EXHIBIT 99.2
PRO FORMA FINANCIAL INFORMATION
COGNEX CORPORATION
INTRODUCTORY INFORMATION
On May 9, 2005, Cognex Corporation acquired all of the outstanding shares of DVT Corporation, a provider of low-cost, easy-to-use vision sensors, for approximately $112 million, net of cash acquired. The purchase price consisted of $100 million in cash paid at closing (net of $5 million of acquired cash), $11 million in cash deposited into an escrow account at closing, and $1 million in transaction costs. The acquisition is accounted for under the purchase method of accounting.
The $112 million purchase price was allocated to the assets acquired and liabilities assumed based on their estimated fair values as follows: $8 million to tangible net assets, $38 million to distribution networks to be amortized over eleven to twelve years, $5 million to customer relationships to be amortized over twelve years, $4 million to completed technologies to be amortized over six years, $1 million to trade names, trademarks, and non-competition agreement to be amortized over four years, $18 million to deferred tax liability, and the remainder of $74 million to goodwill. The Company obtained third-party valuations of the acquired intangible assets. The allocation of the purchase price is subject to future refinement.
The unaudited pro forma statements of income for the three months ended April 3, 2005 and the twelve months ended December 31, 2004 were prepared as if the acquisition had taken place on January 1, 2004. The unaudited pro forma balance sheet as of April 3, 2005 was prepared as if the acquisition had taken place on April 3, 2005.
The unaudited pro forma financial information is intended to provide information about the continuing impact of the acquisition by showing how it might have affected historical financial statements if it had been consummated at an earlier date. This information is not necessarily indicative of future operations or the actual results that would have occurred had the acquisition been consummated at the beginning of the earliest period presented. This information should be read in conjunction with the accompanying notes to the unaudited pro forma financial information.
COGNEX CORPORATION
UNAUDITED PRO FORMA STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED APRIL 3, 2005
(In thousands, except per share amounts)
| Historical | Pro Forma | |||||||||||||||||||||
| Cognex | DVT | Adjustments | Results | |||||||||||||||||||
| Revenue | $ | 43,198 | $ | 7,708 | $ | 50,906 | ||||||||||||||||
| Cost of revenue | 13,790 | 1,592 | $ | 153 | (A) | 15,535 | ||||||||||||||||
| Gross margin | 29,408 | 6,116 | (153 | ) | 35,371 | |||||||||||||||||
| Research, development and engineering expenses | 6,315 | 1,021 | 7,336 | |||||||||||||||||||
| Selling, general and administrative expenses | 17,508 | 3,179 | 822 | (B) | 21,625 | |||||||||||||||||
| 99 | (C) | |||||||||||||||||||||
| 69 | (D) | |||||||||||||||||||||
| (52 | ) | (E) | ||||||||||||||||||||
| Income from operations | 5,585 | 1,916 | (1,091 | ) | 6,410 | |||||||||||||||||
| Other income | 1,569 | (1 | ) | (552 | ) | (F) | 1,016 | |||||||||||||||
| Income before provision for income taxes | 7,154 | 1,915 | (1,643 | ) | 7,426 | |||||||||||||||||
| Provision for income taxes | 1,860 | 632 | (404 | ) | (G) | 2,088 | ||||||||||||||||
| Net income | $ | 5,294 | $ | 1,283 | $ | (1,239 | ) | $ | 5,338 | |||||||||||||
| Net income per diluted share | $ | .11 | $ | .11 | ||||||||||||||||||
| Diluted weighted average shares outstanding | 47,181 | 47,181 | ||||||||||||||||||||
The accompanying notes are an integral part of the pro forma financial information.
COGNEX CORPORATION
UNAUDITED PRO FORMA STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2004
(In thousands, except per share amounts)
| Historical | Pro Forma | |||||||||||||||||||||
| Cognex | DVT | Adjustments | Results | |||||||||||||||||||
| Revenue | $ | 201,957 | $ | 28,239 | $ | 230,196 | ||||||||||||||||
| Cost of revenue | 57,371 | 5,997 | $ | 613 | (A) | 63,981 | ||||||||||||||||
| Gross margin | 144,586 | 22,242 | (613 | ) | 166,215 | |||||||||||||||||
| Research, development, and engineering expenses | 27,063 | 3,503 | 30,566 | |||||||||||||||||||
| Selling, general, and administrative expenses | 70,674 | 13,359 | 3,286 | (B) | 87,887 | |||||||||||||||||
| 395 | (C) | |||||||||||||||||||||
| 278 | (D) | |||||||||||||||||||||
| (105 | ) | (E) | ||||||||||||||||||||
| Income from operations | 46,849 | 5,380 | (4,467 | ) | 47,762 | |||||||||||||||||
| Other income | 6,311 | 3 | (2,207 | ) | (F) | 4,107 | ||||||||||||||||
| Income before provision for income taxes | 53,160 | 5,383 | (6,674 | ) | 51,869 | |||||||||||||||||
| Provision for income taxes | 15,416 | 1,777 | (1,653 | ) | (G) | 15,540 | ||||||||||||||||
| Net income | $ | 37,744 | $ | 3,606 | $ | (5,021 | ) | $ | 36,329 | |||||||||||||
| Net income per diluted share | $ | .80 | $ | .77 | ||||||||||||||||||
| Diluted weighted average shares outstanding | 47,358 | 47,358 | ||||||||||||||||||||
The accompanying notes are an integral part of the pro forma financial information.
COGNEX CORPORATION
UNAUDITED PRO FORMA BALANCE SHEET
APRIL 3, 2005
(Dollars in thousands)
| Historical | Pro Forma | |||||||||||||||||||||
| Cognex | DVT | Adjustments | Results | |||||||||||||||||||
ASSETS | ||||||||||||||||||||||
| Current assets: | ||||||||||||||||||||||
| Cash, cash equivalents, and short-term investments | $ | 272,306 | $ | 4,218 | $ | (115,048 | ) | (H) | $ | 161,476 | ||||||||||||
| Accounts receivable | 29,303 | 5,530 | 34,833 | |||||||||||||||||||
| Inventories | 17,799 | 1,933 | 19,732 | |||||||||||||||||||
| Deferred income taxes | 9,617 | 703 | (1,714 | ) | 8,606 | |||||||||||||||||
| Prepaid expenses and other | 11,695 | 581 | 12,276 | |||||||||||||||||||
| Total current assets | 340,720 | 12,965 | (116,762 | ) | 236,923 | |||||||||||||||||
| Long-term investments | 122,149 | 122,149 | ||||||||||||||||||||
| Property, plant, and equipment | 23,573 | 749 | 24,322 | |||||||||||||||||||
| Deferred income taxes | 21,074 | (16,132 | ) | (H) | 4,942 | |||||||||||||||||
| Intangible assets | 6,800 | 1,742 | 47,590 | (H) | 54,390 | |||||||||||||||||
| (1,742 | ) | (I) | ||||||||||||||||||||
| Goodwill | 6,764 | 888 | 75,463 | (H) | 82,227 | |||||||||||||||||
| (888 | ) | (I) | ||||||||||||||||||||
| Other assets | 3,632 | 3,632 | ||||||||||||||||||||
| $ | 524,712 | $ | 16,344 | $ | (12,471 | ) | $ | 528,585 | ||||||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||||||
| Current liabilities: | ||||||||||||||||||||||
| Accounts payable | $ | 3,855 | $ | 1,332 | $ | 5,187 | ||||||||||||||||
| Accrued expenses | 44,544 | 1,280 | $ | 1,261 | (H) | 47,085 | ||||||||||||||||
| Customer deposits | 3,301 | 3,301 | ||||||||||||||||||||
| Deferred revenue | 6,585 | 6,585 | ||||||||||||||||||||
| Total current liabilities | 58,285 | 2,612 | 1,261 | 62,158 | ||||||||||||||||||
| Shareholders’ equity: | ||||||||||||||||||||||
| Common stock | 93 | 93 | ||||||||||||||||||||
| Additional paid-in capital | 195,734 | 10,981 | (10,981 | ) | (I) | 195,734 | ||||||||||||||||
| Retained earnings | 285,308 | 2,751 | (2,751 | ) | (I) | 285,308 | ||||||||||||||||
| Accumulated other comprehensive loss | (14,708 | ) | (14,708 | ) | ||||||||||||||||||
| Total shareholders’ equity | 466,427 | 13,732 | (13,732 | ) | 466,427 | |||||||||||||||||
| $ | 524,712 | $ | 16,344 | $ | (12,471 | ) | $ | 528,585 | ||||||||||||||
The accompanying notes are an integral part of the pro forma financial information.
COGNEX CORPORATION
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
| (A) | The pro forma adjustment to “Cost of revenue” represents the amortization over six years of $3,680,000 of acquired completed technologies. |
| (B) | The pro forma adjustment to “Selling, general, and administrative expenses” represents the amortization over a weighted-average period of 11.6 years of $38,060,000 of acquired distribution networks. |
| (C) | The pro forma adjustment to “Selling, general, and administrative expenses” represents the amortization over twelve years of $4,740,000 of acquired customer relationships. |
| (D) | The pro forma adjustment to “Selling, general, and administrative expenses” represents the amortization over four years of $1,110,000 of acquired trade names, trademarks, and non-competition agreement. |
| (E) | The pro forma adjustment to “Selling, general, and administrative expenses” represents the elimination of the amortization of the pre-existing intangible assets of DVT. |
| (F) | The pro forma adjustment to “Other income” represents reduced tax-exempt interest income resulting from the net cash outlay in connection with the acquisition. |
| (G) | The pro forma adjustment to “Provision for income taxes” represents the tax benefit associated with items (A), (B), (C), (D), and (E) above. |
| (H) | The pro forma balance sheet adjustments represent the consideration paid and the allocation of the purchase price based on the estimated fair values of the assets acquired and liabilities assumed of DVT (including additional accruals related primarily to transaction costs), with the remainder allocated to goodwill. |
| (I) | The pro forma balance sheet adjustments represent the elimination of the pre-existing intangible assets and capital structure of DVT. |