Exhibit 99.1
Cognex Corporation Reports Second Quarter Results;
Machine Vision Company Announces Increases in Both Revenue and Profits
NATICK, Mass.--(BUSINESS WIRE)--July 23, 2003--
Overview of the Quarter
Cognex Corporation (NASDAQ: CGNX) today announced revenue for the
second quarter ended June 29, 2003 of $36,622,000, and net income of
$3,306,000, or $0.08 per diluted share. These results compare
favorably with both the comparable quarter in 2002 and with the prior
quarter in 2003, as shown in the table below:
Net Income/ Earnings/(Loss)
Time Period Revenue (Loss) per Diluted
Share
- ----------------------------------------------------------------------
Current quarter: Q2-03 $36,622,000 $3,306,000 $0.08
- ----------------------------------------------------------------------
Prior year's quarter: Q2-02 $26,671,000 ($4,712,000) ($0.11)
- ----------------------------------------------------------------------
Increase from Q2-02 to Q2-03 37% ------- -------
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Prior quarter: Q1-03 $32,888,000 $1,793,000 $0.04
- ----------------------------------------------------------------------
Increase from Q1-03 to Q2-03 11% 84% 100%
- ----------------------------------------------------------------------
Revenue for the six months ended June 29, 2003 was $69,510,000, a
43% increase over the $48,451,000 reported for the same six-month
period a year ago. And, Cognex reported net income of $5,099,000, or
$0.12 per diluted share, for the first half of 2003 compared to a net
loss of $7,232,000, or $0.16 per diluted share, for the comparable
period in 2002.
"I am happy to report that in the second quarter, both revenue and
profits increased year-on-year and sequentially. I am also pleased to
say that the order rate has trended upward for the past two quarters;
bookings increased on a sequential basis by 13% in Q1 and by 10% in
Q2," said Dr. Robert J. Shillman, Cognex's Chief Executive Officer and
Chairman. "This positive bookings trend, along with the fact that we
have exceeded our internal targets for revenue and operating profits
in each of the first two quarters of 2003, leads us to be somewhat
more optimistic about the future than we were at the start of the
year. And, irrespective of the rate at which our business recovers, we
will continue to use our strong balance sheet to develop new products
for new markets and to aggressively pursue strategic acquisitions."
Details of the Quarter
Statement of Operations Highlights - Second Quarter of 2003
-- Revenue for the second quarter of 2003 increased 37% over the
comparable quarter in 2002 and 11% on a sequential basis. The
year-on-year increase is primarily due to higher sales to
Original Equipment Manufacturer (OEM) customers in Japan as
well as end-user customers based outside of the United States
and across a variety of industries. The sequential increase is
primarily due to higher sales of Cognex's modular vision
systems to end-user customers in a variety of industries and
geographic regions as well as record revenue of SmartView(R),
the company's surface inspection product.
-- Gross margin was 67% in the second quarter of 2003 compared to
65% in the comparable quarter in 2002 and 64% in the prior
quarter. Cost of revenue for the first and second quarters of
2003 as well as the second quarter of 2002 includes a benefit
of $309,000, $569,000 and $1,000,000, respectively, from the
sale of inventory that was reserved for in the fourth quarter
of 2001. Excluding this benefit, gross margin would have been
66% in the second quarter of 2003, 62% in the second quarter
in 2002, and 63% in the prior quarter. This variation in gross
margin, both year-on-year and sequentially, is primarily due
to changes in sales volume and revenue mix.
-- Research, Development & Engineering (R, D & E) spending in the
second quarter of 2003 decreased 4% from the comparable
quarter in 2002. This decrease is primarily due to
cost-cutting measures implemented by the company, including
the workforce reduction announced by Cognex on August 1, 2002.
On a sequential basis, R, D & E spending increased 5% over the
prior quarter, primarily due to higher employee related
expenses.
-- Selling, General & Administrative (S, G & A) spending in the
second quarter of 2003 decreased 5% from the comparable
quarter in 2002 primarily due to the company's cost-cutting
measures. On a sequential basis, S, G & A increased 5% over
the prior quarter primarily due to higher travel and marketing
expenses, as well as the impact of foreign exchange rates on
the company's international operations.
-- Investment and other income was $1,615,000 in the second
quarter of 2003 compared to a loss of $3,963,000 in the
comparable quarter of 2002. This change is primarily due to
investment losses of $6,184,000 in the second quarter of 2002.
Excluding these losses, investment and other income decreased
year-on-year primarily due to lower yields on investments as
well as a lower average invested balance (over the past year,
the company used approximately $34 million in cash to
repurchase Cognex stock on the open market and to acquire the
wafer identification business of Siemens Dematic AG). On a
sequential basis, investment and other income increased 25%
primarily due to higher investment gains during the quarter.
Balance Sheet Highlights - June 29, 2003
-- Cognex's financial position remains very strong at June 29,
2003, with over $280,000,000 in cash and investments and no
debt. Cash and investments increased nearly $4,400,000 from
the end of 2002 primarily as a result of the company
generating positive cash flow from operations during the first
half of 2003. The company paid out approximately $7,600,000 of
cash in the second quarter to acquire Siemens Dematic AG's
wafer identification business.
-- Days sales outstanding (DSO) for the second quarter of 2003
was 62 days, compared to 58 days in the prior quarter. DSO
remains within the company's targeted range.
-- Inventories at June 29, 2003 decreased 12% from the end of
2002 as Cognex continued to work down excess inventory.
Business Trends and Financial Outlook
-- In the second quarter of 2003, bookings increased on a
sequential basis and the company's book-to-bill ratio was
above 1.0. This increase was primarily due to higher orders
from OEM customers in Japan and end-user customers outside of
the United States. As a result, Cognex expects revenue for the
third quarter of 2003 to increase on a sequential basis to
between $37 million and $40 million. At that revenue level,
gross margin is expected to be in the mid-60% range. Operating
expenses (R, D & E and S, G & A) for the third quarter are
expected to remain essentially flat on a sequential basis. The
effective tax rate for the third quarter of 2003 is expected
to be 31%. And, as a result of the above, earnings for the
third quarter are expected to be between $0.08 and $0.11 per
diluted share, excluding any benefit from the sale of
previously reserved inventory.
Analyst Conference Call and Simultaneous Webcast
Cognex Corporation will host a conference call to discuss its
results for the second quarter of 2003, as well as its financial
outlook, today at 5:00 p.m. eastern time. The telephone number to
listen to the live conference call is 800-344-6783 (or 312-461-9314 if
outside the United States) and the pass code is 684607. Internet users
can listen to a real-time audio broadcast of the conference call on
Cognex's website at http://www.cognex.com/investor/default.asp.
An audio replay of the conference call will begin at 9:00 p.m.
eastern time today and will be available until midnight on July 26,
2003. To listen to the conference call replay, the telephone number is
888-203-1112 (or 719-457-0820 if outside the United States) and the
pass code is 684607. In addition, an archive of the webcast will be
available on the company's website at
http://www.cognex.com/investor/default.asp.
About Cognex Corporation
Cognex Corporation designs, develops, manufacturers, and markets
machine vision systems, or computers that can "see". Cognex is the
world's leader in the machine vision industry, having shipped to date
more than 175,000 machine vision systems, representing over $1.4
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 which 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 which are used for inspecting the surfaces of products
that are manufactured in a continuous fashion, such as metals, paper,
nonwovens and plastics. In addition to its corporate headquarters in
Natick, Massachusetts, Cognex also has regional offices located
throughout North America, Japan, Europe, and Southeast Asia. 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 our
use of the words "expects," "believes," "projects," "anticipates,"
"will" and similar words and other statements of a similar sense.
These statements, which include statements regarding business trends
and the company's financial outlook, 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 involve risks and uncertainties that could cause actual
results to differ materially from those projected. Such risks and
uncertainties include: (1) the effect of the general economic
slowdown, including the worldwide slowdown in capital spending, and
the uncertainty of the timing and rate of recovery; (2) the
cyclicality of the semiconductor and electronics industry; (3) the
company's continued ability to achieve significant international
revenue; (4) the loss of, or significant curtailment of purchases by,
any one or more principal customers; (5) the inability to achieve
expected results from acquisitions; (6) the inability to design and
manufacture new products or products which respond to competitive
technology; and (7) the other risks detailed in the company's reports
filed periodically with the Securities and Exchange Commission,
including the company's Form 10-K for the fiscal year ended December
31, 2002. The company cautions readers not to place undue reliance
upon any such forward-looking statements, which speak only as of the
date made. The company disclaims any obligation subsequently to 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.
COGNEX CORPORATION
Statements of Operations
(In thousands, except per
share amounts)
Three Months Ended Six Months Ended
(unaudited) (unaudited)
June 29, March 30,June 30, June 29, June 30,
2003 2003 2002 2003 2002
-------------------------- -----------------
Revenue $36,622 $32,888 $26,671 $69,510 $48,451
Cost of revenue 11,999 11,716 9,228 23,715 17,793
-------- -------- -------- -------- --------
Gross margin 24,623 21,172 17,443 45,795 30,658
Percentage of revenue 67% 64% 65% 66% 63%
Research, development, and
engineering expenses 6,263 5,983 6,498 12,246 12,850
Percentage of revenue 17% 18% 24% 18% 27%
Selling, general, and
administrative expenses 13,949 13,244 14,704 27,193 27,422
Percentage of revenue 38% 40% 55% 39% 57%
-------- -------- -------- -------- --------
Operating income (loss) 4,411 1,945 (3,759) 6,356 (9,614)
Percentage of revenue 12% 6% (14%) 9% (20%)
Foreign currency gain
(loss) (1,164) (627) 471 (1,791) 164
Investment and other
income (loss) 1,615 1,294 (3,963) 2,909 (1,402)
-------- -------- -------- -------- --------
Income (loss) before taxes 4,862 2,612 (7,251) 7,474 (10,852)
Income tax provision
(benefit) 1,556 819 (2,539) 2,375 (3,620)
-------- -------- -------- -------- --------
Net income (loss) $3,306 $1,793 $(4,712) $5,099 $(7,232)
Percentage of revenue 9% 5% (18%) 7% (15%)
======== ======== ======== ======== ========
Net income (loss) per
diluted common and
common equivalent share $0.08 $0.04 $(0.11) $0.12 $(0.16)
======== ======== ======== ======== ========
Diluted weighted-average
common and common
equivalent shares
outstanding 43,678 43,557 44,172 43,640 44,072
======== ======== ======== ======== ========
COGNEX CORPORATION
Balance Sheets
(In thousands)
June 29, Dec. 31,
2003 2002
-------------------
(unaudited)
Assets
Cash and investments $280,351 $275,985
Accounts receivable 25,846 18,981
Inventories 16,598 18,952
Property, plant, and equipment 25,862 27,405
Other assets 52,758 44,180
--------- ---------
Total assets $401,415 $385,503
========= =========
Liabilities and Stockholders' Equity
Current liabilities $39,232 $30,983
Stockholders' equity 362,183 354,520
--------- ---------
Total liabilities and stockholders' equity $401,415 $385,503
========= =========
COGNEX CORPORATION
Additional Information Schedule
(Dollars in thousands)
Three Months Ended Six Months Ended
(unaudited) (unaudited)
June 29, March 30,June 30, June 29, June 30,
2003 2003 2002 2003 2002
--------------------------------------------
Revenue $36,622 $32,888 $26,671 $69,510 $48,451
======== ======== ======== ======== ========
Revenue by division:
Modular Vision Systems
Division 80% 81% 76% 80% 77%
Surface Inspection
Systems Division 20% 19% 24% 20% 23%
-------- -------- -------- -------- --------
Total 100% 100% 100% 100% 100%
======== ======== ======== ======== ========
Revenue by customer type:
End user 65% 62% 68% 64% 71%
Original equipment
manufacturer 35% 38% 32% 36% 29%
-------- -------- -------- -------- --------
Total 100% 100% 100% 100% 100%
======== ======== ======== ======== ========
Revenue by geography:
Japan 35% 34% 26% 35% 24%
United States 32% 31% 46% 31% 45%
Europe 25% 24% 24% 24% 27%
Other 8% 11% 4% 10% 4%
-------- -------- -------- -------- --------
Total 100% 100% 100% 100% 100%
======== ======== ======== ======== ========
Revenue by industry:
Semiconductor 22% 23% 24% 22% 21%
Electronics 23% 24% 18% 24% 18%
Surface inspection 20% 19% 24% 20% 23%
Automotive 12% 12% 11% 12% 11%
Packaging 2% 3% 4% 2% 3%
Consumer products 2% 2% 5% 2% 5%
Other 19% 17% 14% 18% 19%
-------- -------- -------- -------- --------
Total 100% 100% 100% 100% 100%
======== ======== ======== ======== ========
Revenue by product:
Vision sensors 27% 24% 24% 26% 24%
Surface inspection
vision systems 20% 19% 24% 20% 23%
Other vision systems 39% 43% 36% 40% 35%
Service 14% 14% 16% 14% 18%
-------- -------- -------- -------- --------
Total 100% 100% 100% 100% 100%
======== ======== ======== ======== ========
Number of new customer
accounts:
End user 219 210 258 429 497
Original equipment
manufacturer 23 36 29 59 58
-------- -------- -------- -------- --------
Total 242 246 287 488 555
======== ======== ======== ======== ========
CONTACT: Cognex Corporation
Susan Conway, 508-650-3353