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FLIR Systems Announces Fourth Quarter and Full Year 2013 Financial Results


February 7, 2014 - Wilsonville, OR

FLIR Systems, Inc. (NASDAQ: FLIR) today announced financial results for the fourth quarter ended December 31, 2013. Revenue was $400.3 million, up 4% compared to fourth quarter 2012 revenue of $386.4 million. Operating income in the fourth quarter was $37.8 million, compared to $100.1 million in the fourth quarter of 2012, and was impacted by $31 million in pretax charges related to previously announced restructuring initiatives and the settlement of executive retirement benefits. Fourth quarter 2013 net income was $28.7 million, or $0.20 per diluted share, compared with net income of $77.3 million, or $0.52 per diluted share in the fourth quarter a year ago. The net after tax impact of the restructuring and retirement benefits charges in the fourth quarter was approximately $21 million, or $0.15 per diluted share.

Cash provided by operations in the fourth quarter was $105.2 million, a decrease of 7% compared to the fourth quarter of 2012. During the quarter, FLIR repurchased one million shares of its common stock at an average price of $28.95 per share.

Revenue from FLIR's Commercial Systems division increased 15% from the fourth quarter of 2012, to $244.6 million. Within the Commercial Systems division, revenue from the Thermal Vision and Measurement segment was $208.5 million, an increase of 16% from the fourth quarter results last year. The Raymarine segment contributed $36.1 million of revenue during the fourth quarter, up 10% from the prior year.

Revenue from FLIR's Government Systems division decreased 10% from the fourth quarter of 2012, to $155.7 million. Within the Government Systems division, revenue from the Surveillance segment was $124.7 million, a decrease of 9% from the fourth quarter of 2012. Revenue from the Detection segment was $13.2 million, an increase of 3% compared to the fourth quarter of 2012, and the Integrated Systems segment contributed $17.9 million of revenue during the fourth quarter, compared with revenue of $24.4 million in the prior year.

For the full year, revenue was $1,496.4 million, up 6% compared to $1,405.4 million for the year ended December 31, 2012. Operating income for 2013 was $240.7 million compared to $303.3 million in 2012. Net income for 2013 was $177 million, or $1.22 per diluted share, compared with 2012 net income of $222.4 million, or $1.45 per diluted share. Cash provided by operations reached a record high $355 million during the year, growing 24% over 2012.

FLIR's backlog of firm orders for delivery within the next twelve months was approximately $490 million as of December 31, 2013, a decrease of $33 million during the quarter. Backlog in the Government Systems division was $294 million, decreasing $41 million during the quarter. Backlog in the Commercial Systems division was $196 million, up $8 million during the quarter.

"The new products and core technologies we've recently introduced coupled with the organizational changes we launched in the fourth quarter of 2013 paves the way for FLIR's entrance into several new high volume markets," said Andy Teich, President and CEO of FLIR. "Our financial results were impacted by slowed activity from domestic defense customers and our planned spending and restructuring charges; however, we recorded a record level of cash flow in 2013. Our recent realigning of our operations will create a streamlined organizational structure that focuses on our customers, leverages our vertical integration, employs our CDMQ model for government markets, and furthers our ability to deliver on our goal of 'infrared everywhere.'"

Revenue and Earnings Outlook for 2014
FLIR also announced today that it currently expects revenue in 2014 to be in the range of $1.45 billion to $1.55 billion and net earnings excluding restructuring charges associated with the business realignment to be in the range of $1.40 to $1.50 per diluted share.

Dividend Increase and Declaration
FLIR's Board of Directors has approved a quarterly cash dividend of $0.10 per share on FLIR common stock, an increase of 11% over the previous paid quarterly dividend of $0.09 per share. The Board of Directors has declared the dividend payable March 7, 2014, to shareholders of record as of close of business on February 19, 2014.

Conference Call
FLIR has scheduled a conference call at 11:00 a.m. ET (8:00 a.m. PT) today to discuss its results for the quarter and the year. A simultaneous webcast of the conference call may be accessed online from a link in the Events & Presentations section of www.FLIR.com/investor. A replay will be available after 2:00 p.m. ET (11:00 a.m. PT) at this same Internet address. Summary fourth quarter and historical financial data can be accessed online soon after the release of the fourth quarter results from the Financial Info Database link at 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. FLIR's advanced systems and components are used for a wide variety of thermal imaging, situational awareness, and security applications, including airborne and ground-based surveillance, condition monitoring, navigation, recreation, research and development, manufacturing process control, search and rescue, drug interdiction, transportation safety, border and maritime patrol, environmental monitoring, and chemical, biological, radiological, nuclear, and explosives (CBRNE) threat detection. For more information, visit FLIR'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 2014" 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 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.

(Tables Below)




FLIR SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)(Unaudited)

Three Months Ended Twelve Months Ended
December 31, December 31,
------------------ ----------------------
2013 2012 2013 2012
-------- -------- ---------- ----------

Revenue $400,319 $386,385 $1,496,372 $1,405,358
Cost of goods sold 210,228 181,010 759,362 670,174
-------- -------- ---------- ----------
Gross profit 190,091 205,375 737,010 735,184

Operating expenses:
Research and development 38,425 33,704 147,696 137,354
Selling, general and
administrative 88,033 70,482 322,739 292,500
Restructuring expenses 25,832 1,113 25,832 2,000
-------- -------- ---------- ----------
Total operating expenses 152,290 105,299 496,267 431,854

Earnings from operations 37,801 100,076 240,743 303,330

Interest expense 3,731 2,729 14,091 11,659
Interest income (337) (509) (1,058) (1,582)
Other (income) expense, net (741) 151 (1,276) 1,341
-------- -------- ---------- ----------

Earnings from continuing
operations before income
taxes 35,148 97,705 228,986 291,912
Income tax provision 6,413 19,528 51,971 66,556
-------- -------- ---------- ----------
Earnings from continuing
operations 28,735 78,177 177,015 225,356
Loss from discontinued
operations, net of tax - (916) - (2,958)
-------- -------- ---------- ----------
Net earnings $ 28,735 $ 77,261 $ 177,015 $ 222,398
======== ======== ========== ==========

Basic earnings per share:
Earnings from continuing
operations $ 0.20 $ 0.53 $ 1.24 $ 1.49
Discontinued operations - (0.01) - (0.02)
-------- -------- ---------- ----------
Basic earnings per share $ 0.20 $ 0.52 $ 1.24 $ 1.47
======== ======== ========== ==========

Diluted earnings per share:
Earnings from continuing
operations $ 0.20 $ 0.52 $ 1.22 $ 1.47
Discontinued operations - (0.01) - (0.02)
-------- -------- ---------- ----------
Diluted earnings per share $ 0.20 $ 0.52 $ 1.22 $ 1.45
======== ======== ========== ==========

Weighted average shares
outstanding:
Basic 141,250 148,103 142,446 151,634
======== ======== ========== ==========
Diluted 143,441 149,419 144,595 153,595
======== ======== ========== ==========




FLIR SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)(Unaudited)

December 31, December 31,
2013 2012
------------ ------------
ASSETS

Current assets:
Cash and cash equivalents $ 542,476 $ 321,739
Accounts receivable, net 286,573 335,163
Inventories 344,719 379,080
Prepaid expenses and other current assets 97,574 98,304
Deferred income taxes, net 35,456 30,960
------------ ------------
Total current assets 1,306,798 1,165,246

Property and equipment, net 234,041 211,615
Deferred income taxes, net 20,663 32,223
Goodwill 575,701 564,306
Intangible assets, net 154,195 175,823
Other assets 51,808 41,442
------------ ------------
$ 2,343,206 $ 2,190,655
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
Accounts payable $ 85,730 $ 94,156
Deferred revenue 28,844 29,465
Accrued payroll and related liabilities 62,069 41,506
Accrued expenses 39,316 32,772
Other current liabilities 44,893 31,725
Accrued income taxes 663 11,943
Current portion long-term debt 15,000 -
------------ ------------
Total current liabilities 276,515 241,567

Long-term debt 372,528 248,319
Deferred income taxes 12,101 19,071
Accrued income taxes 19,996 22,812
Pension and other long-term liabilities 48,686 58,985

Commitments and contingencies

Shareholders' equity 1,613,380 1,599,901
------------ ------------
$ 2,343,206 $ 2,190,655
============ ============




FLIR SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)(Unaudited)

Three Months Ended Twelve Months Ended
December 31, December 31,
-------------------- --------------------
2013 2012 2013 2012
--------- --------- --------- ---------

Cash flows from operating
activities:
Net earnings $ 28,735 $ 77,261 $ 177,015 $ 222,398
Income items not affecting
cash:
Depreciation and
amortization 17,818 14,857 62,796 59,715
Deferred income taxes (950) (9,819) (988) (9,220)
Stock-based compensation
arrangements 7,150 6,252 27,823 26,250
Other non-cash items 3,080 3,953 4,564 2,088
Changes in operating assets
and liabilities, net of
acquisitions 49,341 20,370 83,755 (15,686)
--------- --------- --------- ---------
Cash provided by operating
activities 105,174 112,874 354,965 285,545
--------- --------- --------- ---------

Cash flows from investing
activities:
Additions to property and
equipment, net (15,065) (18,901) (52,061) (58,089)
Business acquisitions, net of
cash acquired - (105,909) (20,073) (105,909)
Other investments - (2) - (3,002)
--------- --------- --------- ---------
Cash used by investing
activities (15,065) (124,812) (72,134) (167,000)
--------- --------- --------- ---------

Cash flows from financing
activities:
Proceeds from long term debt - - 150,000 -
Repayments of long term debt (3,750) - (11,250) -
Repurchase of common stock (29,028) (85,185) (162,078) (214,195)
Dividends paid (12,709) (10,428) (51,404) (42,450)
Proceeds from shares issued
pursuant to stock-based
compensation plans 2,698 4,080 8,650 11,198
Excess tax benefit of stock
options exercised 141 53 1,069 1,284
Other financing activities 172 (28) (1,100) (166)
--------- --------- --------- ---------
Cash provided (used) by
financing activities (42,476) (91,508) (66,113) (244,329)
--------- --------- --------- ---------

Effect of exchange rate changes
on cash 2,644 696 4,019 6,677
--------- --------- --------- ---------

Net increase (decrease) in cash
and cash equivalents 50,277 (102,750) 220,737 (119,107)
Cash and cash equivalents,
beginning of period 492,199 424,489 321,739 440,846
--------- --------- --------- ---------
Cash and cash equivalents, end
of period $ 542,476 $ 321,739 $ 542,476 $ 321,739
========= ========= ========= =========




FLIR SYSTEMS, INC.
REVENUE AND EARNINGS FROM OPERATIONS BY SEGMENT
(In thousands)(Unaudited)

Three Months Ended Twelve Months Ended
December 31, December 31,
-------------------- ----------------------
2013 2012 2013 2012
--------- --------- ---------- ----------
REVENUE - EXTERNAL CUSTOMERS
Thermal Vision and Measurement $ 208,486 $ 180,097 $ 727,938 $ 628,019
Raymarine 36,113 32,740 163,200 158,183
Surveillance 124,665 136,351 456,490 486,355
Detection 13,175 12,844 53,191 63,312
Integrated Systems 17,880 24,353 95,553 69,489
--------- --------- ---------- ----------
$ 400,319 $ 386,385 $1,496,372 $1,405,358
========= ========= ========== ==========

EARNINGS (LOSS) FROM
OPERATIONS
Thermal Vision and Measurement $ 35,797 $ 61,629 $ 161,307 $ 171,280
Raymarine (160) 1,230 14,184 11,173
Surveillance 25,199 45,253 126,034 160,219
Detection (3,449) 289 (184) 1,089
Integrated Systems (2,019) 3,901 (1,907) 5,168
Other (17,567) (12,226) (58,691) (45,599)
--------- --------- ---------- ----------
$ 37,801 $ 100,076 $ 240,743 303,330
========= ========= ========== ==========


Company Contact:
Shane Harrison
+1 503.498.3547
www.flir.com

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