8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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): May 26, 2020

Cognex Corporation

(Exact name of registrant as specified in charter)

Massachusetts	001-34218	04-2713778
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

One Vision Drive, Natick, Massachusetts	01760-2059
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code: (508) 650-3000

N/A

(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 (see General Instruction A.2. below):

☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $.002 per share	CGNX	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company       ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Item 2.05 Costs Associated with Exit or Disposal Activities.

On May 26, 2020, the Board of Directors (the “Board”) of Cognex Corporation (the “Company”) approved a restructuring plan intended to reduce the Company’s operating costs, optimize its business model and address the impact of the COVID-19 pandemic. The restructuring plan includes a global reduction in force of approximately 190 employees and office closures. On May 28, 2020, the Company issued a news release announcing the restructuring plan, which is filed as Exhibit 99.1 hereto and is incorporated by reference herein.

The Company estimates that the total restructuring charge will be approximately $20 million. It is anticipated that the restructuring plan will be substantially complete by June 30, 2020 and a substantial portion of the charge will be reflected in the Company’s second quarter results. The restructuring charge will consist primarily of one-time termination benefits (including severance), contract termination costs and other associated costs. The Company expects to provide further detail, including associated cash expenditures, in its upcoming Quarterly Report on Form 10-Q once it has finalized its second quarter financial statements.

The actions described above, together with actions already taken to reduce the Company's overall costs, were designed to generate an aggregate annualized cost savings of approximately $25 million versus the Company’s original planned cost structure. The Company does not believe these cost-saving measures will impair the Company’s ability to conduct the Company’s key business functions.

The restructuring charge described above, as well as the Company’s anticipated savings, are preliminary estimates and actual amounts may be materially different from these estimates. There is no guarantee that the Company will achieve the cost savings that it expects. The Company may also incur additional charges or future cash expenditures not currently contemplated due to events that may occur as a result of, or that are associated with, the Company’s restructuring plan or related activities to address the impact of the COVID-19 pandemic on the Company’s business.

Item 2.06 Material Impairments.

Also in response to the impact of the COVID-19 pandemic, and in connection with the restructuring plan addressed in Item 2.05 above, the Company is performing an impairment analysis of its long-lived assets, including acquired intangible assets. In addition, the Company is reviewing the value of its inventory for excess and obsolete exposures as a result of lower demand levels. As of May 26, 2020, the Company expects to record a non-cash charge during the second quarter in the range of $15 million to $30 million, including the anticipated impairment charge and inventory write down.

The non-cash charge described above is a preliminary estimate and the actual amount may be materially different from this estimate.  Given that many of the activities associated with this charge will not be complete until the Company finalizes its second quarter financial statements, the Company cannot reasonably give a further breakdown of this charge as of the date of this Current Report on Form 8-K.  The Company expects to provide further detail in its upcoming Quarterly Report on Form 10-Q.

Item 5.02 Departure  of  Directors  or  Certain  Officers;  Election  of  Directors;  Appointment  of  Certain Officers; Compensatory Arrangements of Certain Officers.

In light of the Company’s restructuring plan referenced above and the Company’s commitment to reducing costs during this period of uncertainty created by the COVID-19 pandemic, Mr. Robert Willett, President and Chief Executive Officer, Dr. Robert Shillman, Chairman of the Board and Chief Culture Officer, and Mr. Patrick Alias, Director and Senior Vice President, will be taking a temporary reduction in base salary through December 31, 2020.  Specifically, each of Mr. Willett and Dr. Shillman will forego all but that portion of base salary necessary to fund, on an after-tax basis, contributions to continue to participate in the Company’s health benefits plan and 401(k) retirement plan. Mr. Alias will forgo approximately 50% of his base salary.

In addition, the base salary of each of Mr. Paul Todgham, Senior Vice President and Chief Financial Officer, and Ms. Sheila DiPalma, Senior Vice President of Employee Services, will be temporarily reduced by 20% until September 28, 2020.  Mr. Todgham and Ms. DiPalma may utilize paid time off to reduce the effects of this reduction.

Finally, each independent member of the Company’s Board of Directors will temporarily forego all cash compensation through December 31, 2020, including meeting fees and committee chair fees.

All of the above reductions in pay will become effective in June 2020 and are generally not intended to reduce any other benefits.

Item 9.01 Financial Statements and Exhibits

(d)              Exhibits

Exhibit No.	Description
99.1	News release, dated May 28, 2020, by Cognex Corporation (filed herewith)
104	Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document)

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: May 28, 2020	By: /s/ Paul D. Todgham
	Paul D. Todgham
	Senior Vice President and Chief Financial Officer

EX-99.1

Exhibit 99.1

Cognex Announces Significant Cost-Cutting Measures

NATICK, Mass.--(BUSINESS WIRE)--May 28, 2020--Cognex Corporation (NASDAQ: CGNX), the leader in machine vision, today announced that it has taken significant steps to reduce expenses due to the deteriorating market conditions and to position the company for growth when conditions improve.

The actions being taken by Cognex include a reduction in its global workforce of approximately 190 employees (8% of its worldwide headcount) and a reduction in leased office spaces. In addition, Cognex CEO, Rob Willett, and Chairman, Dr. Robert Shillman, decided to waive their salaries, and the company’s Board of Directors have waived their cash fees for the remainder of the year. These measures follow actions previously taken by Cognex during the past two months to reduce spending and restrict new hiring.

“It is very unfortunate that these measures are necessary,” said Dr. Robert J. Shillman, Founder and Chairman of Cognex. “The confidence we have in the future of our business remains unchanged; unfortunately, that future is a bit further off than we would like due to the significant disruption of the global economy. In view of that, we have taken significant steps to protect the company’s long-term financial strength which are necessary to help ensure the wellbeing of our employees, our customers, and our suppliers.”

“We had our business sized for continued growth this year,” said Robert J. Willett, Chief Executive Officer of Cognex. “However, growth has been stifled due to the slowdown by manufacturers, particularly in the automotive industry which was our largest market last year. We are reorganizing Cognex to sharpen our focus on growth areas such as logistics and deep learning and to integrate our recent acquisitions more fully. We view this time as an opportunity to prepare for success when business investment returns.”

Pre-tax Charges for Restructuring and Asset Impairment

Cognex expects to record a total restructuring charge of approximately $20 million, primarily in the second quarter of 2020, for the workforce reduction and lease terminations. These actions, together with steps previously taken, are expected to result in annualized cost savings of approximately $25 million. In addition, Cognex expects to record a non-cash charge of between $15 million and $30 million in the second quarter for the impairment of intangible assets and write-down of excess or obsolete inventory due to the deteriorated business conditions.

About Cognex Corporation

Cognex Corporation designs, develops, manufactures, and markets a wide range of image-based products, all of which use artificial intelligence (AI) techniques that give them the human-like ability to make decisions on what they see. Cognex products include machine vision systems, machine vision sensors and barcode readers that are used in factories and distribution centers around the world where they eliminate production and shipping errors.

Cognex is the world's leader in the machine vision industry, having shipped more than 2 million image-based products, representing over $7 billion in cumulative revenue, since the company's founding in 1981. Headquartered in Natick, Massachusetts, USA, Cognex has offices and distributors located throughout the Americas, Europe, and Asia. For details visit Cognex online at www.cognex.com.

Certain statements made in this news release, which do not relate solely to historical matters, are forward-looking statements. These statements can be identified by use of the words “expects,” “anticipates,” “estimates,” “believes,” “projects,” “intends,” “plans,” “will,” “may,” “shall,” “could,” “should,” and similar words and other statements of a similar sense. These forward-looking statements, which include statements regarding business and market trends, future financial performance, strategic plans and areas of growth, the expected impact of the COVID-19 outbreak and related cost-cutting measures on Cognex’s business and results of operation, and the amount and timing of the pre-tax charges that Cognex expects to incur, involve known and unknown risks and uncertainties that could cause actual results to differ materially from those projected. Such risks and uncertainties include (1) the impact, duration, and severity of the COVID-19 outbreak, (2) current and future conditions in the global economy, including the impact of the COVID-19 outbreak and the imposition of tariffs or export controls; (3) the loss of, or curtailment of purchases by, a large customer; (4) the reliance on revenue from the consumer electronics or automotive industries; (5) the inability to penetrate the logistics industry and other new markets; (6) the inability to achieve significant international revenue; (7) fluctuations in foreign currency exchange rates and the use of derivative instruments; (8) information security breaches or business system disruptions; (9) the inability to attract and retain skilled employees; (10) the failure to effectively manage our growth; (11) the reliance upon key suppliers to manufacture and deliver critical components for our products; (12) the failure to effectively manage product transitions or accurately forecast customer demand; (13) the inability to design and manufacture high-quality products; (14) the technological obsolescence of current products and the inability to develop new products; (15) the failure to properly manage the distribution of products and services; (16) the inability to protect our proprietary technology and intellectual property; (17) our involvement in time-consuming and costly litigation; (18) the impact of competitive pressures; (19) the challenges in integrating and achieving expected results from acquired businesses, including the recent acquisition of Sualab; (20) potential impairment charges with respect to our investments or for acquired intangible assets or goodwill; and (21) exposure to additional tax liabilities; and the other risks detailed in Cognex reports filed with the SEC, including its Form 10-K for the fiscal year ended December 31, 2019 and Form 10-Q for the fiscal quarter ended March 29, 2020. You should not place undue reliance upon any such forward-looking statements, which speak only as of the date made. Cognex disclaims any obligation to update forward-looking statements after the date of such statements.

Contacts

Investor Contact:
Susan Conway
Senior Director of Investor Relations
(508) 650-3353
susan.conway@cognex.com

Media Contact:
Liz Bradley
Director of Corporate Communications
(857) 891-5531
liz.bradley@cognex.com

XML

Document and Entity Information	May 26, 2020
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	May 26, 2020
Entity Registrant Name	Cognex Corporation
Entity Incorporation, State or Country Code	MA
Entity File Number	001-34218
Entity Tax Identification Number	04-2713778
Entity Address, Address Line One	One Vision Drive
Entity Address, City or Town	Natick
Entity Address, State or Province	MA
Entity Address, Postal Zip Code	01760-2059
City Area Code	508
Local Phone Number	650-3000
Entity Information, Former Legal or Registered Name	N/A
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Entity Central Index Key	0000851205
Title of 12(b) Security	Common Stock, par value $.002 per share
Trading Symbol	CGNX
Security Exchange Name	NASDAQ