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Oct 19, 2005
FLIR Systems Announces Third Quarter 2005 Financial Results
FLIR Systems Announces Third Quarter 2005 Financial Results

PORTLAND, OR, Oct 19, 2005 (MARKET WIRE via COMTEX News Network) -- FLIR Systems, Inc. (NASDAQ: FLIR) announced today that revenue for the third quarter ended September 30, 2005 increased 2% to $113.0 million from $110.8 million in the third quarter of 2004. Earnings from operations increased 3% to $26.3 million, or 23% of revenue, from $25.7 million, also 23% of revenue, for the third quarter of 2004. Net earnings for this year's third quarter increased 3% to $17.3 million, or $0.22 per diluted share, compared to net earnings for the third quarter of 2004 of $16.8 million, also $0.22 per diluted share.

For the first nine months of 2005, revenue increased 4% to $352.3 million from $338.9 million for the same period last year. Earnings from operations for the first nine months of 2005 increased 7% to $79.8 million, or 23% of revenue, from $74.7 million, or 22% of revenue, for the first nine months of 2004. Net earnings increased 19% to $56.6 million, or $0.73 per diluted share, compared to net earnings of $47.4 million, or $0.63 per diluted share, for the first nine months of 2004. All per share amounts have been adjusted to reflect the 2-for-1 stock split that was effective on February 2, 2005.

Revenue from the Company's Thermography Division increased 5% over the third quarter last year, as weakness in certain European countries offset strong growth in the Americas and Asia. Revenue from the Company's Imaging Division was virtually unchanged from the third quarter of 2004. Imaging revenue was negatively impacted by lower than expected book and ship revenue at the end of the quarter and the delay of certain orders under existing delivery contracts.

The backlog of orders for delivery within the next twelve months increased by 22% in the third quarter, from $170 million at June 30, 2005 to $207 million at September 30, 2005.

Cash generated from operations totaled $26 million for the third quarter of 2005, and $57 million for the first nine months of 2005. At September 30, 2005, the Company had cash and cash equivalents of $134 million.

"Our revenue and earnings in the third quarter were disappointing, as neither of our businesses achieved their expected results," said FLIR President and CEO Earl R. Lewis. "Thermography experienced slow orders in several European countries, while Imaging experienced an imbalance of orders and production caused by lower than expected book and ship activity and a delay in certain program deliveries. Nevertheless, we are pleased with the good order intake, solid cash flow and strong margins achieved in the quarter. While we do not expect to recoup the third quarter revenue and earnings shortfall in the fourth quarter, and are thus lowering our revenue and EPS outlook for the year, we remain optimistic about the future."

Revenue and Earnings Guidance for 2005

The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially.

Based on its financial results for the first nine months of 2005, and the outlook for the remainder of the year, management currently expects revenue for 2005 to be approximately $510 million to $520 million and net earnings in the range of approximately $1.12 to $1.17 per diluted share. This compares with management's previous expectations for 2005 of revenue of $545 million to $555 million and earnings per share of $1.17 to $1.22.

Forward-Looking Statements

The statements in this release regarding the Company's expectations as to revenue and earnings per share for the year ending December 31, 2005 and the statements by Earl R. Lewis regarding the Company's inability to recoup the third quarter revenue and earnings shortfall in the fourth quarter of 2005 are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are based on current expectations, estimates and projections about the Company's business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors, including the following: changes in demand for the Company's products, product mix, the timing of customer orders and deliveries, the ability of the Company to manufacture and deliver its products within the time period specified in the contracts it receives, the impact of competitive products and pricing, the Company's continuing compliance with US export control laws and regulations, constraints on supplies of critical components, excess or shortage of production capacity, actual purchases under agreements, the continuing eligibility of the Company to act as a federal contractor, the amount and availability of appropriated government procurement funds and other risks discussed from time to time in the Company's Securities and Exchange Commission filings and reports. Further, such statements are subject to the risks inherent inacquisitions of technologies and businesses, including the timing and successful completion of technology and product development through volume production, integration issues, unanticipated costs and expenditures, changing relationships with customers, suppliers and strategic partners, potential contractual, intellectual property or employment issues, accounting treatment and charges, and the risks that the acquisition cannot be completed successfully or that anticipated benefits are not realized. In addition, such statements could be affected by general industry and market conditions and growth rates, and general domestic and international economic conditions. Such forward-looking statements speak only as of the date on which they are made and the company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release.

Conference Call

FLIR has scheduled a conference call at 8:00 am EDT today. A simultaneous Web Cast of the conference call may be accessed online at or A replay will be available approximately one hour after the Web Cast at these same Internet addresses. For a telephone replay, dial (800) 633-8284, reservation #21264277 beginning at approximately 11:00 PM EDT.

About FLIR Systems

FLIR Systems, Inc. is a world leader in the design, manufacture and marketing of thermal imaging and stabilized camera systems for a wide variety of thermography and imaging applications including condition monitoring, research and development, manufacturing process control, airborne observation and broadcast, search and rescue, drug interdiction, surveillance and reconnaissance, navigation safety, border and maritime patrol, environmental monitoring and ground-based security. Visit the company's web site at

          (In thousands, except per share amounts) (Unaudited)
                              Three Months Ended       Nine Months Ended
                                 September 30,            September 30,
                               2005        2004         2005        2004
                            ---------   ---------    ---------   ---------
Revenue                     $ 113,031   $ 110,769    $ 352,314   $ 338,925
Cost of goods sold             52,911      51,789      162,281     165,501
                            ---------   ---------    ---------   ---------
     Gross profit              60,120      58,980      190,033     173,424
Operating expenses:
   Research and development    11,777      11,324       39,002      32,706
   Selling, general
    and administrative         22,002      21,997       71,229      65,983
                            ---------   ---------    ---------   ---------
     Total operating expenses  33,779      33,321      110,231      98,689
     Earnings from operations  26,341      25,659       79,802      74,735
Interest expense                1,954       1,954        5,921       6,061
Other expenses (income), net      949         429       (2,637)      1,037
                            ---------   ---------    ---------   ---------
     Earnings before
      income taxes             23,438      23,276       76,518      67,637
Income tax provision            6,094       6,452       19,895      20,204
                            ---------   ---------    ---------   ---------
     Net earnings           $  17,344   $  16,824    $  56,623   $  47,433
                            =========   =========    =========   =========
Net earnings per share:
   Basic                    $    0.25   $    0.25    $    0.81   $    0.71
                            =========   =========    =========   =========
   Diluted                  $    0.22   $    0.22    $    0.73   $    0.63
                            =========   =========    =========   =========
Weighted average shares
   Basic                       69,777      67,910       69,617      67,182
                            =========   =========    =========   =========
   Diluted                     82,292      81,709       82,286      80,793
                            =========   =========    =========   =========
2004 per share amounts have been adjusted to reflect the two-for-one stock
split and the effect of the restatement for the assumed conversion of the
convertible notes.
                          FLIR SYSTEMS, INC.
                      (In thousands)(Unaudited)
                                           September 30,     December 31,
                                               2005              2004
                                            ---------         ---------
Current assets:
   Cash and cash equivalents                $ 133,884         $ 120,692
   Accounts receivable, net                   111,470           116,928
   Inventories, net                           103,817            98,258
   Prepaid expenses and
    other current assets                       22,902            21,769
   Deferred income taxes, net                   9,771             9,771
                                            ---------         ---------
        Total current assets                  381,844           367,418
Property and equipment, net                    51,111            34,778
Deferred income taxes, net                     24,008            12,573
Goodwill                                      149,475           149,475
Intangible assets, net                         45,900            47,180
Other assets                                   15,813             8,691
                                            ---------         ---------
                                            $ 668,151         $ 620,115
                                            =========         =========
Current liabilities:
   Accounts payable                         $  33,569         $  32,321
   Deferred revenue                             9,561             7,601
   Accrued payroll and related liabilities     16,861            22,375
   Accrued product warranties                   5,843             5,465
   Advance payments from customers              4,159             5,009
   Other current liabilities                    9,898            10,585
   Accrued income taxes                         5,863             5,626
   Current portion of long-term debt               81               105
                                            ---------         ---------
        Total current liabilities              85,835            89,087
Long-term debt                                205,937           205,335
Pension and other long-term liabilities        16,869            12,520
Commitments and contingencies
Shareholder's equity                          359,510           313,173
                                            ---------         ---------
                                            $ 668,151         $ 620,115
                                            =========         =========

Company contact:
Anthony Trunzo
FLIR Systems, Inc.
(503) 498-3547

SOURCE: FLIR Systems, Inc.