8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 30, 2013

FARO TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

Florida	0-23081	59-3157093
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

250 Technology Park, Lake Mary, Florida 32746

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (407) 333-9911

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

On July 30, 2013, FARO Technologies, Inc. (the “Company”) issued a press release announcing its results of operations for the second fiscal quarter ended June 29, 2013. A copy of the press release is furnished as Exhibit 99.1 hereto and is incorporated herein by reference.

The information furnished pursuant to Item 2.02 and Exhibit 99.1 of this Current Report on Form 8-K shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. The information in this Current Report shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date of this Current Report, regardless of any general incorporation language in the filing.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

The following exhibit is furnished with this Current Report on Form 8-K:

Exhibit Number	Description
99.1	Press release dated July 30, 2013.

SIGNATURES

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

	FARO Technologies, Inc. (Registrant)
July 30, 2013	/s/ Keith Bair
	By: Keith Bair
	Its: Chief Financial Officer

EXHIBIT INDEX

Exhibit Number	Description
99.1	Press release dated July 30, 2013.

EX-99.1

Exhibit 99.1

Keith Bair, Senior Vice President and CFO

keith.bair@FARO.com, 407-333-9911

FARO Reports Second Quarter 2013 Results

LAKE MARY, FL, July 30, 2013 – FARO Technologies, Inc. (NASDAQ: FARO) today announced results for the second quarter ended June 29, 2013. Sales in the second quarter of 2013 increased to $68.3 million, from $66.8 million in the second quarter of 2012. The Company reported net income of $3.6 million, or $0.21 per share, in the second quarter of 2013, compared to $4.7 million, or $0.28 per share, in the second quarter of 2012.

New order bookings for the second quarter of 2013 were $66.7 million, a decrease of 6.1% from $71.0 million in the second quarter of 2012.

Gross margin for the second quarter of 2013 was 54.0%, compared to 55.5% in the second quarter of 2012. Gross margins were slightly lower primarily due to lower average selling prices for certain metrology products.

The Company’s operating margin for the second quarter decreased to 8.0%, compared to 10.3% in the second quarter of 2012. Operating expenses increased due to staffing costs and related expenses of $1.8 million primarily in our sales and marketing and research and development organizations, offset by lower legal and professional fees of approximately $1.0 million.

“Our results in the second quarter were impacted by ongoing economic softness in Europe and Asia. While interest in FARO products remains strong, many customers have deferred purchase decisions in light of economic uncertainty,” stated Jay Freeland, FARO’s President and CEO. “The Americas region continues to show signs of strength, generating double-digit sales growth in the quarter and our product development pipeline remains robust. To capitalize on anticipated improvement in our markets, we added staff to our sales and research and development organizations, which adversely

impacted our second quarter results but positions the Company well looking forward. We expect the second half of 2013 should provide an opportunity for improvement driven by the global increase in new sales account managers. However, if the overall macroeconomic environment remains stagnant for the rest of 2013, our markets may remain under some pressure.”

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties, such as statements about demand for its products, anticipated improvement in the markets in which it operates, its product development pipeline, its ability to capitalize on market conditions, and its future operating results and financial condition. Statements that are not historical facts or that describe the Company’s plans, objectives, projections, expectations, assumptions, strategies, or goals are forward-looking statements. In addition, words such as “intend,” “believe,” “will,” “expect” and similar expressions or discussions of FARO’s plans or other intentions identify forward-looking statements. Forward-looking statements are not guarantees of future performance and are subject to various known and unknown risks, uncertainties, and other factors that may cause actual results, performances, or achievements to differ materially from future results, performances, or achievements expressed or implied by such forward-looking statements. Consequently, undue reliance should not be placed on these forward-looking statements.

Factors that could cause actual results to differ materially from what is expressed or forecasted in such forward-looking statements include, but are not limited to:

• development by others of new or improved products, processes or technologies that make the Company’s products obsolete or less competitive;

• the cyclical nature of the industries of the Company’s customers and material adverse changes in customers’ access to liquidity and capital;

• declines or other adverse changes, or lack of improvement, in industries that the Company serves or the domestic and international economies in the regions of the world where the Company operates and other general economic, business, and financing conditions;

• risks associated with international operations, such as fluctuations in currency exchange rates, difficulties in staffing and managing foreign operations, political and economic instability, compliance with import and export regulations, and the burdens and potential exposure of complying with a wide variety of U.S. and foreign laws and labor practices;

• other risks detailed in Part I, Item 1A. Risk Factors in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

Forward-looking statements in this release represent the Company’s judgment as of the date of this release. The Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.

About FARO

FARO is the world’s most trusted source for 3D measurement technology. The Company develops and markets computer-aided measurement and imaging devices and software. Technology from FARO permits high-precision 3D measurement, imaging and comparison of parts and complex structures within production and quality assurance

processes. The devices are used for inspecting components and assemblies, rapid prototyping, documenting large volume spaces or structures in 3D, surveying and construction, as well as for investigation and reconstruction of accident sites or crime scenes.

Approximately 15,000 customers are operating more than 30,000 installations of FARO’s systems, worldwide. The Company’s global headquarters is located in Lake Mary, FL; its European regional headquarters in Stuttgart, Germany; and its Asia/Pacific regional headquarters in Singapore. FARO has offices in Brazil, Mexico, United Kingdom, France, Spain, Italy, Poland, Netherlands, India, China, Malaysia, Vietnam, Thailand and Japan.

More information is available at http://www.faro.com.

###

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months Ended						Six Months Ended
(in thousands, except share data)	June 29, 2013			June 30, 2012			June 29, 2013			June 30, 2012
SALES
Product	$	55,174		$	55,432		$	107,656		$	109,856
Service		13,155			11,330			26,043			22,135
Total Sales		68,329			66,762			133,699			131,991
COST OF SALES
Product		22,921			22,320			44,260			42,826
Service		8,482			7,382			15,688			14,919
Total Cost of Sales (exclusive of depreciation and amortization, shown separately below)		31,403			29,702			59,948			57,745
GROSS PROFIT		36,926			37,060			73,751			74,246
OPERATING EXPENSES:
Selling		16,716			15,841			33,366			31,879
General and administrative		7,826			8,134			15,341			14,762
Depreciation and amortization		1,736			1,689			3,569			3,368
Research and development		5,162			4,525			10,287			8,933
Total operating expenses		31,440			30,189			62,563			58,942
INCOME FROM OPERATIONS		5,486			6,871			11,188			15,304
OTHER (INCOME) EXPENSE
Interest income		(19	)		(20	)		(35	)		(121	)
Other expense, net		504			401			619			261
Interest expense		0			7			1			20
INCOME BEFORE INCOME TAX EXPENSE		5,001			6,483			10,603			15,144
INCOME TAX EXPENSE		1,370			1,749			2,398			3,660
NET INCOME	$	3,631		$	4,734		$	8,205		$	11,484
NET INCOME PER SHARE - BASIC	$	0.21		$	0.28		$	0.48		$	0.68
NET INCOME PER SHARE - DILUTED	$	0.21		$	0.28		$	0.48		$	0.67
Weighted average shares - Basic		17,097,973			16,921,012			17,054,354			16,861,221
Weighted average shares - Diluted		17,173,015			17,140,115			17,177,748			17,157,185

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)	June 29, 2013 (unaudited)			December 31, 2012
ASSETS
Current Assets:
Cash and cash equivalents	$	111,308		$	93,233
Short-term investments		64,993			64,990
Accounts receivable, net		51,717			62,559
Inventories, net		47,781			48,894
Deferred income taxes, net		5,925			7,216
Prepaid expenses and other current assets		11,823			11,186
Total current assets		293,547			288,078
Property and Equipment:
Machinery and equipment		33,296			32,236
Furniture and fixtures		6,443			6,516
Leasehold improvements		10,884			10,897
Property and equipment at cost		50,623			49,649
Less: accumulated depreciation and amortization		(36,326	)		(34,305	)
Property and equipment, net		14,297			15,344
Goodwill		18,656			18,816
Intangible assets, net		7,252			7,048
Service inventory		17,784			19,125
Deferred income taxes, net		2,370			2,396
Total Assets	$	353,906		$	350,807
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	7,386		$	10,413
Accrued liabilities		16,443			18,216
Income taxes payable		1,088			4,886
Current portion of unearned service revenues		19,431			19,460
Customer deposits		3,047			2,662
Current portion of obligations under capital leases		15			45
Total current liabilities		47,410			55,682
Unearned service revenues - less current portion		11,344			11,221
Deferred tax liability, net		1,152			1,149
Obligations under capital leases - less current portion		16			19
Total Liabilities		59,922			68,071
Commitments and contingencies
Shareholders’ Equity:
Common stock - par value $.001, 50,000,000 shares authorized; 17,788,200 and 17,653,879 issued; 17,107,965 and 16,973,644 outstanding, respectively		18			18
Additional paid-in capital		187,098			181,094
Retained earnings		112,563			104,358
Accumulated other comprehensive income		3,380			6,341
Common stock in treasury, at cost - 680,235 shares		(9,075	)		(9,075	)
Total Shareholders’ Equity		293,984			282,736
Total Liabilities and Shareholders’ Equity	$	353,906		$	350,807

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Six Months Ended
(in thousands)	June 29, 2013			June 30, 2012
CASH FLOWS FROM:
OPERATING ACTIVITIES:
Net income	$	8,205		$	11,484
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		3,569			3,368
Compensation for stock options and restricted stock units		2,105			1,866
Provision for bad debts		315			(84	)
Deferred income tax expense (benefit) expense		1,281			(744	)
Change in operating assets and liabilities:
Decrease (increase) in:
Accounts receivable		9,644			3,535
Inventories, net		1,101			(6,173	)
Prepaid expenses and other current assets		(765	)		(1,569	)
Income tax benefit from exercise of stock options		(814	)		(1,114	)
Increase (decrease) in:
Accounts payable and accrued liabilities		(4,565	)		(6,313	)
Income taxes payable		(2,868	)		933
Customer deposits		458			317
Unearned service revenues		594			1,191
Net cash provided by operating activities		18,260			6,697
INVESTING ACTIVITIES:
Purchases of property and equipment		(891	)		(2,533	)
Payments for intangible assets		(832	)		(443	)
Net cash used in investing activities		(1,723	)		(2,976	)
FINANCING ACTIVITIES:
Payments on capital leases		(76	)		(98	)
Income tax benefit from exercise of stock options		814			1,114
Proceeds from issuance of stock, net		3,084			5,601
Net cash provided by financing activities		3,822			6,617
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		(2,284	)		(130	)
INCREASE IN CASH AND CASH EQUIVALENTS		18,075			10,208
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		93,233			64,540
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	111,308		$	74,748

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

	Three Months Ended					Six Months Ended
(in thousands)	June 29, 2013		June 30, 2012			June 29, 2013			June 30, 2012
Net income	$	3,631	$	4,734		$	8,205		$	11,484
Currency translation adjustments		468		(3,022	)		(2,961	)		(1,688	)
Comprehensive income	$	4,099	$	1,712		$	5,244		$	9,796