FLIR Systems Reports Record Fourth Quarter and Full Year 2006 Financial Results

February 08, 2007—FLIR Systems, Inc. (NASDAQ: FLIR) announced today that net earnings for the fourth quarter ended December 31, 2006 increased 16% to a record $39.8 million, or $0.53 per diluted share, compared to net earnings for the fourth quarter of 2005 of $34.1 million, or $0.43 per diluted share. Revenue for the 2006 fourth quarter increased 19% to $185.9 million, up from $156.2 million for the fourth quarter of 2005. The Company’s operating margin in the fourth quarter was 29.6%, compared with 29.5% in the fourth quarter of 2005. Stock-based compensation expense for the fourth quarter of 2006 was $3.1 million, or approximately $0.03 per fully diluted share.

Revenue from the Company’s Thermography division increased 23% over the fourth quarter of 2005, to $72.2 million, due to strong demand across all major product lines.

Revenue from the Company’s Government Systems division increased by 19% in the fourth quarter to $86.2 million, driven by continued strength in the STAR-class products in Portland, and improved performance in the land and maritime markets. Revenue from the Company’s Commercial Vision Systems division increased 10% over the fourth quarter of last year, to $27.5 million, reflecting good growth across numerous product lines.

For the twelve months ended December 31, 2006, net earnings rose 11% to a record $100.9 million, or $1.32 per diluted share, compared to net earnings for the full year 2005 of $90.8 million, or $1.16 per diluted share. Revenue for 2006 was $575.0 million, an increase of 13% from the $508.6 million generated in 2005. The Company’s operating margin for the full year was 23.8%, as compared with 24.8% in 2005. For all of 2006, stock-based compensation expense totaled $10.9 million or $0.11 per diluted share.

Revenue from the Company’s Thermography division increased 19% in 2006, while revenue from the Company’s Government Systems Division grew by 7%, and Commercial Vision Systems revenue increased 16% for the full year.

Cash generated from operations totaled a record $38.8 million for the fourth quarter and $113.5 million for the full year. At December 31, 2006 the Company had cash on hand of $138.6 million. The backlog of firm orders for delivery within the next twelve months was approximately $274 million at December 31, 2006, an increase of 42% compared to backlog of $193 million at December 31, 2005.

Revenue and Earnings Guidance for 2007

FLIR also announced today that it expects net revenue in fiscal 2007 to be in the range of $670 million to $680 million, and net earnings to be in the range of $1.48 to $1.53 per diluted share, which includes stock-based compensation expense of approximately $0.16 per diluted share. This guidance assumes a tax rate for the year of approximately 27% to 29%, and an average share count of approximately 80 million diluted shares.

“We are very pleased with our fourth quarter and full year 2006 performance. Thermography had another outstanding year, and continues to execute well on its strategy. Government Systems saw significantly better order activity and revenue growth in the second half of the year, and our newest division, Commercial Vision Systems, got off to a very good start, and is positioned for significant future growth,” commented Earl R. Lewis, President and CEO of FLIR. “Our strategy of stimulating demand with lower cost infrared technology is clearly working, and our expanding distribution channels are driving increasing sales. Government Systems is again growing revenue, driven by expanded product lines and the success of our commercially developed military qualified model in winning new program business. As a result, we are introducing guidance for 2007 reflecting continued growth,” he concluded.