-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ug7tJOaJFzDPpYe70akyZze66U4t4/V0Mq1AvhbfYmcsPy8HzBfBSe8jB3PEidpr TIAnNtHyu+BlLMNnq2vzhg== 0000950135-00-002750.txt : 20000515 0000950135-00-002750.hdr.sgml : 20000515 ACCESSION NUMBER: 0000950135-00-002750 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000402 FILED AS OF DATE: 20000512 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COGNEX CORP CENTRAL INDEX KEY: 0000851205 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL INSTRUMENTS FOR MEASUREMENT, DISPLAY, AND CONTROL [3823] IRS NUMBER: 042713778 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-17869 FILM NUMBER: 627713 BUSINESS ADDRESS: STREET 1: ONE VISION DR CITY: NATICK STATE: MA ZIP: 01760 BUSINESS PHONE: 5086503000 MAIL ADDRESS: STREET 1: ONE VISION DRIVE CITY: NATICK STATE: MA ZIP: 01760 10-Q 1 COGNEX CORPORATION 1 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended April 2, 2000 or [ ] Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from _____________ to _______________ COMMISSION FILE NUMBER 0-17869 COGNEX CORPORATION ----------------------------------------------------- (Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-2713778 - ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.)
ONE VISION DRIVE NATICK, MASSACHUSETTS 01760-2059 (508) 650-3000 ------------------------------------------- (Address, including zip code, and telephone number, including area code, of principal executive offices) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] As of April 30, 2000, there were 42,962,851 shares of Common Stock, $.002 par value, of the registrant outstanding. Total number of pages: 11 Exhibit index is located on page: 10 ================================================================================ 2 INDEX PART I FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Statements of Income for the three months ended April 2, 2000 and April 4, 1999 Consolidated Balance Sheets at April 2, 2000 and December 31, 1999 Consolidated Statement of Stockholders' Equity for the three months ended April 2, 2000 Consolidated Statements of Cash Flows for the three months ended April 2, 2000 and April 4, 1999 Notes to Consolidated Financial Statements Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations PART II OTHER INFORMATION Item 1. Legal Proceedings Item 2. Changes in Securities Item 3. Defaults Upon Senior Securities Item 4. Submission of Matters to a Vote of Security Holders Item 5. Other Information Item 6. Exhibits and Reports on Form 8-K Signatures 3 PART I: FINANCIAL INFORMATION ITEM 1: FINANCIAL STATEMENTS COGNEX CORPORATION CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts)
THREE MONTHS ENDED APRIL 2, APRIL 4, 2000 1999 -------- -------- (UNAUDITED) Revenue...................................................................... $54,495 $27,485 Cost of revenue.............................................................. 13,918 8,728 ------- ------- Gross profit................................................................. 40,577 18,757 Research, development, and engineering expenses.............................. 7,312 6,534 Selling, general, and administrative expenses................................ 12,639 9,768 ------- ------- Operating income............................................................. 20,626 2,455 Investment income............................................................ 1,821 1,578 Other income................................................................. 218 161 ------- ------- Income before provision for income taxes..................................... 22,665 4,194 Provision for income taxes................................................... 7,253 1,090 ------- ------- Net income................................................................... $15,412 $ 3,104 ======= ======= Net income per common and common-equivalent share: Basic.................................................................... $ .36 $ .08 ======= ======= Diluted.................................................................. $ .34 $ .07 ======= ======= Weighted-average common and common-equivalent shares outstanding: Basic.................................................................... 42,409 40,307 ======= ======= Diluted.................................................................. 45,645 43,371 ======= =======
The accompanying notes are an integral part of these consolidated financial statements. 1 4 COGNEX CORPORATION CONSOLIDATED BALANCE SHEETS (Dollars in thousands)
APRIL 2, DECEMBER 31, 2000 1999 ----------- ------------ (UNAUDITED) ASSETS Current assets: Cash and investments.................................................... $229,809 $216,947 Accounts receivable, less reserves of $2,569 and $2,836 in 2000 and 1999, respectively................................................ 32,217 28,742 Inventories............................................................. 12,526 10,872 Deferred income taxes................................................... 6,082 6,082 Prepaid expenses and other.............................................. 8,597 6,149 -------- -------- Total current assets................................................ 289,231 268,792 Property, plant, and equipment, net.......................................... 32,165 31,857 Deferred income taxes........................................................ 7,051 7,051 Other assets................................................................. 19,204 7,122 -------- -------- $347,651 $314,822 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable........................................................ $ 5,469 $ 4,237 Accrued expenses........................................................ 15,315 18,536 Accrued income taxes.................................................... 8,260 7,470 Customer deposits....................................................... 3,115 2,714 Deferred revenue........................................................ 4,947 4,508 -------- -------- Total current liabilities........................................... 37,106 37,465 -------- -------- Other liabilities............................................................ 719 733 Stockholders' equity: Common stock, $.002 par value - Authorized: 120,000,000 shares, issued: 45,236,454 and 44,220,434 shares in 2000 and 1999, respectively...................... 90 88 Additional paid-in capital.............................................. 140,172 122,522 Treasury stock, at cost, 2,383,106 and 2,381,032 shares in 2000 and 1999, respectively................................................ (43,633) (43,550) Retained earnings....................................................... 212,428 197,016 Accumulated other comprehensive income.................................. 769 548 -------- -------- Total stockholders' equity.......................................... 309,826 276,624 -------- -------- $347,651 $314,822 ======== ========
The accompanying notes are an integral part of these consolidated financial statements. 2 5 COGNEX CORPORATION CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DOLLARS IN THOUSANDS)
ACCUMULATED COMMON STOCK ADDITIONAL TREASURY STOCK OTHER TOTAL ----------------- PAID-IN ------------------- RETAINED COMPREHENSIVE COMPREHENSIVE STOCKHOLDERS' SHARES PAR VALUE CAPITAL SHARES COST EARNINGS INCOME INCOME EQUITY --------- --------- ---------- ------------------- -------- ------------- ------------- ------------- Balance at December 31, 1999.................. 44,220,434 $ 88 $122,522 2,381,032 $(43,550) $197,016 $548 $276,624 Issuance of common stock under stock option plans.. 1,016,020 2 11,150 11,152 Tax benefit from exercise of stock options.......... 6,500 6,500 Common stock received for payment of stock option exercises................. 2,074 (83) (83) Comprehensive income: Net income............... 15,412 $15,412 15,412 Unrealized gain on investment, net of tax.. 310 310 310 Foreign currency translation adjustment.. (89) (89) (89) ------- Comprehensive income..... $15,633 ---------- ---- -------- ---------- -------- -------- ---- ======= -------- Balance at April 2, 2000 (unaudited)................ 45,236,454 $ 90 $140,172 2,383,106 $(43,633) $212,428 $769 $309,826 ========== ==== ======== ========== ======== ======== ==== ========
The accompanying notes are an integral part of these consolidated financial statements. 3 6 COGNEX CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands)
THREE MONTHS ENDED APRIL 2, APRIL 4, 2000 1999 -------- -------- (UNAUDITED) Cash flows from operating activities: Net income.............................................................. $ 15,412 $ 3,104 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization......................................... 2,413 2,256 Tax benefit from exercise of stock options............................ 6,500 300 Change in current assets and current liabilities...................... (8,272) 8,115 Other................................................................. (813) (191) -------- -------- Net cash provided by operating activities............................... 15,240 13,584 -------- -------- Cash flows from investing activities: Purchase of investments................................................. (33,512) (28,412) Maturity of investments................................................. 24,206 19,409 Purchase of property, plant, and equipment.............................. (1,633) (717) Cash paid for business and technology acquisitions...................... (11,263) (789) -------- -------- Net cash used in investing activities................................... (22,202) (10,509) -------- -------- Cash flows from financing activities: Issuance of common stock under stock option plans....................... 11,069 2,047 -------- -------- Net cash provided by financing activities............................... 11,069 2,047 -------- -------- Effect of exchange rate changes on cash...................................... (26) 351 -------- -------- Net increase in cash and cash equivalents.................................... 4,081 5,473 Cash and cash equivalents at beginning of period............................. 48,665 27,807 -------- -------- Cash and cash equivalents at end of period................................... 52,746 33,280 Investments.................................................................. 177,063 139,251 -------- -------- Cash and investments......................................................... $229,809 $172,531 ======== ========
The accompanying notes are an integral part of these consolidated financial statements. 4 7 COGNEX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION As permitted by the rules of the Securities and Exchange Commission applicable to Quarterly Reports on Form 10-Q, these notes are condensed and do not contain all disclosures required by generally accepted accounting principles. Reference should be made to the consolidated financial statements and related notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 1999. In the opinion of the management of Cognex Corporation, the accompanying consolidated unaudited financial statements contain all adjustments (consisting of only normal, recurring adjustments) necessary to present fairly the Company's financial position at April 2, 2000, and the results of operations and changes in stockholders' equity and cash flows for the three months then ended. The results disclosed in the Consolidated Statements of Income for the three months ended April 2, 2000 are not necessarily indicative of the results to be expected for the full year. Certain amounts reported in prior periods have been reclassified to be consistent with the current period's presentation. INVENTORIES Inventories consist of the following:
(In thousands) April 2, December 31, 2000 1999 -------- ------------ Raw materials.................................. $ 6,054 $ 5,451 Work-in-process................................ 2,662 1,987 Finished goods................................. 3,810 3,434 ------- ------- $12,526 $10,872 ======= =======
5 8 COGNEX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NET INCOME PER SHARE Net income per share is calculated as follows:
(In thousands) THREE MONTHS ENDED APRIL 2, APRIL 4, 2000 1999 -------- -------- Net income................................................................. $ 15,412 $ 3,104 ======== ======= BASIC: Weighted-average common shares outstanding............................. 42,409 40,307 ======== ======= Net income per common share............................................ $ .36 $ .08 ======== ======= DILUTED: Weighted-average common shares outstanding............................. 42,409 40,307 Effect of dilutive securities: Stock options....................................................... 3,236 3,064 -------- ------- Weighted-average common and common-equivalent shares outstanding....... 45,645 43,371 ======== ======= Net income per common and common-equivalent share...................... $ .34 $ .07 ======== =======
ACQUISITION OF KOMATSU LTD. MACHINE VISION BUSINESS On March 31, 2000, the Company acquired selected assets of the machine vision business of Komatsu Ltd. for $11,200,000 in cash, with the potential for additional cash payments in 2002 totaling up to $8,000,000 depending upon certain performance criteria. The purchase price was allocated as follows: $297,000 to tangible equipment, to be depreciated in accordance with the Company's depreciation policy; $400,000 to workforce, to be amortized over two years; $2,462,000 to complete technology, to be amortized over five years; and $8,041,000 to goodwill, also to be amortized over five years. The contingent consideration will be recorded as purchase price when paid and will be allocated to goodwill to be amortized over the remaining period of expected benefit. The acquisition was accounted for under the purchase method of accounting. As a result of the proximity of the acquisition date to the end of the quarter, the results of operations of the acquired business were not included in the first quarter. The results of operations of the acquired business were not material compared to the Company's consolidated results of operations, and therefore, pro forma results are not presented. 6 9 ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Revenue for the first quarter of 2000 was $54,495,000, compared to $27,485,000 for the first quarter of 1999. The increase of $27,010,000, or 98%, is due to a higher volume of machine vision systems sold to both Original Equipment Manufacturers (OEM) and end-user customers. The Company's results in the first quarter of 1999 were negatively impacted by a worldwide slowdown in capital spending by manufacturers in the semiconductor and electronics industries. Sales to OEM customers, most of whom make capital equipment used by manufacturers in these industries, increased $19,633,000, or 141%, over the first quarter of 1999. Sales to end-user customers increased over the prior year by $7,377,000, or 55%, as a result of increased volume from customers in general manufacturing and surface inspection industries. Geographically, the most significant increase in revenue over the first quarter of 1999 came from Japan, where most of the Company's OEM customers are located. Sales to customers located in Japan increased $13,880,000, or 144%, over the prior year. Sales to customers located in the United States and Europe increased $8,883,000, or 94%, and $2,935,000, or 37%, respectively, over the first quarter of 1999. Based on strong order levels in both the OEM and end-user markets experienced during the first quarter of 2000, the Company anticipates sequential revenue growth to continue for the remainder of 2000. The gross margin for the first quarter of 2000 was 74%, compared to 68% for the first quarter in 1999. The increase in the gross margin is due primarily to manufacturing efficiencies that resulted from a significant increase in product sales without a corresponding increase in manufacturing overhead. Research, development, and engineering expenses for the first quarter of 2000 were $7,312,000, compared to $6,534,000 for the first quarter of 1999. The increase of $778,000, or 12%, is due primarily to higher personnel-related costs to support the Company's continued investment in the development of new and existing products. Expenses as a percentage of revenue declined from 24% in 1999 to 13% in 2000 as a result of revenue increasing at a faster rate than spending. The Company anticipates that aggregate expenses will continue to increase in 2000 due to planned continuing investment in product development. Selling, general, and administrative expenses for the first quarter of 2000 were $12,639,000, compared to $9,768,000 for the first quarter in 1999. The increase of $2,871,000, or 29%, is due primarily to higher personnel-related costs to support the Company's expanding worldwide operations. Expenses as a percentage of revenue declined from 36% in 1999 to 23% in 2000 as a result of revenue increasing at a faster rate than spending. The Company anticipates that aggregate expenses will continue to increase in 2000 due to additional resources required to support the anticipated higher level of demand and to further penetrate the end-user market. Investment income for the first quarter of 2000 was $1,821,000, compared to $1,578,000 for the first quarter in 1999. The increase of $243,000, or 15%, is due primarily to a higher average invested cash balance in 2000. The Company's effective tax rate for the first quarter of 2000 was 32%, compared to 26% for the first quarter of 1999. The increase in the effective tax rate is due primarily to the higher operating income in 2000 and the diminishing effect of tax-free investment income. 7 10 LIQUIDITY AND CAPITAL RESOURCES The Company's cash requirements during the first quarter of 2000 were met through cash generated from operations. Cash and investments increased $12,862,000 from December 31, 1999 primarily as a result of $15,240,000 of cash generated from operations and $11,069,000 of proceeds from the issuance of common stock under stock option plans, offset by $11,200,000 of cash paid for the machine vision business of Komatsu Ltd. Capital expenditures for the first quarter of 2000 totaled $1,633,000 and consisted primarily of expenditures for computer hardware and software, as well as expenditures for furniture and leasehold improvements to expand the company's facilities in Japan. The Company believes that its existing cash and investments balance, together with cash generated from operations, will be sufficient to meet the Company's planned working capital and capital expenditure requirements through 2000, including existing and potential future business acquisitions. In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin (SAB) No. 101, "Revenue Recognition in Financial Statements." SAB No. 101 sets forth guidelines for accounting and disclosures related to revenue recognition. SAB No. 101 does not require registrants that have not applied this accounting to restate prior financial statements, provided they report a change in accounting principle in accordance with Accounting Principles Board Opinion No. 20, "Accounting Changes," no later than the second quarter of the fiscal year beginning after December 15, 1999. The Company does not expect the application of SAB No. 101 to have a material impact on its results of operations or financial position. In March 2000, the Financial Accounting Standards Board issued Interpretation No. 44, "Accounting for Certain Transactions Involving Stock Compensation - an interpretation of Accounting Principles Board (APB) Opinion No. 25" (FIN 44). FIN 44 clarifies the application of APB Opinion No. 25 including: the definition of an employee for purposes of applying APB Opinion No. 25, the criteria for determining whether a plan qualifies as a noncompensatory plan, the accounting consequence of various modifications to the terms of previously fixed stock options or awards, and the accounting for an exchange of stock compensation awards in a business combination. FIN 44 is effective July 1, 2000, but certain conclusions in FIN 44 cover specific events that occurred after either December 15, 1998 or January 12, 2000. The Company does not expect the application of FIN 44 to have a material impact on its results of operations or financial position. 8 11 FORWARD-LOOKING STATEMENTS Certain statements made in this report, as well as oral statements made by the Company from time to time, which are prefaced with words such as "expects," "anticipates," "believes," "projects," "intends," "plans," and similar words and other statements of similar sense, are forward-looking statements. These statements are based on the Company's current expectations and estimates as to prospective events and circumstances, 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, like any other forward-looking statements, involve risks and uncertainties that could cause actual results to differ materially from those projected or anticipated. Such risks and uncertainties include (1) the loss of, or a significant curtailment of purchases by, any one or more principal customers; (2) the cyclicality of the semiconductor and electronics industries; (3) the Company's continued ability to achieve significant international revenue; (4) capital spending trends by manufacturing companies; (5) inability to protect the Company's proprietary technology and intellectual property; (6) inability to attract or retain skilled employees; (7) technological obsolescence of current products and the inability to develop new products; (8) inability to respond to competitive technology and pricing pressures; and (9) reliance upon certain sole source suppliers to manufacture or deliver critical components of the Company's products. The foregoing list should not be construed as exhaustive and the Company disclaims any obligation to subsequently 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 registration statements filed with the Securities and Exchange Commission. 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. 9 12 PART II: OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None ITEM 2. CHANGES IN SECURITIES None ITEM 3. DEFAULTS UPON SENIOR SECURITIES None ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Exhibit 27 - Financial Data Schedule (electronic filing only) (b) Reports on Form 8-K None 10 13 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. DATE: May 12, 2000 COGNEX CORPORATION /s/ Richard A. Morin -------------------------------------------- Richard A. Morin Vice President of Finance, Chief Financial Officer, and Treasurer (principal financial and accounting officer) 11 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS LEGEND CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) THE CONSOLIDATED FINANCIAL STATEMENTS OF COGNEX CORPORATION FOR THE QUARTER ENDED APRIL 2, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (B) CONSOLIDATED FINANCIAL STATEMENTS 3-MOS DEC-31-2000 DEC-31-1999 APR-02-2000 52,746,000 177,063,000 34,786,000 2,569,000 12,526,000 289,231,000 58,932,000 26,767,000 347,651,000 37,106,000 0 0 0 90,000 309,736,000 347,651,000 54,495,000 54,495,000 13,918,000 13,918,000 0 0 0 22,665,000 7,253,000 15,412,000 0 0 0 15,412,000 0.36 0.34
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