FLIR Systems Announces Third Quarter 2012 Financial Results

PORTLAND, OR--(Marketwire - Oct 25, 2012) - FLIR Systems, Inc. (NASDAQ: FLIR) today announced financial results for the third quarter ended September 30, 2012. Revenue was $332.2 million, down 11% compared to third quarter 2011 revenue of $371.3 million. Operating income in the third quarter was $74.2 million, compared to $85.4 million in the third quarter of 2011. Third quarter 2012 net income was $55.9 million, or $0.37 per diluted share, compared with net income of $64.7 million, or $0.40 per diluted share in the third quarter a year ago. Cash provided by operations in the third quarter was $46.4 million. During the quarter, the Company repurchased 1.9 million shares of its common stock at an average price of $19.96 per share.

Revenue from the Company's Commercial Systems division decreased 8% from the third quarter of 2011, to $181.2 million. Within the Commercial Systems division, revenue from the Thermal Vision and Measurement segment was $149.5 million, a decrease of 7% from the third quarter results last year. The Raymarine segment contributed $31.7 million of revenue during the third quarter, down 11% from the prior year.

Revenue from the Company's Government Systems division decreased 14% from the third quarter of 2011, to $151.0 million. Within the Government Systems division, revenue from the Surveillance segment was $115.9 million, a decrease of 17% from the third quarter of 2011. Revenue from the Detection segment was $15.4 million, a decrease of 27% compared to the third quarter of 2011, and the Integrated Systems segment contributed $19.7 million of revenue during the third quarter, an increase of 42% from the prior year.

The Company's backlog of firm orders for delivery within the next twelve months was approximately $565 million as of September 30, 2012, an increase of $67 million during the quarter. Backlog in the Government Systems division was $392 million, increasing $58 million during the quarter. Backlog in the Commercial Systems division was $173 million, up $9 million during the quarter.

Acquisition of Lorex Technology
FLIR today also announced that it has entered into an agreement pursuant to which it has agreed to acquire Lorex Technology Inc., a leading provider of consumer oriented and professional grade video surveillance systems, for CAD$1.30 per share, or a total cash purchase price of CAD$59 million. Lorex, based in Markham, Ontario, is a pioneer in home security video surveillance systems that can be installed by the user as well as a provider of video surveillance products to security system integrators. Lorex provides homes and businesses bundled video surveillance systems and equipment that includes connected visible light video cameras, illuminated infrared cameras, digital video recorders, video monitors, baby monitors, and wearable action sports cameras. The company sells its solutions through retailers such as Costco, BJ's Wholesale, Amazon.com, and BestBuy.com, as well as through distributors of large-scale security solutions. The acquisition is expected to close by the end of 2012.

"Our third quarter results were as planned. In addition, we were encouraged by the order flow during the quarter and the corresponding increase in our ending backlog," noted Earl Lewis, President and CEO of FLIR. "We were pleased to see both divisions increase margins over last quarter despite headwinds in many of our markets. Additionally, the anticipated acquisition of Lorex is highly complementary to our long-term commercial strategy and is expected to be accretive to 2013 net earnings."

Revenue and Earnings Outlook for 2012
Based on financial results for the first nine months 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 $1.40 billion to $1.45 billion and net earnings to be in the range of $1.42 to $1.47 per diluted share. This compares to the prior outlook of $1.4 billion to $1.5 billion in revenue and $1.40 to $1.50 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 December 7, 2012, to shareholders of record as of close of business on November 19, 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. Summary third 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								Nine Months Ended
				September 30,								September 30,
				2012				2011				2012				2011
Revenue				$	332,230			$	371,327			$	1,018,973			$	1,138,850
Cost of goods sold					158,877				169,430				492,865				535,030
		Gross profit			173,353				201,897				526,108				603,820
Operating expenses:
	Research and development				29,593				35,188				103,674				112,257
	Selling, general and administrative				69,523				81,300				219,181				288,036
		Total operating expenses			99,116				116,488				322,855				400,293
		Earnings from operations			74,237				85,409				203,253				203,527
Interest expense					3,096				1,526				8,930				2,311
Interest income					(268	)			(155	)			(1,073	)			(505	)
Other expense (income), net					2,175				66				1,190				(1,206	)
		Earnings from continuing operations before income taxes			69,234				83,972				194,206				202,927
Income tax provision					13,285				19,582				47,027				57,109
		Earnings from continuing operations			55,949				64,390				147,179				145,818
(Loss) earnings from discontinued operations, net of tax					(44	)			329				(2,042	)			(475	)
		Net earnings		$	55,905			$	64,719			$	145,137			$	145,343
Basic earnings per share:
	Earnings from continuing operations			$	0.37			$	0.41			$	0.96			$	0.92
	Discontinued operations				(0.00	)			0.00				(0.01	)			(0.00	)
		Basic earnings per share		$	0.37			$	0.41			$	0.95			$	0.91
Diluted earnings per share:
	Earnings from continuing operations			$	0.37			$	0.40			$	0.95			$	0.90
	Discontinued operations				(0.00	)			0.00				(0.01	)			(0.00	)
		Diluted earnings per share		$	0.37			$	0.40			$	0.94			$	0.90
Weighted average shares outstanding:
	Basic				150,878				158,665				152,820				159,225
	Diluted				152,327				160,798				154,758				161,811

FLIR SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)(Unaudited)
				September 30,			December 31,
				2012			2011
ASSETS
Current assets:
	Cash and cash equivalents			$	424,489		$	440,846
	Accounts receivable, net				283,669			325,370
	Inventories				360,767			336,051
	Prepaid expenses and other current assets				130,244			104,285
	Deferred income taxes, net				27,013			27,443
		Total current assets			1,226,182			1,233,995
Property and equipment, net					200,850			186,269
Deferred income taxes, net					31,832			31,644
Goodwill					502,401			498,343
Intangible assets, net					145,511			164,440
Other assets					39,238			32,338
				$	2,146,014		$	2,147,029
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
	Accounts payable			$	77,693		$	84,190
	Deferred revenue				19,741			24,046
	Accrued payroll and related liabilities				39,717			49,475
	Accrued product warranties				13,094			13,370
	Advance payments from customers				13,681			13,219
	Accrued expenses				33,249			41,183
	Other current liabilities				4,162			3,886
	Accrued income taxes				-			2,161
		Total current liabilities			201,337			231,530
Long-term debt					248,205			247,861
Deferred income taxes					17,358			17,237
Accrued income taxes					17,052			17,537
Pension and other long-term liabilities					59,639			53,835
Commitments and contingencies
Shareholders' equity					1,602,423			1,579,029
				$	2,146,014		$	2,147,029

FLIR SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)(Unaudited)
				Three Months Ended								Nine Months Ended
				September 30,								September 30,
				2012				2011				2012				2011
Cash flows from operating activities:
	Net earnings			$	55,905			$	64,719			$	145,137			$	145,343
	Income items not affecting cash:
		Depreciation and amortization			14,843				17,577				44,859				61,208
		Deferred income taxes			504				(580	)			599				(1,904	)
		Stock-based compensation arrangements			6,598				5,437				19,997				19,313
	Other non-cash items				(4,982	)			3,373				(6,332	)			3,007
	Changes in operating assets and liabilities, net of acquisitions				(26,428	)			(44,622	)			(31,589	)			(99,272	)
Cash provided by operating activities					46,440				45,904				172,671				127,695
Cash flows from investing activities:
	Additions to property and equipment, net				(12,759	)			(12,366	)			(39,188	)			(31,096	)
	Business acquisitions, net of cash acquired				-				(24,831	)			-				(27,182	)
	Other investments				-				-				(3,000	)			-
Cash used by investing activities					(12,759	)			(37,197	)			(42,188	)			(58,278	)
Cash flows from financing activities:
	Proceeds from long term debt, net				-				247,708				-				247,708
	Repurchase of common stock				(38,809	)			(100,583	)			(129,010	)			(124,384	)
	Dividends paid				(10,537	)			(9,518	)			(32,021	)			(28,686	)
	Proceeds from shares issued pursuant to stock-based compensation plans				1,462				804				7,117				15,085
	Excess tax benefit of stock options exercised				679				2,142				1,231				4,468
	Other financing activities				2				(290	)			(138	)			(317	)
Cash (used) provided by financing activities					(47,203	)			140,263				(152,821	)			113,874
Effect of exchange rate changes on cash					8,240				(10,093	)			5,981				(1,929	)
Net (decrease) increase in cash and cash equivalents					(5,282	)			138,877				(16,357	)			181,362
Cash and cash equivalents, beginning of period					429,771				235,622				440,846				193,137
Cash and cash equivalents, end of period				$	424,489			$	374,499			$	424,489			$	374,499