Loss (Recovery) from Fire

9 Months Ended

Oct. 01, 2023

Unusual or Infrequent Items, or Both [Abstract]

Loss (Recovery) from Fire

Loss (Recovery) from Fire

On June 7, 2022, the Company’s primary contract manufacturer experienced a fire at its plant in Indonesia. The fire destroyed a significant amount of Cognex-owned consigned inventories, as well as component inventories owned by the contract manufacturer that were designated for Cognex products. There was no significant damage to the Company's production equipment. Since the date of the fire, the Company has worked with the contract manufacturer to resume production, maintain standards of product quality, and replenish inventories destroyed by the fire. The Company has also been working to ramp up an additional contract manufacturer to further mitigate risk, diversify the supply chain, and expand production capacity.

During the nine-month period ended October 2, 2022, the Company recorded a net loss related to the fire of $20,294,000, consisting primarily of losses from inventories and other assets of $47,794,000, including $2,891,000 during the three-month period ended October 2, 2022, partially offset by an estimated insurance recovery of $27,500,000. These losses are presented in the caption “Loss (recovery) from fire” on the Consolidated Statements of Operations. The Company received insurance proceeds of $27,560,000 from the Company's insurance carrier in the fourth quarter of 2022, and gross losses recorded during 2022 related to the fire were further reduced by the proceeds received in excess of the original estimated insurance recovery.

During the nine-month period ended October 1, 2023, the Company recorded recoveries related to the fire of $5,250,000, consisting of $2,500,000 during the three-month period ended July 2, 2023 for proceeds received from the Company's insurance carrier in relation to a business interruption claim and $2,750,000 during the three-month period ended October 1, 2023 for proceeds received as part of a financial settlement for lost inventory and other losses incurred as a result of the fire. The Company expects to receive an additional $2,750,000 by the end of 2023. These recovery amounts are presented in the caption “Loss (recovery) from fire” on the Consolidated Statements of Operations.

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