Cognex Corporation Announces 2001 Results

NATICK, Mass.--(BUSINESS WIRE)--Jan. 28, 2002--Cognex Corporation (NASDAQ: CGNX) today announced revenue for the year ended December 31, 2001 of $140,729,000, compared to $250,726,000 reported in 2000. Cognex reported a loss for the year ended December 31, 2001 of $11,127,000, or $0.25 per diluted share, compared to net income of $68,148,000, or $1.49 per diluted share, in 2000. Reported results for 2001 include pre-tax charges recorded in the fourth quarter totaling $27,547,000 for excess inventory and the impairment of intangible assets. Excluding these charges, net income for 2001 would have been $8,267,000, or $0.18 per diluted share.

For the fourth quarter of 2001, revenue was $25,170,000, compared to $66,084,000 for the same period a year ago. Cognex reported a loss for the fourth quarter ended December 31, 2001 of $20,335,000, or $0.46 per diluted share, compared with net income of 15,987,000, or $0.36 per diluted share, for the fourth quarter of 2000. Excluding the charges recorded in the fourth quarter, the company would have reported a loss of $941,000, or $0.02 per diluted share.

Results for the quarter and year ended December 31, 2001 include pre-tax charges of $16,615,000 in cost of revenue and $10,932,000 in operating expenses. The pre-tax charge in cost of revenue reflects $16,300,000 for excess inventory resulting from the extended slowdown in business as well as expected customer transition plans, and $315,000 for the write-down of complete technology. This charge reduced the gross margin for the quarter from 62% to (4%) and it reduced the gross margin for the year from 68% to 56%. In addition, the charge in cost of revenue reduced earnings for the quarter by $0.24 per diluted share and it reduced earnings for the year by $0.23 per diluted share. The pre-tax charge in operating expenses reflects the write-down of goodwill to its estimated fair value. For the quarter and year ended December 31, 2001, this charge reduced earnings by $0.20 per diluted share.

'The very disappointing results for 2001 were due almost entirely to the worldwide slowdown in capital spending by manufacturers in the semiconductor and electronics industries. However, not all of the news in 2001 was bad,' said Dr. Robert J. Shillman, Cognex's President, Chief Executive Officer, and Chairman. 'During the year, we closed a record number of new customers...both OEM and end-user. We had record revenue from our surface inspection systems, primarily due to an increase in sales of SmartView(R), our surface inspection product introduced in 2000. Revenue from In-Sight(TM), Cognex's family of low-cost vision sensors, more than doubled over the level achieved in the prior year. And, we introduced a number of new products, including a vision sensor for tracking and identifying wafers as well as systems for inspecting the packaging of consumer products. We also introduced the world's smallest high-resolution digital CMOS camera designed specifically for machine vision applications.'

Dr. Shillman continued, 'We ended 2001 with only $16 million of orders in backlog, which is our lowest year-end backlog since 1993. In addition, the order rate since the beginning of 2002 has continued to be quite low. Based upon these facts, we currently believe that revenue for the first quarter of 2002 will be in the range of $21 million to $23 million, and that we will report a loss for the quarter in the range of $0.05 to $0.08 per diluted share. If business continues at the current dismal run rate, it is likely that we will report a loss in each subsequent quarter of 2002, and, therefore, for the full year as well.'

'Like almost every other company that serves the semiconductor and electronics marketplace, we are losing money. But unlike many others, we have an exceptionally strong balance sheet with over $292 million in cash and investments...accumulated and carefully managed in our prior 58 quarters of profitability. Because of our financial strength, we can afford to continue to invest in both new product development and in acquisitions until business conditions improve. At that time, we expect to emerge from this downturn in an even stronger position relative to our competition than we have ever been in the past,' concluded Dr. Shillman.

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Analyst Conference Call and Simultaneous Webcast

Cognex Corporation will host an analyst conference call to discuss its results for the fourth quarter and full year of 2001, as well as the financial outlook, today at 5:30 p.m. eastern. The telephone number to listen to the live conference call is 646/862-1120. A replay of the conference call will begin at approximately 7:30 p.m. eastern today and will be available for one week. To listen to the replay of the conference call, the telephone number is 800/633-8284 (or 858/812-6440 if outside the United States) and the access code for the replay is 20070800.

Internet users can listen to a real-time audio broadcast of the conference call on Cognex's website at http://www.cognex.com. An archive of the webcast will be available on Cognex's website for one week.

About Cognex Corporation

Cognex Corporation designs, develops, manufactures, 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 150,000 machine vision systems, representing over $1 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 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 involve risks and uncertainties that could cause actual results to differ materially from those projected or anticipated. 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. 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. Further discussions of risk factors are also available in the company's registration statements filed with the Securities and Exchange Commission.

CONTACT:
Cognex Corporation
Susan Conway
508/650-3353