Hawthorne, CA – OSI Systems has entered into a definitive agreement to acquire Ancore, a provider of advanced inspection systems based upon Pulsed Fast Neutron Analysis (PFNA) and Thermal Neutron Analysis (TNA) for land, sea and air transportation. For the acquisition, OSI will pay $2 million in cash and issue 347,915 shares of OSI common stock, and may pay an additional $2 million in cash and $4.69 million in cash or stock prior to May 10, 2003 based upon performance criteria. Over the next five years, OSI will pay former Ancore stockholders an earn-out of 6% of the price of each PFNA inspection system sold that “represents a potential generational advance above and beyond the current contraband detection systems,” up to $750,000 per system. A typical large cargo PFNA installation is priced at $10 million to $15 million. Such earn-outs are capped at an aggregate of $34 million, and Ancore stockholders are subject to certain restrictions on the sale of OSI stock.