,297	$ 3,137,541

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Thousands	Jun. 30, 2020	Dec. 31, 2019
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	131,106	134,394

XML

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY Statement - USD ($) $ in Thousands	Total	Common Stock and Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Earnings (loss)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance at beginning of period	$ 1,876,786	$ 1,355	$ 2,024,523	$ (149,092)
Balance at end of period	1,876,786	1,355	2,024,523	(149,092)
Repurchase of common stock	(24,998)	(16,999)	(7,999)	0
Common stock issued pursuant to stock-based compensation plans, net	8,709	8,709	0	0
Stock-based compensation	8,289	8,289	0	0
Dividends paid	(23,031)	0	(23,031)	0
Other Comprehensive Income (Loss), Net of Tax	(8,247)	0	0	(8,247)
Net earnings	$ 61,748	0	61,748	0
Common Stock, Dividends, Per Share, Cash Paid	$ 0
Net earnings	$ 107,866
Balance at beginning of period	1,902,695	1,354	2,058,680	(157,339)
Adjustment of DTA under ASU 2016-16	3,439	0	3,439	0
Balance at end of period	1,902,695	1,354	2,058,680	(157,339)
Repurchase of common stock	(24,998)	(7,218)	(17,780)	0
Common stock issued pursuant to stock-based compensation plans, net	1,704	1,704	0	0
Stock-based compensation	8,924	8,924	0	0
Dividends paid	(23,033)	0	(23,033)	0
Other Comprehensive Income (Loss), Net of Tax	3,889	0	0	3,889
Net earnings	46,118	0	46,118	0
Balance at beginning of period	1,911,891	1,356	2,063,985	(153,450)
Balance at end of period	1,911,891	1,356	2,063,985	(153,450)
Balance at beginning of period	1,871,433	16,692	2,020,686	(165,945)
Balance at end of period	1,871,433	16,692	2,020,686	(165,945)
Repurchase of common stock	(150,000)	(23,371)	(126,629)	0
Common stock issued pursuant to stock-based compensation plans, net	580	580	0	0
Stock-based compensation	7,403	7,403	0	0
Dividends paid	(22,728)	0	(22,728)	0
Other Comprehensive Income (Loss), Net of Tax	(17,532)	0	0	(17,532)
Net earnings	$ 15,424	0	15,424	0
Common Stock, Dividends, Per Share, Cash Paid	$ 0
Net earnings	$ 76,681
Balance at beginning of period	1,704,580	1,304	1,886,753	(183,477)
Balance at end of period	1,704,580	1,304	1,886,753	(183,477)
Common stock issued pursuant to stock-based compensation plans, net	3,341	3,341	0	0
Stock-based compensation	12,815	12,815	0	0
Dividends paid	(22,278)	0	(22,278)	0
Other Comprehensive Income (Loss), Net of Tax	(2,332)	0	0	(2,332)
Net earnings	61,257	0	61,257	0
Balance at beginning of period	1,750,701	10,778	1,925,732	(185,809)
Balance at end of period	$ 1,750,701	$ 10,778	$ 1,925,732	$ (185,809)

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Adjustments to reconcile net earnings to net cash provided by operating activities:
Net earnings	$ 76,681	$ 107,866
Depreciation and amortization	47,750	48,915
Stock-based compensation	20,887	17,278
Gain (Loss) on Disposition of Assets	3,585	0
Minority interest Impairment Charges	4,803	0
Deferred income taxes	(513)	2,187
Other, net	3,218	(3,620)
Increase (decrease) in cash, net of acquisitions, resulting from changes in:
Accounts receivable	11,263	(19,128)
Inventories	(46,764)	(23,604)
Prepaid expenses and other current assets	1,596	(11,487)
Other assets	5,679	3,612
Accounts payable	(10,480)	26,446
Deferred revenue	1,898	1,863
Accrued payroll and other liabilities	(8,207)	(13,273)
Accrued income taxes	12,116	(7,885)
Other long-term liabilities	(9,497)	(5,869)
Net cash provided by operating activities	114,015	123,301
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment, net	(27,242)	(17,781)
Proceeds from sale of assets	0	2,973
Business acquisitions, net of cash acquired	0	(602,456)
Minority interest and other investments	304	(5,000)
Net cash used in investing activities	(26,938)	(622,264)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from credit facility and long-term debt, including current portion	175,000	723,054
Repayments of credit facility	6,135	378,095
Repurchase of common stock	(150,000)	(49,996)
Dividends paid	(45,006)	(46,064)
Proceeds from shares issued pursuant to stock-based compensation plans	7,309	17,350
Payment, Tax Withholding, Share-based Payment Arrangement	(10,071)	(10,346)
Other financing activities	0	(522)
Net cash (used in) provided by financing activities	(28,903)	255,381
Effect of exchange rate changes on cash and cash equivalents	(9,808)	323
Net increase (decrease) in cash and cash equivalents	48,366	(243,259)
Cash, cash equivalents and restricted cash, beginning of year	284,592	512,144
Cash, cash equivalents and restricted cash, end of period	$ 332,958	$ 268,885

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Basis of Presentation and Significant Accounting Policies

6 Months Ended

Jun. 30, 2020

Accounting Policies [Abstract]

Nature of Business and Significant Accounting Policies

Basis of Presentation and Accounting Standards Updates

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, 2019.

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, 2020.

Recently Adopted Accounting Pronouncements

Financial Accounting Standards Board ("FASB") Accounting Standards Update ("ASU") No. 2016-13, "Measurement of Credit Losses on Financial Instruments" ("ASU 2016-13" or "Topic 326"): Effective January 1, 2020, the Company adopted ASU 2016-13 using a modified-retrospective approach. The standard changes the way entities recognize impairment of many financial assets by requiring immediate recognition of estimated credit losses expected to occur over their remaining life. Adoption of the standard did not have a material impact on the Company's consolidated financial statements.

FASB ASU No. 2018-18, "Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606" ("ASU 2018-18"): Effective January 1, 2020, the Company adopted ASU 2018-18. The standard clarifies that certain transactions between collaborative arrangement participants should be accounted for under ASC 606, when one participant is a customer, and specifies that a distinct good or service is the unit of account for evaluating whether the transaction is with a customer. The standard also provides guidance on presentation of transactions not in the scope of ASC 606. Adoption of the standard did not have a material impact on the Company's consolidated financial statements.

Recently Issued Accounting Pronouncements

In December 2019, the FASB issued ASU No. 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes". The standard simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 including recognizing deferred taxes for investments, performing intra-period allocations and calculating taxes in interim periods. The ASU 2019-12 also improves consistent application of and simplifies GAAP for other areas of Topic 740 by clarifying and amending existing guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. The standard is effective for fiscal years beginning after December 15, 2020. Early adoption is permitted. The Company plans to adopt the standard as of January 1, 2021 and is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting”, which temporarily simplifies the accounting for contract modifications, including hedging relationships, due to the transition from LIBOR and other interbank offered rates to alternative reference interest rates. For example, entities can elect not to remeasure the contracts at the modification date or reassess a previous accounting determination if certain conditions are met. Additionally, entities can elect to continue applying hedge accounting for hedging relationships affected by reference rate reform if certain conditions are met. The new standard was effective upon issuance and generally can be applied to applicable contract modifications through December 31, 2022. The Company is currently evaluating the impact of the transition from LIBOR to alternative reference interest rates as well as the impact it may have on its consolidated financial statements.

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, 2020. 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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Revenue Revenue

6 Months Ended

Jun. 30, 2020

Revenue from Contract with Customer [Abstract]

Revenue

Revenue

Revenue Recognition

The Company designs, markets and sells products primarily as commercial, off-the-shelf products. Certain customers request different system configurations, based on standard options or accessories that the Company offers. Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. The Company regularly enters into contracts that can include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations. In such situations, contract values are allocated to each performance obligation based on its relative estimated standalone selling price. The vast majority of the Company's revenues are recognized at a point in time when goods are transferred to a customer. However, for certain contracts that include highly customized components, if performance does not create an asset with an alternative use and termination for convenience clauses provide an enforceable right to payment for performance completed to date, revenue is recognized over time as the performance obligation is satisfied.

Revenue includes certain shipping and handling costs and is stated net of third-party agency fees. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as fulfillment costs and are included in cost of goods sold. Revenue is recognized net of allowances for returns and net of taxes collected from customers which are subsequently remitted to governmental authorities. The Company's products are sold with warranty provisions that require it to remedy deficiencies in quality or performance of the Company's products over a specified period of time, generally twelve to twenty-four months, at no cost to its customers. Warranty liabilities are established at the time that revenue is recognized at levels that represent the Company's estimate of the costs that will be incurred to fulfill those warranty requirements. Provisions for estimated losses on sales or related receivables are recorded when identified. Service revenue is deferred and recognized over the contract period, as is the case for extended warranty contracts, or recognized as services are provided.

See Note 17, "Operating Segments and Related Information - Revenue and Long-Lived Assets by Geographic Area" for information related to the Company’s revenues disaggregated by significant geographical region and operating segment.

Contract Balances

The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables and deferred revenue and advance payments from customers on the Consolidated Balance Sheets. Contract assets and liabilities are reported on a contract-by-contract basis. The Company had no material deferred contract costs recorded on the Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019.

Contract assets: The Company recognizes unbilled receivables as contract assets when the Company has rights to consideration for work completed but has not yet billed at the reporting date. Unbilled receivables are included within accounts receivable, net on the Consolidated Balance Sheets. The balance of unbilled receivables as of June 30, 2020 and December 31, 2019 were $23.3 million and $9.4 million, respectively.

Contract liabilities: The Company records contract liabilities when cash payments are received or due in advance of the Company's performance. Contract liabilities include deferred revenue and advance payments from customers. Contract liabilities are classified as either current or long-term in the Consolidated Balance Sheets based on the timing of when the Company expects to recognize revenue. As of June 30, 2020 and December 31, 2019, contract liability balances totaled $56.6 million and $69.1 million, respectively. These balances included amounts classified as long-term as of June 30, 2020 and December 31, 2019 which were $12.1 million and $12.5 million, respectively, and are included within other long-term liabilities in the accompanying Consolidated Balance Sheets. Approximately $37.8 million of revenue recognized during the six months ended June 30, 2020 was included in the combined contract liability balances as of December 31, 2019.

Remaining Performance Obligations

Remaining performance obligations represent the aggregate transaction price allocated to performance obligations with an original contract term greater than one year which are fully or partially unsatisfied at the end of the period. While the remaining performance obligation disclosure is similar in concept to backlog, the definition of remaining performance obligations excludes contracts that provide the customer with the right to cancel or terminate for convenience with no substantial penalty, even if historical experience indicates the likelihood of cancellation or termination is remote. The Company has elected to exclude contracts with customers with an original term of one year or less from remaining performance obligations while these contracts are included within backlog.

Note 2.         Revenue - (Continued)

Remaining Performance Obligations - (Continued)

As of June 30, 2020, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $245.6 million. The Company expects to recognize revenue on approximately 84 percent of the remaining performance obligations over the next twelve months, and the remainder recognized thereafter.

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Stock-based compensation

6 Months Ended

Jun. 30, 2020

Share-based Payment Arrangement, Noncash Expense [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, as amended (the “2011 Plan”). The Company has discontinued issuing awards out of the 2002 Plan, but previously granted awards under the 2002 Plan remain outstanding.

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. Performance-based restricted stock unit awards granted during the year ended December 31, 2017 were earned based upon the Company's operating margin performance over a three-year period. Performance-based restricted stock unit awards granted during the years ended December 31, 2018 and 2019 may be earned based upon a combination of the Company's revenue and operating performance over a three-year period. Certain shares vested under the performance-based restricted stock unit awards and the market-based restricted stock unit awards must 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.

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,
	2020		2019		2020		2019
Cost of goods sold	$	1,668	$	709	$	2,735	$	1,556
Research and development	2,277		1,951		3,954		3,631
Selling, general and administrative	9,296		6,528		14,198		12,091
Stock-based compensation expense before income taxes	$	13,241	$	9,188	$	20,887	$	17,278

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

	June 30,
	2020		2019
Capitalized in inventory	$	453	$	1,016

As of June 30, 2020, the Company had approximately $70.9 million of total unrecognized stock-based compensation costs, net of estimated forfeitures, to be recognized over a weighted average period of approximately 2.1 years.

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Net Earnings Per Share Net Earnings Per Share (Notes)

6 Months Ended

Jun. 30, 2020

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,
	2020		2019		2020		2019
Numerator for earnings per share:
Net earnings for basic and diluted earnings per share	$	61,257	$	46,118	$	76,681	$	107,866
Denominator for earnings per share:
Weighted average number of common shares outstanding	130,831		135,519		132,213		135,530
Assumed exercise of stock options and vesting of restricted stock awards, net of shares assumed reacquired under the treasury stock method	856		1,565		1,176		1,575
Diluted shares outstanding	131,687		137,084		133,389		137,105

The effect of stock-based compensation awards for the three and six months ended June 30, 2020 that aggregated approximately 1,082,000 and 570,000 shares, respectively, has been excluded for purposes of diluted earnings per share since the effect of their inclusion would have been anti-dilutive. The effect of stock-based compensation awards for the three and six months ended June 30, 2019 that aggregated approximately 52,000 and 192,000 shares, respectively, has 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, 2020

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The Company had approximately $0.7 million of cash equivalents at June 30, 2020 and December 31, 2019, 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 in instruments that are convertible to cash daily. The fair value of the Company’s derivative contracts as of June 30, 2020 and December 31, 2019 are disclosed in Note 6, "Derivative Financial Instruments," and are based on Level 2 inputs. The fair value of the Company's borrowings under the Credit Agreement as described in Note 13, "Debt," as of June 30, 2020 approximates the carrying value. The fair value of the Company’s senior unsecured notes as described in Note 13, "Debt," was $432.3 million and $430.1 million based upon Level 2 inputs at June 30, 2020 and December 31, 2019, respectively. The fair value of observable price changes related to the Company's minority interest equity investments are based on Level 3 inputs. During the three months ended June 30, 2020, the Company recognized impairments of $4.8 million associated with its equity minority investments which are included in other expense (income), net in the Consolidated Statements of Income. The Company does not have any other significant financial assets or liabilities that are measured at fair value.

See the discussion of accounting guidance for fair value measurements and the factors used in determining the fair value of financial assets and liabilities as reported in Note 1, "Nature of Business and Significant Accounting Policies" of the Notes to the Consolidated Financial Statements included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

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Derivative Financial Instruments

6 Months Ended

Jun. 30, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Derivative Financial Instruments

The Company's financial position and results of operations are subject to certain financial market risks. The Company regularly assesses these risks and has established risk management practices designed to mitigate the impact of certain foreign currency exchange rate and interest rate risk exposures. The Company does not engage in speculative trading in any financial market.

Foreign Currency Contracts

The Company uses currency forward contracts, not formally designated as hedges, to manage the consolidated exchange rate risk associated with the remeasurement of certain non-functional currency denominated monetary assets and liabilities primarily by subsidiaries that use U.S. dollars, European euros, Canadian dollars, Swedish kronor, Norwegian kroner, Brazilian real and British pound sterling as their functional currency. Changes in fair value of foreign currency forward contracts are recognized in other (income) expense, net at the end of each reporting period. In general, these gains and losses are offset in the Consolidated Statements of Income by the reciprocal gains and losses from the underlying assets or liabilities which originally gave rise to the exposure. At June 30, 2020, the Company’s foreign currency forward contracts, not formally designated as hedges, had maturities of three months or less.

In addition, the Company manages the risk of changes in the fair value of certain monetary liabilities attributable to changes in exchange rates. The Company manages these risks by using currency forward contracts formally designated and effective as fair value hedges. Hedge effectiveness is generally determined by evaluating the alignment of the hedging instrument's critical terms with the critical terms of the hedged item. The forward points attributable to the hedging instruments are excluded from the assessment of effectiveness and amortized to other expense (income), net using a systematic and rational methodology. Differences between the change in fair value of the excluded component and amounts recognized under the systematic and rational method are recognized in other comprehensive income. The change in fair value of the hedging instruments attributable to the hedged risk is reported in other expense (income), net. The change in fair value of the hedged item attributable to the hedged risk is reported as an adjustment to its carrying value and also included in other expense (income), net. At June 30, 2020, the Company’s foreign currency forward contracts formally designated as fair value hedges had maturities of three years or less.

Interest Rate Swap

The Company's outstanding debt at June 30, 2020 consists of fixed rate notes and an unsecured credit facility consisting of an unsecured revolving loan facility, an unsecured U.S. dollar term loan and an unsecured Swedish kronor term loan, all of which accrue interest at a floating rate. As discussed in Note 13, "Debt," interest expense on the Company's floating rate debt is calculated based on a fixed spread over the applicable Eurocurrency rate (e.g. LIBOR) subject to a floor of zero percent. Therefore, fluctuations in market interest rates will cause interest expense increases or decreases on a given amount of floating rate debt.

The Company is managing its interest rate risk related to certain floating rate debt through an interest rate swap (“swap”) in which the Company receives floating rate payments subject to a floor of zero percent and makes fixed rate payments. The impact of the swap is to fix the floating rate basis for the calculation of interest on the unsecured Swedish kronor term loan at 0.590 percent. The swap is designated and effective as a cash flow hedge with individual swap cash flows recorded as an asset or liability in the Company's Consolidated Balance Sheets at fair value. Hedge effectiveness is generally determined by evaluating the alignment of the hedging instrument's critical terms with the critical terms of the hedged item. Fair value adjustments are recorded as an adjustment to accumulated other comprehensive income. All of the Company's derivative counterparties have investment grade credit ratings. The Company is a party to master netting arrangements that contain features that allow counterparties to net settle amounts arising from multiple separate derivative transactions or net settle in the case of certain triggering events such as a bankruptcy or major default of one of the counterparties to the transaction. The Company has not pledged assets or posted collateral as a requirement for entering into or maintaining derivative positions.

The following table presents the gross notional amounts of outstanding derivative instruments (in thousands):

	June 30, 2020		December 31, 2019
Derivative instruments designated as cash flow hedges:
Interest Rate Swap	$	139,971	$	143,302
Derivative instruments designated as fair value hedges:
Currency Forward Contracts	283,333		340,000
Derivative instruments not formally designated as hedges:
Currency Forward Contracts	188,968		104,835

Note 6.        Derivative Financial Instruments - (Continued)

Interest Rate Swap - (Continued)

The following table presents the balance sheet classification and fair value of derivative instruments (in thousands):

		June 30,		December 31,
	Classification	2020		2019
Derivative instruments designated as cash flow hedges:
Derivative instruments in asset positions:
Interest Rate Swap	Prepaid expense and other current assets	$	740	$	404
Derivative instruments in liability positions:
Interest Rate Swap	Other current liabilities	818		453
Interest Rate Swap	Other long-term liabilities	1,851		1,012
Derivative instruments designated as fair value hedges:
Derivative instruments in asset positions:
Currency forward contracts	Prepaid expenses and other current assets	926		—
Currency forward contracts	Other assets	3,298		—
Derivative instruments in liability positions:
Currency forward contracts	Other current liabilities	—		454
Currency forward contracts	Other long-term liabilities	—		1,189
Derivative instruments not formally designated as hedges:
Derivative instruments in asset positions:
Currency forward contracts	Prepaid expenses and other current assets	1,734		3,010
Derivative instruments in liability positions:
Currency forward contracts	Other current liabilities	430		391

The following table presents the statement of income classification of derivative instruments (in thousands):

		Three Months Ended June 30,						Six Months Ended June 30,
	Classification	2020			2019			2020			2019
Derivative instruments designated as cash flow hedges:
Loss recognized in other comprehensive (income) loss, net of tax	Accumulated other comprehensive loss	$	329		$	779		$	650		$	1,586
Loss reclassified from other comprehensive (income) loss to earnings for the effective portion	Interest expense	104			220			275			220
Derivative instruments designated as fair value hedges:
Loss recognized in earnings for effective portion	Other expense (income), net	23,325			—			559			—
Gain recognized in income for amount excluded from effectiveness testing	Other expense (income), net	(1,049		)	—			(2,188		)	—
Loss (gain) recognized in other comprehensive (income) loss, net of tax	Accumulated other comprehensive loss (income)	59			—			(3,811		)	—
Derivative instruments not formally designated as hedges:
Loss (gain) recognized in earnings	Other expense (income), net	6,113			(583		)	(6,777		)	(292		)

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Accounts Receivable

6 Months Ended

Jun. 30, 2020

Receivables [Abstract]

Accounts Receivable

Accounts Receivable

Accounts receivable are net of an allowance for credit losses of $7.4 million and $6.1 million at June 30, 2020 and December 31, 2019, respectively.

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Inventories

6 Months Ended

Jun. 30, 2020

Inventory Disclosure [Abstract]

Inventories

Inventories

Inventories consist of the following (in thousands):

	June 30,		December 31,
	2020		2019
Raw material and subassemblies	$	239,092	$	224,239
Work-in-progress	62,108		44,344
Finished goods	132,708		120,179
	$	433,908	$	388,762

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Leases

6 Months Ended

Jun. 30, 2020

Leases [Abstract]

Leases

Leases

Operating leases are included in other assets, other current liabilities, and other long-term liabilities on the Consolidated Balance Sheets. The Company does not have any finance leases at June 30, 2020.

Most of the Company’s operating leases are for buildings, warehouses and office space. These leases have remaining lease terms of approximately one year to ten years.

The components of lease expense were as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Operating lease expense	$	3,045	$	2,837	$	6,067	$	5,472
Short-term lease expense	26		327		53		573
Variable lease expense	546		602		1,116		1,116
Total lease expense	$	3,617	$	3,766	$	7,236	$	7,161

Supplemental balance sheet information related to operating leases is as follows (in thousands):

	June 30, 2020		December 31, 2019
Operating lease right-of-use assets	$	30,341	$	35,479
Operating lease liabilities	$	34,016	$	39,291

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Property and Equipment	6 Months Ended
	Jun. 30, 2020
Property, Plant and Equipment [Abstract]
Property and Equipment	Property and Equipment Property and equipment are net of accumulated depreciation of $389.1 million and $370.1 million at June 30, 2020 and December 31, 2019, respectively. Depreciation expense for the three months ended June 30, 2020 and 2019 was $11.2 million and $10.8 million, respectively. Depreciation expense for the six months ended June 30, 2020 and 2019 was $23.0 million and $21.2 million, respectively.

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Goodwill

6 Months Ended

Jun. 30, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

Goodwill

In the first quarter of 2020, the Company completed a business reorganization as part of its “Project Be Ready” restructuring plan which resulted in identification of two reportable segments (Industrial Technologies and Defense Technologies). The Company commenced operating and reporting under the new organization structure effective January 1, 2020. See Note 19, “Restructuring” for further information on Project Be Ready and Note 17, "Operating Segments and Related Information" for additional information on the two new reportable operating segments. Goodwill was allocated to identified reporting units using a relative fair value approach. In conjunction with the change in reportable segments, the Company evaluated goodwill for impairment, both before and after the segment change and determined that goodwill was not impaired.

Note 11. Goodwill - (Continued)

The following table presents changes in the carrying value of goodwill and the activity by reportable segment for the six months ended June 30, 2020 (in thousands):

	Industrial Technologies			Defense Technologies			Consolidated
Balance, December 31, 2019	$	635,899		$	728,697		$	1,364,596
Goodwill from acquisitions	—			(12,617		)	(12,617		)
Currency translation adjustments	(2,478		)	(8,512		)	(10,990		)
Balance, June 30, 2020	$	633,421		$	707,568		$	1,340,989

The Company reviews its goodwill for impairment annually during the third quarter, or more frequently if events or circumstances indicate that the carrying value of a reporting unit exceeds its fair value.

See Note 18, "Business Acquisitions" for additional information on goodwill from acquisitions.

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Intangible Assets	6 Months Ended
	Jun. 30, 2020
Goodwill and Intangible Assets Disclosure [Abstract]
Intangible Assets	Intangible Assets Intangible assets are net of accumulated amortization of $151.0 million and $129.9 million at June 30, 2020 and December 31, 2019, respectively. The aggregate amortization expense for the three months ended June 30, 2020 and 2019 was $11.8 million and $21.1 million, respectively. The aggregate amortization expense for the six months ended June 30, 2020 and 2019 was $23.7 million and $27.0 million, respectively.

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Debt

6 Months Ended

Jun. 30, 2020

Debt Disclosure [Abstract]

Debt

Debt

The Company's debt consists of the following (in thousands):

	June 30,			December 31,
	2020			2019
Unsecured notes	$	425,000		$	425,000
Credit Agreement (term loans)	233,721			239,552
Credit Agreement (revolving credit facility)	191,000			16,000
Unamortized discounts and issuance costs	(2,991		)	(3,689		)
Total debt	$	846,730		$	676,863
Less: Credit facility	191,000			16,000
Less: Long-term debt, current portion	12,465			12,444
Long-term debt, net of current portion	$	643,265		$	648,419

In June 2016, the Company issued $425.0 million aggregate principal amount of its 3.125 percent senior unsecured notes due June 15, 2021 (the “2021 Notes”). The net proceeds from the issuance of the 2021 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 2021 Notes is payable semiannually in arrears on December 15 and June 15. The proceeds from the 2021 Notes were used for general corporate purposes, including working capital and capital expenditure needs, business acquisitions and repurchases of the Company’s common stock.

On March 29, 2019, the Company entered into a Second Amended and Restated Credit Agreement (“Credit Agreement”) with Bank of America, N.A., JPMorgan Chase Bank, N.A., U.S. Bank National Association, Citibank, N.A., MUFG Union Bank, N.A., and the other lenders party thereto. The Credit Agreement provides for a $650.0 million unsecured revolving credit facility, a $100.0 million unsecured term loan facility available in U.S. dollars amortizing at 5.000 percent per annum, and a $150.0 million unsecured term loan facility available in Swedish kronor amortizing at 5.0 percent per annum. The Credit Agreement has a term of five years and matures on March 29, 2024. In connection with the closing of the Credit Agreement, the Company made an initial borrowing of $100.0 million in revolving loans, $100.0 million in term loans in U.S. dollars, and the equivalent of $150.0 million in term loans in Swedish kronor and repaid all outstanding amounts under its prior credit agreement.

Note 13.        Debt - (Continued)

The Company has the right, subject to certain conditions, including approval of additional commitments by qualified lenders, to increase the availability under the revolving credit facility by an additional $200.0 million until March 29, 2024. The Credit Agreement allows the Company 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 from the type and tenor of the borrowing and includes loans based on the published term Eurocurrency rate (e.g. LIBOR) in which the loan is denominated. The Eurocurrency rate loans have a floor of zero percent and an applicable margin that ranges from 1.000 percent to 1.375 percent depending on the Company’s consolidated total leverage ratio. At June 30, 2020, the borrowing rate on the revolving loan was 1.553 percent per annum, the borrowing rate on the U.S. dollar term loan was 1.683 percent per annum and the borrowing rate on the Swedish kronor term loan was 1.444 percent per annum.

The Credit Agreement requires the Company to pay a commitment fee on the amount of unused revolving commitments at a rate, based on our consolidated total leverage ratio, which ranges from 0.125 percent to 0.200 percent of unused revolving commitments. At June 30, 2020, the commitment fee on the amount of unused revolving credit was 0.200 percent per annum. The Credit Agreement contains one financial covenant that requires maintenance of a consolidated total leverage ratio with which the Company was in compliance at June 30, 2020.

The facilities available under the Credit Agreement are unsecured. The Credit Agreement also contains language providing for the adoption of a LIBOR successor rate in anticipation of the possibility of LIBOR benchmark reform, consistent with market practice. The Company is engaged in regular dialogue with its lenders and derivatives counterparties to keep apprised of the proposed successor rates in each of the jurisdictions in which there may have a need to execute a financial transaction. Although progress has been made by the various working groups, the Company believes it is too early to accurately assess any financial impact of the LIBOR benchmark reform.

To manage the interest rate risk arising from the variability in interest expense attributable to amounts drawn under the Swedish kronor term loan facility, the Company entered into a floored interest rate swap with a Swedish kronor notional amount initially equivalent to $150.0 million. The interest rate swap was designated, and effective, as a cash flow hedge.

At June 30, 2020, the Company had $10.8 million of letters of credit outstanding, which reduces the total available revolving credit under the Credit Agreement.

On January 11, 2019, a standby letter of credit, not to exceed Swedish kronor 2.2 billion, was issued under a new bilateral letter of credit reimbursement agreement ("L/C Agreement") to secure a payment guarantee required by the Swedish Tax Authorities in order to grant the original respite from paying the tax reassessment described in Note 16, "Income Taxes." The outstanding amount of the L/C Agreement was equivalent to approximately $238.2 million at June 30, 2020. While outstanding amounts under the L/C Agreement do not reduce the available revolving credit from the Credit Agreement, they are considered indebtedness and influence the incremental debt capacity governed by our Credit Agreement covenants. The standby letter of credit was further amended on April 24, 2020 to reflect the new respite.

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Accrued Product Warranties

6 Months Ended

Jun. 30, 2020

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,
	2020			2019			2020			2019
Accrued product warranties, beginning of period	$	19,809		$	19,058		$	19,143		$	18,583
Amounts paid for warranty services	(1,803		)	(4,354		)	(3,806		)	(7,130		)
Warranty provisions for products sold	2,229			3,793			5,089			6,207
Business acquisition	—			25			—			899
Currency translation adjustments and other	113			19			(78		)	(18		)
Accrued product warranties, end of period	$	20,348		$	18,541		$	20,348		$	18,541
Current accrued product warranties, end of period							$	15,887		$	14,478
Long-term accrued product warranties, end of period							$	4,461		$	4,063

Note 14.        Accrued Product Warranties - (Continued)

The Company generally provides a twelve to twenty-four-month warranty on its products. A provision for the estimated future costs of warranty, based upon historical cost and product performance experience, is recorded when revenue is recognized. Long-term accrued product warranties are included in other long-term liabilities on the Consolidated Balance Sheets.

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Contingencies

6 Months Ended

Jun. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

Contingencies

Contingencies

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

On April 24, 2018, the Company entered into a Consent Agreement with the United States Department of State's Directorate of Defense Trade Controls (“DDTC”) to resolve allegations regarding the unauthorized export of technical data and defense services to dual and third country nationals from certain Company facilities, the failure to properly use and manage export licenses and export authorizations, and failures to report certain payments under 22 CFR Part 130 in potential violation of the International Traffic in Arms Regulation (“ITAR”). The Consent Agreement has a four-year term and provides for: (i) a civil penalty of $30.0 million with $15.0 million of this amount suspended on the condition that the funds have or will be used for Department-approved Consent Agreement remedial compliance measures, (ii) the appointment of an external Special Compliance Official to oversee compliance with the Consent Agreement and the ITAR; (iii) two external audits of the Company’s ITAR compliance program; and (iv) continued implementation of ongoing remedial compliance measures and additional remedial compliance measures related to automated systems and ITAR compliance policies, procedures, and training. During the three-month period ended March 31, 2018, the Company recorded a $15.0 million charge for the portion of the penalty that is not subject to suspension. In April 2018, 2019, and 2020, the Company paid $1.0 million, $3.5 million and $3.5 million, respectively, of the $15.0 million charge and as of June 30, 2020, the remaining amounts payable of $3.5 million and $3.5 million have been recorded in other current liabilities and other long-term liabilities, respectively. The remaining $7.0 million is payable in annual installments of $3.5 million through April 2022. The Company expects recent and future investments in remedial compliance measures will be sufficient to cover the $15.0 million suspension amount.

As part of the Consent Agreement, DDTC acknowledged that the Company voluntarily disclosed certain of the alleged Arms Export Control Act and ITAR violations, which were resolved pursuant to the Consent Agreement, cooperated in the DDTC's review, and instituted a number of compliance program improvements.

In May 2017, the Company submitted an initial notification to DDTC regarding potential violations related to certain export classifications obtained through the commodity jurisdiction process and a final voluntary disclosure in August 2017. The Company also submitted a voluntary self-disclosure regarding the same matter with the United States Department of Commerce Bureau of Industry and Security ("BIS"). This matter remains under review by DDTC, BIS and the Department of Justice ("DOJ"). DDTC and BIS both acknowledged the submissions, and the Company executed tolling agreements for this matter with each of DDTC, BIS and DOJ. The DDTC and DOJ tolling agreements have lapsed; FLIR is in discussion with DOJ on resolving the matter. The Company executed a tolling agreement with BIS, and has extended the agreement, suspending the statute of limitations through September 1, 2020.

In June 2017, BIS informed the Company of additional export licensing requirements that restrict the Company’s ability to sell certain 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 sale without a license or 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. BIS subsequently favorably modified these restrictions to reduce the applicability of the restrictions to sales of FLIR's Tau camera cores (as opposed to finished products containing Tau camera cores) to customers in China not identified on a list maintained by the United States Department of Commerce and persons in a country other than those in the Export Administration Regulations ("EAR") Country Group A:5 (Supplement No. 1 to Part 740 of the EAR). If the Company is found to have violated applicable rules and regulations with respect to customers and limitations on the export and 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.

At this time, based on available information regarding these proceedings, 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.

Note 15.        Contingencies - (Continued)

SkyWatch Product Quality Matters

In March 2016, the Company learned of potential quality concerns with respect to as many as 315 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. The Company identified the cause of these quality issues, notified customers of their option to request repair and modification of their in-field units, and has begun in-field repairs of identified affected 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 on remaining units to be between $3.0 million and $9.6 million. As no single amount within the range is a better estimate than any other amount within the range, the Company has recorded an accrual of $3.0 million in other current liabilities as of June 30, 2020. Factors underlying this estimated range of loss may change from time to time, and actual results may vary significantly from this estimate.

Shareholder Derivative Lawsuit

In June 2020, a shareholder filed a derivative lawsuit in the Court of Chancery for the State of Delaware, Case No. 2020-0464, against the Company, as a nominal defendant, and certain current and former directors of the Company. Pointing to the Company’s 2015 settlement with the United States Securities and Exchange Commission of alleged United States Foreign Corrupt Practices Act violations and 2018 settlement with United States Department of State of alleged export control violations, the complaint alleges that the Company’s directors breached their fiduciary duties by failing to ensure that the Company had internal controls in place that would have prevented the alleged underlying misconduct and these settlements. The complaint also asserts claims for, among other matters, corporate waste and unjust enrichment, and seeks unspecified monetary damages from the individual defendants, injunctive relief, disgorgement of director compensation, and attorneys’ fees and costs. Because the complaint is derivative in nature, it does not seek monetary damages from the Company. However, the Company may be required to advance, and ultimately be responsible for, the legal fees and costs incurred by the individual defendants. The Company expects to file a motion to dismiss in the third quarter of 2020.

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 cannot be predicted with certainty, the Company believes the probability is remote that the outcome of each of these matters 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, 2020

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

Income Taxes

The provision for income taxes was as follows (in thousands, except percentages):

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Income tax provision	$	20,637		$	12,005		$	28,411		$	25,014
Effective tax rate	25.2		%	20.7		%	27.0		%	18.8		%

The effective tax rate for the three and six months ended June 30, 2020 is higher than the United States Federal tax rate of 21.0 percent mainly due to non-recognition of the tax benefit of current year operating losses of a foreign subsidiary, an increase in unrecognized tax benefits related to positions taken on prior year tax returns, the addition of valuation allowance against deferred tax assets related to minority investments, and state taxes. These amounts were offset partially by benefits related to US export sales and research credits.

Note 16.        Income Taxes - (Continued)

As of June 30, 2020 and December 31, 2019, the Company has accrued income tax liabilities of $37.1 million related to the transition tax enacted on December 22, 2017 as part of the Tax Cuts and Jobs Act. Of the amounts accrued, none is expected to be due within one year. The remaining transition tax will not accrue interest and will be paid in annual installments beginning in 2021 through 2024.

The Company has not provided United States, state or foreign income taxes for earnings generated after January 1, 2018 by certain subsidiaries outside the United States as management currently intends to reinvest the earnings in operations and other activities outside of the United States indefinitely. Should the Company subsequently elect to repatriate such foreign earnings, the Company would need to accrue and pay state and foreign income taxes, thereby reducing the amount of our cash. United States taxes would generally not be payable due to changes made by the Tax Cuts and Jobs Act.

As of June 30, 2020, the Company had approximately $23.0 million of unrecognized tax benefits, of which $21.7 million would affect the Company’s effective tax rate if recognized. The Company anticipates approximately $10.9 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, 2020, the Company had $4.6 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 Sheets.

During the three-month period ended December 31, 2018, the Swedish Tax Authority (“STA”) issued a reassessment of tax for the year ending December 31, 2012 to one of the Company's non-operating subsidiaries in Sweden. The reassessment concerns the use of tax credits applied against capital gains pursuant to European Union Council Directive 2009/133/EC, commonly referred to as the EU Merger Directive, and assesses taxes and penalties totaling approximately $322.2 million (Swedish kronor 3.0 billion). On March 26, 2020, the Company received an adverse judgment from the First Instance Court of Sweden (the “Court”) regarding the STA's reassessment. The Company does not agree with the Court’s ruling, continues to believe the STA's arguments in the reassessment are not in accordance with Swedish tax regulations or the treaty for the avoidance of double taxation between Sweden and Belgium, and has appealed the decision to the Administrative Court of Appeal in Stockholm. Consequently, no adjustment to the Company's unrecognized tax benefits has been recorded in relation to this matter. The Company has received a respite from paying the reassessment until after a decision by the Administrative Court of Appeal by putting in place a bank guarantee to secure possible future payment of the tax and interest. There can be no assurance that the Company’s appeal will be successful.

During the three-month period ended September 30, 2019, the European Commission announced the opening of a separate review to assess whether an excess profit tax ruling granted by Belgium to one of the Company's international subsidiaries is in breach of European Union state aid rules. The Company believes all taxes assessed by Belgium have been paid and has not adjusted unrecognized tax benefits in relation to this matter.

Management believes that the Company's recorded tax liabilities are adequate in the aggregate for its income tax exposures.

On March 27, 2020, the President signed the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act), the bipartisan $2.0 trillion economic relief package aimed at helping American workers and businesses impacted by the coronavirus pandemic. The CARES Act, along with earlier issued IRS guidance, has allowed the Company to defer certain tax payments. The CARES Act, among other things, also contains numerous other provisions which may benefit the Company. The Company will continue to assess the effect of the CARES Act and ongoing government guidance related to COVID-19 that may be issued.

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

	Tax Years:
United States Federal	2016-2018
State of California	2015-2018
State of Massachusetts	2015-2018
State of Oregon	2016-2018
Sweden	2012-2018
United Kingdom	2015-2018
Belgium	2012-2018

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Operating Segments and Related Information

6 Months Ended

Jun. 30, 2020

Segment Reporting [Abstract]

Operating Business Units and Related Information

Operating Segments and Related Information

Operating Segments

The Company’s chief operating decision maker ("CODM"), its Chief Executive Officer, evaluates each of its segments’ 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. In the first quarter of 2020, the Company completed a business reorganization as part of its "Project Be Ready" restructuring plan which resulted in identification of two reportable segments (Industrial Technologies and Defense Technologies). The Company commenced operating and reporting under the new organization structure effective January 1, 2020. See Note 19, “Restructuring” for further information on Project Be Ready.

Industrial Technologies Segment. The Industrial Technologies 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, manufactures, and services offerings that image, measure, and analyze thermal energy, gases, and other environmental elements for industrial, commercial, and scientific applications, imaging payloads for Unmanned Aerial Systems ("UAS"), and machine vision cameras. Additionally, the segment develops, manufactures, and services fixed-mounted visible and thermal imaging cameras and related analytics software for perimeter security, critical infrastructure, recreational and commercial maritime, and traffic monitoring and control. Offerings include thermal imaging cameras, analytics software, gas detection cameras, firefighting cameras, process automation cameras, environmental test and measurement devices, security cameras, marine electronics, and traffic cameras.

Defense Technologies Segment. The Defense Technologies 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. The segment also 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. Offerings include airborne, land, maritime, and man-portable multi-spectrum imaging systems, radars, lasers, imaging components, integrated multi-sensor system platforms, CBRNE detectors, nano-class UAS solutions, and services related to these systems. The segment also produces advanced multi-mission unmanned air and ground based systems serving US Department of Defense and Federal government agencies, public safety, and governmental customers in international markets.

The following tables present revenue, segment operating income, and segment assets for the two segments. Segment operating income as reviewed by the CODM is revenue less cost of goods sold and operating expenses, excluding general corporate expenses, separation, transaction, and integration costs, amortization of acquired intangible assets, restructuring expenses and asset impairment charges, and discrete legal and compliance matters. Net accounts receivable, inventories and demonstration assets for the 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.

Segment operating income information is as follows (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Revenue—External Customers:
Industrial Technologies	$	300,198		$	284,489		$	576,613		$	555,875
Defense Technologies	181,817			197,509			356,325			370,859
	$	482,015		$	481,998		$	932,938		$	926,734
Revenue—Intersegments:
Industrial Technologies	$	3,927		$	3,876		$	6,629		$	8,462
Defense Technologies	1,438			1,436			3,273			2,947
Eliminations	(5,365		)	(5,312		)	(9,902		)	(11,409		)
	$	—		$	—		$	—		$	—
Segment operating income:
Industrial Technologies	$	107,137		$	71,633		$	171,402		$	140,652
Defense Technologies	41,155			45,786			74,309			92,676
	$	148,292		$	117,419		$	245,711		$	233,328

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

Operating Segments - (Continued)

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,
	2020			2019			2020			2019
Consolidated segment operating income	$	148,292		$	117,419		$	245,711		$	233,328
Unallocated corporate expenses	(29,026		)	(29,635		)	(65,270		)	(57,925		)
Amortization of purchased intangible assets	(11,754		)	(21,046		)	(23,650		)	(26,974		)
Restructuring expenses	(7,702		)	(3,001		)	(28,486		)	(3,610		)
Consolidated earnings from operations	99,810			63,737			128,305			144,819
Interest and non-operating expenses, net	(17,916		)	(5,614		)	(23,213		)	(11,939		)
Consolidated earnings before income taxes	$	81,894		$	58,123		$	105,092		$	132,880

Unallocated corporate expenses include general corporate expenses, separation, transaction, and integration costs, amortization of acquired intangible assets, restructuring expenses and asset impairment charges, and discrete legal and compliance matters.

A reconciliation of the Company's consolidated segment operating assets to consolidated total assets is as follows (in thousands):

	June 30,		December 31,
	2020		2019
Operating segment assets:
Net accounts receivable, inventories and demonstration assets:
Industrial Technologies	$	402,454	$	405,166
Defense Technologies	366,786		332,639
	$	769,240	$	737,805
Goodwill:
Industrial Technologies	633,421		635,899
Defense Technologies	707,568		728,697
	$	1,340,989	$	1,364,596
Total operating segment assets	$	2,110,229	$	2,102,401
Assets not allocated:
Cash and cash equivalents	$	332,958	$	284,592
Prepaid expenses and other current assets	84,078		86,337
Property and equipment, net	255,770		255,905
Deferred income taxes	41,393		39,983
Intangible assets, net	222,123		247,514
Other assets	110,746		120,809
Total assets	$	3,157,297	$	3,137,541

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

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, 2020						Six Months Ended June 30, 2020
	Industrial Technologies		Defense Technologies		Total		Industrial Technologies		Defense Technologies		Total
United States	$	131,301	$	111,700	$	243,001	$	234,638	$	227,647	$	462,285
Europe	77,831		25,945		$	103,776	143,166		45,421		$	188,587
Asia	60,951		16,214		$	77,165	134,338		28,078		$	162,416
Middle East/Africa	14,788		25,094		$	39,882	32,815		50,222		$	83,037
Canada/Latin America	15,327		2,864		$	18,191	31,656		4,957		$	36,613
	$	300,198	$	181,817	$	482,015	$	576,613	$	356,325	$	932,938

	Three Months Ended June 30, 2019						Six Months Ended June 30, 2019
	Industrial Technologies		Defense Technologies		Total		Industrial Technologies		Defense Technologies		Total
United States	$	134,656	$	134,216	$	268,872	$	268,079	$	243,519	$	511,598
Europe	74,439		25,000		99,439		148,303		51,596		199,899
Asia	53,622		17,548		71,170		95,014		34,934		129,948
Middle East/Africa	5,786		18,815		24,601		15,651		36,222		51,873
Canada/Latin America	15,986		1,930		17,916		28,828		4,588		33,416
	$	284,489	$	197,509	$	481,998	$	555,875	$	370,859	$	926,734

Long-lived assets consist of net property and equipment, net identifiable intangible assets, goodwill and other long-term assets. Long-lived assets by significant geographic locations are as follows (in thousands):

	June 30,		December 31,
	2020		2019
United States	$	1,104,883	$	1,137,375
Europe	416,394		435,024
Other foreign	408,351		416,425
	$	1,929,628	$	1,988,824

Major Customers

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
United States government	$	130,047	$	156,161	$	262,196	$	293,654

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Business Acquisitions

6 Months Ended

Jun. 30, 2020

Business Combinations [Abstract]

Business Acquisition

Business Acquisitions

Endeavor Robotics Holdings, Inc. On March 4, 2019, the Company acquired 100% of the outstanding stock of Endeavor Robotics Holdings, Inc. ("Endeavor"), a privately held developer of tactical unmanned ground vehicles for the global military, public safety, and critical infrastructure markets for approximately $385.9 million in cash. The acquisition enhances the Company’s offerings in unmanned ground systems and expands distribution channels in adjacent markets. During the first quarter of 2020, the Company completed the tax assessment for the short–period return that resulted in a goodwill adjustment of $12.6 million. Accordingly, the Company finalized the purchase price allocation and recorded $102.7 million of identified intangible assets and $271.4 million of goodwill in the Defense Technologies segment.

The final allocation of the purchase price for Endeavor is as follows (in thousands):

Cash acquired	$	6,687
Other tangible assets and liabilities	14,915
Net deferred taxes	(9,776		)
Identified intangible assets	102,740
Goodwill	271,365
Total purchase price	$	385,931

The goodwill of $271.4 million represents intellectual capital and the acquired assembled workforce, none of which qualify for recognition as a separate intangible asset. All of the goodwill presented above is not expected to be deductible for tax purposes.

The Company identified $102.7 million of intangible assets. The following table summarizes the acquired intangible assets and their estimated fair values and estimated useful lives (in thousands, except years):

	Estimated Useful Life	Amount
Developed technology	5.0 years	$	60,400
In-process research and development	9.0 years	28,000
Trademarks and trade name	4.5 years	9,990
Backlog	1.0 year	3,850
Customer contracts	1.0 year	500
		$	102,740

Acquisition-date identifiable intangible assets primarily consist of intangibles derived from developed technology, in-process research and development, trademarks and backlog. Developed technology represents the economic advantage of having certain technologies in place that lower manufacturing and operating costs and drive higher margins. In-process research and development consist of proprietary robot technology. Trademarks provide value to the marketing or promotion of an entity and its products or services. 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.

The developed technology and in-process research and development were valued using the income approach and relief from royalty method. The trade names and backlog were valued using an income approach method.

New England Optical Systems, Inc. On May 1, 2019, the Company acquired 100% of the outstanding stock of New England Optical Systems, Inc., a privately-held engineering and manufacturing company engaged in the design and production of infrared optical assemblies. The transaction consideration included a $21.9 million cash payment with up to an additional $12.0 million in deferred compensation payable over a two-year period. During the first quarter of 2020, the Company finalized the purchase price allocation and concluded that there were no changes to the previously recorded $6.4 million of identified intangible assets and $14.0 million of goodwill in the Industrial Technologies segment as presented in Note 20, "Business Acquisitions and Divestitures" of the Notes to the Consolidated Financial Statements included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2019. All of the goodwill is expected to be deductible for tax purposes.

The business acquisitions listed above 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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Restructuring Costs

6 Months Ended

Jun. 30, 2020

Restructuring and Related Activities [Abstract]

Restructuring Costs

Restructuring

In the first quarter of 2020, the Company initiated a strategy-driven restructuring plan, Project Be Ready, to simplify the Company’s product portfolio and better align resources with higher growth opportunities while reducing costs. Project Be Ready includes an organizational realignment, targeted workforce reductions, and facility optimization initiatives. All previously approved ongoing restructuring activities that were in process as of January 1, 2020 have been consolidated into Project Be Ready.

The Company expects to incur total costs of approximately $40.0 million to $55.0 million related to Project Be Ready, including approximately $20.0 million to $25.0 million of employee separation costs, approximately $5.0 million to $10.0 million of facility consolidation expenses, and approximately $15.0 million to $20.0 million of third party and other costs. The Company estimates that a majority of the cumulative pretax costs will be cash outlays related to employee separation, facility consolidation, and third-party expenses and that the costs will continue through 2021.

Restructuring expenses related to Project Be Ready were as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Employee separation costs	$	6,888	$	—	$	17,353	$	—
Lease consolidation expenses	—		—		204		—
Third party and other costs	814		—		10,929		—
Total Restructuring Program Expenses	$	7,702	$	—	$	28,486	$	—

During the three and six months ended June 30, 2020, the Company recognized a total of $7.7 million and $28.5 million, respectively, of expense in connection with Project Be Ready which have been recorded in “Restructuring Expenses” on the Consolidated Statements of Income.

The restructuring liability related to Project Be Ready was as follows (in thousands):

	Employee separation costs			Third party and other costs			Total
Balance at December 31, 2019	$	1,343		$	2,780		$	4,123
Accrual and accrual adjustments	17,353			11,133			28,486
Cash payments	(7,603		)	(13,079		)	(20,682		)
Balance at June 30, 2020	$	11,093		$	834		$	11,927

During the three and six months ended June 30, 2019, the Company recognized a total of $3.0 million and $3.6 million, respectively, of expense in connection with other restructuring activities which have been recorded in “Restructuring Expenses” on the Consolidated Statements of Income.

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Subsequent Events

6 Months Ended

Jun. 30, 2020

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

On August 4, 2020, the Company’s Board of Directors declared a quarterly dividend of $0.17 per share on its common stock, payable on September 4, 2020, to shareholders of record as of the close of business on August 21, 2020. The total cash payment of this dividend will be approximately $22.3 million.

On August 3, 2020, the Company issued and sold $500.0 million in aggregate principal amount of its 2.500 percent unsecured senior notes due 2030 (the “2030 Notes”). The public offering was made pursuant to the Company’s effective shelf registration statement on Form S-3 (Registration No. 333-234452) on file with the Securities and Exchange Commission, including a final prospectus and prospectus supplement filed by the Company on July 22, 2020. The 2030 Notes were issued under a Supplemental Indenture, dated as of August 3, 2020, between FLIR Systems, Inc. and U.S. Bank National Association, as trustee, to an Indenture, dated as of August 3, 2020, between FLIR Systems, Inc. and the trustee.

Note 20.        Subsequent Events - (Continued)

The underwritten public offering price of the 2030 Notes equaled 99.807 percent of their aggregate principal amount, yielding an effective rate (including financing fees and other regulatory, legal and processing fees) of approximately 2.650 percent per annum to maturity. Interest on the 2030 Notes is payable semiannually in arrears on February 1 and August 1 of each year beginning on February 1, 2021. The 2030 Notes will mature on August 1, 2030, unless earlier redeemed. The aggregate net proceeds from the offering were approximately $494.0 million after deducting underwriting discounts and commissions and estimated transaction expenses.

The proceeds from the sale of the Notes will be used to redeem FLIR’s $425.0 million in aggregate principal amount of 3.125 percent notes due June 15, 2021 (the “2021 Notes”), and for general corporate purposes, which may include funding for working capital, investments in our subsidiaries, capital expenditures, acquisitions, and stock repurchases. On July 20, 2020, FLIR issued a notice to holders of the 2021 Notes that it intends to redeem the 2021 Notes in full on August 19, 2020.

The Company expects to record a loss on extinguishment of the debt of approximately $9.0 million in the third quarter of 2020.

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Basis of Presentation and Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2020

Jun. 30, 2019

Accounting Policies [Abstract]

Recently Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements

Financial Accounting Standards Board ("FASB") Accounting Standards Update ("ASU") No. 2016-13, "Measurement of Credit Losses on Financial Instruments" ("ASU 2016-13" or "Topic 326"): Effective January 1, 2020, the Company adopted ASU 2016-13 using a modified-retrospective approach. The standard changes the way entities recognize impairment of many financial assets by requiring immediate recognition of estimated credit losses expected to occur over their remaining life. Adoption of the standard did not have a material impact on the Company's consolidated financial statements.

FASB ASU No. 2018-18, "Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606" ("ASU 2018-18"): Effective January 1, 2020, the Company adopted ASU 2018-18. The standard clarifies that certain transactions between collaborative arrangement participants should be accounted for under ASC 606, when one participant is a customer, and specifies that a distinct good or service is the unit of account for evaluating whether the transaction is with a customer. The standard also provides guidance on presentation of transactions not in the scope of ASC 606. Adoption of the standard did not have a material impact on the Company's consolidated financial statements.

Recently Issued Accounting Pronouncements

In December 2019, the FASB issued ASU No. 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes". The standard simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 including recognizing deferred taxes for investments, performing intra-period allocations and calculating taxes in interim periods. The ASU 2019-12 also improves consistent application of and simplifies GAAP for other areas of Topic 740 by clarifying and amending existing guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. The standard is effective for fiscal years beginning after December 15, 2020. Early adoption is permitted. The Company plans to adopt the standard as of January 1, 2021 and is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements.

Reclassifications [Text Block]

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, 2020. 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 (Tables)

6 Months Ended

Jun. 30, 2020

Share-based Payment Arrangement, Noncash Expense [Abstract]

Share-based Payment Arrangement, Expensed and Capitalized, Amount [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,
	2020		2019		2020		2019
Cost of goods sold	$	1,668	$	709	$	2,735	$	1,556
Research and development	2,277		1,951		3,954		3,631
Selling, general and administrative	9,296		6,528		14,198		12,091
Stock-based compensation expense before income taxes	$	13,241	$	9,188	$	20,887	$	17,278

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

	June 30,
	2020		2019
Capitalized in inventory	$	453	$	1,016

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Net Earnings Per Share Net Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2020

Earnings Per Share [Abstract]

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

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,
	2020		2019		2020		2019
Numerator for earnings per share:
Net earnings for basic and diluted earnings per share	$	61,257	$	46,118	$	76,681	$	107,866
Denominator for earnings per share:
Weighted average number of common shares outstanding	130,831		135,519		132,213		135,530
Assumed exercise of stock options and vesting of restricted stock awards, net of shares assumed reacquired under the treasury stock method	856		1,565		1,176		1,575
Diluted shares outstanding	131,687		137,084		133,389		137,105

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Derivative Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Instruments

The following table presents the gross notional amounts of outstanding derivative instruments (in thousands):

	June 30, 2020		December 31, 2019
Derivative instruments designated as cash flow hedges:
Interest Rate Swap	$	139,971	$	143,302
Derivative instruments designated as fair value hedges:
Currency Forward Contracts	283,333		340,000
Derivative instruments not formally designated as hedges:
Currency Forward Contracts	188,968		104,835

The following table presents the balance sheet classification and fair value of derivative instruments (in thousands):

		June 30,		December 31,
	Classification	2020		2019
Derivative instruments designated as cash flow hedges:
Derivative instruments in asset positions:
Interest Rate Swap	Prepaid expense and other current assets	$	740	$	404
Derivative instruments in liability positions:
Interest Rate Swap	Other current liabilities	818		453
Interest Rate Swap	Other long-term liabilities	1,851		1,012
Derivative instruments designated as fair value hedges:
Derivative instruments in asset positions:
Currency forward contracts	Prepaid expenses and other current assets	926		—
Currency forward contracts	Other assets	3,298		—
Derivative instruments in liability positions:
Currency forward contracts	Other current liabilities	—		454
Currency forward contracts	Other long-term liabilities	—		1,189
Derivative instruments not formally designated as hedges:
Derivative instruments in asset positions:
Currency forward contracts	Prepaid expenses and other current assets	1,734		3,010
Derivative instruments in liability positions:
Currency forward contracts	Other current liabilities	430		391

The following table presents the statement of income classification of derivative instruments (in thousands):

		Three Months Ended June 30,						Six Months Ended June 30,
	Classification	2020			2019			2020			2019
Derivative instruments designated as cash flow hedges:
Loss recognized in other comprehensive (income) loss, net of tax	Accumulated other comprehensive loss	$	329		$	779		$	650		$	1,586
Loss reclassified from other comprehensive (income) loss to earnings for the effective portion	Interest expense	104			220			275			220
Derivative instruments designated as fair value hedges:
Loss recognized in earnings for effective portion	Other expense (income), net	23,325			—			559			—
Gain recognized in income for amount excluded from effectiveness testing	Other expense (income), net	(1,049		)	—			(2,188		)	—
Loss (gain) recognized in other comprehensive (income) loss, net of tax	Accumulated other comprehensive loss (income)	59			—			(3,811		)	—
Derivative instruments not formally designated as hedges:
Loss (gain) recognized in earnings	Other expense (income), net	6,113			(583		)	(6,777		)	(292		)

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Inventories (Tables)

6 Months Ended

Jun. 30, 2020

Inventory Disclosure [Abstract]

Inventories

Inventories consist of the following (in thousands):

	June 30,		December 31,
	2020		2019
Raw material and subassemblies	$	239,092	$	224,239
Work-in-progress	62,108		44,344
Finished goods	132,708		120,179
	$	433,908	$	388,762

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Leases (Tables)

6 Months Ended

Jun. 30, 2020

Leases [Abstract]

Lease Costs

The components of lease expense were as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Operating lease expense	$	3,045	$	2,837	$	6,067	$	5,472
Short-term lease expense	26		327		53		573
Variable lease expense	546		602		1,116		1,116
Total lease expense	$	3,617	$	3,766	$	7,236	$	7,161

Supplemental balance sheet information related to operating leases is as follows (in thousands):

	June 30, 2020		December 31, 2019
Operating lease right-of-use assets	$	30,341	$	35,479
Operating lease liabilities	$	34,016	$	39,291

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Goodwill (Tables)

6 Months Ended

Jun. 30, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Carrying value and the activity

The following table presents changes in the carrying value of goodwill and the activity by reportable segment for the six months ended June 30, 2020 (in thousands):

	Industrial Technologies			Defense Technologies			Consolidated
Balance, December 31, 2019	$	635,899		$	728,697		$	1,364,596
Goodwill from acquisitions	—			(12,617		)	(12,617		)
Currency translation adjustments	(2,478		)	(8,512		)	(10,990		)
Balance, June 30, 2020	$	633,421		$	707,568		$	1,340,989

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Debt Long-Term Debt (Tables)

6 Months Ended

Jun. 30, 2020

Debt Disclosure [Abstract]

Long-term debt

The Company's debt consists of the following (in thousands):

	June 30,			December 31,
	2020			2019
Unsecured notes	$	425,000		$	425,000
Credit Agreement (term loans)	233,721			239,552
Credit Agreement (revolving credit facility)	191,000			16,000
Unamortized discounts and issuance costs	(2,991		)	(3,689		)
Total debt	$	846,730		$	676,863
Less: Credit facility	191,000			16,000
Less: Long-term debt, current portion	12,465			12,444
Long-term debt, net of current portion	$	643,265		$	648,419

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Accrued Product Warranties (Tables)

6 Months Ended

Jun. 30, 2020

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,
	2020			2019			2020			2019
Accrued product warranties, beginning of period	$	19,809		$	19,058		$	19,143		$	18,583
Amounts paid for warranty services	(1,803		)	(4,354		)	(3,806		)	(7,130		)
Warranty provisions for products sold	2,229			3,793			5,089			6,207
Business acquisition	—			25			—			899
Currency translation adjustments and other	113			19			(78		)	(18		)
Accrued product warranties, end of period	$	20,348		$	18,541		$	20,348		$	18,541
Current accrued product warranties, end of period							$	15,887		$	14,478
Long-term accrued product warranties, end of period							$	4,461		$	4,063

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Income Taxes (Tables)

6 Months Ended

Jun. 30, 2020

Income Tax Disclosure [Abstract]

Schedule of Components of Income Tax Expense (Benefit)

The provision for income taxes was as follows (in thousands, except percentages):

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Income tax provision	$	20,637		$	12,005		$	28,411		$	25,014
Effective tax rate	25.2		%	20.7		%	27.0		%	18.8		%

Tax years 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	2016-2018
State of California	2015-2018
State of Massachusetts	2015-2018
State of Oregon	2016-2018
Sweden	2012-2018
United Kingdom	2015-2018
Belgium	2012-2018

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Operating Segments and Related Information (Tables)

6 Months Ended

Jun. 30, 2020

Segment Reporting [Abstract]

Operating Business Unit Information

egment operating income information is as follows (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Revenue—External Customers:
Industrial Technologies	$	300,198		$	284,489		$	576,613		$	555,875
Defense Technologies	181,817			197,509			356,325			370,859
	$	482,015		$	481,998		$	932,938		$	926,734
Revenue—Intersegments:
Industrial Technologies	$	3,927		$	3,876		$	6,629		$	8,462
Defense Technologies	1,438			1,436			3,273			2,947
Eliminations	(5,365		)	(5,312		)	(9,902		)	(11,409		)
	$	—		$	—		$	—		$	—
Segment operating income:
Industrial Technologies	$	107,137		$	71,633		$	171,402		$	140,652
Defense Technologies	41,155			45,786			74,309			92,676
	$	148,292		$	117,419		$	245,711		$	233,328

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

Operating Segments - (Continued)

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,
	2020			2019			2020			2019
Consolidated segment operating income	$	148,292		$	117,419		$	245,711		$	233,328
Unallocated corporate expenses	(29,026		)	(29,635		)	(65,270		)	(57,925		)
Amortization of purchased intangible assets	(11,754		)	(21,046		)	(23,650		)	(26,974		)
Restructuring expenses	(7,702		)	(3,001		)	(28,486		)	(3,610		)
Consolidated earnings from operations	99,810			63,737			128,305			144,819
Interest and non-operating expenses, net	(17,916		)	(5,614		)	(23,213		)	(11,939		)
Consolidated earnings before income taxes	$	81,894		$	58,123		$	105,092		$	132,880

Business unit assets

	June 30,		December 31,
	2020		2019
Operating segment assets:
Net accounts receivable, inventories and demonstration assets:
Industrial Technologies	$	402,454	$	405,166
Defense Technologies	366,786		332,639
	$	769,240	$	737,805
Goodwill:
Industrial Technologies	633,421		635,899
Defense Technologies	707,568		728,697
	$	1,340,989	$	1,364,596
Total operating segment assets	$	2,110,229	$	2,102,401
Assets not allocated:
Cash and cash equivalents	$	332,958	$	284,592
Prepaid expenses and other current assets	84,078		86,337
Property and equipment, net	255,770		255,905
Deferred income taxes	41,393		39,983
Intangible assets, net	222,123		247,514
Other assets	110,746		120,809
Total assets	$	3,157,297	$	3,137,541

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, 2020						Six Months Ended June 30, 2020
	Industrial Technologies		Defense Technologies		Total		Industrial Technologies		Defense Technologies		Total
United States	$	131,301	$	111,700	$	243,001	$	234,638	$	227,647	$	462,285
Europe	77,831		25,945		$	103,776	143,166		45,421		$	188,587
Asia	60,951		16,214		$	77,165	134,338		28,078		$	162,416
Middle East/Africa	14,788		25,094		$	39,882	32,815		50,222		$	83,037
Canada/Latin America	15,327		2,864		$	18,191	31,656		4,957		$	36,613
	$	300,198	$	181,817	$	482,015	$	576,613	$	356,325	$	932,938

	Three Months Ended June 30, 2019						Six Months Ended June 30, 2019
	Industrial Technologies		Defense Technologies		Total		Industrial Technologies		Defense Technologies		Total
United States	$	134,656	$	134,216	$	268,872	$	268,079	$	243,519	$	511,598
Europe	74,439		25,000		99,439		148,303		51,596		199,899
Asia	53,622		17,548		71,170		95,014		34,934		129,948
Middle East/Africa	5,786		18,815		24,601		15,651		36,222		51,873
Canada/Latin America	15,986		1,930		17,916		28,828		4,588		33,416
	$	284,489	$	197,509	$	481,998	$	555,875	$	370,859	$	926,734

Long-lived assets consist of net property and equipment, net identifiable intangible assets, goodwill and other long-term assets. Long-lived assets by significant geographic locations are as follows (in thousands):

	June 30,		December 31,
	2020		2019
United States	$	1,104,883	$	1,137,375
Europe	416,394		435,024
Other foreign	408,351		416,425
	$	1,929,628	$	1,988,824

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,
	2020		2019		2020		2019
United States government	$	130,047	$	156,161	$	262,196	$	293,654

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Business Acquisitions (Tables) - Endeavor [Member]

6 Months Ended

Jun. 30, 2020

Jun. 30, 2019

Business Acquisition [Line Items]

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

The final allocation of the purchase price for Endeavor is as follows (in thousands):

Cash acquired	$	6,687
Other tangible assets and liabilities	14,915
Net deferred taxes	(9,776		)
Identified intangible assets	102,740
Goodwill	271,365
Total purchase price	$	385,931

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

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

	Estimated Useful Life	Amount
Developed technology	5.0 years	$	60,400
In-process research and development	9.0 years	28,000
Trademarks and trade name	4.5 years	9,990
Backlog	1.0 year	3,850
Customer contracts	1.0 year	500
		$	102,740

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Restructuring Costs (Tables)

6 Months Ended

Jun. 30, 2020

Restructuring and Related Activities [Abstract]

Restructuring and Related Costs [Table Text Block]

The restructuring liability related to Project Be Ready was as follows (in thousands):

	Employee separation costs			Third party and other costs			Total
Balance at December 31, 2019	$	1,343		$	2,780		$	4,123
Accrual and accrual adjustments	17,353			11,133			28,486
Cash payments	(7,603		)	(13,079		)	(20,682		)
Balance at June 30, 2020	$	11,093		$	834		$	11,927

Restructuring expenses related to Project Be Ready were as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Employee separation costs	$	6,888	$	—	$	17,353	$	—
Lease consolidation expenses	—		—		204		—
Third party and other costs	814		—		10,929		—
Total Restructuring Program Expenses	$	7,702	$	—	$	28,486	$	—

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Basis of Presentation and Significant Accounting Policies (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Accounting Policies [Abstract]
Right-of-use assets	$ 30,341	$ 35,479
Lease liabilities	$ 34,016	$ 39,291

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Revenue Revenue (Details textual) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2020	Dec. 31, 2019
Revenue from Contract with Customer [Abstract]
Contract assets	$ 23.3	$ 9.4
Contract liabilities	56.6	69.1
Contract with Customer, Liability, Noncurrent	12.1	$ 12.5
Contract liability, revenue recognized	37.8
Remaining performance obligation	$ 245.6
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-07-01
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Remaining performance obligation, expected timing of satisfaction, percent	84.00%
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-07-01
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Remaining performance obligation, expected timing of satisfaction, period	1 year

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Stock-based Compensation (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Stock-based compensation expense	$ 13,241	$ 9,188	$ 20,887	$ 17,278
Cost of Goods Sold [Member]
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Stock-based compensation expese	1,668	709	2,735	1,556
Research and Development Expense [Member]
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Stock-based compensation expese	2,277	1,951	3,954	3,631
Selling, General and Administrative Expenses [Member]
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Stock-based compensation expese	$ 9,296	$ 6,528	$ 14,198	$ 12,091

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Stock-based compensation Stock-based Compensation (Details 1) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Share-based Payment Arrangement, Noncash Expense [Abstract]
Capitalized in inventory	$ 453	$ 1,016

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Stock-based Compensation (Detail textual) $ in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2020 USD ($)	Jun. 30, 2020 USD ($)
Share-based Payment Arrangement, Noncash Expense [Abstract]
Share-based Compensation Arrangement by Share-based Payment Award, Purchase Price of Common Stock, Percent		85.00%
Unrecognized stock-based compensation costs, net of estimated forfeiture	$ 70.9	$ 70.9
Weighted average period of unrecognized stock-based compensation costs, net of estimated forfeiture	2 years 1 month 6 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, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Earnings Per Share [Abstract]
Net Income (loss) Available to Common Stockholders, Basic	$ 61,257	$ 46,118	$ 76,681	$ 107,866
Weighted Average Number of Shares Outstanding, Basic	130,831	135,519	132,213	135,530
Incremental Common Shares Attributable to Dilutive Effect of Share-based Payment Arrangements	856	1,565	1,176	1,575
Weighted Average Number of Shares Outstanding, Diluted	131,687	137,084	133,389	137,105

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Net Earnings Per Share Net Earnings Per Share (Detail textual) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Earnings Per Share [Abstract]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	1,082,000	52,000	570,000	192,000

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Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Minority interest Impairment Charges	$ 4,803	$ 0
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents at fair value	700
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of senior unsecured notes	$ 432,300		$ 430,100

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Derivative Financial Instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Interest Rate Swap
Derivative [Line Items]
Derivative fixed rate	0.59%
Designated as Hedging Instrument | Interest Rate Swap
Derivative [Line Items]
Derivative, Notional Amount	$ 139,971	$ 143,302
Designated as Hedging Instrument | Currency Forward Contracts
Derivative [Line Items]
Derivative, Notional Amount	283,333	340,000
Not Designated as Hedging Instrument | Currency Forward Contracts
Derivative [Line Items]
Derivative, Notional Amount	$ 188,968	$ 104,835

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Balance Sheet Information (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Designated as Hedging Instrument | Prepaid Expenses and Other Current Assets | Interest Rate Swap
Derivative [Line Items]
Derivative Asset	$ 740	$ 404
Designated as Hedging Instrument | Prepaid Expenses and Other Current Assets | Currency Forward Contracts
Derivative [Line Items]
Derivative Asset	926	0
Designated as Hedging Instrument | Other Current Liabilities | Interest Rate Swap
Derivative [Line Items]
Derivative Liability	818	453
Designated as Hedging Instrument | Other Current Liabilities | Currency Forward Contracts
Derivative [Line Items]
Derivative Liability	0	454
Designated as Hedging Instrument | Other Noncurrent Liabilities | Interest Rate Swap
Derivative [Line Items]
Derivative Liability	1,851	1,012
Designated as Hedging Instrument | Other Noncurrent Liabilities | Currency Forward Contracts
Derivative [Line Items]
Derivative Asset	3,298	0
Derivative Liability	0	1,189
Not Designated as Hedging Instrument | Prepaid Expenses and Other Current Assets | Currency Forward Contracts
Derivative [Line Items]
Derivative Asset	1,734	3,010
Not Designated as Hedging Instrument | Other Current Liabilities | Currency Forward Contracts
Derivative [Line Items]
Derivative Liability	$ 430	$ 391

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Income Statement (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Derivative [Line Items]
(Gain) loss recognized in other comprehensive income, net of tax	$ 59	$ 0	$ (3,811)	$ 0
Not Designated as Hedging Instrument | Other Expense (Income), Net
Derivative [Line Items]
(Gain) loss recognized in earnings	6,113	(583)	(6,777)	(292)
Cash Flow Hedging | Designated as Hedging Instrument
Derivative [Line Items]
Loss recognized in other comprehensive income, net of tax	329	779	650	1,586
Cash Flow Hedging | Designated as Hedging Instrument | Interest Expense
Derivative [Line Items]
Loss reclassified from other comprehensive income to earnings for the effective portion	104	220	275	220
Fair Value Hedging | Designated as Hedging Instrument | Other Expense (Income), Net
Derivative [Line Items]
(Gain) loss recognized in earnings for effective portion	23,325	0	559	0
(Gain) loss recognized in income for amount excluded from effectiveness testing	$ (1,049)	$ 0	$ (2,188)	$ 0

XML

Accounts Receivable (Details) - USD ($) $ in Millions	Jun. 30, 2020	Dec. 31, 2019
SEC Schedule, 12-09, Allowance, Credit Loss [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts Receivable, Allowance for Credit Loss	$ 7.4	$ 6.1

XML

Inventories (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Inventory Disclosure [Abstract]
Raw material and subassemblies	$ 239,092	$ 224,239
Work-in-progress	62,108	44,344
Finished goods	132,708	120,179
Total inventories	$ 433,908	$ 388,762

XML

Leases (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Lessee, Lease, Description [Line Items]
Operating lease expense	$ 3,045	$ 2,837	$ 6,067	$ 5,472
Short-term lease expense	26	327	53	573
Variable lease expense	546	602	1,116	1,116
Total lease expense	$ 3,617	$ 3,766	$ 7,236	$ 7,161
Minimum
Lessee, Lease, Description [Line Items]
Remaining lease term	1 year		1 year
Maximum
Lessee, Lease, Description [Line Items]
Remaining lease term	10 years		10 years

XML

Leases - Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Leases [Abstract]
Operating lease right-of-use assets	$ 30,341	$ 35,479
Operating lease liabilities	$ 34,016	$ 39,291

XML

Property and Equipment (Details Textual) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Property, Plant and Equipment [Abstract]
Depreciation	$ 11.2	$ 10.8	$ 23.0	$ 21.2
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment	$ 389.1		$ 389.1		$ 370.1

XML

Goodwill (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2020 USD ($)
Goodwill [Roll Forward]
Beginning Balance	$ 1,364,596
Goodwill, Acquired During Period	(12,617)
Goodwill, Translation Adjustments	(10,990)
Ending Balance	1,340,989
Industrial Technologies
Goodwill [Roll Forward]
Beginning Balance	635,899
Goodwill, Acquired During Period	0
Goodwill, Translation Adjustments	(2,478)
Ending Balance	633,421
Defense Technologies
Goodwill [Roll Forward]
Beginning Balance	728,697
Goodwill, Acquired During Period	(12,617)
Goodwill, Translation Adjustments	(8,512)
Ending Balance	$ 707,568

XML

Intangible Assets Intangible Assets (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Intangible Assets [Abstract]
Finite-Lived Intangible Assets, Accumulated Amortization	$ 151.0		$ 151.0		$ 129.9
Amortization of Intangible Assets	$ 11.8	$ 21.1	$ 23.7	$ 27.0

XML

Debt Long-Term Debt (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Debt Instrument [Line Items]
Long-term Debt, Gross	$ 425,000
Debt Instrument, Unamortized Discount (Premium) and Debt Issuance Costs, Net	2,991	$ 3,689
Long-term Debt	846,730	676,863
Long-term debt, current portion	12,465	12,444
Long-term debt, net of current portion	643,265	648,419
Unsecured notes
Debt Instrument [Line Items]
Long-term Debt, Gross	425,000
Credit Agreement
Debt Instrument [Line Items]
Long-term Debt, Gross	233,721	239,552
Revolving Credit Facility
Debt Instrument [Line Items]
Long-term Debt, Gross	191,000	16,000
Unsecured notes
Debt Instrument [Line Items]
Long-term Debt, Gross	$ 425,000	$ 425,000

XML

Debt (Details texture) - USD ($) $ in Thousands		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Line of Credit Facility [Line Items]
Maximum borrowing capacity		$ 650,000
Net proceeds from credit facility and long-term debt, including current portion		175,000	$ 723,054
Repayments of credit facility		6,135	$ 378,095
Letters of Credit Outstanding, Amount		$ 10,800
Senior unsecured notes, interest rate		3.125%
Line of Credit Facility, Option To Increase Maximum Borrowing Capacity		$ 200,000
Long-term Debt, Gross		$ 425,000
Minimum
Line of Credit Facility [Line Items]
Debt Instrument, Basis Spread on Variable Rate		1.00%
Line of Credit Facility, Commitment Fee Percentage		0.125%
Maximum
Line of Credit Facility [Line Items]
Debt Instrument, Basis Spread on Variable Rate		1.375%
Line of Credit Facility, Commitment Fee Percentage		0.20%
United States of America, Dollars
Line of Credit Facility [Line Items]
Debt Instrument, Interest Rate During Period		1.683%
Swedish Kronor
Line of Credit Facility [Line Items]
Debt Instrument, Interest Rate During Period		1.444%
Term Loan Facility
Line of Credit Facility [Line Items]
Net proceeds from credit facility and long-term debt, including current portion		$ 100,000
Term Loan Facility | United States of America, Dollars
Line of Credit Facility [Line Items]
Senior unsecured notes, issued amount		$ 100,000
Debt instrument, annual amortization (percent)		5.00%
Term Loan Facility | Swedish Kronor
Line of Credit Facility [Line Items]
Senior unsecured notes, issued amount		$ 150,000
Debt instrument, annual amortization (percent)		5.00%
Net proceeds from credit facility and long-term debt, including current portion		$ 150,000
Credit Agreement
Line of Credit Facility [Line Items]
Term of agreement		5 years
Long-term Debt, Gross		$ 233,721		$ 239,552
Credit Agreement | Swedish Kronor
Line of Credit Facility [Line Items]
Long-term Debt, Gross		150,000
Revolving Credit Facility
Line of Credit Facility [Line Items]
Net proceeds from credit facility and long-term debt, including current portion		100,000
Long-term Debt, Gross		191,000		$ 16,000
Standby Letters of Credit
Line of Credit Facility [Line Items]
Letters of Credit Outstanding, Amount		$ 238,200
Three Point One Two Five Percent Senior Unsecured Notes Due June Fifteenth Twenty Twenty Five [Domain]
Line of Credit Facility [Line Items]
Net proceeds from credit facility and long-term debt, including current portion	$ 421,000
Senior unsecured notes, interest rate		3.125%
BANK OF AMERICA, NATIONAL ASSOCIATION [Member]
Line of Credit Facility [Line Items]
Line of Credit Facility, Interest Rate at Period End		1.553%
Line of Credit Facility, Commitment Fee Percentage		0.20%

XML

Accrued Product Warranties (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Movement in Standard Product Warranty Accrual [Roll Forward]
Accrued product warranties, beginning of year	$ 19,809	$ 19,058	$ 19,143	$ 18,583
Amounts paid for warranty services	(1,803)	(4,354)	(3,806)	(7,130)
Warranty provisions for products sold	2,229	3,793	5,089	6,207
Business acquisitions and disposals	0	25	0	899
Currency translation adjustments and other	113	19	(78)	(18)
Accrued product warranties, end of year	20,348	18,541	20,348	18,541
Current accrued product warranties, end of year	15,887	14,478	15,887	14,478	$ 14,611
Long-term accrued product warranties, end of ear	$ 4,461	$ 4,063	$ 4,461	$ 4,063

XML

Contingencies (Details) - USD ($) $ in Millions					6 Months Ended	37 Months Ended
	Apr. 30, 2020	Apr. 30, 2019	Apr. 30, 2018	Apr. 24, 2018	Jun. 30, 2020	Apr. 30, 2022	Jun. 30, 2018
Loss Contingencies [Line Items]
Loss contingency, possible loss suspension					$ 15.0
Other Current Liabilities
Loss Contingencies [Line Items]
Loss contingency accrual					3.5
Other Noncurrent Liabilities
Loss Contingencies [Line Items]
Loss contingency accrual					3.5
Civil Penalty
Loss Contingencies [Line Items]
Litigation settlement payment	$ 3.5	$ 3.5	$ 1.0
Loss contingency accrual					7.0		$ 15.0
Civil Penalty | Maximum
Loss Contingencies [Line Items]
Loss contingency, estimate of possible loss				$ 30.0
Loss contingency, possible loss suspension				$ 15.0
Product Quality Matters | Other Current Liabilities
Loss Contingencies [Line Items]
Loss contingency accrual					3.0
Product Quality Matters | Minimum
Loss Contingencies [Line Items]
Loss contingency, estimate of possible loss					3.0
Product Quality Matters | Maximum
Loss Contingencies [Line Items]
Loss contingency, estimate of possible loss					$ 9.6
Subsequent Event
Loss Contingencies [Line Items]
Litigation settlement payment						$ 3.5

XML

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Current tax expense (benefit):
Income tax provision	$ 20,637	$ 12,005	$ 28,411	$ 25,014
Effective tax rate	25.20%	20.70%	27.00%	18.80%
Current income tax expense (benefit)			$ 10,900
Deferred tax expense (benefit):
Unrecognized Tax Benefits	$ 23,000		23,000
Deferred Income Tax Expense (Benefit), Excluding Discontinued Operations			$ 21,700

XML

Income Taxes (Details 2) $ in Millions	6 Months Ended
	Jun. 30, 2020 USD ($)
Foreign
Income Taxes [Line Items]
Income Tax Examination, Estimate of Possible Loss	$ 322.2
Transition [Member]
Income Taxes [Line Items]
Tax Adjustments, Settlements, and Unusual Provisions	$ 37.1

XML

Income Taxes (Details 3) $ in Millions	6 Months Ended
	Jun. 30, 2020 USD ($)
Income Tax Disclosure [Abstract]
Statutory federal tax rate	21.00%
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued	$ 4.6

XML

Income Taxes (Details 4) $ in Millions	6 Months Ended
	Jun. 30, 2020 USD ($)
United States Federal | Minimum
Income Tax Examination [Line Items]
Open Tax Year	2016
United States Federal | Maximum
Income Tax Examination [Line Items]
Open Tax Year	2018
State of California | Minimum
Income Tax Examination [Line Items]
Open Tax Year	2015
State of California | Maximum
Income Tax Examination [Line Items]
Open Tax Year	2018
MASSACHUSETTS | Minimum
Income Tax Examination [Line Items]
Open Tax Year	2015
MASSACHUSETTS | Maximum
Income Tax Examination [Line Items]
Open Tax Year	2018
OREGON | Minimum
Income Tax Examination [Line Items]
Open Tax Year	2016
OREGON | Maximum
Income Tax Examination [Line Items]
Open Tax Year	2018
SWEDEN | Minimum
Income Tax Examination [Line Items]
Open Tax Year	2012
SWEDEN | Maximum
Income Tax Examination [Line Items]
Open Tax Year	2018
UNITED KINGDOM | Minimum
Income Tax Examination [Line Items]
Open Tax Year	2015
UNITED KINGDOM | Maximum
Income Tax Examination [Line Items]
Open Tax Year	2018
BELGIUM | Minimum
Income Tax Examination [Line Items]
Open Tax Year	2012
BELGIUM | Maximum
Income Tax Examination [Line Items]
Open Tax Year	2018
Foreign
Income Tax Examination [Line Items]
Income Tax Examination, Estimate of Possible Loss	$ 322.2

XML

Operating Segments and Related Information (Details)	6 Months Ended
	Jun. 30, 2020 segment
Segment Reporting [Abstract]
Number of operating business units	2

XML

Operating Segments and Related Information (Details 2) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Business Unit Reporting, Revenue Reconciling Item [Line Items]
Revenue	$ 482,015	$ 481,998	$ 932,938	$ 926,734
Earnings from operations	99,810	63,737	128,305	144,819
Defense Technologies
Business Unit Reporting, Revenue Reconciling Item [Line Items]
Revenue	181,817	197,509	356,325	370,859
Intersegment revenue	(1,438)	(1,436)	(3,273)	(2,947)
Earnings from operations	41,155	45,786	74,309	92,676
Industrial Technologies
Business Unit Reporting, Revenue Reconciling Item [Line Items]
Revenue	300,198	284,489	576,613	555,875
Intersegment revenue	(3,927)	(3,876)	(6,629)	(8,462)
Earnings from operations	107,137	71,633	171,402	140,652
Eliminations
Business Unit Reporting, Revenue Reconciling Item [Line Items]
Intersegment revenue	(5,365)	(5,312)	(9,902)	(11,409)
Total Segments [Member]
Business Unit Reporting, Revenue Reconciling Item [Line Items]
Revenue	482,015	481,998	932,938	926,734
Intersegment revenue	0	0	0	0
Earnings from operations	$ 148,292	$ 117,419	$ 245,711	$ 233,328

XML

Operating Segments and Related Information Operating Segments and related information (Details 3) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Business Unit Reporting, Revenue Reconciling Item [Line Items]
Unallocated corporate expense	$ (29,026)	$ (29,635)	$ (65,270)	$ (57,925)
Amortization of purchased Intangible Assets	(11,800)	(21,100)	(23,700)	(27,000)
Restructuring Costs			28,486	3,610
Other	(7,702)	(3,001)
Consolidated earnings from operations	99,810	63,737	128,305	144,819
Other Nonoperating Expense	(17,916)	(5,614)	(23,213)	(11,939)
Consolidated earnings before income taxes	81,894	58,123	105,092	132,880
Acquisition-related Costs [Member]
Business Unit Reporting, Revenue Reconciling Item [Line Items]
Amortization of purchased Intangible Assets	(11,754)	(21,046)	(23,650)	(26,974)
Total Segments [Member]
Business Unit Reporting, Revenue Reconciling Item [Line Items]
Consolidated segment operating income	148,292	117,419	245,711	233,328
Consolidated earnings from operations	$ 148,292	$ 117,419	$ 245,711	$ 233,328

XML

Operating Segments and Related Information (Details 4) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019	Jun. 30, 2019	Dec. 31, 2018
Segment Reporting, Asset Reconciling Item [Line Items]
BU assets (accounts receivable, inventory and demo assets, Net)	$ 769,240	$ 737,805
BU assets (accounts receivable, inventory, demo assets and goodwill, Net)	2,110,229	2,102,401
Cash and cash equivalents	332,958	284,592	$ 268,885	$ 512,144
Prepaid expenses and other current assets	84,078	86,337
Property and equipment, net	255,770	255,905
Deferred Income Tax Assets, Net	41,393	39,983
Goodwill	1,340,989	1,364,596
Intangible assets, net	222,123	247,514
Other assets	110,746	120,809
Assets	3,157,297	3,137,541
Defense Technologies
Segment Reporting, Asset Reconciling Item [Line Items]
BU assets (accounts receivable, inventory and demo assets, Net)	366,786	332,639
Goodwill	707,568	728,697
Industrial Technologies
Segment Reporting, Asset Reconciling Item [Line Items]
BU assets (accounts receivable, inventory and demo assets, Net)	402,454	405,166
Goodwill	$ 633,421	$ 635,899

XML

Operating Segments and Related Information (Details 5) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Business Unit Reporting, Revenue Reconciling Item [Line Items]
Revenue	$ 482,015	$ 481,998	$ 932,938	$ 926,734
Industrial Technologies
Business Unit Reporting, Revenue Reconciling Item [Line Items]
Revenue	300,198	284,489	576,613	555,875
Industrial Technologies | United States
Business Unit Reporting, Revenue Reconciling Item [Line Items]
Revenue	131,301	134,656	234,638	268,079
Industrial Technologies | Europe [Member]
Business Unit Reporting, Revenue Reconciling Item [Line Items]
Revenue	77,831	74,439	143,166	148,303
Industrial Technologies | Asia [Member]
Business Unit Reporting, Revenue Reconciling Item [Line Items]
Revenue	60,951	53,622	134,338	95,014
Industrial Technologies | Mid_East/Africa [Member]
Business Unit Reporting, Revenue Reconciling Item [Line Items]
Revenue	14,788	5,786	32,815	15,651
Industrial Technologies | Canada/Latin America
Business Unit Reporting, Revenue Reconciling Item [Line Items]
Revenue	15,327	15,986	31,656	28,828
Defense Technologies
Business Unit Reporting, Revenue Reconciling Item [Line Items]
Revenue	181,817	197,509	356,325	370,859
Defense Technologies | United States
Business Unit Reporting, Revenue Reconciling Item [Line Items]
Revenue	111,700	134,216	227,647	243,519
Defense Technologies | Europe [Member]
Business Unit Reporting, Revenue Reconciling Item [Line Items]
Revenue	25,945	25,000	45,421	51,596
Defense Technologies | Asia [Member]
Business Unit Reporting, Revenue Reconciling Item [Line Items]
Revenue	16,214	17,548	28,078	34,934
Defense Technologies | Mid_East/Africa [Member]
Business Unit Reporting, Revenue Reconciling Item [Line Items]
Revenue	25,094	18,815	50,222	36,222
Defense Technologies | Canada/Latin America
Business Unit Reporting, Revenue Reconciling Item [Line Items]
Revenue	2,864	1,930	4,957	4,588
Total Segments [Member]
Business Unit Reporting, Revenue Reconciling Item [Line Items]
Revenue	482,015	481,998	932,938	926,734
Total Segments [Member] | United States
Business Unit Reporting, Revenue Reconciling Item [Line Items]
Revenue	243,001	268,872	462,285	511,598
Total Segments [Member] | Europe [Member]
Business Unit Reporting, Revenue Reconciling Item [Line Items]
Revenue	103,776	99,439	188,587	199,899
Total Segments [Member] | Asia [Member]
Business Unit Reporting, Revenue Reconciling Item [Line Items]
Revenue	77,165	71,170	162,416	129,948
Total Segments [Member] | Mid_East/Africa [Member]
Business Unit Reporting, Revenue Reconciling Item [Line Items]
Revenue	39,882	24,601	83,037	51,873
Total Segments [Member] | Canada/Latin America
Business Unit Reporting, Revenue Reconciling Item [Line Items]
Revenue	$ 18,191	$ 17,916	$ 36,613	$ 33,416

XML

Operating Segments and Related Information (Details 6) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Business Unit Reporting, Asset Reconciling Item [Line Items]
Long-lived assets	$ 1,929,628	$ 1,988,824
United States
Business Unit Reporting, Asset Reconciling Item [Line Items]
Long-lived assets	1,104,883	1,137,375
Europe [Member]
Business Unit Reporting, Asset Reconciling Item [Line Items]
Long-lived assets	416,394	435,024
Other Geographic Region [Member]
Business Unit Reporting, Asset Reconciling Item [Line Items]
Long-lived assets	$ 408,351	$ 416,425

XML

Operating Segments and Related Information (Details 7) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Revenue, Major Customer [Line Items]
Revenue	$ 482,015	$ 481,998	$ 932,938	$ 926,734
United States government
Revenue, Major Customer [Line Items]
Revenue	$ 130,047	$ 156,161	$ 262,196	$ 293,654

XML

Business Acquisitions (Detail) - USD ($) $ in Thousands			24 Months Ended
	May 01, 2019	Mar. 04, 2019	Apr. 30, 2021	Jun. 30, 2020	Dec. 31, 2019
Business Acquisition [Line Items]
Goodwill				$ 1,340,989	$ 1,364,596
Endeavor [Member]
Business Acquisition [Line Items]
Business Combination, Consideration Transferred		$ 385,931
Intangible assets acquired		102,700
Identifiable Intangible assets		102,740
Goodwill		$ 271,365
NEOS [Member]
Business Acquisition [Line Items]
Business Combination, Consideration Transferred	$ 21,900
Identifiable Intangible assets	6,400
Goodwill	$ 14,000
Subsequent Event | NEOS [Member]
Business Acquisition [Line Items]
Business Combination, Consideration Transferred			$ 12,000

XML

Business Acquisitions (Details 1) - USD ($) $ in Thousands			6 Months Ended
	May 01, 2019	Mar. 04, 2019	Jun. 30, 2020	Dec. 31, 2019
Business Acquisition [Line Items]
Goodwill			$ 1,340,989	$ 1,364,596
Developed Technology Rights [Member]
Business Acquisition [Line Items]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life		5 years
In Process Research and Development [Member]
Business Acquisition [Line Items]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life		9 years
Trademarks and Trade Names [Member]
Business Acquisition [Line Items]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life		4 years 6 months
Order or Production Backlog [Member]
Business Acquisition [Line Items]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life		1 year
Customer Contracts [Member]
Business Acquisition [Line Items]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life		1 year
Endeavor [Member]
Business Acquisition [Line Items]
Cash acquired		$ 6,687
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Other Assets (Liabilities), Net		14,915
Net deferred taxes		(9,776)
Identifiable Intangible assets		102,740
Goodwill		271,365
Goodwill, Purchase Accounting Adjustments			$ 12,600
Business Combination, Consideration Transferred		385,931
Endeavor [Member] | Developed Technology Rights [Member]
Business Acquisition [Line Items]
Identifiable Intangible assets		60,400
Endeavor [Member] | In Process Research and Development [Member]
Business Acquisition [Line Items]
Identifiable Intangible assets		28,000
Endeavor [Member] | Trademarks and Trade Names [Member]
Business Acquisition [Line Items]
Identifiable Intangible assets		9,990
Endeavor [Member] | Order or Production Backlog [Member]
Business Acquisition [Line Items]
Identifiable Intangible assets		3,850
Endeavor [Member] | Customer Contracts [Member]
Business Acquisition [Line Items]
Identifiable Intangible assets		$ 500
NEOS [Member]
Business Acquisition [Line Items]
Identifiable Intangible assets	$ 6,400
Goodwill	14,000
Business Combination, Consideration Transferred	$ 21,900

XML

Restructuring Costs (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		24 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2021
Restructuring Cost and Reserve [Line Items]
Restructuring expenses	$ 7,702	$ 3,001	$ 28,486	$ 3,610
Project Be Ready [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring expenses	7,702	0	28,486	0
Employee Separation costs
Restructuring Cost and Reserve [Line Items]
Restructuring expenses			17,353
Employee Separation costs | Project Be Ready [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring expenses	6,888	0	17,353	0
Lease consolidation expense | Project Be Ready [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring expenses	0	0	204	0
Third party and other costs
Restructuring Cost and Reserve [Line Items]
Restructuring expenses			11,133
Third party and other costs | Project Be Ready [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring expenses	$ 814	$ 0	$ 10,929	$ 0
Minimum | Subsequent Event
Restructuring Cost and Reserve [Line Items]
Restructuring expenses					$ 40,000
Minimum | Subsequent Event | Employee Separation costs
Restructuring Cost and Reserve [Line Items]
Restructuring expenses					20,000
Minimum | Subsequent Event | Lease consolidation expense
Restructuring Cost and Reserve [Line Items]
Restructuring expenses					5,000
Minimum | Subsequent Event | Third party cost [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring expenses					15,000
Maximum | Subsequent Event
Restructuring Cost and Reserve [Line Items]
Restructuring expenses					55,000
Maximum | Subsequent Event | Employee Separation costs
Restructuring Cost and Reserve [Line Items]
Restructuring expenses					25,000
Maximum | Subsequent Event | Lease consolidation expense
Restructuring Cost and Reserve [Line Items]
Restructuring expenses					10,000
Maximum | Subsequent Event | Third party cost [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring expenses					$ 20,000

XML

Restructuring Costs (Details 2) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Restructuring Cost and Reserve [Line Items]
Restructuring expenses	$ 7,702	$ 3,001	$ 28,486	$ 3,610
Project Be Ready [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring expenses	$ 7,702	$ 0	$ 28,486	$ 0

XML

Restructuring Costs (Details 3) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Restructuring Cost and Reserve [Line Items]
Restructuring Reserve, Beginning			$ 4,123
Restructuring expenses	$ 7,702	$ 3,001	28,486	$ 3,610
Utilization			(20,682)
Restructuring Reserve, Ending	11,927		11,927
Employee Separation costs
Restructuring Cost and Reserve [Line Items]
Restructuring Reserve, Beginning			1,343
Restructuring expenses			17,353
Utilization			(7,603)
Restructuring Reserve, Ending	11,093		11,093
Third party and other costs
Restructuring Cost and Reserve [Line Items]
Restructuring Reserve, Beginning			2,780
Restructuring expenses			11,133
Utilization			(13,079)
Restructuring Reserve, Ending	$ 834		$ 834

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Subsequent Events (Details) - USD ($) $ / shares in Units, $ in Millions					3 Months Ended
	Sep. 04, 2020	Aug. 21, 2020	Aug. 04, 2020	Aug. 03, 2020	Sep. 30, 2020	Jun. 30, 2020
Subsequent Event [Line Items]
Long-term Debt, Gross						$ 425.0
Senior unsecured notes, interest rate						3.125%
Subsequent Event
Subsequent Event [Line Items]
Dividends Payable, Date Declared			Aug. 04, 2020
Quarterly dividend, value per share			$ 0.17
Quarterly dividend, date to be paid	Sep. 04, 2020
Quarterly dividend, date of record		Aug. 21, 2020
Quarterly dividend, amount declared	$ 22.3
Long-term Debt, Gross				$ 500.0
Senior unsecured notes, interest rate				2.50%
Underwritten public offering price, percentage of aggregate principal amount				99.807%
Debt Instrument, Interest Rate, Effective Percentage				2.65%
Proceeds from Issuance of Long-term Debt				$ 494.0
Gain (Loss) on Extinguishment of Debt					$ 9.0