• Frost & Sullivan hands award to EXFO in recognition of its new portfolio of protocol test solutions for next-generation and traditional SONET/SDH networks>

QUEBEC CITY, CANADA, June 27, 2006—EXFO Electro-Optical Engineering Inc. (NASDAQ: EXFO; TSX: EXF) announced today that it has been named recipient of the 2006 Product Differentiation Innovation Award by Frost & Sullivan.

This prestigious award is presented annually to the telecommunications test and measurement company who “best demonstrates the ability to develop products with successful adoption of new or existing technologies that have become a part of its well-designed product family. Such innovation is expected to significantly contribute to the industry in terms of product performance and degree/rate of technical change”.

EXFO received this award based on its new portfolio of protocol test solutions for next-generation and traditional SONET/SDH networks. The company successively launched the FTB-8120NG and FTB-8130NG Transport Blazer modules for its flagship FTB-400 Universal Test System (UTS). Both modules ─ the former for 2.5 Gb/s and the latter for 10 Gb/s systems ─ support an extensive list of next-generation and legacy SONET/SDH features, including generic framing procedure (GFP), high and low-order virtual concatenation (VCAT), link-capacity adjustment scheme (LCAS), direct mapping of Ethernet frames for Packet-over-SONET (PoS), G.709 and SmartMode™, to name a few.

EXFO also introduced the FTB-8120 and FTB-8130 Transport Blazer for the FTB-200 Compact Platform, a smaller two-slot portable unit that is ideal for super technicians in the field. The FTB-8120 Transport Blazer supports test signals from 64 Kb/s up to 2.5 Gb/s for traditional SONET/SDH networks with upgradeability to 10 Gb/s. The FTB-8130 Transport Blazer provides a full range of testing rates from 64 Kb/s to 10 Gb/s. Both test modules support DSn, SONET, PDH and SDH features, allowing users to perform a wide range of tests from simple bit-error rate (BER) analysis to more advanced network characterization and troubleshooting.

Finally, EXFO released the IQS-8120NG and IQS-8130NG Transport Blazer modules for the IQS-500 Intelligent Test System, which is designed for manufacturing floor and lab environments. Similar to the next-gen SONET/SDH test modules for the FTB-400 UTS, the IQS-8120NG and IQS-8130NG Transport Blazer modules boast an extensive list of features including GFP, high and low-order VCAT, LCAS, G.709, etc. Each module contains an electrical 10/100/1000 Mb/s Ethernet and optical Gigabit Ethernet add/drop interface, used for inter-working with EXFO’s IQS-8510 Packet Blazer Ethernet module or other external Ethernet devices.

All test modules come equipped with EXFO’s exclusive SmartMode feature which provides automatic discovery of the SONET/SDH mixed-mapping signal structure, including VCAT member identification.

“We made the strategic decision a few years ago to steer our protocol product development program towards test solutions for next-generation converged, IP-based networks,” said Etienne Gagnon, EXFO’s Vice-President of Optical and Protocol Product Management. “And it is now beginning to pay off based on our growing product leadership that is not only recognized by Frost & Sullivan but also by an increasing number of major customers. “This award proves that the efforts we’ve deployed toward testing flexible, efficient and robust IP-based networks were right on target and we’re confident that it will increasingly be reflected in our share in this fast-growing market.”

About EXFO
EXFO is a recognized test and measurement expert in the global telecommunications industry. The Telecom Division, which represents the majority of the company's business, offers a full suite of test solutions and monitoring systems to network service providers, cable TV operators, telecom system vendors and component manufacturers in approximately 70 countries. EXFO is the global market leader for portable optical test solutions and a leading supplier of protocol and access test solutions to enable triple-play deployments and converged IP networking. Its PC/Windows-based FTB-200, FTB-400 and IQS-500 test platforms host a wide range of modular test solutions across optical, physical, data and network layers, while maximizing technology reuse across several market segments. The Life Sciences and Industrial Division, which leverages several core telecom technologies, offers value-added solutions in the life sciences and high-precision assembly sectors based on advanced spot-curing, fluorescence microscopy and nanopositioning solutions. For more information about EXFO, visit www.EXFO.com.