-----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, CTRUGAFJLW1pt61cnT2CmWI2AlM25Itx5aU+2C5UhbbILyATrHdAhQ3zkm3ZLVDs wMO0/dqUDtJHWI7zZD9Ieg== 0000950135-99-005164.txt : 19991115 0000950135-99-005164.hdr.sgml : 19991115 ACCESSION NUMBER: 0000950135-99-005164 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991003 FILED AS OF DATE: 19991112 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: 99747857 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 October 3, 1999 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 October 31, 1999, there were 41,436,650 shares of Common Stock, $.002 par value, of the registrant outstanding. Total number of pages: 12 Exhibit index is located on page 11 ================================================================================ 2 INDEX PART I FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Statements of Income for the three and nine months ended October 3, 1999 and October 4, 1998 Consolidated Balance Sheets at October 3, 1999 and December 31, 1998 Consolidated Statement of Stockholders' Equity for the nine months ended October 3, 1999 Consolidated Statements of Cash Flows for the nine months ended October 3, 1999 and October 4, 1998 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 NINE MONTHS ENDED OCTOBER 3, OCTOBER 4, OCTOBER 3, OCTOBER 4, 1999 1998 1999 1998 ---------- ---------- ---------- ---------- (UNAUDITED) (UNAUDITED) Revenue .............................................................. $41,046 $ 24,659 $103,802 $96,751 Cost of revenue ...................................................... 11,949 8,277 31,619 28,678 ------- -------- -------- ------- Gross margin ......................................................... 29,097 16,382 72,183 68,073 Research, development, and engineering expenses ...................... 7,584 6,440 20,718 18,695 Selling, general, and administrative expenses ........................ 10,934 8,937 31,007 28,199 Non-recurring charges ................................................ 2,100 400 2,100 ------- -------- -------- ------- Income (loss) from operations ........................................ 10,579 (1,095) 20,058 19,079 Investment income .................................................... 1,667 1,598 4,745 5,117 Other income ......................................................... 206 148 557 484 ------- -------- -------- ------- Income before provision for income taxes ............................. 12,452 651 25,360 24,680 Income tax provision (benefit) ....................................... 3,486 (300) 7,101 6,670 ------- -------- -------- ------- Net income ........................................................... $ 8,966 $ 951 $ 18,259 $18,010 ======= ======== ======== ======= Net income per share: Basic ............................................................ $ .22 $ .02 $ .45 $ .44 ======= ======== ======== ======= Diluted .......................................................... $ 20 $ .02 $ .42 $ .42 ======= ======== ======== ======= Weighted-average common and common equivalent shares outstanding: Basic ............................................................ 41,146 40,559 40,727 41,269 ======= ======== ======== ======= Diluted .......................................................... 44,348 42,916 43,868 43,052 ======= ======== ======== =======
The accompanying notes are an integral part of these consolidated financial statements. 1 4 COGNEX CORPORATION CONSOLIDATED BALANCE SHEETS (Dollars in thousands)
OCTOBER 3, DECEMBER 31, 1999 1998 ---------- ------------ (UNAUDITED) ASSETS Current assets: Cash and investments ............................................... $ 200,662 $ 158,458 Accounts receivable, less reserves of $2,526 and $2,583 in 1999 and 1998, respectively .............................................. 23,542 20,987 Revenue in excess of billings ...................................... 1,673 4,945 Inventories ........................................................ 11,377 10,812 Deferred income taxes .............................................. 3,936 3,936 Prepaid expenses and other ......................................... 7,799 8,141 --------- --------- Total current assets ........................................... 248,989 207,279 Property, plant, and equipment, net ..................................... 32,264 34,255 Deferred income taxes ................................................... 2,327 2,237 Other assets ............................................................ 3,668 4,157 --------- --------- $ 287,248 $ 247,928 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable ................................................... $ 5,328 $ 2,488 Accrued expenses ................................................... 16,219 11,653 Accrued income taxes ............................................... 3,170 916 Customer deposits .................................................. 3,893 4,894 Deferred revenue ................................................... 3,903 2,965 --------- --------- Total current liabilities ...................................... 32,513 22,916 --------- --------- Other liabilities ....................................................... 1,833 2,137 Stockholders' equity: Common stock, $.002 par value - Authorized: 120,000,000 shares, issued: 43,729,046 and 42,453,980 shares in 1999 and 1998, respectively ........................... 87 85 Additional paid-in capital ......................................... 110,668 97,531 Treasury stock, at cost, 2,380,006 and 2,307,140 shares in 1999 and 1998, respectively .............................................. (43,519) (41,353) Retained earnings .................................................. 184,830 166,571 Accumulated other comprehensive income ............................. 836 41 --------- --------- Total stockholders' equity ..................................... 252,902 222,875 --------- --------- $ 287,248 $ 247,928 ========= =========
The accompanying notes are an integral part of these consolidated financial statements. 2 5 COGNEX CORPORATION CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DOLLARS IN THOUSANDS)
COMMON STOCK ADDITIONAL TREASURY STOCK --------------------- PAID-IN -------------------- SHARES PAR VALUE CAPITAL SHARES COST ---------- ---------- ---------- --------- --------- Balance at December 31, 1998 42,453,980 $85 $ 97,531 2,307,140 $(41,353) Issuance of common stock under stock option and stock purchase plans 1,275,066 2 10,743 Tax benefit from exercise of stock options 2,394 Common stock received for payment 72,866 (2,166) of stock option exercises Comprehensive income: Net income Other comprehensive income: Unrealized gain on investment Translation adjustment Other comprehensive income Comprehensive income ---------- --- -------- --------- -------- Balance at October 3, 1999 (unaudited) 43,729,046 $87 $110,668 2,380,006 $(43,519) ========== === ======== ========= ======== ACCUMULATED OTHER TOTAL RETAINED COMPREHENSIVE COMPREHENSIVE STOCKHOLDERS' EARNINGS INCOME INCOME EQUITY -------- ------------- ------------- ------------- Balance at December 31, 1998 $166,571 $ 41 $222,875 Issuance of common stock under stock option and stock purchase plans 10,745 Tax benefit from exercise of stock options 2,394 Common stock received for payment (2,166) of stock option exercises Comprehensive income: Net income 18,259 $18,259 18,259 Other comprehensive income: Unrealized gain on investment 750 750 750 Translation adjustment 45 45 45 ------- Comprehensive income $19,054 -------- ---- ======= -------- Balance at October 3, 1999 (unaudited) $184,830 $836 $252,902 ======== ==== ========
The accompanying notes are an integral part of these consolidated financial statements. 3 6 COGNEX CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands)
NINE MONTHS ENDED OCTOBER 3, OCTOBER 4, 1999 1998 ---------- ---------- (UNAUDITED) Cash flows from operating activities: Net income .......................................................... $ 18,259 $ 18,010 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization ..................................... 6,996 6,599 Tax benefit from exercise of stock options ........................ 2,394 1,469 Charge for acquired in-process technology ......................... 2,100 Deferred income tax benefit ....................................... (90) (731) Change in other current assets and current liabilities ............ 10,757 (4,914) Other ............................................................. 514 77 --------- --------- Net cash provided by operating activities ........................... 38,830 22,610 --------- --------- Cash flows from investing activities: Purchase of investments ............................................. (79,542) (54,525) Maturity of investments ............................................. 45,021 63,075 Purchase of property, plant, and equipment .......................... (2,299) (6,403) Cash paid for technology acquisitions and equity investments ........ (1,624) (2,864) --------- --------- Net cash used in investing activities ............................... (38,444) (717) --------- --------- Cash flows from financing activities: Issuance of common stock under stock option and stock purchase plans 8,579 2,210 Repurchase of common stock .......................................... (38,253) --------- --------- Net cash provided by (used in) financing activities ................. 8,579 (36,043) --------- --------- Effect of exchange rate changes on cash .................................. (738) 302 --------- --------- Net increase (decrease) in cash and cash equivalents ..................... 8,227 (13,848) Cash and cash equivalents at beginning of period ......................... 27,807 38,198 --------- --------- Cash and cash equivalents at end of period ............................... 36,034 24,350 Investments .............................................................. 164,628 130,031 --------- --------- Cash and investments ..................................................... $ 200,662 $ 154,381 ========= =========
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, 1998. In the opinion of the management of Cognex Corporation, the accompanying consolidated unaudited financial statements contain all adjustments necessary to present fairly the Company's financial position at October 3, 1999, and the results of operations for the three and nine months ended October 3, 1999, and changes in stockholders' equity and cash flows for the periods presented. The results disclosed in the Consolidated Statements of Income for the three and nine months ended October 3, 1999 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) OCTOBER 3, DECEMBER 31, 1999 1998 ---------- ------------ (UNAUDITED) Raw materials .................................. $ 6,404 $ 6,195 Work-in-process ................................ 1,766 1,262 Finished goods ................................. 3,207 3,355 ------- ------- $11,377 $10,812 ======= =======
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 NINE MONTHS ENDED OCTOBER 3, OCTOBER 4, OCTOBER 3, OCTOBER 4, 1999 1998 1999 1998 ---------- ---------- ---------- ---------- (UNAUDITED) (UNAUDITED) Net income ............................................. $ 8,966 $ 951 $18,259 $18,010 ======= ======= ======= ======= Basic: - ------ Weighted-average common shares outstanding ......... 41,146 40,559 40,727 41,269 ======= ======= ======= ======= Net income per common share ........................ $ .22 $ .02 $ .45 $ .44 ======= ======= ======= ======= Diluted: - -------- Weighted-average common shares outstanding ......... 41,146 40,559 40,727 41,269 Effect of dilutive securities: Stock options ................................... 3,202 2,357 3,141 1,783 ------- ------- ------- ------- Weighted-average common and common equivalent shares outstanding ..................................... 44,348 42,916 43,868 43,052 ======= ======= ======= ======= Net income per common and common equivalent share .. $ .20 $ .02 $ .42 $ .42 ======= ======= ======= =======
NON - RECURRING CHARGES During the second quarter of 1999, the Company recorded a pre-tax restructuring charge of $400,000, primarily for severance, lease termination costs, and losses on equipment disposals associated with the closure of its Montreal, Canada manufacturing facility. This action was taken to centralize operations related to the Company's surface inspection product line at its Alameda, California facility. Cash outlays of approximately $63,000 were paid during the third quarter of 1999 related to severance associated with the closure. The remaining cash outlays related to this plan are anticipated to be paid through 2000, with the majority of the payments to be made during the fourth quarter of 1999. During the third quarter of 1998, the Company acquired certain technology of Rockwell Automation's Allen-Bradley machine vision business. The acquired technology related to certain products under development. The technology was valued using a risk-adjusted cash flow model, under which future cash flows were discounted taking into account risks related to existing markets, the technology's life expectancy, future target markets and potential changes thereto, and the competitive outlook for the technology. This analysis resulted in an allocation of $2,100,000 to in-process technology which had not reached technological feasibility and had no alternative future use, and accordingly, was expensed immediately. 6 9 ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Revenue for the three-month period ended October 3, 1999 increased 66% to $41,046,000 from $24,659,000 for the same period in 1998. The increase in revenue of $16,387,000 is due primarily to a higher volume of systems sold to the Company's core Original Equipment Manufacturer (OEM) customers in the semiconductor and electronics industries. Sales to OEM customers increased $13,221,000, or 99%, over the third quarter of the prior year and represented 65% of revenue for the quarter in 1999 compared to 54% in 1998. Sales to end-user customers increased $3,166,000, or 28%, from the third quarter of 1998 due primarily to increased volume from customers in general manufacturing industries. While revenue increased in all of the Company's worldwide regions from the third quarter of 1998, the most significant increase was in Japan, where most of the Company's core OEM customers are located. Revenue for the nine-month period ended October 3, 1999 increased 7% to $103,802,000 from $96,751,000 for the same period in 1998. The increase in revenue of $7,051,000 is attributable to increased volume from both OEM and end-user customers. Sales to OEM customers increased $3,225,000, or 6%, over the prior year and sales to end-user customers increased $3,826,000, or 10%, from the same period in 1998. During 1999, the Company experienced an increase in demand as its customers recovered from the 1998 slowdown in capital spending by manufacturers in the semiconductor and electronics industries. Due to this increased order rate, the Company expects revenue to continue to increase sequentially and year-over-year for the remainder of 1999. Gross margin as a percentage of revenue for the three-month and nine-month periods ended October 3, 1999 was 71% and 70%, respectively, compared to 66% and 70% for the same periods in 1998. The increase in the gross margin percentage for the three-month period is primarily because the third quarter of 1999 included a greater percentage of revenue from modular vision systems, which have higher gross margins than surface inspection systems. Gross margin as a percentage of revenue is expected to remain relatively consistent for the fourth quarter of 1999. Research, development, and engineering expenses for the three-month and nine-month periods ended October 3, 1999 were $7,584,000 and $20,718,000, respectively, compared to $6,440,000 and $18,695,000 for the same periods in 1998, representing an 18% increase for the three-month period and an 11% increase for the nine-month period. The increase in aggregate expenses 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 were 18% and 20% for the three-month and nine-month periods in 1999, compared to 26% and 19% for the same periods in 1998. The decrease in expenses as a percentage of revenue for the three-month period is due to the higher revenue base in 1999. The increase in expenses as a percentage of revenue for the nine-month period is due to higher aggregate expenses in 1999 with only a 7% increase in revenue year over year. The Company anticipates that aggregate expenses will increase moderately for the remainder of 1999 due to planned investment in continuing product development. However, the level of expenses as a percentage of revenue for the fourth quarter of 1999 is expected to decline, as revenue is expected to increase at a greater rate than aggregate expenses. 7 10 RESULTS OF OPERATIONS, CONTINUED Selling, general, and administrative expenses for the three-month and nine-month periods ended October 3, 1999 were $10,934,000 and $31,007,000, respectively, compared to $8,937,000 and $28,199,000 for the same periods in 1998, representing a 22% increase for the three-month period and a 10% increase for the nine-month period. The increase in aggregate expenses is due primarily to higher personnel-related costs, including sales commissions and company bonuses, associated with the increase in customer demand. Expenses as a percentage of revenue were 27% and 30% for the three- month and nine-month periods in 1999, compared to 36% and 29% for the same periods in 1998. The decrease in expenses as a percentage of revenue for the three-month period is due to the higher revenue base in 1999. The increase in expenses as a percentage of revenue for the nine-month period is due to higher aggregate expenses in 1999 with only a 7% increase in revenue year over year. The Company anticipates that aggregate expenses will increase moderately for the remainder of 1999 due to additional resources required to support the higher level of demand. However, the level of expenses as a percentage of revenue for the fourth quarter of 1999 is expected to decline, as revenue is expected to increase at a greater rate than aggregate expenses. During the second quarter of 1999, the Company recorded a pre-tax restructuring charge of $400,000, primarily for severance, lease termination costs, and losses on equipment disposals associated with the closure of its Montreal, Canada manufacturing facility. This action was taken to centralize operations related to the Company's surface inspection product line at its Alameda, California facility. Cash outlays of approximately $63,000 were paid during the third quarter of 1999 related to severance expenses associated with the closure. The remaining cash outlays related to this plan are anticipated to be paid through 2000, with the majority of the payments to be made during the fourth quarter of 1999. Investment income for the three-month and nine-month periods ended October 3, 1999 was $1,667,000 and $4,745,000, respectively, compared to $1,598,000 and $5,117,000 for the same periods in 1998, representing a 4% increase for the three-month period and a 7% decrease for the nine-month period. The increase in investment income for the three-month period is due primarily to a higher average invested cash balance in the third quarter of 1999. The decrease in investment income for the nine-month period is due primarily to a lower interest rate environment. The Company's effective tax rate was 28% for the nine-month period ended October 3, 1999 compared to 27% for the same period in 1998. The increase in the effective tax rate is primarily attributable to the higher operating income in 1999. LIQUIDITY AND CAPITAL RESOURCES The Company's cash requirements during the nine-month period ended October 3, 1999 were met through cash generated from operations. Cash and investments increased $42,204,000 from December 31, 1998 primarily as a result of $38,830,000 of cash generated from operations and $8,579,000 of proceeds from the issuance of common stock under stock option and stock purchase plans. Capital expenditures for the nine-month period were $2,299,000 and consisted primarily of expenditures for computer hardware and software. 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. 8 11 YEAR 2000 UPDATE The Company is aware of the potential for industry-wide business disruption which could occur due to problems related to the "Year 2000" issue. Management believes that it has a prudent plan in place to address this issue within the Company and its supply chain. The components of this plan include: an assessment of internal systems for modification and/or replacement; communication with external vendors to determine their state of readiness to maintain an uninterrupted supply of goods and services to the Company; and an evaluation of products sold by the Company to customers as to the ability of the products to work properly after the turn of the century. INTERNAL SYSTEMS The Company has identified five internal systems that are used for business transaction processing as being critical to the uninterrupted operation of the business. All five systems are presently Year 2000 compliant. VENDORS The Company has sent letters to over 250 vendors outlining its approach towards the Year 2000 issue and asking for either their certification that their product is Year 2000 compliant or their commitment to resolve any issues they may have. The Company has identified vendors it views as critical to its business. Management has defined a critical vendor as one whose inability to continue to provide goods and services would have a serious adverse impact on the Company's ability to produce, deliver, and collect payment for its product. The Company has received responses from all critical vendors outlining their plans for Year 2000 compliance. The Company does not intend to verify representations made by vendors regarding their Year 2000 compliance status. It may never be able to know with certainty whether certain critical vendors are compliant. Failure of critical vendors to make their computer systems Year 2000 compliant could result in delaying deliveries of products and services to the Company. If such delays are extensive, they could have a material adverse effect on the Company's business. PRODUCTS Testing of current releases of Cognex products is complete and has confirmed that Cognex's core vision functionality is not date-sensitive or dependent on date fields and is therefore Year 2000 compliant. The Company's Year 2000 product compliance verification methodology consisted of a review of the source code and functional testing of current releases of Cognex products, which are believed to be representative of prior releases as well. Based on similarities in the source code for current and prior releases of Cognex products and the fact that Cognex's core vision functionality is not date-sensitive or dependent on date fields, the Company believes that prior releases of its products are Year 2000 compliant. The Company does not intend to conduct functionality testing of prior releases of Cognex products. Year 2000 compliance verification included examination of the 1999/2000 date rollover, date-sensitive functionality with the Year 2000, and leap year compliance. COSTS Costs incurred in the Company's Year 2000 compliance effort are expensed as incurred and funded with cash generated from operations. These costs are included in the normal, recurring costs incurred for product development and systems maintenance and are not material to the Company's results of operations. 9 12 YEAR 2000 UPDATE, CONTINUED RISKS Although the Company believes it is taking prudent action related to the identification and resolution of issues related to the Year 2000, its assessment is still in progress. The failure to correct a material Year 2000 problem could result in an interruption in, or a failure of, certain normal business activities. Such failures could materially and adversely affect the Company's results of operations, liquidity, and financial condition. Due to the general uncertainty inherent in the Year 2000 issue, resulting in part from the uncertainty of the Year 2000 readiness of third-party vendors, the Company is unable to determine at this time whether the consequences of Year 2000 failures will have a material impact on the Company's results of operations, liquidity, or financial position. The Year 2000 compliance project is expected to reduce, but not eliminate, the Company's level of uncertainty about the Year 2000 issue and, in particular, about the Year 2000 compliance and readiness of its critical vendors. The Company believes that, with the completion of the Year 2000 compliance project as scheduled, the possibility of significant interruptions to normal operations should be reduced. CONTINGENCY PLAN As part of its contingency planning effort, the Company has identified its core business processes that are vital to the Company such that a Year 2000 failure would have a significant impact on the Company's ability to conduct business. The Company has also identified measures within its control to minimize the impact of a Year 2000 failure. A contingency plan has been finalized that outlines the actions to be taken in the event of a Year 2000 failure to enable the Company to resume operations. The components of this plan include utilizing manual records and processes, securing critical materials for January product shipments in December, and securing alternative vendors and backup systems. FORWARD-LOOKING STATEMENTS Certain statements made in this report (including statements regarding the Year 2000 issue), 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. 10 13 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 11 14 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: November 12, 1999 COGNEX CORPORATION /s/ Richard A. Morin -------------------------------------------- Richard A. Morin Executive Vice President of Finance, Chief Financial Officer, and Treasurer (duly authorized officer, principal financial and accounting officer) 12 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS OF COGNEX CORPORATION FOR THE QUARTER ENDED OCTOBER 3, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL STATEMENTS. US$ 3-MOS DEC-31-1999 JUL-04-1999 OCT-03-1999 1 36,034,000 164,628,000 26,068,000 2,526,000 11,377,000 248,989,000 56,282,000 24,018,000 287,248,000 32,513,000 0 0 0 87,000 252,815,000 287,248,000 41,046,000 41,046,000 11,949,000 11,949,000 0 0 0 12,452,000 3,486,000 8,966,000 0 0 0 8,966,000 0.22 0.20
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