FLIR Systems Announces Second Quarter 2013 Financial Results

PORTLAND, OR--(Marketwired - Jul 25, 2013) - FLIR Systems, Inc. (NASDAQ: FLIR) today announced financial results for the second quarter ended June 30, 2013. Revenue was $389.3 million, up 15% compared to second quarter 2012 revenue of $338.3 million. Operating income in the second quarter increased by 16% to $70.3 million and net income increased 22% to $50.2 million. Second quarter earnings per diluted share were $0.35, an increase of 30% compared to the second quarter a year ago. Cash provided by operations in the second quarter was $134.3 million and represented a quarterly record.

Revenue from the Company's Commercial Systems division increased 17% from the second quarter of 2012, to $221.8 million. Within the Commercial Systems division, revenue from the Thermal Vision and Measurement segment was $175 million, an increase of 23% from the second quarter results last year. The Raymarine segment contributed $46.9 million of revenue during the second quarter, down 1% from the prior year.

Revenue from the Company's Government Systems division increased 13% from the second quarter of 2012, to $167.5 million. Within the Government Systems division, revenue from the Surveillance segment was $118.6 million, a decrease of 1% from the second quarter of 2012. Revenue from the Detection segment was $14.4 million, a decrease of 9% compared to the second quarter of 2012. The Integrated Systems segment contributed $34.5 million of revenue during the second quarter, an increase of 160% from the prior year as a result of deliveries under the MSC program to U.S. Customs and Border Protection.

The Company's backlog of firm orders for delivery within the next twelve months was approximately $528 million as of June 30, 2013, an increase of $23 million during the quarter and $30 million from a year ago. Backlog in the Government Systems division was $339 million, increasing $5 million during the quarter and over the prior year. Backlog in the Commercial Systems division was $190 million, an increase of $18 million during the quarter and $25 million over the prior year.

"We saw solid growth in revenue, operating income, cash flow, and earnings per share in the second quarter, and increased backlog in both divisions," noted Andy Teich, President and CEO of FLIR. "We introduced several new products during the quarter, with more on the horizon. I am very excited about our future given our market presence, product suite, and ability to execute for our customers and our shareholders."

Revenue and Earnings Outlook for 2013
Based on financial results for the first six months of 2013 and the outlook for the remainder of the year, FLIR is reaffirming its outlook for revenue and earnings per share for the full year 2013. Management expects revenue for 2013 to be in the range of $1.5 billion to $1.6 billion and net earnings to be in the range of $1.56 to $1.66 per diluted share.

Dividend Declaration
FLIR's Board of Directors has declared a quarterly cash dividend of $0.09 per share on FLIR common stock, payable September 6, 2013, to shareholders of record as of close of business on August 19, 2013.

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 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 Andy Teich and the statements in the section captioned "Revenue and Earnings Outlook for 2013" 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 FLIR'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 FLIR's products, product mix, the timing of customer orders and deliveries, the ability to develop new products in an efficient and timely manner, the impact of competitive products and pricing, FLIR'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 FLIR to act as a federal contractor, the amount and availability of appropriated government procurement funds and other risks discussed from time to time in FLIR'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 FLIR 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,
				2013				2012				2013				2012
Revenue				$	389,329			$	338,291			$	737,912			$	686,743
Cost of goods sold					199,288				168,262				363,884				333,988
		Gross profit			190,041				170,029				374,028				352,755
Operating expenses:
	Research and development				39,601				37,510				76,285				74,080
	Selling, general and administrative				80,168				71,798				158,341				149,658
		Total operating expenses			119,769				109,308				234,626				223,738
		Earnings from operations			70,272				60,721				139,402				129,017
Interest expense					3,767				2,768				6,664				5,834
Interest income					(274	)			(377	)			(465	)			(805	)
Other expense (income), net					175				240				(589	)			(984	)
		Earnings from continuing operations before income taxes			66,604				58,090				133,792				124,972
Income tax provision					16,446				15,685				31,998				33,742
		Earnings from continuing operations			50,158				42,405				101,794				91,230
Loss from discontinued operations, net of tax					-				(1,312	)			-				(1,998	)
		Net earnings		$	50,158			$	41,093			$	101,794			$	89,232
Basic earnings per share:
	Earnings from continuing operations			$	0.35			$	0.28			$	0.71			$	0.59
	Discontinued operations				-				(0.01	)			-				(0.01	)
		Basic earnings per share		$	0.35			$	0.27			$	0.71			$	0.58
Diluted earnings per share:
	Earnings from continuing operations			$	0.35			$	0.27			$	0.70			$	0.58
	Discontinued operations				-				(0.01	)			-				(0.01	)
		Diluted earnings per share		$	0.35			$	0.27			$	0.70			$	0.57
Weighted average shares outstanding:
	Basic				142,085				153,172				143,350				153,829
	Diluted				143,774				155,033				144,981				155,983

FLIR SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)(Unaudited)
				June 30,			December 31,
				2013			2012
ASSETS							As adjusted(1)
Current assets:
	Cash and cash equivalents			$	492,433		$	321,739
	Accounts receivable, net				278,265			335,163
	Inventories				364,671			381,378
	Prepaid expenses and other current assets				102,530			96,006
	Deferred income taxes, net				30,953			30,960
		Total current assets			1,268,852			1,165,246
Property and equipment, net					216,855			211,615
Deferred income taxes, net					31,826			32,223
Goodwill					558,281			560,784
Intangible assets, net					162,806			175,888
Other assets					47,896			41,377
				$	2,286,516		$	2,187,133
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
	Accounts payable			$	89,797		$	94,156
	Deferred revenue				26,715			29,465
	Accrued payroll and related liabilities				49,565			41,506
	Accrued product warranties				13,638			13,169
	Advance payments from customers				15,854			12,150
	Accrued expenses				43,971			32,772
	Other current liabilities				4,403			6,406
	Accrued income taxes				5,914			11,943
	Current portion long-term debt				15,000			-
		Total current liabilities			264,857			241,567
Long-term debt					379,799			248,319
Deferred income taxes					15,777			15,549
Accrued income taxes					22,398			22,812
Pension and other long-term liabilities					45,676			58,985
Commitments and contingencies
Shareholders' equity					1,558,009			1,599,901
				$	2,286,516		$	2,187,133

(1) Amounts have been adjusted for the reclassification of goodwill and intangible assets related to business acquisitions made in December 2012.

FLIR SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)(Unaudited)
				Three Months Ended								Six Months Ended
				June 30,								June 30,
				2013				2012				2013				2012
Cash flows from operating activities:
	Net earnings			$	50,158			$	41,093			$	101,794			$	89,232
	Income items not affecting cash:
		Depreciation and amortization			15,231				14,809				30,102				30,016
		Deferred income taxes			(18	)			86				26				95
		Stock-based compensation arrangements			7,630				7,865				13,327				13,400
	Other non-cash items				(2,951	)			4,056				(577	)			(1,350	)
	Changes in operating assets and liabilities, net of acquisitions				64,234				9,328				51,571				(5,162	)
Cash provided by operating activities					134,284				77,237				196,243				126,231
Cash flows from investing activities:
	Additions to property and equipment, net				(10,643	)			(13,494	)			(23,291	)			(26,429	)
	Business acquisitions, net of cash acquired				(5,165	)			-				(5,165	)			-
	Other investments				-				(3,000	)			-				(3,000	)
Cash used by investing activities					(15,808	)			(16,494	)			(28,456	)			(29,429	)
Cash flows from financing activities:
	Proceeds from long term debt				150,000				-				150,000				-
	Repayments of long term debt				(3,750	)			-				(3,750	)			-
	Repurchase of common stock				(8,469	)			(64,812	)			(116,830	)			(90,201	)
	Dividends paid				(12,802	)			(10,700	)			(25,909	)			(21,485	)
	Proceeds from shares issued pursuant to stock-based compensation plans				2,706				4,780				3,885				5,656
	Excess tax benefit of stock options exercised				236				214				469				552
	Other financing activities				74				(98	)			54				(140	)
Cash provided (used) by financing activities					127,995				(70,616	)			7,919				(105,618	)
Effect of exchange rate changes on cash					(45	)			(8,522	)			(5,012	)			(2,259	)
Net increase (decrease) in cash and cash equivalents					246,426				(18,395	)			170,694				(11,075	)
Cash and cash equivalents, beginning of period					246,007				448,166				321,739				440,846
Cash and cash equivalents, end of period				$	492,433			$	429,771			$	492,433			$	429,771