April 21, 2004

FLIR Systems Announces First Quarter 2004 Financial Results; Net Earnings Increase 39%; Revenue Increases 57%; Company Names Co-Presidents of Imaging Division

 

PORTLAND, Ore.--(BUSINESS WIRE)--April 21, 2004--FLIR Systems, Inc. (Nasdaq:FLIR) announced today that total revenue for the first quarter ended March 31, 2004 increased 57% to $108.9 million from $69.2 million for the first quarter of 2003. Excluding the effects of the acquisition of Indigo Systems Corporation, which closed January 6, 2004, revenue increased 37%. Earnings from operations increased 58% to $21.9 million from $13.8 million for the first quarter of 2003. Net earnings for the first quarter increased 39% to $12.7 million, or $0.36 per diluted share. This compares to net earnings for the first quarter of 2003 of $9.2 million, or $0.25 per diluted share. All per share amounts have been adjusted to reflect the 2-for-1 stock split that was effective on May 29, 2003.

Revenue from the sale of the Company's Thermography products for the first quarter increased 42% over the first quarter last year, primarily due to continued strong demand from traditional markets and growth in new markets such as building inspection and moisture detection. Excluding the impact of the Indigo acquisition, Thermography revenue rose 28%.

Revenue from the sale of the Company's Imaging products increased 66%, reflecting particularly strong deliveries in the airborne and maritime product lines. Excluding the impact of the Indigo acquisition, Imaging revenue rose 42%.

The backlog of orders grew by 23% to approximately $180 million at March 31, 2004, as compared to $146 million at December 31, 2003. Excluding the acquisition of Indigo, backlog increased 10%.

Cash generated from operations totaled $19 million for the first quarter of 2004. At March 31, 2004, the Company had cash and cash equivalents of approximately $56 million.

"Our financial performance in the first quarter was the result of strong growth in virtually all of our product lines and all of our markets. We are pleased with Indigo's performance in the quarter, and with the progress of integrating the two companies. I believe the Company is well positioned to achieve our goals for 2004," said President and CEO Earl R. Lewis. "Based on the quarter's results, and the expectations for the remainder of the year, we are refining our guidance for earnings per share to between $1.55 and $1.60, from a prior range of $1.50 to $1.60."

Company Names Co-Presidents of Imaging Division

FLIR also announced today the appointment of Andrew C. Teich and William A. Sundermeier as Co-Presidents of the Company's Imaging Division. Previously, Earl Lewis, Chairman, President and CEO, had been acting President of this division. Mr. Teich was previously FLIR's Senior Vice President, Sales and Marketing, and Mr. Sundermeier was previously Senior Vice President and General Manager of FLIR's Portland Operations.

"Our Imaging division has performed extremely well over the past three years, and Andy and Bill have been critical to that success. They have proven themselves in their previous roles as highly effective managers and experienced infrared industry executives," commented Earl Lewis. "I am confident they will be successful in leading our Imaging business into the future," he concluded.

Forward-Looking Statements

The statements in this release by Earl R. Lewis regarding the progress in integrating Indigo Systems Corporation, the expectation of achieving the Company's goals for 2004 and refining the guidance for earnings per share to between $1.55 and $1.60 per share are forward-looking statements. 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 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 in acquisitions 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 11:00 a.m. EDT today. A simultaneous Web Cast of the conference call may be accessed online at www.fulldisclosure.com or www.FLIR.com. 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 #21193066 beginning at approximately 1:00 p.m. 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 www.FLIR.com.

                          FLIR SYSTEMS INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share amounts)(Unaudited)

Three Months Ended
March 31,
2004 2003

Revenue $ 108,861 $ 69,171
Cost of goods sold 55,441 33,128
Gross profit 53,420 36,043

Operating expenses:
Research and development 10,598 7,598
Selling general and administrative 20,960 14,635
Total operating expenses 31,558 22,233

Earnings from operations 21,862 13,810

Interest expense 2,101 260
Other expenses (income) net 832 (107)

Earnings before income taxes 18,929 13,657

Income tax provision 6,246 4,507

Net earnings $ 12,683 $ 9,150

Net earnings per share:
Basic $ 0.38 $ 0.26
Diluted $ 0.36 $ 0.25

Weighted average shares outstanding:
Basic 33,212 34,666
Diluted 35,110 36,064

2003 per share amounts have been adjusted to reflect the two-for-one
stock split.


FLIR SYSTEMS, INC.

CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)

March 31, December
31,
2004 2003
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $ 55,984 $ 197,993
Accounts receivable, net 84,584 79,332
Inventories, net 87,619 75,959
Prepaid expenses and other current assets 19,484 19,997
Deferred income taxes 9,908 8,832
Total current assets 257,579 382,113

Property and equipment, net 29,728 22,758
Deferred income taxes, net 6,500 21,146
Goodwill 149,459 12,500
Intangible assets, net 50,492 4,036
Other assets 7,891 7,870
$ 501,649 $ 450,423


LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 30,032 $ 26,427
Deferred revenue 5,294 4,540
Accrued payroll and related liabilities 12,708 12,778
Accrued product warranties 4,422 3,511
Advance payments from customers 12,893 12,112
Other current liabilities 10,993 8,227
Accrued income taxes (1,994) 2,742
Current portion of long-term debt 1,356 --
Total current liabilities 75,704 70,337

Long-term debt 206,990 204,369
Pension and other long-term liabilities 11,016 10,875

Commitments and contingencies

Shareholders' equity 207,939 164,842
$ 501,649 $ 450,423



CONTACT: FLIR Systems, Inc.


Steve Bailey, 503-684-3731
www.flir.com
or
Investor Contact:
Neil Berkman Associates
310-277-5162


info@BerkmanAssociates.com

SOURCE: FLIR Systems, Inc.


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