EXFO Plans to Invest US$20 Million to Triple Manufacturing Capacity.

Business Editors

QUEBEC--(BUSINESS WIRE)--Dec. 13, 2000

EXFO (Nasadaq:EXFO) (TSE:EXF.)

EXFO Electro-Optical Engineering Inc. (NASDAQ:EXFO)(TSE:EXF.) announced today that it plans to invest US$20 million to triple its manufacturing capacity of fiber-optic test, measurement and monitoring instruments.

EXFO will enhance manufacturing operations within two buildings in Vanier, Quebec, including one plant dedicated to Portable and Monitoring Division products and another one to Industrial and Scientific Division products.

A third building will become available for manufacturing activities once EXFO moves its research and development, marketing and administrative personnel to a new 150,000 square-foot location in the Quebec Metropolitan High-Tech Park in the fall of 2001.

As a result, EXFO will expand its manufacturing space from approximately 55,000 to 180,000 square feet. This, in turn, will allow the company to triple its manufacturing capacity.

"The strong demand for EXFO products has been a key driver behind our expansion plans," said Germain Lamonde, Chairman, CEO and President of EXFO. "We're witnessing wide market acceptance for products that EXFO introduced during the last 12 months like our proprietary Optical Spectrum Analyzer for DWDM network deployment, our DWDM Passive Component Test System for Mux/Demux component manufacturing and our Tunable Laser Source for next-generation C+L-band applications."

Earlier this year, EXFO purchased a 112,000 square-foot building, which had been targeted for R&D and manufacturing operations. The company, however, accepted orders in the amount of US$86.7 million in fiscal 2000, an increase of more than 100% over the previous year. This strong demand compelled EXFO to bolster its expansion plans and triple manufacturing capacity.

"This expansion plan, which will create at least 500 jobs, reflects EXFO's on-going efforts to assume a leadership position in the fiber-optic test, measurement and monitoring industry and underscores our confidence in the long-term robustness of our sector," Lamonde added. "It will provide us with a marked competitive advantage to not only meet customer demand for our products, but also reduce delivery lead times and increase productivity."

About EXFO

EXFO, which derives its name from expertise in fiber optics, is a leading designer, manufacturer and marketer of fiber-optic test, measurement and monitoring instruments for the telecommunications industry.

EXFO develops products mainly for two markets. Its Portable and Monitoring Division provides solutions primarily to telecommunications carriers, cable television companies, public utilities, private network operators as well as third-party installers and equipment rental companies. Its Industrial and Scientific Division designs an extensive line of high-performance instruments and automated test systems for manufacturers of optical components, value-added optical modules and optical networking systems as well as for research and development markets.

This news release may contain statements that constitute forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements other than historical information or statements of current condition. These statements may appear in a number of places in this news release and include statements concerning our intent, belief, or current expectations regarding future events. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ materially from those in the forward-looking statements as a result of various factors which are beyond the control of EXFO, including retention of qualified personnel, revenue synergies, demand for testing and measurement instruments and precision positioning instruments. Although we believe that the expectations reflected in the forward-looking statements are reasonable based on information currently available to us, we cannot assure you that the expectations will prove to have been correct. Accordingly, you should not place undue reliance on these forward-looking statements. In any event, these statements speak only as of the date of this news release. We undertake no obligation to revise or update any of them to reflect events or circumstances after the date of this news release, or to reflect new information or the occurrence of unanticipated events. Readers are referred to our Registration Statement on Form F-1 and our other filings with the U.S. Securities and Exchange Commission and the Canadian securities commissions for a discussion of the other factors that may affect our future performance and other important risk factors concerning us and our operations.