ICOS Vision Systems Reports Financial Results for the Second Quarter of 2006

Share Name	Share Symbol	Market	Type
Icos Vision Systems Corp (MM)	NASDAQ:IVIS	NASDAQ	Common Stock

Icos Vision (NASDAQ:IVIS)
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ICOS Vision Systems Corporation NV (Nasdaq and Euronext: IVIS), a world leader in vision solutions, today announced its unaudited financial results for the second quarter ended June 30, 2006. Revenues for the three months ended June 30, 2006 were EUR 29.8 million, representing a decrease of 11% from first quarter revenues of EUR 33.4 million and an increase of 85% from the EUR 16.1 million reported for the second quarter of 2005. Income from operations for the second quarter of 2006 was EUR 8.4 million, 22% lower than the first quarter's income from operations of EUR 10.8 million and a three-fold increase over the EUR 2.7 million reported for the second quarter of 2005. Net income for the second quarter of 2006 was EUR 7.1 million, or 67 Eurocents per share, compared to net income of EUR 8.8 million, or 83 Eurocents per share, for the first quarter of 2006 and EUR 2.1 million, or 20 Eurocents per share, for the second quarter of 2005. Revenues for the six months ended June 30, 2006 were EUR 63.2 million, representing an increase of 96% over the EUR 32.3 million reported for the same period in 2005. Income from operations for the first six months of 2006 was EUR 19.1 million compared to EUR 5.1 million for the same period last year. Net income for the first six months of 2006 was EUR 15.9 million, or 1.51 Euro compared to net income of EUR 3.8 million, or 36 Eurocents per share, for the first six months of 2005. "We performed to plan in the second quarter, delivering solid financial results while reinforcing our market leadership position," said Anton De Proft, ICOS' president and chief executive officer. "Reflecting our persistence in developing new products through sustained effort and investment, we introduced a new WI-3000 high speed Wafer Inspector at the SEMICON West trade show. This product, which has been enthusiastically received by our customers, addresses the growing need for 100% 3D inspection of wafer bumps and, we believe, widens our technological advantage." Mr. De Proft continued, "Since the end of April, when we last offered guidance, the semiconductor industry environment has deteriorated with manufacturers curtailing capital equipment investments in response to rising inventory levels in the semiconductor supply chain. Although we applaud our customers for safeguarding the health of the industry by averting an extended down cycle, their actions are naturally weakening demand for our products." "Given these prevailing market conditions coupled with the limited visibility that always characterizes order flow for ICOS, we are adopting a conservative approach toward our estimates for the third quarter and assuming that demand remains soft," continued Mr. De Proft. "Under this scenario, we would expect revenue to decrease sequentially by as much as 20% to 30%, which would still translate to a year-over-year growth between 6% and 21%. We expect the gross margin in the third quarter to range between 57% and 60%, reflecting an unfavorable product configuration mix, particular to this quarter." Mr. De Proft concluded: "Periods of softer demand after a strong expansion phase are of course part of the cyclical nature of our industry and ICOS, with its flexible operating model and staff of industry veterans, is very well equipped to manage order flow fluctuations. More importantly to our long-term business strategy, the fundamental growth drivers for packaging technology -increased complexity and greater variety of consumer applications - remain intact and our opportunities to expand our addressable market have not diminished. For these reasons, we intend to stay the course through continued investment in new product developments and next-generation technologies, defending and strengthening our market leadership position." ICOS designs and manufactures inspection equipment for the semiconductor packaging industry. It is a world-leading supplier of equipment for the final visual control of chips before they are used in various applications, such as PC's, cars or portable phones. ICOS' systems perform two- and three-dimensional (2D and 3D) inspections as part of the final visual quality control step in the manufacturing of chips, wafers, flexible tapes for flat panel displays, sockets, substrates and solar cells. Aside from its complete systems, ICOS also offers inspection subsystems for integration in other equipment. ICOS' headquarters are located in Leuven, Belgium and it has R&D centers in Belgium, Germany and Hong Kong and sales and support offices in Japan, the USA, Singapore, Korea and Hong Kong and production facilities in Belgium, Hong Kong and China. "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: This press release contains forward-looking information that involves risks and uncertainties, including statements regarding the Company's plans, objectives, expectations and intentions. Such statements include, without limitation, statements regarding: market conditions and the Company's expected financial performance in the third quarter of 2006; the Company's long term business strategy and opportunities; and the Company's expectations for the results of that strategy in light of those opportunities.. These statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those projected or anticipated. These risks and uncertainties include, without limitation, the risk that the Company's dependence on the cyclical semiconductor and electronic assembly industries; uncertainties inherent in the development of new products and the enhancement of existing products, including technical and regulatory risks, cost overruns and delays; the risk that newly introduced products may contain undetected errors or defects or otherwise not perform as anticipated; the Company's ability to predict accurately the demand for its products, and products under development, and to develop strategies to address its markets successfully; risks relating to technological change and the introduction of new products by the Company's competitors; risks relating to intellectual property and the inherent uncertainty of law suits alleging patent infringement that have been filed or threatened against, or filed by, the Company; risks relating to the conduct of the business worldwide, risks related to currency exchanges and other risks referred to in our most recent annual report on form 20-F and other filings with the Securities and Exchange Commission. The Company cautions readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statements to reflect any change in the Company's expectations or any change in events, conditions or circumstances on which any such statement is based. ICOS Vision Systems Corporation NV can be found on the World Wide Web at www.icos.be -0- *T ICOS Vision Systems Corporation NV Consolidated Statements of Operations according to US GAAP (in thousands of EURO, except for share and per share data) Three months Six months ---------------------------------------------------------------------- ended June 30 ended June 30 ---------------------------------------------------------------------- 2006 2005 2006 2005 ---------------------------------------------------------------------- (unaudited) (unaudited) (unaudited) (unaudited) ---------------------------------------------------------------------- ---------------------------------------------------------------------- Revenues 29,763 16,075 63,152 32,268 ---------------------------------------------------------------------- Cost of goods sold 11,574 6,404 24,327 12,804 ---------------------------------------------------------------------- Gross profit 18,189 9,671 38,825 19,464 ---------------------------------------------------------------------- Operating expenses: ---------------------------------------------------------------------- Research & development 3,773 2,656 7,160 5,297 ---------------------------------------------------------------------- Selling, general & administrative 6,059 4,277 12,536 9,100 ---------------------------------------------------------------------- Total operating expenses 9,832 6,933 19,696 14,397 ---------------------------------------------------------------------- Income from operations 8,357 2,738 19,129 5,067 ---------------------------------------------------------------------- Other income (loss): ---------------------------------------------------------------------- Interest income, net 313 154 528 265 ---------------------------------------------------------------------- Other income 38 46 77 90 ---------------------------------------------------------------------- Foreign currency exchange gain (loss) 314 (268) 310 (399) ---------------------------------------------------------------------- Net other income (loss) 665 (68) 915 (44) ---------------------------------------------------------------------- Net income before taxes 9,022 2,670 20,044 5,023 ---------------------------------------------------------------------- Income taxes 1,915 555 4,137 1,237 ---------------------------------------------------------------------- Net income 7,107 2,115 15,907 3,786 ---------------------------------------------------------------------- ---------------------------------------------------------------------- Basic earnings per share 0.67 0.20 1,51 0.36 ---------------------------------------------------------------------- Weighted average number of shares 10,574,523 10,527,607 10,566,039 10,527,459 ---------------------------------------------------------------------- Diluted earnings per shares 0.67 0.20 1,49 0.35 ---------------------------------------------------------------------- Diluted weighted average number of shares 10,683,379 10,704,309 10,674,632 10,703,819 ---------------------------------------------------------------------- CONSOLIDATED BALANCE SHEETS according to US GAAP (in thousands of EURO) June 30, Dec. 31, 2006 2005 ---------------------------------------------------------------------- ASSETS (unaudited) (audited) ---------------------------------------------------------------------- Current Assets ---------------------------------------------------------------------- Cash and cash equivalents 57,072 50,728 ---------------------------------------------------------------------- Trade accounts receivable, net 25,330 26,542 ---------------------------------------------------------------------- Inventories, net 27,135 25,368 ---------------------------------------------------------------------- Prepaid expenses and other current assets 4,466 3,430 ---------------------------------------------------------------------- Total current assets 114,003 106,068 ---------------------------------------------------------------------- Net property and equipment 10,704 10,131 ---------------------------------------------------------------------- Intangible assets 3,633 4,257 ---------------------------------------------------------------------- Other assets 2,076 2,071 ---------------------------------------------------------------------- Total Assets 130,416 122,527 ---------------------------------------------------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY ---------------------------------------------------------------------- Current Liabilities ---------------------------------------------------------------------- Trade accounts payable 8,239 12,994 ---------------------------------------------------------------------- Short-term borrowings & current portion long- term debt 686 638 ---------------------------------------------------------------------- Other current liabilities 14,361 14,375 ---------------------------------------------------------------------- Total current liabilities 23,286 28,007 ---------------------------------------------------------------------- Long-term debt, excluding current portion 3,537 3,852 ---------------------------------------------------------------------- Other long-term liabilities 1,598 1,587 ---------------------------------------------------------------------- Total liabilities 28,421 33,446 ---------------------------------------------------------------------- STOCKHOLDERS' EQUITY ---------------------------------------------------------------------- Common stock 3,271 3,247 ---------------------------------------------------------------------- Additional paid-in-capital 22,799 22,524 ---------------------------------------------------------------------- Treasury stock (616) - ---------------------------------------------------------------------- Retained earnings 79,689 63,782 ---------------------------------------------------------------------- Accumulated other comprehensive income (loss) (3,148) (472) ---------------------------------------------------------------------- Total stockholders' equity 101,995 89,081 ---------------------------------------------------------------------- Total liabilities and stockholders' equity 130,416 122,527 ---------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF CASH FLOWS ACCORDING TO US GAAP (in thousands of EURO) Three months ended Six months ended ---------------------------------------------------------------------- June 2006 June 2005 June 2006 June 2005 ---------------------------------------------------------------------- Cash flows from (unaudited)(unaudited) (unaudited)(unaudited) operating activities ---------------------------------------------------------------------- Net income 7,107 2,115 15,907 3,786 ---------------------------------------------------------------------- Adjustments to reconcile net income to net cash provided by operating activities: ---------------------------------------------------------------------- Depreciation and amortization 594 500 1,103 990 ---------------------------------------------------------------------- Allowance for doubtful debts 92 68 283 99 ---------------------------------------------------------------------- Deferred tax expense (benefit) (184) 198 (397) 113 ---------------------------------------------------------------------- Loss on disposal of property and equipment - 1 - 19 ---------------------------------------------------------------------- Stock based compensation expense 8 - 16 - ---------------------------------------------------------------------- Changes in assets and liabilities: ---------------------------------------------------------------------- Decrease (increase) in trade accounts receivable 2,281 (2,484) (270) (238) ---------------------------------------------------------------------- Decrease (increase) in inventories (517) (896) (2,878) 750 ---------------------------------------------------------------------- Decrease (increase) in prepaid expenses and other current assets (568) 817 (1,363) 503 ---------------------------------------------------------------------- Decrease (increase) in other assets (7) (15) (91) (24) ---------------------------------------------------------------------- (Decrease) increase in trade accounts payable (3,263) 1,703 (4,552) 1,117 ---------------------------------------------------------------------- (Decrease) increase in other current liabilities (1,622) (874) 611 (1,498) ---------------------------------------------------------------------- (Decrease) increase in other long-term liabilities 135 (55) 260 (80) ---------------------------------------------------------------------- Net cash provided by operating activities 4,056 1,078 8,629 5,537 ---------------------------------------------------------------------- Cash flows from investing activities ---------------------------------------------------------------------- Additions to property and equipment (864) (180) (1,002) (438) ---------------------------------------------------------------------- Net cash used in investing activities (864) (180) (1,002) (438) ---------------------------------------------------------------------- Cash flows from financing activities ---------------------------------------------------------------------- Repayment of borrowings (149) (140) (333) (315) ---------------------------------------------------------------------- Proceeds from borrowings 66 - 66 - ---------------------------------------------------------------------- Payment for purchase of own shares (616) - (616) - ---------------------------------------------------------------------- Proceeds from shares issued in connection with the exercise of stock options 283 61 283 61 ---------------------------------------------------------------------- Net cash used in financing activities (416) (79) (600) (254) ---------------------------------------------------------------------- Increase in cash and cash equivalents 2,776 819 7,027 4,845 ---------------------------------------------------------------------- Impact of exchange rate movements on cash (499) 243 (683) 147 ---------------------------------------------------------------------- Cash and cash equivalents at beginning of period 54,795 46,109 50,728 42,179 ---------------------------------------------------------------------- Cash and cash equivalents at end of period 57,072 47,171 57,072 47,171 ------------------------============================================== *T

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IVIS Icos Vision Systems Corp (MM)