Cognex Corporation Announces Fourth Quarter Results.Business Editors NATICK Natick (nā`tĭk), town (1990 pop. 30,510), Middlesex co., E Mass., a residential and industrial suburb of Boston, on Lake Cochituate; founded as a Native American village by John Eliot 1651, settled by colonial Americans 1718, inc. 1781. , Mass.--(BUSINESS WIRE)--Jan. 28, 2003 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 revenue for the fourth quarter ended December December: see month. 31, 2002 of $33,829,000, a 34% increase over the $25,170,000 reported for the fourth quarter of 2001, and net income for the fourth quarter of 2002 of $424,000, or $0.01 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared to a loss of $20,335,000, or $0.46 per diluted share, for the same period a year ago. Cognex Cog·nex A trademark for the drug tacrine hydrochloride. tacrine hydrochloride Cognex Pharmacologic class: Cholinergic (cholinesterase inhibitor) Therapeutic class: reported revenue for the year ended December 31, 2002, of $114,107,000, compared to $140,729,000 for 2001, and a loss for 2002 of $6,027,000, or $0.14 per diluted share, compared to a loss of $11,127,000, or $0.25 per diluted share, for 2001. Excluding unusual items, which are described in detail on the accompanying ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. supplemental schedule, "Reconciliation of Net Income (Loss) as Reported vs. Net Income (Loss) Excluding Unusual Items," net income for the fourth quarter of 2002 would have been $1,859,000, or $0.04 per diluted share, compared to a loss of $941,000, or $0.02 per diluted share, for the same period in 2001. In addition, the loss for 2002 would have been $2,054,000, or $0.05 per diluted share, compared to net income of $8,267,000, or $0.18 per diluted share, for 2001. "2002 was a very challenging year for Cognex," said Dr. Robert Robert, Henry Martyn 1837-1923. American army engineer and parliamentary authority. He designed the defenses for Washington, D.C., during the Civil War and later wrote Robert's Rules of Order (1876). Noun 1. J. Shillman, Cognex's President, Chief Executive Officer, and Chairman. "The worldwide slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. in capital equipment spending by manufacturers, particularly those in the semiconductor and electronics industries, has severely impacted our results. The best thing I can say about 2002 is that it is behind us." Dr. Shillman continued, "However, there were some positive developments that lead us to be a bit more optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op going into 2003 than we were entering into 2002. We ended the year with $26 million of orders in backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. , which is an increase of 63% over the 2001 year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. backlog. We reduced our cost structure to be in line with the lower level of business, and we returned to profitability...at both the 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. line and the bottom line...in the fourth quarter. SmartView(R), our surface inspection product, exceeded our expectations in 2002 as we set new records for both orders and revenue at our Surface Inspection Systems Division. We also had record bookings and revenue from In-Sight(TM), Cognex's family of low-cost vision sensors
Statement of Operations See Income statement. Highlights - Fourth Quarter of 2002 -- Revenue for the fourth quarter of 2002 increased 34% from the comparable quarter in 2001 and 6% from the prior quarter primarily due to higher shipments to Original Equipment Manufacturers (OEMs). -- Gross margin, excluding the unusual items described in detail in the accompanying supplemental schedule, "Reconciliation of Net Income (Loss) as Reported vs. Net Income (Loss) Excluding Unusual Items," was 66% in the fourth quarter of 2002 compared to 62% in both the comparable quarter in 2001 and the prior quarter. The increase in gross margin, both year-on-year and sequentially, is primarily due to the higher sales volume as well as sales of modular vision systems representing a greater percentage of total revenue. -- R, D & E spending in the fourth quarter of 2002 decreased 9% from the comparable quarter in 2001 and 10% from the prior quarter. The decrease in R, D & E spending, both year-on-year and sequentially, is primarily due to cost-containment measures implemented by the company, including the workforce reduction announced by Cognex on August 1, 2002. -- S, G & A spending in the fourth quarter of 2002 increased 22% from the comparable quarter in 2001 and was essentially flat with the prior quarter. The year-on-year increase in spending is primarily due to higher sales and marketing costs, such as advertising, commissions, and travel, and higher professional fees as well as the impact of foreign exchange rates on the company's international operations, somewhat offset by savings from the workforce reduction in August of 2002. -- Investment and other income for the fourth quarter of 2002 includes a charge of $1,768,000 for the write down of an investment in a venture capital limited partnership to its estimated fair value. Excluding this charge, investment and other income decreased 37% from the fourth quarter of 2001 and 33% from the prior quarter primarily due to lower yields on investments as well as a lower average invested balance after using approximately $26,400,000 in cash to repurchase Cognex stock during the third quarter of 2002. Balance Sheet Highlights - December 31, 2002 -- Cognex's financial position remains very strong at the end of 2002, with $276,000,000 in cash and investments and no debt. Cash and investments at the end of 2002 decreased approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $17,000,000 from December 31, 2001, primarily as a net result of two positive events. In 2002, Cognex paid out approximately $26,400,000 to repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. nearly 1.8 million shares of its common stock and generated in excess of $15,000,000 in cash from operations. -- 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). for the fourth quarter of 2002 was 50 days, compared to 63 days for the comparable quarter in 2001. The decline in DSO See CSO. is primarily due to the company's collection efforts in 2002 as well as to the timing of receipts from certain customers at the end of 2001. -- Inventory at the end of 2002 decreased 18% from the end of 2001 as Cognex used inventory to meet customer requirements. Business Trends and Financial Outlook -- In the fourth quarter of 2002, bookings decreased on a sequential One after the other in some consecutive order such as by name or number. basis and the company's book-to-bill ratio Book-to-Bill Ratio The technology industry's demand-to-supply ratio for orders on a "firm's book" to number of orders filled. Notes: This ratio tells whether the company has more orders than it can deliver (if greater than 1), has the same amount of orders that it can slipped below 1.0 for the first time since the beginning of 2002. This decline was due to lower orders from OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and customers. As a result, Cognex expects revenue for the first quarter of 2003 to also decline on a sequential basis to between $31 million and $33 million. At that revenue level, gross margin is expected to be in the low to mid- mid- pref. Middle: midbrain. 60% 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) for the first quarter are expected to decrease on a sequential basis in the range of 5% to 10%. The effective tax rate for the first quarter of 2003 is expected to be 28%. And, earnings for the first quarter are expected to be between $0.02 and $0.05 per diluted share. Cognex has no visibility for customer demand beyond the first quarter of 2003. Analyst Conference Call and Simultaneous Webcast Cognex Corporation will host a conference call to discuss its results for the fourth quarter and full year of 2002, as well as the financial outlook, today at 6:00 p.m. eastern. The telephone number to listen to the live conference call is 800-481-7713 (or 719-457-2730 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 of the conference call will begin at 9:00 p.m. eastern today and will be available until midnight on February February: see month. 3, 2003. To listen to the conference call replay, the telephone number is 888-203-1112 (or 719-457-0820 if outside the United States) and the access code is 617503. Internet users Internet user n → internauta m/f Internet user Internet n → internaute m/f can listen to a real-time 1. real-time - Describes an application which requires a program to respond to stimuli within some small upper limit of response time (typically milli- or microseconds). Process control at a chemical plant is the classic example. audio broadcast of the conference call on Cognex's website at http://www.cognex.com. An archive (1) A file that contains one or more compressed files. Most archive formats are also capable of storing folders in order to reconstruct the file/folder relationship when decompressed. See archive formats. of the webcast will be available for one week. About Cognex Corporation Cognex Corporation designs, develops, manufacturers, and markets machine vision systems, or computers that can "see". Cognex is the world's leader in the machine vision industry, having shipped to date more than 175,000 machine vision systems, representing over $1.3 billion in cumulative revenue, since the company's founding in 1981. Cognex's Modular Vision Systems Division, headquartered 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 , specializes in machine vision systems which are used for automating the manufacture of a wide range of discrete A component or device that is separate and distinct and treated as a singular unit. items and for assuring their quality. Cognex's Surface Inspection Systems Division, headquartered in Alameda, California Alameda is a city in Alameda County, California, United States. It is located on a small island of the same name next to Oakland, California in the San Francisco Bay. An additional part of the city is Bay Farm Island, which is adjacent to the Oakland International Airport. , specializes in machine vision systems which are used for inspecting the surfaces of products that are manufactured in a continuous fashion, such as metals, paper, nonwovens Nonwoven textiles are those which are neither woven nor knit, for example felt. General use hyphenates the word, but industrial use spells it as one word. Non-wovens are typically not strong (unless reinforced by a backing or densified). and plastics. In addition to its corporate headquarters in Natick, Massachusetts, Cognex also has regional offices 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 Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). , and Southeast Asia Southeast Asia, region of Asia (1990 est. pop. 442,500,000), c.1,740,000 sq mi (4,506,600 sq km), bounded roughly by the Indian subcontinent on the west, China on the north, and the Pacific Ocean on the east. . Visit
Cognex on-line at http://www.cognex.com.
Forward-Looking Statement 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 are forward-looking statements. These statements are based on the company's current expectations and estimates as to prospective events and circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or , which may or may not be in the company's control and as to which there can be no firm assurances given. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected. The company wishes to caution readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. The company disclaims any obligation subsequently to revise forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. Further discussions of risk factors are also available in the company's filings with the Securities and Exchange Commission.
COGNEX CORPORATION
Statements of Operations
(In thousands, except per share amounts)
Three Months Ended Twelve Months Ended
Dec. 31, Sept. 29, Dec. 31, Dec. 31, Dec. 31,
2002 2002 2001 2002 2001
--------------------------- -------------------
(unaudited)
Revenue $33,829 $31,827 $25,170 $114,107 $140,729
Cost of revenue 11,001 11,065 26,232 39,859 62,345
-------- -------- --------- --------- ---------
Gross margin 22,828 20,762 (1,062) 74,248 78,384
Research, development,
and engineering
expenses 6,066 6,714 6,674 25,630 30,094
Selling, general, and
administrative
expenses 15,326 15,442 12,543 58,026 61,590
Amortization of
goodwill - - 780 - 3,108
Charge for intangible
asset impairment - - 10,932 - 10,932
-------- -------- --------- --------- ---------
Operating income (loss) 1,436 (1,394) (31,991) (9,408) (27,340)
Investment and other
income (loss) (20) 2,626 2,780 1,204 11,669
-------- -------- --------- --------- ---------
Income (loss) before
taxes 1,416 1,232 (29,211) (8,204) (15,671)
Income tax provision
(benefit) 992 451 (8,876) (2,177) (4,544)
-------- -------- --------- --------- ---------
Net income (loss) $424 $781 $(20,335) $(6,027) $(11,127)
======== ======== ========= ========= =========
Net income (loss) per
diluted common and
common equivalent
share $0.01 $0.02 $(0.46) $(0.14) $(0.25)
======== ======== ========= ========= =========
Diluted weighted-average
common and common
equivalent shares
outstanding 43,162 43,751 43,835 43,503 43,639
======== ======== ========= ========= =========
COGNEX CORPORATION
Balance Sheets
(In thousands)
Dec. 31, Dec. 31,
2002 2001
-------------------
Assets
Cash and investments $275,985 $292,715
Accounts receivable 18,981 17,064
Inventories 18,952 23,078
Property, plant, and equipment, net 27,405 31,213
Other assets 45,806 42,834
--------- ---------
Total assets $387,129 $406,904
========= =========
Liabilities and Stockholders' Equity
Current liabilities $32,609 $28,860
Stockholders' equity 354,520 378,044
--------- ---------
Total liabilities and stockholders' equity $387,129 $406,904
========= =========
COGNEX CORPORATION
Reconciliation of Net Income (Loss) as Reported
vs. Net Income (Loss) Excluding Unusual Items
(In thousands, except per share amounts)
Three Months Ended Twelve Months Ended
Dec. 31, Sept. 29, Dec. 31, Dec. 31, Dec. 31,
2002 2002 2001 2002 2001
--------------------------------------------
(unaudited)
Net income (loss), as
reported $424 $781 $(20,335) $(6,027)$(11,127)
Unusual items in cost of
revenue:
Charge for excess
inventory and
impairment of
complete technology - - 16,615 - 16,615
Realized benefit
relating to 2001
charge for excess
inventory (528) (1,156) - (2,684) -
Unusual items in operating
expenses:
Charge for impairment
of goodwill - - 10,932 - 10,932
Unusual items in investment
and other income (loss):
Investment losses 1,768 - - 7,952 -
Unusual items in income
tax provision (benefit):
Tax effect of unusual
items 195 428 (8,153) (1,295) (8,153)
--------------------------------------------
Net income (loss),
excluding unusual items $1,859 $53 $(941) $(2,054) $8,267
============================================
Net income (loss) per
diluted common and
common equivalent share,
excluding unusual items $0.04 $0.00 $(0.02) $(0.05) $0.18
============================================
Diluted weighted-average
common and common
equivalent shares
outstanding 43,162 43,751 43,835 43,503 45,187
============================================
COGNEX CORPORATION
Additional Revenue Information
(Dollars in thousands)
Three Months Ended Twelve Months Ended
Dec. 31, Sept. 29, Dec. 31, Dec. 31, Dec. 31,
2002 2002 2001 2002 2001
----------------------------------------------
(unaudited)
Revenue $33,829 $31,827 $25,170 $114,107 $140,729
==============================================
Revenue by customer type:
End user 62% 67% 73% 67% 56%
Original equipment
manufacturer 38% 33% 27% 33% 44%
----------------------------------------------
Total 100% 100% 100% 100% 100%
==============================================
Revenue by geography:
United States 36% 38% 44% 41% 37%
Japan 34% 32% 24% 29% 37%
Europe 21% 24% 26% 24% 22%
Other 9% 6% 6% 6% 4%
----------------------------------------------
Total 100% 100% 100% 100% 100%
==============================================
Revenue by industry:
Semiconductor 32% 25% 16% 25% 29%
Electronics 18% 19% 19% 18% 26%
Surface inspection 18% 21% 26% 21% 17%
Automotive 12% 12% 12% 11% 8%
Packaging 3% 4% 5% 3% 3%
Consumer products 2% 4% 3% 4% 3%
Other 15% 15% 19% 18% 14%
----------------------------------------------
Total 100% 100% 100% 100% 100%
==============================================
Revenue by division:
Modular Vision Systems
Division 82% 79% 74% 79% 83%
Surface Inspection
Systems Division 18% 21% 26% 21% 17%
----------------------------------------------
Total 100% 100% 100% 100% 100%
==============================================
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