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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 the earliest event reported) October 30, 2003
Commission File Number 0-23081
FARO TECHNOLOGIES, INC.
(Exact Name of Registrant as Specified in Its Charter)
Florida 59-3157093
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(State or Other Jurisdiction of Incorporation) (IRS Employer Identification No.)
125 TECHNOLOGY PARK, LAKE MARY, FLORIDA 32746
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(Address of Principal Executive Offices) (Zip Code)
(407) 333-9911
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(Registrant's Telephone Number, Including Area Code)
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(Former Name or Former Address, if Changed Since Last Report)
Item 9. Regulation FD Disclosure
Item 12. Results of Operations and Financial Condition
The following information is being furnished under Item 9 and Item 12 of
Form 8-K. A copy of this press release is attached as Exhibit 99.1 to this Form
8-K.
On October 29, 2003, FARO Technologies, Inc. (the "Company") issued a press
release announcing its results of operations for the third quarter 2003 ended
September 27, 2003. This press release is attached as Exhibit 99.1 to this Form
8-K. The attached press release is furnished under Item 9 and Item 12 of Form
8-K.
The attached press release includes references to the Company's net income
and net income per diluted share for the quarter ended September 27, 2003, after
excluding a $1.1 million gain from settlement of litigation in the third quarter
2003. The attached press release also contains a forecast for net income per
diluted share for 2003 that excludes the gain from settlement of litigation. A
reconciliation of these financial measures to the most directly comparable GAAP
financial measures (which are net income and net income per share) is provided
in the text of the attached press release.
Management believes that providing net income and net income per diluted
share financial information after deducting the gain from settlement of
litigation assists investors by allowing them to more easily compare the
Company's financial performance period to period. The $1.1 million gain from the
settlement in litigation is included as a line item on the Company's income
statement under "Other Income" and, consequently, reflected in net income, but
the gain is not included in revenue or income from operations. Accordingly,
Management believes that excluding the effect of the gain from settlement of
litigation from net income and net income per diluted share aids investors in
understanding the Company's financial results absent non-recurring or unusual
events.
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunder duly authorized.
FARO TECHNOLOGIES, INC.
By: /s/ Gregory A. Fraser
----------------------------------------
Gregory A. Fraser
Executive Vice President, Secretary, and
Treasurer
Date: October 30, 2003
EXHIBIT INDEX
Exhibit Number Description
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99.1 Press Release, dated October 29, 2003
Exhibit 99.1
FARO Technologies Reports Record Third Quarter 2003 Results;
Sales Up 58.7% to $19.2 Million;
Forecasts Continued Strong Growth For 2004
LAKE MARY, Fla., Oct. 29 /PRNewswire-FirstCall/ -- FARO Technologies, Inc.
(Nasdaq: FARO) today reported its fifth consecutive profitable quarter,
exceeding its targeted range of sales and earnings, fueled by an increase in
sales and a reduction of operating expenses as a percentage of sales.
Net income was $3.3 million, or 26 cents per diluted share, in the quarter
that ended September 27, 2003, compared to $72,000, or one cent per diluted
share in the year-ago quarter, which ended September 30, 2002. Excluding a
$1.1 million gain from settlement of litigation, net income was $2.2 million,
or 17 cents per diluted share in the quarter ended September 27, 2003.
Sales for the quarter were $19.2 million, a Company record for any quarter
and a 58.7% increase from $12.1 million in the third quarter of 2002. Sales
increased from higher laser tracker and FaroArm unit sales and from price
increases on the laser tracker and FaroArm products in January 2003. Sales in
the third quarter of 2003 exceeded the high end of the Company's $16-$17
million forecast by $2.2 million, or 12.9% as a result of an increase in new
orders and because of a ramp up in production to meet its goal of shorter
delivery times.
"We had new order bookings of approximately $17.3 million during the
quarter, an increase of $3.4 million, or 24.4% compared to approximately $13.9
million in the year-ago quarter," said Simon Raab, President and CEO. "We
continue to achieve strong growth despite a sluggish manufacturing sector."
Selling, general and administrative ("SG&A") expenses were $6.5 million in
the third quarter of 2003, an increase of $1.4 million, or 27.4% from $5.1
million in the year-ago quarter. As a percentage of sales, SG&A expenses were
33.8% in the third quarter of 2003 compared to 42.2% in the year ago quarter.
Income from operations increased $2.8 million, from a loss of $55,000 in
the third quarter of 2002 to income of $2.7 million in the third quarter of
2003. This increase was primarily a result of an increase in gross profit of
$4.5 million, offset by the $1.4 million increase in SG&A expenses noted
above.
From a regional perspective, in the third quarter of 2003 sales in the
Americas grew 50.7% to $10.4 million compared to $6.9 million in the third
quarter of 2002. Sales in Europe increased 61.0% in the third quarter of 2003
to $6.6 million, compared to $4.1 million in the year ago quarter. Sales in
Asia Pacific in the third quarter increased 100.0% to $2.2 million, from $1.1
million in 2002. For the nine months ended September 27, 2003 sales in the
Americas, Europe and Asia Pacific increased 44.2%, 77.0% and 54.0%
respectively.
"The third quarter was a good indication of how we can leverage our
business model to higher earnings with sales growth," said Simon Raab,
President and CEO. "We have said that we intend to hold our fixed operating
expenses near their current level through 2004 and with continued sales growth
our operating income should continue to increase. We have updated our revenue
guidance for the fourth quarter and 2004, in light of the increase in new
orders for the second and third quarters which have been stronger than our
historical growth rates."
Revised Outlook For 2003 and 2004.
We are anticipating sales for the fourth quarter of 2003 to be $18-$20
million, and total sales in 2003 to be $67-69 million. We expect net income in
the fourth quarter to be $2.1- $2.3 million, or $0.16 - $0.18 per diluted
share, and total earnings per diluted share in 2003 to be $0.58-$0.60.
Excluding the nine cents per diluted share from the gain from litigation in
the third quarter of 2003, we expect earnings per diluted share in 2003 to be
$0.49-$0.51.
Based on our historical growth rate, and the recent positive trends in our
business we are updating our prior 15-20% expectation for sales growth in 2004
to 20-25%. We anticipate that a portion of growth in 2004 will be from the new
Faro Gage product, which we are introducing in 2003, and increased sales of
our existing product line in all regions, especially in Asia Pacific. Based on
our current cost structure, and expected continued improvements in our
business model, we expect the 20-25% increase in sales to result in a 25-50%
increase in net income excluding the gain from settlement of litigation in
2003, or $0.61-$0.77 per diluted share in 2004.
A conference call reviewing the third quarter 2003 results will be held
Thursday, October 30, 2003 beginning at 11:00 AM (Eastern)/ 8:00 AM (Pacific).
To participate please dial 800-905-0392 five minutes prior to start time.
International callers should dial 785.832.1523. The Conference ID is "FARO". A
recording of the call will be available until January 30, 2004 by dialing
888.566.0161. International callers should dial 402.530.9310. No access code
is needed for the replay. The call will be simultaneously broadcast over the
Internet at: http://www.firstcallevents.com/service/ajwz391664302gf12.html
The call will be archived at the Company's website at http://www.faro.com.
Financial Tables Follow
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 our plans, objectives,
projections, expectations, assumptions, strategies, or future events.
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 "may," "believes,"
"anticipates," "expects," "intends," "plans," "seeks," "estimates," "will,"
"should," "could," and similar expressions or discussions of our strategy or
other intentions identify forward-looking statements. Other written or oral
statements, which constitute forward-looking statements, also may be made by
the Company from time to time. 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 forward-looking statements include, but are not
limited to:
* our inability to maintain historical sales growth rates,
* our inability to maintain or reduce operating expenses or maintain our
historical gross margin ,
* difficulties in ramping up production in our new manufacturing facility
in Switzerland and completing the opening and staffing of our sales office in
China,
* our inability to further penetrate our customer base;
* development by others of new or improved products, processes or
technologies that make our products obsolete or less competitive;
* our inability to maintain our technological advantage by developing new
products and enhancing our existing products;
* the cyclical nature of the industries of our customers and the financial
condition of our customers;
* the inability to protect our patents and other proprietary rights in the
United States and foreign countries and the assertion of infringement claims
against us;
* fluctuations in our annual and quarterly operating results as a result
of (i) the size and timing of customer orders, (ii) the amount of time that it
takes to fulfill orders and ship our products, (iii) the length of our sales
cycle to new customers and the time and expense incurred in further
penetrating our existing customer base, (iv) increases in operating expenses
required for product development and new product marketing, (v) costs
associated with new product introductions, such as assembly line start-up
costs and low introductory period production volumes, (vi) the timing and
market acceptance of new products and product enhancements, (vii) customer
order deferrals in anticipation of new products and product enhancements,
(viii) our success in expanding our sales and marketing programs, (ix) start-
up costs associated with opening new sales offices outside of the United
States, (x) fluctuations in revenue and without proportionate adjustments in
fixed costs, (xi) the efficiencies achieved in managing inventories and fixed
assets; and (xii) adverse changes in the manufacturing industry and general
economic conditions.
* the inability of our products to displace traditional measurement
devices and attain broad market acceptance;
* the impact of competitive products and pricing in the CAM2 market and
the broad market for measurement and inspection devices;
* risks associated with expanding international operations, such as
fluctuations in currency exchange rates, difficulties in staffing and managing
foreign operations, political and economic instability, and the burdens of
complying with a wide variety of foreign laws and labor practices;
* the loss of Simon Raab or Greg Fraser or other key personnel;
* our inability to identify, consummate, or achieve expected benefits from
acquisitions;
* the failure to effectively manage our growth;
* the loss of a key supplier and the inability to find a sufficient
alternative supplier in a reasonable period or on commercially reasonable
terms.
* the other risks detailed in the Company's Annual Report on Form 10-K
and other filings from time to time with the Securities and Exchange
Commission.
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.
FARO TECHNOLOGIES, INC. AND SUBSIDIARIES
SUMMARY FINANCIAL TABLE
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Nine Months Ended
September 27 September 30 September 27 September 30
2003 2002 2003 2002
SALES $19,183,958 $12,104,696 $48,831,692 $31,135,903
COST OF SALES 8,153,080 5,552,740 20,235,693 14,589,099
Gross profit 11,030,878 6,551,956 28,595,999 16,546,804
OPERATING EXPENSES
Selling 4,331,615 3,135,738 12,603,913 9,778,401
General and
administrative 2,160,923 1,975,530 6,208,803 5,702,658
Depreciation and
amortization 471,789 529,488 1,599,434 1,811,874
Research and
development 1,135,452 966,398 3,079,075 3,338,829
Employee stock
options 219,410 -- 369,148 2,022
Total operating
expenses 8,319,189 6,607,154 23,860,373 20,633,784
INCOME (LOSS) FROM
OPERATIONS 2,711,689 (55,198) 4,735,626 (4,086,980)
OTHER INCOME
(EXPENSES)
Interest income 14,541 100,940 50,695 342,391
Other income, net 1,109,155 16,504 1,443,625 188,033
Interest expense (13,345) (6,584) (47,903) (9,681)
NET INCOME (LOSS)
BEFORE INCOME TAX 3,822,040 55,662 6,182,043 (3,566,237)
INCOME TAX EXPENSE
(BENEFIT) 488,150 (16,333) 800,738 20,667
NET INCOME
(LOSS) $3,333,890 $71,995 $5,381,305 $(3,586,904)
NET INCOME (LOSS)
PER SHARE - BASIC $0.28 $0.01 $0.45 $(0.30)
NET INCOME (LOSS)
PER SHARE - DILUTED $0.26 $0.01 $0.42 $(0.30)
Weighted average
shares - Basic 12,036,348 11,890,726 11,938,627 11,837,172
Weighted average
shares - Diluted 12,946,088 11,908,109 12,666,995 11,837,172
SELECTED CONSOLIDATED BALANCE SHEET DATA
(UNAUDITED)
Cash and investments $5,910,832
Current assets $37,278,822
Total assets $51,147,218
Current liabilities $10,032,940
Long-term debt $32,263
Total liabilities $11,673,969
Total shareholders' equity $39,473,249
Total liabilities and
shareholders' equity $51,147,218
SOURCE FARO Technologies, Inc.
-0- 10/29/2003
/CONTACT: Greg Fraser, Executive Vice President & CFO, FARO,
+1-407-333-9911; or Vic Allgeier, The TTC Group, +1-212-227-0997, for FARO/
/Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/20000522/FLM035LOGO
AP Archive: http://photoarchive.ap.org
PRN Photo Desk, photodesk@prnewswire.com/
/Web site: http://www.faro.com/
(FARO)
CO: FARO Technologies, Inc.
ST: Florida
IN: AUT MAC STW
SU: ERN