Statement Of Income
Statement Of Income (USD $) | |||
In Thousands, except Per Share data | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 |
Revenue | $1,147,087 | $1,076,974 | $779,397 |
Cost of goods sold | 488,558 | 470,832 | 346,167 |
Gross profit | 658,529 | 606,142 | 433,230 |
Operating expenses: | |||
Research and development | 91,301 | 89,964 | 72,458 |
Selling, general and administrative | 219,941 | 231,687 | 168,940 |
Total operating expenses | 311,242 | 321,651 | 241,398 |
Earnings from operations | 347,287 | 284,491 | 191,832 |
Interest expense | 6,882 | 14,336 | 15,309 |
Interest income | (1,749) | (7,397) | (5,619) |
Other expense (income), net | 1,761 | (12,766) | (3,932) |
Earnings before income taxes | 340,393 | 290,318 | 186,074 |
Income tax provision | 110,180 | 89,418 | 52,502 |
Net earnings | $230,213 | $200,900 | $133,572 |
Net earnings per share: | |||
Basic | 1.54 | 1.45 | 0.99 |
Diluted | 1.45 | 1.28 | 0.89 |
Statement Of Financial Position
Statement Of Financial Position Classified (USD $) | ||
In Thousands | Dec. 31, 2009
| Dec. 31, 2008
|
Current assets: | ||
Cash and cash equivalents | $422,047 | $289,442 |
Accounts receivable, net | 234,974 | 239,183 |
Inventories | 216,500 | 207,487 |
Prepaid expenses and other current assets | 83,981 | 59,824 |
Deferred income taxes, net | 13,231 | 16,566 |
Total current assets | 970,733 | 812,502 |
Property and equipment, net | 139,112 | 122,304 |
Deferred income taxes, net | 5,322 | 2,217 |
Goodwill | 262,331 | 225,685 |
Intangible assets, net | 59,180 | 56,174 |
Other assets | 48,571 | 22,195 |
Assets, Total | 1,485,249 | 1,241,077 |
Current liabilities: | ||
Accounts payable | 53,319 | 47,823 |
Deferred revenue | 21,757 | 27,554 |
Accrued payroll and related liabilities | 39,809 | 43,337 |
Accrued product warranties | 8,667 | 7,826 |
Advance payments from customers | 8,616 | 19,183 |
Accrued expenses | 25,941 | 21,978 |
Accrued income taxes | 15,504 | 0 |
Other current liabilities | 3,978 | 4,574 |
Total current liabilities | 177,591 | 172,275 |
Long-term debt | 58,022 | 182,825 |
Deferred income taxes | 2,222 | 5,983 |
Accrued income taxes | 4,550 | 5,697 |
Pension and other long-term liabilities | 39,115 | 29,572 |
Shareholders' equity: | ||
Preferred stock, $0.01 par value, 10,000 shares authorized; no shares issued at December 31, 2009 or 2008 | 0 | 0 |
Common stock, $0.01 par value, 500,000 shares authorized, 152,826 and 141,387 shares issued at December 31, 2009 and 2008, respectively, and additional paid-in capital | 389,316 | 282,849 |
Retained earnings | 807,303 | 577,090 |
Accumulated other comprehensive earnings (loss) | 7,130 | (15,214) |
Total shareholders' equity | 1,203,749 | 844,725 |
Liabilities and Stockholders' Equity, Total | $1,485,249 | $1,241,077 |
1_Statement Of Financial Positi
Statement Of Financial Position Classified (Parenthetical) (USD $) | ||
Share data in Thousands, except Per Share data | Dec. 31, 2009
| Dec. 31, 2008
|
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 | 152,826 | 141,387 |
Statement Of Shareholders Equit
Statement Of Shareholders Equity And Other Comprehensive Income (USD $) | ||||
In Thousands | Common Stock and Additional Paid-in Capital
| Retained Earnings
| Accumulated Other Comprehensive Earnings (Loss)
| Total
|
Beginning Balance at Dec. 31, 2006 | $147,395 | $242,618 | $20,339 | $410,352 |
Beginning Balance (in shares) at Dec. 31, 2006 | 131,671 | |||
Net earnings for the year | 133,572 | 133,572 | ||
Income tax benefit of common stock options exercised | 18,085 | 18,085 | ||
Repurchase of common stock (in shares) | (177) | |||
Repurchase of common stock | (3,737) | (3,737) | ||
Common stock issued pursuant to stock-based compensation plans, net (in shares) | 5,276 | |||
Common stock issued pursuant to stock-based compensation plans, net | 41,576 | 41,576 | ||
Stock-based compensation expense | 15,490 | 15,490 | ||
Conversion of convertible debt | 4 | 4 | ||
Change in minimum liability for pension plans, net of tax effects of $402 in 2009, $1,954 in 2008 and $255 in 2007 | (456) | (456) | ||
Translation adjustment | 16,850 | 16,850 | ||
Ending Balance (in shares) at Dec. 31, 2007 | 136,770 | |||
Ending Balance at Dec. 31, 2007 | 218,813 | 376,190 | 36,733 | 631,736 |
Net earnings for the year | 200,900 | 200,900 | ||
Income tax benefit of common stock options exercised | 27,350 | 27,350 | ||
Repurchase of common stock (in shares) | (1,381) | |||
Repurchase of common stock | (40,739) | (40,739) | ||
Common stock issued pursuant to stock-based compensation plans, net (in shares) | 4,324 | |||
Common stock issued pursuant to stock-based compensation plans, net | 38,764 | 38,764 | ||
Stock-based compensation expense | 21,151 | 21,151 | ||
Conversion of convertible debt (in shares) | 1,674 | |||
Conversion of convertible debt | 17,510 | 17,510 | ||
Change in minimum liability for pension plans, net of tax effects of $402 in 2009, $1,954 in 2008 and $255 in 2007 | (3,369) | (3,369) | ||
Translation adjustment | (48,578) | (48,578) | ||
Ending Balance (in shares) at Dec. 31, 2008 | 141,387 | |||
Ending Balance at Dec. 31, 2008 | 282,849 | 577,090 | (15,214) | 844,725 |
Net earnings for the year | 230,213 | 230,213 | ||
Income tax benefit of common stock options exercised | 9,245 | 9,245 | ||
Repurchase of common stock (in shares) | (3,232) | |||
Repurchase of common stock | (73,169) | (73,169) | ||
Common stock issued pursuant to stock-based compensation plans, net (in shares) | 2,717 | |||
Common stock issued pursuant to stock-based compensation plans, net | 17,581 | 17,581 | ||
Stock-based compensation expense | 23,888 | 23,888 | ||
Conversion of convertible debt (in shares) | 11,954 | |||
Conversion of convertible debt | 128,427 | 128,427 | ||
Capital contribution | 495 | 495 | ||
Change in minimum liability for pension plans, net of tax effects of $402 in 2009, $1,954 in 2008 and $255 in 2007 | 781 | 781 | ||
Translation adjustment | 21,563 | 21,563 | ||
Ending Balance (in shares) at Dec. 31, 2009 | 152,826 | |||
Ending Balance at Dec. 31, 2009 | $389,316 | $807,303 | $7,130 | $1,203,749 |
2_Statement Of Shareholders Equ
Statement Of Shareholders Equity And Other Comprehensive Income (Parenthetical) (USD $) | |||
In Thousands | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 |
Change in minimum liability for pension plans, tax effects | $402 | $1,954 | $255 |
Statement Of Cash Flows Indirec
Statement Of Cash Flows Indirect (USD $) | |||
In Thousands | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 |
CASH PROVIDED BY OPERATING ACTIVITIES: | |||
Net earnings | $230,213 | $200,900 | $133,572 |
Income items not affecting cash: | |||
Depreciation and amortization | 42,426 | 45,323 | 30,987 |
Deferred income taxes | (608) | (8,756) | (205) |
Stock-based compensation arrangements | 23,955 | 20,974 | 15,316 |
Inducement loss on exchange offer for convertible notes | 1,997 | 0 | 0 |
Other non-cash items | (1,749) | (450) | 98 |
Changes in operating assets and liabilities, net of acquisitions: | |||
Decrease (increase) in accounts receivable | 9,981 | (40,640) | (27,303) |
Increase in inventories | (301) | (30,178) | (34,411) |
Increase in prepaid expenses and other current assets | (22,946) | (3,750) | (24,324) |
(Increase) decrease in other assets | (10,906) | 3,904 | (829) |
Increase (decrease) in accounts payable | 3,293 | (7,324) | 9,879 |
(Decrease) increase in deferred revenue | (6,214) | 10,842 | 446 |
(Decrease) increase in accrued payroll and other liabilities | (20,327) | 28,176 | 12,297 |
Increase (decrease) in accrued income taxes | 13,887 | 1,246 | (5,155) |
Increase (decrease) in pension and other long-term liabilities | 9,059 | (1,951) | 5,735 |
Cash provided by operating activities | 271,760 | 218,316 | 116,103 |
CASH USED BY INVESTING ACTIVITIES: | |||
Additions to property and equipment | (41,874) | (27,641) | (44,048) |
Proceeds on sale of property and equipment | 2,892 | 2 | 93 |
Business acquisitions, net of cash acquired | (73,565) | (78,762) | (41,981) |
Other investments | 4,850 | (7,553) | (1,521) |
Cash used by investing activities | (107,697) | (113,954) | (87,457) |
CASH (USED) PROVIDED BY FINANCING ACTIVITIES: | |||
Repayments of credit agreement | 0 | (19,000) | (26,500) |
Repayments of long-term debt, including current portion | (30) | (3,387) | (7) |
Cash inducement on exchange offer for convertible notes | (1,997) | 0 | 0 |
Repurchase of common stock | (73,169) | (40,739) | (3,737) |
Proceeds from shares issued pursuant to stock-based compensation plans | 22,325 | 42,063 | 42,795 |
Excess tax benefit of stock options exercised | 8,834 | 23,676 | 14,594 |
Capital contribution | 495 | 0 | 0 |
Cash (used) provided by financing activities | (43,542) | 2,613 | 27,145 |
Effect of exchange rate changes on cash | 12,084 | (21,214) | 9,267 |
Net increase in cash and cash equivalents | 132,605 | 85,761 | 65,058 |
Cash and cash equivalents, beginning of year | 289,442 | 203,681 | 138,623 |
Cash and cash equivalents, end of year | $422,047 | $289,442 | $203,681 |
Nature of Business and Signific
Nature of Business and Significant Accounting Policies | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Nature of Business and Significant Accounting Policies | Note1. Nature of Business and Significant Accounting Policies FLIR Systems, Inc. designs, manufactures and markets thermal imaging and stabilized camera systems for a wide variety of applications in commercial, industrial and government markets worldwide. The Companys products are produced in a variety of configurations to suit specific customer needs. These include compact hand-held systems for such applications as surveillance, search and rescue, and industrial analysis and monitoring; sealed, autonomous systems for fixed security monitoring installations; and stabilized gimbaled systems for airborne and shipborne use. The Companys thermal imaging systems use advanced infrared technology that detects infrared radiation, or heat, enabling the operator to measure very small temperature differences and to see objects in total darkness and in many types of adverse conditions including through smoke, haze and most types of fog. Many of the Companys products also incorporate visible light cameras, laser rangefinders, laser illuminators, image analysis software and gyro-stabilized gimbal technology. Principles of consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions were eliminated. Foreign currency translation The assets and liabilities of the Companys subsidiaries outside the United States are translated into United States dollars at current exchange rates in effect at the balance sheet date while revenues and expenses are translated at average exchange rates for the year. Resulting translation adjustments are reflected in accumulated other comprehensive earnings within shareholders equity. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in currencies other than the functional currency are reflected as other income, net, in the Consolidated Statements of Income as incurred. The cumulative translation adjustment included in accumulated other comprehensive earnings (loss) is a gain of $12.6 million and a loss of $9.0 million at December31, 2009 and 2008, respectively. Transaction gains and losses included in other income, net, are a net loss of $3.9 million, and net gains of $12.9 million and $2.9 million for the years ended December31, 2009, 2008 and 2007, respectively. Revenue recognition Revenue is primarily recognized when persuasive evidence of an arrangement exists, upon delivery of the product to the customer at a fixed or determinable price with a reasonable assurance of collection, passage of title and risk of loss to the customer as indicated by the shipping terms and fulfillment of all significant obligations. The Company designs, markets and sells products primarily as commercial, off-the-shelf products. Many of the Companys Government Systems and Commercial Vision Systems customers, particularly those who use its airborne systems, request different system configurations, based on standard options or accessories that the Company offers. In general, revenue arrangements do not involve acceptance provisions based upon customer specified |
Accounting for Convertible Debt
Accounting for Convertible Debt | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Accounting for Convertible Debt | Note2. Accounting for Convertible Debt On January1, 2009, the Company adopted the provisions of the Financial Accounting Standards Board Accounting Standards Codification Subtopic 470-20, Debt with Conversion and Other Options (ASC Subtopic 470-20). ASC Subtopic 470-20 requires that issuers of convertible debt instruments that may be settled in cash should separately account for the liability and equity components in a manner that reflects the entitys nonconvertible debt borrowing rate when interest cost is recognized in subsequent periods. ASC Subtopic 470-20 was effective for financial statements issued for fiscal years beginning after December15, 2008 with retrospective application required. In June 2003, the Company issued $210 million of 3.0 percent senior convertible notes due in 2023. The net proceeds from the issuance were approximately $203.9 million. The Company has determined that the expected life of the notes should be seven years since the notes are first redeemable in June 2010. The Company estimates that its nonconvertible borrowing rate for debt with a seven year maturity issued in June 2003 was 6.0 percent. Accordingly, the value of the liability component of the notes at the time of issuance was $174.4 million and the value of the equity component was $35.6 million. The Company has retrospectively applied the provisions of ASC Subtopic 470-20 to its financial statements beginning in 2003 when the notes were issued. The retrospective application includes the separation of the liability and equity components of the convertible notes, the reallocation of the $6.1 million of issuance costs between the liability and equity components, an increase in interest expense for periods subsequent to issuance to reflect the estimated nonconvertible borrowing rate, and the related tax effects. ASC Subtopic 470-20 also requires that when debt is extinguished, a gain or loss is recognized for the difference between the fair value of the liability component and its carrying value. The Companys retrospective application, therefore, also includes the impact of conversions of notes with an aggregate principal amount of $18.6 million prior to January1, 2009. The carrying amounts of the convertible notes are as follows (in thousands): December31, 2009 December31, 2008 Liability component: Principal amount $ 58,782 $ 191,419 Unamortized discount (706 ) (7,682 ) Unamortized issuance costs (85 ) (942 ) $ 57,991 $ 182,795 Equity component $ (119,724 ) $ 222 The unamortized discount and issuance costs will be amortized through June 2010. The unamortized balance of such costs is shown as a reduction to the carrying amount of the convertible notes. As of December31, 2009, 5.3million shares of the Companys common stock were issuable upon conversion of the remaining notes, valued at $173.4 million as of the closing market price on that day. The $173.4 million is in excess of the principal amount by $114.6 million. The effective interest rate of the convertible notes is 6.0 percent. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Fair Value of Financial Instruments | Note3. Fair Value of Financial Instruments Cash equivalents at December31, 2009 and 2008 were $313.6 million and $205.7, respectively. The Company has categorized its cash and cash equivalents as a Level 1 financial asset, measured at fair value based on quoted prices in active markets of identical assets, in accordance with FASB ASC Topic 820, Fair Value Measurements and Disclosures. All cash equivalents are in instruments that are convertible to cash daily. The Company does not have any other material financial assets or liabilities that are measured at fair value. The carrying amount of accounts receivable, accounts payable and accrued payroll and related liabilities approximates the fair value of those instruments due to their short-term nature. The fair value of the foreign currency exchange contracts as of December31, 2009 are not significant. The fair value of the convertible notes included in long-term debt is estimated based on quoted market prices of the convertible notes. At December31, 2009, the fair value of the convertible notes was approximately $173.4 million. |
Accounts Receivable
Accounts Receivable | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Accounts Receivable | Note4. Accounts Receivable Accounts receivable are net of an allowance for doubtful accounts. The following table summarizes the Companys allowance for doubtful accounts and the activity for 2009, 2008 and 2007 (in thousands): Year Ended December31, 2009 2008 2007 Allowance for doubtful accounts, beginning of year $ 1,294 $ 1,327 $ 1,602 Charges to costs and expenses 1,056 678 7 Write-offs of uncollectible accounts, net of recoveries (485 ) (527 ) (375 ) Currency translation adjustments 92 (184 ) 93 Allowance for doubtful accounts, end of year $ 1,957 $ 1,294 $ 1,327 |
Inventories
Inventories | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Inventories | Note5. Inventories Inventories consist of the following (in thousands): December31, 2009 2008 Raw material and subassemblies $ 144,555 $ 129,108 Work-in-progress 37,732 40,325 Finished goods 34,213 38,054 $ 216,500 $ 207,487 |
Property and Equipment
Property and Equipment | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Property and Equipment | Note6. Property and Equipment Property and equipment are summarized as follows (in thousands): Estimated Useful Life December31, 2009 2008 Land $ 6,942 $ 7,060 Buildings 30years 39,208 33,585 Machinery and equipment 3to7years 116,458 102,651 Office equipment and other 3 to 7 years 79,424 65,554 242,032 208,850 Less accumulated depreciation (102,920 ) (86,546 ) $ 139,112 $ 122,304 Depreciation expense for the years ended December31, 2009, 2008 and 2007 was $26.1 million, $23.1 million, $17.3 million, respectively. |
Goodwill
Goodwill | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Goodwill | Note7. Goodwill During the year ended December31, 2009, the Company recorded goodwill in connection with its acquisitions of Salvador Imaging, Inc., OmniTech Partners, Inc. and Infrared Korea, Ltd (see Note 18). The Company reviews its goodwill for impairment annually, or more frequently, if there is a triggering event. A two-step test is performed to assess goodwill for impairment. First, the fair value of the reporting unit is compared to its carrying value. If the fair value exceeds the carrying value, goodwill is not impaired and no further testing is required. The second step is performed if the carrying value exceeds the fair value. The implied fair value of the reporting units goodwill must be determined and compared to the carrying value of the goodwill. If the carrying value of a reporting units goodwill exceeds its implied fair value, an impairment loss equal to the difference will be recorded. In determining the fair value of the reporting units, the Company relied upon the Income Approach and the Market Approach. Under the Income Approach, the fair value of a business is based on the cash flows it can be expected to generate over its remaining life. The estimated cash flows are converted to their present value equivalent using an appropriate rate of return and are analyzed within the boundary of the overall market capitalization of the Company. Under the Market Approach, the fair value of the business is based on forecasted earnings multiplied by an average earnings multiplier of a group of the Companys peers and compared to the carrying value of the goodwill. As of June30, 2009, the Company has determined that there is no impairment of its recorded goodwill and as of December31, 2009, there have been no triggering events that would require an updated impairment review. The carrying value of goodwill by reporting segment and the activity for the two year period ending December31, 2009 is as follows (in thousands): Government Systems Thermography Commercial Vision Systems Total Balance, December31, 2007 $ 8,295 $ 64,198 $ 103,737 $ 176,230 Goodwill from acquisitions 5,548 44,911 7,593 58,052 Currency translation adjustments (1,041 ) (6,138 ) (716 ) (7,895 ) Other activity (658 ) (44 ) (702 ) Balance, December31, 2008 12,802 102,313 110,570 225,685 Goodwill from acquisitions 24,476 1,323 8,585 34,384 Currency translation adjustments 306 2,448 107 2,861 Other activity (583 ) (16 ) (599 ) Balance, December31, 2009 $ 37,584 $ 105,501 $ 119,246 $ 262,331 |
Intangible Assets
Intangible Assets | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Intangible Assets | Note8. Intangible Assets Intangible assets are summarized as follows (in thousands): Weighted Average Estimated UsefulLife December31, 2009 2008 Product technology 9years $ 43,959 $ 38,375 Customer relationships 7 years 50,151 42,602 Trademarks and tradename portfolios 14years 7,947 8,431 Other 2 year 2,580 2,827 Acquired identifiable intangibles 104,637 92,235 Less accumulated amortization (47,495 ) (38,604 ) Net acquired identifiable intangibles 57,142 53,631 Patents 17 years 3,981 3,728 Less accumulated amortization (2,850 ) (2,449 ) Net patents 1,131 1,279 Cooperation agreement and other 10 years 3,554 3,678 Less accumulated amortization (2,647 ) (2,414 ) Net cooperation agreement and other 907 1,264 $ 59,180 $ 56,174 During the year ended December31, 2009, identifiable intangible assets acquired as part of acquisitions were (in thousands): Salvador Imaging, Inc. $ 2,940 OmniTech Partners, Inc. 13,470 Infrared Korea, Ltd 724 $ 17,134 The aggregate amortization expense recorded in 2009, 2008 and 2007 was $16.4 million, $16.8 million and $8.6 million, respectively. For intangible assets recorded at December31, 2009, the estimated future aggregate amortization expense for the years ending December31, 2010 through 2014 is approximately (in thousands): 2010 $ 15,853 2011 10,919 2012 9,607 2013 8,693 2014 5,135 The Company continually monitors for events and changes in circumstances that could indicate that the carrying amounts of the Companys intangible assets may not be recoverable. When such events or changes in circumstances occur, the Company will assess the recoverability of intangible assets by determining whether the carrying value of such assets will be recovered through their expected future cash flows. If the future undiscounted cash flows are determined to be less than the carrying amount of the intangible assets, the Company will recognize an impairment loss based on the excess of the carrying amount over the fair value of the assets. The Company did not recognize any intangible asset impairment charges in the years ended December31, 2009, 2008 and 2007. |
Credit Agreements
Credit Agreements | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Credit Agreements | Note9. Credit Agreements On October6, 2006, the Company signed a Credit Agreement (Credit Agreement) with Bank of America, N.A., Union Bank of California, N.A., U.S. Bank National Association and other Lenders. The Credit Agreement provides for a $300 million, five-year revolving line of credit. The Company has the right, subject to certain conditions including approval of additional commitments by qualified lenders, to increase the line of credit by an additional $150 million until October6, 2011. The Credit Agreement includes a $100 million sublimit multicurrency option, permitting the Company and certain designated subsidiaries to borrow in euro, kroner, pound sterling and other agreed upon currencies. Under the Credit Agreement, borrowings will bear interest based upon the prime lending rate of the Bank of America or Eurodollar rates with a provision for a spread over Eurodollar rates based upon the Companys leverage ratio. The Eurodollar interest rate was 1.001 percent and the prime lending rate was 3.25 percent at December31, 2009. These rates were 2.175 percent and 3.25 percent, respectively, at December31, 2008. The Credit Agreement requires the Company to pay a commitment fee on the amount of unused credit at a rate, based on the Companys leverage ratio, which ranges from 0.175 percent to 0.325 percent. At December31, 2009 and 2008, the commitment fee rate was 0.175 percent. The Credit Agreement contains five financial covenants that require the maintenance of certain leverage ratios, in addition to minimum levels of EBITDA and consolidated net worth, a maximum level of capital expenditures and, commencing December31, 2009, a minimum level of liquidity comprised of cash and undrawn/unutilized availability under the Credit Agreement. The Credit Agreement is collateralized by substantially all assets of the Company. At December31, 2009 and 2008, the Company had no amounts outstanding under the Credit Agreement. The Company had $7.8 million and $15.8 million of letters of credit outstanding under the Credit Agreement at December31, 2009 and 2008, respectively, which reduces the total available credit. The Company, through its Sweden subsidiary, has a 30million Swedish kroner (approximately $4.2 million) line of credit with an interest rate at 0.95 percent at December31, 2009. At December31, 2009, the Company had no amounts outstanding on this line of credit. The 30million Swedish kroner line of credit is secured primarily by accounts receivable and inventories of the Companys Swedish subsidiary and is subject to automatic renewal on an annual basis. |
Accrued Product Warranties
Accrued Product Warranties | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Accrued Product Warranties | Note10. Accrued Product Warranties The Company generally provides a twelve 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. The following table summarizes the Companys warranty liability and activity for 2009, 2008 and 2007 (in thousands): Year Ended December31, 2009 2008 2007 Accrued product warranties, beginning of year $ 7,826 $ 6,594 $ 5,174 Amounts paid for warranty services (8,426 ) (9,016 ) (7,573 ) Warranty provisions for products sold 9,267 10,248 8,993 Accrued product warranties, end of year $ 8,667 $ 7,826 $ 6,594 |
Long-Term Debt
Long-Term Debt | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Long-Term Debt | Note11. Long-Term Debt Long-term debt consists of the following (in thousands): December31, 2009 2008 (AsAdjusted) Convertible notes $ 58,782 $ 191,419 Issuance cost and discount of the convertible notes (791 ) (8,624 ) Other long-term debt 31 30 $ 58,022 $ 182,825 In June 2003, the Company issued $210 million of 3.0 percent senior convertible notes due in 2023 in a private offering pursuant to Rule 144A under the Securities Act of 1933, as amended. The net proceeds from the issuance were approximately $203.9 million. Interest is payable semiannually on June1 and December1 of each year. The holders of the notes may convert all or some of their notes into shares of the Companys common stock at a conversion rate of 90.1224 shares per $1,000 principal amount of notes prior to the maturity date in certain circumstances. The Company may redeem for cash all or part of the notes on or after June8, 2010. The Companys convertible notes are eligible for conversion at the option of the note holders. On February5, 2009, the Company commenced an exchange offer for any and all of its outstanding convertible notes. Holders who elected to exchange their notes in this offer and whose notes were accepted for exchange by the Company received 90.1224 shares of the Companys common stock and a cash payment of $20 per $1,000 principal amount of notes. The offer expired on March9, 2009. Notes with an aggregate principal amount of $99.9 million were exchanged pursuant to the exchange offer and were converted into approximately 9.0million shares of the Companys common stock. The Company recognized a gain of $2.2 million from the extinguishment of the notes; the gain and the $2.0 million expense associated with the cash inducement are reported in other income, net in the Consolidated Statements of Income. In addition, in July 2009, convertible notes with an aggregate principal amount of $30.1 million were converted into approximately 2.7million shares of the Companys common stock, and in December 2009, convertible notes with an aggregate principal amount of $2.7 million were converted into 244,000 shares of the Companys common stock. As of December31, 2009, notes with an aggregate principal amount of $151.2 million have been converted into approximately 13.6million shares of the Companys common stock. The convertible notes are classified as a long-term liability in the Consolidated Balance Sheet because the stated contractual maturity is in 2023; however, the Company anticipates that all remaining note holders will exercise their option to convert in June 2010. |
Commitments
Commitments | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Commitments | Note12. Commitments The Company leases some of its primary facilities under various operating leases that expire in 2010 through 2018. The Company also leases certain operating machinery and equipment and office equipment under operating lease agreements. Total net rent expense for the years ended December31, 2009, 2008 and 2007 amounted to $10.1 million, $10.5 million and $8.5 million, respectively. The future minimum obligations under all non-cancelable leases, net of expected sublease income, and other contractual obligations are as follows (in thousands): Net Operating Leases Other Contractual Obligations 2010 $ 10,149 $ 569 2011 7,527 579 2012 7,090 550 2013 3,738 550 2014 2,821 550 Thereafter 1,548 1,375 Total minimum payments $ 32,873 $ 4,173 |
Contingencies
Contingencies | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Contingencies | Note13. Contingencies The Company and its subsidiary, Indigo Systems Corporation (now known as FLIR Commercial Systems, Inc.) (together, the FLIR Parties), were named in a lawsuit filed by Raytheon Company on March2, 2007, in the United States District Court for the Eastern District of Texas.On August11, 2008, Raytheon Company was granted leave to file a second amended complaint.The complaint, as amended, asserted claims for tortious interference, patent infringement, trade secret misappropriation, unfair competition, breach of contract and fraudulent concealment.The FLIR Parties filed an answer to the second amended complaint and counterclaims on September2, 2008, in which they denied all material allegations.On August31, 2009, the court entered an order granting the FLIR Parties motion for summary judgment on Raytheons trade secret misappropriation claim based on the FLIR Parties statute of limitations defense.Raytheon has abandoned all of its other claims except its patent claims which are currently set for trial to commence on April19, 2010.The Company intends to vigorously defend itself in this matter and is unable to estimate the amount or range of potential loss, if any, which might result if the outcome in this matter is unfavorable. The Company is also subject to other legal proceedings, claims and litigation arising in the ordinary course of business. The Company makes a provision for a liability when it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated. The Company believes it has recorded adequate provisions for any probable and estimable losses. While the outcome of these matters is currently not determinable, the Company does not expect that the ultimate costs to resolve such matters will have a material adverse effect on the Companys financial position, results of operations or cash flows. |
Income Taxes
Income Taxes | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Income Taxes | Note14. Income Taxes The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events and basis differences that have been recognized in the Companys financial statements and tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement carrying amount and the tax basis of assets and liabilities using the enacted tax rates in effect in the years in which the differences are expected to reverse. Pre-tax earnings by significant geographical locations are as follows (in thousands): Year Ended December31, 2009 2008 2007 (AsAdjusted) (AsAdjusted) United States $ 241,470 $ 195,356 $ 113,019 Foreign 98,923 94,962 73,055 $ 340,393 $ 290,318 $ 186,074 The provisions for income taxes are as follows (in thousands): Year Ended December31, 2009 2008 2007 (AsAdjusted) (AsAdjusted) Current tax expense: Federal $ 75,698 $ 73,039 $ 37,604 State 10,621 7,171 884 Foreign 24,931 17,298 14,536 111,250 97,508 53,024 Deferred tax expense (benefit): Federal 1,744 (7,824 ) (2,113 ) State 92 (67 ) 1,522 Foreign (2,906 ) (199 ) 69 (1,070 ) (8,090 ) (522 ) Total provision $ 110,180 $ 89,418 $ 52,502 Deferred tax assets (liabilities) are composed of the following components (in thousands): December31, 2009 2008 Allowance for doubtful accounts $ 364 $ 326 Accrued product warranties 2,412 1,972 Inventory basis differences 5,399 7,586 Accrued liabilities 4,056 5,175 Deferred revenue 2,407 2,156 Other (1,407 ) (649 ) Net current deferred tax assets $ 13,231 $ 16,566 Foreign accrued liabilities $ 310 Foreign intangibles (919 ) Foreign other 90 Net current deferred tax liabilities $ (519 ) (AsAdjusted) Net operating loss carry-forwards $ 2,164 $ 905 Credit carry-forwards 538 Domestic depreciation (10,745 ) (6,030 ) Supplemental Executive Retirement Plan 6,942 6,489 Stock-based compensation 7,233 6,370 Intangibles (7,042 ) (8,134 ) Deferred revenue 4,077 3,617 Other 2,693 (1,538 ) Net long-term deferred tax assets $ 5,322 $ 2,217 Foreign net operating loss recapture $ (499 ) $ (550 ) Foreign depreciation (574 ) (738 ) Foreign stock-based compensation 1,007 874 Foreign social costs |
Stock-based Compensation
Stock-based Compensation | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Stock-based Compensation | Note15. 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 nonvested stock awards (referred to as restricted stock unit awards) granted under three plans: the FLIR Systems, Inc. 1992 Stock Incentive Plan (the 1992 Plan), the FLIR Systems, Inc. 1993 Stock Option Plan for Non-Employee Directors (the 1993 Plan) and the FLIR Systems, Inc. 2002 Stock Incentive Plan (the 2002 Plan). Prior to January1, 2006, all stock options granted were time-based with vesting schedules ranging from immediate vesting to vesting over three years and generally expired ten years from the grant date. The Company has discontinued issuing option awards out of the 1992 Plan and the 1993 Plan, but previously granted options under those plans remain outstanding until their expiration. During 2006, the Company also began granting performance-based options and time-based restricted stock unit awards. The vesting of performance-based options is contingent upon meeting certain diluted earnings per share growth targets primarily in three independent tranches over a three year period and the options expire ten years from the grant date. The vesting of each tranche is not dependent on the other tranches. Restricted stock unit awards generally vest over a three year period. Shares issued as a result of stock option exercises and the distribution of vested restricted stock units are new shares. The Company also has stock options that it issued as replacement options in connection with the acquisition of Indigo Systems Corporation in 2004. Information with respect to stock option activity for 2009 is as follows: Shares (in thousands) Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value (inthousands) Outstanding at December31, 2008 9,218 $ 13.34 5.7 Granted 1,057 25.57 Exercised (1,873 ) 9.08 Forfeited (15 ) 25.07 Outstanding at December31, 2009 8,387 $ 15.81 5.6 $ 142,786 Exercisable at December31, 2009 6,866 $ 13.37 4.9 $ 133,318 Vested and expected to vest at December31, 2009 8,311 $ 15.71 5.6 $ 142,313 Information with respect to restricted stock unit activity for 2009 is as follows: Shares (inthousands) WeightedAverageGrant Date Fair Value Outstanding at December 31, 2008 1,356 $ 23.98 Granted 661 25.38 Vested (758 ) 19.55 Forfeited (33 ) 26.43 Outstanding at December 31, 2009 1,226 $ 27.41 As of December31, 2009, there are 11,563,000 shares of common stock reserved for future issuance under all of the stock incentive plans. Employee Stock Purchase Plan Additionally, the Company adopted an Employee Stock Purchase Plan in January 1999 (the 1999 ESPP) which allowed employees to purchase sh |
Other Employee Benefit Plans
Other Employee Benefit Plans | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Other Employee Benefit Plans | Note16. Other Employee Benefit Plans Employee 401(k) Plans The Company has a 401(k) Savings and Retirement Plan (the Plan) to provide for voluntary salary deferral contributions on a pre-tax basis for employees within the United States in accordance with Section401(k) of the Internal Revenue Code of 1986, as amended. The Plan allows for contributions by the Company. The Company made and expensed matching contributions of $4.4 million, $4.0 million and $3.6 million for the years ended December31, 2009, 2008 and 2007, respectively. Pension Plans The Company previously offered most of the employees outside the United States participation in a defined benefit pension plan that has been curtailed. In addition, the Company provides a Supplemental Executive Retirement Plan (the SERP) for certain officers of the Company based in the United States. The Company has recorded the minimum pension liability to other comprehensive earnings (loss) and the estimated benefit to be paid in 2010 has been reported in other current liabilities. The measurement date used for the pension plans is December31. Amounts recognized in other comprehensive earnings (loss) during the years ended December31, 2009, 2008 and 2007, net of tax, are as follows (in thousands): Year Ended December31, 2009 2008 2007 Net earnings (loss) $ 493 $ (2,340 ) $ (574 ) Prior service cost 313 (989 ) 141 Transition obligation (25 ) (40 ) (23 ) $ 781 $ (3,369 ) $ (456 ) Components of accumulated other comprehensive earnings (loss) related to the Companys pension plans as of December31, 2009 and 2008 are as follows (in thousands): December31, 2009 2008 Net loss $ (3,935 ) $ (4,427 ) Prior service cost (1,517 ) (1,830 ) Transition obligation 29 53 $ (5,423 ) $ (6,204 ) The amortization of the transition obligation recognized in net periodic benefit costs for the years ended December31, 2009, 2008 and 2007 are $37,000, $43,000 and $42,000, respectively. A summary of the components of the net periodic pension expense for the benefit obligation and fund assets of the plans is as follows (in thousands): YearEndedDecember31, 2009 2008 Change in benefit obligation: Benefit obligation at January1 $ 21,237 $ 15,718 Service costs 125 153 Interest costs 1,085 820 Actuarial loss (219 ) 4,122 Benefits paid (353 ) (357 ) Plan amendments to SERP 1,832 Foreign currency exchange changes 345 (1,051 ) Benefit obligation at December31 $ 22,220 $ 21,237 Fair value of plan assets at December31 $ $ Unfunded status at December31 $ 22,220 $ 21,237 Amounts recognized in the Consolidated Balance Sheets: Current liabilities $ 372 $ 309 Non-current |
Operating Segments and Related
Operating Segments and Related Information | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Operating Segments and Related Information | Note17. Operating Segments and Related Information Operating Segments The Company has determined its operating segments to be the Thermography, Government Systems and Commercial Vision Systems market segments. The Thermography segment addresses a broad range of commercial and industrial applications utilizing infrared cameras to provide precise temperature measurement or other analytic information. Examples of markets served include predictive and preventive maintenance, process control, building inspection, electrical inspection, research and development, scientific analysis and gas detection. The Government Systems and Commercial Vision Systems markets are both comprised of applications focused on providing enhanced vision capabilities utilizing infrared energy and in the case of many Government System products, additional sensor technologies such as visible cameras, low light cameras and lasers. The Government Systems segment addresses mainly government markets such as military, paramilitary, homeland security and other program driven markets both within the United States and internationally. Most products contain multiple sensors and are deployed on airborne, maritime, land-based and man-portable platforms. Applications include search and rescue, force protection, surveillance, drug interdiction, maritime patrol and targeting. The Commercial Vision Systems segment addresses mainly commercial markets including OEM camera modules, perimeter security, firefighting, marine, automotive, airborne and other transportation. These markets are characterized by rapidly growing volumes driven by declining costs for uncooled infrared technology. The accounting policies of each of the segments are the same. The Companys President and Chief Executive Officer evaluates the performance of each segment based upon its revenue and earnings from operations. On a consolidated basis, these amounts represent revenue and earnings from operations as represented in the Consolidated Statements of Income. Other consists of corporate expenses and certain other operating expenses not allocated to the operating segments for management reporting purposes. Intersegment revenues are recorded at an estimated arms length basis and are eliminated in consolidation. Accounts receivable and inventories for operating segments are regularly reviewed by management and are reported below as segment assets. All remaining assets, liabilities, capital expenditures and depreciation are managed on a Company-wide basis. Operating segment information is as follows (in thousands): Year Ended December31, 2009 2008 2007 RevenueExternal Customers: Government Systems $ 655,282 $ 569,028 $ 382,347 Thermography 285,482 327,324 261,831 Commercial Vision Systems 206,323 180,622 135,219 $ 1,147,087 $ 1,076,974 $ 779,397 RevenueIntersegments: Government Systems $ 28,412 $ 30,170 $ 26,362 Thermography 10,104 8,698 Commercial Vision Syst |
Business Acquisitions
Business Acquisitions | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Business Acquisitions | Note18. Business Acquisitions In 2009, the Company acquired all of the outstanding stock of Salvador Imaging, Inc. and OmniTech Partners, Inc. and certain assets of Infrared Korea, Ltd. for approximately $57.1 million in cash. Purchase accounting allocations recorded in 2009 in relation to these acquisitions included recording identifiable intangible assets of approximately $17.1 million, goodwill of approximately $34.4 million, and contingent consideration of approximately $1.9 million. Additionally, in December 2009, the Company acquired all of the outstanding stock of Directed Perception, Inc. for approximately $20.2 million in cash. The allocation of the purchase price to identifiable intangible assets and goodwill is subject to the final determination on the valuation of assets acquired and liabilities assumed. The excess purchase price of approximately $18.5 million has been reported in other assets as of December31, 2009. In 2008, the Company acquired 99.9 percent and all of the outstanding stock of Cedip Infrared Systems and Ifara Tecnologias, S.L., respectively, for approximately $106.9 million in cash, including costs directly associated with the acquisitions. The Company has recorded identifiable intangible assets of approximately $20.1 million and goodwill of approximately $58.1 million in relation to these acquisitions. The operating results of these acquisitions are included in the Companys results of operations since their respective dates of acquisition. These acquisitions are not significant, either individually or in the aggregate, as defined in Regulation S-X of the Securities and Exchange Commission, compared to the Companys overall financial position. Accordingly, pro forma financial statements of the combined entities are not presented. |
Repurchase of Company Stock
Repurchase of Company Stock | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Repurchase of Company Stock | Note19. Repurchase of Company Stock In February 2007 and February 2009, the Companys Board of Directors authorized the repurchase of up to 12.0million shares and 20.0million shares, respectively, of the Companys outstanding shares of common stock in the open market. The February 2007 authorization expired in February 2009 and the February 2009 authorization expires in February 2011. Under these authorizations, the Company has repurchased 3,232,000 shares for a total of $73.2 million, 1,381,000 shares for a total of $40.7 million and 177,000 shares for a total of $3.7 million during the years ended December31, 2009, 2008, and 2007, respectively. |
QUARTERLY FINANCIAL DATA
QUARTERLY FINANCIAL DATA (UNAUDITED) | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
QUARTERLY FINANCIAL DATA (UNAUDITED) | QUARTERLY FINANCIAL DATA (UNAUDITED) FLIR SYSTEMS, INC. (In thousands, except per share data) Q1 Q2 Q3 Q4 2009 Revenue $ 271,996 $ 277,978 $ 285,553 $ 311,560 Gross profit 157,715 161,948 162,817 176,049 Net earnings 54,272 55,653 60,035 60,253 Net earnings per share: Basic $ 0.38 $ 0.37 $ 0.40 $ 0.40 Diluted $ 0.35 $ 0.35 $ 0.38 $ 0.38 2008 (As Adjusted) Revenue $ 236,906 $ 260,978 $ 276,740 $ 302,350 Gross profit 130,795 146,614 155,262 173,471 Net earnings (As Adjusted) 36,521 44,617 54,779 64,983 Net earnings per share: Basic (As Adjusted) $ 0.27 $ 0.32 $ 0.39 $ 0.47 Diluted $ 0.24 $ 0.29 $ 0.35 $ 0.41 The sum of the quarterly earnings per share does not always equal the annual earnings per share as a result of the computation of quarterly versus annual average shares outstanding. |
Document Information
Document Information | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Document Type | 10-K |
Amendment Flag | false |
Document Period End Date | 2009-12-31 |
Entity Information
Entity Information (USD $) | |||
12 Months Ended
Dec. 31, 2009 | Feb. 12, 2010
| Jun. 30, 2009
| |
Trading Symbol | FLIR | ||
Entity Registrant Name | FLIR SYSTEMS INC | ||
Entity Central Index Key | 0000354908 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 152,875,172 | ||
Entity Public Float | $3,346,287,508 |