July 21, 2005

FLIR Systems Announces Second Quarter 2005 Financial Results

Revenue Increases 10%; Net Earnings Increase 37% Management Increases Full Year 2005 Earnings per Share Guidance

PORTLAND, OR, Jul 21, 2005 (MARKET WIRE via COMTEX) -- FLIR Systems, Inc. (NASDAQ: FLIR) announced today that revenue for the second quarter ended June 30, 2005 increased 10% to $131.0 million from $119.3 million for the second quarter of 2004. Earnings from operations increased 19% to $32.3 million, or 25% of revenue, compared with $27.2 million, or 23% of revenue, for the second quarter of 2004. Net earnings for this year's second quarter increased 37% to $24.6 million, or $0.31 per diluted share, compared to net earnings for the second quarter of 2004 of $17.9 million, or $0.24 per diluted share. All per share amounts have been adjusted to reflect the 2-for-1 stock split that was effective on February 2, 2005.

For the first six months of 2005, revenue increased 5% to $239.3 million from $228.2 million for the same period last year. Earnings from operations for the first six months of 2005 increased 9% to $53.5 million, or 22% of revenue, from $49.1 million, also 22% of revenue, for the first six months of 2004. Net earnings increased 28% to $39.3 million, or $0.50 per diluted share, compared to net earnings of $30.6 million, or $0.41 per diluted share, for the first six months of 2004.

Revenue from the Company's Thermography division increased 18% over the second quarter last year, as a result of continued strong demand for the company's E-Series camera line, as well as continued strength in the OEM segment.

Revenue from the Company's Imaging division increased 6% over the second quarter of last year, reflecting good demand for the company's large stabilized camera systems, as well as improved demand in the company's land systems business.

The backlog of orders for delivery within the next twelve months was approximately $170 million at June 30, 2005, compared to $165 million at March 31, 2005.

Cash generated from operations totaled $19 million for the second quarter of 2005, and $31 million for the first six months of the year. At June 30, 2005, the Company had cash and cash equivalents of $108 million. During the quarter, the Company repurchased 1 million shares of its common stock in the open market at an average price of approximately $25.50.

Earl Lewis, President and CEO, stated, "After a slow start to the year, we had record orders in our Imaging business and added significantly to long term backlog in the second quarter. We launched several new products, and expanded our internal optics capability with the acquisition of Brysen Optical Corporation, a small maker of advanced optical coatings. Our Thermography Division began test marketing its newest camera series, with encouraging results. Our margins continue to improve, reflecting savings from the integration of our own detectors into our systems and improved production efficiency at our Imaging plants. We are confident in our outlook for the remainder of 2005 and are thus increasing our earnings per share guidance for the year."

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 six months of 2005, and the outlook for the remainder of the year, management currently expects revenue for 2005 to be approximately $545 million to $555 million and net earnings in the range of approximately $1.17 to $1.22 per diluted share. This compares with management's previous expectations for 2005 of revenue of $545 million to $560 million and earnings per share of $1.12 to $1.18.

Forward-Looking Statements

The statements in this release by Earl R. Lewis and the statements in the Revenue and Earnings Guidance for 2005 above 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. 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 am EDT today. A simultaneous web cast of the conference call may be accessed online from the Calendar of Events link at the investor relations page of 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 #21250310 after 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 INCOME
          (In thousands, except per share amounts)(Unaudited)
                            Three Months Ended         Six Months Ended
                                  June 30,                 June 30,
                              2005        2004         2005        2004
                           ---------   ---------    ---------   ---------
Revenue                    $ 130,966   $ 119,295    $ 239,283   $ 228,156
Cost of goods sold            59,639      58,271      109,370     113,712
                           ---------   ---------    ---------   ---------
    Gross profit              71,327      61,024      129,913     114,444
Operating expenses:
  Research and development    13,970      10,784       27,225      21,382
  Selling, general
   and administrative         25,031      23,026       49,227      43,986
                           ---------   ---------    ---------   ---------
    Total operating expenses  39,001      33,810       76,452      65,368
    Earnings from operations  32,326      27,214       53,461      49,076
Interest expense               1,972       2,006        3,967       4,107
Other (income) expenses, net  (2,852)       (224)      (3,586)        608
                           ---------   ---------    ---------   ---------
    Earnings before
     income taxes             33,206      25,432       53,080      44,361
Income tax provision           8,634       7,506       13,801      13,752
                           ---------   ---------    ---------   ---------
   Net earnings            $  24,572   $  17,926    $  39,279   $  30,609
                           =========   =========    =========   =========
Net earnings per share:
  Basic                    $    0.35   $    0.27   $     0.56  $     0.46
                           ---------   ---------    ---------   ---------
  Diluted                  $    0.31   $    0.24   $     0.50  $     0.41
                           =========   =========    =========   =========
Weighted average
 shares outstanding:
  Basic                       69,519      67,204       69,536      66,815
                           ---------   ---------    ---------   ---------
  Diluted                     81,990      80,700       82,273      80,197
                           ---------   ---------    ---------   ---------
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.
                   CONSOLIDATED BALANCE SHEETS
            (In thousands, except par value)(Unaudited)
                                                  June 30,     December 31,
                                                   2005           2004
                                                ---------      ---------
                         ASSETS
Current assets:
   Cash and cash equivalents                    $ 107,982      $ 120,692
   Accounts receivable, net                       109,092        116,928
   Inventories, net                               100,067         98,258
   Prepaid expenses and other current assets       21,454         21,769
   Deferred income taxes, net                       9,771          9,771
                                                ---------      ---------
      Total current assets                        348,366        367,418
Property and equipment, net                        47,930         34,778
Deferred income taxes, net                         18,709         12,573
Goodwill                                          149,475        149,475
Intangible assets, net                             43,926         47,180
Other assets                                       17,791          8,691
                                                ---------      ---------
                                                $ 626,197      $ 620,115
                                                =========      =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Accounts payable                             $  32,249      $  32,321
   Deferred revenue                                 8,250          7,601
   Accrued payroll and related liabilities         16,197         22,375
   Accrued product warranties                       5,581          5,465
   Advance payments from customers                  3,267          5,009
   Other current liabilities                        7,335         10,585
   Accrued income taxes                             2,979          5,626
   Current portion of long-term debt                  106            105
                                                ---------      ---------
      Total current liabilities                    75,964         89,087
Long-term debt                                    205,720        205,335
Pension and other long-term liabilities            16,668         12,520
Commitments and contingencies
Shareholder's equity                              327,845        313,173
                                                ---------      ---------
                                                $ 626,197      $ 620,115
                                                =========      =========

Company Contact:


Tony Trunzo


503.498.3547


www.flir.com


SOURCE: FLIR Systems, Inc.

http://www.flir.com


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