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Flir Closing Facilities, Merging Optics and Lasers
Oct 2013
By Melinda Rose, Senior Editor

WILSONVILLE, Ore., Oct. 15, 2013 — Flir Systems will close up to six sites in the US and Europe and consolidate its optics and laser manufacturing businesses under a realignment plan announced Tuesday that is expected to save the company more than $20 million a year. The thermal imaging systems maker cited "disappointing" preliminary earnings for the third quarter related to ongoing uncertainty in the US government as a contributing factor.

Flir develops advanced sensors and integrated sensor systems for applications in commercial, industrial and government markets. The business is organized into two divisions: Commercial Systems, which includes the Thermal Vision & Measurement and Raymarine segments; and Government Systems, which includes the Surveillance, Detection and Integrated Systems segments, according to its 2012 annual report.

Flir said it is realigning multiple production and engineering organizations and streamlining its global operations to develop, produce and market products more quickly and effectively. The plan includes closing "not to scale" sites in the US and Europe and transferring those operations to larger company facilities. Consolidating its optics and laser manufacturing businesses will also "better realize the benefits of vertical integration," the company said.

"The realignment of operations ... is the culmination of a strategic operations review we began this past summer to further enhance operating efficiency and profitability and to improve our internal execution with better communication, collaboration and cooperation across the company," said Flir President and CEO Andy Teich.

The company didn't release specifics on which factories will be closed. As of Dec. 31, 2012, it owned seven plants in the US and leased 24 facilities there, and owned seven plants and leased 44 facilities outside the US, primarily in Europe. Its major plants are in Wilsonville; Taby, outside Stockholm, Sweden; North Billerica, Mass.; Goleta, Calif.; Nashua, N.H.; Alpharetta, Ga.; and Fareham, England, near Portsmouth.

Thermal Vision & Measurement operates in Taby, Goleta, Nashua and 38 other locations inside and outside the US, according to Flir's annual report. Raymarine operates out of Fareham and three plants in the US, as well as 13 other facilities outside the US. The Surveillance segment is based in Wilsonville, North Billerica, Taby and 12 other locations inside and outside the US.

The Detection segment operates primarily in the US, with six facilities there and one outside the US, while Integrated Systems is based in Alpharetta and two other US facilities, as well as three locations outside the US.

Flir's full financial results will be released Oct. 24, but based on preliminary information released Tuesday, the company said it expects 2013 revenue to be in the range of $1.4 billion to $1.5 billion, and profit to be in the range of $1.38 to $1.43 per share. The company previously estimated revenue as high as $1.6 billion and profit of as much as $1.66 per share. affected by weakness in markets with exposure to the US federal government, Flir said.

"Extended procurement and export licensing processes at federal government agencies caused shipments to be lower than anticipated in Flir's Surveillance segment and the cores and components line of business within the Thermal Vision & Measurement segment," the company said, adding that it now expects revenue for the third quarter to be between $358 million and $360 million.

"While we are disappointed in the preliminary results for the third quarter, we have also taken steps, above and beyond those related to our strategic review, to reduce costs in response to the current operating environment, and we remain highly confident in our strategy and outlook for the future," Teich said. "Ongoing uncertainty in the US government is likely to continue to affect our performance in the fourth quarter, and our revised guidance is intended to reflect this environment."

Flir said it expects to record a pretax restructuring charge of approximately $27 million to $30 million in the fourth quarter of 2013.

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The processes in which luminous energy incident on the eye is perceived and evaluated.
AmericasAndy TeichBusinessCaliforniaconsolidationdetectiondownsizingearningsEnglandEuropeFlirGeorgiagovernment shutdownimagingindustrialinfrared imagingMassachusettsMelinda RoseNew Hampshireoptical sensoropticsOregonprofitrealignmentrestructuringrevenuestreamliningSwedenvisionlasers

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