Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended September 29, 2019 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, Massachusetts01760-2059
(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 September 29, 2019, there were 170,897,294 shares of Common Stock, $.002 par value per share, of the registrant outstanding.
Net income per weighted-average common and common-equivalent share:
Basic
$
0.24
$
0.47
$
0.72
$
1.01
Diluted
$
0.24
$
0.45
$
0.71
$
0.98
Weighted-average common and common-equivalent shares outstanding:
Basic
170,744
172,189
171,053
172,613
Diluted
174,449
177,245
175,164
178,021
Cash dividends per common share
$
0.050
$
0.045
$
0.150
$
0.135
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
Nine-months Ended
September 29, 2019
September 30, 2018
September 29, 2019
September 30, 2018
(unaudited)
(unaudited)
Net income
$
41,685
$
80,436
$
123,538
$
173,849
Other comprehensive income (loss), net of tax:
Available-for-sale investments:
Net unrealized gain (loss), net of tax of ($5) and $24 in the three-month periods and net of tax of $502 and ($82) in the nine-month periods, respectively
265
522
4,827
(180
)
Reclassification of net realized (gain) loss into current operations
(294
)
(266
)
(716
)
(535
)
Net change related to available-for-sale investments
(29
)
256
4,111
(715
)
Foreign currency translation adjustments:
Foreign currency translation adjustments
(1,099
)
(1,881
)
(1,544
)
(5,078
)
Net change related to foreign currency translation adjustments
(1,099
)
(1,881
)
(1,544
)
(5,078
)
Other comprehensive income (loss), net of tax
(1,128
)
(1,625
)
2,567
(5,793
)
Total comprehensive income
$
40,557
$
78,811
$
126,105
$
168,056
The accompanying notes are an integral part of these consolidated financial statements.
4
COGNEX CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
September 29, 2019
December 31, 2018
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
121,701
$
108,212
Current investments
292,072
427,348
Accounts receivable, less reserves of $1,874 and $1,646 in 2019 and 2018, respectively
107,407
119,172
Unbilled revenue
11,210
8,312
Inventories
65,264
83,282
Prepaid expenses and other current assets
28,127
34,000
Total current assets
625,781
780,326
Non-current investments
504,641
262,039
Property, plant, and equipment, net
88,429
91,396
Operating lease assets
15,806
—
Goodwill
113,208
113,208
Intangible assets, net
7,994
10,113
Deferred income taxes
29,273
28,660
Other assets
5,320
3,925
Total assets
$
1,390,452
$
1,289,667
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
12,766
$
16,230
Accrued expenses
48,561
60,220
Accrued income taxes
4,012
5,062
Deferred revenue and customer deposits
10,431
9,845
Operating lease liabilities
5,445
—
Total current liabilities
81,215
91,357
Non-current operating lease liabilities
10,722
—
Deferred income taxes
289
962
Reserve for income taxes
7,151
7,106
Non-current accrued income taxes
51,113
51,113
Other liabilities
744
3,866
Total liabilities
151,234
154,404
Shareholders’ equity:
Preferred stock, $.01 par value – Authorized: 400 shares in 2019 and 2018, respectively, no shares issued and outstanding
—
—
Common stock, $.002 par value – Authorized: 300,000 shares in 2019 and 2018, respectively, issued and outstanding: 170,897 and 170,820 shares in 2019 and 2018, respectively
342
342
Additional paid-in capital
594,427
529,208
Retained earnings
682,383
646,214
Accumulated other comprehensive loss, net of tax
(37,934
)
(40,501
)
Total shareholders’ equity
1,239,218
1,135,263
Total liabilities and shareholders' equity
$
1,390,452
$
1,289,667
The accompanying notes are an integral part of these consolidated financial statements.
5
COGNEX CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Nine-months Ended
September 29, 2019
September 30, 2018
(unaudited)
Cash flows from operating activities:
Net income
$
123,538
$
173,849
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation expense
33,442
31,339
Depreciation of property, plant, and equipment
15,800
13,474
Amortization of intangible assets
2,119
2,307
Amortization of discounts or premiums on investments
(563
)
123
Realized (gain) loss on sale of investments
(716
)
(535
)
Revaluation of contingent consideration
(1,401
)
(50
)
Change in deferred income taxes
(1,805
)
175
Change in operating assets and liabilities:
Accounts receivable
11,387
(18,136
)
Unbilled revenue
(2,900
)
(6,542
)
Inventories
18,019
(27,699
)
Prepaid expenses and other current assets
5,827
(3,437
)
Accounts payable
(3,398
)
(1,182
)
Accrued expenses
(11,827
)
2,266
Accrued income taxes
(1,043
)
(17,497
)
Deferred revenue and customer deposits
698
4,841
Other
(1,863
)
(1,604
)
Net cash provided by operating activities
185,314
151,692
Cash flows from investing activities:
Purchases of investments
(883,363
)
(616,047
)
Maturities and sales of investments
781,929
635,119
Purchases of property, plant, and equipment
(13,518
)
(27,356
)
Net cash provided by (used in) investing activities
(114,952
)
(8,284
)
Cash flows from financing activities:
Issuance of common stock under stock plans
31,780
25,882
Repurchase of common stock
(61,690
)
(142,262
)
Payment of dividends
(25,682
)
(23,283
)
Payment of contingent consideration
—
(1,000
)
Net cash provided by (used in) financing activities
(55,592
)
(140,663
)
Effect of foreign exchange rate changes on cash and cash equivalents
(1,281
)
(1,956
)
Net change in cash and cash equivalents
13,489
789
Cash and cash equivalents at beginning of period
108,212
106,582
Cash and cash equivalents at end of period
$
121,701
$
107,371
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 June 30, 2019
170,661
$
341
$
578,871
$
649,234
$
(36,806
)
$
1,191,640
Issuance of common stock under stock plans
236
1
5,362
—
—
5,363
Stock-based compensation expense
—
—
10,194
—
—
10,194
Payment of dividends
—
—
—
(8,536
)
—
(8,536
)
Net income
—
—
—
41,685
—
41,685
Net unrealized gain (loss) on available-for-sale investments, net of tax of ($5)
—
—
—
—
265
265
Reclassification of net realized (gain) loss on the sale of available-for-sale investments
—
—
—
—
(294
)
(294
)
Foreign currency translation adjustment
—
—
—
—
(1,099
)
(1,099
)
Balance as of September 29, 2019 (unaudited)
170,897
$
342
$
594,427
$
682,383
$
(37,934
)
$
1,239,218
Common Stock
Additional
Paid-in Capital
Retained Earnings
Accumulated
Other
Comprehensive
Loss
Total
Shareholders’
Equity
Shares
Par Value
Balance as of July 1, 2018
172,032
$
344
$
498,343
$
619,212
$
(38,767
)
$
1,079,132
Issuance of common stock under stock plans
553
1
11,070
—
—
11,071
Repurchase of common stock
(394
)
—
—
(20,954
)
—
(20,954
)
Stock-based compensation expense
—
—
9,143
—
—
9,143
Payment of dividends
—
—
—
(7,759
)
—
(7,759
)
Net income
—
—
—
80,436
—
80,436
Net unrealized gain (loss) on available-for-sale investments, net of tax of $24
—
—
—
—
522
522
Reclassification of net realized (gain) loss on the sale of available-for-sale investments
—
—
—
—
(266
)
(266
)
Foreign currency translation adjustment
—
—
—
—
(1,881
)
(1,881
)
Balance as of September 30, 2018 (unaudited)
172,191
$
345
$
518,556
$
670,935
$
(40,392
)
$
1,149,444
The accompanying notes are an integral part of these consolidated financial statements.
7
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, 2018
170,820
$
342
$
529,208
$
646,214
$
(40,501
)
$
1,135,263
Issuance of common stock under stock plans
1,475
3
31,777
—
—
31,780
Repurchase of common stock
(1,398
)
(3
)
—
(61,687
)
—
(61,690
)
Stock-based compensation expense
—
—
33,442
—
—
33,442
Payment of dividends
—
—
—
(25,682
)
—
(25,682
)
Net income
—
—
—
123,538
—
123,538
Net unrealized gain (loss) on available-for-sale investments, net of tax of $502
—
—
—
—
4,827
4,827
Reclassification of net realized (gain) loss on the sale of available-for-sale investments
—
—
—
—
(716
)
(716
)
Foreign currency translation adjustment
—
—
—
—
(1,544
)
(1,544
)
Balance as of September 29, 2019 (unaudited)
170,897
$
342
$
594,427
$
682,383
$
(37,934
)
$
1,239,218
Common Stock
Additional
Paid-in Capital
Retained Earnings
Accumulated
Other
Comprehensive
Loss
Total
Shareholders’
Equity
Shares
Par Value
Balance as of December 31, 2017
173,507
$
347
$
461,338
$
668,587
$
(34,599
)
$
1,095,673
Issuance of common stock under stock plans
1,434
3
25,879
—
—
25,882
Repurchase of common stock
(2,750
)
(5
)
—
(142,257
)
—
(142,262
)
Stock-based compensation expense
—
—
31,339
—
—
31,339
Payment of dividends
—
—
—
(23,283
)
—
(23,283
)
Adjustment as a result of the adoption of ASU 2016-06 "Income Taxes - Intra-Entity Transfers Other than Inventory"
—
—
—
(5,961
)
—
(5,961
)
Net income
—
—
—
173,849
—
173,849
Net unrealized gain (loss) on available-for-sale investments, net of tax of ($82)
—
—
—
—
(180
)
(180
)
Reclassification of net realized (gain) loss on the sale of available-for-sale investments
—
—
—
—
(535
)
(535
)
Foreign currency translation adjustment
—
—
—
—
(5,078
)
(5,078
)
Balance as of September 30, 2018 (unaudited)
172,191
$
345
$
518,556
$
670,935
$
(40,392
)
$
1,149,444
The accompanying notes are an integral part of these consolidated financial statements.
8
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 ASC 842 "Leases," Cognex Corporation (the "Company") has provided new disclosures related to leases 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, 2018 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 September 29, 2019, and the results of its operations for the three-month and nine-month periods ended September 29, 2019 and September 30, 2018, and changes in shareholders’ equity, comprehensive income, and cash flows for the periods presented.
The results disclosed in the Consolidated Statements of Operations for the three-month and nine-month periods ended September 29, 2019 are not necessarily indicative of the results to be expected for the full year.
Leases
The Company accounts for leases in accordance with Accounting Standard Codification (ASC) 842, "Leases." The core principle of ASC 842 is that a lessee should recognize on the balance sheet the assets and liabilities that arise from leases.
At inception of a contract, the Company determines whether that contract is or contains a lease. The Company determines whether a contract contains a lease by assessing whether there is an identified asset and whether the contract conveys the right to control the use of the identified asset for a period of time in exchange for consideration. The Company has control of the asset if it has the right to direct the use of the asset and obtains substantially all of the economic benefits from the use of the asset throughout the period of use.
As a practical expedient, the Company does not recognize a lease asset or lease liability for leases with a lease term of 12 months or less. In the determination of the lease term, the Company considers the existence of extension or termination options and the probability of those options being exercised.
Lease contracts may include lease components and non-lease components, such as common area maintenance and utilities for property leases. As a practical expedient, the Company accounts for the non-lease components together with the lease components as a single lease component for all of its leases.
The Company classifies a lease as a finance lease when it meets any of the following criteria at the lease commencement date: a) the lease transfers ownership of the underlying asset to the Company by the end of the lease term; b) the lease grants the Company an option to purchase the underlying asset that the Company is reasonably certain to exercise; c) the lease term is for the major part of the remaining economic life of the underlying asset (the Company considers a major part to be 75% or more of the remaining economic life of the underlying asset); d) the present value of the sum of the lease payments and any residual value guaranteed by the Company equals or exceeds substantially all of the fair value of the underlying asset (the Company considers substantially all the fair value to be 90% or more of the fair value of the underlying asset amount); or e) the underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term. When none of the criteria above are met, the Company classifies the lease as an operating lease.
On the lease commencement date, the Company records a lease asset and lease liability on the balance sheet. The lease asset consists of: 1) the amount of the initial lease liability; 2) any lease payments made to the lessor at or before the lease commencement date, minus any lease incentives received; and 3) any initial direct cost incurred by the Company. Initial direct costs are incremental costs of a lease that would not have been incurred if the lease had not been obtained and are capitalized as part of the lease asset.
The lease liability equals the present value of the future cash payments discounted using the Company's incremental borrowing rate. The Company’s incremental borrowing rate is the rate of interest that the Company would have to pay to borrow an amount equal to the lease payments over a similar term, which is the three-month London Interbank Offered Rate (LIBOR) plus a 2.5% credit risk spread.
9
Operating lease expense equals the total cash payments recognized on a straight-line basis over the lease term. The amortization of the lease asset is calculated as the straight-line lease expense less the accretion of the interest on the lease liability each period. The lease liability is reduced by the cash payment less the interest each period.
ASU 2016-13 applies to all reporting entities holding financial assets that are not accounted for at fair value through net income (debt securities). The amendments in this ASU eliminate the probable initial recognition threshold to recognize a credit loss under current U.S. GAAP and, instead, reflect an entity’s current estimate of all expected credit losses. In addition, this ASU broadens the information an entity must consider in developing the credit loss estimate, including the use of reasonable and supportable forecasted information. The amendments in this ASU require that credit losses on available-for-sale debt securities be presented as an allowance rather than as a write-down and an entity will be able to record reversals of credit losses in current period net income. For public companies, the guidance in ASU 2016-13 is effective for annual periods beginning after December 15, 2019, and interim periods within those annual periods. This ASU should be applied through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. As of the date of this report, management is in the process of completing the implementation of this ASU, including finalizing the internal credit losses policy and the related processes, internal control, and disclosures. Management does not expect ASU 2016-13 to have a material impact on the Company's financial statements and disclosures.
Accounting Standards Update (ASU) 2017-08, "Receivables - Nonrefundable Fees and Other Costs - Premium Amortization on Purchased Callable Debt Securities"
ASU 2017-08 applies to all reporting entities that hold investments in callable debt securities that have an amortized cost basis in excess of the amount that is repayable by the issuer at the earliest call date (that is, at a premium). The amendments in this ASU shorten the amortization period for certain callable debt securities held at a premium. Specifically, the amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. Under current GAAP, premiums and discounts on callable debt securities generally are amortized to the maturity date. If that callable debt security is subsequently called, the entity records a loss equal to the unamortized premium. The amendments in this ASU more closely align the amortization period of premiums and discounts to expectations incorporated in market pricing on the underlying securities. For public companies, the amendments in ASU 2017-08 are effective for annual periods beginning after December 15, 2019 and interim reporting periods within annual years beginning after December 15, 2020. This ASU should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption, and, in the period of adoption, the entity is required to provide disclosures about the change in accounting principle. Early adoption is permitted, including adoption in an interim period. Management does not expect ASU 2017-08 to have a material impact on the Company's financial statements and disclosures.
Accounting Standards Update (ASU) 2018-15, "Intangibles - Goodwill and Other - Internal-Use Software"
ASU 2018-15 applies to entities that are a customer in a hosting arrangement that is a service contract. The amendments in this ASU align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. Accordingly, the amendments in this ASU require an entity in a hosting arrangement that is a service contract to follow the guidance in Subtopic 350-40 to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. Further, it requires the entity to expense the capitalized implementation costs over the term of the hosting arrangement. In addition, it requires the presentation of the expenses related to the capitalized implementation costs in the same line item in the statement of income as the fees associated with the hosting element of the arrangement and the classification of the payments for the capitalized implementation costs in the statement of cash flows in the same manner as the payments made for the fees associated with the hosting element. The amendments in this ASU are effective for public entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. Management does not expect ASU 2018-15 to have a material impact on the Company's financial statements and disclosures.
10
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 September 29, 2019 (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
$
16,081
$
—
$
—
Treasury bills
—
362,069
—
Corporate bonds
—
255,207
—
Asset-backed securities
—
146,392
—
Sovereign bonds
—
22,300
—
Agency bonds
—
5,905
—
Municipal bonds
—
4,840
—
Economic hedge forward contracts
—
19
—
Liabilities:
Economic hedge forward contracts
—
70
—
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 did not record an other-than-temporary impairment of these financial assets during the three-month or nine-month periods ended September 29, 2019 and September 30, 2018.
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 following table summarizes the activity for the Company's liability measured at fair value using Level 3 inputs for the nine-month period ended September 29, 2019 (in thousands):
Balance as of December 31, 2018
$
2,554
Fair value adjustment to GVi contingent consideration
(1,646
)
Fair value adjustment to Chiaro contingent consideration
245
Balance as of September 29, 2019
$
1,153
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 or nine-month periods ended September 29, 2019 and September 30, 2018.
11
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):
September 29, 2019
December 31, 2018
Cash
$
105,620
$
104,655
Money market instruments
16,081
3,557
Cash and cash equivalents
121,701
108,212
Treasury bills
105,454
198,477
Asset-backed securities
89,576
78,407
Corporate bonds
87,209
137,871
Sovereign bonds
6,300
8,101
Municipal bonds
3,533
4,492
Current investments
292,072
427,348
Treasury bills
256,615
32,760
Corporate bonds
167,998
162,566
Asset-backed securities
56,816
53,631
Sovereign bonds
16,000
6,316
Agency bonds
5,905
5,921
Municipal bonds
1,307
845
Non-current investments
504,641
262,039
$
918,414
$
797,599
Treasury bills consist of debt securities issued by the U.S. government; 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; sovereign bonds consist of direct debt issued by foreign governments; municipal bonds consist of debt securities issued by state and local government entities; 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.
The following table summarizes the Company’s available-for-sale investments as of September 29, 2019 (in thousands):
Amortized Cost
Gross Unrealized Gains
Gross Unrealized Losses
Fair Value
Current:
Treasury bills
$
105,254
$
212
$
(12
)
$
105,454
Asset-backed securities
89,226
359
(9
)
89,576
Corporate bonds
86,990
222
(3
)
87,209
Sovereign bonds
6,286
14
—
6,300
Municipal bonds
3,535
—
(2
)
3,533
Non-current:
Treasury bills
255,441
1,253
(79
)
256,615
Corporate bonds
167,464
584
(50
)
167,998
Asset-backed securities
56,636
195
(15
)
56,816
Sovereign bonds
15,969
43
(12
)
16,000
Agency bonds
5,930
—
(25
)
5,905
Municipal bonds
1,300
7
—
1,307
$
794,031
$
2,889
$
(207
)
$
796,713
12
COGNEX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The following table summarizes the Company’s gross unrealized losses and fair values for available-for-sale investments in an unrealized loss position as of September 29, 2019 (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
Treasury bills
$
108,863
$
(91
)
$
—
$
—
$
108,863
$
(91
)
Corporate bonds
23,263
(17
)
20,713
(36
)
43,976
(53
)
Asset-backed securities
11,149
(15
)
8,093
(9
)
19,242
(24
)
Sovereign bonds
11,558
(12
)
—
—
11,558
(12
)
Agency bonds
5,905
(25
)
—
—
5,905
(25
)
Municipal bonds
—
—
343
(2
)
343
(2
)
$
160,738
$
(160
)
$
29,149
$
(47
)
$
189,887
$
(207
)
As of September 29, 2019, the Company did not recognize any other-than-temporary impairment of these investments. In its evaluation, management considered the type of security, the credit rating of the security, the length of time the security has been in a loss position, the size of the loss position, the Company's intent and ability to hold the security to expected recovery of value, and other meaningful 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 Company recorded gross realized gains and gross realized losses on the sale of debt securities totaling $361,000 and $67,000, respectively, during the three-month period ended September 29, 2019 and $283,000 and $17,000, respectively, during the three-month period ended September 30, 2018. The Company recorded gross realized gains and gross realized losses on the sale of debt securities totaling $818,000 and $103,000, respectively, during the nine-month period ended September 29, 2019 and $646,000 and $111,000, respectively, during the nine-month period ended September 30, 2018. 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 September 29, 2019 (in thousands):