Electro Optic Systems Holdings Limited (ASX:EOS) Awarded A New Weapon System Contract Also Announcing Consolidation And Upgrade Production Capacity In The USA

Canberra, Aug 2, 2010 AEST (ABN Newswire) - Electro Optic Systems Holdings Limited (ASX:EOS) (PINK:EOPSF) has been awarded a new contract for delivery of remote weapon systems. The contract value is approximately A$10 million and the systems will be delivered within 6 months.

The order is from an existing customer for EOS remote weapon systems, and specifies the delivery of EOS R-400 products.

Commenting immediately after the award of the contract today, the Chief Executive of EOS, Ben Greene said:

"This award lifts the quantity of unfilled orders for weapon systems above the current annual production capacity of EOS for specific product variants. With ongoing marketing efforts, we expect the existing capacity limits to be inappropriate for future operations."

"In expectation of achieving this order threshold, the company has planned a simultaneous consolidation and expansion of its production capacity in the US. This plan is now being executed."

"The Barrington (Illinois) production plant acquired from ROI in November 2009 will be closed immediately and EOS' production capacity in Tucson (Arizona) will be substantially expanded. The consolidation will result in substantial cost savings for EOS, while the expanded Tucson capacity will meet current and future demands."

"In particular the upgraded Tucson plant, to be on line by November 2010, will be able to support rapidly-scalable large scale production as required for the US Army CROWS program. The Army requirement for rapid adjustment of both production volume and product technical configuration in response to urgent needs is not readily met by most production capabilities in this industry, word-wide."

"The commercial need to re-configure and update production capabilities allows EOS to meet these needs with changes implemented in the normal course of business, well before any need arises under the CROWS program. EOS will rely on its CROWS program partner, Northrop Grumman Corporation (NYSE:NOC), for specialist advice and technology transfer to ensure that the new US capabilities will integrate seamlessly with Northrop Grumman supply chain and production control processes for CROWS."

EOS is also reviewing its Australian production capabilities in the light of developing market trends in the Australian region.

Contact

Dr Ben Greene Chief Executive Officer Electro Optic Systems Holdings Tel +61-2-9233-3915 Fax +61-2-9232-3411 Ph: +61-414-365-658 www.eos-aus.com John Palisi Chief Finance Officer Electro Optic Systems Holdings Tel +61-2-9233-3915 Fax +61-2-9232-3411 Ph: +61-403-252-685 www.eos-aus.com