What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-05-02 compared with 2023-10-31 · 199 added, 252 removed, 437 unchanged (51% of the section changed)

3 unchanged sentences

(In thousands, except per share amounts)

Three-months Ended Nine-months Ended

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

(unaudited) (unaudited)

Three-months Ended

March 31, 2024 April 2, 2023

Revenue $ 210,797 $ 201,124

3 unchanged sentences

Selling, general, and administrative expenses 90,628 83,037

Loss (recovery) from fire (Note 17) ( 2,750 ) 2,891 ( 5,250 ) 20,294

Operating income 14,204 22,161

14 unchanged sentences

COGNEX CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

Three-months Ended Nine-months Ended

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

(unaudited) (unaudited)

Three-months Ended

March 31, 2024 April 2, 2023

Net income $ 12,022 $ 25,615

1 unchanged sentence

Available-for-sale investments:

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 )

Net unrealized gain (loss), net of tax of $ 117 and $ 1,858 in the three-month periods, respectively

Reclassification of net realized (gain) loss on the sale of available-for-sale investments into current operations ( 2 ) —

4 unchanged sentences

Other comprehensive income (loss), net of tax ( 15,799 ) 5,067

Total comprehensive income $ 17,675 $ 21,392 $ 101,259 $ 125,707

Total comprehensive income (loss) $ ( 3,777 ) $ 30,682

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

2 unchanged sentences

(In thousands)

October 1, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Current assets:

49 unchanged sentences

(In thousands)

Nine-months Ended

October 1, 2023 October 2, 2022

Three-months Ended

March 31, 2024 April 2, 2023

Cash flows from operating activities:

3 unchanged sentences

Depreciation of property, plant, and equipment 5,279 3,986

(Gain) loss on disposal of property, plant, and equipment ( 2 ) 12

Amortization of intangible assets 2,813 942

Excess and obsolete inventory charges 471 788

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

Fair value adjustment on acquired inventories (Note 17) 1,224 —

Amortization of discounts or premiums on investments 306 700

16 unchanged sentences

Purchases of property, plant, and equipment ( 4,061 ) ( 5,507 )

Net payments related to business acquisitions (Note 17) ( 994 ) —

Net cash provided by (used in) investing activities ( 49,023 ) ( 5,788 )

17 unchanged sentences

Shares Par Value

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

Repurchase of common stock ( 191 ) ( 1 ) — ( 10,477 ) — ( 10,478 )

Stock-based compensation expense — — 12,365 — — 12,365

Payment of dividends ($ 0.070 per common share)

— — — ( 12,049 ) — ( 12,049 )

Net income — — — 18,916 — 18,916

Net unrealized gain (loss) on available-for-sale investments, net of tax of $ 707

— — — — 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 October 1, 2023 (unaudited)

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

Common Stock Additional

Paid-in Capital Retained Earnings Accumulated

Comprehensive

Shareholders’

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

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, 2023

10 unchanged sentences

Foreign currency translation adjustment — — — — ( 16,156 ) ( 16,156 )

Balance as of October 1, 2023 (unaudited)

Balance as of March 31, 2024 (unaudited)

171,662 $ 343 $ 1,047,643 $ 502,338 $ ( 61,135 ) $ 1,489,189

14 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)

Balance as of April 2, 2023 (unaudited)

172,601 $ 345 $ 992,690 $ 517,526 $ ( 64,230 ) $ 1,446,331

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, 2023 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 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.

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 March 31, 2024, and the results of its operations for the three-month periods ended March 31, 2024 and April 2, 2023, 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 periods ended March 31, 2024 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", (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.

Together, the ASUs provide optional expedients and exceptions for applying generally accepted accounting principles (GAAP) to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2024, except for hedging relationships existing as of December 31, 2024 that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship.

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

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.

Accounting Standards Update (ASU) 2023-09, "Income Taxes (Topic 740):

Improvements to Income Tax Disclosures"

The amendments in this ASU apply to all entities that are subject to Topic 740, Income Taxes.

The amendments require public business entities to disclose specific categories in their rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold.

They also require all entities to disclose income taxes paid, net of refunds received, disaggregated by federal, state, and foreign taxes and by individual jurisdictions in which income taxes paid, net of refunds received, is equal to or greater than five percent of total income taxes paid.

For public business entities, the amendments in this ASU are effective for annual periods beginning after December 15, 2024.

The amendments in this ASU should be applied on a prospective basis.

Management does not expect ASU 2023-09 to have a material impact on the Company's financial statements and disclosures.

Accounting Standards Update (ASU) 2023-07, "Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures"

The amendments in this ASU apply to all public entities, including public entities with a single reportable segment, that are required to report segment information in accordance with Topic 280, Segment Reporting.

The amendments require public business entities to provide in interim and annual periods one or more measures of segment profit or loss used by the chief operating decision maker to allocate resources and assess performance.

Additionally, the amendments require disclosure of significant segment expenses and other segment items, as well as incremental qualitative disclosures.

The amendments in this ASU are effective for fiscal years beginning after December 15, 2023 and interim periods with fiscal years beginning after December 15, 2024.

The amendments in the ASU should be applied on a retrospective basis.

We did not early adopt ASU 2023-07.

Management does not expect ASU 2023-07 to 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 1, 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 March 31, 2024 (in thousands):

Quoted Prices in

5 unchanged sentences

Corporate bonds — 353,745 —

Treasury bills — 61,742 —

Treasury notes — 45,053 —

Asset-backed securities — 16,995 —

Certificate of deposit — 6,429 —

Treasury bills — 3,499 —

Sovereign bonds — 1,967 —

10 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 nine-month periods ended October 1, 2023 or October 2, 2022.

The Company did not record impairment charges related to non-financial assets during the three-month periods ended March 31, 2024 or April 2, 2023.

COGNEX CORPORATION

2 unchanged sentences

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

October 1, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Cash $ 128,264 $ 183,242

Certificate of deposit 6,429 —

Treasury bills 3,499 —

Money market instruments 667 19,413

2 unchanged sentences

Asset-backed securities 4,309 3,551

Treasury bills 2,457 11,332

Sovereign bonds 993 990

Agency bonds — 15,858

Municipal bonds — 624

Current investments 139,334 129,392

Corporate bonds 219,713 183,965

Treasury bills 59,285 44,214

Treasury notes 45,053 43,523

Asset-backed securities 12,686 15,763

4 unchanged sentences

asset-backed securities consist of debt securities collateralized by pools of receivables or loans with credit enhancement;

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

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 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):

and treasury notes consist of debt securities issued by the U.S.

All of the Company's securities as of March 31, 2024 and December 31, 2023 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 $ 4,119,000 and $ 3,169,000 as of March 31, 2024 and December 31, 2023, respectively.

The following table summarizes the Company’s available-for-sale investments as of March 31, 2024 (in thousands):

Losses Fair Value

1 unchanged sentence

Asset-backed securities 4,391 — ( 82 ) 4,309

Treasury bills 2,498 — ( 41 ) 2,457

Sovereign bonds 1,006 — ( 13 ) 993

Corporate bonds 225,074 175 ( 5,536 ) 219,713

Treasury bills 60,871 — ( 1,586 ) 59,285

Treasury notes 45,760 — ( 707 ) 45,053

Asset-backed securities 13,512 — ( 826 ) 12,686

3 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 October 1, 2023 (in thousands):

The following table summarizes the Company’s available-for-sale investments as of December 31, 2023 (in thousands):

Losses Fair Value

Corporate bonds $ 128,150 $ — $ ( 3,299 ) $ 124,851

Asset-backed securities 3,637 — ( 86 ) 3,551

Sovereign bonds 1,012 — ( 22 ) 990

Corporate bonds 189,326 506 ( 5,867 ) 183,965

Treasury notes 43,654 82 ( 213 ) 43,523

Asset-backed securities 16,773 — ( 1,010 ) 15,763

Sovereign bonds 1,037 — ( 58 ) 979

$ 383,589 $ 588 $ ( 10,555 ) $ 373,622

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 March 31, 2024 (in thousands):

Unrealized Loss Position For:

4 unchanged sentences

Corporate bonds $ 95,052 $ ( 1,087 ) $ 222,979 $ ( 6,896 ) $ 318,031 $ ( 7,983 )

Treasury bills 56,878 ( 1,492 ) 4,864 ( 135 ) 61,742 ( 1,627 )

Treasury notes 42,612 ( 647 ) 2,441 ( 60 ) 45,053 ( 707 )

Asset-backed securities 14,742 ( 860 ) 2,252 ( 48 ) 16,994 ( 908 )

1 unchanged sentence

$ 152,406 $ ( 2,594 ) $ 229,640 $ ( 7,073 ) $ 382,046 $ ( 9,667 )

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 December 31, 2023 (in thousands):

Unrealized Loss Position For:

Less than 12 Months 12 Months or Greater Total

Fair Value Unrealized

Losses Fair Value Unrealized

Corporate bonds $ 30,770 $ ( 359 ) $ 226,643 $ ( 8,807 ) $ 257,413 $ ( 9,166 )

Treasury notes 20,725 ( 153 ) 2,441 ( 60 ) 23,166 ( 213 )

Asset-backed securities 17,062 ( 1,049 ) 2,252 ( 47 ) 19,314 ( 1,096 )

Sovereign bonds — — 1,968 ( 80 ) 1,968 ( 80 )

$ 68,557 $ ( 1,561 ) $ 233,304 $ ( 8,994 ) $ 301,861 $ ( 10,555 )

Management monitors debt securities that are in an unrealized loss position to determine whether a loss exists related to the credit quality of the issuer.

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 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

Based on this evaluation, no allowance for credit losses on debt securities was recorded as of March 31, 2024 or December 31, 2023.

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

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table summarizes the Company's gross realized gains and losses on the sale of debt securities for the three-month periods ended March 31, 2024 and April 2, 2023 (in thousands):

Three-months Ended

March 31, 2024 April 2, 2023

Gross realized gains $ 2 $ —

3 unchanged sentences

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 October 1, 2023 (in thousands):

The following table presents the effective maturity dates of the Company’s available-for-sale investments as of March 31, 2024 (in thousands):

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

Corporate bonds $ 134,032 $ 57,463 $ 59,120 $ 58,225 $ 44,905 $ — $ 353,745

Treasury bills 2,457 5,306 15,016 21,842 17,121 — 61,742

Treasury notes — 3,429 14,097 22,829 4,698 — 45,053

Asset-backed securities 4,309 6,486 — — — 6,200 16,995

1 unchanged sentence

$ 139,334 $ 68,352 $ 73,217 $ 81,054 $ 49,603 $ 6,200 $ 417,760

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Inventories consisted of the following (in thousands):

October 1, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Raw materials $ 106,506 $ 93,201

5 unchanged sentences

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

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.

As of March 31, 2024, there were no options to terminate and twenty-eight options to extend that were accounted for in the determination of the lease term for the Company's 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 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.

There were no restrictions or covenants for outstanding leases as of March 31, 2024.

The total operating lease expense for the three-month periods ended March 31, 2024 and April 2, 2023 were $ 3,563,000 and $ 2,392,000 , respectively.

The total operating lease cash payments for the three-month periods ended March 31, 2024 and April 2, 2023 were $ 3,208,000 and $ 2,404,000 , 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 March 31, 2024 and April 2, 2023 were $ 82,000 and $ 24,000 , respectively.

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

2 unchanged sentences

Thereafter 44,658

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.

The lease contains two components, including a 88,000 square-foot premises with a term of ten years, six months .

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.

This lease component commenced during the second quarter of 2023, and therefore the Company recorded approximately $ 29,639,000 , which reflects an estimated extension period of five years , within "Operating lease assets" and "Operating lease liabilities" on the Consolidated Balance Sheets on the commencement date.

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 October 1, 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.

Future payment obligations associated with this lease component total $ 13,231,000 , none of which is payable in 2023 and which reflects an estimated extension period of five years .

The discounted present value of the future lease cash payments resulted in a total lease liability of $ 77,165,000 and $ 78,601,000 as of March 31, 2024 and December 31, 2023, respectively.

The Company did not have any leases that had not yet commenced but that created significant rights and obligations as of March 31, 2024.

The Company leases a building in Singapore that serves as a distribution center for customers in Asia.

The lease contains two components:

an 88,000 square-foot premises that had a commencement date in June of 2023 and a second 27,000 square-foot premises that does not commence until the fourth quarter of 2025.

Accordingly, the second component of the lease has not yet been recorded on the Consolidated Balance Sheets, nor has it created any significant rights and obligations as of March 31, 2024.

This second lease component has an original term of eight years and the Company has the right and option to extend this term by an additional five years , commencing upon the expiration of the original term.

Future payment obligations associated with this lease component total $ 13,231,000 , none of which is payable in 2024 and which reflects the estimated extension period of five years .

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

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.

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

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 5.4 % 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 weighted-average discount rate was 5.7 % for the leases outstanding as of both March 31, 2024 and December 31, 2023.

The weighted-average remaining lease term was 10.3 and 10.5 years for the leases outstanding as of March 31, 2024 and December 31, 2023, respectively.

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

1 unchanged sentence

Foreign exchange rate changes ( 7,024 )

Balance as of October 1, 2023 $ 241,042

Balance as of March 31, 2024 $ 386,157

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Intangible Assets

2 unchanged sentences

Amortization Net

Completed technologies $ 28,017 $ ( 19,590 ) $ 8,427

Customer relationships $ 72,775 $ ( 6,587 ) $ 66,188

Completed technologies 60,160 ( 22,112 ) 38,048

Trademarks 842 ( 117 ) 725

Non-compete agreements 340 ( 247 ) 93

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

Balance as of March 31, 2024 $ 134,117 $ ( 29,063 ) $ 105,054

Value Accumulated

Amortization Net

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

Customer relationships $ 75,965 $ ( 5,352 ) $ 70,613

Completed technologies 62,123 ( 20,745 ) 41,378

Trademarks 903 ( 50 ) 853

Non-compete agreements 340 ( 232 ) 108

Balance as of December 31, 2023 $ 139,331 $ ( 26,379 ) $ 112,952

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):

As of March 31, 2024, estimated future amortization expense related to intangible assets was as follows (in thousands):

Year Ended December 31, Amount

11 unchanged sentences

Fulfillment of warranty obligations ( 939 )

Balance as of October 1, 2023 $ 3,805

Foreign exchange rate changes ( 9 )

Balance as of March 31, 2024 $ 4,453

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Commitments and Contingencies

As of October 1, 2023, the Company had outstanding purchase orders totaling $ 70,635,000 to procure inventory from various vendors.

As of March 31, 2024, the Company had outstanding purchase orders totaling $ 40,843,000 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 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.

A significant portion of the Company's outstanding inventory purchase orders as of March 31, 2024, 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.

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):

October 1, 2023 December 31, 2022

March 31, 2024 December 31, 2023

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 39,950 $ 29,652 39,700 $ 30,136

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

Euro 18,500 19,940 40,000 44,302

Mexican Peso 205,000 12,273 145,000 8,505

Chinese Renminbi 50,000 6,886 50,000 7,025

Hungarian Forint 2,250,000 6,152 2,240,000 6,466

British Pound 3,330 4,229 3,345 4,258

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

Japanese Yen 600,000 3,980 600,000 4,255

Swiss Franc 2,400 2,673 — —

Canadian Dollar 1,720 1,270 1,470 1,112

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 1, 2023 December 31, 2022 Sheet

Location October 1, 2023 December 31, 2022

Location March 31, 2024 December 31, 2023 Sheet

Location March 31, 2024 December 31, 2023

Derivatives Not Designated as Hedging Instruments:

Economic hedge forward contracts Prepaid expenses and other current assets $ 22 $ 151 Accrued expenses $ 221 $ 106

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

March 31, 2024 December 31, 2023 March 31, 2024 December 31, 2023

Gross amounts of recognized assets $ 22 $ 151 Gross amounts of recognized liabilities $ 221 $ 106

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

Location in Financial Statements Three-months Ended

March 31, 2024 April 2, 2023

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

Three-months Ended

March 31, 2024 April 2, 2023

Americas $ 83,135 $ 80,442

4 unchanged sentences

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

Three-months Ended Nine-months Ended

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

Three-months Ended

March 31, 2024 April 2, 2023

Standard products and services $ 187,632 $ 190,783

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 $ 17,827,000 and $ 14,578,000 as of October 1, 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 $ 11,783,000 and $ 13,265,000 as of March 31, 2024 and December 31, 2023, 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 1, 2023 (in thousands):

The following table summarizes the allowance for credit losses activity for the three-month period ended March 31, 2024 (in thousands):

Balance as of December 31, 2023 $ 583

Increases to the allowance for credit losses 350

Write-offs, net of recoveries 17

Foreign exchange rate changes 1

Balance as of October 1, 2023 $ 580

Balance as of March 31, 2024 $ 601

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 1, 2023 (in thousands):

The following table summarizes the deferred revenue and customer deposits activity for the three-month period ended March 31, 2024 (in thousands):

Balance as of December 31, 2023 $ 31,525

1 unchanged sentence

Recognition of revenue deferred in prior period ( 16,184 )

Returned customer deposit ( 9,205 )

Foreign exchange rate changes ( 279 )

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.

Balance as of March 31, 2024 $ 39,983

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

The remaining unsatisfied performance obligations for our contracts that have an original expected duration of more than one year, primarily related to extended warranties, are not material.

Stock-Based Compensation Expense

5 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 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.

As of March 31, 2024, forfeitures, cancellations, and other terminations from the 2001 Plan and the 2007 Plan have resulted in 707,900 Carryover Shares, raising the authorized total shares that may be issued under the 2023 Plan to 8,807,900 .

As of March 31, 2024, the Company had 6,001,000 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 nine-month period ended October 1, 2023:

The following table summarizes the Company’s stock option activity for the three-month period ended March 31, 2024:

(in thousands) Weighted-

7 unchanged sentences

Forfeited or expired ( 330 ) 57.58

Outstanding as of October 1, 2023

Outstanding as of March 31, 2024

10,145 $ 49.11 6.30 $ 21,531

Exercisable as of October 1, 2023

Exercisable as of March 31, 2024

5,973 $ 49.04 4.56 $ 15,941

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

Options vested or expected to vest as of March 31, 2024 (1) 9,405 $ 49.28 6.09 $ 20,336

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

Options expected to vest are calculated by applying an estimated forfeiture rate to the unvested options.

The total cash received as a result of stock option exercises for the three-month periods ended March 31, 2024 and April 2, 2023 were $ 1,121,000 and $ 3,976,000 , respectively.

In connection with these exercises, the tax benefit (expense) realized by the Company for the three-month periods ended March 31, 2024 and April 2, 2023 was $( 29,000 ) and $( 1,466,000 ), respectively.

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

Three-months Ended

March 31, 2024 April 2, 2023

Risk-free rate 4.3 % 4.0 %

5 unchanged sentences

Expected dividend yield

Generally, the current dividend yield is calculated by annualizing the cash dividend declared by the Company’s Board of Directors and dividing that result by the closing stock price on the grant date.

The current dividend yield was calculated by annualizing the cash dividend declared by the Company’s Board of Directors and dividing that result by the closing stock price on the grant date.

Expected volatility

2 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 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)

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.

The weighted-average grant-date fair values of stock options granted during the three-month periods ended March 31, 2024 and April 2, 2023 were $ 14.66 and $ 17.79 , respectively.

The total intrinsic values of stock options exercised for the three-month periods ended March 31, 2024 and April 2, 2023 were $ 1,055,000 and $ 3,439,000 , respectively.

The total fair values of stock options vested for the three-month periods ended March 31, 2024 and April 2, 2023 were $ 25,807,000 and $ 31,181,000 , respectively.

Restricted Stock Units (RSUs)

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

The following table summarizes the Company's RSUs activity for the three-month period ended March 31, 2024:

(in thousands) Weighted-Average

5 unchanged sentences

Forfeited or expired ( 36 ) 52.43

Nonvested as of October 1, 2023

Nonvested as of March 31, 2024

1,819 $ 45.68

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 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.

The weighted-average grant-date fair values of RSUs granted during the three-month periods ended March 31, 2024 and April 2, 2023 were $ 38.82 and $ 46.61 , respectively.

There were 339,000 and 453,000 RSUs that vested during the three-month periods ended March 31, 2024 and April 2, 2023, respectively.

Tax obligations for vested RSUs are settled by withholding a portion of the shares prior to distribution to the shareholder.

The total cash used by the Company to fund the tax payments for the three-month periods ended March 31, 2024 and April 2, 2023 were $ 3,981,000 and $ 7,032,000 , respectively.

In connection with these vested RSUs, the tax benefit (expense) realized by the Company for the three-month periods ended March 31, 2024 and April 2, 2023 was $( 4,793,000 ) and $( 2,718,000 ), respectively.

Performance Restricted Stock Units (PRSUs)

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

The following table summarizes the Company's PRSUs activity for the three-month period ended March 31, 2024:

(in thousands) Weighted-Average

3 unchanged sentences

Forfeited or expired — —

Nonvested as of October 1, 2023

Nonvested as of March 31, 2024

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 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.

There were 55,000 and 46,000 PRSUs granted during the three-month periods ended March 31, 2024 and April 2, 2023, respectively.

No PRSUs vested during the three-month periods ended March 31, 2024 and April 2, 2023.

Stock-Based Compensation Expense

3 unchanged sentences

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

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 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.

This resulted in a decrease to compensation expense of $ 1,832,000 and $ 234,000 during the three-month periods ended March 31, 2024 and April 2, 2023,

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 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.

respectively.

As of March 31, 2024, total unrecognized compensation expense, net of estimated forfeitures, related to non-vested equity awards, including stock options, RSUs, and PRSUs, was $ 86,273,000 , which is expected to be recognized over a weighted-average period of 2.1 years.

The total stock-based compensation expense and the related income tax benefit recognized for the three-month period ended March 31, 2024 were $ 13,302,000 and $ 1,745,000 , respectively.

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.

No compensation expense was capitalized as of March 31, 2024 or December 31, 2023.

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

Three-months Ended

March 31, 2024 April 2, 2023

Cost of revenue $ 605 $ 621

3 unchanged sentences

Stock Repurchase Program

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, 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 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.

In March 2022, the Company's Board of Directors authorized the repurchase of $ 500,000,000 of the Company's common stock.

Under this March 2022 program, the Company repurchased 479,000 shares at a total cost of $ 24,178,000 during the three-month period ended April 2, 2023 and 231,000 shares at a total cost of $ 9,339,000 during the three-month period ended March 31, 2024, leaving a remaining balance of $ 323,553,000 as of March 31, 2024.

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 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.

The statutory tax rate is 12.5 % in Ireland, 25 % in China, and 22 % in Korea compared to the U.S.

The Company's effective tax rate was 32 % and 2 % for the three-month periods ended March 31, 2024 and April 2, 2023, respectively.

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

The statutory tax rate is 12.5 % in Ireland, 25 % in China, 34.6 % in Japan, and 21 % in Korea, compared to the U.S.

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 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;

These foreign tax rate differences resulted in a favorable impact to the effective tax rate for both the three-month periods ended March 31, 2024 and April 2, 2023.

The Company recorded a net discrete tax expense totaling $ 3,085,000 for the three-month period ended March 31, 2024, and a net discrete tax benefit totaling $ 3,594,000 for the same period in 2023.

Discrete tax items for the three-month period ended March 31, 2024 included (1) an increase in tax expense of $ 1,123,000 related to stock-based compensation;

(2) an increase in tax expense of $ 458,000 related to state tax matters;

(3) an increase in tax expense of $ 458,000 for interest expense related to tax reserves;

and (4) a net increase in tax expense of $ 1,046,000 for other tax matters.

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;

(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 $ 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.

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

The Company’s reserve for income taxes, including gross interest and penalties, was $ 30,511,000 as of March 31, 2024, of which $ 28,144,000 was classified as a non-current liability and $ 2,367,000 was classified as an offset to deferred tax assets.

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.

1 unchanged sentence

The tax years 2017 through 2023 remain open to examination by various international taxing authorities in other jurisdictions in which the Company operates.

In October 2021, more than 135 countries and jurisdictions agreed to participate in a "two-pillar" international tax approach developed by the Organisation for Economic Co-operation and Development (OECD), which includes establishing a global minimum corporate tax rate of 15%.

The OECD published "Tax Challenges Arising from the Digitalisation of the Economy — Global Anti-Base Erosion Model Rules (Pillar Two)" in December 2021 and subsequently issued additional commentary and administrative guidance clarifying several aspects of the model rules.

Since the model rules have been released, many countries have now enacted Pillar Two-related laws, some of which became effective January 1, 2024, and it is anticipated that more countries will follow suit throughout 2024.

As of March 31, 2024, the Company does not expect Pillar Two taxes to have a significant impact on its 2024 financial statements.

Weighted-Average Shares

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

Three-months Ended Nine-months Ended

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

Three-months Ended

March 31, 2024 April 2, 2023

Basic weighted-average common shares outstanding 171,692 172,624

1 unchanged sentence

Weighted-average common and common-equivalent shares outstanding 172,594 173,903

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

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

The fire destroyed a significant amount of Cognex-owned consigned inventories, as well as component inventories owned by the contract manufacturer that were designated for Cognex products.

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

Since the date of the fire, the Company has worked with the contract manufacturer to resume production, maintain standards of product quality, and replenish inventories destroyed by the fire.

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 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 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

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 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):

One-time Termination Benefits Contract Termination Costs Total

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

Cash payments ( 973 ) ( 56 ) ( 1,029 )

Foreign exchange rate changes 9 1 10

Balance as of October 1, 2023

$ — $ 20 $ 20

Stock options to purchase 8,176,000 and 6,515,000 shares of common stock, on a weighted-average basis, were outstanding during the three-month periods ended March 31, 2024 and April 2, 2023, respectively, but were not included in the calculation of dilutive net income per share because they were anti-dilutive.

Restricted stock units totaling 1,000 and 10,000 shares of common stock, on a weighted-average basis, were outstanding during the

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

three-month periods ended March 31, 2024 and April 2, 2023, 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 March 31, 2024 and April 2, 2023, as PRSUs were not anti-dilutive on a weighted-average basis.

Business Combinations

On October 18, 2023, the Company acquired all the outstanding shares of Moritex Corporation ("Moritex"), a global provider of premium optical components based in Japan, for an enterprise value of ¥ 40 billion Japanese Yen, or approximately $ 270 million U.S.

Dollars based on the closing date foreign exchange rate.

The cash-free, debt-free enterprise value was adjusted by cash acquired, debt assumed, and final working capital balances to arrive at total consideration to be allocated to assets acquired and liabilities assumed of ¥ 44,376,245,000 ($ 296,138,000 based on the closing date foreign exchange rate), of which ¥ 44,227,414,000 ($ 295,144,000 ) was paid in cash on the closing date and ¥ 148,831,000 ($ 994,000 ) was paid during the three-month period ended March 31, 2024 as a final purchase price adjustment based on the closing balance sheet.

Subsequent Events

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.

On May 2, 2024, the Company’s Board of Directors declared a cash dividend of $ 0.075 per share.

The dividend is payable on May 30, 2024 to all shareholders of record as of the close of business on May 16, 2024.

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