A Message from Doctor Bob:
What’s good for business
is good for America
Doctor Bob Addresses |
Factory Automation Revenue($ millions)(Click to Enlarge)
We’re rolling!Cognex set a new record for factory automation revenue, surpassing the previous record set in 2010 by 18%. |
(Click to Enlarge) |
Cognex Quarterly
|
Even protesters benefit
|
Dear Shareholders:
Cognex had a fantastic year in 2011. We reported record revenue, record net income and record earnings per share. My partner, Rob Willett, provides more details about the progress that we made in 2011 in his CEO letter, but here’s the short version: WOW!
At any other time in America’s history, our efforts would be applauded and our results would be publicized as an example for others to follow. Our financial success would be described as the reward for our hard work, smart decisions and willingness to take calculated risks. However, that’s not what’s happening these days. Things have changed.
During his 2008 campaign, President Barack Obama promised that he would bring fundamental change to our society, and, unfortunately, he has delivered on that promise. Since his election, a worrisome, anti-business movement has emerged that is harmful to our nation. It not only criticizes businesses and the people who run them, but it demonizes them. It is a divisive movement that pits our citizens against each other, and it could result in a destructive, downward spiral for our economy and our country.
In response to this push towards socialism, we are launching the “Business Is Good” Campaign. The objective of the B.I.G. Campaign is to spread the word about how business and free enterprise are at the core of America’s success. We want everyone to understand that business not only creates wealth for those who work hard, work smart and take calculated risks, but it also creates jobs that provide opportunity and the means for a better life for everyone who is willing to invest time and effort to help their business succeed. What about those who cannot or will not work? Well, they also benefit because business provides goods and services that they use every day, and tax dollars for social welfare programs that support them.
“Our investors helped build a company that for the past 31 years
has created new technologies and a wide range of sophisticated vision-based products…”
Cognex is a great example of the benefits of the free enterprise system. Our company was founded on the dreams of three young people at a time in the United States when entrepreneurship was encouraged and success in business was praised. What began in 1981 as a startup funded by my life savings of $87,000 is now the largest and most successful machine vision company in the world, with a market value of over $1.5 billion.
In our 31 years in business, we never…NEVER…took money from the government to fund our growth. Instead, we turned to the capital markets…both independent and corporate venture capital firms…to raise the necessary funds to grow our company until we reached profitability. Those early financial investors profited handsomely from their investments, and I am very happy about that. We had other investors too…the employees who joined us early on and accepted lower-than-usual salaries in exchange for stock options. Their investment of sweat equity also paid off handsomely. Our philosophy of sharing risks and rewards with our employees continues to this day as Cognoids continue to accept lower salaries than they could earn elsewhere in exchange for a chance to participate in the company’s growth.
Their investments in our company…both the cash from venture capitalists and the efforts of our employees…resulted in a good financial return, and those investments also delivered tremendous value to society in general. Our investors helped build a company that for the past 31 years has created new technologies and a wide range of sophisticated vision-based products that are used by customers around the world to produce high-quality goods at the lowest possible cost. And that benefits consumers everywhere!
How do you think that it’s possible to purchase a smartphone for $180, a flat screen monitor for $99, or a DVD player for $25? It’s because every one of those items…and just about everything else that you buy these days…is manufactured in highly-automated factories where machine vision…most often Cognex machine vision…is a key enabler. And, our vision systems dramatically reduce the amount of scrap, so the environment wins too. Because of the valuable capabilities that Cognex products deliver, our customers have purchased more than 700,000 units and paid us more than $3 billion for them since 1981.
We not only created new technologies and products over the past 31 years, we also created jobs! Last year alone we filled 95 new positions, bringing us to a total of 919 energetic, creative Cognoids around the world. These positions were mostly in engineering to accelerate the pace of innovation to get products to market sooner, and in sales, service and marketing to grow our worldwide presence.
“We shared our success with our shareholders…those investors who took calculated risk and bought Cognex stock.”
Lately, businesses are criticized for not paying their fair share, and for caring about nothing but the bottom line. Our results prove otherwise. Cognex certainly cared about our customers in 2011; you can’t experience the kind of revenue growth that we reported unless you are meeting your customers’ needs. But we also shared our success with everyone who contributed to it. Check these numbers out:
- Cognoids took home more than $100 million in their paychecks in 2011. That’s money they used to pay rent or mortgages, and to feed and provide for their families. Business is good!
- Our vendors were paid more than $120 million for their goods and services…and, per our long-standing policy, we paid them either on time or even ahead of time! Business is good!
- Our neighbors received a big bonus in 2011. Our tax dollars helped local, regional, state and national governments provide services their citizens depend on. How much did we share with them? One heck of a lot! We paid more than $20 million in taxes in 2011, with most being income taxes. So, tell me again why making a large profit is a bad thing? Business is good!
- Last but not least, we shared our success with our shareholders…those investors who took calculated risk and bought Cognex stock. We increased our quarterly dividend twice during 2011, and distributed $15 million of dividends to them. In addition, our investors had the chance to participate in the growth of our stock; $1,000 of Cognex stock on January 1, 2011 is worth $1,500 today as I write this letter (February 14, 2012). Business is good!
“The B.I.G. Campaign is our attempt to counteract the ‘Big Lie’ that successful businesses and the people who run them are bad.”
Politicians on the left shout about the need for government to “spread the wealth around.” As you can see from the chart to the left, Cognex did that without government intervention. And, even after that, we ended the year with $357 million in cash and investments, which is $74 million more than we had at the start of 2011, and we have no debt! Some on the left may view our “cash hoard” suspiciously, but it is money we earned from our honest efforts and saved over the past 31 years. It is both the reward and the measurement stick of our success…and we’re proud of it!
Now what are we going to do with that cash? Divvy it up between our board members and executive officers? Buy a corporate jet? Hang expensive artwork in our company headquarters? Not a chance! Just like the first dollar that I invested in Cognex, we intend to put that cash to productive use. Perhaps we’ll use it to acquire companies that broaden our product offerings, add new technologies to our products or expand our sales channels; or to fund more engineering projects that fuel additional growth; or to pay higher dividends as a reward for our shareholders’ faith in us; or to repurchase Cognex stock to reduce the “dilutive effect” of employee stock options; or to support science and math education programs and other worthwhile causes in the towns that Cognex calls home. What’s so awful about that?
In summary, Cognex invents new technologies and develops products that benefit all of society; Cognex creates jobs; Cognex pays taxes; Cognex donates to charities; Cognex pays dividends; Cognex stock has increased in value…which is realized by our shareholders and by many of our employees who hold stock options. So is business good? You bet it is!
The media and politicians on the left enjoy telling stories of businessmen gone bad. Sure, there are a few rotten apples in every barrel. But the vast majority of businessmen and businesswomen are ethical, hardworking people who care about the enterprises that they run, and care about the people who depend on them. The B.I.G. Campaign is our attempt to counteract the “Big Lie” that successful businesses and the people who run them are bad.
When I was a boy, there was a common saying which was generally accepted to be true: “What’s good for General Motors is good for America.” The essential meaning of that saying is still true today…what’s good for business is good for America. As long as I am your Chairman, you can be certain that Cognex will continue to work hard to be a model of what a fine company should be…a company that serves the interests of its customers, employees, vendors, neighbors and, of course, you, our shareholders.
Thank you…and remember to vote B.I.G.!
Sincerely yours,
Robert J. Shillman (“Doctor Bob”)
Chairman and Chief Culture Officer