QUEBEC CITY -- EXFO Electro-Optical Engineering Inc. (NASDAQ: EXFO; TSX: EXF.SV) reported today strong profitable growth for its second quarter of fiscal 2006.

Sales increased 30.0% to US$30.1 million in the second quarter ended February 28, 2006, from US$23.1 million in the second quarter of 2005 and 11.2% from US$27.0 million in the first quarter of 2006. Net bookings reached US$28.3 million for a book-to-bill ratio of 0.94 in the second quarter of fiscal 2006 compared to US$24.9 million in the same period last year and US$30.6 million in the first quarter of 2006.

Gross margin amounted to 55.3% of sales in the second quarter of fiscal 2006 compared to 54.9% in the second quarter of 2005 and 55.4% in the first quarter of 2006.

GAAP net earnings in the second quarter of fiscal 2006 totaled US$1.4 million, or US$0.02 per diluted share, compared to net earnings of US$9,000, or US$0.00 per diluted share, in the same period last year and net earnings of US$0.4 million, or US$0.01 per diluted share, in the first quarter of 2006.

GAAP net earnings in the second quarter of fiscal 2006 included US$1.1 million in amortization of intangible assets and US$0.3 million in stock-based compensation costs.

During the second quarter, EXFO announced and subsequently completed its acquisition of the assets of Consultronics Limited, a leading supplier of test equipment for copper-based broadband access networks. Consultronics, which has been integrated into EXFO’s Telecom Division, contributed about one month to the company’s consolidated financial results in the second quarter.

“I am really pleased with our strong execution in the first half of fiscal 2006 as we reached several key strategic milestones,” said Germain Lamonde, EXFO’s Chairman, President and CEO. “First of all, we strengthened our position and product offering in the growing triple-play access test market through the acquisition of Consultronics. Secondly, we substantially grew our international business and customer base to enhance revenue diversification. Thirdly, we launched several new products including the all-important multi-medium, multi-module FTB-200 Compact Platform for the telecom SuperTech as well as next-generation SONET/SDH test modules up to 10 Gb/s for our FTB-200, FTB-400 and IQS-500 platforms. While achieving these goals, we extended our strong sequence of consecutive quarters of sales growth, cash flows from operations and GAAP net earnings to ten, nine and five, respectively.”

EXFO (Nasdaq: EXFO; Toronto: EXF)