10-Q 1 cgnx-20220403.htm 10-Q cgnx-20220403
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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 April 3, 2022 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 Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $.002 per shareCGNXThe 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 April 3, 2022, there were 173,738,182 shares of Common Stock, $.002 par value per share, of the registrant outstanding.



INDEX
 
PART IFINANCIAL INFORMATION

2


PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS

COGNEX CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
 
 Three-months Ended
April 3, 2022April 4, 2021
 (unaudited)
Revenue$282,407 $239,027 
Cost of revenue78,790 54,045 
Gross margin203,617 184,982 
Research, development, and engineering expenses36,054 34,105 
Selling, general, and administrative expenses80,835 72,424 
Operating income86,728 78,453 
Foreign currency gain (loss)(444)(1,008)
Investment income1,468 1,554 
Other income (expense)(48)(168)
Income before income tax expense87,704 78,831 
Income tax expense20,371 8,983 
Net income$67,333 $69,848 
Net income per weighted-average common and common-equivalent share:
Basic$0.39 $0.40 
Diluted$0.38 $0.39 
Weighted-average common and common-equivalent shares outstanding:
Basic174,146 176,288 
Diluted176,668 179,971 
Cash dividends per common share$0.065 $0.060 














 
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
April 3, 2022April 4, 2021
 (unaudited)
Net income$67,333 $69,848 
Other comprehensive income (loss), net of tax:
Available-for-sale investments:
Net unrealized gain (loss), net of tax of $(4,036) and $(585) in the three-month periods, respectively
(13,548)(1,958)
Reclassification of net realized (gain) loss on the sale of available-for-sale investments into current operations36  
Net change related to available-for-sale investments(13,512)(1,958)
Foreign currency translation adjustments:
Foreign currency translation adjustments(2,111)(2,770)
Net change related to foreign currency translation adjustments(2,111)(2,770)
Other comprehensive income (loss), net of tax(15,623)(4,728)
Total comprehensive income$51,710 $65,120 





















The accompanying notes are an integral part of these consolidated financial statements.
4


COGNEX CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
 
April 3, 2022December 31, 2021
 (unaudited) 
ASSETS
Current assets:
Cash and cash equivalents$165,769 $186,161 
Current investments, amortized cost of $149,574 and $137,124 in 2022 and 2021, respectively, allowance for credit losses of $0 in 2022 and 2021
148,966 137,455 
Accounts receivable, allowance for credit losses of $766 and $776 in 2022 and 2021, respectively
155,065 130,348 
Unbilled revenue1,847 3,990 
Inventories136,660 113,102 
Prepaid expenses and other current assets64,573 68,742 
Total current assets672,880 639,798 
Non-current investments, amortized cost of $500,273 and $587,981 in 2022 and 2021, respectively, allowance for credit losses of $0 in 2022 and 2021
479,429 583,748 
Property, plant, and equipment, net77,870 77,546 
Operating lease assets32,217 23,157 
Goodwill241,180 241,713 
Intangible assets, net11,048 11,888 
Deferred income taxes412,333 418,570 
Other assets7,158 7,242 
Total assets$1,934,115 $2,003,662 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable$44,733 $44,051 
Accrued expenses63,122 92,432 
Accrued income taxes24,465 8,577 
Deferred revenue and customer deposits54,455 35,743 
Operating lease liabilities8,351 7,786 
Total current liabilities195,126 188,589 
Non-current operating lease liabilities26,179 17,795 
Deferred income taxes279,729 293,769 
Reserve for income taxes15,110 14,780 
Non-current accrued income taxes44,010 43,160 
Other liabilities15,216 15,476 
Total liabilities575,370 573,569 
Commitments and contingencies (Note 10)
Shareholders’ equity:
Preferred stock, $.01 par value – Authorized: 400 shares in 2022 and 2021, respectively; no shares issued and outstanding
  
Common stock, $.002 par value – Authorized: 300,000 shares in 2022 and 2021, respectively; issued and outstanding: 173,738 and 175,481 shares in 2022 and 2021, respectively
347 351 
Additional paid-in capital933,452 914,802 
Retained earnings488,511 562,882 
Accumulated other comprehensive loss, net of tax(63,565)(47,942)
Total shareholders’ equity1,358,745 1,430,093 
Total liabilities and shareholders' equity$1,934,115 $2,003,662 

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
April 3, 2022April 4, 2021
 (unaudited)
Cash flows from operating activities:
Net income$67,333 $69,848 
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation expense15,056 12,009 
Depreciation of property, plant, and equipment4,117 4,259 
Loss (gain) on disposal of property, plant, and equipment 3 
Amortization of intangible assets840 927 
Excess and obsolete inventory charges379 705 
Amortization of discounts or premiums on investments1,402 586 
Realized loss (gain) on sale of investments36  
Change in deferred income taxes(3,891)1,250 
Change in operating assets and liabilities:
Accounts receivable(24,700)(3,495)
Unbilled revenue2,144 3,958 
Inventories(23,900)(1,323)
Prepaid expenses and other current assets4,212 (10,882)
Accounts payable708 4,760 
Accrued expenses(28,718)(15,973)
Accrued income taxes16,745 1,651 
Deferred revenue and customer deposits18,712 30,641 
Other(958)(285)
Net cash provided by operating activities49,517 98,639 
Cash flows from investing activities:
Purchases of investments(39,155)(298,911)
Maturities and sales of investments112,976 160,552 
Purchases of property, plant, and equipment(4,585)(2,436)
Net cash provided by (used in) investing activities69,236 (140,795)
Cash flows from financing activities:
Net proceeds from issuance of common stock under stock plans3,594 34,744 
Repurchase of common stock(130,405)(6,479)
Payment of dividends(11,303)(10,595)
Net cash provided by (used in) financing activities(138,114)17,670 
Effect of foreign exchange rate changes on cash and cash equivalents(1,031)(1,899)
Net change in cash and cash equivalents(20,392)(26,385)
Cash and cash equivalents at beginning of period186,161 269,073 
Cash and cash equivalents at end of period$165,769 $242,688 












The accompanying notes are an integral part of these consolidated financial statements.
6


COGNEX CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In thousands)
 Common StockAdditional
Paid-in Capital
Retained EarningsAccumulated
Other
Comprehensive
Loss
Total
Shareholders’
Equity
 SharesPar Value
Balance as of December 31, 2021175,481 $351 $914,802 $562,882 $(47,942)$1,430,093 
Net issuance of common stock under stock plans136  3,594 — — 3,594 
Repurchase of common stock(1,879)(4)— (130,401)— (130,405)
Stock-based compensation expense— — 15,056 — — 15,056 
Payment of dividends ($0.065 per common share)
— — — (11,303)— (11,303)
Net income— — — 67,333 — 67,333 
Net unrealized gain (loss) on available-for-sale investments, net of tax of $(4,036)
— — — — (13,548)(13,548)
Reclassification of net realized (gain) loss on the sale of available-for-sale investments— — — — 36 36 
Foreign currency translation adjustment— — — — (2,111)(2,111)
Balance as of April 3, 2022 (unaudited)173,738 $347 $933,452 $488,511 $(63,565)$1,358,745 

 Common StockAdditional
Paid-in Capital
Retained EarningsAccumulated
Other
Comprehensive
Loss
Total
Shareholders’
Equity
 SharesPar Value
Balance as of December 31, 2020175,790 $352 $807,739 $487,912 $(33,801)$1,262,202 
Net issuance of common stock under stock plans898 1 34,743 — — 34,744 
Repurchase of common stock(80) — (6,479)— (6,479)
Stock-based compensation expense— — 12,009 — — 12,009 
Payment of dividends ($0.060 per common share)
— — — (10,595)— (10,595)
Net income— — — 69,848 — 69,848 
Net unrealized gain (loss) on available-for-sale investments, net of tax of $(585)
— — — — (1,958)(1,958)
Foreign currency translation adjustment— — — — (2,770)(2,770)
Balance as of April 4, 2021 (unaudited)176,608 $353 $854,491 $540,686 $(38,529)$1,357,001 











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). 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, 2021 for a full description of other significant accounting policies.
In the opinion of the management of Cognex Corporation (the "Company"), the accompanying consolidated unaudited financial statements contain all adjustments, consisting of normal, recurring adjustments, and financial statement reclassifications necessary to present fairly the Company’s financial position as of April 3, 2022, and the results of its operations for the three-month periods ended April 3, 2022 and April 4, 2021, 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 April 3, 2022 are not necessarily indicative of the results to be expected for the full year.
NOTE 2: New Pronouncements
Accounting Standards Update (ASU) 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting" and (ASU) 2021-01, "Reference Rate Reform (Topic 848): Scope"
The amendments in these ASUs apply to all entities that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. Together, the ASUs provide optional expedients and exceptions for applying generally accepted accounting principles (GAAP) to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 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 these ASUs are effective for all entities as of March 12, 2020 through December 31, 2022. Management does not expect ASU 2020-04 or ASU 2021-01 to have a material impact on the Company's consolidated financial statements and disclosures.
Accounting Standards Update (ASU) 2021-08, "Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers"
The amendments in this ASU primarily address the accounting for contract assets and contract liabilities related to revenue contracts with customers in a business combination. The ASU clarifies that an acquirer should account for the related revenue contracts in accordance with Accounting Standards Codification 606 as if the acquirer had originated the contracts. The amendments in this ASU are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, although early adoption is permitted. The amendments in the ASU should be applied prospectively to business combinations occurring on or after the effective date of the amendments. The expected financial statement impact of this new accounting standard cannot be reasonably estimated at this time, as the impact in future periods will depend on the contract assets and contract liabilities acquired in future business combinations. Management does not expect this ASU to have a material impact on the Company's disclosures.

8


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 April 3, 2022 (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$483 $ $ 
Corporate bonds 512,138  
Asset-backed securities 73,295  
Treasury bills 27,588  
Agency bonds 18,635  
Sovereign bonds 2,007  
Municipal bonds 1,733  
Economic hedge forward contracts 42  
Liabilities:
Economic hedge forward contracts 441  
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 on 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 fair value of the contingent consideration liability related to the Company's acquisition of GVi Ventures, Inc. in 2017 was written down to zero in 2019 resulting from a lower level of revenue in the Americas' automotive industry. The balance remained at zero as of April 3, 2022 and through the remainder of the five-year assessment period which concluded in April 2022.

Non-financial Assets that are Measured at Fair Value on a Non-recurring Basis
Non-financial assets, such as property, plant and equipment, operating lease assets, goodwill, and intangible assets, are required to be measured at fair value only when an impairment loss is recognized. The Company did not record impairment charges related to non-financial assets during the three-month periods ended April 3, 2022 or April 4, 2021.
9


COGNEX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 4: Cash, Cash Equivalents, and Investments
Cash, cash equivalents, and investments consisted of the following (in thousands):
April 3, 2022December 31, 2021
Cash$158,285 $185,624 
Treasury bills7,001  
Money market instruments483 537 
Cash and cash equivalents165,769 186,161 
Corporate bonds97,772 73,088 
Asset-backed securities37,084 37,655 
Treasury bills10,204 18,912 
Agency bonds2,801 2,802 
Municipal bonds1,105 4,998 
Current investments148,966 137,455 
Corporate bonds414,366 481,218 
Asset-backed securities36,211 43,940 
Agency bonds15,834 16,077 
Treasury bills10,383 39,753 
Sovereign bonds2,007 2,119 
Municipal bonds628 641 
Non-current investments479,429 583,748 
$794,164 $907,364 
Treasury bills consist of debt securities issued by the U.S. government; corporate bonds consist of debt securities issued by both domestic and foreign companies; asset-backed securities consist of debt securities collateralized by pools of receivables or loans with credit enhancement; agency bonds consist of domestic or foreign obligations of government agencies and government-sponsored enterprises that have government backing; municipal bonds consist of debt securities issued by state and local government entities; and sovereign bonds consist of direct debt issued by foreign governments. All of the Company's securities as of April 3, 2022 and December 31, 2021 were denominated in U.S. Dollars.
Accrued interest receivable is recorded in "Prepaid expenses and other current assets" on the Consolidated Balance Sheet and amounted to $2,940,000 and $3,037,000 as of April 3, 2022 and December 31, 2021, respectively.
10


COGNEX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The following table summarizes the Company’s available-for-sale investments as of April 3, 2022 (in thousands):
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Value
Current:
Corporate bonds$98,122 $58 $(408)$97,772 
Asset-backed securities37,300 12 (228)37,084 
Treasury bills10,247  (43)10,204 
Agency bonds2,800 1  2,801 
Municipal bonds1,105   1,105 
Non-current:
Corporate bonds433,204 8 (18,846)414,366 
Asset-backed securities37,579  (1,368)36,211 
Agency bonds16,133  (299)15,834 
Treasury bills10,592 1 (210)10,383 
Sovereign bonds2,130  (123)2,007 
Municipal bonds635  (7)628 
$649,847 $80 $(21,532)$628,395 
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 April 3, 2022 (in thousands):
 Unrealized Loss Position For: 
 Less than 12 Months12 Months or GreaterTotal
 Fair ValueUnrealized
Losses
Fair ValueUnrealized
Losses
Fair ValueUnrealized
Losses
Corporate bonds$425,643 $(17,258)$45,219 $(1,996)$470,862 $(19,254)
Asset-backed securities65,603 (1,592)556 (4)66,159 (1,596)
Treasury bills15,982 (250)102 (3)16,084 (253)
Agency bonds15,834 (299)  15,834 (299)
Sovereign bonds2,007 (123)  2,007 (123)
Municipal bonds1,733 (7)  1,733 (7)
$526,802 $(19,529)$45,877 $(2,003)$572,679 $(21,532)
Management monitors debt securities that are in an unrealized loss position to determine whether a loss exists related to the credit quality of the issuer. When developing an estimate of expected credit losses, management considers all relevant information including historical experience, current conditions, and reasonable forecasts of expected future cash flows. Based on this evaluation, no allowance for credit losses on debt securities was recorded as of April 3, 2022 or December 31, 2021. There was no activity recorded in the allowance for credit losses during the three-month periods ended April 3, 2022 or April 4, 2021.
The Company recorded gross realized gains and losses on the sale of debt securities totaling $118,000 and $154,000, respectively, for the three-month period ended April 3, 2022, and no gross realized gains or losses on the sale of debt securities for the three-month period ended April 4, 2021. Realized gains and losses are included in "Investment income" on the Consolidated Statements of Operations. Prior to the sale of these securities, unrealized gains and losses for these debt securities, net of tax, were recorded in shareholders’ equity as accumulated other comprehensive loss.
11


COGNEX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The following table presents the effective maturity dates of the Company’s available-for-sale investments as of April 3, 2022 (in thousands):
<1 year1-2 Years2-3 Years3-4 Years4-5 YearsTotal
Corporate bonds$97,772 $175,124 $168,060 $47,259 $23,923 $512,138 
Asset-backed securities37,084 21,883  14,328  73,295 
Treasury bills10,204 10,383    20,587 
Agency bonds2,801 15,834    18,635 
Sovereign bonds  1,007 1,000  2,007 
Municipal bonds1,105 628    1,733 
$148,966 $223,852 $169,067 $62,587 $23,923 $628,395 
NOTE 5: Inventories
Inventories consisted of the following (in thousands):
April 3, 2022December 31, 2021
Raw materials$66,710 $50,452 
Work-in-process3,979 5,293 
Finished goods65,971 57,357 
$136,660 $113,102 
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.
As of April 3, 2022, there were no options to terminate that were accounted for in the determination of the lease term for outstanding leases, and three options to extend that were accounted for in the determination of the lease term of three of the Company's outstanding leases. Certain leases contain leasehold improvement incentives, retirement obligations, escalating clauses, rent holidays, and variable payments tied to a consumer price index. There were no restrictions or covenants for outstanding leases as of April 3, 2022.
The total operating lease expense for the three-month periods ended April 3, 2022 and April 4, 2021 were $2,229,000 and $2,002,000, respectively. The total operating lease cash payments for the three-month periods ended April 3, 2022 and April 4, 2021 were $2,079,000 and $2,061,000, respectively. The total lease expense for leases with a term of twelve months or less for which the Company elected not to recognize a lease asset or lease liability for the three-month periods ended April 3, 2022 and April 4, 2021 were $38,000 and $40,000, respectively.
12


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 2022$6,960 
20237,978 
20244,912 
20253,197 
20262,511 
20272,431 
Thereafter9,823 
$37,812 
The discounted present value of the future lease cash payments resulted in a lease liability of $34,530,000 and $25,581,000 as of April 3, 2022 and December 31, 2021, respectively. The Company did not have any leases that had not yet commenced but that created significant rights and obligations as of April 3, 2022.
The weighted-average discount rate was 3.0% and 3.4% for the leases outstanding as of April 3, 2022 and December 31, 2021, respectively. The weighted-average remaining lease term was 6.6 and 5.1 years for the leases outstanding as of April 3, 2022 and December 31, 2021, respectively.
NOTE 7: Goodwill
The changes in the carrying value of goodwill were as follows (in thousands):
Balance as of December 31, 2021$241,713 
  Foreign exchange rate changes(533)
Balance as of April 3, 2022$241,180 
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 technologies24,217 15,892 8,325 
Customer relationships10,578 8,060 2,518 
Non-compete agreements710 505 205 
Trademarks110 110  
Balance as of April 3, 2022$73,675 $62,627 $11,048 
 Gross
Carrying
Value
Accumulated
Amortization
Net
Carrying
Value
Distribution networks$38,060 $38,060 $ 
Completed technologies24,217 15,234 8,983 
Customer relationships10,578 7,891 2,687 
Non-compete agreements710 492 218 
Trademarks110 110  
Balance as of December 31, 2021$73,675 $61,787 $11,888 
13


COGNEX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
As of April 3, 2022, estimated future amortization expense related to intangible assets was as follows (in thousands):
Year Ended December 31,Amount
Remainder of fiscal 2022$2,435 
20232,594 
20242,080 
20251,757 
20261,452 
2027730 
$11,048 
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 changes in 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, 2021$5,427 
Provisions for warranties issued during the period876 
Fulfillment of warranty obligations(779)
Balance as of April 3, 2022$5,524 
NOTE 10: Commitments and Contingencies
As of April 3, 2022, the Company had outstanding purchase orders totaling $88,981,000 to procure inventory from various vendors, due in part to higher inventory purchases in response to global supply chain constraints. Certain of these purchase orders may be canceled by the Company, subject to cancellation penalties. These purchase commitments relate primarily to expected sales in the next twelve months.
A significant portion of the Company's outstanding inventory purchase orders as of April 3, 2022, as well as additional preauthorized commitments to procure strategic components based on the Company's expected customer demand, are placed with the Company's primary contract manufacturer for the Company's assembled products. The Company has the obligation to purchase any non-cancelable and non-returnable components that have been purchased by this contract manufacturer with the Company's preauthorization, when these components have not been consumed within the period defined in the terms of the Company's agreement with this contract manufacturer.
NOTE 11: 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. The Company enters into economic hedges utilizing foreign currency forward contracts with maturities that do not exceed approximately three months 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.
14


COGNEX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The Company had the following outstanding forward contracts (in thousands):
April 3, 2022December 31, 2021
CurrencyNotional
Value
USD
Equivalent
Notional
Value
USD
Equivalent
Derivatives Not Designated as Hedging Instruments:
Euro70,000 $77,366 65,000 $73,748 
Chinese Renminbi253,000 39,619 54,374 8,500 
Mexican Peso230,000 11,558 140,000 6,842 
Japanese Yen650,000 5,295 600,000 5,213 
British Pound2,975 3,895 3,370 4,552 
Hungarian Forint1,235,000 3,693 1,355,000 4,155 
Canadian Dollar1,675 1,339 1,480 1,167 

Information regarding the fair value of the outstanding forward contracts was as follows (in thousands):
 Asset DerivativesLiability Derivatives
 BalanceFair ValueBalanceFair Value
 Sheet
Location
April 3, 2022December 31, 2021Sheet
Location
April 3, 2022December 31, 2021
Derivatives Not Designated as Hedging Instruments:
Economic hedge forward contractsPrepaid expenses and other current assets$42 $39 Accrued expenses$441 $230 

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 DerivativesLiability Derivatives
April 3, 2022December 31, 2021April 3, 2022December 31, 2021
Gross amounts of recognized assets$42 $39 Gross amounts of recognized liabilities$441 $230 
Gross amounts offset  Gross amounts offset  
Net amount of assets presented$42 $39 Net amount of liabilities presented$441 $230 

Information regarding the effect of derivative instruments on the consolidated financial statements was as follows (in thousands):
 Location in Financial StatementsThree-months Ended
 April 3, 2022April 4, 2021
Derivatives Not Designated as Hedging Instruments:
Gains (losses) recognized in current operationsForeign currency gain (loss)$1,739 $2,893 
15


COGNEX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 12: 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
April 3, 2022April 4, 2021
Americas$126,658 $107,836 
Europe62,792 57,048 
Greater China48,406 38,238 
Other Asia44,551 35,905 
$282,407 $239,027 

The following table summarizes disaggregated revenue information by revenue type (in thousands):
Three-months Ended
April 3, 2022April 4, 2021
Standard products and services$257,880 $222,326