What changed in this filing

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Item 1. Financial Statements

2024-10-31 compared with 2024-08-01 · 126 added, 121 removed, 568 unchanged (30% of the section changed)

3 unchanged sentences

(In thousands, except per share amounts)

Three-months Ended Six-months Ended

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

Three-months Ended Nine-months Ended

September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023

(unaudited) (unaudited)

23 unchanged sentences

(In thousands)

Three-months Ended Six-months Ended

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

Three-months Ended Nine-months Ended

September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023

(unaudited) (unaudited)

2 unchanged sentences

Available-for-sale investments:

Net unrealized gain (loss), net of tax of $ 336 and $( 584 ) in the three-month periods, and net of tax of $ 453 and $ 1,274 in the six-month periods, respectively

Net unrealized gain (loss), net of tax of $ 2,040 and $ 707 in the three-month periods, and net of tax of $ 2,493 and $ 1,981 in the nine-month periods, respectively

6,252 738 7,631 4,458

10 unchanged sentences

(In thousands)

June 30, 2024 December 31, 2023

September 29, 2024 December 31, 2023

Current assets:

49 unchanged sentences

(In thousands)

Six-months Ended

June 30, 2024 July 2, 2023

Nine-months Ended

September 29, 2024 October 1, 2023

Cash flows from operating activities:

45 unchanged sentences

Shares Par Value

Balance as of March 31, 2024 171,662 $ 343 $ 1,047,643 $ 502,338 $ ( 61,135 ) $ 1,489,189

Balance as of June 30, 2024 171,501 $ 343 $ 1,061,597 $ 515,142 $ ( 70,352 ) $ 1,506,730

Net issuance of common stock under stock plans 96 1 1,665 — — 1,666

6 unchanged sentences

— — — — 6,252 6,252

Reclassification of net realized (gain) loss on the sale of available-for-sale investments — — — — 10 10

Foreign currency translation adjustment — — — — 26,511 26,511

Balance as of June 30, 2024 (unaudited)

Balance as of September 29, 2024 (unaudited)

171,515 $ 343 $ 1,076,363 $ 527,909 $ ( 37,589 ) $ 1,567,026

4 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

20 unchanged sentences

Foreign currency translation adjustment — — — — 108 108

Balance as of June 30, 2024 (unaudited)

Balance as of September 29, 2024 (unaudited)

171,515 $ 343 $ 1,076,363 $ 527,909 $ ( 37,589 ) $ 1,567,026

14 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

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 at the Company's primary contract manufacturer (Note 17), and financial statement reclassifications necessary to present fairly the Company’s financial position as of June 30, 2024, and the results of its operations for the three-month and six-month periods ended June 30, 2024 and July 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 and six-month periods ended June 30, 2024 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 at the Company's primary contract manufacturer (Note 17), and financial statement reclassifications necessary to present fairly the Company’s financial position as of September 29, 2024, and the results of its operations for the three-month and nine-month periods ended September 29, 2024 and October 1, 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 and nine-month periods ended September 29, 2024 are not necessarily indicative of the results to be expected for the full year.

New Pronouncements

20 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 June 30, 2024 (in thousands):

The following table summarizes the financial assets and liabilities required to be measured at fair value on a recurring basis as of September 29, 2024 (in thousands):

Quoted Prices in

6 unchanged sentences

Treasury notes — 46,372 —

Treasury bills — 26,394 —

Asset-backed securities — 15,304 —

Certificate of deposit — 13,811 —

Asset-backed securities — 13,529 —

Treasury bills — 7,122 —

Sovereign bonds — 991 —

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 six-month periods ended June 30, 2024 or July 2, 2023.

The Company did not record impairment charges related to non-financial assets during the three-month or nine-month periods ended September 29, 2024 or October 1, 2023.

COGNEX CORPORATION

2 unchanged sentences

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

June 30, 2024 December 31, 2023

September 29, 2024 December 31, 2023

Cash $ 175,480 $ 183,242

Treasury bills 26,934 —

Certificate of deposit 13,811 —

Treasury bills 7,122 —

Money market instruments 662 19,413

15 unchanged sentences

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

All of the Company's securities as of June 30, 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 $ 4,383,000 and $ 3,169,000 as of June 30, 2024 and December 31, 2023, respectively.

The following table summarizes the Company’s available-for-sale investments as of June 30, 2024 (in thousands):

All of the Company's securities as of September 29, 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 $ 4,749,000 and $ 3,169,000 as of September 29, 2024 and December 31, 2023, respectively.

The following table summarizes the Company’s available-for-sale investments as of September 29, 2024 (in thousands):

Losses Fair Value

2 unchanged sentences

Treasury notes 2,501 — ( 22 ) 2,479

Sovereign bonds 1,001 — ( 1 ) 1,000

Corporate bonds 263,582 2,978 ( 1,865 ) 264,695

15 unchanged sentences

$ 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 June 30, 2024 (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 September 29, 2024 (in thousands):

Unrealized Loss Position For:

4 unchanged sentences

Corporate bonds $ 30,018 $ ( 80 ) $ 127,990 $ ( 2,601 ) $ 158,008 $ ( 2,681 )

Treasury notes 22,107 ( 284 ) 22,936 ( 536 ) 45,043 ( 820 )

Asset-backed securities — — 10,019 ( 532 ) 10,019 ( 532 )

Treasury notes — — 2,479 ( 22 ) 2,479 ( 22 )

Sovereign bonds — — 991 ( 28 ) 991 ( 28 )

13 unchanged sentences

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

Based on this evaluation, no allowance for credit losses on debt securities was recorded as of June 30, 2024 or December 31, 2023.

Based on this evaluation, no allowance for credit losses on debt securities was recorded as of September 29, 2024 or December 31, 2023.

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

1 unchanged sentence

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 June 30, 2024 and July 2, 2023 (in thousands):

Three-months Ended Six-months Ended

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

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 September 29, 2024 and October 1, 2023 (in thousands):

Three-months Ended Nine-months Ended

September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023

Gross realized gains $ — $ 109 $ 8 $ 109

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 June 30, 2024 (in thousands):

The following table presents the effective maturity dates of the Company’s available-for-sale investments as of September 29, 2024 (in thousands):

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

5 unchanged sentences

Inventories consisted of the following (in thousands):

June 30, 2024 December 31, 2023

September 29, 2024 December 31, 2023

Raw materials $ 89,141 $ 93,201

5 unchanged sentences

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

As of June 30, 2024, there were no options to terminate and twenty options to extend that were accounted for in the determination of the lease term for the Company's outstanding leases.

As of September 29, 2024, there were no options to terminate and twenty 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 June 30, 2024.

The total operating lease expense for the three-month and six-month periods ended June 30, 2024 was $ 3,474,000 and $ 7,037,000 , respectively.

The total operating lease cash payments for the three-month and six-month periods ended June 30, 2024 were $ 3,406,000 and $ 6,614,000 , 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 June 30, 2024 was $ 57,000 and $ 139,000 , respectively.

There were no restrictions or covenants for outstanding leases as of September 29, 2024.

The total operating lease expense for the three-month and nine-month periods ended September 29, 2024 was $ 3,610,000 and $ 10,647,000 , respectively.

The total operating lease cash payments for the three-month and nine-month periods ended September 29, 2024 were $ 3,516,000 and $ 10,130,000 , 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 September 29, 2024 was $ 52,000 and $ 191,000 , respectively.

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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 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.

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

2 unchanged sentences

Thereafter 46,700

The discounted present value of the future lease cash payments resulted in a total lease liability of $ 74,183,000 and $ 78,601,000 as of June 30, 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 June 30, 2024.

The discounted present value of the future lease cash payments resulted in a total lease liability of $ 77,181,000 and $ 78,601,000 as of September 29, 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 September 29, 2024.

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

1 unchanged sentence

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 June 30, 2024.

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 September 29, 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.

1 unchanged sentence

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

The weighted-average discount rate was 5.7 % for the leases outstanding as of both June 30, 2024 and December 31, 2023.

The weighted-average remaining lease term was 10.2 and 10.5 years for the leases outstanding as of June 30, 2024 and December 31, 2023, respectively.

The weighted-average discount rate was 5.8 % and 5.7 % for leases outstanding as of September 29, 2024 and December 31, 2023, respectively.

The weighted-average remaining lease term was 10.0 and 10.5 years for the leases outstanding as of September 29, 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 ( 1,508 )

Balance as of June 30, 2024 $ 381,042

Balance as of September 29, 2024 $ 391,673

COGNEX CORPORATION

8 unchanged sentences

Non-compete agreements 340 ( 274 ) 66

Balance as of June 30, 2024 $ 130,138 $ ( 31,590 ) $ 98,548

Balance as of September 29, 2024 $ 138,111 $ ( 35,561 ) $ 102,550

Value Accumulated

5 unchanged sentences

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

As of June 30, 2024, estimated future amortization expense related to intangible assets was as follows (in thousands):

As of September 29, 2024, estimated future amortization expense related to intangible assets was as follows (in thousands):

Year Ended December 31, Amount

12 unchanged sentences

Foreign exchange rate changes 4

Balance as of June 30, 2024 $ 4,354

Balance as of September 29, 2024 $ 4,617

COGNEX CORPORATION

1 unchanged sentence

Commitments and Contingencies

As of June 30, 2024, the Company had outstanding purchase orders totaling $ 43,078,000 to procure inventory from various vendors.

As of September 29, 2024, the Company had outstanding purchase orders totaling $ 38,153,000 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 June 30, 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.

A significant portion of the Company's outstanding inventory purchase orders as of September 29, 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.

8 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 purchase of Moritex Corporation (refer to Note 18 of the consolidated financial statements), which was paid in Japanese Yen.

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):

June 30, 2024 December 31, 2023

September 29, 2024 December 31, 2023

Currency Notional

2 unchanged sentences

Singapore Dollar 38,500 $ 30,055 39,700 $ 30,136

Euro 22,000 23,577 40,000 44,302

Chinese Renminbi 200,000 28,709 50,000 7,025

Euro 20,800 23,245 40,000 44,302

Mexican Peso 238,000 12,016 145,000 8,505

Hungarian Forint 2,040,000 5,723 2,240,000 6,466

British Pound 3,245 4,112 3,345 4,258

Japanese Yen 600,000 4,161 600,000 4,255

British Pound 2,900 3,894 3,345 4,258

Swiss Franc 1,205 1,429 — —

5 unchanged sentences

Balance Fair Value Balance Fair Value

Location June 30, 2024 December 31, 2023 Sheet

Location June 30, 2024 December 31, 2023

Location September 29, 2024 December 31, 2023 Sheet

Location September 29, 2024 December 31, 2023

Derivatives Not Designated as Hedging Instruments:

2 unchanged sentences

Asset Derivatives Liability Derivatives

June 30, 2024 December 31, 2023 June 30, 2024 December 31, 2023

September 29, 2024 December 31, 2023 September 29, 2024 December 31, 2023

Gross amounts of recognized assets $ 234 $ 151 Gross amounts of recognized liabilities $ 152 $ 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 Six-months Ended

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

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

September 29, 2024 October 1, 2023 September 29, 2024 October 1, 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 Six-months Ended

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

Three-months Ended Nine-months Ended

September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023

Americas $ 82,293 $ 80,156 $ 250,590 $ 243,067

4 unchanged sentences

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

Three-months Ended Six-months Ended

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

Three-months Ended Nine-months Ended

September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023

Standard products and services $ 203,182 $ 170,104 $ 591,670 $ 555,831

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 $ 11,310,000 and $ 13,265,000 as of June 30, 2024 and December 31, 2023, respectively.

Costs to fulfill a contract are included in "Prepaid expenses and other current assets" on the Consolidated Balance Sheet and amounted to $ 11,261,000 and $ 13,265,000 as of September 29, 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 six-month period ended June 30, 2024 (in thousands):

The following table summarizes the allowance for credit losses activity for the nine-month period ended September 29, 2024 (in thousands):

Balance as of December 31, 2023 $ 583

2 unchanged sentences

Foreign exchange rate changes ( 2 )

Balance as of June 30, 2024 $ 665

Balance as of September 29, 2024 $ 604

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 June 30, 2024 (in thousands):

The following table summarizes the deferred revenue and customer deposits activity for the nine-month period ended September 29, 2024 (in thousands):

Balance as of December 31, 2023 $ 31,525

2 unchanged sentences

Foreign exchange rate changes 48

Balance as of June 30, 2024 $ 40,529

Balance as of September 29, 2024 $ 30,045

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.

7 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 June 30, 2024, forfeitures, cancellations, and other terminations from the 2001 Plan and the 2007 Plan have resulted in 777,455 Carryover Shares, raising the authorized total shares that may be issued under the 2023 Plan to 8,877,455 .

As of June 30, 2024, the Company had 5,958,000 shares available for grant under its stock plans.

As of September 29, 2024, forfeitures, cancellations, and other terminations from the 2001 Plan and the 2007 Plan have resulted in 889,329 Carryover Shares, raising the authorized total shares that may be issued under the 2023 Plan to 8,989,329 .

As of September 29, 2024, the Company had 6,049,613 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 June 30, 2024:

The following table summarizes the Company’s stock option activity for the nine-month period ended September 29, 2024:

(in thousands) Weighted-

7 unchanged sentences

Forfeited or expired ( 512 ) 54.76

Outstanding as of June 30, 2024

Outstanding as of September 29, 2024

9,951 $ 49.31 5.89 $ 13,032

Exercisable as of June 30, 2024

Exercisable as of September 29, 2024

5,781 $ 49.49 4.12 $ 10,997

Options vested or expected to vest as of June 30, 2024 (1) 9,413 $ 49.36 5.89 $ 33,342

Options vested or expected to vest as of September 29, 2024 (1) 9,318 $ 49.52 5.71 $ 12,609

(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 and six-month periods ended June 30, 2024 was $ 1,516,000 and $ 2,637,000 , respectively, and for the three-month and six-month periods ended July 2, 2023 was $ 6,141,000 and $ 10,118,000 , respectively.

In connection with these exercises, the tax expense realized by the Company for the three-month and six-month periods ended June 30, 2024 was $ 2,043,000 and $ 2,072,000 , respectively, and for the three-month and six-month periods ended July 2, 2023 was $ 2,426,000 and $ 3,893,000 , respectively.

The total cash received as a result of stock option exercises for the three-month and nine-month periods ended September 29, 2024 was $ 2,034,000 and $ 4,671,000 , respectively, and for the three-month and nine-month periods ended October 1, 2023 was $ 889,000 and $ 11,006,000 , respectively.

In connection with these exercises, the tax expense realized by the Company for the three-month and nine-month periods ended September 29, 2024 was $ 559,000 and $ 2,631,000 , respectively, and for the three-month and nine-month periods ended October 1, 2023 was $ 100,000 and $ 3,993,000 , respectively.

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

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

Three-months Ended Nine-months Ended

September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023

Risk-free rate 3.7 % 4.1 % 4.3 % 4.0 %

12 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 June 30, 2024 were $ 18.46 and $ 14.89 , respectively, and during the three-month and six-month periods ended July 2, 2023 were $ 20.09 and $ 17.86 , respectively.

The total intrinsic values of stock options exercised for the three-month and six-month periods ended June 30, 2024 were $ 994,000 and $ 2,049,000 , respectively, and for the three-month and six-month periods ended July 2, 2023 were $ 2,123,000 and $ 5,562,000 , respectively.

The total fair values of stock options vested for the three-month and six-month periods ended June 30, 2024 were $ 698,000 and $ 26,209,000 , respectively, and for the three-month and six-month periods ended July 2, 2023 were $ 892,000 and $ 32,073,000 , respectively.

The weighted-average grant-date fair values of stock options granted during the three-month and nine-month periods ended September 29, 2024 were $ 14.75 and $ 14.89 , respectively, and during the three-month and nine-month periods ended October 1, 2023 were $ 20.55 and $ 18.11 , respectively.

The total intrinsic values of stock options exercised for the three-month and nine-month periods ended September 29, 2024 were $ 1,628,000 and $ 3,677,000 , respectively, and for the three-month and nine-month periods ended October 1, 2023 were $ 557,000 and $ 6,119,000 , respectively.

The total fair values of stock options vested for the three-month and nine-month periods ended September 29, 2024 were $ 1,023,000 and $ 27,232,000 , respectively, and for the three-month and nine-month periods ended October 1, 2023 were $ 962,000 and $ 33,035,000 , respectively.

Restricted Stock Units (RSUs)

The following table summarizes the Company's RSUs activity for the six-month period ended June 30, 2024:

The following table summarizes the Company's RSUs activity for the nine-month period ended September 29, 2024:

(in thousands) Weighted-Average

5 unchanged sentences

Forfeited or expired ( 92 ) 48.06

Nonvested as of June 30, 2024

Nonvested as of September 29, 2024

1,767 $ 44.86

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 June 30, 2024 were $ 43.97 and $ 39.03 , respectively, and during the three-month and six-month periods ended July 2, 2023 were $ 52.53 and $ 46.86 , respectively.

There were 36,000 and 375,000 RSUs that vested during the three-month and six-month periods ended June 30, 2024, respectively, and 29,000 and 482,000 that vested during the three-month and six-month periods ended July 2, 2023, respectively.

The weighted-average grant-date fair values of RSUs granted during the three-month and nine-month periods ended September 29, 2024 were $ 36.40 and $ 38.90 , respectively, and during the three-month and nine-month periods ended October 1, 2023 were $ 46.17 and $ 46.78 , respectively.

There were 33,000 and 408,000 RSUs that vested during the three-month and nine-month periods ended September 29, 2024, respectively, and 18,000 and 500,000 that vested during the three-month and nine-month periods ended October 1, 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 and six-month periods ended June 30, 2024 was $ 526,000 and $ 4,507,000 , respectively, and for the three-month and six-month periods ended July 2, 2023 was $ 432,000 and $ 7,464,000 , respectively.

In connection with these vested RSUs, the tax expense realized by the Company for the three-month and six-month periods ended June 30, 2024 was $ 2,074,000 and $ 6,867,000 , respectively, and for the three-month and six-month periods ended July 2, 2023 was $ 150,000 and $ 3,476,000 , respectively.

The total cash used by the Company to fund the tax payments for the three-month and nine-month periods ended September 29, 2024 was $ 369,000 and $ 4,876,000 , respectively, and for the three-month and nine-month periods ended October 1, 2023 was $ 267,000 and $ 7,731,000 , respectively.

In connection with these vested RSUs, the tax expense realized by the Company for the three-month and nine-month periods ended September 29, 2024 was $ 452,000 and $ 7,319,000 , respectively, and for the three-month and nine-month periods ended October 1, 2023 was $ 317,000 and $ 3,793,000 , respectively.

COGNEX CORPORATION

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Performance Restricted Stock Units (PRSUs)

The following table summarizes the Company's PRSUs activity for the six-month period ended June 30, 2024:

The following table summarizes the Company's PRSUs activity for the nine-month period ended September 29, 2024:

(in thousands) Weighted-Average

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Forfeited or expired — —

Nonvested as of June 30, 2024

Nonvested as of September 29, 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 0 and 55,000 PRSUs granted during the three-month and six-month periods ended June 30, 2024, respectively, and 0 and 46,000 granted during the three-month and six-month periods ended July 2, 2023, respectively.

No PRSUs vested during the three-month and six-month periods ended June 30, 2024 and July 2, 2023.

There were 0 and 55,000 PRSUs granted during the three-month and nine-month periods ended September 29, 2024, respectively, and 0 and 46,000 granted during the three-month and nine-month periods ended October 1, 2023, respectively.

No PRSUs vested during the three-month and nine-month periods ended September 29, 2024 and October 1, 2023.

Stock-Based Compensation Expense

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This resulted in a decrease to compensation expense of $ 1,832,000 in 2024 and $ 234,000 in 2023.

As of June 30, 2024, total unrecognized compensation expense, net of estimated forfeitures, related to non-vested equity awards, including stock options, RSUs, and PRSUs, was $ 75,507,000 , which is expected to be recognized over a weighted-average period of 1.9 years.

The total stock-based compensation expense and the related income tax benefit recognized for the three-month period ended June 30, 2024 were $ 12,964,000 and $ 2,027,000 , respectively, and for the six-month period ended June 30, 2024 were $ 26,266,000 and $ 3,772,000 , respectively.

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.

No compensation expense was capitalized as of June 30, 2024 or December 31, 2023.

As of September 29, 2024, total unrecognized compensation expense, net of estimated forfeitures, related to non-vested equity awards, including stock options, RSUs, and PRSUs, was $ 63,930,000 , which is expected to be recognized over a weighted-average period of 1.7 years.

The total stock-based compensation expense and the related income tax benefit recognized for the three-month period ended September 29, 2024 were $ 13,101,000 and $ 2,287,000 , respectively, and for the nine-month period ended September 29, 2024 were $ 39,367,000 and $ 6,059,000 , respectively.

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.

No compensation expense was capitalized as of September 29, 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 Six-months Ended

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

Three-months Ended Nine-months Ended

September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023

Cost of revenue $ 442 $ 435 $ 1,460 $ 1,497

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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, in addition to repurchases made in prior years, the Company repurchased 966,000 shares at a total cost of $ 49,163,000 during the six-month period ended July 2, 2023 and 473,000 shares at a total cost of $ 19,879,000 during the six-month period ended June 30, 2024, leaving a remaining balance of $ 313,013,000 as of June 30, 2024.

Under this March 2022 program, in addition to repurchases made in other periods, the Company repurchased 1,157,000 shares at a total cost of $ 59,640,000 during the nine-month period ended October 1, 2023 and 555,000 shares at a total cost of $ 23,841,000 during the nine-month period ended September 29, 2024, leaving a remaining balance of $ 309,051,000 as of September 29, 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.

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

The Company's effective tax rate was 13 % and 18 % for the three-month and six-month periods ended June 30, 2024, respectively, and 15 % and 12 % for the three-month and six-month periods ended July 2, 2023, respectively.

The Company's effective tax rate was 19 % for the three-month and nine-month periods ended September 29, 2024, respectively, and 30 % and 16 % for the three-month and nine-month periods ended October 1, 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.

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federal statutory corporate tax rate of 21 %.

These foreign tax rate differences resulted in a favorable impact to the effective tax rate for both the three-month and six-month periods ended June 30, 2024 and July 2, 2023.

The Company recorded a net discrete tax benefit totaling $ 463,000 and a net discrete tax expense totaling $ 2,622,000 for the three-month and six-month periods ended June 30, 2024, and a net discrete tax expense totaling $ 399,000 and a net discrete tax benefit totaling $ 3,195,000 for the same periods in 2023.

Discrete tax items for the six-month period ended June 30, 2024 included (1) an increase in tax expense of $ 1,371,000 related to stock-based compensation;

These foreign tax rate differences resulted in a favorable impact to the effective tax rate for both the three-month and nine-month periods ended September 29, 2024 and October 1, 2023.

The Company recorded a net discrete tax expense totaling $ 889,000 and $ 3,511,000 for the three-month and nine-month periods ended September 29, 2024, and a net discrete tax expense totaling $ 4,035,000 and $ 840,000 for the same periods in 2023.

Discrete tax items for the nine-month period ended September 29, 2024 included (1) an increase in tax expense of $ 1,645,000 related to stock-based compensation;

(2) an increase in tax expense of $ 320,000 related to state tax matters;

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and (5) an increase in tax expense of $ 1,130,000 for other tax matters.

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;

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.

The Company’s reserve for income taxes, including gross interest and penalties, was $ 31,193,000 as of June 30, 2024, of which $ 28,826,000 was classified as a non-current liability and $ 2,367,000 was classified as an offset to 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.

The Company’s reserve for income taxes, including gross interest and penalties, was $ 28,858,000 as of September 29, 2024, of which $ 26,491,000 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.

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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 June 30, 2024, the Company does not expect Pillar Two taxes to have a significant impact on its 2024 financial statements.

As of September 29, 2024, the Company does not expect Pillar Two taxes to have a significant impact on its 2024 financial statements.

COGNEX CORPORATION

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

Three-months Ended Six-months Ended

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

Three-months Ended Nine-months Ended

September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023

Basic weighted-average common shares outstanding 171,519 172,169 171,588 172,408

1 unchanged sentence

Weighted-average common and common-equivalent shares outstanding 172,753 173,354 172,733 173,659

Stock options to purchase 8,325,000 and 8,415,000 shares of common stock, on a weighted-average basis, were outstanding during the three-month and six-month periods ended June 30, 2024, respectively, and 6,890,000 and 6,713,000 during the three-month and six-month periods ended July 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 9,000 shares of common stock, on a weighted-average basis, were outstanding during the three-month and six-month periods ended June 30, 2024, respectively, and 3,000 and 1,000 during the three-month and six-month periods ended July 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 and six-month periods ended June 30, 2024 and July 2, 2023, respectively, as PRSUs were not anti-dilutive on a weighted-average basis.

Stock options to purchase 8,640,000 and 8,490,000 shares of common stock, on a weighted-average basis, were outstanding during the three-month and nine-month periods ended September 29, 2024, respectively, and 6,893,000 and 6,775,000 during the three-month and nine-month periods ended October 1, 2023, respectively, but were not included in the calculation of dilutive net income per share because they were anti-dilutive.

No RSUs were excluded in the calculation of dilutive net income per share for the three-month and nine-month periods ended September 29, 2024 because they were anti-dilutive.

RSUs 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, 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 September 29, 2024 and October 1, 2023, respectively, 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, destroying a significant amount of Cognex-owned consigned inventories.

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.

On June 7, 2022, the Company’s primary contract manufacturer experienced a fire at its plant in Indonesia, destroying a significant amount of Cognex inventories.

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.

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

Business Combinations

1 unchanged sentence

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.

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 purchase price adjustment based on the closing balance sheet.

Subsequent Events

On July 31, 2024, the Company’s Board of Directors declared a cash dividend of $ 0.075 per share.

The dividend is payable on August 29, 2024 to all shareholders of record as of the close of business on August 15, 2024.

On October 30, 2024, the Company’s Board of Directors declared a cash dividend of $ 0.08 per share.

The dividend is payable on November 29, 2024 to all shareholders of record as of the close of business on November 14, 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