-----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, Gekk1RbCx5D0uNNTeesDLUk7H27U8JDfKhKte1HIiK3anwOtmpDgQZ/Bu/YKxC9n a+pZWVfmSfgUw28JjEMtvw== 0000950135-01-503395.txt : 20020410 0000950135-01-503395.hdr.sgml : 20020410 ACCESSION NUMBER: 0000950135-01-503395 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010930 FILED AS OF DATE: 20011109 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: 1934 Act SEC FILE NUMBER: 000-17869 FILM NUMBER: 1779420 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 b40858cce10-q.txt COGNEX CORPORATION ================================================================================ 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 September 30, 2001 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 28, 2001, there were 43,808,190 shares of Common Stock, $.002 par value, of the registrant outstanding. ================================================================================ INDEX PART I FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Statements of Income for the three and nine months ended September 30, 2001 and October 1, 2000 Consolidated Balance Sheets at September 30, 2001 and December 31, 2000 Consolidated Statement of Stockholders' Equity for the nine months ended September 30, 2001 Consolidated Condensed Statements of Cash Flows for the nine months ended September 30, 2001 and October 1, 2000 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 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 ------------------------- ------------------------- SEPTEMBER 30, OCTOBER 1, SEPTEMBER 30, OCTOBER 1, 2001 2000 2001 2000 ------------ ---------- ------------ ---------- (UNAUDITED) (UNAUDITED) Revenue ............................................... $33,974 $67,960 $115,559 $184,642 Cost of revenue ....................................... 11,070 17,402 36,113 47,480 ------- ------- -------- -------- Gross profit .......................................... 22,904 50,558 79,446 137,162 Research, development, and engineering expenses ....... 7,583 8,265 23,420 23,631 Selling, general, and administrative expenses ......... 14,168 16,143 49,047 43,313 Amortization of goodwill .............................. 773 555 2,328 1,199 ------- ------- -------- -------- Operating income ...................................... 380 25,595 4,651 69,019 Investment income ..................................... 2,834 2,624 8,318 6,931 Other income .......................................... 155 297 571 758 ------- ------- -------- -------- Income before provision for income taxes .............. 3,369 28,516 13,540 76,708 Provision for income taxes ............................ 1,077 9,125 4,332 24,547 ------- ------- -------- -------- Net income ............................................ $ 2,292 $19,391 $ 9,208 $ 52,161 ======= ======= ======== ======== Net income per share: Basic ............................................. $ .05 $ .45 $ .21 $ 1.22 ======= ======= ======== ======== Diluted ........................................... $ .05 $ .42 $ .20 $ 1.14 ======= ======= ======== ======== Weighted-average common and common equivalent shares outstanding: Basic ............................................. 43,710 43,325 43,573 42,930 ======= ======= ======== ======== Diluted ........................................... 45,463 45,833 45,266 45,843 ======= ======= ======== ========
The accompanying notes are an integral part of these consolidated financial statements. 1 COGNEX CORPORATION CONSOLIDATED BALANCE SHEETS (Dollars in thousands)
SEPTEMBER 30, DECEMBER 31, 2001 2000 ------------ ----------- (UNAUDITED) ASSETS Current assets: Cash and cash equivalents ............................... $ 48,013 $ 42,925 Short-term investments .................................. 84,448 85,429 Accounts receivable, less reserves of $2,177 and $2,150 in 2001 and 2000, respectively ................ 21,178 47,031 Inventories ............................................. 35,690 27,664 Deferred income taxes ................................... 8,027 7,741 Prepaid expenses and other current assets ............... 7,863 8,950 -------- -------- Total current assets ................................ 205,219 219,740 Long-term investments ..................................... 157,403 149,386 Property, plant, and equipment, net ....................... 32,888 34,012 Deferred income taxes ..................................... 9,576 6,903 Other assets .............................................. 22,837 26,100 -------- -------- $427,923 $436,141 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable ........................................ $ 4,503 $ 10,127 Accrued expenses ........................................ 14,891 22,953 Accrued income taxes .................................... 8,308 9,202 Customer deposits ....................................... 3,340 3,074 Deferred revenue ........................................ 3,383 6,471 -------- -------- Total current liabilities ........................... 34,425 51,827 -------- -------- Other liabilities ......................................... 365 Stockholders' equity: Common stock, $.002 par value - Authorized: 140,000,000 shares, issued: 46,148,545 and 45,787,568 shares in 2001 and 2000, respectively .... 92 92 Additional paid-in capital .............................. 169,019 163,815 Treasury stock, at cost, 2,389,726 and 2,365,332 shares in 2001 and 2000, respectively ....................... (43,421) (42,675) Retained earnings ....................................... 274,372 265,164 Accumulated other comprehensive loss .................... (6,564) (2,447) -------- -------- Total stockholders' equity .......................... 393,498 383,949 -------- -------- $427,923 $436,141 ======== ========
The accompanying notes are an integral part of these consolidated financial statements. 2 COGNEX CORPORATION CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DOLLARS IN THOUSANDS)
ACCUMULATED OTHER COMMON STOCK ADDITIONAL TREASURY STOCK COMPREHEN- COMPREHEN- TOTAL --------------------- PAID-IN -------------------- RETAINED SIVE SIVE STOCKHOLDERS' SHARES PAR VALUE CAPITAL SHARES COST EARNINGS INCOME LOSS EQUITY ---------- --------- ---------- --------- --------- -------- ---------- ---------- ------------- Balance at December 31, 2000 ..... 45,787,568 $ 92 $163,815 2,365,332 $(42,675) $265,164 $(2,447) $383,949 Issuance of common stock under stock option and stock purchase plans ...... 360,977 3,900 3,900 Tax benefit from exercise of stock options ............. 1,304 1,304 Common stock received for payment of stock option exercises..... 24,394 (746) (746) Comprehensive income: Net income........... 9,208 9,208 9,208 Unrealized loss on investments, net of tax............. (3,787) (3,787) (3,787) Foreign currency translation adjustment......... (330) (330) (330) ------ Comprehensive income............. $5,091 ---------- ---- -------- --------- -------- -------- ------- ====== -------- Balance at September 30, 2001 (unaudited)... 46,148,545 $ 92 $169,019 2,389,726 $(43,421) $274,372 $(6,564) $393,498 ========== ==== ======== ========= ======== ======== ======= ========
The accompanying notes are an integral part of these consolidated financial statements. 3 COGNEX CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Dollars in thousands)
NINE MONTHS ENDED -------------------------- SEPTEMBER 30, OCTOBER 1, 2001 2000 ------------ ---------- (UNAUDITED) Cash flows from operating activities: Net income .......................................... $ 9,208 $ 52,161 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization ..................... 10,279 8,889 Tax benefit from exercise of stock options ........ 1,304 13,300 Change in current assets and current liabilities .. 630 (15,555) Other ............................................. (894) (968) -------- --------- Net cash provided by operating activities ........... 20,527 57,827 -------- --------- Cash flows from investing activities: Purchase of investments ............................. (96,217) (100,569) Maturity of investments ............................. 81,381 54,113 Purchase of property, plant, and equipment .......... (3,991) (5,215) Cash paid for business and technology acquisitions, net of cash acquired ............................. (361) (22,181) -------- --------- Net cash used in investing activities ............... (19,188) (73,852) -------- --------- Cash flows from financing activities: Issuance of common stock under stock option and stock purchase plans ............................. 3,154 17,014 -------- --------- Net cash provided by financing activities ........... 3,154 17,014 -------- --------- Effect of exchange rate changes on cash .................. 595 201 -------- --------- Net increase in cash and cash equivalents ................ 5,088 1,190 Cash and cash equivalents at beginning of period ......... 42,925 48,665 -------- --------- Cash and cash equivalents at end of period ............... $ 48,013 $ 49,855 ======== =========
The accompanying notes are an integral part of these consolidated financial statements. 4 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, 2000. 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 September 30, 2001, and the results of operations for the three and nine months ended September 30, 2001 and October 1, 2000, 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 September 30, 2001 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)
SEPTEMBER 30, DECEMBER 31, 2001 2000 ------------ ----------- (UNAUDITED) Raw materials........................................ $22,687 $14,263 Work-in-process...................................... 3,656 5,789 Finished goods....................................... 9,347 7,612 ------- -------- $35,690 $ 27,664 ======= ========
5 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 -------------------------- -------------------------- SEPTEMBER 30, OCTOBER 1, SEPTEMBER 30, OCTOBER 1, 2001 2000 2001 2000 ------------ --------- ------------ ---------- (UNAUDITED) (UNAUDITED) Net income ........................................... $ 2,292 $19,391 $ 9,208 $52,161 ======= ======= ======= ======= BASIC: Weighted-average common shares outstanding ....... 43,710 43,325 43,573 42,930 ======= ======= ======= ======= Net income per common share ...................... $ .05 $ .45 $ .21 $ 1.22 ======= ======= ======= ======= DILUTED: Weighted-average common shares outstanding ....... 43,710 43,325 43,573 42,930 Effect of dilutive securities: Stock options ................................. 1,753 2,508 1,693 2,913 ------- ------- ------- ------- Weighted-average common and common equivalent shares outstanding ............................ 45,463 45,833 45,266 45,843 ======= ======= ======= ======= Net income per common and common equivalent share ......................................... $ .05 $ .42 $ .20 $ 1.14 ======= ======= ======= =======
Stock options to purchase 2,979,771 and 2,647,362 shares of common stock for the three-month and nine-month periods ended September 30, 2001, respectively, and stock options to purchase 1,238,886 and 552,702 shares of common stock for the three-month and nine-month periods ended October 1, 2000, respectively, were outstanding but were not included in the calculation of diluted net income per share because the options' exercise prices were greater than the average market price of the Company's common stock during those periods. Although these stock options were antidilutive for the periods presented, they may be dilutive in future period's calculations. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT In June 1998, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133 requires that all derivative instruments be recorded on the balance sheet at their fair value. Changes in the fair value of derivatives are recorded each period in current earnings or other comprehensive income, depending on whether a derivative is designated as part of a hedge transaction and, if it is, the type of hedge transaction. The Company adopted the provisions of SFAS No. 133 effective January 1, 2001. The impact of adopting SFAS No. 133 was immaterial to the Company. FOREIGN EXCHANGE RISK MANAGEMENT The Company enters into forward exchange contracts to hedge a portion of its intercompany sales of inventory by the US parent to its foreign subsidiary payable in the foreign subsidiary's local currency. These contracts, which related primarily to the Japanese Yen and Euro, generally have a time period of three to six months. Realized and unrealized gains and losses on forward exchange contracts that do not 6 qualify for hedge accounting are recognized immediately in earnings. The total gain/loss incurred for transactions that did not qualify as hedges was a $189,000 gain for the three-month period ended September 30, 2001 and a $175,000 loss for the nine-month period ended September 30, 2001. The Company uses forward exchange contracts to hedge net investments in certain of its European subsidiaries, as well as royalty and cost sharing payments due the parent company. Market value gains and losses on forward exchange contracts hedging firm commitments are recognized when the hedged transaction occurs. These contracts, which related primarily to the Euro currency, generally have a maximum term of two years. Forward exchange contracts receive hedge accounting on firmly committed transactions when they are designated as a hedge of the designated currency exposure and are effective in minimizing such exposure. Forward exchange contracts that qualify for hedge accounting with notional amounts of $9,700,000, $6,800,000, and $451,000 to exchange Euros for US dollars were outstanding as of September 30, 2001. For the three-month and nine-month periods ended September 30, 2001, the Company recorded a cumulative unrealized loss of $1,192,000 and a cumulative unrealized gain of $694,000, respectively, related to these foreign exchange contracts in other comprehensive income. These amounts offset the foreign exchange impact (the hedged transaction), which resulted in an unrealized foreign exchange gain of $1,216,000 and an unrealized foreign exchange loss of $550,000 for the same periods. The market risk exposure from forward exchange contracts is assessed in light of the underlying currency exposures and is controlled by the initiation of additional or offsetting foreign exchange contracts. NEW PRONOUNCEMENTS In July 2001, the FASB issued SFAS No. 141, "Business Combinations." SFAS No. 141 is effective for all business combinations initiated after June 30, 2001 and for all business combinations accounted for by the purchase method for which the date of acquisition is after June 30, 2001. SFAS No. 141 requires that all business combinations be accounted for under the purchase method and that certain acquired intangible assets in a business combination be recognized as assets apart from goodwill. The Company does not expect SFAS No. 141 to have an impact on the Company's financial statements. In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 142 is effective for fiscal years beginning after December 15, 2001. SFAS No. 142 requires, among other things, the cessation of the amortization of goodwill. In addition, the standard includes provisions for the reclassification of certain existing recognized intangibles as goodwill, reassessment of the useful lives of existing recognized intangibles, reclassification of certain intangibles out of previously reported goodwill, and the identification of reporting units for the purposes of assessing potential future impairments of goodwill. SFAS No. 142 also requires the Company to complete a transitional goodwill impairment test six months from the date of adoption. The Company is currently assessing the impact of this new statement on its consolidated financial position and results of operations and has not yet determined the impact of adoption. In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS No. 144 is effective for fiscal years beginning after December 15, 2001. SFAS No. 144 replaces SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." The standard requires that long-lived assets that are to be disposed of by sale be measured at the lower of book value or fair value less cost to sell. Additionally, SFAS No. 144 expands the scope of discontinued operations to include all components of an entity with operations that can be distinguished from the rest of the entity and will be eliminated from the ongoing operations of the entity in a disposal transaction. The Company is currently assessing the impact of this new statement on its consolidated financial position and results of operations and has not yet determined the impact of adoption. 7 ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Revenue for the three-month and nine-month periods ended September 30, 2001 totaled $33,974,000 and $115,559,000, respectively, compared to $67,960,000 and $184,642,000 for the same periods in 2000, representing a 50% decrease for the three-month period and a 37% decrease for the nine-month period. The Company's results continue to be negatively impacted by the worldwide slowdown in capital equipment spending by manufacturers in the semiconductor and electronics industries. Sales to Original Equipment Manufacturers (OEM) customers, most of whom make capital equipment used by manufacturers in these industries, decreased $30,687,000, or 72%, from the three-month period in 2000 and $58,537,000, or 52%, from the nine-month period in 2000. Sales to end-user customers decreased $3,299,000, or 13%, from the three-month period in 2000 and $10,546,000, or 15%, from the nine-month period in 2000, primarily due to lower demand from customers who make electronic products. While revenue decreased in all of the Company's worldwide regions from the third quarter of 2000, the most significant decrease was in Japan, where most of the Company's core OEM customers are located. Comparing consecutive quarters, revenue decreased $3,405,000, or 9%, from the second quarter of 2001. Sales to OEM customers decreased $4,634,000, or 28%, from the prior quarter. Sales to end-user customers, however, increased $1,229,000, or 6%, primarily due to an increase in sales of the Company's surface inspection systems. The Company anticipates that its results for the fourth quarter of 2001 will continue to be negatively impacted by the worldwide slowdown in capital equipment spending, as well as the uncertain economic conditions that exist today. Accordingly, the Company anticipates that its revenue for the fourth quarter of 2001 will be approximately 25% lower than that reported in the third quarter of 2001. The Company has limited visibility to customer demand beyond the fourth quarter of 2001. Over the past nine months, the Company has implemented a number of cost-containment measures to more closely align expenses to the lower level of customer demand. These measures include salary reductions, elimination of all company bonuses, mandatory shutdowns, a reduction in discretionary spending, and most recently, the elimination of selected positions. The Company does not anticipate the savings from these measures to compensate for the substantial decline in revenue, and therefore, expects to report a loss in the range of $0.01 to $0.03 per diluted share for the fourth quarter of 2001. Gross profit as a percentage of revenue for the three-month and nine-month periods ended September 30, 2001 was 67% and 69%, respectively, compared to 74% for the same periods in 2000 and 67% for the second quarter of 2001. The decrease in gross margin from the prior year was due primarily to the impact of the lower sales volume and fixed manufacturing costs, as well as a greater percentage of revenue from the sale of services and surface inspection systems, both of which carry lower margins than the sale of modular vision systems. Gross margin is expected to continue to decrease in the fourth quarter of 2001 due to the anticipated lower revenue, as well as the continued impact of the sale of services and surface inspection systems representing a greater percentage of revenue. Research, development, and engineering expenses for the three-month and nine-month periods ended September 30, 2001 were $7,583,000 and $23,420,000, respectively, compared to $8,265,000 and $23,631,000 for the same periods in 2000, representing an 8% decrease for the three-month period and a 1% decrease for the nine-month period. Aggregate expenses declined slightly from the prior year, as the impact of additional headcount to support the Company's continued investment in the research and development of new and existing products was offset by savings from cost-containment measures, most notably the elimination of all company bonuses and a reduction in discretionary spending. Comparing consecutive quarters, aggregate expenses were relatively flat, as the Company continued its planned product development efforts. Expenses as a percentage of revenue were 22% and 20% for the three- 8 month and nine-month periods in 2001, compared to 12% and 13% for the three-month and nine-month periods in 2000. The increase in expenses as a percentage of revenue was principally due to the lower revenue base in 2001. The Company plans to continue its product development efforts, and therefore, anticipates that aggregate expenses for the fourth quarter of 2001 will continue at approximately the level experienced in the third quarter. Selling, general, and administrative expenses for the three-month and nine-month periods ended September 30, 2001 were $14,168,000 and $49,047,000, respectively, compared to $16,143,000 and $43,313,000 for the same periods in 2000, representing a 12% decrease for the three-month period and a 13% increase for the nine-month period. Aggregate expenses decreased for the three-month period, as the impact of additional headcount to support the Company's expanding worldwide operations and grow its end-user business was offset by savings from cost-containment measures, most notably the elimination of all company bonuses and a reduction in discretionary spending. The impact of the cost- containment measures, however, was not enough to offset the impact of the additional headcount in the first half of 2001, and as a result, aggregate expenses increased for the nine-month period. Comparing consecutive quarters, aggregate expenses decreased $2,273,000, or 14%, due to the impact of the cost-containment measures implemented during the year. Expenses as a percentage of revenue were 42% for the three-month and nine-month periods in 2001, compared to 24% and 23% for the three-month and nine-month periods in 2000. The increase in expenses as a percentage of revenue was principally due to the lower revenue base in 2001. The Company expects to continue to realize benefits from its cost-containment measures, and therefore, anticipates that aggregate expenses for the fourth quarter of 2001 will be lower than the level experienced in the third quarter. Amortization of goodwill for the three-month and nine-month periods ended September 30, 2001 was $773,000 and $2,328,000, respectively, compared to $555,000 and $1,199,000 for the same periods in 2000. The increase in amortization expense was due to additional goodwill associated with the acquisitions completed during 2000. Investment income for the three-month and nine-month periods ended September 30, 2001 was $2,834,000 and $8,318,000 compared to $2,624,000 and $6,931,000 for the same periods in 2000, representing an 8% and 20% increase, respectively. The increase in investment income was due to a combination of a higher average invested balance in 2001 and higher average interest rates on the Company's portfolio of investments, which consists primarily of debt securities. The Company's effective tax rate was 32% for all periods presented. LIQUIDITY AND CAPITAL RESOURCES The Company's cash requirements during the nine-month period ended September 30, 2001 were met through cash generated from operations. Cash and investments increased $12,124,000 from December 31, 2000 primarily as a result of $20,527,000 of cash generated from operations, partially offset by $3,991,000 of capital expenditures, principally for computer hardware. On December 12, 2000, the Company's Board of Directors authorized the repurchase of up to $100,000,000 of the Company's common stock. As of September 30, 2001, the Company had not repurchased any shares under this program. 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, investing, and financing requirements through 2001, including the Company's stock repurchase program and potential business acquisitions. 9 NEW PRONOUNCEMENTS In July 2001, the FASB issued SFAS No. 141, "Business Combinations." SFAS No. 141 is effective for all business combinations initiated after June 30, 2001 and for all business combinations accounted for by the purchase method for which the date of acquisition is after June 30, 2001. SFAS No. 141 requires that all business combinations be accounted for under the purchase method and that certain acquired intangible assets in a business combination be recognized as assets apart from goodwill. The Company does not expect SFAS No. 141 to have an impact on the Company's financial statements. In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 142 is effective for fiscal years beginning after December 15, 2001. SFAS No. 142 requires, among other things, the cessation of the amortization of goodwill. In addition, the standard includes provisions for the reclassification of certain existing recognized intangibles as goodwill, reassessment of the useful lives of existing recognized intangibles, reclassification of certain intangibles out of previously reported goodwill, and the identification of reporting units for the purposes of assessing potential future impairments of goodwill. SFAS No. 142 also requires the Company to complete a transitional goodwill impairment test six months from the date of adoption. The Company is currently assessing the impact of this new statement on its consolidated financial position and results of operations and has not yet determined the impact of adoption. In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS No. 144 is effective for fiscal years beginning after December 15, 2001. SFAS No. 144 replaces SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." The standard requires that long-lived assets that are to be disposed of by sale be measured at the lower of book value or fair value less cost to sell. Additionally, SFAS No. 144 expands the scope of discontinued operations to include all components of an entity with operations that can be distinguished from the rest of the entity and will be eliminated from the ongoing operations of the entity in a disposal transaction. The Company is currently assessing the impact of this new statement on its consolidated financial position and results of operations and has not yet determined the impact of adoption. 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) the capital spending trends by manufacturing companies; (5) the inability to protect the Company's proprietary technology and intellectual property; (6) the inability to attract or retain skilled employees; (7) the technological obsolescence of current products and the inability to develop new products; (8) the inability to respond to competitive technology and pricing pressures; and (9) the 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 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 None (b) Reports on Form 8-K None 11 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 10, 2001 COGNEX CORPORATION /s/ Richard A. Morin ---------------------------------------- Richard A. Morin Vice President of Finance, Chief Financial Officer, and Treasurer (duly authorized officer, principal financial and accounting officer) 12 -----END PRIVACY-ENHANCED MESSAGE-----