##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 for the quarterly period ended June 29, 2008 or
 o
    
    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 0 -17869
 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)
  Yes þ
    
    No o
  Large accelerated filer þAccelerated filer oNon-accelerated filer o(Do not check if a smaller reporting company)Smaller reporting company o  Yes o
    
    No þ




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##### 



INDEX
 
 PART I
    
    FINANCIAL INFORMATION
    
    
    1Item 1.
    
    Financial Statements
    
    
    1Consolidated Statements of Operations for the three-month and
six-month periods ended June 29, 2008 and July 1, 2007
    
    
    1Consolidated Balance Sheets at June 29, 2008 and December 31, 2007
    
    
    2Consolidated Statement of Shareholders Equity for the six-month
period ended June 29, 2008
    
    
    3Consolidated Condensed Statements of Cash Flows for the six-month
periods ended June 29, 2008 and July 1, 2007
    
    
    4Notes to Consolidated Financial Statements (interim periods unaudited)
    
    
    5Item 2.
    
    Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    14Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    19Item 4.
    
    Controls and Procedures
    
    
    19PART II
    
    OTHER INFORMATION
    
    
    20Item 1.
    
    Legal Proceedings
    
    
    20Item 1A.
    
    Risk Factors
    
    
    21Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    21Item 3.
    
    Defaults Upon Senior Securities
    
    
    22Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    22Item 5.
    
    Other Information
    
    
    22Item 6.
    
    Exhibits
    
    
    22Signatures
    
    
    23EX-10.2 FORM OF STOCK OPTION AGREEMENT UNDER 2007 STOCK OPTION AND INCENTIVE PLANEX-10.3 LETTER FROM THE COMPANY TO RICHARD A. MORIN REGARDING STOCK OPTION AGREEMENTSEX-31.1 SECTION 302 CERTIFICATION OF THE CEOEX-31.2 SECTION 302 CERTIFICATION OF THE CFOEX-32.1 SECTION 906 CERTIFICATION OF THE CEOEX-32.2 SECTION 906 CERTIFICATION OF THE CFO




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##### Table of Contents



PART I: FINANCIAL INFORMATION
 
 ITEM 1: FINANCIAL STATEMENTS
 
 COGNEX CORPORATION
 CONSOLIDATED STATEMENTS OF OPERATIONS
 Three Months Ended
    
    
    Six Months EndedJune 29,
    
    
    July 1,
    
    
    June 29,
    
    
    July 1,2008
    
    
    2007
    
    
    2008
    
    
    2007(unaudited)
    
    
    (unaudited)RevenueProduct
    
    $
    62,456
    
    
    $
    48,725
    
    
    $
    117,399
    
    
    $
    93,636Service
    
    
    4,633
    
    
    
    6,017
    
    
    
    10,203
    
    
    
    12,03367,089
    
    
    
    54,742
    
    
    
    127,602
    
    
    
    105,669Cost of revenueProduct
    
    
    16,082
    
    
    
    13,968
    
    
    
    30,074
    
    
    
    24,745Service
    
    
    2,943
    
    
    
    3,982
    
    
    
    6,006
    
    
    
    7,59319,025
    
    
    
    17,950
    
    
    
    36,080
    
    
    
    32,338Gross marginProduct
    
    
    46,374
    
    
    
    34,757
    
    
    
    87,325
    
    
    
    68,891Service
    
    
    1,690
    
    
    
    2,035
    
    
    
    4,197
    
    
    
    4,44048,064
    
    
    
    36,792
    
    
    
    91,522
    
    
    
    73,331Research, development, and engineering expenses
    
    
    9,290
    
    
    
    7,870
    
    
    
    18,219
    
    
    
    15,751Selling, general, and administrative expenses
    
    
    28,048
    
    
    
    24,593
    
    
    
    54,574
    
    
    
    48,564Operating income
    
    
    10,726
    
    
    
    4,329
    
    
    
    18,729
    
    
    
    9,016Foreign currency gain (loss)
    
    
    (647
    )
    
    
    (323
    )
    
    
    471
    
    
    
    (441
    )Investment income
    
    
    1,757
    
    
    
    2,040
    
    
    
    3,734
    
    
    
    4,005Other income (expense)
    
    
    29
    
    
    
    (102
    )
    
    
    384
    
    
    
    (289
    )Income from continuing operations before income tax expense
    
    
    11,865
    
    
    
    5,944
    
    
    
    23,318
    
    
    
    12,291Income tax expense on continuing operations
    
    
    3,103
    
    
    
    2,004
    
    
    
    5,966
    
    
    
    3,664Income from continuing operations
    
    
    8,762
    
    
    
    3,940
    
    
    
    17,352
    
    
    
    8,627Loss from operations of discontinued business, net of tax (Note 14)
    
    
    (3,109
    )
    
    
    (113
    )
    
    
    (3,224
    )
    
    
    (165
    )Net Income
    
    $
    5,653
    
    
    $
    3,827
    
    
    $
    14,128
    
    
    $
    8,462Basic earnings per weighted-average common and common-equivalent
share:Income from continuing operations
    
    $
    0.21
    
    
    $
    0.09
    
    
    $
    0.41
    
    
    $
    0.20Loss from discontinued operations
    
    $
    (0.08
    )
    
    $
    0.00
    
    
    $
    (0.08
    )
    
    $
    (0.01
    )Net Income
    
    $
    0.13
    
    
    $
    0.09
    
    
    $
    0.33
    
    
    $
    0.19Diluted earnings per weighted-average common and common-equivalent
share:Income from continuing operations
    
    $
    0.21
    
    
    $
    0.09
    
    
    $
    0.41
    
    
    $
    0.19Loss from discontinued operations
    
    $
    (0.08
    )
    
    $
    0.00
    
    
    $
    (0.08
    )
    
    $
    0.00Net Income
    
    $
    0.13
    
    
    $
    0.09
    
    
    $
    0.33
    
    
    $
    0.19Weighted-average common and common-equivalent shares outstanding:Basic
    
    
    41,942
    
    
    
    43,857
    
    
    
    42,459
    
    
    
    44,146Diluted
    
    
    42,588
    
    
    
    44,281
    
    
    
    42,742
    
    
    
    44,665Cash dividends per common share
    
    $
    0.085
    
    
    $
    0.085
    
    
    $
    0.170
    
    
    $
    0.170
  1




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##### Table of Contents



COGNEX CORPORATION
CONSOLIDATED BALANCE SHEETS
 June 29,
    
    
    December 31,2008
    
    
    2007(unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    131,363
    
    
    $
    104,144Short-term investments
    
    
    77,052
    
    
    
    113,179Accounts receivable, less reserves of
$1,456 and $1,317 in 2008 and 2007,
respectively
    
    
    40,125
    
    
    
    38,900Inventories, net
    
    
    28,815
    
    
    
    27,394Deferred income taxes
    
    
    7,330
    
    
    
    7,504Prepaid expenses and other current assets
    
    
    16,384
    
    
    
    16,361Held-for-sale assets (Note 14)
    
    
    3,170
    
    
    
    5,919Total current assets
    
    
    304,239
    
    
    
    313,401Long-term investments
    
    
    54,038
    
    
    
    50,565Property, plant, and equipment, net
    
    
    28,024
    
    
    
    26,636Deferred income taxes
    
    
    20,586
    
    
    
    19,750Intangible assets, net
    
    
    36,888
    
    
    
    39,475Goodwill
    
    
    81,488
    
    
    
    81,032Other assets
    
    
    9,047
    
    
    
    8,687$
    534,310
    
    
    $
    539,546LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    9,576
    
    
    $
    7,245Accrued expenses
    
    
    21,233
    
    
    
    20,098Accrued income taxes
    
    
    2,831
    
    
    
    3,242Deferred revenue and customer deposits
    
    
    15,188
    
    
    
    13,288Total current liabilities
    
    
    48,828
    
    
    
    43,873Reserve for income taxes
    
    
    19,470
    
    
    
    19,308Commitments and contingencies (Notes 5, 6, 7, and 8)Shareholders equity:Common stock, $.002 par value 
Authorized: 140,000 shares, issued: 41,960
and 43,347 shares in 2008 and 2007,
respectively
    
    
    84
    
    
    
    87Additional paid-in capital
    
    
    115,188
    
    
    
    140,943Retained earnings
    
    
    344,146
    
    
    
    337,231Accumulated other comprehensive gain (loss)
    
    
    6,594
    
    
    
    (1,896
    )Total shareholders equity
    
    
    466,012
    
    
    
    476,365$
    534,310
    
    
    $
    539,546
  2




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##### Table of Contents



COGNEX CORPORATION
CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY
 AccumulatedAdditional
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    TotalCommon Stock
    
    
    Paid-in
    
    
    Retained
    
    
    Comprehensive
    
    
    Comprehensive
    
    
    ShareholdersShares
    
    
    Par Value
    
    
    Capital
    
    
    Earnings
    
    
    Gain (Loss)
    
    
    Income
    
    
    EquityBalance at December 31, 2007
    
    
    43,347
    
    
    $
    87
    
    
    $
    140,943
    
    
    $
    337,231
    
    
    $
    (1,896
    )
    
    
    
    
    
    $
    476,365Issuance of common stock under stock option
and stock purchase plans
    
    
    779
    
    
    
    
    
    
    
    13,519
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,519Stock-based compensation expense
    
    
    
    
    
    
    
    
    
    
    4,396
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,396Excess tax benefit from stock option
exercises
    
    
    
    
    
    
    
    
    
    
    1,640
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,640Recognized tax benefit from stock option
exercises from previous year
    
    
    
    
    
    
    
    
    
    
    307
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    307Repurchase of common stock
    
    
    (2,166
    )
    
    
    (3
    )
    
    
    (45,617
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (45,620
    )Payment of dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,213
    )
    
    
    
    
    
    
    
    
    
    
    (7,213
    )Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,128
    
    
    
    
    
    
    $
    14,128
    
    
    
    14,128Net unrealized gain on available-for-sale
investments, net of tax of $5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9
    
    
    
    9
    
    
    
    9Foreign currency translation adjustment,
net of tax of $1,378
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,481
    
    
    
    8,481
    
    
    
    8,481Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    22,618Balance at June 29, 2008 (unaudited)
    
    
    41,960
    
    
    $
    84
    
    
    $
    115,188
    
    
    $
    344,146
    
    
    $
    6,594
    
    
    
    
    
    
    $
    466,012
  3




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##### Table of Contents



COGNEX CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
 Six Months EndedJune 29,
    
    
    July 1,2008
    
    
    2007(unaudited)Cash flows from operating activities:Net income
    
    $
    14,128
    
    
    $
    8,462Adjustments to reconcile net income to net cash provided by operations:Impairment loss related to discontinued business (Note 14)
    
    
    2,987
    
    
    
    Stock-based compensation expense
    
    
    4,396
    
    
    
    5,521Depreciation and amortization
    
    
    5,825
    
    
    
    5,650Provisions for excess and obsolete inventory
    
    
    1,259
    
    
    
    3,130Excess tax benefit from stock option exercises
    
    
    (1,640
    )
    
    
    (181
    )Deferred income tax benefit
    
    
    (1,956
    )
    
    
    (4,384
    )Deposit related to Japan tax audit (Note 8)
    
    
    
    
    
    
    (6,336
    )Change in operating assets and liabilities
    
    
    2,996
    
    
    
    6,127Net cash provided by operating activities
    
    
    27,995
    
    
    
    17,989Cash flows from investing activities:Purchase of investments
    
    
    (60,776
    )
    
    
    (172,022
    )Maturity and sale of investments
    
    
    95,704
    
    
    
    182,870Purchase of property, plant, and equipment
    
    
    (3,507
    )
    
    
    (2,561
    )Cash paid for business acquisition
    
    
    (1,000
    )
    
    
    (502
    )Cash deposit related to discontinued business (Note 14)
    
    
    250
    
    
    
    Net cash provided by investing activities
    
    
    30,671
    
    
    
    7,785Cash flows from financing activities:Issuance of common stock under stock option and stock purchase plans
    
    
    13,519
    
    
    
    4,640Repurchase of common stock
    
    
    (45,620
    )
    
    
    (32,663
    )Payment of dividends
    
    
    (7,213
    )
    
    
    (7,534
    )Excess tax benefit from stock option exercises
    
    
    1,640
    
    
    
    181Net cash used in financing activities
    
    
    (37,674
    )
    
    
    (35,376
    )Effect of foreign exchange rate changes on cash
    
    
    6,227
    
    
    
    1,006Net increase (decrease) in cash and cash equivalents
    
    
    27,219
    
    
    
    (8,596
    )Cash and cash equivalents at beginning of period
    
    
    104,144
    
    
    
    87,361Cash and cash equivalents at end of period
    
    $
    131,363
    
    
    $
    78,765
  4




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##### Table of Contents



COGNEX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 1: Summary of Significant Accounting Policies
    NOTE 2: New Pronouncements
 FASB Statement No. 141R, Business Combinations
  NOTE 3: Cash, Cash Equivalents, and Investments
  June 29,
    
    
    December 31,2008
    
    
    2007Cash
    
    $
    120,378
    
    
    $
    104,144Cash equivalents
    
    
    10,985
    
    
    
    Cash and cash equivalents
    
    $
    131,363
    
    
    $
    104,144Municipal bonds
    
    
    77,052
    
    
    
    113,179Short-term investments
    
    $
    77,052
    
    
    $
    113,179Municipal bonds
    
    
    46,570
    
    
    
    43,097Limited partnership interest (accounted for using cost method)
    
    
    7,468
    
    
    
    7,468Long-term investments
    
    $
    54,038
    
    
    $
    50,565$
    262,453
    
    
    $
    267,888
 5




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##### Table of Contents



COGNEX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 3: Cash, Cash Equivalents, and Investments (continued)
  NOTE 4: Inventories
  June 29,
    
    
    December 31,2008
    
    
    2007Raw materials
    
    $
    14,513
    
    
    $
    13,005Work-in-process
    
    
    2,355
    
    
    
    1,336Finished goods
    
    
    11,947
    
    
    
    13,053$
    28,815
    
    
    $
    27,394
 NOTE 5: Warranty Obligations
   Balance at December 31, 2007
    
    $
    1,462Provisions for warranties issued during the period
    
    
    734Fulfillment of warranty obligations
    
    
    (764
    )Foreign exchange rate changes
    
    
    66Balance at June 29, 2008
    
    $
    1,498
 NOTE 6: Contingencies
  6




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COGNEX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 6: Contingencies (continued)
    NOTE 7: Indemnification Provisions
    7




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##### Table of Contents



COGNEX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 8: Income Taxes
     NOTE 9: Stock-Based Compensation Expense
   8




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COGNEX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 9: Stock-Based Compensation Expense (continued)
  Weighted-Weighted-
    
    
    AverageAverage
    
    
    RemainingExercise
    
    
    Contractual
    
    
    AggregateShares
    
    
    Price
    
    
    Term
    
    
    Intrinsic Value(in thousands)
    
    
    
    
    
    (in years)
    
    
    (in thousands)Outstanding at December 31, 2007
    
    
    10,940
    
    
    $
    25.50Granted
    
    
    2,321
    
    
    
    20.12Exercised
    
    
    (774
    )
    
    
    17.30Forfeited or Expired
    
    
    (268
    )
    
    
    25.77Outstanding at June 29, 2008
    
    
    12,219
    
    
    $
    24.99
    
    
    
    6.5
    
    
    $
    18,864Exercisable at June 29, 2008
    
    
    7,716
    
    
    $
    26.53
    
    
    
    5.0
    
    
    $
    8,553
   Three Months Ended
    
    Six Months EndedJune 29,
    
    July 1,
    
    June 29,
    
    July 1,2008
    
    2007
    
    2008
    
    2007Risk-free rate
    
    
    3.8
    %
    
    
    4.9
    %
    
    
    3.9
    %
    
    
    4.9
    %Expected dividend yield
    
    
    1.3
    %
    
    
    1.5
    %
    
    
    1.7
    %
    
    
    1.5
    %Expected volatility
    
    
    42
    %
    
    
    35
    %
    
    
    42
    %
    
    
    35
    %Expected term (in years)
    
    
    6.5
    
    
    
    4.3
    
    
    
    6.0
    
    
    
    4.3
 Risk-free rate
 Expected dividend yield
 Expected volatility
 Expected term
 9




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COGNEX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 9: Stock-Based Compensation Expense (continued)
     Three Months Ended
    
    
    Six Months EndedJune 29, 2008
    
    
    July 1, 2007
    
    
    June 29, 2008
    
    
    July 1, 2007Product cost of revenue
    
    $
    145
    
    
    $
    149
    
    
    $
    315
    
    
    $
    312Service cost of revenue
    
    
    127
    
    
    
    148
    
    
    
    315
    
    
    
    277Research, development, and engineering
    
    
    728
    
    
    
    723
    
    
    
    1,593
    
    
    
    1,545Selling, general, and administrative
    
    
    1,523
    
    
    
    1,509
    
    
    
    2,173
    
    
    
    3,387$
    2,523
    
    
    $
    2,529
    
    
    $
    4,396
    
    
    $
    5,521
  Note 10: Stock Repurchase Program
   10




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COGNEX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 10: Stock Repurchase Program (continued)
    NOTE 11: Dividends
   NOTE 12: Weighted-Average Shares
  Three Months Ended
    
    Six Months EndedJune 29, 2008
    
    July 1, 2007
    
    June 29, 2008
    
    July 1, 2007Basic weighted-average common
shares outstanding
    
    
    41,942
    
    
    
    43,857
    
    
    
    42,459
    
    
    
    44,146Effect of dilutive stock options
    
    
    646
    
    
    
    424
    
    
    
    283
    
    
    
    519Diluted weighted-average common
and common-equivalent shares
outstanding
    
    
    42,588
    
    
    
    44,281
    
    
    
    42,742
    
    
    
    44.665
  NOTE 13: Segment Information
  11




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COGNEX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 13: Segment Information (continued)
  ReconcilingMVSD
    
    SISD
    
    Items
    
    ConsolidatedThree Months Ended
June 29, 2008Product revenue
    
    $
    55,456
    
    
    $
    7,000
    
    
    $
    
    
    
    $
    62,456Service revenue
    
    
    2,222
    
    
    
    2,411
    
    
    
    
    
    
    
    4,633Operating income
    
    
    14,635
    
    
    
    1,355
    
    
    
    (5,264
    )
    
    
    10,726Six Months Ended
June 29, 2008Product revenue
    
    $
    106,646
    
    
    $
    10,753
    
    
    $
    
    
    
    $
    117,399Service revenue
    
    
    5,276
    
    
    
    4,927
    
    
    
    
    
    
    
    10,203Operating income
    
    
    28,033
    
    
    
    1,322
    
    
    
    (10,626
    )
    
    
    18,729
 ReconcilingMVSD
    
    SISD
    
    Items
    
    ConsolidatedThree Months Ended
July 1, 2007Product revenue
    
    $
    44,577
    
    
    $
    4,148
    
    
    $
    
    
    
    $
    48,725Service revenue
    
    
    3,436
    
    
    
    2,581
    
    
    
    
    
    
    
    6,017Operating income
    
    
    9,110
    
    
    
    (66
    )
    
    
    (4,715
    )
    
    
    4,329Six Months Ended
July 1, 2007Product revenue
    
    $
    86,508
    
    
    $
    7,128
    
    
    $
    
    
    
    $
    93,636Service revenue
    
    
    6,635
    
    
    
    5,398
    
    
    
    
    
    
    
    12,033Operating income
    
    
    20,127
    
    
    
    (691
    )
    
    
    (10,420
    )
    
    
    9,016
  Note 14: Sale of Lane Departure Warning Business
   12




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COGNEX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 14: Sale of Lane Departure Warning Business (continued)
  Inventories
    
    $
    85Prepaid expenses and other current assets
    
    
    45Property, plant, and equipment, net
    
    
    49Intangible assets
    
    
    222Goodwill
    
    
    5,756Valuation allowance
    
    
    (2,987
    )$
    3,170
  13




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ITEM 2: MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Forward-Looking Statements
  Executive Overview
   
    
    Semiconductor and electronics capital equipment manufacturers purchase Cognex vision
products and integrate them into the automation equipment that they manufacture and then
sell to their customers to either make semiconductor chips or assemble printed circuit
boards. Although the Company sells to original equipment manufacturers (OEMs) in a number
of industries, these semiconductor and electronics OEMs have historically been large
consumers of our products. Over the past several years, however, we have diversified our
customer base beyond the semiconductor and electronics capital equipment sector. Demand
from these capital equipment manufacturers is highly cyclical, with periods of investment
followed by temporary downturns. Sales to semiconductor and electronics capital equipment
manufacturers represented approximately 19% of total revenue for the second quarter of
2008.
    
    Discrete manufacturers in the automotive, consumer electronics, food, beverage,
healthcare, pharmaceutical, aerospace, and other industries use machine vision for a wide
variety of applications in factory automation. These manufacturers purchase Cognex vision
products and install them on their production lines or automation cells. We believe that long-term, sustained revenue
growth will come from a broad base of factory automation customers. Accordingly, we have
invested in developing new products and functionality that make vision easier to use and in
building a worldwide sales and support infrastructure in order to access more of the
potential market for machine vision. Sales to discrete factory automation customers
represented approximately 67% of total revenue for the second quarter of 2008.
    
    Surface inspection customers are manufacturers of materials processed in a continuous
fashion, such as metals, paper, non-wovens, plastics, and glass. These customers need
sophisticated
 14




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machine vision to detect and classify defects on the surfaces of those
materials as they are being processed at high speeds. Surface inspection sales represented
approximately 14% of total revenue for the second quarter of 2008.
   Results of Operations
 Revenue
       15




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Gross Margin
      Operating Expenses
     16




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Nonoperating Income (Expense)
    17




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Income Tax Expense on Continuing Operations
  Discontinued Operations
   Liquidity and Capital Resources
     18




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ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 ITEM 4: CONTROLS AND PROCEDURES
  19




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PART II: OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
    20




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ITEM 1A. RISK FACTORS
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  Total Number of
    
    Approximate DollarShares Purchased as
    
    Value of SharesPart of Publicly
    
    that May Yet BeTotal Number of
    
    Average Price
    
    Announced Plans or
    
    Purchased Under thePeriod
    
    Shares Purchased
    
    Paid per Share
    
    Programs (1)
    
    Plans or ProgramsMarch 31  April 30,
2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    90,236,000May 1  May 31, 2008
    
    
    499,199
    
    
    $
    25.91
    
    
    
    499,199
    
    
    $
    77,303,000June 1  June 29, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    77,303,000Total
    
    
    499,199
    
    
    $
    25.91
    
    
    
    499,199
    
    
    $
    77,303,000
 
 (1)
    
    In July 2006, the Companys Board of Directors authorized the
repurchase of up to $100,000,000 of the Companys common stock. This repurchase
program was completed during the second quarter of 2008. In March 2008, the
Companys Board of Directors authorized the repurchase of up to an additonal
$30,000,000 of the Companys common stock under a Rule 10b5-1 Plan. In April
2008, the Companys Board of Directors authorized the repurchase of up to an
additional $50,000,000 of the Companys common stock. 21




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ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
      
 ITEM 5. OTHER INFORMATION
  
 ITEM 6. EXHIBITS
        
 *
    
    Filed herewith**
    
    Furnished herewith 22




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SIGNATURES
  DATE: July 28, 2008
    COGNEX CORPORATION/s/ Robert J. ShillmanRobert J. ShillmanChief Executive Officer, President, and Chairman of the
Board of Directors
(duly authorized officer, principal executive officer)/s/ Richard A. MorinRichard A. MorinSenior Vice President of Finance and Administration, Chief
Financial Officer, and Treasurer
(duly authorized officer, principal financial
and accounting officer) 23