Original Source: FD (FAIR DISCLOSURE) WIRE
GEORGE STAPHOS, ANALYST, BANC OF AMERICA SECURITIES: Good morning. I am George Staphos, I am BofA's paper and packaging analyst doing a little bit of pinch-hitting here today introducing with great pleasure FLIR Systems. Before we introduce Anthony Trunzo, I want to make you aware that we are required to make a number of conflict of interest and related disclosures in connection with our participation in this conference and the statements that we make. If you are interested in these very, very important disclosures, they are available in the back of the room in packet form. Also for all of those on the Web listening in, they are available on the website as well.
With that out of the way, we have FLIR Systems here and Anthony Trunzo to present for the Company. Anthony joined FLIR in August of '03 as Senior Vice President of Corporate Strategy and Development. Anthony, take it away.
ANTHONY TRUNZO, SVP OF CORPORATE STRATEGY AND DEVELOPMENT, FLIR SYSTEMS, INC.: Great. Thank you very much. Good morning, everybody, and thank you for joining us this morning. I have my own forward-looking statements comments to make before we start. This presentation and discussion do contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance, and actual outcomes and results may differ materially. I refer you to our most recently filed 10-K which was filed about two weeks ago for a description of these factors that could cause actual outcomes or results to differ materially.
With that out of the way, FLIR is the world's largest commercial infrared company. Last year revenue was $779 million. Our outlook for revenue this year is somewhere between $1 billion and $1.050 billion in revenue, so continued excellent growth. US government represents 39% of our revenue. International represents 39% of our revenue and just a little over half of our revenue comes from commercial nongovernment sources.
One of the really important things about FLIR, I'm going to take you through sort of a number of highlights but -- is the Company has developed a significant track record for growth. Over the last five years compounded, our revenue has grown at 24% annually, and our earnings per share have grown at 27% annually. Also note that during that time, we delivered compound annual returns to shareholders of 39% a year.
So what is this market that we are in? It is a large market today. It is growing very fast. We approached this market with a commercial model across all markets, not just our commercial businesses but also our government business which is unique compared with our competitors in most of those businesses. I referenced the fact that the Company now has a seven-year actually track record of north of 20% growth in revenue and north of 20% growth in earnings per share.
One of the crucial aspects of FLIR, one of the defining factors about our Company is we have the lowest cost in the industry we think by a fairly significant margin. And we've worked very hard over the last number of years to develop a very, very broad line of products addressing a broad array of verticals, each with individually purpose built distribution channels that we think would be very hard to replicate. So we have a brand as well in the name of FLIR which stands for forward-looking infrared.
The technology we use is not what people typically think of as night vision. There's some pictures up here on the screen. This green glow that folks are probably used to seeing on television is the typical night vision goggle. What this technology does is it takes existing ambient light, just visible light that is usually present even at night and amplifies it. That is why you get this grainy image. There is a lot of noise in the image because it is amplifying existing light.
Another way to get an image at night is to illuminate a scene with infrared light and get a reflection back from that. Our technology is entirely passive. It uses the infrared portion of the electromagnetic spectrum that everybody -- everything in the universe emits infrared radiation. Our sensors receive that information in the form of heat. It is completely passive and it gives the ability under certain circumstances to see very, very long distances in some cases identifying a human being at more than 10 kilometers.
What is it used for? There is really two or three things that our customers really focus on. Historically and still primarily, infrared saves lives in lots of different applications everything from search and rescue to accident avoidance -- we'll talk a little bit about the work that we're doing with auto manufacturers. Force projection for our military markets, law-enforcement where everything from hand-held systems that are used by basically an officer walking the beat all the way to airborne law-enforcement systems.
Security is a rapidly growing business that has its roots again in border and military but is rapidly growing commercially. Firefighting and lots of reconnaissance and increasingly medical applications. We see the possibility over time of infrared being an important assessment tool in the identification of certain types of cancer.
It saves money and these images are from our thermography division, and I'm going to talk a little bit about our divisions but under these circumstances, you are saving money usually in the form of energy. You are doing a building or a home inspection that is telling you if you are losing energy. You are doing preventive maintenance that will tell you when a large machine is about to fail. Improvement in manufacturing efficiency and security itself obviously is a money saver also.
We now also have some products that are quite unique in terms of being able to safeguard the environment. Infrared if filtered in a proper way, can actually see emissions of many hydrocarbons including methane gas which is a very powerful greenhouse gas. We can also see an image because of the absorption of the electromagnetic spectrum sulphur hexafluoride, which is used today to cool many electrical transformers and has the effect of on the environment compared with carbon dioxide of 23,000 times the virulence in terms of its impact as a greenhouse gas. We can help find pollution and …