Rapiscan Systems Recieves Contract for Solid-State CT Systems for High-Speed Hold Baggage Screening

Rapiscan Systems

Category: Hold Baggage Screening | 09/03/2006 - 10:20:34

· Total contract value of approximately $40 million if all options for additional systems are exercised

· Revolutionary system would be up to four times faster than current certified HBS CT systems

Rapiscan Systems, a division of OSI Systems, Inc. (NASDAQ: OSIS - News), announced today that it has received a contract for approximately $7 million from Manchester Airport Group ("MAG") for multiple units of the Rapiscan RTT120 CT system for high-speed hold baggage screening ("HBS").

The contract award included an initial deposit of approximately $1.7 million. Under the terms of the contract Rapiscan Systems is to deliver the systems starting in fiscal 2008 and the customer has an option for additional systems through 2011. If fully exercised, the option would bring the total value of the contract to approximately $40 million.

The Rapiscan RTT120 has been designed to screen up to 1,500 bags per hour, or up to four times the speed of the currently deployed certified CT systems in U.S. airports. The Rapiscan RTT120 utilizes a patented solid-state design that eliminates the need for a rotating mechanical gantry.

Customer Service Director of MAG, Mr. Mike Razackerly, stated, "In 1996 Manchester was the first airport in the world to deploy CT technology for Hold Baggage Screening. Having more experience with this type of technology than other airport management groups, we studied the benefits of the RTT120 closely and were convinced this technology represents a major step forward in security detection systems in terms of both efficiency and cost."

President of Rapiscan Systems, Mr. Ajay Mehra, stated, "We are extremely pleased with today's announcement and look forward to working closely with Manchester Airports as they deploy this state-of-the-art HBS technology in their network of airports. The Rapiscan RTT120 underscores Rapiscan Systems' commitment to the HBS market solidifying our global leadership position in the aviation market."

Chairman and CEO of OSI Systems, Mr. Deepak Chopra, stated, "We applaud the management of Manchester Airports for their foresight and commitment to the next generation of HBS systems. The Rapiscan RTT120's patented technology would revolutionize the HBS market, especially in terms of integration and deployment cost.

We have invested substantial R&D resources in this program over the last few years. As a result of this order we plan to accelerate our R&D investment in this program. This technology could also have tremendous applications in the carry-on baggage and medical imaging markets."

Since 2002, approximately 1,200 certified HBS CT systems have been deployed in the U.S. These CT systems, with an average hourly throughput of approximately 400 bags an hour, have effectively become a choke point in baggage handling systems. As such, the current systems have resulted in high integration costs, or sometimes an inability to integrate the systems, resulting in placement on airport concourses. These factors not only drive costs, but result in passenger congestion and delays.

Rapiscan's internal estimates indicate that approximately 400 to 500 of the currently deployed certified systems in the U.S. will be eligible for replacement in the next three years with the remainder being replaced by 2011. Overall, the potential global market for the Rapiscan RTT120 is estimated to be several thousand systems over the next installation cycle.

Rapiscan Systems stated that, because the RTT120 is currently in development, and subject to the inherent risks and uncertainties of product development, there can be no assurance of the successful completion of that development, timely or otherwise, or of the characteristics of any final product, or whether such final product will achieve certification by regulatory authorities.