What changed in this filing

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Item 1. Financial Statements

2023-05-04 compared with 2022-11-03 · 159 added, 215 removed, 440 unchanged (46% of the section changed)

3 unchanged sentences

(In thousands, except per share amounts)

Three-months Ended Nine-months Ended

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

(unaudited) (unaudited)

Three-months Ended

April 2, 2023 April 3, 2022

Revenue $ 201,124 $ 282,407

3 unchanged sentences

Selling, general, and administrative expenses 83,037 80,835

Loss from fire (Note 17) 2,891 — 20,294 —

Operating income 22,161 86,728

16 unchanged sentences

(In thousands)

Three-months Ended Nine-months Ended

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

(unaudited) (unaudited)

Three-months Ended

April 2, 2023 April 3, 2022

Net income $ 25,615 $ 67,333

1 unchanged sentence

Available-for-sale investments:

Net unrealized gain (loss), net of tax of $( 1,564 ) and $( 162 ) in the three-month periods, and net of tax of $( 6,298 ) and $( 808 ) in the nine-month

periods, respectively

Net unrealized gain (loss), net of tax of $ 1,858 and $( 4,036 ) in the three-month periods, respectively

5,426 ( 13,548 )

10 unchanged sentences

(In thousands)

October 2, 2022 December 31, 2021

April 2, 2023 December 31, 2022

Current assets:

49 unchanged sentences

(In thousands)

Nine-months Ended

October 2, 2022 October 3, 2021

Three-months Ended

April 2, 2023 April 3, 2022

Cash flows from operating activities:

3 unchanged sentences

Depreciation of property, plant, and equipment 3,986 4,117

Loss on disposal of property, plant, and equipment 12 4

Amortization of intangible assets 942 840

Excess and obsolete inventory charges 788 379

Non-cash impact of write-offs related to fire (Note 17) 45,827 —

Amortization of discounts or premiums on investments 700 1,402

35 unchanged sentences

Shares Par Value

Balance as of July 3, 2022 173,397 $ 347 $ 947,269 $ 512,230 $ ( 69,861 ) $ 1,389,985

Net issuance of common stock under stock plans 73 — ( 189 ) — — ( 189 )

Repurchase of common stock ( 540 ) ( 1 ) — ( 24,069 ) — ( 24,070 )

Stock-based compensation expense — — 13,366 — — 13,366

Payment of dividends ($ 0.065 per common share)

— — — ( 11,264 ) — ( 11,264 )

Net income — — — 33,980 — 33,980

Net unrealized gain (loss) on available-for-sale investments, net of tax of $( 1,564 )

— — — — ( 5,315 ) ( 5,315 )

Reclassification of net realized (gain) loss on the sale of available-for-sale investments — — — — 79 79

Foreign currency translation adjustment — — — — ( 7,352 ) ( 7,352 )

Balance as of October 2, 2022 (unaudited) 172,930 $ 346 $ 960,446 $ 510,877 $ ( 82,449 ) $ 1,389,220

Common Stock Additional

Paid-in Capital Retained Earnings Accumulated

Comprehensive

Shareholders’

Shares Par Value

Balance as of July 4, 2021 176,707 $ 353 $ 874,883 $ 593,290 $ ( 39,072 ) $ 1,429,454

Net issuance of common stock under stock plans 415 1 14,693 — — 14,694

Repurchase of common stock ( 323 ) — — ( 27,417 ) — ( 27,417 )

Stock-based compensation expense — — 10,614 — — 10,614

Payment of dividends ($ 0.060 per common share)

— — — ( 10,608 ) — ( 10,608 )

Net income — — — 78,900 — 78,900

Net unrealized gain (loss) on available-for-sale investments, net of tax of $( 162 )

— — — — ( 521 ) ( 521 )

Reclassification of net realized (gain) loss on the sale of available-for-sale investments — — — — ( 19 ) ( 19 )

Foreign currency translation adjustment — — — — ( 2,136 ) ( 2,136 )

Balance as of October 3, 2021 (unaudited) 176,799 $ 354 $ 900,190 $ 634,165 $ ( 41,748 ) $ 1,492,961

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

COGNEX CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(In thousands)

Common Stock Additional

Paid-in Capital Retained Earnings Accumulated

Comprehensive

Shareholders’

Shares Par Value

Balance as of December 31, 2022 172,631 $ 345 $ 979,167 $ 528,179 $ ( 69,297 ) $ 1,438,394

7 unchanged sentences

— — — — 5,426 5,426

Reclassification of net realized (gain) loss on the sale of available-for-sale investments — — — — 103 103

Foreign currency translation adjustment — — — — ( 359 ) ( 359 )

Balance as of October 2, 2022 (unaudited) 172,930 $ 346 $ 960,446 $ 510,877 $ ( 82,449 ) $ 1,389,220

Balance as of April 2, 2023 (unaudited) 172,601 $ 345 $ 992,690 $ 517,526 $ ( 64,230 ) $ 1,446,331

Common Stock Additional

14 unchanged sentences

Foreign currency translation adjustment — — — — ( 2,111 ) ( 2,111 )

Balance as of October 3, 2021 (unaudited) 176,799 $ 354 $ 900,190 $ 634,165 $ ( 41,748 ) $ 1,492,961

Balance as of April 3, 2022 (unaudited) 173,738 $ 347 $ 933,452 $ 488,511 $ ( 63,565 ) $ 1,358,745

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

4 unchanged sentences

Reference should be made to the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 for a full description of other significant accounting policies.

In the opinion of the management of Cognex Corporation (the "Company"), the accompanying consolidated unaudited financial statements contain all adjustments, consisting of normal, recurring adjustments, adjustments related to the loss from fire (Note 17), and financial statement reclassifications necessary to present fairly the Company’s financial position as of October 2, 2022, and the results of its operations for the three-month and nine-month periods ended October 2, 2022 and October 3, 2021, and changes in shareholders’ equity, comprehensive income, and cash flows for the periods presented.

The results disclosed in the Consolidated Statements of Operations for the three-month and nine-month periods ended October 2, 2022 are not necessarily indicative of the results to be expected for the full year.

In the opinion of the management of Cognex Corporation (the "Company"), the accompanying consolidated unaudited financial statements contain all adjustments, consisting of normal, recurring adjustments, and financial statement reclassifications necessary to present fairly the Company’s financial position as of April 2, 2023, and the results of its operations for the three-month periods ended April 2, 2023 and April 3, 2022, and changes in shareholders’ equity, comprehensive income, and cash flows for the periods presented.

The results disclosed in the Consolidated Statements of Operations for the three-month period ended April 2, 2023 are not necessarily indicative of the results to be expected for the full year.

New Pronouncements

Accounting Standards Update (ASU) 2020-04, "Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting" and (ASU) 2021-01, "Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting", (ASU) 2021-01, "Reference Rate Reform (Topic 848):

Scope", and Accounting Standards Update (ASU) 2022-06, "Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848"

The amendments in these ASUs apply to all entities that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.

2 unchanged sentences

The amendments in these ASUs are effective for all entities as of March 12, 2020 through December 31, 2024.

Management does not expect ASU 2020-04 or ASU 2021-01 to have a material impact on the Company's consolidated financial statements and disclosures.

Accounting Standards Update (ASU) 2021-08, "Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers"

The amendments in this ASU primarily address the accounting for contract assets and contract liabilities related to revenue contracts with customers in a business combination.

The ASU clarifies that an acquirer should account for the related revenue contracts in accordance with Accounting Standards Codification 606 as if the acquirer had originated the contracts.

The amendments in this ASU are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, although early adoption is permitted.

The amendments in the ASU should be applied prospectively to business combinations occurring on or after the effective date of the amendments.

The expected financial statement impact of this new accounting standard cannot be reasonably estimated at this time, as the impact in future periods will depend on the contract assets and contract liabilities acquired in future business combinations.

Management does not expect this ASU to have a material impact on the Company's disclosures.

Management adopted Topic 848 on January 1, 2023, and now uses the Secured Overnight Financing Rate (SOFR).

The adoption did not have a material impact on the Company's financial statements and disclosures.

COGNEX CORPORATION

2 unchanged sentences

Financial Assets and Liabilities that are Measured at Fair Value on a Recurring Basis

The following table summarizes the financial assets and liabilities required to be measured at fair value on a recurring basis as of October 2, 2022 (in thousands):

The following table summarizes the financial assets and liabilities required to be measured at fair value on a recurring basis as of April 2, 2023 (in thousands):

Quoted Prices in

5 unchanged sentences

Corporate bonds — 545,863 —

Asset-backed securities — 56,508 —

Treasury bills — 61,112 —

Asset-backed securities — 54,146 —

Agency bonds — 16,038 —

10 unchanged sentences

The market participants are generally large commercial banks.

The fair value of the contingent consideration liability related to the Company's acquisition of GVi Ventures, Inc.

in 2017 was written down to zero in 2019 resulting from a lower level of revenue in the Americas' automotive industry.

The balance remained at zero through the remainder of the five-year assessment period which concluded during the second quarter of 2022.

Non-financial Assets that are Measured at Fair Value on a Non-recurring Basis

Non-financial assets, such as property, plant and equipment, operating lease assets, goodwill, and intangible assets, are required to be measured at fair value only when an impairment loss is recognized.

The Company did not record impairment charges related to non-financial assets during the three-month or nine-month periods ended October 2, 2022 or October 3, 2021.

The Company did not record impairment charges related to non-financial assets during the three-month periods ended April 2, 2023 or April 3, 2022.

COGNEX CORPORATION

2 unchanged sentences

Cash, cash equivalents, and investments consisted of the following (in thousands):

October 2, 2022 December 31, 2021

April 2, 2023 December 31, 2022

Cash $ 160,553 $ 180,959

8 unchanged sentences

Corporate bonds 385,543 374,440

Asset-backed securities 28,389 43,940

Treasury bills 52,661 44,214

Asset-backed securities 22,881 33,539

Sovereign bonds 1,954 1,924

Agency bonds — 16,077

Municipal bonds — 641

Non-current investments 463,039 454,117

6 unchanged sentences

and sovereign bonds consist of direct debt issued by foreign governments.

All of the Company's securities as of October 2, 2022 and December 31, 2021 were denominated in U.S.

Accrued interest receivable is recorded in "Prepaid expenses and other current assets" on the Consolidated Balance Sheet and amounted to $ 3,011,000 and $ 3,037,000 as of October 2, 2022 and December 31, 2021, respectively.

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table summarizes the Company’s available-for-sale investments as of October 2, 2022 (in thousands):

All of the Company's securities as of April 2, 2023 and December 31, 2022 were denominated in U.S.

Accrued interest receivable is recorded in "Prepaid expenses and other current assets" on the Consolidated Balance Sheet and amounted to $ 4,559,000 and $ 3,620,000 as of April 2, 2023 and December 31, 2022, respectively.

The following table summarizes the Company’s available-for-sale investments as of April 2, 2023 (in thousands):

Losses Fair Value

5 unchanged sentences

Corporate bonds 400,051 1,623 ( 16,131 ) 385,543

Asset-backed securities 30,227 — ( 1,838 ) 28,389

Treasury bills 52,290 489 ( 118 ) 52,661

Asset-backed securities 23,905 117 ( 1,141 ) 22,881

Sovereign bonds 2,083 — ( 129 ) 1,954

$ 699,272 $ 2,232 $ ( 21,762 ) $ 679,742

The following table summarizes the Company’s gross unrealized losses and fair values for available-for-sale investments in an unrealized loss position as of October 2, 2022 (in thousands):

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table summarizes the Company’s gross unrealized losses and fair values for available-for-sale investments in an unrealized loss position as of April 2, 2023 (in thousands):

Unrealized Loss Position For:

5 unchanged sentences

Asset-backed securities 10,998 ( 213 ) 32,783 ( 1,679 ) 43,781 ( 1,892 )

Treasury bills 19,427 ( 499 ) 101 ( 4 ) 19,528 ( 503 )

Agency bonds — — 16,037 ( 110 ) 16,037 ( 110 )

Treasury bills 4,878 ( 117 ) 8,451 ( 157 ) 13,329 ( 274 )

Sovereign bonds — — 1,954 ( 129 ) 1,954 ( 129 )

3 unchanged sentences

When developing an estimate of expected credit losses, management considers all relevant information including historical experience, current conditions, and reasonable forecasts of expected future cash flows.

Based on this evaluation, no allowance for credit losses on debt securities was recorded as of October 2, 2022 or December 31, 2021.

There was no activity recorded in the allowance for credit losses during the three-month or nine-month periods ended October 2, 2022 or October 3, 2021.

The Company recorded no gross realized gains on the sale of debt securities for the three-month period ended October 2, 2022 and gross realized gains on the sale of debt securities totaling $ 133,000 for the nine-month period ended October 2, 2022, and gross realized losses on the sale of debt securities totaling $ 79,000 and $ 236,000 for the three-month and nine-month periods ended October 2, 2022, respectively.

The Company recorded gross realized gains on the sale of debt securities totaling $ 19,000 and $ 87,000 for the three-month and nine-month periods ended October 3, 2021, respectively, and no gross realized losses on the sale of debt securities for the three-month and nine-month periods ended October 3, 2021.

Based on this evaluation, no allowance for credit losses on debt securities was recorded as of April 2, 2023 or December 31, 2022.

There was no activity recorded in the allowance for credit losses during the three-month periods ended April 2, 2023 or April 3, 2022.

Management currently intends to hold these securities to full value recovery at maturity.

The Company recorded no gross realized gains or gross realized losses on the sale of debt securities for the three-month period ended April 2, 2023.

The Company recorded gross realized gains and gross realized losses on the sale of debt securities totaling $ 118,000 and $ 154,000 , respectively, for the three-month period ended April 3, 2022.

Realized gains and losses are included in "Investment income" on the Consolidated Statements of Operations.

Prior to the sale of these securities, unrealized gains and losses for these debt securities, net of tax, were recorded in shareholders’ equity as accumulated other comprehensive loss.

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table presents the effective maturity dates of the Company’s available-for-sale investments as of October 2, 2022 (in thousands):

<1 year 1-2 Years 2-3 Years 3-4 Years 4-5 Years Total

The following table presents the effective maturity dates of the Company’s available-for-sale investments as of April 2, 2023 (in thousands):

<1 year 1-2 Years 2-3 Years 3-4 Years 4-5 Years 5-8 Years Total

Corporate bonds $ 160,320 $ 166,170 $ 87,347 $ 63,241 $ 66,558 $ 2,227 $ 545,863

Asset-backed securities 28,119 16,384 3,202 8,803 — 56,508

Treasury bills 8,451 3,414 15,156 17,837 16,254 — 61,112

Asset-backed securities 31,265 2,579 12,599 7,703 — — 54,146

Agency bonds 16,038 — — — — — 16,038

3 unchanged sentences

Inventories consisted of the following (in thousands):

October 2, 2022 December 31, 2021

April 2, 2023 December 31, 2022

Raw materials $ 77,520 $ 71,720

2 unchanged sentences

$ 127,147 $ 122,480

Refer to Note 17 for information regarding losses incurred from the fire at the Company's primary contract manufacturer's plant in Indonesia during the second quarter of 2022, including the impact on inventories.

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The Company's leases are primarily leased properties across different worldwide locations where the Company conducts its operations.

1 unchanged sentence

Certain leases may contain options to extend or terminate the lease at the Company's sole discretion.

As of October 2, 2022, there were two options to terminate and six options to extend that were accounted for in the determination of the lease term for outstanding leases.

As of April 2, 2023, there was one option to terminate and eighteen options to extend that were accounted for in the determination of the lease term for outstanding leases.

Certain leases contain leasehold improvement incentives, retirement obligations, escalating clauses, rent holidays, and variable payments tied to a consumer price index.

There were no restrictions or covenants for outstanding leases as of October 2, 2022.

The total operating lease expense for the three-month and nine-month periods ended October 2, 2022 were $ 2,255,000 and $ 6,699,000 , respectively.

The total operating lease cash payments for the three-month and nine-month periods ended October 2, 2022 were $ 2,161,000 and $ 6,467,000 , respectively.

The total lease expense for leases with a term of twelve months or less for which the Company elected not to recognize a lease asset or lease liability for the three-month and nine-month periods ended October 2, 2022 was $ 35,000 and $ 110,000 , respectively.

The total operating lease expense for the three-month and nine-month periods ended October 3, 2021 were $ 2,068,000 and $ 6,091,000 , respectively.

The total operating lease cash payments for the three-month and nine-month periods ended October 3, 2021 were $ 2,079,000 and $ 6,154,000 , respectively.

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

There were no restrictions or covenants for outstanding leases as of April 2, 2023.

The total operating lease expense for the three-month periods ended April 2, 2023 and April 3, 2022 were $ 2,392,000 and $ 2,229,000 , respectively.

The total operating lease cash payments for the three-month periods ended April 2, 2023 and April 3, 2022 were $ 2,404,000 and $ 2,079,000 , respectively.

The total lease expense for leases with a term of twelve months or less for which the Company elected not to recognize a lease asset or lease liability for the three-month periods ended April 2, 2023 and April 3, 2022 was $ 24,000 and $ 38,000 , respectively.

Future operating lease cash payments are as follows (in thousands):

2 unchanged sentences

Thereafter 12,769

The discounted present value of the future lease cash payments resulted in a lease liability of $ 33,371,000 and $ 25,581,000 as of October 2, 2022 and December 31, 2021, respectively.

The Company did not have any leases that had not yet commenced but that created significant rights and obligations as of October 2, 2022.

The discounted present value of the future lease cash payments resulted in a total lease liability of $ 39,566,000 and $ 39,752,000 as of April 2, 2023 and December 31, 2022, respectively.

The Company did not have any leases that had not yet commenced but that created significant rights and obligations as of April 2, 2023.

In December 2021, the Company entered into a lease for a 65,000 square-foot building in Southborough, Massachusetts for a term of ten years to serve as a new distribution center for customers in the Americas.

1 unchanged sentence

This lease commenced during the first quarter of 2022, and therefore the Company recorded approximately $ 9,271,000 within "Operating lease assets" and "Operating lease liabilities" on the Consolidated Balance Sheets on the commencement date.

The weighted-average discount rate was 2.9 % and 3.4 % for the leases outstanding as of October 2, 2022 and December 31, 2021, respectively.

The weighted-average remaining lease term was 6.7 and 5.1 years for the leases outstanding as of October 2, 2022 and December 31, 2021, respectively.

The weighted-average discount rate was 3.3 % for the leases outstanding as of both April 2, 2023 and December 31, 2022.

The weighted-average remaining lease term was 7.6 and 7.8 years for the leases outstanding as of April 2, 2023 and December 31, 2022, respectively.

The changes in the carrying value of goodwill were as follows (in thousands):

1 unchanged sentence

Foreign exchange rate changes ( 589 )

Balance as of October 2, 2022 $ 237,509

Balance as of April 2, 2023 $ 242,041

COGNEX CORPORATION

4 unchanged sentences

Amortization Net

Distribution networks $ 38,060 $ 38,060 $ —

Completed technologies $ 28,017 $ ( 18,492 ) $ 9,525

1 unchanged sentence

Non-compete agreements 340 ( 191 ) 149

Trademarks 110 110 —

Balance as of October 2, 2022 $ 73,675 $ 64,255 $ 9,420

Balance as of April 2, 2023 $ 34,195 $ ( 22,723 ) $ 11,472

Value Accumulated

Amortization Net

Distribution networks $ 38,060 $ 38,060 $ —

Completed technologies $ 28,017 $ ( 17,744 ) $ 10,273

1 unchanged sentence

Non-compete agreements 340 ( 177 ) 163

Trademarks 110 110 —

Balance as of December 31, 2022 $ 34,195 $ ( 21,781 ) $ 12,414

As of October 2, 2022, estimated future amortization expense related to intangible assets was as follows (in thousands):

As of April 2, 2023, estimated future amortization expense related to intangible assets was as follows (in thousands):

Year Ended December 31, Amount

Remainder of fiscal 2023 $ 2,195

Thereafter 543

Warranty Obligations

8 unchanged sentences

Fulfillment of warranty obligations ( 828 )

Balance as of October 2, 2022 $ 4,990

Balance as of April 2, 2023 $ 4,074

COGNEX CORPORATION

1 unchanged sentence

Commitments and Contingencies

As of October 2, 2022, the Company had outstanding purchase orders totaling $ 81,565,000 to procure inventory from various vendors, due in part to higher inventory purchases in response to global supply chain constraints.

As of April 2, 2023, the Company had outstanding purchase orders totaling $ 47,486,000 to procure inventory from various vendors.

Certain of these purchase orders may be canceled by the Company, subject to cancellation penalties.

These purchase commitments relate primarily to expected sales in the next twelve months.

The Company expects the level of outstanding purchase orders to increase for the remainder of the year as it continues to replenish inventories destroyed in the fire on June 7, 2022 at its primary contract manufacturer (refer to Note 17).

A significant portion of the Company's outstanding inventory purchase orders as of October 2, 2022, as well as additional preauthorized commitments to procure strategic components based on the Company's expected customer demand, are placed with the Company's primary contract manufacturer for the Company's assembled products.

The Company has the obligation to purchase any non-cancelable and non-returnable components that have been purchased by this contract manufacturer with the Company's preauthorization, when these components have not been consumed within the period defined in the terms of the Company's agreement with this contract manufacturer.

A significant portion of the Company's outstanding inventory purchase orders as of April 2, 2023, as well as additional preauthorized commitments to procure strategic components based on the Company's expected customer demand, are placed with the Company's primary contract manufacturer for the Company's assembled products.

The Company has the obligation to purchase any non-cancelable and non-returnable components that have been purchased by the contract manufacturer with the Company's preauthorization, when these components have not been consumed within the period defined in the terms of the Company's agreement with this contract manufacturer.

While the Company typically expects such purchased components to be used in future production of Cognex finished goods, these components are considered in the Company's reserve estimate for excess and obsolete inventory.

Furthermore, the Company accrues for losses on commitments for the future purchase of non-cancelable and non-returnable components from this contract manufacturer at the time that circumstances, such as changes in demand, indicate that the value of the components may not be recoverable, the loss is probable, and management has the ability to reasonably estimate the amount of the loss.

Various claims and legal proceedings generally incidental to the normal course of business are pending or threatened on behalf of or against the Company.

While we cannot predict the outcome of these matters, we believe that any liability arising from them will not have a material adverse effect on our financial position, liquidity, or results of operations.

Derivative Instruments

4 unchanged sentences

The Company had the following outstanding forward contracts (in thousands):

October 2, 2022 December 31, 2021

April 2, 2023 December 31, 2022

Currency Notional

2 unchanged sentences

Euro 32,500 $ 35,529 60,000 $ 64,174

Chinese Renminbi 175,000 25,352 54,374 8,500

Mexican Peso 155,000 8,498 185,000 9,480

Hungarian Forint 1,890,000 5,381 1,590,000 4,238

Japanese Yen 600,000 4,536 700,000 5,281

British Pound 3,485 4,313 3,445 4,161

Hungarian Forint 1,280,000 2,948 1,355,000 4,155

Canadian Dollar 1,705 1,261 1,730 1,278

Chinese Renminbi — — 55,000 7,619

Swiss Franc — — 1,120 1,218

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Information regarding the fair value of the outstanding forward contracts was as follows (in thousands):

1 unchanged sentence

Balance Fair Value Balance Fair Value

Location October 2, 2022 December 31, 2021 Sheet

Location October 2, 2022 December 31, 2021

Location April 2, 2023 December 31, 2022 Sheet

Location April 2, 2023 December 31, 2022

Derivatives Not Designated as Hedging Instruments:

Economic hedge forward contracts Prepaid expenses and other current assets $ 154 $ 27 Accrued expenses $ 74 $ 479

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table presents the gross activity for all derivative assets and liabilities which were presented on a net basis on the Consolidated Balance Sheets due to the right of offset with each counterparty (in thousands):

Asset Derivatives Liability Derivatives

October 2, 2022 December 31, 2021 October 2, 2022 December 31, 2021

April 2, 2023 December 31, 2022 April 2, 2023 December 31, 2022

Gross amounts of recognized assets $ 154 $ 27 Gross amounts of recognized liabilities $ 74 $ 479

2 unchanged sentences

Information regarding the effect of derivative instruments on the consolidated financial statements was as follows (in thousands):

Location in Financial Statements Three-months Ended Nine-months Ended

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

Location in Financial Statements Three-months Ended

April 2, 2023 April 3, 2022

Derivatives Not Designated as Hedging Instruments:

4 unchanged sentences

The following table summarizes disaggregated revenue information by geographic area based upon the customer's country of domicile (in thousands):

Three-months Ended Nine-months Ended

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

Three-months Ended

April 2, 2023 April 3, 2022

Americas $ 80,442 $ 126,658

4 unchanged sentences

The following table summarizes disaggregated revenue information by revenue type (in thousands):

Three-months Ended Nine-months Ended

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

Three-months Ended

April 2, 2023 April 3, 2022

Standard products and services $ 190,783 $ 257,880

2 unchanged sentences

Costs to Fulfill a Contract

Costs to fulfill a contract are included in "Prepaid expenses and other current assets" on the Consolidated Balance Sheet and amounted to $ 15,581,000 and $ 10,854,000 as of October 2, 2022 and December 31, 2021, respectively.

Costs to fulfill a contract are included in "Prepaid expenses and other current assets" on the Consolidated Balance Sheet and amounted to $ 20,219,000 and $ 14,578,000 as of April 2, 2023 and December 31, 2022, respectively.

Accounts Receivable, Contract Assets, and Contract Liabilities

3 unchanged sentences

Contract liabilities consist of deferred revenue and customer deposits which arise when amounts are billed to or collected from customers in advance of revenue recognition.

The following table summarizes the allowance for credit losses activity for the nine-month period ended October 2, 2022 (in thousands):

The following table summarizes the allowance for credit losses activity for the three-month period ended April 2, 2023 (in thousands):

Balance as of December 31, 2022 $ 730

Increases to the allowance for credit losses 350

Write-offs, net of recoveries ( 78 )

Foreign exchange rate changes ( 1 )

Balance as of October 2, 2022 $ 741

Balance as of April 2, 2023 $ 1,001

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table summarizes the deferred revenue and customer deposits activity for the nine-month period ended October 2, 2022 (in thousands):

The following table summarizes the deferred revenue and customer deposits activity for the three-month period ended April 2, 2023 (in thousands):

Balance as of December 31, 2022 $ 40,787

1 unchanged sentence

Recognition of revenue deferred in prior period ( 8,578 )

Returned customer deposit ( 9,205 )

Foreign exchange rate changes 15

Balance as of October 2, 2022 $ 54,777

Balance as of April 2, 2023 $ 57,805

As a practical expedient, the Company has elected not to disclose the aggregate amount of the transaction price allocated to unsatisfied performance obligations, as our contracts have an original expected duration of less than one year.

1 unchanged sentence

The Company’s stock-based awards that result in compensation expense consist of stock options, restricted stock units ("RSUs"), and performance restricted stock units ("PRSUs").

As of October 2, 2022, the Company had 13,748,000 shares available for grant under its stock plans.

As of April 2, 2023, the Company had 12,116,000 shares available for grant under its stock plans.

Stock options are granted with an exercise price equal to the market value of the Company’s common stock at the grant date and generally vest over four or five years based upon continuous service and expire ten years from the grant date.

RSUs generally vest upon three or four years of continuous employment or incrementally over such three or four-year period.

RSUs generally vest upon three or four years of continuous employment or incrementally over such three or four-year periods.

PRSUs generally vest upon three years of continuous employment and achievement of performance criteria established by the Compensation Committee of our Board of Directors on or prior to the grant date.

Participants are not entitled to dividends on RSUs or PRSUs.

Participants are not entitled to dividends on stock options, RSUs, or PRSUs.

Stock Options

The following table summarizes the Company’s stock option activity for the nine-month period ended October 2, 2022:

The following table summarizes the Company’s stock option activity for the three-month period ended April 2, 2023:

(in thousands) Weighted-

6 unchanged sentences

Forfeited or expired ( 247 ) 58.05

Outstanding as of October 2, 2022 8,681 $ 51.03 6.40 $ 22,376

Exercisable as of October 2, 2022 4,335 $ 43.54 5.08 $ 22,334

Options vested or expected to vest as of October 2, 2022 (1) 8,189 $ 50.48 6.27 $ 22,375

Outstanding as of April 2, 2023 9,308 $ 51.16 6.53 $ 37,312

Exercisable as of April 2, 2023 5,433 $ 47.45 5.12 $ 33,531

Options vested or expected to vest as of April 2, 2023 (1) 8,735 $ 50.90 6.37 $ 36,643

(1) In addition to the vested options, the Company expects a portion of the unvested options to vest at some point in the future.

3 unchanged sentences

The fair values of stock options granted in each period presented were estimated using the following weighted-average assumptions:

Three-months Ended Nine-months Ended

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

Three-months Ended

April 2, 2023 April 3, 2022

Risk-free rate 4.0 % 1.9 %

10 unchanged sentences

The expected term was derived from the binomial lattice model from the impact of events that trigger exercises over time.

The weighted-average grant-date fair values of stock options granted during the three-month and nine-month periods ended October 2, 2022 were $ 18.81 and $ 21.40 , respectively, and during the three-month and nine-month periods ended October 3, 2021 were $ 35.64 and $ 33.78 , respectively.

The total intrinsic values of stock options exercised for the three-month and nine-month periods ended October 2, 2022 were $ 516,000 and $ 3,615,000 , respectively, and for the three-month and nine-month periods ended October 3, 2021 were $ 21,415,000 and $ 75,363,000 , respectively.

The total fair values of stock options vested for the three-month and nine-month periods ended October 2, 2022 were $ 1,159,000 and $ 27,882,000 , respectively, and for the three-month and nine-month periods ended October 3, 2021 were $ 1,498,000 and $ 38,928,000 , respectively.

The weighted-average grant-date fair values of stock options granted during the three-month periods ended April 2, 2023 and April 3, 2022 were $ 17.79 and $ 22.45 , respectively.

The total intrinsic values of stock options exercised for the three-month periods ended April 2, 2023 and April 3, 2022 were $ 3,439,000 and $ 2,615,000 , respectively.

The total fair values of stock options vested for the three-month periods ended April 2, 2023 and April 3, 2022 were $ 31,181,000 and $ 25,535,000 , respectively.

Restricted Stock Units (RSUs)

The following table summarizes the Company's RSUs activity for the nine-month period ended October 2, 2022:

The following table summarizes the Company's RSUs activity for the three-month period ended April 2, 2023:

(in thousands) Weighted-Average

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Forfeited or expired ( 32 ) 66.98

Nonvested as of October 2, 2022 1,312 $ 61.67

Nonvested as of April 2, 2023 1,419 $ 55.69

The fair value of RSUs is determined based on the observable market price of the Company's stock on the grant date less the present value of expected future dividends.

The weighted-average grant-date fair values of RSUs granted during the three-month periods ended April 2, 2023 and April 3, 2022 were $ 46.61 and $ 63.96 , respectively.

There were 453,000 and 54,000 RSUs that vested during the three-month periods ended April 2, 2023 and April 3, 2022, respectively.

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The fair value of RSUs is determined based on the observable market price of the Company's stock on the grant date less the present value of expected future dividends.

The weighted-average grant-date fair values of RSUs granted during the three-month and nine-month periods ended October 2, 2022 were $ 47.12 and $ 58.44 , respectively, and during the three-month and nine-month periods ended October 3, 2021 were $ 86.34 and $ 87.38 , respectively.

There were 67,000 and 141,000 RSUs that vested during the three-month and nine-month periods ended October 2, 2022, respectively, and 0 and 15,000 that vested during the three-month and nine-month periods ended October 3, 2021, respectively.

Performance Restricted Stock Units (PRSUs)

The following table summarizes the Company's PRSUs activity for the nine-month period ended October 2, 2022:

The following table summarizes the Company's PRSUs activity for the three-month period ended April 2, 2023:

(in thousands) Weighted-Average

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Forfeited or expired — —

Nonvested as of October 2, 2022 33 $ 62.49

No PRSUs were granted or vested during the three-month period ended October 2, 2022.

No PRSUs were granted or vested during the three-month and nine-month periods ended October 3, 2021.

Nonvested as of April 2, 2023 79 $ 52.23

The fair value of PRSUs is calculated using the Monte Carlo simulation model to estimate the probability of satisfying the service and market conditions stipulated in the award grant.

There were 46,000 and 33,000 PRSUs granted during the three-month periods ended April 2, 2023 and April 3, 2022, respectively.

No PRSUs vested during the three-month periods ended April 2, 2023 and April 3, 2022.

Stock-Based Compensation Expense

The Company stratifies its employee population into two groups:

one consisting of senior management and another consisting of all other employees.

The Company currently applies an estimated annual forfeiture rate of 7 % to all stock-based awards for senior management and a rate of 12 % for all other employees.

The Company stratifies its employee population into three groups:

one consisting of the CEO, one consisting of senior management, and another consisting of all other employees.

The Company currently applies an estimated annual forfeiture rate of 0 % to all stock-based awards for the CEO, 8 % to all stock-based awards for senior management, and a rate of 13 % for all other employees.

Each year during the first quarter, the Company revises its forfeiture rate based on updated estimates of employee turnover.

This resulted in an increase to compensation expense of $ 1,536,000 in 2022 and a decrease to compensation expense of $ 255,000 in 2021.

As of October 2, 2022, total unrecognized compensation expense related to non-vested equity awards, including stock options, RSUs, and PRSUs, was $ 68,089,000 , which is expected to be recognized over a weighted-average period of 1.6 years.

The total stock-based compensation expense and the related income tax benefit recognized for the three-month period ended October 2, 2022 were $ 13,366,000 and $ 2,133,000 , respectively, and for the nine-month period ended October 2, 2022 were $ 41,419,000 and $ 6,496,000 , respectively.

The total stock-based compensation expense and the related income tax benefit recognized for the three-month period ended October 3, 2021 were $ 10,614,000 and $ 1,637,000 , respectively, and for the nine-month period ended October 3, 2021 were $ 33,353,000 and $ 5,101,000 , respectively.

No compensation expense was capitalized as of October 2, 2022 or December 31, 2021.

This resulted in a decrease to compensation expense of $ 234,000 in 2023 and an increase to compensation expense of $ 1,536,000 in 2022.

As of April 2, 2023, total unrecognized compensation expense, net of estimated forfeitures, related to non-vested equity awards, including stock options, RSUs, and PRSUs, was $ 86,841,000 , which is expected to be recognized over a weighted-average period of 2.4 years.

The total stock-based compensation expense and the related income tax benefit recognized for the three-month period ended April 2, 2023 were $ 16,579,000 and $ 2,308,000 , respectively.

The total stock-based compensation expense and the related income tax benefit recognized for the three-month period ended April 3, 2022 were $ 15,056,000 and $ 2,319,000 , respectively.

No compensation expense was capitalized as of April 2, 2023 or December 31, 2022.

The following table presents the stock-based compensation expense by caption for each period presented on the Consolidated Statements of Operations (in thousands):

Three-months Ended Nine-months Ended

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

Three-months Ended

April 2, 2023 April 3, 2022

Cost of revenue $ 621 $ 563

6 unchanged sentences

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

As of October 2, 2022, the Company repurchased 2,737,000 shares at a cost of $ 200,000,000 under this program, including 1,677,000 shares at a cost of $ 117,000,000 during the first quarter of 2022, which completed purchases under this program.

Under this March 2020 program, in addition to repurchases made in prior years, the Company repurchased 1,677,000 shares at a cost of $ 117,000,000 during the three-month period ended April 3, 2022, which completed purchases under this program.

On March 3, 2022, the Company's Board of Directors authorized the repurchase of an additional $ 500,000,000 of the Company's common stock.

During the nine-month period ended October 2, 2022, the Company repurchased 1,125,000 shares, and an additional 5,000 shares that were repurchased in 2021 and settled in 2022, at a total cost of $ 61,387,000 under this additional authorization, leaving a remaining balance of $ 438,613,000 as of October 2, 2022.

Under this March 2022 program, the Company repurchased 202,000 shares at a cost of $ 13,405,000 during the three-month period ended April 3, 2022.

Under this same March 2022 program, in addition to purchases made during the prior year, the Company repurchased 479,000 shares at a total cost of $ 24,178,000 during the three-month period ended April 2, 2023 leaving a remaining balance of $ 388,508,000 as of April 2, 2023.

The Company may repurchase shares under this program in future periods depending on a variety of factors, including, among other things, the impact of dilution from employee stock awards, stock price, share availability, and cash requirements.

The Company is authorized to make repurchases of its common stock through open market purchases, pursuant to Rule 10b5-1 trading plans, or in privately negotiated transactions.

The Company's effective tax rate was 14 % and 16 % for the three-month and nine-month periods ended October 2, 2022, respectively, and 11 % and 13 % for the three-month and nine-month periods ended October 3, 2021, respectively.

The Company recorded a net discrete tax benefit totaling $ 930,000 and a net discrete tax expense totaling $ 616,000 for the three-month and nine-month periods ended October 2, 2022, respectively, and net discrete tax benefits totaling $ 6,262,000 and $ 12,365,000 for the same periods in 2021.

Discrete tax items for the three-month and nine-month periods ended October 2, 2022 included (1) a decrease in tax expense during the three-month and nine-month periods ended October 2, 2022 of $ 928,000 and $ 3,368,000 , respectively, arising from the impact of the loss from fire recorded (refer to Note 17), (2) an increase in tax expense of $ 1,417,000 arising from an Internal Revenue Service (IRS) audit recorded during the three-month period ended April 3, 2022, which was offset by a decrease in tax expense of $ 2,519,000 related to releases of reserves for income taxes due to the closure of this Internal Revenue Service (IRS) audit during the three-month period ended July 3, 2022, (3) an increase in tax expense of $ 1,734,000 to establish a full valuation allowance against deferred tax assets related to foreign tax credits during the three-month period ended April 3, 2022, (4) an increase in tax expense of $ 883,000 and $ 4,236,000 during the three-month and nine-month periods ended October 2, 2022, respectively, primarily consisting of transfer pricing and return-to-provision adjustments, and (5) a decrease in tax expense of $ 884,000 during both the three-month and nine-month periods ended October 2, 2022 related to the release of tax reserves due to closed periods.

Discrete tax items for the three-month and nine-month periods ended October 3, 2021 included a decrease in tax expense of $ 3,250,000 and $ 9,888,000 , respectively, related to stock-based compensation, 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.

This impact was not material for the three-month and nine-month periods ended October 2, 2022.

The remaining discrete tax benefits for the three-month and nine-month periods ended October 3, 2021 of $ 3,012,000 and $ 2,477,000 , respectively, consisted of primarily return-to-provision adjustments and the release of tax reserves.

Excluding the impact of these discrete tax items, the Company’s effective tax rate was 16 % for both the three-month and nine-month periods ended October 2, 2022, and 18 % for both the three-month and nine-month periods ended October 3, 2021.

The Company's effective tax rate was 2 % for the three-month period ended April 2, 2023, and 23 % for the three-month period ended April 3, 2022.

The Company has defined its major tax jurisdictions as the United States, Ireland, China, and Korea, and within the United States, Massachusetts.

1 unchanged sentence

federal statutory corporate tax rate of 21 %.

These differences resulted in a lower effective tax rate for the three-month and nine-month periods ended October 2, 2022 as compared to the same periods in 2021 due to more of the Company's profits being earned and taxed in lower tax jurisdictions.

The remaining decrease in the effective tax rate for the three-month and nine-month periods was primarily attributable to lower state taxes.

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The Company’s reserve for income taxes, including gross interest and penalties, was $ 12,772,000 as of October 2, 2022, which included $ 12,204,000 classified as a non-current liability and $ 568,000 recorded as a reduction to non-current deferred tax assets.

These foreign tax rate differences resulted in a net decrease to the effective tax rate for both the three-month periods ended April 2, 2023 and April 3, 2022.

The Company recorded a net discrete tax benefit totaling $ 3,594,000 for the three-month period ended April 2, 2023, and a net discrete tax expense totaling $ 6,338,000 for the same period in 2022.

Discrete tax items for the three-month period ended April 2, 2023 included (1) an increase in tax expense of $ 1,068,000 related to stock-based compensation;

(2) a decrease in tax expense of $ 2,292,000 for releasing tax reserves on state tax credits;

(3) a decrease in tax expense of $ 2,198,000 for adjustments to certain deferred tax assets;

and (4) a decrease in tax expense of $ 172,000 for return-to-provision adjustments.

Discrete tax items for the three-month period ended April 3, 2022 included (1) an increase in tax expense of $ 1,417,000 arising from an Internal Revenue Service (IRS) audit;

(2) an increase in tax expense of $ 1,734,000 to establish a full valuation allowance against deferred tax assets related to foreign tax credits;

and (3) an increase in tax expense of $ 3,187,000 consisting primarily of transfer pricing and return-to-provision adjustments.

Excluding the impact of these discrete tax items, the Company’s effective tax rate was 16 % for both the three-month periods ended April 2, 2023 and April 3, 2022.

The Company’s reserve for income taxes, including gross interest and penalties, was $ 20,030,000 as of April 2, 2023, which was classified as a non-current liability.

If the Company’s tax positions were sustained or the statutes of limitations related to certain positions expired, these reserves would be released and income tax expense would be reduced in a future period.

Within the United States, the tax years 2019 through 2022 remain open to examination by the IRS, and 2018 through 2021 remain open to examination by various state tax authorities.

The Company is currently under audit by the state of Massachusetts for the years 2020 and 2021.

The tax years 2017 through 2022 remain open to examination by various taxing authorities in other jurisdictions in which the Company operates.

The Company received the Closing Letter for Agreed Income Tax Cases from the IRS and the Company is no longer under audit by the IRS for the tax years 2017 and 2018.

The Company is no longer under audit by the Commonwealth of Massachusetts for tax years 2017 and 2018.

These audits were completed during the nine-month period ended October 2, 2022 and resulted in no material tax impact to the Company's financial statements.

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Weighted-Average Shares

Weighted-average shares were calculated as follows (in thousands):

Three-months Ended Nine-months Ended

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

Three-months Ended

April 2, 2023 April 3, 2022

Basic weighted-average common shares outstanding 172,624 174,146

1 unchanged sentence

Weighted-average common and common-equivalent shares outstanding 173,903 176,668

Stock options to purchase 6,167,000 and 3,297,000 shares of common stock, on a weighted-average basis, were outstanding during the three-month and nine-month periods ended October 2, 2022, respectively, and 586,000 and 655,000 for the same periods in 2021, respectively, but were not included in the calculation of dilutive net income per share because they were anti-dilutive.

Restricted stock units totaling 607,000 and 26,000 shares of common stock, on a weighted-average basis, were outstanding during the three-month and nine-month periods ended October 2, 2022, respectively, and 1,000 for both the three-month and nine-month periods in 2021, but were not included in the calculation of dilutive net income per share because they were anti-dilutive.

PRSUs totaling 33,000 and 0 shares of common stock, on a weighted-average basis, were outstanding during the three-month and nine-month periods ended October 2, 2022, respectively, but were not included in the calculation of dilutive net income per share because they were anti-dilutive.

There were no anti-dilutive PRSUs outstanding, on a weighted-average basis, during the three-month and nine-month periods October 3, 2021.

Loss from Fire

Stock options to purchase 6,515,000 and 1,282,000 shares of common stock, on a weighted-average basis, were outstanding during the three-month periods ended April 2, 2023 and April 3, 2022, respectively, but were not included in the calculation of dilutive net income per share because they were anti-dilutive.

Restricted stock units totaling 10,000 and 20,000 shares of common stock, on a weighted-average basis, were outstanding during the three-month periods ended April 2, 2023 and April 3, 2022, respectively, but were not included in the calculation of dilutive net income per share because they were anti-dilutive.

No PRSUs were excluded in the calculation of dilutive net income per share for the three-month periods ended April 2, 2023 and April 3, 2022, as PRSUs were not anti-dilutive on a weighted-average basis.

Loss (Recovery) from Fire

On June 7, 2022, the Company’s primary contract manufacturer experienced a fire at its plant in Indonesia.

1 unchanged sentence

There was no significant damage to the Company's production equipment.

Since the date of the fire and through the date of financial statement issuance, the Company has worked with the contract manufacturer to assess the damage, resume production, and replenish inventories destroyed by the fire.

Additionally, beginning last year, the Company has been working to ramp up an additional contract manufacturer to further mitigate risk, diversify supply chain, and expand production capacity.

We expect this additional contract manufacturer to commence production later in the year.

As a result of the fire, the Company recorded $ 47,794,000 in gross losses in 2022, including $ 44,903,000 during the three-month period ended July 3, 2022 and $ 2,891,000 during the three-month period ended October 2, 2022.

Gross losses related to $ 37,643,000 of primarily Cognex-owned inventory that was destroyed or deemed to have a net realizable value of zero, $ 8,184,000 of primarily prepayments related to Cognex-designated components that were owned by the contract manufacturer, and $ 1,967,000 related to deleveraging of costs related to our distribution centers.

Based on the provisions of the Company's insurance policies, the gross losses have been reduced by the estimated insurance proceeds expected to be received from the Company’s insurance carrier.

The Company has determined that partial recovery of the incurred losses is probable and therefore recorded an insurance recovery of $ 27,500,000

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

during the three-month period ended July 3, 2022.

The insurance receivable is included in “Prepaid expenses and other current assets” on the Consolidated Balance Sheets as of October 2, 2022.

Gross losses, net of insurance recovery, total $ 2,891,000 and $ 20,294,000 for the three-month and nine-month periods ended October 2, 2022, respectively, and are presented in the caption “Loss from fire” on the Consolidated Statements of Operations.

Subsequent to the October 2, 2022 balance sheet date, but prior to the date of financial statement issuance, the Company received insurance proceeds of $ 27,560,000 from the Company's insurance carrier.

In the fourth quarter of 2022, the loss from fire will be reduced by the proceeds received in excess of the original estimated insurance recovery recorded of $ 27,500,000 .

As of October 2, 2022 and through the date of financial statement issuance, management cannot yet estimate additional recoveries that could be available from the contract manufacturer.

As a result of the fire, the Company recorded $ 48,339,000 in gross losses in 2022, primarily related to Cognex-owned inventory that was destroyed or deemed to have a net realizable value of zero, and prepayments related to Cognex-designated components that were owned by the contract manufacturer .

Gross losses were reduced by insurance proceeds received from the Company’s insurance carrier of $ 27,560,000 in the fourth quarter of 2022.

Subsequent to the April 2, 2023 balance sheet date, but prior to the date of financial statement issuance, the Company received insurance proceeds of $ 2,500,000 related to a business interruption claim associated with the fire from the Company's insurance carrier.

In the second quarter of 2023, this recovery amount will be presented in the caption “Loss (recovery) from fire” on the Consolidated Statements of Operations.

As of April 2, 2023 and through the date of financial statement issuance, management cannot yet estimate additional recoveries that could be available from the contract manufacturer.

Any future, additional recoveries in excess of recognized losses will be treated as gain contingencies and will be recognized when the gain is realized or realizable.

There can be no assurance, however, that the insurance coverage and/or recoveries from the contract manufacturer will be available to cover the losses from the fire.

After considering all the relevant events and circumstances resulting from the fire, management does not believe that the carrying value of the Company exceeds its fair value, or that the carrying amount of the Company’s intangible assets may not be recoverable.

As such, no goodwill or intangible asset impairment charges were recorded during 2022 as a result of the fire.

Restructuring Charges

On December 7, 2022, the Company acquired all of the outstanding shares of SAC Sirius Advanced Cybernetics GmbH ("SAC"), a leader in computational lighting technology based in Germany.

Following its acquisition of SAC, the Company performed restructuring activities to align the cost and operating structure of the acquired business with the Company's business strategy.

As of December 31, 2022, the majority of these restructuring actions were completed.

No additional charges were recorded during the three-month period ended April 2, 2023, or are expected to be incurred in future periods in relation to this restructuring plan.

The following table summarizes the activity in the Company’s restructuring reserve related to these restructuring activities, which is included in “Accrued expenses” on the Consolidated Balance Sheets (in thousands):

One-time Termination Benefits Contract Termination Costs Total

Balance as of December 31, 2022 $ 964 $ 75 $ 1,039

Cash payments ( 143 ) ( 20 ) ( 163 )

Foreign exchange rate changes 17 1 18

Balance as of April 2, 2023 $ 838 $ 56 $ 894

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Subsequent Events

On November 3, 2022, the Company’s Board of Directors declared a cash dividend of $ 0.07 per share.

The dividend is payable on December 2, 2022 to all shareholders of record as of the close of business on November 18, 2022.

On May 4, 2023, the Company’s Board of Directors declared a cash dividend of $ 0.07 per share.

The dividend is payable on June 2, 2023 to all shareholders of record as of the close of business on May 19, 2023.

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 1. Financial Statements