================================================================================
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