What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-10-31 compared with 2023-08-03 · 156 added, 138 removed, 533 unchanged (36% of the section changed)

3 unchanged sentences

(In thousands, except per share amounts)

Three-months Ended Six-months Ended

July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022

Three-months Ended Nine-months Ended

October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022

(unaudited) (unaudited)

23 unchanged sentences

(In thousands)

Three-months Ended Six-months Ended

July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022

Three-months Ended Nine-months Ended

October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022

(unaudited) (unaudited)

2 unchanged sentences

Available-for-sale investments:

Net unrealized gain (loss), net of tax of $( 584 ) and $( 698 ) in the three-month periods, and net of tax of $ 1,274 and $( 4,734 ) in the six-month periods, respectively

Net unrealized gain (loss), net of tax of $ 707 and $( 1,564 ) in the three-month periods, and net of tax of $ 1,981 and $( 6,298 ) in the nine-month periods, respectively

738 ( 5,315 ) 4,458 ( 21,185 )

10 unchanged sentences

(In thousands)

July 2, 2023 December 31, 2022

October 1, 2023 December 31, 2022

Current assets:

49 unchanged sentences

(In thousands)

Six-months Ended

July 2, 2023 July 3, 2022

Nine-months Ended

October 1, 2023 October 2, 2022

Cash flows from operating activities:

Net income $ 102,005 $ 160,214

Adjustments to reconcile net income to net cash provided by operating activities:

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Stock-based compensation expense 41,518 41,419

5 unchanged sentences

Amortization of discounts or premiums on investments 1,347 3,976

Realized loss (gain) on sale of investments — 24

Realized (gain) loss on sale of investments 624 103

Change in deferred income taxes ( 14,691 ) ( 14,799 )

33 unchanged sentences

Shares Par Value

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

Balance as of July 2, 2023 172,293 $ 345 $ 1,010,973 $ 537,947 $ ( 68,802 ) $ 1,480,463

Net issuance of common stock under stock plans 40 — 622 — — 622

6 unchanged sentences

— — — — 738 738

Reclassification of net realized (gain) loss on the sale of available-for-sale investments — — — — 624 624

Foreign currency translation adjustment — — — — ( 2,603 ) ( 2,603 )

Balance as of July 2, 2023 (unaudited)

Balance as of October 1, 2023 (unaudited)

172,142 $ 344 $ 1,023,960 $ 534,337 $ ( 70,043 ) $ 1,488,598

4 unchanged sentences

Shares Par Value

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

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 )

8 unchanged sentences

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

Balance as of July 3, 2022 (unaudited)

Balance as of October 2, 2022 (unaudited)

172,930 $ 346 $ 960,446 $ 510,877 $ ( 82,449 ) $ 1,389,220

18 unchanged sentences

— — — — 4,458 4,458

Reclassification of net realized (gain) loss on the sale of available-for-sale investments — — — — 624 624

Foreign currency translation adjustment — — — — ( 5,828 ) ( 5,828 )

Balance as of July 2, 2023 (unaudited)

Balance as of October 1, 2023 (unaudited)

172,142 $ 344 $ 1,023,960 $ 534,337 $ ( 70,043 ) $ 1,488,598

16 unchanged sentences

Foreign currency translation adjustment — — — — ( 13,425 ) ( 13,425 )

Balance as of July 3, 2022 (unaudited)

Balance as of October 2, 2022 (unaudited)

172,930 $ 346 $ 960,446 $ 510,877 $ ( 82,449 ) $ 1,389,220

5 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 losses and recoveries from the fire (Note 17), and financial statement reclassifications necessary to present fairly the Company’s financial position as of July 2, 2023, and the results of its operations for the three-month and six-month periods ended July 2, 2023 and July 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 and six-month periods ended July 2, 2023 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, adjustments related to losses and recoveries from the fire (Note 17), and financial statement reclassifications necessary to present fairly the Company’s financial position as of October 1, 2023, and the results of its operations for the three-month and nine-month periods ended October 1, 2023 and October 2, 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 and nine-month periods ended October 1, 2023 are not necessarily indicative of the results to be expected for the full year.

New Pronouncements

13 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 July 2, 2023 (in thousands):

The following table summarizes the financial assets and liabilities required to be measured at fair value on a recurring basis as of October 1, 2023 (in thousands):

Quoted Prices in

8 unchanged sentences

Sovereign bonds — 1,940 —

Municipal bonds — 635 —

Economic hedge forward contracts — 196 —

9 unchanged sentences

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 six-month periods ended July 2, 2023 or July 3, 2022.

The Company did not record impairment charges related to non-financial assets during the three-month or nine-month periods ended October 1, 2023 or October 2, 2022.

COGNEX CORPORATION

2 unchanged sentences

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

July 2, 2023 December 31, 2022

October 1, 2023 December 31, 2022

Cash $ 153,785 $ 180,959

4 unchanged sentences

Treasury bills 2,457 11,332

Municipal bonds 635 624

Sovereign bonds 979 —

Agency bonds — 15,858

Municipal bonds — 624

Current investments 117,147 218,759

8 unchanged sentences

treasury bills consist of debt securities issued by the U.S.

municipal bonds consist of debt securities issued by state and local government entities;

sovereign bonds consist of direct debt issued by foreign governments;

agency bonds consist of domestic or foreign obligations of government agencies and government-sponsored enterprises that have government backing;

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

All of the Company's securities as of July 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 Sheets and amounted to $ 4,265,000 and $ 3,620,000 as of July 2, 2023 and December 31, 2022, respectively.

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

and municipal bonds consist of debt securities issued by state and local government entities.

All of the Company's securities as of October 1, 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 Sheets and amounted to $ 4,094,000 and $ 3,620,000 as of October 1, 2023 and December 31, 2022, respectively.

The following table summarizes the Company’s available-for-sale investments as of October 1, 2023 (in thousands):

Losses Fair Value

2 unchanged sentences

Treasury bills 2,498 — ( 41 ) 2,457

Municipal bonds 635 — — 635

Sovereign bonds 1,017 — ( 38 ) 979

Corporate bonds 251,635 9 ( 12,866 ) 238,778

5 unchanged sentences

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 July 2, 2023 (in thousands):

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 1, 2023 (in thousands):

Unrealized Loss Position For:

7 unchanged sentences

Sovereign bonds — — 1,940 ( 119 ) 1,940 ( 119 )

Municipal bonds — — — — — —

$ 192,403 $ ( 5,857 ) $ 255,965 $ ( 13,905 ) $ 448,368 $ ( 19,762 )

1 unchanged sentence

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 July 2, 2023 or December 31, 2022.

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

Management currently intends to hold debt securities that are in an unrealized loss position to full value recovery at maturity.

The Company recorded no gross realized gains or losses on the sale of debt securities during the three-month and six-month periods ended July 2, 2023.

The Company recorded gross realized gains on the sale of debt securities totaling $ 15,000 and $ 133,000 during the three-month and six-month periods ended July 3, 2022, respectively, and gross realized losses on the sale of debt securities totaling $ 3,000 and $ 157,000 during the three-month and six-month periods ended July 3, 2022, respectively.

Based on this evaluation, no allowance for credit losses on debt securities was recorded as of October 1, 2023 or December 31, 2022.

There was no activity recorded in the allowance for credit losses during the three-month or nine-month periods ended October 1, 2023 or October 2, 2022.

The following table summarizes the Company's gross realized gains and losses on the sale of debt securities for the three-month and nine-month periods ended October 1, 2023 and October 2, 2022 (in thousands):

Three-months Ended Nine-months Ended

October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022

Gross realized gains $ 109 $ — $ 109 $ 133

Gross realized losses ( 733 ) ( 79 ) ( 733 ) ( 236 )

Net realized gains (losses) $ ( 624 ) $ ( 79 ) $ ( 624 ) $ ( 103 )

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 income (loss).

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

The following table presents the effective maturity dates of the Company’s available-for-sale investments as of October 1, 2023 (in thousands):

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

3 unchanged sentences

Sovereign bonds 979 — 961 — — — 1,940

Municipal bonds 635 — — — — — 635

$ 117,147 $ 113,525 $ 91,970 $ 60,698 $ 59,660 $ 7,138 $ 450,138

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Inventories consisted of the following (in thousands):

July 2, 2023 December 31, 2022

October 1, 2023 December 31, 2022

Raw materials $ 80,091 $ 71,720

2 unchanged sentences

$ 133,866 $ 122,480

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 July 2, 2023, there were no options to terminate and twenty options to extend that were accounted for in the determination of the lease term for outstanding leases.

As of October 1, 2023, there were no options to terminate and twenty-nine 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 July 2, 2023.

The total operating lease expense for the three-month and six-month periods ended July 2, 2023 was $ 2,639,000 and $ 5,031,000 , respectively.

The total operating lease cash payments for the three-month and six-month periods ended July 2, 2023 were $ 2,364,000 and $ 4,768,000 , 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 six-month periods ended July 2, 2023 was $ 136,000 and $ 160,000 , respectively.

The total operating lease expense for the three-month and six-month periods ended July 3, 2022 was $ 2,215,000 and $ 4,444,000 , respectively.

The total operating lease cash payments for the three-month and six-month periods ended July 3, 2022 were $ 2,227,000 and $ 4,306,000 , respectively.

There were no restrictions or covenants for outstanding leases as of October 1, 2023.

The total operating lease expense for the three-month and nine-month periods ended October 1, 2023 was $ 5,512,000 and $ 8,151,000 , respectively.

The total operating lease cash payments for the three-month and nine-month periods ended October 1, 2023 were $ 5,168,000 and $ 7,532,000 , 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 1, 2023 was $ 132,000 and $ 292,000 , respectively.

The total operating lease expense for the three-month and nine-month periods ended October 2, 2022 was $ 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.

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

2 unchanged sentences

Thereafter 46,421

The discounted present value of the future lease cash payments resulted in a total lease liability of $ 70,040,000 and $ 39,752,000 as of July 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 July 2, 2023.

The discounted present value of the future lease cash payments resulted in a total lease liability of $ 68,432,000 and $ 39,752,000 as of October 1, 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 October 1, 2023.

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

In June 2023, the Company entered into a lease for a 115,000 square-foot building in Singapore to serve as a new distribution center for customers in Asia.

3 unchanged sentences

The second component of this Singapore lease is for a 27,000 square-foot premises with a term of eight years .

The commencement date for this lease component is in the fourth quarter of 2025, and therefore it was not yet recorded on the Consolidated Balance Sheets, nor did it create any significant rights and obligations as of July 2, 2023.

The Company has the right and option to extend the term of this lease component for an additional period of five years , commencing upon the expiration of the original term.

1 unchanged sentence

Future payment obligations related to this lease component are not included in the future operating lease cash payments table above.

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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 , which does not reflect an estimated extension period, within "Operating lease assets" and "Operating lease liabilities" on the Consolidated Balance Sheets on the commencement date.

The weighted-average discount rate was 5.3 % and 3.3 % for the leases outstanding as of July 2, 2023 and December 31, 2022, respectively.

The weighted-average remaining lease term was 11.0 and 7.8 years for the leases outstanding as of July 2, 2023 and December 31, 2022, respectively.

The weighted-average discount rate was 5.4 % and 3.3 % for the leases outstanding as of October 1, 2023 and December 31, 2022, respectively.

The weighted-average remaining lease term was 10.8 and 7.8 years for the leases outstanding as of October 1, 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 ( 1,588 )

Balance as of July 2, 2023 $ 241,582

Balance as of October 1, 2023 $ 241,042

Intangible Assets

5 unchanged sentences

Non-compete agreements 340 ( 219 ) 121

Balance as of July 2, 2023 $ 34,195 $ ( 23,466 ) $ 10,729

Balance as of October 1, 2023 $ 34,195 $ ( 24,209 ) $ 9,986

Value Accumulated

4 unchanged sentences

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

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

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

As of October 1, 2023, estimated future amortization expense related to intangible assets was as follows (in thousands):

Year Ended December 31, Amount

1 unchanged sentence

Thereafter 543

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Warranty Obligations

8 unchanged sentences

Fulfillment of warranty obligations ( 2,292 )

Balance as of July 2, 2023 $ 4,001

Balance as of October 1, 2023 $ 3,805

Commitments and Contingencies

As of July 2, 2023, the Company had outstanding purchase orders totaling $ 40,388,000 to procure inventory from various vendors.

As of October 1, 2023, the Company had outstanding purchase orders totaling $ 70,635,000 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.

A significant portion of the Company's outstanding inventory purchase orders as of July 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.

A significant portion of the Company's outstanding inventory purchase orders as of October 1, 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.

3 unchanged sentences

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.

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Derivative Instruments

3 unchanged sentences

These economic hedges are not designated as hedging instruments for hedge accounting treatment.

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Additionally, during the three-month period ended October 1, 2023, the Company entered into a foreign currency forward contract to exchange U.S.

Dollars for ¥ 40,000,000,000 to hedge the Japanese Yen purchase price of the acquisition of Moritex Corporation (refer to Note 19 of the consolidated financial statements).

Upon the settlement of this contract, the Company recorded a foreign currency loss of $ 8,456,000 , which was recorded in "Foreign currency gain (loss)" on the Consolidated Statements of Operations for the three-month period ended October 1, 2023.

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

July 2, 2023 December 31, 2022

October 1, 2023 December 31, 2022

Currency Notional

1 unchanged sentence

Derivatives Not Designated as Hedging Instruments:

Japanese Yen 40,600,000 $ 272,499 700,000 $ 5,281

Euro 37,500 39,741 60,000 64,174

Singapore Dollar 40,500 29,747 — —

Chinese Renminbi 200,000 27,445 55,000 7,619

2 unchanged sentences

British Pound 3,230 3,956 3,445 4,161

Japanese Yen 600,000 4,159 700,000 5,281

Canadian Dollar 1,650 1,225 1,730 1,278

3 unchanged sentences

Balance Fair Value Balance Fair Value

Location July 2, 2023 December 31, 2022 Sheet

Location July 2, 2023 December 31, 2022

Location October 1, 2023 December 31, 2022 Sheet

Location October 1, 2023 December 31, 2022

Derivatives Not Designated as Hedging Instruments:

Economic hedge forward contracts Prepaid expenses and other current assets $ 196 $ 27 Accrued expenses $ 128 $ 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

July 2, 2023 December 31, 2022 July 2, 2023 December 31, 2022

October 1, 2023 December 31, 2022 October 1, 2023 December 31, 2022

Gross amounts of recognized assets $ 196 $ 27 Gross amounts of recognized liabilities $ 128 $ 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 Six-months Ended

July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022

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

October 1, 2023 October 2, 2022 October 1, 2023 October 2, 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 Six-months Ended

July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022

Three-months Ended Nine-months Ended

October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022

Americas $ 80,156 $ 65,847 $ 243,067 $ 284,057

4 unchanged sentences

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

Three-months Ended Six-months Ended

July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022

Three-months Ended Nine-months Ended

October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022

Standard products and services $ 170,104 $ 158,244 $ 555,831 $ 637,598

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 $ 18,951,000 and $ 14,578,000 as of July 2, 2023 and December 31, 2022, respectively.

Costs to fulfill a contract are included in "Prepaid expenses and other current assets" on the Consolidated Balance Sheet and amounted to $ 17,827,000 and $ 14,578,000 as of October 1, 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 six-month period ended July 2, 2023 (in thousands):

The following table summarizes the allowance for credit losses activity for the nine-month period ended October 1, 2023 (in thousands):

Balance as of December 31, 2022 $ 730

2 unchanged sentences

Foreign exchange rate changes —

Balance as of July 2, 2023 $ 602

Balance as of October 1, 2023 $ 580

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

The following table summarizes the deferred revenue and customer deposits activity for the nine-month period ended October 1, 2023 (in thousands):

Balance as of December 31, 2022 $ 40,787

3 unchanged sentences

Foreign exchange rate changes ( 776 )

Balance as of July 2, 2023 $ 43,439

Balance as of October 1, 2023 $ 40,246

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.

6 unchanged sentences

With the approval of the 2023 Plan, the 10,610,800 shares of common stock subject to awards granted under the 2001 Plan and the 2007 Plan that were outstanding as of May 3, 2023 may become eligible for issuance under the 2023 Plan if such awards are forfeited, cancelled or otherwise terminated (other than by exercise) (the “Carryover Shares”).

As of July 2, 2023, forfeits, cancellations, and other terminations from the 2001 Plan and the 2007 Plan have resulted in 147,585 Carryover Shares, raising the authorized total shares that may be issued under the 2023 Plan to 8,247,585 .

As of July 2, 2023, the Company had 8,183,000 shares available for grant under its stock plans.

As of October 1, 2023, forfeits, cancellations, and other terminations from the 2001 Plan and the 2007 Plan have resulted in 214,024 Carryover Shares, raising the authorized total shares that may be issued under the 2023 Plan to 8,314,024 .

As of October 1, 2023, the Company had 8,035,000 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.

5 unchanged sentences

Stock Options

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

The following table summarizes the Company’s stock option activity for the nine-month period ended October 1, 2023:

(in thousands) Weighted-

7 unchanged sentences

Forfeited or expired ( 562 ) 57.71

Outstanding as of July 2, 2023

Outstanding as of October 1, 2023

8,975 $ 51.19 6.13 $ 17,396

Exercisable as of July 2, 2023

Exercisable as of October 1, 2023

5,182 $ 47.67 4.67 $ 17,378

Options vested or expected to vest as of July 2, 2023 (1) 8,416 $ 50.95 6.17 $ 67,670

Options vested or expected to vest as of October 1, 2023 (1) 8,493 $ 51.01 5.98 $ 17,396

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

1 unchanged sentence

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

Three-months Ended Six-months Ended

July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022

Three-months Ended Nine-months Ended

October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022

Risk-free rate 4.1 % 2.7 % 4.0 % 2.1 %

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 six-month periods ended July 2, 2023 were $ 20.09 and $ 17.86 , respectively, and during the three-month and six-month periods ended July 3, 2022 were $ 18.21 and $ 22.33 , respectively.

The total intrinsic values of stock options exercised for the three-month and six-month periods ended July 2, 2023 were $ 2,123,000 and $ 5,562,000 , respectively, and for the three-month and six-month periods ended July 3, 2022 were $ 934,000 and $ 3,099,000 , respectively.

The total fair values of stock options vested for the three-month and

The weighted-average grant-date fair values of stock options granted during the three-month and nine-month periods ended October 1, 2023 were $ 20.55 and $ 18.11 , respectively, and during the three-month and nine-month periods ended October 2, 2022 were $ 18.81 and $ 21.40 , respectively.

The total intrinsic values of stock options exercised for the three-month and nine-month periods ended October 1, 2023 were $ 557,000 and $ 6,119,000 , respectively, and for the three-month and nine-month periods ended

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

six-month periods ended July 2, 2023 were $ 892,000 and $ 32,073,000 , respectively, and for the three-month and six-month periods ended July 3, 2022 were $ 1,188,000 and $ 26,723,000 , respectively.

October 2, 2022 were $ 516,000 and $ 3,615,000 , respectively.

The total fair values of stock options vested for the three-month and nine-month periods ended October 1, 2023 were $ 962,000 and $ 33,035,000 , respectively, and for the three-month and nine-month periods ended October 2, 2022 were $ 1,159,000 and $ 27,882,000 , respectively.

Restricted Stock Units (RSUs)

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

The following table summarizes the Company's RSUs activity for the nine-month period ended October 1, 2023:

(in thousands) Weighted-Average

5 unchanged sentences

Forfeited or expired ( 86 ) 60.65

Nonvested as of July 2, 2023

Nonvested as of October 1, 2023

1,431 $ 54.79

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 six-month periods ended July 2, 2023 were $ 52.53 and $ 46.86 , respectively, and during the three-month and six-month periods ended July 3, 2022 were $ 45.25 and $ 63.37 , respectively.

There were 29,000 and 482,000 RSUs that vested during the three-month and six-month periods ended July 2, 2023, respectively, and 20,000 and 74,000 that vested during the three-month and six-month periods ended July 3, 2022, respectively.

The weighted-average grant-date fair values of RSUs granted during the three-month and nine-month periods ended October 1, 2023 were $ 46.17 and $ 46.78 , respectively, and during the three-month and nine-month periods ended October 2, 2022 were $ 47.12 and $ 58.44 , respectively.

There were 18,000 and 500,000 RSUs that vested during the three-month and nine-month periods ended October 1, 2023, respectively, and 67,000 and 141,000 that vested during the three-month and nine-month periods ended October 2, 2022, respectively.

Performance Restricted Stock Units (PRSUs)

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

The following table summarizes the Company's PRSUs activity for the nine-month period ended October 1, 2023:

(in thousands) Weighted-Average

3 unchanged sentences

Forfeited or expired — —

Nonvested as of July 2, 2023

Nonvested as of October 1, 2023

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 0 and 46,000 PRSUs granted during the three-month and six-month periods ended July 2, 2023, respectively, and 0 and 33,000 PRSUs granted during the three-month and six-month periods ended July 3, 2022, respectively.

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

There were no PRSUs granted during the three-month periods ended October 1, 2023 and October 2, 2022.

There were 46,000 and 33,000 PRSUs granted during the nine-month periods ended October 1, 2023 and October 2, 2022, respectively.

No PRSUs vested during the three-month and nine-month periods ended October 1, 2023 and October 2, 2022.

Stock-Based Compensation Expense

4 unchanged sentences

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 July 2, 2023, total unrecognized compensation expense, net of estimated forfeitures, related to non-vested equity awards, including stock options, RSUs, and PRSUs, was $ 76,162,000 , which is expected to be recognized over a weighted-average period of 2.2 years.

As of October 1, 2023, total unrecognized compensation expense, net of estimated forfeitures, related to non-vested equity awards, including stock options, RSUs, and PRSUs, was $ 68,509,000 , which is expected to be recognized over a weighted-average period of 2.0 years.

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The total stock-based compensation expense and the related income tax benefit recognized for the three-month period ended July 2, 2023 were $ 12,574,000 and $ 1,892,000 , respectively, and for the six-month period ended July 2, 2023 were $ 29,153,000 and $ 4,200,000 , respectively.

The total stock-based compensation expense and the related income tax benefit recognized for the three-month period ended July 3, 2022 were $ 12,997,000 and $ 2,044,000 , respectively, and for the six-month period ended July 3, 2022 were $ 28,053,000 and $ 4,363,000 , respectively.

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

The total stock-based compensation expense and the related income tax benefit recognized for the three-month period ended October 1, 2023 were $ 12,365,000 and $ 1,971,000 , respectively, and for the nine-month period ended October 1, 2023 were $ 41,518,000 and $ 6,053,000 , respectively.

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.

No compensation expense was capitalized as of October 1, 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 Six-months Ended

July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022

Three-months Ended Nine-months Ended

October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022

Cost of revenue $ 435 $ 468 $ 1,497 $ 1,513

4 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.

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 six-month period ended July 3, 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, and an additional 5,000 shares that were repurchased in 2021 and settled in 2022, at a cost of $ 117,000,000 during the nine-month period ended October 2, 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.

Under this March 2022 program, the Company repurchased 590,000 shares at a cost of $ 37,317,000 during the six-month period ended July 3, 2022.

Under this same March 2022 program, in addition to repurchases made in the prior year, the Company repurchased 966,000 shares at a total cost of $ 49,163,000 during the six-month period ended July 2, 2023 leaving a remaining balance of $ 363,523,000 as of July 2, 2023.

Under this March 2022 program, the Company repurchased 1,125,000 shares at a total cost of $ 61,387,000 during the nine-month period ended October 2, 2022.

Under this same March 2022 program, in addition to repurchases made in the prior year, the Company repurchased 1,157,000 shares at a total cost of $ 59,640,000 during the nine-month period ended October 1, 2023, leaving a remaining balance of $ 353,046,000 as of October 1, 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.

2 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The Company's effective tax rate was 15 % and 12 % for the three-month and six-month periods ended July 2, 2023, respectively, and 9 % and 17 % for the three-month and six-month periods ended July 3, 2022, respectively.

The Company's effective tax rate was 30 % and 16 % for the three-month and nine-month periods ended October 1, 2023, respectively, and 14 % and 16 % for the three-month and nine-month periods ended October 2, 2022, respectively.

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

The Company recorded a net discrete tax expense totaling $ 399,000 and a net discrete tax benefit totaling $ 3,195,000 for the three-month and six-month periods ended July 2, 2023, and a net discrete tax benefit totaling $ 2,352,000 and a net discrete tax expense totaling $ 3,986,000 for the same periods in 2022.

Discrete tax items for the six-month period ended July 2, 2023 included (1) an increase in tax expense of $ 1,766,000 related to stock-based compensation;

(2) a net decrease in tax expense of $ 3,051,000 due primarily to the release of tax reserves on state tax credits and foreign audit settlements;

These foreign tax rate differences resulted in a net decrease to the effective tax rate for both the three-month and nine-month periods ended October 1, 2023 and October 2, 2022.

The Company recorded a net discrete tax expense totaling $ 4,035,000 and $ 840,000 for the three-month and nine-month periods ended October 1, 2023, respectively and a net discrete tax benefit totaling $ 2,000 and a net discrete tax expense totaling $ 3,984,000 for the same periods in 2022.

Discrete tax items for the nine-month period ended October 1, 2023 included (1) a net decrease in tax expense of $ 3,043,000 due primarily to the release of tax reserves on state tax credits and foreign audit settlements;

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

and (4) a net increase in tax expense of $ 288,000 for return-to-provision adjustments.

Discrete tax items for the six-month period ended July 3, 2022 included (1) an increase in tax expense of $ 176,000 related to stock-based compensation;

(2) a decrease in tax expense of $ 1,577,000 arising from audit settlements;

(3) an increase in tax expense of $ 2,178,000 for an adjustment related to deferred state taxes due to a reduction in the Company's blended state rate;

(4) a net increase in tax expense of $ 2,134,000 for return-to-provision adjustments;

and (5) an increase in tax expense of $ 1,769,000 related to stock-based compensation.

Discrete tax items for the nine-month period ended October 2, 2022 included (1) a net increase in tax expense of $ 3,822,000 primarily for return-to-provision adjustments;

(2) a net decrease in tax expense of $ 2,461,000 arising primarily from audit settlements and releases of reserves;

(3) an increase in tax expense of $ 2,316,000 to establish a reserve against certain deferred tax assets;

and (4) an increase in tax expense of $ 3,071,000 consisting primarily of transfer pricing and return-to-provision adjustments.

The Company’s reserve for income taxes, including gross interest and penalties, was $ 19,239,000 as of July 2, 2023, which was classified as a non-current liability.

and (4) an increase in tax expense of $ 307,000 related to stock-based compensation;

The Company’s reserve for income taxes, including gross interest and penalties, was $ 19,450,000 as of October 1, 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.

3 unchanged sentences

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

Three-months Ended Six-months Ended

July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022

Three-months Ended Nine-months Ended

October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022

Basic weighted-average common shares outstanding 172,169 173,256 172,408 173,640

1 unchanged sentence

Weighted-average common and common-equivalent shares outstanding 173,354 174,327 173,659 175,233

Stock options to purchase 6,890,000 and 6,713,000 shares of common stock, on a weighted-average basis, were outstanding during the three-month and six-month periods ended July 2, 2023, respectively, and 4,048,000 and 1,818,000 for the same periods in 2022, respectively, but were not included in the calculation of dilutive net income per share because they were anti-dilutive.

Restricted stock units totaling 3,000 and 1,000 shares of common stock, on a weighted-average basis, were outstanding during the three-month and six-month periods ended July 2, 2023, respectively, and 480,000 and 21,000 for the same periods in 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 and six-month periods ended July 2, 2023, as PRSUs were not anti-dilutive on a weighted-average basis.

PRSUs totaling 33,000 and 0 shares of common stock, on a weighted-average basis, were outstanding during the three-month and six-month periods ended July 3, 2022, respectively, but were not included in the calculation of dilutive net income per share because they were anti-dilutive .

Stock options to purchase 6,893,000 and 6,775,000 shares of common stock, on a weighted-average basis, were outstanding during the three-month and nine-month periods ended October 1, 2023, respectively, and 6,167,000 and 3,297,000 for the same periods in 2022, respectively, but were not included in the calculation of dilutive net income per share because they were anti-dilutive.

Restricted stock units totaling 3,000 and 1,000 shares of common stock, on a weighted-average basis, were outstanding during the three-month and nine-month periods ended October 1, 2023, respectively, and 607,000 and 26,000 for the same periods in 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 and nine-month periods ended October 1, 2023, as PRSUs were not anti-dilutive on a weighted-average basis.

PRSUs totaling 33,000 shares of common stock, on a weighted average basis, were outstanding during the three-month period ended October 2,

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

2022, 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 nine-month period ended October 2, 2022 as PRSUs were not anti-dilutive on a weighted-average basis.

Loss (Recovery) from Fire

4 unchanged sentences

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

During the three-month period ended July 3, 2022, the Company recorded a net loss related to the fire of $ 17,403,000 , consisting primarily of losses from inventories and other assets of $ 44,903,000 , partially offset by an estimated insurance recovery of $ 27,500,000 .

The net loss is presented in the caption “Loss (recovery) from fire” on the Consolidated Statements of Operations.

During the nine-month period ended October 2, 2022, the Company recorded a net loss related to the fire of $ 20,294,000 , consisting primarily of losses from inventories and other assets of $ 47,794,000 , including $ 2,891,000 during the three-month period ended October 2, 2022, partially offset by an estimated insurance recovery of $ 27,500,000 .

These losses are presented in the caption “Loss (recovery) from fire” on the Consolidated Statements of Operations.

The Company received insurance proceeds of $ 27,560,000 from the Company's insurance carrier in the fourth quarter of 2022, and gross losses recorded during 2022 related to the fire were further reduced by the proceeds received in excess of the original estimated insurance recovery.

During the three-month period ended July 2, 2023, the Company recorded a recovery related to the fire of $ 2,500,000 for proceeds received from the Company's insurance carrier in relation to a business interruption claim.

This recovery amount is presented in the caption “Loss (recovery) from fire” on the Consolidated Statements of Operations.

As of July 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.

During the nine-month period ended October 1, 2023, the Company recorded recoveries related to the fire of $ 5,250,000 , consisting of $ 2,500,000 during the three-month period ended July 2, 2023 for proceeds received from the Company's insurance carrier in relation to a business interruption claim and $ 2,750,000 during the three-month period ended October 1, 2023 for proceeds received as part of a financial settlement for lost inventory and other losses incurred as a result of the fire.

The Company expects to receive an additional $ 2,750,000 by the end of 2023.

These recovery amounts are presented in the caption “Loss (recovery) from fire” on the Consolidated Statements of Operations.

As of October 1, 2023 and through the date of financial statement issuance, management does not anticipate additional recoveries other than disclosed.

Restructuring Charges

2 unchanged sentences

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

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

No additional charges were recorded during the three-month and nine-month periods ended October 1, 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):

3 unchanged sentences

Foreign exchange rate changes 9 1 10

Balance as of July 2, 2023

Balance as of October 1, 2023

$ — $ 20 $ 20

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Subsequent Events

On August 3, 2023, the Company’s Board of Directors declared a cash dividend of $ 0.07 per share.

The dividend is payable on September 1, 2023 to all shareholders of record as of the close of business on August 18, 2023.

On October 18, 2023 , the Company acquired all of the outstanding shares of Moritex Corporation, a leading global provider of optics components with a strong presence in Japan, for an enterprise value of ¥ 40 billion, or approximately $ 270 million based on closing-date foreign exchange rates, in an all-cash transaction.

Given the timing of this acquisition, the Company is in the process of completing the purchase price allocation for the consideration paid.

Transaction costs incurred to date were not material and were expensed as incurred.

The financial results of Moritex Corporation prior to the acquisition date are not material to the consolidated financial results of the Company.

On October 31, 2023, the Company’s Board of Directors declared a cash dividend of $ 0.075 per share.

The dividend is payable on December 1, 2023 to all shareholders of record as of the close of business on November 17, 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