Cognex Corporation Reports First Quarter Results for 2004.Business Editors/High-Tech Writers 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)--April 20, 2004 Machine Vision Company Announces Dramatic Increases in Bookings, Revenues and Profits Overview of the Quarter 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 first quarter ended April 4, 2004 of $48,169,000, and net income of $8,567,000, or $0.18 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 results compare very favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. with both the comparable quarter in 2003 and with the prior quarter, as shown in the table below:
Earnings
Time Period Revenue Net Income per Diluted
Share
Current quarter: Q1-04 $48,169,000 $8,567,000 $0.18
Prior year's quarter: Q1-03 $32,888,000 $1,793,000 $0.04
Increase from Q1-03 to Q1-04 46% 378% 345%
Prior quarter: Q4-03 $41,878,000 $5,714,000 $0.13
Increase from Q4-03 to Q1-04 15% 50% 44%
"I am overjoyed o·ver·joy tr.v. o·ver·joyed, o·ver·joy·ing, o·ver·joys To fill with joy; delight. o to report significant increases in revenue and profits for the first quarter of 2004, 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 ," 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 Chief Executive Officer and Chairman. "These increases were driven primarily by strong demand from our customers in the semiconductor industry, whose businesses have recovered from the three year slump Slump A temporary fall in performance, often describing consistently falling security prices for several weeks or months. . In addition, despite the turnaround Turnaround A situation where a company that has had poor performance for an extended period of time experiences a positive reversal. Notes: A speculator may profit from a turnaround if he or she accurately anticipates the improvement of a poorly performing company. , we continued to keep a tight rein on spending and invested only in those areas that drive revenue, such as in sales and marketing. Bottom line...our first quarter results have given us a great start to 2004, and we believe that 2004 will be an excellent year for Cognex Cog·nex A trademark for the drug tacrine hydrochloride. tacrine hydrochloride Cognex Pharmacologic class: Cholinergic (cholinesterase inhibitor) Therapeutic class: ." Details of the Quarter Statement of Operations See Income statement. Highlights - First Quarter of 2004 -- Revenue for the first quarter of 2004 increased 46% over the comparable quarter in 2003 and 15% on a sequential One after the other in some consecutive order such as by name or number. basis. The increase, both year-on-year and sequentially, is due to higher sales to Original Equipment Manufacturer (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 in the semiconductor industry. -- Gross margin was 69% in the first quarter of 2004 compared to 64% in the comparable quarter in 2003 and 68% in the prior quarter. Cost of revenue for the first quarter of 2004 as well as the first and fourth quarters of 2003 includes a benefit of $262,000, $309,000 and $116,000, 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 69% in the first quarter of 2004, 63% in the first quarter of 2003, and 68% in the prior quarter. The increase in gross margin, both year-on-year and sequentially, is due to higher sales volume as well as product mix. -- Research, Development & Engineering (R, D & E) spending in the first quarter of 2004 increased 15% from the comparable quarter in 2003 and 11% from the prior quarter. The increase in R, D & E spending, both year-on-year and sequentially, is due to higher employee-related expenses including a full quarter of spending for Gavitec's machine vision business, which was acquired on December December: see month. 1, 2003, and the accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. of anticipated company bonuses for 2004. -- Selling, General & Administrative (S, G & A) spending in the first quarter of 2004 increased 23% from the comparable quarter in 2003 and 10% on a sequential basis. The increase in S, G & A spending, both year-on-year and sequential, is due to higher employee-related costs, including higher commissions, 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, and the accrual of anticipated company bonuses for 2004, as well as the impact of foreign exchange rates on the company's international operations. -- Investment and other income was $1,274,000 in the first quarter of 2004 compared to $1,294,000 in the comparable quarter of 2003 and $1,396,000 in the prior quarter. The decrease in investment and other income, both year-on-year and sequentially, is due to lower yields on cash and investment balances. -- The foreign currency gain was $625,000 in the first quarter of 2004 as compared to a loss of $627,000 in the comparable quarter of 2003 and a loss of $749,000 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 balances that are reported in one currency and collected in another. -- The effective tax rate was 29% in the first quarter of 2004 as compared to 31% in both the comparable quarter of 2003 as well as in the prior quarter. The decrease in the effective tax rate is due to more of the company's profits being earned and taxed in lower tax jurisdictions in 2004 than in 2003. Balance Sheet Highlights - April 4, 2004 -- Cognex's financial position remains very strong at April 4, 2004, with nearly $335,000,000 in cash and investments and no debt. Cash and investments increased over $30,000,000 from the end of 2003. This increase is the net result of positive cash flow from operations and cash received from the exercise of employee stock options, less a dividend payment of approximately $2,700,000. -- 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 first quarter of 2004 was 48 days, compared to 56 days in the prior quarter, and is well within the company's targeted range. -- Inventories at April 4, 2004 decreased 8% from the end of 2003, as inventory turns improved in the first quarter to a rate equivalent to 3.8 times per year from 3.4 times per year in the fourth quarter of 2003. Business Trends and Financial Outlook -- In the first quarter of 2004, bookings increased by nearly 50% on a sequential 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 was above 1.0. This increase was primarily due to higher orders from customers in the semiconductor and electronics industries. Cognex expects revenue for the second quarter of 2004 to be between $53 million and $56 million. At that revenue level, gross margin is expected to be in the high 60% range. For the second 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 on a sequential basis in the range of 5% to 10% as the company increases its investment in sales and marketing to help drive revenue. The effective tax rate for the second quarter of 2004 is expected to be 29%. And, as a result of the above, earnings for the second quarter are expected to be between $0.20 and $0.24 per diluted share. Analyst Conference Call and Simultaneous Webcast Cognex Corporation will host a conference call to discuss its results for the first quarter of 2004, as well as its financial outlook, today at 5:30 p.m. eastern time. The telephone number for the live call is 800-770-5589 (or 973-935-2039 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 tonight at approximately 7:30 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 United States) and the access code is 4677951. 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 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 200,000 vision systems, representing over $1.5 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 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 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; and (7) 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 31, 2003. 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.
COGNEX CORPORATION
Statements of Operations
(In thousands, except per share amounts)
Three Months Ended
April 4, December 31, March 30,
2004 2003 2003
(unaudited)
Revenue $48,169 $41,878 $32,888
Cost of revenue 14,789 13,234 11,716
Gross margin 33,380 28,644 21,172
Percentage of revenue 69% 68% 64%
Research, development, and
engineering expenses 6,898 6,227 5,983
Percentage of revenue 14% 15% 18%
Selling, general, and
administrative expenses 16,314 14,770 13,244
Percentage of revenue 34% 35% 40%
Operating income 10,168 7,647 1,945
Percentage of revenue 21% 18% 6%
Foreign currency gain (loss) 625 (749) (627)
Investment and other income 1,274 1,396 1,294
Income before taxes 12,067 8,294 2,612
Income tax provision 3,500 2,580 819
Net income $ 8,567 $ 5,714 $ 1,793
Percentage of revenue 18% 14% 5%
Net income per diluted common
and common equivalent share $ 0.18 $ 0.13 $ 0.04
Diluted weighted-average common
and common equivalent shares
outstanding 46,752 44,931 43,557
Cash dividends per common share $ 0.06 $ 0.06 $ -
COGNEX CORPORATION
Balance Sheets
(In thousands)
April 4, December 31,
2004 2003
Assets (unaudited)
Cash and investments $334,659 $303,502
Accounts receivable 26,456 26,697
Inventories 14,221 15,519
Property, plant, and equipment 24,500 24,980
Other assets 63,885 61,835
Total assets $463,721 $432,533
Liabilities and Stockholders' Equity
Current liabilities $46,957 $47,287
Other liabilities 243 252
Stockholders' equity 416,521 384,994
Total liabilities and stockholders'
equity $463,721 $432,533
COGNEX CORPORATION
Additional Information Schedule
(Dollars in thousands)
Three Months Ended
April 4, December 31, March 30,
2004 2003 2003
(unaudited)
Revenue $48,169 $41,878 $32,888
Revenue by division:
Modular Vision Systems Division 88% 80% 81%
Surface Inspection Systems Division 12% 20% 19%
Total 100% 100% 100%
Revenue by customer type:
Original equipment manufacturer 51% 38% 38%
End user 49% 62% 62%
Total 100% 100% 100%
Revenue by geography:
Japan 41% 30% 34%
United States 28% 36% 31%
Europe 26% 27% 24%
Other 5% 7% 11%
Total 100% 100% 100%
Revenue by industry:
Semiconductor 40% 26% 23%
Electronics 21% 22% 24%
Surface inspection 12% 20% 19%
Automotive 8% 10% 12%
Consumer products 2% 2% 2%
Medical 2% 2% 2%
Pharmaceutical 1% 2% 1%
Packaging 1% 1% 3%
Other 13% 15% 14%
Total 100% 100% 100%
Revenue by product:
PC-based vision systems 51% 41% 46%
Vision sensors 28% 32% 26%
Surface inspection vision systems 9% 16% 14%
Service 12% 11% 14%
Total 100% 100% 100%
Number of new customer accounts:
End user 191 212 210
Original equipment manufacturer 37 15 36
Total 228 227 246
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