10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549 

FORM 10-Q 

(Mark One)

☒ Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended March 29, 2020 or

☐ Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from __________ to __________

Commission File Number 001-34218

COGNEX CORPORATION

(Exact name of registrant as specified in its charter)

Massachusetts	04-2713778
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

One Vision Drive

Natick, Massachusetts 01760-2059

(508) 650-3000

(Address, including zip code, and telephone number, including area code, of principal executive offices)

Securities registered pursuant to the Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $.002 per share	CGNX	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act (Check one):

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    

Yes ☐ No ☒

As of March 29, 2020, there were 171,688,004 shares of Common Stock, $.002 par value per share, of the registrant outstanding.

INDEX

PART I	FINANCIAL INFORMATION	3
Item 1.	Financial Statements (interim periods unaudited)	3
	Consolidated Statements of Operations for the three-month periods ended March 29, 2020 and March 31, 2019	3
	Consolidated Statements of Comprehensive Income for the three-month periods ended March 29, 2020 and March 31, 2019	4
	Consolidated Balance Sheets as of March 29, 2020 and December 31, 2019	5
	Consolidated Statements of Cash Flows for the three-month periods ended March 29, 2020 and March 31, 2020	6
	Consolidated Statements of Shareholders’ Equity for the three-month periods ended March 29, 2020 and March 31, 2019	7
	Notes to Consolidated Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	27
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 3.	Defaults Upon Senior Securities	29
Item 4.	Mine Safety Disclosures	29
Item 5.	Other Information	29
Item 6.	Exhibits	30
	Signatures	31

2

PART I: FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS

COGNEX CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

 

	Three-months Ended
	March 29, 2020			March 31, 2019
	(unaudited)
Revenue	$	167,235		$	173,484
Cost of revenue	41,200			46,284
Gross margin	126,035			127,200
Research, development, and engineering expenses	35,946			30,242
Selling, general, and administrative expenses	69,138			66,811
Operating income	20,951			30,147
Foreign currency gain (loss)	(3,003		)	(248		)
Investment income	5,229			4,905
Other income (expense)	(183		)	927
Income before income tax expense	22,994			35,731
Income tax expense	2,517			2,627
Net income	$	20,477		$	33,104
Net income per weighted-average common and common-equivalent share:
Basic	$	0.12		$	0.19
Diluted	$	0.12		$	0.19
Weighted-average common and common-equivalent shares outstanding:
Basic	172,408			171,098
Diluted	175,602			175,607
Cash dividends per common share	$	0.055		$	0.050

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

3

COGNEX CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

	Three-months Ended
	March 29, 2020			March 31, 2019
	(unaudited)
Net income	$	20,477		$	33,104
Other comprehensive income (loss), net of tax:
Available-for-sale investments:
Net unrealized gain (loss), net of tax of ($952) and $268 in 2020 and 2019, respectively	(3,861		)	2,251
Reclassification of credit loss on investments into current operations	160			—
Reclassification of net realized (gain) loss into current operations	(1,850		)	(40		)
Net change related to available-for-sale investments	(5,551		)	2,211
Foreign currency translation adjustments:
Foreign currency translation adjustments	(7,365		)	218
Net change related to foreign currency translation adjustments	(7,365		)	218
Other comprehensive income (loss), net of tax	(12,916		)	2,429
Total comprehensive income	$	7,561		$	35,533

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

4

COGNEX CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands)

 

	March 29, 2020			December 31, 2019
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	239,197		$	171,431
Current investments, amortized cost of $155,671 and $235,610 in 2020 and 2019, respectively, allowance for expected credit losses of $0 in 2020 and 2019	159,244			240,470
Accounts receivable, less reserves of $2,061 and $1,821 in 2020 and 2019, respectively	100,463			103,447
Unbilled revenue	5,485			4,782
Inventories	54,985			60,261
Prepaid expenses and other current assets	35,913			26,840
Total current assets	595,287			607,231
Non-current investments, amortized cost of $450,719 and $431,633 in 2020 and 2019, respectively, allowance for expected credit losses of $160 and $0 in 2020 and 2019, respectively	446,955			433,452
Property, plant, and equipment, net	86,702			89,443
Operating lease assets	17,346			17,522
Goodwill	242,214			243,445
Intangible assets, net	38,102			39,490
Deferred income taxes	450,280			449,519
Other assets	8,191			5,833
Total assets	$	1,885,077		$	1,885,935
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	16,195		$	17,866
Accrued expenses	63,955			52,199
Accrued income taxes	38,692			30,333
Deferred revenue and customer deposits	26,252			14,432
Operating lease liabilities	5,550			5,647
Total current liabilities	150,644			120,477
Non-current operating lease liabilities	12,416			12,326
Deferred income taxes	330,532			332,344
Reserve for income taxes	11,891			11,563
Non-current accrued income taxes	48,915			51,113
Other liabilities	3,186			2,402
Total liabilities	557,584			530,225
Shareholders’ equity:
Preferred stock, $.01 par value – Authorized: 400 shares in 2020 and 2019, respectively, no shares issued and outstanding	—			—
Common stock, $.002 par value – Authorized: 300,000 shares in 2020 and 2019, respectively, issued and outstanding: 171,688 and 172,440 shares in 2020 and 2019, respectively	344			345
Additional paid-in capital	664,132			639,372
Retained earnings	713,208			753,268
Accumulated other comprehensive loss, net of tax	(50,191		)	(37,275		)
Total shareholders’ equity	1,327,493			1,355,710
Total liabilities and shareholders' equity	$	1,885,077		$	1,885,935

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

5

COGNEX CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Three-months Ended
	March 29, 2020			March 31, 2019
	(unaudited)
Cash flows from operating activities:
Net income	$	20,477		$	33,104
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation expense	14,790			12,281
Depreciation of property, plant, and equipment	5,631			5,175
Amortization of intangible assets	1,388			769
Amortization of discounts or premiums on investments	106			(1,461		)
Realized (gain) loss on sale of investments	(1,850		)	(40		)
Credit loss on investments	160			—
Revaluation of contingent consideration	—			(985		)
Change in deferred income taxes	(1,826		)	(1,140		)
Change in operating assets and liabilities:
Accounts receivable	2,182			12,827
Unbilled revenue	(703		)	(1,890		)
Inventories	4,954			4,073
Prepaid expenses and other current assets	(9,788		)	3,191
Accounts payable	(1,613		)	4,245
Accrued expenses	12,720			(11,708		)
Accrued income taxes	7,650			(3,501		)
Deferred revenue and customer deposits	11,961			6,760
Other	(1,097		)	(439		)
Net cash provided by operating activities	65,142			61,261
Cash flows from investing activities:
Purchases of investments	(199,530		)	(258,596		)
Maturities and sales of investments	262,126			193,572
Purchases of property, plant, and equipment	(3,074		)	(5,078		)
Net cash provided by (used in) investing activities	59,522			(70,102		)
Cash flows from financing activities:
Issuance of common stock under stock plans	9,971			14,346
Repurchase of common stock	(51,036		)	—
Payment of dividends	(9,503		)	(8,564		)
Net cash provided by (used in) financing activities	(50,568		)	5,782
Effect of foreign exchange rate changes on cash and cash equivalents	(6,330		)	143
Net change in cash and cash equivalents	67,766			(2,916		)
Cash and cash equivalents at beginning of period	171,431			108,212
Cash and cash equivalents at end of period	$	239,197		$	105,296

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

6

COGNEX CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(In thousands)

	Common Stock					Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
	Shares		Par Value
Balance as of December 31, 2019	172,440		$	345		$	639,372	$	753,268		$	(37,275	)	$	1,355,710
Issuance of common stock under stock plans	463		1			9,970		—			—			9,971
Repurchase of common stock	(1,215	)	(2		)	—		(51,034		)	—			(51,036		)
Stock-based compensation expense	—		—			14,790		—			—			14,790
Payment of dividends	—		—			—		(9,503		)	—			(9,503		)
Net income	—		—			—		20,477			—			20,477
Net unrealized gain (loss) on available-for-sale investments, net of tax of ($952)	—		—			—		—			(3,861		)	(3,861		)
Reclassification of credit loss on investments											160			160
Reclassification of net realized (gain) loss on the sale of available-for-sale investments	—		—			—		—			(1,850		)	(1,850		)
Foreign currency translation adjustment	—		—			—		—			(7,365		)	(7,365		)
Balance as of March 29, 2020 (unaudited)	171,688		$	344		$	664,132	$	713,208		$	(50,191	)	$	1,327,493

	Common Stock			Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
	Shares	Par Value
Balance as of December 31, 2018	170,820	$	342	$	529,208	$	646,214		$	(40,501	)	$	1,135,263
Issuance of common stock under stock plans	717	1		14,345		—			—			14,346
Stock-based compensation expense	—	—		12,281		—			—			12,281
Payment of dividends	—	—		—		(8,564		)	—			(8,564		)
Net income	—	—		—		33,104			—			33,104
Net unrealized gain (loss) on available-for-sale investments, net of tax of $268	—	—		—		—			2,251			2,251
Reclassification of net realized (gain) loss on the sale of available-for-sale investments	—	—		—		—			(40		)	(40		)
Foreign currency translation adjustment	—	—		—		—			218			218
Balance as of March 31, 2019 (unaudited)	171,537	$	343	$	555,834	$	670,754		$	(38,072	)	$	1,188,859

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

7

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1: Summary of Significant Accounting Policies

As permitted by the rules of the Securities and Exchange Commission applicable to Quarterly Reports on Form 10-Q, these notes are condensed and do not contain all disclosures required by generally accepted accounting principles (GAAP). As a result of the adoption of ASU 2016-13 "Measurement of Credit Losses on Financial Instruments," Cognex Corporation (the "Company") has provided new disclosures related to credit losses in this Quarterly Report on Form 10-Q. 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, 2019 for a full description of other significant accounting policies.

In the opinion of the management of 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 29, 2020, and the results of its operations for the three-month periods ended March 29, 2020 and March 31, 2019, and changes in shareholders’ equity, comprehensive income, and cash flows for the periods presented.

The results disclosed in the Consolidated Statements of Operations for the three-month period ended March 29, 2020 are not necessarily indicative of the results to be expected for the full year.

Cash, Cash Equivalents, and Investments

Money market instruments, as well as certificates of deposits and debt securities with original maturities of three months or less, are classified as cash equivalents and are stated at amortized cost. Certificates of deposit and debt securities with original maturities greater than three months and remaining maturities of one year or less are classified as current investments. Debt securities with remaining maturities greater than one year are classified as non-current investments. It is the Company’s policy to invest in debt securities with effective maturities that do not exceed ten years.

Debt securities with original maturities greater than three months are designated as available-for-sale and are reported at fair value, with unrealized gains and losses, net of tax and credit losses, recorded in shareholders’ equity as other comprehensive income (loss). Realized gains and losses are included in current operations, along with the amortization of the discount or premium on debt securities arising at acquisition, and are calculated using the specific identification method. The Company’s limited partnership interest is accounted for using the cost method because the Company’s investment is less than 5% of the partnership and the Company has no influence over the partnership’s operating and financial policies. The carrying value of this investment has been reduced to zero, and therefore, distributions are recorded as investment income as they occur.

Management monitors the carrying value of its investments in debt securities compared to their fair value to determine whether a credit loss or other type of impairment has occurred. If the fair value of a debt security is less than its amortized cost, the Company assesses whether the decline has resulted from a credit loss or other factors. In assessing whether a credit loss exists, the Company compares the present value of the cash flows expected to be collected from the security with the amortized cost basis of the security. If the present value of the cash flows expected to be collected is less than the amortized cost basis of the security, then a credit loss exists and an allowance for credit losses is recorded. The allowance for credit losses is limited by the amount that the fair value is less than the amortized cost basis of the security. Credit losses on impaired securities continue to be measured in subsequent periods, using the present value of expected future cash flows, and changes in the expected credit losses are recorded in current operations. Credit losses are included in "Other income (expense)" on the Consolidated Statement of Operations. When developing an estimate of the expected credit losses, the Company considers all available information relevant to assessing the collectability of cash flows. This information includes internal and external factors, historical and current events, reasonable and supportable forecasts including management's expectations of future economic conditions, the type of security, the credit rating of the security, the size of the loss position, as well as other relevant information.

An impairment is recognized as a write-down if (i) the Company has the intent to sell the security or (ii) it is more likely than not that the Company will be required to sell the security before recovery of the entire amortized cost basis. If impairment is considered upon condition (i) or (ii) described above, the debt security's amortized cost basis is written-down to its fair value and the impairment is recognized in current operations. Subsequent increases in the fair value of the debt securities after the write-down are included in shareholders' equity as other comprehensive income. The differences between the new amortized cost basis and the cash flows expected to be collected are accreted as interest income.

8

Unrealized losses, that have not been recorded through an allowance for credit losses or write-down of the debt security, are recorded in shareholders' equity as other comprehensive loss, net of the applicable taxes.

Accounts Receivable

The Company extends credit with various payment terms to customers based upon an evaluation of their financial condition. Accounts that are outstanding longer than the payment terms are considered to be past due. The Company establishes an allowance against accounts receivable for potential credit losses and records bad debt expense in current operations when it determines receivables are at risk for collection based upon the length of time the receivable has been outstanding, the customer’s current ability to pay its obligations to the Company, general economic and industry conditions, reasonable forecasts about the future, as well as various other factors. Receivables are written off against this allowance in the period they are determined to be uncollectible and payments subsequently received on previously written-off receivables are recorded as a reversal of the bad debt expense. Credit losses are included in "Selling, general, and administrative expenses" on the Consolidated Statement of Operations.

NOTE 2: New Pronouncements

Accounting Standards Update (ASU) 2019-12, "Simplifying the Accounting for Income Taxes"

ASU 2019-12 applies to all entities within the scope of Topic 740, Income Taxes. The amendments in this ASU simplify the accounting for income taxes by removing the following exceptions: 1) exception to the incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income or a gain from other items; 2) exception to the requirement to recognize a deferred tax liability for equity method investments when a foreign subsidiary becomes an equity method investment; 3) exception to the ability not to recognize a deferred tax liability for a foreign subsidiary when a foreign equity method investment becomes a subsidiary; and 4) exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. The amendments in this ASU also simplify the accounting for income taxes by doing the following: 1) requiring that an entity recognize a franchise tax that is partially based on income as an income-based tax and account for any incremental amount incurred as a non-income-based tax; 2) requiring that an entity evaluate when a step up in the tax basis of goodwill should be considered part of the business combination in which the book goodwill was originally recognized and when it should be considered a separate transaction; 3) specifying that an entity is not required to allocate the consolidated amount of current and deferred tax expense to a legal entity that is not subject to tax in its separate financial statements; and 4) requiring that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that included the enacted date. The amendments in this ASU are effective for public companies for annual periods, and interim periods within those annual periods, beginning after December 15, 2020. Early adoption is permitted; however, an entity that elects to early adopt the amendments must adopt all the amendments in the same period. The amendments in this ASU related to separate financial statements of legal entities that are not subject to tax should be applied on a retrospective basis for all periods presented. The amendments related to changes in ownership of foreign equity method investments or foreign subsidiaries should be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. The amendments related to franchise taxes that are partially based on income should be applied on either a retrospective basis for all periods presented or a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. All other amendments should be applied on a prospective basis. Management does not expect ASU 2019-12 to have a material impact on the Company's consolidated financial statements and disclosures.

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

The amendments in this ASU 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. The amendments in this ASU 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, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. The amendments in this ASU are effective for all entities as of March 12, 2020 through December 31, 2022. Management does not expect ASU 2020-04 to have a material impact on the Company's consolidated financial statements and disclosures.

9

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 3: Fair Value Measurements

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 March 29, 2020 (in thousands):

	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant  Other Observable Inputs (Level 2)		Unobservable Inputs (Level 3)
Assets:
Money market instruments	$	13,990	$	—	$	—
Corporate bonds	—		232,806
Treasury bills	—		210,456		—
Asset-backed securities	—		121,351		—
Sovereign bonds	—		24,570		—
Municipal bonds	—		6,980
Agency bonds	—		5,915		—
Certificate of deposit			4,121
Economic hedge forward contracts	—		131		—
Liabilities:
Economic hedge forward contracts	—		703		—
Contingent consideration liabilities	—		—		1,153

The Company’s money market instruments are reported at fair value based upon the daily market price for identical assets in active markets, and are therefore classified as Level 1.

The Company’s debt securities and forward contracts are reported at fair value based upon model-driven valuations in which all significant inputs are observable or can be derived from or corroborated by observable market data for substantially the full term of the asset or liability, and are therefore classified as Level 2. Management is responsible for estimating the fair value of these financial assets and liabilities, and in doing so, considers valuations provided by a large, third-party pricing service. For debt securities, this service maintains regular contact with market makers, brokers, dealers, and analysts to gather information on market movement, direction, trends, and other specific data. They use this information to structure yield curves for various types of debt securities and arrive at the daily valuations. The Company's forward contracts are typically traded or executed in over-the-counter markets with a high degree of pricing transparency. The market participants are generally large commercial banks. The Company's certificate of deposit is valued at cost, which approximates fair value given its short term to maturity.

The Company recorded credit losses on debt securities totaling $160,000 during the three-month period ended March 29, 2020. No credit losses were recorded during the three-month period ended March 31, 2019.

The Company's contingent consideration liabilities are reported at fair value based upon probability-adjusted present values of the consideration expected to be paid using significant inputs that are not observable in the market and are therefore classified as Level 3. Key assumptions used in these estimates include probability assessments with respect to the likelihood of achieving certain revenue milestones. The fair values of these contingent consideration liabilities were calculated using discount rates consistent with the level of risk of achievement, and are remeasured each reporting period with changes in fair value recorded in "Other income (expense)" on the Consolidated Statements of Operations.

The Company currently has two contingent consideration liabilities related to the Chiaro Technologies, LLC ("Chiaro") and GVi Ventures, Inc. ("GVi") acquisitions. The fair value of the Chiaro contingent consideration liability was $1,153,000 as of March 29, 2020 and December 31, 2019. The undiscounted potential outcomes related to future contingent consideration range from $0 to $1,250,000 based upon certain milestone revenue levels to be paid in 2020 if earned. The GVi contingent consideration liability was written down to zero as of December 31, 2019 resulting from a lower level of revenue in the Americas' automotive industry, and the balance remains at zero as of March 29, 2020. The undiscounted potential outcomes related to future contingent consideration range from $0 to $2,500,000 based upon certain revenue levels over the next two years.

10

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

Non-financial assets such as property, plant and equipment, goodwill, and intangible assets are required to be measured at fair value only when an impairment loss is recognized. The Company did not record an impairment charge related to these assets during the three-month periods ended March 29, 2020 and March 31, 2019.

NOTE 4: Cash, Cash Equivalents, and Investments

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

	March 29, 2020		December 31, 2019
Cash	$	225,207	$	155,498
Money market instruments	13,990		15,933
Cash and cash equivalents	239,197		171,431
Asset-backed securities	69,956		66,680
Corporate bonds	54,937		65,624
Treasury bills	19,763		92,914
Municipal bonds	6,980		4,630
Certificate of deposit	4,121		4,328
Sovereign bonds	3,487		6,294
Current investments	159,244		240,470
Treasury bills	190,693		216,334
Corporate bonds	177,869		146,474
Asset-backed securities	51,395		46,403
Sovereign bonds	21,083		16,005
Agency bonds	5,915		5,914
Municipal bonds	—		2,322
Non-current investments	446,955		433,452
	$	845,396	$	845,353

Asset-backed securities consist of debt securities collateralized by pools of receivables or loans with credit enhancement; corporate bonds consist of debt securities issued by both domestic and foreign companies; treasury bills consist of debt securities issued by the U.S. government; municipal bonds consist of debt securities issued by state and local government entities; certificates of deposit are time deposits held by financial institutions with a fixed interest rate; sovereign bonds consist of direct debt issued by foreign governments; and agency bonds consist of domestic or foreign obligations of government agencies and government-sponsored enterprises that have government backing. All securities are denominated in U.S. Dollars and the certificate of deposit is denominated in Korean Won.

11

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

On January 1, 2020, the Company adopted Accounting Standards Update (ASU) 2016-13, “Measurement of Credit Losses on Financial Instruments,” using the modified-retrospective approach, which requires the Company to apply the standard on a prospective basis with a cumulative-effect adjustment to retained earnings as of the beginning of the period in which the guidance is effective. The Company did not record an adjustment to retained earnings, as there were no debt securities with credit losses as of the adoption date.

The following table summarizes the Company’s available-for-sale investments as of March 29, 2020 (in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Current:
Asset-backed securities	$	70,510	$	25	$	(579	)	$	69,956
Corporate bonds	55,404		20		(487		)	54,937
Treasury bills	19,328		435		—			19,763
Municipal bonds	6,944		36		—			6,980
Sovereign bonds	3,485		2		—			3,487
Non-current:
Treasury bills	187,794		2,899		—			190,693
Corporate bonds	183,646		117		(5,894		)	177,869
Asset-backed securities	52,405		55		(1,065		)	51,395
Sovereign bonds	20,944		147		(8		)	21,083
Agency bonds	5,930		—		(15		)	5,915
	$	606,390	$	3,736	$	(8,048	)	$	602,078

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 29, 2020 (in thousands):

	Unrealized Loss Position For:
	Less than 12 Months					12 Months or Greater					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Corporate bonds	$	195,755	$	(6,337	)	$	1,146	$	(44	)	$	196,901	$	(6,381	)
Asset-backed securities	108,932		(1,640		)	674		(4		)	109,606		(1,644		)
Sovereign bonds	13,662		(8		)	—		—			13,662		(8		)
Agency bonds	3,123		(6		)	2,792		(9		)	5,915		(15		)
	$	321,472	$	(7,991	)	$	4,612	$	(57	)	$	326,084	$	(8,048	)

The Company recorded credit losses on debt securities totaling $160,000 during the three-month period ended March 29, 2020. No credit losses on debt securities were recorded during the three-month period ended March 31, 2019. Credit losses are included in "Other income (expense)" on the Consolidated Statement of Operations.

Accrued interest receivable is recorded in "Prepaid expenses and other current assets" on the Consolidated Balance Sheet and amounted to $2,268,000 and $2,874,000 as of March 29, 2020 and December 31, 2019, respectively.

In its evaluation to determine expected credit losses, management considered all available historical and current information, expectations of future economic conditions, the type of security, the credit rating of the security, and the size of the loss position, as well as other relevant information. The Company does not intend to sell, and is unlikely to be required to sell, any of these available-for-sale investments before their effective maturity or market price recovery.

The following table summarizes the allowance for credit losses activity for the three-month period ended March 29, 2020 (in thousands):

Balance as of December 31, 2019	$	—
Increases to the allowance for credit losses	160
Write-offs	—
Balance as of March 29, 2020	$	160

12

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The Company recorded gross realized gains and gross realized losses on the sale of debt securities totaling $1,865,000 and $15,000, respectively, during the three-month period ended March 29, 2020 and $64,000 and $24,000, respectively, during the three-month period ended March 31, 2019. These gains and losses are included in "Investment income" on the Consolidated Statements of Operations. Prior to the sale of these securities, unrealized gains and losses for these debt securities, net of tax, are recorded in shareholders’ equity as accumulated other comprehensive loss.

The following table presents the effective maturity dates of the Company’s available-for-sale investments as of March 29, 2020 (in thousands):

	<1 year		1-2 Years		2-3 Years		3-4 Years		4-5 Years		Total
Corporate bonds	$	54,937	$	87,940	$	80,663	$	9,266	$	—	$	232,806
Treasury bills	19,763		101,648		89,045		—		—		210,456
Asset-backed securities	69,956		10,436		33,206		3,393		4,360		121,351
Sovereign bonds	3,487		21,083		—		—		—		24,570
Municipal bonds	6,980		—		—		—		—		6,980
Agency bonds	—		—		5,915		—		—		5,915
	$	155,123	$	221,107	$	208,829	$	12,659	$	4,360	$	602,078

NOTE 5: Inventories

Inventories consisted of the following (in thousands):

	March 29, 2020		December 31, 2019
Raw materials	$	23,246	$	27,285
Work-in-process	6,034		5,503
Finished goods	25,705		27,473
	$	54,985	$	60,261

NOTE 6:  Leases

The Company's leases are primarily leased properties across different worldwide locations where the Company conducts its operations. All of these leases are classified as operating leases. Certain leases may contain options to extend or terminate the lease at the Company's sole discretion. There were no options to extend or terminate that were included in the determination of the lease term for the leases outstanding as of March 29, 2020. 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 the leases outstanding as of March 29, 2020.

The total operating lease expense for the three-month periods ended March 29, 2020 and March 31, 2019 was $1,906,000 and $1,485,000, respectively. The total operating lease cash payments for the three-month periods ended March 29, 2020 and March 31, 2019 were $1,863,000 and $1,401,000, 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 was $39,000 and $169,000 for the three-month periods ended March 29, 2020 and March 31, 2019, respectively.

13

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

Year Ended December 31,	Amount
Remainder of fiscal 2020	$	5,001
2021	6,223
2022	4,739
2023	3,712
2024	1,490
2025	429
Thereafter	—
	$	21,594

The discounted present value of the future lease cash payments resulted in a lease liability of $17,966,000 and $17,973,000 as of March 29, 2020 and December 31, 2019, respectively. The Company did not have any leases that had not yet commenced but that created significant rights and obligations as of March 29, 2020 or March 31, 2019.

The weighted-average discount rate was 4.4% and 4.8% for the leases outstanding as of March 29, 2020 and March 31, 2019, respectively. The weighted-average remaining lease term was 3.7 and 4.1 for the leases outstanding as of March 29, 2020 and March 31, 2019, respectively.

The Company owns a building adjacent to its corporate headquarters that is partially occupied by a tenant who has a lease agreement that will expire in 2022. Rental income was $77,000 for both periods ended March 29, 2020 and March 31, 2019, respectively.

Future minimum rental receipts under non-cancelable lease agreements are as follows (in thousands):

Year Ended December 31,	Amount
Remainder of fiscal 2020	$	230
2021	307
2022	307
	$	844

NOTE 7:  Goodwill

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

Balance as of December 31, 2019	$	243,445
Foreign exchange rate changes	(1,231		)
Balance as of March 29, 2020	$	242,214

14

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 8:  Intangible Assets

Amortized intangible assets consisted of the following (in thousands):

	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
Distribution networks	$	38,060	$	38,060	$	—
Completed technologies	31,987		10,154		21,833
Customer relationships	14,407		6,738		7,669
In-process technologies	8,200		—		8,200
Non-compete agreements	710		395		315
Trademarks	110		25		85
Balance as of March 29, 2020	$	93,474	$	55,372	$	38,102
	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
Distribution networks	$	38,060	$	38,060	$	—
Completed technologies	31,987		9,160		22,827
Customer relationships	14,407		6,402		8,005
In-process technologies	8,200		—		8,200
Non-compete agreements	710		350		360
Trademarks	110		12		98
Balance as of December 31, 2019	$	93,474	$	53,984	$	39,490

In connection with the acquisition of Sualab Co., Ltd. ("Sualab") in the fourth quarter of 2019, the Company acquired in-process technologies valued at $8,200,000. In-process technology is an indefinite-lived intangible asset until the technology is finalized, at which point it is amortized over its estimated useful life.

As of March 29, 2020, estimated future amortization expense related to intangible assets is as follows (in thousands):

Year Ended December 31,	Amount
Remainder of fiscal 2020	$	4,023
2021	5,232
2022	4,862
2023	4,160
2024	3,593
2025	3,270
Thereafter	4,762
	$	29,902

NOTE 9: Warranty Obligations

The Company records the estimated cost of fulfilling product warranties at the time of sale based upon historical costs to fulfill claims. Obligations may also be recorded subsequent to the time of sale whenever specific events or circumstances impacting product quality become known that would not have been taken into account using historical data. While we engage in extensive product quality programs and processes, including actively monitoring and evaluating the quality of our component suppliers and third-party contract manufacturers, the Company’s warranty obligation is affected by product failure rates, material usage, and service delivery costs incurred in correcting a product failure. An adverse change in any of these factors may result in the need for additional warranty provisions. Warranty obligations are included in “Accrued expenses” on the Consolidated Balance Sheets.

15

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The changes in the warranty obligation were as follows (in thousands):

Balance as of December 31, 2019	$	4,713
Provisions for warranties issued during the period	725
Fulfillment of warranty obligations	(419		)
Balance as of March 29, 2020	$	5,019

NOTE 10: Derivative Instruments

The Company’s foreign currency risk management strategy is principally designed to mitigate the potential financial impact of changes in the value of transactions and balances denominated in foreign currencies resulting from changes in foreign currency exchange rates. Currently, the Company enters into economic hedges to manage this risk. The economic hedges utilize foreign currency forward contracts with maturities of up to 45 days to manage the exposure to fluctuations in foreign currency exchange rates arising primarily from foreign-denominated receivables and payables. The gains and losses on these derivatives are intended to be offset by the changes in the fair value of the assets and liabilities being hedged. These economic hedges are not designated as hedging instruments for hedge accounting treatment.

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

	March 29, 2020			December 31, 2019
Currency	Notional Value	USD Equivalent		Notional Value	USD Equivalent
Derivatives Not Designated as Hedging Instruments:
Korean Won	130,400,000	$	107,516	161,951,500	$	139,688
Euro	37,500	41,275		18,000	20,249
Mexican Peso	180,000	7,647		80,000	4,223
Japanese Yen	600,000	5,540		575,000	5,291
British Pound	2,750	3,364		2,700	3,569
Hungarian Forint	980,000	3,026		870,000	2,962
Canadian Dollar	1,300	922		1,300	1,000
Taiwanese Dollar	22,000	735		37,450	1,256
Singapore Dollar	—	—		845	628

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

	Asset Derivatives					Liability Derivatives
	Balance	Fair Value				Balance	Fair Value
	Sheet Location	March 29, 2020		December 31, 2019		Sheet Location	March 29, 2020		December 31, 2019
Derivatives Not Designated as Hedging Instruments:
Economic hedge forward contracts	Prepaid expenses and other current assets	$	131	$	857	Accrued expenses	$	703	$	23

16

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
	March 29, 2020		December 31, 2019			March 29, 2020		December 31, 2019
Gross amounts of recognized assets	$	131	$	857	Gross amounts of recognized liabilities	$	703	$	23
Gross amounts offset	—		—		Gross amounts offset	—		—
Net amount of assets presented	$	131	$	857	Net amount of liabilities presented	$	703	$	23

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

	Location in Financial Statements	Three-months Ended
		March 29, 2020			March 31, 2019
Derivatives Not Designated as Hedging Instruments:
Gains (losses) recognized in current operations	Foreign currency gain (loss)	$	(8,240	)	$	505

NOTE 11: Revenue Recognition

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

	Three-months Ended
	March 29, 2020		March 31, 2019
Americas	$	60,247	$	64,770
Europe	48,582		59,539
Greater China	26,403		22,816
Other Asia	32,003		26,359
	$	167,235	$	173,484

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

	Three-months Ended
	March 29, 2020		March 31, 2020
Standard products and services	$	152,854	$	161,052
Application-specific customer solutions	14,381		12,432
	$	167,235	$	173,484

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 $5,835,000 and $3,963,000 as of March 29, 2020 and December 31, 2019, respectively.

Accounts Receivable, Contract Assets, and Contract Liabilities

Accounts receivable represent amounts billed and currently due from customers which are reported at their net estimated realizable value. The Company maintains an allowance against its accounts receivable for potential credit losses. Contract assets consist of unbilled revenue which arises when revenue is recognized in advance of billing for

17

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

certain application-specific customer solutions contracts. 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.

On January 1, 2020, the Company adopted Accounting Standards Update (ASU) 2016-13, “Measurement of Credit Losses on Financial Instruments,” using the modified-retrospective approach, which requires the Company to apply the standard on a prospective basis with a cumulative-effect adjustment to retained earnings as of the beginning of the period in which the guidance is effective. The Company did not record an adjustment to retained earnings as this ASU did not have a material impact on the Company's consolidated allowance for credit losses.

The Company recorded credit losses on accounts receivable of $300,000 for the three-month period ended March 29, 2020. No credit losses on accounts receivables were recorded during the three-month period ended March 31, 2019.

The following table summarizes the allowance for credit losses activity for the three-month period ended March 29, 2020 (in thousands):

Balance as of December 31, 2019	$	530
Increases to the allowance for credit losses	300
Write-offs	(64		)
Foreign exchange rate changes	5
Balance as of March 29, 2020	$	771

The following table summarizes the deferred revenue and customer deposits activity for the three-month period ended March 29, 2020 (in thousands):

Balance as of December 31, 2019	$	14,432
Increases to deferred revenue and customer deposits	24,625
Recognition of revenue	(12,670		)
Foreign exchange rate changes	(135		)
Balance as of March 29, 2020	$	26,252

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.

NOTE 12: Stock-Based Compensation Expense

Stock Plans

The Company’s stock-based awards that result in compensation expense consist of stock options and restricted stock units ("RSUs"). As of March 29, 2020, the Company had 16,115,000 shares available for grant. Stock options are granted with an exercise price equal to the market value of the Company’s common stock at the grant date and generally vest over four or five years based upon continuous service and expire ten years from the grant date. RSUs generally vest upon three years of continuous employment or incrementally over such three-year period. Participants are not entitled to dividends on RSUs.

18

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Stock Options

The following table summarizes the Company’s stock option activity for the three-month period ended March 29, 2020:

	Shares (in thousands)		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Outstanding as of December 31, 2019	12,899		$	37.95
Granted	883		50.94
Exercised	(463	)	21.52
Forfeited or expired	(83	)	50.10
Outstanding as of March 29, 2020	13,236		$	39.32	7.12	$	113,087
Exercisable as of March 29. 2020	6,652		$	30.93	6.01	$	98,637
Options vested or expected to vest as of March 29, 2020 (1)	12,139		$	38.37	6.98	$	112,251

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

	Three-months Ended
	March 29, 2020		March 31, 2019
Risk-free rate	1.6	%	2.7	%
Expected dividend yield	0.43	%	0.39	%
Expected volatility	37	%	37	%
Expected term (in years)	6.0		5.3

Risk-free rate

The risk-free rate was based upon a treasury instrument whose term was consistent with the contractual term of the option.

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. 

Expected volatility

The expected volatility was based upon a combination of historical volatility of the Company’s common stock over the contractual term of the option and implied volatility for traded options of the Company’s stock.

Expected term

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 periods ended March 29, 2020 and March 31, 2019 were $18.46 and $18.59, respectively.

The total intrinsic values of stock options exercised for the three-month periods ended March 29, 2020 and March 31, 2019 were $14,454,000 and $22,579,000, respectively. The total fair values of stock options vested for the three-month periods ended March 29, 2020 and March 31, 2019 were $36,664,000 and $29,972,000, respectively.

19

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Restricted Stock Units (RSUs)

The following table summarizes the Company's RSUs activity for the three-month period ended March 29, 2020:

	Shares (in thousands)		Weighted-Average Grant Date Fair Value
Nonvested as of December 31, 2019	150		$	48.63
Granted	390		50.94
Vested	—		—
Forfeited or expired	(4	)	50.28
Nonvested as of March 29, 2020	536		$	50.30

The weighted-average grant-date fair values of RSUs granted during the three-month period ended March 29, 2020 was $50.94. There were no RSUs that vested during the three-month period ended March 29, 2020. There were no RSUs granted or vested during the three-month period ended March 31, 2019.

Stock-Based Compensation Expense

The Company stratifies its employee population into two groups: one consisting of senior management and another consisting of all other employees. The Company currently applies an estimated annual forfeiture rate of 7% to all equity awards for senior management and a rate of 12% for all other employees. Each year during the first quarter, the Company revises its forfeiture rate. This resulted in an increase to compensation expense of $1,787,000 in 2020 and a decrease to compensation expense of $499,000 in 2019.

As of March 29, 2020, total unrecognized compensation expense related to non-vested equity awards, including stock options and RSUs, was $72,823,000, which is expected to be recognized over a weighted-average period of 2.21 years.

The total stock-based compensation expense and the related income tax benefit recognized for the three-month period ended March 29, 2020 were $14,790,000 and $2,564,000, respectively, and for the three-month period ended March 31, 2019 were $12,281,000 and $2,222,000, respectively. No compensation expense was capitalized as of March 29, 2020 or December 31, 2019.

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
	March 29, 2020		March 31, 2019
Cost of revenue	$	354	$	451
Research, development, and engineering	5,366		4,467
Selling, general, and administrative	9,070		7,363
	$	14,790	$	12,281

NOTE 13: Stock Repurchase Program

In October 2018, the Company's Board of Directors authorized the repurchase of $200,000,000 of the Company's common stock. As of March 29, 2020, the Company repurchased 2,816,000 shares at a cost of $121,348,000 under this program, including 1,215,000 shares at a cost of $51,036,000 during the three-month period ended March 29, 2020, leaving a remaining balance of $78,652,000. On March 12, 2020 the Company's Board of Directors authorized the repurchase of an additional $200,000,000 of the Company's common stock. Purchases under this March 2020 program will commence upon completion of the October 2018 program. The Company may repurchase shares under these programs in future periods depending upon a variety of factors, including, among other things, the impact of dilution from employee equity 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.

20

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 14: Income Taxes

A reconciliation of the United States federal statutory corporate tax rate to the Company’s income tax expense, or effective tax rate, was as follows:

	Three-months Ended
	March 29, 2020		March 31, 2019
Income tax expense at U.S. federal statutory corporate tax rate	21	%	21	%
State income taxes, net of federal benefit	1	%	1	%
Foreign tax rate differential	(6	)%	(9	)%
Tax credit	(1	)%	—	%
Discrete tax benefit related to stock options	(7	)%	(8	)%
Other discrete tax events	1	%	—	%
Other	2	%	2	%
Income tax expense	11	%	7	%

The Company is tax resident in numerous jurisdictions around the world and has identified its major tax jurisdictions as the United States, Ireland, and China. The statutory tax rate is 12.5% in Ireland and 25% in China, compared to the U.S. federal statutory corporate tax rate of 21%. These differences resulted in a decrease in the effective tax rate by 6 and 9 percentage points for the three-month periods ended March 29, 2020 and March 31, 2019, respectively. Management has determined that earnings from its legal entity in China will be indefinitely reinvested to provide local funding for growth, and that earnings from all other jurisdictions will not be indefinitely reinvested.

The excess tax benefit arising from the difference between the deduction for tax purposes and the compensation cost recognized for financial reporting purposes from stock option exercises resulted in a decrease in the effective tax rate by 7 and 8 percentage points for the three-month periods ended March 29, 2020 and March 31, 2019, respectively.

During the three-month period ended March 29, 2020, the Company recorded a $306,000 increase in reserves for income taxes, net of deferred tax benefit. Estimated interest and penalties included in these amounts totaled $155,000 for the three-month period ended March 29, 2020.

The Company’s reserve for income taxes, including gross interest and penalties, was $12,919,000 as of March 29, 2020, which included $11,891,000 classified as a non-current liability and $1,028,000 recorded as an increase to a non-current deferred tax liability. The amount of gross interest and penalties included in these balances was $1,109,000. 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. As a result of the expiration of certain statutes of limitations, there is a potential that a portion of these reserves could be released, which would decrease income tax expense by approximately $1,300,000 to $1,400,000 over the next twelve months.

The Company has defined its major tax jurisdictions as the United States, Ireland, and China, and within the United States, Massachusetts. Within the United States, the tax years 2016 through 2019 remain open to examination by the Internal Revenue Service and various state tax authorities. The tax years 2015 through 2019 remain open to examination by various taxing authorities in other jurisdictions in which the Company operates.

NOTE 15: Weighted-Average Shares

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

	Three-months Ended
	March 29, 2020	March 31, 2019
Basic weighted-average common shares outstanding	172,408	171,098
Effect of dilutive equity awards	3,194	4,509
Weighted-average common and common-equivalent shares outstanding	175,602	175,607

Stock options to purchase 6,273,000 and 4,832,000 shares of common stock, on a weighted-average basis, were outstanding during the three-month periods ended March 29, 2020 and March 31, 2019, respectively, but were not included in the calculation of dilutive net income per share because they were anti-dilutive. There were no anti-dilutive

21

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

restricted stock units outstanding, on a weighted-average basis, during the three-month periods ended March 29, 2020 and March 31, 2019, respectively.

NOTE 16: Subsequent Events

On April 27, 2020, the Company’s Board of Directors declared a cash dividend of $0.055 per share. The dividend is payable on May 29, 2020 to all shareholders of record as of the close of business on May 15, 2020.

In April 2020, recent interpretations of a German law relating to withholding taxes on intellectual property rights have emerged.  The Company is currently evaluating this law and any related impact to its financial position or results of operations.

The COVID-19 (also referred to as "coronavirus") outbreak had a modest adverse impact on our business in the first quarter of 2020, primarily near the end of the quarter. This impact has expanded and accelerated into the second quarter, as we have noted lower demand for our products in certain industries, additional disruptions to our supply chain, longer customer delivery times, higher delivery costs, and further shutdowns of customer facilities. While it is difficult for us to quantify the duration and severity of this impact due to many factors beyond our control and knowledge, including changing governmental regulations and the scope and duration of social distancing and commerce restrictions, we expect the impact on our business to be more significant in the second quarter than the first quarter of 2020.

22

ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

Certain statements made in this report, as well as oral statements made by the Company from time to time, constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Readers can identify these forward-looking statements by our use of the words “expects,” “anticipates,” “estimates,” “believes,” “projects,” “intends,” “plans,” “will,” “may,” “shall,” “could,” “should,” and similar words and other statements of a similar sense. These statements are based upon our current estimates and expectations as to prospective events and circumstances, which may or may not be in our control and as to which there can be no firm assurances given. These forward-looking statements, which include statements regarding business and market trends, future financial performance, the expected impact of the COVID-19 outbreak on our business and results of operations, customer order rates and timing of related revenue, future product mix, research and development activities, investments, strategic plans, and estimated tax benefits and expenses and other tax matters, involve known and unknown risks and uncertainties that could cause actual results to differ materially from those projected. Such risks and uncertainties include: (1) the impact, duration and severity of the COVID-19 outbreak; (2) current and future conditions in the global economy, including the impact of the COVID-19 outbreak and the imposition of tariffs or export controls; (3) the loss of, or curtailment of purchases by, a large customer; (4) the reliance on revenue from the consumer electronics or automotive industries; (5) the inability to penetrate the logistics industry and other new markets; (6) the inability to achieve significant international revenue; (7) fluctuations in foreign currency exchange rates and the use of derivative instruments; (8) information security breaches or business system disruptions; (9) the inability to attract and retain skilled employees; (10) the failure to effectively manage our growth; (11) the reliance upon key suppliers to manufacture and deliver critical components for our products; (12) the failure to effectively manage product transitions or accurately forecast customer demand; (13) the inability to design and manufacture high-quality products; (14) the technological obsolescence of current products and the inability to develop new products; (15) the failure to properly manage the distribution of products and services; (16) the inability to protect our proprietary technology and intellectual property; (17) our involvement in time-consuming and costly litigation; (18) the impact of competitive pressures; (19) the challenges in integrating and achieving expected results from acquired businesses, including the recent acquisition of Sualab; (20) potential impairment charges with respect to our investments or for acquired intangible assets or goodwill; and (21) exposure to additional tax liabilities. The foregoing list should not be construed as exhaustive and we encourage readers to refer to the detailed discussion of risk factors included in Part I - Item 1A of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019, as updated by Part II - Item 1A of this Quarterly Report on Form 10-Q. The Company cautions readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. The Company disclaims any obligation to subsequently revise forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date such statements are made.

Executive Overview

Cognex Corporation is a leading worldwide provider of machine vision products that capture and analyze visual information in order to automate manufacturing and distribution tasks where vision is required. In addition to product revenue derived from the sale of machine vision products, the Company also generates revenue by providing maintenance and support, consulting, and training services to its customers; however, service revenue accounted for less than 10% of total revenue for all periods presented.

Cognex machine vision is used to automate manufacturing and distribution processes in a variety of industries, where the technology is widely recognized as an important component of automated production and quality assurance. Virtually every manufacturer can achieve better quality and manufacturing efficiency by using machine vision, and therefore, Cognex products are used by a broad base of customers across a variety of industries, including consumer electronics, automotive, consumer products, food and beverage, pharmaceuticals, and medical devices. Cognex products are also used to automate distribution processes in the logistics industry, including for applications in retail distribution and ecommerce to scan, track, and sort goods through distribution centers.

Revenue for the first quarter of 2020 totaled $167,235,000, representing a decrease of 4% from the first quarter of 2019. The decrease was driven by lower revenue from the automotive industry, which is our largest market, partially offset by higher revenue from the electronics industry. Although revenue for the first quarter of 2020 was adversely impacted by the COVID-19 outbreak, first in China and then later in the quarter in other regions, we expect this impact to be more significant to our business in the second quarter of 2020. Gross margin was 75% for the first quarter of 2020 compared to 73% for the first quarter of 2019 due primarily to favorable product mix toward higher-margin sales in the electronics industry. Operating expenses increased by 8% over the prior year due to investments to support

23

the Company's strategic priorities, including ongoing costs related to the acquisition of Sualab Co., Ltd. in the fourth quarter of 2019. The Company also recorded higher stock expense and incentive compensation accruals in the first quarter of 2020. As a result of the lower revenue level and continued investments, operating income was 13% of revenue for the first quarter of 2020 compared to 17% for the first quarter of 2019, net income was 12% of revenue for the first quarter of 2020 compared to 19% for the first quarter of 2019, and net income per diluted share was $0.12 for the first quarter of 2020 compared to $0.19 for the first quarter of 2019.

Results of Operations

As foreign currency exchange rates are a factor in understanding period-to-period comparisons, we believe the presentation of results on a constant-currency basis in addition to reported results helps improve investors’ ability to understand our operating results and evaluate our performance in comparison to prior periods. We also use results on a constant-currency basis as one measure to evaluate our performance. Constant-currency information compares results between periods as if exchange rates had remained constant period-over-period. We generally refer to such amounts calculated on a constant-currency basis as excluding the impact of foreign currency exchange rate changes. Results on a constant-currency basis are not in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) and should be considered in addition to, and not as a substitute for, results prepared in accordance with U.S. GAAP.

Revenue

Revenue for the first quarter of 2020 totaled $167,235,000, representing a decrease of $6,249,000, or 4%, over the first quarter of 2019. Changes in foreign currency exchange rates did not have a material impact on revenue.

The COVID-19 outbreak had a modest adverse impact on our business in the first quarter of 2020, primarily near the end of the quarter. This impact included lower demand for our products in certain industries, disruptions to our supply chain, and the shutdown of certain customer facilities. This impact was most significant in the automotive industry, for which revenue had been declining prior to the COVID-19 outbreak and this decline was further exacerbated by the effects of COVID-19. These conditions also had a lesser impact on the timing of revenue from customers in the logistics industry, resulting in delays in shipments and on-site customer installations. The decrease in automotive and other industries was partially offset by higher revenue from customers in the electronics industry, as well as from customers in a few other smaller industries we serve.

From a geographic perspective, revenue from customers based in the Americas decreased by 7% and revenue from customers based in Europe decreased by 18%, with the most significant decrease coming from the automotive industry. Revenue from customers based in Greater China and other countries in Asia, however, increased by 16% and 21%, respectively, as higher revenue from the electronics industry was only partially offset by lower revenue from the automotive industry.

As of the date of this report, we expect revenue for the second quarter of 2020 to be lower than the first quarter of 2020 due to the continued impact of COVID-19 on our business. This impact has expanded and accelerated into the second quarter, as we have noted lower demand for our products in certain industries, additional disruptions to our supply chain, longer customer delivery times, and further shutdowns of customer facilities. The shutdown of certain customer facilities may impact our ability to deliver products and perform on-site services, which may delay revenue recognition. While it is difficult for us to quantify this impact due to many factors beyond our control and knowledge, including changing governmental regulations and the scope and duration of social distancing and commerce restrictions, we expect the impact on our business to be more significant in the second quarter than the first quarter of 2020.

Gross Margin

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

As of the date of this report, we expect gross margin as a percentage of revenue for the second quarter of 2020 to be in the mid-70s range, but lower than the gross margin reported for the first quarter of 2020 due to the anticipated lower revenue level and less favorable product mix. We also expect to incur higher delivery costs in the second quarter resulting from expediting materials and freight surcharges passed on by carriers as a result of COVID-19.

Operating Expenses

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

24

	Three-month period
RD&E expenses for the first quarter of 2019	$	30,242
Personnel-related costs	1,628
Acquisition deferred compensation	1,310
Stock expense	958
Incentive compensation	948
Other	860
RD&E expenses for the first quarter of 2020	$	35,946

RD&E expenses increased due to higher personnel-related costs resulting primarily from headcount additions to support the Company's strategic priorities, of which $914,000 related to a team of deep learning engineers from the Company's acquisition of Sualab Co., Ltd. in the fourth quarter of 2019. The consideration from this acquisition included deferred payments that are being recorded as compensation expense over four years from the closing date, which accounted for an additional $1,310,000 of the increase in RD&E expense.

The Company recorded higher stock expense and incentive compensation accruals in the first quarter of 2020. Stock expense was higher than the prior year due partially to the impact of revised forfeiture rates. Annual incentive compensation plans were reset at the beginning of the year with relevant performance goals for 2020. We will continue to monitor the achievement of these performance goals for the remainder of the year due to the impact of COVID-19 on our business, among other factors, which may result in adjustments to our incentive compensation accruals in future quarters.

RD&E expenses as a percentage of revenue were 21% for the first quarter of 2020 compared to 17% for the first quarter of 2019. We believe that a continued commitment to RD&E activities is essential in order to maintain or achieve product leadership with our existing products, to provide innovative new product offerings, as well as to provide engineering support for large customers. In addition, we consider our ability to accelerate time to market for new products to be critical to our revenue growth. Therefore, we expect to continue to make significant RD&E investments in the future, and currently intend to continue our product development plans during periods of lower revenue levels, which may result in a higher level of RD&E expenses as a percentage of revenue in future quarters compared to the 21% reported in the first quarter of 2020.

Selling, General, and Administrative Expenses

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

	Three-month period
SG&A expense in the first quarter of 2019	$	66,811
Personnel-related costs	2,048
Stock expense	1,785
Incentive compensation	1,129
Travel expense	(1,745		)
Other	(890		)
SG&A expense in the first quarter of 2020	$	69,138

SG&A expenses increased due to higher personnel-related costs resulting primarily from headcount additions and the reallocation of sales resources to support the Company's strategic priorities. Although our total sales personnel at the end of the first quarter of 2020 was relatively flat with the first quarter of 2019, we have reallocated our sales resources to areas of our business where we see the highest opportunity for growth, which has resulted in a shift toward regions with relatively higher labor costs.

The Company recorded higher stock expense and incentive compensation accruals in the first quarter of 2020. Stock expense was higher than the prior year due partially to the impact of revised forfeiture rates. Annual incentive compensation plans were reset at the beginning of the year with relevant performance goals for 2020. We will continue to monitor the achievement of these performance goals for the remainder of the year due to the impact of COVID-19 on our business, among other factors, which may result in adjustments to our incentive compensation accruals in future quarters.

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These increases were partially offset by lower travel expenses resulting from COVID-19 restrictions. We expect these restrictions to continue in the second quarter of 2020, resulting in a further reduction in travel expenses compared to both the first quarter of 2020 and the second quarter of 2019.

Non-operating Income (Expense)

The Company recorded foreign currency losses of $3,003,000 for the first quarter of 2020 and $248,000 for the first quarter of 2019. Foreign currency gains and losses result primarily from the revaluation and settlement of accounts receivable, accounts payable, and intercompany balances that are reported in one currency and collected in another. The increase in foreign currency losses in the first quarter of 2020 was primarily related to the revaluation of an intercompany balance that was created by the migration of acquired intellectual property from one subsidiary to another in the fourth quarter of 2019. This intercompany balance is expected to be settled in 2020.

Investment income increased by $324,000, or 7%, from the prior year. The increase was due to higher yields on the Company's portfolio of debt securities, and to a lesser extent additional funds available for investment.

The Company recorded other expense of $183,000 for the first quarter of 2020 and other income of $927,000 for the first quarter of 2019. Other income (expense) includes fair value adjustments of contingent consideration liabilities arising from business acquisitions. The Company recorded a $1,060,000 decrease in the fair value of its GVi contingent consideration liability that was recorded as other income in the first quarter of 2019, resulting from a lower level of revenue in the Americas’ automotive industry.

Income Tax Expense

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

The effective tax rate included a decrease in tax expense of $1,680,000 for the first quarter of 2020 and $2,730,000 for the first quarter of 2019 primarily from the excess tax benefit arising from the difference between the deduction for tax purposes and the compensation cost recognized for financial reporting purposes from stock option exercises. The Company cannot predict the level of stock option exercises by employees in future periods.

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

Excluding the impact of these discrete items, the Company’s effective tax rate was 17% of pre-tax income for the first quarter of 2020 compared to 15% of pre-tax income for the first quarter of 2019. This increase was due to more of the Company's profits being earned and taxed in higher tax jurisdictions, which included the impact of changes made to the Company's international tax structure in the fourth quarter of 2019.

Liquidity and Capital Resources

The Company has historically been able to generate positive cash flow from operations, which has funded its operating activities and other cash requirements and has resulted in an accumulated cash and investment balance of $845,396,000 as of March 29, 2020. The Company has established guidelines relative to credit ratings, diversification, and maturities of its investments that maintain liquidity.

The Company’s cash requirements for the first quarter of 2020 were primarily met with positive cash flows from operations and the sale of investments. Cash requirements consisted of operating activities, the repurchase of common stock, the payment of dividends, and capital expenditures. Capital expenditures for the first quarter of 2020 totaled $3,074,000 and consisted primarily of computer hardware and software, manufacturing test equipment related to new product introductions, and improvements made to the Company's headquarters building in Natick, Massachusetts and various leased facilities.

In October 2018, the Company's Board of Directors authorized the repurchase of $200,000,000 of the Company's common stock. As of March 29, 2020, the Company repurchased 2,816,000 shares at a cost of $121,348,000 under this program, including 1,215,000 shares at a cost of $51,036,000 for the first quarter of 2020, leaving a remaining balance of $78,652,000. On March 12, 2020 the Company's Board of Directors authorized the repurchase of an additional $200,000,000 of the Company's common stock. Purchases under this March 2020 program will commence upon completion of the October 2018 program. The Company may repurchase shares under these programs in future periods depending on a variety of factors, including, among other things, the impact of dilution from employee equity 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.

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The Company’s Board of Directors declared and paid cash dividends of $0.050 per share in the first, second, and third quarters of 2019. The dividend was increased to $0.055 per share in the fourth quarter of 2019 and the first quarter of 2020. Total dividends paid amounted to $9,503,000 for the first quarter of 2020. Future dividends will be declared at the discretion of the Company’s Board of Directors and will depend upon such factors as the Board deems relevant including, among other things, the Company’s ability to generate positive cash flows from operations.

The Company believes that its existing cash and investment balances, together with cash flow from operations, will be sufficient to meet its operating, investing, and financing activities for the next twelve months. As of March 29, 2020, the Company had $845,396,000 in cash and investments. In addition, the Company has no long-term debt and does not anticipate needing debt financing in the near future. We believe that our strong cash position has put us in a relatively good position to maintain our liquidity during downturns in our business related to COVID-19 and with respect to our longer-term liquidity needs.

New Pronouncements

Refer to Part I - Note 2 within this Form 10-Q, for a full description of recently issued accounting pronouncements including the expected dates of adoption and the expected impact on the financial position and results of operations of the Company.

ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes to the Company’s exposures to market risk since December 31, 2019.

ITEM 4: CONTROLS AND PROCEDURES

As required by Rules 13a-15 and 15d-15 of the Securities Exchange Act of 1934, the Company has evaluated, with the participation of management, including the Chief Executive Officer and the Chief Financial Officer, the effectiveness of its disclosure controls and procedures (as defined in such rules) as of the end of the period covered by this report. Based on such evaluation, the Chief Executive Officer and Chief Financial Officer concluded that such disclosure controls and procedures were effective as of that date. From time to time, the Company reviews its disclosure controls and procedures, and may from time to time make changes aimed at enhancing their effectiveness and to ensure that the Company’s systems evolve with its business.

There was no change in the Company's internal control over the financial reporting that occurred during the quarter ended March 29, 2020 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting. We have considered the impact of COVID-19 on our internal controls over financial reporting.  Personnel constraints related to working from home have made our ability to execute certain controls more challenging; however, we have enhanced existing monitoring controls in an effort to ensure we continue to have effective internal controls during this time.

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PART II: OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Various claims and legal proceedings generally incidental to the normal course of business are pending or threatened on behalf of or against the Company. While we cannot predict the outcome of these matters, we believe that any liability arising from them will not have a material adverse effect on our financial position, liquidity, or results of operations.

ITEM 1A. RISK FACTORS

For a complete list of factors that could affect the Company’s business, results of operations, and financial condition, see the risk factors discussion provided in Part I—Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019. The following information updates, and should be read in conjunction with, Part I - Item 1A of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

Our business has been, and is expected to continue to be, adversely affected by the recent COVID-19 outbreak.

The COVID-19 (also referred to as “coronavirus”) outbreak, which was first reported in China in the beginning of 2020, developed into a global pandemic in March 2020. The COVID-19 outbreak had a modest adverse impact on our business in the first quarter of 2020, primarily near the end of the quarter. This impact has expanded and accelerated into the second quarter, as we have noted lower demand for our products in certain industries, additional disruptions to our supply chain, longer customer delivery times, higher delivery costs, and further shutdowns of customer facilities.

We face several risks and uncertainties related to the impact of COVID-19 on our business. It is difficult for us to quantify the duration and severity of this impact due to many factors beyond our control and knowledge, including changing governmental regulations and the scope and duration of social distancing and commercial restrictions. These risks and uncertainties include, among others:

• our customers may further delay or cancel orders for our products,

• additional customer facilities may be shutdown for extended periods of time, resulting in our inability to deliver products, perform on-site services, or make on-site sales visits,

• our customers may not have sufficient cash flow or access to financing to purchase our products,

• our customers may not pay us within agreed upon terms or may default on their payments altogether,

• our vendors may be unable to fulfill their delivery obligations to us within acceptable lead times for extended periods of time, which may force us to seek alternative sources of supply at higher costs,

• our contract manufacturers may experience interruptions that result in delivery delays and higher costs for our products,

• we may experience manufacturing delays and higher costs in the event of a supply disruption from a single-source vendor,

• we may experience extended customer delivery times and higher delivery costs,

• our distribution centers in Natick, Massachusetts and Cork, Ireland may be forced to operate with a significantly reduced workforce or be forced to shut down altogether due to government regulations or health concerns,

• our online sales and marketing efforts may be less effective than face-to-face activities, resulting in less customer acquisition and lower sales from new products,

• challenges involved in working from home may delay certain of our new product introductions,

• lower demand for our products may result in charges for excess and obsolete inventory if we are unable to sell inventory that is either already on hand or committed to purchase,

• lower cash flows may result in impairment charges for acquired intangible assets or goodwill,

• our investment portfolio of debt securities may be exposed to material credit losses, and

• a decline in our stock price may make stock-based awards a less attractive form of compensation and a less attractive form of retention for our employees.

These risks and uncertainties could have a material adverse effect on the continuity of our business and our results of operations and financial condition. The impact of COVID-19 also may exacerbate other risks discussed in Part I - Item 1A of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019, any of which could have a material adverse effect on our business, results of operations and financial condition. This situation is continuously changing and additional impacts on our business may arise of which we are not currently aware.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table sets forth information with respect to purchases by the Company of shares of its common stock during the three-month period ended March 29, 2020:

	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1)
January 1 - January 26, 2020	—	$	—	—	$	129,688,000
January 27 - February 23, 2020	—	—		—	129,688,000
February 24 - March 29, 2020	1,215,000	42.01		1,215,000	278,652,000
Total	1,215,000	$	42.01	1,215,000	$	278,652,000

(1) In October 2018, the Company's Board of Directors authorized the repurchase of $200,000,000 of the Company's common stock. Purchases under this program commenced in October 2018. On March 12, 2020, the Company's Board of Directors authorized the repurchase of an additional $200,000,000 of the Company's common stock.  This new authorization will commence once the Company completes the October 2018 program, with repurchases subject to market conditions and other relevant factors. 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.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

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 ITEM 6. EXHIBITS

Exhibit Number
31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934*
31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934*
32.1	Certification of Principal Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**
32.2	Certification of Principal Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**
101.SCH	Inline XBRL Taxonomy Extension Schema Document*
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document*
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document*
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document*
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document*
104	Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101.*)
*	Filed herewith
**	Furnished herewith

30

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

Date:	April 27, 2020	COGNEX CORPORATION
		By:	/s/ Robert J. Willett
			Robert J. Willett
			President and Chief Executive Officer
			(Principal Executive Officer)
		By:	/s/ Paul D. Todgham
			Paul D. Todgham
			Senior Vice President of Finance and Chief Financial Officer
			(Principal Financial Officer)

31

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Robert J. Willett, certify that:

1    I have reviewed this quarterly report on Form 10-Q of Cognex Corporation;

2    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4    The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5    The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	April 27, 2020	By:	/s/ Robert J. Willett
			Robert J. Willett
			President and Chief Executive Officer
			(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Paul D. Todgham, certify that:

1    I have reviewed this quarterly report on Form 10-Q of Cognex Corporation;

2    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4    The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5    The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	April 27, 2020	By:	/s/ Paul D. Todgham
			Paul D. Todgham
			Senior Vice President of Finance and Chief Financial Officer
			(Principal Financial Officer)

EX-32.1

Exhibit 32.1*

CERTIFICATION PURSUANT TO

18 U.S.C. 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned officer of Cognex Corporation (the “Company”) hereby certifies to his knowledge that the Company’s quarterly report on Form 10-Q for the quarterly period ended March 29, 2020 (the “Report”), as filed with the Securities and Exchange Commission on the date hereof, fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended, and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	April 27, 2020	By:	/s/ Robert J. Willett
			Robert J. Willett
			President and Chief Executive Officer
			(Principal Executive Officer)

* This certification shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.

EX-32.2

Exhibit 32.2*

CERTIFICATION PURSUANT TO

18 U.S.C. 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned officer of Cognex Corporation (the “Company”) hereby certifies to his knowledge that the Company’s quarterly report on Form 10-Q for the quarterly period ended March 29, 2020 (the “Report”), as filed with the Securities and Exchange Commission on the date hereof, fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended, and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	April 27, 2020	By:	/s/ Paul D. Todgham
			Paul D. Todgham
			Senior Vice President of Finance and Chief Financial Officer
			(Principal Financial Officer)

* This certification shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.

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Cash, Cash Equivalents, and Investments (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 29, 2020	Mar. 31, 2019
Cash and Cash Equivalents [Abstract]
Reclassification of credit loss on investments	$ 160	$ 0
Gross realized gains on sale of investments	1,865	64
Gross realized losses on sale of investments	$ 15	$ 24

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Cash, Cash Equivalents, and Investments Cash, Cash Equivalents, and Investments - Schedule of Allowance for Credit Loss Activity (Details) $ in Thousands	3 Months Ended
	Mar. 29, 2020 USD ($)
Debt Securities, Available-for-sale, Allowance for Credit Loss [Roll Forward]
Balance as of December 31, 2019	$ 0
Increases to the allowance for credit losses	160
Write-offs	0
Foreign exchange rate changes	0
Balance as of March 29, 2020	$ 160

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Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended
	Mar. 29, 2020	Mar. 31, 2019
Statement of Comprehensive Income [Abstract]
Net income	$ 20,477	$ 33,104
Available-for-sale investments:
Net unrealized gain (loss), net of tax of ($952) and $268 in 2020 and 2019, respectively	(3,861)	2,251
Reclassification of credit loss on investments	160	0
Reclassification of net realized (gain) loss into current operations	(1,850)	(40)
Net change related to available-for-sale investments	(5,551)	2,211
Foreign currency translation adjustments:
Foreign currency translation adjustments	(7,365)	218
Other comprehensive income (loss), net of tax	(12,916)	2,429
Total comprehensive income	$ 7,561	$ 35,533

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Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 29, 2020	Mar. 31, 2019
Cash flows from operating activities:
Net income	$ 20,477	$ 33,104
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation expense	14,790	12,281
Depreciation of property, plant, and equipment	5,631	5,175
Amortization of intangible assets	1,388	769
Amortization of discounts or premiums on investments	106	(1,461)
Realized (gain) loss on sale of investments	(1,850)	(40)
Reclassification of credit loss on investments	160	0
Revaluation of contingent consideration	0	(985)
Change in deferred income taxes	(1,826)	(1,140)
Accounts receivable	2,182	12,827
Unbilled revenue	(703)	(1,890)
Inventories	4,954	4,073
Prepaid expenses and other current assets	(9,788)	3,191
Accounts payable	(1,613)	4,245
Accrued expenses	12,720	(11,708)
Accrued income taxes	7,650	(3,501)
Deferred revenue and customer deposits	11,961	6,760
Other	(1,097)	(439)
Net cash provided by operating activities	65,142	61,261
Cash flows from investing activities:
Purchases of investments	(199,530)	(258,596)
Maturities and sales of investments	262,126	193,572
Purchases of property, plant, and equipment	(3,074)	(5,078)
Net cash provided by (used in) investing activities	59,522	(70,102)
Cash flows from financing activities:
Issuance of common stock under stock plans	9,971	14,346
Repurchase of common stock	(51,036)	0
Payment of dividends	(9,503)	(8,564)
Net cash provided by (used in) financing activities	(50,568)	5,782
Effect of foreign exchange rate changes on cash and cash equivalents	(6,330)	143
Net change in cash and cash equivalents	67,766	(2,916)
Cash and cash equivalents at beginning of period	171,431	108,212
Cash and cash equivalents at end of period	$ 239,197	$ 105,296

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Leases - Future Minimum Lease Payment Obligations Under Operating Leases (Details) $ in Thousands	Mar. 29, 2020 USD ($)
Leases [Abstract]
Remainder of fiscal 2019	$ 5,001
2020	6,223
2021	4,739
2022	3,712
2023	1,490
2024	429
Thereafter	0
Total	$ 21,594

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Stock-Based Compensation Expense - Weighted-Average Assumptions Used in Estimating Fair Values of Stock Options Granted (Detail)	3 Months Ended
	Mar. 29, 2020	Mar. 31, 2019
Share-based Payment Arrangement [Abstract]
Risk-free rate	1.60%	2.70%
Expected dividend yield	0.43%	0.39%
Expected volatility	37.00%	37.00%
Expected term (in years)	6 years	5 years 3 months 18 days

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Revenue Recognition - Schedule of Allowance for Credit Loss (Details) $ in Thousands	3 Months Ended
	Mar. 29, 2020 USD ($)
Accounts Receivable, Allowance for Credit Loss [Roll Forward]
Balance as of December 31, 2019	$ 530
Increases to the allowance for credit losses	300
Write-offs	(64)
Foreign exchange rate changes	5
Balance as of March 29, 2020	$ 771

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Cash, Cash Equivalents, and Investments (Tables)

3 Months Ended

Mar. 29, 2020

Cash and Cash Equivalents [Abstract]

Components of Cash, Cash Equivalents, and Investments

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

	March 29, 2020		December 31, 2019
Cash	$	225,207	$	155,498
Money market instruments	13,990		15,933
Cash and cash equivalents	239,197		171,431
Asset-backed securities	69,956		66,680
Corporate bonds	54,937		65,624
Treasury bills	19,763		92,914
Municipal bonds	6,980		4,630
Certificate of deposit	4,121		4,328
Sovereign bonds	3,487		6,294
Current investments	159,244		240,470
Treasury bills	190,693		216,334
Corporate bonds	177,869		146,474
Asset-backed securities	51,395		46,403
Sovereign bonds	21,083		16,005
Agency bonds	5,915		5,914
Municipal bonds	—		2,322
Non-current investments	446,955		433,452
	$	845,396	$	845,353

Summary of Available-for-Sale Investments

The following table summarizes the Company’s available-for-sale investments as of March 29, 2020 (in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Current:
Asset-backed securities	$	70,510	$	25	$	(579	)	$	69,956
Corporate bonds	55,404		20		(487		)	54,937
Treasury bills	19,328		435		—			19,763
Municipal bonds	6,944		36		—			6,980
Sovereign bonds	3,485		2		—			3,487
Non-current:
Treasury bills	187,794		2,899		—			190,693
Corporate bonds	183,646		117		(5,894		)	177,869
Asset-backed securities	52,405		55		(1,065		)	51,395
Sovereign bonds	20,944		147		(8		)	21,083
Agency bonds	5,930		—		(15		)	5,915
	$	606,390	$	3,736	$	(8,048	)	$	602,078

Gross Unrealized Losses and Fair Values for Available-for-Sale Investments

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 29, 2020 (in thousands):

	Unrealized Loss Position For:
	Less than 12 Months					12 Months or Greater					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Corporate bonds	$	195,755	$	(6,337	)	$	1,146	$	(44	)	$	196,901	$	(6,381	)
Asset-backed securities	108,932		(1,640		)	674		(4		)	109,606		(1,644		)
Sovereign bonds	13,662		(8		)	—		—			13,662		(8		)
Agency bonds	3,123		(6		)	2,792		(9		)	5,915		(15		)
	$	321,472	$	(7,991	)	$	4,612	$	(57	)	$	326,084	$	(8,048	)

Schedule of Allowance for Credit Loss Activity

The following table summarizes the allowance for credit losses activity for the three-month period ended March 29, 2020 (in thousands):

Balance as of December 31, 2019	$	—
Increases to the allowance for credit losses	160
Write-offs	—
Balance as of March 29, 2020	$	160

Effective Maturity Dates of Available-for-Sale Investments

The following table presents the effective maturity dates of the Company’s available-for-sale investments as of March 29, 2020 (in thousands):

	<1 year		1-2 Years		2-3 Years		3-4 Years		4-5 Years		Total
Corporate bonds	$	54,937	$	87,940	$	80,663	$	9,266	$	—	$	232,806
Treasury bills	19,763		101,648		89,045		—		—		210,456
Asset-backed securities	69,956		10,436		33,206		3,393		4,360		121,351
Sovereign bonds	3,487		21,083		—		—		—		24,570
Municipal bonds	6,980		—		—		—		—		6,980
Agency bonds	—		—		5,915		—		—		5,915
	$	155,123	$	221,107	$	208,829	$	12,659	$	4,360	$	602,078

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Weighted-Average Shares

3 Months Ended

Mar. 29, 2020

Earnings Per Share [Abstract]

Weighted-Average Shares

Weighted-Average Shares

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

	Three-months Ended
	March 29, 2020	March 31, 2019
Basic weighted-average common shares outstanding	172,408	171,098
Effect of dilutive equity awards	3,194	4,509
Weighted-average common and common-equivalent shares outstanding	175,602	175,607

Stock options to purchase 6,273,000 and 4,832,000 shares of common stock, on a weighted-average basis, were outstanding during the three-month periods ended March 29, 2020 and March 31, 2019, respectively, but were not included in the calculation of dilutive net income per share because they were anti-dilutive. There were no anti-dilutive

restricted stock units outstanding, on a weighted-average basis, during the three-month periods ended March 29, 2020 and March 31, 2019, respectively.

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Revenue Recognition

3 Months Ended

Mar. 29, 2020

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Revenue Recognition

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

	Three-months Ended
	March 29, 2020		March 31, 2019
Americas	$	60,247	$	64,770
Europe	48,582		59,539
Greater China	26,403		22,816
Other Asia	32,003		26,359
	$	167,235	$	173,484

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

	Three-months Ended
	March 29, 2020		March 31, 2020
Standard products and services	$	152,854	$	161,052
Application-specific customer solutions	14,381		12,432
	$	167,235	$	173,484

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 $5,835,000 and $3,963,000 as of March 29, 2020 and December 31, 2019, respectively.

Accounts Receivable, Contract Assets, and Contract Liabilities

Accounts receivable represent amounts billed and currently due from customers which are reported at their net estimated realizable value. The Company maintains an allowance against its accounts receivable for potential credit losses. Contract assets consist of unbilled revenue which arises when revenue is recognized in advance of billing for

certain application-specific customer solutions contracts. 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.

On January 1, 2020, the Company adopted Accounting Standards Update (ASU) 2016-13, “Measurement of Credit Losses on Financial Instruments,” using the modified-retrospective approach, which requires the Company to apply the standard on a prospective basis with a cumulative-effect adjustment to retained earnings as of the beginning of the period in which the guidance is effective. The Company did not record an adjustment to retained earnings as this ASU did not have a material impact on the Company's consolidated allowance for credit losses.

The Company recorded credit losses on accounts receivable of $300,000 for the three-month period ended March 29, 2020. No credit losses on accounts receivables were recorded during the three-month period ended March 31, 2019.

The following table summarizes the allowance for credit losses activity for the three-month period ended March 29, 2020 (in thousands):

Balance as of December 31, 2019	$	530
Increases to the allowance for credit losses	300
Write-offs	(64		)
Foreign exchange rate changes	5
Balance as of March 29, 2020	$	771

The following table summarizes the deferred revenue and customer deposits activity for the three-month period ended March 29, 2020 (in thousands):

Balance as of December 31, 2019	$	14,432
Increases to deferred revenue and customer deposits	24,625
Recognition of revenue	(12,670		)
Foreign exchange rate changes	(135		)
Balance as of March 29, 2020	$	26,252

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.

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Goodwill (Notes)

3 Months Ended

Mar. 29, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

Goodwill

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

Balance as of December 31, 2019	$	243,445
Foreign exchange rate changes	(1,231		)
Balance as of March 29, 2020	$	242,214

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Fair Value Measurements

3 Months Ended

Mar. 29, 2020

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

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 March 29, 2020 (in thousands):

	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant  Other Observable Inputs (Level 2)		Unobservable Inputs (Level 3)
Assets:
Money market instruments	$	13,990	$	—	$	—
Corporate bonds	—		232,806
Treasury bills	—		210,456		—
Asset-backed securities	—		121,351		—
Sovereign bonds	—		24,570		—
Municipal bonds	—		6,980
Agency bonds	—		5,915		—
Certificate of deposit			4,121
Economic hedge forward contracts	—		131		—
Liabilities:
Economic hedge forward contracts	—		703		—
Contingent consideration liabilities	—		—		1,153

The Company’s money market instruments are reported at fair value based upon the daily market price for identical assets in active markets, and are therefore classified as Level 1.

The Company’s debt securities and forward contracts are reported at fair value based upon model-driven valuations in which all significant inputs are observable or can be derived from or corroborated by observable market data for substantially the full term of the asset or liability, and are therefore classified as Level 2. Management is responsible for estimating the fair value of these financial assets and liabilities, and in doing so, considers valuations provided by a large, third-party pricing service. For debt securities, this service maintains regular contact with market makers, brokers, dealers, and analysts to gather information on market movement, direction, trends, and other specific data. They use this information to structure yield curves for various types of debt securities and arrive at the daily valuations. The Company's forward contracts are typically traded or executed in over-the-counter markets with a high degree of pricing transparency. The market participants are generally large commercial banks. The Company's certificate of deposit is valued at cost, which approximates fair value given its short term to maturity.

The Company recorded credit losses on debt securities totaling $160,000 during the three-month period ended March 29, 2020. No credit losses were recorded during the three-month period ended March 31, 2019.

The Company's contingent consideration liabilities are reported at fair value based upon probability-adjusted present values of the consideration expected to be paid using significant inputs that are not observable in the market and are therefore classified as Level 3. Key assumptions used in these estimates include probability assessments with respect to the likelihood of achieving certain revenue milestones. The fair values of these contingent consideration liabilities were calculated using discount rates consistent with the level of risk of achievement, and are remeasured each reporting period with changes in fair value recorded in "Other income (expense)" on the Consolidated Statements of Operations.

The Company currently has two contingent consideration liabilities related to the Chiaro Technologies, LLC ("Chiaro") and GVi Ventures, Inc. ("GVi") acquisitions. The fair value of the Chiaro contingent consideration liability was $1,153,000 as of March 29, 2020 and December 31, 2019. The undiscounted potential outcomes related to future contingent consideration range from $0 to $1,250,000 based upon certain milestone revenue levels to be paid in 2020 if earned. The GVi contingent consideration liability was written down to zero as of December 31, 2019 resulting from a lower level of revenue in the Americas' automotive industry, and the balance remains at zero as of March 29, 2020. The undiscounted potential outcomes related to future contingent consideration range from $0 to $2,500,000 based upon certain revenue levels over the next two years.

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

Non-financial assets such as property, plant and equipment, goodwill, and intangible assets are required to be measured at fair value only when an impairment loss is recognized. The Company did not record an impairment charge related to these assets during the three-month periods ended March 29, 2020 and March 31, 2019.

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Goodwill (Tables)

3 Months Ended

Mar. 29, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill

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

Balance as of December 31, 2019	$	243,445
Foreign exchange rate changes	(1,231		)
Balance as of March 29, 2020	$	242,214

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Revenue Recognition (Tables)

3 Months Ended

Mar. 29, 2020

Revenue from Contract with Customer [Abstract]

Revenue from External Customers by Geographic Areas

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

	Three-months Ended
	March 29, 2020		March 31, 2019
Americas	$	60,247	$	64,770
Europe	48,582		59,539
Greater China	26,403		22,816
Other Asia	32,003		26,359
	$	167,235	$	173,484

Revenue from External Customers by Products and Services

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

	Three-months Ended
	March 29, 2020		March 31, 2020
Standard products and services	$	152,854	$	161,052
Application-specific customer solutions	14,381		12,432
	$	167,235	$	173,484

Schedule of Allowance for Credit Loss Activity

The following table summarizes the allowance for credit losses activity for the three-month period ended March 29, 2020 (in thousands):

Balance as of December 31, 2019	$	530
Increases to the allowance for credit losses	300
Write-offs	(64		)
Foreign exchange rate changes	5
Balance as of March 29, 2020	$	771

Deferred Revenue, by Arrangement, Disclosure

The following table summarizes the deferred revenue and customer deposits activity for the three-month period ended March 29, 2020 (in thousands):

Balance as of December 31, 2019	$	14,432
Increases to deferred revenue and customer deposits	24,625
Recognition of revenue	(12,670		)
Foreign exchange rate changes	(135		)
Balance as of March 29, 2020	$	26,252

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Fair Value Measurements - Assets and Liabilities Measured at Fair Value on a Recurring Basis (Detail) - USD ($) $ in Thousands	Mar. 29, 2020	Dec. 31, 2019
Assets:
Money market instruments	$ 13,990	$ 15,933
Financial assets at fair value	602,078
Corporate Bonds
Assets:
Financial assets at fair value	232,806
Treasury Bills
Assets:
Financial assets at fair value	210,456
Asset-Backed Securities
Assets:
Financial assets at fair value	121,351
Sovereign Bonds
Assets:
Financial assets at fair value	24,570
Agency Bonds
Assets:
Financial assets at fair value	5,915
Municipal Bonds
Assets:
Financial assets at fair value	6,980
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair Value, Measurements, Recurring
Assets:
Money market instruments	13,990
Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Certificate Of Deposit, Fair Value Disclosure	4,121
Assets:
Money market instruments	0
Economic hedge forward contracts	131
Liabilities:
Economic hedge forward contracts	703
Contingent consideration liabilities	0
Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Recurring | Corporate Bonds
Assets:
Financial assets at fair value	232,806
Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Recurring | Treasury Bills
Assets:
Financial assets at fair value	210,456
Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Recurring | Asset-Backed Securities
Assets:
Financial assets at fair value	121,351
Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Recurring | Sovereign Bonds
Assets:
Financial assets at fair value	24,570
Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Recurring | Agency Bonds
Assets:
Financial assets at fair value	5,915
Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Recurring | Municipal Bonds
Assets:
Financial assets at fair value	6,980
Fair Value, Inputs, Level 3 | Fair Value, Measurements, Recurring
Liabilities:
Contingent consideration liabilities	$ 1,153	$ 1,153

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Derivative Instruments - Derivative Instruments, Gain (Loss) (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 29, 2020	Mar. 31, 2019
Not Designated as Hedging Instrument | Foreign Currency Gain (Loss)
Derivative Instruments, Gain (Loss) [Line Items]
Gains (losses) recognized in current operations	$ (8,240)	$ 505

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Derivative Instruments (Detail)	3 Months Ended
	Mar. 29, 2020
Not Designated as Hedging Instrument
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Remaining maturity of foreign currency derivatives (up to)	45 days

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Leases - Future Minimum Rental Receipts Under Non-cancelable Lease Agreements (Details) $ in Thousands	Mar. 29, 2020 USD ($)
Leases [Abstract]
Remainder of fiscal 2020	$ 230
2021	307
2022	307
Total	$ 844

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Weighted-Average Shares - Calculation of Weighted-Average Shares (Detail) - shares shares in Thousands	3 Months Ended
	Mar. 29, 2020	Mar. 31, 2019
Earnings Per Share [Abstract]
Basic weighted-average common shares outstanding	172,408	171,098
Effect of dilutive equity awards	3,194	4,509
Weighted-average common and common-equivalent shares outstanding	175,602	175,607

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Intangible Assets

3 Months Ended

Mar. 29, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

Intangible Assets

Amortized intangible assets consisted of the following (in thousands):

	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
Distribution networks	$	38,060	$	38,060	$	—
Completed technologies	31,987		10,154		21,833
Customer relationships	14,407		6,738		7,669
In-process technologies	8,200		—		8,200
Non-compete agreements	710		395		315
Trademarks	110		25		85
Balance as of March 29, 2020	$	93,474	$	55,372	$	38,102
	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
Distribution networks	$	38,060	$	38,060	$	—
Completed technologies	31,987		9,160		22,827
Customer relationships	14,407		6,402		8,005
In-process technologies	8,200		—		8,200
Non-compete agreements	710		350		360
Trademarks	110		12		98
Balance as of December 31, 2019	$	93,474	$	53,984	$	39,490

In connection with the acquisition of Sualab Co., Ltd. ("Sualab") in the fourth quarter of 2019, the Company acquired in-process technologies valued at $8,200,000. In-process technology is an indefinite-lived intangible asset until the technology is finalized, at which point it is amortized over its estimated useful life.

As of March 29, 2020, estimated future amortization expense related to intangible assets is as follows (in thousands):

Year Ended December 31,	Amount
Remainder of fiscal 2020	$	4,023
2021	5,232
2022	4,862
2023	4,160
2024	3,593
2025	3,270
Thereafter	4,762
	$	29,902

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Cash, Cash Equivalents, and Investments

3 Months Ended

Mar. 29, 2020

Cash and Cash Equivalents [Abstract]

Cash, Cash Equivalents, and Investments

Cash, Cash Equivalents, and Investments

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

	March 29, 2020		December 31, 2019
Cash	$	225,207	$	155,498
Money market instruments	13,990		15,933
Cash and cash equivalents	239,197		171,431
Asset-backed securities	69,956		66,680
Corporate bonds	54,937		65,624
Treasury bills	19,763		92,914
Municipal bonds	6,980		4,630
Certificate of deposit	4,121		4,328
Sovereign bonds	3,487		6,294
Current investments	159,244		240,470
Treasury bills	190,693		216,334
Corporate bonds	177,869		146,474
Asset-backed securities	51,395		46,403
Sovereign bonds	21,083		16,005
Agency bonds	5,915		5,914
Municipal bonds	—		2,322
Non-current investments	446,955		433,452
	$	845,396	$	845,353

Asset-backed securities consist of debt securities collateralized by pools of receivables or loans with credit enhancement; corporate bonds consist of debt securities issued by both domestic and foreign companies; treasury bills consist of debt securities issued by the U.S. government; municipal bonds consist of debt securities issued by state and local government entities; certificates of deposit are time deposits held by financial institutions with a fixed interest rate; sovereign bonds consist of direct debt issued by foreign governments; and agency bonds consist of domestic or foreign obligations of government agencies and government-sponsored enterprises that have government backing. All securities are denominated in U.S. Dollars and the certificate of deposit is denominated in Korean Won.

On January 1, 2020, the Company adopted Accounting Standards Update (ASU) 2016-13, “Measurement of Credit Losses on Financial Instruments,” using the modified-retrospective approach, which requires the Company to apply the standard on a prospective basis with a cumulative-effect adjustment to retained earnings as of the beginning of the period in which the guidance is effective. The Company did not record an adjustment to retained earnings, as there were no debt securities with credit losses as of the adoption date.

The following table summarizes the Company’s available-for-sale investments as of March 29, 2020 (in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Current:
Asset-backed securities	$	70,510	$	25	$	(579	)	$	69,956
Corporate bonds	55,404		20		(487		)	54,937
Treasury bills	19,328		435		—			19,763
Municipal bonds	6,944		36		—			6,980
Sovereign bonds	3,485		2		—			3,487
Non-current:
Treasury bills	187,794		2,899		—			190,693
Corporate bonds	183,646		117		(5,894		)	177,869
Asset-backed securities	52,405		55		(1,065		)	51,395
Sovereign bonds	20,944		147		(8		)	21,083
Agency bonds	5,930		—		(15		)	5,915
	$	606,390	$	3,736	$	(8,048	)	$	602,078

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 29, 2020 (in thousands):

	Unrealized Loss Position For:
	Less than 12 Months					12 Months or Greater					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Corporate bonds	$	195,755	$	(6,337	)	$	1,146	$	(44	)	$	196,901	$	(6,381	)
Asset-backed securities	108,932		(1,640		)	674		(4		)	109,606		(1,644		)
Sovereign bonds	13,662		(8		)	—		—			13,662		(8		)
Agency bonds	3,123		(6		)	2,792		(9		)	5,915		(15		)
	$	321,472	$	(7,991	)	$	4,612	$	(57	)	$	326,084	$	(8,048	)

The Company recorded credit losses on debt securities totaling $160,000 during the three-month period ended March 29, 2020. No credit losses on debt securities were recorded during the three-month period ended March 31, 2019. Credit losses are included in "Other income (expense)" on the Consolidated Statement of Operations.

Accrued interest receivable is recorded in "Prepaid expenses and other current assets" on the Consolidated Balance Sheet and amounted to $2,268,000 and $2,874,000 as of March 29, 2020 and December 31, 2019, respectively.

In its evaluation to determine expected credit losses, management considered all available historical and current information, expectations of future economic conditions, the type of security, the credit rating of the security, and the size of the loss position, as well as other relevant information. The Company does not intend to sell, and is unlikely to be required to sell, any of these available-for-sale investments before their effective maturity or market price recovery.

The following table summarizes the allowance for credit losses activity for the three-month period ended March 29, 2020 (in thousands):

Balance as of December 31, 2019	$	—
Increases to the allowance for credit losses	160
Write-offs	—
Balance as of March 29, 2020	$	160

The Company recorded gross realized gains and gross realized losses on the sale of debt securities totaling $1,865,000 and $15,000, respectively, during the three-month period ended March 29, 2020 and $64,000 and $24,000, respectively, during the three-month period ended March 31, 2019. These gains and losses are included in "Investment income" on the Consolidated Statements of Operations. Prior to the sale of these securities, unrealized gains and losses for these debt securities, net of tax, are recorded in shareholders’ equity as accumulated other comprehensive loss.

The following table presents the effective maturity dates of the Company’s available-for-sale investments as of March 29, 2020 (in thousands):

	<1 year		1-2 Years		2-3 Years		3-4 Years		4-5 Years		Total
Corporate bonds	$	54,937	$	87,940	$	80,663	$	9,266	$	—	$	232,806
Treasury bills	19,763		101,648		89,045		—		—		210,456
Asset-backed securities	69,956		10,436		33,206		3,393		4,360		121,351
Sovereign bonds	3,487		21,083		—		—		—		24,570
Municipal bonds	6,980		—		—		—		—		6,980
Agency bonds	—		—		5,915		—		—		5,915
	$	155,123	$	221,107	$	208,829	$	12,659	$	4,360	$	602,078

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Weighted-Average Shares (Tables)

3 Months Ended

Mar. 29, 2020

Earnings Per Share [Abstract]

Calculation of Weighted-Average Shares

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

	Three-months Ended
	March 29, 2020	March 31, 2019
Basic weighted-average common shares outstanding	172,408	171,098
Effect of dilutive equity awards	3,194	4,509
Weighted-average common and common-equivalent shares outstanding	175,602	175,607

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Leases (Tables)

3 Months Ended

Mar. 29, 2020

Leases [Abstract]

Lessor, Operating Lease, Payments to be Received, Maturity [Table Text Block]

Future minimum rental receipts under non-cancelable lease agreements are as follows (in thousands):

Year Ended December 31,	Amount
Remainder of fiscal 2020	$	230
2021	307
2022	307
	$	844

Lessee, Operating Lease, Liability, Maturity

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

Year Ended December 31,	Amount
Remainder of fiscal 2020	$	5,001
2021	6,223
2022	4,739
2023	3,712
2024	1,490
2025	429
Thereafter	—
	$	21,594

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Derivative Instruments (Tables)

3 Months Ended

Mar. 29, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Outstanding Forward Contracts Table

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

	March 29, 2020			December 31, 2019
Currency	Notional Value	USD Equivalent		Notional Value	USD Equivalent
Derivatives Not Designated as Hedging Instruments:
Korean Won	130,400,000	$	107,516	161,951,500	$	139,688
Euro	37,500	41,275		18,000	20,249
Mexican Peso	180,000	7,647		80,000	4,223
Japanese Yen	600,000	5,540		575,000	5,291
British Pound	2,750	3,364		2,700	3,569
Hungarian Forint	980,000	3,026		870,000	2,962
Canadian Dollar	1,300	922		1,300	1,000
Taiwanese Dollar	22,000	735		37,450	1,256
Singapore Dollar	—	—		845	628

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value

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

	Asset Derivatives					Liability Derivatives
	Balance	Fair Value				Balance	Fair Value
	Sheet Location	March 29, 2020		December 31, 2019		Sheet Location	March 29, 2020		December 31, 2019
Derivatives Not Designated as Hedging Instruments:
Economic hedge forward contracts	Prepaid expenses and other current assets	$	131	$	857	Accrued expenses	$	703	$	23

Offsetting Assets

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
	March 29, 2020		December 31, 2019			March 29, 2020		December 31, 2019
Gross amounts of recognized assets	$	131	$	857	Gross amounts of recognized liabilities	$	703	$	23
Gross amounts offset	—		—		Gross amounts offset	—		—
Net amount of assets presented	$	131	$	857	Net amount of liabilities presented	$	703	$	23

Derivative Instruments, Gain (Loss)

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

	Location in Financial Statements	Three-months Ended
		March 29, 2020			March 31, 2019
Derivatives Not Designated as Hedging Instruments:
Gains (losses) recognized in current operations	Foreign currency gain (loss)	$	(8,240	)	$	505

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Derivative Instruments - Outstanding Forward Contracts Table (Detail) - Not Designated as Hedging Instrument € in Thousands, ₩ in Thousands, ¥ in Thousands, $ in Thousands, $ in Thousands, $ in Thousands, $ in Thousands	Mar. 29, 2020 EUR (€)	Mar. 29, 2020 CAD ($)	Mar. 29, 2020 SGD ($)	Mar. 29, 2020 JPY (¥)	Mar. 29, 2020 KRW (₩)	Mar. 29, 2020 TWD ($)	Mar. 29, 2020 USD ($)	Dec. 31, 2019 EUR (€)	Dec. 31, 2019 CAD ($)	Dec. 31, 2019 SGD ($)	Dec. 31, 2019 JPY (¥)	Dec. 31, 2019 KRW (₩)	Dec. 31, 2019 TWD ($)	Dec. 31, 2019 USD ($)
Euro Member Countries, Euro
Derivative [Line Items]
Outstanding forward contracts	€ 37,500						$ 41,275	€ 18,000						$ 20,249
Japanese Yen
Derivative [Line Items]
Outstanding forward contracts				¥ 600,000			5,540				¥ 575,000			5,291
Mexico, Pesos
Derivative [Line Items]
Outstanding forward contracts				180,000			7,647				80,000			4,223
United Kingdom, Pounds
Derivative [Line Items]
Outstanding forward contracts				2,750			3,364				2,700			3,569
Hungary, Forint
Derivative [Line Items]
Outstanding forward contracts				¥ 980,000			3,026				¥ 870,000			2,962
Korean Won
Derivative [Line Items]
Outstanding forward contracts					₩ 130,400,000		107,516					₩ 161,951,500		139,688
Taiwanese Dollar
Derivative [Line Items]
Outstanding forward contracts						$ 22,000	735						$ 37,450	1,256
Canada, Dollars
Derivative [Line Items]
Outstanding forward contracts		$ 1,300					922		$ 1,300					1,000
Singapore, Dollars
Derivative [Line Items]
Outstanding forward contracts			$ 0				$ 0			$ 845				$ 628

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Goodwill (Details) $ in Thousands	3 Months Ended
	Mar. 29, 2020 USD ($)
Goodwill [Roll Forward]
Balance as of December 31, 2019	$ 243,445
Foreign exchange rate changes	(1,231)
Balance as of December 31, 2019	$ 242,214

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Revenue Recognition - Revenue Disaggregated by Geography (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 29, 2020	Mar. 31, 2019
Disaggregation of Revenue [Line Items]
Revenue	$ 167,235	$ 173,484
Americas
Disaggregation of Revenue [Line Items]
Revenue	60,247	64,770
Europe
Disaggregation of Revenue [Line Items]
Revenue	48,582	59,539
Greater China
Disaggregation of Revenue [Line Items]
Revenue	26,403	22,816
Other Asia
Disaggregation of Revenue [Line Items]
Revenue	$ 32,003	$ 26,359

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Weighted-Average Shares (Detail) - shares	3 Months Ended
	Mar. 29, 2020	Mar. 31, 2019
Earnings Per Share [Abstract]
Stock options to purchase anti-dilutive common stock	6,273,000	4,832,000

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Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 29, 2020	Mar. 31, 2019
Income Statement [Abstract]
Revenue	$ 167,235	$ 173,484
Cost of revenue	41,200	46,284
Gross margin	126,035	127,200
Research, development, and engineering expenses	35,946	30,242
Selling, general, and administrative expenses	69,138	66,811
Operating income	20,951	30,147
Foreign currency gain (loss)	(3,003)	(248)
Investment income	5,229	4,905
Other income (expense)	(183)	927
Income before income tax expense	22,994	35,731
Income tax expense	2,517	2,627
Net Income	$ 20,477	$ 33,104
Net income per weighted-average common and common-equivalent share:
Basic (usd per share)	$ 0.12	$ 0.19
Diluted (usd per share)	$ 0.12	$ 0.19
Weighted-average common and common-equivalent shares outstanding:
Basic (shares)	172,408	171,098
Diluted (shares)	175,602	175,607
Cash dividends per common share (usd per share)	$ 0.055	$ 0.050

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Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Mar. 29, 2020	Dec. 31, 2019
Statement of Financial Position [Abstract]
Reserves for accounts receivable	$ 2,061	$ 1,821
Common stock, par value	$ 0.002	$ 0.002
Common stock, shares authorized	300,000,000	300,000,000
Common stock, shares issued	171,688,000	172,440,000

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Leases - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 29, 2020	Mar. 31, 2019	Dec. 31, 2019
Leases [Abstract]
Operating Lease, Liability	$ 17,966	$ 17,973
Operating lease, right-of-use asset	17,346		$ 17,522
Operating lease, liability, current	5,550		5,647
Operating lease, liability, noncurrent	12,416		$ 12,326
Operating lease, cost	1,906	1,485
Operating lease, payments	1,863	1,401
Lease, cost	$ 39	$ 169
Weighted average discount rate	440.00%	4.80%
Weighted average remaining lease term	3 years 8 months 12 days	4 years 1 month 6 days
Rental income	$ 77

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Fair Value Measurements (Details) - USD ($)	3 Months Ended
	Mar. 29, 2020	Mar. 31, 2019	Dec. 31, 2019
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Reclassification of credit loss on investments	$ 160,000	$ 0
Business Combination, Contingent Consideration, Liability	0		$ 0
Chiaro Technologies LLC [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Business Combination, Contingent Consideration, Liability	1,153,000
GVi Ventures, Inc. [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, Low	2,500,000
Minimum | Chiaro Technologies LLC [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, Low	0
Minimum | GVi Ventures, Inc. [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, Low	0
Maximum | Chiaro Technologies LLC [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, Low	$ 1,250,000

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Cash, Cash Equivalents, and Investments - Gross Unrealized Losses and Fair Values for Available-for-Sale Investments (Detail) $ in Thousands	Mar. 29, 2020 USD ($)
Debt Securities, Available-for-sale [Line Items]
Fair value, less than 12 months	$ 321,472
Unrealized losses, less than 12 months	(7,991)
Fair value, 12 months or greater	4,612
Unrealized losses, 12 months or greater	(57)
Total fair value	326,084
Total unrealized losses	(8,048)
Agency Bonds
Debt Securities, Available-for-sale [Line Items]
Fair value, less than 12 months	3,123
Unrealized losses, less than 12 months	(6)
Fair value, 12 months or greater	2,792
Unrealized losses, 12 months or greater	(9)
Total fair value	5,915
Total unrealized losses	(15)
Corporate Bonds
Debt Securities, Available-for-sale [Line Items]
Fair value, less than 12 months	195,755
Unrealized losses, less than 12 months	(6,337)
Fair value, 12 months or greater	1,146
Unrealized losses, 12 months or greater	(44)
Total fair value	196,901
Total unrealized losses	(6,381)
Asset-Backed Securities
Debt Securities, Available-for-sale [Line Items]
Fair value, less than 12 months	108,932
Unrealized losses, less than 12 months	(1,640)
Fair value, 12 months or greater	674
Unrealized losses, 12 months or greater	(4)
Total fair value	109,606
Total unrealized losses	(1,644)
Sovereign Bonds
Debt Securities, Available-for-sale [Line Items]
Fair value, less than 12 months	13,662
Unrealized losses, less than 12 months	(8)
Fair value, 12 months or greater	0
Unrealized losses, 12 months or greater	0
Total fair value	13,662
Total unrealized losses	$ (8)

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Stock-Based Compensation Expense Stock-Based Compensation Expense - Schedule of Restricted Stock Units (Details) - $ / shares	3 Months Ended
	Mar. 29, 2020	Mar. 31, 2019
Shares (in thousands)
Vested (in shares)		0
Restricted Stock Units (RSUs)
Shares (in thousands)
Nonvested as of December 31, 2019 (in shares)	150,000
Granted (in shares)	390,000	0
Vested (in shares)	0
Forfeited or expired (in shares)	(4,000)
Nonvested as of March 29, 2020 (in shares)	536,000
Weighted-Average Grant Date Fair Value
Nonvested as of December 31, 2019 (in dollars per share)	$ 48.63
Granted (in dollars per share)	50.94
Vested (in dollars per share)	0
Forfeited or expired (in dollars per share)	50.28
Nonvested as of March 29, 2020 (in dollars per share)	$ 50.30

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Revenue Recognition - Deferred Revenue Activity (Details) $ in Thousands	3 Months Ended
	Mar. 29, 2020 USD ($)
Movement in Deferred Revenue [Roll Forward]
Balance as of December 31, 2019	$ 14,432
Increases to deferred revenue and customer deposits	24,625
Recognition of revenue	(12,670)
Foreign exchange rate changes	(135)
Balance as of March 29, 2020	$ 26,252

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Subsequent Events

3 Months Ended

Mar. 29, 2020

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

On April 27, 2020, the Company’s Board of Directors declared a cash dividend of $0.055 per share. The dividend is payable on May 29, 2020 to all shareholders of record as of the close of business on May 15, 2020.

In April 2020, recent interpretations of a German law relating to withholding taxes on intellectual property rights have emerged.  The Company is currently evaluating this law and any related impact to its financial position or results of operations.

The COVID-19 (also referred to as "coronavirus") outbreak had a modest adverse impact on our business in the first quarter of 2020, primarily near the end of the quarter. This impact has expanded and accelerated into the second quarter, as we have noted lower demand for our products in certain industries, additional disruptions to our supply chain, longer customer delivery times, higher delivery costs, and further shutdowns of customer facilities. While it is difficult for us to quantify the duration and severity of this impact due to many factors beyond our control and knowledge, including changing governmental regulations and the scope and duration of social distancing and commerce restrictions, we expect the impact on our business to be more significant in the second quarter than the first quarter of 2020.

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Stock-Based Compensation Expense

3 Months Ended

Mar. 29, 2020

Share-based Payment Arrangement [Abstract]

Stock-Based Compensation Expense

Stock-Based Compensation Expense

Stock Plans

The Company’s stock-based awards that result in compensation expense consist of stock options and restricted stock units ("RSUs"). As of March 29, 2020, the Company had 16,115,000 shares available for grant. Stock options are granted with an exercise price equal to the market value of the Company’s common stock at the grant date and generally vest over four or five years based upon continuous service and expire ten years from the grant date. RSUs generally vest upon three years of continuous employment or incrementally over such three-year period. Participants are not entitled to dividends on RSUs.

Stock Options

The following table summarizes the Company’s stock option activity for the three-month period ended March 29, 2020:

	Shares (in thousands)		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Outstanding as of December 31, 2019	12,899		$	37.95
Granted	883		50.94
Exercised	(463	)	21.52
Forfeited or expired	(83	)	50.10
Outstanding as of March 29, 2020	13,236		$	39.32	7.12	$	113,087
Exercisable as of March 29. 2020	6,652		$	30.93	6.01	$	98,637
Options vested or expected to vest as of March 29, 2020 (1)	12,139		$	38.37	6.98	$	112,251

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

	Three-months Ended
	March 29, 2020		March 31, 2019
Risk-free rate	1.6	%	2.7	%
Expected dividend yield	0.43	%	0.39	%
Expected volatility	37	%	37	%
Expected term (in years)	6.0		5.3

Risk-free rate

The risk-free rate was based upon a treasury instrument whose term was consistent with the contractual term of the option.

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. 

Expected volatility

The expected volatility was based upon a combination of historical volatility of the Company’s common stock over the contractual term of the option and implied volatility for traded options of the Company’s stock.

Expected term

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 periods ended March 29, 2020 and March 31, 2019 were $18.46 and $18.59, respectively.

The total intrinsic values of stock options exercised for the three-month periods ended March 29, 2020 and March 31, 2019 were $14,454,000 and $22,579,000, respectively. The total fair values of stock options vested for the three-month periods ended March 29, 2020 and March 31, 2019 were $36,664,000 and $29,972,000, respectively.

Restricted Stock Units (RSUs)

The following table summarizes the Company's RSUs activity for the three-month period ended March 29, 2020:

	Shares (in thousands)		Weighted-Average Grant Date Fair Value
Nonvested as of December 31, 2019	150		$	48.63
Granted	390		50.94
Vested	—		—
Forfeited or expired	(4	)	50.28
Nonvested as of March 29, 2020	536		$	50.30

The weighted-average grant-date fair values of RSUs granted during the three-month period ended March 29, 2020 was $50.94. There were no RSUs that vested during the three-month period ended March 29, 2020. There were no RSUs granted or vested during the three-month period ended March 31, 2019.

Stock-Based Compensation Expense

The Company stratifies its employee population into two groups: one consisting of senior management and another consisting of all other employees. The Company currently applies an estimated annual forfeiture rate of 7% to all equity awards for senior management and a rate of 12% for all other employees. Each year during the first quarter, the Company revises its forfeiture rate. This resulted in an increase to compensation expense of $1,787,000 in 2020 and a decrease to compensation expense of $499,000 in 2019.

As of March 29, 2020, total unrecognized compensation expense related to non-vested equity awards, including stock options and RSUs, was $72,823,000, which is expected to be recognized over a weighted-average period of 2.21 years.

The total stock-based compensation expense and the related income tax benefit recognized for the three-month period ended March 29, 2020 were $14,790,000 and $2,564,000, respectively, and for the three-month period ended March 31, 2019 were $12,281,000 and $2,222,000, respectively. No compensation expense was capitalized as of March 29, 2020 or December 31, 2019.

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
	March 29, 2020		March 31, 2019
Cost of revenue	$	354	$	451
Research, development, and engineering	5,366		4,467
Selling, general, and administrative	9,070		7,363
	$	14,790	$	12,281

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Inventories (Tables)

3 Months Ended

Mar. 29, 2020

Inventory Disclosure [Abstract]

Schedule of Inventories

Inventories consisted of the following (in thousands):

	March 29, 2020		December 31, 2019
Raw materials	$	23,246	$	27,285
Work-in-process	6,034		5,503
Finished goods	25,705		27,473
	$	54,985	$	60,261

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Intangible Assets (Tables)

3 Months Ended

Mar. 29, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Intangible Assets

Amortized intangible assets consisted of the following (in thousands):

	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
Distribution networks	$	38,060	$	38,060	$	—
Completed technologies	31,987		10,154		21,833
Customer relationships	14,407		6,738		7,669
In-process technologies	8,200		—		8,200
Non-compete agreements	710		395		315
Trademarks	110		25		85
Balance as of March 29, 2020	$	93,474	$	55,372	$	38,102
	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
Distribution networks	$	38,060	$	38,060	$	—
Completed technologies	31,987		9,160		22,827
Customer relationships	14,407		6,402		8,005
In-process technologies	8,200		—		8,200
Non-compete agreements	710		350		360
Trademarks	110		12		98
Balance as of December 31, 2019	$	93,474	$	53,984	$	39,490

Schedule of Intangible Assets, Future Amortization Expense

As of March 29, 2020, estimated future amortization expense related to intangible assets is as follows (in thousands):

Year Ended December 31,	Amount
Remainder of fiscal 2020	$	4,023
2021	5,232
2022	4,862
2023	4,160
2024	3,593
2025	3,270
Thereafter	4,762
	$	29,902

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Stock-Based Compensation Expense (Tables)

3 Months Ended

Mar. 29, 2020

Share-based Payment Arrangement [Abstract]

Summary of Stock Option Activity

The following table summarizes the Company’s stock option activity for the three-month period ended March 29, 2020:

	Shares (in thousands)		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Outstanding as of December 31, 2019	12,899		$	37.95
Granted	883		50.94
Exercised	(463	)	21.52
Forfeited or expired	(83	)	50.10
Outstanding as of March 29, 2020	13,236		$	39.32	7.12	$	113,087
Exercisable as of March 29. 2020	6,652		$	30.93	6.01	$	98,637
Options vested or expected to vest as of March 29, 2020 (1)	12,139		$	38.37	6.98	$	112,251

 (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.

Weighted-Average Assumptions Used in Estimating Fair Values of Stock Options Granted

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

	Three-months Ended
	March 29, 2020		March 31, 2019
Risk-free rate	1.6	%	2.7	%
Expected dividend yield	0.43	%	0.39	%
Expected volatility	37	%	37	%
Expected term (in years)	6.0		5.3

Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs

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
	March 29, 2020		March 31, 2019
Cost of revenue	$	354	$	451
Research, development, and engineering	5,366		4,467
Selling, general, and administrative	9,070		7,363
	$	14,790	$	12,281

Schedule of Nonvested Restricted Stock Units Activity

The following table summarizes the Company's RSUs activity for the three-month period ended March 29, 2020:

	Shares (in thousands)		Weighted-Average Grant Date Fair Value
Nonvested as of December 31, 2019	150		$	48.63
Granted	390		50.94
Vested	—		—
Forfeited or expired	(4	)	50.28
Nonvested as of March 29, 2020	536		$	50.30

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Derivative Instruments

3 Months Ended

Mar. 29, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

Derivative Instruments

The Company’s foreign currency risk management strategy is principally designed to mitigate the potential financial impact of changes in the value of transactions and balances denominated in foreign currencies resulting from changes in foreign currency exchange rates. Currently, the Company enters into economic hedges to manage this risk. The economic hedges utilize foreign currency forward contracts with maturities of up to 45 days to manage the exposure to fluctuations in foreign currency exchange rates arising primarily from foreign-denominated receivables and payables. The gains and losses on these derivatives are intended to be offset by the changes in the fair value of the assets and liabilities being hedged. These economic hedges are not designated as hedging instruments for hedge accounting treatment.

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

	March 29, 2020			December 31, 2019
Currency	Notional Value	USD Equivalent		Notional Value	USD Equivalent
Derivatives Not Designated as Hedging Instruments:
Korean Won	130,400,000	$	107,516	161,951,500	$	139,688
Euro	37,500	41,275		18,000	20,249
Mexican Peso	180,000	7,647		80,000	4,223
Japanese Yen	600,000	5,540		575,000	5,291
British Pound	2,750	3,364		2,700	3,569
Hungarian Forint	980,000	3,026		870,000	2,962
Canadian Dollar	1,300	922		1,300	1,000
Taiwanese Dollar	22,000	735		37,450	1,256
Singapore Dollar	—	—		845	628

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

	Asset Derivatives					Liability Derivatives
	Balance	Fair Value				Balance	Fair Value
	Sheet Location	March 29, 2020		December 31, 2019		Sheet Location	March 29, 2020		December 31, 2019
Derivatives Not Designated as Hedging Instruments:
Economic hedge forward contracts	Prepaid expenses and other current assets	$	131	$	857	Accrued expenses	$	703	$	23

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
	March 29, 2020		December 31, 2019			March 29, 2020		December 31, 2019
Gross amounts of recognized assets	$	131	$	857	Gross amounts of recognized liabilities	$	703	$	23
Gross amounts offset	—		—		Gross amounts offset	—		—
Net amount of assets presented	$	131	$	857	Net amount of liabilities presented	$	703	$	23

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

	Location in Financial Statements	Three-months Ended
		March 29, 2020			March 31, 2019
Derivatives Not Designated as Hedging Instruments:
Gains (losses) recognized in current operations	Foreign currency gain (loss)	$	(8,240	)	$	505

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Leases

3 Months Ended

Mar. 29, 2020

Leases [Abstract]

Leases

Leases

The Company's leases are primarily leased properties across different worldwide locations where the Company conducts its operations. All of these leases are classified as operating leases. Certain leases may contain options to extend or terminate the lease at the Company's sole discretion. There were no options to extend or terminate that were included in the determination of the lease term for the leases outstanding as of March 29, 2020. 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 the leases outstanding as of March 29, 2020.

The total operating lease expense for the three-month periods ended March 29, 2020 and March 31, 2019 was $1,906,000 and $1,485,000, respectively. The total operating lease cash payments for the three-month periods ended March 29, 2020 and March 31, 2019 were $1,863,000 and $1,401,000, 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 was $39,000 and $169,000 for the three-month periods ended March 29, 2020 and March 31, 2019, respectively.

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

Year Ended December 31,	Amount
Remainder of fiscal 2020	$	5,001
2021	6,223
2022	4,739
2023	3,712
2024	1,490
2025	429
Thereafter	—
	$	21,594

The discounted present value of the future lease cash payments resulted in a lease liability of $17,966,000 and $17,973,000 as of March 29, 2020 and December 31, 2019, respectively. The Company did not have any leases that had not yet commenced but that created significant rights and obligations as of March 29, 2020 or March 31, 2019.

The weighted-average discount rate was 4.4% and 4.8% for the leases outstanding as of March 29, 2020 and March 31, 2019, respectively. The weighted-average remaining lease term was 3.7 and 4.1 for the leases outstanding as of March 29, 2020 and March 31, 2019, respectively.

The Company owns a building adjacent to its corporate headquarters that is partially occupied by a tenant who has a lease agreement that will expire in 2022. Rental income was $77,000 for both periods ended March 29, 2020 and March 31, 2019, respectively.

Future minimum rental receipts under non-cancelable lease agreements are as follows (in thousands):

Year Ended December 31,	Amount
Remainder of fiscal 2020	$	230
2021	307
2022	307
	$	844

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New Pronouncements

3 Months Ended

Mar. 29, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

New Pronouncements

New Pronouncements

Accounting Standards Update (ASU) 2019-12, "Simplifying the Accounting for Income Taxes"

ASU 2019-12 applies to all entities within the scope of Topic 740, Income Taxes. The amendments in this ASU simplify the accounting for income taxes by removing the following exceptions: 1) exception to the incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income or a gain from other items; 2) exception to the requirement to recognize a deferred tax liability for equity method investments when a foreign subsidiary becomes an equity method investment; 3) exception to the ability not to recognize a deferred tax liability for a foreign subsidiary when a foreign equity method investment becomes a subsidiary; and 4) exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. The amendments in this ASU also simplify the accounting for income taxes by doing the following: 1) requiring that an entity recognize a franchise tax that is partially based on income as an income-based tax and account for any incremental amount incurred as a non-income-based tax; 2) requiring that an entity evaluate when a step up in the tax basis of goodwill should be considered part of the business combination in which the book goodwill was originally recognized and when it should be considered a separate transaction; 3) specifying that an entity is not required to allocate the consolidated amount of current and deferred tax expense to a legal entity that is not subject to tax in its separate financial statements; and 4) requiring that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that included the enacted date. The amendments in this ASU are effective for public companies for annual periods, and interim periods within those annual periods, beginning after December 15, 2020. Early adoption is permitted; however, an entity that elects to early adopt the amendments must adopt all the amendments in the same period. The amendments in this ASU related to separate financial statements of legal entities that are not subject to tax should be applied on a retrospective basis for all periods presented. The amendments related to changes in ownership of foreign equity method investments or foreign subsidiaries should be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. The amendments related to franchise taxes that are partially based on income should be applied on either a retrospective basis for all periods presented or a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. All other amendments should be applied on a prospective basis. Management does not expect ASU 2019-12 to have a material impact on the Company's consolidated financial statements and disclosures.

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

The amendments in this ASU 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. The amendments in this ASU 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, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. The amendments in this ASU are effective for all entities as of March 12, 2020 through December 31, 2022. Management does not expect ASU 2020-04 to have a material impact on the Company's consolidated financial statements and disclosures.

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Income Taxes - Reconciliation of United States Federal Statutory Corporate Tax Rate to Company's Effective Tax Rate, or Income Tax Provision (Detail)	3 Months Ended
	Mar. 29, 2020	Mar. 31, 2019
Income Tax Disclosure [Abstract]
Income tax expense at U.S. federal statutory corporate tax rate	21.00%	21.00%
State income taxes, net of federal benefit	1.00%	1.00%
Foreign tax rate differential	(6.00%)	(9.00%)
Tax credit	(1.00%)	0.00%
Discrete tax benefit related to stock options	(7.00%)	(8.00%)
Other discrete tax events	1.00%	0.00%
Other	2.00%	2.00%
Income tax expense	11.00%	7.00%

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Subsequent Events (Details)	Apr. 27, 2020 USD ($)
Subsequent Event
Subsequent Event [Line Items]
Dividends (in dollars per share)	$ 0.055

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Derivative Instruments - Offsetting Assets (Detail) - USD ($) $ in Thousands	Mar. 29, 2020	Dec. 31, 2019
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Gross amounts of recognized assets	$ 131	$ 857
Gross amounts offset	0	0
Net amount of assets presented	131	857
Gross amounts of recognized liabilities	703	23
Gross amounts offset	0	0
Net amount of liabilities presented	$ 703	$ 23

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Warranty Obligations - Changes in Warranty Obligations (Detail) $ in Thousands	3 Months Ended
	Mar. 29, 2020 USD ($)
Movement in Standard Product Warranty Accrual [Roll Forward]
Beginning balance	$ 4,713
Provisions for warranties issued during the period	725
Fulfillment of warranty obligations	(419)
Ending balance	$ 5,019

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Stock Repurchase Program (Detail) - USD ($) shares in Thousands	3 Months Ended
	Mar. 29, 2020	Mar. 12, 2020	Oct. 29, 2018
Equity, Class of Treasury Stock [Line Items]
Remaining authorized repurchase amount	$ 78,652,000
Stock repurchased during period, value	$ 51,036,000
Repurchase Program October 2018
Equity, Class of Treasury Stock [Line Items]
Authorized common stock to be repurchased			$ 200,000,000
Share repurchased (in shares)	2,816
Shares repurchased, value	$ 121,348,000
Repurchase of common stock (in shares)	1,215
Stock repurchased during period, value	$ 51,036,000
Repurchase Program March 2020
Equity, Class of Treasury Stock [Line Items]
Authorized common stock to be repurchased		$ 200,000,000

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Stock-Based Compensation Expense - Summary of Stock Option Activity (Detail) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 29, 2020 USD ($) $ / shares shares
Shares (in thousands)
Outstanding, shares | shares	12,899
Granted, shares | shares	883
Exercised, shares | shares	(463)
Forfeited or expired, shares | shares	(83)
Outstanding, shares | shares	13,236
Exercisable as of reporting date, shares | shares	6,652
Options vested or expected to vest as of reporting date, shares | shares	12,139
Weighted- Average Exercise Price
Outstanding, shares | $ / shares	$ 37.95
Granted, in dollars per share | $ / shares	50.94
Exercised, in dollars per share | $ / shares	21.52
Forfeited or expired, in dollars per share | $ / shares	50.10
Outstanding, shares | $ / shares	39.32
Exercisable as of reporting date, Weighted-Average Exercise Price, in dollars per share | $ / shares	30.93
Weighted- Average Remaining Contractual Term (in years) | $ / shares	$ 38.37
Weighted- Average Remaining Contractual Term (in years)
Outstanding, in years	7 years 1 month 13 days
Exercisable, in years	6 years 3 days
Options vested or expected to vest, in years	6 years 11 months 23 days
Aggregate Intrinsic Value (in thousands)
Outstanding, in dollars | $	$ 113,087
Exercisable, in dollars | $	98,637
Options vested or expected to vest, in dollars | $	$ 112,251

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Revenue Recognition - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 29, 2020	Dec. 31, 2019
Revenue from Contract with Customer [Abstract]
Costs to fulfill contract	$ 5,835	$ 3,963
Credit losses on accounts receivable	$ 300

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Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 29, 2020	Mar. 31, 2019
Statement of Comprehensive Income [Abstract]
Tax effect on cash flow hedges	$ 0	$ 0
Tax effect of unrealized gain (loss) on available-for-sale investments	(952)	268
Tax effect of foreign currency translation adjustment	$ 0	$ 0

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Cash, Cash Equivalents, and Investments - Components of Cash, Cash Equivalents, and Investments (Detail) - USD ($) $ in Thousands	Mar. 29, 2020	Dec. 31, 2019
Debt Securities, Available-for-sale [Line Items]
Cash	$ 225,207	$ 155,498
Money market instruments	13,990	15,933
Cash and cash equivalents	239,197	171,431
Current investments	159,244	240,470
Non-current investments	446,955	433,452
Total	845,396	845,353
Treasury Bills
Debt Securities, Available-for-sale [Line Items]
Current investments	19,763	92,914
Long-term investments	190,693	216,334
Corporate Bonds
Debt Securities, Available-for-sale [Line Items]
Current investments	54,937	65,624
Long-term investments	177,869	146,474
Asset-Backed Securities
Debt Securities, Available-for-sale [Line Items]
Current investments	69,956	66,680
Long-term investments	51,395	46,403
Certificate of deposit
Debt Securities, Available-for-sale [Line Items]
Current investments	4,121	4,328
Sovereign bonds
Debt Securities, Available-for-sale [Line Items]
Current investments	3,487	6,294
Sovereign Bonds
Debt Securities, Available-for-sale [Line Items]
Long-term investments	21,083	16,005
Agency Bonds
Debt Securities, Available-for-sale [Line Items]
Long-term investments	5,915	5,914
Municipal Bonds
Debt Securities, Available-for-sale [Line Items]
Current investments	6,980	4,630
Long-term investments	$ 0	$ 2,322

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Cash, Cash Equivalents, and Investments - Effective Maturity Dates of Available-for-Sale Investments (Detail) $ in Thousands	Mar. 29, 2020 USD ($)
Debt Securities, Available-for-sale [Line Items]
1 year or less	$ 155,123
1-2 years	221,107
2-3 years	208,829
3-4 years	12,659
4-5 years	4,360
Fair value	602,078
Corporate Bonds
Debt Securities, Available-for-sale [Line Items]
1 year or less	54,937
1-2 years	87,940
2-3 years	80,663
3-4 years	9,266
4-5 years	0
Fair value	232,806
Treasury Bills
Debt Securities, Available-for-sale [Line Items]
1 year or less	19,763
1-2 years	101,648
2-3 years	89,045
3-4 years	0
4-5 years	0
Fair value	210,456
Asset-Backed Securities
Debt Securities, Available-for-sale [Line Items]
1 year or less	69,956
1-2 years	10,436
2-3 years	33,206
3-4 years	3,393
4-5 years	4,360
Fair value	121,351
Sovereign Bonds
Debt Securities, Available-for-sale [Line Items]
1 year or less	3,487
1-2 years	21,083
2-3 years	0
3-4 years	0
4-5 years	0
Fair value	24,570
Agency Bonds
Debt Securities, Available-for-sale [Line Items]
1 year or less	0
1-2 years	0
2-3 years	5,915
3-4 years	0
4-5 years	0
Fair value	5,915
Municipal Bonds
Debt Securities, Available-for-sale [Line Items]
1 year or less	6,980
1-2 years	0
2-3 years	0
3-4 years	0
4-5 years	0
Fair value	$ 6,980

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Consolidated Statement of Shareholders' Equity - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Loss
Beginning Balance (in shares) at Dec. 31, 2018		170,820
Beginning Balance at Dec. 31, 2018	$ 1,135,263	$ 342	$ 529,208	$ 646,214	$ (40,501)
Increase (Decrease) in Stockholders' Equity
Issuance of common stock under stock plans (in shares)		717
Issuance of common stock under stock plans	14,346	$ 1	14,345
Stock-based compensation expense	12,281		12,281
Payment of dividends	(8,564)			(8,564)
Net income	33,104			33,104
Net unrealized gain (loss) on available-for-sale investments, net of tax of ($82)	2,251				2,251
Reclassification of credit loss on investments	0
Reclassification of net realized (gain) loss on the sale of available-for-sale investments	(40)				(40)
Foreign currency translation adjustment	218				218
Ending Balance (in shares) at Mar. 31, 2019		171,537
Ending Balance at Mar. 31, 2019	$ 1,188,859	$ 343	555,834	670,754	(38,072)
Beginning Balance (in shares) at Dec. 31, 2019	172,440	172,440
Beginning Balance at Dec. 31, 2019	$ 1,355,710	$ 345	639,372	753,268	(37,275)
Increase (Decrease) in Stockholders' Equity
Issuance of common stock under stock plans (in shares)		463
Issuance of common stock under stock plans	9,971	$ 1	9,970
Repurchase of common stock (in shares)		(1,215)
Repurchase of common stock	(51,036)	$ (2)		(51,034)
Stock-based compensation expense	14,790		14,790
Payment of dividends	(9,503)			(9,503)
Net income	20,477			20,477
Net unrealized gain (loss) on available-for-sale investments, net of tax of ($82)	(3,861)				(3,861)
Reclassification of credit loss on investments	(160)				160
Reclassification of net realized (gain) loss on the sale of available-for-sale investments	(1,850)				(1,850)
Foreign currency translation adjustment	$ (7,365)				(7,365)
Ending Balance (in shares) at Mar. 29, 2020	171,688	171,688
Ending Balance at Mar. 29, 2020	$ 1,327,493	$ 344	$ 664,132	$ 713,208	$ (50,191)

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 29, 2020

Fair Value Disclosures [Abstract]

Assets and Liabilities 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 March 29, 2020 (in thousands):

	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant  Other Observable Inputs (Level 2)		Unobservable Inputs (Level 3)
Assets:
Money market instruments	$	13,990	$	—	$	—
Corporate bonds	—		232,806
Treasury bills	—		210,456		—
Asset-backed securities	—		121,351		—
Sovereign bonds	—		24,570		—
Municipal bonds	—		6,980
Agency bonds	—		5,915		—
Certificate of deposit			4,121
Economic hedge forward contracts	—		131		—
Liabilities:
Economic hedge forward contracts	—		703		—
Contingent consideration liabilities	—		—		1,153

Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation

The undiscounted potential outcomes related to future contingent consideration range from $0 to $1,250,000 based upon certain milestone revenue levels to be paid in 2020 if earned. The GVi contingent consideration liability was written down to zero as of December 31, 2019 resulting from a lower level of revenue in the Americas' automotive industry, and the balance remains at zero as of March 29, 2020. The undiscounted potential outcomes related to future contingent consideration range from $0 to $2,500,000 based upon certain revenue levels over the next two years.

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Taxes

3 Months Ended

Mar. 29, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Taxes

A reconciliation of the United States federal statutory corporate tax rate to the Company’s income tax expense, or effective tax rate, was as follows:

	Three-months Ended
	March 29, 2020		March 31, 2019
Income tax expense at U.S. federal statutory corporate tax rate	21	%	21	%
State income taxes, net of federal benefit	1	%	1	%
Foreign tax rate differential	(6	)%	(9	)%
Tax credit	(1	)%	—	%
Discrete tax benefit related to stock options	(7	)%	(8	)%
Other discrete tax events	1	%	—	%
Other	2	%	2	%
Income tax expense	11	%	7	%

The Company is tax resident in numerous jurisdictions around the world and has identified its major tax jurisdictions as the United States, Ireland, and China. The statutory tax rate is 12.5% in Ireland and 25% in China, compared to the U.S. federal statutory corporate tax rate of 21%. These differences resulted in a decrease in the effective tax rate by 6 and 9 percentage points for the three-month periods ended March 29, 2020 and March 31, 2019, respectively. Management has determined that earnings from its legal entity in China will be indefinitely reinvested to provide local funding for growth, and that earnings from all other jurisdictions will not be indefinitely reinvested.

The excess tax benefit arising from the difference between the deduction for tax purposes and the compensation cost recognized for financial reporting purposes from stock option exercises resulted in a decrease in the effective tax rate by 7 and 8 percentage points for the three-month periods ended March 29, 2020 and March 31, 2019, respectively.

During the three-month period ended March 29, 2020, the Company recorded a $306,000 increase in reserves for income taxes, net of deferred tax benefit. Estimated interest and penalties included in these amounts totaled $155,000 for the three-month period ended March 29, 2020.

The Company’s reserve for income taxes, including gross interest and penalties, was $12,919,000 as of March 29, 2020, which included $11,891,000 classified as a non-current liability and $1,028,000 recorded as an increase to a non-current deferred tax liability. The amount of gross interest and penalties included in these balances was $1,109,000. 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. As a result of the expiration of certain statutes of limitations, there is a potential that a portion of these reserves could be released, which would decrease income tax expense by approximately $1,300,000 to $1,400,000 over the next twelve months.

The Company has defined its major tax jurisdictions as the United States, Ireland, and China, and within the United States, Massachusetts. Within the United States, the tax years 2016 through 2019 remain open to examination by the Internal Revenue Service and various state tax authorities. The tax years 2015 through 2019 remain open to examination by various taxing authorities in other jurisdictions in which the Company operates.

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Stock-Based Compensation Expense (Detail)	3 Months Ended
	Mar. 29, 2020 USD ($) group $ / shares shares	Mar. 31, 2019 USD ($) $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted-average grant-date fair values, in dollars per share | $ / shares	$ 18.46	$ 18.59
Total intrinsic value	$ 14,454,000	$ 22,579,000
Total fair values of stock options vest	$ 36,664,000	$ 29,972,000
Vested (in shares) | shares		0
Groups within the employee population | group	2
Estimated annual forfeiture rate for unvested options for senior management	7.00%
Estimated annual forfeiture rate for unvested options for all other employees	12.00%
Increase (decrease) to compensation expense	$ 1,787,000	$ 499,000
Unrecognized compensation expense	$ 72,823,000
Weighted average period to be recognized	2 years 2 months 15 days
Stock-based compensation expense	$ 14,790,000	12,281,000
Tax benefit from compensation expense	2,564,000	$ 2,222,000
Recognized period costs capitalized	$ 0
Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares available for grant under stock option plans | shares	16,115,000
Expiration period from grant day	10 years
Performance Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period for stock option plans	3 years
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in dollars per share) | $ / shares	$ 50.94
Vested (in shares) | shares	0
Granted (in shares) | shares	390,000	0
Minimum | General Stock Option Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period for stock option plans	4 years
Maximum | General Stock Option Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period for stock option plans	5 years

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Revenue Recognition - Revenue Disaggregated by Products and Services (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 29, 2020	Mar. 31, 2019
Revenue from External Customer [Line Items]
Revenue	$ 167,235	$ 173,484
Standard Products and Services
Revenue from External Customer [Line Items]
Revenue	152,854	161,052
Application-Specific Customer Solutions
Revenue from External Customer [Line Items]
Revenue	$ 14,381	$ 12,432

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Stock-Based Compensation Expense - Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 29, 2020	Mar. 31, 2019
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 14,790	$ 12,281
Cost of Revenue
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	354	451
Research, Development, and Engineering Expenses
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	5,366	4,467
Selling, General, and Administrative
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 9,070	$ 7,363

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Cash, Cash Equivalents, and Investments - Summary of Available-for-Sale Investments (Detail) $ in Thousands	Mar. 29, 2020 USD ($)
Debt Securities, Available-for-sale [Line Items]
Amortized cost	$ 606,390
Gross unrealized gains	3,736
Gross unrealized losses	(8,048)
Fair value	602,078
Agency Bonds
Debt Securities, Available-for-sale [Line Items]
Gross unrealized losses	(15)
Agency Bonds | Long-Term Investments
Debt Securities, Available-for-sale [Line Items]
Amortized cost	5,930
Gross unrealized gains	0
Gross unrealized losses	(15)
Fair value	5,915
Treasury Bills | Short-Term Investments
Debt Securities, Available-for-sale [Line Items]
Amortized cost	19,328
Gross unrealized gains	435
Gross unrealized losses	0
Fair value	19,763
Treasury Bills | Long-Term Investments
Debt Securities, Available-for-sale [Line Items]
Amortized cost	187,794
Gross unrealized gains	2,899
Gross unrealized losses	0
Fair value	190,693
Corporate Bonds
Debt Securities, Available-for-sale [Line Items]
Gross unrealized losses	(6,381)
Corporate Bonds | Short-Term Investments
Debt Securities, Available-for-sale [Line Items]
Amortized cost	55,404
Gross unrealized gains	20
Gross unrealized losses	(487)
Fair value	54,937
Corporate Bonds | Long-Term Investments
Debt Securities, Available-for-sale [Line Items]
Amortized cost	183,646
Gross unrealized gains	117
Gross unrealized losses	(5,894)
Fair value	177,869
Asset-Backed Securities
Debt Securities, Available-for-sale [Line Items]
Gross unrealized losses	(1,644)
Asset-Backed Securities | Short-Term Investments
Debt Securities, Available-for-sale [Line Items]
Amortized cost	70,510
Gross unrealized gains	25
Gross unrealized losses	(579)
Fair value	69,956
Asset-Backed Securities | Long-Term Investments
Debt Securities, Available-for-sale [Line Items]
Amortized cost	52,405
Gross unrealized gains	55
Gross unrealized losses	(1,065)
Fair value	51,395
Sovereign Bonds
Debt Securities, Available-for-sale [Line Items]
Gross unrealized losses	(8)
Sovereign Bonds | Short-Term Investments
Debt Securities, Available-for-sale [Line Items]
Amortized cost	3,485
Gross unrealized gains	2
Gross unrealized losses	0
Fair value	3,487
Sovereign Bonds | Long-Term Investments
Debt Securities, Available-for-sale [Line Items]
Amortized cost	20,944
Gross unrealized gains	147
Gross unrealized losses	(8)
Fair value	21,083
Municipal Bonds | Short-Term Investments
Debt Securities, Available-for-sale [Line Items]
Amortized cost	6,944
Gross unrealized gains	36
Gross unrealized losses	0
Fair value	$ 6,980

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Inventories - Schedule of Inventories (Detail) - USD ($) $ in Thousands	Mar. 29, 2020	Dec. 31, 2019
Inventory Disclosure [Abstract]
Raw materials	$ 23,246	$ 27,285
Work-in-process	6,034	5,503
Finished goods	25,705	27,473
Inventories	$ 54,985	$ 60,261

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Consolidated Statement of Shareholders' Equity (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 29, 2020	Mar. 31, 2019
Statement of Stockholders' Equity [Abstract]
Tax effect of unrealized gain (loss) on available-for-sale investments	$ (952)	$ 268

XML

Cover Page	3 Months Ended
	Mar. 29, 2020 shares
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 29, 2020
Document Transition Report	false
Entity File Number	001-34218
Entity Registrant Name	COGNEX CORP
Entity Central Index Key	0000851205
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q1
Amendment Flag	false
Entity Incorporation, State or Country Code	MA
Entity Tax Identification Number	04-2713778
Entity Address, Address Line One	One Vision Drive
Entity Address, City or Town	Natick
Entity Address, State or Province	MA
Entity Address, Postal Zip Code	01760
City Area Code	508
Local Phone Number	650-3000
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Title of 12(b) Security	Common Stock, par value $.002 per share
Trading Symbol	CGNX
Security Exchange Name	NASDAQ
Entity Common Stock, Shares Outstanding	171,688,004

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 29, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 239,197	$ 171,431
Current investments	159,244	240,470
Accounts receivable, less reserves of $2,061 and $1,821 in 2020 and 2019, respectively	100,463	103,447
Unbilled revenue	5,485	4,782
Inventories	54,985	60,261
Prepaid expenses and other current assets	35,913	26,840
Total current assets	595,287	607,231
Non-current investments	446,955	433,452
Property, plant, and equipment, net	86,702	89,443
Operating lease assets	17,346	17,522
Goodwill	242,214	243,445
Intangible assets, net	38,102	39,490
Deferred income taxes	450,280	449,519
Other assets	8,191	5,833
Total assets	1,885,077	1,885,935
Current liabilities:
Accounts payable	16,195	17,866
Accrued expenses	63,955	52,199
Accrued income taxes	38,692	30,333
Deferred revenue and customer deposits	26,252	14,432
Operating lease liabilities	5,550	5,647
Total current liabilities	150,644	120,477
Operating Lease, Liability, Noncurrent	12,416	12,326
Deferred income taxes	330,532	332,344
Reserve for income taxes	11,891	11,563
Non-current accrued income taxes	48,915	51,113
Other liabilities	3,186	2,402
Total liabilities	557,584	530,225
Preferred Stock, Value, Outstanding	0	0
Shareholders’ equity:
Common stock, $.002 par value – Authorized: 300,000 shares in 2020 and 2019, respectively, issued and outstanding: 171,688 and 172,440 shares in 2020 and 2019, respectively	344	345
Additional paid-in capital	664,132	639,372
Retained earnings	713,208	753,268
Accumulated other comprehensive loss, net of tax	(50,191)	(37,275)
Total shareholders’ equity	1,327,493	1,355,710
Total liabilities and shareholders' equity	$ 1,885,077	$ 1,885,935

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 29, 2020

Accounting Policies [Abstract]

Cash, Cash Equivalents, and Investments

Cash, Cash Equivalents, and Investments

Money market instruments, as well as certificates of deposits and debt securities with original maturities of three months or less, are classified as cash equivalents and are stated at amortized cost. Certificates of deposit and debt securities with original maturities greater than three months and remaining maturities of one year or less are classified as current investments. Debt securities with remaining maturities greater than one year are classified as non-current investments. It is the Company’s policy to invest in debt securities with effective maturities that do not exceed ten years.

Debt securities with original maturities greater than three months are designated as available-for-sale and are reported at fair value, with unrealized gains and losses, net of tax and credit losses, recorded in shareholders’ equity as other comprehensive income (loss). Realized gains and losses are included in current operations, along with the amortization of the discount or premium on debt securities arising at acquisition, and are calculated using the specific identification method. The Company’s limited partnership interest is accounted for using the cost method because the Company’s investment is less than 5% of the partnership and the Company has no influence over the partnership’s operating and financial policies. The carrying value of this investment has been reduced to zero, and therefore, distributions are recorded as investment income as they occur.

Management monitors the carrying value of its investments in debt securities compared to their fair value to determine whether a credit loss or other type of impairment has occurred. If the fair value of a debt security is less than its amortized cost, the Company assesses whether the decline has resulted from a credit loss or other factors. In assessing whether a credit loss exists, the Company compares the present value of the cash flows expected to be collected from the security with the amortized cost basis of the security. If the present value of the cash flows expected to be collected is less than the amortized cost basis of the security, then a credit loss exists and an allowance for credit losses is recorded. The allowance for credit losses is limited by the amount that the fair value is less than the amortized cost basis of the security. Credit losses on impaired securities continue to be measured in subsequent periods, using the present value of expected future cash flows, and changes in the expected credit losses are recorded in current operations. Credit losses are included in "Other income (expense)" on the Consolidated Statement of Operations. When developing an estimate of the expected credit losses, the Company considers all available information relevant to assessing the collectability of cash flows. This information includes internal and external factors, historical and current events, reasonable and supportable forecasts including management's expectations of future economic conditions, the type of security, the credit rating of the security, the size of the loss position, as well as other relevant information.

An impairment is recognized as a write-down if (i) the Company has the intent to sell the security or (ii) it is more likely than not that the Company will be required to sell the security before recovery of the entire amortized cost basis. If impairment is considered upon condition (i) or (ii) described above, the debt security's amortized cost basis is written-down to its fair value and the impairment is recognized in current operations. Subsequent increases in the fair value of the debt securities after the write-down are included in shareholders' equity as other comprehensive income. The differences between the new amortized cost basis and the cash flows expected to be collected are accreted as interest income.

Unrealized losses, that have not been recorded through an allowance for credit losses or write-down of the debt security, are recorded in shareholders' equity as other comprehensive loss, net of the applicable taxes.

Accounts Receivable

Accounts Receivable

The Company extends credit with various payment terms to customers based upon an evaluation of their financial condition. Accounts that are outstanding longer than the payment terms are considered to be past due. The Company establishes an allowance against accounts receivable for potential credit losses and records bad debt expense in current operations when it determines receivables are at risk for collection based upon the length of time the receivable has been outstanding, the customer’s current ability to pay its obligations to the Company, general economic and industry conditions, reasonable forecasts about the future, as well as various other factors. Receivables are written off against this allowance in the period they are determined to be uncollectible and payments subsequently received on previously written-off receivables are recorded as a reversal of the bad debt expense. Credit losses are included in "Selling, general, and administrative expenses" on the Consolidated Statement of Operations.

New Pronouncements

ew Pronouncements

Accounting Standards Update (ASU) 2019-12, "Simplifying the Accounting for Income Taxes"

ASU 2019-12 applies to all entities within the scope of Topic 740, Income Taxes. The amendments in this ASU simplify the accounting for income taxes by removing the following exceptions: 1) exception to the incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income or a gain from other items; 2) exception to the requirement to recognize a deferred tax liability for equity method investments when a foreign subsidiary becomes an equity method investment; 3) exception to the ability not to recognize a deferred tax liability for a foreign subsidiary when a foreign equity method investment becomes a subsidiary; and 4) exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. The amendments in this ASU also simplify the accounting for income taxes by doing the following: 1) requiring that an entity recognize a franchise tax that is partially based on income as an income-based tax and account for any incremental amount incurred as a non-income-based tax; 2) requiring that an entity evaluate when a step up in the tax basis of goodwill should be considered part of the business combination in which the book goodwill was originally recognized and when it should be considered a separate transaction; 3) specifying that an entity is not required to allocate the consolidated amount of current and deferred tax expense to a legal entity that is not subject to tax in its separate financial statements; and 4) requiring that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that included the enacted date. The amendments in this ASU are effective for public companies for annual periods, and interim periods within those annual periods, beginning after December 15, 2020. Early adoption is permitted; however, an entity that elects to early adopt the amendments must adopt all the amendments in the same period. The amendments in this ASU related to separate financial statements of legal entities that are not subject to tax should be applied on a retrospective basis for all periods presented. The amendments related to changes in ownership of foreign equity method investments or foreign subsidiaries should be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. The amendments related to franchise taxes that are partially based on income should be applied on either a retrospective basis for all periods presented or a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. All other amendments should be applied on a prospective basis. Management does not expect ASU 2019-12 to have a material impact on the Company's consolidated financial statements and disclosures.

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

The amendments in this ASU 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. The amendments in this ASU 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, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. The amendments in this ASU are effective for all entities as of March 12, 2020 through December 31, 2022. Management does not expect ASU 2020-04 to have a material impact on the Company's consolidated financial statements and disclosures.

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Stock Repurchase Program	3 Months Ended
	Mar. 29, 2020
Equity [Abstract]
Stock Repurchase Program	Stock Repurchase ProgramIn October 2018, the Company's Board of Directors authorized the repurchase of $200,000,000 of the Company's common stock. As of March 29, 2020, the Company repurchased 2,816,000 shares at a cost of $121,348,000 under this program, including 1,215,000 shares at a cost of $51,036,000 during the three-month period ended March 29, 2020, leaving a remaining balance of $78,652,000. On March 12, 2020 the Company's Board of Directors authorized the repurchase of an additional $200,000,000 of the Company's common stock. Purchases under this March 2020 program will commence upon completion of the October 2018 program. The Company may repurchase shares under these programs in future periods depending upon a variety of factors, including, among other things, the impact of dilution from employee equity 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.

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Warranty Obligations (Tables)

3 Months Ended

Mar. 29, 2020

Product Warranties Disclosures [Abstract]

Changes in Warranty Obligations

The changes in the warranty obligation were as follows (in thousands):

Balance as of December 31, 2019	$	4,713
Provisions for warranties issued during the period	725
Fulfillment of warranty obligations	(419		)
Balance as of March 29, 2020	$	5,019

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Income Taxes (Tables)

3 Months Ended

Mar. 29, 2020

Income Tax Disclosure [Abstract]

Reconciliation of United States Federal Statutory Corporate Tax Rate to Company's Effective Tax Rate, or Income Tax Provision

A reconciliation of the United States federal statutory corporate tax rate to the Company’s income tax expense, or effective tax rate, was as follows:

	Three-months Ended
	March 29, 2020		March 31, 2019
Income tax expense at U.S. federal statutory corporate tax rate	21	%	21	%
State income taxes, net of federal benefit	1	%	1	%
Foreign tax rate differential	(6	)%	(9	)%
Tax credit	(1	)%	—	%
Discrete tax benefit related to stock options	(7	)%	(8	)%
Other discrete tax events	1	%	—	%
Other	2	%	2	%
Income tax expense	11	%	7	%

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Inventories

3 Months Ended

Mar. 29, 2020

Inventory Disclosure [Abstract]

Inventories

Inventories

Inventories consisted of the following (in thousands):

	March 29, 2020		December 31, 2019
Raw materials	$	23,246	$	27,285
Work-in-process	6,034		5,503
Finished goods	25,705		27,473
	$	54,985	$	60,261

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Summary of Significant Accounting Policies

3 Months Ended

Mar. 29, 2020

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

As permitted by the rules of the Securities and Exchange Commission applicable to Quarterly Reports on Form 10-Q, these notes are condensed and do not contain all disclosures required by generally accepted accounting principles (GAAP). As a result of the adoption of ASU 2016-13 "Measurement of Credit Losses on Financial Instruments," Cognex Corporation (the "Company") has provided new disclosures related to credit losses in this Quarterly Report on Form 10-Q. 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, 2019 for a full description of other significant accounting policies.

In the opinion of the management of 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 29, 2020, and the results of its operations for the three-month periods ended March 29, 2020 and March 31, 2019, and changes in shareholders’ equity, comprehensive income, and cash flows for the periods presented.

The results disclosed in the Consolidated Statements of Operations for the three-month period ended March 29, 2020 are not necessarily indicative of the results to be expected for the full year.

Cash, Cash Equivalents, and Investments

Money market instruments, as well as certificates of deposits and debt securities with original maturities of three months or less, are classified as cash equivalents and are stated at amortized cost. Certificates of deposit and debt securities with original maturities greater than three months and remaining maturities of one year or less are classified as current investments. Debt securities with remaining maturities greater than one year are classified as non-current investments. It is the Company’s policy to invest in debt securities with effective maturities that do not exceed ten years.

Debt securities with original maturities greater than three months are designated as available-for-sale and are reported at fair value, with unrealized gains and losses, net of tax and credit losses, recorded in shareholders’ equity as other comprehensive income (loss). Realized gains and losses are included in current operations, along with the amortization of the discount or premium on debt securities arising at acquisition, and are calculated using the specific identification method. The Company’s limited partnership interest is accounted for using the cost method because the Company’s investment is less than 5% of the partnership and the Company has no influence over the partnership’s operating and financial policies. The carrying value of this investment has been reduced to zero, and therefore, distributions are recorded as investment income as they occur.

Management monitors the carrying value of its investments in debt securities compared to their fair value to determine whether a credit loss or other type of impairment has occurred. If the fair value of a debt security is less than its amortized cost, the Company assesses whether the decline has resulted from a credit loss or other factors. In assessing whether a credit loss exists, the Company compares the present value of the cash flows expected to be collected from the security with the amortized cost basis of the security. If the present value of the cash flows expected to be collected is less than the amortized cost basis of the security, then a credit loss exists and an allowance for credit losses is recorded. The allowance for credit losses is limited by the amount that the fair value is less than the amortized cost basis of the security. Credit losses on impaired securities continue to be measured in subsequent periods, using the present value of expected future cash flows, and changes in the expected credit losses are recorded in current operations. Credit losses are included in "Other income (expense)" on the Consolidated Statement of Operations. When developing an estimate of the expected credit losses, the Company considers all available information relevant to assessing the collectability of cash flows. This information includes internal and external factors, historical and current events, reasonable and supportable forecasts including management's expectations of future economic conditions, the type of security, the credit rating of the security, the size of the loss position, as well as other relevant information.

An impairment is recognized as a write-down if (i) the Company has the intent to sell the security or (ii) it is more likely than not that the Company will be required to sell the security before recovery of the entire amortized cost basis. If impairment is considered upon condition (i) or (ii) described above, the debt security's amortized cost basis is written-down to its fair value and the impairment is recognized in current operations. Subsequent increases in the fair value of the debt securities after the write-down are included in shareholders' equity as other comprehensive income. The differences between the new amortized cost basis and the cash flows expected to be collected are accreted as interest income.

Unrealized losses, that have not been recorded through an allowance for credit losses or write-down of the debt security, are recorded in shareholders' equity as other comprehensive loss, net of the applicable taxes.

Accounts Receivable

The Company extends credit with various payment terms to customers based upon an evaluation of their financial condition. Accounts that are outstanding longer than the payment terms are considered to be past due. The Company establishes an allowance against accounts receivable for potential credit losses and records bad debt expense in current operations when it determines receivables are at risk for collection based upon the length of time the receivable has been outstanding, the customer’s current ability to pay its obligations to the Company, general economic and industry conditions, reasonable forecasts about the future, as well as various other factors. Receivables are written off against this allowance in the period they are determined to be uncollectible and payments subsequently received on previously written-off receivables are recorded as a reversal of the bad debt expense. Credit losses are included in "Selling, general, and administrative expenses" on the Consolidated Statement of Operations.

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Warranty Obligations

3 Months Ended

Mar. 29, 2020

Product Warranties Disclosures [Abstract]

Warranty Obligations

Warranty Obligations

The Company records the estimated cost of fulfilling product warranties at the time of sale based upon historical costs to fulfill claims. Obligations may also be recorded subsequent to the time of sale whenever specific events or circumstances impacting product quality become known that would not have been taken into account using historical data. While we engage in extensive product quality programs and processes, including actively monitoring and evaluating the quality of our component suppliers and third-party contract manufacturers, the Company’s warranty obligation is affected by product failure rates, material usage, and service delivery costs incurred in correcting a product failure. An adverse change in any of these factors may result in the need for additional warranty provisions. Warranty obligations are included in “Accrued expenses” on the Consolidated Balance Sheets.

The changes in the warranty obligation were as follows (in thousands):

Balance as of December 31, 2019	$	4,713
Provisions for warranties issued during the period	725
Fulfillment of warranty obligations	(419		)
Balance as of March 29, 2020	$	5,019

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Income Taxes (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 29, 2020	Mar. 31, 2019	Dec. 31, 2019
Income Tax Contingency [Line Items]
Income tax expense at U.S. federal statutory corporate tax rate	21.00%	21.00%
Decrease in effective tax rate	6.00%	9.00%
Decrease in effective tax rate for difference between deduction for tax purposes and compensation cost recognized from stock option exercises	7.00%	8.00%
Increase in reserves for income taxes, net of deferred tax benefit	$ 306
Interest and penalties included in reserve	155
Liability for uncertain tax positions	12,919
Reserve for income taxes classified as a noncurrent iability	11,891		$ 11,563
Reserve for income taxes classified an noncurrent deferred tax assets	1,028
Interest and penalties, gross	1,109
Minimum decrease in income tax expense due to release in reserves	1,300
Maximum decrease in income tax expense due to release in reserves	$ 1,400
Tax years open to examination by Internal Revenue Service	2016 through 2019
Tax years open to examination by various taxing authorities for other entities	2015 through 2019
Foreign Tax Authority | Revenue Commissioners, Ireland
Income Tax Contingency [Line Items]
Income tax expense at U.S. federal statutory corporate tax rate	12.50%
Foreign Tax Authority | State Administration of Taxation, China
Income Tax Contingency [Line Items]
Income tax expense at U.S. federal statutory corporate tax rate	25.00%
Domestic Tax Authority
Income Tax Contingency [Line Items]
Income tax expense at U.S. federal statutory corporate tax rate	21.00%

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Derivative Instruments - Schedule of Derivative Instruments in Statement of Financial Position, Fair Value (Detail) - USD ($) $ in Thousands	Mar. 29, 2020	Dec. 31, 2019
Derivatives, Fair Value [Line Items]
Derivative asset	$ 131	$ 857
Derivative liability	703	23
Not Designated as Hedging Instrument | Prepaid Expenses and Other Current Assets
Derivatives, Fair Value [Line Items]
Derivative asset	131	857
Not Designated as Hedging Instrument | Accrued Expenses
Derivatives, Fair Value [Line Items]
Derivative liability	$ 703	$ 23

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Intangible Assets (Details) - USD ($) $ in Thousands	Mar. 29, 2020	Dec. 31, 2019	Dec. 31, 2018
Distribution Rights, Developed Technology Rights, Customer Contracts And Relationships, Other Intangible Assets, And Trademarks
Gross Carrying Value	$ 93,474		$ 93,474
Accumulated Amortization	55,372		53,984
Net Carrying Value	38,102	$ 39,490	39,490
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
Net Carrying Value	38,102	39,490	39,490
Distribution networks
Distribution Rights, Developed Technology Rights, Customer Contracts And Relationships, Other Intangible Assets, And Trademarks
Gross Carrying Value	38,060		38,060
Accumulated Amortization	38,060		38,060
Net Carrying Value	0		0
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
Net Carrying Value	0		0
Completed technologies
Distribution Rights, Developed Technology Rights, Customer Contracts And Relationships, Other Intangible Assets, And Trademarks
Gross Carrying Value	31,987		31,987
Accumulated Amortization	10,154		9,160
Net Carrying Value	21,833		22,827
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
Net Carrying Value	21,833		22,827
Customer relationships
Distribution Rights, Developed Technology Rights, Customer Contracts And Relationships, Other Intangible Assets, And Trademarks
Gross Carrying Value	14,407		14,407
Accumulated Amortization	6,738		6,402
Net Carrying Value	7,669		8,005
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
Net Carrying Value	7,669		8,005
In-process technologies
Distribution Rights, Developed Technology Rights, Customer Contracts And Relationships, Other Intangible Assets, And Trademarks
Gross Carrying Value	8,200	8,200
Accumulated Amortization	0	0
Net Carrying Value	8,200	8,200
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
Net Carrying Value	8,200	8,200
Non-compete agreements
Distribution Rights, Developed Technology Rights, Customer Contracts And Relationships, Other Intangible Assets, And Trademarks
Gross Carrying Value	710		710
Accumulated Amortization	395		350
Net Carrying Value	315		360
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
Net Carrying Value	315		$ 360
Trademarks
Distribution Rights, Developed Technology Rights, Customer Contracts And Relationships, Other Intangible Assets, And Trademarks
Gross Carrying Value	110	110
Accumulated Amortization	25	12
Net Carrying Value	85	98
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
Net Carrying Value	85	$ 98
Indefinite-lived intangible asset excluding in-process technologies
Distribution Rights, Developed Technology Rights, Customer Contracts And Relationships, Other Intangible Assets, And Trademarks
Net Carrying Value	29,902
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
Remainder of fiscal 2020	4,023
2019	5,232
2020	4,862
2021	4,160
2022	3,593
2023	3,270
Thereafter	4,762
Net Carrying Value	$ 29,902