CyberOptics Reports Full-Year 2004 and Fourth Quarter Sales and Earnings

Business Wire, Feb 15, 2005

MINNEAPOLIS -- CyberOptics Corporation (Nasdaq:CYBE) today reported consolidated revenues of $58,037,000 for 2004, an increase of 63% from $35,636,000 in 2003. Net income totaled $10,626,000 or $1.18 per diluted share, a significant improvement from the net loss of $2,637,000 or $0.32 per share in 2003.

For the fourth quarter of 2004 ended December 31, consolidated revenues came to $11,228,000, virtually unchanged from $11,189,000 in the year-earlier period and down from $19,385,000 in this year's third quarter. Net income came to $794,000 or $0.09 per diluted share, compared to $896,000 or $0.11 per diluted share in the fourth quarter of 2003 and $3,624,000 or $0.40 per diluted share in this year's third quarter.

CyberOptics' U.S.-based results in 2003 did not include an income tax provision--either a benefit on losses or tax expense on earnings--due to the establishment of a valuation allowance on deferred tax assets in 2002. The level of income earned in 2004 resulted in the Company utilizing available tax loss carryforwards and paying income taxes for the year. Since CyberOptics has continued to maintain a valuation allowance on deferred tax assets, these taxes resulted in a tax provision at an effective rate of 16% for the year. CyberOptics will continue to assess carrying or eliminating a full valuation allowance on deferred tax assets on a quarterly basis during 2005. If reversed, CyberOptics would record a significant non-cash gain.

Kathleen P. Iverson, president and chief executive officer, commented, "The past year was an excellent period for CyberOptics as new and upgraded products developed during the deep industry recession from 2001 through much of 2003 enabled us to participate fully in the upturn of the global electronics market. Our strong full-year earnings also benefited our expanded Asian distribution channel and the streamlined cost structure that we have implemented in recent years, which has made CyberOptics a more efficient, focused and profitable organization. As a result of these factors, we generated more than $15 million of cash during 2005."

Iverson continued, "As previously reported, orders for our SMT and semiconductor products slowed significantly during the third quarter, which resulted in our lower fourth quarter operating results in comparison to our strong third quarter levels. However, despite the sharp drop in sales, CyberOptics remained profitable, reflecting the positive impact of our reduced cost structure. In addition, order rates stabilized in the fourth quarter and have improved slightly thus far in 2005. For these reasons, we are currently forecasting revenues for the first quarter of 2005 of $11.0 to $12.0 million and earnings of $0.05 to $0.10 per diluted share, which includes an effective tax rate of approximately 25%."

Steven K. Case, Ph.D., chairman and founder, said, "Regarding new product development, we are very encouraged by our agreement with DEK International GmbH to develop fiducial/ inspection cameras for DEK's industry-leading line of SMT solder paste screen printers. Mounted inside the screen printer, our sensors will ensure that bare circuit boards are registered and aligned properly before the application of solder paste, as well as provide DEK with an upgraded capability for solder paste and stencil inspection. Initial revenues from this product are anticipated in the second quarter of 2005, which will make DEK our newest OEM customer. We believe our relationship with DEK, the leading provider of screen printers to the global electronic assembly market, may also lead to the development of additional solder paste inspection technologies. This agreement also represents another step forward for our strategy of embedding sensing technology inside SMT production equipment. As another part of this strategy, Universal Instruments Corporation is integrating our Embedded Process Verification (EPV(TM)) inspection technology into its new-generation robotic assembly equipment. Sales of the first EPV-equipped Universal platforms are anticipated in late 2005. In addition, a new EPV sensor for retrofitting the existing pick-and-place installations of another OEM is scheduled for introduction in mid-2005. We are aggressively pursuing additional customers for our EPV technology."

Case added, "During this year's first quarter, we also anticipate the initial sales of our new WaferSense(TM) auto leveling sensor, a wireless, wafer-like device that enables quick and accurate leveling of semiconductor wafer processing and automation equipment. WaferSense significantly reduces the amount of time required for making leveling and coplanarity adjustments, resulting in increased up-time, production through-put and process yield."

Financial Review

--Sales of SMT component placement sensors to OEMs of robotic pick-and-place equipment in the fourth quarter were virtually unchanged from the year-earlier period but declined 41% from this year's third quarter level. For the year, sensor sales rose 94%.