-----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, DDSpR0T2jxaAsbpVVNx7Oq69KtYWVJ+dyDkK5Bji5aLpAFobM4rinsqVvnOLS0Eb X5/j5b/Q5BMVklP2vN4Qyg== 0001157523-06-000637.txt : 20060125 0001157523-06-000637.hdr.sgml : 20060125 20060125163549 ACCESSION NUMBER: 0001157523-06-000637 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20060125 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060125 DATE AS OF CHANGE: 20060125 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: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-17869 FILM NUMBER: 06550047 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 8-K 1 a5064626.txt COGNEX CORPORATION 8-K ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of Earliest Event Reported): January 25, 2006 COGNEX CORPORATION - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Massachusetts 0-17869 04-2713778 ------------- ------- ---------- (State or other jurisdiction of (Commission File Number) (I.R.S. Employer incorporation or organization) Identification No.) One Vision Drive Natick, Massachusetts 01760-2059 (Address, including zip code, of principal executive offices) (508) 650-3000 (Registrant's telephone number, including area code) (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ================================================================================ Item 2.02 Results of Operations and Financial Condition On January 25, 2006, Cognex Corporation issued a news release to report its financial results for the fourth quarter and full year ended December 31, 2005. The release is furnished as Exhibit 99.1 hereto. The information in this Current Report on Form 8-K, including the Exhibit attached hereto, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, regardless of any general incorporation language in such filing. Item 9.01 Financial Statements and Exhibits (c) Exhibits Exhibit No. Description - ----------- ----------- 99.1 News release, dated January 25, 2006, by Cognex Corporation SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. COGNEX CORPORATION Dated: January 25, 2006 By: /s/ Richard A. Morin ------------------------ Richard A. Morin Senior Vice President of Finance, Chief Financial Officer and Treasurer EX-99.1 2 a5064626ex991.txt EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1 Cognex Corporation Announces Fourth Quarter Results NATICK, Mass.--(BUSINESS WIRE)--Jan. 25, 2006--Cognex Corporation (NASDAQ: CGNX) today announced revenue for the fourth quarter ended December 31, 2005 of $60,818,000, and net income of $11,750,000, or $0.24 per diluted share. These most recent quarterly results are compared to the company's historical results for the fourth quarter of 2004 and for the third quarter of 2005 in the table below. Also provided in the table below are revenue, net income and earnings per share for the year ended December 31, 2005, as compared to the company's historical results for the year ended December 31, 2004. Revenue Net Income Earnings per Diluted Share - ---------------------------------------------------------------------- Quarterly Comparisons - ---------------------------------------------------------------------- Current quarter: Q4-05 $60,818,000 $11,750,000 $0.24 - ---------------------------------------------------------------------- Prior year's quarter: Q4-04 $43,909,000 $6,644,000 $0.14 - ---------------------------------------------------------------------- Change from Q4-04 to Q4-05 39% 77% 69% - ---------------------------------------------------------------------- Prior quarter: Q3-05 $58,256,000 $10,858,000 $0.22 - ---------------------------------------------------------------------- Change from Q3-05 to Q4-05 4% 8% 9% - ---------------------------------------------------------------------- - ---------------------------------------------------------------------- Yearly Comparisons - ---------------------------------------------------------------------- Year ended December 31, 2005 $216,875,000 $35,702,000 $0.74 - ---------------------------------------------------------------------- Year ended December 31, 2004 $201,957,000 $37,744,000 $0.80 - ---------------------------------------------------------------------- Change from 2004 to 2005 7% (5%) (7%) - ---------------------------------------------------------------------- The company's reported results for 2005 include the results of DVT Corporation (since May 9, 2005), and also include the amortization costs related to that acquisition ($1,143,000 in the fourth quarter and $3,048,000 for the year). "I am rather pleased with our results for 2005; despite a dramatic year-on-year decline of more than 30% in revenue from our customers who manufacture capital equipment for the semiconductor and electronics industries, our revenue kept pace with 2004 because of significant growth in our other businesses that focus on the factory floor," said Dr. Robert J. Shillman, Cognex's Chairman and Chief Executive Officer. "Our 2005 revenue from the Surface Inspection market grew by 22% vs. 2004, as did our business in the Factory Automation market...and that's without including the revenue from DVT which we acquired in May of 2005. We expect that those businesses, together with new initiatives, will make Cognex far less dependent on the vagaries of the semiconductor and electronics capital equipment industries." Dr. Shillman continued, "And, although our net income is not yet at our target level of 20% (or more) of revenue, given the downturn in the Semi/Electronics business, we did pretty well in 2005, with net income at 16% of revenue and operating income at 20% of revenue (or 18% and 22%, respectively, excluding $3 million of amortization for DVT acquisition-related costs)." "Finally, we had a positive surprise at the end of 2005 when the Lemelson Partnership, whose machine vision patents were declared invalid, unenforceable, and not infringed by Cognex, said that they would not seek further review by the U.S. Supreme Court of that decision (even though they have until late February of 2006 to do so), and they advised the U.S. District Court of Arizona that they intend to file a motion to dismiss their machine vision patent claims against hundreds of companies, many of whom are Cognex customers. As a result, in the fourth quarter we reversed a $1 million reserve that we had established for possible indemnification of our customers around the world. Now everyone can benefit from the use of Cognex products without fear of Lemelson," concluded Dr. Shillman. Details of the Quarter ---------------------- Statement of Operations Highlights - Fourth Quarter of 2005 -- Revenue for the fourth quarter of 2005 increased a dramatic 39% over the fourth quarter of 2004 due to the following factors: -- Record revenue from the Factory Automation market (including incremental revenue of approximately $6,200,000 from the DVT acquisition), -- Increased revenue from customers in the Semiconductor and Electronics Capital Equipment business, and -- Higher sales of SmartView(R), the company's surface inspection product. On a sequential basis, revenue increased 4% over the prior quarter due to higher revenue from the Factory Automation and Semi/Electronics Capital Equipment markets. -- Gross margin was 72% in the fourth quarter of 2005 compared to 73% in both the fourth quarter of 2004 and in the prior quarter. Cost of revenue for the fourth quarter of 2005, the fourth quarter of 2004, and the third quarter of 2005 includes a benefit of $287,000, $317,000, and $185,000, respectively, relating to the sale of inventory previously reserved. Excluding this benefit, gross margin would have been 71% in the fourth quarter of 2005, 72% in the fourth quarter of 2004, and 73% in the prior quarter. Gross margin declined year-on-year despite higher sales volume due to revenue mix as well as favorable variances in the fourth quarter of 2004 that didn't repeat in the current quarter. On a sequential basis, the gross margin declined due to revenue mix and higher manufacturing costs. During the fourth quarter of 2005, Cognex began moving a portion of its manufacturing operation from Massachusetts to Ireland to be closer to its contract manufacturer. -- Research, Development & Engineering (R, D & E) spending in the fourth quarter of 2005 decreased 1% from the fourth quarter of 2004 and 4% from the prior quarter. Spending decreased year-on-year (despite incremental costs associated with the new employees added from the DVT acquisition) due to lower outside service costs. The decline on a sequential basis is due to lower employee-related costs, including relocation expenses, as compared to the prior quarter. -- Selling, General & Administrative (S, G & A) spending in the fourth quarter of 2005 increased 18% from the fourth quarter of 2004 and 3% on a sequential basis (or 23% and 8%, respectively, excluding the $1,000,000 Lemelson reserve reversal). The increase year-on-year is due to incremental DVT costs, the company's investment in sales and marketing, and higher professional fees. On a sequential basis, the increase is due to higher employee-related expenses and sales costs, including commissions and travel and entertainment. -- The company reported a foreign currency loss of $286,000 in the fourth quarter of 2005, a gain of $1,568,000 in the fourth quarter of 2004 and a loss of $410,000 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 $1,531,000 in the fourth quarter of 2005 compared to $1,322,000 in the fourth quarter of 2004 and $1,156,000 in the prior quarter. The increase in investment and other income, both year-on-year and sequentially, is due to higher yields. -- The effective tax rate was 26% in the third and fourth quarters of 2005 as compared to 29% in the fourth quarter of 2004. The effective tax rate decreased year-on-year due to more of the company's profits being earned and taxed in lower tax jurisdictions in 2005 than in 2004. Balance Sheet Highlights - December 31, 2005 -- Cognex's financial position at December 31, 2005 was very strong, with over $312,000,000 in cash and investments, and no debt. Cash and investments decreased by nearly $79,000,000 from the end of 2004, primarily due to the following uses: -- $115 million to purchase DVT, -- $15 million paid out to shareholders as dividends, and -- $11.7 million to repurchase approximately 384,000 shares of common stock on the open market. Notwithstanding those non-operating uses, Cognex generated positive cash flow from operations in 2005 of over $41,000,000. -- Days sales outstanding (DSO) for the fourth quarter of 2005 was 62 days, and remains within the company's targeted range. -- Inventories at December 31, 2005 decreased by approximately $1,300,000, or 6%, from the end of 2004 despite incremental inventory from the DVT acquisition, and inventory turns in the fourth quarter were equivalent to 3.7 times per year. Business Trends and Financial Outlook Bookings and Backlog: -- For the fourth quarter of 2005, bookings increased slightly over the prior quarter due to higher orders from the Semiconductor and Electronics Capital Equipment market and the Factory Automation market, which set a new record. The increase in orders from those markets offset the expected decline in surface inspection orders given the unsustainably high order rate in the first nine months of the year. Consolidated backlog at year end was approximately $33,000,000, which is an increase of 14% over the 2004 year-end backlog of approximately $29,000,000. Financial Outlook: -- For the first quarter of 2006, Cognex expects revenue to be between $60 million and $63 million. At that revenue level, gross margin is expected to be in the low-70% range, including estimated pre-tax stock-based compensation expense of $300,000. For the first quarter, operating expenses (R, D & E and S, G & A), including estimated pre-tax stock-based compensation expense of $2,600,000, are expected to increase by 15% to 20% on a sequential basis. The effective tax rate is expected to be 26%. As a result of the above, earnings are expected to be between $0.16 and $0.20 per diluted share (or between $0.20 and $0.24 per diluted share excluding estimated stock-based compensation expenses of $2,900,000). Non-GAAP Financial Measures This press release contains non-GAAP financial measures which Cognex believes are helpful in allowing individuals to more accurately assess its operations and more readily compare its results over multiple periods. However, the non-GAAP financial measures are not meant to be considered in isolation, nor as a substitute for financial information provided in accordance with GAAP. Analyst Conference Call and Simultaneous Webcast Cognex will host a conference call to discuss its results for the fourth 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 United States). 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 United States) and the access code is 6871747. 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 300,000 machine vision systems, representing over $1.9 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, Southeast Asia, and Latin America. 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. COGNEX CORPORATION Statements of Operations (Unaudited) In thousands, except per share amounts Three Months Ended Twelve Months Ended Dec. 31, Oct. 2, Dec. 31, Dec. 31, Dec. 31, 2005 2005 2004 2005 2004 -------- -------- -------- -------- -------- Revenue $ 60,818 $ 58,256 $ 43,909 $216,875 $201,957 Cost of revenue 17,289 15,755 11,791 62,899 57,371 -------- -------- -------- -------- -------- Gross margin 43,529 42,501 32,118 153,976 144,586 Percentage of revenue 72% 73% 73% 71% 72% Research, development, and engineering expenses 6,916 7,224 6,958 27,640 27,063 Percentage of revenue 11% 12% 16% 13% 13% Selling, general, and administrative expenses 21,979 21,351 18,693 82,332 70,674 Percentage of revenue 36% 37% 43% 38% 35% -------- -------- -------- -------- -------- Operating income 14,634 13,926 6,467 44,004 46,849 Percentage of revenue 24% 24% 15% 20% 23% Foreign currency gain (loss) (286) (410) 1,568 (888) 1,641 Investment and other income 1,531 1,156 1,322 5,130 4,670 -------- -------- -------- -------- -------- Income before taxes 15,879 14,672 9,357 48,246 53,160 Income tax provision 4,129 3,814 2,713 12,544 15,416 -------- -------- -------- -------- -------- Net income $ 11,750 $ 10,858 $ 6,644 $ 35,702 $ 37,744 Percentage of revenue 19% 19% 15% 16% 19% ======== ======== ======== ======== ======== Net income per diluted common and common equivalent share $ 0.24 $ 0.22 $ 0.14 $ 0.74 $ 0.80 ======== ======== ======== ======== ======== Diluted weighted-average common and common equivalent shares outstanding 48,320 48,469 46,157 47,935 47,358 ======== ======== ======== ======== ======== Cash dividends per common share $ 0.08 $ 0.08 $ 0.08 $ 0.32 $ 0.28 ======== ======== ======== ======== ======== COGNEX CORPORATION Balance Sheets (Unaudited) In thousands December 31, December 31, 2005 2004 ------------ ------------ Assets Cash and investments $ 312,258 $ 391,076 Accounts receivable 42,051 33,816 Inventories 18,819 20,091 Property, plant, and equipment 24,175 23,995 Other assets 167,259 64,330 ------------ ------------ Total assets $ 564,562 $ 533,308 ============ ============ Liabilities and Stockholders' Equity Current liabilities $ 58,041 $ 70,501 Stockholders' equity 506,521 462,807 ------------ ------------ Total liabilities and stockholders' equity $ 564,562 $ 533,308 ============ ============ COGNEX CORPORATION Additional Information Schedule (Unaudited) Dollars in thousands Three Months Ended Twelve Months Ended Dec. 31, Oct. 2, Dec. 31, Dec. 31, Dec. 31, 2005 2005 2004 2005 2004 -------- -------- -------- -------- -------- Revenue $ 60,818 $ 58,256 $ 43,909 $216,875 $201,957 ======== ======== ======== ======== ======== Revenue by division: Modular Vision Systems Division 86% 84% 83% 84% 86% Surface Inspection Systems Division 14% 16% 17% 16% 14% -------- -------- -------- -------- -------- Total 100% 100% 100% 100% 100% ======== ======== ======== ======== ======== Revenue by geography: United States 37% 37% 36% 37% 31% Japan 28% 30% 29% 28% 38% Europe 28% 27% 29% 29% 25% Other 7% 6% 6% 6% 6% -------- -------- -------- -------- -------- Total 100% 100% 100% 100% 100% ======== ======== ======== ======== ======== Revenue by market: Discrete factory automation 56% 57% 56% 57% 44% Semiconductor and electronics capital equipment 30% 27% 27% 27% 42% Surface inspection 14% 16% 17% 16% 14% -------- -------- -------- -------- -------- Total 100% 100% 100% 100% 100% ======== ======== ======== ======== ======== Revenue by product: Vision sensors 45% 44% 38% 43% 30% PC-based vision systems 34% 34% 35% 35% 47% Surface inspection vision systems 10% 12% 13% 11% 10% Service 11% 10% 14% 11% 13% -------- -------- -------- -------- -------- Total 100% 100% 100% 100% 100% ======== ======== ======== ======== ======== CONTACT: Cognex Corporation Susan Conway, 508-650-3353 Director of Investor Relations -----END PRIVACY-ENHANCED MESSAGE-----