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): February 27, 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 February 27, 2013, FARO Technologies, Inc. (the “Company”) issued a press release announcing its results of operations for the fourth fiscal quarter and fiscal year ended December 31, 2012. 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 February 27, 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) | ||||||
| February 27, 2013 |
/s/ Keith Bair | |||||
| By: | Keith Bair | |||||
| Its: | Chief Financial Officer | |||||
EXHIBIT INDEX
| Exhibit |
Description | |
| 99.1 | Press release dated February 27, 2013. | |
Exhibit 99.1
NEWS BULLETIN
|
FARO Technologies Inc. 250 Technology Park Lake Mary, FL 32746 |
|||||
| The Measure of Success |
Keith Bair, Senior Vice President and CFO
keith.bair@FARO.com, 407-333-9911
FARO Reports Fourth Quarter and Full Year 2012 Results
LAKE MARY, FL, February 27, 2013 – FARO Technologies, Inc. (NASDAQ: FARO) today announced results for the fourth quarter ended December 31, 2012. Sales in the fourth quarter of 2012 increased 4.7% to $80.7 million, from $77.1 million in the fourth quarter of 2011. The Company reported net income decreased to $7.8 million, or $0.46 per share, in the fourth quarter of 2012, from $9.5 million, or $0.56 per share, in the fourth quarter of 2011.
Fiscal 2012 sales were $273.4 million, an increase of 7.6% compared to fiscal 2011 sales of $254.2 million. Net income for fiscal 2012 was $23.0 million compared to $23.4 million in fiscal 2011. The decline in net income was attributable in part to legal fees of $3.7 million in fiscal 2012, compared with $1.3 million in 2011, associated with the FCPA Monitor and the Nikon Patent case, both of which were substantially and favorably resolved during 2012. Cash flow from operating activities for 2012 was $27.9 million, compared to $8.7 million in 2011.
New order bookings for the fourth quarter of 2012 were $82.1 million, an increase of $5.0 million, or 6.5%, compared to $77.1 million in the fourth quarter of 2011. New order bookings for fiscal 2012 were $276.2 million, an increase of 8.0% from $255.7 million in fiscal 2011.
“Performance in the fourth quarter and for the full year was solid in light of the economic headwinds we faced in most of our end markets. Although customer interest was strong throughout the year and our new products were well received, deal closure rates were slower reflecting continued economic uncertainty,” stated Jay Freeland, FARO’s President & CEO.
Sales of the Focus Laser Scanner were particularly strong. Gross margins on this product are lower than the Company’s other products primarily because of greater reliance on the distribution channel compared to the Company’s other products. However, those sales involve minimal associated sales and marketing expenses. Overall gross margin for the fourth quarter of 2012 was 53.4%, compared to 56.5% in the fourth quarter of 2011.
The Company’s operating margin for the fourth quarter decreased to 13.9%, compared to 16.7% in the fourth quarter of 2011 and included approximately $0.4 million of professional fees related to the Company’s patent litigation.
“Although our overall 2012 results were satisfactory, they did not meet our expectations. In 2013, we anticipate continuing market uncertainty. To address this and drive improved performance, we expect to continue to strengthen our product portfolio, increase sales coverage around the world, and tighten cost controls across the Company’s operations,” Freeland concluded.
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, 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; |
| • | production delays caused by shortages of raw materials incorporated in the Company’s products; |
| • | 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, 2011. |
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 BALANCE SHEETS
| (in thousands, except share data) |
December 31, 2012 |
December 31, 2011 |
||||||
| ASSETS |
||||||||
| Current Assets: |
||||||||
| Cash and cash equivalents |
$ | 93,233 | $ | 64,540 | ||||
| Short-term investments |
64,990 | 64,997 | ||||||
| Accounts receivable, net |
62,559 | 57,512 | ||||||
| Inventories, net |
48,894 | 49,934 | ||||||
| Deferred income taxes, net |
7,216 | 5,297 | ||||||
| Prepaid expenses and other current assets |
11,186 | 9,207 | ||||||
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| Total current assets |
288,078 | 251,487 | ||||||
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| Property and Equipment: |
||||||||
| Machinery and equipment |
32,236 | 29,171 | ||||||
| Furniture and fixtures |
6,516 | 5,963 | ||||||
| Leasehold improvements |
10,897 | 10,233 | ||||||
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| Property and equipment at cost |
49,649 | 45,367 | ||||||
| Less: accumulated depreciation and amortization |
(34,305 | ) | (29,134 | ) | ||||
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| Property and equipment, net |
15,344 | 16,233 | ||||||
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| Goodwill |
18,816 | 18,610 | ||||||
| Intangible assets, net |
7,048 | 6,849 | ||||||
| Service inventory |
19,125 | 17,316 | ||||||
| Deferred income taxes, net |
2,396 | 2,296 | ||||||
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| Total Assets |
$ | 350,807 | $ | 312,791 | ||||
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| LIABILITIES AND SHAREHOLDERS’ EQUITY |
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| Current Liabilities: |
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| Accounts payable |
$ | 10,413 | $ | 13,396 | ||||
| Accrued liabilities |
18,216 | 18,076 | ||||||
| Income taxes payable |
4,886 | 2,682 | ||||||
| Current portion of unearned service revenues |
19,460 | 15,638 | ||||||
| Customer deposits |
2,662 | 4,072 | ||||||
| Current portion of obligations under capital leases |
45 | 84 | ||||||
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| Total current liabilities |
55,682 | 53,948 | ||||||
| Unearned service revenues - less current portion |
11,221 | 9,540 | ||||||
| Deferred tax liability, net |
1,149 | 1,148 | ||||||
| Obligations under capital leases - less current portion |
19 | 257 | ||||||
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| Total Liabilities |
68,071 | 64,893 | ||||||
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| Shareholders’ Equity: |
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| Common stock - par value $.001, 50,000,000 shares authorized; 17,653,879 and 17,381,110 issued; 16,973,644 and 16,700,875 outstanding, respectively |
18 | 17 | ||||||
| Additional paid-in capital |
181,094 | 169,780 | ||||||
| Retained earnings |
104,358 | 81,360 | ||||||
| Accumulated other comprehensive income |
6,341 | 5,816 | ||||||
| Common stock in treasury, at cost - 680,235 shares |
(9,075 | ) | (9,075 | ) | ||||
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| Total Shareholders’ Equity |
282,736 | 247,898 | ||||||
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| Total Liabilities and Shareholders’ Equity |
$ | 350,807 | $ | 312,791 | ||||
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FARO TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| (in thousands, except share and per share data) |
Dec 31, 2012 | Dec 31, 2011 | Dec 31, 2012 | Dec 31, 2011 | ||||||||||||
| SALES |
||||||||||||||||
| Product |
$ | 68,775 | $ | 65,953 | $ | 227,905 | $ | 212,635 | ||||||||
| Service |
11,895 | 11,127 | 45,490 | 41,529 | ||||||||||||
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| Total Sales |
80,670 | 77,080 | 273,395 | 254,164 | ||||||||||||
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| COST OF SALES |
||||||||||||||||
| Product |
30,170 | 25,881 | 94,103 | 82,408 | ||||||||||||
| Service |
7,431 | 7,687 | 29,673 | 28,067 | ||||||||||||
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| Total Cost of Sales (exclusive of depreciation and amortization, shown separately below) |
37,601 | 33,568 | 123,776 | 110,475 | ||||||||||||
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| GROSS PROFIT |
43,069 | 43,512 | 149,619 | 143,689 | ||||||||||||
| OPERATING EXPENSES: |
||||||||||||||||
| Selling |
18,413 | 17,960 | 64,446 | 62,117 | ||||||||||||
| General and administrative |
7,037 | 6,875 | 29,065 | 26,806 | ||||||||||||
| Depreciation and amortization |
1,812 | 1,665 | 6,976 | 6,712 | ||||||||||||
| Research and development |
4,580 | 4,159 | 17,578 | 15,196 | ||||||||||||
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| Total operating expenses |
31,842 | 30,659 | 118,065 | 110,831 | ||||||||||||
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| INCOME FROM OPERATIONS |
11,227 | 12,853 | 31,554 | 32,858 | ||||||||||||
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| OTHER (INCOME) EXPENSE |
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| Interest income |
(19 | ) | (17 | ) | (160 | ) | (101 | ) | ||||||||
| Other expense, net |
529 | 442 | 744 | 1,217 | ||||||||||||
| Interest expense |
6 | 4 | 28 | 37 | ||||||||||||
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| INCOME BEFORE INCOME TAX EXPENSE |
10,711 | 12,424 | 30,942 | 31,705 | ||||||||||||
| INCOME TAX EXPENSE |
2,870 | 2,952 | 7,944 | 8,328 | ||||||||||||
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| NET INCOME |
$ | 7,841 | $ | 9,472 | $ | 22,998 | $ | 23,377 | ||||||||
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| NET INCOME PER SHARE - BASIC |
$ | 0.46 | $ | 0.57 | $ | 1.36 | $ | 1.42 | ||||||||
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| NET INCOME PER SHARE - DILUTED |
$ | 0.46 | $ | 0.56 | $ | 1.34 | $ | 1.39 | ||||||||
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| Weighted average shares - Basic |
16,966,063 | 16,668,567 | 16,910,830 | 16,503,773 | ||||||||||||
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| Weighted average shares - Diluted |
17,074,074 | 16,940,438 | 17,129,128 | 16,868,430 | ||||||||||||
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FARO TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Years Ended December 31, | ||||||||||||
| (in thousands) |
2012 | 2011 | 2010 | |||||||||
| CASH FLOWS FROM: |
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| OPERATING ACTIVITIES: |
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| Net income |
$ | 22,998 | $ | 23,377 | $ | 11,068 | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||||||
| Depreciation and amortization |
6,976 | 6,712 | 6,326 | |||||||||
| Compensation for stock options and restricted stock units |
4,018 | 2,727 | 2,392 | |||||||||
| Provision for (net recovery of) bad debts |
(23 | ) | 2,169 | 2,408 | ||||||||
| Deferred income tax benefit |
(2,016 | ) | (672 | ) | (693 | ) | ||||||
| Change in operating assets and liabilities: |
||||||||||||
| Decrease (increase) in: |
||||||||||||
| Accounts receivable |
(4,840 | ) | (8,979 | ) | (13,018 | ) | ||||||
| Inventories, net |
(844 | ) | (27,329 | ) | (6,273 | ) | ||||||
| Prepaid expenses and other current assets |
(1,870 | ) | (1,417 | ) | (2,172 | ) | ||||||
| Income tax benefit from exercise of stock options |
(1,135 | ) | (1,593 | ) | (133 | ) | ||||||
| Increase (decrease) in: |
||||||||||||
| Accounts payable and accrued liabilities |
(3,079 | ) | 4,644 | 10,435 | ||||||||
| Income taxes payable |
3,497 | 2,998 | 829 | |||||||||
| Customer deposits |
(1,374 | ) | 668 | 1,474 | ||||||||
| Unearned service revenues |
5,565 | 5,384 | 2,338 | |||||||||
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| Net cash provided by (used in) operating activities |
27,873 | 8,689 | 14,981 | |||||||||
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| INVESTING ACTIVITIES: |
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| Purchases of property and equipment |
(3,843 | ) | (4,474 | ) | (4,047 | ) | ||||||
| Payments for intangible assets |
(1,361 | ) | (890 | ) | (979 | ) | ||||||
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| Net cash used in investing activities |
(5,204 | ) | (5,364 | ) | (5,026 | ) | ||||||
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| FINANCING ACTIVITIES: |
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| Proceeds from notes payable |
— | — | 2,490 | |||||||||
| Payments on notes payable |
— | — | (2,490 | ) | ||||||||
| Payments on capital leases |
(132 | ) | (163 | ) | (84 | ) | ||||||
| Income tax benefit from exercise of stock options |
1,135 | 1,593 | 133 | |||||||||
| Proceeds from issuance of stock, net |
6,162 | 9,150 | 1,405 | |||||||||
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| Net cash provided by financing activities |
7,165 | 10,580 | 1,454 | |||||||||
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| EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS |
(1,141 | ) | (87 | ) | 4,235 | |||||||
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| INCREASE IN CASH AND CASH EQUIVALENTS |
28,693 | 13,818 | 15,644 | |||||||||
| CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR |
64,540 | 50,722 | 35,078 | |||||||||
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| CASH AND CASH EQUIVALENTS, END OF YEAR |
$ | 93,233 | $ | 64,540 | $ | 50,722 | ||||||
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