AXSYS TECHNOLOGIES SALES INCREASE 13% IN FOURTH QUARTER

Record Fiscal 2006 Results

ROCKY HILL, CT - February 20, 2007 - Axsys Technologies, Inc. (NASDAQ:AXYS), a global leader in the design, manufacture and distribution of precision optical solutions, today announced financial results for the fourth quarter and year ended December 31, 2006.

Fourth Quarter Highlights

• Record revenue of $40.6 million, a 13% increase over fiscal 2005 fourth quarter.
• Record bookings of $55.8 million, resulting in a backlog of $130.4 million, which is a 16% increase relative to the prior year end.
• Successful integration of New England operations with minimal business interruption.

Sales growth was largely due to increasing participation on a variety of force protection programs, perimeter and border security programs, and strategic missile programs. Inefficiencies write-offs associated with the facility consolidation in New England resulted in a decrease in gross margin to 30.7% in the quarter versus 32.4% in the fourth quarter of 2005.

Operating income increased to $4.1 million in the fourth quarter of 2006, up from $4.0 million in the fourth quarter of 2005. Adjusting for the facility relocation expense and the recognition of share-based compensation expense, pro forma operating income was $4.8 million in the fourth quarter of 2006, which was 20% higher than the operating income in the fourth quarter of 2005.

Net income increased to $2.6 million, or $0.24 per diluted share, up from $2.5 million, or $0.23 per diluted share, in the fourth quarter of 2005, despite a $0.06 per share impact from moving and lease termination expenses from the consolidation of facilities in New England, the recognition of share-based compensation expense, and a discontinued operations charge in the fourth quarter of 2006. The discontinued operations charge resulted from an accrual of $137,000, net of tax, or $0.01 per diluted share, for additional environmental remediation at a formerly occupied facility.

Segment Sales (in millions):

	Three Months Ended:		Twelve Months Ended:
	Dec 31, 2006	Dec 31, 2005	Dec 31, 2006	Dec 31, 2005
Optical Systems Group	$33.8	$29.9	$129.9	$108.6
Distributed Products Group	6.8	6.0	26.4	24.9

"We finished the year with another strong quarter, with Optical Systems' and Distributed Products' sales both growing 13% relative to the fourth quarter of 2005," said Stephen W. Bershad, Chairman and Chief Executive Officer of Axsys. "Notably, the Company successfully consolidated our New England operations under one roof while simultaneously setting new revenue, booking and backlog records."

Fiscal 2006 Results

For the 2006 fiscal year, Axsys achieved record sales of $156.3 million, a 17% increase relative to fiscal 2005. The 2005 fiscal year included eight months of revenues from DiOP, which was acquired on May 2, 2005. On a pro-forma basis, the revenue growth would have been 11% if Axsys had owned the business for the full year.

Operating income was $16.3 million, 17% higher than 2005, despite the recognition of $1.1 million of pre-tax share-based compensation expense pursuant to the Company's implementation of FAS 123R on January 1, 2006 and the $0.4 million pre-tax facility relocation expense incurred in the fourth quarter of 2006.

The Company's diluted earnings per share were $0.94 in 2006, 7% higher than 2005. Fiscal 2006 earnings included a $0.06 per share expense for share-based compensation and $0.02 per share facility relocation expense. The diluted earnings per share comparison was also adversely affected by a 30% increase in weighted-average diluted shares outstanding.

Fiscal 2007 Guidance

Axsys elaborated on the 2007 guidance provided with the Company's previous earnings release on October 25, 2006. In fiscal 2007, Axsys anticipates achieving annual sales of $169 to $172 million, net income of $11.8 to $12.1 million and earnings per diluted share from continuing operations of $1.07 to $1.10.

"We continue to feel optimistic about the company's prospects," continued Mr. Bershad. "Our record $130 million backlog gives us excellent visibility into the coming year, and we are comfortable confirming our 2007 guidance of 8 to 10% revenue growth and diluted earnings per share from continuing operations growth of 13 to 15%."

Conference Call

Management will conduct a conference call reviewing the financial results on Wednesday, February 21, 2007 at 10:00 am ET. Shareholders, institutional investors and equity research analysts are invited to participate in the call by dialing 1-800-573-4842 and entering conference passcode 70243811.

The conference call will be webcast live via the Investor Relations section of the Company's web site at www.axsys.com. A replay of the webcast will be available shortly after the conclusion of the call for a period of approximately 90 days.

About Axsys

Axsys Technologies, Inc. is a vertically integrated OEM supplier of precision optical solutions for high technology applications, serving the aerospace, defense, and high performance commercial markets. For more information, visit www.axsys.com.

Financial Reports