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FLIR Systems Inc. Reports Operating Results (10-K)

February 29, 2012 | About:
10qk

10qk

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FLIR Systems Inc. (FLIR) filed Annual Report for the period ended 2011-12-31.

Flir Systems has a market cap of $4.07 billion; its shares were traded at around $26.27 with a P/E ratio of 16.4 and P/S ratio of 2.6. The dividend yield of Flir Systems stocks is 1.1%. Flir Systems had an annual average earning growth of 22.4% over the past 10 years. GuruFocus rated Flir Systems the business predictability rank of 4-star.

Highlight of Business Operations:

Our earnings, combined with our modest capital expenditure requirements, result in the generation of significant free cash flow. In the years ended December 31, 2011 and 2010, our net cash provided by operating activities was $243.9 million and $255.3 million, respectively. Over the past 5 years, our operating cash flows have exceeded our net earnings every year except in 2007. This ability to consistently convert revenues into net operating cash provides us significant flexibility in making growth and capital deployment decisions, such as executing strategic acquisitions, undertaking new product or technology development initiatives, building out our distribution and marketing presence, making capital investments, or repurchasing shares of our common stock in the open market. Since 2006, we have utilized approximately $625 million of cash for acquisitions, $310 million for share repurchases, and $220 million for capital expenditures. In 2011, we initiated a quarterly common stock dividend, further augmenting our capital structure and shareholder return strategy.

Selling, general and administrative expenses. Selling, general and administrative expenses were $368.2 million, or 23.8 percent of revenue in 2011 compared to $286.7 million, or 20.6 percent of revenue, in 2010 and $219.9 million, or 19.2 percent of revenue, in 2009. The increase in selling, general and administrative expenses from 2010 to 2011 was primarily due to the operating expenses related to businesses acquired during 2010 which represented $46.1 million of the increase, the payment of a $39 million litigation settlement in the second quarter of 2011, and increased spending in each of our business segments to drive future growth. The increase in selling, general and administrative expenses from 2009 to 2010 was primarily due to increased spending in each of our business segments to support future growth, as well as the operating expenses of businesses acquired during 2009 and 2010, acquisition related costs incurred in 2010 of $9.2 million and a $3.0 million litigation settlement recorded in the third quarter of 2010. We anticipate selling, general and administrative expenses in the future to increase at a slower rate than revenue.

Revenue decreased by 14.0 percent in 2011 compared to 2010, primarily due to decreases in revenue from U.S. government agencies, partially offset by revenue of $8.8 million from ICx business units, which were acquired on October 4, 2010. Lower revenue and increased segment operating expenses caused the decline in earnings from operations and operating margin from 2010 to 2011. The earnings from operations include the impact of the amortization of intangible assets of $2.4 million and $0.6 million, and the fair value adjustments on inventory of $2.6 million and $1.3 million in 2011 and 2010, respectively. The fair value adjustment on inventory related to purchase price accounting and the adjustment was fully amortized in 2011. The decline in backlog from 2010 to 2011 was primarily due to the continued reduction in procurement activity by our U.S. government customers in 2011.

ICx was acquired on October 4, 2010 and the operating results are for the period since the acquisition. The earnings from operations include the impact of the amortization of intangible assets of $2.6 million and $0.6 million, and the fair value adjustments on inventory of $4.2 million and $2.1 million in 2011 and 2010, respectively. The fair value adjustment on inventory related to purchase price accounting and the adjustment was fully amortized in 2011.

ICx was acquired on October 4, 2010 and the operating results are for the period since the acquisition. The earnings from operations include the impact of the amortization of intangible assets of $1.6 million and $0.4 million, and the fair value adjustments on inventory of $0.5 million and $0.2 million in 2011 and 2010, respectively. The fair value adjustment on inventory related to purchase price accounting and the adjustment was fully amortized in 2011.

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