FLIR Systems Announces Third Quarter 2005 Financial Results

FLIR Systems, Inc. (NASDAQ: FLIR) announced today that revenue for the third quarter ended September 30, 2005 increased 2% to $113.0 million from $110.8 million in the third quarter of 2004. Earnings from operations increased 3% to $26.3 million, or 23% of revenue, from $25.7 million, also 23% of revenue, for the third quarter of 2004. Net earnings for this year's third quarter increased 3% to $17.3 million, or $0.22 per diluted share, compared to net earnings for the third quarter of 2004 of $16.8 million, also $0.22 per diluted share.

For the first nine months of 2005, revenue increased 4% to $352.3 million from $338.9 million for the same period last year. Earnings from operations for the first nine months of 2005 increased 7% to $79.8 million, or 23% of revenue, from $74.7 million, or 22% of revenue, for the first nine months of 2004. Net earnings increased 19% to $56.6 million, or $0.73 per diluted share, compared to net earnings of $47.4 million, or $0.63 per diluted share, for the first nine months 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 5% over the third quarter last year, as weakness in certain European countries offset strong growth in the Americas and Asia. Revenue from the Company's Imaging Division was virtually unchanged from the third quarter of 2004. Imaging revenue was negatively impacted by lower than expected book and ship revenue at the end of the quarter and the delay of certain orders under existing delivery contracts.

The backlog of orders for delivery within the next twelve months increased by 22% in the third quarter, from $170 million at June 30, 2005 to $207 million at September 30, 2005.

Cash generated from operations totaled $26 million for the third quarter of 2005, and $57 million for the first nine months of 2005. At September 30, 2005, the Company had cash and cash equivalents of $134 million.

"Our revenue and earnings in the third quarter were disappointing, as neither of our businesses achieved their expected results," said FLIR President and CEO Earl R. Lewis. "Thermography experienced slow orders in several European countries, while Imaging experienced an imbalance of orders and production caused by lower than expected book and ship activity and a delay in certain program deliveries. Nevertheless, we are pleased with the good order intake, solid cash flow and strong margins achieved in the quarter. While we do not expect to recoup the third quarter revenue and earnings shortfall in the fourth quarter, and are thus lowering our revenue and EPS outlook for the year, we remain optimistic about the future."

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 nine months of 2005, and the outlook for the remainder of the year, management currently expects revenue for 2005 to be approximately $510 million to $520 million and net earnings in the range of approximately $1.12 to $1.17 per diluted share. This compares with management's previous expectations for 2005 of revenue of $545 million to $555 million and earnings per share of $1.17 to $1.22.