Cognex Corporation Announces Second Quarter Results.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. -- 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 second quarter ended July July: see month. 3, 2005, of $54,603,000, and net income of $7,800,000, or $0.17 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. These most recent quarterly results, which include results from the acquisition of DVT See deep vein thrombosis. Corporation since May 9, 2005, are compared to the company's historical results for the second quarter of 2004 and for the first quarter of 2005 in the table below.
Earnings per
Diluted
Time Period Revenue Net Income Share
----------------------------------------------------------------------
Current quarter: Q2-05 $54,603,000 $7,800,000 $0.17
----------------------------------------------------------------------
Prior year's quarter: Q2-04 $54,467,000 $10,878,000 $0.23
----------------------------------------------------------------------
Change from Q2-04 to Q2-05 0% (28%) (28%)
----------------------------------------------------------------------
Prior quarter: Q1-05 $43,198,000 $5,294,000 $0.11
----------------------------------------------------------------------
Change from Q1-05 to Q2-05 26% 47% 47%
----------------------------------------------------------------------
Revenue, net income and earnings per share for the six months ended July 3, 2005, which include results from the acquisition of DVT Corporation since May 9, 2005, are compared to the company's historical results for the comparable period in 2004 in the table below.
Earnings per
Diluted
Time Period Revenue Net Income Share
----------------------------------------------------------------------
Six months ended July 3,
2005 $97,801,000 $13,094,000 $0.28
----------------------------------------------------------------------
Six months ended July 4,
2004 $102,636,000 $19,445,000 $0.41
----------------------------------------------------------------------
Change from first six months
of 2004 to first six months
of 2005 (5%) (33%) (33%)
----------------------------------------------------------------------
To help readers understand the company's performance excluding the acquisition of DVT, the company's Statement of Operations See Income statement. is shown in Exhibit 1 (Including DVT) and Exhibit 2 (Excluding DVT), and a reconciliation of the quarter and six months ended July 3, 2005, including and excluding DVT is shown in Exhibit 3. "The second quarter of 2005 was a good quarter if you look at it on a sequential One after the other in some consecutive order such as by name or number. basis, but not so good on a year-on-year comparison," 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 Chairman and Chief Executive Officer. "Revenue increased significantly on a sequential basis due to higher sales to customers in the surface inspection and factory automation markets, each of which had record revenue in the second quarter of 2005, as well as from revenue from our acquisition of DVT Corporation, which did better than expected. And, our net margin improved as we began to see a return on the investments we made during 2004 in end user sales and marketing personnel to help drive future revenue." Dr. Shillman continued, "However, the year-on-year comparables are disappointing due to lower demand from customers in the semiconductor and electronics capital equipment industries, and due to the incremental costs Costs which are additional costs to the Service appropriations that would not have been incurred absent support of the contingency operation. See also financial management. of our investments outside of this 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. sector to generate growth for the future." Details of the Quarter Statement of Operations Highlights - Second Quarter of 2005 --Revenue for the second quarter of 2005 was flat with the comparable quarter in 2004, and that was quite an accomplishment given that the revenue from customers who make capital equipment for the semiconductor and electronics industries declined by 49%. That shortage was completely made up by higher revenue from discrete A component or device that is separate and distinct and treated as a singular unit. manufacturers in the factory automation area (including $5,500,000 from DVT Corporation) and higher sales of SmartView(R), the company's surface inspection product. On a sequential basis, revenue increased 26% due to higher factory automation revenue and higher sales of SmartView. --Gross margin was 71% in the second quarter of 2005 compared to 71% in the comparable quarter in 2004 and 68% in the prior quarter. Cost of revenue for the second quarter of 2004 as well as the first and second quarters of 2005 includes a benefit of $234,000, $118,000, and $169,000, respectively, relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc an inventory reserve recorded in the fourth quarter of 2001. Excluding this benefit, gross margin would have been 70% in the second quarter of 2005, 70% in the second quarter of 2004, and 68% in the prior quarter. The increase in gross margin on a sequential basis is due to the higher revenue in the second quarter. --Research, Development & Engineering (R, D & E) spending in the second quarter of 2005 increased 8% from the comparable quarter in 2004 and 14% from the prior quarter. The year-on-year and sequential increases are due primarily to the new employees added from the acquisition of DVT during the second quarter of 2005. --Selling, General & Administrative (S, G & A) spending in the second quarter of 2005 increased 22% from the second quarter of 2004, and increased 23% on a sequential basis. The increase year-on-year is due to additional end-user (job) end-user - The person who uses a computer application, as opposed to those who developed or support it. The end-user may or may not know anything about computers, how they work, or what to do if something goes wrong. sales personnel hired by Cognex Cog·nex A trademark for the drug tacrine hydrochloride. tacrine hydrochloride Cognex Pharmacologic class: Cholinergic (cholinesterase inhibitor) Therapeutic class: as well as costs from the DVT acquisition, including new employees and the amortization of acquisition-related costs (which were approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $660,000 pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta in the quarter). The sequential increase is due to higher marketing communication costs and company bonuses in the second quarter as well as the incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. DVT costs. --The company reported a foreign currency loss of $291,000 in the second quarter of 2005 compared to a loss of $50,000 in the comparable quarter of 2004 and a gain of $99,000 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 $973,000 in the second quarter of 2005 compared to $1,031,000 in the second quarter of 2004 and $1,470,000 in the prior quarter. The decrease in investment and other income, both year-on-year and sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen , is due to a lower average cash and investment balance in the second quarter of 2005 due to the acquisition of DVT during the quarter for approximately $115,000,000 in cash. --The effective tax rate was 26% in the second quarter of 2005 as compared to 29% in the comparable quarter of 2004 and 26% in the prior quarter. The decrease in the effective tax rate year-on-year is due to more of the company's profits being earned and taxed in lower tax jurisdictions in 2005 than in 2004. Balance Sheet Highlights - July 3, 2005 --Cognex's financial position at July 3, 2005 was very strong, with over $285,000,000 in cash and investments, and no debt. Cash and investments decreased by nearly $106,000,000 from the end of 2004 as the company paid out approximately $115,000,000 of cash in the second quarter to acquire DVT Corporation. During the first half of 2005, 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 nearly $13,000,000 and paid out over $7,400,000 in dividends. Cumulative to date, the company has paid out nearly $70,000,000 in repurchases of its common stock on the open market and $25,000,000 in dividends. --Days sales outstanding (DSO See CSO. ) for the second quarter of 2005 was 59 days, and remains within the company's targeted range. --Inventories at July 3, 2005 increased by $258,000, or 1%, from the end of the prior quarter and inventory turns in the second quarter improved to a rate equivalent to 3.6 times per year. Business Trends and Financial Outlook Bookings: --For the second quarter of 2005, bookings increased by 15% on a sequential basis (4% excluding DVT) 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 was above 1.0. This increase was primarily due to higher demand from discrete manufacturers in the factory automation area (where bookings increased by 31%, or 10% excluding DVT) and from customers who make capital equipment for the semiconductor and electronics industries (where bookings increased by 21%). Although orders for SmartView declined from the prior quarter's record, the second quarter of 2005 represented the second highest level for that product line. Financial Outlook --For the third quarter of 2005, Cognex expects revenue to increase on a sequential basis to between $57 million and $60 million. At that revenue level, gross margin is expected to be in the low-to-mid 70% range. For the third quarter, 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 increase by 5% to 10% on a sequential basis. The effective tax rate is expected to be 26%. As a result of the above, earnings for the third quarter are expected to be between $0.19 and $0.23 per diluted share. Analyst Conference Call and Simultaneous Webcast Cognex will host a conference call to discuss its results for the second quarter of 2005, as well as its financial outlook, today at 5:00 p.m. eastern time. The telephone number for the live call is 800-770-5589 (or 973-935-2039 if outside the U.S.). A replay will begin tonight at approximately 7:00 p.m. eastern time and will run continuously for 72 hours. The telephone number for the replay is 877-519-4471 (or 973-341-3080 if outside the U.S.) and the access code is 6156886. 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, as well as 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. replay of the call, on Cognex's website at http://www.cognex.com/investor/default.asp. About Cognex Corporation Cognex Corporation designs, develops, manufactures, and markets machine vision systems, or computers that can "see." Cognex is the world's leader in the machine vision industry, having shipped more than 250,000 machine vision systems, representing over $1.8 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 that are used for automating the manufacture of a wide range of discrete 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 that are used for inspecting the surfaces of products manufactured in a continuous fashion, such as metals, papers and plastics. In addition to its corporate headquarters in Natick, Massachusetts, Cognex 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 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 and its attachments, which do not relate solely to historical matters, are forward-looking statements. You can identify these forward-looking statements 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 trends and the company's financial outlook, involve risks and uncertainties that could cause actual results to differ materially from those projected. Such risks and uncertainties include: (1) global 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 significant curtailment Curtailment The act of contracting or reducing operations of a company in the hope of bringing it financial or operational stability. This management technique is often used when a company has grown too fast and is unable to effectively manage its operations. of purchases by, any one or more principal customers; (6) the reliance upon certain sole source suppliers to manufacture and deliver critical components for the company's products; (7) challenges in integrating acquisitions and achieving anticipated benefits; and (8) 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 ended December December: see month. 31, 2004. You should not place undue reliance upon any such forward-looking statements, which speak only as of the date made. The company disclaims any obligation to update forward-looking statements after the date of such statements.
Exhibit 1
COGNEX CORPORATION
Statements of Operations - Including DVT From May 9, 2005
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
July 3, April 3, July 4, July 3, July 4,
2005 2005 2004 2005 2004
--------------------------------------------
(unaudited) (unaudited)
Revenue $54,603 $43,198 $54,467 97,801 102,636
Cost of revenue 16,065 13,790 15,905 29,855 30,694
-------- -------- -------- -------- --------
Gross margin 38,538 29,408 38,562 67,946 71,942
Percentage of revenue 71% 68% 71% 69% 70%
Research, development, and
engineering expenses 7,185 6,315 6,655 13,500 13,553
Percentage of revenue 13% 15% 12% 14% 13%
Selling, general, and
administrative expenses 21,494 17,508 17,568 39,002 33,882
Percentage of revenue 39% 41% 32% 40% 33%
-------- -------- -------- -------- --------
Operating income 9,859 5,585 14,339 15,444 24,507
Percentage of revenue 18% 13% 26% 16% 24%
Foreign currency gain
(loss) (291) 99 (50) (192) 575
Investment and other
income 973 1,470 1,031 2,443 2,305
-------- -------- -------- -------- --------
Income before taxes 10,541 7,154 15,320 17,695 27,387
Income tax provision 2,741 1,860 4,442 4,601 7,942
-------- -------- -------- -------- --------
Net income $7,800 $5,294 $10,878 $13,094 $19,445
Percentage of revenue 14% 12% 20% 13% 19%
======== ======== ======== ======== ========
Net income per diluted
common and common
equivalent share $0.17 $0.11 $0.23 $0.28 $0.41
======== ======== ======== ======== ========
Diluted weighted-average
common and common
equivalent shares
outstanding 47,141 47,181 47,241 47,269 47,317
======== ======== ======== ======== ========
Cash dividends per common
share $0.08 $0.08 $0.06 0.16 $0.12
======== ======== ======== ======== ========
Exhibit 2
COGNEX CORPORATION
Statements of Operations - Excluding DVT
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
July 3, April 3, July 4, July 3, July 4,
2005 2005 2004 2005 2004
--------------------------------------------
(unaudited) (unaudited)
Revenue $49,142 $43,198 $54,467 92,340 102,636
Cost of revenue 14,896 13,790 15,905 28,686 30,694
-------- -------- -------- -------- --------
Gross margin 34,246 29,408 38,562 63,654 71,942
Percentage of revenue 70% 68% 71% 69% 70%
Research, development, and
engineering expenses 6,564 6,315 6,655 12,879 13,553
Percentage of revenue 13% 15% 12% 14% 13%
Selling, general, and
administrative expenses 18,578 17,508 17,568 36,086 33,882
Percentage of revenue 38% 41% 32% 39% 33%
-------- -------- -------- -------- --------
Operating income 9,104 5,585 14,339 14,689 24,507
Percentage of revenue 19% 13% 26% 16% 24%
Foreign currency gain
(loss) (291) 99 (50) (192) 575
Investment and other
income 967 1,470 1,031 2,437 2,305
-------- -------- -------- -------- --------
Income before taxes 9,780 7,154 15,320 16,934 27,387
Income tax provision 2,456 1,860 4,442 4,316 7,942
-------- -------- -------- -------- --------
Net income $7,324 $5,294 $10,878 $12,618 $19,445
Percentage of revenue 15% 12% 20% 14% 19%
======== ======== ======== ======== ========
Net income per diluted
common and common
equivalent share $0.16 $0.11 $0.23 $0.27 $0.41
======== ======== ======== ======== ========
Diluted weighted-average
common and common
equivalent shares
outstanding 47,141 47,181 47,241 47,269 47,317
======== ======== ======== ======== ========
Cash dividends per common
share $0.08 $0.08 $0.06 0.16 $0.12
======== ======== ======== ======== ========
Exhibit 3
COGNEX CORPORATION
Statements of Operations Reconciliation -
Including DVT From May 9, 2005
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
July 3, 2005 July 3, 2005
------------------------- ---------------------------
Cognex Cognex
Excluding DVT Consol- Excluding DVT Consol-
DVT idated DVT idated
------------------------- ---------------------------
(unaudited) (unaudited)
Revenue $49,142 $5,461 $54,603 92,340 5,461 97,801
Cost of revenue 14,896 1,169 16,065 28,686 1,169 29,855
-------- ------- -------- --------- ------ ----------
Gross margin 34,246 4,292 38,538 63,654 4,292 67,946
Percentage
of revenue 70% 79% 71% 69% 79% 69%
Research,
development, and
engineering
expenses 6,564 621 7,185 12,879 621 13,500
Percentage
of revenue 13% 11% 13% 14% 11% 14%
Selling, general,
and
administrative
expenses 18,578 2,916 21,494 36,086 2,916 39,002
Percentage
of revenue 38% 53% 39% 39% 53% 40%
-------- ------- -------- --------- ------ ----------
Operating income 9,104 755 9,859 14,689 755 15,444
Percentage
of revenue 19% 14% 18% 16% 14% 16%
Foreign currency
gain (loss) (291) - (291) (192) - (192)
Investment and
other income 967 6 973 2,437 6 2,443
-------- ------- -------- --------- ------ ----------
Income before
taxes 9,780 761 10,541 16,934 761 17,695
Income tax
provision 2,456 285 2,741 4,316 285 4,601
-------- ------- -------- --------- ------ ----------
Net income $7,324 $476 $7,800 $12,618 $476 $13,094
Percentage
of revenue 15% 9% 14% 14% 9% 13%
======== ======= ======== ========= ====== ==========
Net income per
diluted common
and common
equivalent
share $0.16 $0.17 $0.27 $0.28
======== ======== ========= ==========
Diluted weighted
-average common
and common
equivalent
shares
outstanding 47,141 47,141 47,269 47,269
======== ======== ========= ==========
Cash dividends
per common share $0.08 $0.08 0.16 0.16
======== ======== ========= ==========
Exhibit 4
COGNEX CORPORATION
Balance Sheets - Including DVT at July 3, 2005
(In thousands)
July 3, December 31,
2005 2004
------------ --------------
(unaudited)
Assets
Cash and investments $285,490 $391,076
Accounts receivable 36,283 33,816
Inventories 18,057 20,091
Property, plant, and equipment 24,216 23,995
Other assets 168,064 64,330
------------ --------------
Total assets $532,110 $533,308
============ ==============
Liabilities and Stockholders' Equity
Current liabilities $58,967 $70,501
Stockholders' equity 473,143 462,807
------------ --------------
Total liabilities and stockholders' equity $532,110 $533,308
============ ==============
Exhibit 5
COGNEX CORPORATION
Additional Information Schedule - Including DVT From May 9, 2005
(Dollars in thousands)
Three Months Ended Six Months Ended
July 3, April 3, July 4, July 3, July 4,
2005 2005 2004 2005 2004
-------------------------- ------------------
(unaudited) (unaudited)
Revenue $54,603 $43,198 $54,467 $97,801 $102,636
======== ======== ======== ======== =========
Revenue by division:
Modular Vision Systems
Division 83% 84% 85% 83% 86%
Surface Inspection
Systems Division 17% 16% 15% 17% 14%
-------- -------- -------- -------- ---------
Total 100% 100% 100% 100% 100%
======== ======== ======== ======== =========
Revenue by geography:
United States 37% 37% 31% 37% 30%
Europe 31% 29% 22% 30% 24%
Japan 26% 28% 41% 27% 41%
Other 6% 6% 6% 6% 5%
-------- -------- -------- -------- ---------
Total 100% 100% 100% 100% 100%
======== ======== ======== ======== =========
Revenue by market:
Discrete factory
automation 60% 57% 41% 57% 41%
Semiconductor and
electronics capital
equipment 23% 27% 44% 26% 45%
Surface inspection 17% 16% 15% 17% 14%
-------- -------- -------- -------- ---------
Total 100% 100% 100% 100% 100%
======== ======== ======== ======== =========
Revenue by product:
Vision sensors 41% 37% 27% 39% 28%
PC-based vision systems 35% 39% 50% 37% 50%
Surface inspection
vision systems 13% 10% 11% 12% 10%
Service 11% 14% 12% 12% 12%
-------- -------- -------- -------- ---------
Total 100% 100% 100% 100% 100%
======== ======== ======== ======== =========
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