Cognex Corporation Announces Fourth Quarter Results.NATICK, Mass. -- Cognex Corporation Cognex Corporation is an American corporation that manufactures commercial machine vision systems. Cognex is the world leader in its field, holding an array of patents and employing academic experts. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : CGNX) today announced its financial results for the fourth quarter and year ended December 31, 2007. Revenue, net income and earnings per share reported for the quarter and year ended December 31, 2007 are compared to the fourth quarter of 2006, the third quarter of 2007, and to the year ended December 31, 2006 in Table 1 below. [TABLE OMITTED] The effect of stock option expensing on certain line items in the P&L as reported under GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). is shown in Exhibit 2. "The fourth quarter of 2007 was a very good quarter for Cognex," said Dr. Robert J. Shillman, the Chairman and Chief Executive Officer of Cognex. "I am pleased to say that revenue and earnings per share, excluding stock option expense, were at the highest level since the Internet bubble See dot-com bubble. burst seven years ago. In addition, we set two new records for quarterly revenue; first in the Surface Inspection market, where we had revenue of $12 million in the fourth quarter, and second in the Factory Automation market, where revenue was $40 million and now represents our largest market." Dr. Shillman continued, "I am feeling more optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about our future today than I was at this point last year. We spent a great deal of time, effort and money in 2007 working on product development and realigning our sales force. As a result of both of those efforts, we expect to introduce a number of important new products in 2008, and our direct sales team and network of distributors are starting 2008 energized and focused on selling. It appears that 2008 will be a great year for Cognex." Details of the Quarter Statement of Operations See Income statement. Highlights - Fourth Quarter of 2007 * Revenue for the fourth quarter of 2007 increased 12% from the fourth quarter of 2006, and 19% from the prior quarter due to higher sales to the Factory Automation and Surface Inspection markets, both of which set new records for quarterly revenue. Notably, the increase in Factory Automation revenue, both year-on-year and sequentially, was across a number of different industries with the largest increase in absolute dollars from Europe. The increase in Factory Automation and Surface Inspection was offset somewhat by a decline in the Semiconductor and Electronics Capital Equipment Market, which has been in a cyclical cyclical Of or relating to a variable, such as housing starts, car sales, or the price of a certain stock, that is subject to regular or irregular up-and-down movements. slowdown since early 2006. * Gross margin was 73% in the fourth quarter of 2007, 72% in the fourth quarter of 2006 and 73% in the prior quarter. The increase in gross margin year-on-year is primarily due to the higher sales volume in the fourth quarter of 2007. Gross margin was flat on a sequential basis despite higher revenue due to product mix; a greater percentage of revenue in the fourth quarter of 2007 as compared to the third quarter came from the sale of surface inspection systems than from modular vision systems. * Research, Development & Engineering (R, D & E) spending in the fourth quarter of 2007 increased 19% from the fourth quarter of 2006 and 11% from the prior quarter. The increase in R, D & E spending year-on-year is due to higher employee-related costs, contract labor and patent-related costs. The sequential increase is due to higher patent-related costs and stock option expense. * Selling, General & Administrative (S, G & A) spending in the fourth quarter of 2007 increased 11% from both the fourth quarter of 2006 and the prior quarter. The increase in S, G & A spending, both year-on-year and sequentially, is due to higher costs related to additional sales headcount, professional fees, and the impact of foreign exchange rates on the company's international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. . Higher stock option and marketing expenses also contributed to the increase on a sequential basis. * Cognex reported foreign currency gains of $367,000 in the fourth quarter of 2007, $374,000 in the fourth quarter of 2006 and $353,000 in the prior quarter. The company recognizes foreign currency gains and losses on the revaluation Revaluation A calculated adjustment to a country's official exchange rate relative to a chosen baseline. The baseline can be anything from wage rates to the price of gold to a foreign currency. In a fixed exchange rate regime, only a decision by a country's government (i.e. and settlement of accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying and payable balances that are reported in one currency and collected or paid in another. * Investment and other income was $2,110,000 in the fourth quarter of 2007, $1,581,000 in the fourth quarter of 2006 and $1,881,000 in the prior quarter. The increase, both year-on-year and sequentially, is due to higher yields on invested balances. Higher rental income Noun 1. rental income - income received from rental properties income - the financial gain (earned or unearned) accruing over a given period of time in 2007 also contributed to the increase over the fourth quarter of 2006. * The effective tax rate was 19% in the fourth quarter of 2007, 19% in the fourth quarter of 2006 and 21% in the third quarter of 2007. Excluding the items described below, the tax rate would have been 19% in the fourth quarter of 2007, 25% in the fourth quarter of 2006 and 26% in the prior quarter. The decrease, both year-on-year and sequentially, is primarily due to more of the company's profits being earned in lower tax jurisdictions. [TABLE OMITTED] Balance Sheet Highlights - December 31, 2007 * Cognex's financial position at December 31, 2007 was very strong, with approximately $268,000,000 in cash and investments and no debt. In 2007, Cognex generated positive cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses of more than $48,000,000, paid out approximately $15,000,000 in dividends to shareholders, and spent more than $32,000,000 to repurchase approximately 1,430,000 shares of its common stock on the open market. * Days sales outstanding In accountancy, Days Sales Outstanding is a company's average collection period. A low figure indicates that the company collects its outstanding receivables quickly. Typically it is looked at either quarterly or yearly (90 or 365 days). (DSO See CSO. ) for the fourth quarter of 2007 was 52 days, and remains within the company's targeted range. * Inventories at December 31, 2007, decreased by approximately $3,100,000, or 10%, from the end of 2006, and inventory turns in the fourth quarter were equivalent to 2.4 times per year. The impact of foreign exchange rates added approximately $2,000,000 to the inventory balance in 2007; excluding this impact, inventories would have decreased by more than $5,100,000, or 17%. Financial Outlook For the first quarter of 2008, Cognex expects revenue to be between $58 million and $61 million. Although this range is lower than the revenue reported for the fourth quarter of 2007, it represents a significant increase as compared to the first quarter of 2007. Gross margin is expected to be in the low-70% range. Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. (R, D & E and S, G & A) are expected to be essentially flat on a sequential basis. The effective tax rate is expected to be 23%. As a result of the above, earnings for the first quarter of 2008 are expected to be between $0.13 and $0.18 per diluted share. Non-GAAP Financial Measures Exhibit 2 of this press release includes a reconciliation of certain financial measures from GAAP to non-GAAP. Cognex believes that these non-GAAP financial measures are useful to investors because they allow investors to more accurately assess and compare the company's results over multiple periods and to evaluate the effectiveness of the methodology used by management to review its operating results. In particular, Cognex incurs expense related to stock options included in its GAAP presentation of cost of revenue, research, development, and engineering expenses (R,D&E), and selling, general and administrative expenses (S,G&A). Cognex excludes these expenses for the purpose of calculating non-GAAP adjusted gross margin, non-GAAP adjusted operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. , non-GAAP adjusted net income and non-GAAP adjusted earnings per share when it evaluates its continuing operational performance and in connection with its budgeting process and the allocation of resources allocation of resources Apportionment of productive assets among different uses. The issue of resource allocation arises as societies seek to balance limited resources (capital, labour, land) against the various and often unlimited wants of their members. , because these expenses have no current effect on cash or the future uses of cash and they fluctuate as a result of changes in Cognex's stock price. Cognex does not intend for these non-GAAP financial measures to be considered in isolation, nor as a substitute for financial information provided in accordance with GAAP. Analyst Conference Call and Simultaneous Webcast Cognex will host a conference call to discuss its results for the fourth quarter of 2007, as well as its financial outlook, today at 5:00 p.m. eastern time. The telephone number for the live call is 866-814-8448 (or 703-639-1367 if outside the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. ). A replay will begin at 8:00 p.m. eastern time today and will run continuously until 11:59 p.m. eastern time on Sunday, February 17, 2008. The telephone number for the replay is 888-266-2081 (or 703-925-2533 if outside the United States) and the access code is 1185094. Internet users Internet user n → internauta m/f Internet user Internet n → internaute m/f can listen to a real-time audio broadcast of the conference call, as well as an archive replay of the call, on Cognex's website at http://www.cognex.com/Investor. About Cognex Corporation Cognex Corporation designs, develops, manufactures, and markets machine vision sensors and systems, or devices that can "see." Cognex vision sensors are used in factories around the world to automate the manufacture of a wide range of items and to assure their quality. Cognex is the world's leader in the machine vision industry, having shipped more than 400,000 machine vision systems, representing over $2 billion in cumulative revenue, since the company's founding in 1981. In addition to its corporate headquarters in Natick, Massachusetts Natick (Pronunciation IPA: /ˈneɪtɪk/) is a town in Middlesex County, Massachusetts, United States. Natick is located near the center of the MetroWest region of Massachusetts, with a population of 32,170 at the , Cognex also has regional offices and distributors located throughout North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , Japan, Europe, Asia, and Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. . Visit Cognex on-line at http://www.cognex.com/. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Certain statements made in this press release, which do not relate solely to historical matters, are forward-looking statements. These statements can be identified by use of the words "expects," "anticipates," "estimates," "believes," "projects," "intends," "plans," "will," "may," "shall" and similar words. These forward-looking statements, which include statements regarding business and market trends, the company's product development and sales efforts, revenue growth and the company's financial outlook, involve known and unknown risks and uncertainties that could cause actual results to differ materially from those projected. Such risks and uncertainties include: (1) economic conditions that impact the capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. trends of manufacturers in a variety of industries; (2) the cyclicality of the semiconductor and electronics industries; (3) the inability to achieve significant international revenue; (4) fluctuations in foreign exchange rates; (5) the loss of, or a significant curtailment of purchases by, any one or more principal customers; (6) the reliance upon certain sole-source suppliers of critical components; (7) the inability to attract and retain skilled employees; (8) the inability to design and manufacture high-quality products; (9) the technological obsolescence ob·so·les·cent adj. 1. Being in the process of passing out of use or usefulness; becoming obsolete. 2. Biology Gradually disappearing; imperfectly or only slightly developed. of current products and the inability to develop new products; (10) the failure to effectively manage product transitions or accurately forecast customer demand; (11) the failure to properly manage the distribution of products and services; (12) the inability to protect Cognex proprietary technology and intellectual property; (13) the company's involvement in time-consuming and costly litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. ; (14) the impact of competitive pressures; (15) the challenges in integrating acquired businesses and achieving expected results; (16) exposure to additional tax liabilities; and (17) the other risks detailed in the company's reports filed with the SEC, including the company's Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the fiscal year 2007. You should not place undue reliance upon any such forward-looking statements, which speak only as of the date made. Cognex disclaims any obligation to update forward-looking statements after the date of such statements. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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