FLIR Systems Inc. (FLIR) has settled its litigation with William J. Parrish and E. Timothy Fitzgibbons ("Plaintiffs"), which was pending since 2008 in the California Superior Court for the County of Santa Barbara.
The litigation arose from FLIR’s 2004 acquisition of Indigo Systems Corporation, Plaintiffs' resulting employment with FLIR, and lawsuit between the parties filed by FLIR in 2006. As per the agreement, FLIR will be paying $39 million to settle all the existing claims and will be using a non-exclusive license for certain infrared technology.
With the settlement of the litigation, FLIR will now be able to give its full attention gaining technical expertise thermal imaging and threat detection systems.
The company has 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 it to effectively combine a wide variety of technologies and payloads to design and manufacture complex systems to suit its customers’ needs.
However, FLIR derives significant revenue from contracts or subcontracts with the U.S. government agencies. A significant reduction in the purchase of its products by these agencies would have an adverse impact on its business. The funding of contracts awarded to the company depends on the overall budget of the United States government and appropriation process, which is beyond its control. Major competitors of FLIR Systems are L-3 Communications Holdings Inc. (LLL) and Lockheed Martin Corporation (LMT).
FLIR Systems Inc. is a leader in design, manufacture and marketing of thermal imaging systems. Its products are used in a wide variety of applications in commercial, industrial and government markets, internationally as well as domestically. It offers a wide variety of system configurations to suit specific customer requirements. The company’s business is organized into three divisions: Government Systems, Commercial Vision Systems and Thermography Products.
We continue to maintain a Neutral rating on FLIR System for the long term. The company has a Zacks #4 Rank (Sell recommendation) over the next one-to-three months.
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