FLIR Systems Announces Second Quarter 2012 Financial Results

PORTLAND, OR--(Marketwire - Jul 26, 2012) - FLIR Systems, Inc. (NASDAQ: FLIR) today announced financial results for the second quarter ended June 30, 2012. Revenue was $338.3 million, down 14% compared to second quarter 2011 revenue of $391.6 million. Operating income in the second quarter was $60.7 million, compared to $41.8 million in the second quarter of 2011, and was negatively impacted by restructuring costs of approximately $6.8 million before tax. Second quarter 2012 net income was $41.1 million, or $0.27 per diluted share, compared with net income of $29.3 million, or $0.18 per diluted share in the second quarter a year ago. Excluding the net after tax impact of the restructuring costs referred to above, second quarter 2012 net income was $46.1 million, or $0.30 per diluted share. Cash provided by operations in the second quarter was $77.2 million. During the quarter, the Company repurchased 3 million shares of its common stock at an average price of $21.60 per share.

Revenue from the Company's Commercial Systems division decreased 12% from the second quarter of 2011, to $189.8 million. Within the Commercial Systems division, revenue from the Thermal Vision and Measurement segment was $142.6 million, a decrease of 13% from the second quarter results last year. The Raymarine segment contributed $47.2 million of revenue during the second quarter, down 6% from the prior year.

Revenue from the Company's Government Systems division decreased 16% from the second quarter of 2011, to $148.5 million. Within the Government Systems division, revenue from the Surveillance segment was $119.5 million, a decrease of 16% from the second quarter of 2011. Revenue from the Detection segment was $15.7 million, a decrease of 9% compared to the second quarter of 2011, and the Integrated Systems segment contributed $13.3 million of revenue during the second quarter, a decrease of 26% from the prior year.

The Company's backlog of firm orders for delivery within the next twelve months was approximately $498 million as of June 30, 2012, an increase of $41 million during the quarter. Backlog in the Government Systems division was $334 million, increasing $22 million during the quarter. Backlog in the Commercial Systems division was $164 million, up $19 million during the quarter.

"This second quarter proved difficult for our company," noted Earl Lewis, President and CEO of FLIR. "Macroeconomic conditions impacted many of our largest markets, but we continued to manage our business in response to these challenges. Both divisions had meaningful increases in backlog during the quarter, and we further streamlined our operations. While the first half of 2012 underperformed our expectations, we anticipate an improved second half and a return to earnings growth in the fourth quarter."

Revenue and Earnings Outlook for 2012
As announced previously, based on financial results for the first half of 2012 and the outlook for the remainder of the year, FLIR has modified its outlook for revenue and earnings per share for the full year 2012. Management currently expects revenue for 2012 to be in the range of $1.4 billion to $1.5 billion and net earnings to be in the range of $1.40 to $1.50 per diluted share. This compares to the prior outlook of $1.55 billion to $1.65 billion in revenue and $1.60 to $1.70 in earnings per diluted share for the full year 2012.

Dividend Declaration
FLIR's Board of Directors has declared a quarterly cash dividend of $0.07 per share on FLIR common stock, payable September 7, 2012, to shareholders of record as of close of business on August 20, 2012.

Conference Call
FLIR has scheduled a conference call at 8:00 a.m. ET (5:00 a.m. PT) today to discuss its results for the quarter. A simultaneous webcast of the conference call may be accessed online from the Upcoming Events link at the Investor Relations page of www.FLIR.com. A replay will be available after 11:00 a.m. ET (8:00 a.m. PT) at this same Internet address. For a telephone replay, dial (877) 660-6853 after 11:00 a.m. ET and reference Account #407 and Conference ID #397563. Summary second quarter and historical financial data, including segment details, may be accessed online from the Summary Financial Data section of www.FLIR.com/investor.

About FLIR Systems
FLIR Systems, Inc. is a world leader in the design, manufacture, and marketing of sensor systems that enhance perception and awareness. The Company's advanced thermal imaging and threat detection systems are used for a wide variety of imaging, thermography, and security applications, including airborne and ground-based surveillance, condition monitoring, research and development, manufacturing process control, search and rescue, drug interdiction, navigation, transportation safety, border and maritime patrol, environmental monitoring, and chemical, biological, radiological, nuclear, and explosives (CBRNE) detection. Visit the Company's web site at www.FLIR.com.

Forward-Looking Statements
The statements in this release by Earl Lewis and the statements in the section captioned "Revenue and Earnings Outlook for 2012" above 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 impact of competitive products and pricing, the Company's continuing compliance with U.S. export control laws and regulations, the timely receipt of any required export licenses, constraints on supplies of critical components, excess or shortage of production capacity, the ability to manufacture and ship the products in the time period required, 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, or for changes made to this document by wire services or Internet service providers.

FLIR SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)(Unaudited)
				Three Months Ended								Six Months Ended
				June 30,								June 30,
				2012				2011(1)				2012				2011(1)
Revenue				$	338,291			$	391,555			$	686,743			$	767,524
Cost of goods sold					168,262				186,144				333,988				365,601
		Gross profit			170,029				205,411				352,755				401,923
Operating expenses:
	Research and development				37,510				39,481				74,080				77,070
	Selling, general and administrative				71,798				124,127				149,658				206,735
		Total operating expenses			109,308				163,608				223,738				283,805
		Earnings from operations			60,721				41,803				129,017				118,118
Interest expense					2,768				435				5,834				786
Interest income					(377	)			(86	)			(805	)			(350	)
Other expense (income), net					240				(2,124	)			(984	)			(1,272	)
		Earnings from continuing operations before income taxes			58,090				43,578				124,972				118,954
Income tax provision					15,685				13,755				33,742				37,528
		Earnings from continuing operations			42,405				29,823				91,230				81,426
Loss from discontinued operations, net of tax					(1,312	)			(514	)			(1,998	)			(802	)
		Net earnings		$	41,093			$	29,309			$	89,232			$	80,624
Basic earnings per share:
	Earnings from continuing operations			$	0.28			$	0.19			$	0.59			$	0.51
	Discontinued operations				(0.01	)			(0.00	)			(0.01	)			(0.01	)
		Basic earnings per share		$	0.27			$	0.18			$	0.58			$	0.51
Diluted earnings per share:
	Earnings from continuing operations			$	0.27			$	0.18			$	0.58			$	0.50
	Discontinued operations				(0.01	)			(0.00	)			(0.01	)			(0.00	)
		Diluted earnings per share		$	0.27			$	0.18			$	0.57			$	0.50
Weighted average shares outstanding:
	Basic				153,172				159,796				153,829				159,599
	Diluted				155,033				162,550				155,983				162,427

(1) Amounts have been adjusted for the reclassification of certain discontinued operations to continued operations.

FLIR SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)(Unaudited)
				June 30,			December 31,
				2012			2011
ASSETS
Current assets:
	Cash and cash equivalents			$	429,771		$	440,846
	Accounts receivable, net				268,550			325,370
	Inventories				350,791			336,051
	Prepaid expenses and other current assets				124,794			104,285
	Deferred income taxes, net				27,023			27,443
		Total current assets			1,200,929			1,233,995
Property and equipment, net					193,594			186,269
Deferred income taxes, net					31,857			31,644
Goodwill					497,728			498,343
Intangible assets, net					152,274			164,440
Other assets					38,424			32,338
				$	2,114,806		$	2,147,029
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
	Accounts payable			$	79,611		$	84,190
	Deferred revenue				23,446			24,046
	Accrued payroll and related liabilities				44,794			49,475
	Accrued product warranties				13,232			13,370
	Advance payments from customers				10,425			13,219
	Accrued expenses				32,862			41,183
	Other current liabilities				4,057			3,886
	Accrued income taxes				-			2,161
		Total current liabilities			208,427			231,530
Long-term debt					248,090			247,861
Deferred income taxes					17,294			17,237
Accrued income taxes					18,138			17,537
Pension and other long-term liabilities					58,082			53,835
Commitments and contingencies
Shareholders' equity					1,564,775			1,579,029
				$	2,114,806		$	2,147,029

FLIR SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)(Unaudited)
				Three Months Ended								Six Months Ended
				June 30,								June 30,
				2012				2011				2012				2011
Cash flows from operating activities:
	Net earnings			$	41,093			$	29,309			$	89,232			$	80,624
	Income items not affecting cash:
		Depreciation and amortization			14,809				23,738				30,016				43,631
		Deferred income taxes			86				(1,259	)			95				(1,324	)
		Stock-based compensation arrangements			7,865				7,588				13,400				13,876
	Other non-cash items				4,056				(3,793	)			(1,350	)			(629	)
	Changes in operating assets and liabilities, net of acquisitions				9,328				(36,178	)			(5,162	)			(54,387	)
Cash provided by operating activities					77,237				19,405				126,231				81,791
Cash flows from investing activities:
	Additions to property and equipment, net				(13,494	)			(14,464	)			(26,429	)			(18,730	)
	Business acquisitions, net of cash acquired				-				(2,351	)			-				(2,351	)
	Other investments				(3,000	)			-				(3,000	)			-
Cash used by investing activities					(16,494	)			(16,815	)			(29,429	)			(21,081	)
Cash flows from financing activities:
	Repurchase of common stock				(64,812	)			(17,026	)			(90,201	)			(23,801	)
	Dividends paid				(10,700	)			(9,598	)			(21,485	)			(19,168	)
	Proceeds from shares issued pursuant to stock-based compensation plans				4,780				7,248				5,656				14,281
	Excess tax benefit of stock options exercised				214				734				552				2,326
	Other financing activities				(98	)			(3	)			(140	)			(27	)
Cash used by financing activities					(70,616	)			(18,645	)			(105,618	)			(26,389	)
Effect of exchange rate changes on cash					(8,522	)			1,448				(2,259	)			8,164
Net (decrease) increase in cash and cash equivalents					(18,395	)			(14,607	)			(11,075	)			42,485
Cash and cash equivalents, beginning of period					448,166				250,229				440,846				193,137
Cash and cash equivalents, end of period				$	429,771			$	235,622			$	429,771			$	235,622