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

PORTLAND, OR -- (MARKET WIRE) -- February 8, 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.

Conference Call

FLIR has scheduled a conference call at 11:00 am EST today. A simultaneous WebCast will be available from the Investor Relations link at www.FLIR.com. A replay will be available after 1:00 PM EST at this same internet address. For a telephone replay, dial (800) 633-8284, reservation #21320581 after 1:00 PM EST.

About FLIR Systems

FLIR Systems, Inc. is a world leader in the design, manufacture, and marketing of thermal imaging and stabilized camera systems for a wide variety of thermography and imaging applications including condition monitoring, research and development, manufacturing process control, airborne observation and broadcast, search and rescue, drug interdiction, surveillance and reconnaissance, navigation safety, border and maritime patrol, environmental monitoring and ground-based security. Visit the Company's web site at www.FLIR.com.

Forward-Looking Statements

The statements in this release by Earl R. Lewis and the statements in the section captioned "Revenue and Earnings Guidance for 2007" above are forward-looking statements. 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 US export control laws and regulations, constraints on supplies of critical components, excess or shortage of production capacity, 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.

                             FLIR SYSTEMS,INC.

                    CONSOLIDATED STATEMENTS OF INCOME
           (In thousands, except per share amounts)(Unaudited)


                                 Three Months Ended   Twelve Months Ended
                                    December 31,          December 31,
                                --------------------- --------------------
                                  2006       2005       2006       2005
                                ---------- ---------  ---------  ---------

Revenue                         $  185,899 $ 156,247  $ 575,000  $ 508,561
Cost of goods sold                  81,456    69,586    260,087    231,867
                                ---------- ---------  ---------  ---------
      Gross profit                 104,443    86,661    314,913    276,694

Operating expenses:
   Research and development         16,261    12,512     60,584     51,514
   Selling, general and
    administrative                  33,109    27,998    117,374     99,227
                                ---------- ---------  ---------  ---------
      Total operating expenses      49,370    40,510    177,958    150,741

      Earnings from operations      55,073    46,151    136,955    125,953

Interest expense                     2,813     2,001      8,956      7,922
Other expense (income), net            262    (1,556)    (4,612)    (4,193)
                                ---------- ---------  ---------  ---------

      Earnings before income
       taxes                        51,998    45,706    132,611    122,224

Income tax provision                12,242    11,564     31,715     31,459
                                ---------- ---------  ---------  ---------

      Net earnings              $   39,756 $  34,142  $ 100,896  $  90,765
                                ========== =========  =========  =========

Net earnings per share:
   Basic                        $     0.61 $    0.49  $    1.49  $    1.30
                                ---------- ---------  ---------  ---------
   Diluted                      $     0.53 $    0.43  $    1.32  $    1.16
                                ========== =========  =========  =========

Weighted average shares outstanding:
   Basic                            65,673    69,468     67,845     69,580
                                ---------- ---------  ---------  ---------
   Diluted                          77,620    81,222     79,778     82,029
                                ---------- ---------  ---------  ---------




                            FLIR SYSTEMS, INC.

                        CONSOLIDATED BALANCE SHEETS
                        (In thousands)(Unaudited)


                                                  December 31, December 31,
                                                      2006         2005
                                                  ------------ ------------
                      ASSETS
Current assets:
   Cash and cash equivalents                      $    138,623 $    107,057
   Accounts receivable, net                            167,502      142,782
   Inventories, net                                    135,928      103,837
   Prepaid expenses and other current assets            29,155       33,153
   Deferred income taxes, net                           19,460       18,709
                                                  ------------ ------------
      Total current assets                             490,668      405,538

Property and equipment, net                             92,156       59,479
Deferred income taxes, net                               3,369        8,415
Goodwill                                               159,802      158,065
Intangible assets, net                                  40,917       46,901
Other assets                                            15,116       15,981
                                                  ------------ ------------
                                                  $    802,028 $    694,379
                                                  ============ ============

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Notes payable                                  $     45,500 $         --
   Accounts payable                                     40,608       34,477
   Deferred revenue                                     13,709       10,297
   Accrued payroll and related liabilities              24,030       20,374
   Accrued product warranties                            5,174        5,059
   Advance payments from customers                      10,064        5,013
   Other current liabilities                            12,149       11,626
   Accrued income taxes                                 10,749        3,148
   Current portion of long-term debt                         7           56
                                                  ------------ ------------
      Total current liabilities                        161,990       90,050

Long-term debt                                         207,024      206,155
Deferred tax liability, net                              2,392       10,779
Pension and other long-term liabilities                 19,607       18,413

Commitments and contingencies

Shareholders’ equity                                   411,015      368,982
                                                  ------------ ------------
                                                  $    802,028 $    694,379
                                                  ============ ============

Contact Information: Company Contact: Tony Trunzo +1 503.498.3547 www.flir.com