FLIR Systems Announces First Quarter 2005 Financial Results; Reaffirms

    Business Editors

    PORTLAND, Ore.--(BUSINESS WIRE)--April 20, 2005--FLIR Systems, Inc. (NASDAQ:FLIR) announced today that net earnings in its first fiscal quarter ended March 31, 2005 increased by 16% to $14.7 million, from $12.7 million in the first quarter of 2004. Revenue for the quarter was $108.3 million, approximately unchanged from $108.9 million in the first quarter of 2004. Earnings from operations declined 3% to $21.1 million from $21.9 million for the first quarter of 2004. Net earnings per fully diluted share were $0.19, compared with $0.17 in the first quarter 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 18% over the first quarter last year, primarily due to continued strong international sales, and strong demand for the company's E-Series camera line.
    Revenue from the Company's Imaging Division declined by 9% due to slower order activity from the US Government and delays in the receipt of export licenses to certain international customers.
    The backlog of orders grew by 4% to approximately $165 million at March 31, 2005, as compared to $159 million at December 31, 2004.
    Cash generated from operations totaled $12 million for the first quarter of 2005. At March 31, 2005, the Company had cash and cash equivalents of approximately $126 million.
    "Our financial performance in the first quarter was slightly below our internal expectations, largely as a result of slow order placement activity by the US Government and delays in receiving certain export licenses. However we expect improved order activity as the year progresses, and thus remain comfortable with our outlook for the full year," said FLIR President and CEO Earl R. Lewis. "Our current expectation for the full year 2005 is for earnings per share in the range of $1.12 to $1.18, and revenue in the range of $545 million to $560 million."

    Forward-Looking Statements

    The statements in this release by Earl R. Lewis regarding the expectation of achieving the Company's revenue and earnings per share objectives for 2005 and improving order activity 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.earnings.com or from the Calendar of Events link at investor relations page of www.FLIR.com. A replay will be available after 1:00 p.m. EDT at these same Internet addresses. For a telephone replay, dial (800) 633-8284, reservation #21243541 after 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, 2005 2004

Revenue $108,317 $108,861 Cost of goods sold 49,731 55,441 Gross profit 58,586 53,420

Operating expenses: Research and development 13,255 10,598 Selling, general and administrative 24,196 20,960 Total operating expenses 37,451 31,558

Earnings from operations 21,135 21,862

Interest expense 1,995 2,101 Other (income) expenses, net (734) 832

Earnings before income taxes 19,874 18,929

Income tax provision 5,167 6,246

Net earnings $14,707 $12,683

Net earnings per share: Basic $0.21 $0.19 Diluted $0.19 $0.17

Weighted average shares outstanding: Basic 69,554 66,425 Diluted 82,556 79,683

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)

Mar. 31, Dec. 31, 2005 2004 ASSETS (Unaudited)

Current assets: Cash and cash equivalents $125,613 $120,692 Accounts receivable, net 106,997 116,928 Inventories, net 108,279 98,258 Prepaid expenses and other current assets 21,310 21,769 Deferred income taxes, net 9,771 9,771 Total current assets 371,970 367,418

Property and equipment, net 45,181 34,778 Deferred income taxes, net 17,565 12,573 Goodwill 149,475 149,475 Intangible assets, net 45,569 47,180 Other assets 14,507 8,691

$644,267 $620,115

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities: Accounts payable $32,268 $32,321 Deferred revenue 11,760 7,601 Accrued payroll and related liabilities 16,288 22,375 Accrued product warranties 5,345 5,465 Advance payments from customers 5,860 5,009 Other current liabilities 10,728 10,585 Accrued income taxes 2,770 5,626 Current portion of long-term debt 105 105 Total current liabilities 85,124 89,087

Long-term debt 205,528 205,335 Pension and other long-term liabilities 16,503 12,520

Commitments and contingencies

Shareholders' equity 337,112 313,173

$644,267 $620,115

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CONTACT: FLIR Systems, Inc. Anthony Trunzo, 503-684-3731 www.flir.com or Investor Contact: Neil Berkman Associates, 310-277-5162 info@BerkmanAssociates.com

KEYWORD: OREGON INDUSTRY KEYWORD: HARDWARE BANKING AEROSPACE/DEFENSE GOVERNMENT EARNINGS CONFERENCE CALLS SOURCE: FLIR Systems, Inc.

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