Flow International Announces Final Fiscal 2006 Fourth Quarter and Year-End Results

Ends Profitable Year With Double-Digit Revenue Growth

KENT, Wash., July 25 -- Flow International Corporation , the world's leading supplier of ultrahigh-pressure waterjet products, today reported results for its fiscal 2006 fourth quarter and year ended April 30, 2006. Flow reported consolidated quarterly sales of $63.1 million and operating income of $6.6 million or 10% of sales. Net income for the quarter was $6.6 million or $0.19 basic earnings per share and $0.18 per fully diluted share. Results for the quarter include a $575,000 restructuring expense, which represents the remaining lease and related costs on its vacated Wixom, Michigan facility. These results supersede the figures previously provided in the Company's preliminary earnings release issued on July 13, 2006.

By comparison, in the fiscal 2005 fourth quarter, Flow reported consolidated sales of $48.8 million and operating income of $3.3 million. Loss from continuing operations for the fiscal 2005 fourth quarter was $8.0 million or $0.34 basic and diluted loss per share. Net loss in the year-ago quarter was $15.0 million or $0.64 basic and diluted loss per share and included a $7.1 million loss related to the Avure business unit, which the Company divested in October 2005.

For the twelve months ended April 30, 2006, Flow reported consolidated sales of $203.3 million, compared to $173.0 million for the same 12-month period in fiscal 2005. For the 12 months ended April 30, 2006, Flow reported income from continuing operations of $5.9 million or $0.17 per basic share and $0.16 per diluted share. That compares to net loss from continuing operations of $12.2 million or $0.69 loss per basic and diluted share in the year-ago 12- month period. Including a $588,000 net loss from the discontinued Avure business, net income for the 12-month period ended April 30, 2006, was $5.3 million or $0.15 per basic and diluted share. By comparison, for the 12 months of fiscal 2005, the Company reported a net loss of $21.2 million, or $1.19 basic and diluted loss per share, which included a $9.0 million net loss related to the divested Avure business.

  Operations Review
  For the fiscal 2006 fourth quarter, compared to the prior-year quarter:

-- System sales grew 42% to $50.4 million, representing 80% of revenues during the quarter, on strong aerospace, semiconductor and domestic shapecutting sales. Revenues from aftermarket consumables were $12.7 million, which is slightly down comparatively from the year-ago period resulting from the Company's sale of its garnet distribution operation in the fiscal second quarter. However, growth in consumables revenue has increased along with the growth in the installed base of waterjets as well as from Flow's increased penetration of that installed base. Flow believes it is the leader in the waterjet cutting systems market, with approximately 40% of the global market and more than 60% of the North America market. For the year, aftermarket sales, adjusted for sale of the garnet business, increased 6% consistent with the increase in the installed base.

-- North America Waterjet sales increased 34% to $32.6 million during the quarter on the strength of U.S. shapecutting system sales. The Company continued to enjoy strong revenues from new large aerospace system sales, as that industry increasingly recognizes the accuracy, speed, and versatility advantages of the waterjet over conventional cutting technologies. Currently, Flow offers the only product used to waterjet cut the composite wings of the new large commercial airplanes.

-- Sales in Asia increased 104% to $13.9 million on the strength of sales to the semiconductor industry. In November 2005, Flow introduced its Nanojet system, which is tailored specifically for the semiconductor industry and has thus far been well received in the marketplace.

-- Other International Waterjets sales, which consist primarily of sales to Europe and South America, increased 7% to $11.7 million, on strengthened demand in Europe for waterjets and improving market penetration. The Company continues to make additional investments in sales and marketing in Europe to boost sales in European countries.

-- Revenues in the Applications segment declined 27% to $4.9 million as a result of ongoing softness in the automotive industry. Flow's Applications group sells automation and robotic waterjet cutting cells and non-waterjet systems primarily to the North American automotive market. Applications revenues were also down comparatively because of the closing and relocation of the Company's Wixom, Michigan facility to its Burlington, Ontario facility in September 2005. Flow's Applications group has de-emphasized sales of non- waterjet systems to focus on sales of systems that integrate waterjet cutting cells. While the impact of this strategic shift has been to reduce Applications revenues in the short-term, the Company believes that it better positions the group strategically.

About Flow International

Flow International Corporation is the world's leading developer and manufacturer of ultrahigh-pressure waterjet cutting technology to industries including automotive, aerospace, job shop, surface preparation, and more. For more information, visit http://www.flowcorp.com/ .