ý
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2011.
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
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Oregon
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93-0708501
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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27700 SW Parkway Avenue, Wilsonville, Oregon
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97070
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(Address of principal executive offices)
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(Zip code)
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Title of Each Class
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Name of Each Exchange
on Which Registered
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Common Stock, $0.01 par value
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|
NASDAQ Global Select Market
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Large accelerated filer
x
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Accelerated filer
¨
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Non-accelerated filer
¨
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Smaller reporting company
¨
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PART I
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Item 1
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Item 1A
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Item 1B
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Item 2
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Item 3
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Item 4
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PART II
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Item 5
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Item 6
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Item 7
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Item 7A
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Item 8
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Item 9
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Item 9A
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Item 9B
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PART III
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Item 10
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Item 11
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Item 12
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Item 13
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Item 14
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PART IV
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Item 15
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ITEM 1.
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BUSINESS
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Thermal Vision Markets
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Security and Surveillance
|
Thermal imaging systems have been used for surveillance and perimeter security of government, military and industrial facilities for many years. Over the past few years, we have introduced a series of lower priced, purpose built systems targeted at the commercial security market and are actively expanding distribution in this market. Our security products are now being used to protect critical infrastructure, ports, borders, commercial sites, and residential homes. Demand for security systems utilizing thermal imaging technology is growing rapidly, especially in lower cost, higher volume market segments.
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Automotive Night Vision
|
We offer a night vision system for passenger automobiles that provides drivers with the ability to see at night and through obscurants, such as fog, at distances much further and wider than can be seen with traditional headlights. We currently provide camera cores for certain Audi, BMW, and Rolls Royce models through our partnership with Autoliv Electronics, a major supplier of automotive safety equipment. We expect to continue to expand this technology into new makes and models over the next several years.
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Marine
|
In 2006, we introduced the first cost-effective infrared device specifically designed for recreational boating, cruise lines, commercial fishing and merchant marine vessels, ferries, and other maritime markets. Since then we have aggressively expanded distribution through a combination of direct sales and a network of dealers. Our acquisition of Raymarine has greatly expanded our distribution capabilities as well as our product breadth. We now offer an integrated suite of maritime electronics that utilizes multifunction displays, infrared cameras, depth sounders, GPS, auto pilots, and advanced command and control software.
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Personal Vision
|
We are pioneering the use of advanced thermal imaging technology for consumer applications. Our easy to use, affordable, and lightweight personal vision thermal cameras give people the ability to see at night and stay safe in various settings. We enhance people’s enjoyment of the outdoors by enabling them to keep track of their camping party, see and track animals, and navigate during deteriorated weather conditions. In the home, our cameras can be used for numerous household and security applications, such as locating heat leaks, evaluating insulation coverage, detecting water damage, identifying intruders, and locating pests.
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Law Enforcement
|
We are a leader in the supply of low cost, hand-held systems to the law enforcement market. These cameras provide a lightweight, cost-effective, high performance tool for police officers and other law enforcement professionals to conduct search and rescue, surveillance, or pursuit missions.
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OEM Markets
|
We supply cooled and uncooled camera cores, sensors, and readout integrated circuits on an OEM basis for a broad range of applications where customers require a product at a lower level of integration than a fully developed thermal imaging system. Examples of major customers in this segment are Mine Safety Appliances (firefighting); Bullard (firefighting); AeroVironment (unmanned aerial vehicles); Northrop Grumman (cooled cores for military applications); Hologic (readout integrated circuits for digital X-ray); and various makers of security systems worldwide.
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Thermal Measurement Markets
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Predictive Maintenance
|
Thermal imaging systems are used for monitoring the condition of mechanical and electrical equipment. Such monitoring assists our customers in identifying equipment faults (manifested as hot spots) so they can be repaired before they fail. This increases equipment productivity and avoids catastrophic failures or major damage, which reduces operating expenses by lowering repair costs and reducing downtime. Improved functionality of image analysis software, smaller size and weight, and simplicity of system operation are critical factors for this well established market segment.
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Research & Development
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Infrared’s unique ability to detect very small differences in temperature while detailing complex thermal dynamics and patterns makes thermal imaging systems a useful tool in a wide variety of research and development applications. Our systems provide the ability to view thermal distribution in real time for products ranging in size from small hybrid integrated circuits to jet engines. Common applications include product development of microelectronics, cell phones, laptop computers, telecommunications equipment, consumer appliances, automotive components, and aircraft engines. Systems used in research and development applications typically require very high imaging performance and measurement precision, coupled with extensive analysis and reporting software. We have a complete line of both cooled and uncooled infrared imagers specifically designed for high-end research and development applications.
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Manufacturing Process Control
|
Thermal imaging applications for manufacturing process control include applications where temperature consistency is critical, including monitoring the quality of metal, plastic and glass cast parts, which are highly dependent upon the temperature distribution in the mold; monitoring the quality of paper, which is dependent upon proper and even moisture distribution during the drying process; and monitoring the quality of products such as rubber gloves, which can be thermally examined to locate abnormally warm or cool spots, indicating non-uniform thickness that may result in a quality defect.
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Building Inspection
|
Infrared imagers can detect missing insulation, electrical faults, water intrusion and pest infiltration, gauge energy efficiency, and help detect the presence of moisture. Market segments include building diagnostics, energy auditing and home inspection, property and facility management, HVAC and plumbing, and moisture detection and restoration. This market has grown rapidly as costs have declined and new uses for thermal imaging systems have emerged.
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Gas Detection
|
Specially designed infrared systems can detect and image hydrocarbon gas emissions or leaks. Using this technology, we have established a market focused on leak detection at gas production, transmission and storage locations, as well as compliance monitoring by environmental and other regulatory agencies. New applications are emerging for this technology. For example, we now have a system that detects sulfur hexafluoride, a dangerous pollutant and potential fire hazard used as an insulator in electrical transformers. During 2010, the U.S. Environmental Protection Agency (“EPA”) issued a requirement that large-scale extractors and distributors of greenhouse gases begin to annually self-report the amount of greenhouse gas that is emitted from their facilities. The issuance noted that the EPA will allow, and in certain situations require, the use of optical gas imaging systems such as ours to be used to perform the emission analysis.
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|
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Test and Measurement
|
We supply trade professionals a wide range of test equipment to deliver high accuracy readings for the measurement of electricity, light, sound, temperature, humidity, airflow, revolutions per minute and water quality. Our fifteen product categories provide innovative tools that are used worldwide and are available through catalogs, distributors and retail stores.
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Emerging Markets
|
We have successfully introduced progressively lower priced thermal imaging systems that have enabled us to expand traditional thermography markets and open new markets for our products. These products, the latest of which is the i-family, have met with strong market acceptance in the higher volume building and electrical inspection markets, and we expect additional market segments for thermal imaging to develop as prices continue to decline. These market segments may include healthcare and screening, food service and distribution, veterinary science, automotive care, aircraft inspection, and maritime vessel inspections.
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Training
|
We offer fee-based training on the principles of thermography and the use of our products through ITC
®
, our Infrared Training Center, which provides comprehensive instruction, training, certification and applications engineering from several FLIR locations or at the customer’s site. We also license Infrared Training Centers to qualified third parties in certain countries.
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Markets
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|
Search and Rescue
|
Thermal imaging systems are used in airborne and shipborne search and rescue missions to rescue individuals in danger or distress on boats or vehicles, or wounded or lost in adverse conditions. Such systems are in use today by organizations such as the United States Army, United States Coast Guard, the United States Marine Corps, the United States Air National Guard and the United Kingdom Ministry of Defense.
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Force Protection
|
In instances where military or other personnel are deployed in hostile areas, thermal imaging systems mounted on towers or other platforms are deployed to identify and defeat potential threats at an early stage. Our systems are deployed for this purpose by the United States Army, United States Marine Corps and others worldwide.
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Border and Maritime Patrol
|
Thermal imaging systems are used in airborne, shipborne, hand-held and fixed installation applications for border and maritime surveillance, particularly at night, to enforce borders and coastal waters, to monitor national fishing boundaries and to prevent smuggling. Our cameras are currently deployed along numerous borders worldwide, including in the United States, Europe and the Middle East.
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Surveillance and Reconnaissance
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Thermal imaging systems are used in surveillance and reconnaissance applications for the precise positioning of objects or people from substantial distances and for enhanced situational awareness, particularly at night or in conditions of reduced or obscured visibility. We also offer high-resolution frequency-modulated continuous wave radars that enable wide-area surveillance capable of detecting potential threats before they cross a perimeter. These systems are installed on fixed platforms, manned mobile platforms, and unmanned aerial vehicles.
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Airborne Law Enforcement
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We are a leader in the supply of stabilized airborne thermal imaging systems for federal, state, and local law enforcement agencies. Agencies with this type of equipment have the ability to track suspects, locate lost persons, and provide situational awareness to officers on the ground.
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System Design and Integration
|
We have developed extensive competencies in the design and integration of numerous capabilities and payloads into integrated systems or sub-systems. Competencies such as stabilization, packaging and systems integration allow us to effectively combine a wide variety of technologies and payloads to design and manufacture complex systems to suit our customers’ needs.
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Radiometry
|
Our ability to produce thermal imaging systems that can accurately measure temperature is critical in many of our thermography markets. We have demonstrated know-how in designing and producing systems that can measure temperature to within very precise tolerances while maintaining accuracy and stability over time and over a wide range of ambient temperatures. We believe our skills in this area, known as radiometry, offer an important competitive advantage over many of our competitors.
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|
|
Mechanical Engineering
|
Our design and production of thermal imaging systems involves highly sophisticated mechanical engineering techniques, particularly in the design and assembly of the supporting structures for system components such as detector arrays, coolers, scanners and optics. We also have expertise in designing stabilized assemblies used in our gimbal mounted products utilizing electro-mechanical control, gyroscopes and electronic stabilization, and specialized control mechanisms.
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Infrared Detector Design Manufacturing
|
We design and manufacture both cooled and uncooled infrared detector arrays, in high volumes and at low costs. We believe our uncooled vanadium oxide microbolometers and cooled detectors using indium antimonide and indium gallium arsenide are among the highest performing infrared detectors of their type available in the world. Internal design and manufacturing of detectors provides significant cost and engineering advantages compared with the use of third-party detectors.
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|
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Integrated Circuits and Electronic Design
|
We have significant electronic design capabilities across several specialized areas, including readout integrated circuit design, signal processing, image processing, and electronics integration. Our design expertise lies in the areas of reliability, low power consumption and extreme environmental survivability.
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|
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Sensing Materials
|
Our sensors use new materials with novel characteristics, such as innovative semiconductors, crystals, polymers, reagents, and other recently developed materials. Some materials are extraordinarily sensitive, responding to trace exposures of chemical compounds such as explosives, nerve agents, or biological proteins. Other materials respond to low-intensity radioactive emissions of electromagnetic energy, such as specific bands of infrared light. Many of these materials did not exist a few years ago or could not be sufficiently purified or economically assembled into functional structures.
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|
|
Software Development
|
Software is an increasingly important aspect of our overall engineering and design activity. We offer networking capability, video analytics and other software and middleware inside many of our camera systems, and such applications are growing in importance. Our systems are also able to interface with many standard external software protocols.
|
|
|
Optical Design, Fabrication and Coating
|
We design and manufacture sophisticated infrared optics using materials such as silicon and germanium that are required to produce a thermal imaging system. This capability allows us to rapidly develop optics optimized for use with our cameras and avoid costs and delays associated with reliance on third-party optics suppliers. We also have the ability to apply custom vapor deposited coatings to improve the transmission of the unique lens materials that are used in infrared systems.
|
|
|
Micro-Coolers
|
We manufacture the industry’s smallest, lightest and lowest power micro-coolers for use in cooling infrared detectors. Our coolers are especially effective in hand-held applications, where light weight and long battery life are essential.
|
|
|
Lasers and Laser Components
|
Many of our more sophisticated systems are increasingly being offered with various types of laser payloads, including pointers, illuminators, rangefinders and designators. We design and manufacture purpose-built laser rangefinders and designators for inclusion in some of our gimbaled systems. We also manufacture certain laser-related components for customers. Our 2011 acquisition of Aerius Photonics, LLC enhanced our ability to provide advanced laser components.
|
Tactical Platforms
|
With our acquisition of ICx in 2010, we added the capability to develop and manufacture comprehensive and integrated solutions for surveillance, assessment, and response. These platform solutions draw from our Surveillance and Detection products, as well as products sourced outside of the Company. These unmanned and manned networkable mobile and vehicle mounted tower systems, branded under
Cerberus
and
SkyWatch
names, can be deployed in nearly any environment and have provided security at borders, at theme parks, for police and military forces, at national monuments, and at high profile events.
|
ITEM 1A.
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RISK FACTORS
|
•
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the timing, number and size of orders from, and shipments to, our customers, as well as the relative mix of those orders;
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•
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variations in the volume of orders for a particular product or product line in a particular quarter;
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•
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the size and timing of new contract awards;
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•
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the timing of the release of government funds for procurement of our products; and
|
•
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the timing of orders and shipments within a given fiscal quarter.
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•
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the seasonal pattern of contracting by the United States government and certain foreign governments;
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•
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the desire of customers to take delivery of equipment prior to fiscal year ends due to funding considerations; and
|
•
|
the tendency of commercial enterprises to fully utilize annual capital budgets prior to expiration.
|
•
|
the imposition of and changes to governmental controls;
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•
|
restrictions on the export of critical technology;
|
•
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trade restrictions;
|
•
|
difficulty in collecting receivables;
|
•
|
inadequate protection of intellectual property;
|
•
|
labor union activities;
|
•
|
changes in tariffs and taxes;
|
•
|
restriction on the importation and exportation of goods and services;
|
•
|
compliance with anti-bribery and anti-corruption laws;
|
•
|
difficulties in staffing and managing international operations; and
|
•
|
political and economic instability.
|
•
|
the jurisdictions in which profits are determined to be earned and taxed;
|
•
|
the resolution of issues arising from tax audits with various tax authorities;
|
•
|
changes in the valuation of our deferred tax assets and liabilities;
|
•
|
adjustments to estimated taxes upon finalization of various tax returns;
|
•
|
increases in expenses not deductible for tax purposes;
|
•
|
changes in available tax credits;
|
•
|
changes in share-based compensation expense;
|
•
|
changes in tax laws or the interpretation of such tax laws and changes in generally accepted accounting principles; and/or
|
•
|
the repatriation of earnings from outside the United States for which we have not previously provided for United States taxes.
|
Location
|
Owned
|
|
Leased
|
||
|
(Square feet in Thousands)
|
||||
Wilsonville (Portland), Oregon
|
154
|
|
|
—
|
|
Danderyd (Stockholm), Sweden
|
—
|
|
|
125
|
|
Arninge (Stockholm), Sweden
|
178
|
|
|
—
|
|
North Billerica (Boston), Massachusetts
|
133
|
|
|
—
|
|
Goleta (Santa Barbara), California
|
169
|
|
|
137
|
|
Nashua, New Hampshire
|
140
|
|
|
—
|
|
Alpharetta (Atlanta), Georgia
|
—
|
|
|
81
|
|
Fareham (Portsmouth), United Kingdom
|
63
|
|
|
—
|
|
Other
|
104
|
|
|
691
|
|
Total
|
941
|
|
|
1,034
|
|
ITEM 3.
|
LEGAL PROCEEDINGS
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
ITEM 5.
|
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
|
2011
|
|
2010
|
||||||||||||
|
High
|
|
Low
|
|
High
|
|
Low
|
||||||||
First Quarter
|
$
|
34.61
|
|
|
$
|
28.87
|
|
|
$
|
32.93
|
|
|
$
|
26.49
|
|
Second Quarter
|
37.04
|
|
|
32.03
|
|
|
31.42
|
|
|
26.73
|
|
||||
Third Quarter
|
34.68
|
|
|
22.15
|
|
|
30.66
|
|
|
24.38
|
|
||||
Fourth Quarter
|
27.68
|
|
|
24.16
|
|
|
29.97
|
|
|
24.61
|
|
|
Dec 06
|
|
Dec 07
|
|
Dec 08
|
|
Dec 09
|
|
Dec 10
|
|
Dec 11
|
||||||||||||
FLIR Systems, Inc.
|
$
|
100.00
|
|
|
$
|
196.67
|
|
|
$
|
192.77
|
|
|
$
|
205.66
|
|
|
$
|
186.93
|
|
|
$
|
158.80
|
|
S&P 500 Index
|
100.00
|
|
|
105.49
|
|
|
66.46
|
|
|
84.05
|
|
|
96.71
|
|
|
98.76
|
|
||||||
S&P 500 Electronic Equipment & Instruments Index
|
100.00
|
|
|
111.37
|
|
|
47.38
|
|
|
74.63
|
|
|
85.19
|
|
|
72.40
|
|
Period
|
Total Number of Shares Purchased
(1)
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Maximum Number of Shares that May Yet Be Purchased at December 31, 2011 Under the Plans or Programs
|
|||||
March 1 to March 31, 2011
|
212,879
|
|
|
$
|
31.83
|
|
|
212,879
|
|
|
|
|
May 1 to May 31, 2011
|
177,161
|
|
|
$
|
35.07
|
|
|
177,161
|
|
|
|
|
June 1 to June 30, 2011
|
322,839
|
|
|
$
|
33.49
|
|
|
322,839
|
|
|
|
|
July 1 to July 31, 2011
|
100,000
|
|
|
$
|
28.38
|
|
|
100,000
|
|
|
|
|
August 1 to August 31, 2011
|
2,201,826
|
|
|
$
|
24.20
|
|
|
2,201,826
|
|
|
|
|
September 1 to September 30, 2011
|
1,698,174
|
|
|
$
|
26.18
|
|
|
1,698,174
|
|
|
|
|
October 1 to October 31, 2011
|
284,751
|
|
|
$
|
26.57
|
|
|
284,751
|
|
|
|
|
November 1 to November 30, 2011
|
684,421
|
|
|
$
|
25.41
|
|
|
684,421
|
|
|
|
|
December 1 to December 31, 2011
|
453,194
|
|
|
$
|
25.00
|
|
|
453,194
|
|
|
|
|
Total
|
6,135,245
|
|
|
$
|
26.19
|
|
|
6,135,245
|
|
|
13,864,755
|
|
(1)
|
All shares were purchased in open market transactions.
|
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
Year Ended December 31,
(1)
|
|||||||
|
2011
|
|
2010
(2)
|
|
2009
|
|||
Revenue
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of goods sold
|
46.3
|
|
|
45.0
|
|
|
42.6
|
|
Gross profit
|
53.7
|
|
|
55.0
|
|
|
57.4
|
|
Operating expenses:
|
|
|
|
|
|
|||
Research and development
|
9.5
|
|
|
8.4
|
|
|
8.0
|
|
Selling, general and administrative
|
23.8
|
|
|
20.6
|
|
|
19.2
|
|
Total operating expenses
|
33.4
|
|
|
29.0
|
|
|
27.1
|
|
Earnings from operations
|
20.3
|
|
|
26.0
|
|
|
30.3
|
|
Interest expense
|
0.4
|
|
|
0.2
|
|
|
0.6
|
|
Interest income
|
(0.1
|
)
|
|
(0.1
|
)
|
|
(0.2
|
)
|
Other income, net
|
(0.1
|
)
|
|
(0.3
|
)
|
|
0.2
|
|
Earnings from continuing operations before income taxes
|
20.1
|
|
|
26.1
|
|
|
29.7
|
|
Income tax provision
|
5.7
|
|
|
8.2
|
|
|
9.6
|
|
Earnings from continuing operations
|
14.4
|
|
|
17.9
|
|
|
20.1
|
|
Loss from discontinued operations, net of tax
|
(0.1
|
)
|
|
(0.0
|
)
|
|
—
|
|
Net earnings
|
14.3
|
%
|
|
17.9
|
%
|
|
20.1
|
%
|
(1)
|
Totals may not recompute due to rounding
|
(2)
|
Amounts have been adjusted for the reclassification of certain discontinued operations to continuing operations.
|
|
Year Ended December 31,
|
||||||||||
|
2011
|
|
2010
|
|
2009
|
||||||
Revenue
|
$
|
660.3
|
|
|
$
|
574.9
|
|
|
$
|
491.8
|
|
Earnings from operations
|
194.7
|
|
|
163.7
|
|
|
122.2
|
|
|||
Operating margin
|
29.5
|
%
|
|
28.5
|
%
|
|
24.9
|
%
|
|||
Backlog
|
136
|
|
|
135
|
|
|
111
|
|
|
Year Ended December 31,
|
||||||
|
2011
|
|
2010
|
||||
Revenue
|
$
|
171.5
|
|
|
$
|
104.1
|
|
Earnings from operations
|
11.9
|
|
|
8.3
|
|
||
Operating margin
|
6.9
|
%
|
|
8.0
|
%
|
||
Backlog
|
5
|
|
|
11
|
|
|
Year Ended December 31,
|
||||||||||
|
2011
|
|
2010
|
|
2009
|
||||||
Revenue
|
$
|
577.6
|
|
|
$
|
671.3
|
|
|
$
|
655.3
|
|
Earnings from operations
|
208.5
|
|
|
256.2
|
|
|
286.4
|
|
|||
Operating margin
|
36.1
|
%
|
|
38.2
|
%
|
|
43.7
|
%
|
|||
Backlog
|
247
|
|
|
333
|
|
|
433
|
|
|
Year Ended December 31,
|
||||||
|
2011
|
|
2010
|
||||
Revenue
|
$
|
79.9
|
|
|
$
|
23.6
|
|
Earnings from operations
|
(5.6
|
)
|
|
(2.5
|
)
|
||
Operating margin
|
(7.0
|
)%
|
|
(10.8
|
)%
|
||
Backlog
|
25
|
|
|
20
|
|
|
Year Ended December 31,
|
||||||
|
2011
|
|
2010
|
||||
Revenue
|
$
|
54.8
|
|
|
$
|
14.7
|
|
Earnings from operations
|
1.7
|
|
|
—
|
|
||
Operating margin
|
3.0
|
%
|
|
0.2
|
%
|
||
Backlog
|
42
|
|
|
36
|
|
|
Payments Due by Period
|
||||||||||||||||||
Contractual Obligations
|
Total
|
|
Less than
1 Year
|
|
1 – 3
Years
|
|
3 – 5
Years
|
|
More than
5 Years
|
||||||||||
Long-term debt
|
$
|
296,875
|
|
|
$
|
9,375
|
|
|
$
|
18,750
|
|
|
$
|
268,750
|
|
|
$
|
—
|
|
Operating leases
|
36,230
|
|
|
16,700
|
|
|
14,683
|
|
|
4,047
|
|
|
800
|
|
|||||
Licensing rights
|
3,025
|
|
|
550
|
|
|
1,100
|
|
|
1,100
|
|
|
275
|
|
|||||
Post-retirement obligations
|
23,497
|
|
|
525
|
|
|
14,203
|
|
|
998
|
|
|
7,771
|
|
|||||
Other obligations
|
2,753
|
|
|
2,728
|
|
|
25
|
|
|
—
|
|
|
—
|
|
|||||
|
$
|
362,380
|
|
|
$
|
29,878
|
|
|
$
|
48,761
|
|
|
$
|
274,895
|
|
|
$
|
8,846
|
|
ITEM 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
Statement
|
Page
|
FLIR SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
|
|||||||||||
|
Year Ended December 31,
|
||||||||||
|
2011
|
|
2010
(1)
|
|
2009
|
||||||
Revenue
|
$
|
1,544,062
|
|
|
$
|
1,388,437
|
|
|
$
|
1,147,087
|
|
Cost of goods sold
|
715,458
|
|
|
624,796
|
|
|
488,558
|
|
|||
Gross profit
|
828,604
|
|
|
763,641
|
|
|
658,529
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Research and development
|
147,177
|
|
|
116,635
|
|
|
91,301
|
|
|||
Selling, general and administrative
|
368,232
|
|
|
286,695
|
|
|
219,941
|
|
|||
Total operating expenses
|
515,409
|
|
|
403,330
|
|
|
311,242
|
|
|||
Earnings from operations
|
313,195
|
|
|
360,311
|
|
|
347,287
|
|
|||
Interest expense
|
5,487
|
|
|
2,884
|
|
|
6,882
|
|
|||
Interest income
|
(1,273
|
)
|
|
(1,258
|
)
|
|
(1,749
|
)
|
|||
Other (income) expense, net
|
(2,098
|
)
|
|
(4,015
|
)
|
|
1,761
|
|
|||
Earnings from continuing operations before income taxes
|
311,079
|
|
|
362,700
|
|
|
340,393
|
|
|||
Income tax provision
|
88,427
|
|
|
114,326
|
|
|
110,180
|
|
|||
Earnings from continuing operations
|
222,652
|
|
|
248,374
|
|
|
230,213
|
|
|||
Loss from discontinued operations, net of tax
|
(1,178
|
)
|
|
(248
|
)
|
|
—
|
|
|||
Net earnings
|
$
|
221,474
|
|
|
$
|
248,126
|
|
|
$
|
230,213
|
|
Basic earnings per share:
|
|
|
|
|
|
||||||
Continuing operations
|
$
|
1.41
|
|
|
$
|
1.59
|
|
|
$
|
1.54
|
|
Discontinued operations
|
(0.01
|
)
|
|
(0.00
|
)
|
|
—
|
|
|||
Basic earnings per share
|
$
|
1.40
|
|
|
$
|
1.59
|
|
|
$
|
1.54
|
|
Diluted earnings per share:
|
|
|
|
|
|
||||||
Continuing operations
|
$
|
1.38
|
|
|
$
|
1.54
|
|
|
$
|
1.45
|
|
Discontinued operations
|
(0.01
|
)
|
|
(0.00
|
)
|
|
—
|
|
|||
Diluted earnings per share
|
$
|
1.38
|
|
|
$
|
1.54
|
|
|
$
|
1.45
|
|
FLIR SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except for par value)
|
|||||||
|
December 31,
|
||||||
|
2011
|
|
2010
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
440,846
|
|
|
$
|
193,137
|
|
Accounts receivable, net
|
325,370
|
|
|
339,723
|
|
||
Inventories
|
336,051
|
|
|
303,156
|
|
||
Prepaid expenses and other current assets
|
104,285
|
|
|
95,663
|
|
||
Deferred income taxes, net
|
27,443
|
|
|
23,128
|
|
||
Total current assets
|
1,233,995
|
|
|
954,807
|
|
||
Property and equipment, net
|
186,269
|
|
|
189,119
|
|
||
Deferred income taxes, net
|
31,644
|
|
|
22,742
|
|
||
Goodwill
|
498,343
|
|
|
482,019
|
|
||
Intangible assets, net
|
164,440
|
|
|
177,385
|
|
||
Other assets
|
32,338
|
|
|
31,280
|
|
||
|
$
|
2,147,029
|
|
|
$
|
1,857,352
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
84,190
|
|
|
$
|
85,881
|
|
Deferred revenue
|
24,046
|
|
|
17,867
|
|
||
Accrued payroll and related liabilities
|
49,475
|
|
|
54,894
|
|
||
Accrued product warranties
|
13,370
|
|
|
15,711
|
|
||
Advance payments from customers
|
13,219
|
|
|
22,616
|
|
||
Accrued expenses
|
41,183
|
|
|
36,578
|
|
||
Accrued income taxes
|
2,161
|
|
|
8,218
|
|
||
Other current liabilities
|
3,886
|
|
|
8,186
|
|
||
Total current liabilities
|
231,530
|
|
|
249,951
|
|
||
Long-term debt
|
247,861
|
|
|
—
|
|
||
Deferred income taxes
|
17,237
|
|
|
13,163
|
|
||
Accrued income taxes
|
17,537
|
|
|
19,793
|
|
||
Pension and other long-term liabilities
|
53,835
|
|
|
51,897
|
|
||
Commitments and contingencies (Notes 12 and 13)
|
|
|
|
||||
Shareholders’ equity:
|
|
|
|
||||
Preferred stock, $0.01 par value, 10,000 shares authorized; no shares issued at December 31, 2011 or 2010
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value, 500,000 shares authorized, 154,969 and 159,212 shares issued at December 31, 2011 and 2010, respectively, and additional paid-in capital
|
352,157
|
|
|
465,467
|
|
||
Retained earnings
|
1,238,866
|
|
|
1,055,429
|
|
||
Accumulated other comprehensive (loss) earnings
|
(11,994
|
)
|
|
1,652
|
|
||
Total shareholders’ equity
|
1,579,029
|
|
|
1,522,548
|
|
||
|
$
|
2,147,029
|
|
|
$
|
1,857,352
|
|
FLIR SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY AND COMPREHENSIVE EARNINGS
(in thousands)
|
||||||||||||||||||||||
|
Common Stock and
Additional
Paid-in Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Earnings
(Loss)
|
|
Total
Shareholder’s
Equity
|
|
Annual
Comprehensive
Earnings
|
|||||||||||||
|
Shares
|
|
Amount
|
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance, December 31, 2008
|
141,387
|
|
|
$
|
282,849
|
|
|
$
|
577,090
|
|
|
$
|
(15,214
|
)
|
|
$
|
844,725
|
|
|
|
||
Net earnings for the year
|
—
|
|
|
—
|
|
|
230,213
|
|
|
—
|
|
|
230,213
|
|
|
$
|
230,213
|
|
||||
Income tax benefit of common stock options exercised
|
—
|
|
|
9,245
|
|
|
—
|
|
|
—
|
|
|
9,245
|
|
|
—
|
|
|||||
Repurchase of common stock
|
(3,232
|
)
|
|
(73,169
|
)
|
|
—
|
|
|
—
|
|
|
(73,169
|
)
|
|
—
|
|
|||||
Common stock issued pursuant to stock-based compensation plans, net
|
2,717
|
|
|
17,581
|
|
|
—
|
|
|
—
|
|
|
17,581
|
|
|
—
|
|
|||||
Stock-based compensation expense
|
—
|
|
|
23,888
|
|
|
—
|
|
|
—
|
|
|
23,888
|
|
|
—
|
|
|||||
Conversion of convertible debt
|
11,954
|
|
|
128,427
|
|
|
—
|
|
|
—
|
|
|
128,427
|
|
|
—
|
|
|||||
Capital contribution
|
—
|
|
|
495
|
|
|
—
|
|
|
—
|
|
|
495
|
|
|
—
|
|
|||||
Change in minimum liability for pension plans, net of tax effects of $402
|
—
|
|
|
—
|
|
|
—
|
|
|
781
|
|
|
781
|
|
|
781
|
|
|||||
Translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
21,563
|
|
|
21,563
|
|
|
21,563
|
|
|||||
Balance, December 31, 2009
|
152,826
|
|
|
389,316
|
|
|
807,303
|
|
|
7,130
|
|
|
1,203,749
|
|
|
|
||||||
Comprehensive earnings, year ended December 31, 2009
|
|
|
|
|
|
|
|
|
|
|
$
|
252,557
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net earnings for the year
|
—
|
|
|
—
|
|
|
248,126
|
|
|
—
|
|
|
248,126
|
|
|
$
|
248,126
|
|
||||
Income tax benefit of common stock options exercised
|
—
|
|
|
8,263
|
|
|
—
|
|
|
—
|
|
|
8,263
|
|
|
—
|
|
|||||
Repurchase of common stock
|
(1,306
|
)
|
|
(35,725
|
)
|
|
—
|
|
|
—
|
|
|
(35,725
|
)
|
|
—
|
|
|||||
Common stock issued pursuant to stock-based compensation plans, net
|
2,397
|
|
|
17,388
|
|
|
—
|
|
|
—
|
|
|
17,388
|
|
|
—
|
|
|||||
Stock-based compensation expense
|
—
|
|
|
25,352
|
|
|
—
|
|
|
—
|
|
|
25,352
|
|
|
—
|
|
|||||
Conversion of convertible debt
|
5,295
|
|
|
58,752
|
|
|
—
|
|
|
—
|
|
|
58,752
|
|
|
—
|
|
|||||
Stock issued for acquisitions
|
—
|
|
|
2,121
|
|
|
—
|
|
|
—
|
|
|
2,121
|
|
|
—
|
|
|||||
Change in minimum liability for pension plans, net of tax effects of $350
|
—
|
|
|
—
|
|
|
—
|
|
|
664
|
|
|
664
|
|
|
664
|
|
|||||
Translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,142
|
)
|
|
(6,142
|
)
|
|
(6,142
|
)
|
|||||
Balance, December 31, 2010
|
159,212
|
|
|
465,467
|
|
|
1,055,429
|
|
|
1,652
|
|
|
1,522,548
|
|
|
|
||||||
Comprehensive earnings, year ended December 31, 2010
|
|
|
|
|
|
|
|
|
|
|
$
|
242,648
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net earnings for the year
|
—
|
|
|
—
|
|
|
221,474
|
|
|
—
|
|
|
221,474
|
|
|
$
|
221,474
|
|
||||
Income tax benefit of common stock options exercised
|
—
|
|
|
5,545
|
|
|
—
|
|
|
—
|
|
|
5,545
|
|
|
—
|
|
|||||
Repurchase of common stock
|
(6,135
|
)
|
|
(160,669
|
)
|
|
—
|
|
|
—
|
|
|
(160,669
|
)
|
|
—
|
|
|||||
Common stock issued pursuant to stock-based compensation plans, net
|
1,892
|
|
|
16,751
|
|
|
—
|
|
|
—
|
|
|
16,751
|
|
|
—
|
|
|||||
Stock-based compensation expense
|
—
|
|
|
25,063
|
|
|
—
|
|
|
—
|
|
|
25,063
|
|
|
—
|
|
|||||
Dividends paid
|
—
|
|
|
—
|
|
|
(38,037
|
)
|
|
—
|
|
|
(38,037
|
)
|
|
—
|
|
|||||
Change in minimum liability for pension plans, net of tax effects of $653
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,113
|
)
|
|
(1,113
|
)
|
|
(1,113
|
)
|
|||||
Translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
(12,533
|
)
|
|
(12,533
|
)
|
|
(12,533
|
)
|
|||||
Balance, December 31, 2011
|
154,969
|
|
|
$
|
352,157
|
|
|
$
|
1,238,866
|
|
|
$
|
(11,994
|
)
|
|
$
|
1,579,029
|
|
|
|
||
Comprehensive earnings, year ended December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
$
|
207,828
|
|
FLIR SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
|
|||||||||||
|
Year Ended December 31,
|
||||||||||
|
2011
|
|
2010
|
|
2009
|
||||||
CASH PROVIDED BY OPERATING ACTIVITIES:
|
|
|
|
|
|
||||||
Net earnings
|
$
|
221,474
|
|
|
$
|
248,126
|
|
|
$
|
230,213
|
|
Income items not affecting cash:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
77,498
|
|
|
61,297
|
|
|
42,426
|
|
|||
Deferred income taxes
|
(12,195
|
)
|
|
(14,099
|
)
|
|
(608
|
)
|
|||
Stock-based compensation arrangements
|
24,917
|
|
|
25,575
|
|
|
23,955
|
|
|||
Inducement loss on exchange offer for convertible notes
|
—
|
|
|
—
|
|
|
1,997
|
|
|||
Other non-cash items
|
12,654
|
|
|
10,320
|
|
|
(1,749
|
)
|
|||
Changes in operating assets and liabilities, net of acquisitions:
|
|
|
|
|
|
||||||
Decrease (increase) in accounts receivable
|
17,992
|
|
|
(47,711
|
)
|
|
9,981
|
|
|||
Increase in inventories
|
(48,361
|
)
|
|
(25,151
|
)
|
|
(301
|
)
|
|||
(Increase) decrease in prepaid expenses and other current assets
|
(11,473
|
)
|
|
23,975
|
|
|
(22,946
|
)
|
|||
Increase in other assets
|
(5,589
|
)
|
|
(28,573
|
)
|
|
(10,906
|
)
|
|||
(Decrease) increase in accounts payable
|
(5,565
|
)
|
|
11,563
|
|
|
3,293
|
|
|||
Increase (decrease) in deferred revenue
|
5,426
|
|
|
(15,448
|
)
|
|
(6,214
|
)
|
|||
Decrease in accrued payroll and other liabilities
|
(25,599
|
)
|
|
(5,753
|
)
|
|
(20,327
|
)
|
|||
(Decrease) increase in accrued income taxes
|
(9,865
|
)
|
|
(2,928
|
)
|
|
13,887
|
|
|||
Increase in pension and other long-term liabilities
|
2,577
|
|
|
14,058
|
|
|
9,059
|
|
|||
Cash provided by operating activities
|
243,891
|
|
|
255,251
|
|
|
271,760
|
|
|||
CASH USED BY INVESTING ACTIVITIES:
|
|
|
|
|
|
||||||
Additions to property and equipment
|
(42,014
|
)
|
|
(65,973
|
)
|
|
(41,874
|
)
|
|||
Proceeds on sale of property and equipment
|
68
|
|
|
225
|
|
|
2,892
|
|
|||
Business acquisitions, net of cash acquired
|
(27,182
|
)
|
|
(402,721
|
)
|
|
(73,565
|
)
|
|||
Other investments
|
1,991
|
|
|
3,080
|
|
|
4,850
|
|
|||
Cash used by investing activities
|
(67,137
|
)
|
|
(465,389
|
)
|
|
(107,697
|
)
|
|||
CASH PROVIDED (USED) BY FINANCING ACTIVITIES:
|
|
|
|
|
|
||||||
Net proceeds of long-term debt, including current portion
|
247,708
|
|
|
—
|
|
|
—
|
|
|||
Cash inducement on exchange offer for convertible notes
|
—
|
|
|
—
|
|
|
(1,997
|
)
|
|||
Repurchase of common stock
|
(160,669
|
)
|
|
(35,725
|
)
|
|
(73,169
|
)
|
|||
Dividends paid
|
(38,037
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from shares issued pursuant to stock-based compensation plans
|
21,706
|
|
|
21,469
|
|
|
22,325
|
|
|||
Excess tax benefit of stock options exercised
|
5,195
|
|
|
7,649
|
|
|
8,834
|
|
|||
Other financing activities
|
(458
|
)
|
|
120
|
|
|
465
|
|
|||
Cash provided (used) by financing activities
|
75,445
|
|
|
(6,487
|
)
|
|
(43,542
|
)
|
|||
Effect of exchange rate changes on cash
|
(4,490
|
)
|
|
(12,285
|
)
|
|
12,084
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
247,709
|
|
|
(228,910
|
)
|
|
132,605
|
|
|||
Cash and cash equivalents, beginning of year
|
193,137
|
|
|
422,047
|
|
|
289,442
|
|
|||
Cash and cash equivalents, end of year
|
$
|
440,846
|
|
|
$
|
193,137
|
|
|
$
|
422,047
|
|
Note 1.
|
Nature of Business and Significant Accounting Policies
|
Note 1.
|
Nature of Business and Significant Accounting Policies—(Continued)
|
Note 1.
|
Nature of Business and Significant Accounting Policies—(Continued)
|
Note 1.
|
Nature of Business and Significant Accounting Policies—(Continued)
|
|
Year Ended December 31,
|
||||||||||
|
2011
|
|
2010
(1)
|
|
2009
|
||||||
Numerator for earnings per share:
|
|
|
|
|
|
||||||
Earnings from continuing operations
|
$
|
222,652
|
|
|
$
|
248,374
|
|
|
$
|
230,213
|
|
Loss from discontinued operations
|
(1,178
|
)
|
|
(248
|
)
|
|
—
|
|
|||
Net earnings for basic earnings per share
|
221,474
|
|
|
248,126
|
|
|
230,213
|
|
|||
Interest associated with convertible notes, net of tax
|
—
|
|
|
935
|
|
|
3,585
|
|
|||
Net earnings available to common shareholders—diluted
|
$
|
221,474
|
|
|
$
|
249,061
|
|
|
$
|
233,798
|
|
Denominator for earnings per share:
|
|
|
|
|
|
||||||
Weighted average number of common shares outstanding
|
158,323
|
|
|
156,141
|
|
|
149,405
|
|
|||
Assumed exercise of stock options and vesting of restricted stock awards, net of shares assumed reacquired under the treasury stock method
|
2,528
|
|
|
3,196
|
|
|
3,518
|
|
|||
Assumed conversion of convertible notes
|
—
|
|
|
2,293
|
|
|
8,646
|
|
|||
Diluted shares outstanding
|
160,851
|
|
|
161,630
|
|
|
161,569
|
|
|
Year Ended December 31,
|
||||||||||
|
2011
|
|
2010
|
|
2009
|
||||||
Cash paid for:
|
|
|
|
|
|
||||||
Interest
|
$
|
1,119
|
|
|
$
|
1,631
|
|
|
$
|
2,972
|
|
Taxes
|
$
|
106,215
|
|
|
$
|
111,778
|
|
|
$
|
116,733
|
|
Non-cash transactions:
|
|
|
|
|
|
||||||
Conversion of convertible notes to common stock
|
$
|
—
|
|
|
$
|
58,752
|
|
|
$
|
132,637
|
|
Stock issued for business acquisition
|
$
|
—
|
|
|
2,121
|
|
|
—
|
|
Note 1.
|
Nature of Business and Significant Accounting Policies—(Continued)
|
|
Year Ended December 31,
|
||||||||||
|
2011
|
|
2010
|
|
2009
|
||||||
Cost of goods sold
|
$
|
3,306
|
|
|
$
|
3,694
|
|
|
$
|
3,297
|
|
Research and development
|
5,195
|
|
|
5,015
|
|
|
4,943
|
|
|||
Selling, general and administrative
|
16,416
|
|
|
16,866
|
|
|
15,715
|
|
|||
Stock-based compensation expense before income taxes
|
24,917
|
|
|
25,575
|
|
|
23,955
|
|
|||
Income tax benefit
|
(6,976
|
)
|
|
(8,011
|
)
|
|
(7,011
|
)
|
|||
Total stock-based compensation expense after income taxes
|
$
|
17,941
|
|
|
$
|
17,564
|
|
|
$
|
16,944
|
|
|
December 31,
|
||||||||||
|
2011
|
|
2010
|
|
2009
|
||||||
Capitalized in inventory
|
$
|
819
|
|
|
$
|
673
|
|
|
$
|
896
|
|
|
2011
|
|
2010
|
|
2009
|
|||
Stock option awards:
|
|
|
|
|
|
|||
Risk-free interest rate
|
1.0
|
%
|
|
1.6
|
%
|
|
1.5
|
%
|
Expected dividend yield
|
0.7
|
%
|
|
—
|
%
|
|
—
|
%
|
Expected term
|
4.3 years
|
|
|
4.3 years
|
|
|
4.3 years
|
|
Expected volatility
|
42.3
|
%
|
|
45.1
|
%
|
|
46.9
|
%
|
Employee stock purchase plan:
|
|
|
|
|
|
|||
Risk-free interest rate
|
0.1
|
%
|
|
0.2
|
%
|
|
0.3
|
%
|
Expected dividend yield
|
0.8
|
%
|
|
—
|
%
|
|
—
|
%
|
Expected term
|
6 months
|
|
|
6 months
|
|
|
6 months
|
|
Expected volatility
|
33.1
|
%
|
|
27.1
|
%
|
|
49.5
|
%
|
Note 1.
|
Nature of Business and Significant Accounting Policies—(Continued)
|
|
Years Ended December 31,
|
||||||||||
|
2011
|
|
2010
|
|
2009
|
||||||
Stock option awards:
|
|
|
|
|
|
||||||
Weighted average grant date fair value per share
|
$
|
11.61
|
|
|
$
|
11.52
|
|
|
$
|
9.96
|
|
Total fair value of awards granted
|
$
|
4,613
|
|
|
$
|
7,299
|
|
|
$
|
10,534
|
|
Total fair value of awards vested
|
$
|
8,492
|
|
|
$
|
7,281
|
|
|
$
|
6,964
|
|
Total intrinsic value of options exercised
|
$
|
21,234
|
|
|
$
|
33,920
|
|
|
$
|
34,648
|
|
Restricted stock unit awards:
|
|
|
|
|
|
||||||
Weighted average grant date fair value per share
|
$
|
34.35
|
|
|
$
|
29.91
|
|
|
$
|
25.38
|
|
Total fair value of awards granted
|
$
|
21,822
|
|
|
$
|
16,011
|
|
|
$
|
16,793
|
|
Employee stock purchase plan:
|
|
|
|
|
|
||||||
Weighted average grant date fair value per share
|
$
|
6.99
|
|
|
$
|
6.59
|
|
|
$
|
8.37
|
|
Total fair value of shares estimated to be issued
|
$
|
2,359
|
|
|
$
|
1,885
|
|
|
$
|
1,073
|
|
Note 1.
|
Nature of Business and Significant Accounting Policies—(Continued)
|
Note 2.
|
Fair Value of Financial Instruments
|
Note 3.
|
Foreign Currency Exchange Rate Risk
|
Note 3.
|
Foreign Currency Exchange Rate Risk—(Continued)
|
|
Year Ended December 31,
|
||||||
|
2011
|
|
2010
|
||||
Euro
|
$
|
19,640
|
|
|
$
|
41,022
|
|
Swedish kroner
|
18,091
|
|
|
23,212
|
|
||
British pound sterling
|
3,050
|
|
|
1,551
|
|
||
Australian dollar
|
609
|
|
|
1,017
|
|
||
Danish kroner
|
174
|
|
|
—
|
|
||
Japanese yen
|
3,581
|
|
|
—
|
|
||
|
$
|
45,145
|
|
|
$
|
66,802
|
|
Note 4.
|
Accounts Receivable
|
|
Year Ended December 31,
|
||||||||||
|
2011
|
|
2010
|
|
2009
|
||||||
Allowance for doubtful accounts, beginning of year
|
$
|
5,104
|
|
|
$
|
1,957
|
|
|
$
|
1,294
|
|
Charges to costs and expenses
|
1,699
|
|
|
1,010
|
|
|
1,056
|
|
|||
Write-offs of uncollectible accounts, net of recoveries
|
(973
|
)
|
|
(92
|
)
|
|
(497
|
)
|
|||
Business acquisitions and disposals
|
(148
|
)
|
|
2,330
|
|
|
12
|
|
|||
Currency translation adjustments
|
(126
|
)
|
|
(101
|
)
|
|
92
|
|
|||
Allowance for doubtful accounts, end of year
|
$
|
5,555
|
|
|
$
|
5,104
|
|
|
$
|
1,957
|
|
Note 5.
|
Inventories
|
|
December 31,
|
||||||
|
2011
|
|
2010
|
||||
Raw material and subassemblies
|
$
|
225,573
|
|
|
$
|
185,359
|
|
Work-in-progress
|
55,886
|
|
|
48,788
|
|
||
Finished goods
|
54,592
|
|
|
69,009
|
|
||
|
$
|
336,051
|
|
|
$
|
303,156
|
|
|
Estimated
Useful Life
|
|
December 31,
|
||||||
|
2011
|
|
2010
|
||||||
Land
|
—
|
|
$
|
22,501
|
|
|
$
|
19,944
|
|
Buildings
|
30 years
|
|
78,673
|
|
|
72,924
|
|
||
Machinery and equipment
|
3 to 7 years
|
|
156,884
|
|
|
139,422
|
|
||
Office equipment and other
|
3 to 10 years
|
|
92,848
|
|
|
95,009
|
|
||
|
|
|
350,906
|
|
|
327,299
|
|
||
Less accumulated depreciation
|
|
|
(164,637
|
)
|
|
(138,180
|
)
|
||
|
|
|
$
|
186,269
|
|
|
$
|
189,119
|
|
Note 7.
|
Goodwill
|
|
Thermal Vision and Measurement
|
|
Raymarine
|
|
Surveillance
|
|
Detection
|
|
Integrated Systems
|
|
Total
|
||||||||||||
Balance, December 31, 2009
|
$
|
224,747
|
|
|
$
|
—
|
|
|
$
|
37,584
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
262,331
|
|
Goodwill from acquisitions
|
14,065
|
|
|
91,643
|
|
|
50,126
|
|
|
41,026
|
|
|
19,494
|
|
|
216,354
|
|
||||||
Currency translation adjustments
|
(2,627
|
)
|
|
5,623
|
|
|
292
|
|
|
—
|
|
|
—
|
|
|
3,288
|
|
||||||
Other activity
|
(4
|
)
|
|
—
|
|
|
50
|
|
|
—
|
|
|
—
|
|
|
46
|
|
||||||
Balance, December 31, 2010
|
236,181
|
|
|
97,266
|
|
|
88,052
|
|
|
41,026
|
|
|
19,494
|
|
|
482,019
|
|
||||||
Goodwill from acquisitions
|
16,452
|
|
|
1,440
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17,892
|
|
||||||
Currency translation adjustments
|
(1,344
|
)
|
|
(610
|
)
|
|
(90
|
)
|
|
—
|
|
|
—
|
|
|
(2,044
|
)
|
||||||
Other activity
|
(102
|
)
|
|
268
|
|
|
2,539
|
|
|
(2,864
|
)
|
|
635
|
|
|
476
|
|
||||||
Balance, December 31, 2011
|
$
|
251,187
|
|
|
$
|
98,364
|
|
|
$
|
90,501
|
|
|
$
|
38,162
|
|
|
$
|
20,129
|
|
|
$
|
498,343
|
|
|
Weighted
Average
Estimated
Useful Life
|
|
December 31,
|
||||||
|
2011
|
|
2010
|
||||||
Product technology
|
10 years
|
|
$
|
95,123
|
|
|
$
|
88,078
|
|
Customer relationships
|
10 years
|
|
85,662
|
|
|
85,362
|
|
||
Trademarks and tradename portfolios
|
14 years
|
|
8,197
|
|
|
7,947
|
|
||
Tradename portfolio not subject to amortization
|
Indefinite
|
|
32,076
|
|
|
32,250
|
|
||
Other
|
4 years
|
|
24,530
|
|
|
23,010
|
|
||
Acquired identifiable intangibles
|
|
|
245,588
|
|
|
236,647
|
|
||
Less accumulated amortization
|
|
|
(88,588
|
)
|
|
(66,793
|
)
|
||
Net acquired identifiable intangibles
|
|
|
157,000
|
|
|
169,854
|
|
||
Patents
|
17 years
|
|
4,202
|
|
|
4,277
|
|
||
Less accumulated amortization
|
|
|
(3,478
|
)
|
|
(3,287
|
)
|
||
Net patents
|
|
|
724
|
|
|
990
|
|
||
Acquired in-place leases and other
|
7 years
|
|
12,882
|
|
|
10,881
|
|
||
Less accumulated amortization
|
|
|
(6,166
|
)
|
|
(4,340
|
)
|
||
Net acquired in-place leases and other
|
|
|
6,716
|
|
|
6,541
|
|
||
|
|
|
$
|
164,440
|
|
|
$
|
177,385
|
|
2012
|
$
|
24,739
|
|
2013
|
22,840
|
|
|
2014
|
17,873
|
|
|
2015
|
13,755
|
|
|
2016
|
9,102
|
|
Note 9.
|
Credit Agreements
|
Note 9.
|
Credit Agreements—(Continued)
|
Note 10.
|
Accrued Product Warranties
|
|
Year Ended December 31,
|
||||||||||
|
2011
|
|
2010
|
|
2009
|
||||||
Accrued product warranties, beginning of year
|
$
|
18,686
|
|
|
$
|
9,438
|
|
|
$
|
7,826
|
|
Amounts paid for warranty services
|
(7,732
|
)
|
|
(2,029
|
)
|
|
(8,861
|
)
|
|||
Warranty provisions for products sold
|
5,402
|
|
|
2,073
|
|
|
10,038
|
|
|||
Business acquisitions and disposals
|
(20
|
)
|
|
8,969
|
|
|
202
|
|
|||
Currency translation adjustments and other
|
(290
|
)
|
|
235
|
|
|
233
|
|
|||
Accrued product warranties, end of year
|
$
|
16,046
|
|
|
$
|
18,686
|
|
|
$
|
9,438
|
|
|
|
|
|
|
|
||||||
Current accrued product warranties, end of year
|
$
|
13,370
|
|
|
$
|
15,711
|
|
|
$
|
9,438
|
|
Long-term accrued product warranties, end of year
|
$
|
2,676
|
|
|
$
|
2,975
|
|
|
$
|
—
|
|
Note 11.
|
Long-Term Debt
|
|
December 31,
|
||||||
|
2011
|
|
2010
|
||||
Unsecured notes
|
$
|
250,000
|
|
|
$
|
—
|
|
Unamortized issuance costs
|
(2,139
|
)
|
|
—
|
|
||
|
$
|
247,861
|
|
|
$
|
—
|
|
Note 11.
|
Long-Term Debt—(Continued)
|
Note 12.
|
Commitments
|
|
Net
Operating
Leases
|
|
Other
Contractual
Obligations
|
||||
2012
|
$
|
15,927
|
|
|
$
|
3,278
|
|
2013
|
7,856
|
|
|
575
|
|
||
2014
|
5,699
|
|
|
550
|
|
||
2015
|
1,949
|
|
|
550
|
|
||
2016
|
896
|
|
|
550
|
|
||
Thereafter
|
174
|
|
|
275
|
|
||
Total minimum payments
|
$
|
32,501
|
|
|
$
|
5,778
|
|
Note 13.
|
Contingencies
|
Note 14.
|
Income Taxes
|
|
Year Ended December 31,
|
||||||||||
|
2011
|
|
2010
|
|
2009
|
||||||
Current tax expense:
|
|
|
|
|
|
||||||
Federal
|
$
|
62,858
|
|
|
$
|
79,551
|
|
|
$
|
75,698
|
|
State
|
9,262
|
|
|
16,511
|
|
|
10,621
|
|
|||
Foreign
|
24,452
|
|
|
32,883
|
|
|
24,931
|
|
|||
|
96,572
|
|
|
128,945
|
|
|
111,250
|
|
|||
Deferred tax expense (benefit):
|
|
|
|
|
|
||||||
Federal
|
(5,185
|
)
|
|
(10,183
|
)
|
|
1,744
|
|
|||
State
|
(993
|
)
|
|
(1,571
|
)
|
|
92
|
|
|||
Foreign
|
(1,967
|
)
|
|
(2,865
|
)
|
|
(2,906
|
)
|
|||
|
(8,145
|
)
|
|
(14,619
|
)
|
|
(1,070
|
)
|
|||
Total provision
|
$
|
88,427
|
|
|
$
|
114,326
|
|
|
$
|
110,180
|
|
Note 14.
|
Income Taxes—(Continued)
|
|
December 31,
|
||||||
|
2011
|
|
2010
|
||||
Allowance for doubtful accounts
|
$
|
595
|
|
|
$
|
800
|
|
Accrued product warranties
|
2,964
|
|
|
2,862
|
|
||
Inventory basis differences
|
10,295
|
|
|
7,957
|
|
||
Accrued liabilities
|
9,499
|
|
|
10,121
|
|
||
Deferred revenue
|
2,568
|
|
|
1,256
|
|
||
Current net operating loss
|
844
|
|
|
376
|
|
||
Other
|
(1,602
|
)
|
|
(746
|
)
|
||
Foreign accrued liabilities
|
1,402
|
|
|
568
|
|
||
Foreign intangibles
|
(255
|
)
|
|
(1,312
|
)
|
||
Foreign inventory
|
—
|
|
|
893
|
|
||
Foreign other
|
1,133
|
|
|
353
|
|
||
Net current deferred tax assets
|
$
|
27,443
|
|
|
$
|
23,128
|
|
|
|
|
|
||||
Net operating loss carry-forwards
|
$
|
28,826
|
|
|
$
|
39,531
|
|
Credit carry-forwards
|
6,175
|
|
|
2,477
|
|
||
Domestic depreciation
|
(8,682
|
)
|
|
(11,796
|
)
|
||
Supplemental Executive Retirement Plan
|
7,684
|
|
|
6,415
|
|
||
Stock-based compensation
|
11,978
|
|
|
10,690
|
|
||
Intangibles
|
(22,436
|
)
|
|
(26,888
|
)
|
||
Deferred revenue
|
5,599
|
|
|
3,704
|
|
||
Other
|
7,561
|
|
|
4,172
|
|
||
Valuation allowance
|
(5,061
|
)
|
|
(5,563
|
)
|
||
Net long-term deferred tax assets
|
$
|
31,644
|
|
|
$
|
22,742
|
|
|
|
|
|
||||
Foreign net operating loss recapture
|
$
|
(550
|
)
|
|
$
|
(531
|
)
|
Foreign credit carry-forwards
|
632
|
|
|
166
|
|
||
Foreign depreciation
|
3,431
|
|
|
3,426
|
|
||
Foreign stock-based compensation
|
788
|
|
|
1,080
|
|
||
Foreign social costs
|
(462
|
)
|
|
(860
|
)
|
||
Foreign intangibles
|
(23,074
|
)
|
|
(17,543
|
)
|
||
Foreign pension
|
33
|
|
|
26
|
|
||
Foreign net operating loss carry-forwards
|
2,877
|
|
|
2,438
|
|
||
Foreign other
|
747
|
|
|
381
|
|
||
Valuation allowance
|
(1,659
|
)
|
|
(1,746
|
)
|
||
Long-term deferred tax liabilities
|
$
|
(17,237
|
)
|
|
$
|
(13,163
|
)
|
Note 14.
|
Income Taxes—(Continued)
|
|
Year Ended December 31,
|
|||||||
|
2011
|
|
2010
|
|
2009
|
|||
Statutory federal tax rate
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
Increase (decrease) in rates resulting from:
|
|
|
|
|
|
|||
Foreign rate differential
|
(3.8
|
)
|
|
(1.9
|
)
|
|
(4.0
|
)
|
Federal and state income tax credits
|
(2.9
|
)
|
|
(1.5
|
)
|
|
(4.7
|
)
|
State taxes
|
2.2
|
|
|
2.6
|
|
|
2.6
|
|
Non-deductible expenses
|
(1.2
|
)
|
|
(1.6
|
)
|
|
3.0
|
|
Other
|
(0.9
|
)
|
|
(1.1
|
)
|
|
0.5
|
|
Effective tax rate
|
28.4
|
%
|
|
31.5
|
%
|
|
32.4
|
%
|
|
Year Ended December 31,
|
||||||||||
|
2011
|
|
2010
|
|
2009
|
||||||
Balance, beginning of year
|
$
|
30,949
|
|
|
$
|
8,297
|
|
|
$
|
5,697
|
|
Increases related to current year tax positions
|
1,225
|
|
|
2,339
|
|
|
2,528
|
|
|||
Increases related to prior year tax positions
|
4,192
|
|
|
1,561
|
|
|
227
|
|
|||
Decreases related to prior year tax positions
|
(4,608
|
)
|
|
(11
|
)
|
|
(29
|
)
|
|||
Acquisitions
|
—
|
|
|
25,716
|
|
|
—
|
|
|||
Lapse of statute of limitations
|
(2,558
|
)
|
|
(6,953
|
)
|
|
—
|
|
|||
Settlements
|
—
|
|
|
—
|
|
|
(126
|
)
|
|||
Balance, end of year
|
$
|
29,200
|
|
|
$
|
30,949
|
|
|
$
|
8,297
|
|
Note 14.
|
Income Taxes—(Continued)
|
Note 15.
|
Stock-based Compensation
|
|
Shares
(in thousands)
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual
Term
|
|
Aggregate
Intrinsic
Value
(in thousands)
|
||||||
Outstanding at December 31, 2010
|
7,403
|
|
|
$
|
18.69
|
|
|
5.6
|
|
|
|
||
Granted
|
397
|
|
|
35.00
|
|
|
|
|
|
||||
Exercised
|
(1,148
|
)
|
|
12.06
|
|
|
|
|
|
||||
Forfeited
|
(82
|
)
|
|
27.63
|
|
|
|
|
|
||||
Outstanding at December 31, 2011
|
6,570
|
|
|
$
|
20.73
|
|
|
5.0
|
|
|
$
|
41,277
|
|
Exercisable at December 31, 2011
|
5,581
|
|
|
$
|
19.00
|
|
|
4.4
|
|
|
$
|
41,273
|
|
Vested and expected to vest at December 31, 2011
|
6,435
|
|
|
$
|
20.59
|
|
|
5.0
|
|
|
$
|
41,276
|
|
Note 15.
|
Stock-based Compensation—(Continued)
|
|
Shares
(in thousands)
|
|
Weighted
Average Grant
Date Fair Value
|
|||
Outstanding at December 31, 2010
|
1,351
|
|
|
$
|
28.54
|
|
Granted
|
637
|
|
|
34.35
|
|
|
Vested and distributed
|
(576
|
)
|
|
29.06
|
|
|
Forfeited
|
(107
|
)
|
|
29.83
|
|
|
Outstanding at December 31, 2011
|
1,305
|
|
|
$
|
30.89
|
|
Note 16.
|
Other Employee Benefit Plans
|
|
Year Ended December 31,
|
||||||||||
|
2011
|
|
2010
|
|
2009
|
||||||
Net earnings (loss)
|
$
|
(1,410
|
)
|
|
$
|
396
|
|
|
$
|
493
|
|
Prior service cost
|
297
|
|
|
297
|
|
|
313
|
|
|||
Transition obligation
|
—
|
|
|
(29
|
)
|
|
(25
|
)
|
|||
|
$
|
(1,113
|
)
|
|
$
|
664
|
|
|
$
|
781
|
|
Note 16.
|
Other Employee Benefit Plans—(Continued)
|
|
December 31,
|
||||||
|
2011
|
|
2010
|
||||
Net loss
|
$
|
(4,949
|
)
|
|
$
|
(3,539
|
)
|
Prior service cost
|
(923
|
)
|
|
(1,220
|
)
|
||
|
$
|
(5,872
|
)
|
|
$
|
(4,759
|
)
|
|
Year Ended December 31,
|
||||||
|
2011
|
|
2010
|
||||
Change in benefit obligation:
|
|
|
|
||||
Benefit obligation at January 1
|
$
|
20,564
|
|
|
$
|
22,220
|
|
Service costs
|
205
|
|
|
142
|
|
||
Interest costs
|
1,047
|
|
|
1,135
|
|
||
Actuarial loss (gain)
|
2,697
|
|
|
1,319
|
|
||
Benefits paid
|
(436
|
)
|
|
(4,541
|
)
|
||
Foreign currency exchange changes
|
(98
|
)
|
|
289
|
|
||
Benefit obligation at December 31
|
$
|
23,979
|
|
|
$
|
20,564
|
|
Fair value of plan assets at December 31
|
$
|
—
|
|
|
$
|
—
|
|
Unfunded status at December 31
|
$
|
23,979
|
|
|
$
|
20,564
|
|
Amounts recognized in the Consolidated Balance Sheets:
|
|
|
|
||||
Current liabilities
|
$
|
401
|
|
|
$
|
420
|
|
Non-current liabilities
|
$
|
23,578
|
|
|
$
|
20,144
|
|
|
Year Ended December 31,
|
||||
|
2011
|
|
2010
|
||
Net periodic benefit cost:
|
|
|
|
||
SERP:
|
|
|
|
||
Discount rate
|
5.15
|
%
|
|
5.50
|
%
|
Rate of increase in compensation levels
|
5.00
|
%
|
|
5.00
|
%
|
Defined benefit pension plan for employees outside the United States:
|
|
|
|
||
Discount rate
|
3.40
|
%
|
|
4.70
|
%
|
Funded status and projected benefit obligation:
|
|
|
|
||
SERP:
|
|
|
|
||
Discount rate
|
4.00
|
%
|
|
5.15
|
%
|
Rate of increase in compensation levels
|
5.00
|
%
|
|
5.00
|
%
|
Defined benefit pension plan for employees outside the United States:
|
|
|
|
||
Discount rate
|
3.40
|
%
|
|
4.70
|
%
|
Note 16.
|
Other Employee Benefit Plans—(Continued)
|
2012
|
$
|
525
|
|
2013
|
13,714
|
|
|
2014
|
490
|
|
|
2015
|
500
|
|
|
2016
|
498
|
|
|
Five years thereafter
|
7,427
|
|
|
|
$
|
23,154
|
|
|
Year Ended December 31,
|
||||||||||
|
2011
|
|
2010
|
|
2009
|
||||||
Service costs
|
$
|
205
|
|
|
$
|
142
|
|
|
$
|
125
|
|
Interest costs
|
1,047
|
|
|
1,135
|
|
|
1,085
|
|
|||
Net amortization and deferral
|
903
|
|
|
967
|
|
|
1,045
|
|
|||
Settlement loss
|
—
|
|
|
1,392
|
|
|
—
|
|
|||
Net periodic pension costs
|
$
|
2,155
|
|
|
$
|
3,636
|
|
|
$
|
2,255
|
|
|
Year Ending December 31, 2012
|
||
Net loss
|
$
|
445
|
|
Net prior service cost
|
297
|
|
|
|
$
|
742
|
|
Note 17.
|
Operating Segments and Related Information
|
Note 17.
|
Operating Segments and Related Information—(Continued)
|
|
Year Ended December 31,
|
||||||||||
|
2011
|
|
2010
(1)
|
|
2009
|
||||||
Revenue—External Customers:
|
|
|
|
|
|
||||||
Thermal Vision and Measurement
|
$
|
660,256
|
|
|
$
|
574,852
|
|
|
$
|
491,805
|
|
Raymarine
|
171,489
|
|
|
104,089
|
|
|
—
|
|
|||
Surveillance
|
577,552
|
|
|
671,250
|
|
|
655,282
|
|
|||
Detection
|
79,918
|
|
|
23,554
|
|
|
—
|
|
|||
Integrated Systems
|
54,847
|
|
|
14,692
|
|
|
—
|
|
|||
|
$
|
1,544,062
|
|
|
$
|
1,388,437
|
|
|
$
|
1,147,087
|
|
Revenue—Intersegments:
|
|
|
|
|
|
||||||
Thermal Vision and Measurement
|
$
|
18,553
|
|
|
$
|
16,670
|
|
|
$
|
13,202
|
|
Raymarine
|
7
|
|
|
—
|
|
|
—
|
|
|||
Surveillance
|
32,266
|
|
|
28,284
|
|
|
28,412
|
|
|||
Detection
|
3,394
|
|
|
—
|
|
|
—
|
|
|||
Integrated Systems
|
6,639
|
|
|
—
|
|
|
—
|
|
|||
Eliminations
|
(60,859
|
)
|
|
(44,954
|
)
|
|
(41,614
|
)
|
|||
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Earnings (loss) from operations:
|
|
|
|
|
|
||||||
Thermal Vision and Measurement
|
$
|
194,674
|
|
|
$
|
163,664
|
|
|
$
|
122,219
|
|
Raymarine
|
11,855
|
|
|
8,284
|
|
|
—
|
|
|||
Surveillance
|
208,510
|
|
|
256,208
|
|
|
286,361
|
|
|||
Detection
|
(5,568
|
)
|
|
(2,541
|
)
|
|
—
|
|
|||
Integrated Systems
|
1,659
|
|
|
32
|
|
|
—
|
|
|||
Other
|
(97,935
|
)
|
|
(65,336
|
)
|
|
(61,293
|
)
|
|||
|
$
|
313,195
|
|
|
$
|
360,311
|
|
|
$
|
347,287
|
|
Note 17.
|
Operating Segments and Related Information—(Continued)
|
|
December 31,
|
||||||
|
2011
|
|
2010
|
||||
Segment assets (accounts receivable, net and inventories):
|
|
|
|
||||
Thermal Vision and Measurement
|
$
|
233,888
|
|
|
$
|
199,311
|
|
Raymarine
|
60,093
|
|
|
58,236
|
|
||
Surveillance
|
316,616
|
|
|
327,240
|
|
||
Detection
|
32,447
|
|
|
39,103
|
|
||
Integrated Systems
|
17,774
|
|
|
13,504
|
|
||
Discontinued Operations
|
603
|
|
|
5,485
|
|
||
|
$
|
661,421
|
|
|
$
|
642,879
|
|
|
Year Ended December 31,
|
||||||||||
|
2011
|
|
2010
|
|
2009
|
||||||
United States government
|
$
|
444,882
|
|
|
$
|
473,948
|
|
|
$
|
494,641
|
|
Note 18.
|
Business Acquisitions
|
Cash acquired
|
$
|
3,629
|
|
Accounts receivable, net
|
2,567
|
|
|
Inventories
|
49
|
|
|
Property and equipment
|
851
|
|
|
Other assets
|
132
|
|
|
Liabilities
|
(5,474
|
)
|
|
Net tangible assets
|
1,754
|
|
|
Identifiable intangible assets
|
8,830
|
|
|
Goodwill
|
16,452
|
|
|
Purchase price
|
$
|
27,036
|
|
|
Estimated
Useful Life
|
|
Amount
|
||
Customer Relationships
|
7 years
|
|
$
|
780
|
|
Patented/Proprietary Technology
|
7 years
|
|
6,500
|
|
|
Backlog & Other
|
2 years
|
|
1,550
|
|
|
|
|
|
$
|
8,830
|
|
|
Identifiable Intangible Assets
|
|
Goodwill
|
||||
Surveillance
|
$
|
25,730
|
|
|
$
|
52,665
|
|
Detection
|
16,750
|
|
|
38,162
|
|
||
Integrated Systems
|
12,080
|
|
|
20,129
|
|
||
Thermal Vision and Measurement
|
1,130
|
|
|
—
|
|
||
Discontinued Operations
|
1,740
|
|
|
—
|
|
||
|
$
|
57,430
|
|
|
$
|
110,956
|
|
Cash acquired
|
$
|
36,197
|
|
Accounts receivable, net
|
24,405
|
|
|
Inventories
|
41,982
|
|
|
Property and equipment
|
9,016
|
|
|
Other assets
|
13,947
|
|
|
Liabilities
|
(41,661
|
)
|
|
Net tangible assets
|
83,886
|
|
|
Identifiable intangible assets
|
57,430
|
|
|
Goodwill
|
110,956
|
|
|
Deferred taxes, net
|
14,069
|
|
|
Purchase price
|
$
|
266,341
|
|
Note 19.
|
Discontinued Operations
|
Note 20.
|
Shareholders’ Equity
|
Note 21.
|
Subsequent Event
|
QUARTERLY FINANCIAL DATA (UNAUDITED)
FLIR SYSTEMS, INC.
(In thousands, except per share data)
|
|||||||||||||||
|
Q1
(1)
|
|
Q2
(1)
|
|
Q3
(1)
|
|
Q4
(1)
|
||||||||
2011
|
|
|
|
|
|
|
|
||||||||
Revenue
|
$
|
375,969
|
|
|
$
|
391,554
|
|
|
$
|
371,327
|
|
|
$
|
405,212
|
|
Gross profit
|
196,512
|
|
|
205,410
|
|
|
201,897
|
|
|
224,785
|
|
||||
Earnings from continuing operations
|
51,605
|
|
|
29,822
|
|
(2)
|
64,390
|
|
|
76,835
|
|
||||
(Loss) income from discontinued operations
|
(289
|
)
|
|
(513
|
)
|
|
329
|
|
|
(705
|
)
|
||||
Net earnings
|
51,316
|
|
|
29,309
|
|
|
64,719
|
|
|
76,130
|
|
||||
Basic earnings per share:
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
0.32
|
|
|
$
|
0.19
|
|
|
$
|
0.41
|
|
|
$
|
0.49
|
|
Discontinued operations
|
(0.00
|
)
|
|
(0.00
|
)
|
|
(0.00
|
)
|
|
(0.00
|
)
|
||||
Basic earnings per share
|
$
|
0.32
|
|
|
$
|
0.18
|
|
|
$
|
0.41
|
|
|
$
|
0.49
|
|
Diluted earnings per share:
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
0.32
|
|
|
$
|
0.18
|
|
|
$
|
0.40
|
|
|
$
|
0.49
|
|
Discontinued operations
|
(0.00
|
)
|
|
(0.00
|
)
|
|
(0.00
|
)
|
|
(0.00
|
)
|
||||
Diluted earnings per share
|
$
|
0.32
|
|
|
$
|
0.18
|
|
|
$
|
0.40
|
|
|
$
|
0.48
|
|
2010
|
|
|
|
|
|
|
|
||||||||
Revenue
|
$
|
287,298
|
|
|
$
|
331,133
|
|
|
$
|
332,497
|
|
|
$
|
437,509
|
|
Gross profit
|
165,354
|
|
|
183,323
|
|
|
182,108
|
|
|
232,856
|
|
||||
Earnings from continuing operations
|
55,895
|
|
|
59,454
|
|
|
62,955
|
|
|
70,070
|
|
||||
Loss from discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
(248
|
)
|
||||
Net earnings
|
55,895
|
|
|
59,454
|
|
|
62,955
|
|
|
69,822
|
|
||||
Basic earnings per share:
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
0.37
|
|
|
$
|
0.38
|
|
|
$
|
0.40
|
|
|
$
|
0.44
|
|
Discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.00
|
)
|
||||
Basic earnings per share
|
$
|
0.37
|
|
|
$
|
0.38
|
|
|
$
|
0.40
|
|
|
$
|
0.44
|
|
Diluted earnings per share:
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
0.35
|
|
|
$
|
0.37
|
|
|
$
|
0.39
|
|
|
$
|
0.44
|
|
Discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.00
|
)
|
||||
Diluted earnings per share
|
$
|
0.35
|
|
|
$
|
0.37
|
|
|
$
|
0.39
|
|
|
$
|
0.43
|
|
(1)
|
Amounts for the fourth quarter of 2010 and the first three quarters of 2011 have been adjusted for the reclassification of certain discontinued
operations to continuing operations.
|
(2)
|
Earnings
from continuing operations for the second quarter of 2011 include the payment of a
$39 million
litigation settlement. See Note 13 to the Consolidated Financial Statements for additional information.
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
ITEM 9A.
|
CONTROLS AND PROCEDURES
|
ITEM 9B.
|
OTHER INFORMATION
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
ITEM 11.
|
EXECUTIVE COMPENSATION
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
ITEM 14.
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
ITEM 15.
|
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|
Number
|
Description
|
3.1
|
Second Restated Articles of Incorporation of FLIR Systems, Inc., as amended through May 12, 2008 (incorporated by reference to Exhibit 3.1 to the Annual Report on Form 10-K filed on February 27, 2009).
|
|
|
3.2
|
Second Restated Bylaws of FLIR Systems, Inc., as amended through August 6, 2009 (incorporated by reference to Exhibit 3.1 to the Quarterly Report on Form 10-Q filed on August 10, 2009).
|
|
|
4.1
|
Indenture, dated August 19, 2011, between FLIR Systems, Inc. and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed on August 19, 2011).
|
|
|
4.2
|
First Supplemental Indenture, dated August 19, 2011, between FLIR Systems, Inc. and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed on August 19, 2011).
|
|
|
4.3
|
Form of 3.750% Note due September 1, 2016 (incorporated by reference to Exhibit 4.3 to the Current Report on Form 8-K filed on August 19, 2011).
|
|
|
4.4
|
Second Supplemental Indenture, dated January 30, 2012, between FLIR Commercial Systems, Inc., FLIR Government Systems, Inc. and U.S. Bank National Association, as trustee.
|
|
|
10.1
|
1993 Stock Option Plan for Non-employee Directors (incorporated by reference to Exhibit 10.4 to Registration Statement on Form S-1 (File No. 33-62582)).
(1)
|
|
|
10.2
|
FLIR Systems, Inc. 2002 Stock Incentive Plan, amended April 21, 2004 (incorporated by reference to Exhibit 10.13 to the Annual Report on Form 10-K filed on March 4, 2005).
(1)
|
|
|
10.3
|
FLIR Systems, Inc. 2002 Stock Incentive Plan Stock Option Agreement (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on February 10, 2005).
(1)
|
|
|
10.4
|
FLIR Systems, Inc. 2007 Executive Bonus Plan (incorporated by reference to Exhibit 10.16 to the Annual Report on Form 10-K filed on March 16, 2007).
(1)
|
|
|
10.5
|
Form of 2007 Executive Bonus Plan Performance Award Agreement dated as of March 14, 2007 (incorporated by reference to Exhibit 10.18 to the Annual Report on Form 10-K filed on March 16, 2007).
(1)
|
|
|
10.6
|
Form of Stock Option Agreement for 2002 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 on the Current Report on Form 8-K filed on May 4, 2007).
(1)
|
|
|
10.7
|
Form of Deferred Stock Agreement for 2002 Stock Incentive Plan (incorporated by reference to Exhibit 10.2 on the Current Report on Form 8-K filed on May 4, 2007).
(1)
|
|
|
10.8
|
Form of Change in Control Agreement dated as of May 6, 2009 (incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q filed on May 8, 2009).
(1)
|
|
|
10.9
|
Amended and Restated FLIR Systems, Inc. Supplemental Executive Retirement Plan, as amended and restated on October 22, 2009 (incorporated by reference to Exhibit 10.16 to the Annual Report on Form 10-K filed on February 26, 2010).
(1)
|
|
|
10.10
|
Executive Employment Agreement between FLIR Systems, Inc. and Earl R. Lewis dated as of February 28, 2011 (incorporated by reference to Exhibit 10.3 to the Annual Report on Form 10-K filed on March 1, 2011).
(1)
|
|
|
10.11
|
Credit Agreement by and among FLIR Systems, Inc. and certain subsidiaries of FLIR Systems, Inc., as borrowers, Bank of America, N.A., U.S. Bank National Association, JPMorgan Chase Bank N.A. and other Lenders identified therein as of February 8, 2011 (incorporated by reference to Exhibit 10.3 to the Annual Report on Form 10-K filed on March 1, 2011).
|
|
|
10.12
|
First Amendment to Credit Agreement by and among FLIR Systems, Inc. and certain subsidiaries of FLIR Systems, Inc., as borrowers, Bank of America, N.A., U.S. Bank National Association, JPMorgan Chase Bank N.A. and other Lenders dated August 9, 2011 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on August 12, 2011).
|
|
|
10.13
|
Joinder Agreement to the Credit Agreement by and among FLIR Commercial Systems, Inc,, FLIR Government Systems, Inc and Bank of America, N.A. dated January 30, 2012.
|
|
|
(1)
|
This exhibit constitutes a management contract or compensatory plan or arrangement.
|
|
FLIR SYSTEMS, INC.
|
||
|
(Registrant)
|
||
|
|
|
|
|
By:
|
|
/
S
/ A
NTHONY
L. T
RUNZO
|
|
|
|
Anthony L. Trunzo
Sr. Vice President, Finance and Chief Financial Officer
|
Signature
|
|
Title
|
/
S
/ E
ARL
R. L
EWIS
|
|
Chairman of the Board of Directors, President and Chief Executive Officer
|
Earl R. Lewis
|
|
|
|
|
|
/
S
/ A
NTHONY
L. T
RUNZO
|
|
Sr. Vice President, Finance and Chief Financial Officer
|
Anthony L. Trunzo
|
|
(Principal Financial Officer)
|
|
|
|
/
S
/ D
AVID
A. M
UESSLE
|
|
Vice President and Corporate Controller
|
David A. Muessle
|
|
(Principal Accounting Officer)
|
|
|
|
/
S
/ J
OHN
D. C
ARTER
|
|
Director
|
John D. Carter
|
|
|
|
|
|
/
S
/ W
ILLIAM
W. C
ROUCH
|
|
Director
|
William W. Crouch
|
|
|
|
|
|
/
S
/ A
NGUS
L. M
ACDONALD
|
|
Director
|
Angus L. Macdonald
|
|
|
|
|
|
/
S
/ M
ICHAEL
T. S
MITH
|
|
Director
|
Michael T. Smith
|
|
|
|
|
|
/
S
/ J
OHN
W. W
OOD
, J
R
.
|
|
Director
|
John W. Wood, Jr.
|
|
|
|
|
|
/
S
/ S
TEVEN
E. W
YNNE
|
|
Director
|
Steven E. Wynne
|
|
|
Title:
|
President
|
Title:
|
Chief Financial Officer
|
Title:
|
Vice President
|
Subsidiary
|
Tax Payer ID #
|
Jurisdiction
|
Owner
|
% of
Ownership
|
FLIR Commercial Systems, Inc.
|
77-0423382
|
California
|
FLIR Systems, Inc.
|
100%
|
FLIR Government Systems, Inc.
|
30-0584518
|
Delaware
|
FLIR Systems, Inc.
|
100%
|
|
First
Performance Period
|
|
|
Second
Performance Period
|
|
|
Third
Performance Period
|
|||
|
EPS
|
Percent of Target Shares That Will Vest
|
|
|
EPS
|
Percent of Target Shares That Will Vest
|
|
|
EPS
|
Percent of Target Shares That Will Vest
|
Threshold Performance
|
$1.62
|
50%
|
|
|
$1.86
|
50%
|
|
|
$2.24
|
50%
|
|
$1.63
|
57%
|
|
|
$1.87
|
56%
|
|
|
$2.25
|
55%
|
|
$1.64
|
64%
|
|
|
$1.88
|
61%
|
|
|
$2.26
|
60%
|
|
$1.65
|
71%
|
|
|
$1.89
|
67%
|
|
|
$2.27
|
65%
|
|
$1.66
|
79%
|
|
|
$1.90
|
72%
|
|
|
$2.28
|
70%
|
|
$1.67
|
86%
|
|
|
$1.91
|
78%
|
|
|
$2.29
|
75%
|
|
$1.68
|
93%
|
|
|
$1.92
|
83%
|
|
|
$2.30
|
80%
|
|
|
|
|
|
$1.93
|
89%
|
|
|
$2.31
|
85%
|
|
|
|
|
|
$1.94
|
94%
|
|
|
$2.32
|
90%
|
|
|
|
|
|
|
|
|
|
$2.33
|
95%
|
Target Performance
|
$1.69
|
100%
|
|
|
$1.95
|
100%
|
|
|
$2.34
|
100%
|
|
$1.70
|
106%
|
|
|
$1.96
|
106%
|
|
|
$2.35
|
105%
|
|
$1.71
|
113%
|
|
|
$1.97
|
112%
|
|
|
$2.36
|
111%
|
|
$1.72
|
119%
|
|
|
$1.98
|
118%
|
|
|
$2.37
|
116%
|
|
$1.73
|
125%
|
|
|
$1.99
|
124%
|
|
|
$2.38
|
121%
|
|
$1.74
|
131%
|
|
|
$2.00
|
129%
|
|
|
$2.39
|
126%
|
|
$1.75
|
138%
|
|
|
$2.01
|
135%
|
|
|
$2.40
|
132%
|
|
$1.76
|
144%
|
|
|
$2.02
|
141%
|
|
|
$2.41
|
137%
|
|
$1.77
|
150%
|
|
|
$2.03
|
147%
|
|
|
$2.42
|
142%
|
|
$1.78
|
156%
|
|
|
$2.04
|
153%
|
|
|
$2.43
|
147%
|
|
$1.79
|
163%
|
|
|
$2.05
|
159%
|
|
|
$2.44
|
153%
|
|
$1.80
|
169%
|
|
|
$2.06
|
165%
|
|
|
$2.45
|
158%
|
|
$1.81
|
175%
|
|
|
$2.07
|
171%
|
|
|
$2.46
|
163%
|
|
$1.82
|
181%
|
|
|
$2.08
|
176%
|
|
|
$2.47
|
168%
|
|
$1.83
|
188%
|
|
|
$2.09
|
182%
|
|
|
$2.48
|
174%
|
|
$1.84
|
194%
|
|
|
$2.10
|
188%
|
|
|
$2.49
|
179%
|
|
|
|
|
|
$2.11
|
194%
|
|
|
$2.50
|
184%
|
|
|
|
|
|
|
|
|
|
$2.51
|
189%
|
|
|
|
|
|
|
|
|
|
$2.52
|
195%
|
Maximum Performance
|
$1.85
|
200%
|
|
|
$2.12
|
200%
|
|
|
$2.53
|
200%
|
•
|
FLIR Systems Ltd., a United Kingdom Corporation
|
•
|
FLIR Systems CV, a Netherlands Corporation
|
•
|
FLIR Systems Ltd., an Ontario Corporation
|
•
|
FLIR Commercial Systems, Inc., a California, USA Corporation
|
•
|
FSI Holdings, Inc., an Oregon, USA Corporation
|
•
|
FLIR Systems Aviation, LLC, an Oregon, USA Limited Liability Company
|
•
|
FLIR Government Systems, Inc., a Delaware, USA Corporation
|
1.
|
I have reviewed this annual report on Form 10-K 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 13-15(f) and 15d-15(f)) for the registrant and have:
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a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluations; and
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d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
|
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
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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.
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Date February 29, 2012
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|
/s/ A
NTHONY
L. T
RUNZO
|
|
|
Anthony L. Trunzo
|
|
|
Sr. Vice President, Finance and Chief Financial Officer
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Date February 29, 2012
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|
/s/ E
ARL
R. L
EWIS
|
|
|
Earl R. Lewis
|
|
|
President and Chief Executive Officer
|
Date February 29, 2012
|
|
/s/ A
NTHONY
L. T
RUNZO
|
|
|
Anthony L. Trunzo
|
|
|
Chief Financial Officer
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1.
|
I have reviewed this annual report on Form 10-K of FLIR Systems, Inc.;
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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;
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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 13-15(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 February 29, 2012
|
|
/s/ E
ARL
R. L
EWIS
|
|
|
Earl R. Lewis
|
|
|
President and Chief Executive Officer
|