CyberOptics Acquires Imagenation Corporation.

Business Editors & Technology Writers

MINNEAPOLIS--(BUSINESS WIRE)--Oct. 25, 2000

Acquisition of Machine Vision Component and Subsystem Manufacturer

Provides CyberOptics with Critical Mass and New Technologies for

Semiconductor Capital Equipment Market

CyberOptics Corporation today announced that it has acquired Imagenation Corporation, a leading designer and manufacturer of machine vision components and subsystems for the semiconductor capital equipment and general-purpose machine vision market. The all-cash transaction totaled approximately $6 million, net of cash acquired, plus contingent considerations.

Based in Portland, Oregon, Imagenation has annual sales of approximately $5.5 million and will become part of the CyberOptics semiconductor product group. The addition of Imagenation will increase the sales volume of this product group to approximately $15 million on an annualized basis. Imagenation will continue to operate out of its Portland facility.

Steven M. Quist, president and chief executive officer, commented: "The acquisition of Imagenation represents a focused initiative aimed at building the critical mass, augmenting the competitive capabilities and accelerating the growth of our semiconductor equipment business. As a result of this transaction, CyberOptics is positioned to provide a growing range of vision-based process solutions to original equipment manufacturers of robotic wafer handling equipment and semiconductor fabrication tools. The fact that Imagenation's customer base closely parallels that of ours' should further strengthen our position in the semiconductor equipment market."

Quist continued: "In addition to Imagenation's strong base of vision technology, this acquisition also provides us with a highly skilled R&D team and a talented management group. We believe this transaction represents a cost-effective investment for expanding our reach in the semiconductor equipment market. Internally developing Imagenation's capabilities would have involved substantially higher costs over a longer period of time."

The Imagenation transaction will contribute approximately $900,000 to the Company's consolidated sales in the fourth quarter. Management expects that this acquisition will include a one-time in-process R&D charge which will materially impact fourth quarter net income. Excluding this charge, the acquisition is not expected to materially affect fourth quarter earnings. Quist added: "We expect this acquisition to be relatively neutral to earnings through 2001 and to become accretive thereafter as the result of new product introductions to the semiconductor equipment marketplace."

Imagenation's principal product line at this time consists of precision video frame grabbers, a machine vision component that captures, digitizes and stores video images. Imagenation also serves the medical/scientific, security/ surveillance and traffic control frame grabber markets.

Imagenation's market focus is shifting further toward the semiconductor equipment market due to product development initiatives currently under way. A single-board, machine vision subsystem technology is being pursued to perform image capture and analysis, in addition to outputting control signals and other data. This vision cell subsystem is being developed for high-volume semiconductor wafer inspection applications.

CyberOptics Corporation, a recognized worldwide leader in optical technology, designs and manufactures a growing range of yield and through-put enhancement tools for the SMT electronic assembly equipment and semiconductor fabrication equipment markets.

Statements regarding CyberOptics' performance for the remainder of 2000, particularly as that performance is impacted by the acquisition of Imagenation, are forward-looking and involve risks and uncertainties, including risks related to our ability to successfully integrate Imagenation's operations, the accuracy of the information we have received from Imagenation, our current inability to accurately assess the value of research and development projects in process at Imagenation, market conditions in the global electronics industry, competitive technologies, the commercial success of new products, and other factors set forth in the Company's filings with the Securities and Exchange Commission.