No fine as Flir settles with SEC

WASHINGTON — Flir Systems, a Portland-based maker of night-vision cameras, has agreed to settle Securities and Exchange Commission (SEC) charges that it fraudulently inflated profits to meet analysts' forecasts in 1998 and 1999.

Flir, which didn't pay a fine, agreed to be subject to stiffer sanctions if it commits similar violations in the future, the SEC said. The company neither admitted nor denied wrongdoing.

"Flir is a much stronger company today than it was four years ago," Flir Chief Executive Officer Earl Lewis said in a statement.

The SEC yesterday also sued four former Flir executives "for engaging in a wide-ranging scheme" to inflate results. Charged with fraud were former Chief Executive Officer Kenneth Stringer, former Chief Financial Officer Mark Samper, former Vice President William Martin and former director of sales operations Steven Eagleburger.

Flir, in addition to replacing the former officers, has strengthened its accounting department and replaced its former outside auditor, Lewis said. PricewaterhouseCoopers was dismissed as auditor in May 2000, and the company's new outside auditor is KPMG.

Flir's stock price fell $2.66, or 7.1 percent, to $34.99 yesterday. Its shares have fallen 40 percent from a 52-week high of $58.64 March 4.

Flir — whose surveillance products are used for public safety, defense and electronic news gathering — inflated profits by $14.9 million and revenue by $27.1 million in 1998 and 1999, the SEC complaint said. The company, which had $214 million in revenue last year, has since restated its results.

Flir improperly recorded revenue by booking false sales, entering side agreements with customers, and booking rental agreements as sales, the SEC alleged.

Stringer, 49, is contesting the SEC's complaint, his attorney said.

Samper, 41, agreed to pay $171,000 to settle the SEC charges and to be barred from working again as an executive of a public company, the SEC said. Martin, 46, agreed to pay $87,000 and to be barred for 10 years from working as an executive at a public company. Eagleburger, 55, agreed to pay $25,000.

Samper, Martin and Eagleburger neither admitted nor denied the allegations, the SEC said. Attorneys for the three either declined comment or didn't respond to a request for comment.

A Pricewaterhouse spokeswoman didn't respond to a request for comment.

Flir agreed to pay $6 million to settle class-action shareholder litigation in January 2001.