EXFO to Reduce Work Force by 30 Percent

QUEBEC CITY, June 4 -- EXFO Electro-Optical Engineering Inc. announced yesterday it will reduce its work force by 30 percent, as part of a restructuring plan that it says will result in approximately $10 million (US) in annualized pretax savings.

"EXFO has developed a strong market presence with network service providers around the world for almost 18 years and has extended this leadership into protocol-layer testing," said Germain Lamonde, chairman, president and CEO of EXFO. "However, continued depressed spending levels in the telecommunications industry, geopolitical and economic uncertainty and the impact of SARS lead us to adjust our cost structure in order to accelerate our return to profitability."

EXFO said the cuts are necessary in order to adjust its cost structure to current market realities, and said it will also rationalize its business activities and consolidate some of its manufacturing operations. It said the cost-cutting efforts are expected to lower the company’s pro forma break-even level (excluding the after-tax effect of amortization of intangible assets, restructuring charges and other related charges) to approximately $18 million in quarterly sales. Conversely, it said the measures will incur charges of approximately $4.8 million, of which $350,000 will be recorded in the third quarter of fiscal 2003 and the remainder mostly in the fourth quarter.

EXFO also revised its financial outlook for the third quarter of fiscal 2003. The company now anticipates sales of approximately 15 million for the third quarter ended May 31, compared to previously announced guidance of $16 million to $19 million. The company will report third-quarter results for fiscal 2003 on June 26.

EXFO is a manufacturer of fiber optic test, measurement, monitoring and automation solutions for the global telecommunications industry. It also makes instruments, test automation systems and manufacturing automation equipment for transmission system and optical component vendors and for research and development labs.

For more information, visit: www.exfo.com