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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 April 2, 1995 or
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/ / 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
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COGNEX CORPORATION
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(Exact name of registrant as specified in its charter)
Massachusetts 04-2713778
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Vision Drive
Natick, Massachusetts 01760-2059
(508) 650-3000
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(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 April 30, 1995, there were 18,886,661 shares of Common Stock,
$.002 par value, of the registrant outstanding.
Total number of pages: 11
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INDEX
PART I FINANCIAL INFORMATION
ITEM 1. Financial Statements
Consolidated Statements of Income for the three
months ended April 2, 1995 and April 3, 1994
Consolidated Balance Sheets as of April 2, 1995 and
December 31, 1994
Consolidated Statement of Stockholders' Equity for
the three months ended April 2, 1995
Consolidated Statements of Cash Flows for the three
months ended April 2, 1995 and April 3, 1994
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
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PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
COGNEX CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
THREE MONTHS ENDED
APRIL 2, APRIL 3,
1995 1994
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(UNAUDITED)
Revenue............................................... $19,437 $12,838
Cost of revenue....................................... 3,952 2,810
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Gross margin.......................................... 15,485 10,028
Research, development and engineering expenses........ 2,716 2,481
Selling, general and administrative expenses.......... 5,071 3,307
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Income from operations................................ 7,698 4,240
Interest income....................................... 632 393
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Income before provision for income taxes.............. 8,330 4,633
Provision for income taxes............................ 2,457 1,436
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Net income............................................ $ 5,873 $ 3,197
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Net income per share.................................. $ .29 $ .17
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Weighted average common shares outstanding............ 20,392 18,473
======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
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COGNEX CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
APRIL 2, DECEMBER 31,
1995 1994
----------- ------------
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents................................... $ 36,178 $ 56,326
Investments................................................. 49,480 25,169
Accounts receivable, less reserves of approximately
$686 and $684 in 1995 and 1994, respectively........... 11,699 9,151
Inventories................................................. 5,462 4,439
Deferred income taxes....................................... 1,554 1,463
Prepaid expenses and other.................................. 1,574 1,195
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Total current assets................................... 105,947 97,743
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Property, plant and equipment, net............................. 14,767 14,503
Other assets................................................... 565 593
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$121,279 $112,839
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable............................................ $ 967 $ 1,284
Accrued expenses............................................ 5,171 5,135
Accrued income taxes........................................ 2,772 1,674
Customer deposits........................................... 615 744
Deferred revenue............................................ 429 394
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Total current liabilities.............................. 9,954 9,231
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Stockholders' equity:
Common stock, $.002 par value -
Authorized: 25,000,000 shares, issued: 18,876,488 and
18,751,935 shares in 1995 and 1994, respectively.......... 38 38
Additional paid-in capital.................................. 55,314 53,633
Cumulative translation adjustment........................... 110 (53)
Retained earnings........................................... 56,355 50,482
Treasury stock, at cost, 30,878 shares in 1995 and 1994..... (492) (492)
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Total stockholders' equity............................. 111,325 103,608
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$121,279 $112,839
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The accompanying notes are an integral part of these consolidated financial
statements.
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COGNEX CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(Dollars in thousands)
COMMON STOCK TREASURY STOCK
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NUMBER $.002 ADDITIONAL CUMULATIVE NUMBER TOTAL
OF PAR PAID-IN TRANSLATION RETAINED OF STOCKHOLDERS'
SHARES VALUE CAPITAL ADJUSTMENT EARNINGS SHARES COST EQUITY
---------- ----- --------- ----------- -------- ------ ----- -----------
Balance at December 31, 1994 ....................... 18,751,935 $38 $53,633 $(53) $50,482 30,878 $(492) $103,608
Issuance of stock under stock option plans ...... 124,553 761 761
Tax benefit from the exercise of stock options .. 920 920
Translation adjustment .......................... 163 163
Net income ...................................... 5,873 5,873
---------- --- ------- ---- ------- ------ ----- --------
Balance at April 2, 1995 (unaudited) ............... 18,876,488 $38 $55,314 $110 $56,355 30,878 $(492) $111,325
========== === ======= ==== ======= ====== ===== ========
The accompanying notes are an integral part of these consolidated financial
statements.
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COGNEX CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
THREE MONTHS ENDED
APRIL 2, APRIL 3,
1995 1994
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(UNAUDITED)
Cash flows from operating activities:
Net income ............................................ $ 5,873 $ 3,197
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization ...................... 624 360
Tax benefit from the exercise of stock options ..... 920 869
Change in current assets and current liabilities ... (3,367) (1,355)
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Net cash provided by operating activities ............. 4,050 3,071
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Cash flows from investing activities:
Purchase of investments ............................... (28,970) (6,086)
Maturities of investments ............................. 4,659 5,717
Purchase of property, plant and equipment ............. (801) (6,725)
Decrease in other assets .............................. 116
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Net cash used in investing activities ................. (24,996) (7,094)
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Cash flows from financing activities:
Issuance of stock under stock option plans ............ 761 807
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Net cash provided by financing activities ............. 761 807
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Effect of exchange rate changes on cash .................... 37 (43)
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Net decrease in cash and cash equivalents .................. (20,148) (3,259)
Cash and cash equivalents at beginning of period ........... 56,326 21,833
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Cash and cash equivalents at end of period ................. $ 36,178 $18,574
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The accompanying notes are an integral part of these consolidated financial
statements.
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COGNEX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ------------------------------------------
Basis of Presentation
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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 financial
statements and related notes included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1994, as filed with the
Securities and Exchange Commission on March 27, 1995.
In the opinion of the management of Cognex Corporation, the accompanying
financial statements contain all adjustments (consisting of only normal
recurring adjustments) necessary to present fairly the Company's
financial position at April 2, 1995 and December 31, 1994, and the results
of its operations and changes in stockholders' equity and cash flows for
the three months ended April 2, 1995 and April 3, 1994.
The results disclosed in the Consolidated Statement of Income for the
three months ended April 2, 1995 are not necessarily indicative of the
results to be expected for the full year.
INVENTORIES
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Inventories consist of the following:
(In thousands) APRIL 2, DECEMBER 31,
1995 1994
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(UNAUDITED)
Raw materials $3,198 $2,476
Work-in-process 1,621 1,604
Finished goods 643 359
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$5,462 $4,439
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PROPERTY, PLANT AND EQUIPMENT
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Property, plant and equipment consist of the following:
(In thousands) APRIL 2, DECEMBER 31,
1995 1994
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(UNAUDITED)
Land $ 800 $ 800
Building 7,841 7,836
Building improvements 1,173 1,107
Construction in progress 22
Computer hardware and software 9,531 8,772
Furniture and fixtures 1,367 1,298
Leasehold improvements 294 250
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21,028 20,063
Less: accumulated depreciation and amortization (6,261) (5,560)
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$14,767 $14,503
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COGNEX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NET INCOME PER SHARE
- --------------------
Net income per share is calculated based on the weighted average number of
common and dilutive common equivalent shares outstanding during the period.
Primary and fully diluted net income per share are not materially different for
each of the periods presented. Dilutive common equivalent shares consist
of stock options, calculated using the treasury stock method.
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ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Revenue for the three-month period ended April 2, 1995 increased 51% to
$19,437,000 from $12,838,000 for the three-month period ended April 3, 1994.
Contributing to the revenue increase, each of the Company's major geographic
areas, the United States, Japan, and Europe, grew in excess of 40% from the
first quarter of 1994 to the first quarter of 1995. The most substantial
increase came from Japan, where revenue increased $3,321,000 or 62% over the
comparable period in 1994.
International revenue amounted to $11,132,000 for the three-month period
in 1995 compared to $7,077,000 for the same period in 1994, an increase of 57%.
Domestic revenue increased $2,544,000 or 44% for the three-month period in 1995
over the comparable period in 1994. The increase in worldwide revenue is due
primarily to the growth in sales to existing customers, that is, those customers
that have been with the Company for three or more years. Sales to existing
customers represented 85% of revenue for the three-month period ended April 2,
1995 and increased 57% over the comparable period in 1994.
Sales of the Cognex 2000 Series vision system decreased to 8% of
revenue for the three-month period ended April 2, 1995 from 15% of revenue for
the three-month period ended April 3, 1994. Sales of the Cognex 3000 Series
vision system increased $1,229,000 over the comparable period in 1994 and
remained relatively flat as a percentage of revenue. Sales of the Cognex 4000
Series vision system represented 41% of revenue for the three-month period in
1995 compared to 39% of revenue for the same period in 1994, an increase of
$2,943,000 or 59%. Sales of the Cognex 5000 Series vision system increased
$1,668,000 and represented 26% of revenue for both three-month periods.
Gross margin for the three-month period ended April 2, 1995 increased
to $15,485,000 or 80% of revenue from $10,028,000 or 78% of revenue for the
three-month period ended April 3, 1994. The two point increase in the gross
margin percentage is primarily due to favorable manufacturing variances and
increased revenue from the Company's Customer Satisfaction group.
Research, development and engineering expenses increased to $2,716,000
for the three-month period ended April 2, 1995 from $2,481,000 for the three-
month period ended April 3, 1994. Expenses as a percentage of revenue were 14%
for the three-month period in 1995 compared to 19% for the comparable period in
1994. The increase in aggregate costs is due primarily to higher personnel costs
to support the Company's investment in the research and development of new and
existing products. The decrease in expenses as a percentage of revenue is due
to the revenue growth outpacing the investment in research and development.
Selling, general and administrative expenses increased to $5,071,000
for the three-month period ended April 2, 1995 from $3,307,000 for the three-
month period ended April 3, 1994. Expenses as a percentage of revenue remained
constant at 26% for both three-month periods. The increase in aggregate costs
is primarily due to higher personnel costs, both domestically and
internationally, to support the Company's increased revenue and customer base.
Interest income increased to $632,000 for the three-month period ended
April 2, 1995 from $393,000 for the three-month period ended April 3, 1994. The
increase in interest income is due primarily to a larger investment base.
The Company's effective tax rate for the three-month period ended April
2, 1995 was 29.5% compared to 31.0% for the three-month period ended April 3,
1994. The decrease in the effective tax rate is primarily due to a reduction in
state income taxes and an increased benefit from tax-exempt interest income
resulting from a larger investment base.
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LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital and other cash requirements during the
three-month period ended April 2, 1995 were met through cash flow generated
from operations. Working capital at April 2, 1995 was $95,993,000, an increase
of $7,481,000 from the working capital balance at December 31, 1994. Cash and
investments increased $4,163,000 from December 31, 1994 primarily as a result
of cash generated from operations.
At April 2, 1995, the Company had no outstanding short-term or
long-term debt. The Company has a $1,000,000 unsecured demand line of credit
with a bank, which is available through August 15, 1995. There have been no
borrowings under the line of credit.
Capital requirements consist primarily of expenditures for computer
hardware and software equipment. Capital expenditures in the three-month period
ended April 2, 1995 were $801,000, all of which were funded out of current
operations.
The Company believes that the existing cash and investment balances,
together with cash generated from operations, will be sufficient to meet the
Company's working capital and capital expenditure requirements through 1995.
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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
Exhibit 11 - Computation of Per Share Earnings
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
None
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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: May 10, 1995 COGNEX CORPORATION
/s/ Robert J. Shillman
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Robert J. Shillman
President, Chief Executive Officer, and Chairman
(principal executive officer)
/s/ John J. Rogers, Jr.
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John J. Rogers, Jr.
Vice President, Chief Financial Officer, and Treasurer
(principal financial and accounting officer)
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