EX-99.1 2 a4933647ex991.txt EXHIBIT 99.1 Exhibit 99.1 Cognex Corporation Announces Second Quarter Results NATICK, Mass.--(BUSINESS WIRE)--July 19, 2005--Cognex Corporation (NASDAQ: CGNX) today announced revenue for the second quarter ended July 3, 2005, of $54,603,000, and net income of $7,800,000, or $0.17 per diluted share. These most recent quarterly results, which include results from the acquisition of DVT Corporation since May 9, 2005, are compared to the company's historical results for the second quarter of 2004 and for the first quarter of 2005 in the table below. Earnings per Diluted Time Period Revenue Net Income Share ---------------------------------------------------------------------- Current quarter: Q2-05 $54,603,000 $7,800,000 $0.17 ---------------------------------------------------------------------- Prior year's quarter: Q2-04 $54,467,000 $10,878,000 $0.23 ---------------------------------------------------------------------- Change from Q2-04 to Q2-05 0% (28%) (28%) ---------------------------------------------------------------------- Prior quarter: Q1-05 $43,198,000 $5,294,000 $0.11 ---------------------------------------------------------------------- Change from Q1-05 to Q2-05 26% 47% 47% ---------------------------------------------------------------------- Revenue, net income and earnings per share for the six months ended July 3, 2005, which include results from the acquisition of DVT Corporation since May 9, 2005, are compared to the company's historical results for the comparable period in 2004 in the table below. Earnings per Diluted Time Period Revenue Net Income Share ---------------------------------------------------------------------- Six months ended July 3, 2005 $97,801,000 $13,094,000 $0.28 ---------------------------------------------------------------------- Six months ended July 4, 2004 $102,636,000 $19,445,000 $0.41 ---------------------------------------------------------------------- Change from first six months of 2004 to first six months of 2005 (5%) (33%) (33%) ---------------------------------------------------------------------- To help readers understand the company's performance excluding the acquisition of DVT, the company's Statement of Operations is shown in Exhibit 1 (Including DVT) and Exhibit 2 (Excluding DVT), and a reconciliation of the quarter and six months ended July 3, 2005, including and excluding DVT is shown in Exhibit 3. "The second quarter of 2005 was a good quarter if you look at it on a sequential basis, but not so good on a year-on-year comparison," said Dr. Robert J. Shillman, Cognex's Chairman and Chief Executive Officer. "Revenue increased significantly on a sequential basis due to higher sales to customers in the surface inspection and factory automation markets, each of which had record revenue in the second quarter of 2005, as well as from revenue from our acquisition of DVT Corporation, which did better than expected. And, our net margin improved as we began to see a return on the investments we made during 2004 in end user sales and marketing personnel to help drive future revenue." Dr. Shillman continued, "However, the year-on-year comparables are disappointing due to lower demand from customers in the semiconductor and electronics capital equipment industries, and due to the incremental costs of our investments outside of this cyclical sector to generate growth for the future." Details of the Quarter Statement of Operations Highlights - Second Quarter of 2005 -- Revenue for the second quarter of 2005 was flat with the comparable quarter in 2004, and that was quite an accomplishment given that the revenue from customers who make capital equipment for the semiconductor and electronics industries declined by 49%. That shortage was completely made up by higher revenue from discrete manufacturers in the factory automation area (including $5,500,000 from DVT Corporation) and higher sales of SmartView(R), the company's surface inspection product. On a sequential basis, revenue increased 26% due to higher factory automation revenue and higher sales of SmartView. -- Gross margin was 71% in the second quarter of 2005 compared to 71% in the comparable quarter in 2004 and 68% in the prior quarter. Cost of revenue for the second quarter of 2004 as well as the first and second quarters of 2005 includes a benefit of $234,000, $118,000, and $169,000, respectively, relating to an inventory reserve recorded in the fourth quarter of 2001. Excluding this benefit, gross margin would have been 70% in the second quarter of 2005, 70% in the second quarter of 2004, and 68% in the prior quarter. The increase in gross margin on a sequential basis is due to the higher revenue in the second quarter. -- Research, Development & Engineering (R, D & E) spending in the second quarter of 2005 increased 8% from the comparable quarter in 2004 and 14% from the prior quarter. The year-on-year and sequential increases are due primarily to the new employees added from the acquisition of DVT during the second quarter of 2005. -- Selling, General & Administrative (S, G & A) spending in the second quarter of 2005 increased 22% from the second quarter of 2004, and increased 23% on a sequential basis. The increase year-on-year is due to additional end-user sales personnel hired by Cognex as well as costs from the DVT acquisition, including new employees and the amortization of acquisition-related costs (which were approximately $660,000 pre-tax in the quarter). The sequential increase is due to higher marketing communication costs and company bonuses in the second quarter as well as the incremental DVT costs. -- The company reported a foreign currency loss of $291,000 in the second quarter of 2005 compared to a loss of $50,000 in the comparable quarter of 2004 and a gain of $99,000 in the prior quarter. The company recognizes foreign currency gains and losses on the revaluation and settlement of accounts receivable and payable balances that are reported in one currency and collected or paid in another. -- Investment and other income was $973,000 in the second quarter of 2005 compared to $1,031,000 in the second quarter of 2004 and $1,470,000 in the prior quarter. The decrease in investment and other income, both year-on-year and sequentially, is due to a lower average cash and investment balance in the second quarter of 2005 due to the acquisition of DVT during the quarter for approximately $115,000,000 in cash. -- The effective tax rate was 26% in the second quarter of 2005 as compared to 29% in the comparable quarter of 2004 and 26% in the prior quarter. The decrease in the effective tax rate year-on-year is due to more of the company's profits being earned and taxed in lower tax jurisdictions in 2005 than in 2004. Balance Sheet Highlights - July 3, 2005 -- Cognex's financial position at July 3, 2005 was very strong, with over $285,000,000 in cash and investments, and no debt. Cash and investments decreased by nearly $106,000,000 from the end of 2004 as the company paid out approximately $115,000,000 of cash in the second quarter to acquire DVT Corporation. During the first half of 2005, Cognex generated positive cash flow from operations of nearly $13,000,000 and paid out over $7,400,000 in dividends. Cumulative to date, the company has paid out nearly $70,000,000 in repurchases of its common stock on the open market and $25,000,000 in dividends. -- Days sales outstanding (DSO) for the second quarter of 2005 was 59 days, and remains within the company's targeted range. -- Inventories at July 3, 2005 increased by $258,000, or 1%, from the end of the prior quarter and inventory turns in the second quarter improved to a rate equivalent to 3.6 times per year. Business Trends and Financial Outlook Bookings: -- For the second quarter of 2005, bookings increased by 15% on a sequential basis (4% excluding DVT) and the company's book-to-bill ratio was above 1.0. This increase was primarily due to higher demand from discrete manufacturers in the factory automation area (where bookings increased by 31%, or 10% excluding DVT) and from customers who make capital equipment for the semiconductor and electronics industries (where bookings increased by 21%). Although orders for SmartView declined from the prior quarter's record, the second quarter of 2005 represented the second highest level for that product line. Financial Outlook -- For the third quarter of 2005, Cognex expects revenue to increase on a sequential basis to between $57 million and $60 million. At that revenue level, gross margin is expected to be in the low-to-mid 70% range. For the third quarter, operating expenses (R, D & E and S, G & A) are expected to increase by 5% to 10% on a sequential basis. The effective tax rate is expected to be 26%. As a result of the above, earnings for the third quarter are expected to be between $0.19 and $0.23 per diluted share. Analyst Conference Call and Simultaneous Webcast Cognex will host a conference call to discuss its results for the second quarter of 2005, as well as its financial outlook, today at 5:00 p.m. eastern time. The telephone number for the live call is 800-770-5589 (or 973-935-2039 if outside the U.S.). A replay will begin tonight at approximately 7:00 p.m. eastern time and will run continuously for 72 hours. The telephone number for the replay is 877-519-4471 (or 973-341-3080 if outside the U.S.) and the access code is 6156886. Internet users can listen to a real-time audio broadcast of the conference call, as well as an archive replay of the call, on Cognex's website at http://www.cognex.com/investor/default.asp. About Cognex Corporation Cognex Corporation designs, develops, manufactures, and markets machine vision systems, or computers that can "see." Cognex is the world's leader in the machine vision industry, having shipped more than 250,000 machine vision systems, representing over $1.8 billion in cumulative revenue, since the company's founding in 1981. Cognex's Modular Vision Systems Division, headquartered in Natick, Massachusetts, specializes in machine vision systems that are used for automating the manufacture of a wide range of discrete items and for assuring their quality. Cognex's Surface Inspection Systems Division, headquartered in Alameda, California, specializes in machine vision systems that are used for inspecting the surfaces of products manufactured in a continuous fashion, such as metals, papers and plastics. In addition to its corporate headquarters in Natick, Massachusetts, Cognex has regional offices and distributors located throughout North America, Japan, Europe, and Southeast Asia. Visit Cognex on-line at http://www.cognex.com. Forward-Looking Statement Certain statements made in this press release and its attachments, which do not relate solely to historical matters, are forward-looking statements. You can identify these forward-looking statements by use of the words "expects," "anticipates," "estimates," "believes," "projects," "intends," "plans," "will," "may," "shall" and similar words. These forward-looking statements, which include statements regarding business trends and the company's financial outlook, involve risks and uncertainties that could cause actual results to differ materially from those projected. Such risks and uncertainties include: (1) global economic conditions that impact the capital spending trends of manufacturers in a variety of industries; (2) the cyclicality of the semiconductor and electronics industries; (3) the inability to achieve significant international revenue; (4) fluctuations in foreign exchange rates; (5) the loss of, or significant curtailment of purchases by, any one or more principal customers; (6) the reliance upon certain sole source suppliers to manufacture and deliver critical components for the company's products; (7) challenges in integrating acquisitions and achieving anticipated benefits; and (8) the other risks detailed in the company's reports filed with the SEC, including the company's Form 10-K for the fiscal year ended December 31, 2004. You should not place undue reliance upon any such forward-looking statements, which speak only as of the date made. The company disclaims any obligation to update forward-looking statements after the date of such statements. Exhibit 1 COGNEX CORPORATION Statements of Operations - Including DVT From May 9, 2005 (In thousands, except per share amounts) Three Months Ended Six Months Ended July 3, April 3, July 4, July 3, July 4, 2005 2005 2004 2005 2004 -------------------------------------------- (unaudited) (unaudited) Revenue $54,603 $43,198 $54,467 97,801 102,636 Cost of revenue 16,065 13,790 15,905 29,855 30,694 -------- -------- -------- -------- -------- Gross margin 38,538 29,408 38,562 67,946 71,942 Percentage of revenue 71% 68% 71% 69% 70% Research, development, and engineering expenses 7,185 6,315 6,655 13,500 13,553 Percentage of revenue 13% 15% 12% 14% 13% Selling, general, and administrative expenses 21,494 17,508 17,568 39,002 33,882 Percentage of revenue 39% 41% 32% 40% 33% -------- -------- -------- -------- -------- Operating income 9,859 5,585 14,339 15,444 24,507 Percentage of revenue 18% 13% 26% 16% 24% Foreign currency gain (loss) (291) 99 (50) (192) 575 Investment and other income 973 1,470 1,031 2,443 2,305 -------- -------- -------- -------- -------- Income before taxes 10,541 7,154 15,320 17,695 27,387 Income tax provision 2,741 1,860 4,442 4,601 7,942 -------- -------- -------- -------- -------- Net income $7,800 $5,294 $10,878 $13,094 $19,445 Percentage of revenue 14% 12% 20% 13% 19% ======== ======== ======== ======== ======== Net income per diluted common and common equivalent share $0.17 $0.11 $0.23 $0.28 $0.41 ======== ======== ======== ======== ======== Diluted weighted-average common and common equivalent shares outstanding 47,141 47,181 47,241 47,269 47,317 ======== ======== ======== ======== ======== Cash dividends per common share $0.08 $0.08 $0.06 0.16 $0.12 ======== ======== ======== ======== ======== Exhibit 2 COGNEX CORPORATION Statements of Operations - Excluding DVT (In thousands, except per share amounts) Three Months Ended Six Months Ended July 3, April 3, July 4, July 3, July 4, 2005 2005 2004 2005 2004 -------------------------------------------- (unaudited) (unaudited) Revenue $49,142 $43,198 $54,467 92,340 102,636 Cost of revenue 14,896 13,790 15,905 28,686 30,694 -------- -------- -------- -------- -------- Gross margin 34,246 29,408 38,562 63,654 71,942 Percentage of revenue 70% 68% 71% 69% 70% Research, development, and engineering expenses 6,564 6,315 6,655 12,879 13,553 Percentage of revenue 13% 15% 12% 14% 13% Selling, general, and administrative expenses 18,578 17,508 17,568 36,086 33,882 Percentage of revenue 38% 41% 32% 39% 33% -------- -------- -------- -------- -------- Operating income 9,104 5,585 14,339 14,689 24,507 Percentage of revenue 19% 13% 26% 16% 24% Foreign currency gain (loss) (291) 99 (50) (192) 575 Investment and other income 967 1,470 1,031 2,437 2,305 -------- -------- -------- -------- -------- Income before taxes 9,780 7,154 15,320 16,934 27,387 Income tax provision 2,456 1,860 4,442 4,316 7,942 -------- -------- -------- -------- -------- Net income $7,324 $5,294 $10,878 $12,618 $19,445 Percentage of revenue 15% 12% 20% 14% 19% ======== ======== ======== ======== ======== Net income per diluted common and common equivalent share $0.16 $0.11 $0.23 $0.27 $0.41 ======== ======== ======== ======== ======== Diluted weighted-average common and common equivalent shares outstanding 47,141 47,181 47,241 47,269 47,317 ======== ======== ======== ======== ======== Cash dividends per common share $0.08 $0.08 $0.06 0.16 $0.12 ======== ======== ======== ======== ======== Exhibit 3 COGNEX CORPORATION Statements of Operations Reconciliation - Including DVT From May 9, 2005 (In thousands, except per share amounts) Three Months Ended Six Months Ended July 3, 2005 July 3, 2005 ------------------------- --------------------------- Cognex Cognex Excluding DVT Consol- Excluding DVT Consol- DVT idated DVT idated ------------------------- --------------------------- (unaudited) (unaudited) Revenue $49,142 $5,461 $54,603 92,340 5,461 97,801 Cost of revenue 14,896 1,169 16,065 28,686 1,169 29,855 -------- ------- -------- --------- ------ ---------- Gross margin 34,246 4,292 38,538 63,654 4,292 67,946 Percentage of revenue 70% 79% 71% 69% 79% 69% Research, development, and engineering expenses 6,564 621 7,185 12,879 621 13,500 Percentage of revenue 13% 11% 13% 14% 11% 14% Selling, general, and administrative expenses 18,578 2,916 21,494 36,086 2,916 39,002 Percentage of revenue 38% 53% 39% 39% 53% 40% -------- ------- -------- --------- ------ ---------- Operating income 9,104 755 9,859 14,689 755 15,444 Percentage of revenue 19% 14% 18% 16% 14% 16% Foreign currency gain (loss) (291) - (291) (192) - (192) Investment and other income 967 6 973 2,437 6 2,443 -------- ------- -------- --------- ------ ---------- Income before taxes 9,780 761 10,541 16,934 761 17,695 Income tax provision 2,456 285 2,741 4,316 285 4,601 -------- ------- -------- --------- ------ ---------- Net income $7,324 $476 $7,800 $12,618 $476 $13,094 Percentage of revenue 15% 9% 14% 14% 9% 13% ======== ======= ======== ========= ====== ========== Net income per diluted common and common equivalent share $0.16 $0.17 $0.27 $0.28 ======== ======== ========= ========== Diluted weighted -average common and common equivalent shares outstanding 47,141 47,141 47,269 47,269 ======== ======== ========= ========== Cash dividends per common share $0.08 $0.08 0.16 0.16 ======== ======== ========= ========== Exhibit 4 COGNEX CORPORATION Balance Sheets - Including DVT at July 3, 2005 (In thousands) July 3, December 31, 2005 2004 ------------ -------------- (unaudited) Assets Cash and investments $285,490 $391,076 Accounts receivable 36,283 33,816 Inventories 18,057 20,091 Property, plant, and equipment 24,216 23,995 Other assets 168,064 64,330 ------------ -------------- Total assets $532,110 $533,308 ============ ============== Liabilities and Stockholders' Equity Current liabilities $58,967 $70,501 Stockholders' equity 473,143 462,807 ------------ -------------- Total liabilities and stockholders' equity $532,110 $533,308 ============ ============== Exhibit 5 COGNEX CORPORATION Additional Information Schedule - Including DVT From May 9, 2005 (Dollars in thousands) Three Months Ended Six Months Ended July 3, April 3, July 4, July 3, July 4, 2005 2005 2004 2005 2004 -------------------------- ------------------ (unaudited) (unaudited) Revenue $54,603 $43,198 $54,467 $97,801 $102,636 ======== ======== ======== ======== ========= Revenue by division: Modular Vision Systems Division 83% 84% 85% 83% 86% Surface Inspection Systems Division 17% 16% 15% 17% 14% -------- -------- -------- -------- --------- Total 100% 100% 100% 100% 100% ======== ======== ======== ======== ========= Revenue by geography: United States 37% 37% 31% 37% 30% Europe 31% 29% 22% 30% 24% Japan 26% 28% 41% 27% 41% Other 6% 6% 6% 6% 5% -------- -------- -------- -------- --------- Total 100% 100% 100% 100% 100% ======== ======== ======== ======== ========= Revenue by market: Discrete factory automation 60% 57% 41% 57% 41% Semiconductor and electronics capital equipment 23% 27% 44% 26% 45% Surface inspection 17% 16% 15% 17% 14% -------- -------- -------- -------- --------- Total 100% 100% 100% 100% 100% ======== ======== ======== ======== ========= Revenue by product: Vision sensors 41% 37% 27% 39% 28% PC-based vision systems 35% 39% 50% 37% 50% Surface inspection vision systems 13% 10% 11% 12% 10% Service 11% 14% 12% 12% 12% -------- -------- -------- -------- --------- Total 100% 100% 100% 100% 100% ======== ======== ======== ======== ========= CONTACT: Cognex Corporation Susan Conway, 508-650-3353 Director of Investor Relations