Precision Optics Corporation announces workforce reduction

Aug. 1, 2001--The sharp reduction in demand and industry-wide excess inventory levels of passive telecommunications components has hampered the Company's ability to obtain new orders for its Dense Wavelength Division Multiplexer filters.

Precision Optics Corporation, Inc. (Nasdaq: POCI) announced it is reducing its workforce by approximately 30 percent, or 24 employees. The sharp reduction in demand and industry-wide excess inventory levels of passive telecommunications components has hampered the Company's ability to obtain new orders for its Dense Wavelength Division Multiplexer filters.

The Company's principal customer for DWDM filters has notified Precision Optics that it is canceling approximately $140,000 of filter orders due to the customer's excess inventory issues affecting all of its vendors and all product lines. As a result, Precision Optics expects shipments of its DWDM filters during the quarter ending September 30, 2001 to be substantially lower than the $620,000 of filter shipments in the previous quarter, and cannot predict when significant demand for its DWDM filters will resume.

Along with the workforce reduction, Precision Optics will be reducing other discretionary expenses. These actions together are expected to generate annual cash savings in the range of $1.5 million to $2 million.

About Precision Optics:

Precision Optics Corporation, a manufacturer of optical thin films and optical instruments, designs and manufactures high-quality optical thin film coatings, medical instruments, and other advanced optical systems. For more information, visit www.poci.com.

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