Electro Optic Systems Holdings Limited (ASX:EOS) Production Positioned For US Army Common Remotely Operated Weapon Station Program

Canberra, Oct 13, 2010 AEST (ABN Newswire) - Electro Optic Systems Holdings Limited (ASX:EOS) (PINK:EOPSF) has completed the upgrade of its Tucson, Arizona facility for a new scalable and flexible production capacity in the US.

Recognising the increasing importance of its US production base, EOS has invested to consolidate, expand and extensively upgrade its US facility. The upgraded EOS facility for production and support of remote weapon systems that was completed this week in Tucson is designed to provide production that is scalable from 10 production units per week to 75 units per week, and to produce each member of the EOS weapon system family.

The expanded Tucson plant enables US based production for future military contracts expected to be in US dollars and to minimise the effects of an appreciating Australian dollar against the US dollar.

The Chief Executive of EOS' Arizona subsidiary, EOS Technologies, Inc., Hugo Keyner said:

"EOS has now completed the consolidation in Tucson of all its US-based weapon system production, including the large capacity acquired in November 2009 from Recon Optical Inc. The consolidation by itself will lead to improvements in production efficiency, and the new plant and technology we have injected will add to this."

"A new element will be the flexibility of the plant to scale up or down as needed to meet production targets. An emerging trend in defence business is the use of short-term appropriations to fund long term procurements, resulting in stop-start funding and, until now, sharp reductions in the overall efficiency of delivering program outcomes. For the first time EOS will be able to surge production volume over a wide range, and be price-competitive at any point in that range."

Commenting from EOS' production plant in Tucson today, EOS' Chief Executive Officer Ben Greene added:

"The new plant is positioned to meet US domestic demand and also to take advantage of any long-term weakness in the US dollar for regional exports. EOS expects that this scalable US capacity will provide a competitive advantage for some time."

"This new facility also allows EOS to meet any future production requirement for the US Army CROWS program, which specifies production rates of up to 75 units per week. New technology means that the large capacity has not been achieved by degrading the plant's competitiveness at lower volumes."

"The expansion of the US production facility does not signal any reduction in Australian operations. The Australian plants continue to manufacture and service remote weapon systems for strong growth markets in Asia, Europe and the Middle East as well as meeting the needs of the Australian Defence Force."

Contact

Ben Greene Chief Executive Officer Ph: +61-414-365-658 Hugo Keyner CEO: EOS Technologies Inc. Ph: +1-520-331-3109 http://www.eos-aus.com