What changed in this filing

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Item 2. Management’s Discussion and Analysis

2020-07-29 compared with 2020-04-27 · 105 added, 75 removed, 74 unchanged (71% of the section changed)

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These statements are based upon our current estimates and expectations as to prospective events and circumstances, which may or may not be in our control and as to which there can be no firm assurances given.

These forward-looking statements, which include statements regarding business and market trends, future financial performance, the expected impact of the COVID-19 outbreak on our business and results of operations, customer order rates and timing of related revenue, future product mix, research and development activities, investments, strategic plans, and estimated tax benefits and expenses and other tax matters, involve known and unknown risks and uncertainties that could cause actual results to differ materially from those projected.

These forward-looking statements, which include statements regarding business and market trends, future financial performance, the expected impact of the COVID-19 pandemic on our business and results of operations, customer order rates and timing of related revenue, future product mix, restructuring and other cost savings initiatives, research and development activities, investments, liquidity, strategic plans, and estimated tax benefits and expenses and other tax matters, involve known and unknown risks and uncertainties that could cause actual results to differ materially from those projected.

Such risks and uncertainties include:

(1) the impact, duration and severity of the COVID-19 outbreak;

(2) current and future conditions in the global economy, including the impact of the COVID-19 outbreak and the imposition of tariffs or export controls;

(1) the impact, duration and severity of the COVID-19 pandemic;

(2) current and future conditions in the global economy, including the impact of the COVID-19 pandemic and the imposition of tariffs or export controls;

(3) the loss of, or curtailment of purchases by, a large customer;

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(20) potential impairment charges with respect to our investments or for acquired intangible assets or goodwill;

and (21) exposure to additional tax liabilities.

(21) exposure to additional tax liabilities;

and (22) potential disruptions to our business due to restructuring activities and the failure of such activities to generate the anticipated cost savings.

The foregoing list should not be construed as exhaustive and we encourage readers to refer to the detailed discussion of risk factors included in Part I - Item 1A of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019, as updated by Part II - Item 1A of this Quarterly Report on Form 10-Q.

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Cognex products are also used to automate distribution processes in the logistics industry, including for applications in retail distribution and ecommerce to scan, track, and sort goods through distribution centers.

Revenue for the first quarter of 2020 totaled $167,235,000, representing a decrease of 4% from the first quarter of 2019.

The decrease was driven by lower revenue from the automotive industry, which is our largest market, partially offset by higher revenue from the electronics industry.

Although revenue for the first quarter of 2020 was adversely impacted by the COVID-19 outbreak, first in China and then later in the quarter in other regions, we expect this impact to be more significant to our business in the second quarter of 2020.

Gross margin was 75% for the first quarter of 2020 compared to 73% for the first quarter of 2019 due primarily to favorable product mix toward higher-margin sales in the electronics industry.

Operating expenses increased by 8% over the prior year due to investments to support

the Company's strategic priorities, including ongoing costs related to the acquisition of Sualab Co., Ltd.

in the fourth quarter of 2019.

The Company also recorded higher stock expense and incentive compensation accruals in the first quarter of 2020.

As a result of the lower revenue level and continued investments, operating income was 13% of revenue for the first quarter of 2020 compared to 17% for the first quarter of 2019, net income was 12% of revenue for the first quarter of 2020 compared to 19% for the first quarter of 2019, and net income per diluted share was $0.12 for the first quarter of 2020 compared to $0.19 for the first quarter of 2019.

Revenue for the second quarter of 2020 totaled $169,097,000, representing a decrease of 15% from the second quarter of 2019.

Our business has been adversely and materially impacted by deteriorating global economic conditions resulting from the COVID-19 pandemic.

This impact was most notable in the automotive industry, our largest market, for which revenue continued to decline from the first quarter of 2020 and was significantly lower than

the second quarter of 2019.

Gross margin was 70% for the second quarter of 2020 compared to 74% for the second quarter of 2019 due to higher provisions for excess and obsolete inventories as a result of the deteriorating business conditions.

Operating expenses increased by 30% from the second quarter of 2019.

In order to more closely align our cost structure to the lower level of business, we implemented a variety of cost-cutting measures in the second quarter, including a workforce reduction and office closures, and recorded restructuring charges of $14,798,000 from these actions.

The significant decline in business levels also triggered a review of long-lived assets that resulted in intangible asset impairment charges of $19,571,000.

Excluding these charges, operating expenses decreased by 6% from the second quarter of 2019 due primarily to lower travel expenses resulting from COVID-19 restrictions.

As a result of the lower revenue level and charges related to excess inventories, restructuring actions, and intangible asset impairments, we reported an operating loss of 4% of revenue in the second quarter of 2020 compared to an operating profit of 26% of revenue in the second quarter of 2019.

We reported a net loss of 1% of revenue in the second quarter of 2020, or $0.01 per share, compared to a net profit of 24% of revenue in the second quarter of 2019, or $0.28 per share.

Results of Operations

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GAAP) and should be considered in addition to, and not as a substitute for, results prepared in accordance with U.S.

Revenue for the first quarter of 2020 totaled $167,235,000, representing a decrease of $6,249,000, or 4%, over the first quarter of 2019.

Revenue decreased by $29,950,000, or 15%, for the three-month period and decreased by $36,199,000, or 10%, for the six-month period.

Changes in foreign currency exchange rates did not have a material impact on revenue.

The COVID-19 outbreak had a modest adverse impact on our business in the first quarter of 2020, primarily near the end of the quarter.

This impact included lower demand for our products in certain industries, disruptions to our supply chain, and the shutdown of certain customer facilities.

This impact was most significant in the automotive industry, for which revenue had been declining prior to the COVID-19 outbreak and this decline was further exacerbated by the effects of COVID-19.

These conditions also had a lesser impact on the timing of revenue from customers in the logistics industry, resulting in delays in shipments and on-site customer installations.

The decrease in automotive and other industries was partially offset by higher revenue from customers in the electronics industry, as well as from customers in a few other smaller industries we serve.

From a geographic perspective, revenue from customers based in the Americas decreased by 7% and revenue from customers based in Europe decreased by 18%, with the most significant decrease coming from the automotive industry.

Revenue from customers based in Greater China and other countries in Asia, however, increased by 16% and 21%, respectively, as higher revenue from the electronics industry was only partially offset by lower revenue from the automotive industry.

As of the date of this report, we expect revenue for the second quarter of 2020 to be lower than the first quarter of 2020 due to the continued impact of COVID-19 on our business.

This impact has expanded and accelerated into the second quarter, as we have noted lower demand for our products in certain industries, additional disruptions to our supply chain, longer customer delivery times, and further shutdowns of customer facilities.

The shutdown of certain customer facilities may impact our ability to deliver products and perform on-site services, which may delay revenue recognition.

While it is difficult for us to quantify this impact due to many factors beyond our control and knowledge, including changing governmental regulations and the scope and duration of social distancing and commerce restrictions, we expect the impact on our business to be more significant in the second quarter than the first quarter of 2020.

Gross margin as a percentage of revenue was 75% for the first quarter of 2020 compared to 73% for the first quarter of 2019.

The increase in the gross margin percentage was due primarily to favorable product mix toward higher-margin sales in the electronics industry.

As of the date of this report, we expect gross margin as a percentage of revenue for the second quarter of 2020 to be in the mid-70s range, but lower than the gross margin reported for the first quarter of 2020 due to the anticipated lower revenue level and less favorable product mix.

We also expect to incur higher delivery costs in the second quarter resulting from expediting materials and freight surcharges passed on by carriers as a result of COVID-19.

Deteriorating global economic conditions resulting from the COVID-19 pandemic, which had a modest impact on our business in the first quarter of 2020, had a more significant impact in the second quarter, as we noted lower demand for our products in certain industries, additional disruptions to our supply chain, longer customer delivery times, and further shutdowns of customer facilities.

This impact was most notable in the automotive industry, for which revenue declined from the first quarter of 2020 and was significantly lower than the prior year for both the three-month and six-month periods.

Revenue in the logistics industry increased from the first quarter of 2020 and was higher than the prior year for both the three-month and six-month periods driven by higher demand from ecommerce customers.

This was partially offset, however, by lower demand from retail distribution customers and delays in revenue recognition related to customer facility access for on-site installations caused by COVID-19 conditions.

The timing of revenue recognition also impacted revenue in the electronics industry, which was lower than the prior year for the three-month period and relatively flat for the six-month period.

From a geographic perspective, revenue from customers based in the Americas decreased by 11% for the three-month period and 9% for the six-month period with the most significant decrease coming from the automotive industry.

Revenue from customers based in Europe decreased by 40% for the three-month period and 29% for the six-month period also due to lower sales in the automotive industry, as well as in the electronics industry.

Revenue from customers based in Greater China decreased by 11% for the three-month period due to lower sales from the automotive industry and were relatively flat for the six-month period, as lower revenue in the automotive industry was offset by higher revenue in the electronics industry.

Revenue from other countries in Asia increased by 23% for the three-month period and 22% for the six-month period due to higher sales from the electronics industry.

As of the date of this report, we expect revenue for the third quarter of 2020 to be higher than both the second quarter of 2020 and the third quarter of 2019 due to anticipated higher revenue in the electronics industry.

We expect COVID-19 to continue to adversely impact our revenue in the third quarter of 2020 as compared to the prior year outside of electronics, logistics ecommerce, and a few smaller industries, with the most notable adverse impact expected in the automotive industry.

It is difficult for us to quantify this impact due to many factors beyond our control and knowledge, including changing governmental regulations and the scope and duration of social distancing and commerce restrictions, including access to customer facilities for on-site installations.

Gross margin as a percentage of revenue was 70% and 73% for the three-month and six-month periods in 2020, respectively, compared to 74% for both periods in 2019.

The decrease in the gross margin percentage was due to higher provisions for excess and obsolete inventories, which totaled $7,718,000 and $8,783,000 for the three-month and six-month periods ended June 28, 2020, respectively, compared to $933,000 and $1,713,000 for the same periods in 2019.

The higher level of provisions recorded in the three-month period ended June 28, 2020 was due to lower projected sales of excess inventories as a result of the deteriorating global economic conditions from the COVID-19 pandemic.

Gross margin as a percentage of revenue would be relatively consistent for all periods presented excluding the provisions for excess and obsolete inventories.

As of the date of this report, we expect gross margin as a percentage of revenue for the third quarter of 2020 to be similar to the percentage reported in the first half of 2019.

Although we expect provisions for excess and obsolete inventory to be lower than the second quarter of 2020, we expect a greater percentage of revenue from application-specific customer solutions, which have relatively lower margins.

Operating Expenses

Research, development, and engineering (RD&E) expenses increased by $5,704,000, or 19%, from the first quarter of 2019 as detailed in the table below (in thousands).

Three-month period

RD&E expenses for the first quarter of 2019

Research, development, and engineering (RD&E) expenses increased by $2,318,000, or 8%, for the three-month period and $8,022,000, or 14%, for the six-month period as detailed in the table below (in thousands).

Three-month period Six-month period

RD&E expenses in 2019 $ 28,079 $ 58,321

Personnel-related costs 1,405 3,033

Acquisition deferred compensation 1,310 2,620

Stock expense

Incentive compensation 1,601 2,549

RD&E expenses for the first quarter of 2020

RD&E expenses increased due to higher personnel-related costs resulting primarily from headcount additions to support the Company's strategic priorities, of which $914,000 related to a team of deep learning engineers from the Company's acquisition of Sualab Co., Ltd.

in the fourth quarter of 2019.

The consideration from this acquisition included deferred payments that are being recorded as compensation expense over four years from the closing date, which accounted for an additional $1,310,000 of the increase in RD&E expense.

The Company recorded higher stock expense and incentive compensation accruals in the first quarter of 2020.

Stock expense was higher than the prior year due partially to the impact of revised forfeiture rates.

Annual incentive compensation plans were reset at the beginning of the year with relevant performance goals for 2020.

Travel expense (671) (771)

Stock expense (1,130) (172)

Other (197) 763

RD&E expenses in 2020 $ 30,397 $ 66,343

RD&E expenses increased due to higher personnel-related costs primarily from headcount additions related to a team of deep learning engineers from the Company's acquisition of Sualab in the fourth quarter of 2019.

The consideration for this acquisition included deferred payments that are being recorded as compensation expense over four years from the closing date, which accounted for an additional increase in RD&E expense of $1,310,000 for the three-month period and $2,620,000 for the six-month period.

In addition, the Company recorded higher incentive compensation accruals for annual plans with relevant performance goals for 2020.

We will continue to monitor the achievement of these performance goals for the remainder of the year due to the impact of COVID-19 on our business, among other factors, which may result in adjustments to our incentive compensation accruals in future quarters.

RD&E expenses as a percentage of revenue were 21% for the first quarter of 2020 compared to 17% for the first quarter of 2019.

We believe that a continued commitment to RD&E activities is essential in order to maintain or achieve product leadership with our existing products, to provide innovative new product offerings, as well as to provide engineering support for large customers.

These increases were partially offset by lower travel expenses resulting from COVID-19 restrictions.

We expect these restrictions to continue in the third quarter of 2020.

The Company also recorded lower stock expense as a result of a lower total value of awards granted in 2020 as compared to 2019, as well as the impact on the timing of stock expense recognition from a shift in our compensation practices toward the granting of restricted stock units with cliff vesting.

In addition, credits were recorded to stock expense in the second quarter of 2020 for awards cancelled as a result of a workforce reduction.

RD&E expenses as a percentage of revenue were 18% and 20% for the three-month and six-month periods in 2020, respectively, compared to 14% and 16% for the same periods in 2019.

We believe that a continued commitment to RD&E activities is essential in order to maintain or achieve product leadership with our existing products and to provide innovative new product offerings, as well as to provide engineering support for large customers.

In addition, we consider our ability to accelerate time to market for new products to be critical to our revenue growth.

Therefore, we expect to continue to make significant RD&E investments in the future, and currently intend to continue our product development plans during periods of lower revenue levels, which may result in a higher level of RD&E expenses as a percentage of revenue in future quarters compared to the 21% reported in the first quarter of 2020.

Therefore, we expect to continue to make significant RD&E investments in the future, and currently intend to continue our product development plans during periods of lower revenue levels.

Selling, General, and Administrative Expenses

Selling, general, and administrative (SG&A) expenses increased by $2,327,000, or 3%, from the first quarter of 2019 as detailed in the table below (in thousands).

Three-month period

SG&A expense in the first quarter of 2019

Personnel-related costs

Selling, general, and administrative (SG&A) expenses decreased by $8,092,000, or 12%, for the three-month period and $5,765,000, or 4%, for the six-month period as detailed in the table below (in thousands).

Three-month period Six-month period

SG&A expenses in 2019 $ 68,245 $ 135,056

Travel expense (4,843) (6,588)

Foreign currency exchange rate changes (1,074) (1,857)

Marketing programs (949) (1,231)

Contract labor (636) (1,126)

Stock expense (1,810) (25)

Incentive compensation 2,654 3,783

Travel expense

SG&A expense in the first quarter of 2020

SG&A expenses increased due to higher personnel-related costs resulting primarily from headcount additions and the reallocation of sales resources to support the Company's strategic priorities.

Although our total sales personnel at the end of the first quarter of 2020 was relatively flat with the first quarter of 2019, we have reallocated our sales resources to areas of our business where we see the highest opportunity for growth, which has resulted in a shift toward regions with relatively higher labor costs.

The Company recorded higher stock expense and incentive compensation accruals in the first quarter of 2020.

Stock expense was higher than the prior year due partially to the impact of revised forfeiture rates.

Annual incentive compensation plans were reset at the beginning of the year with relevant performance goals for 2020.

Other (1,434) 1,279

SG&A expenses in 2020 $ 60,153 $ 129,291

SG&A expenses decreased due to lower travel expenses resulting from COVID-19 restrictions.

We expect these restrictions to continue in the third quarter of 2020.

Foreign currency exchange rate changes also resulted in a lower level of SG&A expenses in 2020, as costs denominated in foreign currencies were translated to U.S.

Dollars at a lower rate due to a relatively stronger U.S.

In addition, the Company reduced spending on marketing programs and contract labor in response to the lower business levels.

In addition, credits were recorded to stock expense in the second quarter of 2020 for awards cancelled as a result of a workforce reduction.

These decreases were partially offset by higher incentive compensation accruals for annual plans with relevant performance goals for 2020.

These increases were partially offset by lower travel expenses resulting from COVID-19 restrictions.

We expect these restrictions to continue in the second quarter of 2020, resulting in a further reduction in travel expenses compared to both the first quarter of 2020 and the second quarter of 2019.

Restructuring Charges

On May 26, 2020, the Company's Board of Directors approved a restructuring plan intended to reduce the Company's operating costs, optimize its business model, and address the impact of the COVID-19 pandemic.

The restructuring plan included a global workforce reduction of approximately 8% and office closures.

The Company estimates the total restructuring charges from these actions to be approximately $16,445,000, of which $14,798,000 has been recorded in the second quarter.

The remaining charges of approximately $1,647,000 are expected to be recognized during the second half of 2020, primarily in the third quarter.

The actions described above, together with actions already taken to reduce the Company's overall costs, were designed to generate an aggregate annualized cost savings of approximately $25,000,000 versus the Company's original planned cost structure.

Management does not believe these cost-saving measures will impair the Company's ability to conduct its key business functions.

Intangible Asset Impairment Charges

The significant decline in business levels triggered a review of long-lived assets for potential impairment in the second quarter of 2020.

This review resulted in intangible asset impairment charges totaling $19,571,000 recorded in the second quarter, primarily related to lower projected cash flows from the technologies and customer relationships acquired from Sualab as a result of the deteriorating global economic conditions from the COVID-19 pandemic.

Non-operating Income (Expense)

The Company recorded foreign currency losses of $3,003,000 for the first quarter of 2020 and $248,000 for the first quarter of 2019.

The Company recorded foreign currency gains of $336,000 and foreign currency losses of $2,667,000 for the three-month and six-month periods in 2020, respectively, compared to foreign currency gains of $140,000 and foreign currency losses of $108,000 for the same periods in 2019.

Foreign currency gains and losses result primarily from the revaluation and settlement of accounts receivable, accounts payable, and intercompany balances that are reported in one currency and collected in another.

The increase in foreign currency losses in the first quarter of 2020 was primarily related to the revaluation of an intercompany balance that was created by the migration of acquired intellectual property from one subsidiary to another in the fourth quarter of 2019.

This intercompany balance is expected to be settled in 2020.

Investment income increased by $324,000, or 7%, from the prior year.

The increase was due to higher yields on the Company's portfolio of debt securities, and to a lesser extent additional funds available for investment.

The Company recorded other expense of $183,000 for the first quarter of 2020 and other income of $927,000 for the first quarter of 2019.

The higher level of foreign currency losses for the six-month period in 2020 was primarily related to the revaluation of an intercompany balance that was created by the migration of acquired intellectual property from one subsidiary to another in the fourth quarter of 2019.

This intercompany balance is expected to be settled in the third quarter of 2020.

Investment income decreased by $1,932,000, or 37%, for the three-month period and $1,608,000, or 16%, for the six-month period.

The decrease was due to lower yields on the Company's portfolio of debt securities and a lower average invested balance.

The Company recorded other income of $203,000 and $20,000 for the three-month and six-month periods in 2020, respectively, compared to other expense of $144,000 and other income of $783,000 for the same periods in 2019.

Other income (expense) includes fair value adjustments of contingent consideration liabilities arising from business acquisitions.

The Company recorded a $1,060,000 decrease in the fair value of its GVi contingent consideration liability that was recorded as other income in the first quarter of 2019, resulting from a lower level of revenue in the Americas’ automotive industry.

The Company recorded a $1,060,000 decrease in the fair value of its GVi contingent consideration liability in the first quarter of 2019, resulting from a lower level of revenue in the Americas’ automotive industry.

Income Tax Expense

The Company’s effective tax rate was 11% of pre-tax income for the first quarter of 2020 compared to 7% of pre-tax income for the first quarter of 2019.

The effective tax rate included a decrease in tax expense of $1,680,000 for the first quarter of 2020 and $2,730,000 for the first quarter of 2019 primarily from the excess tax benefit arising from the difference between the deduction for tax purposes and the compensation cost recognized for financial reporting purposes from stock option exercises.

The Company’s effective tax rate was a benefit of 51% of pre-tax loss and an expense of 7% of pre-tax income for the three-month and six-month periods in 2020, respectively, compared to an expense of 14% and 12% of pre-tax income for the same periods in 2019.

The effective tax rate included a decrease in tax expense of $4,413,000 and $6,093,000 for the three-month and six-month periods in 2020, respectively, and $1,248,000 and $3,978,000 for the same periods in 2019, primarily from the excess tax benefit arising from the difference between the deduction for tax purposes and the compensation cost recognized for financial reporting purposes from stock exercises.

The Company cannot predict the level of stock option exercises by employees in future periods.

Other discrete tax items included an increase in tax expense of $242,000 for the first quarter of 2020 from the final true-up of the prior year's tax accrual upon filing the related tax return.

Excluding the impact of these discrete items, the Company’s effective tax rate was 17% of pre-tax income for the first quarter of 2020 compared to 15% of pre-tax income for the first quarter of 2019.

This increase was due to more of the Company's profits being earned and taxed in higher tax jurisdictions, which included the impact of changes made to the Company's international tax structure in the fourth quarter of 2019.

Other discrete tax items included an increase in tax expense of $3,267,000 and $3,509,000 for the three-month and six-month periods in 2020, respectively, primarily from the final true-up of the prior year's tax accrual upon filing the related tax return.

Excluding the impact of these discrete items, the Company’s effective tax rate was a benefit of 1% of pre-tax loss and an expense of 19% of pre-tax income for the three-month and six-month periods in 2020, respectively, compared to an expense of 17% and 16% of pre-tax income for the same periods in 2019.

The increase in the effective tax rate, excluding the impact of discrete items, for the six-month period from 16% in 2019 to 19% in 2020 was due to more of the Company's profits being earned and taxed in higher tax jurisdictions.

This adjustment to the effective tax rate resulted in an 18 percentage-point impact on the effective tax rate for the three-month period ended June 28, 2020.

Liquidity and Capital Resources

The Company has historically been able to generate positive cash flow from operations, which has funded its operating activities and other cash requirements and has resulted in an accumulated cash and investment balance of $845,396,000 as of March 29, 2020.

The Company has established guidelines relative to credit ratings, diversification, and maturities of its investments that maintain liquidity.

The Company’s cash requirements for the first quarter of 2020 were primarily met with positive cash flows from operations and the sale of investments.

The Company’s cash requirements for the six-month period ended June 28, 2020 were primarily met with positive cash flows from operations.

Cash requirements consisted of operating activities, the repurchase of common stock, the payment of dividends, and capital expenditures.

Capital expenditures for the first quarter of 2020 totaled $3,074,000 and consisted primarily of computer hardware and software, manufacturing test equipment related to new product introductions, and improvements made to the Company's headquarters building in Natick, Massachusetts and various leased facilities.

Capital expenditures for the six-month period ended June 28, 2020 totaled $6,985,000 and consisted primarily of computer hardware and software, manufacturing test equipment related to new product introductions, and improvements made to the Company's headquarters building in Natick, Massachusetts and various leased facilities.

The Company intends to continue to invest in capital projects in the second half of 2020 despite the current lower business levels, particularly related to its management information systems, which we believe are important to support our longer-term growth objectives.

Our business has been adversely and materially impacted by deteriorating global economic conditions resulting from the COVID-19 pandemic.

In order to more closely align our cost structure to the lower level of business, we implemented a variety of cost-cutting measures in the second quarter of 2020, including a workforce reduction and

office closures.

The Company estimates the total restructuring charges from these actions to be approximately $16,445,000, of which $3,145,000 represents non-cash charges, $4,689,000 was paid in the second quarter of 2020, and the remainder is expected to be paid out in the second half of 2020, primarily in the third quarter.

In October 2018, the Company's Board of Directors authorized the repurchase of $200,000,000 of the Company's common stock.

As of March 29, 2020, the Company repurchased 2,816,000 shares at a cost of $121,348,000 under this program, including 1,215,000 shares at a cost of $51,036,000 for the first quarter of 2020, leaving a remaining balance of $78,652,000.

As of June 28, 2020, the Company repurchased 2,816,000 shares at a cost of $121,348,000 under this program, including 1,215,000 shares at a cost of $51,036,000 in the first quarter of 2020, leaving a remaining balance of $78,652,000.

No shares were repurchased during the second quarter of 2020.

On March 12, 2020 the Company's Board of Directors authorized the repurchase of an additional $200,000,000 of the Company's common stock.

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The Company’s Board of Directors declared and paid cash dividends of $0.050 per share in the first, second, and third quarters of 2019.

The dividend was increased to $0.055 per share in the fourth quarter of 2019 and the first quarter of 2020.

Total dividends paid amounted to $9,503,000 for the first quarter of 2020.

The dividend was increased to $0.055 per share in the fourth quarter of 2019, the first quarter of 2020, and the second quarter of 2020.

Total dividends paid amounted to $18,972,000 for the six-month period ended June 28, 2020.

Future dividends will be declared at the discretion of the Company’s Board of Directors and will depend upon such factors as the Board deems relevant including, among other things, the Company’s ability to generate positive cash flows from operations.

The Company believes that its existing cash and investment balances, together with cash flow from operations, will be sufficient to meet its operating, investing, and financing activities for the next twelve months.

As of March 29, 2020, the Company had $845,396,000 in cash and investments.

As of June 28, 2020, the Company had $896,192,000 in cash and investments.

In addition, the Company has no long-term debt and does not anticipate needing debt financing in the near future.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis