Exhibit 99.1
Cognex Corporation Reports Third Quarter Results;
Machine Vision Company Announces
Significant Increases in Both Revenue and Profit
NATICK, Mass.--(BUSINESS WIRE)--Oct. 14, 2003--
Overview of the Quarter
Cognex Corporation (NASDAQ: CGNX) today announced revenue for the
third quarter ended September 28, 2003 of $38,704,000, and net income
of $5,138,000, or $0.11 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:
Earnings per
Time Period Revenue Net Income Diluted Share
Current quarter: Q3-03 $38,704,000 $5,138,000 $0.11
Prior year's quarter: Q3-02 $31,827,000 $781,000 $0.02
Increase from Q3-02 to Q3-03 22% 558% 450%
Prior quarter: Q2-03 $36,622,000 $3,306,000 $0.08
Increase from Q2-03 to Q3-03 6% 55% 38%
Revenue for the nine months ended September 28, 2003 was
$108,214,000, a 35% increase over the $80,278,000 reported for the
same nine-month period a year ago. And, for the first nine months of
2003, Cognex reported net income of $10,237,000, or $0.23 per diluted
share, compared to a net loss of $6,451,000, or $0.15 per diluted
share, for the comparable period in 2002.
"I am happy to report that in the third quarter, both revenue and
profits increased year-on-year and sequentially," said Dr. Robert J.
Shillman, Cognex's Chief Executive Officer and Chairman. "This is the
second quarter in a row that we reported favorable comparisons, and we
currently expect this positive trend to continue for our results in
Q4-03 as well. Although spending on capital equipment by manufacturing
companies remains tight, business continues to improve each quarter.
Irrespective of the pace of recovery, we intend to continue to use our
exceptionally strong balance sheet to pursue growth opportunities,
including acquisitions."
Details of the Quarter
Statement of Operations Highlights - Third Quarter of 2003
-- Revenue for the third quarter of 2003 increased 22% over the
comparable quarter in 2002 and 6% on a sequential basis. The
year-on-year increase is due to higher sales to Original
Equipment Manufacturer (OEM) customers in the semiconductor
and electronics industries as well as to end-user customers
across a variety of industries. The sequential increase is
primarily due to higher sales to OEM customers in the
semiconductor industry.
-- Gross margin was 66% in the third quarter of 2003 compared to
65% in the comparable quarter in 2002 and 67% in the prior
quarter. Cost of revenue for the second and third quarters of
2003 as well as the third quarter of 2002 includes a benefit
of $569,000, $296,000 and $1,156,000, respectively, relating
to an inventory reserve recorded in the fourth quarter of
2001. Excluding this benefit, gross margin would have been 65%
in the third quarter of 2003, 62% in the third quarter in
2002, and 66% in the prior quarter. The increase in gross
margin year-on-year is primarily due to the higher sales
volume. The decline in gross margin on a sequential basis is
due to pricing discounts given to certain customers as well as
lower service revenue resulting from the timing of educational
classes and consulting projects.
-- Research, Development & Engineering (R, D & E) spending in the
third quarter of 2003 decreased 7% 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. R, D & E
spending was essentially flat on a sequential basis.
-- Selling, General & Administrative (S, G & A) spending in the
third quarter of 2003 decreased 12% from the comparable
quarter in 2002 primarily due to the company's cost-cutting
measures. On a sequential basis, S, G & A spending was
essentially flat with the prior quarter.
-- Investment and other income was $1,145,000 in the third
quarter of 2003 compared to $2,626,000 in the comparable
quarter of 2002 and $1,615,000 in the prior quarter. The
decrease year-on-year is primarily due to lower yields on
investments. On a sequential basis, the decrease in investment
and other income is due to losses realized in the third
quarter as compared to gains in the second quarter.
-- The foreign currency gain was $828,000 in the third quarter of
2003 as compared to a gain of $109,000 in the comparable
quarter of 2002 and a loss of $1,164,000 in the prior quarter.
The company recognizes foreign currency gains and losses on
the collection and translation of accounts receivable balances
that are reported in one currency and collected in another.
Balance Sheet Highlights - September 28, 2003
-- Cognex's financial position remains very strong at September
28, 2003, with nearly $300,000,000 in cash and investments and
no debt. Cash and investments increased over $22,000,000 from
the end of 2002. This increase is the net result of positive
cash flow from operations and cash received from the exercise
of employee stock options, less the payment of approximately
$7,600,000 in the second quarter to acquire the Siemens
Dematic AG's wafer identification business as well as the
payment of approximately $2,600,000 in the third quarter for
the company's first-ever dividend.
-- Days sales outstanding (DSO) for the third quarter of 2003 was
66 days, compared to 62 days in the prior quarter. DSO remains
within the company's targeted range.
-- Inventories at September 28, 2003 decreased 20% from the end
of 2002, as inventory turns improved in the third quarter to a
rate equivalent to 3.4 times per year from 2.4 times per year
in the fourth quarter of 2002.
Business Trends and Financial Outlook
-- In the third quarter of 2003, bookings declined 4% on a
sequential basis and the company's book-to-bill ratio was
slightly below 1.0. This decrease was primarily due to the
timing of orders received by the company's Surface Inspection
Systems Division, which had record bookings in the first half
of 2003. Cognex expects revenue for the fourth quarter of 2003
to be between $39 million and $42 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 fourth
quarter are expected to remain essentially flat on a
sequential basis. The effective tax rate for the fourth
quarter of 2003 is expected to be 31%. And, as a result of the
above, earnings for the fourth quarter are expected to be
between $0.11 and $0.14 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 third quarter of 2003, as well as its financial
outlook, today at 5:30 p.m. eastern time. The telephone number for the
live call is 888-855-5428 (or 719-457-2665 if outside the United
States). A replay will begin tonight at 9:30 p.m. eastern time and
will end at midnight on Friday, October 17, 2003. The telephone number
for the replay is 888-203-1112 (or 719-457-0820 if outside the United
States). The access code for both the live call and the replay is
753785.
Internet users can listen to a real-time audio broadcast of the
conference call as well as an archive of the call on Cognex'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 use
of the words "expects," "believes," "projects," "anticipates," "will"
and similar words. These forward-looking statements, which include
statements regarding business trends and the company's financial
outlook, 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 with the SEC, including the company's Form 10-K for the fiscal
year ended December 31, 2002. You should not place undue reliance upon
any such forward-looking statements, which speak only as of the date
made. The company disclaims any obligation to update forward-looking
statements after the date of such statements.
COGNEX CORPORATION
Statements of Operations
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
Sept. 28, June 29, Sept. 29, Sept. 28, Sept. 29,
2003 2003 2002 2003 2002
(unaudited) (unaudited)
Revenue $38,704 $36,622 $31,827 $108,214 $80,278
Cost of revenue 13,190 11,999 11,065 36,905 28,858
Gross margin 25,514 24,623 20,762 71,309 51,420
Percentage of
revenue 66% 67% 65% 66% 64%
Research, development,
and engineering
expenses 6,246 6,263 6,714 18,492 19,564
Percentage of
revenue 16% 17% 21% 17% 24%
Selling, general, and
administrative
expenses 13,761 13,949 15,551 40,954 42,973
Percentage of
revenue 36% 38% 49% 38% 54%
Operating income (loss) 5,507 4,411 (1,503) 11,863 (11,117)
Percentage of
revenue 14% 12% (5%) 11% (14%)
Foreign currency gain
(loss) 828 (1,164) 109 (963) 273
Investment and other
income 1,145 1,615 2,626 4,054 1,224
Income (loss) before
taxes 7,480 4,862 1,232 14,954 (9,620)
Income tax provision
(benefit) 2,342 1,556 451 4,717 (3,169)
Net income (loss) $5,138 $3,306 $781 $10,237 $(6,451)
Percentage of
revenue 13% 9% 2% 9% (8%)
Net income (loss) per
diluted common and
common equivalent
share $0.11 $0.08 $0.02 $0.23 $(0.15)
Diluted weighted-average
common and common
equivalent shares
outstanding 44,890 43,678 43,751 44,120 43,817
COGNEX CORPORATION
Balance Sheets
(In thousands)
September 28, December 31,
2003 2002
(unaudited)
Assets
Cash and investments $298,371 $275,985
Accounts receivable 28,899 18,981
Inventories 15,152 18,952
Property, plant, and equipment 25,083 27,405
Other assets 55,130 44,180
Total assets $422,635 $385,503
Liabilities and Stockholders' Equity
Current liabilities $42,546 $30,983
Stockholders' equity 380,089 354,520
Total liabilities and stockholders' equity $422,635 $385,503
COGNEX CORPORATION
Additional Information Schedule
(Dollars in thousands)
Three Months Ended Nine Months Ended
Sept. 28, June 29, Sept. 29, Sept. 28, Sept. 29,
2003 2003 2002 2003 2002
(unaudited) (unaudited)
Revenue $38,704 $36,622 $31,827 $108,214 $80,278
Revenue by division:
Modular Vision
Systems Division 82% 80% 79% 81% 78%
Surface Inspection
Systems Division 18% 20% 21% 19% 22%
Total 100% 100% 100% 100% 100%
Revenue by customer type:
End user 60% 65% 67% 62% 70%
Original equipment
manufacturer 40% 35% 33% 38% 30%
Total 100% 100% 100% 100% 100%
Revenue by geography:
Japan 35% 35% 32% 35% 27%
United States 35% 32% 38% 33% 42%
Europe 24% 25% 24% 24% 26%
Other 6% 8% 6% 8% 5%
Total 100% 100% 100% 100% 100%
Revenue by industry:
Semiconductor 26% 22% 25% 24% 23%
Electronics 23% 23% 19% 24% 18%
Surface inspection 18% 20% 21% 19% 22%
Automotive 11% 12% 12% 12% 11%
Consumer products 2% 2% 4% 2% 4%
Packaging 1% 2% 4% 2% 4%
Other 19% 19% 15% 17% 18%
Total 100% 100% 100% 100% 100%
Revenue by product:
PC-based vision
systems 46% 43% 44% 45% 41%
Vision sensors 29% 27% 26% 27% 25%
Surface inspection
vision systems 13% 16% 16% 14% 17%
Service 12% 14% 14% 14% 17%
Total 100% 100% 100% 100% 100%
Number of new customer accounts:
End user 226 219 230 655 727
Original equipment
manufacturer 30 23 26 89 84
Total 256 242 256 744 811
CONTACT: Cognex Corporation
Susan Conway, 508-650-3353