View:
================================================================================
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) March 10, 2005
FARO Technologies, Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 0-23081 59-3157093
---------------------------- ----------- -------------------
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
125 Technology Park, Lake Mary, Florida 32746
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (407) 333-9911
--------------------------------------------------------------
(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
ITEM 7.01 REGULATION FD DISCLOSURE
On March 9, 2005, FARO Technologies announced via press release,
subject: FARO Reports EPS of $1.06 in 2004. A copy of the press release is
attached hereto.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
99.1 Press release dated as of March 9, 2005
SIGNATURES
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 hereunto duly authorized.
FARO TECHNOLOGIES, INC.
-------------------------
(Registrant)
Date March 9, 2005
/s/ GREGORY A. FRASER
-------------------------
Gregory A. Fraser
Executive Vice President,
Secretary and Treasurer
Exhibit 99.1
FARO REPORTS EPS OF $1.06 IN 2004
LAKE MARY, Fla., March 9 /PRNewswire-FirstCall/ -- FARO Technologies, Inc.
(Nasdaq: FARO) today announced results for the fourth quarter and year ended
December 31, 2004. Net income for the fourth quarter was approximately $4.9
million, or $0.34 per diluted share, a 69.0% increase compared with $2.9
million, or $0.22 per diluted share in the fourth quarter of 2003. Net income
for the full year 2004 was approximately $14.9 million, or $1.06 per diluted
share, a 79.5% increase compared with $8.3 million, or $0.64 per diluted share
in fiscal 2003, and slightly higher than the Company's forecasted earnings per
diluted share range of $0.95-$1.05.
Sales for the fourth quarter of 2004 were approximately $28.5 million, an
increase of $5.5 million, or 23.9% from $23.0 million in the fourth quarter of
2003. New order bookings for the fourth quarter were approximately $30.9
million, an increase of $9.8 million, or 46.4% compared with approximately $21.1
million in the year-ago quarter. For the fiscal year ended December 31, 2004,
the Company reported sales of approximately $97.0 million, a 35.1% increase from
$71.8 million in fiscal 2003. New order bookings for fiscal 2004 were
approximately $96.7 million, a 42.6% increase from approximately $67.8 million
in fiscal 2003. Sales in 2004 were in the middle of the $95-$100 million range
forecast by the Company.
"New order bookings in Asia/Pacific in the fourth quarter were approximately
20% of total new order bookings in the quarter," said Simon Raab, Chief
Executive Officer. "We expect some variations in this percentage from quarter to
quarter going forward, but we are encouraged by the returns we are seeing on our
investment in that region."
Gross margin for the fourth quarter of 2004 was approximately 58.0%,
compared to 59.6% in the fourth quarter of 2003. Gross margin in the fourth
quarter was less than in the previous three quarters of 2004 partly as a result
of a higher proportion of sales coming from demonstration equipment, which carry
lower margins. Gross margin for fiscal 2004 was 61.8%, a 2.9 percentage point
improvement from 58.9% in fiscal 2003. Gross margin for fiscal 2004 was within
the Company's target full-year range of 60%-65%.
Selling, general and administrative ("SG&A") expenses were approximately
$11.6 million, or 40.7% of sales in the fourth quarter, an increase of $2.6
million from $9.0 million or 39.1% of sales in the fourth quarter of 2003. SG&A
expenses for fiscal 2004 were approximately $37.6 million or 38.8% of sales, an
increase of $9.4 million from $28.2 million, or 39.3% of sales in fiscal 2003.
Selling expenses as a percentage of sales were 29.0% of sales in the fourth
quarter of 2004, higher than the average of 25.7% for the three previous
quarters in 2004 in part because of the Company's establishment of new sales
offices in India and Korea, and continued expansion of the offices in China.
Selling expenses as a percentage of sales for fiscal 2004 were 26.7%, somewhat
higher than the Company's full-year target of 25%.
Research and development ("R&D") expenses were approximately $1.5 million
for the fourth quarter of 2004, virtually unchanged from $1.5 million in the
fourth quarter of 2003. R&D expenses for fiscal 2004 were approximately $5.4
million, an increase of $0.9 million from $4.5 million in fiscal 2003. R&D
expenses as a percentage of sales in 2004 were 5.6%, within the Company's target
full-year range of 5%-7%.
Operating margin for the fourth quarter of 2004 was approximately 9.8%, a
decrease of 2.0 percentage points from 11.8% in the fourth quarter of 2003, as a
result of the previously mentioned lower gross margin and higher selling
expenses in the quarter. Operating margin for fiscal 2004 was 15.0%, an increase
of 4.6 percentage points compared to 10.4% in fiscal 2003, and within the
Company's target full-year range of 15%-20%.
Income before income tax for the fourth quarter was approximately $3.1
million, a slight decrease from $3.3 million in the fourth quarter of 2003.
Income before income tax for fiscal 2004 was approximately $15.3 million, an
increase of $5.9 million, or 62.8% from $9.4 million in fiscal 2003.
The Company had an income tax benefit of approximately $1.9 million for the
fourth quarter of 2004, due primarily to the release of approximately $1.7
million in valuation allowance on foreign deferred tax assets relating to net
operating losses which the Company now believes are more likely than not to be
realized. The Company calculated the amount to release from the valuation
allowance in the fourth quarter using projections of future earnings over the
next two years. The income tax rate of 2.3% for fiscal 2004 was significantly
less than the Company's long-term target of 25%.
Sarbanes-Oxley Section 404 Internal Controls Update
The Company expects to file the report of its auditor regarding its
compliance with Sarbanes-Oxley Section 404 in its Form 10-K, which it expects to
file by March 16, 2005. "While disappointed with the cost and effort required to
meet this standard, we have vigorously undertaken efforts to positively comply.
I am proud of our entire organization for staying focused on our business while
also accommodating the internal and external audit of internal controls," said
Raab.
Outlook for 2005
We continue to forecast 25%-30% sales growth in 2005 compared to 2004, to
approximately $121-$126 million. Based on a 20% income tax rate we forecast 2005
net income to be approximately $14.5-$19.0 million, or $1.03-$1.36 per diluted
share. This forecast includes an estimated cost of $2 million as calculated
under the Black-Scholes method of FAS 123, related to our expected adoption of
FAS 123(R) for the expensing of stock options.
We have established target full-year ranges in 2005 for gross margin of
59%-62% and operating margin of 14.5%-18.5%. These target ranges represent our
full-year operating goals and are not estimates or forecasts of actual results
in 2005.
The Company intends to continue to provide annual guidance, revised
quarterly. The Company also intends to host a strategic outlook and guidance
conference within 30 days, which will be web cast. More details on this
conference will follow at a later date.
Financial Table Follows
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,"
"projects," "forecast," "target," "goal," 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 continue to grow sales in the Asia Pacific region;
* Our inability to keep our financial results within our target goals as a
result of various potential factors, such as investments in potential
acquisitions or strategic sales, product, or other initiatives;
* Our inability to find less expensive alternatives to stock options to
attract and retain employees;
* Our inability to successfully identify and acquire target companies or
achieve expected benefits from acquisitions that are consummated;
* The fact that the market potential for the CAM2 market and the potential
adoption rate for our products are difficult to quantify and predict;
* The effects of increased competition as a result of recent consolidation
in the CAM2 market;
* Difficulty in predicting our effective tax rate;
* 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
a number of factors;
* 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 our Chief Executive Officer, our President and Chief Operating
Officer, our Executive Vice President and Treasurer, or our Chief Financial
Officer or other key personnel;
* 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; and
* 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.
About FARO:
FARO Technologies, Inc. (Nasdaq: FARO) and its international subsidiaries
design, develop, and market software and portable, computerized measurement
devices. The Company's products allow manufacturers to perform three-
dimensional inspections of parts and assemblies on the shop floor. This helps
eliminate manufacturing errors, and thereby increases productivity and
profitability for a variety of industries in FARO's worldwide customer base.
Principal products include the FARO Gage and Gage-Plus(TM), Platinum and
Titanium model Faro Arms(R), SI and X model FARO Laser Trackers(R) and a CAM2(R)
family of advanced CAD-based measurement and reporting software. FARO
Technologies is ISO 9001 certified and Guide 25 approved. Learn more at
http://www.faro.com .
FARO TECHNOLOGIES, INC. AND SUBSIDIARIES
SUMMARY FINANCIAL TABLE
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Twelve Months Ended
------------------------------- -------------------------------
Dec 31, Dec 31, Dec 31, Dec 31,
2004 2003 2004 2003
-------------- -------------- -------------- --------------
SALES $ 28,542,302 $ 22,954,290 $ 97,019,875 $ 71,785,980
COST OF SALES 11,995,164 9,284,556 37,023,704 29,520,249
Gross profit 16,547,138 13,669,734 59,996,171 42,265,731
OPERATING EXPENSES:
Selling 8,287,029 5,737,496 25,886,482 18,341,409
General and
administrative 3,329,148 3,256,739 11,745,313 9,834,690
Depreciation and
amortization 678,191 519,596 2,339,496 2,119,030
Research and
development 1,457,403 1,451,392 5,441,048 4,530,467
Total Operating
Expenses 13,751,771 10,965,223 45,412,339 34,825,596
INCOME FROM OPERATIONS 2,795,367 2,704,511 14,583,832 7,440,135
OTHER INCOME
(EXPENSES)
Interest income 121,856 30,985 355,682 81,680
Other income, net 146,248 516,181 361,719 1,959,806
Interest expense (6,062) 1,552 (12,068) (46,351)
INCOME BEFORE INCOME
TAX 3,057,409 3,253,229 15,289,165 9,435,270
INCOME TAX (BENEFIT)
EXPENSE (1,857,055) 356,792 358,291 1,157,530
NET INCOME $ 4,914,464 $ 2,896,437 $ 14,930,874 $ 8,277,740
NET INCOME PER SHARE -
BASIC $ 0.35 $ 0.23 $ 1.08 $ 0.68
NET INCOME PER SHARE -
DILUTED $ 0.34 $ 0.22 $ 1.06 $ 0.64
Weighted average
shares - Basic 13,990,439 12,813,200 13,833,590 12,181,221
Weighted average
shares - Diluted 14,377,024 13,418,202 14,023,159 12,845,992
SELECTED CONSOLIDATED BALANCE SHEET DATA
(UNAUDITED)
Dec 31, 2004
--------------
Cash and investments $ 38,842,235
Current assets $ 81,219,693
Total assets $ 105,078,361
Current liabilities $ 15,290,722
Obligations under capital leases -
less current portion $ 145,697
Total liabilities $ 15,919,800
Total shareholders' equity $ 89,158,561
Total liabilities and shareholders' equity $ 105,078,361
SELECTED CONSOLIDATED STATEMENT OF CASH FLOWS DATA
(UNAUDITED)
Dec 31, 2004
--------------
Net cash provided by operating activities $ 7,299,759
Net cash (used in) investing activities $ (10,070,045)
Net cash provided by financing activities $ 1,300,194
Effect of Exchange Rate Changes on Cash $ 407,480
Cash and Cash Equivalents, Beginning of Period $ 17,419,847
Cash and Cash Equivalents, End of Period $ 16,357,235
SOURCE FARO Technologies, Inc.
-0- 03/09/2005
/CONTACT: Greg Fraser, EVP, FARO Technologies, Inc., +1-407-333-9911; or
Vic Allgeier, The TTC Group, +1-212-227-0997, for FARO Technologies, Inc./
/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 /