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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 October 3, 2004 or

o      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
incorporation or organization)
(I.R.S. Employer 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.
 
xYes          o No

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act)
 
xYes          o No
As of October 31, 2004, there were 46,078,605 shares of Common Stock, $.002 par value, of the registrant outstanding.




 
     
 



INDEX

 

 
PART I
 
FINANCIAL INFORMATION
 
   
Item 1.
 
Financial Statements
 
 
Consolidated Statements of Operations for the three-month and nine-month periods ended October 3, 2004 and September 28, 2003
 
 
Consolidated Balance Sheets at October 3, 2004 and December 31, 2003
 
 
Consolidated Statement of Stockholders' Equity for the nine-month period ended October 3, 2004
 
 
Consolidated Condensed Statements of Cash Flows for the nine-month periods ended October 3, 2004 and September 28, 2003
 
 
Notes to Consolidated Financial Statements
 
   
Item 2.
 
Management's Discussion and Analysis of Financial Condition and Results of Operations
 
   
Item 3.
 
Quantitative and Qualitative Disclosures About Market Risk
 
   
Item 4.
 
Controls and Procedures
 
   
PART II
 
OTHER INFORMATION
 
   
Item 1.
 
Legal Proceedings
 
   
Item 2.
 
Unregistered Sales of Equity Securities and Use of Proceeds
 
   
Item 3.
 
Defaults Upon Senior Securities
 
   
Item 4.
 
Submission of Matters to a Vote of Security Holders
 
   
Item 5.
 
Other Information
 
   
Item 6.
 
Exhibits
 
   
 
Signatures
 
   

 

 
     
 

PART I: FINANCIAL INFORMATION
 

ITEM 1: FINANCIAL STATEMENTS
 
 
COGNEX CORPORATION
 
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)

 
 
Three Months Ended
Nine Months Ended
   
October 3,
    
September 28,
    
October 3,
    
September 28,
   
2004
    
2003
    
2004
    
2003
 
(unaudited)
(unaudited)
                       
Revenue   
                      
Product
$
48,319
  
$
33,965
  
$
138,839
  
$
93,604
Service
  
7,093
    
4,739
    
19,209
    
14,610
   
55,412
    
38,704
    
158,048
    
108,214
Cost of revenue  
                      
Product
  
11,106
    
10,139
    
34,747
    
28,004
Service
  
3,780
    
3,051
    
10,833
    
8,901
   
14,886
    
13,190
    
45,580
    
36,905
Gross margin 
                      
Product
  
37,213
    
23,826
    
104,092
    
65,600
Service
  
3,313
    
1,688
    
8,376
    
5,709
   
40,526
    
25,514
    
112,468
    
71,309
                       
Research, development, and engineering expenses
  
6,552
    
6,246
    
20,105
    
18,492
                       
Selling, general, and administrative expenses
  
18,099
    
13,761
    
51,981
    
40,954
                       
Operating income
  
15,875
    
5,507
    
40,382
    
11,863
                       
Foreign currency gain (loss)
  
(502
)
  
828
    
73
    
(963)
                       
Investment and other income
  
1,043
    
1,145
    
3,348
    
4,054
                       
Income before provision for income taxes
  
16,416
    
7,480
    
43,803
    
14,954
                       
Income tax provision
  
4,761
    
2,342
    
12,703
    
4,717
                       
Net income
$
11,655
  
$
5,138
  
$
31,100
  
$
10,237
                       
Net income per common and common-equivalent share:
                      
Basic
$
0.26
 
$
0.12
 
$
0.69
 
$
0.24
Diluted
$
0.25
 
$
0.11
 
$
0.66
 
$
0.23
                       
Weighted-average common and common-equivalent shares outstanding:
                      
Basic
  
44,928
    
43,153
    
45,281
    
42,947
Diluted
  
46,415
    
44,890
    
47,424
    
44,120
                       
Cash dividends per common share
$
0.08
  
$
0.06
 
$
0.20
  
$
0.06
                       



The accompanying notes are an integral part of these consolidated financial statements.

 
  1  
 

COGNEX CORPORATION
 
CONSOLIDATED BALANCE SHEETS
(In thousands)




   
October 3,
  
December 31,
2004
  
2003
ASSETS
  
(unaudited)
 
    
Current assets:
          
Cash and cash equivalents
$
65,105
  
$
76,227
Short-term investments
  
181,764
   
56,406
Accounts receivable, less reserves of $2,839 and $2,613 in 2004 and 2003, respectively
  
37,495
    
26,697
Inventories
  
16,715
    
15,519
Deferred income taxes
  
7,653
    
8,223
Prepaid expenses and other current assets
  
12,509
    
14,526
Total current assets
  
321,241
    
197,598
           
Long-term investments
  
135,324
    
170,869
Property, plant, and equipment, net
  
23,835
    
24,980
Deferred income taxes
  
19,440
    
19,428
Intangible assets, net
  
7,341
    
8,582
Goodwill, net
  
6,562
    
7,222
Other assets